SEBI GRADE A

2020

COMPANY
LAW
 “Sometimes it is
the people who no
one imagines
anything of who do
the things that no
one can imagine.”

– Alan Turing
 Syllabus
Prospectus
Directors
Meetings of Board & its
Powers
Share Capital & Debentures
Payment of Dividends
Audit & Auditors
NCLT & NCLAT
PROSPECTUS
M/s ABC Ltd., is a Public
Limited company desires to
issue its securities. States
the ways a company can
issue its securities?
a)To public through
Prospectus (IPO and FPO)
b)Private Placement
c)By right or bonus issue
d)All of the above
Answer - D, Section 23. Public offer &
private placement.
(1) A public company may issue securities—
a)to public through prospectus (herein
referred to as "public offer") by complying
with the provisions of this Part; or
b)through private placement by complying
with the provisions of Part II of this
Chapter; or
c) through a rights issue or a bonus issue in
accordance with the provisions of this Act
and in case of a listed company or a
company which intends to get its
securities listed also with the provisions
of the SEBI Act, 1992 & the rules &
regulations made thereunder.
Section 23 of the Companies Act, 2013
deals with the ways a Public company
can issue its securities namely………..
a)To public through Prospectus (IPO &
FPO)
b)Private Placement
c)By right or bonus issue
d)All of the above
Answer - d,
(As per Section 23(1) of
the Companies Act,
2013)
M/s ABC Pvt. Ltd., is a
Private Limited company
desires to issue its
securities. States the ways a
Private company can issue
its securities?
a. By right issue
b. By bonus issue
c. Private Placement
d. All of the above
Answer - d,

(As per Section 23(1) of the

Companies Act, 2013)
……….. Company is prohibited
from access to the public in
raising its capital.
a. Public company
b. Private company
c. All of the above
d. None of the above
Answer – b
(As per Section 2(68) of the
Companies Act, 2013,
Private Company prohibits any
invitation to the public to
subscribe for any securities for
any securities of the Company.)
Can issue of Prospectus
compulsory for a company?
a. Yes
b. No
c. Partly Yes
d. Partly No
Answer – b
(As per Section 23(1) of the
Companies Act, 2013,
it is issued by a public company
which is seeking to raise the
required funds from the public
by means of issue of shares and
debentures. It is not necessary
for every company to file a
prospectus. ... Private
companies are not required to
file a prospectus. )
M/s ABC Pvt. Ltd., is a Private
Limited company desires to
issue prospectus for public
offer. Whether Company can
do so?
a. Yes
b. No
c. Partly Yes
d. Partly No
Answer – b
(As per Section 23(2) of the
Companies Act, 2013,
a Private Company is
prohibited from inviting the
public for subscription of its
shares, i.e. a Private Company
cannot issue Prospectus,
whereas a Public Company is
free to invite public for
subscription i.e., a Public
Company can issue a
Prospectus.)
If a company or any other person has
received application for allotment of
securities along with advance
payment then the company or any
other person shall intimate the
changes to such applicant, and an
option to withdraw their application
shall be given to such applicants and
if such applicants desire to withdraw
their application, all monies received
them shall be refunded within ………..
Days.
a. 20 days
b. 10 days
c. 30 days
d. 15 days
Answer – d
Proviso to Section 31 of the
Companies Act, 2013
Provided that where a company or
any other person has received
applications for the allotment of
securities along with advance
payments of subscription before the
making of any such change, the
company or other person shall
intimate the changes to such
applicants and if they express a
desire to withdraw their application,
the company or other person shall
refund all the monies received as
subscription within 15 days thereof.
A Prospectus issued by the
financial institutions or bank
for one or more issue of the
securities or class of securities
specified in the prospectus is
called …….
a. Deemed Prospectus
b. Red herring Prospectus
c. Shelf Prospectus
d. Abridged Prospectus
Answer – c
(Section 31 of the Companies act,
2013,
Shelf prospectus means a prospectus
in respect of which the securities or
class of securities are issued for
subscription in one or more issue
over a certain period without the
issue of a further prospectus.)
No allotment of any securities of
a company offered to the public
for subscription shall be made
unless….
a)The amount stated in the
prospectus as the minimum
amount has been subscribed
b)The sum payable on application
for the amount so stated have
been paid to and received by
the company by cheque or
other instrument
c)Both a and b
d)a or b
Answer – c

Section 39. Allotment of securities

by company.

