Corporate and Other Laws (Group I) Model Test Paper - 3 (Questions) - CA Intermediate PDF Download

 Page 1


MODEL TEST PAPER 3 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
Time Allowed – 3 Hours Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II. 
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) 
3. Part II comprises questions which require descriptive type answers. 
PART I – Case Scenario based MCQs (30 Marks) 
Part I is compulsory 
Case Scenario 1  
In the busy city of Nagpur, there is a company “Transfiguration Industries Limited”. 
As the Annual General Meeting (AGM) of the company approached, the Board of 
Directors of Transfiguration Industries Limited gathered to discuss the appointment 
and removal of auditors in accordance with the Companies Act, 2013. 
Mr. Jack, the Chairman of the board, opened the meeting by addressing the 
importance of adhering to the provisions outlined in Sections 139, 140, and 141 of 
the Companies Act, 2013. He emphasized the significance of appointing auditors 
who would uphold integrity and transparency in the company's financial reporting. 
As the discussion ensued, Ms. Sara, a diligent board member, raised a question 
regarding the tenure of auditors. She asked whether there were any restrictions on 
the duration for which an auditor could be appointed. The board referred to Section 
139(2) of the Companies Act, 2013, and informed about maximum period for which 
auditors can be appointed. 
Dr. Patel, a seasoned member of the board, then inquired about the procedure for 
appointing the first auditor of the company. Mr. Jack explained that according to 
Section 139(1) and (6) of the Companies Act, 2013, the first auditor would be 
appointed by the Board of Directors within thirty days from the date of registration 
of the company.  
Amidst the discussion, Mr. CS, the Company Secretary, emphasized the 
importance of obtaining the auditor's written consent and certificate before their 
appointment.  
Finally, Mr. Jack concluded the meeting by reiterating the company's commitment 
to corporate governance and regulatory compliance. He emphasized the role of the 
Audit Committee as outlined in the Companies Act, 2013. 
Answer the following questions in the light of the given facts and the relevant legal 
provisions as per the Companies act, 2013:  
1.  State which is the correct statement as regards the maximum tenure for which 
an individual auditor and an auditor firm can be appointed under the 
Companies Act, 2013? 
(a) Both for five years 
119
Page 2


MODEL TEST PAPER 3 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
Time Allowed – 3 Hours Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II. 
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) 
3. Part II comprises questions which require descriptive type answers. 
PART I – Case Scenario based MCQs (30 Marks) 
Part I is compulsory 
Case Scenario 1  
In the busy city of Nagpur, there is a company “Transfiguration Industries Limited”. 
As the Annual General Meeting (AGM) of the company approached, the Board of 
Directors of Transfiguration Industries Limited gathered to discuss the appointment 
and removal of auditors in accordance with the Companies Act, 2013. 
Mr. Jack, the Chairman of the board, opened the meeting by addressing the 
importance of adhering to the provisions outlined in Sections 139, 140, and 141 of 
the Companies Act, 2013. He emphasized the significance of appointing auditors 
who would uphold integrity and transparency in the company's financial reporting. 
As the discussion ensued, Ms. Sara, a diligent board member, raised a question 
regarding the tenure of auditors. She asked whether there were any restrictions on 
the duration for which an auditor could be appointed. The board referred to Section 
139(2) of the Companies Act, 2013, and informed about maximum period for which 
auditors can be appointed. 
Dr. Patel, a seasoned member of the board, then inquired about the procedure for 
appointing the first auditor of the company. Mr. Jack explained that according to 
Section 139(1) and (6) of the Companies Act, 2013, the first auditor would be 
appointed by the Board of Directors within thirty days from the date of registration 
of the company.  
Amidst the discussion, Mr. CS, the Company Secretary, emphasized the 
importance of obtaining the auditor's written consent and certificate before their 
appointment.  
Finally, Mr. Jack concluded the meeting by reiterating the company's commitment 
to corporate governance and regulatory compliance. He emphasized the role of the 
Audit Committee as outlined in the Companies Act, 2013. 
