Practice Reading Comprehension from "The Hindu" Corporate Affairs (Dated- 8th Nov 2016)
Dear Readers, we have given here the English Practice Questions for upcoming IBPS PO/ RRB/ Clerk Exam 2016 from “THE HINDU” Editorial Page. Candidates can use this material for their preparations.
Not a Corporate Sinecure
The recent Ratan Tata-Cyrus Mistry imbroglio brings into sharp focus the role and position of independent directors. Under Section 149 of the Companies Act, at least one-third of the directors of a listed company must be independent. That means that the person so appointed must not be a promoter of the company or its holding subsidiary or associate company nor should he/she be related to the promoters of the company. In addition, neither the individual nor his/her relatives should have a pecuniary relationship with the company. They are also, under Section 149(6), to be persons of integrity and possessing the relevant skills and experience.
Independent directors, though they may in the initial stage be invited by the controlling shareholders of a company or its incumbent managing director, are appointed by the shareholders at a General Meeting; they are so appointed to safeguard not only the best interests of all shareholders but also of all stakeholders.
Prior to the enactment of the Companies Act, 2013, the independent director had only civil liability. And to a great extent he/she was part of a “hail fellow” network where controlling shareholders invited their friends to sit on their boards confident of their support. In many other instances, retiring senior executives eagerly sought seats on the board as a way to supplement their pension. They were often grateful for being given a berth and remained loyal to the management that invited them. The only time I can recall when there was consternation, fear, outrage and indignation was when an arrest warrant was issued on Nimesh Kampani in 2009 as he was an independent director in Nagarjuna Finance. The company had defaulted on repaying deposits. Many felt this was unfair as an independent director had no executive duty and should not be held responsible.
Section 149(12) provides that an independent director shall be liable only in respect of omission or commission by a company that had occurred with his/her knowledge, attributable through board processes, and with his consent or connivance, or where he had not acted diligently. I am uncertain whether independent directors appreciate this, but this provision is all-encompassing as it suggests that if a company has made a decision which is not in its better interest (taking into account all stakeholders) at a board meeting and the independent director was aware or party to the decision, he is liable both in civil and criminal terms. Many senior proponents of the law have opined that this means that even if the director has not attended a meeting but the item was mentioned on the agenda and the independent director had not objected to it, he/she would be liable. Furthermore, if the independent director attends a meeting where the matter is discussed and he/she keeps quiet even though not in agreement, he/she could be held both criminally and civilly liable. The independent director, if he/she is not in agreement with a proposal, must, if he/she wants to be in the clear, state his/her disagreement and have it recorded in the minutes.
1). Which will be the apt title for the above passage?
a) The upgraded Companies act.
b) Roles and Responsibilities of independent directors
c) Sections described in Companies act.
d) Independent Directors and their companies
e) Evolution of Companies Act
2). In the above passage who can be an independent directors?
a) The person who has more than 50% of Shares of the company.
b) The senior most experienced executive director
c) The founder of the company who should not hold the post of MD or CEO
d) The person who should not have any relationship with company or with its Share/Stake holders.
e) The person who has relevant experience and not worked prior in the company.
3). The process of choosing the Independent director involves?
a) Can be elected by the process of voting in the meeting of Executive Directors.
b) Called by Share holders or present MD and through meeting with share holders.
c) Can be directly recruited by interview process.
d) Invited by the CEO or founder of the company and through meeting with share holders
e) None of these
4). Which of important change has been made after revising the companies act in the year 2013?
a) The independent Director can be charged both civil and criminal terms.
b) Both the independent Director and Non-Executive director is accountable for civil liability.
c) The independent Director can be charged only through civil terms.
d) d) The independent Director will be charged on civil terms and Non-Executive director will be charged on criminal terms.
e) None of these
5). According to the enhancement of Companies act in the year 2013 whom of the following surely can't be a independent directors according to the passage ?
i). Relatives of the Share holder.
ii). Partners of the Share holder's in their other business.
iii). Senior Retired MD of the same company.
iv).Person with less than 25 years of experience.
a) Only i and iii
b) only ii, iii and iv
c) Only i, ii, and iii
d) only ii and iii
e) All the above
6). According to section 149(12) when the independent director of the company will be accountable to take action against him under civil and criminal law?
a) At the time were the independent director attends a meeting where the matter against stake holders is discussed and he/she keeps quiet even though not in agreement
b) At the time were the independent director knows the matter against stake holders is to be decided in the meeting through agenda and he/she avoids the meeting .
c) At the time were the independent director is present in meeting where the matter against stake holders is decide and he/she keeps quiet.
d) All the above
e) None of the above
7). what is the synonyms of "connivance" which is used in the above passage?
e) e)None of these
8). What should be the Antonyms of "incumbent" ?
e) None of these
9). What will be the opposite of " proponents " which is highlighted in the above passage?
10). Find the appropriate word which can be replaced in the place of " pecuniary " ?
e) e)All the above
1. (b) , 2. (d), 3. (b), 4. (a), 5. (c), 6. (d), 7. (a), 8. (c), 9. (d), 10.(e).