Mock Test Paper - Series II: December, 2025

Date of Paper: 8th December, 2025

Time of Paper: 10 A.M. to 1 P.M.
INTERMEDIATE COURSE: GROUP – I
PAPER – 2: CORPORATE AND OTHER LAWS
ANSWER TO PART – I CASE SCENARIO BASED MCQS
1. (b)
2. (a)
3. (b)
4. (b)
5. (c)
6. (a)
7. (a)
8. (a)
9. (a)
10. (d)
11. (c)
12. (c)
13. (b)
14. (d)
15. (c)
ANSWERS OF PART – II DESCRIPTIVE QUESTIONS
1. (a) As per the provisions of sub-section (2) of section 42 of the Companies Act, 2013,
private placement shall be made only to a select group of persons who have been
identified by the Board (herein referred to as "identified persons"), whose number
shall not exceed 50 or such higher number as may be prescribed, in a financial
year subject to such conditions as may be prescribed.
It is also provided that any offer or invitation made to qualified institutional buyers,
or to employees of the company under a scheme of employees’ stock option as

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 per provisions of section 62(1)(b) shall not be considered while calculating the
limit of two hundred persons.
According to Rule 14 (2) of the Companies (Prospectus and Allotment of
Securities) Rules, 2014, an offer or invitation to subscribe securities under private
placement shall not be made to persons more than two hundred in the aggregate
in a financial year.
As per Explanation given in this Rule, it is clarified that the restrictions aforesaid
would be reckoned individually for each kind of security that is equity share,
preference share or debenture.
Referring to the above mentioned provisions of sub-section (2) of section 42 of
the Companies Act, 2013 and Rule 14 the Companies (Prospectus and Allotment
of Securities) Rules, 2014, we can conclude as follows:
(i) The company is correct in proposing that private placement shall be made
only to a select group of identified persons not exceeding 200 in a financial
year. This part of the proposal is correct.
The company is also correct in proposing that the aforesaid ceiling of
identified persons shall not apply to offer made to the qualified institutional
buyers, but the company is not correct in saying that the said ceiling is
applicable to employees covered under the Company’s Employee Stock
Option Scheme. Hence, the second part of the proposal is only partially
correct.
(ii) The Companies (Prospectus and Allotment of Securities) Rules, 2014
provides that an offer or invitation to subscribe securities under private
placement shall not be made to persons more than 200 in aggregate in a
financial year.
Keeping the ceiling of 200 persons in aggregate during a financial year,
offer of private placement can be made more than once in a financial year.
Therefore, the second statement is not fully correct.
(b) (i) As per the provisions of section 141 (3) of the Companies Act, 2013 read
with Rule 10 of Companies (Audit and Auditors) Rule 2014, a body
corporate other than a limited liability partnership registered under the
Limited Liability Partnership Act, 2008 shall not be qualified for
appointment as auditor of a company.
In the given case, proposal of ZR Ltd. to appoint ASK & Associates LLP as
auditors of the company is valid as the restriction marked for appointment
as auditor for a body corporate is not applicable to Limited Liability
Partnership.

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 (ii) According to section 134(1) of the Companies Act, 2013, the financial
statement, including consolidated financial statement, if any, shall be
approved by the Board of Directors before they are signed on behalf of the
Board by the chairperson of the company where he is authorised by the
Board or by two directors out of which one shall be managing director, if
any, and the Chief Executive Officer, the Chief Financial Officer and the
company secretary of the company, wherever they are appointed, or in the
case of One Person Company, only by one director, for submission to the
auditor for his report thereon.
In the instant case, the Balance Sheet and Profit and Loss Account have
been signed only by Mr. Mehra and Ms. Singh, the directors. In view of
section 134(1) of the Companies Act, 2013, Mr. Verma, the Managing
Director should have been one of the two signing directors.
Further, since the company has also employed a full- time Secretary, he
should also sign the Balance Sheet and the Statement of Profit and Loss.
(c) The investment in immovable properties in India by Pujari Sharma, a resident
outside India, is a Capital Account Transaction which is permissible as per
Schedule II of the Foreign Exchange Management (Permissible Capital Account
Transactions) Regulations, 2000 which permits Acquisition and Transfer of
Immovable Property in India by a Person Resident Outside India.
According to Schedule III to Foreign Exchange Management (Current Account
Transactions) Rules, 2000, remittances by persons other than individuals shall
require prior approval of the Reserve Bank of India if Commission, per transaction,
to agents abroad for sale of residential flats or commercial plots in India exceeds
USD 25,000 or five percent of the inward remittance whichever is more.
As per the facts of the question and mentioned provisions, the following are the
answers to the questions asked:
(i) Yes, the investment by Pujari Sharma and payment of commission on this
transaction is permissible.
(ii) Calculation of maximum commission that can be paid without the approval
of RBI.
The maximum amount of commission that can be paid to each broker for each
transaction, without RBI approval is, more of- USD 25,000 or ` 6 lakh [i.e. 5%
of (60% of 2 crore)].
Thus, ` 6,00,000 can be paid to each broker as commission without taking any
prior approval of the RBI.

