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ICSI - FINAL Old Syllabus June 2005 Corporate Law & Practice I Answer 6 questions including question No. 1 which is compulsory. Q 1 Comment on any four of the following: (i) Public deposits as a source of finance for companies has largely lost its relevance (ii) The Central Government is the only authority recognised under the Companies Act, 1956 to order investigation into the affairs of companies. (iii) Issue of shares at a premium by companies is not subjected to any regulation under the Companies Act, 1956. So is the case with regard to utilisation of amount of the premium received. (iv) A non-subsidiary private limited company registered in India having only five non-resident shareholders two of whom are the directors of the company, can hold its annual general meeting outside India to suit the convenience of shareholders (v) Shareholders in a duly convened annual general meeting passed a resolution for payment of dividend at a rate higher than what was resolved by the Board of directors (5 x 4 = 20 marks). Q 2 (a) Do you consider that the provisions of the Companies Act, 1956 in regard to divisible profits of a company as the sole requirement for determining the quantum of dividend? Give reasons for your answer. (b) “Special audit can be ordered by the Central Government under section 233A, if a company has sustained losses continuously for two years and the special auditor must be a Chartered Accountant in practice.” Discuss (8+8 = 16 marks). Q 3 (a) Veer Ltd. has a subsidiary company Zara Ltd. which is formed to carry out some of the objectives of Veer Ltd. Veer Ltd. suspended one of its several businesses by passing a resolution at the company’s extra-ordinary general meeting with effect from 1st January, 2004. The business so suspended continued to be suspended until November, 2004. On 1st December, 2004 a group of shareholders of Veer Ltd. filed a petition in the court for winding-up of the company on the ground of suspension of business by the company. Having regard to the provisions of the Companies Act, 1956, decide – (i) Whether the shareholders’ contention is tenable? (ii) What would be your answer in case Veer Ltd. had suspended all its business? (iii) Can shareholders of Zara Ltd. file a petition in the court for winding-up of their company on the ground that the holding company, viz., Veer Ltd. has suspended its entire business though Zara Ltd. has not suspended any of its business? (b) A public limited company obtained a loan by mortgage of its plot of land. None of the persons having concern with the transaction could remember that the mortgage required registration with the Registrar of Companies within 30 days of its creation. How would you advise the company as to – (i) rectification of omission to register the mortgage? (ii) the consequences that would follow if no steps are taken to rectify the omission? (6+10 = 16 marks) Q 4 Comment on the following statements: (i) The accounts duly audited and adopted at an annual general meeting cannot be amended subsequently. (ii) For the purpose of the Companies Act, 1956, a government company has a distinct personality which cannot be confused with the State (iii) Holding company is deemed to have powers to appoint directors of its subsidiary company (iv) A company is a person at law, the action is vested in it and cannot be brought by a single shareholder (4 x 4 = 16 marks). Q 5 (a) Tejaswy Ltd. proposes to acquire equity shares of Grand Housing Ltd. worth Rs. 19 lakh. On the basis of following information, advise Tejaswy Ltd. about the requirements to be complied with under the Companies Act, 1956 for the proposed investment in Grand Housing Ltd. Authorised share capital – Rs. 50,00,000 Issued, subscribed and paid-up capital Rs 25,00,000 Free Reserves – Rs 5,00,000 (b) An allottee of shares in a company brought an action against a director of the company in respect of false statements in the prospectus. The director in turn contended that the statements were propounded and prepared by the promoters and he only relied on them. Examine the validity of the contention of the director (8+8 = 16 marks). Q 6 (a) Give brief answers with reasons to the following : (i) Are the requirements of giving notice for an annual general meeting and for any other general meeting identical? (ii) What is considered as special business in a general meeting? (iii) Which companies are required to file compliance certificate with the Registrar of Companies? (iv) Is attachment of a document and annexing of a document and annexing of a document mean one and the same thing under the Companies Act, 1956? (v) What is the minimum number of directors required for a producer company? (b) Can a minor be a – (i) signatory to the memorandum of association of a company; (ii) shareholder of a company; and (iii) promoter of a company? (c) State the consequences of operating by a public company with five members as three out of eight members of the company had sold off their shares to the existing shareholders under a private arrangement that got effect a year before (10+3+3 = 16 marks). Q 7 Answer the following with reference to a scheme of amalgamation of companies: (a) What is the majority required for approving the scheme of amalgamation in a meeting of members of a company called as per the directions of the