48CoMIANY LAW

of Director in another company permitted |lst proviso to Section a

3. The director

6. Holding Office
a dircctor of another compan
()]: However, such a person can be appointed as with
(a) an individ
the prior permission of the Board. (c) an assoCia

7. Holding Office of Director in more than one company at the same time 4. The minimur
the
commencement of the Act or within a period of 6 months from such commencemen
(a) 5
of the Act |2nd Proviso to Section 203 (3)]: whole-timc koy managcrial pcrsonncl holdin
office in more than one company at the same time on the date of commcnccmcnt of thi (c) 3
5. Under Sectic
Act, shall, within a period of six months from such commencement, choosc one comDany
any, (a) Three dir
in which he wishes to continuce to hold the office of key managcrial personnel.
8. Appointment of Managing Director of one Company as Managing Dircctor or (c) Five dire-
Manager of another company [3rd proviso to Section 203 (3)]: A company may appoint Secti
6. As per
or employ a person as its managing director, if he is the managing dircctor or manager (a) 3 directo
of one, and of not more than one, other company subject to-
(c) 5 directo
(a) such appointment or employment is made or approved by a resolution passed at a
7. The minim*
meting of the Board with the consent of all the directors present at the meting
(a) 1
(6) specific notice of such meting and of the resolution to be moved thercat shall be given
(c) 3
to all the directors then in India.
8. The maxim
9. Vacancy in the office of key Managerial Personnel to be filled up within a period of
6 months by the Board |Section 203 (4)]: Ifthe office of any wholetime key managerial (a) 10

personnel is vacated, the resulting vacancy shall be filled up by the Board within a period () 20
of 6 months from the date of such vacancy. 9. A compan,
10. Penalty for contravention of the provisions of Section 203 [Section 203(5)] If a (a) passing
company fails to comply with the provisions of Section 203.
(b) passing
) it shall be punishable with fine which shall not be less than Rs. 1,00,000 but which (c) obtaini
may extend to Rs. 5,00,000 and
(d) obtaini
(i) every director and key managerial personnel of the company who is in default shall
10. The maxi.
be punishable with fine which may extend to Rs. 50,000 and a further fine which may
extend to Rs. 1,000 for every day after the first during which the default continues. (a) 5
( 20
11. No persor
Exercise And Hints
888888838ERSEEA (a) 10 pu
A. Multiple Choice Questions (MCQs) (c) 20 pu
12. Section 1
1. The term director' has been defined in-
(a) at leas
(a)Section 2(30) b) Section 2(14)
(c) at lea
(c)Section 2(34) (d) Section 2(40)
13. Which o
2. According to Section 2(34) of this Act, 'director' means
director (a) every
(a) a appointed to the board of the
company
b) a fim, association appointed to the board of the company b) every
(c) a company appointed to the board of the company (c) every
(d) any person appointed to the board of the company
(d) both
 BOARD OF MANAGEMENT249
3. The director i s
(a) an individual (b) a fim
(c) an association (d) a company
4. The minimum number of directors which every public limited company should have i s
(a) 5 (b) 10
()3 (d) 7
5. Under Section 149 (1), every public company shall have at least

Three directors b) Two directors

() Five directors (d) Seven directors
6. As per Section 149(1), a
private company cannot have less than
(a) 3 directors (b) 2 directors
)5 directors (d) 7 directors
7. The minimum number of directors which every one person company should have i s
()1 (b) 2
)3 (d) 7
8. The maximum number of directors that a have i s
company can

a)10 6) 15
20 ) 25
9. A company may appoint more than maximum number of directors after-

a) passing a
special resolution at the general meeting
(b) passing an ordinary resolution at the general meeting
)obtaining approval of the Central Government
(d) obtaining approval of the Tribunal
10. The maximum number of companies in which an individual can become director is:
a) 5 (b) 15
)20 d) 50
. No person hold office of
can director in
a more than-
(a) 10 public companies at a time b) 15 public companies at a time
)20 public companies at a time (d) 50 public companies at a time
2. Section 149(1) provides that such class or classes of companies shall have-

a) at least one woman director (b) at least two women directors

(c) at least three women directors (d) at least four women directors
Which of the following class of companies shall appoint at least one woman director
a) every isted company
0) every other public company having paid-up share capital of Rs. 100 crore or more
every other public company having turnover of Rs. 300 crore or more
(d) both (a) and (b) or (¢)
250 COMPANY LAw

14. A new company incorporated under the Companies Act, 2013 shall employ at least
one womn
director within a period of
(a) 2 months from the date of its incorporation
b) 3 months from the date of its incorporation
() 6 months from the date of its incorporation
(d) 10 months from the date of its incorporation
15. Any intermittent vacancy of a woman director shall be filled-uP
a by the Board at the earliest but not later than immediate next Board meeting
(6) within a period of 3 months from the date of such vacancy
c)both (a) and (b) whichever is later
(d) (a) or (b), whichever is later
16. A transition period of-is provided to persons acting as directors to comply with the requirenent
of maximum number of directorship and for appointing woman directors for prescribed class
of companies
(a 1 year (b) 2 years

