Legal
Aspect Of Finance Notes(Shared by Niharika Bhagat)
The charges requiring registration
with ROC are
A charge on uncalled share capital
A change for purpose of securing
any issue of debentures
A charge on any immovable property
The central government may exempt
any class of companies from compliance with any of the requirements
in Schdule VI. – True
The maximum rate of interest on
the loan availed by a person resident in India from a no- resident
india is –two percentage over the bank rate
The salary drawn by Mr. Shamkar is
Basic 5,00, DA Rs 4,000, HRA Rs. 1000. The employer’s share of
contribution to Provident fund is Rs. 900
The Balance Sheet and Profit and
Loss Account shall be approved by the Board of Directors after they
are signed on the behalf of Board – False
The maximum fine for not giving a
copy of the balance sheet within 7 days to the person entitled to it
is - Rs. 5,000
A company having paid up share
capital of Rs.50 lakhs or more can appoint – a sole selling agent
Match
Allocable surplus more than bonus
payable – Carry Forward for set on
Allocation surplus less than bonus
payable—Carry forward for set off
Allocation surplus is equal to
bonus payable—No question of set on or set off
Allocation surplus more than onus
payable—No considered for set on or set off
In the case Ball v/s William hunt,
it was help that, “incapacity for work ” includes – inability
to get work
Banks maintaining NRE accounts are
permitted to grant loans in india to the account holders
Gratuity shall be payable to an
employee on his
The maximum fine for not
preserving the records for 8 yrs – 10,000
If the paid up capital of all
companies is more than Rs. 25 lacs each, the maximum number of
companies that a person can audit is – ten
Insurance of employer’s
liability to pay gratuity under the act is compulsory , if the
number of employees is less than 100. – False
An apprentice is not entitled to
bonus – True
The books of account of every
company relating to a period of not less than eight years
immediately preceding the current year shall be preserved in the
good order.
A person resident in india is free
to send (export) any gift article of value not exceeding -5,00,000.
If an employer avoids payment of
gratuity he can be punished with an imprisonment upto a maximum
period of - Six months
Of the three copies received by
him , ROC will return one copy and another copy to – Charge
Holder.
These do not fall under the
category of person resident in India.
A person who has gone out of india
or has taken up employment outside india.
Body corporate register in india
A branch or agency in india owned
or controlled by a person resident outside india.
If the number of person employed
is more than one thousand , the wages shall be paid – before the
expiry of the tenth day.
The Committee for fixing minimum
wages shall consist of persons representing the
Employers
Employees
Independent persons
An auditor checks each and every
transaction. – True
The following are not included in
the basic wages
Nomination facility can be availed
by
A share holder
A depositor
A retrenched employee is eligible
to get bonus provided he has worked for a minimum qualifying period.
– True
If the salary payable is weekly on
every Saturday and if the number of employees is less than 1,000 the
last date for payment of wages for the period ending on 27-10-2007
will be 3-Nov-07
Balances in NRO accounts are not
eligible for remittance outside India without the approval of the
Reserve Bank of India
Reserve bank of india has issued
Export Regulations which are effective from 1st
June,2000
These sectors require prior
approval of Government for FDI
Activities/items that require an
industrial License.
Proposals for acquisition of
shares in an existing Indian company in Financial services sector.
All proposals falling outside
notified sectoral policy
ESI Corporation makes regulations
for
The manner and time for payment of
contribution
The entry in or upon books or
cards of particulars of contribution paid and benefits distributed.
The issue, safe custody,
production , inspection and delivery of books or cards.
Foreign exchange for travel abroad
can be purchase from banks against rupee payment in cash upto
Rs. 50,000/-
The maximum amount of fine for
violation of provisions of payment of bonus Act Rs. 1,000
A housing finance institution in
india approved by National Housing bank cannot provide housing loan
to a non – resident Indian. –False
The Functions of the debenture
trustees shall generally be
If the aggregate value of the
foreign exchange in the form of currency notes,bank notes or
travellers cheques brought in exceeds USD 10,00/- or its equivalent
and /or the value of foreign currency exceeds USD 5,000/- or its
equivalent, it should be declared to the Customs Authorities at the
Airport in the Currency Declaration Form
Preferences shares can be redeemed
even if they are not fully paid up. False
If an employer violates the
provisions of Payment of Bonus Act, he can be punished with an
imprisonment upto a maximum period of Six months
A company has availed a loan of
Rs. 10 lacs and cash credit facility of Rs. 5 lacs. It has repaid
the laon. After this the charge is modified
Foreign Exchange management Act
authorises the RBI to make such regulations as it may think
fit to monitor the exports.
