Skip to content

CMA Final · Corporate and Economic Laws · Prevention of Oppression and Mismanagement

Under section 241(3), when the Central Government sees circumstances such as fraud, misfeasance or persistent negligence by a person concerned in managing a company, what may it do?

The Central Government may initiate a case and refer it to the Tribunal, requesting an inquiry and a decision on whether the person is a fit and proper person to hold office as director or any other office connected with managing any company. It cannot disqualify directly.

  1. ADirectly disqualify the person from all directorships by executive order
  2. BRefer the case to the Tribunal asking it to decide whether the person is fit and proper to hold office as director or any other office connected with management of any companyCorrect
  3. COrder the company to buy out the person's shares
  4. DDirect the Registrar to strike off the company's name

Explanation

Section 241(3) lets the Central Government initiate a case and refer it to the Tribunal for an inquiry and decision on whether the person is fit and proper. It does not give the Government power to disqualify directly, and the person is joined as a respondent.

Did you get it right without looking?

One question tells you little. A timed set on Prevention of Oppression and Mismanagement shows your real accuracy, how long you take and where you lose marks.

Practise Prevention of Oppression and MismanagementFree diagnostic mock

More Prevention of Oppression and Mismanagement questions