CS Excutive Programme Module II (New Course) Appendix Final June 2010

Free of Cost ISBN : 978-81-7666-847-7
Appendix
CS Executive Programme
Module II (New Course)
June - 2010
INDEX
Paper 4 Company Law II- 1
Paper 5 Economic and Labour Laws II- 6
Paper 6 Securities Laws and Compliances II- 12
PAPER'S
Paper - 4 : Company Law
Chapter-1 : Introduction
2010 - June [5] (b) Rani is a wealthy lady enjoying large dividend and interest
income. She has formed three private companies and agreed with each of them
to hold a block of investment as an agent for it. Income received was credited
in the accounts of the company but the company handed back the amount to her
as a pretended loan. This way, she divided her income in three parts in a bid to
reduce her tax liability. Discuss the legality of the purpose for which the three
companies were formed. (5 marks)
(c) Carefree is an officer of Cosy Cosy Ltd., who is authorised to sign on behalf
of the company any contract, bill of exchange, hundi, promissory note, cheque,
or order for money or goods. In these circumstances, Carefree signs a cheque
on behalf of the company without mentioning the name of the company. Who
is liable to the holder in such a case? (5 marks)
2010 - June [6] Distinguish between the following:
(i) Company and corporation. (4 marks)
2010 - June [8] Write notes on the following:
(i) Disadvantages of corporate form of enterprise (4 marks)
CS Executive Programme Module - II (New Course) II-2

Chapter-3 : Incorporation and its Consequences-II Types of Companies
(ii) Remuneration of promoters (4 marks)
Chapter-4 : Incorporation and its Consequences-III Memorandum of
Association and Articles of Association
2010 - June [1] {C} Comment on the following:
(i) A company has a statutory right to alter its articles of association.
(5 marks)
Chapter-6 : Financial structure and Membership-I Concept of Capital
and Financing of Companies
(ii) Nominal capital and subscribed capital. (4 marks)
Chapter-7 : Financial structure and Membership-II Alteration of Share
Capital
(iii) Shares and stock. (4 marks)
Chapter-8 : Financial structure and Membership-III Prospectus
(ii) Red-herring prospectus means a prospectus which has complete
particulars on the price of the securities offered and the quantum of
securities offered. (5 marks)
Chapter-10 : Financial Structure and Membership-V Creation and
Registration of Charges
2010 - June [3] (d) What is the effect of crystallisation of a floating charge?
(4 marks)
Chapter-11 : Financial Structure and Membership-VI Allotment and
Certificates of Securities
2010 - June [4] (a) In the case where the shares of a company are held in joint-
names of two persons Arpit and Rakshit and one of these joint-holders requests
the company to split the shares equally between them by issuing fresh share
certificates, what should the company do? (4 marks)
(d) A company has forfeited shares of a defaulting shareholder for non-
payment of call money. However, the defaulting shareholder approaches the
Board after forfeiture of shares to cancel the said forfeiture. What should the
Board do? Give your advice. (4 marks)
Chapter-12 : Financial structure and Membership-VII Membership in a
Company
2010 - June [4] (c) Four types of persons, viz., a section 25 company, an
insolvent individual, a trade union and a pawnee, apply for membership in your
public limited company. Will you accept them as members of your company?
Why? (4 marks)

