All questions of The Companies Act, 2013 for CA Foundation Exam

I think the answer is memorandum because the details of all the company relevant is first enter in the memorandum

A

ANSWER

Unlimited because it is prescribed in Articals of Association

Liability of Members in a Company Limited by Guarantee

A company limited by guarantee is a type of company in which the members' liability is limited to a certain amount that they agree to contribute to the assets of the company in the event of its winding up. This type of company is commonly used by non-profit organizations, clubs, or associations.

The liability of the members in a company limited by guarantee is different from that of a company limited by shares. In a company limited by shares, the liability of the members is limited to the unpaid value of their shares. However, in a company limited by guarantee, the liability of the members is limited to a guarantee amount that they have agreed to contribute to the assets of the company in case of its winding up.

Guarantee Amount

The guarantee amount is the amount that the members agree to contribute to the assets of the company in the event of its winding up. This amount is usually specified in the company's articles of association. The guarantee amount can be any amount that the members agree upon, but it is usually a nominal amount, such as one pound or one dollar.

Unpaid Value of Shares

The unpaid value of shares is the amount that a shareholder has not yet paid for their shares. In a company limited by shares, the liability of the shareholders is limited to the unpaid value of their shares. However, in a company limited by guarantee, there are no shares, and therefore, there is no unpaid value of shares.

Unlimited Liability

Unlimited liability means that the members are liable for all the debts and obligations of the company, and there is no limit to their liability. This type of liability is not applicable to a company limited by guarantee, as the liability of the members is limited to the guarantee amount that they have agreed to contribute to the assets of the company in case of its winding up.

Conclusion

In conclusion, the liability of the members in a company limited by guarantee is limited to a guarantee amount that they have agreed to contribute to the assets of the company in case of its winding up. The members are not liable for the unpaid value of shares, and their liability is not unlimited.

Registration of a Company

A company is a legal entity that is registered under the Companies Act, 2013. Registration of a company is a legal process that involves several steps. The registration process of a company is complete when it has obtained an incorporation certificate from the Registrar of Companies. Let us understand the registration process of a company in detail.

Memorandum of Association and Articles of Association

The first step in the registration of a company is to prepare the Memorandum of Association (MOA) and Articles of Association (AOA). MOA contains the fundamental details of the company, such as the name of the company, its registered office, the objectives of the company, and the capital structure. AOA contains the internal rules and regulations of the company.

Incorporation Certificate

Once the MOA and AOA are prepared, the company files an application for registration with the Registrar of Companies (ROC) along with the necessary documents, such as the MOA, AOA, and a list of directors. If the ROC is satisfied that all the requirements have been complied with, it issues an incorporation certificate.

Certificate for Commencement of Business

If the company has share capital, it is required to obtain a certificate of commencement of business. This certificate is issued by the ROC after the company has completed certain formalities, such as the filing of a declaration stating that the minimum subscription has been received.

Actual Commencement of Business

After obtaining the incorporation certificate and certificate of commencement of business (if required), the company can commence its business activities.

Conclusion

Therefore, the correct answer is option B, which states that a company is said to have been registered when it obtains an incorporation certificate from the Registrar of Companies.