Answer the following questions in the light of the given facts and the relevant legal 
provisions as per the Companies act, 2013:  
1.  State which is the correct statement as regards the maximum tenure for which 
an individual auditor and an auditor firm can be appointed under the 
Companies Act, 2013? 
(a) Both for five years 
119
(b) Individual auditor for more than one term and an auditor firm for two 
terms  
(c) Individual auditor for one term of five consecutive years and an auditor 
firm for two term of five consecutive years 
(d) Individual auditor for more than two terms and an auditor firm for more 
two terms of five consecutive years   
2.   State on the correctness of the procedure explained for an appointment of the 
first auditor of a company by Mr. Jack? 
(a) Incorrect. Requirement of Act specifies appointment of first auditor is to 
be made by the shareholders in an EGM within ninety days 
(b) Correct. Requirement of Act specifies appointment of first auditor by the 
Board of Directors within 30 days from the date of registration of the 
company 
(c) Incorrect. Requirement of Act specifies appointment of first auditor by 
the Board of Directors within 30 days on the advise of Company 
Secretary 
(d) Incorrect. Requirement of Act specifies appointment of first auditor by 
the Registrar of Companies (ROC) within 15 days 
3.   What is the requirement before appointing an auditor as per Section 139(1) of 
the Companies Act, 2013? 
(a) Auditor's written consent and certificate 
(b) Approval from the Ministry of Corporate Affairs 
(c) Appointment by the Registrar of Companies (ROC) 
(d) Recommendation from the Audit Committee 
4. During the meeting, Ms. Sara asks whether a relative of a director can be 
appointed as the company’s auditor. What does the Companies Act, 2013, 
state with regard to disqualification of auditors in this case? 
(a) Relatives of directors can be appointed as auditors, without any 
restrictions if they are qualified Chartered Accountants. 
(b) Relatives of directors cannot be appointed as auditors under any 
circumstances 
(c) Relatives of directors can be appointed as auditors if their pecuniary 
relationship with the company is below the prescribed threshold 
(d) Relatives of directors can only be appointed with Registrar of Companies 
approval. 
5.  If the Board of Directors of Transfiguration Industries Limited seeks to remove 
an auditor before the expiry of their term, what procedure must be followed as 
per the provisions of the Companies Act, 2013? 
(a)  The Board can remove the auditor by passing a resolution in a board 
meeting. 
120
Page 3


MODEL TEST PAPER 3 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
Time Allowed – 3 Hours Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II. 
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) 
3. Part II comprises questions which require descriptive type answers. 
PART I – Case Scenario based MCQs (30 Marks) 
Part I is compulsory 
Case Scenario 1  
In the busy city of Nagpur, there is a company “Transfiguration Industries Limited”. 
As the Annual General Meeting (AGM) of the company approached, the Board of 
Directors of Transfiguration Industries Limited gathered to discuss the appointment 
and removal of auditors in accordance with the Companies Act, 2013. 
Mr. Jack, the Chairman of the board, opened the meeting by addressing the 
importance of adhering to the provisions outlined in Sections 139, 140, and 141 of 
the Companies Act, 2013. He emphasized the significance of appointing auditors 
who would uphold integrity and transparency in the company's financial reporting. 
As the discussion ensued, Ms. Sara, a diligent board member, raised a question 
regarding the tenure of auditors. She asked whether there were any restrictions on 
the duration for which an auditor could be appointed. The board referred to Section 
139(2) of the Companies Act, 2013, and informed about maximum period for which 
auditors can be appointed. 
Dr. Patel, a seasoned member of the board, then inquired about the procedure for 
appointing the first auditor of the company. Mr. Jack explained that according to 
Section 139(1) and (6) of the Companies Act, 2013, the first auditor would be 
appointed by the Board of Directors within thirty days from the date of registration 
of the company.  
Amidst the discussion, Mr. CS, the Company Secretary, emphasized the 
importance of obtaining the auditor's written consent and certificate before their 
appointment.  