Foreign Investment in preference
share fall outside the External Commercial Borrowing(ECB)
guidelines. –True
A resident Indian going abroad for
medical treatment abroad can purchase US Dollar 1,00,000
without RBI’s permission.
The Fund in RFC account are free
from all restrictions regarding utilisation of foreign currency
balances. True
Use of the International Credit
Cards(ICCs)/ATMs/Debit Cards can be made for
This Act authorizes the Central
Government to formulate rules and regulation fir withdrawal of
exchange for imports – FEMA
Type of chages – Section 125 of
Companies Act
Date of notice of
charge – Section 126 of companies Act
Registration of
charges on properties acquired subject to charge – Section 127 of
Comapnies Act
Register of charges
to be kept by Registrar – Section 130 of Companies Act
This institute assists Employees’
State Insurance Corporation to discharge its functions efficiently
Standing Committee
Medical Benefit council
If at the time of making a
nomination, the employee has no family then the nomination may be
made in favour of any person. – True.
NRE accounts may be in the form of
Minimum wages must provide for
The bare sustenance of life
The prevention of efficiency of
the worker
Some measure of education, medical
requirement and amenities
Maximum Interest payable on
gratuity is equal to 25% of gratuity payable
No individual FII/sub-account can
acquire more than 10% of the paid up capital of an Indian
company.
An Indirect tax Levied by
Government on the goods manufactured in india is called as Excise
Duty
The Preference shares be redeemed
The maximum % of net own funds
that a company needs, to purchase the securities of other company is
60%
The Employees’ State Insurance
Act,1948 provides for
Medical care
and treatment
Payment of
cash benefit during sickness
Pension to
the dependents on the death of a worker due to employment injury
An employee could not attend duty
due to Bandh. The Action that can be taken by the employer will be –
Treat the absence as authorised leave.
Mr. Vishal from Pune has received
a guest from USA on tour to India. Mr. Vishal needs RBI permission
to make expenses for his foreign guest – False
The compensation can be denied
under WC Act
If workman is under the influence
of drink or drugs
If accident is caused due to
wilful disobedience of rules or order
If there is disregard of safety
devices.
This section of Central Excise
Act,1944 deals with charging of Duty of Excise – Section 3
Accounting standard are issued by
– ICAI
An Indian company, a
proprietorship concern or a firm in india cannot accept deposits
from a non- resident Indian on non- repatriation basis- False
The conditions applicable for the
public deposits accepted by an Indian company from a Non-Resident
Indian are
The deposits are received under a
public deposit scheme
The amount representing the
deposit is received by inward remittance from outside India through
normal banking channels
The company of aggregate deposits
accepted by the company shall not exceed 35% of its net owned funds.
Doubt
NRIs/PIOs can purchase/sell
shares/convertible debentures of Indian companies on Stock Exchanges
under – Portfolio Investment Scheme
FDI in sectors/activities to the
extent permitted under automatic route requires prior approval
either by the Government or RBI. – False
The maximum contribution that an
employer has to contribute to meet the administrative expenses of
the Deposit Linked Insurance fund is – ¼ th if their contribution
to deposite Linked Insurance Fund.
The salary drawn by Mr. Shankar
fir June 2007 is Basic Rs. 5,000/- DA Rs. 4,000/-,HRA Rs.1,000.
During the month he was on leave without pay for 10days. The total
credit PF wil be – Rs.600
The form for creation of a charge
should be filed within 30 days from the date of execution of
the document with the Registrar of Companies.
NRO account – Interest is
taxable
NRE Account –
Interest is tax free
FCNR(B) Account –
Exchange risk borne by the depositor
FCNR(A) Account –
Scheme discontinued
If a part of an year is less than
six months, then it will be treated as a full year for the purposes
of payment of gratuity – False
An employment in a factory or
establishment to which the ESI Act applies is called –Insuable
employment
The Employees’ Pension Scheme
provides for
The following sums shall be
deducted from the gross profits as prior charges for computation of
allocable surplus for bonus
Depreciation
Employment rebate
Direct tax
The consignee abroad is not
entitled to deduct the charges and his fee from the sale proceeds-
false
A typical GDR is denominated in -
US$
The maximum amount that a company
can contribute to charitable and other funds not directly relating
to the business of the Company in terms of percentage of average
profits is 5%.