Maximum no. of persons in case of partnership banking business:
In a partnership banking business, the maximum number of persons depends on the legal requirements and regulations set by the governing authorities. However, there are certain general guidelines and considerations to determine the maximum number of partners in a partnership banking business.
Factors to consider:
1. Legal requirements: Different countries and jurisdictions have different laws and regulations regarding the maximum number of partners in a partnership banking business. It is important to comply with these legal requirements to ensure the business operates within the boundaries of the law.
2. Type of partnership: There are different types of partnerships, such as general partnerships, limited partnerships, and limited liability partnerships. The maximum number of partners may vary depending on the type of partnership.
3. Capital requirements: Partnership banking businesses typically require a significant amount of capital to operate. The maximum number of partners may be determined based on the capital contributions and financial capabilities of each partner.
4. Management and decision-making: With a larger number of partners, it can become challenging to effectively manage the business and make timely decisions. The maximum number of partners should be determined based on the ability to maintain efficient management and decision-making processes.
5. Liability and risk-sharing: Partners in a partnership banking business share both profits and liabilities. The maximum number of partners should be determined based on the ability to effectively manage and distribute the risks and liabilities associated with the business.
Conclusion:
- The maximum number of persons in a partnership banking business varies depending on the legal requirements, type of partnership, capital requirements, management considerations, and risk-sharing factors.
- It is essential to comply with the legal requirements and ensure effective management and decision-making processes while determining the maximum number of partners in a partnership banking business.
- Without specific information about the jurisdiction and specific partnership type, it is not possible to provide an exact maximum number of persons.

's assets
b)Power to change the company's name
c)Power to issue new shares
d)Power to declare dividends to shareholders

Refund of Application Money

When a company issues shares to the public, it invites the public to subscribe to its shares. The investors have to apply for the shares by filling up an application form and remitting the application money. If the minimum subscription is not received, the company has to refund the application money to the investors. The following are the details regarding the refund of application money:

Time Limit for Refund

The Companies Act, 2013, provides that if the minimum subscription is not received within 60 days from the date of the issue of the prospectus, the company has to refund the entire application money to the investors within 15 days from the expiry of 60 days. Therefore, the total time for refunding the application money is 75 days.

However, if the company fails to refund the application money within the prescribed time, it has to pay interest at the rate of 12% per annum from the expiry of the 15th day to the date of the refund.

Minimum Subscription

Minimum subscription means the amount of shares that must be subscribed by the public to enable the company to allot the shares. The Companies Act, 2013, provides that in case of a public issue, the minimum subscription must be 90% of the issued amount.

Conclusion

In conclusion, if the minimum subscription is not received, the company has to refund the application money to the investors within 15 days from the expiry of 60 days. The time limit for refunding the application money is 75 days. If the company fails to refund the application money within the prescribed time, it has to pay interest at the rate of 12% per annum from the expiry of the 15th day to the date of the refund.

Minimum Number of Directors in a Private Company
In the context of corporate governance, the structure of a private company is defined by its legal framework. Understanding the minimum number of directors required is crucial for compliance with regulations.
Legal Requirement
- According to the Companies Act, the minimum number of directors for a private company is two.
- This is stipulated to ensure a basic level of governance and accountability within the company.
Rationale Behind the Requirement
- Diversity of Thought: Having two directors promotes diverse perspectives in decision-making, which is vital for the growth and sustainability of the company.
- Checks and Balances: A minimum of two directors allows for necessary checks and balances, reducing the risk of unilateral decisions that could adversely affect the company.
Comparison with Other Company Types
- Public Companies: Public companies typically require a higher number of directors to enhance governance and oversight due to their complex structures and larger stakeholder base.
- One-Direcor Companies: Some jurisdictions allow for a one-person company (OPC) where the sole director can also be the sole shareholder. However, this is not applicable to private companies as per the standard definitions.
Conclusion
In summary, the correct answer is option B: 2. This requirement reflects the legal and practical need for a minimum level of governance in private companies, supporting effective management and accountability.

Introduction:
In order to understand the correct answer, it is important to have a clear understanding of the process of commencing business for a private limited company. The process involves obtaining certain legal documents and fulfilling various legal requirements.

Certificate of Incorporation:
The certificate of incorporation is a legal document issued by the Registrar of Companies, which signifies the creation of a new company. It confirms that the company has been registered under the Companies Act and has a separate legal existence. This certificate includes important details such as the company name, registered office address, and the date of incorporation.

Certificate to Commence Business:
After obtaining the certificate of incorporation, a private limited company needs to obtain a separate certificate to commence business. This requirement was introduced by the Companies (Amendment) Act, 2015, in order to ensure that companies do not start their operations immediately after incorporation without adequate capital and proper compliance.

