Chapter 7: Management and Administration - Test 1: answer key

Question 1 · 2 marks · Chapter 7: Management and Administration · hard

Scenario. Anekta Garments Ltd. is an unlisted public company with 1,850 members, having its registered office in Ludhiana, Punjab. The company allotted 2,00,000 equity shares to Mr. Rohit on 15th May 2025, but the consideration for these shares was actually funded by his brother-in-law, Mr. Suresh, under a private family arrangement. The company made the necessary entries in its Register of Members (Form MGT-1) on 22nd May 2025. Neither Rohit filed Form MGT-4 declaring that he was only a registered owner, nor did Suresh file Form MGT-5 declaring his beneficial interest. In August 2025, the company received a declaration from another shareholder, Ms. Priya, under Section 90 of the Companies Act, 2013, stating that she indirectly held 12% of the company's voting rights through a chain of subsidiaries. The company's Company Secretary, Mr. Anil, is now reviewing the compliance status. Meanwhile, the company wants to keep a foreign register for its members residing in Dubai and has opened the register on 1st September 2025. The Board is also considering whether the company's Annual Return for FY 2024-25 needs certification by a Practicing Company Secretary (PCS) and whether Form MGT-7A can be used instead of MGT-7.

In the case of Anekta Garments Ltd., what is the consequence of Mr. Suresh’s failure to file Form MGT-5 declaring his beneficial interest?

1. Suresh’s rights with respect to the shares shall not be enforceable by him or by any person claiming through him. (correct answer)
2. Suresh can enforce his rights as a beneficial owner only after paying a penalty of ₹50,000.
3. The company can forfeit the shares held by Rohit and transfer them to Suresh.
4. Suresh’s declaration is not required because he is a relative of the registered owner.

Answer: A — Suresh’s rights with respect to the shares shall not be enforceable by him or by any person claiming through him.

Explanation. Section 89(8) expressly provides that where a declaration required to be made by the beneficial owner under Section 89(2) is not made, any right with respect to such shares shall not be enforceable by the beneficial owner or by any person claiming through him. Option (a)) is the correct statutory consequence. Option (b)) is a trap—penalty under Section 89(5) is separate and does not restore enforceability. Options (c) and (d) are incorrect because there is no provision for forfeiture, and the exemption for relatives does not exist under Section 89.

Where it goes wrong. Students often assume that paying a penalty regularises the default; however, Section 89(8) suspends enforceability of rights until the declaration is made.

Authority. Section 89(8) of the Companies Act, 2013

Question 2 · 2 marks · Chapter 7: Management and Administration · medium

Anekta Garments Ltd. opened a foreign register in Dubai on 1st September 2025. Within what time must the company file Form MGT-3 with the Registrar of Companies?

1. Within 15 days of opening the foreign register.
2. Within 30 days of opening the foreign register. (correct answer)
3. Within 45 days of opening the foreign register.
4. Within 60 days of opening the foreign register.

Answer: B — Within 30 days of opening the foreign register.

Explanation. Rule 7(2) of the Companies (Management and Administration) Rules, 2014 mandates that a company must file notice of the situation of the office where the foreign register is kept in Form MGT-3 with the Registrar within 30 days from the date of opening of the foreign register. Option (b) is correct. Options (a), (c), and (d) represent incorrect timelines not prescribed under the Rules.

Where it goes wrong. Students may confuse the 30-day timeline with the 15-day timeline applicable for transmitting copies of entries from the foreign register to the registered office in India.

Authority. Section 88(4) of the Companies Act, 2013; Rule 7(2) of the Companies (Management and Administration) Rules, 2014

Question 3 · 2 marks · Chapter 7: Management and Administration · medium

Regarding Ms. Priya’s declaration under Section 90, which form must the company use to maintain the register of significant beneficial owners?

1. Form BEN-1
2. Form BEN-2
3. Form BEN-3 (correct answer)
4. Form BEN-4

Answer: C — Form BEN-3

Explanation. Under Section 90(2) read with Rule 5 of the SBO Rules, 2018, every company must maintain a register of significant beneficial owners in Form BEN-3. Form BEN-1 is the declaration by the SBO, Form BEN-2 is the return filed with the RoC, and Form BEN-4 is the notice issued by the company seeking information. Hence, option (c) is correct.

