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

Mr. Roop was appointed as an Additional Director of XYZ Limited in July, 2022. Immediately after his appointment, on behalf of the Company he entered into an agreement with NY Private Limited for supplies of raw material. In the ensuing meeting, he was regularized as a Director. He signed Contract with Laxmi vendors. At the end of the December 2022, management came to know that his appointment was not valid
as he was disqualified to act as a Director of any Company. He signed one more agreement in January 2023 with Saraswati vendors. In such scenario, what will be the status of contract/agreements he signed on behalf of XYZ Limited?

In compliance to the Companies Act, 2013, at least one woman Director shall be on Board of such class or classes of companies as may be prescribed. Ms. Riya is keen to hold the office of woman Director in a company. She has selected some companies in which there is a vacancy for the woman Director. Advice Ms. Riya in selecting the companies which are mandatorily required to appoint a woman Director:

KDS Agro Pvt. Ltd., a newly incorporated company has not mentioned the names of first Directors of the company in its Articles of Association. Referring the provisions of the Companies Act, 2013, who shall be deemed to be the first Directors of the company?

Which company is exempted from passing special resolution for appointment of more than fifteen directors.

In case the name of a person who is applying for DIN does not have a last name, then his or her father’s or grandfather’s surname shall be mentioned in the last name along with the declaration in which Form?

According to Section 156, every existing director shall, within how many months of the receipt of DIN from the Central Government, intimate his DIN to the company or all the companies wherein he is a director.

According to Section 157(2), if any company fails to furnish the DIN to Registrar, it shall be liable to a penalty of

If a company has eight directors, of which six were appointed according to the principle of proportional representation. In such a case___ can be removed by the shareholders.

Section 164 prescribes disqualifications which get attached to a person if he is or has been a director of a company which has committed default in

Identify the incorrect condition given under Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014 for appointment of independent director.

Which of the persons are required to pass online proficiency self assessment test

Which of the persons are not required to pass online proficiency self assessment test

Can Minor become director.

Total Number of directors for the purpose of Rotation of directors includes

Deposit of Rs. 100000 under section 160 is required in case of

Mr. ‘R’ holds directorship in 10 Public Companies and 11 Private Companies as on 31.05.2022. One of the above Private Company is a dormant Company. Apart from the dormant Company, on 30.06.2022 a Private Company (in which Mr. R is holding directorship) has become a subsidiary of a Public Company.

WRPC Limited (WRPC) is a Mumbai-based company, in which the Central Government holds 35% of share capital while the Governments of Maharashtra and Karnataka hold 15% and 10% of share capital respectively. WRPC manufactures corrosion resistant overhead transmission and distribution products.
The internal auditors of the company had raised serious concerns in respect of certain internal control irregularities. During the year 2018-19, WRPC also defaulted in complying with statutory requirements pertaining to filing of its financial statements under Section 137 and Annual Return under Section 92. Consequently, the company received a notice from the Registrar of Companies, Mumbai-Maharashtra, to rectify the default.
The Company was also served Show Cause Notices (SCN) by the Revenue Officials on certain GST and Income-tax related issues.The Board of Directors of WRPC consisted of 14 Directors. Due to the increased volume of business, alleged internal control irregularities and lack of professional skills needed for the statutory compliances, the company felt the necessity of inclusion of some senior professionals on its Board. Accordingly, it was thought of inducting Rajan, a Chartered Accountant and Sanjay, a Company Secretary, as the Executive Directors. Circuit Board Private Limited (CBPL), a Delhi-based company and PISCO Electronics Limited (PISCO Electronics), a Pune-based company, are the two major component suppliers to WRPC. CBPL is a family managed business with fifty-seven shareholders and PISCO Electronics is yet to be a listed company but in near future it intends to get listed.
As per the audited financial statements, the paid-up capital and turnover of CBPL and PISCO Electronics were as under:
Paid-up Capital (Rs. in Crore) Turnover (Rs. in Crore)
(as on 31.03.2019) (as on 31.03.2020) (F.Y. 2018-19)(F.Y. 2019-20)
CBPL 100 100 315 350
PISCO Electronics 50 50 275 305

