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.

Hint – No, Separate Legal Entity

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.

Hint – if proper resolution is passed under section 62, shareholders

have no right to take objections.

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.

Hint: once proposal is approved it can not be revoked under section

63.

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

to its existing shareholders. Comment. – In public issue shares can

be offered to any person by issuing prospectus.

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. – Section 77 (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. Register by Paying advaloram

fees as per Companies Amendment Act, 2019.

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 –

Section 188 will not apply as products are sold at arms length price.

and (ii) Elegant Ltd. provides a discount of 10% on such market

price on its sale to only those companies and not to others –

Resolution at general meeting.

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- 1 % Lower rat of interest (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 – Refund as

there is non compliance so refund can be made earlier then 3

months.

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.

Just write what is habeas corpus + mention one case law.

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

Yes there are restrictions on foundmental rights.

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

Define + mention one case law

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.

 Additional imprisonment can not exceed ¼ of original

imprisomenemt.

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 ?

In case where a plaint is to be filed against the Company, such plaint

can be filed in the court in whose jurisdiction the registered office of
the company is situated. However in case of Companies or
corporation, it shall be considered that it carries its business at its
principal office or sole office, if cause of action has not arisen at any
other place.
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.

Acts prior or after the issue can be considered as relevant fact.

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 ? - Maximum imprisonment in

summary trial can be for 3 months.

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 ? CJM does not have power to pass life

imprisonment.

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

help of a case law. Section 415 to 420

10) Que: What is pari materia law? – interpretation of statues,

reference to other statues.

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

Incroporation, Charter Document 1 and 2!

1) The Articles of Association may contain provisions for

entrenchment. Yes Section 5

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

? Yes refer section 96

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. There

are restrictions with use of the name Corporation, refer companies

Incorporation Rule 2020.

 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.

Hint: As per section 62 if conversion clause was approved by

special resolution then it can be enforced.

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 ?

Hint : Capital can not be restricted by Conditions strict then special

resolution can be put via entrenchment clause.

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

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

origin or overseas citizen of India ?

Common wealth convention or Hague convention, - provision -

Companies Incorporation Rule 2014

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

Companies, Elucidate.

LLPs have advantages but it can not come up with public issues.

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.

No need to inform NCLT as per section 13.

 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.

MOA is liable to stamp duty as per the rate of stamp in the state of

incorporation + MOA has to be dated after reservation of name and

before paying the stamp duty.

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.

Yes it is allowed- section 47

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.

Up to 250000 us dollar per resident per financial year for current as well

as capital account transactions.

 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

NRI + Resident outside India except farmhouse, plantaions property

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 ?

Partial Restraint - allowed

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

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

liability partnership is permitted.

Activity under Automatic Route

 6) What is the process of registration under FCRA? Not benami person

+ Having project report

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.

Section 52 ofTOPA

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

the Transfer of Property Act, 1882.

TOPA

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 - Yes

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. Yes

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

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

In the given problem M/s Highspeed Ltd. has utilized Rs. 400 crore

out of total Rs. 500 crore raised through public issue. As the amount

utilized is more than 75% of the total amount raised, the company

may utilize the remaining unutilized 100 crore for the purpose as

stated in the question.

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.

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) ? Yes
 What will be the date of UPSI ? 25th april (iv) What are the factors

to be taken into account by the adjudicating officer while imposing

penalty for the act ? Amount of unfair gain and wrongful loss

6) 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.

Determination of increase in authorized capital required: a. Paid-up share

capital as on 31/03/2018 : Rs. 300 crores b. Paid-up share capital after

conversion of debentures : Rs. 450 crores c. Proposed Bonus issue : One

share for every share held d. Post Bonus issue Capital : Rs. 900 Crores

Since authorized capital is Rs.700 crores only, it is required to increase

the authorized capital by 200 crores or more. The Reserves & Surplus is

Rs. 800 crores, therefore bonus issue of Rs. 450 crores can be made out
of reserves & surplus. – ALSO COMPLY WITH OTHER

REQUIRMENTS

7) “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.

Regulations made by SEBI + Composition + Powers of SEBI

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

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

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

Book Building Process.

Yes in book building process its possible

9) 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. – write the

new composition of Judical and technical member

 10) What is the difference between dematerialisation and

immobilisation? - write in paragraphs

Company Law Test 2: Topics, Directors Section 149-205, General

Meetings, Auditor, Accounts, CSR!

1) Rajesh & Ramesh Co., Chartered Accountants, are the statutory

auditor of FDE Textiles Pvt. Ltd. DEF Products Ltd., the holding

company of FDE Textiles Pvt. Ltd., is considering to allot

assignment of designing of financial information system to Rajesh &

Ramesh Co. Comment and advise the Board of directors of DEF

Products. Ltd. on the above.

2) Sona is a director elected by small shareholders of Rupa Ltd. In this

matter, with reference to the provisions of Companies Act, 2013 : (i)

Explain whether a director elected by small shareholders is eligible

to be appointed as independent director. (ii) What is the tenure of

such director ? (iii) What is the minimum number of equity shares to

be held by Sona ?

