Chapter 13 GOVERNMENT COMPANY

Chapter 13 : GOVERNMENT COMPANY

1. Government company requires to prepare annual report within three months 13.1
a. from last day of financial year to b. from the date of AGM in c. from the date d. none of the
which financial statements which the CAG gave of audit report above
pertains comment

2. What are the documents a Government Company should place before both house of Parliaments/ State
legislation?
a. Annual report b. Audit report c. Comments of CAG d. All the above

3. Government company means company in which 51% or more paid up share capital is held
a. Partly by CG and partly by SG b. CG or SG c. CG and SG or SGs d. All of the above

4. Government company means a company which is

a. Subsidiary of b. Holding of c. both of above d. none of the above
government company government company

5. Central Government and Government of Karnataka together hold 40% of the paid up share capital of XY
Limited. A Government Company also holds 20% of the paid up share capital in XY Limited. Examine with
reference to the provisions of the Companies Act 2013 whether XY Limited is Government Company.
a. Government company b. Private Company c. Public Company d. None of the above

6. Government of Gujarat and Government of Orissa are members of AB Limited such that AB Ltd. is a
Government Company. Central Government is not a member. Examine with reference to the provisions of
the Companies Act 2013, what documents are to be prepared?
a. Annual reports on the working and b. GST Report c. Managerial d. Profitability
affairs of the company. Remuneration report statement

7. Government of Gujarat and Government of Orissa are members of AB Limited such that AB Ltd. is a
Government Company. Central Government is not a member. Examine with reference to the provisions of
the Companies Act 2013, what documents are to be prepared?
a. Annual reports on the working and b. Profitability c. Board report d. All of above
affairs of the company. statement

8. Central Government is a member of a government company AB limited. AGM was held on 3rd July 2018 in
which the CAG has given its comments on the audit report. Examine with reference to the provisions of
the Companies Act 2013, what should be done by the AB limited?
a. Prepare an annual b. Prepare an annual c. Prepare Consolidated report d. (b) and (c)
rd rd
report within 3 Aug report within 3 Oct within 3 months from the
‘18. ‘18. date of AGM

9. In the situation above (Q8.) what further action is required to be taken?

a. Submit the Annual b. File appeal c. Place the Annual Report, Audit Report along with d. All of
Report in court if aggrieved CAG comments, before both houses of Parliament above

10. Shares of GH Limited is held by Government of Maharashtra and Government of Rajasthan to the extent
of 62%. As per the provisions of Sec 395, before which Authority shall such company place its Annual
Report?
a. Court b. Parliament c. State Legislature d. Registrar

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 Chapter 13 GOVERNMENT COMPANY

13.2 11. Shares of GH Limited is held by Central Government and by Government of Rajasthan to the extent of
52%. As per the provisions of Sec 394, before which Authority shall such company place its Annual Report?
a. Court b. Both House of Parliament c. State Legislature d. (b) and (c)

12. Shares of GH Limited is held by Central Government to the extent of 58%. As per the provisions of Sec
394, before which Authority shall such company place its Annual Report and Audit Report?
a. Court b. Both House of Parliament c. State Legislature d. (b) and (c)

13. Blooming Flowers Limited is a subsidiary of a government company but not a wholly owned subsidiary of
a Government company. Examine with reference to the provisions of Companies Act whether Blooming
Flowers Limited is Government Company.
a. Government Company b. Sec 8 Company c. Private Ltd. d. None of the above

14. Mr. Somebody is appointed as a director of a Government Company. He did not file his consent to act as
director under DIR2 after appointment. Examine with the provisions of the Companies Act if he is legally liable
considering the contravention.
a. Should file b. Director of Government c. Company and Officer in default d. None of the
consent within 30 Company is exempted from shall be punishable with fine of above
days of appointment. filing consent with the ROC. Rs. 50,000 to Rs. 5, 00,000.

