Chapter 2 Directors: Board Meetings & Its Powers

Chapter 2:Board Meetings 2.1

& Its powers

1. ‘A. Ltd incorporated in 2011, held Board meetings between 1st January 2016 to 31st December 2017 on
the following dates:
28th February 2016, 20th June 2016, 10th October 2016, 1st February, 2017, 31st March, 2017, 25th July,
2017, 20th November, 2017. Is there a violation of Sec 173 and if so for which year.
a. Violation in 2016 b. Violation in 2017 c. No Violation d. Both 2016 & 2017

2. ‘A. Ltd incorporated in 2011, held Board meetings between 1st January 2016 to 31st December 2017 on
the following dates:
28th February 2016, 20th June 2016, 10th October 2016, 1st February, 2017, 31st March, 2017, 25th July,
2017, 20th November, 2017.
Director Wiseman says that there has been no violation of Sec 173.
Director Dumbman says that there is a violation of sec 173.
Director Lostman says that if TWO Board Meetings are not held within 31st March 2018; violation will
occur.
Who is correct?
a. Wiseman b. Dumbman c. Lostman d. None

3. ‘A. Ltd incorporated in 2011, held Board meetings between 1st January 2016 to 31st December 2016
on the following dates:
2nd January 2016, 28th April 2016, 1st August 2016, 1st October, 2016, 1st December 2016
Many of the Directors refrained from attending the Meeting on 1st December claiming that it was
illegal as the Sec 173 required only 4 meetings mandatorily in a year. Is the BM held on 1 st December
2016 Invalid?
a. Yes, 1/12/2016 b. No, 1/12/2016 is a c. No, since 4 d. No, as Board Meeting is
is not a legal BM, legal BM as 4 meetings are to be held after 3 years of
as it’s the 5th meetings are the calculated in FY incorporation hence 5
meeting. minimum number of 16-17, it’s a valid BM are permitted.
BM stipulated. meeting.

4. The following is an extract of balance sheet of a Company on 31stJan , 2016:

Equity Shareholding (FV Rs 10/-) : Rs. 10 lakhs, Liabilities: Rs. 2 lakhs, Profits: 3 lakhs
Assets: Rs. 15 lakhs, Bank A/c Rs. 1 lakh, Debtors 5 lakhs, Other Assets (incl. Fixed Assets) 9 lakhs
The Company incorporated on 1st Jan 2016. As the Balance Sheet shows the company got off to some
good business, and in order to avoid any noncompliance penalty of Companies Act, 2013, Mr. Heavy,
who is one of the 3 Directors holding 100000 shares and deeply involved in the business felt the
need to seek a professional advice on the BM provisions under Companies Act, 2013. Mr. Not Heavy,
a fellow Director on the Board of the Company suggested your name for the same:
What would be your advise to them on 31st Jan 2016 regarding BM provision.
a. Min 4 BM to be b. Min 4 BM to be held c. Min 4 BM in a d. Min 2 BM at
held in a Calendar in a Financial Year at Financial Year at interval not less
year at interval not interval not interval not exceeding than 90 days and
exceeding 120 exceeding 120 days 90 days between atleast 1 BM in
days between between consecutive consecutive BM and every half of the
consecutive BM. BM. atleast 1 BM per calendar year
Quarter

5. Federation of Indian Chambers of Commerce and Industry (FICCI)’s, (Sec 8 Co’s) President Elect Mr.

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 Chapter 2 Directors: Board Meetings & Its powers

Somanytaking over from President Mr. Shah seeks your advise as to the BM provisions applicable to
his organisation. Kindly suggest the procedure to be followed.
2.2
a. Min 4 BM to be b. Min 4 BM to be held in c. Min 4 BM in a d. 1 BM in every 6
held in a a Financial Year at Financial Year at calendar year
Calendar year at interval not exceeding interval not
interval not 120 days between exceeding 90 days
exceeding 120 consecutive BM. between
days between consecutive BM and
consecutive BM. atleast 1 BM per
Quarter

6. A OPC with 2 or more Directors shall be required to hold a First Board Meeting u/s 173(1) :
a. Within 30 b. Within 60 c. No First BM required u/s d. No First BM required u/s
days of days of 173(1) if atleast 1 BM 173(1) if atleast 1 BM held
Incorporation Incorporation held every half calendar every quarter of the
year at interval not less calendar year at interval not
than 90 days between less than 60 days between
consecutive BM’s consecutive BM’s

7. A small company shall be required to hold a First Board Meeting u/s 173(1) :
a. Within 30 b. Within 60 c. No First BM required d. No First BM required u/s
days of days of u/s 173(1) if atleast 1 173(1) if atleast 1 BM held
Incorporation Incorporation BM held every half every quarter of the calendar
calendar year at year at interval not less than
interval not less than 60 days between consecutive
90 days between BM’s
consecutive BM’s

8. An OPC with 1 Director shall be required to hold a First Board Meeting u/s 173(1) :
a. Within 30 b. Within 60 days c. No First BM d. No First BM required u/s 173(1) if
days of of required u/s atleast 4 BM held every calendar
Incorporation Incorporation 173(1 )at all year at interval not exceeding 120
days between consecutive BM’s

9. A Dormant company shall be required to hold a First Board Meeting u/s 173(1) :
a. Within 30 b. Within 60 days c. No First BM required u/s d. No First BM required u/s
days of of 173(1) if atleast 1 BM held 173(1) if atleast 1 BM held
Incorporation Incorporation every half calendar year every quarter of the
at interval not less than calendar year at interval not
90 days between less than 60 days between
consecutive BM’s consecutive BM’s

10. A OPC with 2 or more Directors shall be required to hold which of the following minimum number of
Board Meeting u/s 173(1) :
a. Min 4 BM to be b. Min 4 BM to be c. Atleast 1 BM held d. Atleast 1 BM held every
held in a Calendar held in a Financial every half calendar quarter of calendar
year at interval year at interval not year at interval not year at interval not less
not exceeding 120 exceeding 120 days less than 90 days than 60 days between
days between between between consecutive BM’s
consecutive BM consecutive BM consecutive BM’s

11. The following Directors have the respective views on the delivery of Notice of BM:
Mr A. The Notice should be delivered either by hand OR by post OR by electronic means

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 Chapter 2 Directors: Board Meetings & Its Powers

Mr B The Notice should be delivered by hand AND by post AND by electronic means
Mr C The Notice should be delivered by the preferred mode of delivery of the recipient Director
Which of the aforementioned Directors have the right opinion: 2.3
a. Mr A b. Mr B c. Mr C d. None

12. For a BM dealing with non-urgent matters notice of the BM shall be given atleast before :
a. 7 days b. 14 days c. 21 days d. 28 days

13. When Directors participate through Audio Visual means what are its pre requisites:
a. It should record b. It should record and c. It should recognize d. All of these
the Directors’ store the proceedings the participant
participation of the meeting Director

14. The water pipeline of a reputed hotel company ruptured due to accidental damage. Immediate bids
were obtained from repair contractors; a heavy financial outlay was expected. The BM needs to be
called urgently to select a contractor or else the business suffers loss of reputation and payment of
compensation to clients. Can an urgent BM be held without any Notice being given?
a. Yes b. No c. Yes, but ratify the same at d. Yes, but Independent Directors need
the BM to be present

15. The water pipeline of a reputed hotel company ruptured due to accidental damage. Immediate bids
were obtained from repair contractors; a heavy financial outlay was expected. The BM needs to be
called urgently to select a contractor or else the business suffers loss of reputation and payment of
compensation to clients. Can an urgent BM be held with a shorter Notice being given?
a. Yes b. No c. Notice for a shorter period can be d. Yes, BM can be held without notice
given and Independent Director (if also but Independent Director (if any)
any) shall be present at BM OR ratify shall be present at BM OR ratify the
the decisions taken thereat by decisions taken thereat by circulation.
circulation.

