422

Roll No.

Time allowed : 3 hours Maximum marks : 100

Total number of questions : 6 Total number of printed pages : 12

NOTE : 1. Answer ALL Questions.

2. ALL references to sections relate to the Companies Act, 2013 unless stated otherwise.

PART
1. (a) Explain the exceptions, if any, to the Majority Rule in Foss v. Harbottle case law.
(5 marks)
(b) Comment on the following :

() Credit rating at the time of accepting Deposit by a company is mandatory.

(i) No company can invite Deposit without entering into a contract for deposit
insurance.
(ii) Creation of security for repayment of Deposit is not mandatory for all companies
while accepting Deposit.
(iv) Trustees for Depositors can be removed by a simple majority.
(v) Only remedy for Depositors in case of default in repayment of Deposit by
the company is to file a suit.

(5 marks)

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(c) Shortwalkers Limited was a listed company operating fitness centres all over India.
In their Meeting on 1st April, 2022 the Board of directorsof the company approved
purchase of gym equipment for 75 crore from Fitness Solutions (Private) Limnited
acompany managed by Anita, wife of Sunil, the CFO of Shortwalkers Limited. The
annual turnover of Shortwalkers Limited for the last financial year is 500 crore.
The entire shareholding of Fitness Solutions (Private) Limited was held by Anita and
two other directors.

In his report to the shareholders of Shortwalkers Limited, the auditor of the company
made adverse remarks on the transaction stating that the approval of the Audit Committee

and special resolution were not obtained before approving the deal.
The Board, in their report to the shareholders remarked that the purchase transaction
was at arm's length price and Sunil, was not a related party and approval of audit

committee and the shareholders was not necessary.

Referring to provisions of Companies Act, 2013, examine the submissions of the Board.

(5 marks)
() State the provisions of the Companies Act, 2013 for the issue of bonus shares by
a listed company

() Can acompany declare bonus shares in lieu of dividend ?

(i) Is bonus shares same as stock dividend?

(5 marks)
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Attempt all parts of either . No. 2 or Q. No. 24

2. (a) Amar, Akash and Ashish were the owners of a coffee estate in Munnar. They registered
a new company called Mandoli Coffee Estate Private Limited and transferred their

coffee estate to the newly formed company.

They claimed exemption from paying Registration charges and Stamp duty on the
ground that since they were the only shareholders of the company, the transaction
was nothing but transfer by them from one name to themselves in another name.

Referring to the provisions of Companies Act, 2013, is their claim tenable ?

(3 marks)

(b) The Board of Customerlast Limited, an unlisted public company is exploring ways
to increase its paid-up share capital from ? 125 crore to ? 150 crore. The CFO
of the company suggested that instead of offering shares to all existing shareholders
as a rights issue the company can issue further shares by private placement to four
identified Qualified Institutional Buyers and the top 250existing shareholders by receiving
cash without offering shares to other shareholders.
The company secretary of the company objects to the manner of raising further capital,
i.e. the offerings to the select shareholders as well as receiving cash.
Referring to the provisions of Companies Act, 2013 decide.
(3 marks)

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(c) Harsh is a promoter director of Himmat Pvt. Ltd. He borrowed some funds from
his friend for a certain purpose but the same is lying idle at present. Thus; he plans
to give loan to the company for working capital needs. Harsh has approached you,
a Practising Company Secretary, for suggestion, if there is any situation where such
loan will not constitute Deposit. Advise Harsh with reference to the provisions of
the Companies Act, 2013.
(3 marks)
(a) Magnificent Ltd. has filed various e-forms with Registrar of Companies due to various
events in the Company. With reference to e-filing of forms, State for which services/
eforms, process for refund of fee is not applicable.
(3 marks)
(e) Stunning Commodities Lid. gave notice seeking information from Uijwal (not a member
of the Company) whom the company has reasonable cause to believe to be having
knowledge of the identity of a significant beneficial owner (SBO) of the company.
It is observed that information given by Ujjwal is not satisfactory. You are General
Manager (Secretarial) of the Company. The CEO of the Company asks youfor further
action to be taken by the company on this, if any. Please advise.
(3 marks)

OR (Alternate question to 0. No. 2)

2A. () The legislative authority for enacting corporate laws and securities laws in India is
distinctly different from the authority for enactment of corporate laws and securities
laws in USA. Explain.

(3 marks)
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5

() Mr. Raj who is a resident of Bengaluru, sent a Transfer Deed for registration of
transfer of shares, to the company at the address of its registered office in Delhi.
from
He did not receive the share certificates even after the expiry of six months
the date of dispatch of transfer deed. He lodged a criminal complaint in the court
the
at Bengaluru. Decide under the provisions of the Companies Act, 2013, whether
court at Bengaluru is competent to take action in the said matter ?
(3 marks)

(ii) Write short note on Capital Redemption Reserve Account.

