Q.1 A) Select the correct option and rewrite the sentences.

State Bank of India is an example of a __________ company.

Answer: b) Statutory

Explanation: A statutory company is established by a special act of

Parliament or state legislature. State Bank of India (SBI) was created under
the State Bank of India Act, 1955.

A letter without __________ Is invalid.

Answer: b) Signature

Explanation: A letter without a signature is not legally valid, as it lacks

authentication.

A __________ cannot be a member of a company.

Answer: c) Minor

Explanation: A minor (under 18 years of age) cannot enter into a contract as

per the Indian Contract Act, 1872, and thus cannot become a company
member.

Every company except OPC and a small company shall hold a

minimum of __________ board meetings each year.

Answer: b) 3

Explanation: As per the Companies Act, 2013, every public and private
company (except OPC and small companies) must hold at least 4 board
meetings each year, but small companies and OPCs need only 2.

__________ can hear appeals against the orders issued by NCLT.

Answer: a) NCLAT

Explanation: NCLAT (National Company Law Appellate Tribunal) is the

appellate body that hears appeals against NCLT (National Company Law
Tribunal) decisions.
B) Match the pairs.

Group ‘A’ Group ‘B’ Correct Answer

a) Statutory company 4) Life Insurance ✅
Corporation
b) Capital clause 6) Details of capital ✅
structure of a company
c) Public company 7) At least 3 (Three) ✅
directors
d) Minutes of meeting 10) Prepared after the ✅
meeting
e) Regulator of 3) SEBI ✅
Securities Market

C) Write a word, term, or phrase that substitutes each sentence.

The members of Joint Hindu Family Business.

Answer: Karta and Coparceners

Explanation: The Karta (head of the family) manages the business, and
coparceners (family members) share ownership.

Prospectus attached with every share application form.

Answer: Abridged Prospectus

Explanation: An abridged prospectus is a summary of the main prospectus,

attached to a share application form.

The organization with a distinct feature of separate ownership and

management.

Answer: Company

Explanation: A company has separate legal existence, where owners

(shareholders) are different from management (directors).

A company officer who drafts the minutes of the meeting.

Answer: Company Secretary

Explanation: The Company Secretary is responsible for writing the minutes of

meetings.
Request of the Secretary to the bank not to make payment of a
cheque.

Answer: Stop Payment Order

Explanation: A stop payment order is issued when a company wants to

prevent the payment of a cheque.

D) State whether the following statements are True or False.

A Secretary need not have knowledge of computers.

Answer: False

Explanation: A Company Secretary needs computer skills for documentation,

communication, and compliance work.

Promoters are persons who take the necessary steps to set up a

company.

Answer: True

Explanation: Promoters initiate the incorporation process, prepare legal

documents, and arrange for initial capital.

A member is entitled to profits of the company when a dividend is

declared.

Answer: True

Explanation: Shareholders receive dividends when the company distributes

profits.

A member has a right to attend a Board meeting.

Answer: False

Explanation: Only Directors attend Board Meetings; members (shareholders)

attend General Meetings.

Q.2 Explain the following terms/concepts (Any 4) (8 Marks):

1) Listed Company

A listed company is a company whose shares are publicly traded on a

recognized stock exchange such as BSE (Bombay Stock Exchange) or NSE
(National Stock Exchange).
These companies must comply with SEBI (Securities and Exchange Board of
India) regulations and disclose financial reports regularly.

Example: Tata Motors Ltd., Infosys Ltd., Reliance Industries Ltd.

2) Promoters

Promoters are individuals or groups who conceive the idea of starting a

company and take necessary steps to bring it into existence.

They handle key activities like arranging capital, preparing legal documents
(Memorandum of Association, Articles of Association), and appointing
directors.

Example: Dhirubhai Ambani was a promoter of Reliance Industries Ltd.

3) Name Clause

The Name Clause is the first clause in a company’s Memorandum of

Association (MOA).

It specifies the legal name of the company, which must not be identical or
too similar to an existing company’s name.

The name must include “Limited” for public companies or “Private Limited”
for private companies.

