Read the following paragraph and answer the five questions that follow :

Section 455 of Indian Companies Act, 2013 talks about a New Provision Calls 'DORMANT COMPANY'. This concept was not there in Companies Act, 1956.

A Dormant Company offers excellent advantage to the promoters who want to hold an asset or intellectual property under the corporate shield for its usage at a later stage. For instance: if a promoter wants to buy lands now for its future project at a comparatively lesser price, he may do the same through dormant company so that he can use the land for its future project. Thus, dormant company status is a new phenomenon in the Companies Act 2013 and is an excellent tool for keeping assets in the company for its future usage. A dormant company may be either a public company or a private company or a one person company.

Certain companies, due to the nature of their business, may not be able to start any business, for a long time from the date of incorporation as for instance any business for creation intellectual property or for a future project and has no significant accounting transaction. Such a company may be an "Inactive company". Construction Companies/Real Estate Companies/Incorporate New Companies to hold land/properties for future projects. This concept is beneficial for them. By this concept, they can Incorporate Company and purchase property/land in that company and get status of Dormant company in comparison of active company. It will help to save cost of compliances for inactive companies.

1. Given below are statements: One is labelled as Assertion A and the other is labelled as Reason R:

Assertion (A): Provision is made to obtain the status of a 'dormant company' for a inactive company that doesn't trade

Reason (R): Dormant company doesn't trade but has significant accounting transaction.

In the light of the above statements, choose the most appropriate answer from the options given below :

(a) Both (A) and (R) are correct and (R) is the correct explanation of (A)

(b) Both (A) and (R) are correct but (R) is NOT the correct explanation of (A)

(c) (A) is correct but (R) is not correct

(d) (A) is not correct but (R) is correct


2. Dormant company offers excellent advantage to which of the following?

(a) Bankers

(b) Creditors

(c) Shareholders

(d) Promoters


3. Given below are two statements: One is labelled as Assertion A and the other is labelled as Reason R.

Assertion (A) If a company gets status of a dormant company, then it is subject to less compliance in comparison to active company.

Reason (R): It will help to save of compliances for Inactive companies when they become dormant company under section 455 of the Companies Act, 2013 as compared to the Companies Act, 1956.

In the light of the above statements, choose the most appropriate answer from the options given below :

(a) Both (A) and (R) are correct and (R) is the correct explanation of (A)

(b) Both (A) and (R) are correct but (R) is NOT the correct explanation of (A)

(c) (A) is correct but (R) is not correct

(d) (A) is not correct but (R) is correct


4. Which of the following companies do not fall under a purview of Dormant company?

(A) Private company

(B) One person company

(C) Limited and unlimited liability companies

(D) Public company

(E) Government company

Choose the most appropriate answer from the

options given below:

(a) (B), (D), (E) only

(b) (A), (C), (D) only

(c) (A), (B), (D) only

(d) None of the above


5. Which one of the following nature of business is suitable to a Dormant company?

(a) Shipping business

(b) Manufacturing business

(c) Real Estate business

(d) Pharmaceutical business


ANSWERS

1 - c

2 - d

3 - a

4 - d

5 - c