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2. (a) (i) According to section 123(3) of the Companies Act, 2013, the Board of
Directors of a company may declare interim dividend during any financial
year or at any time during the period from closure of financial year till
holding of the annual general meeting out of the surplus in the profit and
loss account or out of profits of the financial year for which such interim
dividend is sought to be declared or out of profits generated in the financial
year till the quarter preceding the date of declaration of the interim
dividend.
In the instant case, Sun Light Limited has complied due diligence in
declaring interim dividend as it was declared by Board of Directors at their
meeting held on 7 th July, 2025 before holding its first Annual General
Meeting. Also, the financial statement revealed net profit so the interim
dividend can be paid out of profits of the financial year ending 31 st March,
2025.
(ii) According to section 8(1) of the Companies Act, 2013, a company having
licence under Section 8 (Formation of companies with charitable objects,
etc.) is prohibited from paying any dividend to its members. Its profits are
intended to be applied only in promoting the objects for which it is formed.
(b) Section 50 of the Companies Act, 2013, deals with acceptance of call money in
advance by a company which requires that such acceptance can be made only if
the company is authorised by its articles to do so.
According to section 6 of the Companies Act, 2013,
‘Save as otherwise expressly provided in this Act—
(a) the provisions of this Act shall have effect notwithstanding anything to the
contrary contained in the memorandum or articles of a company, or in any
agreement executed by it, or in any resolution passed by the company in
general meeting or by its Board of Directors, whether the same be
registered, executed or passed, as the case may be, before or after the
commencement of this Act; and
(b) any provision contained in the memorandum, articles, agreement or
resolution shall, to the extent to which it is repugnant (in conflict) to the
provisions of this Act, become or be void, as the case may be.’
In simple words, the provisions of this Act shall have overriding effect. It is also to
be noted that section 6, starts with “Save as otherwise ….”. It means that if any
other section of the Act says that article is superior then we will treat it accordingly.
Here, in the given case, articles of Shree Private Limited provide that the company
shall not be permitted to accept or keep advance subscription or call money in

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 advance and accordingly here, such provision contained in the articles of
association will prevail and cannot be considered as void.
(c) According to section 10 of the General Clauses Act, 1897, where by any legislation
or regulation, any act or proceeding is directed or allowed to be done or taken in
any court or office on a certain day or within a prescribed period then, if the Court
or office is closed on that day or last day of the prescribed period, the act or
proceeding shall be considered as done or taken in due time if it is done or taken
on the next day afterwards on which the Court or office is open.
In the given question, the court fixed the date of hearing of dispute between Prem
and Vicky, on 27th October 2025, which was subsequently announced to be a
holiday.
Applying the above provisions we can conclude that the hearing date of
27th October 2025, shall be extended to the next working day.
3. (a) According to Rule 2(1)(e) of the Companies (Acceptance of Deposits) Rules, 2014
"eligible company" means a public company as referred to in sub-section (1) of
section 76 of the Companies Act, 2013, having a net worth of not less than one
hundred crore rupees or a turnover of not less than five hundred crore rupees and
which has obtained the prior consent of the company in general meeting by means
of a special resolution and also filed the said resolution with the Registrar of
Companies before making any invitation to the Public for acceptance of deposits.
Provided that an eligible company, which is accepting deposits within the limits
specified under clause (c) of sub-section (1) of section 180, may accept deposits
by means of an ordinary resolution.
Maximum Amount of Deposits: As per Rule 3(4)(b) of the Companies
(Acceptance of Deposits) Rules, 2014, an eligible company is permitted to accept
or renew deposits from persons other than its members. As per the law the amount
of such deposit together with the amount of outstanding deposits (excluding
deposits from members) on the date of acceptance or renewal can be maximum
twenty-five per cent. of the aggregate of its paid-up share capital, free reserves
and securities premium account of the company.
(b) Casual vacancy: According to section 139(8) of the Companies Act, 2013,
(1) In the case of a company whose accounts are subject to audit by an auditor
appointed by the Comptroller and Auditor General (CAG) of India, casual
vacancy of an auditor shall be filled by the CAG within 30 days.

