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CA Intermediate Mock Test Paper (1): Corporate and other laws -Nov 2020

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Test Series: October, 2020 MOCK TEST PAPER INTERMEDIATE (NEW): GROUP I PAPER 2: CORPORATE AND OTHER LAWS Division A is compulsory In Division B, Question No.1 is compulsory Attempt any Three questions out of the remaining Four questions Time Allowed 3 Hours Maximum Marks 100 Division A (30 Marks) 1. Mr. Abhinav Gyan is a tech expert and one among the promoter of Doon Technology Limited (DTL). He did his engineering from one of the prestigious IIT in CSE and then perused masters in management from IIM. He started DTL fifteen years back. DTL is famous for advance technologies such as artificial intelligence, block-chain solutions and many others. The company went public a decade ago but not listed. Since DTL is expanding its operations in wake of opportunities arises out of industrial revolution, hence willing to retain the profit for growth of the company, but shareholders are seeking dividend; because for shareholders larger the bottom line means larger the dividend. The outbreak of COVID-19 is another reason which forced the directors to retain the earnings. After the closure of books of account for year 2019-20, directors proposed the dividend of 10% against the expectation of 20% by shareholders. But considering the extended lock-down which causes a delay in delivering the projects (results in deferment of revenue and additional cost), directors are of the opinion to revoke the dividend. Shareholders seeks appointment of internal auditor for audit on a concurrent basis, whereas management of DTL states it does not require to appoint an internal auditor under the law and it will cause an unnecessary financial burden on the company. The excerpts from financial statements of the preceding financial year 2019-20 are as under: Particulars Amount in Crores Paid-up share capital 45 Turnover 495 Outstanding loans or borrowings* 105 Outstanding deposits *Includes inter-corporate loan of INRs 25 crores 22# # up-till 31st January, 2020 the outstanding deposit was INRs 30 crores Mr. Gyan, one of the shareholder of DTL, out of his savings bought 40,000 shares of another company Time Consultancy Services (TCS) of face value 10 each. On such shares, the final call of 2 is due but unpaid by Mr. Gyan. In the meantime, TCS declared the dividend at a rate of 15%. Out of total dividend of INRs 8.4 crores declared on 31 st August 2020, INRs 0.42 crores remain unpaid as on 30 th September 2020 at the end of TCS. Out of such INRs 0.42 crores, INRs 12 lakhs are on account of the operation of law and INRs 3 lakhs on account of legal disputes of right. The unpaid dividend was finally paid on 12th December, 2020 in full. Mr. Gyan came from humble background, hence as part of ethical commitment to uplift the society by promoting education to children of the economically weak section, he decided to form a section 8 company around 2 years back with the support of fellow professional, who later become a member of such a company. Receipts are excess of expenditure hence it was decided that Gyan foundation will declare some dividend to its members. 1 The Institute of Chartered Accountants of India

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