16. Mr. A, a Director of ABC Ltd recently had a housewarming ceremony at which all BOD members,
Secretary & Employees of the ABC Ltd were invited and in attendance. For the next BOD meeting the
Company sent a notice at the address of his newly opened house and not at registered address in
company’s records (which was his old house). This was done in foresight that the notice would not
make it to him had it been sent at the registered address. Is the treatment proper and in line with
Companies Act?
a. Yes, since the newly b. No, since the c. Yes, the invite for house d. As per Companies
opened house is house is not the warming is akin to an Act the Director
indirectly brought to address application for change in whose address for
attention of the Co’s registered with registered address delivery is in doubt,
records the company shall be served
notice only by hand

17. An OPC with 2 or more Directors shall be required to give 7 days’ notice for BM :
a. True b. False c. Notice provisions are deemed complied with d. OPC is not required to
if 1 BM every half calendar year is held and conduct BM as it is only
gap between 2 consecutive BM is not less led by One Person.
than 90 days

18. Failure to give BM Notice shall result in following Penalty to the defaulting Officer of the Company:
a. Rs. 25000/- b. Rs. 25000/- + Rs. 100/- c. Rs. 10000/- d. Rs. 10000/- + Rs 100/- every day
for every day default the default continues
continues

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 Chapter 2 Directors: Board Meetings & Its powers

19. BM was called for an urgent matter required to be deliberated, what are the requirements for such a
2.4
BM:
a. An Independent b. An Independent c. If the Company has d. Notice calling such a
Director (if any) Director (if any) shall be Independent BM shall be signed by
shall be the present at such meeting Directors , only they Independent
Chairman of such OR atleast ratify the can vote on such Directors only
a meeting decisions made thereat urgent matters
through circulation

20. What provisions pertaining to BM are applicable to Specified IFSC public Company:
a. Such company b. Such company shall c. Such company shall d. Such company shall
shall hold First BM hold First BM within 60 hold First BM within hold First BM within
within 30 days of days of Incorporation 30 days of 60 days of
Incorporation and and 1 BM in each half Incorporation and 1 Incorporation and 1
1 BM in each half of calendar year BM in each quarter BM in each quarter of
of calendar year of calendar year calendar year

21. What modes of attendance are available to a Director attending a BM

a. In person b. Video Conference c. Prescribed Audio Visual means d. All of these

22. Mr. A attending his daughter’s destination wedding joined a BM via Video Conferencing:
At this meeting discussion was done regarding financial budgets and approval of the Financial
Statement. Presence at BM via Video Conferencing is not permissible for which of these matters?
a. Discussion for b. Approval of annual c. Both are d. Both are not
budgets are not Financial Statement is permissible permissible
permissible not permissible

23. Mr. A attending his daughter’s destination wedding joined a BM via Video Conferencing:
At this meeting discussion was done regarding wide range of financial budgets and approval of the
Board’s Report. Presence at BM via Video Conferencing is not permissible for which of these matters?
a. Discussion for budgets b. Approval of Board’s c. Both are d. Both are not
are not permissible Report is not permissible permissible permissible

24. Notice was received by Mr. Traveller, Director of Wanderlust Ltd. for BM to be held on 15 th of the
month. On that day Mr. Traveller was to travel to New York and hence couldn’t be able to attend the
meeting.
Mr. Stationary told Mr. Traveller not to worry as the Companies Act, permits attendance through
Video Conferencing as well:
At the meeting that ensued following matters were discussed:
I. Payment of Bonuses
II. Selection of Transport Contractors
III. Approval of Quarterly Financial Statements for Stock Exchange compliances
In light of gravity of the decisions taken thereat, is the attendance of Mr. Traveller through Electronic
mode valid under Companies Act
a. Yes for all matters b. No for all matters c. Yes for I & II only d. No for I & II only

25. What shall be Quorum in case No. of Directors is 12:

a. 3. b. 4. c. 9. d. 2

26. What shall be Quorum in case No. of Directors is 13:

a. 3. b. 4. c. 5. d. 2

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 Chapter 2 Directors: Board Meetings & Its Powers

27. A. Ltd had 9 Directors on its Board. A Board Meeting was convened on 15th of the month. On that day,
7 of the Directors were on visit to a Regional Conference. The meeting was conducted by the
remaining two and a letter jointly signed by the 7 absentee member Directors was obtained as a No- 2.5
Objection for lack of Quorum.
Is the BM legal if absentee Directors waive Quorum in writing ?
a. No, as Quorum is fixed by b. Yes, Quorum can be c. Yes, Quorum is a just d. Yes, provided
the Act and cannot be reduced if over a guiding principle Independent
reduced by Co (only 2/3rd Directors and can be waived by Directors
specific businesses can be consent to do so written declaration unanimously
done when Quorum falls) approve the
same

28. In a 3-person Board, with Mr. A, Mr. B, Miss C as the Directors, 3 resolutions were to be passed, but
following Directors were Interested therein:
Resolution Interested Directors
I Mr A
II Mr B & Miss C
III Miss C
On which Resolution the Board doesn’t hold a Quorum
a. I & III b. II c. None d. All

29. ‘The First Step’ Ltd engages in selling souvenirs made by juvenile inmates and using the surpluses
thereof only to impart vocational education to juveniles in jails, it is incorporated under special
provisions applicable to Social Welfare entities under Companies Act and seeks advise in following
case:
A BM was called on 28th June, at the meeting Directors for District No..1 , 4, & 6 were in attendance.
But the Directors for remaining 13 other districts could not make it in time. There is one Director for
each district . Is the quorum at the meeting valid?
a. No as 6 Directors b. No as the requisite c. Yes as 2 Directors are d. A single Director can
are minimum quorum is 4 minimum Quorum in form Quorum in
Quorum in above members or more given case above case
case

30. A meeting is convened on 19th of January, due to lack of Quorum it stands postponed to which of the
following days?
a. 25th January – b. 26th January - c. 27th January - d. 28th January - First
Friday Republic Day of Sunday working day of the week
India