(c)90days (d) 120 days

17. Every company shall have at least one directr (i.e. knmow as resident director) who has stayed
in India for a total period o f
(a) not less than 60 days in the previous calendar year
(b) not less than 90 days in the previous calendar year
(c) not less than 120 days in the previous calendar year
(d) not less than 182 days in the previous calendar year
18. Every listed public company shall havee
(a) at least one-third of the total number of directors as independent directors
b) at least two-third of the total number of directors as independent directors
a t least hree-fourth of the total number of directors as independent directors
d) none of the above
19. As per Section 2(47) of the Companies Act, 2013 Independent Director' means
(a) independent director referred to in of Section 149(5)
an

b) independent director referred to in of Section 149(6)

an

(c) an
independent director refemed to in of Section 149(2)
(d) an independent director refered to in of Section 149(4)
20. According to Section 149(6), an independent director in relation eans a director
to a company, means a
other than-
a) A Managing Director b) A Wholetime Director
(o) A Nominee Director (d) All of the above rs as
21. Which of the following class or classes of companies shall have at least two
independent directors
a) the public companies having paid-up share capital of Rs. 10 crore or more
(b) the
public companies having tumover of Rs. 100 crore or more and deposs

(c) the public companies which have, in aggregate, outstanding loans, debenu
exceeding Rs. 50 crore
(d) either (a) or (b) or ()
 BoARD OF MANAGEMENT251
22. Any intermittent vacaney of
independent director shall be filled up
an

(a) by the Board of Dircctors at the carlicst but not later than immediate next Board meeting
b)within
3 months from the date of such
vacancy
)both () and (); whichever is later
(d) either (a) or (b), whichever is later
23. An Independent director in relation to a
company includes a
person
(a) who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and
experience
b) who is or was not promoter of the company or its holding, subsidiary or associate company
a

(cwho is not related to promoters or directors in the company, its holding, subsidiary or associate
company
(d) all of the above
24. Every Independent director shall give a declaration that he meets the criteria of independence
as
provided in section 149(6)-
(a) at the first meeting of the Board in which he participates as a director and thereafter the fimm
meeting of the Board in every financial year
(b) whenever there is a
change in the circumstances which may affect his status
director
as an
independent
botha) and (b)
(d) either (a) or (6)
25. The company and independent director shall abide the
by provisions specified in-
(a) Schedule IV b) Schedule V
(c) Schedule VI (d) Schecule VII
26. An Independent director shall hold office for a term up t o
(a) 3consecutive years on the Board of a
company
(b) 4 consecutive years on the Board of a company
(c) 5 consecutive years on the Board of
company a

(d) 6 consecutive years the

on Board of a
company
27. An Independent director shall hold office for a term up to 5 consecutive
years, but shall be
eligible for reappointment
)on passing of a special resolution and isclosure of such appoint in he Board's report
) on passing of an ordinary resolution and approval of the Board
)on passing of a special resolution and approval of the Tribunal
d)on passing of an ordinary resolution and approval of the Tribunal
28. No
Independentdirector shall hold office for more than
a) 2 consecutive terms (b) 3 consecutive temms
) 4 consecutive tems (d) 5 consecutive tems
29. No
Independent directors shall hold office for more than 2 consecutive years, but shall be eligible
for appointment in that company after the expiration o f
()2 years of ceasing to become an independent director
independent director
0 years of ceasing to become an

)(d 45 years of ceasing to become independent director

an
years of ceasing to become an independent director
252+CoMPANY LAW
h acts
30. An Independent director shall be held liable, only in respect of such acts of
of omic
omission or
commission by a company-
(a) which had occured with his knowledge, attributable through Board processes

connivance
b) which had occurred with his consent or

Where he had not acted diligently

(d) both (a) and (b) or ()
31. An Independent director shal
(a) be entitled to any stock option b) not be entitled to any stock option

(c)be entitled to receive remuneration d) both (6) and (c)

32. An Independent director may receive remuneration
) by way of fee provided under section 1976)
b) by way of reimbursement of expenses for participation in the Board and other meetings
)by way of profit related commission as may be approved by the members
d) all of the above
33. Board of Directors of every listed company and such other class or classes of
The
shall constitute an Audit Committee with at least
companies

a) 2 Independent Direcitors (b) 3 Independent Directors

) 4 Independent Directors (d) 1 Independent Director
34. The provisions in respect of retirement of directors by rotation shall
a) also be applicable to appointment of Independent directors
(b) not be applicable to appointment of Independent directors
() either (a) or (b)
(d) none of the above
35. Which of the following
statements is not true ?
a) The provision of retirement of directors by rotation shall not be applicable to Independent directors
b) An Independent director shall not be included in the total number of directors liable to relre by
rotation
(c) Managing director or a whole-time director or a Nominee director are Independent directors or
a company

(d) The company and Independent director shall abide by the provisions specified in Schedule Iy
i.e. code for Independent director
36. Which of the following statements is true?
(a) An Independent director may be selected from Data Bank nd
qualifications of persons who are eligible and willing to act containing names, addresses a
as independent director
(b) The Data Bank shall create and maintain data of or
in accordance with such rules as may be
persons willing to act as independent diree
prescribed
(c) The Central Government may prescribe the manner and dent
procedure of selection of indepe
directors and also for creation and maintenance of data of dent

director
persons to act as
willing indepeu
(d) All of the above
 BoARD OF MANAGEMENT253

37. According to section 150(2), the appointment of independent director shall be approved b y

(a) the Central Govemment (b) the Tribunal

(c) the Company in general meeting (d) both (b) and (c)
38. Any body, instifute or association who has been authorised by the Central Government, shall
create and maintain a data bank of persons willing and
eligible to be appointed as independent
director and such data bank shall be placed
a) on the website of the Ministry of Corporate Affairs (MCA)
(b) on any other website as may be approved by the Central Government
(c)on the website of any other agency notified by the Tribunal
d) either (a) or (b)
39. As per Section 149, 'nominee director' director
means a

