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CS Executive · Company Law and Practice · Annual Report - Concepts

Gujarat Textile Ltd is a Government company in which the Central Government and the State of Gujarat are both members. The Central Government has prepared the Section 394(1) annual report. Which statement is correct about the State Government's obligation?

The State Government must cause a copy of the Central Government's report to be laid before the House or both Houses of the State Legislature, along with the audit report and the CAG's comments or supplement. Section 395 applies only when the Central Government is not a member.

  1. AIt must cause a copy of that report to be laid before the State Legislature House or Houses, with the audit report and CAG's commentsCorrect
  2. BIt must prepare a separate report within one year and lay it only before Parliament
  3. CIt has no obligation because the Central Government is a member
  4. DIt must file the report with the Registrar within thirty days

Explanation

Under Section 394(2), where a State Government is also a member alongside the Central Government, it must cause a copy of the Central Government's report to be laid before its Legislature, together with the audit report and the CAG's comments or supplement. It does not prepare its own separate report; Section 395 applies only where the Central Government is not a member.

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