Finally, Mr. Jack concluded the meeting by reiterating the company's commitment 
to corporate governance and regulatory compliance. He emphasized the role of the 
Audit Committee as outlined in the Companies Act, 2013. 
Answer the following questions in the light of the given facts and the relevant legal 
provisions as per the Companies act, 2013:  
1.  State which is the correct statement as regards the maximum tenure for which 
an individual auditor and an auditor firm can be appointed under the 
Companies Act, 2013? 
(a) Both for five years 
119
(b) Individual auditor for more than one term and an auditor firm for two 
terms  
(c) Individual auditor for one term of five consecutive years and an auditor 
firm for two term of five consecutive years 
(d) Individual auditor for more than two terms and an auditor firm for more 
two terms of five consecutive years   
2.   State on the correctness of the procedure explained for an appointment of the 
first auditor of a company by Mr. Jack? 
(a) Incorrect. Requirement of Act specifies appointment of first auditor is to 
be made by the shareholders in an EGM within ninety days 
(b) Correct. Requirement of Act specifies appointment of first auditor by the 
Board of Directors within 30 days from the date of registration of the 
company 
(c) Incorrect. Requirement of Act specifies appointment of first auditor by 
the Board of Directors within 30 days on the advise of Company 
Secretary 
(d) Incorrect. Requirement of Act specifies appointment of first auditor by 
the Registrar of Companies (ROC) within 15 days 
3.   What is the requirement before appointing an auditor as per Section 139(1) of 
the Companies Act, 2013? 
(a) Auditor's written consent and certificate 
(b) Approval from the Ministry of Corporate Affairs 
(c) Appointment by the Registrar of Companies (ROC) 
(d) Recommendation from the Audit Committee 
4. During the meeting, Ms. Sara asks whether a relative of a director can be 
appointed as the company’s auditor. What does the Companies Act, 2013, 
state with regard to disqualification of auditors in this case? 
(a) Relatives of directors can be appointed as auditors, without any 
restrictions if they are qualified Chartered Accountants. 
(b) Relatives of directors cannot be appointed as auditors under any 
circumstances 
(c) Relatives of directors can be appointed as auditors if their pecuniary 
relationship with the company is below the prescribed threshold 
(d) Relatives of directors can only be appointed with Registrar of Companies 
approval. 
5.  If the Board of Directors of Transfiguration Industries Limited seeks to remove 
an auditor before the expiry of their term, what procedure must be followed as 
per the provisions of the Companies Act, 2013? 
(a)  The Board can remove the auditor by passing a resolution in a board 
meeting. 
120
(b)  The Board must obtain prior approval from the Audit Committee and 
inform the Registrar. 
(c)  The company must obtain prior approval from the Central Government 
and pass a special resolution in a general meeting. 
(d)  The Board must notify the Comptroller and Auditor General of India, even 
if Transfiguration Industries Limited is not a Government company. 
Case Scenario 2  
In the heart of Mumbai, two ambitious entrepreneurs, Ram and Preet, decided to 
establish a limited liability partnership (LLP) named "TechGenius LLP" to 
revolutionize the IT industry. As they delved into the legal requirements of forming 
an LLP, they stumbled upon the crucial provision of having designated partners. 
Ram, a tech-savvy enthusiast, and Preet, a seasoned business strategist, 
understood the significance of complying with the regulations to ensure smooth 
operations of their venture. They gathered their legal team to discuss the 
implications of the designated partner requirement under the LLP Act. 
With the assistance of their legal advisor, Ms. Alia, they navigated through the 
provisions of the LLP Act, particularly focusing on Sections 7 and 9, which outlined 
the obligations and penalties related to designated partners. 
As they embarked on their journey to establish TechGenius LLP, they encountered 
various challenges and decisions regarding the appointment and responsibilities of 
designated partners.  
Answer the following MCQs (6-8) in the light of the Limited Liability Partnership Act, 
2008 
6.  Ram and Preet want to ensure compliance with the LLP Act regarding the 
number of designated partners. As per the Act what is the minimum 
requirement for designated partners that an LLP must have? 
