Question- Nov 2018

Discuss the provisions relating to

private placement of shares under
the Companies Act,2013.
 Question- Nov 2016

When is a Company required to issue a

“shelf prospectus” under the provisions of
the Companies Act,2013? Explain the law
relating to issuing & filing of such
prospectus.
 Question- Nov 2018

What is Shelf-Prospectus ?State the

important provisions relating to the
issuance of Shelf-Prospectus under the
provisions of Companies Act,2013.
 Question- Nov 2019

The Board of Directors of Chandra Ltd. proposes to issue

the prospectus inviting offers from the public for
subscribing the shares of the Company . State the reports
which shall be included in the prospectus for the purposes
of providing financial information under the provisions of
the Companies Act,2013?
 Question- May
2018

TDL Ltd, a public company is planning to bring a public issue of

equity shares in June,2018.The company has appointed
underwriters for getting its shares subscribed . As a Chartered
Accountant of the company appraise the Board of TDL Ltd. About
the provisions of payment of underwriter’s commission as per
Companies Act,2013.
 Question- May
2019

Modern Jewellery Ltd. Decides to pay 5% of the issue price gap of

shares as underwriting commission to the underwriters, but the
Articles of the company authorize only 4% underwriting
commission on shares. Examine the validity of the above decision
under the provisions of the Companies Act,2013.
 Question- May
2019

Explain various instances which make the allotment

of securities as irregular allotment under the
Companies Act,2013.
 Question- Jan 2021

A Ltd issued 100000 equity shares of Rs.100 each at par to the public by issuing
a prospectus. The prospectus discloses the minimum subscription amount of
Rs.1500000 required to be received on application of shares & share application
money shall be payable at Rs.20/ share. The prospectus further reveals that A Ltd
has applied for listing of shares in 3 recognized stock exchanges of which 1
application has been rejected. The issue was fully subscribed & A Ltd. Received
an amount of Rs.2000000 on share application. A Ltd, then proceeded for
allotment of shares. Examine the three disclosures in the above case study which
are the deciding factors in an allotment of shares & the consequences for
violation, if any under the provisions of the Companies Act,2013.
 Question- May
2016

P Ltd issued & published its prospectus to invite the investors to purchase its
shares. The said prospectus contained a false statement . Mr. X purchased some
partly paid shares of the company in good faith from the Stock
Exchange.Subsequently,the Company was wound up & the name of Mr. X was
included in the list of contributories. Decide:
(i) Whether Mr. X is liable to pay the unpaid amount?
(ii) Can Mr. X sue the directors of the company to recover damages?
 Question- May
2017

With a view to issue shares to the general public a prospectus containing some false information
was issued by a company . Mr. Damu received copy of the prospectus from the company , but did
not apply for allotment of any shares . The allotment of shares to the general public was completed
by the company within the stipulated period. A few months later , Mr. Damu bought 4000 shares
through the stock exchange at a higher price which later on fell sharply. Damu sold these shares at
a heavy loss.Mr Damu claims damages from the company for the loss suffered on the ground that
the prospectus issued by the company contained a false statement .Referring to the provision of
the Companies Act,2013 examine whether Damu’s claims for damages is justified?
 Question- Nov 2018

Explain the conditions & the manner

in which a company may issue
Global Depository Receipts in a
foreign country.
1) Sec 23 to 41 of the Companies Act,2013 deals
with

a) Declaration of dividends.

b) Private placements.

c) Public offer.

d) Incorporation of company.
2) Private placements are under Section _____of
the Companies Act,2013.

a) 40.

b) 41.

c) 42.

d) 43.
3) When capital is raised from public at large, it is
called.

a) Public offer.

b) Private placements.

c) Securities market.

d) None of the above.

 4) Capital raised from a defined group or inner circle
i.e. pre-known select group of persons is called_____

a) Public offer.

b)Private placements.

c) Securities market.

d) None of the above.