Chapter-13 : Financial structure and Membership-VIII Transfer and
Transmission of Securities
2010 - June [4] (b) Layman is a holder of a share warrant in Ontime Fliers
Ltd., a public limited company. Unfortunately, Layman is unaware of any of
the formalities to be complied with for transferring the said share warrant.
Advise him about the formalities to be completed in this regard. (4 marks)
Chapter-14 : Management and Control of Fompanies-I Institution of
Directors
2010 - June [5] (a) Abhay is director in two companiesGoodluck India Pvt.
Ltd. and Lucky Winners India Pvt. Ltd. Abhay attended Board meetings of
these two companies on 22
nd
August, 2009 in the same building Welcome
House at 2 p.m. and 4 p.m. respectively.
(i) Can Abhay draw travelling allowance from both the companies?
(ii) Is he entitled to receive sitting fees fully from both the companies?
(6 marks)
(iii) Alternate directors
(v) Independent directors (4 marks each)
Chapter-15 : Management and control of Companies-II Powers and
Duties of Directors
(iii) The power of directors to approve the annual accounts can be
delegated to a committee of directors or some of the directors.
(5 marks)
Chapter-16 : Management and Control of Companies-III managing
Director, Whole-Time Director and Manager
(iv) Whole-time chairman and part-time chairman. (4 marks)
Chapter-18 : Management and Control of companies-V Meeting
2010 - June [2] (c) Discuss the various methods by which sense of a meeting
is ascertained. (6 marks)
2010 - June [3] (a) Discuss the requirements for keeping the minutes book of
general meetings. (4 marks)
(b) Discuss briefly the voting rights of a proxy. (4 marks)
(c) State whether a Board meeting of a company can be held at any place.
(4 marks)
(iv) Passing of resolution by postal ballot (4 marks)

Chapter-31 : Limited Liability Partnership
(iv) There are no shareholders in a limited liability partnership, instead
there are partners. (5 marks)
Chapter-35 : Winding up of Companies
(v) In case of a company, the terms winding-up and dissolution convey
the same meaning. (5 marks)
(v) Insolvency of an individual/firm and winding-up of a company
(4 marks)
Chapter-37 : Objective Question
2010 - June [2] (a) Choose the most appropriate answer from the given options
in respect of the following:
(i) Where the auditor of a company resigns, the vacancy arising therefrom
can be filled by the company only at
(a) General meeting
(b) Board meeting
(c) Audit committee meeting
(d) None of the above.
(ii) The invitation and acceptance of deposits by non-banking non-
financial companies in India is regulated by
(a) The Reserve Bank of India Act, 1934
(b) The Securities and Exchange Board of India Act, 1992
(c) The Companies Act, 1956
(d) None of the above.
(iii) The Companies Act, 1956 allows a company to re-convert its stock
into
(a) Fully paid-up equity shares
(b) Partly paid-up equity shares
(c) Unpaid equity shares
(d) Uncalled shares.
(iv) In the case of incorporation of an Asset Management Company
(AMC), the memorandum of association and articles of association are
required to be vetted by which of the following authority before these
documents are registered by the Registrar of Companies
(a) ROC
(b) SEBI
(c) RBI
(d) NSDL.

(v) Which of the following is correct in respect of a public limited
company in India
(a) Business can be commenced immediately on incorporation
(b) No need to have more than two directors
(c) There is no restriction on remuneration payable to directors
(d) The number of members is unlimited. (1 mark each)
2010 - June [2] (b) Re-write the following sentences after filling-in the blank
spaces with appropriate word(s)/figure(s):
(i) A private company, which is a subsidiary of a company which is not
a private company, is a company.
(ii) All contracts which are purported to be made on behalf of a company
before its incorporation are known as contracts.
(iii) The issue of ESOPs or Employees Stock Option Scheme shall be
subject to approval of shareholders through a resolution.
(iv) Sweat equity shares issued to employees or directors shall be locked-in
for a period of from the date of allotment.
(v) When a company makes buy-back of shares or securities, the buy-back
operations shall be completed within from the date of passing
of the special resolution or a resolution passed by the Board.
(1 mark each)
2010 - June [7] State, with reasons in brief, whether the following statements
are correct or incorrect:
(i) The members of an unlimited company are liable directly to the
creditors of the company.
(ii) A promoter has legal right to claim promotional expenses for his
services.
(iii) Preference shares are non-cumulative unless expressly stated to be
cumulative.
(iv) A charge created orally shall also require registration.
(v) A return of allotment in e-form 2 is required to be filed with the
Registrar of Companies even if a single share is allotted by a company.
(vi) The Prospectus must be dated.
(vii) A company is required to obtain approval of the debenture trustees for
any distribution of dividend.
(viii) Additional directors can be appointed only by public companies.
(2 marks each)