(a)  Maximum One 
(b)  At least Two 
(c)  At least Five 
(d)  No mandatory requirement 
7.  What is the meaning of "resident in India" as per the LLP Act? 
(a) A person owning property in India 
(b) A person holding citizenship of India 
(c) A person who has stayed in India for a minimum of one hundred twenty 
days during the financial year 
(d) A person who has permanent residence in India 
8. Suppose if Ram is declared insolvent during his tenure as a designated 
partner, what will happen under the LLP Act?  
(a) Ram can continue as a designated partner until the LLP appoints a 
replacement.  
121
Page 4


MODEL TEST PAPER 3 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
Time Allowed – 3 Hours Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II. 
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) 
3. Part II comprises questions which require descriptive type answers. 
PART I – Case Scenario based MCQs (30 Marks) 
Part I is compulsory 
Case Scenario 1  
In the busy city of Nagpur, there is a company “Transfiguration Industries Limited”. 
As the Annual General Meeting (AGM) of the company approached, the Board of 
Directors of Transfiguration Industries Limited gathered to discuss the appointment 
and removal of auditors in accordance with the Companies Act, 2013. 
Mr. Jack, the Chairman of the board, opened the meeting by addressing the 
importance of adhering to the provisions outlined in Sections 139, 140, and 141 of 
the Companies Act, 2013. He emphasized the significance of appointing auditors 
who would uphold integrity and transparency in the company's financial reporting. 
As the discussion ensued, Ms. Sara, a diligent board member, raised a question 
regarding the tenure of auditors. She asked whether there were any restrictions on 
the duration for which an auditor could be appointed. The board referred to Section 
139(2) of the Companies Act, 2013, and informed about maximum period for which 
auditors can be appointed. 
Dr. Patel, a seasoned member of the board, then inquired about the procedure for 
appointing the first auditor of the company. Mr. Jack explained that according to 
Section 139(1) and (6) of the Companies Act, 2013, the first auditor would be 
appointed by the Board of Directors within thirty days from the date of registration 
of the company.  
Amidst the discussion, Mr. CS, the Company Secretary, emphasized the 
importance of obtaining the auditor's written consent and certificate before their 
appointment.  
Finally, Mr. Jack concluded the meeting by reiterating the company's commitment 
to corporate governance and regulatory compliance. He emphasized the role of the 
Audit Committee as outlined in the Companies Act, 2013. 
Answer the following questions in the light of the given facts and the relevant legal 
provisions as per the Companies act, 2013:  
1.  State which is the correct statement as regards the maximum tenure for which 
an individual auditor and an auditor firm can be appointed under the 
Companies Act, 2013? 
(a) Both for five years 
119
(b) Individual auditor for more than one term and an auditor firm for two 
terms  
(c) Individual auditor for one term of five consecutive years and an auditor 
firm for two term of five consecutive years 
(d) Individual auditor for more than two terms and an auditor firm for more 
two terms of five consecutive years   
2.   State on the correctness of the procedure explained for an appointment of the 
first auditor of a company by Mr. Jack? 
(a) Incorrect. Requirement of Act specifies appointment of first auditor is to 
be made by the shareholders in an EGM within ninety days 
(b) Correct. Requirement of Act specifies appointment of first auditor by the 
Board of Directors within 30 days from the date of registration of the 
company 
(c) Incorrect. Requirement of Act specifies appointment of first auditor by 
the Board of Directors within 30 days on the advise of Company 
Secretary 
(d) Incorrect. Requirement of Act specifies appointment of first auditor by 
the Registrar of Companies (ROC) within 15 days 
3.   What is the requirement before appointing an auditor as per Section 139(1) of 
the Companies Act, 2013? 
(a) Auditor's written consent and certificate 
(b) Approval from the Ministry of Corporate Affairs 
(c) Appointment by the Registrar of Companies (ROC) 
(d) Recommendation from the Audit Committee 
4. During the meeting, Ms. Sara asks whether a relative of a director can be 
appointed as the company’s auditor. What does the Companies Act, 2013, 
state with regard to disqualification of auditors in this case? 