Example: ABC Pvt. Ltd., XYZ Ltd.

4) Amendment

An Amendment refers to any modification or change made in a company’s

legal documents, policies, or rules.

Companies may amend their Memorandum of Association (MOA) or Articles

of Association (AOA) with approval from shareholders and regulatory
authorities.

Example: Changing the authorized share capital of a company requires an

amendment in the MOA.

5) Notice and Agenda of Board Meeting

A Notice of a Board Meeting is an official communication sent to directors,

informing them about the date, time, venue, and purpose of the meeting.
The Agenda is a list of topics or issues to be discussed during the meeting,
such as approval of financial statements, declaration of dividends,
appointment of directors, etc.

As per the Companies Act, 2013, the notice must be sent at least 7 days
before the meeting.

6) Letter of Credit

A Letter of Credit (LC) is a financial document issued by a bank guaranteeing

payment to a seller on behalf of a buyer.

It is widely used in international trade to ensure secure transactions.

If the buyer fails to make the payment, the bank covers the amount.

Example: An Indian importer buying goods from a Chinese exporter can use
an LC to assure the seller

Q.3 Study the following case/situation and express your opinion. (Any 2) (6m)

1) A Company plans to offer Rights Issue

A) Which document must it send to its shareholders for offering the

Rights Issue?

The company must send a Letter of Offer to its shareholders.

B) Instead of Rights Issue, if the company wants to issue shares to

the public, which document must it issue for inviting the public to
subscribe for it?

The company must issue a Prospectus to invite the public to subscribe to

shares.

C) Name the document which is called an incomplete prospectus.

The document is called a Red Herring Prospectus.

2) Mr. A is a commerce graduate. He has vast experience in the field of

finance and financial Market. He wishes to become director of XYZ Co. Ltd.

A) Is he required to obtain DIN?

Yes, Director Identification Number (DIN) is mandatory for becoming a

director.
B) Can XYZ Co. Ltd. Object to his directorship on the lack of
specialized qualification?

No, as per the Companies Act, 2013, there is no requirement for a specific
qualification to become a director.

C) If he is appointed as director of XYZ Co. Ltd, is he entitled to

remuneration?

Yes, he is entitled to remuneration, sitting fees, and commission based on

the company’s policy.

3) Platinum Limited Company was incorporated on 1 st Jan. 2018. Advice the

Board of Directors on the following matters.

A) Within what period should the company hold its 1st Annual
General Meeting?

As per the Companies Act, 2013, the first AGM must be held within 9 months
from the end of the first financial year, or within 18 months from
incorporation, whichever is earlier.

B) At which place should the Annual General Meeting be held?

The AGM should be held at the Registered Office of the company or at a

venue in the same city, town, or village.

C) How many days in advance should the notice and agenda be sent
to members?

At least 21 clear days before the meeting.

Q.4 Distinguish between. (Any 3) (12m)

Distinguish between Sole Trading and partnership firm

Basis Sole Trading Concern Partnership Firm

Ownership Owned by a single Owned by two or more
individual. individuals.
Liability Unlimited liability of the Partners have unlimited
owner. or limited liability.
Decision Making Quick, as only one Decisions are made
person decides. collectively by partners.
Profit Sharing Entire profit goes to the Profits are shared as
owner. per the agreement.
Legal Formalities Fewer legal formalities. Requires a partnership
agreement and
registration.

2. Managing Director vs. Manager

Basis Managing Director Manager

Appointment Appointed by the Board Appointed by the
of Directors. company.
Authority Has higher authority Implements policies but
and policy-making has limited decision-
power. making power.
Control Controls overall Controls only specific
operations. departments or
functions.
Tenure Tenure depends on Works as per
board approval. employment contract.

3. Motion vs. Resolution

Basis Motion Resolution

Meaning A proposal put forward A formal decision taken
for discussion. after a motion is
passed.
Status Can be modified or Once passed, it
withdrawn. becomes binding.
Approval Requires discussion Becomes effective upon
before approval. approval.

