ICSI - Intermediate Examination New Syllabus

ICSI Inter – II December 2006 Company Law

Answer 6 questions including Q No. 1 which is compulsory.

Q1 Comment on any four of the following: (i) Prof. Grower rightly said, “Members may come and go, but the company can go on for ever”. (ii) ‘Promoters’ though not defined in the Companies Act, 1956, can still be identified and liability can be attached on them. (iii) Memorandum and articles bind the individual members inter se and the company to the members. (iv) Every company must hold an annual general meeting in every calendar year (v) A company cannot raise deposits for an unlimited amount (5 x 4 = 20 marks)

Q 2 (a) Write short notes on any two of the following: (i) Red-herring prospectus and information memorandum (ii) Effect of irregular allotment (iii) Resolution passed by circulation by directors. (b) Distinguish between any two of the following : (i) ‘Shares’ and ‘debentures’. (ii) ‘Ordinary business’ and ‘special business’. (iii) ‘Extra-ordinary general meeting’ and ‘annual general meeting’ (8+8 = 16 marks)

Q 3 (a) Sampath, managing director of a listed company, wants to put a proposal before the Board of directors for reduction of financial year from 12 months to 9 months, i.e., the financial year to end on 31^st March, 2006 is proposed to be closed on 31^st December, 2005. Before putting the proposal for deliberation to the Board, he wants to understand the legal provisions in this regard. As a company secretary of the listed company, draft a suitable note clarifying the legal provisions involved with regard to reduction of financial year. (b) Whether the State Government can object to the transfer of registered office on the ground of loss of revenue to or of employment of citizen of the State? Comment in the light of judicial pronouncements. (c) “A body corporate cannot be a member of a company which is its holding company and any allotment or transfer of shares in a company to its subsidiary shall be void.” Explain the statement and comment on the exception to the said general clause (8+4+4 = 16 mark)

Q 4 (a) In line with the judicial pronouncements, define the term ‘indoor management’. Under what circumstances ‘doctrine of indoor management’ cannot be used as a tool to protect the outsiders against the company? (b) Give your opinion whether the Registrar of Companies can take balance sheet and profit and loss account on record even if it is not laid before annual general meeting or placed before the extra-ordinary general meeting. (c) “Decision taken by the Board of directors cannot be altered or changed by the shareholders even if they want to approve it with unanimous majority.” Comment. (d) Write a short note on ‘right to inspection of books of account’ by a director or his duly appointment attorney (4 x 4 = 16 marks)

Q 5 (a) Balance sheet of DEF Ltd. as at 31^st March, 2005 shows among others the following information: Paid up shares capital – Rs. 20 crore, Reserves and surplus – Rs. 35 crore, Reserve for redemption of debentures – Rs. 15 crore, Capital reserves – Rs. 5 crore. The company has already given following loans/stood guarantees for loans to other companies : Loan to GHI Ltd. – Rs. 12 crore, Guarantee given on behalf of JKL Ltd. – Rs. 11 crore. MNO Ltd. has approached DEF Ltd. for loan of Rs. 15 crore. Advise the management whether DEF Ltd. can give the loan of Rs. 15 crore to MNO Ltd. and if yes, set out the procedure therefor. (b) Outline the provisions with regard to compulsory transfer of profits to reserves which should be borne in mind at the time of declaration of dividend by a company (10+6 = 16 marks)

Q 6 (a) What are the duties of the Company Secretary in respect of appointment/re-appointment of sole-selling agent? (b) State the provisions relating to unclaimed dividend. (c) When is the prospectus not required to be issued? (6+6+4 = 16 marks)

Q 7 (a) What could be the ‘objects’ of a multi-State co-operative society? (b) State the rights and disabilities of trustees. (c) In the context of managerial remuneration, explain what does the expression ‘inadequate profits’ mean (5+5+6 = 16 marks)

Q 8 (a) Discuss the provisions related to ‘majority rule’ and ‘minority rights’ with reference to the concept of rights of majority. (b) What are the remedies available to the minority shareholders? (10+6 = 16 marks)

ICSI INTER – II December 2006 Company Secretarial Practice

Answer 6 questions including Q No. 1 which is compulsory.

Q 1 (a) As a Company Secretary, what steps would you take for (i) incorporation; and (ii) commencement of business of a public limited company having share capital? (b) Draw up the agenda for the first Board meeting of a newly incorporated company (12+8 = 20 marks)

Q 2 Correct the following resolutions and re-draft them giving explanation as to why it needed re-drafting : (i) The Board passed the following resolution : “Resolved that in terms of section 21, the objects clause of the company be altered as under – To undertake manufacturing of chemicals, textiles and plastic goods.” (ii) The Board recommended to the members for approval at Annual General Meeting the following resolution as a special resolution : “Resolved that as per the provisions of section 16, the registered office of the company be shifted from 16, Gokhale Road, Thane to 21, Ram Murti Road, Thane.” (iii) The Board passed the following resolution: “Resolved that according to section 262, Rupak is appointed as an additional director to hold the office till Deepak returns to India, who is out of India for more than 6 months.” (iv) The Board passed the following resolution : “As per section 268, Anubhav is appointed as the managing director of the company and to be paid a salary of Rs. 5 lakh per month (all inclusive). (4 x 4 = 16 marks)

Q 3 (a) Briefly explain the procedure relating to inviting and accepting deposits. (b) Set out the procedure for declaration and payment of interim dividend. (c) State the procedure relating to registration of charges (6+5+5 = 16 marks)

Q 4 State the secretarial standards issued by the ICSI in respect of the following. Also draft specimen notices for the respective meetings : (i) Notice of the Board meeting; and (ii) Notice of the general meeting (8 x 2 = 16 marks)

Q 5 Bright Fabrics Ltd. is involved in the business of readymade garments. As a Company Secretary, you have been asked to prepare a detailed note enumerating the steps to be taken to comply with the provisions of the Companies Act, 1956 in respect of the following : (i) To set-up a mini steel plant; (ii) To change the name of the company to Rama Industries Ltd. and (iii) To shift (a) the registered office; and (b) the administrative office of the company within the same State but under the jurisdiction of different Registrar of Companies (6+5+5 = 16 marks)

Q 6 As a Company Secretary, what would be your advice on the following situations: (i) A 100% subsidiary of a public company, having a paid-up capital of Rs. 10 crore, is unable to get a qualified Company Secretary; however, the managing director of the subsidiary is a qualified Company Secretary and a fellow member of the Institute of Company Secretaries of India. (ii) At the Annual General Meeting of Azad Ltd., Raghav, the managing director, is to be re-appointed for a fresh term of 5 years; however, the managing director is not able to make it to the Annual General Meeting as his flight is cancelled. (iii) The minutes of the 6^th Annual General Meeting of Broad Band Ltd. are ready; however, the company’s chairman Brij is no more, he passed away 3 days after the Annual General Meeting. (iv) Lalit, a director of Rich Look Ltd., is seeking re-election at the company’s AGM. While the chairman puts the resolution for Lalit’s re-appointment, which has been duly proposed and seconded, to vote, two shareholders point out to the chairman that Lalit is disqualified to act as director since Padma Ltd., of which Lalit is also a director, has failed to repay its depositors for the past 3 years and default continues (4 x 4 = 16 marks)

Q 7 (a) Set out the procedure for the appointment and fixation of remuneration of auditors of a listed company. (b) A company having a paid-up share capital of Rs. 1 crore desires to appoint a sole-selling agent for Uttar Pradesh region. Detail the procedure to be followed for making this appointment (8 x 2 = 16 marks)

Q 8 Write short notes on the following: (i) Filling of documents electronically (ii) Inter-corporate loans (iii) Official liquidator (iv) Defunct companies (4 x 4 = 16 marks)

ICSI – December 2005 - Gr. I - COMPANY LAW

 Q 1 Attempt any five of the following: (i) Mention the provisions relating to change in the name of a company (ii) Explain the provisions for transfer of unclaimed dividend (iii) State the provisions regarding registration and modification of charges (iv) “Company has an independent existence apart from its members.” Comment (v) Abhijeet is a shareholder of Kutumb Ltd. On receipt of notice of an annual general meeting to be held on 28^th September, 2004, Abhijeet issued a proxy in favour of Balijeet on 25^th September, 2004. Abhijeet again issued another proxy in favour of Charanjeet on 26^th September, 2004. Both Baljeet and Charanjeet attended the meeting on 28^th September, 2004. Decide who is entitled to vote on a poll (vi) Clover Ltd. has received a notice from its shareholders holding in all 8% of the paid-up capital for the removal of one of the directors. Advise the company (4 x 5 = 20 marks)

Q 2 (a) GCL Ltd., a listed company, wants to increase its paid-up capital through private placement basis. Before placing the proposal to the Board of directors for formal approval, the managing director of the company would like to understand the legal provisions pertaining to the following issues: (i) Restrictions on the quantum of preferential allotment (ii) Criteria for pricing of the proposed issue (iii) Restriction on currency of instrument (iv) Financial commitment necessary from the promoters/financial institutions, etc. As a company secretary of the GCL Ltd. write a brief note to the managing director focusing on the above issues (b) “Green shoe option is a mechanism for stabilising the post-issue price of the shares.” Comment in the light of the SEBI guidelines (8+8 = 16 marks).

