Level 1: CA Final Law – Part I – Sec A – Chapter 1 – Appointment and Qualifications of Directors MCQs – Set II

A director to be appointed as Independent Director, has or had no pecuniary relation (other than remuneration) > 10% of his total income or amount prescribed by CG with the Company or its Holding, Subsidiary, Associate Co., promoter or director:

Mr. X, son of Mr. A (Promoter of Associate Company PQR) Ltd seeks to be appointed as Independent Director of LMN Pvt. Ltd. Can he be so appointed?

Mr. R has a pecuniary relationship with PQR Ltd. to the tune of Rs. 2 Lacs (Including remuneration of Rs. 1 lac). His total income is 10 Lacs. Can he be appointed as an Independent Director of XYZ Ltd. (Subsidiary of PQR Ltd.)

Ms. K is a relative of Mr. M and PQR Ltd. is the subsidiary Company of ABC Ltd. Mr. M has given a guarantee to the Director of ABC Ltd. Can Ms. K be appointed as an Independent Director?

Ms. K is a relative of Mr. M. PQR Ltd. is the subsidiary Company of ABC Ltd. Mr.M had given a guarantee to the Promoter of ABC Ltd on 20th Dec 2020. Can Ms.K be appointed as an Independent Director on 21st Dec 2022?

H Ltd. seeks to appoint Mr. R as Independent Director. Mr. S brother of Mr. R is a deemed Director of a Section 8 Company which holds 6% of the voting power of H Ltd. Can Mr. R be so appointed?

Casual Vacancy of an Independent director shall be filled by ___

H Ltd. appointed Mr. R as Small shareholder’s Director. Mr. S brother of Mr. R, Director of a Section 8 Company receives 32% of its receipts from H Ltd. Can Mr. R continue as a Small shareholder’s Director?

Mr. X, ID of K Ltd. was already in receipt of remuneration and reimbursement of expense. The Company is proposing to pay profit related commission and offer stock option of shares to incentivize him for his excellent contribution in the year. Is the proposal valid?

Mr. S was appointed as a small shareholder’s director of XYZ Limited, which is in the business of Oil refining. Subsequently, A Limited and B Limited have also appointed him as small shareholder’s director. A is engaged in the manufacture of stationeries whereas B in the business of manufacturing bearings. Are these appointments valid?

Mr. S was appointed as a small shareholder’s director of XYZ Limited, which is in the business of Oil drilling ,refining and marketing. Subsequently, A Limited and B Limited have also appointed him as small shareholder’s director. A is engaged in the business of Oil Refining too whereas B in the business of manufacturing oil rig equipments. Are these appointments valid?

First Directors of a Company shall be appointed in the following manner:
1. based on manner provided in AOA
2. all subscribers to the MOA who are individuals shall be deemed to be directors
3. whose name is mentioned in the AOA
Which of the following is a correct sequence to follow in appointment of First Directors?

Ms. S appointed as First director of Company B Ltd. wishes to know her tenure as First Director.

Ms. S appointed as Additional director of Company B Ltd. wishes to know her tenure as Additional Director.

DFG Ltd. appoints its Directors in GM however they wish to know if any director can be appointed at BOD meeting. Which of the following Director can be in BM?

A and B were appointed as first directors on 8th April, 2021 in Sun Glass Ltd. Thereafter, C, D and E were appointed as directors on 10th July 2021 and F, G and H were also appointed as directors on 11th August 2021 in the company. In the next AGM of the company, A and B were proposed to be retired by rotation and re-appointed as directors. Is the proposal for retirement by rotation and re-appointment of A and B valid?

Mr. PQR has been appointed as Additional Director on the Board of Meghna Ltd. on 12th January, 2022.Mr. PQR has filed his consent to Act as a Director only with the company. Is the appointment valid

Company XYZ Ltd. seeks to appoint an Additional Director on account of increase in work load. Which of the following ways can be opted for his appointment?

Company XYZ Ltd. seeks to appoint an Alternate Director . Which of the following ways can be opted for his appointment?

R Ltd. a Listed Company, in its AOA empowers the Board of Directors to appoint Additional Director. The Board of Directors, therefore, appoints Mr. R as the additional director. It was noticed that the proposal to appoint Mr. R as a director on the Company’s Board was rejected by the members at the company’s AGM just before his eventual appointment by BOD as Additional Director. Whether Mr. R’s appointment as additional director by the Board of Directors is valid?

AOA of XYZ Ltd. specifies a maximum of 12 directors. There are 12 directors on Board. The Company seeks to appoint Mr. Sinha as Additional Director. Can the same be done?

Board of PQR Ltd. seeks to appoint Mr. L as Alternate Director of Mr. S, an Independent Director. What is the basic requirement?

An alternate director may be appointed for a director during his absence for a period of not less than ___ months from India

Mr. Devendra Kumar has been appointed as an alternate director in place of Mr. Gaurav Jain (i.e. Original Director) in Urban Development Private Limited. Now, company wants to appoint Mr. Devendra Kumar as an alternate director in place of Ms. Shaily Jaiswal.

Mr.A has been convicted by a court of any offence involving moral turpitude for 3months can he be appointed as director.

Mr. Jigar is a director of PQR Ltd., which had accepted deposits from public. The Financial position of PQR Ltd. declined which resulted in failure to repay the deposits. It became due for payment on 10th April, 2021 and such repayment has not been made till 5th May, 2022. Another company JKL Ltd. wants to appoint the said Mr. Jigar as its director at its annual general meeting to be held on 6th August,2022. State the correct statement as to the appointment of Mr. Jigar as a director of JKL Ltd.

