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

Sagar Minerals Ltd, a Government company in which only the State of Odisha is a member, has gone into liquidation. The Central Government is not a member. Which statement is correct under Section 395?

Sections 395 and 394 apply, so far as may be, to a Government company in liquidation just as to any other Government company. The State Government therefore remains bound to cause the annual report to be prepared and laid, as liquidation does not end the obligation.

  1. AThe State Government has no duty to prepare an annual report while the company is in liquidation
  2. BSections 395 and 394 apply, so far as may be, to the company in liquidation as to any other Government companyCorrect
  3. COnly Section 394 applies, and the Central Government must prepare the report
  4. DThe annual report is replaced by the liquidator's report to the Registrar

Explanation

Section 395(2) states that Sections 395 and 394 apply, so far as may be, to a Government company in liquidation as they apply to any other Government company. So the State Government's duty continues. Option one wrongly assumes liquidation removes the duty.

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