(a) Relatives of directors can be appointed as auditors, without any 
restrictions if they are qualified Chartered Accountants. 
(b) Relatives of directors cannot be appointed as auditors under any 
circumstances 
(c) Relatives of directors can be appointed as auditors if their pecuniary 
relationship with the company is below the prescribed threshold 
(d) Relatives of directors can only be appointed with Registrar of Companies 
approval. 
5.  If the Board of Directors of Transfiguration Industries Limited seeks to remove 
an auditor before the expiry of their term, what procedure must be followed as 
per the provisions of the Companies Act, 2013? 
(a)  The Board can remove the auditor by passing a resolution in a board 
meeting. 
120
(b)  The Board must obtain prior approval from the Audit Committee and 
inform the Registrar. 
(c)  The company must obtain prior approval from the Central Government 
and pass a special resolution in a general meeting. 
(d)  The Board must notify the Comptroller and Auditor General of India, even 
if Transfiguration Industries Limited is not a Government company. 
Case Scenario 2  
In the heart of Mumbai, two ambitious entrepreneurs, Ram and Preet, decided to 
establish a limited liability partnership (LLP) named "TechGenius LLP" to 
revolutionize the IT industry. As they delved into the legal requirements of forming 
an LLP, they stumbled upon the crucial provision of having designated partners. 
Ram, a tech-savvy enthusiast, and Preet, a seasoned business strategist, 
understood the significance of complying with the regulations to ensure smooth 
operations of their venture. They gathered their legal team to discuss the 
implications of the designated partner requirement under the LLP Act. 
With the assistance of their legal advisor, Ms. Alia, they navigated through the 
provisions of the LLP Act, particularly focusing on Sections 7 and 9, which outlined 
the obligations and penalties related to designated partners. 
As they embarked on their journey to establish TechGenius LLP, they encountered 
various challenges and decisions regarding the appointment and responsibilities of 
designated partners.  
Answer the following MCQs (6-8) in the light of the Limited Liability Partnership Act, 
2008 
6.  Ram and Preet want to ensure compliance with the LLP Act regarding the 
number of designated partners. As per the Act what is the minimum 
requirement for designated partners that an LLP must have? 
(a)  Maximum One 
(b)  At least Two 
(c)  At least Five 
(d)  No mandatory requirement 
7.  What is the meaning of "resident in India" as per the LLP Act? 
(a) A person owning property in India 
(b) A person holding citizenship of India 
(c) A person who has stayed in India for a minimum of one hundred twenty 
days during the financial year 
(d) A person who has permanent residence in India 
8. Suppose if Ram is declared insolvent during his tenure as a designated 
partner, what will happen under the LLP Act?  
(a) Ram can continue as a designated partner until the LLP appoints a 
replacement.  
121
(b) Ram is immediately disqualified from being a designated partner.  
(c) Ram’s status as a designated partner must be reviewed by the LLP and 
till then he can continue as a partner in the LLP. 
(d) The LLP must notify the Registrar, but Ram can continue in his role.  
Case Scenario 3  
XYZ Limited was required to file an appeal with the National Company Law Tribunal 
(NCLT) under a statutory regulation that prescribed a filing deadline of October 2, 
2025. However, as October 2 was a public holiday, the company’s legal counsel 
did not file the appeal on that day, unaware of the legal provisions concerning 
deadlines falling on holidays. The office reopened on October 3, 2025, and the legal 
counsel filed the appeal on the same day. 
In a separate matter, XYZ Limited was involved in a property dispute where it 
needed to measure the distance between two boundary points for evidence 
submission. The applicable Regulation, governed by a Central Act enacted after 
1950, required distances to be measured on a straight line along a horizontal plane 
unless otherwise specified. However, the company measured the distance by 
tracing the natural curvature of the land instead of adhering to the prescribed 
method. 
