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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Board Effectiveness and Building Better Boards

Sudarshan Textiles Ltd is a going concern with a functioning Board. A shareholder argues that because the Companies Act, 2013 once had a section dealing with 'Cesser of Board's powers on appointment of Company Liquidator' (section 313), the Board must stop all functions the moment any liquidator is named. As per the official text of the Act, what is the status of section 313?

Section 313 on cesser of the Board's powers on appointment of a Company Liquidator has been omitted with effect from 15 November 2016. It is no longer a live provision, so it cannot be cited as an operative rule stopping the Board's powers.

  1. AIt has been omitted with effect from 15 November 2016Correct
  2. BIt is in force and applies to every company
  3. CIt applies only to Producer Companies
  4. DIt applies only to listed companies

Explanation

The official text shows section 313 as omitted by section 255 and the Eleventh Schedule of the Insolvency and Bankruptcy Code, with effect from 15-11-2016. So the shareholder cannot rely on it as a live provision. The other options wrongly treat it as operative.

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