Where it goes wrong. Students often mix up the forms: BEN-1 is for the individual’s declaration, BEN-2 is for the company’s filing with the RoC, and BEN-3 is the statutory register.

Authority. Section 90(2) of the Companies Act, 2013; Rule 5 of the Companies (Significant Beneficial Owners) Rules, 2018

Question 4 · 2 marks · Chapter 7: Management and Administration · hard

Anekta Garments Ltd. wants to know whether its Annual Return for FY 2024-25 requires certification by a Practicing Company Secretary (PCS) in Form MGT-8. The company’s paid-up share capital is ₹12 crore and turnover is ₹55 crore. Which statement is correct?

1. PCS certification is required only if the company is listed.
2. PCS certification is mandatory because the company is an unlisted public company.
3. PCS certification is not required because the paid-up capital is below ₹10 crore.
4. PCS certification is mandatory because the company’s turnover exceeds ₹50 crore. (correct answer)

Answer: D — PCS certification is mandatory because the company’s turnover exceeds ₹50 crore.

Explanation. Section 92(2) read with Rule 11(2) requires PCS certification in Form MGT-8 for (i) listed companies, or (ii) companies having paid-up share capital of ₹10 crore or more, or (iii) turnover of ₹50 crore or more. Since Anekta’s turnover is ₹55 crore (exceeding ₹50 crore), certification is mandatory. Option (d)) is correct. Option (b) is incorrect because not all unlisted public companies require certification. Option (c) is factually wrong because the capital is ₹12 crore. Option (a)) is incorrect because the criteria are disjunctive.

Where it goes wrong. Students may focus only on paid-up capital and ignore the turnover criterion, or wrongly assume that unlisted public companies are automatically exempt.

Authority. Section 92(2) of the Companies Act, 2013; Rule 11(2) of the Companies (Management and Administration) Rules, 2014

Question 5 · 2 marks · Chapter 7: Management and Administration · hard

Scenario. Zenith Agro Tech Pvt Ltd is a private company incorporated in 2018 with a paid-up share capital of ₹18 crore and a turnover of ₹62 crore for FY 2024-25. The company has 45 members. The Board of Directors decided to keep the registers of members and copies of annual returns at its branch office in Nashik, where more than one-tenth of the total members reside. The company passed a special resolution on 20th June 2025 approving this shift, but the resolution was not filed with the Registrar of Companies (RoC). On 1st July 2025, a member, Mr. Vivek, sought inspection of the Register of Members and annual returns at the Nashik office. The company allowed inspection but refused to provide copies, stating that copies would be provided only at the registered office in Pune. Meanwhile, the company filed its annual return for FY 2024-25 on 30th November 2025. The RoC observed that the annual return was not certified by a PCS and issued a show-cause notice. The company contended that since it is a private company with a turnover below ₹100 crore, PCS certification is not required. The company also failed to file Form MGT-3 for the foreign register it opened in Singapore on 1st August 2025 within the prescribed timeline.

Zenith Agro Tech Pvt Ltd shifted its registers to Nashik based on a special resolution but did not file the resolution with the RoC. What is the validity of keeping the registers at Nashik?

1. The registers can be kept at Nashik because a special resolution was passed, and filing with the RoC is a subsequent procedural requirement. (correct answer)
2. The registers cannot be kept at Nashik because the special resolution must be filed with the RoC in advance before the shift.
3. The registers can be kept at Nashik only if the company obtains prior approval of the Regional Director.
4. The registers can be kept at Nashik if the company files the special resolution with the RoC within 30 days of the shift.

Answer: A — The registers can be kept at Nashik because a special resolution was passed, and filing with the RoC is a subsequent procedural requirement.

Explanation. Section 94(1) permits registers to be kept at any other place in India where more than one-tenth of the members reside, if approved by a special resolution. The requirement to give a copy of the proposed resolution to the Registrar in advance was omitted by the Companies (Amendment) Act, 2017 w.e.f. 13.06.2018. Therefore, the special resolution itself is sufficient, and non-filing does not invalidate the shift. Option (a) is correct. Options (b) and (d) refer to pre-2018 requirements. Option (c) is incorrect as no Regional Director approval is needed.

