Question 1

Which is NOT a part of a typical compliance cycle?

Accepted Answer

Documentation/evidence is essential; ignoring it is not part of compliance cycle.

Question 2

Fairness in governance mainly refers to:

Accepted Answer

Fairness/equity includes protecting minority shareholders (concept).

Question 3

Criminal liability for misstatement may involve:

Accepted Answer

Criminal liability involves penalties for serious violations/fraudulent misstatements.

Question 4

Board meeting minutes are important because they:

Accepted Answer

Minutes document resolutions and evidence board decisions.

Question 5

Secretarial standards are mainly related to:

Accepted Answer

They standardise best practices for conducting and recording meetings (concept).

Question 6

A resolution is:

Accepted Answer

Resolutions record decisions of members/directors in meetings.

Question 7

CSR stands for:

Accepted Answer

CSR means Corporate Social Responsibility.

Question 8

A prospectus is primarily issued to:

Accepted Answer

Prospectus is a public invitation document for subscription and disclosure.

Question 9

Oppression is more connected to:

Accepted Answer

Oppression focuses on fairness and members’ rights (concept).

Question 10

Which is a statutory duty of directors?

Accepted Answer

Statutory duties include compliance, disclosures, and care/skill/diligence.

Question 11

Disqualification of a director may occur due to:

Accepted Answer

Typical disqualifications include unsound mind, insolvency, convictions and statutory defaults.

Question 12

During winding up, the company generally continues to exist for the limited purpose of:

Accepted Answer

Company exists during winding up to complete liquidation formalities (concept).

Question 13

In winding up, payments generally follow the principle of:

Accepted Answer

A safe conceptual point: creditors/priority claims are settled before shareholders.

Question 14

A key objective of oppression and mismanagement provisions is:

Accepted Answer

These provisions provide minority protection and governance correction (concept).

Question 15

Paid-up capital means:

Accepted Answer

Paid-up is the amount actually paid by shareholders on called-up capital.

Question 16

Which committee (concept) may be responsible for CSR initiatives?

Accepted Answer

CSR committee plans and monitors CSR projects where applicable (concept).

Question 17

Misstatement in a prospectus includes:

Accepted Answer

Misstatement covers untrue statements and material omissions that mislead investors.

Question 18

Mismanagement generally refers to:

Accepted Answer

Mismanagement is improper management that harms the company (concept).

Question 19

Lifting the corporate veil means:

Accepted Answer

Courts/regulators may pierce the veil in fraud/sham/tax evasion situations.

Question 20

A director should avoid:

Accepted Answer

Directors must avoid conflicts and disclose any interest.

Question 21

State one type of share capital.

Accepted Answer

**Authorised capital** is one type of share capital (also issued/subscribed/paid-up).

Question 22

Separate legal entity means company and members are distinct. (True/False)

Accepted Answer

True. A company has a **separate legal identity** from its members and can own property and sue/be sued.

Question 23

State one primary function of a liquidator.

Accepted Answer

To **realise assets** and use the proceeds to settle liabilities in the winding up process (concept).

Question 24

What is incorporation of a company?

Accepted Answer

Incorporation is the legal process of registering a company under law to obtain a **separate legal identity**.

Question 25

Name any one mode of winding up (concept).

Accepted Answer

**Voluntary winding up** (or compulsory/tribunal winding up) (concept).

Question 26

State one purpose of notice of meeting.

Accepted Answer

Notice informs members about the **date, time, place and agenda** so they can attend and prepare.

Question 27

State one classification of companies based on liability.

Accepted Answer

Companies based on liability include **company limited by shares** (also limited by guarantee / unlimited).

Question 28

Minutes and accounts can act as evidence in such cases. (True/False)

Accepted Answer

True. **Minutes**, accounts and records help prove unfair or harmful conduct (concept).

Question 29

Give one circumstance where corporate veil may be lifted.

Accepted Answer

Corporate veil may be lifted in case of **fraud** (or tax evasion / sham company).

Question 30

Define prospectus.

Accepted Answer

A **prospectus** is a document issued by a company inviting the public to subscribe for its securities and disclosing material information about the company.

Question 31

Differentiate private and public company (any three points) using a table.

Accepted Answer

Private vs public company:

| Basis | Private company | Public company |
|---|---|---|
| Share transfer | **restricted** | generally transferable |
| Public invitation | cannot invite public | can invite public (as per law) |
| Compliance | relatively less | relatively more |

Thus, private companies have closer control; public companies have wider ownership and compliance.