4. Current Account vs. Savings Account

Basis Current Account Savings Account

Purpose Used for frequent Used for saving and
business transactions. earning interest.
Interest No or very low interest. Earns moderate
interest.
Withdrawal No withdrawal limits. Limited withdrawals per
month.

Q.5 Answer in brief (Any 2):

 1. Importance of Certificate of Incorporation:

The Certificate of Incorporation is a legal document issued by the Registrar of

Companies (ROC), confirming that a company is legally formed. Its
importance includes:

Legal Existence – The company becomes a separate legal entity.

Limited Liability – Protects shareholders from personal liability.

Perpetual Succession – The company continues to exist regardless of

changes in ownership.

Right to Enter Contracts – Allows the company to enter into legal

agreements.

Eligibility for Raising Funds – Enables the company to raise capital through
shares or loans.

2.Four Powers of Managing Directors:

A Managing Director (MD) has the authority to oversee company operations.

Key powers include:

Decision-Making Authority – Implements company policies and makes

strategic decisions.

Financial Management – Approves budgets, investments, and financial

transactions.

Hiring and Firing – Appoints, supervises, or removes employees as needed.

Legal Representation – Represents the company in legal and government

matters.

3.Duties of a Secretary after the Annual General Meeting (AGM):

A company secretary has several post-AGM responsibilities, including:

Filing Resolutions with ROC – Submitting approved resolutions and financial
statements.

Drafting Meeting Minutes – Preparing and distributing the official record of

discussions.

Communicating with Shareholders – Informing shareholders about decisions

taken in the AGM.

Updating Company Records – Ensuring changes in directors, auditors, or

capital are recorded.

Compliance with Legal Requirements – Ensuring the company follows

corporate governance

Q.6 Justify the following statements (Any 2):

1. A secretary is considered a paid employee.

Employment Status – A company secretary is appointed by the company and

receives a salary for their services.

Defined Responsibilities – They perform administrative and compliance

duties as per company policies.

Legal Recognition – The Companies Act recognizes them as an officer of the

company.

Not an Owner – Unlike directors or shareholders, a secretary does not hold

ownership rights.

Works Under the Board – They function under the instructions of the Board of
Directors.

2. Members of a company are entitled to several rights.

Right to Vote – Shareholders can vote in general meetings on key company

decisions.

Right to Dividends – Members are entitled to receive a share of company

profits.

Right to Inspect Records – Shareholders can access financial statements and

company records.
Right to Transfer Shares – They can buy, sell, or transfer their shares.

Right to Sue – Members can take legal action if their rights are violated.

3. Proxy cannot speak in the meeting.

Legal Restriction – A proxy is only allowed to vote on behalf of a shareholder,

not participate in discussions.

No Decision-Making Power – They cannot raise questions or propose

resolutions.

Limited Role – Proxies are only appointed for representation, not active
participation.

Subject to Company Rules – The company’s Articles of Association determine

their scope.

Acts as a Representative – They can only act as per the instructions given by
the shareholder.

4. The Companies Act, 2013 has given certain powers to ROC.

Company Registration – The Registrar of Companies (ROC) is responsible for

registering companies.

Regulatory Oversight – It ensures companies comply with legal requirements.

Inspection Powers – The ROC can inspect company records and financial
statements.

Dissolution of Companies – It can strike off defunct companies from the

register.

Approval of Changes – The ROC approves changes in the company’s

structure, directors, and capital.

Q.7 Attempt the following (Any 2):

1. Letter to a Director Who Was Absent for a Board Meeting

[Your Name]

[Your Designation]

[Company Name]

[Company Address]

[Date]

To,

[Director’s Name]

[Company Name]

[Director’s Address]

Subject: Proceedings of the Board Meeting Held on [Date]

Dear [Director’s Name],

I hope you are doing well. I am writing to inform you about the key
discussions and decisions made during the Board Meeting held on [Date],
which you were unable to attend.

Some of the important points discussed were:

Financial Performance Review – The company’s financial statements for the

quarter were analyzed.

Strategic Decisions – Approval of a new expansion plan for the next fiscal
year.