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 (2) In case the CAG does not fill the vacancy within the said period, the Board
of Directors shall fill the vacancy within next 30 days.
XYZ Ltd. can follow the above provisions for filling of its casual vacancy of its
auditor.
In case, XYZ Ltd. would have been a company other than a government company,
the following provisions would be applicable for filling of its casual vacancy:
(a) The Board may fill any casual vacancy in the office of an auditor within 30
days but where such vacancy is caused by the resignation of an auditor,
such appointment shall also be approved by the company at a general
meeting convened within three months of the recommendation of the
Board.
(b) Any auditor appointed in a casual vacancy shall hold office until the
conclusion of the next annual general meeting.
(c) (i) “Affidavit”: According to section 3(3) of the General Clauses Act, 1897,
‘Affidavit’ shall include affirmation and declaration in the case of persons
by law allowed to affirm or declare instead of swearing.
The above definition is inclusive in nature. It states that Affidavit shall
include affirmation and declarations. This definition does not define
affidavit. However, we can understand this term in general parlance.
Affidavit is a written statement confirmed by oath or affirmation for use as
evidence in Court or before any authority.
(ii) “Good Faith”: According to section 3(22) of the General Clauses Act,
1897, a thing shall be deemed to be done in “good faith” where it is in fact
done honestly, whether it is done negligently or not.
The question of good faith under the General Clauses Act is one of fact. It
is to be determined with reference to the circumstances of each case. Thus,
anything done with due care and attention, which is not malafide, whether
it is done negligently or not is presumed to have been done in good faith.
4. (a) A company filing a shelf prospectus shall be required to file an information
memorandum with the Registrar within the prescribed time, prior to the issue of a
second or subsequent offer of securities under the shelf prospectus containing;
a. All material facts relating to new charges created,

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 b. Changes in the financial position of the company as have occurred
between the first offer of securities or the previous offer of securities and
the succeeding offer of securities, and
c. Such other changes as may be prescribed.
(b) According to section 92(1) of the Companies Act, 2013, every company shall
prepare a return (referred to as the Annual Return) in the prescribed
form containing the specified particulars as they stood on the close of the financial
year. In terms of Second Proviso to section 91 (1), the Central Government may
prescribe abridged form of annual return for One Person Company, small
company and such other class or classes of companies as may be prescribed.
Accordingly, as per Rule 11 (1), One Person Company and small company shall
file the annual return from the financial year 2020-2021 onwards in Form No.
MGT-7A. However, in relation to One Person Company and small company, the
annual return shall be signed by the company secretary, or where there is no
company secretary, by the director of the company.
Accordingly, following are the advise given by the expert:
(i) As per section 92 and Rule 11(1), since ABC Pvt. Ltd. is a One Person
Company (OPC), it should file its annual return in Form MGT-7A (abridged
form) for the financial year 2024-25.
(ii) In the absence of a company secretary, the annual return should be signed
by the sole director of the company as per the provisions applicable to One
Person Companies.
(c) Associated Words to be Understood in Common Sense Manner: When two
words or expressions are coupled together one of which generally excludes the
other, obviously the more general term is used in a meaning excluding the specific
one. On the other hand, there is the concept of ‘Noscitur A Sociis’ (‘it is known by
its associates’), that is to say ‘the meaning of a word is to be judged by the
company it keeps’. When two or more words which are capable of analogous
(similar or parallel) meaning are coupled together, they are to be understood in
their cognate sense (i.e. akin in origin, nature or quality). They take, as it were,
their colour from each other, i.e., the more general is restricted to a sense
analogous to the less general. It is a rule wider than the rule of ejusdem generis,
rather ejusdem generis is only an application of the noscitur a sociis. It must be
borne in mind that nocitur a sociis, is merely a rule of construction and it cannot
prevail in cases where it is clear that the wider words have been deliberately used
in order to make the scope of the defined word correspondingly wider.
5. (a) According to section 114 of the Companies Act, 2013, a resolution shall be a
special resolution when the votes cast in favour of the resolution, whether on a