The certificate to commence business is issued by the Registrar of Companies only when the following conditions are met:

1. Subscription of shares: The company must have received a minimum subscription of shares as stated in its prospectus. This ensures that the company has sufficient capital to carry out its business activities.

2. Declaration by directors: The directors of the company must file a declaration stating that the minimum subscription has been received and the company has complied with all the requirements of the Companies Act.

3. Payment of application and allotment money: The application and allotment money for the shares subscribed by the shareholders must be deposited in a separate bank account.

Correct Answer:
The correct answer is option 'B' - After obtaining the certificate of incorporation. This is because a private limited company can commence business operations only after obtaining the certificate of incorporation. The certificate to commence business is not a mandatory requirement for private limited companies.

Conclusion:
In conclusion, a private limited company can commence business after obtaining the certificate of incorporation. The certificate to commence business is an additional requirement that may be applicable depending on the circumstances of the company. It is important for companies to fulfill all legal requirements and obtain the necessary certificates before starting their operations.

Minimum Paid-up Share Capital in Case of a Public Company
The minimum paid-up share capital required in case of a public company is 5 Lakhs. This means that the company must have at least 5 Lakhs worth of shares issued and paid for by its shareholders.
Here are the key points to remember about the minimum paid-up share capital for a public company:
1. Definition: A public company is a type of company that offers its shares to the general public and is listed on a stock exchange.
2. Legal Requirement: As per the Companies Act, 2013, a public company must have a minimum paid-up share capital of 5 Lakhs or such higher amount as may be prescribed.
3. Memorandum of Association: The Memorandum of Association of a public company must specify the amount of share capital with which the company is registered. This amount should be at least 5 Lakhs.
4. Capital Structure: The share capital of a company is divided into shares of fixed value. The shareholders of the company contribute towards this share capital by purchasing shares.
5. Importance of Paid-up Share Capital: The paid-up share capital represents the actual amount of money that has been paid by the shareholders for the shares they hold. It is an important indicator of the financial strength and stability of a company.
6. Utilization: The paid-up share capital can be utilized by the company for various purposes such as business expansion, investment in assets, repayment of debts, and meeting working capital requirements.
In conclusion, the minimum paid-up share capital in case of a public company is 5 Lakhs. This requirement ensures that the company has a sufficient financial base to operate and meet its obligations to the shareholders and other stakeholders.

ANSWER b)

The Securities and Exchange Commission (SEC) in the United States as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The policy is intended to encourage employees to report any suspected violations of securities laws or other unlawful activities within their organization without fear of retaliation. The policy also provides protection and incentives for whistleblowers who provide information that leads to successful enforcement actions by the SEC.

False Statement: Directors are always liable for any misstatement in a prospectus.

Explanation:

Board of Directors:

- A meeting of the Board of Directors must be held at least once in every 3 months. This is stated in Section 173 of the Companies Act, 2013.

Appointment of Directors:

- Any corporate, association, or firm can be appointed as a director of a company. This is stated in Section 149 of the Companies Act, 2013.

Qualification Shares:

- The nominal value of qualification shares should not exceed Rs. 1,00,000. This is stated in Rule 4 of the Companies (Share Capital and Debentures) Rules, 2014.

Liability of Directors:

- Directors are liable for any misstatement in a prospectus. However, this liability is not absolute. Section 34 of the Companies Act, 2013 states that a director shall be liable only if he had knowledge of the misstatement or if he had acted with the intention to deceive the shareholders.

Therefore, the false statement is option D, as the liability of directors for misstatement in a prospectus is not absolute, but depends on the level of knowledge and intention of the director.

