Maximum Marks: 100
Time: 3 Hours
Instructions:
- Attempt all questions.
- Support answers with relevant Companies Act 2013, SEBI Regulations, FEMA, Competition Act provisions.
- Show detailed reasoning for practical and case-based questions.
Section A: Theory & Conceptual Questions (20 Marks)
Answer any 4 questions. Each carries 5 marks.
- Explain the roles and responsibilities of directors under the Companies Act, 2013, including duties under Sections 166 and 149.
- Discuss the key provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for listed companies.
- Explain the powers of the Company Law Tribunal (NCLT) and appellate powers of NCLAT under the Companies Act, 2013.
- Discuss the regulatory framework of Foreign Direct Investment (FDI) and FEMA compliance in India.
- Explain the anti-competition provisions under the Competition Act, 2002 and penalties for contravention.
Section B: Practical / Application Questions (50 Marks)
Answer any 5 questions. Each carries 10 marks.
- Company Incorporation: Draft the checklist and documents required for incorporating a private limited company under Companies Act, 2013.
- Board Meeting & Resolutions: ABC Ltd. plans to issue bonus shares. Draft the board resolution and necessary approvals for the same.
- Company Secretarial Compliance: A company fails to file its annual return on time. Explain consequences under Companies Act, 2013, and draft a penalty notice as per Section 92.
- SEBI Insider Trading: An employee trades shares based on unpublished price-sensitive information. Explain liability under SEBI (Prohibition of Insider Trading) Regulations, 2015, and draft a show-cause notice.
- FEMA Case Study: A resident Indian investor wants to invest USD 1 million in a foreign company. Explain the compliances under FEMA and RBI approval requirements.
Section C: Case Study / Analytical Questions (30 Marks)
Answer any 2 questions. Each carries 15 marks.
- Corporate Governance Case: XYZ Ltd., a listed company, fails to appoint an independent director for two consecutive years. Required:
a) Identify sections violated under Companies Act, 2013 and SEBI LODR 2015.
b) Suggest corrective measures and penalties.
c) Discuss impact on corporate governance rating. - Merger & Acquisition Case: ABC Ltd. acquires 75% of DEF Ltd. without following Section 236 (Compromise, Arrangement & Amalgamation) requirements. Required:
a) Explain legal consequences and remedies available to minority shareholders.
b) Draft the application process to NCLT for approval.
c) Explain compliance under SEBI takeover regulations. - Competition Law Case: A dominant company abuses market power by predatory pricing. Required:
a) Identify sections of Competition Act contravened.
b) Explain penalties and regulatory action by CCI.
c) Suggest remedial measures to restore fair competition.
Solutions – CA Final: Corporate & Economic Laws (100 Marks)
Section A: Theory & Conceptual Questions (20 Marks)
- Roles & Responsibilities of Directors (Sections 149 & 166, Companies Act 2013)
- Duties of Directors (Sec 166):
- Act in good faith, promote company’s objectives
- Exercise due care, skill, and diligence
- Avoid conflict of interest
- Not achieve undue gain for self or others
- Independent Directors (Sec 149):
- Should be non-executive, not having pecuniary interest
- Protect minority shareholders
- Participate in audit and remuneration committees
- Duties of Directors (Sec 166):
- SEBI (LODR) Regulations, 2015
- Key Provisions:
- Mandatory disclosures to stock exchanges
- Quarterly financial results within 45 days
- Corporate governance requirements (Board composition, committees)
- Related party transaction disclosure
- Purpose: Ensure transparency, accountability, and investor protection
- Key Provisions:
- Powers of NCLT & NCLAT
- NCLT Powers:
- Approve mergers, schemes of arrangement
- Compromise with creditors and members
- Winding up of companies
- Fraud or mismanagement investigation
- NCLAT: Appellate authority for NCLT orders under Sections 410, 421