CBPL had 4 Directors as on 31.03.2019 and 5 as on 31.03.2020. In case of PISCO Electronics, there were 7 Directors as on 31.03.2019 and 6 as on 31.03.2020. However, none of the companies had appointed any woman Director during these two years.
Ajay Prakash is the Chairman and Managing Director (CMD) of CBPL. Considering his old age and other health related issues, he wants to retire from the company. Accordingly, he discussed the matter in a Board Meeting and also proposed to explore the possibilities of appointing his eldest son Pranav Prakash (MBA from FMS, University of Delhi) as the Managing Director of the company for a period of 10 years from 1.1.2021 onwards.
The Board Meetings of PISCO Electronics were convened five times during the calendar year 2019. No Board Meeting was held in January or February 2020 but thereafter, six Board Meetings were held during the remaining part of the calendar year 2020.
Vasuki is one of the executive Directors appointed by the PISCO Electronics. He had taken a loan of Rs. 70 lacs from the company on 1.1.2019 after fulfilling the required formalities. The terms and conditions on which the loan was granted specified that Vasuki shall repay the principal amount in 5 years (i.e. 20 quarterly installments of equal amount) and the interest @9% per annum (to be charged at monthly rests on the reducing balance) shall also be paid as and when due.
However, due to the changed economic scenario during 2020, there was a drastic reduction in the normal borrowing rates. Accordingly, Vasuki requested the company for change in his borrowing terms i.e. to reduce the interest rate to 8% per annum from the existing 9% per annum and to increase the period of repayment from the present 20 installments to 30 installments.

Multiple Choice Questions

From the given case, it is observed that WRPC had 14 Directors but due to increased volume of business, alleged internal control irregularities and professional skills, etc., required for the statutory compliances, the company intended to induct Rajan, a Chartered Accountant and Sanjay, a Company Secretary, as the Executive Directors. Which of the following options is best suited to such a situation:

From the given case, it is noticed that none of the companies had appointed any woman Director though CBPL had 4 Directors as on 31.03.2019 and 5 as on 31.03.2020 and PISCO had 7 Directors as on 31.03.2019 and 6 as on 31.03.2020. Which of the following option is applicable in the given situation:

Which of the following Whole-time Key-Managerial Personnel (KMP), both CBPL and PISCO Electronics are mandatorily required to appoint:

In view of the changed economic scenario in the country, Vasuki, one of the Executive Directors of PISCO Electronics, requested the company for change in his borrowing terms i.e. to reduce the interest rate to 8% per annum from the existing 9% per annum and to increase the period of repayment from the present 20 installments to 30 installments. Which of the following options is applicable in such a situation:

Ajay Prakash, the Chairman and Managing Director of CBPL, desiring to retire due to his old age and health related issues, wants to appoint his eldest son Pranav Prakash as the Managing Director of the CBPL for a period of 10 years from 1.1.2021 onwards. From the following options choose the correct one:

Based at Shivamogga, Karnataka, Lotus Switchgears Limited (LSL) is a noted manufacturer, exporter and supplier of electrical products like Miniature Circuit Breakers (MCBs), Molded Case Circuit Breakers (MCCBs), Residual Current Circuit Breakers (RCCBs), Electric Leakage Circuit Breakers (ELCBs), Solar water Pumping Systems, Wires and Cables, etc. and has a good network of factories and distribution channels. The business grew by leaps and bounds due to the sincere and dedicated efforts of founding Directors, Arjun, Ramakrishnan, Ravi Bhatt, Ramesh and Ripudaman. However, the company is facing some difficult times for the past four years or so. Arjun is the Managing Director while Ramesh and Ripudaman are the Whole-time Directors.
In a quest to overcome the difficulties faced by the company, Raghuram, a visionary, was appointed as the Executive Director at the EGM held on 12th January, 2018.
Shruthi Components Private Limited (SCPL) is one of the subsidiaries of LSL. The Board of Directors of LSL wished to exercise the power to dispose of its whole investment in SCPL. Accordingly, Mahadevan, whole-time Company Secretary of the company was directed to ascertain the procedure for disposing of company’s investment in SCPL.
Following data was extracted from the Audited Financial Statements of LSL for the year ending 31.03.2021:
S. No Description Amount (Rs. in Crore)
1 Paid -up Capital 50
2 General Reserves 54
3 Securities Premium Account 5
4 Accumulated Losses 7
5 Revaluation Reserves created out of revaluation
of assets 30
6 Deferred Revenue Expenditure & Miscellaneous
Expenditure not written off 2
7 Investment in SCPL 25

