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CMA Intermediate · Business Laws and Ethics · Company Types, Promotion, Formation and Related Procedures

After incorporation, it is proved that Nandini Pvt Ltd was incorporated by suppressing material facts in the documents filed. Which of the following can the Tribunal direct under section 7(7), after giving the company a reasonable opportunity of being heard?

The Tribunal can direct that the liability of members shall be unlimited. Section 7(7) lists this along with regulating management, removing the company's name from the register and winding up, but only after the company is given a reasonable opportunity of being heard.

  1. AThat the liability of the members shall be unlimitedCorrect
  2. BThat the Registrar shall refund all fees to the promoters
  3. CThat the subscribers shall be disqualified for life from becoming directors
  4. DThat the company shall be converted into a public company

Explanation

Section 7(7) allows the Tribunal to regulate management, direct that members' liability be unlimited, direct removal of the company's name from the register, order winding up, or pass other orders. Refund of fees, lifetime disqualification and conversion to a public company are not listed.

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