Where it goes wrong. Students relying on old study materials may incorrectly apply the pre-2018 requirement of filing the resolution with the RoC in advance.

Authority. Section 94(1) of the Companies Act, 2013

Question 6 · 2 marks · Chapter 7: Management and Administration · medium

Mr. Vivek, a member of Zenith Agro Tech Pvt Ltd, was allowed inspection at Nashik but refused copies. What is the maximum penalty per default for refusal to provide copies under Section 94?

1. ₹25,000 for the company and ₹5,000 for every officer in default.
2. ₹1,000 per day subject to a maximum of ₹1,00,000. (correct answer)
3. ₹1,00,000 for the company and ₹50,000 for every officer in default.
4. ₹5,000 per day subject to a maximum of ₹5,00,000.

Answer: B — ₹1,000 per day subject to a maximum of ₹1,00,000.

Explanation. Section 94(4) provides that if inspection or making of extracts or copies is refused, the company and every officer in default shall be liable to a penalty of ₹1,000 for every day during which the refusal or default continues, subject to a maximum of ₹1,00,000. Option (b)) is the correct statutory penalty. Options (a), (b), and (d) are incorrect figures from other provisions.

Where it goes wrong. Students may confuse the penalty under Section 94(4) with the penalty for failure to maintain registers under Section 88(5) (₹3,00,000) or for refusal of inspection of minutes under Section 119(3).

Authority. Section 94(4) of the Companies Act, 2013

Question 7 · 2 marks · Chapter 7: Management and Administration · hard

The RoC issued a show-cause notice to Zenith Agro Tech Pvt Ltd for not certifying its annual return with Form MGT-8. The company argued that as a private company, it is exempt. Is the company’s contention valid?

1. Valid, because all private companies are exempt from PCS certification.
2. Valid, because the company’s turnover is below ₹100 crore.
3. Invalid, because the company’s turnover of ₹62 crore exceeds the ₹50 crore threshold. (correct answer)
4. Invalid, because all companies with paid-up capital above ₹5 crore require PCS certification.

Answer: C — Invalid, because the company’s turnover of ₹62 crore exceeds the ₹50 crore threshold.

Explanation. The requirement for PCS certification in Form MGT-8 applies to a listed company or a company having paid-up share capital of ₹10 crore or more or turnover of ₹50 crore or more, irrespective of whether it is private or public. Zenith Agro Tech’s turnover is ₹62 crore, which exceeds ₹50 crore, so certification is mandatory. Option (c) is correct. Option (a) is a misconception—private companies are not universally exempt. Option (b) uses a wrong threshold (₹100 crore). Option (d) uses a wrong capital threshold (₹5 crore).

Where it goes wrong. Students often incorrectly assume that private companies are exempt from PCS certification, ignoring the turnover-based threshold.

Authority. Section 92(2) of the Companies Act, 2013; Rule 11(2) of the Companies (Management and Administration) Rules, 2014

Question 8 · 2 marks · Chapter 7: Management and Administration · hard

Zenith Agro Tech Pvt Ltd opened a foreign register in Singapore on 1st August 2025 but failed to file Form MGT-3. What is the penalty for non-filing of Form MGT-3?

1. ₹1,000 per day subject to a maximum of ₹1,00,000.
2. ₹5,000 per day subject to a maximum of ₹5,00,000.
3. ₹10,000 plus ₹100 per day subject to a maximum of ₹2,00,000.
4. No specific penalty is prescribed for late filing of Form MGT-3. (correct answer)

Answer: D — No specific penalty is prescribed for late filing of Form MGT-3.

Explanation. Neither Section 88 nor Rule 7 prescribes a specific penalty for failure to file Form MGT-3. However, Section 450 of the Companies Act, 2013 provides a residual penalty for contravention of any provision where no specific penalty is provided, which is ₹10,000 and in case of continuing offence, ₹1,000 per day subject to a maximum of ₹2,00,000. Since the question asks for the specific penalty for non-filing of Form MGT-3, and no specific penalty is laid down, option (d) is the most appropriate. Options (a), (b), and (c) are penalties under other provisions.

Where it goes wrong. Students may assume that every form has a specific penalty, but for Form MGT-3, the penalty is residuary under Section 450.

