SEBI Grade A 2020

Company Law
Important MCQs - Chapter XI
Appointment and Qualifications of
Directors- Part 2

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 Question 1
A _____________ is an individual who is appointed to attend a board meeting on behalf of the director of a company
where the principal director would be unable to attend.

a) Additional Director
b) Alternate Director
c) Nominee Director
d) Independent Director

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 Explanation to Q 1

Alternate director is a personnel who is appointed by the Board of Directors, as a substitute to a director who may
be absent from India, for a period which isn’t less than three months

Independent directors are directors on Board of a company who are independent individuals, not having any other
relationship or transaction with the company

Additional directors are appointed by the Board of Directors without approval of shareholders who hold office till
the next AGM.

Nominee Directors are normally appointed by large shareholding institutions like Investment bank to act as their
representative.

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 Question 1
A _____________ is an individual who is appointed to attend a board meeting on behalf of the director of a company
where the principal director would be unable to attend.

a) Additional Director
b) Alternate Director
c) Nominee Director
d) Independent Director

Answer - B

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 Question 2
A person can be a director in maximum ____________companies out of which maximum ____________can be public
companies.

a) 20,10
b) 15,10
c) 15,5
d) 15,12

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 Explanation to Q 2

A person can be a director (including alternate directorship) in maximum of 20 companies subject to that he can be
a director in maximum of 10 Public companies

Note:

When we count directorship of max in 20 companies then dormant companies must not be included

For the limit of directorship of max 10 in public companies, directorship in private companies that are either holding
or subsidiary company of a public company shall be included.

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 Question 2
A person can be a director in maximum ____________companies out of which maximum ____________can be public
companies.

a) 20,10
b) 15,10
c) 15,5
d) 15,12

Answer - A

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 Question 3
Mr. Ram is a director in 15 private companies. He is liable for penalty of

a) Rs.50000
b) Rs.100000
c) Rs.200000
d) None of the above

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 Explanation to Q 3

A person can be a director (including alternate directorship) in maximum of 20 companies subject to that he can be
a director in maximum of 10 Public companies

Penalty for violation of subsection (1) of 165

The person shall liable to a penalty of five thousand rupees for each day after the first day during which such
contravention continues

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 Question 3
Mr. Ram is a director in 15 private companies. He is liable for penalty of

a) Rs.50000
b) Rs.100000
c) Rs.200000
d) None of the above

Answer - D

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 Question 4
Mr. Shyam is a director in 25 companies, out of which 9 are public companies and 8 are private dormant companies.
Assuming no private company is subsidiary of public company then in how many more private companies he can become
director?

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

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 Explanation to Q 4

A person can be a director (including alternate directorship) in maximum of 20 companies subject to that he can be
a director in maximum of 10 Public companies

Note:

When we count directorship of max in 20 companies then dormant companies must not be included

For the limit of directorship of max 10 in public companies, directorship in private companies that are either holding
or subsidiary company of a public company shall be included.

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 Question 4
Mr. Shyam is a director in 25 companies, out of which 9 are public companies and 8 are private dormant companies.
Assuming no private company is subsidiary of public company then in how many more private companies he can become
director?

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

Answer - B

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 Question 5
In which of the following cases, a director is not liable to vacate his office?

a) He incurs any disqualifications specified in Section 164

b) He is convicted by a court for any offence and imprisoned for more than 6 months
c) He absents himself for all Board Meetings during last 6 months without seeking leave of absence from the board
d) He fails to disclose his interest in any contract, contravening provisions of Section 184

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 Explanation to Q 5
The office of Director shall become vacant

1.If director incurs any of the disqualifications specified in section 164.

