Which among the following statements is NOT true.

The correct answer is Option (2) → The director of a company must be a shareholder.

The Companies Act, 2013 does not require a director to hold shares of the company. A director is appointed to manage the company; only the Articles of a company may ask its directors to hold a few qualification shares. So the statement that a director must be a shareholder is the one that is not true. The other three statements are true:

Option (1) Share application account is a personal account. — A true statement. It records the money owed to or by the applicants, who are persons, so it is a personal account.

Option (3) Paid up capital cannot exceed called up capital. — A true statement. Paid up capital is the part of the called up capital actually received, so it is at most equal to the called up capital; money paid before a call is shown as calls in advance, not as paid up capital.

Option (4) Capital reserves are created from capital profits. — A true statement. A capital reserve is built from capital profits, such as the gain left on reissue of forfeited shares.