3) PQR Textiles Ltd., a listed company covered under the relevant

Rules and Section 148 of the Companies Act, 2013 for appointment

of Cost Auditors, has appointed CMA Suresh as cost auditor of the

company for the financial year 2020-21. Management of

the company desires to appoint the same Cost Auditor for the next

financial year also. Explain the procedure for reappointment of the

same Cost Auditor for the next financial year.

4) Provisions with reference to Related Party Transactions under SEBI

(LODR) Regulations 2015 are wider in scope than Section 188 of

the Companies Act, 2013 and the rules prescribed thereunder.

Discuss.
5) Explain provisions with regard to voluntary revision of financial

statement.

6) Draft specimen of a resolution appointing auditor of the company to

fill vacancy caused by resignation.

7) Smriti Technologies Ltd. was incorporated before 9 years. It is being

observed that the net worth is eroded by its accumulated losses as at

31-03-2017. However, in relation to general meeting of the

company, examine the powers of the Chairperson to adjourn the

meeting suo moto. Referring to the provisions of the Companies

Act, 2013, answer the following : (i) Whether a fresh notice is

required to be given for adjourned meeting ? (ii) Whether a new

business not stated in the original agenda can be transacted at the

adjourned meeting ? (iii) What consequences follow in case the

meeting is a requisitioned meeting and the required quorum is not

present at the scheduled date and time ?

 8) A company secretary qualifies its report because a company is not

maintaining register of proxies. Is he right in doing so? (ii) What

will he check in the Register of proxies as a company secretary?

SBEC: Topics: Striking off, IBC 2016, Various Initial Registration,

Dormant Company, Startups!
1) Rajeev is a young entrepreneur willing to establish an incubator set
up in the space of IT, software development, cloud computing or
hardware/software maintenance. Advise Amar regarding the benefits
available to entrepreneurs in establishing start-ups and comment on
Seed Funding.
2) What are the procedural steps with respect to start a dairy
business.
3) Radha Manufacturing Ltd. want to file an application for removal of
name of company from the Registrar of Companies (ROC).
Enumerate the various grounds for which Company is permitted to
file an application for removal of name from ROC under the
provisions of the Companies Act, 2013.

4) ABC Ltd. is planning to enter into the business of Insurance for

which Board of Directors of the Company seeks your advice about
the norms in respect of paid up equity capital for carrying out the
business of an insurer. Advise them accordingly with reference to
the provisions of Insurance Act, 1938 as amended by Insurance
Regulatory and Development Authority Act, 1999. Also state the
items that are excluded in determining the amount of paid up equity
capital of an insurer under the said Acts.
 5) List out various situations in which a Company is not permitted to
apply for strike off the name of the Company from Registrar of
Companies.

6) The Registrar has suo moto struck off the name of M/s A2Z
Solutions, a LLP from the register as Registrar has a reasonable
cause to believe that the LLP is not carrying on any business for last
two years. Being aggrieved by the order of Registrar, the LLP wants
to file an appeal before National Company Law Tribunal (NCLT)
for restoration of the name of the LLP in the Registrar of Partnership
maintained by the Registrar. Referring to the provisions of the
Limited Liability Partnership Act, 2008, advise the company on the
procedure to be followed for making an application to NCLT.
7) RKG Infrastructure Ltd. were incurring continuous losses and its
financial position went bad to worse. Now, Company is undergoing
a corporate insolvency resolution process. Dinesh who is one of the
senior employees of the company has not been paid his salary for
over 3 months amounting to 4,50,000. He files an application for
initiating corporate insolvency resolution process with an
Adjudicating Authority. Analyze and state whether Dinesh is
entitled to make an application to initiate corporate insolvency
resolution process.
JIGL Topics : Arbitration + Interpretation + Registration of
Documents + IT Act + Limitation .
1) Briefly mention internal and external aids to interpretation of statute
2) Distinguish between ‘Public key’ and ‘private key’.
3) Advise in the matter of the following, the provisions of registration
of documents under the Registration Act, 1908 with reference to
section applicable : (i) Lease agreement for eleven months with rent
payable monthly, having an option to the tenant to renew for further
for the same period and so on. (1 mark) (ii) Lease agreement is only
for a year with a reserved rent for the period granted vis. one year. (1
mark) (iii) Lease agreement for one with reserving yearly rent. (1
 mark) (iv) Lease agreement for a fixed term of five years with yearly
rent payable. Explain the rule of ejusdem generis with the help of
any case decided by the Supreme Court of India.
4) Describe the offence of ‘ hacking’ the computer system as
provided under the provisions of the Information Technology Act,
2000.

5) Ramendra prefers an appeal for setting aside the arbitral award on

the ground that he was not given a proper notice of arbitral
proceedings and thereby not being able to present his case. He also
furnishes sufficient proof and pleads before the Court that he
received the arbitral award just 10 days back. Advise with reasons
— (i) Whether Ramendra will succeed in his prayer; and (ii)
Whether the law of limitation will not be a bar ?

6) Write a note on jurisdiction of arbitral tribunal?