31. Out of the 3 Directors on the Board of A Ltd. Mr A passed away and Mr B tendered his resignation
before the BM scheduled for 15th of the month. At such a meeting Mr. C being the sole Director could
no way achieve the Quorum and as such made business decision by passing resolutions himself. The
Shareholders were displeased at such single handed approval system. Will the resolutions passed
stand?
a. Yes, as there is b. Yes, but only if c. No, as the Companies d. Yes, as the BM was already
no way to the Act only allows notified before the events of
achieve the resolutions continuing director/s retirement and death took
mandatory 2 passed are to act in order to place, hence decisions taken
person assented to by restore Quorum or call thereat are legally binding
Quorum the GM of Shareholders
Shareholders

32. Mr A. Director of A.Ltd is also the sole proprietor of Alpha Traders who are the leading supplier of Raw

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 Chapter 2 Directors: Board Meetings & Its powers

Material to Supersonic Traders. Supersonic is expecting to receive an order from A Ltd. The BM
convened to grant this order has Mr. A present thereat. Is he an Interested Director?
2.6
a. Yes, as he is b. Yes, as he is c. No, as he is a mere d. No, since Mr. A is a sole
indirectly to owner of an entity supplier to proprietor and as such has
benefit from a other than Supersonic, not an immunity from provisions
better financial Directorship of A owner/partner of Interested Directors
position of Ltd therein.
Supersonic

33. Mr A. Director of A.Ltd is also the partner in Alpha Traders. Mr. B. his partner in Alpha Traders is also a
partner in Supersonic Traders. Supersonic is expecting to receive an order from A Ltd. The BM
convened to grant this order has Mr. A present thereat. Is he an Interested Director?
a. Yes, as he is b. Yes, as he is c. No, as he is a mere d. No, since Mr. A is a partner
financially within two partner to Mr. B (who of Mr. B , and as such the
related with a degrees of is separately a partner partnership assumes a
partner of the separation from in Supersonic different legal status and
beneficiary of the bidder i.e. Traders), and not an hence immune to
the resolution. Supersonic owner/partner provisions of Interested
himself. Directors

34. What provision of Quorum is applicable to OPC with more than 1 Director:
a. Quorum 2 or b. 25% or 8 c. No Quorum required d. No Quorum required at BM of
1/3rd members for OPC in this case OPC

35. Mr A. Director of A.Ltd is also the partner in Alpha Traders. Alpha Traders is expecting to receive an
order from A Ltd. The BM convened to grant this order has Mr. A present thereat. As an Interested
Director can he participate?
a. Yes, as an interested b. Yes, but only c. No, Interested Directors d. Yes, but such action
director is required on disclosing are not allowed to vote shall be ratified by
not to vote only if he interest in matters pertaining to Independent
is a “Director “ in outside entities where Directors’ Committee
benefiting they are owners.
“Company”

36. Mr A. Director of A. Pvt Ltd is also the partner in Alpha Traders. Alpha Traders is expecting to receive
an order from A Pvt Ltd. The BM convened to grant this order has Mr. A present thereat. As an
Interested Director can he participate?
a. Yes, as an interested b. Yes, but only on c. No, Interested d. Yes, but such action
director is required not disclosing Directors are not shall be ratified by
to vote only if he is a interest allowed to vote in Independent
“Director “ in benefiting matters pertaining to Directors’
“Company” outside entities Committee
where they are
owners.

37. How many Directors are required for making request that a resolution circulated for approval shall
instead be passed by convening BM:
a. 1/3rd or more b. 2/3rd or more c. Minimum 2 d. 1/2 or more

38. Which of the following is correct: The resolution passed by circulation

a. Shall be noted at b. Shall be noted at the c. Shall be noted at d. Shall be noted at the
the next BM and immediate next GM the next BM but immediate next GM held
made part of held by the company not recorded in by the company and

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 Chapter 2 Directors: Board Meetings & Its Powers

minutes thereof and made part of Minutes ratified by shareholders

minutes thereof
2.7
39. NTPC Ltd. (NSE: NTPC) engaged in retail business has a paid up share Capital of 5.5 crore, with total
outstanding liabilities incl. loans and debentures) of 11 crores. It made a turnover of 50 crores . Is it
required to appoint an Audit Committee?
a. Yes, as it has b. Yes, as it has liabilities c. Yes, as its share d. Yes, as it is a Listed
turnover over over minimum limit capital is over Public Company
minimum limit minimum limit

40. Of the 4 Directors on the Audit Committee of A. Ltd. 2 are illiterate and 2 are Chartered Accountants.
This is done so as to bring about inclusivity of opinions. Is the constitution valid under Companies Act?
a. Yes, atleast 50% b. Yes, as the c. No, as majority d. No, as Companies Act
are able to read education is no are required to requires all Audit
and understand criteria for selecting read and Committee members to be
financial Directors for Audit understand financially literate
statements Committee financial
statements

41. Artisans , a sec 8 company is required to form a Audit Committee . It appoints 5 member Directors,
only 2 of whom are Independent. Is this a valid constitution of the Audit Committee?
a. No, as more than b. No, as more than 3/4th c. Yes , as the d. Yes, as the provisions are
50 percent shall be shall be Independent, minimum criteria relaxed for a sec 8
Independent and any fraction shall of 2 Independent company, exempting
Directors be counted as 1 Directors is need for majority
fulfilled Independent Director

42. The Audit Committee of Arc Ltd. requested the CA firm engaged in audit of Arc Ltd. to produce its
Auditor’s Report as per terms of reference of such Committee with the BOD. The CA firm outright
declined saying that the Audit Committee was overstepping its limits. Is the view of the CA Firm proper
as per Act?
a. Yes, as the CA Firm is b. No, as the Audit c. No, as the Audit d. Yes , as the right over
answerable to BOD Committee is given Committee is sole documentation of the
and not to a delegated such right under authority for all Audit records solely lies
authority e.g. Audit Companies Act, communications with the auditor.
Committee 2013. with auditors

43. The auditor of Arc Ltd. attended the meeting of Audit Committee thereof. He made a statement about
certain pressing matters about Internal Control weaknesses. In the ensuing resolution of the Board ,
regarding the fortification of Internal Control through digital means, the auditor claimed he had a
special right to vote under Companies Act, as he is the expert on that subject. Is he entitled to vote?
a.Yes, Audit Committee is b. No, the Auditor has no c. Yes, Audit d. Yes, Auditor can
required to allow right under Companies Committee is cast a vote, but
auditor to vote on Act to vote at such formed by only if there is a tie
matters towards which meeting, but has right default with the in the number of
he has made statements to make statement Auditor as a votes
in Committee meeting thereat. member

44. Medking Ltd. is required to have vigil mechanism and has an existing Audit Committee. Mr. A is a
member of this Audit Committee and Chairperson. Besides, he is a consultant to Goodmeds Ltd., who
supply raw material to Medking Ltd. Mr. Truthful an employee in the testing department found the
supplies of Goodmeds to be substandard and accused Mr. A of accepting kickbacks. And brought this
to notice of the higher-ups. After no response to his complaint he approached the Audit Committee.
Mr. A who is also the Chairman of Audit Committee participated in the ensuing discussions.

