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Question Paper

Corporate & Other Laws Duration: 65

Details: Test- 1 Marks: 35

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Q-1 The paid-up share capital of Altar Private Limited is Rs.1 crore, consisting of 8 lacs Equity
Shares of Rs.10 each, fully paid-up and 2 lacs Cumulative Preference Shares of Rs.10 each,
fully paid up. New Private Limited and Ultra Private Limited are holding 3 lacs Equity Shares
and 50,000 Equity Shares respectively in Altar Private Limited. New Private Limited and Ultra
Private Limited are the subsidiaries of PQR Private Limited. With reference to the provisions
of the Companies Act, 2013 examine whether Altar Private Limited is a subsidiary of PQR
Private Limited? Would your answer be different if PQR Private Limited has 8 out of 9
Directors on the Board of Altar Private Limited?

(4 Marks)

Q-2 Sound Syndicate Ltd., a public company, its articles of association empowers
themanaging agents to borrow both short and long term loans on behalf of the company,
Mr.Liddle, the director of the company, approached Easy Finance Ltd., a non-bankingfinance
company for a loan of Rs.25,00,000 in name of the company.The Lender agreed and
provided the above said loan. Later on, Sound Syndicate Ltd.refused to repay the money
borrowed on the pretext that no resolution authorizingsuch loan have been actually passed
by the company and the lender should haveenquired about the same prior providing such
loan hence company not liable to pay such loan.Analyse the above situation in terms of the
provisions of Doctrine of Indoor Managementunder the Companies Act, 2013 and examine
whether the contention of Sound SyndicateLtd. is correct or not?

(4 Marks)

Q-3 The Board of Directors of Sindhu Limited wants to make some changes and to alter
some Clauses of the Articles of Association which are to be urgently carried out, which
include the increase in Authorized Capital of the company, issue of shares, increase in
borrowing limits and increase in the number of directors. Discuss about the provisions of
the Companies Act, 2013 to be followed for alteration of Articles of Association.

(4 Marks)
Q-4 With a view to issue shares to the general public a prospectus containing some false
information was issued by a company. Mr. X received copy of the prospectus from the
company, but did not apply for allotment of any shares. The allotment of shares to the
general public was completed by the company within the stipulated period. A few months
later, Mr. X bought 2000 shares through the stock exchange at a higher price which later on
fell sharply. X sold these shares at a heavy loss. Mr. X claims damages from the company for
the loss suffered on the ground the prospectus issued by the company contained a false
statement. Referring to the provisions of the Companies Act, 2013 examine whether X’s
claim for damages is justified.

(4 Marks)

Q-5 Examine the validity of these allotments in the light of the provisions of the Companies
Act, 2013

(i) Mars India Ltd. owed to Sunil Rs. 1,000. On becoming this debt payable, the company
offered Sunil10 shares of Rs. 100 each in full settlement of the debt. The said shares were
fully paid and were allotted to Sunil.

(ii) The Board of Directors of Reckless Investments Ltd. have allotted shares to the investors
of thecompany without issuing a prospectus with the concerned Registrar of Companies.
Explain the remedy available to the investors in this regard

(4 Marks)

Q-6 Parag Constructions Limited is a leading infrastructure company. One of the directors of
the company Mr. Parag has been singing all construction contracts on behalf of company for
many years. All the parties who ever deal with the company know Mr. Parag very well.
Company has got a very important construction contract from a renowned software
company. Parag constructions will do construction for this site in partnership with a local
contractor Firoz bhai. Mr. Parag signed partnership deed with Firoz bhai on behalf of
company because he has an implied authority. Later in a dispute company denied to accept
liability as a partner. Can the company deny its liability as a partner?