(3 marks)
(iv) As aCompany Secretary, advise your client whether the following matters can be

transacted by getting a resolution passed through postal ballots

(a) Issue of shares with differential voting rights
(6) Sale of the whole of the undertaking of the Company
(c) Buy-back of own shares by the Company.
(3 marks)
(v) The Board of directors of ZED Ltd. (Listed Company) is actively considering a proposal
to buy back its shares. Naveen has recently joined the Board as an Additional Director.
You are the senior partner of a firm of Company Secretaries and Naveen has sought
your views, if there is any requirement for filing Declaration of Solvency by the company
with any regulatory authority and particulars thereof. Also, what would be the time
gap between two buy-backs. Advise Naveen in the light of the provisions of the

Companies Act, 2013.

(3 marks)

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3, (a) You are a Speaker on Corporate Laws at a Seminar. One person from the audience
has sought your opinion on the following matters :
() Can an Insolvent be a member in a company ?
(i) Can a Receiver be a member in acompany ?
(ii) How does an investor avail services of a Depository in case of pledge of
shares ?

(142+25 marks)
(6) A newly appointed auditor of alisted company came across the evidence of
under
invoicing of exports, round tripping of funds through tax heavens and fraudulent siphoning
of funds amounting to ten million USD. Explain the further course of action by
the
auditor. Also explain what is fraud ?
(5 marks)
(c) With reference to the provisions of Singapore Companies Act, explain when a Private
Company need not hold annual general mecting ? What is the due date of holding
the annual general meeting of listed public company ?
(3+2=5 marks)
·PART--II
4. (a) Rakesh Agarwal is a Non-Exccutive & Non-Independent director of
Happy Travels
Limited, an unlisted company. The paid-up share capital of the
crore. The company is 120
company has availed a term loan of R 65 crore.
The Board of directors, in their meeting
passed a resolution to grant a housing loan
of rupees one crore to Rakesh for
purchase of an apartment in Navi Mumbai at
concessional interest rate. The company has implemented a housing loan for
employees at concessional interest rates. The Secretarial its permanent
lo¡n granted to Rakesh in his Auditor has obËected to the
Secretarial Audit report.
Is the claim of
Secretarial Auditor correct ?
Will your answer differ if the
company is a private limited company ?
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(b) Draft minutes of 19th meeting of the Board of directors of Zwiggy Foods Ltd held
on 28th January, 2022 were circulated on 5th February, 2022. In this backdrop,
answer the following :
() Sonali, an independent director, who attended the meeting communicated her
comments on 15th February, 2022. Do you think her comments cart be
considered ?

(ii) Sujata, a small shareholder director, communicated her comments on 10th

February, 2022 but she was absent in the meeting without obtaining leave
of absence. Can her comments be taken on record ?

(5 marks)
(c) The Board of directors of ABCLimited met thrice in the year 2021 and 4th meeting
though called but could not be held for want of quorum. Examine with reference
to the relevant provisions of the Companies Act 2013, whether any provision of the
Act has been contravened ?

(5 marks)

(d) The CFO of a well-known public company (one among top 20 listed companies)
suggested to the Board of directors to constitute a Risk Management Committee with

only the CFO and General Manager (HR) as its members.

only
The Company Secretary of the company, however insisted that he should not
chairman
be included in the Risk Management Committee but should also be made the
of the committee as he is well versed in corporate laws.
Rules, examine
Referring to the provisions of Companies Act, 2013 and the Relevant
the proposal.
(5 marks)
P.T.O.
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Attempt all parts of either Q. No. 5 or . No. SA

5. (a) Zero Motors Limited, a listed company has three manufacturing divisions :
() Cycle Division
(i) Motorcycle Division
(ii) Electric Scooter Division.

The following infornmation is given : (Rupees in crore)

Equity share capital : 300

Preference share capital : 120

General Reserve: 500

Revaluation Reserve : 200

Profit and Loss Alc (CR): 300

Long term loan: 480

Short term loan : 620

Gross revenue in last FY: 2010

Investment in Cycle division : 40

Turnover of Cycle division 450

The Board òf directors of the company have decidéd by unanimous resolution the
following in their meeting held on 31st May, 2023 :
() To obtain a further long term loan of Rupees 300 crore from financial institution.
(i) To invest in trust securities the compensation received as a result of divestment
of Cycle Division.
Referring to the provisions of Companies Act, 2013, decide if the board resolution
is sufficient for the above proposals.
(4 marks)
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(6) Prapti Hotels Ltd. want to appoint Susmita as an independent director from lst January,
2022. It came to the knowledge of Vice President (Commercial) of the company that
Susmita stayed at their hotel at Ooty for three days from lst June to 3rd June, 2021
at room rent of? 2,500 per day and thus had entered into a transaction with the

company. The Hotel charged same room rent from other members of the general public
during that time. Advise the Vice President (Commercial), if Susmita can be appointed
as an independent director of the company from lst January, 2022.