The maximum limit in terms of
percentage of its average net profits which may be contributed by a
Company in any financial year is 5%.
Taking personal jewellery out of
India is governed by – Baggage Rules
A “private company means”
A company which has a minimum
paid-up capital of one lakh rupees
A company which restricts the
right to transfer its shares
A company which limits the number
of this member fifty
A memorandum containing such
salient features of a prospectus as may be prescribed is called as –
abridge prospectus
These books of accounts are to be
kept by the company
The “Value” on which the
excise duty is payable as a percentage is called as – Invoice
Price
The date of agreement for a
foreign Technical collaboration is 10-3-2000. The date of
commencement if commercial production is 20-1-2002. The last date
upto which payment of royalty can be made to the foreign
collaborator would be -1/20/12
An individual resident in India
may borrow from a non- resident Indian or a person of Indian origin
on the following conditions
The loan should be in rupees
The amount borrowed shall not be
allowed to be repatriated outside india
The period of loan shall not
exceed three years
A workman has worked for 250 days
on daily wages basis. Daily wages paid to him is Rs. 30,000/-, the
average monthly wages for the purpose of compensation will be –
3,600
A person resident in india, who
has acquired immovable property outside india may transfer it by way
of gift to his relative who is a person resident in India. – True
A company should give intimation
of appointment to every auditor within 7 days of appointment.
Any trade settlements can be
freely made through Rupee accounts of Bhutanese and Nepalese
nations.
Preference shares can be
Certificate from statutory
Auditors or chartered Accountant indicating the manner of arriving
at the price of the shares issued to the persons resident outside
india should be send to RBI.- True
The maximum deduction from salary
is 50% if the recovery of co-operative society is not
involved.
The salary drawn by Mr. Shankar
is Basic Rs. 5,000/- , DA Rs. 4,00/- HRA Rs. 1,000. The total credit
to PF will be – Rs. 900/-
In case of death of an employee,
the amount of balance in EPF account is paid to nominee/legal
heirs.- True
A company can keep books of
account at any other place than the registered office of the company
– True
Employer’s contribution to EPF
as % of eligible wages – 10%
Interest payable by
employer for delayed payment of EPF – 12%
Employer’s
contribution to Pension Fund as % of eligible wages – 8.33 %
Employer’s
contribution to Deposit Linked Insurance Fund as % of eligible wages
– 1%
For the purpose of the section 9
of the Excise Act, a fact is said to be proved only when
Deductions made by the employer
from the salary payable to employee which are authorised by
the Payment of Wages Act are called as authorised deductions.
Every notification under
clause(f) of the first proviso to sub-section(2) of 11B of the
Excise Act shall be laid before each House of Parliament.
Provisions relating to Investment
shall not relate to these companies
Insurance company
Housing company
A non-executive Chairman is not
entitled to maintain a Chairman’s office at the company’s
expense – False
A foreign company can set up
Liaison , Project and Branch Offices in India after obtaining –
approval from RBI
The EPF Act was accordingly
extended to many additional industries by the end of March,1957. –
true
Besides authorised dealer,
full-fledged money changers are also permitted to release exchange
for business and private visits
Persons resident in india are
permitted to maintain foreign currency accounts in India. under the
following schemes
A charge which is not registered
is void against these persons
A company has to execute this
document if the period of debenture redemption exceeds 18 months. –
Trust Deed
However , it is also possible for
an FII to declare itself a 100% debt FII in which case it can make –
its entire investment in debt instruments
Manager- Has the management of the
whole or substantially the whole of the affairs of the company.
Managing Director-Is
entrusted with substantial power of management which would not be
otherwise be exercisable by him
Office-Included any
director, manager or secretary
Board-Means the Board
of Directors of the policy formulation committee
A person resident in India is not
free to hold, own, transfer or invest in foreign currency ,foreign
security or any immovable property situated outside India if such
currency, security or property was acquired ,held or owned by such
person when he was resident outside India or inherited from a person
who was resident outside India –false
All pecuniary relationship or
transactions of the non-executive directors vis-Ã -vis the company
shall be – disclosed in the annual report
Allocable surplus means 60% of
the avaible surplus in an accounting year.