The minimum number of members in a private company is 2.
Explanation:
In order to understand the minimum number of members required in a private company, we need to refer to the Companies Act, 2013 in India. According to Section 2(68) of the Companies Act, a private company is defined as a company which has a minimum paid-up share capital of one lakh rupees or such higher amount as may be prescribed and which by its articles:
- Restricts the right to transfer its shares
- Limits the number of its members to two hundred
- Prohibits any invitation to the public to subscribe for any securities of the company
Based on this definition, the minimum number of members required for a private company is 2. This means that a private company can be formed with a minimum of two individuals as its members.
To summarize:
- The Companies Act, 2013 defines a private company as a company that restricts the right to transfer its shares, limits the number of its members to two hundred, and prohibits any invitation to the public to subscribe for any securities of the company.
- The minimum number of members required for a private company is 2.

Minimum number of members in case of public company:
- According to the Companies Act, 2013, a public company must have a minimum number of members. The minimum number of members required is 7.
- This means that a public company cannot be formed or incorporated with less than 7 members.
- The Companies Act also specifies that in the case of a public company, there is no maximum limit on the number of members.
- The minimum number of members is necessary to ensure that the company has a sufficient number of shareholders to share the ownership and responsibilities of the company.
- The requirement of a minimum number of members in a public company is intended to ensure that there is adequate representation and diversity of interests among the shareholders.
- The minimum number of members also provides a level of protection for the shareholders by ensuring that decisions are made collectively and not by a single individual.
- It is important for a public company to have a minimum number of members to maintain transparency, accountability, and proper governance.
- The requirement of a minimum number of members may vary in different jurisdictions, so it is essential to consult the relevant laws and regulations in the specific country or region.

Property of the Company Belongs to the Company

Explanation:
When a company is formed, it becomes a separate legal entity that is distinct from its owners, shareholders, members, and promoters. The company has its own identity, assets, liabilities, and rights. Therefore, the property of the company belongs to the company itself and not to its owners.

Reasons why the property of the company belongs to the company:

1. Separate Legal Entity: A company is a separate legal entity under the law. It is capable of owning assets, incurring liabilities, and entering into contracts in its own name. Therefore, the property of the company belongs to the company itself.

2. Limited Liability: One of the main advantages of forming a company is that the liability of its owners is limited to their investment in the company. This means that the shareholders are not personally liable for the debts of the company. Therefore, the property of the company belongs to the company and not to its shareholders.

3. Transferability of Shares: In a company, ownership is represented by shares. The shareholders can buy or sell their shares without affecting the ownership or control of the company. Therefore, the property of the company belongs to the company and not to its shareholders.

Conclusion:

In conclusion, the property of the company belongs to the company itself and not to its owners, shareholders, members, or promoters. The company is a separate legal entity under the law, and it has its own identity, assets, liabilities, and rights. Therefore, the company can own, manage, and dispose of its property as per its own discretion.

Age limit of Directors in case of private company

There is no age limit prescribed for Directors in case of private company. Any person, regardless of their age, can become a Director of a private company if they meet the eligibility criteria.

Eligibility criteria for Directors in private company

The Companies Act, 2013 lays down certain eligibility criteria for Directors in private company, which include:

1. Minimum age - A person must be at least 18 years old to become a Director of a private company.

2. Director Identification Number (DIN) - Every Director must have a DIN, which is a unique identification number allotted by the Ministry of Corporate Affairs (MCA).

3. Consent and disclosure - Before becoming a Director, a person must give their consent and also disclose their interest in other companies, firms, or businesses.

4. Disqualification - A person may be disqualified from becoming a Director if they have been convicted of certain offences, declared insolvent, or are of unsound mind.

Conclusion

In conclusion, there is no age limit for Directors in case of private company. However, they must meet the eligibility criteria laid down by the Companies Act, 2013.

Minimum Paid-Up Share Capital in a Private Company

The minimum paid-up share capital in case of a private company is 1 Lakh. Let us understand this in detail.

