Skip to content

CS Executive · Company Law and Practice · Legal Status and Types of Registered Companies

Kaveri Traders Ltd paid its annual fee to the Registrar, paid the office rent and the electricity bill for its registered office, and allotted shares only to meet a requirement of the Act. It did nothing else in the year. For dormant company purposes, how are these transactions treated?

None of them is a significant accounting transaction. The Act excludes Registrar fees, payments needed to meet legal requirements, allotment of shares to fulfil the Act's requirements, and payments for maintaining office and records, so these do not stop dormant status.

  1. AAll are significant accounting transactions and bar dormant status
  2. BOnly the share allotment is a significant accounting transaction
  3. COnly the rent and electricity payments are significant accounting transactions
  4. DNone is a significant accounting transactionCorrect

Explanation

Under the Explanation to section 455, a significant accounting transaction excludes fees paid to the Registrar, payments to fulfil requirements of the Act or other law, allotment of shares to fulfil requirements of the Act, and payments for maintenance of office and records. All three listed items are excluded.

Did you get it right without looking?

One question tells you little. A timed set on Legal Status and Types of Registered Companies shows your real accuracy, how long you take and where you lose marks.

Practise Legal Status and Types of Registered CompaniesFree diagnostic mock

More Legal Status and Types of Registered Companies questions