Question 32

Explain difference between directors’ powers and duties (brief) using a table.

Accepted Answer

Powers vs duties:

| Basis | **Powers** | **Duties** |
|---|---|---|
| Meaning | authority to take decisions | obligations to act properly |
| Focus | management actions | **good faith**, care, compliance |
| Nature | enable control | ensure accountability |

Thus, powers allow directors to act; duties ensure they act lawfully and ethically.

Question 33

Write the voluntary winding up process as a flowchart and explain briefly (exam-style).

Accepted Answer

Voluntary winding up (flow):

Resolution/decision → Appoint **liquidator** → Realise assets → Settle liabilities → Distribute surplus → Final report → Dissolution

Briefly, the liquidator manages liquidation so creditors are paid first and any surplus is distributed (concept).

Question 34

State any three powers/duties of a liquidator using a table.

Accepted Answer

Powers/duties of liquidator (any three) (concept):

| Area | **Power/Duty** |
|---|---|
| Custody | take control of assets and records |
| Realisation | sell/realise assets |
| Settlement | verify and pay liabilities |
| Reporting | maintain accounts and reports |

Any three points can be written in exams.

Question 35

Explain the role of the company secretary in corporate governance (any three points).

Accepted Answer

Role of CS in corporate governance (any three):

- ensures meetings are properly convened and documented (agenda, notice, minutes)
- ensures timely **compliance** and filings (concept)
- maintains statutory records and provides an audit trail
- advises the board on governance and legal requirements (concept)

Thus, the CS strengthens transparency and accountability.

Question 36

Explain compliance management: meaning, objectives and benefits (exam-style) with a table and conclusion.

Accepted Answer

### Meaning
Compliance management is a system to ensure the organisation follows applicable laws and maintains **evidence** of adherence.

### Objectives/benefits (table)
| Objective | Benefit |
|---|---|
| Risk control | fewer **penalties** and disputes |
| Transparency | better stakeholder confidence |
| Process discipline | timely filings and cleaner audits |

### Conclusion
Effective compliance management reduces legal risk and strengthens corporate governance through documentation and continuous monitoring.

Question 37

Write an exam-style answer on features of a company (any five) with a table and conclusion.

Accepted Answer

### Features of a company (any five)

| Feature | Meaning |
|---|---|
| **Separate legal entity** | company is distinct from members |
| **Limited liability** | liability limited to shares/guarantee |
| Perpetual succession | continuous existence |
| Separate property | company owns assets |
| Management by directors | acts through board |

### Conclusion
These features make the company suitable for large-scale business by ensuring continuity, limited risk and better governance.

Question 38

Differentiate compulsory/tribunal winding up and voluntary winding up (exam-style) with a table and conclusion.

Accepted Answer

### Comparison (concept)

| Basis | **Voluntary winding up** | **Compulsory/tribunal winding up** |
|---|---|---|
| Initiation | company decision/resolution | authority/tribunal order |
| Trigger | internal decision, business closure | legal grounds and order (concept) |
| Control | liquidator under voluntary process | liquidation under ordered process |

### Conclusion
Voluntary winding up is self-initiated, while compulsory winding up is imposed through an authority order based on legal grounds (concept).

Question 39

Write an exam-style note on nature and scope of company law (include a table and conclusion).

Accepted Answer

### Nature
Company law is **statutory**, regulatory and disclosure-based, focusing on governance and stakeholder protection.

### Scope
| Area | Covers |
|---|---|
| Incorporation | registration, MOA/AOA |
| Management | directors, meetings, resolutions |
| Compliance | filings, accounts, audit |
| Remedies | oppression/mismanagement, investigation |

### Conclusion
Thus, company law provides a comprehensive framework for forming and regulating companies and ensuring accountability in corporate affairs.

Question 40

Explain directors’ duties (fiduciary and statutory) (exam-style) with a table and conclusion.

Accepted Answer

### Directors’ duties
Directors must act honestly and lawfully.

| Duty category | Key duties |
|---|---|
| **Fiduciary** | **good faith**, avoid conflict, no secret profit, proper purpose |
| Statutory | compliance with law, due care/diligence, disclosures and filings |

### Conclusion
By following fiduciary and statutory duties, directors protect stakeholder interests and ensure good corporate governance.

Company Law — Question Paper

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