5) A private company can issue securities through
prospectus(public offering)?

a) True.

b) Partly true.

c) False.

d) None of the above.

6) Private company issues securities through:

a) Private placement.

b) Prospectus/Public Offer.

c) Right issue.

d) Bonus issue.
7) Securities is defined in clause (h) of Section 2 of
the_____

a) Companies Act,1956.

b) Companies Act,2013.

c) SEBI Act,1992.

d) Securities
Contracts(Regulation)Act,1956.
8) Right & bonus issue of securities by a public
company shall be governed by Section____

a)23.

b)24.

c)25.

d)26.
9) Issue or transfer of securities by listed company or
company proposed to be listed shall be governed by:

a) SEBI Rules & Regulations.

b) SEBI Act,1992.

c) Companies Act,1956.

d) None of the above.

10) All powers relating to all other matters relating
to prospectus, return of allotment, redemption of
preference shares & any other matter shall be
exercised by:
a) Central government.

b) Tribunal.

c) Registrar.

d) All , as the case may be.

 11) Section ____ lays down power of Securities &
Exchange Board(SEBI) to regulate issue & transfer of
securities , etc

a)23.

b)24.

c)25.

d)26.
12) Meaning of prospectus is given under Section ___
of the Companies Act,2013.

a) Section 2(68).

b) Section 2(69).

c) Section 2(70).

d) Section 2(71).
13) Following matters are stated in the prospectus.
Tick the information which is not included in the
prospectus.

a) General Information.

b) Financial Information.

c) Statutory Information.

d) Any expert statement who is not

interested in the formation or
promotion or management of the
company.
 14) No prospectus shall be valid if it is issued more
than___days after the date on which a copy thereof
is delivered to the Registrar under Subsection(4).

a) 90.

b) 100.

c) 45.

d) 60.
15) Memorandum together with the shelf prospectus
shall be deemed to be a___

a) Memorandum of Association .

b) Article of Association.

c) Certificate of Incorporation .

d) Prospectus.
16) ____is issued prior to the issue of prospectus.

a) Shelf Prospectus.

b) Red Herring Prospectus.

c) Abridged Prospectus.

d) Memorandum.
17) Section___deals with the offer for sale of
securities by certain members of company.

a) 25.

b) 26.

c) 27.

d) 28.
18) Once funds are raised through prospectus,
principles of____ comes into play.

a) Doctrine of Ultra vires.

b) Doctrine of Constructive notice.

c) Doctrine of intra vires.

d) Doctrine of outdoor management.

19) Where an ___ is filed,everytime an offer of securities
is made, such memorandum together with the shelf
prospectus shall be deemed to be a prospectus .

a) Information memorandum.

b) Red Herring Prospectus.

c) Shelf Prospectus.

d) Abridged Prospectus.
20) Public offer of securities shall be issued only in ___
form by complying with the provisions of depositories
Act,1996.

a) Deposit.

b) Dematerialized.

c) Derivative.

d) None of these.
21) Shelf prospectus, Red herring Prospectus & Abridged
prospectus are under section___& ___of the Companies
Act,2013.

a)31,32.

b)41,42.

c) 51,52.

d) 21,22.
 22) In accordance to Sec___ every company making
public offer shall make an application to one or more
recognized stock exchanges & obtain permission for the
securities to be dealt with in.
a) 40(1).

b) 40(2).

c) 41(1).

d) 41(2).
23) If a default is made in complying the provisions of
Section 40(1),the company shall be liable

a) Fine Rs 50000 to 3000000.

b) Imprisonment of the Board of

Directors upto 5 years.
c) Fine from 5 lakh rupees to 50 lakh
rupees.
d) Fine varying from 2 lakh rupees to 6
lakh rupees.
24) Rules regarding the payment of commission to the
person, in connection with the subscription to its
securities, are given in Rule ___of the companies

a) 12.

b) 13.

c) 14.

d) 15.
25) The payment of the commission shall be authorized in
the company’s ___

a) Prospectus.

b) Memorandum of Association .

c) Article of Association.

d) Annual General Meeting Report .