Court? Also discuss whether the scheme is to be approved by preference shareholders. (b) State whether companies being amalgamated must be the companies registered in India. (c) When will the Court order dissolution of the transferor company? (8+4+4 = 16 marks) Q 8 Write short notes on any four of the following: (i) Shelf prospectus (ii) Bonus shares held in abeyance (iii) Preferential payments (iv) Measures initiated by the government for protection of investors/creditors (v) General requisites of a valid meeting ( 4 x 4 = 16 marks). ICSI - FINAL Old Syllabus – June 2005 Corporate Law & Practice II Answer 6 questions including question No. 1 which is compulsory. Q 1 Draft Board resolutions with preamble for any four of the following: (i) Payment of a interim dividend (ii) Appointment of a managing director (iii) Constitution of an audit committee (iv) Approving and authorising the proposed working capital borrowings from a bank. (v) Inter-corporate investments (5 x 4 = 20 marks) Q 2 (a) Managing director of your company seeks your advice on the composition of the Board of directors of a proposed subsidiary company to be incorporated. Give a brief self-contained note for the use of your managing director (b) Write a detailed note to the Board of directors about the need for performance evaluation of the Board of directors (8+8 = 16 marks). Q 3 (a) Enumerate the essential clauses of a joint venture/foreign collaboration agreement (b) Outline the various social responsibilities of a company (8+8 = 16 marks). Q 4 (a) The accumulated losses of Life Spice Ltd. has eroded 50% of its net worth as at 31st March, 2005. Explain its consequences under the Sick Industrial Companies (Special Provisions) Act, 1985. (b) While sanctioning a scheme of arrangement of a company, the High Court is required under section 391(2) to take into account the latest auditors report on the accounts of the company. For this purpose, would it be necessary for a company to have its accounts audited upto a date before the commencement of hearing of its petition and present the report of the auditors to the Court for its consideration before approval is accorded to the scheme? (c) Explain in brief the procedure for merger of two companies (4+4+8 = 16 marks). Q 5 “Audit committee holds key to good corporate governance”. Discuss the role of an audit committee in corporate governance. Explain the provisions of the Companies Act, 1956 and listing requirements in this regard (16 marks). Q 6 (a) What are the matters to be included in the directors’ responsibility statement under section 217(2AA)?. Explain its relevance to the stakeholders (b) What do you understand by the term ‘corporate opportunity’? What are the defenses available in a situation where it is alleged that a director has taken away a corporate opportunity for his personal benefits? (8+8 = 16 marks). Q 7 Discuss the correctness of the following statements giving reasons for your answer. (i) Board of directors cannot accord sanction to a contract in which a director is interested under section 297 through resolution by circulation. (ii) Board of directors of a public company is solely authorised to extend the repayment period of any debt taken by a director in case the debt does not exceed Rs. 50,000. (iii) If a company wants to avail cash credit facility exceeding the paid-up share capital and free reserves of the company, the decision can be taken solely by the Board of directors. (iv) If an employee drawing a monthly remuneration of Rs. 18,000 is appointed to his office in a company prior to his relative becomes a director in that company, the provision of section 314 will not be applicable (4 x 4 = 16 marks). Q 8 As the Company Secretary of Win Sure Ltd., advise the Chairman of your company about the type of meeting and resolution required to transact the following items of business: (i) Appointment of a sole-selling agent; (ii) Investment in mutual funds; (iii) Payment of dividend to shareholders; (iv) Appointment of an internal auditor; (v) Buy-back of 10% equity shares; (vi) Issue of debenture; (vii) Shifting of the registered office from one State to another State; and (viii) Appointment of statutory auditors of a company where LIC holds 26% equity shares (2 x 8 = 16 marks). December 2004 Corporate Law & Practice I Answer 6 questions including question No. 1 which is compulsory. Q 1 Examine the following statements: (i) Technical experience of a shareholder is not the experience of the company. (ii) Members may die, but a company never dies – with reference to sanctity of subscription clause (iii) Though a company cannot be a citizen, yet it has nationality, domicile and residence. (iv) Corporate governance is the current buzz in India as well as world over (4 x 5 = 20 marks). Q 2 “A foreign company though recognised under the Companies Act, 1956, based on certain criteria is a body corporate and not a company under the aforesaid Act.” Analyse this statement with reference to the provisions of the Companies Act, 1956 and state briefly the requirements to be met by a foreign company so recognised under the provisions of the Companies Act, 1956 (16 marks) Q 3 (a) A Joint-Hindu family consisting of a father and five major sons and another family consisting of a father, five major sons and one minor son carried on banking business as owners thereof. Discuss if the