Paper - 5 : Economic and Labour Laws
Chapter-2 : Foreign Trade Policy and Producers
2010 - June [1] {C} With reference to the relevant legal enactments, write
short notes on the following:
(i) Privileges to a star export house (3 marks)
Chapter-3 : Trade, Competition & Consumer Protection
(ii) Competition advocacy (3 marks)
2010 - June [3] (a) Distinguish between the following:
(ii) Contract of service and contract for service. (5 marks)
2010 - June [4] (c) Jolly Ltd. maintained a guest house for the use of its
managing director and other executives. It entered into an agreement with a
firm for the installation of central air-conditioning system. The system installed
did not function, developed snags and there was leakage of water from ducting
system. The company filed a complaint claiming compensation for deficiency
in service under the Consumer Protection Act, 1986. Will it succeed? Give
reasons with reference to case law, if any. (5 marks)
Chapter-4 : Essential Commodities and Standards of Weight and
Measures
(v) Mens rea under the Essential Commodities Act, 1955 (3 marks)
2010 - June [5] (c) Evaluate the efficacy of the Essential Commodities Act,
1955 in controlling the production, supply and distribution of essential
commodities in the country. (5 marks)
Chapter-5 : Management of Foreign Exchange Transactions
2010 - June [4] (a) With reference to the relevant provisions of the Foreign
Exchange Management Act, 1999 and the rules and regulations made
thereunder, advise on the following:
(i) An Indian company engaged in financial sector is interested in making
investment in banking business abroad.
(ii) An Indian resident wants to purchase foreign securities by making
remittances from his resident foreign currency (RFC) account.
(iii) A Bangladeshi millionaire is interested to invest in India subject to
FDI policy of the Government of India.
(iv) An Indian public limited company wants to issue bonus shares to an
existing non-resident shareholder.

(v) An Indian citizen resident outside India is interested in acquiring a
house in Chennai and a farm house on the outskirts of Delhi.
(1 marks each)
Chapter-6 : Pollution Control and Environmental Protection
(iv) The concept of sustainable development. (3 marks)
2010 - June [4] (b) Critically examine the application of the rule of strict
liability while fixing the liability for environmental pollution. (5 marks)
2010 - June [5] (b) Critically examine how environmental pollution violates
human rights. (5 marks)
Chapter-7 : Management of Intellectual Property Rights
(iii) Term of patents
(vi) International copyright. (3 marks each)
(i) Intellectual property and industrial property.
(iii) Patent and patent of addition. (5 marks each)
2010 - June [5] (a) Mention five important grounds for opposition to the grant
of patents. (5 marks)
Chapter-9 : Minimum Wags Act, 1948
2010 - June [8] Attempt the following stating relevant legal provisions and
decided case law, if any:
(iii) An out-worker prepared goods at his residence and later on supplied
these goods to the employer. Will he be treated as an employee under
the Minimum Wages Act, 1948?
(v) A company was running into losses and was unable to pay the
minimum rates of wages to its workers. The workers pleaded that the
employer must pay them the minimum rates of wages. The employer
(company) intends to go to the court challenging the constitutional
validity of the Minimum Wages Act, 1948. Will the company succeed?
(4 marks each)
Chapter-11 : Payment of Gratuity Act, 1972
(iv) Mauji Ram was absent from duty without leave. The employer took the
plea that it had resulted in the breach of continuous service for the
purposes of gratuity under the Payment of gratuity Act, 1972. Is the
plea of the employer legal and enforceable? (4 marks)

