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Question Paper

Corporate & other laws Duration: 65

Details: Test-9 (Ch-9) Marks: 35

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Q-1(i) SKIP Limited (the Company) was incorporated on 01.04.2019. The balances extracted
from its audited financial statement are as given below:

Financial Year (FY) Net Profit before tax Net Profit after tax (Ignore Income
Tax computation)

2019-20 Rs 5.00 crore Rs 3.75 crore

2020-21 Rs 7.00 crore Rs 5.25 crore

The Company proposes to allocate the minimum required amount for CSR Activities to be
undertaken during FY 2021-22, if it is mandatory. You are requested to advice the Company
in this regard and compute the minimum amount to be allocated, if so required, taking into
account the relevant provisions of the Companies Act, 2013.

(6 Marks)

Q-2Adil is a student of CA Intermediate. His friend (who is also in CA Intermediate) has

approached him to explain to him the provisions of the Companies Act, 2013, on the
following:

(i) Inspection of books of account and other books and papers of the company.

(ii) Period of preservation of books of accounts

(4 Marks)

Q-3 The Income Tax Authorities in the current financial year 2022-23 observed, during the
assessment proceedings, a need to re-open the accounts of Sun Ltd. for the financial year
2011-12 and, therefore, filed an application before the National Company Law Tribunal
(NCLT) to issue the order to Sun Ltd. for re-opening of its accounts and recasting the
financial statements for the financial year 2011-12. Examine the validity of the application
filed by the Income Tax Authorities to NCLT.

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 (4 Marks)

Q-4 Aura Ltd. is a listed company having a paid-up share capital of Rs 25 crore as at 31st
March, 2021 and turnover of Rs 100 crore during the financial year 2020-21. The Company
Secretary has advised the Board of Directors that Aura Ltd. is not required to appoint
'Internal Auditor' as the company's paid up share capital and turnover are less than the
threshold limit prescribed under the Companies Act, 2013. Do you agree with the advice of
the Company Secretary? Explain your view referring to the provisions of the Companies Act,
2013.

(5 Marks)

Q-5 Dhiman Limited is a company incorporated in India. Dhiman Limited is a leading

manufacturer of sports shoes. It has many subsidiaries, one of them being Best Shoes
Limited which is based in Morocco. Dhiman Limited is in the process of finalization of
the consolidated financial statements of the company for the year ended 31 March 2022.
The accounts section of Dhiman Limited has requested the management of Best Shoes
Limited to provide its standalone financial statements to Dhiman Limited. The subsidiary
company prepares its financial statements in the local language of the country and the same
is provided to the Indian parent company. Further, audit of financial statement is not
required by the Best Shoes Limited under the Moroccan laws.

Advise, how would Dhiman Limited deal with the consolidation of such financial statements.

(6 Marks)

Q-6 MCQS

1. Shri Limited (a company having CSR Committee as per the provision of Section 135 of the
Companies Act, 2013) decides to spend and utilize the amount of Corporate Social

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Responsibility on the activities for the benefit of all the employees of Shri Limited. As per
the provision of Companies Act, 2013 this would mean that:-

(a) This is the total amount spent on Corporate Social Responsibility activities by Shri Limited
for that financial year

(b) No amount spent on Corporate Social Responsibility activities by Shri Limited for that
financial year

(c) Only half of the total amount spent, shall be considered to be spent on Corporate Social
Responsibility activities by Shri Limited for that financial year

(d) Only the amount that has been spent on the employees having salary of Rs. 20,000 per
month or less, shall be considered be considered to be spent on Corporate Social
Responsibility activities by Shri Limited for that financial year.

2. The aggregate value of the paid-up share capital of Sai Ram Limited, a listed company,
was ₹ 200 crore divided into 20 crore equity shares of ₹10/- each at the end of the financial
year 2021-22 having its registered office at Pune. This company had been registered with an
authorised share capital of ₹ 300 crore divided into 30 crore equity shares of ₹10/- each.
The company has very good reputation in compliance of all legal requirements on time. The
company produces health related products such as ayurvedic medicines, medical
instruments, sanitizers, masks, medical soaps etc. The extract of Balance Sheet of the
company as on 31st March, 2022 showed the following figures–

Particulars Amount (₹ in
crore)

Free reserves created out of profits 200

Securities Premium account 80

Credit balance of Profit & Loss account 50

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Reserves created out of revaluation of assets 25

Miscellaneous expenditure not written off 10

Turnover of the company during the financial year 2021-22 was ₹ 700 crore and the net
profit calculated in accordance with section 198 of the Companies Act, 2013 with other
adjustments as per CSR Rules was ₹4 crore only.