organisation requires registration under the Companies Act, 1956 (b) Legal representative of a deceased member of a company alleged oppression and mis-management. He made a complaint to Company Law Board for relief. The management of the company is of the opinion that he has no locus standi since he is not a member. The register of members still shows the name of the deceased as member. Will the complaint of representative of the deceased member be entertained by the Company Law Board? (c) Is it necessary to file the letter of offer for renounciable rights shares with the Registrar of Companies? Explain. (d) The Official Liquidator of Bright Dental Multi-Speciality Hospital Ltd. in liquidation instituted misfeasance proceedings against the managing director of the company. During the pendency of proceedings, the managing director passed away. Examine the extent to which the legal representatives of the deceased managing director can be held liable (4 x 4 = 16 marks) Q 4 (a) Distinguish between the removal and retirement of a statutory auditor and state the procedure to be followed in these regard (b) Do you think that a statutory auditor will suffer disqualification in the following circumstances in the light of provisions of the Companies Act, 1956: (i) The statutory auditor of a company acquired 100 debentures of a company in a public issue when he was not the statutory auditor and continues to hold them even after his appointment as the statutory auditor (ii) When in a five partner firm of chartered accountants, one of the partners dies and as per the partnership deed the firm gets reconstituted in terms of the original partnership deed (iii) Where one of the managers, who is the audit in-charge of a firm of chartered accountants, buys a colour television on credit from the company for which the firm is the statutory auditor, under a guarantee by one of the partners of the firm (c) When a company has been directed to maintain records under section 209(1)(d) of the Companies Act, 1956, would the requirement of audit of such records under section 233B of the said Act arise concurrently? (6+6+4 = 16 marks) Q 5 (a) Mrs. And Mr. Raghu desire to incorporate a private limited company which will takeover their existing partnership business. They have engaged Teja, a Practising Company Secretary to draft the ‘memorandum’ and ‘articles of association’ of the proposed company. In order to reduce the cost of printing, the Practising Company Secretary was advised to include only the legally essential clauses in the articles of association of the proposed company. Draft the said clauses of the articles of association keeping in view the instructions of the promoters (b) Due to inadvertence, the Secretary of a company failed to send notice to sixteen members out of 10,000 members of the company in respect of a special resolution to be passed at an annual general meeting. The special resolution was passed at that meeting. State with reasons whether the resolution is valid? (10+6 = 16 marks). Q 6 (a) Aastha Ltd., a listed company, desires to dispose of one of its undertakings. Set out the procedure and draft the requisite resolution (b) Kajol Ltd. transferred dividend to a special dividend account and also posted dividend warrants to the shareholders within 30 days from the date of declaration of dividend. The Registrar of Companies on inspection found that the company has failed to transfer the unpaid dividend amount to a special account within the stipulated time under section 205A(1) of the Companies Act, 1956. The Registrar of Companies proceeded against the company and its directors after one year from the date of inspection. The company and its directors approached the High Court contending that it had deposited the entire dividend amount in a separate dividend account and despatched dividend warrants within the stipulated time limit. It also contended that the complaint was time barred. Is the company’s contention right? (12+4 = 16 marks) Q 7 (a) Golden Tea Estates Ltd. had taken a term loan of Rs. 50 lakh from a bank secured by some of its assets. The company has defaulted in the matter of payment of two installments of term loan amounting to Rs. 5 lakh as per the terms of the loan agreement. The bank filed winding up petition in the court. The company opposed the petition for winding up on the ground that it has employed 500 workers, paid their salaries regularly and that it has paid all the taxes due to the Government. The company requested for some time to repay the loan installments. The company is also supported by some major creditors. Explain the circumstances under which a company be ordered to be would up by the Court on the ground of inability to pay its debts and whether the bank will succeed in this case (b) What is ‘Indian Depository Receipt’ (IDR) and state who are eligible to issue such receipt? (10+6 = 16 marks) Q 8 (a) Describe the powers of the Central Government to grant exemptions under section 25 to companies from the provisions of the Companies Act, 1956 (b) What do you understand by ‘takeover bid’ or ‘takeover offer’? What are the types of takeover bid/offer ? (c) State any eight exceptions to the doctrine of ultra vires. (8+4+4 = 16 marks). ICSI - FINAL Old Syllabus – December 2004 Corporate Law & Practice II (1)
Answer 6 questions including question No. 1 which is compulsory.