Based on the above data and considering Section 2 (57)1 of the Companies Act, 2013, Mahadevan calculated the ‘net worth’ of LSL as under:
Particulars Amount (Rs. in Crores)
Paid-up Capital 50
Add: General Reserves 54
Add: Securities Premium Account 5
Less: Accumulated Losses 7
Less: Deferred Revenue Expenditure 2
& Miscellaneous Expenditure not written off
Net Worth 100

In view of the ‘net worth’ of Rs. 100 crore, Mahadevan informed the Board that as per the relevant provisions SCPL was an undertaking of LSL.
Earlier during April, 2020, in the course of normal business, LSL entered into a contract for the continuous supply of some consumables and components with Swastik Supplies Private Limited (SSPL) for a period of 3 years to be renewed with mutual consent thereafter. Ramesh, the Whole-time Director of LSL, was not an interested party at the time of entering into this Supply Contract with SSPL. However, during the second year of the Supply Contract, Rajesh, son of Ramesh, purchased about 30% of the equity shares of SSPL through one of his family owned business entities and also lent Rs. 25 lakh as unsecured loan to SSPL. Ramesh did not inform LSL or the Board of Directors regarding the new developments since he was of the opinion that there was no need for such disclosure. However, the Company Secretary and the Board had their own reservations, after the matter came to their knowledge from a third party. During the statutory audit for the F.Y. 2020-21, while verifying the earlier years’ documents in connection with certain matter, the newly appointed auditors observed that the appointment of Raghuram as an Executive Director was invalid by reason of certain defects and also disqualification. During the month of August, 2021, the statutory auditors discussed the issue of irregular appointment with the Board of Directors of LSL.

The Board apprised the auditors that since his appointment as Executive Director of the company, Raghuram had participated in several Board Meetings and assented to various decisions, which had both pecuniary and operational impact. In addition, the Board had also passed several resolutions during that period. Accordingly, the Board, in one of its meetings, decided by passing a resolution that the wrongfully appointed Director Raghuram shall make good the losses, if any, for the period he remained Executive Director but all the resolutions passed during his period shall be valid and stand good.
One of the investors, Raman had invested substantially in the equity shares of Lotus Switchgears Limited. However, he was quite worried about his investment after going through the latest audited financial statements of 2020-21, for he found that there was continuous downward trend in earning per share (EPS). He was of the opinion that the Directors of LSL have been getting exorbitant remuneration, resulting in lesser profits for the company. Accordingly, he approached the Registered Office of the company at Shivamogga and requested for inspection of the copies of the recent Service Contracts of Arjun, the Managing Director as well as Ramesh and Ripudaman, the Whole-time Directors of the company. He was utterly surprised when he was informed by the official concerned that the Service Contracts with Arjun, Ramesh and Ripudaman were not in writing and therefore, could not be produced for inspection. However, he was also informed that only copies of the written Memorandum setting out the terms and conditions of the service could be provided for inspection. Raman was not convinced and thought it to be a fraudulent practice for which the company and every defaulting officer of the company must be punished. LSL, after complying with the required legal formalities, had made some political contributions and had incurred certain expenses during the financial year 2020-21. The details are as under:
(a) Payment of Rs. 10,00,000 as contributions to LMS party.
(b) Donation of Rs. 2,00,000 for a public function and a dance program of Ravi Shankar, a film star and it can be reasonably presumed that his activities support Janta Welfare Party.
(c) Publication cost of Rs. 1,00,000 incurred for inserting an advertisement in the Souvenir published on behalf of Janta Welfare Party.
(d) Publication of pamphlets costing Rs. 1,00,000 though not meant for any political party but incurred for promoting a candidate for the next state elections.
LSL disclosed in its financial statements Rs. 11,00,000 as political contributions and Rs. 3,00,000 as ‘Advertisement and Business Promotion Expenses’.