Answer the following MCQs (9-11) in the light of the General Clauses Act, 1897. 
9.  According to the provisions of the General Clauses Act, 1897, was the filing 
of XYZ Limited's appeal on October 3, 2025, considered valid?  
(a) Yes, because the office was closed on October 2, 2025, and filing on the 
next open day is valid. 
(b) No, because the deadline was October 2, 2025, and it was not adhered 
to. 
(c) Yes, but only if the Tribunal provided an extension. 
(d) No, because the legal counsel failed to check whether holidays impact 
the deadline. 
10.   In the property dispute involving XYZ Limited, was the method of measuring 
the distance valid? 
(a) Yes, because it followed the natural curvature of the land. 
(b) No, because distances under Central Acts must be measured in a 
straight line on a horizontal plane unless specified otherwise. 
(c) Yes, if the parties mutually agreed to the method. 
(d) No, because measuring methods are irrelevant to the dispute. 
11.  If the Regulation explicitly required "measurement by natural terrain," would 
XYZ Private Limited's method of measuring the distance along the land’s 
natural curvature be valid? 
(a) Yes, because the specific regulation would take precedence over the 
general rule. 
122
Page 5


MODEL TEST PAPER 3 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
Time Allowed – 3 Hours Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II. 
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) 
3. Part II comprises questions which require descriptive type answers. 
PART I – Case Scenario based MCQs (30 Marks) 
Part I is compulsory 
Case Scenario 1  
In the busy city of Nagpur, there is a company “Transfiguration Industries Limited”. 
As the Annual General Meeting (AGM) of the company approached, the Board of 
Directors of Transfiguration Industries Limited gathered to discuss the appointment 
and removal of auditors in accordance with the Companies Act, 2013. 
Mr. Jack, the Chairman of the board, opened the meeting by addressing the 
importance of adhering to the provisions outlined in Sections 139, 140, and 141 of 
the Companies Act, 2013. He emphasized the significance of appointing auditors 
who would uphold integrity and transparency in the company's financial reporting. 
As the discussion ensued, Ms. Sara, a diligent board member, raised a question 
regarding the tenure of auditors. She asked whether there were any restrictions on 
the duration for which an auditor could be appointed. The board referred to Section 
139(2) of the Companies Act, 2013, and informed about maximum period for which 
auditors can be appointed. 
Dr. Patel, a seasoned member of the board, then inquired about the procedure for 
appointing the first auditor of the company. Mr. Jack explained that according to 
Section 139(1) and (6) of the Companies Act, 2013, the first auditor would be 
appointed by the Board of Directors within thirty days from the date of registration 
of the company.  
Amidst the discussion, Mr. CS, the Company Secretary, emphasized the 
importance of obtaining the auditor's written consent and certificate before their 
appointment.  
Finally, Mr. Jack concluded the meeting by reiterating the company's commitment 
to corporate governance and regulatory compliance. He emphasized the role of the 
Audit Committee as outlined in the Companies Act, 2013. 
Answer the following questions in the light of the given facts and the relevant legal 
provisions as per the Companies act, 2013:  
1.  State which is the correct statement as regards the maximum tenure for which 
an individual auditor and an auditor firm can be appointed under the 
Companies Act, 2013? 
(a) Both for five years 
119
(b) Individual auditor for more than one term and an auditor firm for two 
terms  
(c) Individual auditor for one term of five consecutive years and an auditor 
firm for two term of five consecutive years 
(d) Individual auditor for more than two terms and an auditor firm for more 
two terms of five consecutive years   
2.   State on the correctness of the procedure explained for an appointment of the 
first auditor of a company by Mr. Jack? 
(a) Incorrect. Requirement of Act specifies appointment of first auditor is to 
be made by the shareholders in an EGM within ninety days 
(b) Correct. Requirement of Act specifies appointment of first auditor by the 
Board of Directors within 30 days from the date of registration of the 
company 
(c) Incorrect. Requirement of Act specifies appointment of first auditor by 
the Board of Directors within 30 days on the advise of Company 
Secretary 
(d) Incorrect. Requirement of Act specifies appointment of first auditor by 
the Registrar of Companies (ROC) within 15 days 
3.   What is the requirement before appointing an auditor as per Section 139(1) of 
the Companies Act, 2013? 