- Appeal to Supreme Court: On substantial questions of law
- NCLT Powers:
- FDI & FEMA Compliance
- FDI Regulatory Framework: Automatic route or government approval
- FEMA Compliance:
- Filing of Form FC-GPR for share subscription
- RBI reporting for foreign investment
- Restrictions on sectoral caps
- Penalties: Non-compliance under Sections 13/15 of FEMA
- Competition Act, 2002 – Anti-Competitive Practices
- Section 3: Anti-competitive agreements (cartels, price-fixing)
- Section 4: Abuse of dominant position
- Penalties: Up to 10% of turnover, imprisonment for repeated violations
- Remedies: Cease & desist orders, divestiture
Section B: Practical / Application Questions (50 Marks)
Q1: Company Incorporation Checklist
- Documents Required:
- Digital Signature Certificate (DSC)
- Director Identification Number (DIN)
- Name approval (RUN Form)
- Memorandum of Association (MoA)
- Articles of Association (AoA)
- Proof of registered office
- Subscriber sheets, consent letters of directors
- Procedure:
- Apply to MCA for incorporation via SPICe+ Form
- PAN and TAN issuance through MCA portal
Q2: Board Resolution – Bonus Shares
Board Resolution:
“Resolved that pursuant to Section 63 of Companies Act, 2013, the company approves the issue of 1:2 bonus shares to existing shareholders, out of free reserves. The CFO is authorized to do all acts necessary for filing with MCA, updating the Register of Members, and listing with stock exchanges.”
- Necessary Approvals:
- Shareholders approval (if required)
- SEBI/Stock Exchange compliance for listed companies
Q3: Non-Filing of Annual Return (Sec 92)
- Consequence:
- Penalty on company = ₹ 50,000 (Sec 92(5))
- Penalty on officer = ₹ 25,000
- Draft Penalty Notice:
“Notice is hereby given to ABC Ltd. for non-filing of annual return for FY 2025-26. The company is liable to pay a penalty of ₹ 50,000 under Section 92(5) of Companies Act, 2013.”
Q4: SEBI Insider Trading
- Liability:
- Civil penalty up to ₹ 25 crore or 3 times profit made
- Prohibition from trading for specified period (Sec 12A, SEBI PIT Regulations)
- Show-Cause Notice:
“You are directed to show cause within 15 days as to why action should not be taken against you for trading in XYZ Ltd. shares based on unpublished price-sensitive information in violation of SEBI (Prohibition of Insider Trading) Regulations, 2015.”
Q5: FEMA – Foreign Investment Compliance
- Resident Indian investor investing USD 1M abroad:
- Comply with Liberalized Remittance Scheme (LRS)
- File Form ODI (Overseas Direct Investment) with RBI
- Ensure sectoral and approval limits are not exceeded
- Maintain reporting requirements annually to RBI
Section C: Case Study / Analytical Questions (30 Marks)
Q1: Corporate Governance – Independent Director Non-Appointment
- Sections Violated:
- Companies Act, 2013: Sec 149 (Board composition)
- SEBI LODR: Regulation 17(1)
- Corrective Measures:
- Appoint independent directors immediately
- File disclosure with stock exchanges
- Penalty: ₹ 1 lakh on company, ₹ 25,000 on officers
- Impact: Poor corporate governance rating → affects investor confidence
Q2: M&A – Non-Compliance of Sec 236
- Legal Consequences:
- Minority shareholders can file objection with NCLT
- NCLT may approve/modify/reject the scheme
- NCLT Application Process:
- File scheme of arrangement
- Issue notice to shareholders/creditors
- Hearing before NCLT and order
- SEBI Takeover Compliance:
- Mandatory open offer if acquisition exceeds 25% in listed company
Q3: Competition Law – Predatory Pricing
- Sections Violated: Section 4 (Abuse of dominant position)
- Regulatory Action by CCI:
- Cease & desist order
- Penalty up to 10% of turnover
- Divestiture/remedial directions
- Remedial Measures:
- Adopt fair pricing policy
- Avoid exclusive agreements
- Compliance program to monitor anti-competitive practices
Disclaimer:
This mock test is created for educational purposes only. Questions and solutions are original and inspired by typical CA Final exam patterns; they are not copied from any official CA exam papers.