Q 3 (a) Discuss the powers of the Board of directors which can be exercised only by means of resolution passed at a meeting of the Board. (b) “A loan given to the wife of the managing director who is a bona fide employee of the company need not necessarily be treated as loans given to relatives of directors of the company.” Comment. (c) Explain the position of an interested director in the light of the provisions of section 300 (6+5+5 = 16 marks)

Q 4 (a) Balance sheet of ABC Ltd. as at 31^st March, 2004 shows the following liabilities: Paid-up capital – Rs. 10 crore. Reserves and surplus – Rs. 20 crore. Reserves for redemption of debentures – Rs. 5 crore. The company has already advanced to the following companies : XYZ Ltd. – Rs. 6 crore. MNO Ltd. – Rs. 2 crore. ABC Ltd. has given corporate guarantee of Rs. 5 crore to STU Ltd. PQR Ltd. has approached ABC Ltd. for inter-corporate loan of Rs. 8 crore. As the Company Secretary of ABC Ltd., advise the management on the limits of making loans and inter-corporate investments (b) Discuss the law relating to acceptance of deposits by non-banking non-financial companies (6+10 = 16 marks).

Q 5 (a) Bring out the distinguishing features of debentures and preference shares as sources of finance (b) Write notes on any two of the following. (i) Register of members as a prima facie evidence of membership (ii) Pledging of securities in dematerialised form (iii) Signing of the Board’s report (6+10 = 16 marks)

Q 6 (a) Explain the provisions relating to ‘buy-back of shares’ (b) Following information is available from the audited balance sheet of Short Cut Ltd. as at 31^st March, 2004. Paid-up share capital – Rs. 500 lakh, Share premium account – Rs. 100 lakh, General reserves – Rs. 800 lakh, Secured loans – Rs. 500 lakh, Unsecured loans Rs. 400 lakh. The company plans to buy-back its shares. Compute the maximum limit upto which the company can buy-back its shares (c) Whether the buy-back of shares amounts to reduction of share capital? (10+4+2 = 16 marks)

Q 7 Explain the provisions of the Companies Act, 1956 relating to protection of interests of minority shareholders (16 marks).

Q 8 (a) State the provisions relating to payment of maximum remuneration to managerial personnel (b) Explain the doctrine of cypres. (c) Explain the law relating to alternate directors (8+4+4 = 16 marks).

December 2005

ICSI Inter – II - Company Secretarial Practice

 Q 1. Draft a suitable notice along with requisite explanatory statement(s), if any, to convene the ensuing 14^th Annual General Meeting of Exell Ltd. for transacting the following items of business. Assume all other relevant data : (i) Placing of annual accounts for the year ended 31^st March, 2005 (ii) Re-appointing Veer and Zara as directors who retire by rotation and confirming Rex as director, who was co-opted as an additional director during December, 2004 (iii) Re-appointment of auditors (30% of the paid-up capital of the company is held by the LIC) (iv) To declare dividend recommended by the Board of directors (v) To increase the authorised capital of the company from Rs. 50 lakh to Rs. 5 crore (20 marks).

Q 2 (a) State the procedure for incorporation of a private limited company (b) Draft a memorandum of association for filing with the Registrar of Companies for registration of a private limited company with an authorised capital of Rs. 50 lakh. Make necessary assumptions wherever required (8+8 = 16 marks)

Q 3 State the procedure for – (i) Compounding of offences (ii) Convening Board meetings (iii) Allotment of shares and (iv) Demand and conduct of a poll (4 x 4 = 16 marks)

Q 4. State, with reasons in brief, whether the following statements are true or false : (i) A Board meeting may be held even on a Sunday (ii) Every director who has attained the age of 65 years shall cease to serve on the Board of the Company (iii) A dividend may exceed the paid-up capital of the company (iv) At every Board or general meeting, the quorum shall be maintained throughout the meeting; else the meeting shall be deemed invalid (v) Shifting of the corporate office requires the approval of the State government (vi) Inspection of Board minutes may be validly denied to any shareholder (vii) Proxies may be accepted till the commencement of the general meeting (viii) At Board meetings, the Chairman is free to exercise his casting vote, if the situation so warrants (2 x 8 = 16 marks)

Q 5. (a) Draft a resolution for creation of a mortgage of a company’s undertaking under section 293 of the Companies Act, 1956. (b) Explain the procedure relating to – (i) change of auditors and (ii) transmission of shares (8+8 = 16 marks).

Q 6. (a) Outline the procedure for changing the financial year of a company (b) Explain the procedure for re-materialisation of shares (c) Can a person start functioning as a director immediately on his appointment to the office of the director? (d) The position of profitability and reserve of a company is as follows : Profit during a year – 20.0 lakh, Depreciation – 7.5 lakh, Depreciation for previous year not provided – 8.0 lakh, General reserve – 10.0 lakh, Investment allowance reserve – 5.0 lakh, Paid-up share capital – 50.0 lakh. Determine the maximum amount of dividend the company may declare (4 x 4 = 16 marks).

Q 7 Briefly answer any eight of the following: (i) A subscriber to the memorandum and Articles of association of a company is illiterate. How can he sign them? (ii) The promoters of Rosy Pvt. Ltd. prepare the memorandum and submit its photocopies for incorporation. Would it be accepted? (iii) Board of directors of a company proposes to alter its articles by inserting a new clause to provide for expulsion of members by the management. Can they do so? (iv) ABC, a partnership firm, subscribes for shares of Zel Ltd. The company rejects the application. Can it do so? (v) Mention the documents to be submitted for the conversion of a public company into a private company (vi) Briefly explain the remedies available to investors for non-payment of matured deposits (vii) A company has ten directors. It wishes to increase the number of directors to 14. Outline the procedure (viii) Can a manager be removed from his office? (ix) Who is a compliance officer? (x) What is an audit committee? (8 x 2 = 16 marks)

Q 8. Distinguish between the following : (i) ‘Additional director’ and ‘alternate director’ (ii) ‘Registration of charge’ and ‘satisfaction of charge’ (iii) ‘Register of directors’ shareholdings’ and ‘register of directors’. (iv) ‘Managing director’ and ‘whole-time director’ (4 x 4 = 16 marks).

Group II - Paper 5 - Company Law

June -  2005

Answer 6 questions including question No.1, which is compulsory.

Q 1. Distinguish between the following: (i) ‘Whole-time secretary’ and ‘secretary in whole-time practice’. (ii) ‘Executive director’ and  ‘independent director’ (iii) ‘Statutory audit’ and  ‘special audit’ (iv) ‘Company’ and ‘partnership’  (v) ‘Debentures’ and ‘shares’ (4 x 5 = 20 marks).

Q 2. (a) The Board of directors of a company having a paid-up capital of Rs 50 lakh by a resolution approved the appointment of a sole-selling agent under section 294AA. The extra-ordinary general meeting of the company disapproved the appointment of the sole-selling agent. Discuss the consequences of such disapproval. (b) Whether consideration for shares can be paid in kind? In a company, shares were allotted in return for sugarcane growing land transferred to the company. In the winding-up proceedings, it was alleged that the value of land was one-tenth of the value of shares allotted. Whether a Court can interfere in the matter to remedy the position? Discuss. (c) One of the joint-holders applied to a company requesting for the splitting of 300 equity shares equally among the joint-holders by issuing fresh share certificates to each of the three joint-holders separately. Is the company bound to comply with this request? Give reasons. (d) Amol & Co., a proprietary firm of Amol, a Chartered Accountant in practice, has been appointed as the statutory auditor by a private limited company. Subsequently, it came to light that Mrs. Amol has been holding less than 1% of the shares of that company. Will this vitiate the appointment of the statutory auditor? Answer with reasons.  (4 x 4 = 16 marks)

Q 3. (a) Asia Pacific Co .Ltd., called its annual general meeting on 30^th September, 2001 and adjourned it to 31^st December, 2001 due to delay in completion of audit of accounts for the year ended 31^st March, 2001. At the adjourned meeting, the meeting was further adjourned to 31^st March, 2002. Subsequently, the annual general meeting was held on 28^th January, 2002. State whether the company has complied with section 166 and, if not, whether the company is liable to default and conviction (b) ABC Pvt. Ltd. was promoted by three groups  A, B, and C. Each group was holding one-third of the paid-up capital of the company. The Board of directors comprises of three directors Ajay, Bidur and Chankaya representing the group A,B and C respectively. The company was engaged in the business of construction  of tenements. It had acquired 60 acres of land in the year 1985 for a sum of Rs. 60 lakh. The market value of the land as on 31^st March, 2005 is Rs. 6 crore. Inspite of the best efforts by the company, the projects could not be completed and all the projects are in haphazard condition. The company is facing financial difficulties. Recently, Chanakya has started feeling that he is being neglected and is not taken into confidence in taking business decisions. Chankya representing group C on the Board of directors has filed a petition under section 397/398 for not calling him for the Board meetings, irresponsible behaviour of  Ajay and Bidur leading to financial distress and has claimed a consideration of Rs. 2 crore for transferring his shares to group A and B. Will he succeed? (8 x 2 = 16 marks).