2.He absents himself from all the meetings of the Board of Directors held during a period of twelve months with
or without seeking leave of absence of the Board

3.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 (Section 184 is about that directors disclose his interest in other companies)

4.He fails to disclose his interest in any contract or arrangement in which he is directly or indirectly interested,
in contravention of the provisions of section 184

5.He is convicted by a court of any offence and sentenced to imprisonment for not less than six months

6.He is removed as per section 169 (Section 169 is related to removal of director)

7.He was appointed as a director by virtue of his holding any office or other employment in the holding, subsidiary
or associate company, so he would cease to be a director when he ceases to hold such office

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 Question 5
In which of the following cases, a director is not liable to vacate his office?

a) He incurs any disqualifications specified in Section 164

b) He is convicted by a court for any offence and imprisoned for more than 6 months
c) He absents himself for all Board Meetings during last 6 months without seeking leave of absence from the board
d) He fails to disclose his interest in any contract, contravening provisions of Section 184

Answer - C

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 Question 6
Independent director appointed for second term can be removed by the company by

a) Passing an Ordinary resolution

b) Passing a Special Resolution
c) Passing a Board Resolution
d) None of the above

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 Explanation to Q 6

By Passing an ordinary Resolution before the expiry of his term

A company can remove a director
after giving him an opportunity to present his case

An independent director re-appointed for second term shall be removed by the company only by passing a
special resolution and after giving him a reasonable opportunity of being heard.

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 Question 6
Independent director appointed for second term can be removed by the company by

a) Passing an Ordinary resolution

b) Passing a Special Resolution
c) Passing a Board Resolution
d) None of the above

Answer - B

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 Question 7
The resigning director can inform the ROC about his resignation using Form ________

a) DIR 10
b) DIR 11
c) DIR 12
d) DIR 13

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 Explanation to Q 7

Forms for Director Appointment and Qualifications

 DIR 1- Application for inclusion of name in databank of directors.
 DIR 2 – Consent of directors to act as directors of the company
 DIR 3- Application for allotment of DIN
 DIR 5- Application for surrender of DIN
 DIR 6 – Intimation of change in particulars of Directors to be given to the CG
 DIR 8 -Every director shall inform to the company concerned about his disqualification under section 164 in Form
DIR-8 before he is appointed.
 DIR 9 – Whenever a company fails to file the financial statements or annual returns, or fails to repay any deposit,
interest, dividend, or fails to redeem its debentures the company shall immediately file Form DIR-9 to the Registrar
furnishing therein the names and addresses of all the directors of the company during the relevant financial years.
 DIR 10 – Form of application for removal of disqualification of directors
 DIR 11 – Notice of resignation of a director to the Registrar filed by director
 DIR 12 – Notice of resignation of a director to the Registrar filed by company/ Return containing the particulars of
appointment of Directors or KMP

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 Question 7
The resigning director can inform the ROC about his resignation using Form ________

a) DIR 10
b) DIR 11
c) DIR 12
d) DIR 13

Answer - B

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 Question 8
What is the maximum period a director can abstain from attending Board meetings to prevent himself from being forced
to vacate the office of director?

a) Period of 12 months without taking Board’s approval

b) Period of 9 months without taking Board’s approval
c) Period of 2 years in case of serious injury and after taking approval from board
d) Period of 12 months with or without taking Board’s approval

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 Explanation to Q 8
The office of Director shall become vacant

1.If director incurs any of the disqualifications specified in section 164.

2.He absents himself from all the meetings of the Board of Directors held during a period of twelve months with
or without seeking leave of absence of the Board

3.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 (Section 184 is about that directors disclose his interest in other companies)

4.He fails to disclose his interest in any contract or arrangement in which he is directly or indirectly interested,
in contravention of the provisions of section 184

5.He is convicted by a court of any offence and sentenced to imprisonment for not less than six months

6.He is removed as per section 169 (Section 169 is related to removal of director)

7.He was appointed as a director by virtue of his holding any office or other employment in the holding, subsidiary
or associate company, so he would cease to be a director when he ceases to hold such office

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 Question 8
What is the maximum period a director can abstain from attending Board meetings to prevent himself from being forced
to vacate the office of director?

a) Period of 12 months without taking Board’s approval

b) Period of 9 months without taking Board’s approval
c) Period of 2 years in case of serious injury and after taking approval from board
d) Period of 12 months with or without taking Board’s approval

Answer - D

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