26) The rate of commission to be paid to the person shall
not exceed ___ of the price at which the shares are
issued, or the authorized rate, whichever is less
a) 5% .

b) 18%.

c) 2.5%.

d) 12%.
27) The rate of commission to be paid to the person shall
not exceed ___of the price at which the debentures are
issued or as specified in company’s article, whichever is
less.
a) 2.5% .

b) 5%.

c) 7.5%.

d) 12%.
28) Which Section deals with the provisions regarding
advertisement of prospectus.

a) Section 25 .

b) Section 30.

c) Section 35.

d) Section 40.
29) Section___ deals with “abridged” prospectus means
short or edited prospectus in the prescribed manner
which accompanies the application form for securities..

a) 30.

b) 31.

c) 33.

d) 32.
30) If a company makes any default in complying with the
provisions of the section, it shall be liable to a penalty of

a) Twenty-five thousand rupees for each

default.
b) Fifty thousand rupees for each
default.
c) Fifty-five thousand rupees for each
default .

d) One lakh rupees for each default .

31) The amount payable on application on every security
not be less than___ of the nominal account of the
security.

a) 2%.

b) 5%.

c) 8%.

d) 12%.
 32) If the stated minimum amount has not been received
within a period of___from the date of issue of the
prospectus, or such other periods as may be specified by the
Securities & Exchange Board.
a) 10 days.

b) 20 days.

c) 30 days.

d) 40 days.
 33) According to Section____ no allotment of any securities of a company offered to the public for
subscription shall be made unless the amount stated in the prospectus as the minimum amount has been
subscribed and the sums payable on application for the amount so stated have been paid to & received by
the company by cheque or other instrument.

a) 35(1).

b) 36(1).

c) 38(1).

d) 39(1).
34) Section 35 of the Companies Act 2013 deals with:

a) Criminal liability for mis-statements in

prospectus.
b) Civil liability for mis-statements in prospectus
in under Section___of the Companies Act 2013.

c) Allotment of securities by company.

d) Punishment for frauds.

35) Criminal liability for mis-statements in prospectus is
under Section___for the Companies Act,2013

a) 33.

b) 34.

c) 35.

d) 36.
 36) An allottee of shares in a Company brought action against a
Director in respect of false statements in prospectus. The director
contended that the statements were prepared by the promoters &
he has relied on them & so director is not liable .Help the allottee
by providing the correct answer.
a) Yes, the director shall be held liable under Sec
37 of the Companies Act,2013.

b) No, the director shall not be held liable..

c) Yes, the director shall be held liable under Sec

34 & Sec 35 of the Companies Act,2013.

d) Both a & b.
37) ____is applicable in case of Civil liability.

a) Criminal Procedure Code,1973.

b) Civil Procedure Code,1908.

c) Punishment as under Companies

Act,2013.

d) None of these.
38) Criminal Procedure Code,1973 is applicable in case
of___

a) Civil Liability.

b) Counter Party Liability.

c) Securities Liability.

d) Criminal Liability.
39) Which of the following is an essential condition for
criminal liability.

a) Damage.

b) Actus Reus.

c) Mens Rea.

d) Attempt to crime.
40) Civil liability is an offence against.

a) Counter party.

b) State.

c) Promoter.

d) Director.
41) Section 36 of the Companies Act, 2013 states:-

a) Civil procedure Code,1973 is

applicable in case of civil liablity.
b) Punishment of personation for acquisition of
securities.
c) Punishment for fraudulently inducing
person to invest money.

d) Punishment for fraud.

