SEBI Grade A 2022– Companies Act Practice Question | Set- 4

Correct Answer – B. Section 2(35)

Explanation: Apply hint given in previous part. Since most of the words start with a or b or c, Section 2(8) is less likely to be the answer. Section 2(35) is most likely to be the answer.

Correct Answer – B. Equity shareholder enjoys higher preferential rights in matters of payment of dividend

Explanation: Shares can be classified into two categories – Preference shares and equity shares. Preference shares: According to Section 43 of Companies Act 2013, persons holding preference shares are assured of preferential dividend at a fixed rate during the life of the company. Equity shares: Equity shares are those shares, which are not preference shares. It means they do not enjoy any preferential rights in the matter of payment of dividend or repayment of capital.

Correct Answer – D. As company may consider appropriate

Explanation: A company may, before the declaration of any dividend in any financial year, transfer such percentage of its profits for that financial year as it may consider appropriate to the reserves of the company. Therefore, the company may transfer such percentage of profit to reserves before declaration of dividend as it may consider necessary. Such transfer is not mandatory and the percentage to be transferred to reserves is to be decided at the discretion of the company.

Correct Answer – D. All of the above

Explanation: Any dividend payable in cash may be paid by cheque or warrant or in any electronic mode to the shareholder entitled to the payment of the dividend.

Correct Answer – C. Protection

Explanation: Investor Education and Protection Fund (Section 125)

Correct Answer – B. 7

Explanation: Section 124(6): All shares in respect of which [dividend has not been paid or claimed for seven consecutive years or more shall be] transferred by the company in the name of Investor Education and Protection Fund along with a statement containing such details as may be prescribed.

Correct Answer – C. Section 125

Correct Answer – A. 5 days

Explanation: Section 123(4): The amount of the dividend, including interim dividend, shall be deposited in a scheduled bank in a separate account within five days from the date of declaration of such dividend.

Correct Answer – C. Profit on sale of asset

Correct Answer – B. 30

Explanation: Section 139(6): Notwithstanding anything contained in sub-section (1), the first auditor of a company, other than a Government company, shall be appointed by the Board of Directors within thirty days from the date of registration of the company and in the case of failure of the Board to appoint such auditor, it shall inform the members of the company, who shall within ninety days at an extraordinary general meeting appoint such auditor and such auditor shall hold office till the conclusion of the first annual general meeting.