Multiple Choice Questions

Raman, who had invested substantially in LSL, was informed that only copies of the written Memorandum setting out the terms and conditions of the service could be provided for inspection as no written Service Contracts with Arjun (Managing Director) as well as Ramesh and Ripudaman (Whole-time Directors) were available. Raman was not convinced and thought it to be a fraudulent practice for which the company and every defaulting officer of the company must be punished. From the following options, choose the most appropriate one:

According to Mahadevan, whole-time Company Secretary, SCPL was an undertaking of LSL. If the Board of Directors of LSL decides to dispose of its investment in SCPL, considering SCPL as an undertaking of LSL, which of the following options shall be applicable:

According to the case scenario, the Board of Directors of LSL stated that since January, 2018 Raghuram had participated in several Board Meetings and assented to various decisions, which had both pecuniary and operational impact. In addition, the Board had passed several resolutions during that period. Accordingly, the Board, in one of its meetings, decided by passing a resolution that the wrongfully appointed Director Raghuram shall make good the losses, if any, over the period he remained Executive Director and all the resolutions passed during his period and assented to by him shall be valid and stand good.

The case scenario states that LSL, after complying with the required legal formalities, made some political contributions and incurred some expenses during the financial year 2019-20. LSL showed in its financial statements Rs. 11,00,000 as political contributions and Rs. 3,00,000 as ‘Advertisement and Business Promotion Expenses’. From the following options choose the correct one:

Lagus Transport Services Limited (LTSL) is operating in the domain of logistics and public transport. The company has pan-India presence. As per its Articles of Association, the company can appoint a maximum of 15 Directors and all of them shall be rotational Directors. Presently, the company has a strength of 14 Directors, of which 9 are executive Directors and the remaining 5 are non-executive Directors. Following information was extracted from the audited financial statements as on 31st March, 2020:
S. No. Particulars Amount (Rs. in Crores)
1. Authorised Share Capital
(15,00,00,000 Equity Shares of Rs. 1 each) 15.00
2. Paid-up Share Capital 8.42
3. Turnover 84.00
4. Outstanding Loans, Debentures and Deposits
(in aggregate) 42.00

In the Annual General Meeting (AGM), held on 20th August, 2020, Anil, Badal, Chanchal and Damodar were appointed as Directors in place of Mohan, Navin, Om and Prasad by passing a single resolution with simple majority. It is to be noted that earlier, a motion authorising the appointment of Anil, Badal, Chanchal and Damodar by a single resolution was passed in the meeting and not a single vote was cast against such motion.
Based on the audited financial statements as on 31st March, 2021, following information emerged:
S. No. Particulars Amount (Rs. in Crores)
1. Authorised Share Capital
(15,00,00,000 Equity Shares of Rs. 1 each) 15.00
2. Paid-up Share Capital 8.42
3. Turnover 120.52
4. Outstanding Loans, Debentures and Deposits
(in aggregate) 40.00

It is noteworthy that due to the increased turnover there arose the requirement of appointing two independent Directors. Since the company was required to appoint two independent Directors, the total strength of the Board with such appointments would go up to 16 Directors from the present 14 whereas according to the Articles, the company can have a maximum of 15 Directors. Accordingly, the Articles were altered and the total strength was increased to 20 Directors. After altering the Articles, the company proceeded to appoint four independent Directors instead of the mandatorily required two since it was felt that such step would strengthen the corporate governance to the maximum extent. The independent Directors were:
(i) Mrs. Eekam, who is considered ‘influencer’ on supply chain management and has a lot of expertise in the logistics field;
(ii) Mrs. Prajna who is a marketing expert;
(iii) Mrs. Ruchita, who is MBA (Finance and Accounting) from IIM, Ahmedabad; and
(iv) Mr. Amit, who is skilled in developing customised software.
Subsequent to the above developments, the time to hold Annual General Meeting (AGM) approached and it was conducted on 12th August, 2021 through video conferencing after complying with applicable provisions
of the Companies Act, 2013 read with General Circular 20/2020, dated 05-05-2020, issued by MCA.