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 Chapter 2 Directors: Board Meetings & Its powers

Can Mr A participate in such business of Audit Committee despite the apparent conflicts of interest?
a. No, as the Companies Act b. Yes, provided that such c. None of these.
2.8
requires a person having resolutions passed as a
conflict of interest to recuse result of deliberations are
himself from deliberations on further ratified at Board
those matters Meeting

45. Failure of a Company to enforce a proper vigil mechanism u/s 177(9) can result in fine of :
a. 1 lakh to 5 b. 5 lakh to 10 lakh c. 10 lakh to 15 d. 5 lakh + 1000/- for every
lakh lakh continuing day without vigil
mechanism

46. Defaulting officer of a Company who fails to enforce a proper vigil mechanism u/s 177(9) can be u/s
178(8) :
a. Imprisoned for upto 1 year OR b. Imprisoned for upto 6 months c. Fine from d. None of
Fined from 25000 to 100000 OR OR Fined upto 10000 10000 to these
Both OR Both 50000

47. Bosch Ltd {NSE:Bosch} is a listed public company having PUC of 5 crores, turnover of 50 crore and
aggregate borrowing and debt of 50 crores:
Will it be required to form a Nomination and Remuneration Committee?
a. Yes, as the PUC b. Yes, as the c. Yes, as aggregate d. Yes as all listed public
is above 1 turnover is borrowings are equal to companies require to have a
crore above 10 or exceed 50 crores Nomination and Remuneration
crores Committee

48. Bosch Ltd is an unlisted public company having PUC of 15 crores, turnover of 50 crore and aggregate
borrowing and debt of 50 crores:
Will it be required to form a Nomination and Remuneration Committee?
a. Yes, as the PUC b. Yes, as the c. Yes, as aggregate d. Yes as all unlisted
is above 10 turnover is borrowings are equal to or companies require to
crore above 10 exceed 50 crores have a Nomination and
crores Remuneration Committee

49. A Nomination and Remuneration Committee has 4 member Directors including the Chairperson of
BOD. All of whom are non-executive and 2 are Independent Directors. Is the constitution proper? If
not, why?
a. Yes , the b. No, as the number c. No, as the number of d. No, as the minimum
constitution is of Independent non-executive number of member
proper Directors shall be a Directors shall be less Directors for a NRC is
majority, which it is than 3. 5
not

50. A certain company has Nomination and Remuneration Committee consisting 4 member Directors
including the Chairperson of Company. Of which 3 are non-executive and 2 amongst them are
Independent Directors. Chairperson of Company (only executive member) is elected as the Chair of
the NRC. Is the constitution proper?
a. No, as the no of b. No, as the number of c. No, as the Chairperson d. Yes, the
Executive directors Independent Directors of Company can’t be constitution is
is insufficient is insufficient Chair of NRC in line with
Companies Act.

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 Chapter 2 Directors: Board Meetings & Its Powers

51. Would it be permissible for Chairperson of Company to Chair the NRC in the above case if such person
was a non-executive Director?
2.9
a. Yes, as Non- b. No, as Chairperson of c. No, as the number of d. Yes, as a
executive Company is prohibited to be Executive Directors NRC is
Chairperson of Chair of NRC irrespective of would fall to zero, required to
Company can be a whether executive or non- which is below have only
Chair of NRC executive minimum prescribed Non-
executive
Directors

52. A 4 person Stakeholders Relationship Committee was formed by Prakash Ltd having 1001
Shareholders.
The 4 members were highly qualified Executive Directors. Amongst them a Director was named
Chairman. Is this a validly constituted SRC, if not, why?
a. Yes, the SRC is b. No, the SRC is not validly c. No, the SRC d. No, the SRC is
validly constituted as there is failure Chairman is invalid, invalid as it
constituted to maintain minimum no. of as the post can be consists members
Non-Executive Members on held only by Non- already serving on
SRC executive Director BOD.

53. Failure of a Company to constitute a proper Nomination & Remuneration Committee can result in fine
of :
a. 1 lakh to 5 lakh b. 5 lakh to 10 lakh c. 10 lakh to 15 d. 5 lakh + 1000/- for every
lakh continuing day without NRC

54. Defaulting officer of a Company which fails to constitute a proper NRC can be :
a. Imprisoned for upto 1 year b. Imprisoned for upto 6 months c. No Imprisonment. d. None
OR Fined from 25000 to OR Fined upto 10000 OR Both Fine from 10000 to of
100000 OR Both 50000 these

55. The BOD at the BM approved a contract to Arc Builders. The said contractor was having less than 2
years 11 months of Building experience in Infra projects at that point. At the ensuing General meeting
3 months later, the Company added a regulation that only Contractors with more than 3 years of
Builiding experience shall be hired . Arc Builders’ contract was rescinded as a result retrospectively, as
the GM was of the opinion that Shareholders can undo decisions made by BOD, and can provide
retrospective ratification or revocation. Is the treatment correct.
a. No, the BOD’s decisions cannot b. Yes, the Shareholders at c. No, the Shareholders cannot
be retrospectively rescinded by GM are true owners of rescind the contract as on the
GM of shareholders as they the Company and can do relevant date of GM the Arc
were valid on the day they ratify as well as rescind a Builders have requisite
were made contract retrospectively experience

56. Good People, a Sec 8 Company, wanted to pass a resolution through circulation on the matter of
investing of the Company’s funds in select Government securities. Can the Sec 8 Company pass such a
resolution through Circulation?
a. Yes, it is b. No, as the Companies Act c. No, as the Sec 8 d. Yes, but the
specifically prohibits specifically Companies are Securities can only
covered in the passing circular resolution prohibited to be Government
Companies Act. on above matter pass resolutions Guaranteed
by circulation securities

57. Bahd People, a Sec 8 Company, wanted to pass a resolution through circulation on the matter of giving

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security towards loan borrowed by it. Can the Sec 8 Company pass such resolution through Circulation?
a. Yes, it is b. No, as the Companies Act c. No, as the Sec 8 d. Yes, but only if
2.10
specifically prohibits specifically Companies are the value of
covered in the passing circular resolution prohibited to pass security does not
Companies Act. on above matter any resolutions by exceed Rs. 1 lakh
circulation

58. BOD of A. Ltd wanted to delegate the power of borrowing monies to the Managing Director. Is this a
proper delegation of power?
a. Yes, as such b. No, as a c. No, as the decision of d. Yes, provided the
delegation is delegated borrowing monies is a matter upper limit of
allowed under authority (i.e. that the Companies Act borrowings shall
Companies Act. BOD ) cannot mandates to be passed by not exceed Rs. 1
further delegate BOD only lakh

59. A. Ltd wanted to make contribution to Topi Kamal Haath Party, a political party. The BOD delegated the
same to a select Committee formed entirely of Independent Directors. Is the delegation proper?
a.Yes , as the Committee b. No, as resolution for c. No, as such d. No, Political
is fully Independent as political Contributions resolution is to be Contributions are
stipulated by are to be made only at passed at BOD in a banned to be made
Companies Act GM of shareholder convened BM only w.e.f. FY 2017