Authority. Section 88(4) of the Companies Act, 2013; Rule 7(2) of the Companies (Management and Administration) Rules, 2014

Question 9 · 2 marks · Chapter 7: Management and Administration · medium

Scenario. Vayu Renewables Ltd. is a listed public company with its registered office in Ahmedabad. The company's shares are listed on the BSE and NSE. For FY 2024-25, the company had a paid-up equity share capital of ₹25 crore and a turnover of ₹180 crore. The company filed its annual return on 28th October 2025, which was signed by a director and the Company Secretary. The RoC pointed out that the annual return was not certified by a PCS in Form MGT-8. The company's management argued that since the company is listed, it is required to file Form MGT-7 but PCS certification is not mandatory if the paid-up capital is below ₹50 crore. Meanwhile, the company received a declaration under Section 89 from Mr. Farhan, a registered shareholder holding 15% shares, stating that he does not hold the beneficial interest and that the beneficial owner is a foreign entity. The company failed to file Form MGT-6 with the RoC within 30 days of receiving the declaration. The RoC also noticed that the company maintained its register of members in electronic form but the audit trail was disabled. Additionally, the company's annual return for FY 2023-24 had a delay of 90 days in filing.

Vayu Renewables Ltd., a listed company, filed its annual return in Form MGT-7 but did not obtain PCS certification in Form MGT-8. What is the correct legal position regarding PCS certification for a listed company?

1. PCS certification is mandatory for all listed companies, irrespective of their paid-up capital or turnover. (correct answer)
2. PCS certification is optional for listed companies if their paid-up capital is below ₹50 crore.
3. PCS certification is required only if the listed company’s turnover exceeds ₹100 crore.
4. PCS certification is required only if the listed company has more than 1,000 members.

Answer: A — PCS certification is mandatory for all listed companies, irrespective of their paid-up capital or turnover.

Explanation. Section 92(2) mandates PCS certification in Form MGT-8 for every listed company, regardless of its paid-up capital or turnover. The other criteria (paid-up capital ≥ ₹10 crore or turnover ≥ ₹50 crore) apply to unlisted companies. Therefore, Option (a)) is correct. Options (a), (c), and (d) introduce thresholds that are not applicable to listed companies.

Where it goes wrong. Students may incorrectly apply the monetary thresholds applicable to unlisted companies to listed companies, overlooking that listing itself triggers mandatory PCS certification.

Authority. Section 92(2) of the Companies Act, 2013

Question 10 · 2 marks · Chapter 7: Management and Administration · hard

Vayu Renewables Ltd. failed to file Form MGT-6 within 30 days of receiving Mr. Farhan’s declaration under Section 89. What is the maximum penalty on the company for this failure?

1. ₹1,00,000
2. ₹5,00,000 (correct answer)
3. ₹2,00,000
4. ₹10,00,000

Answer: B — ₹5,00,000

Explanation. Under Section 89(7), if a company fails to file the return in Form MGT-6 within the specified time, the company and every officer in default shall be liable to a penalty of ₹1,000 for each day during which the failure continues, subject to a maximum of ₹5,00,000 for the company and ₹2,00,000 for the officer. Therefore, the maximum penalty on the company is ₹5,00,000. Option (b)) is correct. Options (a), (b), and (d) are incorrect limits.

Where it goes wrong. Students may confuse the maximum penalty on the company (₹5,00,000) with the maximum penalty on the officer in default (₹2,00,000).

Authority. Section 89(7) of the Companies Act, 2013

Question 11 · 2 marks · Chapter 7: Management and Administration · medium

The RoC noticed that Vayu Renewables Ltd. disabled the audit trail in its electronic books of account. Which provision of the Companies (Accounts) Rules, 2014 is violated?

1. Rule 4 – financial information maintained outside India.
2. Rule 3(2) – books of account must be kept on accrual basis.
3. Rule 3(1) – audit trail must be preserved and not capable of being disabled. (correct answer)
4. Rule 5 – consolidation of accounts.

Answer: C — Rule 3(1) – audit trail must be preserved and not capable of being disabled.

Explanation. Rule 3(1) of the Companies (Accounts) Rules, 2014, applicable from FY 2023-24, mandates that accounting software used for maintaining books of account must have an audit trail/edit log facility, and the audit trail must not be capable of being disabled. Disabling the audit trail violates Rule 3(1). Options (b), (c), and (d) refer to other rules not relevant to audit trail.