(1) No allotment of any securities of

a company offered to the public for
subscription shall be made unless
the amount stated in the prospectus
as the minimum amount has been
subscribed and the sums payable on
application for the amount so stated
have been paid to and received by
the company by cheque or other
instrument.
Amount payable on application on
every security shall be…….
a)Not less than 5 % of nominal
amount
b)Such other amount or % as
specified by SEBI
c)a or b
d)None of the above
Answer – c

(Section 39(2) The amount

payable on application on
every security shall not be less
than 5% of the nominal
amount of the security or such
other %age or amount, as may
be specified by the SEBI by
making regulations in this
behalf.
If Company fails to issue regular
prospectus, if any person is not
satisfied with Abridged Prospectus
and he can demand regular
prospectus from the Company. State
the penalty for non-compliance.
a. Rs. 50,000/-
b. Rs. 1,00,000/-
c. Rs. 5,00,000
d. None of the above
Answer - A,
33.Issue of application forms for securities.
1.No form of application for the purchase of
any of the securities of a company shall be
issued unless such form is accompanied by
an abridged prospectus:
Provided that nothing in this sub-section shall
apply if it is shown that the form on
application was issued—
a)in connection with a bona fide invitation to
a person to enter into an underwriting
agreement with respect to such securities;
or
b)in relation to securities which were not
offered to the public.
2.A copy of the prospectus shall, on a
request being made by any person before the
closing of the subscription list and the offer,
be furnished to him.
3.If a company makes any default in
complying with the provisions of this section,
it shall be liable to a penalty of Rs.50,000/-
for each default.
………….Means a prospectus
contained summary of original
Prospectus so as to save cost
and time.
a. Deemed Prospectus
b. Red herring Prospectus
c. Shelf Prospectus
d. Abridged Prospectus
Answer - D,

(As per Section 33 of the

Companies Act, 2013.)
It is compulsory for every
company to issue Abridged
Prospectus with ………
a. Regular Prospectus
b. Application Form
c. Red herring Prospectus
d. Shelf Prospectus
Answer - B,

(As per Section 33 of the

Companies Act, 2013.)
………… Prospectus is estimated
worth of the company in open
market
a. Deemed Prospectus
b. Red herring Prospectus
c. Shelf Prospectus
d. Abridged Prospectus
Answer – b
32. Red herring prospectus.

(1) A company proposing to make an offer of

securities may issue a red herring prospectus
prior to the issue of a prospectus.

(2) A company proposing to issue a red herring

prospectus shall file it with the Registrar at least
3 days prior to the opening of the subscription list
& the offer.

Explanation.—For the purposes of this section,

the RED HERRING
expression "

PROSPECTUS" means a prospectus

which does not include complete particulars of
the quantum or price of the securities included
therein.
Red herring Prospectus shall
be filed by the company with
the ROC at least …….. days
prior to the opening of the
subscription and the offer
a. 3 days
b. 15 days
c. 30 days
d. 60 days
Answer – a

(Section 33 of the Companies

Act, 2013, time limit for
filing with ROC.)
The underwriting commission on
Debenture must not exceed…….
a. 2.0 % of the issued price of shares
b. 2.5 % of the issued price of shares
c. 5.0 % of the issued price of shares
d. 5.5 % of the issued price of shares
Answer – b

(As per Rule 13 of Companies

(Prospectus and allotment of
securities) Rules, 2014)
………….. Is an instrument
through which Indian company
can issue its shares across the
globe?
a. Global Depository Receipt
b. American Depository Receipt
c. Indian Depository Receipt
d. None of the above
Answer – A

(Section 41 of The
Companies Act, 2013)
MNS. Ltd. is a Public Limited
company desires to offer shares
60 persons under private
placement. Whether Company
can do so?
a. Yes
b. No
c. Partly Yes
d. Partly No
Answer – b

(Section 42 of the Companies Act,

2013, A Private placement offer or
invitation shall not be made, in one
financial year, to more than 50
Persons and not more than 200
persons in aggregate in a financial
year. Any offer which is in
contravention to Section 42 of the
Companies Act, 2013 shall be treated
as public offer)
Issue of offer letter to investor
under private placement in
Form number……………
a. PAS 1
b. PAS 2
c. PAS 3
d. PAS 4
Answer – d

(Section 42 of the Companies Act,

2013 and Companies (Prospectus And
Allotment of Securities) Rules, 2014)
Under Private Placement, if the
application money not refunded,
company shall pay interest 12%
p.a. from the end of …. Days.
a. 30 days
b. 40 days
c. 60 days
d. 90 days
Answer – c

(Section 42 of the
Companies Act, 2013)