Chapter-12 : Employees Provident Fund Miscellaneous Provision Act,
1952
(iv) Excluded employee under the Employees Provident Fund Scheme,
1952. (5 marks)
Chapter-13 : Employees State Insurance Act, 1948
(ii) Purposes for which ESI fund may be expended under the Employees
State Insurance Act, 1948. (5 marks)
(ii) Principal employer and immediate employer under the Employees
State Insurance Act, 1948. (5 marks)
(vi) An employee was on his way to the factory. He met with an accident
one kilometre away from the place of his employment. He pleaded that
the injury was caused by accident arising out of and in the course of
employment and claimed employment injury benefits under the
Employees State Insurance Act, 1948. Will the employee succeed?
(4 marks)
Chapter-14 : Workmens Compensation Act, 1923
(vi) Theory of notional extension of employment under the Workmens
Compensation Act, 1923. (5 marks)
(i) A driver of bus belonging to the employer was involved in an accident
which resulted in the impairment of free movement of his left hand
disabling him form driving vehicles. He was, however, capable of
performing other work. He claimed compensation contending that the
said accident had resulted in permanent disablement of driving
vehicles. Will he succeed? (4 marks)
Chapter-15 : Contract Labour Act, 1970
(v) Prohibition of employment of contract labour under the Contract
Labour (Regulation and Abolition) Act, 1970. (5 marks)
(vii) Some contract labour was engaged by an organisation. There was
subsequently prohibition of employment of contract labour in that
category as a consequence of the notification issued by the central

Government. The employer did not absorb the contract labour and
employ them on regular basis. The workmen challenged the action of
the organisation. Will they succeed? (4 marks)
Chapter-16 : Industrial Disputes Act, 1947
(i) Principles governing domestic enquiry. (5 marks)
(i) Legal strike and justified strike. (5 marks)
Chapter-17 : Industrial Employment (Standing Orders) Act, 1946
(iii) Procedure to be followed for the certification of standing orders under
the Industrial Employment (Standing Orders) Act, 1946. (5 marks)
Chapter-18 : Factories Act, 1948
(iii) Premises and precincts under the Factories Act, 1948. (5 marks)
(ii) The workers were engaged by beedi manufacturer for rolling beedies
at home subject to the rejection of defective beedies by manufacturer.
The workers claimed that they should be treated as workers under the
provisions of the Factories Act, 1948. Will they succeed? (4 marks)
Chapter-19 : Objective Questions
2010 - June [2] State, with reasons in brief, whether the following statements
are correct or incorrect. Attempt:
(i) The Consumer Protection Act, 1986 only reinforces the doctrine of
caveat emptor.
(ii) In all legal proceedings relating to trade mark registered under the
Trade Marks Act, 1999, the original registration and all subsequent
assignments and transmissions thereof shall be prima facie evidence
of its validity.
(iii) Cartel includes an association of producers, sellers or distributors who,
by agreement among themselves, limit, control or attempt to control
the production, distribution, sale or price of or trade in goods or
provision of services.
(iv) Trade practice includes a single or isolated action of any person in
relation to any trade.
(v) While calculating the value of plant and machinery for the purpose of
small scale/ancillary industrial undertaking, the following shall be
included