Where it goes wrong. Students may focus on the statutory requirement to maintain books in electronic mode but overlook the specific audit trail requirement introduced by the 2021 amendment.

Authority. Rule 3(1) of the Companies (Accounts) Rules, 2014

Question 12 · 2 marks · Chapter 7: Management and Administration · medium

Vayu Renewables Ltd. filed its annual return for FY 2023-24 with a delay of 90 days. What is the maximum penalty on the company under Section 92(5)?

1. ₹50,000
2. ₹1,00,000
3. ₹5,00,000
4. ₹2,00,000 (correct answer)

Answer: D — ₹2,00,000

Explanation. Section 92(5) provides that for failure to file the annual return, the company and every officer in default shall be liable to a penalty of ₹10,000 and in case of continuing failure, a further penalty of ₹100 per day, subject to a maximum of ₹2,00,000 for the company and ₹50,000 for the officer. Hence, the maximum penalty on the company is ₹2,00,000. Option (d)) is correct.

Where it goes wrong. Students may confuse the maximum penalty on the company (₹2,00,000) with the maximum penalty on the officer (₹50,000), or with the higher penalty under Section 92(6) for incorrect PCS certification (₹2,00,000, but that applies to the PCS).

Authority. Section 92(5) of the Companies Act, 2013

Question 13 · 2 marks · Chapter 7: Management and Administration · medium

Scenario. Sunrise Infra Ltd. is an unlisted public company with 2,200 members. The company has a paid-up share capital of ₹40 crore and a turnover of ₹95 crore. On 10th April 2025, the company received a notice from Mr. Deepak, a member holding 12% of the paid-up capital, requesting inspection of the register of members and annual returns kept at the registered office in Mumbai. The company allowed inspection but demanded a fee of ₹500. Mr. Deepak challenged the fee. Meanwhile, the company had also opened a foreign register in London on 1st March 2025, but failed to file Form MGT-3 with the RoC within 30 days. The company’s Annual General Meeting (AGM) for FY 2024-25 was held on 30th September 2025, and the annual return was filed on 25th November 2025. The RoC observed that the annual return was not signed by the Company Secretary, as the company had not appointed a whole-time Company Secretary. Additionally, the company failed to maintain the register of debenture-holders in Form MGT-2 for its non-convertible debentures issued in FY 2023-24. The company also could not provide the annual return on its website as required under Section 92(3).

Sunrise Infra Ltd. demanded a fee of ₹500 from Mr. Deepak for inspecting the register of members. Is the company justified in charging this fee?

1. No, because a member is entitled to inspect the register without payment of any fee. (correct answer)
2. Yes, because the company can charge any fee as specified in its Articles.
3. Yes, but the fee cannot exceed ₹50 per inspection.
4. No, because inspection is allowed only with the prior approval of the Registrar.

Answer: A — No, because a member is entitled to inspect the register without payment of any fee.

Explanation. Section 94(2) provides that registers and copies of returns shall be open for inspection by any member, debenture-holder, other security holder or beneficial owner during business hours without payment of any fee. The company cannot charge a fee from members for inspection. Option (a)) is correct. Option (c) refers to a fee limit, but no fee is payable by members. Option (d) is incorrect as no prior approval is required.

Where it goes wrong. Students may confuse the fee for inspection (nil for members) with the fee for obtaining copies (which can be charged, subject to limits).

Authority. Section 94(2) of the Companies Act, 2013

Question 14 · 2 marks · Chapter 7: Management and Administration · hard

Sunrise Infra Ltd. failed to file Form MGT-3 for its London foreign register within 30 days. What is the consequence of this default?

1. The foreign register becomes invalid and the company must close it.
2. The company is liable to a penalty under Section 450 for contravention of Rule 7. (correct answer)
3. The company must file Form MGT-3 within an additional 30 days with a late fee.
4. There is no consequence because Form MGT-3 is required only for registers kept in countries with which India has a tax treaty.

Answer: B — The company is liable to a penalty under Section 450 for contravention of Rule 7.

