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CS Executive Programme Module-II
(Solution upto June - 2013 & Questions of - Dec - 2013 Included)
Paper - 4: Company Law
Chapter - 1: Introduction
2013 - June [2] (a) (i)
The statement is false, because the company is not a Citizenship Act,1955 or the
Constitution of India [State Trading Corporation of India Vs.C.T.O ].
2013 - June [6] (v)
Please refer 2004 - Dec [8] (a) (iv) on page no. 26
Chapter - 2: Types of Companies
2013 - June [2] (b) (i)
(d) Fifty
Chapter - 4: Memorandum of Association and Articles of Association
2013 - June [1] {C} (ii)
The alteration of articles of association must be bonafide for interest of the Company.
If the alteration is not for the interest of the Company, but for majority of Shareholders,
then the alteration would be bad.
In other words, an alteration of articles must not discriminate between the majority and
minority shareholders so as to give the former an advantage over the latter. [ All India
Railway mens benefit Fund V. Jamadar Baleshwarnath Bali].
2013 - June [3] (a) (i)
` 1,000
2013 - June [5] (a)
Section 12 to 23 of the Companies Act, 1956 prescribe the particulars to be mentioned
in the memorandum of association and other requirements. It is the constitution of the
company in its relation to the outsider world. The company cannot depart from the
provisions of the memorandum. If it enters into contract or engages in any trade or
business which is beyond the powers conferred on it by the memorandum, such a
contract or the act will be ultra vires the company and hence void. The memorandum
of association of a company is its charter defining the objects of its existence and
operations.
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The purpose of the object clause in the memorandum is two-fold. First, the intending
shareholder before making investment in the company should know the field in, or the
purpose for which it is going to be used and what risk he is taking in making the
investment. The second purpose is that anyone dealing with the company will know
without doubt what is the permitted range of activities of the company [Cotman Vs.
Brougham (1918) A.C. 514].
Its purpose is to enable the shareholders, creditors and those dealing with the company
to know what is the permitted range of enterprise. The objects clauses in the
memorandum are to be so construed as to confer on the company all powers
reasonably required to the attainment of the objects.
2013 - June [7] (c)
In the given case the objection of the employees is sustainable.
In the case of Bharat Commerce and Industries Ltd. it was held that employees union
which is a registered body and which represents quite a number of the employees
employed at the registered office of the company, has the right to appear and to oppose
the application on the ground that their interests would be likely to be prejudicially
affected if such special resolution would be confirmed by the court. It is always open to
the employees concerned to bring it to the notice of the court through their union or
even individually, if the company is passing such resolution did not act bona fide so as
to enable the court to examine the reason set out in the petition to consider whether it
would be just and equitable to confirm such a resolution.
Chapter - 5: Contracts and Conversions
2013 - June [1] {C} (i)
A company cannot ratify a per-incorporation contract, but it is open to it to enter into a
new contract after its incorporation to given effect to a contract made before its
formation [Howard Vs. Patent Ivory Co. (1888) 38 Ch. D.] Since the per-incorporation
contract is a nullity, even the company cannot sue the vendor of property if he fails to
carry out such a contract.
In India, however, Sections 15 and 19 of the Specific Relief Act, 1963, have
considerably alleviated the difficulty. Section 15(h) provides that where the promoters
of a company have, before its incorporation, entered into a contract for the purposes of
the company, and such contract is warranted by the terms of incorporation, the
company may, if it has accepted the contract, and has communicated such acceptance
to the other party to the contract, obtain specific performance of the contract. Under
Section 19 (e) under similar circumstances, specific performance may be enforced
against the company by the other party to the contract.
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(b) Different types of Meetings under the Companies Act, 1956 are as under:
(i) Statutory Meeting;
(ii) Annual General Meeting;
(iii) Extra- ordinary General Meeting;
(iv) Class Meeting;
(v) Board Meeting;
(vi) Meeting of Board Committee;
(vii) Meeting of debentureholder;
(viii) Meeting of Creditor;
(ix) Meeting of Contributory in winding up.
(c) When the Board of Directors of the company are not in a position to meet in person
to discuss and consider any resolution, which is of urgent nature and the same
cannot be kept pending till they meet, the articles of association usually contain
provisions for passing of board resolution by circulation. Regulation 81 of Table
A contains provisions in this regard. It states that a resolution in writing signed by
all the members of the Board or Committee of Board shall be as valid and effectual
as if it had been passed at a meeting of the Board or Committee duly held. Section
289 of the Company Act,1956 provides for passing such resolution. No such
resolution will be treated as passed unless: (i) it has been circulated in draft form
together with necessary papers, if any, to all the directors or to all members of the
committee of directors, then in India, and to all other directors, or members at their
usual address in India, and (ii) it has been approved by all such directors then in
India or by majority of them, as one entitled to vote on the resolution. The number
of directors or members to whom the resolution has been circulated should not be
less than quorum fixed for a meeting of the Board or Committee, as the case may
be. The resolution by circulation will be submitted in the next meeting of the Board
for confirmation. Some of the matters which cannot be passed by the Board by
circulation are:
(i) to fill a casual vacancy occurred in the Board;
(ii) to make calls on shareholders in respect of money unpaid on shares;
(iii) to issue debentures;
(iv) to make any political contribution;
(v) to make declaration of solvency;
(vi) to invest the funds of the company.