(a) nominated by any financial institution in pursuance of the provisions of any law for the time
in force or of any agreement being
b) appointed by any Government or any other person to represent its interest
(c) both (a) and (b)
) either () or (b)
40. The company and every officer of the company who is in default in
of Section 149 shal be punishable with fine o f complying with the provisions
a) Rs. 50,000 b) Rs. 5,00,000
Rs. 50,000 to Rs. 5,00,000 () Rs. 10,00,000
41. A listed company may have one director elected
by such small shareholders in such manner
and with such terms and conditions as be
may prescribed. Hence 'small shareholders' means
(a) a shareholder
holding shares of nominal value of not more than Rs. 20,000 or such other sum
as may be
prescribed
(b) a shareholder holding shares of nominal value of Rs. 50,000
a shareholder
holding shares of nominal value of Rs. 1,00,000
(d) a shareholder holding shares of nominal value of Rs. 10,000
42. A listed company may have a small shareholders' director elected by the small shareholders
upon a notice o f

(a) not less than 1,000 small shareholders

(b) one-tenth of the total number of small shareholders
)both (a) and (b)
() either () or (b)
43, When small shareholders intending to
propose a person as a candidate for the post of smal
shareholdes' director shall give a notice of their intention with the company-
(a) at least 10 days before the meeting (b) at least 14 days before the meeting
()at least 15 days before the meeting (d) at least 21 days before the meeting
254 COMPANY LAw

44. Where no provision is made in the Articles

of Assciation of a
company (other than
ny (other than
the appointment of the first directors, then OPC) fr
(a) the promoters of the company shall be deemcd to be the first
directors of the compan
directors are duly appoinled any until the
b) the subscribers to the Memorandum of
Association who are individuals shall be deemed.
the first directors of the company until the directors are
duly appointed ned to be .

(c)an individual being member of the company shall be decmed to be the fírst
(d) none of the above
director of the co.
ompany
45. Every person proposed to be appointed as a director by the company in
otherwise, shall general meetina.or
(a) fumish his Director ldentification Number
b) file a declaration that he is not disqualified to become a director under this Act
C)both (a) and (b)
) either (a) or (b)
46. Which of the
following statements is true ?
(a) No person shall be appointed as a director of a
Identification Number (DIN) company unless he has been allotted the
Director
b) A person
appointed as a director of a company shall not act
to the
company his consent to hold his office as director
as a director unless he has given
(c) The person appointed as a director shall file his
consent to act as director with the
30 days of his Registrar within
appointment in such manner as may be prescribed
d) All of the above
47. Unless the Articles
then at least
provide for the retirement of all directors at
every annual general meefing,
(a) two-thirds of the total number of directors
are liable to retire
b) one-third of the total number of directors by rotation
are liable to retire
(c) one-half of the total number of directors are by rotation
liable to retire by rotation
(d) one-fourth of the total number of directors are
liable to retire by rotation
48. What is the proportion of total
directors that can be given
company? permanent appointment in n
()
(
(d)
49. What is the
proportion of directors of public company who should retire at every
general
meeting?
a)rd of the total number of directors
(6) rd of the directors who are liable to retire by rotation

()rd of the total number of director

(d)rd of the directors who are liable to retire by rotation
 BOARD OF MANAGEMENT255

50. For the purposes of Section 152 (2), 'total number of directors' shall
(a) include indendent directors b) not include independent directors
() include altemate director (d) none of these
51. X Co. Ltd. has 9 directors in the Board. It
of rotational directors will be
can
appoint only 3 permanent directors. The number
(a) 4 b) 5
c)6 (d) 8
52. In case the number of directors who are liable to retire
by rotafion is not three or a multiple
of three, then the number nearest to one-third shall retire
from office. If there are 7 directors
liable to retire by rotation, then

(a) 2 directors will retire in the first year, 2 in the second year and 3 in the third
year
(b) 3 directors will retire in the first year, 2 in the second year and 2 in the third
year
(c) 2 directors will retire in the first year, 3 in the second year and 2 in the third
year
(d) none of these
53. The directors to retire by
rotation at every annual
general meeting
(a) shall be those who have been longest in office since their
appointment
(b) in case of the directors appointed on the same day, those will retire first who have agreed to retire
as per the
agreement among themselves,
c) in the absence of any such agreement, the directors to retire first shall be detemined by lot
(d) all of the above
54. The retiring director shall be deemed to have been re-appointed at the adjourned meeting, unless
(a) a resolution for the re-appointment of such director has been put to the meeting and lost,
b) the retiring direcitor has expressed his unwillingness to be so re-appointed
(c) he is not qualified or is disqualified for appointment
d) all of the above
S5. Every individual intending to be appointed as director shall make an application
in Form No DIN 3 for allotment
electronically
of Director ldentification Number (DIN)-
(a) to the company with fee (b) to the Central Govemment with fee
c)to the Tribunal with fee (d) to the Court with fee
56. The Central Government shall allot DIN to the applicant within

aone month from the receipt of the application for the same
(6) two months from the receipt of the application for the same
C)three months from the receipt of the application for the same
(d) none of the above
7. Which of the following statement is True?
4) A director of 10 companies will require 10 number of DIN

(0) Only one DIN is required for one person even though he is a director in more than one company
A n individual who had already been allotted a DIN cannot apply, obtain or possess another DIN
(d)Both (a) and ()
256 COMPANY LAW

