1

TEST-1-May-24
Debentures / Charge / Deposits / General Meetings

Instructions for Test on Corporate & Other Laws

1. How to submit a test

• Plz write all your answers on copy
• Scan them through a scanner in your mobile app (should be visible)
• Convert your file into PDF File. Give your name to this PDF File
• Send it through E Mail at amitpopliclasses40@gmail.com

4. Mention the following on top of your answer sheet

Name of Student

Attempt i.e. Appearing for Exam May-24 Mode [ Live/GD]

E Mail ID

Marks in last Test

(Mention N.A. if this is your first
Test)

 This Test is only for students who have taken our classes or Test Series, kindly do not
send your answers, if you are not fulfilling this requirement
2
TEST-1-May-24
Debentures / Charge / Deposits / General Meetings

Quest-1 WEE Remedies Ltd. incorporated on 26th November, 1995 with a paid-up capital of
25 crores. According to financial results of the company as on 31.3.2022 net worth
of the company was 120 crores and turnover for the year 2021-22 was 350 crores.
The Company proposed to accept the deposits as on 1st November, 2022, which
would be due for repayment on 30th September, 2027 from the public for
expansion and redevelopment programs of company. Besides that, company accepts
a loan of 1.5 crores from Mr. P N Seth (Director) and the loan was expected to be
repaid after twenty-four months. Company in its books of account, records the
receipt as a loan under non-current liabilities. At the time of advancing loan, Mr.
Seth affirms in writing that such amount is not being given out of funds acquired
by him by borrowing or accepting loans or deposits from others and complete
details of such loan transaction is furnished in the boards' report.
On the basis of above facts answer the following questions:
(i) Whether Company was eligible to accept deposit from public? What is the
criteria for acceptance of deposit and tenure for which deposit can be accepted?
Whether the tenure decided by Company was in accordance with provisions of
Companies Act, 2013?
(ii) With reference to the loan advanced by Mr. Seth to Company, state whether the same is to be
classified as a deposit or not? [ 5 Marks]
According to section 2(31) ➔ ‘Deposit’ includes any receipt of money by way of
deposit or loan or in any other form, by a company, but does not include such
categories of amount as may be prescribed.

Meaning of Depositor: - the term ‘Depositor’ means:

(i) any member of the company who has made a deposit with the company in
accordance with the provisions of section 73 of the Act, or

(ii) any person who has made a deposit with a public company in accordance with the
provisions of section 76 of the Act.

Thus, Deposit can be accepted from member or public

Who may accept Deposit from Public

1. Eligible Company i.e. A public company, having
➢ Net worth of not less than one hundred crore rupees or
➢ Turnover of not less than five hundred crore rupees
may accept deposits from persons other than its members
3
TEST-1-May-24
Debentures / Charge / Deposits / General Meetings

Other Criteria for acceptance of Deposits as per Companies (Acceptance of

Deposits) Rules, 2014
1. The ‘eligible company’ is required to obtain the prior consent by means of a special
resolution
However, ➔if deposits is within the limits specified under section 180 (1) (c)➔
ordinary resolution is required

2. Tenure- A company is not permitted to accept deposits which is repayable on

demand or in less than 6 months.
Further, the maximum period of acceptance of deposit cannot exceed 36 months.
Exception- a company may accept or renew deposits for repayment earlier than six
months subject to the condition that:
(i) such deposits shall not 10% of [ PUC + FR + SP]; and
such deposits are repayable only on or after three months

In the given case, Company with Net worth of 120 Crores has accepted Deposits
for more than 36 months

Conclusion: - Based upon the above provisions, we may conclude that company is not
justified in accepting Deposits for over 36 months as it would be in violation of
provisions of Acceptance of Deposits

Situation-2- Loan advanced by Mr. Seth i.e. Director to Company,

As per Rule2(1)(c) of Companies (Acceptance of Deposits Rules), 2014, Deposits shall not include
any amount received from a person who, at the time of the receipt of the amount,
was a director of the company or a relative of the director of the Private company.
Provided that the director of the company or relative of the director of the
private company,➔ furnishes to the company ➔ a declaration in writing to the
effect that the amount is not being given out of funds acquired by him by
borrowing or accepting loans or deposits from others and the company shall
disclose the details of money so accepted in the Board’s report;