Explanation. Rule 7(2) requires Form MGT-3 to be filed within 30 days of opening the foreign register. No specific penalty is provided under Section 88 or Rule 7, so the residual penalty under Section 450 applies (₹10,000 and ₹1,000 per day for continuing default, up to ₹2,00,000). Option (b) correctly identifies the consequence. Options (a), (c), and (d) are not valid legal consequences.

Where it goes wrong. Students may assume a specific penalty exists for Form MGT-3, or that late filing can be regularised by paying a late fee without penalty.

Authority. Section 88(4) of the Companies Act, 2013; Rule 7(2) of the Companies (Management and Administration) Rules, 2014; Section 450 of the Companies Act, 2013

Question 15 · 2 marks · Chapter 7: Management and Administration · medium

The annual return of Sunrise Infra Ltd. was not signed by the Company Secretary because the company had not appointed a whole-time Company Secretary. Who can sign the annual return in this case?

1. Any director of the company.
2. The Chief Financial Officer of the company.
3. A director and a Company Secretary in practice. (correct answer)
4. The statutory auditor of the company.

Answer: C — A director and a Company Secretary in practice.

Explanation. Section 92(1) requires the annual return to be signed by a director and the Company Secretary; and in case there is no Company Secretary, by a Company Secretary in practice. Since the company has not appointed a whole-time Company Secretary, the annual return must be signed by a director and a Company Secretary in practice. Option (c)) is correct. Options (a), (c), and (d) are not authorised signatories under Section 92(1).

Where it goes wrong. Students may overlook the requirement of a Company Secretary in practice and assume that any director can sign alone.

Authority. Section 92(1) of the Companies Act, 2013

Question 16 · 2 marks · Chapter 7: Management and Administration · medium

Sunrise Infra Ltd. failed to maintain the register of debenture-holders in Form MGT-2. What is the penalty on the company for this failure?

1. ₹1,00,000
2. ₹10,00,000
3. ₹5,00,000
4. ₹3,00,000 (correct answer)

Answer: D — ₹3,00,000

Explanation. Section 88(5) provides that if a company fails to maintain the register of members, debenture-holders, or other security holders in accordance with Section 88(1) or (2), the company shall be liable to a penalty of ₹3,00,000, and every officer in default shall be liable to a penalty of ₹50,000. Therefore, the penalty on the company is ₹3,00,000. Option (d)) is correct.

Where it goes wrong. Students may confuse the penalty under Section 88(5) with the penalty under Section 94(4) for refusal of inspection (₹1,00,000) or under Section 92(5) for failure to file the annual return (₹2,00,000).

Authority. Section 88(5) of the Companies Act, 2013

Question 17 · 2 marks · Chapter 7: Management and Administration · medium

Scenario. Alpha Ltd. has 850 members. It failed to maintain its Register of Members in Form MGT-1. What is the maximum penalty that can be imposed on the company?

Alpha Ltd. has 850 members. It failed to maintain its Register of Members in Form MGT-1. What is the maximum penalty that can be imposed on the company?

1. ₹3,00,000 (correct answer)
2. ₹1,00,000
3. ₹5,00,000
4. ₹10,00,000

Answer: A — ₹3,00,000

Explanation. Section 88(5) imposes a penalty of ₹3,00,000 on the company for failure to maintain the Register of Members, and ₹50,000 on every officer in default. Therefore, the maximum penalty on the company is ₹3,00,000. Option (a)) is correct.

Where it goes wrong. Students may incorrectly apply the higher penalty of ₹5,00,000 (which applies to certain Section 89/90 defaults) to a Section 88 violation.

Authority. Section 88(5) of the Companies Act, 2013

Question 18 · 2 marks · Chapter 7: Management and Administration · hard

Scenario. Beta Ltd. filed its annual return without the signature of a director. The annual return was filed on time but is defective. What is the penalty on the company for this defect?

Beta Ltd. filed its annual return without the signature of a director. The annual return was filed on time but is defective. What is the penalty on the company for this defect?

1. ₹50,000 and ₹500 per day for continuing default, up to ₹5,00,000.
2. ₹10,000 and ₹100 per day for continuing default, up to ₹2,00,000. (correct answer)
3. ₹1,000 per day for continuing default, up to ₹1,00,000.
4. No penalty for a defective return if filed within time.