Mr. D, a professional architect, had been approached by Newage Builders Limited – a company formed by her distant relatives but with whom she has good rapports – to accept the directorship in the company. However, she could not immediately agree to take the post of director, for she did not possess Director Identification Number (DIN). Accordingly, she applied for the DIN but her application was found to be incomplete and she received an e-mail on 3rd January, 2022 which directed her to rectify the defects by resubmitting the application. Advise Diksha regarding the latest date by which she must resubmit the application after fully rectifying it.

Rati holds 2,500 equity shares of Rs. 10 each (Rs. 5 paid up) in Uranus Glass Limited which is listed on National Stock Exchange as well as Bombay Stock Exchange. In the same company her mother Rachna holds 2,000 equity shares on which Rs. 7 have been paid up. Her brother Ruchir has also been allotted 3,000 equity shares by the Uranus but till date, similar to Rati, he has paid only Rs. 5 as application and allotment money. All the three claim to be small shareholders and want to participate in the process of appointing small shareholders’ directors. Advise them whether they could be categorized as small shareholders.

State which is not a valid situation for the vacation of the office of director amongst the given:
(i) When the directors absents himself from 3 consecutive meetings of Board of Directors held during a period of 12 months
(ii) Director entering into a contract in which he is uninterested
(iii) Order disqualifying him as Director has been made by Court or NCLT
(iv) If he is convicted by a Court of any offence, whether involving moral turpitude or otherwise, and sentenced to imprisonment for not less than 6 months.
(v) If he is convicted by a Court of any offence, whether involving moral turpitude or otherwise, and sentenced to imprisonment for less than 6 months.

The articles need to provide for the appointment of ____ of the total number of the directors in accordance with the principle of proportional representation.

According to Rule4(2)21, following classes of unlisted public companies shall not be required to appoint Independent directors
(a) a joint venture;
(b) a wholly owned subsidiary
(c) subsidiary company
(d) a dormant company as defined under section 455 of the Act.
(e) small company

B’north Motors and Spares Limited, a listed company, has 4500 small shareholders but till date there is no director who can represent them. Accordingly, some of such shareholders have approached the company for appointment of their director on the Board. By choosing the correct option, advise as to minimum how many small shareholders must group together so that they succeed in their objective.

Mr.A’s Relative was a employee in the year 2019-20.Is Mr. A Eligible to be appointed as an independent director for the year 2022-22.

Rati holds 2,500 equity shares of Rs. 10 each (Rs. 5 paid up) in Uranus Glass Limited which is listed on National Stock Exchange as well as Bombay Stock Exchange. In the same company her mother Rachna holds 2,000 equity shares on which Rs. 7 have been paid up. Her brother Ruchir has also been allotted 3,000 equity shares by the Uranus but till date, similar to Rati, he has paid only Rs. 5 as application and
allotment money. All the three claim to be small shareholders and want to participate in the process of appointing small shareholders’ directors. Advise them whether they could be categorized as small shareholders.

What is the effective date of resignation of a director

In case all the directors of a company resign from their offices, or vacate their offices under section 167 who shall appoint the required number of directors who shall hold office till the directors are appointed by the company in general meeting.

Special notice under Section 115 is required to be signed by

Toys Private Limited has 8 directors. Its Board of Directors desires to increase the number of directors from 8 to 16. Advise whether under the provisions of the Companies Act, 2013, the Board can do so.

The Articles of Association of Rajasthan Toys Private Limited provide that the maximum number of Directors in the company shall not exceed 10. Presently, the company has 8 directors. Its Board of Directors desires to increase the number of directors from 8 to 16. Advise whether under the provisions of the Companies Act, 2013, the Board can do so?

The Board of directors of XYZ Ltd. filled up a casual vacancy caused by the death of Mr. P by appointing Mr. C as a director on 3rdApril, 2022 which was subsequently approved by the members in the immediate next general meeting. Unfortunately Mr. C expired on 15th May, 2022 after working about 40 days as a director. The Board now wishes to fill up the casual vacancy by appointing Mrs.C in the forthcoming meeting of the Board. Advise the Board in this regard keeping in view the provisions of the Companies Act, 2013.

State which is not a valid situation for the vacation of the office of director amongst the given:
(i) When the directors absents himself from 3 consecutive meetings of Board of Directors held during a period of 12 months
(ii) Director entering into a contract in which he is uninterested
(iii) Order disqualifying him as Director has been made by Court or NCLT
(iv) If he is convicted by a Court of any offence, whether involving moral turpitude or otherwise, and sentenced to imprisonment for not less than 6 months.

Rachna, Ridhdhi, Ruby and Rakhi are directors in Zippona Tours and Travellers Private Limited whose equity shares are partly paid-up. The company required the shareholders to make payment of Rs. 3 per share (FV Rs. 10 per share) being the final call in respect of shares held by them latest by 30th June, 2022. As director, Ruby held individually 2,00,000 shares and also at the same time held jointly 1,00,000 shares along with her brother Rajesh whose name appeared first in the Register of Members. In respect of 2,00,000 shares held individually by her, Ruby duly made the payment before the last date; however, in respect of joint shareholding of 1,00,000 shares, Rajesh was unable to make payment even though six months also expired from the last day i.e. 30th June, 2022. Advise whether Ruby incurs any disqualification regarding her directorship in the company.

All the three directors of Cygnus Wires Limited generally remain out of India for developing connections and securing business opportunities on behalf of the company. However, the company must strictly follow the legal requirement that at least one of its directors must stay for the specified statutory period in India. To reckon as ‘resident director’ for the financial year 2022-23, advise the company as to which period spent in India by Jennifer shall count towards statutory period.