KATHMANDU UNIVERSITY SCHOOL OF MANAGEMENT

Balkumari, Lalitpur

Home Assignment 1

Date: 20th March, 2020

Submitted By: Submitted To:

Sulakshana Dhungel Mr. Sharan Shankar Paudel
BBA Faculty of Corporate Law
Year 3 Sem 2
177028
1) Mr. A entered partnership agreement with B, January 2019 A.D. Agreement was silent
regarding profit & loss sharing between them. Mr. B had been handling administrative
matters of Firm. After one year, B stopped doing his job and left partnership firm just
sending mail to A but A did not entertain that notice then after B claimed 60% profit
including out of total profit of Firm and reasonable salary with A.

Questions

A) Discuss the legal status of Firm

According to Chapter-5, Section 29 of Partnership Act, 2020, a firm can be dissolved

either with the consent of all the partners or according to the provisions specified in the
partnership agreement of the specific firm. The above case has not mentioned about any
prior agreement about dissolution terms. Mr. A does not approve the dissolution.
As per Section 30, any partner can cause to dissolve the firm by providing a legal notice
in writing to all the partners in absence of the related dissolution provision specified in
the partnership agreement. Mr. A has been informed about the dissolution only through
email which serves no legal ground for the dissolution as per above clause.
Since none of the conditions for dissolution are validated in the above case, the legal
position of the firm is still partnership.

B) Do you think, B's Claim is Valid?

In the case, Mr. B has claimed 60% of the profit including out of total profit and
reasonable salary for handling administrative matters of the firm. According to the
Chapter 3, Section 19- Remuneration and Interest of the Partnership Act 2020, every
partner shall be entitled to receive remuneration as specified in the agreement for
managing the business of the firm. But, as the partnership agreement is silent regarding
the sharing of profit between the two partners, the profit must be shared among the two
partners proportional to their initial capital investment into the partnership firm.
2) How can you ensure quorum requirement and majority to pass resolution in Public
Limited Company in the following condition?
XYZ Company Limited has 3 shareholders whereas Mr. X representing from CHB
Limited Company and holds 63% share, Mr. Y holds 27% and Mr. Z hold 10%
respectively. Suppose only Mr. Y is absent in the AGM. (There is need to pass special
resolution)

According to Chapter 5, Section 73, Sub-section 2 of the Company Act 2006, no

proceedings of the meeting of the public company shall be conducted unless at least three
shareholders of the total shareholders, representing more than fifty percent of the total
number of allotted shares of that company, are present either in person or by proxy, given
that such provisions are not specified in the AOA.
However, Sub-section 4 of Section 73 states that in case of the company incorporated
under the proviso to Sub-section (2), of Section 3 or a company incorporated under
Subsection (1) of Section 173, the presence of three shareholders as mentioned in Sub-
section (2) or (3) shall not be mandatory.
As per the above case, Mr. X represents from CHB Limited Company who holds 63%
share of XYZ Company Limited. Here, the XYZ Company Ltd. is incorporated under the
provision to Sub-section 2 of Section 3, since CHB Company Ltd. has been the promoter
for XYZ Company Ltd. Hence, the presence of three shareholders shall not be mandatory
for the proceedings of the meeting.
Since Mr. X and Mr. Z collectively represent 73% of the total shares which is greater
than the 50% requirement, and the presence of at least three shareholders is not
mandatory for Mr. X represents the promoter share, the quorum requirement is fulfilled
even without Mr. Y and the AGM would be considered valid.