15. A government company holds 10% of the paid up share capital in Excel Limited. Central Government
holds 55% of the paid up share capital of Excel Limited. Examine whether Excel Limited can be considered as
Government company as per the provisions of Companies Act.
a. Government company b. Public Company c. Private Company d. None of the above

16. 30 % of the paid capital of AB Limited is held by a government company. State government also holds
30% of the paid up capital of AB Limited. As per the provisions of Companies Act, for AB Limited to be called as
Government company which of the following conditions is to be fulfilled?
a. 21% or more to be b. 21% or more to c. 21% or more to be held by Central d. None of
held by Government be held by Government or State government or the above
Company Public Company Subsidiary of a Government Company

17. FTI Ltd. a Government Company has inadequate profits in the year 2018-19. The directors of the Company
proposed to declare dividends for the said year, but later changed their minds quoting inadequate profits
as a reason. The members of the company are of the view that since profit for the current year is
inadequate a dividend at maximum 10% can be still be paid as per law. Comment.
a. No dividend can b. Members are c. Since the profits for the current year is d. None of
be declared on correct in claiming inadequate, dividends can be declared in the above.
account of dividend only to compliance with sec 123 from
inadequate the tune of accumulated profits by following rules as
profits. maximum 10% prescribed.

18. XYZ Ltd., a Government Company declared dividend on 8th April 2018. The Company however failed to
deposit the dividend in a separate bank account within 5 days of declaration. What are the repercussions?
a. Company shall be liable to pay b. Officer in default shall be c. (a) and (b) d. No legal
interest @ 12% p.a. from the liable to a penalty of Rs. repercussion
date of such default. 1000/- per day.

19. SKP Ltd. involved in the manufacturing of ‘Fans’, ‘Coolers’, ‘Fridges’, etc. did not comply to the
requirement of AS-17. The directors of SKP Ltd. are of the view that since it is a Government Company,
segment reporting as per AS-17 is not required. Comment.

© CA Darshan D. Khare
 Chapter 13 GOVERNMENT COMPANY

a. The view b. Contention of the c. Contention of the directors d. Contention of the directors is
posed by directors is is incorrect, as compliance incorrect, as compliance with
directors incorrect, as AS-17 with AS-17 on Segment AS-17 on Segment Reporting is
is correct. on Segment Reporting is exempted for exempted for Government 13.3
Reporting is Government Companies Companies involved in Defence
applicable to all dealing with Agricultural Production.
companies. Products.

20. AOA of XYZ Ltd. a Government Company specifies a maximum of 16 directors. There are 16 directors on
Board. The Company seeks to appoint Mr. Sinha as Additional Director. Can the same be done?
a. Since the maximum b. Appointment of Additional c. Since, XYZ Ltd. is a d. None of the
number allowed is 16, Director is not considered Government Company, above.
appointment of in the total count of it can appoint
Additional Director is Directors hence can be maximum no. of
possible only after appointed by passing a directors above 15 by
passing a GM-SR. GM-OR. passing GM-OR only.

© CA Darshan D. Khare
 Chapter 13 GOVERNMENT COMPANY

13.4 Answers

1. b 2. d 3. d 4. a
5. c
(Hint: XY Limited is not Government company because holding of Central Government and Government of
Karnataka is less than prescribed 51%.The holding of the Government Company is not taken into account).
6. a 7. a 8. b
(Hint: If the CG is a member of Government Company then such company shall prepare
an annual report within 3 months from the date of AGM in which the CAG gave
comment on the audit report u/s 143(6))
9. c 10. c 11. d
12. a 13. b 14. b (Hint: Newly appointed director of Government Company is exempted
from filing his consent to act as director under DIR2)
15. a
(Hint: Because the holding of the central government is more than prescribed 51% under the definition of
Government company. The holding of the Government Company cannot be taken into account)
16. c
(Hint: Because the holding of the central government or state government or its subsidiary should be more
than prescribed 51% under the definition of Government company. The holding of the Government Company
cannot be taken into account).
17. d
(Hint: In case of inadequate profit in the Current Year a Government Co. can declare the dividend out of
accumulated profit without compliance of the rules).
18. d
(Hint: The requirement of depositing dividend amount (incl. interim dividend) to be deposited in a separate
scheduled Bank in a separate account within 5 days from the date of declaration does not apply to Govt. Co.)
19. d 20. c

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