58. Out of the following statements, which one is incorrect as regards to the Director Identif.e.
Number (DIN) ication
(a) DIN is an unique identification number and once obtained is valid throughout the lifetima
director ne of a

b) DIN is mandatory for

all directors of Indian companies whether they are citizens of
India a not
() DIN is mandatory for directors of foreign company having branch offices in India
(d) A single DIN is required for an individual irespective of directorships held by him
59. Every person, who has been
appointed to hold the office of
director, shall, on or
appointment, furnish to the company his consent in writing to act as director inbefore h.

a) Form DIR 2 (b) Fom DIR 3

Fom DIR 4 (d) Form DIR 5
60. Every existing director shall intimate his DN to the company
director within-
or
companies where he is a

(a) month of the receipt of DIN from the Central Govermment

one

b) two months of the receipt of DIN from the Central Govermment

) three months of the receipt of DIN from the Central Government
(d) six months of the receipt of DIN from the Central Government
61. Every company shall furnish the DIN of
all its directors to the
Registrar of companies within
(a) 10 days of the receipt of such intimation from the director
(b) 15 days of the receipt of such intimation from the director
(c) 30 days of the receipt of such intimation from the director
d) 60 days of the receipt of such intimation from the director
62. If any individual or director of a
155 and 156, such individual or
company, contravenes any of the provisions of Sections 15,
director shall be punishable-
a)with imprisonment for a
tem upto 6 months
b) with fine which may extend to Rs. 50,000
(c) with a further fine (if the contravention
continues) which
after the first during which the contravention may extend to Rs. 500 for every y
continues
d) (a) or (b) and (c)
63. A person who is not a
retiring director shall be eligible for appointment to the office of a rector
at any general meeting of the dire
company
(a) if he or some member intending to propose him as a director has to leave a notice m
under his hand signifying his candidature as a
director
b) such notice should be left at the registered office of the company not less than 14
before

the meeting aay

(c)such notice shall be with deposit of Rs. 1,00,000 such higher amount be
rescribed

d) all of the above

or as may p
64. As per Section 161(1), a company
may appoint an Additional Director
(a) if the Articles of Association confer such power on its Board of Directors ed as

(b) the person to be appointed as an additional director should not have failed to get
a director in a
app
general meeting
both () and (b)
(d) either (a) or (b)
 BOARD OF MANAGEMENT257

65. An Additional Directorshall hold office

upto-
(a) the datc of the next annual general
meeting of the company
b) the last date on which the annual
general meeting should have been held
(c)(a) or (b), whichever is earlier
(d) (a) or (b), whichever is later
66. Section 161 relating to
appointment of Additional Director applies t o
(a) All companies
(b) Public companies only
(c) Private companies only
(d) None of the above
67. An alternate Director is
appointed to act in
place of a director
(a) whose office falls vacant due to death, resignation and insanity
b) who is absent for a
period of not less than 3 months from India
(c) who was appointed to fill up a casual vacancy
(d) none of the above
68. A person shall be eligible for
appointment as an alternate directer, if
(a) the Articles of Association of the company authorise
b) the company in general meeting may be passing a resolution authorise the Board of Directors
to appoint such person as an altermate director

(c) he is not holding any office of alternate directorship for any other director in the
company
) a) or (b) and ()
69. An Alternate Director shal-
(a) not hold office for a period longer than that permissible to the director in whose place he has
been appointed
(b) vacate the office if and when the director in whose place he has been appointed returns to India
(o)both (a) and (b)
d) cither (a) or (b)
70. Subject to the Articles of a company, the Board may appoint any person as a director
nominated
a) by any institution in pursuance of the provisions of any law for the time being in force or of
any agreement
(6) by the Central Government or the State Govemment by virtue of its shareholding in a Govermment
Company
both (a) and (b)
d) eiher ( or (6)
71. In the case of a public company, if the office of any director appointed in general meeting is
Vacated before the term of office expires in the normal course, the resulting casual vacancy may
be filled
a) by the shareholders at the general mecting
6) by the Board of Directors at the meeting of the Board
()by the Central Government
(d) by the Tribunal

C. Law()17
258CoMPANYLAW
ional representa.
72. According to Section 163, a company may appoint its directors by proportional representation
this method;
a) only if the company's Articles provide for appointment by
(b) the Articles of Association of a company may provide for the appointment of not less than
third of the total number of directors of a company according to the principle of proportiona
two
nal
representation
C)such appointments may be made in every 3 years

(d) all of the above

73. Which of the following modes of voting may be adopted for appointing the directors
by
proportional representation
(a) Voting by single transferable vote (b) Cummulative voting
(c) Any other method (d) Either (a) or (b) or (0)
74. The director appointed under the principle of proportional representation shall hold office for
a period o f

(a) 2 years (6) 3 years

(c) 5 years (d) 45 days
75. No individual shall hold office at the same time as small shareholders' directors in more than
a) One Company (b) Two Companies
)Three Comapnies (d) Four Companies
76. Section 163 relating to appointment of directors by proportional representation applies to-
(a) All Companies (b) Public Companies only
(c) Private Companies only (d) Both Public and Private Companies
77. A person shall not be
eligible for appointment as a director of a company, i f
(a) he is of unsound mind and stands so declared by a competent court
(b) he is an undischarged insolvent
(c) he has applied to be adjudicated as an insolvent and his application is pending
(d) all of the above cases
78. A person shall not be
eligible for appoint as a director of a company, if he has been convie
by a court of any offence
(a) whether involving moral turpitude or otherwise
(b) sentenced in respect thereof to imprisonment for not less than 6 months
() a period of 5 years has not elapsed from date of expiry of the sentence
(d) all of the above
79. The disqualifications of director referred to in Section 164 (1) (d), 164 (1) (e) and
shall not take effect
(a) for 30 days from the date of conviction or order of disqualification from