Q 4. Comment on any four of the following statements: (i) Unsecured loans from promoters are always treated as exempt deposits (ii) In a further issue of share capital by a public company, shares must always be issued to its existing shareholders (iii) In certain cases, prospectus need not be issued (iv) The debenture trustees protect the interests of the debenture-holders. (v) A Company does not have unlimited powers to alter its articles of association (4 x 4 = 16 marks).

Q 5. (a) What is ‘registered office’ of a company? Within what period a company must have a registered office? (b) Hum Tum Ltd., a company having a shareholder fund of Rs. 80 crore of which Rs. 30 crore is free reserves, desires to make a loan of Rs. 20 crore to Young Ltd. The company has already investments in and made loans to various other body corporates to the extent of Rs. 35 crore. Can this loan be given by a resolution of the Board of directors? (c) Ramesh, a shareholder in Mod Ltd., desires to nominate his wife Radha as a nominee in respect of his shareholdings. Can Mod Ltd. accept the nomination so made? Advise the company. (d) A representative of a foreign company in India was only receiving orders from customers. State whether the place where the orders so received be termed as a place of business (4 x 4 = 16 marks)

Q 6. (a) While sanctioning working capital limit, the rate of interest has been fixed at a specified percentage above the bank rate as notified by the RBI. There was a change in the interest rate due to RBI notification issued later. The bank insisted on filing a return of modification of charges. Is the stand of the bank correct? Discuss with reasons. (b) Articles of Association of a company has put a cap of Rs. 10,000 on sitting fee. There is a proposal to increase the sitting fee from present amount of Rs. 8,000 to Rs. 20,0000. Advise the company (c) A company filed form Nos. 17 and 13 in triplicate duly signed by both the bank and company’s authorised personnel for the satisfaction of charges based on the bank’s letter issued one week after the date of payment of charge (loan) but within 30 days from this payment date. The Registrar of Companies insisted that the letter of the bank for accepting the satisfaction of charge be filed with Form Nos. 17 and 13 and also insisted on issue of notice to the holder of the charge, i.e., the bank. He also decided that the date of filing should be computed from the date of bank’s letter. Discuss the correctness of his views (5+5+6 = 16 marks).

Q 7. (a) Teji Pvt. Ltd. received a cheque of Rs. 10 lakh towards the share application money from Vinod on 31^st March, 2005. On the same day, the Board of directors allotted the shares, filed necessary returns and issued the share certificate. The cheque was subsequently deposited with the bank which bounced. Advise the company. (b) As per the audited balance sheet of Dowell Ltd. as at 31^st March, 2004, the details of share capital, reserves and surplus are as under.

Miscellaneous expenditure to the extent not written off as at 31^st March, 2004 is Rs. 1.25 lakh. Break-up of unsecured loans as at 31^st March, 2004 is given below:

Compute the limits upto which Dowell Ltd. can accept further deposits from the public and shareholders (Answer to the nearest rupees in thousands) (8 + 8 = 16 marks).

Q 8. (a) Rana is a director of Urmi Exports Ltd. Urmi Exports Ltd. wishes to enter into a contract with Srilakshmi Creations Pvt. Ltd., a company registered in Mauritius in which Mrs. Rana is a director. What compliances, if any, are required under the Companies Act, 1956? (b) What are the modes of reduction of shares capital? Specify the cases of diminution of share capital which are not regarded as reduction of share capital (c) Arun buys 300 shares of a company from Barun on the faith of a share certificate issued by the company. Arun submits to the company a transfer deed, duly executed, along with Barun’s share certificate for transferring the shares in his name. The company discovers that the certificate in the name of Barun has been fraudulently obtained and refuses to register the transfer. Is Arun entitled to get the shares transferred in his name? (5+5+6 = 16 marks)

Group II - Paper 6 - Company Secretarial Practice

June -  2005

Answer 6 questions including question No.1, which is compulsory.

Q 1 Draft the specimen resolutions alongwith necessary explanatory statements wherever required for transacting the following items of business (i) Deleting article 49 of the articles of association relating to managing agents (ii) Sub-division of shares (iii) Appointment of a director other than a retiring director (iv) Declaration of interim dividend (5 x 4 = 20 marks).

Q 2 (a) A company declared dividend on 31^st October, 1996 for the year ended 31^st March, 1996. Out of the dividend so declared, a sum of Rs. 2,17,290 remain unclaimed as at 31^st March, 2004. As the secretary of the company, how will you deal with this amount? (b) Asha Ltd. sought to refuse registration of shares in the name of Vibha Ltd. on the ostensible ground that Vibha Ltd. has not complied with the requirements of section 292 of the Companies Act, 1956 in making the investment. Is the action of Asha Ltd. valid? Justify (8+8 = 16 marks).

Q 3 Sabhavana Ltd. had a record turnover of Rs. 100 crore and earned a net profit of Rs. 23 crore for the year ended 31^st March, 2004 which was its 10^th year of operations. Prepare the Board of directors’ report for the year 2003-04. You may make necessary assumptions about the facts and figures as may be necessary (16 marks).

Q 4 (a) Elucidate the procedure to be followed for incorporation of a private limited company and outline the distinctive features of such a company under the Companies Act, 1956 (b) Discuss the law and procedure relating to inter-corporate loans and investments (8 x 2 = 16 marks).

Q 5 In the light of provisions of the Companies Act, 1956, state with reasons whether the following statements are true or false. Attempt any four: (i) Deposits received by a public company from another public company are reckoned as deposits under the Companies (Acceptance of Deposits) Rules, 1975. (ii) Unless depreciation is provided, there is no way dividends can be paid by a company. (iii) All resolutions that are passed at Board meetings need only simple majority, special resolution has nothing to do with Board meetings. (iv) A special resolution requires two-thirds majority of total voting power. (v) Minutes of the Board meeting needs to be signed by the chairman within 30 days of the meeting (4 x 4 = 16 marks).

Q 6 (a) Outline the meaning and significance of a ‘charge’. What are the charges that need to be registered? What are the consequences of non-filing of a charge? (b) Ajay, a shareholder of Adarsh Ltd., wrote to the company for supply of copies of 100 folios of register of members. The company insisted that before asking copies of folios, Ajay ought to have taken inspection and specified the particulars of the folios. Without such inspection, copies of folios cannot be made available. Advise Ajay. (c) Zahir wrote to the company to supply him copies of audited balance sheets since 31st March, 2001. The company refused to supply him all these balance sheets but was willing to supply the last audited balance sheet of the company for the financial year ended 31^st March, 2004. Advise Zahir (6+5+5 = 16 marks).

Q 7 (a) The Chairman and the Company Secretary are charged with the offence of violation of the mandatory provisions of the Companies Act, 1956 for having failed to file necessary returns as per the Act. They feel that there could be penal action against them only if there is deliberate violation of law and not when there were inadvertent errors. Hence, in their opinion, there should not be any prosecution. Advise them. (b) Holder of only one share of a large public company gave notice under section 284 of the Companies Act, 1956 for removal of the whole-time director who is the CEO of the company at the ensuing Annual General Meeting. The company has been advised not to entertain the notice in view of non-compliance of requirements of section 188 in regard to circulation of members’ resolution. The matter has been referred to you for a second opinion. Advise (8 x 2 = 16 marks).

Q 8 (a) Advance Solutions Pvt. Ltd. is a company engaged in development of software. Ajit, Baljit and Charanjit are the only shareholders and directors of the company. Ajit has recently started his own independent software development company. Baljit and Charanjit are of the view that continuation of Ajit as director and shareholder of the company will be against the interests of the company. Therefore, they want to expel Ajit as a member as well as director of the company. Advise Baljit and Charanjit. (b) Shares of Anand Pvt. Ltd. are held by Ram and Shyam in the proportion of 70:30. Ram transfers his entire shareholding in favour of Rama Investments Ltd. Anand Pvt. Ltd. became a subsidiary of the public company and changed its status as such. State the implications of above and enumerate the procedure, if any, required to be followed in this regard (8 x 2 = 16 marks).

Group II - Paper 5 - Company Law

December -  2004

Answer 6 questions including question No.1, which is compulsory.