60. Can the powers of the Board u/s 179(3) be restricted by Shareholders in GM?
a. Yes, the shareholders b. No, the powers of c. Yes, but only the 3 d. Yes, only if the
have a right to put the Board bestowed specific cases as BOD has no
restriction on the under 179(3) are mentioned under Independent
Board’s exercise of absolute and can’t Sec 179(3) (d) (e) Directors
powers u/s 179(3) be restricted by Co and (f) appointed
thereto
61. Board of A Ltd wishes to exercise the power to sell its whole undertaking in Ab Ltd its subsidiary.
A. Ltd’s total net worth as per the preceding financial year audited Balance Sheet was 100 crores.
The Investment in Ab Ltd was 30 Crores only. The exercise of such power was done after consent
of the Company through ordinary resolution. Is the treatment correct?
a. No, as the b. No, as the c. Yes, as the d. Yes, as the Company
Company shall be Company shall be Company shall be shall be required to
required to provide required to provide required to provide provide consent by
consent by Special consent by Special consent by Ordinary Resolution
Resolution as the Resolution as the Ordinary irrespective of %age
total investment total investment Resolution as the of investment
exceeds 20 % net exceeds 15 % net total investment is
worth. worth less than 40 % net
worth

62. Board of A Ltd exercised the power to sell its whole undertaking in Ab Ltd (its subsidiary). A Ltd’s
total net worth as per the preceding financial year audited Balance Sheet was 100 crores. The
Investment in Ab Ltd was 15 Crores only. The exercise of such power was through consent of the
Company through ordinary resolution. Is the treatment correct.
a. No, as the b. No, as the c. Yes, as the Company d. Yes, as the Company
Company shall Company shall be shall be required to shall be required to
be required to required to provide provide consent by provide consent by
provide consent by Special Special Resolution Ordinary Resolution in
consent by Resolution as the only when total all cases.
Special total investment investment in

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 Chapter 2 Directors: Board Meetings & Its Powers

Resolution exceeds 10 % net undertaking exceeds

irrespective of worth 20 % net worth
the % age. 2.11

63. Board of A Ltd exercised the power to sell its whole undertaking in Ab Ltd its subsidiary. A Ltd’s
total income for the previous financial year was 100 crores. The income share contributed by Ab
Ltd was 30 Crores only. The exercise of such power was through consent of the Company
through ordinary resolution. Is the treatment correct.
a. No, as the b. No, as the Company c. Yes, as the d. Yes, as the
Company shall be shall be required to Company shall be Company shall be
required to provide provide consent by required to provide required to
consent by Special Special Resolution consent by Ordinary provide consent
Resolution as Ab as Ab Ltd’s share in Resolution as Ab by Ordinary
Ltd’s share in total total income exceeds Ltd’s share in total Resolution in all
income exceeds 20 15 % income is less than cases
%. 40 %

64. Board of A Ltd exercised the power to sell its whole undertaking in Ab Ltd its subsidiary. A Ltd’s
total income for the previous financial year was 100 crores. The income contributed by Ab Ltd
was 15 Crores only. The exercise of such power was through a consent of the Company through
ordinary resolution. Is the treatment correct.
a. No, as the b. Yes, as the c. Yes, as the d. Yes, as the
Company shall be Company shall be Company shall be Company shall be
required to provide required to provide required to provide required to
consent by Special consent by Special consent by Ordinary provide consent
Resolution in all Resolution only if Resolution as Ab by Ordinary
such cases Ab Ltd’s share in Ltd’s share in total Resolution in all
total income exceeds income is less than cases
20 % 40 %

65. Board of A Ltd exercised the power to invest in trust securities the proceeds of compensation
received as a result of merger/amalgamation. The exercise of such power was through consent
of the Company through ordinary resolution. Is the treatment correct?
a. No, as the b. No, as the Company c. Yes, as the d. No, as such a decision
Company shall shall be required to Company shall lies entirely with
be prohibited to provide consent by be required to Company at GM and
invest such sums Special Resolution provide consent can’t be delegated to
as per the as the same is by Ordinary BOD in any form
Companies Act stipulated in Resolution in all
Companies Act such cases

66. Board of A Ltd exercised the power to remit (ignore) repayment of debt due from Director. The
exercise of such power was through consent of the Company through ordinary resolution. Is the
treatment correct?
a. No, as the b. No, as the c. Yes, as the same d. No, as such a decision lies
Company shall Company shall be is exempted entirely with Company at
be prohibited required to provide from Special GM and can’t be delegated
to remit such consent by Special Resolution under to BOD in any form
sums as per Resolution as the the Companies
the Companies same is stipulated Act 2013
Act in Companies Act

67. What penal provisions befall a Director who has not disclosed interest u/s 184

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 Chapter 2 Directors: Board Meetings & Its powers

a. Imprison : <= 1 b.Imprison : <= 6 c. Imprison: <= 1 yr d. Imprison: <= 6 mt Fine

yr mt Fine : <=1 lakh : 50000-1 lakh or Both
2.12
Fine : 1-2 lakh Fine : 1-2 lakh Or Both
Or Both Or Both

68. Mr. A was interested in a contract. He was a Director of A.Ltd. The interest was not disclosed.
On prospective discovery of his interest the Director, the BOD wanted to annul the contract.
Can it do so?
a. Yes, the b. Yes, the contract is c. No, the contract d. Yes, the contract is
contract is voidable by the cannot be voided voidable and the Company
voidable at the party in which the on a technicality shall bear all costs that
option of the Director has and the outsiders may have unduly befallen
Company interest, failing are protected by on the other party as a
which the Director Doctrine of result of voiding
shall indemnify Indoor
Management

69. A. Ltd’s extract of financial statements is as follows :

Paid-Up Capital and Free Reserves 100 Crores. Sec Premium 10 crores
Money Borrowed 50 crores (includes 10 crores temporary loan repayable within 6 months).
Money proposed to be borrowed 60 crores.
An ordinary resolution at the GM is passed to approve such additional borrowing.
Is the treatment correct.
a. Yes, as aggregate of b. No, as Sp c. Yes, as all d. Yes, as the money to
money borrowed and to Resolution is borrowing of be borrowed is less
be borrowed does not required for all money requires than 3/4ths of the
exceed PUC + FR+SP, the times when consent by total PUC+FR
hence does not require money is Ordinary
Sp Resolution borrowed Resolution

70. In the above question would the treatment be correct if the Money proposed to be borrowed was
70 crores instead of 60 crores
a. Yes, as the aggregate of money borrowed b. No, as the aggregate of money
and to be borrowed would not exceed borrowed and to be borrowed would
PUC + FR+SP, hence won’t require Sp exceed prescribed limit hence require
Resolution. Thereby current treatment Sp Resolution. Thereby current
would stand treatment would be wrong

71. In question No. 69 would the treatment be correct if the Money proposed to be borrowed was 71
crores instead of 60 crores
a. No, as the aggregate of money borrowed b. No, the same treatment would stand
and to be borrowed would exceed PUC +
FR+SP, hence consent by Sp Resolution

