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CMA Intermediate · Business Laws and Ethics · Key Managerial Personnel

Mr. Rao, a key managerial personnel of Sagar Ltd, bought shares of Sagar Ltd on a forward basis. Based on the Companies Act, 2013 text, which statement is correct?

Section 194 was omitted with effect from 9 February 2018, so it no longer makes such forward dealing an offence under that section. The company must still record the KMP's securities holdings in the register kept under Section 170, which ensures disclosure.

  1. AHe commits an offence under Section 194 as it stands today
  2. BSection 194 has been omitted w.e.f. 9-2-2018, so that section no longer prohibits such dealing, though his holdings must be recorded under Section 170Correct
  3. CHe must be removed from office under Section 203(4)
  4. DHis dealing is valid only if the Board authorises it under Section 21

Explanation

Section 194 was omitted by the 2017 Amendment Act w.e.f. 9-2-2018, so it cannot be applied now. His securities holdings remain to be shown in the register under Section 170(1). Section 203(4) concerns vacancies and Section 21 concerns authentication, neither of which governs share dealings.

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