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MAY20\8 FINAL (NEW COURSE)
GROUP-l PAPER-4
CORPORATE AND
Roll No...............................
ALLIED LAWS
4
Total No. of Questions-12] [Total No. of Printed Pages-6
Time Allowed-3 Hours Maximum Marks-100
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Answers to questions are to be given only in English except in the case of candidates
who have opted for Hindi medium. If a candidate who has not opted for Hindi
medium, answers in Hindi, his answers in Hindi will not be valued.
Answer all questions.
Marks
SECTION-A
1. (a) Mr. Sachin was appointed as an additional Director of Conservative Finance 5
Ltd. w.e.f. 1st October, 2009, in a casual vacancy by way of a circular
resolution passed by the Board of Directors. The next annual general
meeting of the company was due on 31st March, 2010, but the same was
not held due to delay in the finalisation of the accounts. Some of the
shareholders of the company have questioned the validity of the appointment
of Mr. Sachin and his continuation as additional director beyond 31st
March, 2010. Advise the company on the complaints made by the
shareholders.
(b) Mewar Instrumentations Limited is a subsidiary of a Government company. 5
The comptroller and Auditor General of India appointed Sobman & Company
to conduct a supplementary audit of Mewar Instrumentations Limited.
Discuss, under the provisions of the Companies Act, 1956 whether the
Comptroller and Auditor General's power to authorise such audit for the
said subsidiary company is in order?
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2. (a) Mr. Ramesh and his supporters hold more than 50% of the equity shl1re 5 "
capital of Progressive Realtors Ltd. Dissatisfied with the performance of
the company, Mr. Ramesh sends a notice to the Board of Directors about
his intention to inspect the account books of the company. Explain the
provisions of the Companies Act, 1956 regarding the persons who can
inspect the books of account and the right of Mr. Ramesh in this matter.
(b) X, & Co. Ltd. ,made a loss of Rs. 20 lakhs after providing for depreciation 5
for the year ended 31st' March, 2009 and as a result the company was not
in a position to declare any dividend for the said year out of profits.
However, the Board of Directors of the company announced the declaration
of dividend of 15% on the equity shares payable out of free reserves. The
paid up share capital of the company and its free re~erves as on 31st
March, 2009 are Rs. Two crOTes and Ten crores respectively. The average
dividend declared by the Company in the last five years is 25%. Examine
the validity of declaration of dividend.
3. (a)
Ambitions Engineering Consultants Ltd., whose financial year ends on 5
31st March, has acquired Struggling Techies Ltd. making it ,a subsidiary
company. The financial year of the subsidiary company ends qn 30th June.
The management of the holding company wants to change the financial
year of the subsidiary company, if possIble, so as to coincide with the
financial year of the holding company. State the relevant-provisions of the
Companies Act, 1956 regarding the financial year and the maximum period
upto which the accounts can be prepared in a Financial Year and the
approvals, if any, required to be taken to accomplish this task.
(b) Ganesh Textiles Private Limited has discontinued it,s Business since 2006. 5
Negligible assets are available with the company, but also some liabilities.
The company has been regular in filing Annual Returns and Balance Sheets.
The Director of the Company propose to apply to the Registrar of Companies
for striking the name of the company on the ground that it is a defunct
company.
Advise, as to what steps can be taken to get the name of the company
struck off under the provisions of the Companies Act, 1956.
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4. (a) Mr. Mutthu Swami is working as Chief Accountant is Eastern
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Pharmaceuticals Ltd. The Board of Director of the said company propose
to charge him with the duty of ensuring compliance with the provisions of
the Companies Act, 1956 so that accounts and Balance Sheet and Profit
and Loss account can be maintained and prepared in accordance with the
provisions of law for the time being in force. Draft a "Board Resolution"
for the said purpose. Also point out the consequences in case of default,
when such resolution is passed.
(b) Mr. Ravindranathan is holding the post of Director in three companies out 5
of which Goodluck Colours Limited is one. For the financial year ended on
31st March, 2009, Goodluck Colours Limited failed to pay interest on
loans taken from a financial institution and also failed to repay the matured
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deposits. On 1st June, 2009 Mr. Ravindranathan accepting the post of
Additional Director in Soma Footwear Limited, submitted a declaration
-that the disqualification specified in Section 274 of the Companies Act,
1956 is not applicable in his case. Decide whether the declaration submitted
by Mr. Ravindranathan to Soma Footwear Limited is in order.