In the given case, Mr. Seth affirms in writing that amount is not being given out
of funds acquired by him by borrowing or accepting loans or deposits from others
and complete details of such loan transaction is furnished in the boards' report.
4
TEST-1-May-24
Debentures / Charge / Deposits / General Meetings

Conclusion: - Thus, we may conclude that amount so received from Mr Seth

shall not be Deposits
Quest-2 Majboot Cement Ltd. (MCL) is known for its hassle free and home building solutions.
Its unique products tailor made for Indian climate conditions and sustainable
operations. MCL was incorporated in July 2000 with an authorized capital of 1,000
crores. According to financial statements as on 31st March, 2023, paid-up capital
of company was 600 crores and free reserves were 650 crores. Registered Office
of the company situated in New Delhi, but around 15% of total members are
resident of Faridabad (Haryana). Company wants to place its Register of Members
at its branch office in Faridabad.
MCL is planning to expand its existence throughout the country. For this purpose,
Company has taken 200 crores term loan and 125 crores of Working Capital loan
from Banks on 18th June, 2023. Charge was created on all the assets of company
on that day for above loan of 325 crores, but company failed to register the charge
with the registrar of companies within the prescribed time. The Registrar granted
a grace period of further 30 days to MCL in respect of application filed by it for
the same, however, still it failed to register the charge within the grace period.
Finally, the application for registration of charge was furnished on 18th August,
2023.
MCL wants to convene its 23rd AGM on 10th September, 2023 at the registered
office of the company. Notice for the same was served on 22nd August, 2023. 78%
of members have given their consent to convene AGM at shorter notice due to
urgent need of funds for the expansion plans.
With reference to provisions of Companies Act, 2013, answer the following questions:
(i) Company wants to maintain its Member's Register at Faridabad, advise whether
the decision of company is valid?
(ii) Which type of Charge was created by Company on 18th June, 2023? Whether
application filed by company on 18th August, 2023 was in compliance with provisions
of Registration of Charge of Companies Act, 2013?
(iii) Whether the notice given to convene AGM at shorter notice was in compliance of
Companies Act, 2013? [ 5 Marks]
1. Place of Maintainig Register of Members [ Sec 88 of companies Act 2013]
Every company shall keep and maintain Registeres as prescribed u/s 88 at the
registered office of the company unless a special resolution is passed in a general
meeting to place it
at any other place within the city, town or village in which the registered office
is situated or
any other place in India in which more than 1/10th of the total members entered
in the register of members reside.
5
TEST-1-May-24
Debentures / Charge / Deposits / General Meetings

In given case, Company wants to maintain its Member's Register at Faridabad,Whereas

company is having its Registered Office in New Delhi

Conclusion:- Company may maintain its Member's Register at Faridabad provided it need to
have an approval from members through Special Resolution

2. Given Case is Based on Provisions regarding Registration of Charge [ Sec 77 of

companies Act 2013]
According to section 77 of the Companies Act, 2013,
• it shall be duty of the company creating a charge, to register the particulars of
the charge in prescribed form i.e. Form CHG-1, signed by the company and the
charge holder along with such fees as prescribed, with the registrar within 30
days of creation.

The Registrar may,

• on being satisfied that the company had sufficient cause for not filing the
instrument of charge,
• within a period of 30 days of the date of creation of the charge,
• allow the registration of the same after 30 days
• but within a period of 60 days of the date of such creation of charge on
payment of additional fee.

Even if Charge could not be created within 60 Days, still ROC may allow creation of charge within
a period of next 60 days on payment of Advelorum fees

In the given case, Charge is created on 18th June, 2023 and the application for
registration of charge was furnished on 18th August

Since Charge was created on 18th June, thus Form no CHG-1 shall be filed with ROC
:-Within 30 days i.e. till 18 July with prescribed fee
:-Within next 30 days i.e. till 17th August along with Additional Fee
:-Within next 60 days i.e. till 16th Oct along with Advelorum Fee

Conclusion:- We may conclude that ROC may allow registration of charge subject
payment of Advelorum fee.

