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

Kaveri Traders Ltd paid the Registrar's filing fees, paid the audit fee needed to meet a legal requirement, and paid rent and record-storage charges for its office. It also bought shares of another company as an investment. Which of these is a 'significant accounting transaction' for section 455?

The purchase of shares of another company as an investment is a significant accounting transaction. Section 455 excludes only Registrar fees, payments to meet legal requirements, allotment of shares to fulfil the Act, and office and record maintenance payments. An investment falls outside those exclusions.

  1. APayment of fees to the Registrar
  2. BPurchase of shares of another company as an investmentCorrect
  3. CPayments for maintenance of its office and records
  4. DPayments made to fulfil requirements of any law

Explanation

Section 455 excludes payments of fees to the Registrar, payments to fulfil legal requirements, allotment of shares to fulfil the Act, and payments for office and record maintenance. An investment purchase is none of these, so it is a significant accounting transaction.

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