(a) Auditor's written consent and certificate 
(b) Approval from the Ministry of Corporate Affairs 
(c) Appointment by the Registrar of Companies (ROC) 
(d) Recommendation from the Audit Committee 
4. During the meeting, Ms. Sara asks whether a relative of a director can be 
appointed as the company’s auditor. What does the Companies Act, 2013, 
state with regard to disqualification of auditors in this case? 
(a) Relatives of directors can be appointed as auditors, without any 
restrictions if they are qualified Chartered Accountants. 
(b) Relatives of directors cannot be appointed as auditors under any 
circumstances 
(c) Relatives of directors can be appointed as auditors if their pecuniary 
relationship with the company is below the prescribed threshold 
(d) Relatives of directors can only be appointed with Registrar of Companies 
approval. 
5.  If the Board of Directors of Transfiguration Industries Limited seeks to remove 
an auditor before the expiry of their term, what procedure must be followed as 
per the provisions of the Companies Act, 2013? 
(a)  The Board can remove the auditor by passing a resolution in a board 
meeting. 
120
(b)  The Board must obtain prior approval from the Audit Committee and 
inform the Registrar. 
(c)  The company must obtain prior approval from the Central Government 
and pass a special resolution in a general meeting. 
(d)  The Board must notify the Comptroller and Auditor General of India, even 
if Transfiguration Industries Limited is not a Government company. 
Case Scenario 2  
In the heart of Mumbai, two ambitious entrepreneurs, Ram and Preet, decided to 
establish a limited liability partnership (LLP) named "TechGenius LLP" to 
revolutionize the IT industry. As they delved into the legal requirements of forming 
an LLP, they stumbled upon the crucial provision of having designated partners. 
Ram, a tech-savvy enthusiast, and Preet, a seasoned business strategist, 
understood the significance of complying with the regulations to ensure smooth 
operations of their venture. They gathered their legal team to discuss the 
implications of the designated partner requirement under the LLP Act. 
With the assistance of their legal advisor, Ms. Alia, they navigated through the 
provisions of the LLP Act, particularly focusing on Sections 7 and 9, which outlined 
the obligations and penalties related to designated partners. 
As they embarked on their journey to establish TechGenius LLP, they encountered 
various challenges and decisions regarding the appointment and responsibilities of 
designated partners.  
Answer the following MCQs (6-8) in the light of the Limited Liability Partnership Act, 
2008 
6.  Ram and Preet want to ensure compliance with the LLP Act regarding the 
number of designated partners. As per the Act what is the minimum 
requirement for designated partners that an LLP must have? 
(a)  Maximum One 
(b)  At least Two 
(c)  At least Five 
(d)  No mandatory requirement 
7.  What is the meaning of "resident in India" as per the LLP Act? 
(a) A person owning property in India 
(b) A person holding citizenship of India 
(c) A person who has stayed in India for a minimum of one hundred twenty 
days during the financial year 
(d) A person who has permanent residence in India 
8. Suppose if Ram is declared insolvent during his tenure as a designated 
partner, what will happen under the LLP Act?  
(a) Ram can continue as a designated partner until the LLP appoints a 
replacement.  
121
(b) Ram is immediately disqualified from being a designated partner.  
(c) Ram’s status as a designated partner must be reviewed by the LLP and 
till then he can continue as a partner in the LLP. 
(d) The LLP must notify the Registrar, but Ram can continue in his role.  
Case Scenario 3  
XYZ Limited was required to file an appeal with the National Company Law Tribunal 
(NCLT) under a statutory regulation that prescribed a filing deadline of October 2, 
2025. However, as October 2 was a public holiday, the company’s legal counsel 
did not file the appeal on that day, unaware of the legal provisions concerning 
deadlines falling on holidays. The office reopened on October 3, 2025, and the legal 
counsel filed the appeal on the same day. 