(5 Marks)

Q-7 MCQs

(I) CASE STUDY BASED MCQ: -

(2 Marks each × 3 = Total 6 Marks)

XYZ Limited (Trading Company) a listed company, having sound financial track records
decided to invite the public to subscribe its equity share capital and to make deposits with
the company. As an innovative methods of raising funds, the company issued a prospect on
6th January 2020 which did not include complete particulars of the quantum or price of the
equity shares and which did enable the merchant bankers handing the public offer to test
the demand for the equity shares. The Company being eligible company for acceptance of
public deposit obtained the prior consent by means of a special resolution in general
meeting and filed the said resolution with the Registrar of Companies (ROC). Thereafter the
company invited the public to make deposits by way of Advertisement in the newspaper.
The prospectus issued on 6th January 2020 was filed with ROC. It was proposed to open the
offer of equity shares on 7th February, 2020. Again, a prospectus was issued indicating the
size, price, terms & conditions, highlights of the variations with the prospectus issued on 6th
January, 2020. Upon closing the offer of equity shares, the due diligence was compiled by
the company.

(1) The Prospectus issued on 6th January, 2020 shall be filed with

(a) Register of Companies on or before 4th February, 2020

(b) Register of Companies on or before 3rd February, 2020
(c) Securities and Exchange Board of India SEBI on or before 4 th February, 2020
(d) Registrar of Companies and SEBI on or before 3rd February, 2020
(2) In order to be eligible to accept the public deposit XYZ Limited shall have ________

(a) Net worth of not less than one hundred crore rupees or turnover of not less than
five hundred crore rupees
(b) Net worth of not less than ten crore rupees and turnover of not less than one
hundred crore rupees
(c) Turnover of not less than two hundred crore rupees
(d) Net profit of not less than one hundred crore rupees

(3) The prospectus issued on 6th January, 2020 is called-

(a) Shelf Prospectus

(b) Red Herring Prospectus
(c) Information Memorandum
(d) Abridged Prospectus

(II) GENERAL MCQs:-

(4) Rajesh has formed a ‘One Person Company (OPC)’ with his wife Roopali as nominee. For
the last two years his wife Roopali is suffering from terminal illness and due to this hard fact
he wants to change her as nominee. He has a trusted and experienced friend Ramnivas who
could be made nominee or his (Rajesh) son Rakshak who is of seventeen years of age.
Whom should he nominate as nominee in place of his wife?

(a) Since blood relation can only be appointed as nominee in case of OPC, Rajesh needs
to appoint his son Rakshak.
(b) Rajesh can appoint his friend Ramnivas as nominee in his OPC.
(a) (C) Roopali is not agreeable to the proposal of Rajesh and hence, Rajesh cannot
change her as the nominee
(c) Either Rakshak or Mr. Ramnivas can be appointed as nominee.
(5) Swastik Pvt Ltd passed a special resolution to change its name to Swastik Darshan
Limited on 30th May, 2017. Relevant MCA filing was done on due time and then Company
got its new stationery printed on 1st July, 2017. However, there was a delay in issue of
certificate and Company received new certificate on 20th August, 2017 which was issued on
10th August, 2017. Company wants to enter into a lease agreement for new premise. When
they can do such agreement in new name of Company?

(a) 30th May, 2017

(b) 1st July, 2017
(c) 20th August, 2017
(d) 10th August, 2017

(6) Feel Rich Co. Ltd. Having its registered office at New Delhi, is a subsidiary of a German
company named Richman Company limited. The financial year of the parent/holding
company ends on 31st December every year. The subsidiary company intends to follow a
different financial year for consolidation of its accounts with its parent company, situated
outside India. For doing so it is required to take prior permission of the competent
authority. For the purpose from the following who will be this competent authority-

(a) Registrar of Companies at New Delhi

(b) Tribunal
(c) Central Government
(d) SEBI

(7) A, B, C, D, E, F, G want to incorporate a public limited company. However, G wants his

private limited company to be its member instead of himself. Following this proposition of
G, D also wants his registered partnership firm to be its member instead of himself.

(a) Both G and D are required to sign the Memorandum of newly formed company in their
individual capacity and not through their concerns.
(b) Private Limited Company of G can be the subscriber to the Memorandum of newly
formed company but D has to sign the Memorandum in his individual capacity.

(c) Both G and D have to obtain the consent of other five persons in writing before their
private limited company and partnership firm subscribe to the Memorandum.

(d) Private Limited Company of G cannot be the subscriber to the Memorandum of newly
formed company but registered partnership firm of D can be the subscriber to the
Memorandum.

(1 Marks each × 4 = Total 4 Marks)