Answer: B — ₹10,000 and ₹100 per day for continuing default, up to ₹2,00,000.

Explanation. Section 92(5) applies to failure to file the annual return under Section 92(4). Filing a defective return is treated as non-compliance with Section 92, and the penalty under Section 92(5) applies: ₹10,000 and ₹100 per day for continuing failure, subject to a maximum of ₹2,00,000 for the company. Option (b)) is correct. Option (a)) relates to Section 92(6) (incorrect PCS certification). Option (c) is the penalty under Section 94(4). Option (d) is incorrect as a defective return is not treated as valid filing.

Where it goes wrong. Students may assume that filing within time is sufficient even if the return is defective, or may apply the PCS-specific penalty.

Authority. Section 92(5) of the Companies Act, 2013

Question 19 · 2 marks · Chapter 7: Management and Administration · hard

Scenario. Gamma Ltd. kept its register of members at a place other than the registered office without passing a special resolution. What is the penalty on the company for this violation?

Gamma Ltd. kept its register of members at a place other than the registered office without passing a special resolution. What is the penalty on the company for this violation?

1. ₹1,00,000
2. ₹5,00,000
3. ₹3,00,000 (correct answer)
4. ₹1,000 per day subject to a maximum of ₹1,00,000.

Answer: C — ₹3,00,000

Explanation. Keeping the register at a place other than the registered office without a special resolution is a failure to maintain the register in accordance with Section 88 read with Section 94. Section 88(5) imposes a penalty of ₹3,00,000 on the company. Option (c)) is correct. Option (d) is the penalty for refusal of inspection under Section 94(4), not for improper maintenance.

Where it goes wrong. Students may apply the Section 94(4) penalty for refusal of inspection, but the default here is improper maintenance of the register, governed by Section 88(5).

Authority. Section 88(5) of the Companies Act, 2013; Section 94(1) of the Companies Act, 2013

Question 20 · 2 marks · Chapter 7: Management and Administration · medium

Scenario. Delta Ltd. received a declaration under Section 89 but failed to file Form MGT-6 with the RoC. The company’s default continued for 100 days. What is the maximum penalty on the company?

Delta Ltd. received a declaration under Section 89 but failed to file Form MGT-6 with the RoC. The company’s default continued for 100 days. What is the maximum penalty on the company?

1. ₹1,00,000
2. ₹2,00,000
3. ₹10,00,000
4. ₹5,00,000 (correct answer)

Answer: D — ₹5,00,000

Explanation. Under Section 89(7), the maximum penalty on the company for failure to file Form MGT-6 is ₹5,00,000. Even though the default continued for 100 days, the maximum cap is ₹5,00,000. Option (d)) is correct.

Where it goes wrong. Students may calculate ₹1,000 × 100 = ₹1,00,000 and stop there, but the statutory maximum is ₹5,00,000, which applies once the daily penalty exceeds that amount.

Authority. Section 89(7) of the Companies Act, 2013

Question 21 · 2 marks · Chapter 7: Management and Administration · medium

Scenario. Epsilon Ltd. is an unlisted public company with a paid-up capital of ₹8 crore and a turnover of ₹45 crore. Its annual return for FY 2024-25 was filed without PCS certification. Is the company required to obtain PCS certification?

Epsilon Ltd. is an unlisted public company with a paid-up capital of ₹8 crore and a turnover of ₹45 crore. Its annual return for FY 2024-25 was filed without PCS certification. Is the company required to obtain PCS certification?

1. No, because neither the paid-up capital nor the turnover meets the prescribed thresholds. (correct answer)
2. Yes, because the paid-up capital exceeds ₹5 crore.
3. Yes, because all public companies require PCS certification.
4. No, because PCS certification is required only for listed companies.

Answer: A — No, because neither the paid-up capital nor the turnover meets the prescribed thresholds.

Explanation. PCS certification is required for a listed company or a company with paid-up capital ≥ ₹10 crore or turnover ≥ ₹50 crore. Epsilon Ltd. has paid-up capital of ₹8 crore (below ₹10 crore) and turnover of ₹45 crore (below ₹50 crore). Therefore, it is not required to obtain PCS certification. Option (a)) is correct.

Where it goes wrong. Students may incorrectly apply a lower threshold (₹5 crore) or assume all public companies need certification.