(6) where an appeal or petition is preferred within 30 days as aforesaid, unt1l expiy
the date on which such
appeal or petition is disposed off unll

where any further appeal or petition is preferred against order or sentence within
such further
appeal or petition is disposed off
d) both (a) and (b) or (©)
 BOARD O MaNAGEMENT259
R0. A person shall not be eligible for appointment as a director ofa company, i f
(a) an order disqualifying him for appointment as a dircctor has been passed by a court or the Tribunal
and the order is in force
6 he has not paid any calls in respet of shares of the company held by him and 6 months have
elapsed from the last day fixcd for the payment of call money
che has not complied with Section 1s2(3) ie. appointed/acted as dircctor without being allotted
the DIN

(d) all of the above

81. A person, who is or has been a director ofa company, shall not be eligible to be re-appointed
as a director of that company which-
)has not fíled financial statements of annual retuns for any continuous period of 3 financial years
b) has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures
on the due date or pay interest thereof or pay any dividend declared and such failure to pay or
redeem continues for 1 year or more
() both (a) and (b)
(d) either (a) or (b)
82. The office of a director shall become vacant in case
(a)he incurs any of the disqualifications specified in Section 164
(b) he absents himself from all the meetings of the Board of Directors during a period of 12 months
with or without seeking leave of absence of the Board
()he acts in contravention of the provisions of Section 184 relating to entering into contracts or
arrangements in which he is directly or indirectly interested
(d) all of the above cases
83. The office of a director shall become vacant in case
(a) he fails to disclose his interest in any contract or arangement in which he is directly or indirectly
interested, in contravention of the provisions of Section 184
(b) he becomes disqualified by an order of a court or the Tribunal
c) he is convicted by a court of any offence whether involving moral turpitude or otherwise and
sentenced in respect thereof to imprisonment for not less than 6 months
(d) all of the above cases
84. lfa person, funetions as a director when knows that the office of director held by him has become
vacant on account of any of the disqualifications under Section 167(1), he shall be punishable-
(a) with imprisonment for a term upto 1 year
b) with a fine of Rs. 1,00,000 to Rs. 5,00,000
(c)both (a) and (b)
(d) either (a) or (b) or (c)
85. Where all the directors of a company vacate their offices under any of the disqualifications
specified in Section 167(1), then
(a) the promoter of the company shall appoint the required number of directors who shall hold office
till the directors are appointed in the general meeting
(6) in the absence of the promoter, the Central Govemment shall appoint the required number of
directors who shall hold office till the directors are appointed in the general meeting
() both (a) and (b)
(d) either (a) or (b)
260 CoMPANY LAW

86. A director of a company may resign from his ofmice

(a) by giving a notice in writing to the conmpany
(b) the Board shall on receipt of such notice take note of the same
(c) the company shall intimate the Registrar in Fomm No. DIR 12 within 30 days from the i .
receipt of notice of registration
(d) all of the above
87. The director shall also forward
copy of his resignaftion
a
aong with detailed reasons
for
resignation to the Registrar of companies within
(a)15 days of resignation in such manner as may be prescribed
(b) 30 days of resignatíon in such manner as may be prescribed

(c) 60 days of resignation in such may be

manneT as prescribed
)90 days of resignation in such manner as may be prescribed
88. The resignation of a director shall take effect from-
(a) the date on which the notice is received by the company

(b) the date, if any, specifíed by the director in the notice

c)(a) or (b), whichever is later
(d) (a) or (b), whichever is earlier
89. Where all the directors of a company resiga from their offces or vacate their offices under
Section 167, then

(a)the promoter of the ocompany shal appoint required number of directors who shall bold offce
till the directors are appointed by the company in general meeting
(b)the Central Government (in the absence of promoter) shall appoint the required number of dhrectors
who shall hold office till the directors are appointed by the company in general meeting
(c) either a) or (b)
(d) none of the above
er
90. Subject to the provisions of Section 165(1), the members of a company specify any lesser numbe
of companies in which a director of the company may act as directors by-
(a) passing special resolution (b) passing ordinary resolution

(c)obtaining approval of the Tribunal d) none of the above

director
91. The maximum number of public companies in which a person can be appointed as u

shall not exceed 10. For determination of public companies for this purpose
arded
(a) directorship in private companies that are holding company of á public company shall De le

as a public company
copa
b) directorship in private companies that are subsidiary company of a pubhc
regarded as a public company
(c) either (a) or (b)
(d) none of the above
 BoARD OF MANAGEMENT261

97. Any person holding office

as director in
companics more than the limits as
165(1), immediately before the commencement of this
Act shall, within a
in Section specified
such commencement period of one year from
(a) choose not more than the
specified limit of those
tocontinue to hold the office of director companies, companies in which he wishes
as

b)resign his office as director in the other remaining

companies
(c) intimate his choice to each of the companies in which he was
such commencement and to the holding the office of director before
Registrar having jurisdiction in respect of each such company
d) all of the above
93. No person shall act as director in more than the specified number of companies
(a)after despatching the resignation of his office
director or non-executive director thereof
as
b) after the expiry on one
year from the commencement of this Act
c)either (a) or (b), whichever is earlier
(d) either (a) or (b), whichever is later
94. In calculating
the number of 20
companies of which a
person may be
companies shall be excluded except director, the following
(a) A private company
b) An unlimited company
(C) An association not carying on business for profit
d) Both (b) and ()
95. If a person
accepts an
appoin tment as a director in contravention of Section
be punishable 165(1), he shall