Q 1 Draft the Board resolutions for the following: (i) Authorising managing director to invest surplus funds (ii) For availing of credit facilities sanctioned by the State Bank of India (iii) Appointment of cost auditor (iv) Appointment of X, who is already the managing director of XYZ Ltd., as the managing director of your company (5 x 4 = 20 marks).
Q 2 (a) The chairman of a large public limited
company which was incurring losses but has now turned around, seeks your advice
on the following: The company has on its Board non-executive directors with
rich and varied experience and the company has benefited from their experience
and in turn the company has paid them only the nominal sitting fees. The
chairman desires to pay annual remuneration of Rs. 2 lakh to each of the
non-executive directors in addition to the sitting fees. Give the procedure to
be allowed along with a draft of the resolution to be passed Liabilities side - Paid up capital - Rs 10 crores, Share Premium account – Rs 20 crores, Long term loans – Rs 20 crores. Assets Side - Accumulated losses – Rs 35 crores, Preliminary expenses - Rs 5 crores. During April, 2004, the company had issued further capital of Rs. 15 crore at par. During May, 2004 the Chairman wants to appoint a managing director on a monthly remuneration of Rs. 2,50,000 (minimum remuneration). State the procedure to be followed (8+8 = 16 marks) Q 3 To ensure better corporate governance, the Companies Act, 1956 and listing requirements contain several provisions regarding constitution of an audit committee. Critically examine the relevant provisions (16 marks) Q 4 Write short notes on the following: (i) Foreign technology agreements (ii) Appointment of a director by the central government (iii) Disinterested quorum (iv) Passing of a resolution by circulation (4 x 4 = 16 marks) Q 5 Draft the minutes of a meeting of the Board of Directors of Fair Deal Ltd. held on 30th April, 2004. Besides the usual items of business, the following matters were also considered by the Board: - Disclosure of interest by directors; -- Resignation of Kunal from the Board of directors and appointment of Gautam in his place and - Constitution of a remuneration committee (16 marks) Q 6 (a) A meeting of the Board of directors of Xel Ltd. whose shares are listed on BSE was held on 15th July, 2004. The next Board meeting was convened on 20th November, 2004. It was argued that the later meeting was invalid. Examine. (b) The Board of directors of a public company in the private sector having earned an average net profit of Rs. 1 crore during the last three financial years proposes to denote the following amounts during the current year: (i) Rs. 1,50,000 to a school run exclusively for the benefit of employees; (ii) Rs. 45,000 to a general charitable fund; and (iii) Rs. 4,75,000 to a political party. Advise the Board of directors about the powers in respect of the above donations explaining the relevant provisions of the Companies Act, 1956 (c) Explain the legal position and the suggested course of action in the following cases - (i) The annual general meeting of a company was adjourned sine die and a retiring director, who was otherwise eligible for reappointment, could not be appointed before adjournment. (ii) Nidhi Ltd. intends to appoint Madhav as an alternate director in place of Samuel who has gone abroad for one year. But there is no provision in the articles of association authorising the Board to appoint an alternate director (4+6+6 = 16 marks). Q 7 American Depository Receipt (ADR) has become one of the alternative sources for foreign investment. Explain the nature of the instrument, advantages of the instrument and the procedure to be followed by a company while making an ADR issue (16 marks). Q 8 (a) Santosh, who is a director of number of companies, has been appointed as a director of your company. As the Company Secretary, outline the points to be considered and the procedure to be followed by him and the company on taking up the directorship (b) Explain ‘insider’, ‘connected person’ and ‘un-published price sensitive information’ under the SEBI (Prohibition of Insider Trading) Regulations, 1992 (8+8 = 16 marks) ICSI - FINAL Old Syllabus – June 2004 Corporate Law & Practice I (1)
Answer 6 questions including question No. 1 which is compulsory.
Q 1 Provisions relating to amendment in the memorandum of association for alteration of the objects clause and for shifting the registered office are based on different legal considerations and leaves minority shareholders and creditors without any legal recourse when their interests are affected by any change in the objects clause. Comment. (20 marks) Q 2 (a) “An ultra vires borrowing does not give rise to any indebtedness either at law or at equity on the part of the company.” Discuss this above statement with reference to relevant case decision, if any. Does the lender have any remedies under the above situati |