Q 1 Answer any four of the following: (a) Prudent Ltd. is paying remuneration to its non-executive directors in the form of commission at the rate of one percent of the net profits of the company distributed equally among all the non-executive directors. The company is providing depreciation on straight line basis at the rates specified in schedule XIV to the Companies Act, 1956. The company seeks your advice in respect of the following: (i) Whether is it necessary to make adjustment in respect of depreciation for the purpose of arriving at the net profit of the company to determine the quantum of remuneration payable to its non-executive directors? (ii) Is it possible to pay minimum remuneration to non-executive directors besides sitting fees in the event of loss in a financial year? Advise the company explaining the relevant provisions of the Companies Act, 1956 (b) The financial year of Bright Business Consultants Ltd. ends on 30^th June every year. For the financial year ended 30^th June, 2001, the company could not hold its annual general meeting on or before 31^st December, 2001 and accordingly, requested the Registrar of Companies, Chennai, to grant an extension of time for a period of 3 months so that the general meeting could be held on or before 31^st March, 2002. The company held its last annual general meeting on 31^st December, 2000 for adopting its annual accounts for the year ended 30^th June, 2000. Examine whether the request of the company would be considered by the Registrar of Companies in view of the fact that if extension was granted there would be no annual general meeting of the company during the calendar year 2001 (c) State the advantages of depository system (d) What is the procedure for shifting of registered office of a company from one State to Another ? (e) What is meant by crystallisation of floating charge? What are its effects? (5 x 4 = 20 marks)

Q 2. (a) A private limited company wants to increase its subscribed capital by offering further issue of shares to friends and relatives of directors by Boards’ resolution. Is it valid as per law? (b) Minutes of the meeting of the Board of directors recorded earlier found to be not acceptable to the Chairman. Can that be scored out or deleted or crossed out by the Chairman? (c) (i) An adjourned annual meeting falls on a holiday. Is there any contravention of the Companies Act, 1956 for holding the said meeting on that day? (ii) Whether the chairman of a meeting has power to dissolve the meeting before the business of the meeting is over? (5+4+7 = 16 marks)

Q 3 (a) Under what circumstances can a member of a company seek rectification in the register of members of the company of which he is a member? (b) “The role of a company secretary is threefold”. Explain (8 x 2 = 16 marks).

Q 4. Can a company purchase its own securities and, if so, how? What are the prohibitions, if any, for buy-back of securities? (16 marks)

Q 5 (a) Who are responsible for keeping the books of account of a company? What are the liabilities imposed on them for their failure in this regard? (b) What are the statutory books to be maintained by a company under the Companies Act, 1956 (6+10 = 16 marks)

Q 6 (a) “Dividends once declared become debts.” Explain. (b) “The investor education and protection fund shall be utilised for promotion of investor awareness and protection of interests of investors.” Explain. What are the sources of its funds? (c) The Board of Directors of Greenfield Projects Ltd., a company whose shares are listed on the Delhi Stock Exchange, purposes to give loans to a sister company in excess of the limits prescribed under section 372A(1) of the Companies Act, 1956. The next annual general meeting of the company is due only after six months. Since the Board is anxious to complete the formalities quickly without waiting for the day of the next annual general meeting, advise the Board of Directors about the steps to be taken to comply with the legal requirements under the Companies Act, 1956 (4+4+8 = 16 marks).

Q 7. (a) Explain ‘ordinary resolution’ and ‘special resolution’. Set out the instances where special notice for passing the resolution is required (b) Define ‘multi-State Co-operative Society’ and briefly state its objectives (8+8 = 16 marks).

Q 8. (a) Write short notes on any two of the following: (i) Perpetual succession (ii) Unauthorised or ultra vires  borrowings. (iii) ‘Small depositors’ under the Companies Act, 1956. (b) Distinguish between any two of the following  (i) ‘Equity shares’ and ‘preference shares’. (ii) ‘Transfer of shares’ and ‘transmission of shares’. (iii) ‘First director’ and ‘a director appointed in a casual vacancy’  (8+8= 16 marks)

Group II - Paper 6 - Company Secretarial Practice

December -  2004

Answer 6 questions including question No.1, which is compulsory.

Q 1 The following events occurred for Anmol Ltd. during the financial year 2003-04: (i) Company’s new factory which can increase the overall capacity by 50% has been fully commissioned on 1^st January, 2004. (ii) Due to oversight, the filing of annual accounts of the company got delayed by 25 days for the year ended 31^st March, 2003 and company paid the prescribed additional fee for the delay (iii) Praful was appointed as an additional director on 30^th December, 2003. On the same day, Quershi was appointed on the Board in place of Ronnie, who died on 20^th December, 2003. (iv) Auditors’ report contained two comments – (a) need to further strengthen internal control systems; and (b) delay in the payment of central excise dues for the month of July, 2003 by 5 days. Comment on the need to include the above events in the Board of Directors’ report for the year 2003-04 for placing the same before annual general meeting. Also, draft the Board of directors’ report incorporating applicable items suitably and assume other relevant data needed (20 marks)

Q 2 The 35^th annual general meeting of Novelty Ltd., having adequate profits, was held in Mumbai on Monday, the 10^th May, 2004 at 4.00 P.M. Among the special items of business transacted were: (i) re-appointment of Abhay as the managing director for a further period of 5 years with effect from 1^st June, 2004 on an enhanced basic salary of Rs. 80,000 per month, his perquisites remaining the same as at present and the appointment being strictly within schedule XIII; and (ii) issue of rights shares in the ratio of 1:3 involving fractional shares (12,00,000 equity shares of Rs. 10 each at a premium of Rs. 25). Draft the minutes of the meeting (16 marks).

Q 3 The Board of directors of Vipasa Ltd. of which you are the Company Secretary require your advice on the following matters: (i) Shifting of the registered office of the company from Pune to Mumbai; (ii) Appointment of Ram as an alternate director in place of George, a British national, representing the foreign collaborators of the company; (iii) Appointment of Win-Win Co., Advocates, a partner of which is a relative of a director, as legal advisors on a retainer fees of Rs. 50,000 per month for a period of two years; and (iv) Changing the financial year of the company to a period of 15 months ending 31^st March ( 4 x 4 = 16 marks)

Q 4 Draft specimen resolutions for transacting any four of the following items of business indicating the kind of meeting at which each resolution is to be passed and the type of resolution with the majority required for : (i) Declaration of a dividend of 50% on equity shares (ii) Increasing the authorised capital from Rs. 2 crore to Rs. 4 crore; (iii) Appointing Bidur as a Company Secretary; (iv) Disposal of the company’s bearings manufacturing plant at Rajkot; and (v) Investment of Rs. 1 crore in rights shares in Mahalaxmi Fabricators Ltd. (4 x 4 = 16 marks)

Q 5 Explain in detail the various clauses of the memorandum of association other than the situation clause of a public limited company and the procedure for effecting changes in these clauses (16 marks).

Q 6 As a Company Secretary, how would you deal with the following situations: (i) The data fixed for the annual general meeting of a public company is declared a holiday by the Government to mourn the death of a national leader (ii) A Board meeting is duly convened and held. However, in the course of the meeting, one of the directors excuses himself and departs thereby reducing the number of directors present to a number below the quorum (iii) A 3 year contract for the sale of he Company’s disposable car is signed with Arvind Ltd. Later, it is found that one of the directors of Arvind Ltd. holds a 10% equity stake in the company (iv) A director as well as his alternate happen to be present at a meeting of the Board of directors of the company (4 x 4 = 16 marks).

Q 7 (a) What do you understand by ‘explanatory statement’ required to be annexed to the notice of the general meeting of a company? State the requisites for a proper explanatory statement (b) Explain the procedure involved in registering a charge for the following assets of the company offered as security to company’s bankers for : (i) temporary overdraft availed of by depositing a fixed deposit receipt with the bank, who in turn have marked a lien on the same; and (ii) cash credit availed of on stocks of raw materials under lock and key with the bank (6+10 = 16 marks).

Q 8 State the procedure for – (i) appointment of a Company Secretary (ii) appointment of a director to fill-up a casual vacancy. (iii) appointment of a sole selling agent (5+5+6 = 16 marks)

Group II - Paper 5 - Company Law

June -  2004

Answer 6 questions including question No.1, which is compulsory.

Q 1. Comment on the following : (i) A private company requires no provisional contract. (ii) A delay in filing of memorandum of satisfaction of charge cannot be condoned by the  Registrar of Companies (iii) A share certificate of the company is an official publication (iv) A private company may, in its articles, incorporate additional disqualifications in respect of directorship of the company. (v) The appointment of several directors cannot be clubbed together (4 x 5 = 20 marks).

Q 2 (a) Arun is a director of ABC Ltd., which has failed to repay matured deposits from 1^st April, 2003 onwards and the default continues. But ABC Ltd. is regular in filing annual accounts and annual returns. Arun is also a director of PQR Ltd. and XYZ Ltd. Answer the following questions with reference to the relevant provisions of the Companies Act, 1956 : (i) Whether Arun is disqualified under section 274(1)(g) of the Companies Act, 1956 and if so, whether he is required to vacate his office of director in PQR Ltd. and XYZ Ltd.? (ii) Is it possible for the Board of directors of DEF Ltd. to appoint Arun as an additional director at the Board meeting to be held on 15^th June, 2004? (b) The paid-up capital of Royal Ltd. has been increased from Rs. 4 crore to Rs. 6 crore. The board of directors of Royal Ltd. proposes to constitute an audit committee. At present, the Board consists of 10 directors including a managing director. Draft a Board resolution taking into consideration the requirements of the Companies Act, 1956 relating to constitution of the audit committee and the voting rights of its members (10+6 = 16 marks).

Q 3 (a) The Board of directors of Greendfield Projects Ltd., a company whose shares are listed in Delhi Stock Exchange, proposes to give loan to a sister company in excess of the limit prescribed under section 372A of the Companies Act, 1956. The next annual general meeting of the company is due only after sex months. Since the Board is anxious to complete the formalities quickly without waiting for the date of next annual general meeting, advise the Board about the steps to be taken to comply with the legal requirements under the Companies Act, 1956  (b) Marygold Ltd., a listed company, decides to make a public issue of equity shares. Explain briefly the eligibility norms to be complied with by the company as prescribed under the SEBI guidelines (8+8 = 16 marks).