72. In question No. 69 would the treatment be correct if Money Borrowed previously (i.e.50 crores)
had temporary loans component of 20 crores instead of 10.
a. Yes, as in that case b. No, as the aggregate c. Yes, as in d. No, as in any case a Special
the aggregate of of the Money any case the resolution would have
money borrowed borrowed and to be ordinary been required
and to be borrowed would be resolution is
borrowed won’t equal to or exceed required
exceed PUC + PUC + FR +SP
FR+SP

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 Chapter 2 Directors: Board Meetings & Its Powers

73. Board of A Ltd exercised the power to sell its whole undertaking in Ab Ltd its subsidiary. A Ltd’s
2.13
total net worth as per the preceding financial year audited Balance Sheet was 100 crores. The
Investment in Ab Ltd was 30 Crores only. The exercise of such power was through consent of
the Company through special resolution. The limits for the sale of investment were not explicitly
mentioned in GM-SR. Is the treatment correct.
a. Yes, the b. No, as in addition to c. Yes, as the d. Yes, as the BOD is at
requirement of a the Special Resolution limits are liberty to define the
Special what is also required is notified for financial limits within
Resolution is the the mention of the different which to exercise the
sole criteria as limits of funds class of power
per the Act Companies
by the
Companies
Act, 2013

74. Board of A Ltd exercised the power to sell its whole undertaking in Ab Ltd its subsidiary through
a consent of the Company vide an ordinary resolution. Later it was discovered in 4 months that
the situation warranted a special resolution. Owing to the same, the title of the purchaser of the
undertaking was brought into question. Is the treatment correct.
a. Yes, the title of b. No, as the title of c. Yes, as the d. No, as any suit for this
the purchaser is the purchaser is free decision taken sale transaction is time
invalid if the from any defect in relates to sale of barred as per the Statute
Company fails to procedure of undertaking of Limitations applicable
provide a special approval provided hence the same is to such case
resolution where the purchaser has void ab initio and
needed under made purchase in doctrine of
Companies Act good faith indoor
management
doesn’t protect
outsiders

75. Board of Adarsh (Pvt) Ltd sold its undertaking as defined in explanation to Sec 180(1)(a). The
Company at the GM objected to such an exercise of power calling it to be a wrongful as it was
without approval of Company through Special Resolution as required for sale of undertaking u/s
180(1)(a) of Companies Act, 2013. Owing to the same, the title of the purchaser of the
undertaking was brought into question. Is the treatment correct.
a. Yes, the title of b. No, as the title of the c. Yes, as the decision d. No as these
the purchaser is purchaser is free from taken relates to sale provisions are N.A.
invalid if the any defect in of undertaking and to Adarsh
Company fails to procedure of approval the same is void ab
provide a special provided the initio and doctrine
resolution where purchaser has made of indoor
needed under purchase in good faith management
Companies Act as per section 180 doesn’t protect
outsiders

76. A Ltd seeks to make contribution to Charitable funds of 5 lakh in FY 2017-18. The Board
approved such a resolution without consent of Company at GM. In light of the given extract
for the 3 immediately preceding FY, is the treatment correct?
FY Net Profits (in lakhs)
FY 2014-15 50
FY 2015-16 150
FY 2016-17 100

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 Chapter 2 Directors: Board Meetings & Its powers

a. Yes, as for b. No, as the c. Yes, as the d. No, as the amount is

Charitable fund Companies Act, amount does equal to or exceeds 5 %
2.14
contribution no 2013 prohibits not exceed 5% of the Avg N.P.of 3
consent of Charitable fund of the Avg. IPFY and hence needs
Company is contribution with or N.P of 3 IPFY approval of Company at
required without consent no approval of GM
Co at GM
needed

77. Would the treatment be correct in the above case change if instead of net profit of 50 Lakhs in
FY 2014-15 the company made net profit of 40 Lakhs.
a. Yes, as for b. No, as the c. Yes, as the d. No, as the amount is
Charitable Companies Act, amount does equal to or exceeds 5 %
fund 2013 prohibits not exceed 5% of the Avg N.P.of 3
contribution Charitable fund of the Avg. N.P IPFY and hence needs
no consent of contribution with or of 2 IPFY no approval of Company at
Company is without consent approval of Co GM
required at GM needed

78. A Ltd. with turnover of 100 lakhs Contributed 10 Lakh to the Flower Hand Broom Political
Party. The contribution was consented through a BOD resolution . Some members of the
Company objected that Company’s consent for the same shall have been obtained. Is the
Contribution valid in light of Companies Act, 2013
a. Yes, the b. No, the contribution is c. Yes, the d. No, the
contribution is not valid as the contribution is contribution is
valid as no consent Company’s consent at valid as the Act invalid as there can
of the Company at GM is required if the does not be no contribution
GM is required if amount of contribution require the to any Political
amount is <= 10% is >= 10% of Turnover Company’s Party
of Turnover consent but
only the BOD
resolution
approving the
same

79. Would the contribution be valid if in question no 78 A Ltd was a Company in which CG or SG
or partly both held more than 51 % shareholding?
a. Yes, as Government b. No, since the c.Yes, as the d. No, as in case of
Company is not Companies Act, Act allows Government
prohibited to make any 2013 expressly Governme Companies , Company’s
political contributions as prohibits such a nt to make approval in GM is
the Government itself contribution to be contributio required.
owns the Company made n upto 20
% of the
turnover

80. Would the contribution be valid in question no. 78 if A Ltd was incorporated 364 days before
making such a contribution.
a. No, as company is b. No, as company is c. Yes, as the d. Yes, as the Company
in existence for less in existence for less contribution is has completed 180 days
than 1 FY it is than 3 FY it is independent as stipulated in the
prohibited to make prohibited to make of the time for Companies Act, 2013
any political any political which the
contributions contributions Company has

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 Chapter 2 Directors: Board Meetings & Its Powers

been in
existence
2.15
81. Would contribution be valid in question no. 78 if A Ltd made contribution through Cash or
Cheque which was not crossed.
a. Yes, as contribution b.No, as account c. Yes, as the amount d. No, as the amount is
to political party payee is <= 10% of the >= 10% of the
does not necessarily instruments are turnover of the turnover of the
have to be in necessary as Company the use Company, hence the
account payee stipulated in of Account payee use of Account payee
instrument Companies Act instruments is not instruments is
mandatory mandatory

82. A. Ltd. Made contribution to political parties as follows:

1. Flower Hand Broom(FHB) Party Rs. 100000/-
2. Advertisement in the ‘Socialist’ a pamphlet being issued at rallies by FHB Party Rs 10000/-.
3. Advertisement in ‘Social Soldier’ a brochure chronicling left-leaning seminars, printed by Mr.
Leftist, whose philosophies glorify FHB Party . Rs 5000/-.
The P&L discloses the Contribution to political parties u/s 182 as Rs 100000/- and
Advertisement as 15000/- . Is the disclosure in line with Sec 182 of Companies Act?
a. Yes, as only direct b. No, as the c. No, as the d. No, as all the amount
contributions to Contribution in Contribution in shall be mandatorily
political parties are 1. and 2. above 1. 2. and 3. classified as
covered in Sec 182 are covered in above are Advertisement
Sec 182 so covered in Sec Expenditure as stipulated
amount shall be 182 so amount by Companies Act, 2013
110000/- shall be
115000/-