Multiple Choice Questions

In this case scenario, Anil, Badal, Chanchal and Damodar were appointed as Directors by passing a single resolution at the AGM. Is such appointment valid?

In the given case scenario, according to the Articles all the Directors are rotational. Had this been not the case, how many Directors were required to retire at the AGM which was held on 20th August, 2020?

In the given case scenario, if it is presumed that as on 31st March, 2021, the turnover of the company is Rs. 87.00 crores and the paid-up share capital is Rs. 12.00 crores, would the company be still mandatorily required to appoint two independent Directors?

According to the case scenario, the company altered its Articles of Association so as to increase the total strength of Directors up to 20 from the present 15 Directors. Which of the following options is applicable in such a case of alteration:

As on 12th August, 2021, when the AGM of LTSL was held, the total strength of Directors reached to 18 due to the appointment of four independent Directors. When all the Directors are rotational, how many Directors would have got retired at this AGM?

Sheetal Chemicals Limited (SCL) is a listed company dealing in petrochemicals which are used in numerous household products like wax, detergents, dyes, carpeting, safety glasses, etc. As per the latest audited balance sheet as at 31st March, 2021, its paid-up capital stood at Rs. 40.00 crores against its Authorised Capital of Rs. 50.00 crore. The turnover for the FY 2020-21 was to the tune of Rs. 300.00 crore. The company has thirteen Directors on its Board namely, A1, B2, C3, D4, E5, F6, G7, H8, I9, J10, K11, L12 and M13 of which A1, B2, C3, D4, and E5 are the Independent Directors. The Articles of Association of the company restrict the maximum number of Directors to fifteen.
SCL remains ever-conscious to corporate governance and ensures compliance to legal provisions in both letter and spirit. L12 is the Managing Director of the company whereas M13 is the only woman Director. The company has constituted requisite committees as per the requirements of law. The Audit Committee consists of seven Directors as members i.e. A1, B2, C3, D4, E5, I9 and J10.
Earlier, for the financial year ending 31st March, 2020, the company successfully convened and held Annual General Meeting (AGM) on 25th September, 2020 at its registered office at Pune. On the fateful day of AGM, while returning to Mumbai from Pune by road after her re-appointment at AGM, a fatal accident claimed the life of M13 thus snatching an efficient and trustworthy Director from the hands of the company. Later on, a Board Meeting was held on 09-01-2021 and N14, a finance professional and daughter of deceased woman Director M13 was appointed as Director to fill the vacancy of woman Director so created due to the death of her mother M13. It may be noted that before 09-01-2021, a Board Meeting was held on 15-09-2020.
SCL is a growing company which wants to diversify its business into the sphere of agrochemicals also and therefore, desires to bring on its Board O15 who is a chemical engineer with hands-on experience of about twenty years post his qualification in the field of agrochemicals and other petroleum products. Besides production, he is well versed in marketing of agrochemicals both in India and abroad. It is hoped that he shall prove to be a valuable asset to the company. Accordingly, a Board Meeting was held on 6th April, 2021 to appoint O15 as additional Director. As the total strength of Directors was well within the limit prescribed by the Articles, there was no need to alter the Articles.

Multiple Choice Questions

After the appointment of O15 as additional Director on 06-04-2021, another Board Meeting of SCL was held on 17-08-2021 through video conferencing2. From the given options, choose the correct one which indicates the quorum for the current Board Meeting.

For the purpose of meeting of the Audit Committee of SCL, how
many members should be present at such meeting in order to
constitute the quorum.