2013 - June [4] (v)
Decisions of the company are made by resolutions of its members, passed at meeting
of members. The word resolution has not been defined in the Companies Act. It may
be defined as the formal decision of a meeting on any motion before it. A proposal when
passed and accepted by the members becomes resolution. Resolutions under present
Companies Act, 1956 are of three kinds :
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(i) Ordinary
(ii) Special
(iii) Resolution requiring special notice
Under Section 189 of the Companies Act, defines the ordinary and special resolutions :
(a) Ordinary resolution : It means a resolution passed at a general meeting of a
company by a simple majority of members entitled to vote and also voting in
person or by proxy (where proxies are allowed) is called an ordinary resolution.
(b) Special resolution : A special resolution is one passed at a general meeting of a
company when :
(i) The intention to propose the resolution as a special resolution has been duly
specified in the notice calling the general meeting and the notice has been
given to the members in accordance with the provisions of this Act, and
(ii) The votes cast in favour of the resolution by members entitled to vote and
voting are not less than three times the number of votes cast against the
resolution by members so entitled to vote.
(iii) Resolution requiring special notice : According to Section 190 of the
company Act, 1956 where by any provision of this. Act or in the articles,
special notice is required of any resolution, notice of the intention to move the
resolution is required to be given to the company. where such a notice is
required by this Act or the company's Articles, the notice must be given not
less than 14 days before the meeting at which the resolution is to be moved
exclusive of the day on which the notice is served and the day of the meeting.
After receiving such a notice the company must give its members notice of the
resolution in the same manner as it gives notice of the meeting. If this is not
practicable the company must give notice to the members by advertisement
in a newspaper having on appropriate circulation or in any other mode allowed
by the articles.
2013 - June [7] (a)
Section 174(3) of the Companies Act, 1956 states that unless the articles otherwise
provide, if within half an hour from the time appointed for holding a meeting of a
company, a quorum is not present, the m eeting, if called upon the requisition of
members, shall stand dissolved. According to Section 174(4) in any other case, the
meeting shall stand adjourned to the same day in the next week, at the same time and
place, or to such other day and at such other time and place as the Board may
determine. Section 174(5) lays down that if at the adjourned meeting also, quorum is
not present within half an hour from the time appointed for holding the meeting, the
members present shall constitute quorum.
In the present case, quorum is not present within thirty minutes of the scheduled
time for holding of the annual general meeting. Therefore, the company should comply
with the provisions of section 174(4) as discussed above.
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pursuant to section 217(3). If the date of the Auditors Report is subsequent to that of
the Directors Report, then it would not be possible for the Board to comply with the
above requirement. In light of the above, in the present case, the dating of the Directors
Report and Auditors Report is not in order.
Chapter - 29: Law Relating to Co-operatives, Societies and Trust
2013 - June [4] (iv)
Oral Trust and Written Trust: A trust may be declared either orally or through an
instrument in writing. However, a trust in relation to movable property can be declared
orally by transferring the possession of the property with a direction that the property be
held in trust. In regard to a private trust for immovable properties, a written trust deed
is a pre - requisite.
Chapter - 31: Limited Liability Partnerships
2013 - June [1] {C} (iv)
A Limited Liability Partnership (LLP) registered in Singapore which is proposing to
establish a place of business in Mumbai is a foreign LLP and need to comply with LLP
Rules 2009.
As per rule 34 (i), provides that a Foreign Limited Liability Partnership shall, within 30
days of establishing a place of business in India, file with the Registrar in Form No. 27.
Following documents must be submitted to Registrar:
1. a copy of certificate of incorporation or registration
2. a full address of the registered office or principal office.
3. a full address of the office of the Limited Liability Partnership in India.
4. a list of partners and designated partners.
Chapter - 34: Striking off Name of Companies
2013 - June [5] (b)
Please refer 2011 - June [5] (a) on page no. 490
Chapter - 36: An Introduction to E-Governance
2013 - June [1] {C} (v)
Please refer 2008 - Dec [4] (d) on page no. 500
2013 - June [4] (iii)
Pre-Scrutiny : It is a functionality that is used for checking whether certain core aspects
are properly filled in the e-form. Before submitting the e- Form for pre-scrutiny the user
has to make the necessary attachments in PDF format.
Check Form: By clicking CHECK FORM the user will be in a position to find out
whether the mandatory fields in an e -Form are duly filled - in.
For example, if the user enters alphabets in Date of appointment of director field,
he/she will be asked to correct that.