(4 marks)
(c) With respect to E-Voting, explain the following :
(a) E-Voting
(6) Agency
(c) Cut-off date

(a) Cyber security

(4 marks)
(a) Merçury Limited is incorporated in USA and having its registered office in Los Angeles.
Board of directors of Mercury Limited taken a decision to merge Mercury Limited
with Mars Limited, a company incorporated in India having its registered office in
New Delhi. Referring to the provisions of the Companies Act 2013, advise the Board
of directors of Mercury Limited for Merger.

(4 marks)

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(e) The Board Meeting followed by the Annual General Meeting of a large listed company

has just concluded and the Chairman is reluctant to call an Extra Ordinary General
meeting or a Board Meeting any time soon.
The Chairman of the company sought your advice on appointing Paritosh who has
just retired as CMD from a large commercial bank as an independent director on

the Board of the company for the period of seven years.

Advice.
(4 marks)

OR (Alternate question to . No. 5)

5A. () The Chief Financial Officer of a listed company be appointed as its Compliance Oficer.
Comment.

(4 marks)
(i) Following particulars are extracted from the financial statements of Surat Gold and
Diamonds limited for the year ended 31st March, 2023 :
(Unit in Rupees)
Salaries and perquisites paid to managing director 1,50,000 and whole time director
? 1,20,000. Provision for bonus 1,00,000 and gratuity 1,00,000 (included the
bonus 10,000 and gratuity 12,000 for the above directors)
Provision for doubtful debts 60,000
Profit on sale of forfeited shares 10,000
Short term capital gains 2,60,000
Contribution to approved charitable trust 1,00,000.

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Provision for income tax 4,80,000 and surcharges ? 1,20,000

pany
Net Profit for the FY 2022-23 32,00,000
neral
Aggregate amount of accumulated losses of previous years ? 2,50,000

The board of directors consisted of a managing director, a whole time director and
has
three other non-executive directors.
Or on

You are required to calculate the net profit for computing managerial remuneration
and the maximum managerial remuneration payable to the above said five directors.
narks) State your assumptions.
(4 marks)
mistake in
(ii) Jyoti Prasad obtained two (2) Director Identification Number (DINs) by
private limited
fficer. 2016 and 2019. He used his second DIN to become director in two
of
and three public limited companies. Later, on realisation, he applied to Registrar
narks)
Companies for deactivation of his first DIN. The Registrar rejected the application.
ld and
Examining relevant legal provisions, discuss.
(4 marks)
pees) removed
(iv) Lazybones, director of Global Travels Limited, an unlisted public company was
irector
after following due
from the Office of Director ws 169 of Companies Act, 2013
ed the
Justice.
process of Notice and the principles of Natural
up the vacancy caused by removal
The board of directors sought your opinion on filling
of director. Advise.
(4 marks)
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(v) The following information is given :
(Rupees in Crores)
Name Status Annual Borrowings
Paid-up
Share Capital Turnover
Sky Limited Listed 9 96 48
Earth Limited Unlisted 19 420 45
Water (Private) Subsidiary of 4 112 27
Ltd. Earth Limited
() Which companies are required to constitute Nomination and Remuneration
Committee (NRC) ?
(i) Can the Chariman of the company also. chair the NRC ?
(üi) What is the minimum number of executive directors and independent directors
on NRC ?
(i) What is the quorum and number of meetings of NRC in a financial year ?
(4 marks)
PARTIII
6. (a) () Write a note on UDIN and eCSin.
(i) Highlight the risk involved in the functioning of a mega professional firm.
(5 marks)
(6) CS Manish, a Company Secretary in practice is an expert in Goods and Service
Tax. On being approached by a reputed University at Mumbai, Manish took up teaching
assignment of indirect tax laws at University from 11 A.M. to 3 P.M. on every
Tuesday and 2 P.M. to 5 P.M. on every Friday. Remuneration was contracted to
be fixed for the assignment. The University was recognised by the Council of ICSI
for imparting teaching. Has Manish committed professional misconduct in terms of
provisions of the Company Secretaries Act, 1980 ?
(S marks)

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