Definition of Paid-Up Share Capital

Paid-up share capital refers to the amount of money that a company has received from its shareholders in exchange for the shares they have issued. It is the actual amount of money that the company has received from its shareholders, and it is different from the authorized share capital, which is the maximum amount of share capital that a company is authorized to issue.

Minimum Paid-Up Share Capital in a Private Company

Under the Companies Act, 2013, the minimum paid-up share capital for a private company is 1 Lakh. This means that a private company needs to have a minimum of 1 Lakh rupees as its paid-up share capital at the time of incorporation.

This requirement was introduced to ensure that companies have a minimum amount of capital to carry out their business operations. However, it is important to note that the paid-up share capital requirement is only a minimum requirement, and companies can have a higher paid-up share capital if they choose to.

Consequences of Not Meeting the Paid-Up Share Capital Requirement

If a private company does not meet the minimum paid-up share capital requirement, it may face penalties and legal consequences. The Registrar of Companies (ROC) may also reject the company's application for incorporation if it does not meet the requirement.

Conclusion

In conclusion, the minimum paid-up share capital in case of a private company is 1 Lakh. Private companies need to ensure that they meet this requirement at the time of incorporation to avoid penalties and legal consequences.

The correct answer is option 'C': 3.

Public companies are required to have a minimum number of directors to ensure effective governance and decision-making. These directors are responsible for overseeing the company's operations and making important decisions on behalf of the shareholders.

Here are the reasons why the minimum number of directors in case of a public company is 3:

1. Legal Requirement:
- The Companies Act, 2013 in India mandates that a public company must have a minimum of three directors.
- Section 149(1) of the Act states that every public company shall have a minimum number of three directors.

2. Distribution of Responsibilities:
- Having at least three directors allows for the distribution of responsibilities and decision-making among a group of individuals.
- This ensures that no single director has excessive control or influence over the company's affairs.

3. Independent Directors:
- The Act requires that at least one-third of the total directors be independent directors.
- Independent directors are individuals who are not related to the company and do not have any material or pecuniary relationship with the company.
- They bring objectivity and independent judgment to the board's decision-making process.
- Having a minimum of three directors allows for the inclusion of independent directors in the board.

4. Board Committees:
- Public companies often have various board committees such as audit committee, nomination and remuneration committee, etc.
- These committees require a certain number of directors to be formed effectively.
- With a minimum of three directors, these committees can be constituted and function efficiently.

5. Quorum for Board Meetings:
- Quorum refers to the minimum number of directors required to be present at a board meeting for it to be valid and have the power to make decisions.
- The Act specifies that the quorum for a board meeting of a public company shall be one-third of the total strength of the board or two directors, whichever is higher.
- With a minimum of three directors, the quorum requirement can be met even if one director is absent.

In conclusion, the minimum number of directors in case of a public company is three. This requirement ensures proper governance, distribution of responsibilities, inclusion of independent directors, formation of board committees, and fulfillment of quorum requirements.

Age Limit of Directors in Case of Public Company

Introduction:
A public company is a company that offers its securities to the public, typically through an initial public offering (IPO). The directors of a public company are responsible for managing the affairs of the company. However, there are certain restrictions on the age limit of the directors of a public company.

Age Limit of Directors:
The Companies Act, 2013, does not specify any age limit for the directors of a public company. However, the Securities and Exchange Board of India (SEBI) has prescribed an age limit for the directors of a listed company.

SEBI has mandated that the age limit for independent directors of a listed company should be 70 years. However, if the shareholders of the company pass a special resolution, the age limit can be extended up to 75 years.

SEBI has also mandated that the age limit for executive directors of a listed company should be 65 years. However, if the shareholders of the company pass a special resolution, the age limit can be extended up to 70 years.

Conclusion:
In conclusion, the age limit for directors of a public company varies depending on whether the company is listed or unlisted. In the case of a listed company, SEBI has prescribed an age limit for independent and executive directors. However, the Companies Act, 2013, does not specify any age limit for the directors of a public company.