A person resident in india , not
being a company incorporated in india, may borrow in rupees on
non-repatriation basis from a non- resident Indian or a person of
Indian origin
The amount of loan shall be
received by way of inward remittance from outside india
The period of loan shall not
exceed three years
The rate of interest on the loan
shall not exceed two percentage points over the bank
No gratuity shall be liable to
attachment in executing of any decree or order of any civil,
revenue or criminal court
Salary and wages does not include
dearness allowance – false
Words ‘Internation Global
Continental being the first name-
Words
‘Internation Global Continental’ being used within the name with
bracket-
Word ‘Hindustan,
India, Bharat, being used within the name without brackets-
For use of word
‘Enterprise’ within the name
The Reserve Bank has made Foreign
Exchange Management Regulation ,2000 which came into force – 1st
day of June 2000
FIIs are required to allocate
their investment between equity and debt instrument in the ratio of
70:30:00
In relation of any other
establishment which is not a factory , the term employer includes
the person – who has the ultimate control over the affairs
Dependents include
Premature withdrawal of FCNR(B)
deposits for the purpose of opening NRNR Rupee Deposit accounts with
an authorised dealer other that the one with whom the account
FCNR(B) is maintain, will attract penalty – true
The company articles require a
person to hold the qualification shares before his appointment or to
obtain them within shorter time – than two months
The main purpose of the payment of
wages act 1936 is to ensure
The ESI act extends to the whole
of India – True
All payment made under the foreign
investment and technology transfer includes the levy of cess under
the Research and Development cess act,1986 – true
Rate of interest applicable to
these accounts shall be in accordance with the
direction/instructions issued by – Reserve bank from time to time
In connection with private visit
abroad , viz., for tourism , etc. Foreign exchange upto USD 10,000,
in any one calendar year may be – obtained from an authorised
dealer
The court has to record reasons in
writing – for imposing lesser punishment
‘Contribution’ means the sum
of money payable to the Corporation by the principal employer.
Any person resident outside
India may open NRO account .
Main types of shares – Equity
shares, preference shares
A Liaison office can carry on only
– liaison activity
Import Licenses are for the CIF
value and cannot be utilized to the full amount to cover the FOB
value of import. – True
Nothing in the bonus act shall
apply to any other financial institution other than a banking
company which the central government may specify having regard to
Deduction may be on account of –
the absence of employed person from the place where he is required
to work
Such absence may be
for whole or any part of the period during which –he is so required
to work
An employed person
shall be deemed to be absent if, he refuses to carry out his work- In
pursuance of a stay or strike
The amount of such
deductions must bear to his wages the same proportion as - his
absence bears to the total wage period
Words and expression defined in
the industrial disputes act shall have – the same meaning in the
bonus act
Debenture – A secured Loan
redeemable after a specified period
Preference share-Preference in dividend and redemption
Equity share-
Residual shareholder
Commercial Paper- Negotiable instrument to raise short term finance
A person who ultimate controls is
the employer
The situation that investors could
invest in equities of overseas listed firms that hold at least 20%
in a listed Indian firm which was made in terms of our A.P.(DIR
series) Circualr No. 66 dated January 13,2003 continues as an
additional facilit
The auditor’s report shall state
Whether he has obtained all the
information and explanations
Whether in his opinion, proper
books of account as required by law have been maintained
For the purpose of the section 9
of the Excise Act, a fact said to be proved only when
Every Inquiry by the Excise
authority shall be deemed to be a judicial proceeding within
the meaning of section 193 and section 228 of the Indian Penal Code.
Steps that might be Initiated by a
debenture trustee
Ensure that the assets of the
Company are sufficient to discharge the principal amounts
Ensuring that the terms of
prospectus are not inconsistent with the terms of the debentures
Call meetings of the debenture
holders
Balance sheet or profit and loss
account shall include any notes thereon or – in documents annexed
thereto
Offences under section 9 of the
Excise act shall be deemed to be – Non – Cognizable
GDR- global Depository Receipts
are essentially those instrument , which possess a certain number of
underlying- shares in the custody of depository bank
Form 8 & 13 – creation of
charge, modification of charge
No amount of foreign exchange can
be remitted outside India to become eligible or for earning point or
credits for immigration. – True
Any nomination made by an employee
in favour of a person who is not the member of his family, shall be
void.- true
In respect of job works under
notification No. 214/86, the Merchant Manufacturer is liable
to pay the excise duty.