(a) the cost of installation of plant and machinery;
(b) the cost of research and development equipment and pollution
control equipments;
(c) the cost of fire fighting equipments; and
(d) the charges paid for technical know-how for erection of plant and
machinery.
(vi) Special Economic Zone (SEZ) is deemed to be a foreign territory for
the purposes of trade operations, duties and tariffs. (3 marks each)
spaces with appropriate word(s)/figures(s):
(i) Foreign contribution means donation, delivery or transfer made by any
foreign source of any article, if the market value in India, of such
article, on the date of such gift, delivery or transfer, exceeds Rs.
.
(ii) Environmental clearance is not required form the Central Government,
if investment is less than for any item reserved for the small
scale sector.
(iii) The amount representing the full export value of goods or software
exported is required to be realised and repatriated to India within
month(s) from the date of export.
(iv) The term of every patent granted afer the commencement of the
Patents (Amendment) Act, 2002 shall be year(s) from the
date of filing of application of the patent.
(v) Literary, dramatic, musical or artistic works enjoy copyright protection
for the life time of the author plus year(s) beyond the death
of the author. (1 mark each)
spaces with appropriate word(s)/figure(s):
(i) The membership of provident fund scheme is compulsory for
employees drawing a p ay not exceeding Rs. per month.
(ii) means termination of the service of an employee otherwise
than on superannuation.
(iii) Wages are to be paid within working days form the date of
termination of the employee whatever be the reason of termination.
(iv) Superannuation in relation to an employee, who is a member of the
pension scheme, means the attainment of the age of years.
(v) Under the Workmens Compensation Act, 1923, the employer shall
not be liable when the injury does not result in disablement for a
period exceeding day. (1 mark each)

2010 - June [7] (c) Choose the most appropriate answer from the given options
in respect of the following:
(i) An application for the recovery of bonus from an employer shall be
made within
(a) Six months form the date on which the money became due
(b) One year from the date on which the money became due
(c) 60 Days from the date on which the money became due
(d) 90 Days from the date on which the money became due.
(ii) The occupier of a factory is required to send a written notice to the
Chief Inspector of Factories at least
(a) 7 Days before he begins to occupy or use the premises as a factory
(b) 15 Days before he begins to occupy or use the premises as a
factory
(c) 21 Days before he begins to occupy or use the premises as a
factory
(d) 10 Days before he begins to occupy or use the premises as a
factory.
(iii) The State Government may make rules regarding the provisions and
maintenance of a canteen for the use of workers wherein more than
(a) 250 Workers are ordinarily employed
(b) 500 Workers are ordinarily employed
(c) 300 Workers are ordinarily employed
(d) 100 workers are ordinarily employed
(iv) The minimum amount of compensation in case of permanent total
disablement is
(a) Rs. 1,00,000
(b) Rs. 90,000
(c) Rs. 80,000
(d) Rs. 70,000.
(v) The Contract Labour (Regulation and Abolition) Act, 1970 applies to
every establishment or contractor wherein workmen employed on any
day of the preceding 12 months shall be
(a) 100 Workmen or more
(b) 20 Workmen or more
(c) 50 Workmen or more
(d) 10 Workmen or more. (1 mark each)

Paper - 6 : Securities Laws and Compliances
Chapter-1 : An Overview of Legal & Regulatory Framework
2010 - June [3] (d) Primary market is of great significance to the economy.
Comment. (4 marks)
2010 - June [4] (b) What is a self-regulatory organisation? What are its
functions and obligations? (5 marks)
Chapter-2 : Money Market
2010 - June [3] (b) Explain the following terms related to money market:
(i) Auction
(ii) Primary dealer (2 marks each)
(iii) Commercial bills and commercial papers. (3 marks)
Chapter-3 : Capital Market Instrument
2010 - June [2] (a) Write short notes on the following:
(i) Mortgage backed securities
(iv) Debt for equity swap. (2 marks each)
2010 - June [3] (a) Explain the following terms related to capital market:
(i) Commodity pool (2 marks)
Chapter-4 : Credit Rating
2010 - June [4] (c) Discuss the factors generally considered by credit rating
agencies for the rating of manufacturing companies. (4 marks)
Chapter-5 : Capital Market Intermediaries
(ii) Merchant banker and portfolio manager. (3 marks)
2010 - June [5] (a) Explain briefly the responsibilities and obligations of a
debenture trustee. (4 marks)
Chapter-6 : Stock Exchange
2010 - June [2] (a) Write short notes on the following:
(ii) Basket trading system
(iii) Market abuse (2 marks each)
2010 - June [3] (c) Write a brief note on market making. (3 marks)
(i) Funds pay-in and funds pay-out. (3 marks)
2010 - June [5] (b) Explain briefly the broad framework for short selling.
(4 marks)