(a) with fine of Rs. 5,000 to Rs. 25,000

(b) with fine of Rs. 10,000 to Rs. 50,000
c)with fine of Rs. 25,000 to Rs. 1,00,000
(d) with fine of Rs. 5,000 to Rs. 25,000 for every
continues
day after the first during which the contravention
96. A
company may remove a director, not being a director appointed by the Tribunal under Section
242, before the expiry of the period of his office by-
a)passing special resolution and
giving him a reasonable opportunity of being heard
(6)
passing ordinary resolution and giving him a reasonable opportunity of being heard
passing special resolution and approval of the Central Govemment
(d) none of the above
Special notice by specified number of members shall be required of any resolution
a)to remove a director
to appoint somebody in of director
place so removed
)both (a) and
(b)
) cither () or (b)
98.
Vacancy created by the removal of a director may be filled by the appointment of another
director in his
(a) by the
place
meeting at which he is removed (b) by the Board of Directors
c) by the Central
Govemment (by the Tribunal
 262 CoGAN LW
be given by such number of member-
a director shall
99. A special notice to r e m o v e
(a) bolding not less than 1%
of total voting power
b)holding shares on which aggregate sum of not less than Rs. 5,00,000 has beenpaid-up

C)either (a) or (b)

both (a) and (b)
nof correct ?
100. Which of the folowing sta tements is
not act in accordance with
the Articles of Association of the com
a) Adirector of a company shall company
to promote the objects of the company for the be
b) A director shall act in good faith in order
of its members as a whole and in the best interests of the company, 1S employees, the shareholde

the community
c) A director shall exercise his diuties with due and reasonable care, sk1ll and diligence and shal
exercise independent judgement
(d A director of a company shall not assign his offñce and any assignnment so made shall be mid
101. For the first time, duties of directors have been specifically provided i n

(aSection 166 b) Section 167

C)Section 168 (d) Section 170

102. Ifa director is found guilty of making any undue gain or advantage either to himself or to his
relatives, he shall be liable to p a y
(a) an amount equal to that gain to the company
(b) an amount equal to 2 times of gain to the company
(c) an amoumt equal to 3 times of gain to the company
(d) an amount equal to Rs. 1,00,000 to the company
103. If a director of the company contravenes the provisions of Section 166 such director shall e
punishable with fine o f
(a) Rs. 1,00,000 b) Rs. 5,00,000
(c) Rs. 1,00,000 to Rs. 5,00,000 cRs. 5,0,000
104. Appointment of an Alternate Director is the prerogative of the
a) Board of Directors b) Shareholders
(c) Govemment (d) None of these
ess
105. No person shal be appointed as an Alternate Director for an Independent director une
Act
(a)he is qualified to be appointed as an Independent director underthe provisions o Act
(b) he is disqualified to be appointed as an Independent director under the provisions or u

(c) either (a) or (b)

(d) none of the above
106. Which of the following statements is true?
(a) Directos are primanly recognised as agents of a compar
b) Directors occupy the position similar to that of trustees and
aputal

(c) Directors stand in a fiduciary position towards the company in respect of

in respect their
or ue
powers
y
under their control
(d) Directors are the employees of the company whose affairs they man
 BoARD OF MANAGEMEVT263
107. A director of a company shall have a right

(a) to the books of account and other

inspect books and papers maintained
by the company
b) to receive a notice of a resoutuon to remove him as a director
and to make representations in
writing to the company
(c)to resign from office of director by giving a notice in writing to the company
(d) all of the above

108. The Board of Directors shall not exercise any power do any act or
or required
or
thing which is not directed
(a) under the provisions of the Companies Act, 2013

b) by the Memorandum of Association of the company

c)by the Articles of Association of the company
() either (a) or (6) or (o)

109. The Board of Directors of a company shall exercise the powers by passing resolution at its
meeting
(a) to make calls on shareholderS in respect of money unpaid on theirs
(b) to authorise buy-back of securities under Section 68
()to issue securities, including debentures, whether in India or outside India
(d) all of the above
110. The iability of a director of a
company arise from:
(a) Breach of fiduciary duty (b) Ultra-vires Acts
Negligence and Misfeasance (d)All of the above
111. The liabilities of directors towards third parties may be-

(a) civil liability for misstatement in prospectus

) prospectus issued with intent to defraud the applicants for the securities of a company
C)1ailure to repay application money in case of minimum amount has not been subscribed
(d) all of the above
According to Section 2 (54), 'managing director' means a director who is entrusted with
substantial powers of management of the affairs of the company-
a) by virtue of the Articles of a company or an agreement with the company
(6) by virtue or resolution passed in its general meeting
)by virtue of its Board of Directors
d) either (a) or (b) or (c)
5, Which of the following statements is true ?
4) A company shall not appoint at the same time a managing director and a manager

0A Company shall not appoint or re-appoint any person as managing director for a term exceeding
S
years at a time
A l l reappoint shall ot be made earlier than 1 year before the expiry of his term
d) All of the above
264 CoMPANY LAW