Q 4 (a) “Save as provided under the Companies Act, 1956, a person cannot be appointed as debenture trustee of a company.” Comment. (b) When is the balance sheet considered to be final? Is it an acknowledgement of debt? (c) Discuss briefly the provisions of the Companies Act, 1956 as regards ‘authentication of accounts’. How will the accounts be authenticated when only one director is available? (5+5+6 = 16 marks)

Q 5 (a) Distinguish between – (i) ‘Debenture’ and ‘debenture stock’. (ii) ‘Debenture’ and ‘loan’. (b) Can debentures be re-issued? (c) “It is basically the duty of the company to effect the registration of charge.” Examine (6+5+5 = 16 marks)

Q 6 (a) Sudesh sent an envelope to Nova Technologies Ltd. on 6^th June, 2003. The envelop contained a duly executed transfer deed along with relevant share certificate. On an enquiry, it was learnt that the envelope has not been delivered to the company and the same may have been lost in postal transit. Sudesh seeks your advise, as a company secretary, as to how to obtain a duplicate share certificate from the company in lieu of the lost one (b) Ram, a director of Jay Kay Brothers Ltd., was born on 29^th February, 1924. He has filed a declaration with Jay Kay Brothers Ltd. that he is not disqualified under any of the law nor he was ever detained or convicted for any offence. On this footing, the Board of Jay Kay Brothers Ltd. appointed him as the managing director of the company at a remuneration of Rs. 50,000 p.m. which has also been duly approved by an independent remuneration committee. The appointment was made on 26^th August, 2003 subject to approval of annual general meeting. On 29^th September, 2003 the annual general meeting passed an ordinary resolution for his appointment. On 10^th October, 2003, when Form No. 25C was furnished to PCS & Co., a firm of practicing company secretaries, for its certification and onward submission to the Registrar of Companies. Prem, a partner of the said firm, refused to certify Form No. 25C stating that the requirements of schedule XIII have not been complied with. Jay Kay Brothers Ltd. inquires from you, as an expert on company law, whether PCS & Co. is right in its approach? State your views with reasons (c) Swift Technologies Ltd. wants to insert a new sub-clause in the objects clause of the memorandum of association of the company to commence a new wing of marketing of CDs. It is an unlisted company. Advise the Board of directors about the steps to be taken in this regard (6+5+5 = 16 marks).

Q 7 (a) Kith & Kin Consultants Pvt. Ltd., incorporated in the year 2003, seeks your legal advice regarding the following appointments relating to directors and their relatives : (i) Niraj, who is a relative of one of the directors, is to be appointed as the managing director on a monthly salary of Rs. 50,000 plus other perquisites as applicable to other executives of the company (ii) Namita, a relative of a director, is to be appointed as the chief executive officer on a consolidated salary of Rs. 25,000 per month. Advise the company explaining the relevant provisions of the Companies Act, 1956 (b) A multi-State cooperative society is desirous of amending its bye-laws. Advise the society as to what procedure is required to be followed for the said purpose under the Multi State Cooperative Societies Act, 2002 (8+8 = 16 marks)

Q 8 (a) Discuss the time and place for holding statutory meeting. What is its scope? (b) Discuss briefly the requirements of issuing notice for the adjourned meeting of the Board of directors (c) A depositor had deposited some money in a cumulative scheme of an eligible non-banking non-financial company registered under the provisions of the Companies Act, 1956, but he did not receive the fixed deposit receipt until 42 days of the date of deposit. However, he got it on 47^th day. State with reasons whether an infringement of law is involved in this case (5+5+6 = 16 marks).

Group II - Paper 6 - Company Secretarial Practice

June  2004

Answer 6 questions including question No.1, which is compulsory.

Q 1. Draft specimen resolutions for transacting the following items of business, indicating the kind of meeting at which each resolution is to be passed and the type of resolution with the majority required to : (i) change the place of registered office from one State to another (ii) open a bank account with a scheduled bank for payment of dividend (iii) issue of duplicate share certificate (iv) commence a new business by a public limited company (v) grant general power of attorney to the company secretary (4 x 5 = 20 marks).

Q 2 (a) What are the legal requirements to be complied with in regard to recording of minutes and maintenance of minutes book? (b) “A company can keep its registers at a place other than the registered office.” Comment. (c) Can an alternate director said to be interested in a contract or arrangement in which the original director was interested, but the alternate director has no interest whatsoever? (6+5+5 = 16 marks)

Q 3 (a) All shareholders of a company, whose registered office is at New Delhi, unanimously requested the company to hold its next annual general meeting at Lucknow. Can their request be acceded to? (b) At the annual general meeting of ABC Ltd., one of the agenda items was for the retirement and reappointment of X,  a director of the company. However, though around 50 members attended the meeting, nobody proposed the name of X, the retiring director, at the meeting for his reappointment. As Secretary of the company present at the meeting, advise the chairman about the steps to be taken as per the provisions of the Companies Act, 1956 (c) The articles of association of a company require the instrument appointing a proxy to be received by the company 75 hours before the meeting. State with reasons whether it is a valid requirement (d) The present Board of directors of a company consists of 2 non-retiring directors, 3 additional directors and 4 other directors. State the number of directors, if any, who will be liable to retire at the next annual general meeting and the number of directors who shall vacate the office at the annual general meeting (4 x 4 = 16 marks).

Q 4 (a) State the provisions of the Companies Act, 1956 relating to the contents of annual return of a company having share capital, its signing and the time limit within which it should be filed (b) State the law and procedure relating to unpaid or unclaimed dividend (8+8 = 16 marks).

Q 5. State, with reasons, whether the following statements are true or false: (i) An item of special business to be transacted at a meeting is required to be passed by a special resolution (ii) An alternate director shall hold office till conclusion of the next annual general meeting (iii) Redemption of preference shares by the company shall reduce the amount of its authorised share capital (iv) Charge on any book debt of the company requires registration with the Registrar of Companies. (v) A company can invest any amount in any other body corporate by passing a special resolution (3+3+3+3+4 = 16 marks).

Q 6 (a) What is the procedure for appointment of directors to be elected by small shareholders? (b) Discuss the various modes of cessation of membership of a company. (c) What do you mean by ‘directors’ responsibility statement’? What are its contents? [5+5+6 = 16 marks]

Q 7 (a) Astitva Ltd. desires to engage in a new business which is outside the scope of its existing objects clause. Explain the procedure for giving effect to this proposal (b) Ramsay, a director of Humlog Ltd., resigned from the directorship with immediate effect by his letter dated 16^th April, 2002 which was received and acknowledged by the company on 20^th April, 2002. However, the company did not file Form No. 32 with the Registrar of Companies in time. Meanwhile, for a default committed by the company under the Negotiable Instruments Act, 1881, on 20^th May, 2002 the director was sought to be prosecuted. Ramsay contended that he should not be prosecuted as he has resigned from the directorship of the company, which was effective from the date it was received by the company and that he was not the director on the date the default was allegedly committed. Is the argument of Ramsay tenable? (12+4 = 16 marks)

Q 8 (a) Draft the Board of Directors’ report of an unlisted public company (b) The Central Government holds 32% of the equity shares of Globe Ltd. The State governments of Tamil Nadu and Andhra Pradesh together hold 15%, UTI holds 5% and LIC holds 2% of the equity shares of the company. Is it a government company? (c) A public limited company having Rs. 15 lakh paid-up share capital, which is facing shortage of fund for its day-to-day affairs, borrowed a sum of Rs. 5 lakh from one of its directors on 1^st April, 2003. Does it violate any provision of the Companies Act, 1956 and rules framed thereunder? (10+3+3 = 16 marks)

Group II - Paper 5 - Company Law

December -  2003

Answer 6 questions including question No.1, which is compulsory.

Q 1 Explain the following : (i) Common seal and its affixation. (ii) A company as a partner. (iii) Interim dividend. (iv) Corporate identity number (CIN) (v) Investors education and protection fund [4 x 5 = 20 marks].

Q 2 (a) What are the features of a corporate form of business enterprise? (b) What is the ‘doctrine of constructive notice’? Explain with case law. (c) What do you mean by ‘lifting of corporate veil’? [8+4+4 = 16 marks]

Q 3. (a) State the modes of acquiring membership in a company. (b) Can a member be expelled from a company? Discuss with reference to a case law. (c) What securities are eligible for dematerialisation? (d) Briefly state the manner of surrender of shares [4x 4 = 16 marks].