Chapter-7 : Mutual Fund
2010 - June [5] (c) The redemption price of a mutual fund unit is Rs. 48 while
the front-end load and back-end load charges are 2% and 3% respectively.
You are required to calculate-
(i) Net asset value per unit; and
(ii) Public offer price of the unit. (7 marks)
Chapter-8 : Venture Capital
2010 - June [2] (c) Explain the investment criteria for a foreign venture
capital fund in India. (4 marks)
Chapter-11 : Depositories
2010 - June [3] (a) Explain the following terms related to capital market:
(ii) Depository participant. (2 marks)
Chapter-12 : Public Issue of Securities
2010 - June [6] (a) IPO grading is a service aimed at facilitating the
assessment of the equity issue offered to the public. Discuss. (4 marks)
(b) Define fast track issue. List out the conditions to make a fast track issue.
(4 marks)
(c) What are the eligibility norms for public issue by an unlisted company?
(4 marks)
2010 - June [7] (a) What is due diligence in the process of public issue of
securities? Explain its scope and significance. (4 marks)
(d) You are the Company Secretary of Great India Ltd. Prepare a Board note
outlining various requirements of SEBI guidelines for rights issue and list out
the major steps involved in rights issue. (8 marks)
2010 - June [8] (c) Can an issuer company offer specified securities at
different prices? What are the conditions laid down under the SEBI investor
protection guidelines with regard to differential pricing of securities?
(5 marks)
(d) What is book building? What is the difference between fixed price
process and book building process? (5 marks)
Chapter-13 : Debt Market
2010 - June [6] (d) Briefly explain the following terms related to debt market:
(i) Pass through certificates
(ii) Benchmarked instruments
(iii) Inflation linked bonds
(iv) Floating interest rate. (2 marks each)
Chapter-14 : Resource Mobilisation in international Capital Market
2010 - June [7] (c) State the conditions required to be fulfilled for conversion
of external commercial borrowings (ECBs) into equity. (4 marks)

2010 - June [8] (b) Briefly explain the principal documents involved in
issuance of global depository receipts (GDRs) and foreign currency convertible
bonds (FCCBs). (5 marks)
Chapter-15 : Indian Depository Receipt
2010 - June [7] (b) What are the compliances under the listing agreement for
Indian depository receipts (IDRs) relating to appointment of Company
Secretary and undertaking of due diligence of Registrar and Transfer Agent
(RTA), etc.? (4 marks)
Chapter-16 : Investor Protection
2010 - June [8] (a) What are the legal provisions for investor protection with
regard to
(i) misstatements in a prospectus; and
(ii) failure to send financial statements? (5 marks)
Chapter-17 : Objective Questions
2010 - June [1] {C} (a) State, with reasons in brief, whether the following
statements are correct or incorrect:
(i) Capital market is wider than securities market.
(ii) Mandatory client code facilitates market surveillance.
(iii) CAMEL model is used for rating of banking companies.
(iv) A foreign currency convertible bond is a quasi-debt instrument.
(v) The placement memorandum is to be issued for private circulation
only after the expiry of 21 days of its submission to SEBI.
(2 marks each)
2010 - June [1] {C} (b) Rewrite the following sentences after filling in the
blank spaces with appropriate word(s)/figure(s):
(i) Credit rating is considered more relevant for gradation of ______.
(ii) Clearing corporation deals with ______.
(iii) Securities in ______are not available for buy-back until the period
expires.
(iv) Indian money market is getting integrated with the global market
through______.
(v) ______is a stabilization tool for post-listing price of newly issued
shares. (1 mark each)
2010 - June [2] (b) Expand the following abbreviations:
(i) MCFS
(ii) SPDR
(iii) WMA (1 mark each)

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