5. (a) A scheme of reconstruction of Southern Stone Company Limited was a.pproved 5
by its shareholders and creditors in their meeting and resolutions to that
effect were passed. Afterwards a few shareholders and creditors of the
company raised objections against the said arrangements of reconstruction.
The entire paid up capital of the company was wiped out by theaccu$ulated
losses. Advise the Directors of the said company about the steps to be
taken to give effect to the proposed scheme under th~ Companies Act,
1956.
(b) Mr. X is an unsecured creditor and has to recover a sum of Rs. 7 lakhs 5
from Global Footwear Company Limited. The said company has become
financially insolvent and hence unable to pay its debts. With the object of
recovery of the said amount Mr. X is willing to proceed for compulsory.
winding up of the company. Advise the steps and procedure in this relation
under the provisions of the Companies Act, 1956.
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6. (a) ABC Limited, over years, enjoys high reputation and its General Reserve 5
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is many times more than the paid up capital of the Company. There is .,
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apprehension of cornering the shares of the company by some- persons
likely to result in change in the Board of Directors which may be prejudicial
to the Public interest.
Advise, as to how can ABC Limited block the transfer of shares of the
company under the provisions of the Companies Act, 1956.
(b) The Articles of Association of Rajasthan Toys Private Limited provide that 5
the maximum number of Directors in the company shall be 10. Presently,
the company is having 8 Directors. The Board of Directors of the said
company desire to increase the number of Directors to 15. Advise whether
under the provisions of the Companies Act, 1956 the Board of Directors
can do so.
7. (a) Advise the Board of Director of Spectra Papers Limited regarding validity 5
and extent of their powers, under the provisions of the Companies Act,
1956 in relation to the following matters:
(i) Buy-back of the shares of the Company, for the first time, upto 10%
of the paid up equity share capital without passing a special resolution.
(ii) Delegation of Power to the Managing Director of the cqmpany to invest
surplus funds of the company in the shares of some, companies.
(b) Non-executive Directors of ABC Limited, who are neither in the whole 5
time employment of the company nor Managing, Directors have been given
the following remuneration -
(i) Guarantee Commission has been paid to them for having guaranteed
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the term loans obtained from a Financial institution.
(ii) Commission payable to them is calculated on the basis of book-profits
arrieved at after providing for depreciation as per straight line method,
Examine the validity of these payments in the light of the provisions
of the Companies Act, 1956.
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SECTION-B
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8. A to Z Ltd. an unlisted public company, eligible to make a public issue, desires G
to get its securities listed on Mumbai Stock Exchange, pursuant to a public
issue to be made shortly. The company seeks your advice in respect of the
following:
(a) Whether the company can freely price its equity shares; and
(b) Whether it can issue equity shares to those applicants in the firm allotment
category at a price different from the price at which equity shares are
offered to the public.
Advise, keeping in view the SEBI guidelines in this regard.
9. (i) The Reserve Bank of India issued certain directions to Dream Construction 3
Limited, an authorised person under the Foreign Exchange Management
Act, 1999 to file certain returns. The Company failed to file the said
returns. Decide, as to what penal provisions are applicable against the
said authorised person under the said Act.
(ii) Examine under the Foreign Exchange Management Act, 1999 whether &
"Payment of remuneration to foreign technicians" is Iipermissible transaCtion
under the provisions of the said Act. .
10. P Ltd. and Q Ltd. both dealing in chemicals and fertilizers have entered into 6
an agreement to jointly promote the sale of their products. A complaint has
been received by the Competition Commission of India (CCI) starting that the
agreement between the two is anti-competitive and against the interests of
others in the trade. Examine with reference to the Provisions of the Competition
Act, 2002, what are factors the CCI will take into account to determine whether
the agreement in question will have any appreciable adverse effect on competition
in the market.
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11. Mr. Gopal is a director in a Bank. 'The Reserve Bank of India terminates him
on the ground that his conduct is deterimental to the interest of the depositors. ..
Decide, whether the Reserve Bank of India can do so under the Banking Regulatiofl
Act, 1949. Can the Reserve Bank of India appoint Additional Director in a
Bank under the said Act?
12. Gaurav Textile Company Limited has entered into a contract with a Company. 6
You are invited to read and interpret the do,cument of contract. What rules of
interpretation of deeds and documents would you apply while doing so ?
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