Company Law test Topic: Introduction, Share Capital, Charges,

Deposits, Debentures and Membership – 40 Marks

1. A shareholder who holds 99% of the share capital of a company can

be held liable for the acts of the company. Comment.

2. The Board of directors of Nav Avtar Ltd. passed a resolution for

issue of rights shares. However, certain shareholders of the

company raised an objection as to whether the company needed

additional capital. Discuss the validity of the counter-move taken by

the shareholders and resolution passed by the Board.

3. The Board of directors of Aakash Ltd., a listed company, at its

meeting held on 1st April, 2011 announced a proposal for issue of

bonus shares to all equity shareholders of the company at 1:1 ratio.

On 1st May, 2021, the directors at another meeting passed a

resolution to reverse the proposal of bonus issue announced on 1st

April, 2021. Discuss the validity of the proposal and the reversal.

4. A company going for public issue of shares must issue such shares

to its existing shareholders. Comment.

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 5. Rigid Limited during an Internal Audit in March 2019 noticed the

following : (a) A charge for the mortgage of company’s lands in

Chennai created on 1st October 2018 in favour of the company’s

Bankers against a term loan of ` 20 crore, has not been registered

till date. (b) The company has failed to register the charge on its

Administrative Buildings to cover a loan of ` 25 Crore created on

5th November 2018 in favour of LlC. Advise the Board of the

Company on the remedial action.

6. Elegant Ltd., engaged in the retailing of petroleum products sourced

from the national oil companies, sells petrol and diesel, in addition

to other outside customers, to the companies in which the directors

of the Company hold directorship. The total value of supplies made

to such companies during the year 2018-19 amounted to ` 125

Crore. This forms 12% of the annual turnover of Elegant Ltd.

Explain the compliance requirements for Elegant Limited assuming

: (i) The products are sold by Elegant Limited to those companies at

the market price announced by the oil marketing companies and (ii)

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 Elegant Ltd. provides a discount of 10% on such market price on its

sale to only those companies and not to others.

7. Tarun deposited ` 1,00,000 in April 2018 with F Ltd., an unlisted

public company carrying on manufacturing operations for a term of

3 years. Tarun seeks your advice on the following : (a) Tarun has an

emergency in November 2018 at home for which he needs the above

funds immediately. Can he get back the money without any

deductions ? (b) During December 2018, F Ltd. was issued a notice

by the Reserve Bank of India declaring the deposit scheme invalid as

F Ltd. had paid brokerage in excess of the limits prescribed by RBl.

Can Tarun be paid back the whole amount of deposit with accrued

interest without any deduction ?

JIGL: Topics IPC, CRPC, CPC, Evidence, Constitution!

1) "Writ of habeas corpus is a bulwark of personal liberty." Justify this

statement in the light of the provisions stated in the Constitution of

India.

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 2) "Right to fundamental freedoms is not absolute." Elaborate.

3) Explain the 'pith and substance' rule with the help of decided cases

4) A Magistrate of the First Class passed a sentence of imprisonment

for a term of three years with a fine of 6,000 and in lieu of non-

payment thereof, an additional imprisonment for another one year.

The aggrieved party, Anshul, wants to prefer an appeal against the

order of the Magistrate. Will he succeed ? Advise with reasons.

5) A real estate company has its head office at Delhi and branch

offices at Ahmedabad, Patna and Indore. A dispute cropped up

between Sorabh and the company in respect of a transaction

through Ahmedabad office. Sorabh files a suit in respect of this

dispute against the company in a court at Patna. How will the court

decide ?

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 6) Ramu is accused of a crime. He suddenly left his house after

commission of the crime. He explained to the court that he had

sudden and urgent business at the place to which he had gone. He

also gave the details of his business there. Discuss, what facts are

relevant and not relevant in this case.

7) Sohan is tried summarily by the Metropolitan Magistrate on the

charge of committing theft and is sentenced to undergo

imprisonment for a period of six months. Can Sohan challenge this

decision ? If so, on what grounds ?

8) 'X' is charged for murder of 'Y'. The chargesheet is filed in the court

of Chief Judicial Magistrate, who passed the order of sentence of

life imprisonment. 'X' engages you as an Advocate. What shall be

your advice in the matter ?

9) Que: Explain the provisions relating to Cheating under IPC, with

help of a case law.

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 10) Que: What is pari materia law?

SBEC: Topics – Types of Organization, Kinds of Companies,

Incroporation, Charter Document 1 and 2!

1) The Articles of Association may contain provisions for

entrenchment.

2) Kejri Ltd., an unlisted company is having its corporate office in

Kolkata. It is having registered office in New Delhi and wants to call

its annual general meeting in Mumbai on 1st September 2019. Can

the company do so as per the provisions of the Companies Act, 2013

3) Shyam Agarwal wants to incorporate a company in the name and

style of Raghav Forest Corporation Ltd. in the state of Himachal

Pradesh. Can a company be incorporated with the said name ?

Referring to the provisions of the Companies Act, 2013 and you

being a practicing Company Secretary, advise the promoters.

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 4) A company has taken a term loan from a financial institution and is

regularly paying the loan installments and interest. The financial

institution proposes to convert 20% of the loan into equity shares of

the company as per terms of the agreement. Advise the company,

whether the financial institution can enforce such a convertibility

clause ? Also examine the validity of such a clause.

5) A company wants to include a provision in its Articles of Association

by altering them to limit the company’s share capital to a fixed

amount. Can it do so ? Will your answer be different if 100%

shareholders agree for such alteration ?

