Limited Insolvency Exam – Model Question Paper 2018

Full-length model question paper for the Limited Insolvency Exam conducted by the Insolvency and Bankruptcy Board of India ( IBBI ) 2018 syllabus

26. Which of the following statements is not true about disposal of the show cause notice issued to an insolvency professional agency?
a) The order of disposal of show-cause notice becomes effective on the day of receipt of the order by the insolvency professional agency.
b) The order of disposal of show-cause notice becomes effective ordinarily after thirty days of the date of issue of order.
c) The Disciplinary Committee disposes of the show-cause notice by a reasoned order in adherence to principles of natural justice.
d) The Disciplinary Committee endeavours to dispose of the show-cause notice within a period of six months of the assignment.

Ans. (a)

27. Who enrols an individual as a professional member?
a) The Insolvency and Bankruptcy Board of India
b) The National Company Law Tribunal
c) The Insolvency Professional Agency
d) The Ministry of Corporate Affairs

Ans.(c)

28. Which of the following is eligible for registration as an insolvency professional?
a) An engineer with 15 years professional experience and having passed the National Insolvency Examination
b) An advocate with 11 years of professional experience and having passed the Limited Insolvency Examination
c) An MBA with 11 years of professional experience and having passed the Limited Insolvency Examination
d) A chartered Accountant with 11 years of professional experience and having attempted National Insolvency Examination

Ans. (b)

29. Which of the following is not covered by the code of conduct for insolvency professionals?
a) Negligence while performing his functions and duties.
b) Taking up corporate insolvency resolution processes of two corporate debtors simultaneously.
c) Accepting gifts or hospitality from a creditor
d) Conducting business which in the opinion of the IBBI is inconsistent with the reputation of the profession.

Ans. (b)

30. Who decides the fees payable to a liquidator under the IBBI (Liquidation Process) Regulations, 2016?
a) Committee of Creditors
b) Corporate Debtor
c) Insolvency and Bankruptcy Board of India
d) Adjudicating Authority

Ans. (a)

31. Which of the following may not prove existence of debt due to an operational creditor under the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016?
a) Records available with an information utility
b) A charge registered with Registrar of Companies
c) A contract for the supply of goods and service.
d) An invoice demanding payment for the goods and services supplied

Ans.(b)

32. The option to sell the assets of a corporate debtor by means of private sale under the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 is not available to a liquidator if the asset is_________
a) perishable.
b) sold at a price lower than the reserve price of a failed auction.
c) likely to deteriorate in value if not sold immediately.
d) sold at a price higher than the reserve price of a failed auction.

Ans. (b)

33. In which of the following circumstances voluntary liquidation is permissible?
a) Where the committee of creditors decides to liquidate the company during the resolution period.
b) Where the Adjudicating Authority does not receive a resolution plan of a company
c) Where the company has no debt or can pay all its debts in full.
d) Where debt equity ratio of the company is less than one.

Ans.(c)

34. The Annual Status Report indicating progress of the voluntary liquidation is not required to include the____
a) details of assets that are yet to be sold.
b) distribution made to stakeholders.
c) cost of realization of the assets.
d) developments in any material litigation.

Ans. (c)

35. Which of the following is not a requirement for registration as an information utility?
a) It has a minimum net worth of Rs.50 crore.
b) Not more than 26% of its voting power is held by persons resident outside India.
c) More than half of its directors are independent directors.
d) Its sole object is to provide core services and other services under the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017.

Ans. (b)

36. An information utility holds financial information as a____________
a) trustee.
b) regulator.
c) custodian.
d) fiduciary.

Ans. (c)

37. During a fast track process, existence of dues can be proved in case of workmen–
a) individually or collectively
b) individually only
c) collectively only
d) by resolution professional

Ans.(a)

38. An order of the Insolvency and Bankruptcy Board of India directing an inspecting authority to conduct an inspection of records of a service provider may not contain____________
a) scope of inspection
b) privileges of service provider
c) composition of inspecting authority
d) timelines for conducting the inspection

Ans.(b)

39. A show-cause notice issued by the Insolvency and Bankruptcy Board of India on consideration of an inspection report needs to be disposed of by ________within__________
a) Inspecting Authority, Six months.
b) IBBI, three months
c) Adjudicating Authority, One year
d) Disciplinary Committee, Six months

Ans.(d)

40. When a complaint and grievance is in the same matter, it will fall within the category of –
a) general complaint
b) complaint-cum-grievance
c) complaint
d) grievance

Ans.(b)

41. Par value of a share mean
a) face value of the share
b) dividend value of the share
c) actual value of the share
d) market value of the share

Ans.(a)

42. Who among the following need not to be given notice for the general meeting of a company?
a) a member of the company
b) an assignee of an insolvent member
c) the auditor of the company
d) a debenture holder of the company

Ans. (d)

43. Financial statement of a company does not include ______
a) due and drawn statement.
b) balance sheet.
c) cash flow statement.
d) profit and loss account.

Ans. (a)

44. The date from which the scheme of mergers and amalgamation of companies is effective is_________
a) effective date.
b) appointed date.
c) date of creditor’s assent to merger.
d) date of order of merger by National Company Law Tribunal.

Ans.(b)

45. When a company has failed to commence its business within one year of its incorporation, ___________
a) the registrar may strike off its name from the register of companies.
b) it will be given a dormant status.
c) its registration will be suspended.
d) it will be referred to official liquidator.

Ans.(a)

46. Can a member function as a Bench of National Company Law Tribunal?
a) Yes, a technical member, if duly authorised.
b) Yes, judicial member, if duly authorised.
c) Yes, only in exigencies when no other member is available.
d) No, a member cannot function as a Bench.

Ans.(b)

47. After the retirement of a partner of a partnership firm, If the remaining partners want to continue the business, a new partnership agreement is______
a) Necessary
b) Not necessary
c) not possible as the partnership is already dissolved
d) is optional

Ans.(a)

48. Where a partnership agreement provides neither for the duration nor for the determination of the partnership, it is________
a) limited liability partnership
b) joint stock company
c) partnership at will
d) never a partnership

Ans.(c)

49. Mr. X, a partner of a limited liability partnership defrauded creditors of the limited liability partnership for fraudulent purpose. The liability of the limited liability partnership ___
a) shall be unlimited.
b) shall be limited.
c) shall be limited, but the rest of liability will be that of Mr. X.
d) shall be nil, as all the liability will be that of Mr. X.

Ans.(a)

50. Which of the following circumstances is not a condition for winding up of limited liability partnership by the Tribunal?
a) the limited liability partnership decides that it would be wound up by the Tribunal.
b) the number of partners of the limited liability partnership is reduced below two for the last 9 months.
c) the number of partners of the limited liability partnership is reduced below two for the last 12 months.
d) if the limited liability partnership has made a default in filing with the Registrar the Statement of Accounts and Solvency or annual return for any two consecutive financial years.

Ans. (d)

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