Q 4. (a) In a private limited company, there are only two directors on the Board. A Board meeting convened was adjourned for want of quorum. At the adjourned meeting, inspite of quorum not being present, resolutions were passed as per the agenda. Discuss the validity of resolutions so passed. (b) Anubhav Ltd. held four Board meetings in a calendar year with an interval of more than 3 months in between two Board meetings. Comment. (c) Manoj was the chairman of a company and borrowed Rs 5 lakh from State Bank of India, Patna under a promissory note. A suit was filed for the recovery of the debts on the basis of the pronote executed by the chairman. The company refused to accept the liability on the plea that the chairman had borrowed funds without authorization from the company. Will the company succeed? Explain. (d) Whether a chairman of the Board can be removed by shareholders in a general meeting? [4 x 4 = 16 marks]

Q 5 (a) Define ‘small shareholders’. Can a person hold office as small sharholders’ director in three companies at the same time? (b) Humlog Ltd. received a letter from IDBI on 1^st March, 2003 which has financed the project, requesting the company to appoint Madhavan, General Manager (Operations), IDBI, as a director on its Board with immediate effect, as per the terms of sanction. Does his appointment require any other approval? Is he liable for retirement by rotation? (c) Explain the provisions relating to tenure of office of auditors under various circumstances [4+4+8 = 16 marks]

Q 6 Describe the provisions of law concerning ‘compliance certificate’ to be given by a secretary in whole-time practice. Specify eight areas covered by the prescribed format for certification. [16 marks]

Q 7. (a) What are the provisions of the Companies (Acceptance of Deposits) Rules, 1975 for premature re-payment of deposits? (b) Enumerate the steps involved in issue of bonus shares by a listed company. [6+10 = 16 marks]

Q 8. (a) Name the industries which are prohibited to appoint sole selling agents under the Companies Act, 1956. (b) Discuss the law relating to inter-corporate loans and guarantees. [4+12 = 16 marks]

Group II - Paper 6 - Company Secretarial Practice

December  2003

Answer 6 questions including question No.1, which is compulsory.

Q 1. Redraft the following notice for an annual general meeting keeping in view the requirements of the law. Also draft the necessary annexure, if required: “Notice is hereby given that the Twenty Fourth Annual General Meeting of the Directors of XYZ Ltd. will be held at the Administrative Office of the Company at 4^th floor, Bagirathi Complex, Bright Road, New Delhi, on Sunday, the 29^th June, 2003 at 10.30 PM to transact the following business:

ORDINARY BUSINESS -  (i) To receive and approve the audited statement of accounts for the year ended 31^st March, 2003 and to consider the reports of the Directors and the Auditors thereon. (ii) To pay a dividend. (iii) (a) To elect Directors in place of Kader and Mrs. Geetha, who retire by rotation and being eligible, offer themselves for re-election. (b) To appoint Muralidharan as Director of the company who has been an additional director of the company, appointed during December, 2002.

SPECIAL BUSINESS - (iv) To appoint Auditors and to fix remuneration and in this connection, to consider, and, if thought fit, to pass with or without modification, the following resolution as a Special Resolution: “RESOLVED that, pursuant to the provisions of section 224 of the Companies Act, 1956, M/s ABC and Co. Ltd., the Chartered Accountants, be and they are hereby appointed the Auditors of the company to hold office for the financial year 2003-04 and the Board of Directors be and is hereby authorised to fix their remuneration for the said period.”

For XYZ Ltd.
Company Secretary

Date : 20^th June, 2003

Registered Office :
Mathura Bhavan, II Cross
Patel Nagar, Agra

Note : A member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of himself and a proxy need not be a member. [20 marks]

Q 2. Bright and Prosperous (Pvt.) Ltd. is a family-owned company incorporated with a capital of Rs. 1,75,000. The company has a number of indigenous and foreign agencies for manufactured engineering goods and has had a steady growth in turnover and profits over the last ten years. The directors, visualizing further growth in the company’s business, have decided to make the company public; however, for the time being, the company will not be listed on any stock exchange. Your services, as company secretary, have been requisitioned to advise the Board on the various steps to be taken, alongwith draft resolutions, to achieve the objective. Make a detailed presentation to the Board. [16 marks]

Q 3. As the company secretary of Sharp Practices Ltd., advise the Board on the following matters : (i) For extending the tenure of the managing director by a period of 5 years on a revised remuneration package; (ii) one of the directors has not attended any of the last four Board meetings; (iii) For holding a Board meeting at the registered office of the foreign collaborators of the company at Franfurt; and (iv) For granting a housing loan to the whole-time director in-charge of finance [4 x 4 = 16 marks].

Q 4. Write notes on any four of the following (i) Buy-back of shares (ii) Minimum/maximum number of directors in a company (iii) Need for secretarial standards (iv) Free transferability of shares (v) Satisfaction of charges [4 x 4 = 16 marks].

Q 5. The Board of directors of Sunbeam Industries Ltd. of which you are the company secretary, seek your advice on the following matters : (i) To commence manufacturing of refrigerators and washing machines, which are not germane to the existing activities. (ii) To shift the corporate office of the company to New Delhi, the registered office will continue to function in Mumbai. (iii) To appoint Shyam as a director in place of Atmaram, a director who passed away recently. (iv) To open a new bank account of the company with Everready Bank Ltd., Jolly Place, New Delhi to facilitate its New Delhi operations. Advise the Board along with appropriate resolutions [4 x 4 = 16 marks].

Q 6. (a) What do you mean by non-statutory books/registers to be maintained by a company? Why are such books/registers maintained by the companies? (b) Classify the following into statutory and non-statutory books/registers and explain briefly the necessity and the contents of each of them: (i) Dividend register (ii) Register of charges (iii) register of share transfers and transmission (iv) Register of contracts with companies and firms in which directors are interested [4+12 = 16 marks].

Q 7. (a) A company opened a dual purpose account, so that dividend was paid to the shareholders from that account and the unpaid amount of dividend remained with the bank, which earns nominal interest to the company. Bank also agreed to honour all dividend warrants deposited at its specified branches spread across the country. Accordingly, the money was transferred to the dual purpose account and dividend warrants were posted within three days from the date of the declaration of the dividends  However, later on, company realized that it would be impossible for it to know whether or not the dividend warrants have been encashed by the shareholders unless they were returned back to the bank or the company. Therefore, company decided to continue with the dual purpose account till the warrants go stale and only then transfer the unpaid dividend to a special account with a scheduled bank, as prescribed for payment of dividend. Examine whether there is any contravention of the provisions of the law relating to the payment of dividend (b) A few directors of a power company registered in India, who are foreign nationals, collected funds from non-resident individuals and companies with a promise to issue shares of that power company. They made false and misleading statements and suppressed facts. They diverted the funds so raised to certain investment companies owned by them abroad. The funds so diverted were utilized by the investment companies for securing allotment of shares in the power company. Can the aforesaid directors be prosecuted for trial in the Indian courts for the commission of offences under sections 60, 63, 68 and 68A of the Companies Act, 1956? Support your answer with case law, if any [8+8 = 16 marks].

Q 8. (a) 5,000 Equity shares in a company were standing registered in the joint-names of Smt. Sumati and Sri Krishan. A dispute arose between them. Sri Krishan requested the company to split the holdings half and half and show his name as the first joint-holder in one half of the holdings so split. Discuss whether the company can entertain Sri Krishan’s request (b) X was a shareholder in company M Ltd. X died bequeathing a will under which Z, son of X, was empowered to receive the amount of the shares. The articles of association of M Ltd. vested with the Board of directors absolute discretion in regard to registration of transfer of shares. In the instant case, the Board refused to register the transmission of shares on the grounds that the will entitled Z to receive amount of the shares only and that he was an undesirable person to the company. Is the refusal to register the transmission by the Board of directors of company correct? Explain [8+8 = 16 marks]

Group II - Paper 5 - Company Law

June  2003

Answer 6 questions including question No.1, which is compulsory.

Q 1. Your company is a listed company and wants to dispose of one of its undertakings (manufacturing glass) consequent upon its decision to stick to its core business, viz. manufacture of paper and boards. State the relevant provisions of the Companies Act, 1956 to be complied with and the steps to be taken for compliance. [20 marks]

Q 2. (a) Specify the conditions subject to which the following are treated as exempt deposits: (i) Debentures secured by mortgage of property. (ii) Deposits from directors of a private company. (b) What are the circumstances under which approval of members is not required for making loans and investments and providing security/giving guarantee to other bodies corporate? (c) Can a company accept deposits without issuing text of advertisement? Explain the relevant rules. [4+6+6 = 16 marks]

Q 3. Examine the following with reference to the relevant provisions of the Companies Act, 1956: (i) A meeting of the Board of directors of Opaque Ltd. was convened on 30^th September, 2002, but the meeting did not take place for want of quorum. As a result, the company did not hold any Board meeting for the quarter ended 30^th September, 2002 and there is a complaint that the company has violated the provisions of the Companies Act, 1956 in this regard. (ii) Hi-Fi Computers Ltd. wants to file its documents with the Registrar of Companies in computer print-out form. (iii) A director failed to disclose his interest in a contract in which he was interested and the same was approved at the Board meeting. (iv) Goody-Goody Ltd. proposes to appoint Johar, a relative of one of the directors of the company, as general manager (marketing) on a monthly remuneration of Rs. 60,000. [4 x 4 = 16 marks]