Authority. Section 92(2) of the Companies Act, 2013

Question 22 · 2 marks · Chapter 7: Management and Administration · medium

Scenario. Zeta Ltd. failed to file its annual return for FY 2024-25. The RoC initiated adjudication. What is the maximum penalty on each officer in default under Section 92(5)?

Zeta Ltd. failed to file its annual return for FY 2024-25. The RoC initiated adjudication. What is the maximum penalty on each officer in default under Section 92(5)?

1. ₹25,000
2. ₹50,000 (correct answer)
3. ₹1,00,000
4. ₹2,00,000

Answer: B — ₹50,000

Explanation. Under Section 92(5), the maximum penalty on an officer in default for failure to file the annual return is ₹50,000. The company’s maximum penalty is ₹2,00,000. Option (b) is correct.

Where it goes wrong. Students may confuse the officer’s maximum penalty (₹50,000) with the company’s maximum penalty (₹2,00,000).

Authority. Section 92(5) of the Companies Act, 2013

Question 23 · 2 marks · Chapter 7: Management and Administration · hard

Scenario. Theta Ltd. maintained its register of members in electronic form but did not ensure that the records were capable of being dated and signed digitally. Which rule is violated?

Theta Ltd. maintained its register of members in electronic form but did not ensure that the records were capable of being dated and signed digitally. Which rule is violated?

1. Rule 5 of the Companies (Significant Beneficial Owners) Rules, 2018.
2. Rule 3 of the Companies (Accounts) Rules, 2014.
3. Rule 27 of the Companies (Management and Administration) Rules, 2014. (correct answer)
4. Rule 7 of the Companies (Management and Administration) Rules, 2014.

Answer: C — Rule 27 of the Companies (Management and Administration) Rules, 2014.

Explanation. Rule 27 of the Companies (Management and Administration) Rules, 2014 lays down the conditions for maintaining records in electronic form, including that the records must be capable of being dated and signed digitally wherever required. Failure to meet this condition violates Rule 27. Option (c)) is correct.

Where it goes wrong. Students may confuse Rule 27 (electronic records under Chapter VII) with Rule 3 of the Companies (Accounts) Rules, 2014 (audit trail for books of account).

Authority. Rule 27 of the Companies (Management and Administration) Rules, 2014

Question 24 · 2 marks · Chapter 7: Management and Administration · medium

Scenario. Iota Ltd. refused inspection of its register of members to a member. The refusal continued for 60 days. What is the maximum penalty that can be imposed on the company?

Iota Ltd. refused inspection of its register of members to a member. The refusal continued for 60 days. What is the maximum penalty that can be imposed on the company?

1. ₹60,000
2. ₹5,00,000
3. ₹3,00,000
4. ₹1,00,000 (correct answer)

Answer: D — ₹1,00,000

Explanation. Section 94(4) provides for a penalty of ₹1,000 per day for refusal of inspection, subject to a maximum of ₹1,00,000. For 60 days, the daily penalty would be ₹60,000, but the question asks for the maximum penalty, which is the statutory cap of ₹1,00,000. Option (d)) is correct.

Where it goes wrong. Students may calculate the actual penalty (₹60,000) instead of the maximum statutory cap (₹1,00,000).

Authority. Section 94(4) of the Companies Act, 2013

Question 25 · 2 marks · Chapter 7: Management and Administration · medium

Scenario. Kappa Ltd. is a small company. Which form should it use to file its annual return from FY 2020-21 onwards?

Kappa Ltd. is a small company. Which form should it use to file its annual return from FY 2020-21 onwards?

1. Form MGT-7A (correct answer)
2. Form MGT-7
3. Form MGT-8
4. Form MGT-9

Answer: A — Form MGT-7A

Explanation. Rule 11(1) provides that One Person Companies (OPCs) and small companies shall file their annual return in Form MGT-7A from FY 2020-21 onwards. Form MGT-7 is for other companies, Form MGT-8 is the PCS certification, and Form MGT-9 (extract of annual return) was under the old Act. Option (a)) is correct.

Where it goes wrong. Students may incorrectly select Form MGT-7 for a small company, or confuse MGT-7A with MGT-8.

Authority. Rule 11(1) of the Companies (Management and Administration) Rules, 2014