42) According to Sec 37,a suit may be filed or any other action may
be taken under section __or Section__by any person, group of
persons affected by any misleading statement in the prospectus

a) 31,32,33

b) 34,35,36

c) 38,39,40

d) 41,42,43
 43) The need of class Action suits was first felt in the context of
securities market during the time of ___ where a large group of
people where cheated regarding their hard earned money invested
in stock market.
a) Satyam Scam

b) L & T Scam

c) Consumer Disputes

d) None of the above

44) M applies for share on the basis of prospectus which contains mis-statement.
The shares are allotted to him, who afterwards transfers them to N.Can N bring
an action for rescission on the grounds of mis-statement under Section 37?

a) Yes,N can bring an action for rescission of the

contract to buy shares from M.

b) No,N can not bring an action for

rescission.
c) Only M can bring an action for
rescission.
d) Nobody can bring an action for
rescission.
 45)___in relation to affairs of a company includes any
act,omission,concealment of any fact or abuse position
committed by any person to gain undue advantage.

a) Wrongful gain

b) Wrongful loss

c) Fraud

d) Unlawful advantage
46) ___means the gain by unlawful means of property to
which the person gaining is not legally entitled.

a) Wrongful gain

b) Wrongful loss

c) Fraud

d) Unlawful advantage
47) ___means the loss by unlawful means of property to
which the person losing is entitled.

a) Wrongful gain

b) Wrongful loss

c) Fraud

d) Unlawful advantage
 48) Under which section the punishment of
imprisonment & fine regarding fraud is given?

a) Section 400

b) Section 450

c) Section 500

d) Section 447
49) Where the fraud in a question involves public interest
the term of imprisonment shall not less than ___years.

a) 2 years

b) 4 years

c) 3 years

d) 6 years
50) As per Section___a company after passing a special
resolution in its general meeting, issue depository
receipts in any foreign country in a prescribed manner.

a) 40

b) 41

c) 42

d) 43
51) Necessary conditions & manner in which a company
may issue depository receipts in a foreign country are
given in ___
a) Section 40 of the Companies Act,1956

b) Companies Act,2013

c) Companies Rules 2014

d) Securities Act,1956
52) A company may issue depository receipts, if it is
eligible to do so in terms of the Scheme & relevant
provisions of the____

a) Companies Rules 2014

b) Section 40

c) Securities Act,1956

d) Foreign Exchange Management Rules

& Regulations
53) Depository receipts shall be issued by___

a) An overseas depository bank

b) Foreign Exchange Board

c) Currency Convertible Bonds.

d) None of the above

54) Global Depository Receipt are traded on___

a) National Stock Exchange

b) Bombay Stock Exchange

c) International Stock Exchange

d) None of the above

55) Section ___of Companies Act deals with private
placement of securities.

a) 41

b) 42

c) 43

d) 44
56) Capital raised from a defined group or inner circle is
called___

a) Public offer

b) Private Placements

c) Securities Market

d) None of the above

57) Any offer of invitations not in compliance with the
provisions of Section 42 shall be treated as a___

a) Public offer

b) Private placements

c) Invalid offer

d) fraud
58) A company may, make private placements through
issue of a private placement___

a) Calls

b) Mails

c) Offer letter

d) Shares directly
59) The offer of securities shall be made to such number of persons
not exceeding____or such higher number as may be prescribed, in
a financial year & on such conditions as may be prescribed.

a) twenty

b) forty

c) fifty

d) sixty
60) A company making an offer under this Section shall
allot its Securities within___days from the date of
receipts

a) Forty

b) fifty

c) Sixty

d) Twenty
 61) When a company is not able to allot "securities
within the specified time, it shall repay the application
money to the subscribers within ___days from the end
date of default.
a) 10

b) 14

c) 15

d) 20
62) ABC company is offering 1000 shares of Rs.10 each to
a shareholder on private placements basis. Whether the
offer made by the ABC is in order?

a) Offer is acceptable under Section 42

b) Offer is not acceptable as Private

placement under Section 43

c) Offer is acceptable under Section 43

d) Offer is not acceptable as Private

placement under Section 42