7) On 30th November, 2008, Mohan took a loan of 20,000 from Sohan.

He paid 5,000 to him on 31st August, 2011, towards part-payment.
After that, Sohan did not receive any amount from Mohan.
Subsequently, Sohan instituted a suit for recovery of the dues from
Mohan after the expiry of 2 years from the date of last part-payment.
Advise, whether (i) the suit is maintainable; and (ii) the part-
payment is an acknowledgment of payment.
EBCL: Topics Competition Act + Consumer Protection Act + ECB+
Essential Commodities + Legal Metrology+PMLA
1) Z Ltd. is enjoying dominant position which came to the notice of
Competition Commission of India. Whether the Commission can
order to Z Ltd. for “Division” in the manner suggested by
Commission ? Can such order be passed by the Commission
irrespective of any hurdles in Companies Act, 2013 ?
2) X, an officer of the Enforcement Directorate along with his team
entered into a house, belonging to a reputed and rich person, the
person present in house objected to it and demands the order of the
competent court for searching the concerned house, i.e. Search
Warrant. But the officer ignores and simply shows his ID. Discuss
the powers of Enforcement Directorate and its relevant procedure as
laid down in the Prevention of Money Laundering Act, 2002.

3) Fatima, a student took admission in the ‘ABC College’, of a

Government approved Private University. But, later on Fatima
joined another college of Government University. She claimed
refund of admission fee from ABC College. The college refused to
refund admission fee on the ground that there is no rule in Private
University to refund the admission fee. She filed a petition before
District Consumer Forum Under Consumer Protection Act, 2019.
Will she succeed ? Discuss with reference to a decided case in this
matter.

4) What is meant by “Arbitration Agreement” ? State the constituents

of an arbitration agreement under the Arbitration and Conciliation
Act, 1996.

5) Under what circumstances the Central Government is empowered to

issue the orders relating to control production, supply and
distribution of essential commodities, under the Essential
Commodies Act, 1955.

6) What is the object and scope of the Essential Commodities Act,

1955 ? Discuss briefly
 7) Briefly explain categorically the conditions that are conducive to
‘Cartelization’.

8) Discuss the powers of inspection of the Director, Controller or any

other legal metrology officer, under Legal Metrology Act, 2009
SLCM: Take Overs + Buy Back + Delisting + Depositories + SCRA
1) What do you understand by “Application Supported by Blocked
Amount (ASBA)” ? How does it work in Initial Public Offer (IPO) ?
Describe.

2) “A company can raise funds from the primary market through

different methods, different types of issues and by means of offer
document and red herring prospectus”. Enumerate

3) Explain Indirect Acquisition in detail.

4) What is Escrow account under SEBI Takeover Regulations ? How

the amount can be released from this account ?

5) What is the mandatory open offer and its effect on incremental

voting rights in case of fresh issue ?

6) Happy Ltd. makes an issue worth ` 150 crore to the public, out of
which ` 30 crore was for sale to existing shareholders. Explain the
provisions regarding the utilisation of proceeds and state whether
any exception is available.

7) Romeo International Limited, an Indian public limited company, is

listed on BSE. On Friday i.e. 14th December, 2018 one of the
 shareholders of the Company, Ganesh, who was already holding
30% stake in the company, made a public announcement for an open
offer for the acquisition of 13 crore equity shares (Face value ` 10
each), constituting 26% of the equity share capital of the Romeo
International Limited. The offer price per share according to
Takeover Regulations is arrived at ` 500 per share. Explain the
following with reference to SEBI (Substantial Acquisition of Shares
and Takeovers) Regulations, 2011 : (a) What is the time limit for
depositing amount in escrow account and explain with the relevant
provisions, what amount should be deposited in escrow account in
this case ? (b) Explain the forms of maintaining the escrow account.

8) Young Ltd. is a company incorporated under the provisions of the

Companies Act, 2013. The Company is listed on National Stock
Exchange since 1st January, 2017. The promoters of the Company
are now exploring the possibility to voluntarily delist the Company
on or before 1st October, 2019 under the SEBI (Delisting of Equity
Shares) Regulations, 2009 by providing an exit opportunity to all the
public shareholders. Assume that you are a legal advisor of the
Company and accordingly, answer the following questions : (i) Is
the Company eligible for voluntary delisting in terms of the
Delisting Regulations ? (ii) What are the circumstances/conditions
under which equity shares of a company cannot be delisted as per
the Delisting Regulations ?

9) Govind Ltd. proposes to issue 20 lakh share warrants to its

promotors. The share warrant gives an option to buy shares at a
predetermined price. The price trend of the Company’s share in the
stock market is given below : • Closing price on the relevant date : `
250. • The average weekly high and low of the closing price during
the 26 weeks preceding to the relevant date : ` 275. The average
weekly high and low of the closing price during the 2 weeks
preceding to the relevant date : ` 280. You are required to : (a)
 Identify the minimum price at which share warrants should be
issued; and (b) Calculate the amount payable by the promoters at the
time of allotment of the warrants. –dec 20 que

10) Explain the modes of Buy back under SEBI Buyback

Regulations.