The Board of Directors of the company constituted of the following persons as directors- a
Chartered Accountant ‘Sai Ram’ as the Managing Director, ‘Roshan’ and ‘Prachita’ as
independent directors, ‘Hari Om’, ‘Bindu’, ‘Reddy’ and ‘Komal’. Prakash, Chief compliance
officer of the company informed the Board on 20th April, 2022 that the company attracts
the provisions of section 135 of the Companies Act, 2013 and all the formalities have to be
complied with accordingly. Thereafter, on 30th April, 2022 a CSR committee was formed to
act and comply the provisions of Corporate Social Responsibility.

The company proposed a list of activities to spend 4% of the average net profits of the
company made during the three immediately preceding financial years in pursuance of its
CSR Policy as under

1. The CSR projects for the benefit of employees of the company and their families only.

2. A contribution of ₹ 10,000/- to a political party under section 182 of the Companies Act,
2013.

3. A contribution to the PM CARES Fund during Covid pandemic.

4. Local activities like promotion of child and women education.

5. Activities carried out for fulfilment of any other statutory obligations under any law in
force in India.

6. CSR projects undertaken through a Section 8 company.

On the basis of above facts and by applying applicable provisions of Companies Act, 2013
and the applicable Rules therein, choose the correct answer.

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For the purpose of section 135 of the Companies Act, 2013, the net worth has to calculated
as defined under section 2(57) of the Act. In this context, which of the following statements
is correct with reference to the above case –

(a) The net worth of Sai Ram Limited during the financial year 2021-22 was Rs 520 crore.

(b) The net worth of Sai Ram Limited during the financial year 2021-22 was Rs 530 crore.

(c) The net worth of Sai Ram Limited during the financial year 2021-22 was Rs 555 crore.

(d) The net worth of Sai Ram Limited during the financial year 2021-22 was Rs 620 crore

3. Shri Limited (a company having CSR Committee as per the provision of Section 135 of the
Companies Act, 2013) decides to spend and utilize the amount of Corporate Social
Responsibility on the activities for the benefit of all the employees of Shri Limited. As per
the provision of Companies Act, 2013 this would mean that:-

(a) This is the total amount spent on Corporate Social Responsibility activities by Shri Limited
for that financial year

(b) No amount spent on Corporate Social Responsibility activities by Shri Limited for that
financial year

(c) Only half of the total amount spent, shall be considered to be spent on Corporate Social
Responsibility activities by Shri Limited for that financial year

(d) Only the amount that has been spent on the employees having salary of Rs. 20,000 per
month or less,

4. Mr. Ajay hails from a farming family and carries on the business of cultivation and milling
of paddy. He is also the sole member of New-Deal Limited (NDL), a one person company.
NDL is operated as rice Sheller and also deals in trading of high quality basmati rice. Mr.
Ajay’s father is operating as a nominee for the purposes of this OPC. The accounts

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department of NDL prepared and published only Profit and Loss Account and Balance Sheet
as a financial statement and did not prepare cash flow statements and explanatory notes to
accounts. A statement of changes in equity is not required in the case of NDL.

Question-Which of the following statements is correct, with reference to the requirement

for financial Statements of ‘New Deal Limited’ (One Person Company)

(a) NDL fails to meet the requirement because its financial statement do not include
explanatory notes to accounts

(b) NDL fails to meet the requirement because its financial statements do not include cash
flow statement

(c) NDL fails to meet the requirement because its financial statements do not include
explanatory notes to account and cash flow statement

(d) NDL has complied with the requirements related to financial statements shall be
considered be considered to be spent on Corporate Social Responsibility activities by Shri
Limited for that financial year.

5. G Ltd. (a company having CSR Committee as per the provision of Section 135 of the
Companies Act, 2013) decides to spend and utilize half of the amount of Corporate Social
Responsibility on the activities for the benefit of all the employees of G Limited and the
remaining half of the amount of Corporate Social Responsibility on the activities for the
benefit of family members of employees of G Limited As per the provision of Companies
Act, 2013 this would mean that:-

(a) This is the total amount spent on Corporate Social Responsibility activities by G Limited
for that financial year

(b) No amount spent on Corporate Social Responsibility activities by G Limited for that
financial year

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(c) Half amount spent on Corporate Social Responsibility activities by G Limited for that
financial year

(d) Half amount spent on Corporate Social Responsibility activities and remaining half
amount spent on Other Activities by G Limited for that financial year

(2 x 5=10 Marks)

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