6) One of the subscribers to Memorandum of Association of a company

under process of incorporation is a foreign national residing outside

India. State the provisions of Companies Act, 2013 regarding

authentication of his signature and address. Will the requirement of

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 business visa be applicable to his case if he is a person of Indian

origin or overseas citizen of India ?

7) Most of the business persons are preferring to form LLPs in place of

Companies, Elucidate.

8) ABC Ltd. has altered its name from BCD Ltd. to ABC Ltd. However,

the fact of alteration of name of the company was not brought to the

notice of NCLT. Please advise the company ABC Ltd. whether it has

a right to execute a decree in its new name after the change of name.

9) You are a Company Secretary in practice. The would be promoters

of a company have asked you about stamping and dating of

Memorandum and Articles of Association. Advise them.

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 10) Explain whether the Articles of Association of a company can

provide for payment of dividend by a company in proportion to the

amount paid up on its equity shares.

EBCL: RBI ACT, FDI, FEMA+Foreign Currency

Transaction+FCRA+TOPA

1) What is meant by Liberalised Remittance Scheme (LRS) ? State the

permissible capital account transactions which may be handled by

an individual in this process, under the Foreign Exchange

Management Act (FEMA), 1999.

2) Who can purchase immovable property in India ? State the

requirements which must be satisfied for repatriation of sale

proceeds of any immovable property outside India under Foreign

Exchange Management Act, 1999

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 3) X has two properties, property ‘A’ and property ‘B’. He sells his

property ‘A’ to Y and puts a condition that Y should not construct

more than one storey on property ‘A’, so that property ‘B’, which he

retains, shall have good light and free air. Ascertain, whether

condition imposed by X is valid under the Transfer of Property Act,

1882 ?

4) Reserve Bank of India is a banker of banks. Comment.

5) Under what conditions ‘Foreign Direct Investment’ in limited

liability partnership is permitted.

6) What is the process of registration under FCRA?

7) What do you mean by the rule of lis pendens ? Write down the

essentials of rule of lis pendens as provided in the Transfer of

Property Act, 1882.

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 8) State the meaning and characteristics of immovable property as per

the Transfer of Property Act, 1882.

Securities Law and Capital Markets: Topics: ICDR, SEBI ACT,

Depositories, SCRA, Insider Trading.

1) ‘A stock exchange on its own can delist any security thereon’.

Explain how Recognized Stock Exchange delists any securities listed

thereon under Securities Contracts (Regulations) Rules, 1957

2) SEBI has been given necessary autonomy and authority to regulate

and develop an orderly market. Elucidate the statement in the light

of statutory powers vested with SEBI.

3) M/s Highspeed Ltd. manufacturing a car components for leading

car manufacturer. Its public issue of ` 500 crore was fully

subscribed. The public issue money ought to be utilized for setup an

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 assembly-line for the existing business. Out of ` 500 crore, the

company spent ` 400 crore for assembly-line. The management

consultant, hired for Business Process re-engineering has suggested

to invest balance amount to setup bike components manufacturing

unit. You, being company secretary of the company, advise on the

opinion of management consultant by referring provisions of SEBI

Guidelines

4) From the following information, calculate the Enterprise Value of E

Ltd. : Balance Sheet of E Ltd. as on 31st March, 2018 Liabilities

Amount Assets Amount (` Lakh) (` Lakh) Share Capital (Face Value

Non-Current Assets 2,550 ` 2) 952 Current Assets : Reserves &

Surplus 48 Cash & Cash Equivalent 102 Minority Interest 115

Other Current Assets 1,323 Short-term Borrowings 2,860 3,975

3,975, Current Market Price Per Share is ` 96.

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 5) The price of equity share of a listed company viz. NextDial Ltd.

(NDL) increased from ` 10 to high of ` 50 i.e. a rise of 500% during

the period 1st April, 2018 to 30th Sept., 2018. NDL had entered into

a Share Purchase Agreement (SPA) with the proposed acquirer(s) to

acquire 40% of the subscribed equity share capital as of 31st Aug.,

2018 which would result in change of management. This initial

discussion on the deal was made on 1st April, 2018 but SPA was

signed on 25th April, 2018. During 1st April, 2018 to 30th Sept.,

2018, the promoter and his wife dealt in the script of NextDial Ltd.

Referring to the provisions of SEBI (PIT) Regulations, answer the

following : (i) Define Unpublished Price Sensitive Information. (ii)

Whether there was any Unpublished Price Sensitive Information

(UPSI) ?

6) What will be the date of UPSI ? (iv) What are the factors to be taken

into account by the adjudicating officer while imposing penalty for

the act ?

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 7) The financial data of Natural Energy Limited as on 31st March,

2018 are as under : (i) Authorised Share Capital : ` 700 crore (ii)

Paid-up Capital : ` 300 crore (iii) Free Reserves : ` 800 crore The

company has pending convertible debenture of ` 150 crore, due for

conversion in financial year 2018-19. The company proposes to

issue bonus shares in the ratio of 1 : 1 after conversion of

debenture. You being a company secretary, advise on the procedure

to be followed by referring SEBI regulations.

8) “SEBI has been established with objective of protecting the interest

of investors and to promote the development of and to regulate the

securities market (SEBI Act, 1992)”. Discuss its composition and

initiatives taken by SEBI for development and regulation of

securities market.

9) “The book building process is very transparent. All investors

including small investors can see on an hourly basis where the book

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 is being built before applying”. Explain the offer to public through

Book Building Process.

10) What do you mean by Securities Appellate Tribunal (SAT) ?

What is its composition ? As a Company Secretary, advise the

aggrieved party about the appeal procedure and powers of SAT.

11) What is the difference between dematerialisation and

immobilisation?

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