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

Karnataka Mining Ltd is a Government company in which only the State of Karnataka is a member, and it is now in liquidation. Which statement is correct under Sections 394 and 395?

The State Government must still cause an annual report on the company's working and affairs to be prepared and laid before its Legislature. Section 395(2) applies these provisions, so far as may be, to a Government company in liquidation as to any other.

  1. AThe State Government must cause an annual report to be prepared and laid before its Legislature, as the provisions apply to a company in liquidationCorrect
  2. BNo report is required because the company is in liquidation
  3. CThe Central Government must lay the report before Parliament
  4. DThe report is required only if the company has a cost auditor

Explanation

Section 395(1) puts the duty on the State Government where the Central Government is not a member. Section 395(2) applies Sections 395 and 394 so far as may be to a Government company in liquidation as to any other.

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