Q 4. (a) The Companies (Amendment) Act, 2000 has prescribed an additional duty on the Board of Directors to include directors’ responsibility statement in the Board’s report. Explain briefly the details to be furnished in the said statement. (b) Rao & Rao, a firm of charged accountants, have to be appointed in place of Shah & Shah, chartered accountants, as the auditors of Freebee Ltd. Explain the steps to be taken with regard to the appointment and payment of remuneration to the auditors. (c) (i) Explain the doctrine of cypress. (ii) When is a ‘trust’ extinguished? (d) “A company cannot ratify its pre-incorporation contracts”. Comment. [4+4+4+4 = 16 marks]

Q 5. (a) “A company is a separate person from its members.” Explain the circumstances under which the court may disregard the company’s corporate personality. (b) State the steps to be taken for converting a ‘private company’ into a ‘public company’. [8+8 = 16 marks]

Q 6. (a) Can an annual general meeting be called at a shorter notice? Would your answer be different if it were an extra-ordinary general meeting? (b) In a public company where the articles of association require presence of six members to constitute the quorum, can the following persons be treated as members for the purpose of constituting the quorum : - X, a representative of Governor of a State; - Y and Z, preference shareholders; - A, representing B Ltd. and C Ltd.; and – P, Q, R and S who were proxies. (c) Explain the powers of the Company Law Board to prevent oppression and mismanagement. [4+4+8 = 16 marks]

Q 7. (a) Acrid Ltd. maintains the minutes book of the Board meetings in loose leaf system and gets them bound once in three months. Can it do so? Board meetings were held on 24^th March, 2002 and 15^th April, 2002. Ronie, who was the chairman of these two meetings died on 1^st May, 2002, without signing the minutes of the Board meeting held on 15^th April, 2002. How should the minutes be signed and by whom? (b) Explain the procedure for passing the resolution by circulation under section 289 of the Companies Act, 1956. (c) No company can appoint a person as its sole selling agent, if he has a substantial interest in that company, without prior approval of the central government. Explain ‘substantial interest’. [5+5+6 = 16 marks]

Q 8. (a) When can a company commence its business? (b) Prabhavi is already director in 14 companies. He is being appointed as a director of another company named Growfast Ltd. Advise Prabhavi in regard to the following : (i) Restriction on the number of directorship to be held by an individual and whether he can accept the new appointment in view thereof. (ii) Which are the companies to be excluded for the purpose of calculating the ceiling on the appointment of directors? (c) Facts and Figures Ltd., stood surety for Amiable Pvt. Ltd. (not a subsidiary company) for a bank loan to that company for repayment with interest at 15% of Rs. 10 lakh. This amount is about 3% of its paid-up equity capital. The company also had a reasonable amount in free reserves. Taneja, a director of Facts and Figures Ltd., was a member of Amiable Pvt. Ltd. Do you think that Facts and Figures Ltd. or Taneja had committed any violation of the Companies Act, 1956? Answer with reasons. (d) Madan was appointed as a director of Sure Success Ltd. in a casual vacancy on 3^rd March, 2001 and vacated that office on 30^th September of that year. In the annual general meeting, held on 28^th September 2002, Madan was appointed as a director against a regular vacancy on the Board. As he had already served the company as a director, no consent was filed with the Registrar of Companies. However, the Registrar on receiving the Form No. 32 from the company, issued a notice to the company alleging non-compliance with the requirements of section 264 of the Companies Act, 1956 in the matter of appointment of Madan as a director. Examine the matter and give your opinion in this regard for consideration of the Board of the company. [3+6+3+4 = 16 marks] 

Group II - Paper 6 - Company Secretarial Practice

June 2003

Answer 6 questions including question No.1, which is compulsory.

Q 1. Draft specimen resolutions for transacting the following items of business indicating the kind of meeting at which each resolution is to be passed and the type of resolution required for : (i) alteration of the objects clause. (ii) disposal of forfeited shares. (iii) declaration of final dividend where an interim dividend for the year has been paid. (iv) making final call on shares on which 80% money was collected at the time of issue.  [5 x 4 = 20 marks]

Q 2. Explain the legal position in the following circumstances: (i) Harsh (Pvt.) Ltd. was incorporated on 1^st January, 2002. Later on it was observed that all the signatures on the memorandum of association filed with the Registrar of Companies were forged. Is the incorporation of the company valid? (ii) Anant Ltd., a public company, is having paid up share capital of Rs. 20 crore and free reserves amounting to Rs. 10 crore. The Board of directors made a loan of Rs. 15 crore to a body corporate. Has the company violated any provisions of the Companies Act, 1956? (iii) X (aged 52 years) and Y (aged 60 years) were appointed at the annual general meeting as directors of ABC Ltd. on the same day. At the next annual general meeting, one director is liable for retirement by rotation under section 256 of the Companies Act, 1956. The Board seeks your advice as to who should retire. Advise. (iv) Only two members were personally present at an adjourned general meeting of a public limited company. Is the meeting valid? [4 x 4 = 16 marks]

Q 3 Draft the minutes of the Board meeting of a company in which the accounts for the financial year were considered. Assume any other four items of business. [16 marks]

Q 4. (a) Write short notes on – (i) Investor education and protection fund; and (ii) Statutory books and registers. (b) At a Board meeting of Aapur Ltd., 7 out of 9 directors were interested in one particular item of agenda. Can they discuss the item and take decision? (c) State the procedure for approving contracts in which directors are interested. (d) The secretary of a listed company while sending notices to all members and others concerned in respect of a special resolution to be proposed at the annual general meeting, inadvertently omitted to send notice to few members. The resolution was passed at the annual general meeting. Discuss whether the resolution is valid or not.  [6+2+6+2 = 16 marks]

Q 5 Draft a notice along with explanatory statement for annual general meeting of a public limited company to transact, in addition to the normal items, the following business for according consent/authority to the Board of directors to – (i) appoint a managing director in terms of Schedule XIII of the Companies Act, 1956; and (ii) further issue of shares to the persons other than the existing shareholders. [16 marks]

Q 6 (a) Discuss the procedure for increase in authorised share capital. (b) Discuss the procedure for making a complaint to the Company Law Board for non-repayment of deposits. (c) Discuss the procedure for condonation of delay by the central government in relation to filing of various documents with the Registrar of Companies. (d) Discuss the procedure for transmission of shares to nominee.  [4 x 4 = 16 marks]

Q 7. (a) Anurag, who is not a member of the company, wants to inspect the register of directors. Can the company refuse inspection? On refusal, has Anurag any remedy? (b) Amar, a director of a company, sends his friend Sunil to inspect the accounts of the company with an authority letter to inspect the accounts of the company. Can he be allowed to take inspection? (c) Smart, an officer of the Securities and Exchange Board of India, reaches the registered office of the company for inspection of the books of account without any prior notice or appointment. Can the officer be allowed to take inspection? (d) A shareholder wants to inspect the books of account of the company. Can he do so? [4 x 4 = 16 marks]

Q 8. State, with reasons, whether the following statements are true or false: (i) A director must be a member of the company. (ii) Minimum five persons are required for formation of a public company. (iii) A company having profits must declare at least 10% dividend. (iv) Proxy has no right to speak. (v) A chairman has right of casting vote. [3+3+3+3+4 = 16 marks]

ICSI - Intermediate Examination New Syllabus

Group II - Paper 5 - Company Law

December 2002

Answer 6 questions including question No.1, which is compulsory.

Q. 1 Navneet, a retired bureaucrat, has been appointed as a chairman of the Healthy Life Ltd., engaged in medicare business. As he has no background in corporate affairs, he asks you as the company secretary of the company to provide him with a self-explanatory note on any five of the following- (i) Relevance of the memorandum of association and the articles of association to the company. (ii) Relevance of the memorandum of association and the articles of association to the members. (iii) Types of resolutions that a company can pass for transacting various items of business. (iv) Rights of the members of the company in regard to general meeting of the company. (v) Officer in default. (vi) Managing director and his legal relation with the chairman of the company. [5 marks each]

Q. 2 Answer the following with reasons: (i) The Board of directors of Experiment Ltd. appointed Harish as managing director in the Board meeting held on 1st January, 2001 for 3 months complying with Schedule XIII of the Companies Act, 1956. Harish has ceased to be a managing director with effect from 31st March, 2001. As a result of his exit as a managing director, the Board had then appointed Atal as the managing director in the Board meeting held on 31st March, 2001, with effect from 1st April, 2001. The company ratified the appointment of both these persons as managing director for the relevant periods in the next annual general meeting of the company held on 20th September, 2001. Whether the appointment of Harish as the managing director required any ratification as he has already ceased to be the managing director? (ii) Relying on the judgment of the Delhi High Court in Edward Keventor Successors Pvt. Ltd. Vs. Krishna Kumar Sud, delivered in 1968, Modern Ltd. maintained its minutes in computer generated print-outs and bound them regularly every two years. Do you think, having regard to the provisions of sections 193 and 194 of the Companies Act, 1956, maintenance of minutes in such a manner is in order and should be acceptable to all the courts? (iii) A listed public company, in its Board meeting held on 1st October, 2001, declared an interim dividend of 10% on its paid-up equity share capital, fixing the record date as 30th October, 2001 for the purpose. The company had also notified the stock exchange at which the shares are listed in time about the declaration of the said interim dividend. The company decided to make the payment of the interim dividend by premature encashment of certain fixed deposits and started sending dividend warrants from 15th October, 2001 after getting credit for the deposits in its current account with the same bank which issued the deposit certificates. Whether the above are in compliance with the applicable provisions of the Companies Act, 1956? Is the fixation of record date in accordance with the stock exchange listing requirements? [5 x 3 = 15 marks]

