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CS Professional · Internal and Forensic Audit · Audit and Investigations

Meridian Textiles Ltd's members feel its affairs are being run fraudulently. They want an inquiry into the company's affairs under the Companies Act, 2013, by way of an order of the Tribunal. Which of the following is a correct statement about the Tribunal's power to order an investigation?

The Tribunal can order an investigation into a company's affairs on an application from the prescribed number of members, among other triggers. It does not need an auditor's recommendation, and it does not need the company to be wound up first.

  1. AThe Tribunal may order an investigation on a members' application only if the company's auditor first recommends it
  2. BThe Tribunal may order an investigation into the company's affairs on an application by the prescribed number of members, or on a Tribunal-formed opinion in suitable casesCorrect
  3. COnly the Registrar of Companies can ask for an investigation, and members have no role in the process
  4. DInvestigation can be ordered only after the company has been wound up

Explanation

Under the Companies Act, 2013, the Tribunal can order an investigation on an application by the prescribed minimum number of members (or members holding the prescribed shareholding), or on a report of the Registrar and similar triggers. The Tribunal's order does not depend on the auditor's recommendation or on winding up. Options that deny members any role or require winding up are therefore wrong.

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