114. Any company shall not appoint any person as managing director who

(a) is below the age of 21 yeurs has attained the age of 70 ycars
or

(b) is an undischarged insolvent or adjudged as an insolvent

(c)has any time been convicted by a court of an offcnce and sentenced for a Deticd
6 months of more tha
.c

d) all of the above

115. According to Section 2(53), 'manager' means an individual who, subject to the
control and direction of the Board of Directors superinton
ndence,
a) has the management of the whole or substantially the whole of the
affairs of the comr
b) includes a director or any other person occupying the pany
service
position of manager under a contract t

)both () and (b)

d) either (a) or (b)
116. According to Section 2(51), 'key managerial person', in relation to a
(a) the Chief Executive officer company, means-
or the Managing Director
6) the Company
or
Manager
Secretary
(c) the whole-time Director, the Chief Financial Officer
d) all of the above
117. As per Section 203(1), every company shall have the whole-time
(a) Managing director
Key Managerial personnel
or Chief Executive Officer
Director
or
Manager and in their absence, a whole-ime
b) Company Secretary
(c) Chief Financial Officer
(d) All of the above
118. The
procedure of appoint of every whole-time KMP is-
(a) by means of a resolution of the Board
including the remuneration containing the terms and conditions of the apponimen
b) by means of special resolution at the general meeting of the shareholders
(c) by means of ordinary resolution at the general meeting of the shareholders
(d) none of the above
119. Which of the
following statement is true?
(a) A whole-time KMP shall not hold office in bsidiary
company at the same time
more than one company except in 1s

b) A whole-time KMM holding office in choose

one
more than company at the same time, one
company as
per his wish within
a
period of 6 months
( I f the offñice of any whole-time KMP is vacated, the resulting vacancy shall be fnledup
Board within a period of 6 months from
the date of vacancy
(d) All of the above
with ine
120. If company fails to comply with the
a

which shall not be less than- provisions of Section 203, shall be

puni
(a) Rs. 1,00,000
(b) Rs. 5,00,000
(c) Rs. 1,00,000 to Rs. 5,00,000 (d) Rs. 10,00,000
 BOARD OF MaNaGEMENT265
12 What is the overall maximum managerial remuneration that can be paid by a public company
in respect of a financial year ?

(a) 9% of Net profits b) 10% of Net profits

(c)11% of Net profits (d) 12% of Nct profits
122. Out of the following statements, which one is correct as regard to the whole-time director-
(a) Whole-time director' includes a director in the whole-time
employment of the company
(b) A company shall not appoint or
re-appoint any person as whole-time dircctor for a term exceceding
5 years at a time
(c)All re-appointment of whole-time director shall not be made earlier than 1
year before the
of his term expiry
(d) All of the above
123. Company Secretary' or 'Secretary' means
(a) a Company. Secretary as defined in Section 2(1)(©) of the Company Secretaries Act, 1980
b) a Company Secretary who is appointed by a
company to perform the functions of a
Company
Secretary under this Act
(both() and (b)
d) either (a) or (b)
124. Appointment of a whole-time Company Secretary is mandatory for every listed company and
other public company having a paid-up share
capital o f
(a) Rs. 5 crore or more (b) Rs. 10 crore or more
(c) Rs. 15 crore or more (d) Rs. 25 crore or more
125. The functions of the Company Secretary include
(a) To report to Board about compliance with the provisions of the Act, the rules made thereunder
and other laws applicable to the
company,
b) to ensurethat the company complies with the applicable secretarial standards as may be approved
by the Central Government
(c) to
discharge such other duties as
may be prescribed
d) all of the above
126. The
expression 'Secretarial Standards' means
(a) Secretarial Standards issued by the Institute of Company Secretaries of India constituted under
Section 3 of the Company Secretaries Act, 1980
(6) Secretaries standards approved by the Central Govemment
Both (a) and (b)
(d) Either (a) or (6)
4 Which of the following powers of the Board of Directors shall be exercised only by means of
esolufion passed at meetings of the Board as provided in Rule 8
(a) To make political contribution
To
appoint or remove Key Managerial Personnel (KMP)
To appoint Internal Auditor and Secretarial Auditor
(d) All of the above
266 CoMPANY LAW

Answers E
A. 1. (c). 2. (a), 3. (a), 4. (©), 5. (a), 6. (b), 7. (a), 8. (b), 9. (a), 10. (), 11. (a), 12. (a), 13. (a
14. (), 15. (d), 16. (a), 17. (d), l8. (a), 19. (b), 20. (d), 21. (d), 22. (d), 23. (d), 24. (d), 25 d),
26. (c), 27. (a), 28. (a), 29. (b), 30. (d), 31. (b), 32. (d), 33. (b), 34. (b), 35. (c), 36. (d). 37 (a),
38. (d), 39. (d), 40. (c), 41. (a), 42. (d), 43. (b), 44. (b), 45. (c), 46. (d), 47. (a), 48. (b). 49
50. (b), 51. (), 52. (a), 53. (d), 54. (d), 55. b), 56. (a), 57. (d), 58. (), 59. (a), 60. (a). 61
62. (d), 63. (d), 64. (c), 65. (©), 66. (a), 67. (b), 68. (d), 69. (), 70, (d), 71. (b), 72. (d), 73, (
74. (b), 75. (b), 76. (d), 77. (), 78. (d), 79. (d), 80. (d), 81. (d), 82. (d), 83. (), 84. (d), 85. (
86. (), 87. (b), 88. (), 89. (), 90. (a), 91. (0), 92. (), 93. (), 94. (), 95. (d), 96. (D), 97. (
98. (a), 99. (), 100. (a), 101. (), 102. (a), 103. (c), 104. (a), 105. (a), 106. (), 107. (d), 108, (
109. (d), 110. (d), 111. (d), 112. (), 113. (d), 114. (d), 115. (), 116. (d), 117. (d), 118. (, 119.
120, (), 121. (), 122. (), 123. (), 124. (a), 125. (d), 126. (), 127. (d).