In a separate matter, XYZ Limited was involved in a property dispute where it 
needed to measure the distance between two boundary points for evidence 
submission. The applicable Regulation, governed by a Central Act enacted after 
1950, required distances to be measured on a straight line along a horizontal plane 
unless otherwise specified. However, the company measured the distance by 
tracing the natural curvature of the land instead of adhering to the prescribed 
method. 
Answer the following MCQs (9-11) in the light of the General Clauses Act, 1897. 
9.  According to the provisions of the General Clauses Act, 1897, was the filing 
of XYZ Limited's appeal on October 3, 2025, considered valid?  
(a) Yes, because the office was closed on October 2, 2025, and filing on the 
next open day is valid. 
(b) No, because the deadline was October 2, 2025, and it was not adhered 
to. 
(c) Yes, but only if the Tribunal provided an extension. 
(d) No, because the legal counsel failed to check whether holidays impact 
the deadline. 
10.   In the property dispute involving XYZ Limited, was the method of measuring 
the distance valid? 
(a) Yes, because it followed the natural curvature of the land. 
(b) No, because distances under Central Acts must be measured in a 
straight line on a horizontal plane unless specified otherwise. 
(c) Yes, if the parties mutually agreed to the method. 
(d) No, because measuring methods are irrelevant to the dispute. 
11.  If the Regulation explicitly required "measurement by natural terrain," would 
XYZ Private Limited's method of measuring the distance along the land’s 
natural curvature be valid? 
(a) Yes, because the specific regulation would take precedence over the 
general rule. 
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(b) No, because Central Acts universally mandate straight-line
measurement on a horizontal plane.
(c) Yes, provided the specific regulation was enacted only by a State
Legislature.
(d) Yes, provided the specific regulation was approved by a Court.
12. “Associate company”, in relation to another company, means a company in
which that other company has a significant influence, but which is not
a subsidiary company of the company having such influence and includes
a joint venture company. Here, the words ‘significant influence’ means:
(a) Control of at least 10% of total voting power
(b) Control of at least 15% of total voting power
(c) Control of at least 20% of total voting power
(d) Control of at least 25% of total voting power (2 Marks) 
13. Indus Labs Limited and Magica Biotec Limited issued preference shares with 
distinct dividend payment structures. Indus Pharma Labs Limited stipulates 
that the preferential dividend may be an amount, such as ? 5,00,000 in one 
year, payable to preference shareholders before any payments are made to 
ordinary shareholders. In contrast, Magica Biotec Limited specifies that the 
amount payable as a preferential dividend is calculated at a rate of 8 
percent of the nominal value of each share.
How do Indus Labs Limited and Magica Biotec Limited differ in their payment 
of preferential dividends? Is it the valid mode of payment of dividend 
under the Companies Act, 2013.
(a) Indus Labs pays dividends at a fixed rate, while Magica Biotec pays a 
fixed amount. Yes, it’s a valid mode of payment of dividend
(b) Indus Labs pays a fixed amount as dividends, while Magica Biotec pays 
dividends at a fixed rate. Yes, it’s a valid mode of payment of dividend
(c) Both companies pay dividends at a fixed rate. No, it’s not a valid mode 
of payment of dividend
(d) Both companies pay a fixed amount as dividends. Yes, it’s a valid mode 
of payment of dividend (2 Marks)
14. TechWise Ltd., an Indian company, wishes to make a donation of USD 36,000 
for the creation of a Chair in a reputed educational institute located 
abroad. The company's foreign exchange earnings during the previous three 
financial years amount to USD 3,500,000. What action should 
TechWise Ltd. take regarding this donation under the Foreign 
Exchange Management Act (FEMA), 1999?
(a) TechWise Ltd. can proceed with the donation without seeking prior 
approval.
(b) TechWise Ltd. should seek prior approval from the Reserve Bank 
of India before making the donation.
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