Q. 3 (a) A private limited company, not being a subsidiary of any body corporate, wishes to incorporate in its articles of association the power to issue shares with differential rights of widely varying nature. Draft the proposed clause for inclusion in the articles of association empowering issue of these shares and stating at least two variations in the rights attached to these shares. (b) A public limited company desires to invite deposits from the public. Draft an advertisement to be published in the newspapers with assumed facts and figures for this purpose.  [5+10 = 15 marks]

Q. 4 Outline the requirements of the Companies Act, 1956 in regard to conduct of annual general meting, giving at least three matters which can be decided in the manner prescribed without being discussed in the meeting. [15 marks]

Q. 5 (a) Directors’ responsibility statement is a new feature recently introduced in the Companies Act, 1956. State – (i) the objective of the above statement. (ii) the contents of this statement. (iii) where this statement is to figure. (b) It is said that a company secretary plays a pivotal role in the proper functioning of a company. Discuss briefly the role of a company secretary in the matter of compliance with statutory requirements of the company in which he is employed as an officer, citing three major matters for such compliance. (c) How is the term ‘employees stock option scheme’ (ESOS) defined in the Companies Act, 1956? Is it different in the SEBI’s guidelines on ‘employees stock option scheme’ (ESOS) and employees stock purchase scheme (ESPS) issued in 1999? Answer should be backed by brief reasons. [5+5+5 = 15 marks]

Q. 6 (a) (i) What is meant by ‘transmission of shares’? (ii) Is the family arrangement a transfer of shares? Is it necessary for parties who are close relatives to require succession certificate to establish a valid title to shares of a company on the demise of the holder of such shares? (iii) A transfer deed was executed by the mother of a minor as his natural guardian and the company had registered the transfer of shares covered by the transfer deed. Now, the minor’s father requests the company to substitute the name of minor’s mother with his name. The company expresses its inability. What is the remedy available to the father of the minor? (b) A newly incorporated public company investing about Rs. 500 crore in an infrastructure project wants to know whether its members can be given any ‘return on the capital’ contributed by them as the project will require at least three years to become operational. Advise the company. [9+6 = 15 marks]

Q. 7 (a) Demonstrate how the shareholders’ democracy is aided by express provisions of the Companies Act, 1956. Give three examples. (b) Certain share certificates were lodged with a company for registering transfer by the transferee. These share certificates were duly accompanied by transfer deeds. The company registered the transfer. After some period, the company received a latter from the transferor that the share certificates are missing from his office. Meanwhile, a further share transfer request was received by the company in respect of some of the aforesaid share certificates accompanied by a transfer deed executed by the previous transferee for a valid consideration. On close verification, the company came to know that the previous transfer was effected on the basis of a forged transfer deed. The company does not know how to deal with the situation. Advise the company. (c) A finance company lent a certain sum of money to Modern Garments Ltd., a company manufacturing garments, at an agreed rate of interest, to be repaid as per the schedule attached to the loan agreement. The borrowing company made payments of the first three instalments contained in the schedule and thereafter could not make any payment due to its working capital problem. The lending company sent registered letters to the borrowing company demanding the payments. It is contented by the borrowing company that the lending company agreed in a meeting to accept shares of the borrowing company in settlement of the unpaid balance of the loan and accrued interest. Thereupon, the borrowing company allotted shares to the lending company and sent the share certificates to that company by registered post. The lending company seeks to get the register of members of the Modern Garments Ltd. rectified and contends that it never applied for any shares in the borrowing company and it wan just unilateral allotment. Will the lending company succeed? [5 marks each].

Q. 8 (a) (i) Is a co-operative society a body corporate?  Answer with brier reasons. (ii) What is a multi-State co-operative society? (iii) Can a dispute among the members of a multi-State co-operative society be entertained by any court of law in the country?  (b) State the steps necessary to get a society registered under the Societies Registration Act. 1860. (c) (i) A tribal chief having no legal heir wants to create a public charitable trust for upliftment of the educational level among his co-tribals. Can he do so? (ii) A will was made to create a trust for building a temple, where the family idol of the person making the will is to be installed. The person making the will named his sons and daughters as trustees of the proposed trust and earmarked a specified sum for the trust. Any income arising out of the sum specified for the trust is to be utilized only for the purposes of the temple which will be open to all irrespective of caste, sex or religion. State with reasons whether this trust will be a public charitable trust or a private trust. [5+5+5 = 15 marks]

Group II - Paper 6 - Company Secretarial Practice

December 2002

Answer 6 questions including question No.1, which is compulsory.

Q. 1 (a) Specify in detail the steps to be taken for incorporation and commencement of business of a public limited company having share capital. (b) Following documents were placed for approval as per agenda before the Board meeting, attended by all the directors and auditors of XYZ Ltd. – Draft directors’ report. – Balance sheet for the year ended 31st March, 2002. – Draft auditors’ report as prepared by auditors based on the audit conducted for the year ended 31st March, 2002 and to be signed by the auditors soon after the annual accounts are approved by the Board and duly signed. – Statement in lieu of advertisement to be filed with the Registrar of Companies in connection with public deposits. XYZ Ltd. has seven directors comprising of a chairman and managing director (CMD), a whole-time director, a finance director (FD) and four independent directors. While discussing these documents at the meeting, one of the directors suggested as follows: (i) CMD and Company Secretary to sign the directors’ report; (ii) CMD, FD and Company Secretary to sign the balance sheet; (iii) FD or Company Secretary to countersign the auditor’s report; and (iv) The directors present at the meeting to sign the statement in lieu of advertisement. As the Company Secretary of the XYZ Ltd., comment on the above suggestions. [12+8 = 20 marks]

Q. 2 As the Company Secretary of Big Brothers Ltd., an Indo-Swedish joint venture listed on the stock exchange and with 70% Swedish equity participation, advise the Board of directors on the following matters: (i) Appointment of Smart, a member of the company’s Board of directors and an expatriate, as the managing director of the company. Smart has been sent to India by the Swedish company only about a fortnight back, after concluding a memorandum of understanding with the Indian joint venture partner; (ii) Acceptance of public deposits; (iii) Appointment of Kapil as an additional director; and (iv) Retiring auditor not seeking re-appointment. [4 x 4 = 16 marks]

Q. 3 Explain the purpose, contents, time limit for filing and other relevant aspects, if any, relating to the filing of the following forms under the Companies Act, 1956 : (i) Form No. 8 (ii) Form No.18 (iii)  Form No. 23 (iv) Form No. 29 (v) Form No. 32 [3+3+3+3+4 = 16 marks]

Q. 4 (a) Explain the legal and procedural requirements in regard to poll at an annual general meeting. (b) A listed company desires to buyback 9.5% of its paid-up capital and free reserves. List out the steps to be taken to effect this decision. [8+8 = 16 marks]

Q. 5 (a) What are the steps involved in ‘dematerialisation’ and ’rematerialisation’ of shares? (b) What are ‘registerable charges’? Explain the procedure for registration of charges under the Companies Act, 1956. [8+8 = 16 marks]

Q. 6 Draft specimen resolutions for transacting any four of the following items of business indicating the kind of meeting at which each resolution is to be passed and the type of resolution with majority required: (i) To lease an undertaking of a listed company. (ii) To appoint an alternate director. (iii) To increase the number of directors from existing 8 to 15 directors. (iv) To borrow in excess of the paid-up capital and free reserves, where free reserves constitute just 15% of the paid-up capital. (v) To change the name of the company. [4 marks each i.e. 16 marks]

Q. 7 (a) PQR Ltd., having paid-up capital of Rs. 50 lakh, entered into a contract with company XYZ Ltd., in which director Dev was holding 20% shares. The director did not disclose his interest at the time of approval of the contract by the Board. How would you deal with this situation? (b) Anand, who was appointed as an additional director of a public limited company for the first time, filed his consent with the company. He also signed his consent in the prescribed form and delivered the same to the company for filing it with the Registrar of Companies. Due to inadvertence, the said form was not filed within the stipulated time limit. State the course of action that you would take in this regard. (c) Director-X and Director-Y of A Ltd. hold 0.5% and 1.25% of paid-up capital of B Pvt. Ltd. respectively. Z, a relative of Director-X, also hold in aggregate of 0.5% paid-up capital of B Pvt. Ltd. Other than these, no other director/relative of director of A Ltd. holds shares in B Pvt. Ltd. When A Ltd. considers a proposed contract with B Pvt. Ltd., advise whether Director-X or Director-Y or both the directors should disclose interest. (d) Mohan and Sohan jointly hold 5% of equity shares of Kirtiman Ltd., a public unlisted company which has adopted Table A as its Articles. They appointed P1 and P2 respectively as proxies to attend the 26th annual general meeting of the company. How