B. Short type Questions:

1. Define a Director. [6.1]
2 What should be the minimum number of Directors of Public, Private and one person company?
6.2]
3 What should be the maximum number of Directors of a company ? [6.2]
4. Who can become a director? [6.1]
5. Can an insolvent be the director of a company of a company ? [6.1]
6. Can a fim appointed as a director of the company ? [6.1] [C.U.B.Com 2007, 2010]
7. Define Independent Director. [6.21
8. Define Managing Director. [6.31]
9. Define Manager. [6.35]
10. Define Key Managerial Personnel. [6.36]
11. How the first director of company is appointed ? [6.7]
12. What do you mean by Nominee Director ? [6.14] IC.U.BCom 2008)
13 What are the restricitions on appointing a director ? [6.2]
14. What do you mean by Director ldentification Number ? [6.10]
15. Mention two reasons of disqualification of engaging a director. [6.13]
16. Give an idea about retirement of director. [6.9]
17. Give an idea about the position of director as agent.
[6.22 IC.U.B.Com 2006
18. Mention two restrictions on the power of Board. [6.24]
19. Mention two liabilities of directors to the company. [6.30]
20. Mention two duties of directors. [6.19]
21. Mention two rights of directors. [6.20]
22. Mention the limit on number of directorship. [6.15]
23. State appointment of director against casual vacancy. [6.12)
24. State appointment of Additional Directors. [6.12]
25. Define Alternate Director. [6.12]
26. State the provisions of appointment of Nominee Director. [6.12]
27. Define whole-time Director. [6.1] o r[ S e c t i o n

Ans.
A director in the whole-time
2 (94)1.
employment of the company is known as whole-time dire
 BoARD OF MANaGEMENT 267
Questions:
ype
C.MediumDiscuss the different modes of appointment of Director. [6.2]
cs the conditions to be sat1isfied for
qualifying to be
appointed as Independent Director.
2 Dise
[6.3]
of Selection of Independent Directors and
3. Discussithe manner
shgs
maintenance of data bank of Independent
Directors. [6.6
Discuss the legal proVISions oI appointment of Directors of a company. [6.8]

Discuss the legal proviS1ons of Ieturement of Directors of public company by rotation. (6.91

hat do you mean by Director ldentification Number? State the legal provisions in this regard. [6.10]
Stateappointment of Director other than retiring Director at General Meeting of the Company. [6.11]
8 Disouss the appontment of Directors by propositional representation. [6.12
9 State the reasons for which the directors are considered disqualified. [6.13

10. State the legal provisions regarding resignation of Director. [6.14|

11. State the legal provisions regarding number of Directorship. [6.15]
12. State the circumstances under which the offñce of a director shall become vacant. [6.16]
13. What are the nules of removal of Directors. [6.17]
14. Discuss the powers and duties of directors. [6.19
C.U.B.Com 2011]
15. Discuss the rights of directors. [6.20]
16. Directors are not only agents, but are also is some sense trustees of the company. [6.22]
[C.U.B.Com 2012]
17. State the legal position of Directors. [6.22]
18. Discuss the powers of Board of Directors. [6.23]
19. Discuss the restrictions on of Board of Directors.
powers [6.24]
20. Discuss the prohibitions and restrictions regarding political contributions. [6.26]
21. State the disclosure of Interest
by Directors. [6.28]
22. Discuss the legal provisions regarding loan to Directors. [6.29)
23. Discuss the liabilities of directors to the
company. [6.30)
24. Discuss the liabilities of directors to the third
25.
parties. [6.30]
Discuss the criminal liabilities of Directors.
b.
[6.30)
Discuss the legal provisions regarding Managerial remunneration. |6.35]
Dscus the legal provisions regarding appointment of Key Managerial personnel. [6.36]
D. Long Questions

EXplain the legal position of Director of a company. State the provisions of removal, qualification and
salihcation of the Directors as per
Companies Act. [6.22, 6.17&6.13] [C.U.B.Com Hons. 2010]
a l a r e the
different modes of appointment of directors of public limited company. [6.2]
3.
Define C.U.B.Com 2012]
Act, 2013. ependent
[6.21) Director. Discuss the legal provisions of Independent Director as per Companies
4.
DISCuss the
5. Are powers and duties of directors. [C.U.B.Com 2011]
Clors
[6.2
agents? Discuss the liabilities of Directors. [6.22 & 6.30] C.U.B.Com 2008]
268COMPANY LAw

6. What are the disqualifications of Directors? Explain the position of directors in the company?

C.U.B.Com 2008
7.
State how the
Managing Director of a public Ltd. Company is appointed, and give an idea about the
qualifications of managing director [6.31]
8. Discuss the rights, power and duties of Managing Director. [6.19 & 6.20]
C.U.B.Com
2006, 2009, 20131
9. Define Key Managerial Personnel. Discuss the legal provisions regarding appointment of Kev
managerisal personnel. [6.36]
10. Discuss the manner of computation of profits as Companies Act. 2013.
per [6.34]
11. Discuss the rights
and duties of director of limited company.
a public [6.19] [C.U.B.Com 20121
12 State how Managing Director of Public limited company be
can appointed and mention his duties.
6.31] Ic.U.B.Com 2013