From the case scenario, it is observed that after the death of
M13, her daughter N14 was appointed at a Board Meeting held
on 09-01-2021 to fill the vacancy of woman Director. Is the
appointment of N14 on 09-01-2021 justified?

In the above case scenario, L12 is the Managing Director of SCL. If it is assumed that there is no managing or Whole-Time Director, then in such a situation, how much remuneration the company can pay to all the Directors for the Financial Year 2020-21.

In this case scenario, the Audit Committee formed by SCL contains seven members. If there are only six members in the Audit Committee then out of such six members, minimum how many shall be the independent members?

Global Trade and Securities (India) Limited (GTSIL) is a listed company having been listed at BSE and NSE. It was incorporated around four and a half years back in June, 2017 and has its registered office at Connaught Place, New Delhi. The authorised and paid-up share capital of the company is Rs. 30.00 crore. GTSIL is duly registered with the Securities and Exchange Board of India (SEBI) for providing merchant banking services. The company offers a varied range of services including issue management, handling of buy-back of shares, debt and equity syndication, mergers and acquisitions, listing and delisting, etc. GTSIL is a well-established and reputed name among the regulatory authorities, Government Agencies, law firms, share-brokers, mutual funds, banks and other prominent organisations. The company is being managed by nine Directors out of which three are independent Directors. Of the other non-independent six Directors, two are non-executive. The four executive Directors i.e. Skand, Srishti, Rina and Rohan are energetic, young and dynamic professionals with vast experience in the field of merchant banking. In the current Financial Year 2021-22, a chance scrutiny of accounts revealed that during the last financial year, by oversight, Rohan, who heads the new issue division of the company, had drawn remuneration in excess of the limit provided by the relevant statutory provisions.
The shareholding base of the company is quite wide and therefore, the number of small shareholders having stake in the company is substantial. It so happened that some of them wished to appoint Mukund, a seasoned finance professional, as small shareholders’ Director on the Board of the company. After due process, Mukund was appointed by the company as Director to represent small shareholders. During the financial year 2020-21, the profits of the company rose by around 7.00 crore in comparison to the previous year and therefore, a rise in the dividend per share was expected to be approved in the AGM. Accordingly, a dividend of Rs. 6 per share was declared as against Rs. 4 per share in the preceding year and the same was approved at the AGM held on 24-09-2021 through video conferencing as permitted by MCA vide General Circular No. 20/2020, dated 05-05-2020 read along with General Circular No. 02/2021, dated 13-01-2021. It is a proven fact that PESTEL analysis3 (i.e. analysis of political, economic, social, technological, environmental and legal factors affecting organisations) has always been a critical aspect for the success of any organisation. Keeping this crucial fact in view, the Directors of the company desiring to improve political understanding, after following the due procedure of law in this respect, made one-time political contribution of certain amount in the current Financial Year to Janta Vikassheel Dal which is one of the prominent political parties of the country duly registered under Section 29A of the Representation of the People Act, 1951.

Multiple Choice Questions

1 According to the case scenario, small shareholders appointed Mukund as small shareholders’ Director on the Board of the company. Out of the following four options, choose the one which correctly indicates the minimum number of small shareholders who might have assembled together to get Mukund appointed as Director to represent them.

From the case scenario it is evident that the company made political contributions of certain amount to Janta Vikassheel Dal, a prominent political party of the country. As the company is in existence for less than five years, how much amount it might have contributed to the political party in question.

The above case scenario states that Mukund was appointed as small shareholders’ Director on the Board of the company. To be a Director of the small shareholders, what is the nominal value of shares which such Director is required to own:

In this case scenario, the name of the company includes the word ‘India’. In case a company is desirous of including the words ‘British India’ in its name, which of the following options is applicable:

The above case scenario reveals that Rohan, one of the Directors, had drawn remuneration in excess of the limit prescribed by the relevant provisions. As regards recovery of the excess remuneration drawn by him, which of the following options is applicable:

Blessed with both artistic and business approach, Deb, Debosmita and Divyanshi, putting their best foot forward entered India’s Rs. 2,000 crore fragrance market by floating Daffodils Perfumes and Scent Limited (DPSL) in the year 2009 with an Authorised Capital of Rs. 30.00 crore. Along with them, there were ten other family members who became subscribers to the Memorandum of Association. It goes without saying that the trio were the first Directors of the company. Having Registered Office at Kannauj, the perfume capital of India, Uttar Pradesh, DPSL focussed on natural fragrances and made perfumes from flowers, camphor, saffron and other aromatic substances.
In the very next year, during April, 2010, Anirudh, a qualified Chartered Accountant and financial advisor was appointed to head the Finance Department of the company. After the promulgation of the Companies Act, 2013, his appointment was regularised as Chief Financial Officer (CFO) under the relevant provisions requiring appointment of Key Managerial Personnel (KMP).
Knowing the fact that perfumes have emerged as an essential product, driven by growing trend of personal care and forming part of everyone’s pride as well as confidence, they roped in Devpriya, a smart market analyst, and Divya, an IT Professional, as Directors at the time of conducting Annual General Meeting (AGM) on 25th September, 2011. The company was doing well and its yearly turnover was increasing gradually.
As on 31-03-2020, DPSL, yet to be listed, had paid-up share capital of Rs. 15.00 crore with 355 shareholders and its free reserves as on that date were Rs. 12.00 crore. DPSL also had secured and unsecured debts aggregating to Rs. 2.00 crore. Its turnover for the financial year 2019-20 was Rs. 85.00 crore. Based on the audited financial statements as on 31-03-2020 when paid-up capital exceeded the threshold limit, four independent Directors, namely, Rajan, Rahul, Ranjit and Raima were appointed in April, 2020.
Prior to the above development, Anirudh, the CFO of the company took early retirement in December, 2019. However, in one of the Board Meetings held on 25th June, 2020, Deb expressed his desire to again engage Anirudh by appointing him as independent Director during the current year 2020, in addition to the already appointed four independent Directors. As of now, the Articles of Association provide for the payment of sitting fee of Rs. 40,000 to each of the non-independent Directors of the company for attending every Board or Committee Meeting.
The Audited financial results as on 31-03-2020 also required constitution of an Audit Committee. Accordingly, an Audit Committee was constituted which comprised Deb and Debosmita as non-independent Directors besides certain independent Directors.
It came to light that the company was sitting on crore of rupees in terms of cash and bank balance. Due to the pandemic COVID-19 and subsequent lockdown in the country, the production almost came to a standstill and the demand dived southwards. As there was not much to invest in terms of any new projects, the Board of Directors thought to provide investors an opportunity to exit from their investment in the company. Accordingly, in a duly convened Board Meeting which was held on 25-03-2021, the Directors proposed buy-back of equity shares keeping in view the relevant clause of the Articles providing for the said buy-back.

Multiple Choice questions

According to the case scenario, Deb expressed his desire to again engage Anirudh by appointing him as independent Director during the current year 2020. Which of the following options is applicable with respect to the appointment of Anirudh as an independent Director of DPSL in the year 2020:

It is observed from the case scenario that the non-independent Directors are being paid sitting fee of Rs. 40,000 for attending every Board/Committee Meeting. From the following options, choose the one which indicates the sitting fee payable to the independent Directors for attending a Board or Committee Meeting:

The case scenario states that in a duly convened Board Meeting which was held on 25-03-2021, the Directors of DPSL proposed buy-back of equity shares keeping in view the relevant clause of the Articles providing for the said buy-back. In case the Articles of the company did not contain any clause providing for buy-back, then which of the following options is applicable in such a situation:

According to the case scenario, the Audit Committee constituted at DPSL comprises Deb and Debosmita as non-independent Directors besides certain independent Directors. Minimum how many independent Directors might have been included in the Audit Committee if there were two non-independent Directors in it.

Suppose DPSL resorts to buy-back of its equity shares after fulfilling all the legal formalities. Post buy-back, what ratio the DPSL shall be required to maintain between the aggregate of secured and unsecured debts owed by it and its paid-up capital and free reserves?