83. A. Ltd made a contribution of Rs 100000/- to political party but did not follow the Sec 182 of
Companies Act 2013. What shall be the punishment for such contravention imposed on the
company?
a. 5x the amount b.10x the amount c. 15x the d. No penalty on the Co.
amount

84. In the above case, what shall be the punishment labelled onto the defaulting officers of the
company?
a. Imprisonment : upto b.Imprisonment : c. Imprisonment d. Imprisonment : upto 1
1 year. Fine : 5x the upto 6 months. : upto 2 years. year. Fine : 10x the
amount Fine : 5x the Fine : 10x the amount
amount amount

85. A. Ltd sought to contribute to the National Defence Fund an amount at 6 % of the average net
profits of 3 years immediately preceding the FY. There is a debate as to who is the proper
authority to approve such a resolution. Who is the proper authority?
a. The BOD b. The person or authority c. The Co. d. All of these
exercising powers of the in GM
BOD

86. Mr. Good a Director of A. Ltd. Has developed an interest in a previously approved contract
which at the time of approval he was not interested in. The Director is of the opinion that he is
not liable to any further reporting duty since he has disclosed interest at the time of original
approval. But the BOD takes a contrary view. Who is correct?

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 Chapter 2 Directors: Board Meetings & Its powers

a. Mr. Good is b. BOD’s view is c. Mr. Good is d. BOD’s view is correct

correct as his correct as any required to disclose only if Mr. Good had
2.16
view is similar change in the the interest only voted in favour of the
to the interest is to be once he has made interested party in the
Companies disclosed forthwith any financial gains, original resolution
Act, 2013 or at earliest next mere gaining of an
BM interest doesn’t
require disclosure

87. What form is prescribed under Rule 9 of Companies (Meetings of Board and its Powers) Rules,
2014 for disclosure of interest of Directors and their shareholding?
a. MBP-1 b.MBP-2 c. MBP-3 d. MBP-4

88. Mr. Executive a Director of A Ltd. was appointed to that Directorship in July 2017. At the time
the flaw in the appointment procedure was not noticed. Mr. Executive voted in many
resolutions. In September the auditors brought to the notice of the BOD the flaw in
appointment. The BOD were of the opinion that the resolutions to which Mr. Executive had
assented shall be invalid by the fact that Mr. Executive was himself invalidly appointed. Is the
view off the BOD correct?
a. Yes, as per the b. No, as per the c. Yes, BOD is d. No, BOD is incorrect
Companies Act, Companies Act, 2013, correct as the wrongfully
2013 all the discovery of any however a appointed Director
resolutions flaw in the Company in shall be required to
assented to by a appointment of GM can ratify make good the losses
Director whose Director shall not the same and if any, but all
appointment was repudiate the validity validate such resolutions shall stand
invalid shall stand of resolutions made decisions if it
void until such flaw was chooses
noticed

89. What is the position in law of resolutions (if any) voted upon by the aforesaid Director in Q No
88 after the flaw was notified to the BOD?
a. Those b. The resolutions c. The Co.at a GM d. The resolutions shall be
resolutions shall passed shall not convened within studied by expert
stand as the flaw stand as the 3 months shall committee of the BOD of
is presumed to Companies Act ratify the same which such Director shall
have been explicitly states not be a part
ignored so

90. A. Ltd purchased lands in the name of the Director who held more than 75 percent of all shares
of the Company. The Company virtually belongs to the Director and so the property is held in
name of the Director, but bought and paid for by the Company. One member objected to this.
What is the position of the Companies Act, 2013 on this issue?
a. The Company can b.The company can c. The company d. The Company can
hold land property in hold all securities in can neither hold all forms of
name of any other any other persons hold land assets in the name of
person without name, but land property or its Executive
restriction property is securities in Directors
prohibited any other
persons name

91. Would your answer in the above case differ if instead of land it was shares in a subsidiary
company and the Director was a nominee thereto , and such holding in Directors’ name was
solely so that the number of members are maintained above Statutory limits

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 Chapter 2 Directors: Board Meetings & Its Powers

a. Yes, as the same is b. No, as there is no

explicitly covered in specific distinction
Companies Act,2013 made 2.17

92. Mr. A a Director purchased FloorTiles from the Marble Floor Ltd. He holds Directorship in
Marble Floor Ltd. The company extended credit to the Director which was not a policy of the
Company. The Auditors raised question saying that this was not permitted in the Companies
Act. Which of the following is correct
a. The Director is in violation b.The Company is c. There is no d. There is no
of the Companies Act as in violation of the prohibition on trade violation of
no Director is allowed to Companies Act as between the Director Co’s Act
deal with the Company no sale is allowed and Company but
wherein he is Director to be done to the credit arrangement is
Director prohibited as a loan

93. What shall be the penal provisions attracted by the defaulting Company in Q No 92
a. Fine : 1-5 Lakhs b. Fine : 5-25 Lakhs c. Fine : 1 d. No penalty
Lakh

94. A Ltd. Held shares as a beneficial owner but the shares were in name of the Depository. A
register as required by law u/s 187 of Companies Act 2013 to enumerate details of such
holdings was not maintained. What are the penal provisions for the same?
a. Fine : 25000-25 lakh b.Fine: 25000- 5 c. Fine: 25000- 1 d.Fine: 25000-50000
lakh lakh

95. What Form is prescribed for the maintenance of Register as stated above in Q No 94 as per
Rule 14 of the Companies ( Meetings of Board and its Powers) Rules , 2014?
a. Imprison : <= 1 b. Imprison : <= 6 c. Imprison: <= 1 d. Imprison: <= 6 mt Fine :
yr mt yr Fine : 25000- 25000-50000
Fine : 25000-1 Fine : 25000-1 50000 Or Both Or Both
lakh lakh
Or Both Or Both

96. Mr. Pro provides tax related advice to the Board of A Ltd which a company with turnover of 5
crores. He does practice also as a Tax consultant. A transaction of leasing of property is sought to
be undertaken by the Company with Mr Pro for 1 crore. The Board wants this to be approved by
the Company as Mr. Pro is a related party in their estimation. Is the treatment valid?
a. Yes Mr. Pro is a b.No, Mr. Pro is not a c. Yes, Mr.Pro is d. No, Mr. Pro is a
related party as related party as the a related party professional and as such not
the BOD is fields of Tax as Tax covered under Companies
accustomed to consultancy and consulting can Act as related person on
Act on his land leasing are not be associated whose orders the BOD acts,
directions the same even with land since he does so in
though the BOD leasing as ways professional capacity
acts on his to evade tax
directions

97. Register for Contracts and Arrangements entered into with Related Parties and those in which
Director are Interested shall be maintained in Form:?
a. MBP-1 b. MBP-2 c. MBP-3 d. MBP-4

98. Mr. A a member of A Ltd wanted to inspect the contract of service / memorandum of terms of
appointment of the employment of M.D. / W.T.D of A Ltd. He was informed that such a record