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 show of hands, or electronically or on a poll, as the case may be, by members
who, being entitled so to do, vote in person or by proxy or by postal ballot, are
required to be not less than three times the number of the votes, if any, cast
against the resolution by members so entitled and voting.
Thus, in terms of the requisite majority, votes cast in favour have to be compared
with votes cast against the resolution. Abstentions or invalid votes, if any, are not
to be taken into account.
Accordingly, in the given problem, the votes cast in favour (15) being not more
than 3 times of the votes cast against (6), therefore the decision of the chairman
is not in order.
(b) According to section 25 of the Limited Liability Partnership Act, 2008,
(1) Every partner shall inform the LLP of any change in his name or address
within a period of 15 days of such change.
(2) A LLP shall—
(a) where a person becomes or ceases to be a partner, file a notice with
the Registrar within 30 days from the date he becomes or ceases to
be a partner; and
(b) where there is any change in the name or address of a partner, file
a notice with the Registrar within 30 days of such change.
(3) A notice filed with the Registrar under sub-section (2)—
(a) shall be in such form and accompanied by such fees as may be
prescribed;
(b) shall be signed by the designated partner of the LLP and
authenticated in a manner as may be prescribed; and
(c) if it relates to an incoming partner, shall contain a statement by such
partner that he consents to becoming a partner, signed by him and
authenticated in the manner as may be prescribed.
(i) Priya’s Address Change: Under the provision, Priya was required to inform XYZ
LLP of her address change within 15 days of the move. Following that, XYZ LLP
was required to file a notice with the RoC within 30 days of being notified of Priya's
new address. As Priya did not inform the LLP about change of address and
consequently LLP did not file a notice regarding the change in address of Priya
with the Registrar, XYZ LLP is not in compliance with the required timeline.

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 (ii) Ramesh’s Admission as a Partner: For new partners, XYZ LLP must file a notice
with the RoC within 30 days of a person becoming a partner. This notice should
include Ramesh’s consent statement, signed by him and authenticated as
prescribed. The delay in filing means XYZ LLP did not meet the 30 day
requirement.
(c) External aids are the factors that help in interpreting/ construing an Act and have
been given the convenient nomenclature of ‘External Aids to Interpretation’. Apart
from the statute itself there are many matters which may be taken into account
when the statute is ambiguous. These matters are called external aids.
Dictionary Definitions: Dictionary Definitions is one of the External Aids to
interpretation. First we have to refer to the Act in question to find out if any
particular word or expression is defined in it. Where we find that a word is not
defined in the Act itself, we may refer to dictionaries to find out the general sense
in which that word is commonly understood. However, in selecting one out of the
several meanings of a word, we must always take into consideration the context
in which it is used in the Act. It is the fundamental rule that the meanings of words
and expressions used in an Act must take their colour from the context in which
they appear. Further, judicial decisions laying down the meaning of words in
construing statutes in ‘pari materia’ will have greater weight than the meaning
furnished by dictionaries. However, for technical terms reference may be made to
technical dictionaries.
6. (a) (i) Where an application is made by a company or body corporate, which is a
holding company or a subsidiary or associate company of a company
incorporated outside India and which is required to follow a different
financial year for consolidation of its accounts outside India, the Cen tral
Government may, on the basis of such application made in such form and
manner as may be prescribed, allow any period as its financial year,
whether or not that period is a year.
Meadow Limited is advised to follow the above procedure accordingly.
(ii) According to section 128(1) of the Companies Act, 2013, every company
shall prepare “books of account” and other relevant books and papers and
financial statement for every financial year. These books of account should
give a true and fair view of the state of the affairs of the company, including
that of its branch office(s). These books of account must be kept on accrual
basis and according to the double entry system of accounting. Hence,
maintenance of books of account under Singly Entry System of Accounting
by Sunrise Enterprises Limited is not permitted.

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(b) As per section 389 of the Companies Act, 2013, no person shall issue, circulate
or distribute in India any prospectus offering for subscription in securities of a
company incorporated or to be incorporated outside India, whether the company
has or has not established, or when formed will or will not establish, a place of
business in India, unless before the issue, circulation or distribution of the
prospectus in India, a copy thereof certified by the chairperson of the company
and two other directors of the company as having been approved by resolution of
the managing body has been delivered for registration to the Registrar and the
prospectus states on the face of it that a copy has been so delivered, and there is
endorsed on or attached to the copy, any consent to the issue of the prospectus
required by section 388 and such documents as may be prescribed under Rule 11
of the Companies (Incorporated outside India) Rules, 2014.
Accordingly, the Arbrush Limited a foreign company shall proceed with the issue
of prospectus in compliance with the above stated provisions of section 379 of the
Act.
(c) As per section 3(27) of the General Clauses Act, 1897, the term imprisonment
means imprisonment of either description as defined in the Indian Penal Code.
Under the Indian Penal Code, imprisonment is of two types:
1. Rigorous imprisonment – imprisonment with hard labour, and
2. Simple imprisonment – imprisonment without hard labour.
Therefore, when an Act provides that an offence is punishable with imprisonment,
the Court may, in its discretion, award either rigorous or simple imprisonment.

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