COMPANY LAW QUIZ 9 MARCH 2009 090309195322_ This is a quiz created byDr. b yDr. T.K. Jain for PGPSE participants of AFTERSCHOOOL. Join AFTERSCHOOOL and promote social entrepreneurship / spiritual entrepreneurship. You may contact us for conducting workshops w orkshops on spiritual entrepreneurship / meditation / social entrepreneurship / solidarity in your organisation / school / college / institution / club. Contact Dr. T.K. Jain at : 91-9414430763 or
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Questions Image every company shall submit a quarterly compliance report to the stock exchanges as per sub clause (IX) (ii), of the revised clause 49, within 15 days from the quarter ending 31st March 2004 by the shareholders of the company () Correct () Incorrect companies have to set up committees committees such as Audit Committee, shareholders/ investors grievances committee etc before seeking listing. () Correct () Incorrect the stock exchanges will will set up monitoring cell with identified personnel to monitor the compliance with the provisions of the corporate governance. This cell shall obtain the quarterly compliance report from the companies which are required to comply with the requirements of corporate governance and shall submit a consolidated compliance report to RBI within 30 days of the end of each quarter. () Correct () Incorrect In case of a non-executive chairman, at least one-third of board should comprise of independent directors and in case of an executive chairman, at least half of board should comprise of independent directors. () Correct () Incorrect for becoming an independent director, following condition individually / collectively must be fulilled by the person : [] Not Not owni owning ng two two per perce cent nt or more more of the the blo block ck of voting shares. [] is not a suppl supplie ier, r, ser servi vice ce pro provi vide derr or custo custome merr of the the company [] is not a part partner ner or an an execu executi tive ve of of the the sta statu tuto tory ry audi auditt firm or the internal audit firm
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has has not not been been an an exec execut utiv ivee of the the comp compan any y in in the the immediately preceding three financial years [] is not not rel relat ated ed to to pro promo mote ters rs or mana manage geme ment nt [] apar apartt from from rec recei eivi ving ng dire direct ctor or's 's rem remune unera rati tion, on, doe doess not not have any material pecuniary relationships [] an interested director [] inst instit itut utio ional nal dire direct ctor or - repr repres esen enti ting ng ins insti titu tuti tion on In Desiraju Venkata Krishna Sharma (1955): a director is agent of the company and is personally liable to pay taxes payable by the company. () Correct () Incorrect in Land Allotment Co (1894) : it was held that directors are not and will never be trustees of the company. () Correct () Incorrect The considerations as regards compensation paid to an independent director shall not be the same as those applied to a non-executive director. () Correct () Incorrect The company shall not publish its compensation philosophy and statement of entitled compensation in respect of nonexecutive directors in its annual report. () Correct () Incorrect Company shall not disclose on an annual basis, details of shares held by non-executive directors () Correct () Incorrect Non-executive directors shall be required to disclose their stock holding (both own or held by / for other persons on a beneficial basis) in the listed company in which they are proposed to be appointed as directors after they are appointed as director () Correct () Incorrect Independent Director shall not review legal compliance reports prepared by the company () Correct () Incorrect The board meeting shall be held at least four times a year, with a maximum time gap of four months between any two meetings () Correct () Incorrect
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A director shall not be a member in more than 10 committees or act as Chairman of more than five committees across all companies in which he is a director. () Correct () Incorrect It is not necessary for every director to inform the company about the committee positions he occupies in other companies () Correct () Incorrect directorship in a private limited limited companies, foreign foreign companies and companies under Section 25 of the Companies Act are also counted while counting coun ting maximum limit with regard to membership in committee or chairmanship. () Correct () Incorrect Only the Audit Committee, the Shareholders' Grievance Committee and the Remuneration Committee shall be considered for counting the number of maximum committee to which a director may become a member. () Correct () Incorrect It shall be optional for the Board of a company to lay down the code of conduct for all Board members and senior management of a company. This code of conduct may be posted on the website of the company. () Correct () Incorrect As per listing agreement, (clause 49): All Board members and senior management personnel shall affirm compliance with the code on an annual basis. The annual report of the company shall contain a declaration to this effect signed by the CEO and COO. () Correct () Incorrect "senior management" means personnel of the company who are members of its management/operating council (including one level below the top management) () Correct () Incorrect A person shall be eligible for the office of non-executive director so long as the term of office did not exceed nine years in three terms of three years each, running continuously. () Correct () Incorrect The audit committee (of directors) shall have minimum three members
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() Correct () Incorrect All the members of audit committee must be non-executive directors, with the majority of them being independent. () Correct () Incorrect All members of audit committee shall be financially literate and at least one member shall have accounting or related financial management expertise. () Correct () Incorrect The term "financially literate" means the ability to read and understand basic financial statements i.e. balance sheet, profit and loss account, and statement of cash flows. () Correct () Incorrect The Chairman of the audit Committee must not be an independent director () Correct () Incorrect The Chairman of audit committee must be present at Annual General Meeting to answer shareholder queries () Correct () Incorrect The finance director, head of internal audit and when required, a representative of the external auditor must be present as invitees for the meetings of the audit committee () Correct () Incorrect The Company Secretary will not act as the secretary to the audit committee () Correct () Incorrect The audit committee shall meet at least 4 times a year. () Correct () Incorrect The quorum of audit committee shall be either two members or one third of the members of the audit committee, whichever is higher and minimum of two independent directors. () Correct () Incorrect which of these are powers of the audit committee : []
To inve invest stig igat atee any any act activ ivit ity y wit withi hin n its its term termss of of reference.
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To obt obtai ain n outs outsid idee lega legall or other other prof profes essi siona onall advi advice ce.. To seek seek info inform rmat atio ion n from from any any emp emplo loye yee. e. To secu secure re atte attenda ndanc ncee of of out outsi side ders rs with with rele releva vant nt expertise Which of these is the role of audit committee: []
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Revi Review ewin ing g the the comp compan any' y'ss fin finan anci cial al and and ris risk k management policies. [] to Dis Discu cuss ss wit with h inte intern rnal al audi audito tors rs and and ext exter ernal nal audi audito tor r any significant findings [] revi review ew accou account ntin ing g pol polic icie iess and and chan changes ges in them them [] Reco Recomm mmen endi ding ng the the app appoi oint ntme ment nt and and rem remov oval al of of external auditor, fixation of audit fee [] supe superv rvis isee fin finan anci cial al repor reporti ting ng proc proces esss and and the the disclosure of its financial information to ensure that the financial statement is correct [] to ac act as as st statutory au auditor following matters must be taken up by postal ballot: [] [] [] [] [] []
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Matt Matter erss rel relat atin ing g to to cha chang ngee in in man manag agem emen entt Corporate re restructuri uring Maki Making ng a furt furthe herr issu issuee of shar shares es thr throug ough h pref prefer eren enti tial al allotment or private placement basis Ente Enteri ring ng a new new busin busines esss area area not not ger germa mane ne to the the existing business of the company Vari Variat atio ion n in right rightss atta attache ched d to clas classs of secu securi riti ties es Sale Sale of inves investm tmen ents ts in the the com compa pani nies es,, whe where re the the shareholding or the voting rights of the company co mpany exceeds 25% Sale Sale of goods goods / sma small ll asse assets ts of the the unde undert rtak akin ing g chang changee in in mem memor orand andum um / art artic icle less of of the the com compa pany ny