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 Chapter 2 Directors: Board Meetings & Its powers

was not maintained. What are the penal provisions applicable to the Company
2.18
a. Fine: 25000 b. Fine: 50000 c. Fine: 75000 d. Fine: 100000

99. In the above case, what are penal provisions applicable to the officers of the Company
a. Fine: 5000 b. Fine: 10000 c. Fine: 15000 d. Fine: 20000

100 Will your answer for Q 98 change if the Company was a Private Company rather than a Public
. Company
a. Yes, the Fine for b. Yes, the Fine for c. Yes, as d. No, as no distinction
Private Company Private Company provisions are is made under Act for
shall be half the shall be twice the Not Applicable Public and Private
fines notified for fines notified for to the Private Company
Public Company Public Company Company

Answers

Question Answer (Reason wherever needed)

1 a. As only 3 BM are held
2 b. There is violation of Sec 173 hence Mr. Dumbman is right. Mr. Lostman’s contention that
2 BM held before 31/3/18 would rectify the situation is wrong as the BM are counted for a
Calendar Year and not Financial Year.
3 b.
4 d. The provisions applicable to an OPC shall be applicable as one Director (Mr. Heavy)
holds whole shareholding. Also the BM cannot be dispensed with as it is not an OPC with
single Director, but more than 1 Director.
5 d. Applicable provisions of Sec 8 Company
6 c. OPC shall be in compliance of provisions of Sec 173 ( which specifies the First BM
requirements) if it holds 1 BM in each half of calendar year atleast 90 days apart
7 c. Same reasons as above are applicable to the Small Company also
8 c. Nothing contained in Sec 173 (which specifies the First BM requirements) shall apply to
an OPC with One Director only. Hence First BM not applicable to OPC with one Director.
9 c. Dormant Company BM are based on principles similar to 6 above
10 c. OPC shall be in compliance of provisions of Sec 173 ( which specifies the Minimum
number of BM requirements) if it holds 1 BM in each half of calendar year atleast 90 days
apart
11 a. Delivery of notice to be done only once in any of the 3 means prescribed.
12 a.
13 d.
14 b. Since the Act prescribes a notice of LESS THAN 7 days in case of Urgent BM, but
nevertheless Notice is necessary.
15 c.
16 b.
17 c. Point d. is not correct as OPC though owned by One Person can appoint more than one
Directors, as is the case in Question
18 a.
19 b.
20 B
21 D
22 b. Approval of only Annual Financial Statement is not permissible , other periodic FS can be

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Chapter 2 Directors: Board Meetings & Its Powers

approved
23 B
2.19
24 a. Quarterly not Annual Financial Statements are approved .
25 b. 1/3rd comes to 4
26 c. 1/3rd comes to 4.33 which shall be made to 5
27 a.
28 b.
29 b. As total directors is 16 (13+3) the Quorum is 8 or 25% (i.e. 4) w.e.l as it is a Sec 8 Co. as
per information from the Question
30 d. As 26th is a national holiday and 27th is a Sunday, the adjourned meeting shall be held on
Monday.
31 c.
32 c. Ownership is crucial criteria for “interest” u/s 184
33 c. Direct ownership is crucial criteria for “interest” u/s 184
34 c. Provisions of Quorum do not apply to OPC with 1 Director.
35 c.
36 b. As it is a Private Company. In Public Company this won’t be possible
37 a.
38 A
39 d. As it is listed public company on NSE it has to have an Audit Committee
40 c.
41 d.
42 b.
43 b.
44 a.
45 a. u/s 178(8)
46 a. u/s 178(8)
47 d.
48 A
49 a. As non executive directors are more than 3 and ATLEAST half are Independent
50 c.
51 b.
52 c.
53 a. u/s 178(8)
54 a. u/s 178(8)
55 a. Sec 179(2) states the same
56 a. Sec 179(3) (d)/(e)/(f) gives specific exception to Sec 8 Company
57 a. Sec 179(3) (d)/(e)/(f) gives specific exception to Sec 8 Company
58 a. Proviso to Sec 179(3) gives specific exception to Sec 8 Company
59 c. Covered under Sec 179(3)(k): additional matters prescribed
60 a. Sec 179(4)
61 a. Ab Ltd is an “undertaking” as the Investment therein(i.e. 30 crores) exceeds the 20% of
Co’s Net worth (20%*100 crores). So u/s 180(1)(a) GM-SR is required .
62 c. Ab Ltd is not an “undertaking” as the Investment therein (i.e. 15 crores) does not exceed
20% of Co’s Net worth (20%*100 crores). So u/s 180(1)(a) GM-SR is not required .
63 a. Ab Ltd is an “undertaking” as the Income therefrom(i.e. 30 crores) exceeds the 20% of
Co’s total income (20%*100 crores). So u/s 180(1)(a) GM-SR is required
64 b. Ab Ltd is not an “undertaking” as the Income therefrom (i.e. 15 crores) does not exceed
20% of Co’s total income (20%*100 crores). So u/s 180(1)(a) GM-SR is not required
65 b. Sec 180(1)(b)

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 Chapter 2 Directors: Board Meetings & Its powers

66 b. Sec 180(1)(d)
2.20
67 c. Sec 184(4)
68 a. Sec 184(3)
69 a. PUC+FR+SP=110; Money(borrowed +to be borrowed - temporary loans)=50+60-
10=100
Since 110>=100, no consent vide Special Resolution needed.
70 a. PUC+FR+SP=110; Money(borrowed +to be borrowed - temporary loans)=50+70-
10=110
Since 110>=110, no consent vide Special Resolution needed.
71 a. PUC+FR+SP=110; Money(borrowed +to be borrowed - temporary loans)=50+71-
10=111
Since 110<111, consent vide Special Resolution needed.
72 a. PUC+FR+SP=110; Money(borrowed +to be borrowed - temporary loans)=50+71-
20=101
Since 110>=101, no consent vide Special Resolution needed.
73 a. Special Resolution is required as ‘undertaking’ is sold u/s 180(1)(a). Requirement of
mentioning monetary limit in GM-SR applies to 180(1)(c)
74 b. Section 180(3)
75 d. Sec 180 N.A. to Pvt. Co.
76 c. Contribution(i.e. 5 lakhs)<= 5% of AvgNP of 3 Prev FY (i.e. 5%*{(50+150+100)/3}).
77 d. Contribution(i.e. 5 lakhs)> 5% of AvgNP of 3 Prev FY (i.e. 5%*{(40+150+100)/3}).
78 c.
79 b. Sec 182 does not apply to GovtCo’s as is the case in given Question
80 b.
81 b.
82 c.
83 a.
84 b.
85 d.
86 b.
87 a.
88 b. Sec 176
89 b. Proviso to Sec 176
90 c. Exception in 187(2) exist, but option c reflects general rule in Sec 187
91 a. Proviso to 187(1)
92 c.
93 b.
94 a. Sec 187(4)
95 b. Sec 187(4)
96 d.
97 d.
98 a. Sec 190(3)
99 a. Sec 190(3)
100 c. Sec 190(4)

© CA Darshan D. Khare