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

Under the Companies Act, 2013, which of the following is a ground on which a member may apply to the Tribunal for relief under Section 241(1)(b)?

A member can apply under Section 241(1)(b) where a material change in management or control has occurred, not brought about by or in the interests of creditors or a class of shareholders, and the change makes prejudicial conduct of the company's affairs likely.

  1. AA material change has taken place in the management or control of the company, not brought about by or in the interests of creditors or any class of shareholders, and the affairs are likely to be conducted in a manner prejudicial to the company's interests or its membersCorrect
  2. BThe company has declared a lower dividend than the member expected for the year
  3. CThe statutory auditor has qualified his report on the financial statements
  4. DThe company has failed to hold a board meeting in one quarter

Explanation

Section 241(1)(b) covers a material change in management or control (by a change in the Board, manager or share ownership) that is not brought about by or in the interests of creditors, including debenture holders, or any class of shareholders, where as a result the affairs are likely to be conducted prejudicially. The other options are not grounds listed in the section.

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