Appointment of Auditors – The board appointed new auditors for the

upcoming financial year.

Compliance and Legal Matters – Updates on regulatory requirements were

shared.
Please let me know if you need further details regarding the meeting. We
appreciate your valuable inputs and look forward to your presence in the
next meeting.

Best regards,

[Your Name]

[Your Designation]

[Company Name]

2. Letter to a Bank to Stop Payment of a Cheque

[Your Name]
[Your Designation]

[Company Name]

[Company Address]

[Date]

To,

The Branch Manager

[Bank Name]

[Bank Branch Address]

Subject: Request to Stop Payment of Cheque No. [Cheque Number]

Dear Sir/Madam,

I am writing to formally request the stop payment of cheque number

[Cheque Number], dated [Date], issued in favor of [Payee’s Name], for the
amount of [Amount] due to [reason, e.g., lost cheque, incorrect amount,
etc.].

Please ensure that this cheque is not processed and confirm the action taken
at the earliest. I would appreciate your prompt assistance in this matter.
Kindly let me know if any additional information is required.

Thank you for your cooperation.

Best regards,

[Your Name]

[Your Contact Information]

[Company Name]

3. Letter to ROC Seeking an Extension of Time to Hold AGM

[Your Name]

[Your Designation]

[Company Name]

[Company Address]

[Date]

To,

The Registrar of Companies

[Registrar’s Office Address]

Subject: Request for Extension of Time to Hold Annual General Meeting
(AGM)

Dear Sir/Madam,

We, [Company Name], registered under CIN [Company Identification

Number], request an extension for holding our Annual General Meeting
(AGM) for the financial year [Year]. Due to [reason, e.g., unforeseen
circumstances, financial audit delay, etc.], we are unable to hold the AGM
within the prescribed time limit.

We kindly request an extension of [mention period, e.g., 2 months] to

conduct the AGM and assure you that all necessary formalities will be
completed within this period. We seek your approval and look forward to
your positive response.

Thank you for your time and consideration.

Yours sincerely,

[Your Name]

[Your Designation]

[Company Name]

Q.8 Answer the following (Any 1):

 1. Define a ‘Company’ and Explain the Types of Companies Based
on Liability of Members

Definition of a Company:

A company is a legal entity formed by individuals or groups to conduct

business activities. It is registered under the Companies Act, 2013, and has a
separate legal identity, meaning it can own assets, enter into contracts, and
sue or be sued in its name.

Types of Companies Based on Liability of Members:

Companies can be classified into three types based on members’ liability:

Company Limited by Shares – In this type, members’ liability is limited to the

amount unpaid on their shares. If the company faces losses, shareholders are
only liable to pay the remaining unpaid amount on their shares.

Company Limited by Guarantee – Here, members’ liability is limited to the

amount they agree to contribute in case the company is wound up. This type
is common for non-profit organizations.

Unlimited Liability Company – In such companies, members have unlimited

liability, meaning they are personally liable for the company’s debts.
Creditors can recover debts from members’ personal assets if needed.

Thus, companies provide different levels of liability protection to their

members based on their structure and purpose.

2. Explain Different Parts of a Business Letter

A business letter is a formal document used for professional communication.
It consists of several essential parts:

Sender’s Address – The sender’s complete address is mentioned at the top,

ensuring the recipient knows who the letter is from.

Date – The date of writing the letter is included to provide a record of

communication.

Recipient’s Address – The name and address of the recipient (individual or

company) are mentioned below the sender’s details.

Salutation – A polite greeting such as “Dear Sir/Madam” or the recipient’s

name is used.

Subject Line – A brief line stating the purpose of the letter, making it clear
and direct.

Body of the Letter – The main content of the letter, divided into:

Introduction – States the reason for writing.

Main Content – Provides details and explanations.

Conclusion – Ends with a polite closing statement or request.

Complimentary Close – A formal closing phrase like “Yours sincerely” or “Best

regards.

Signature and Name – The sender’s name, designation, and signature are
placed at the end for authentication.

These parts ensure a professional and clear structure for effective business
communication.