3. Given case is based on provisions of Shorter Notice [ Proviso to Sec 101 of

companies Act 2013]
6
TEST-1-May-24
Debentures / Charge / Deposits / General Meetings

General meeting may be called after giving shorter notice if consent, in writing or
by electronic mode, is accorded thereto
:-in the case of an annual general meeting, by not less than 95% of the members
entitled to vote thereat
In the given case, MCL wants to convene its AGM on Shorter Notice after getting
consent of 78% of members
Conclusion:- Based on above provisions, we may conclude that Notice given for convening
shorter notice if not in compliance of Sec 101, since consent of 95% of the members
entitled to vote could not be obtained
Quest-3 The Board of Directors of 'A Limited' made a private placement offer to a group
of 150 persons to subscribe for 100 equity shares @ 100 each on 1st April, 2022
after passing a special resolution in this regard. The company received application
money from the members on 15th April, 2022 but did not make an allotment of
shares till 31st July, 2022. Instead, during this interim period, the Company opted
to utilize the application money for the payment of dividend that had been declared
by the company. Some of the members raised an objection that as the allotment
was not done by the Company within the prescribed time limit, the company is liable
to repay the application money with interest @ 15% p.a. for such non-compliance .
Examine the validity of the objection raised by the members with reference to the
Companies Act, 2013, and also decide whether application money can be used for
the payment of dividends by the company.
What are the requirements outlined in the Companies Act, 2013 regarding the
appointment of a Debenture Trustee by a company?
Can the following entities be designated as a Debenture Trustee':

(i) An investor who holds advantageous stake.

(ii) A lender to whom the company has a debt of only 1,000.
(iii) An individual who has provided a guarantee for the repayment of the debenture amount
issued by the company. [ 5 Marks]

1. Private Placement [ Sec 42 of Companies Act 2013]

Meaning- The term "private placement" means any offer of securities or invitation
to subscribe securities to a select group of persons by a company (other than by
way of public offer) through issue of a private placement offer letter
offer/invitation to number of persons- The offer of securities only to a select
group of persons who have been identified by the Board subject to maximum to
200 persons in a financial year
It does not include-
• Qualified institutional buyers and
• employees being offered securities under a scheme of employee’s stock
7
TEST-1-May-24
Debentures / Charge / Deposits / General Meetings

option
Time for allotment of securities- A company making an offer or invitation under
this section shall allot its securities within 60 days from the date of receipt of the
application money.
Default in allotment of securities-Where the company is not able to allot the
securities within stated period, it shall repay the application money to the
subscribers within 15 days from the date of completion of sixty days and
If the company fails to repay the application money within the aforesaid period, it
shall be liable to repay that money with interest @ of 12% per annum from the
expiry of the sixtieth day
In the given case, The company received application money from the members on 15th April,
2022 but did not make an allotment of shares till 31st July, 2022.

Since, company received on 15th April, thus It should have made allotment within 60 days i.e.
by 14th June. Else company is liable to repay the amount by 29th June, other wise company shall
pay Interest @ 12% p.a. from 15th June till the payment date

Conclusion: - Basen on the above provisions, we may conclude that contention of members for
interest @ 15% is not valid as company is liable to pay the amount along with Interest @12%

Appointment of Debenture Trustee:- Following companies shall appoint Debenture Trustees

1. Company Issuing Secured Debentures as per COMPANIES (SHARE CAPITAL AND DEBENTURES)
RULES, 2014
2.Company issuing a prospectus or make an offer or invitation to the public or to its
members exceeding five hundred for the subscription of its debentures

Eligibility of Following Persons as Debenture Trustees

1. An investor who holds advantageous stake.
No person shall be appointed as a debenture trustee, if he beneficially holds
shares in the company
Conclusion-Thus an investor who holds advantageous stake can not become D.T.

(ii) A lender to whom the company has a debt of only 1,000.

No person shall be appointed as a debenture trustee, if he is beneficially entitled
to moneys which are to be paid by the company otherwise than as remuneration
payable to the debenture trustee;
Conclusion-Thus a lender to whom the company has a debt of only 1,000 can not become
D.T.
8
TEST-1-May-24
Debentures / Charge / Deposits / General Meetings

(iii) An individual who has provided a guarantee for the repayment of the debenture amount
issued by the company.
No person shall be appointed as a debenture trustee, if he has furnished any
guarantee in respect of the principal debts secured by the debentures or interest
thereon
Conclusion-Thus An individual who has provided a guarantee for the repayment of the
debenture can not become D.T.