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

Himalaya Hydro Ltd is a Government company in which both the Central Government and the State of Himachal Pradesh are members. Which provision governs the State Government's obligation regarding the annual report?

Section 394(2) governs. Because the Central Government is a member, Section 395 does not apply; the Centre prepares the report, and the State Government causes a copy to be laid before the State Legislature together with the audit report and comments upon or supplement to it.

  1. ASection 395(1), because a State Government is a member
  2. BSection 394(2), under which the State Government causes a copy of the Central Government's annual report to be laid before the State Legislature with the audit report and commentsCorrect
  3. CSection 395(2), which applies only to companies in liquidation
  4. DNo provision, as the State is only a minority member

Explanation

Section 395(1) applies only where the Central Government is not a member. Here the Centre is a member, so Section 394 governs: the Centre prepares the report and, under Section 394(2), the State Government causes a copy to be laid before its Legislature with the audit report and comments.

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