2013 - June [5] (d)
Please refer 2011 - June [5] (b) on page no. 502
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(4 marks)
(4 marks each)
(4 marks)
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2013 - Dec [2] (b) Write the most appropriate answer from the given options in respect
of the following:
(vi) The power of Board of directors (to invest in shares or debentures of any other
body corporate under section 372A) must be exercised by
(a) Simple majority
(b) Special majority
(c) Unanimous vote
(d) None of the above.
(1 mark)
2013 - Dec [8] (c) A director should not make any secret profits even while selling his
own property to the company. Explain.
(4 marks)
Chapter - 18: Meetings
2013 - Dec [1] {C} Comment on the following:
(v) Failure to hold a particular general meeting may render the company liable to be
wound-up.
(5 marks)
2013 - Dec [2] (a) State, with reasons in brief, whether the following statements are
true or false :
(i) Unlike other general meetings of a company, statutory meeting cannot be
adjourned.
(2 marks)
(b) Write the most appropriate answer from the given options in respect of the following:
(v) Under clause 49 of the listing agreement, every listed company in India must
hold at least four Board meetings in a year. Maximum time gap between any two
meetings shall not be more than
(a) Four months
(b) Two months
(c) Six months
(d) Three months.
(1 mark)
2013 - Dec [3] (a) Re-write the following sentences after filling-in the blank spaces with
appropriate word(s)/figure(s):
(ii) All general meetings other than statutory and annual general meeting are called
__________ general meeting.
( 1 mark)
Chapter - 20: Deposits
2013 - Dec [7] (b) Royal Ltd. which is a non-banking non-financial company, registered
under the Companies Act, 1956, intends to accept short-term public deposits repayable
in a period of one month, three months and six months. The company is also planning
to introduce long-term public deposit schemes for 48 months. Examine.
(4 marks)
(d) What measures can a company take to get the date of maturity of public deposits
extended, as it is not in a position to repay the deposits on maturity owing to adverse
financial conditions?
(4 marks)
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Chapter - 27: Shareholders Democracy, Majority Powers and Minority Rights and
Prevention of Oppression and Mismanagement
2013 - Dec [1] {C} Comment on the following:
(i) An attempt to force new and more risky objects upon unw illing minority
shareholders may in certain circumstances amount to oppression. (5 marks)
Chapter - 28: Compromises and Arrangements - An Overview
2013 - Dec [8] (d) A demerger scheme was approved by the shareholders, secured and
unsecured creditors. The scheme was neither in violation of any law nor against public
interest. However, Accounting Standard-14 was not followed. Whether the scheme can
be sanctioned? Explain.
(4 marks)
Chapter - 29: Law Relating to Co-operatives, Societies and Trust
2013 - Dec [1] {C} Comment on the following:
(ii) A trust cannot be created orally and must always be in writing.
(5 marks)
2013 - Dec [5] (c) Who may be admitted as members of a multi-State co-operative
society?
(4 marks)
2013 - Dec [6] Write notes on the following:
(iv) Public and private trusts
(4 marks)
2013 - Dec [8] (a) What do you mean by the word co-operative? What are the
principles of co-operative?
(4 marks)
Chapter - 31: Limited Liability Partnerships
2013 - Dec [4] Distinguish between the following:
(i) Partnership firm and limited liability partnership.
(4 marks)
2013 - Dec [5] (b) Who cannot be appointed as designated partners of a limited liability
partnership in India?
(4 marks)
Chapter - 33: Offences and Penalties - An Overview
2013 - Dec [3] (b) Who shall be considered as an officer in default?
(4 marks)
Chapter - 34: Striking off Name of Companies
2013 - Dec [1] {C} Comment on the following:
(iii) The striking-off the name of a company does not materially affect the creditors
of the company.
(5 marks)
Chapter - 35 Winding up of Companies
2013 - Dec [4] Distinguish between the following:
(iv) Winding-up and dissolution.
(4 marks)
2013 - Dec [5] (a) When is the winding-up of a company deemed to commence
(i) In case of voluntary winding-up; and
(ii) In case of winding-up by the court?
(4 marks)
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2013 - Dec [7] (a) ABC Ltd., a company has been incurring losses for the last 2 years
and has not been paying wages to its workmen for the last 3 months. Trade Union of
the workmen has applied to the court for winding- up of the company. Will it succeed?
Give reasons.
(4 marks)
Chapter - 36: An Introduction to E-Governance
2013 - Dec [3] (a) Re-write the following sentences after filling-in the blank spaces with
appropriate word(s)/figure(s):
(iii) _________ is only a document in electronic format for filing with MCA authorities
through internet.
(iv) _________ is a unique identification number and once obtained is valid for
lifetime of a director.
(viii) XBRL stands for _________.
(1 mark each)
(c) Which are the companies mandated to file their balance sheets in XBRL format with
the Registrar of Companies?
(4 marks)
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FOR NOTES
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