Company Law Prospectus & Incorporation Question Paper 1

MEPL CLASSES
COMPANY LAW
WEBSITE – www.meplclasses.com
MAIL-ID – [email protected]
ADDRESS – 59, JATINDRA MOHAN AVENUE, SOVABAZAR, KOLKATA– 700005
(TIME ALLOTED – 90 MINUTES) (MARKS ALLOTED – 60 MARKS)
EACH QUESTION CARRIES 5 MARKS
Question 1.
Parag Constructions Limited is a leading infrastructure company. One of the directors of the company
Mr. Parag has been signing 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 Firozbhai. Mr. Parag signed
partnership deed with Firozbhai 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?
Question 2.
The Board of Directors of Chandra Mechanical Toys Limited proposes to issue a prospectus inviting
offers from the public for subscribing to the equity shares of the Company. State the reports which
shall be included in the prospectus for the purposes of providing financial information under the
provisions of the Companies Act, 2013.
Question 3.
Explain in the light of the provisions of the Companies Act, 2013, the circumstances under which a
subsidiary company can become a member of its holding company.
Question 4.
How does the Companies Act, 2013 regulate and restrict the following matters in respect of a
company going for public issue of shares:
(i) Minimum Amount stated in the Prospectus; and
(ii)Application Money payable on shares.
Question 5.
Manglu and friends got registered a company in the name of Taxmann advisory private limited.
Taxmann is a registered trademark. After 5 years when the owner of trademark came to know about
the same, it filed an application with relevant authority. Can the company be compelled to change
its name by the owner of trademark? Can the owner of registered trademark request the company
and then company changes its name at its discretion?
Question 6.
Examine the validity of the following statement with reference to the provisions of the Companies
Act, 2013. The Articles of Association of X Limited contained a provision that the underwriting
commission may be paid up to 4% of the issue price of the shares. However, the Board of Directors
have decided to pay the underwriting commission of 5% to Deal & Co., the underwriters."
Question 7.
Yadav dairy products Private limited has registered its articles along with memorandum at the time
of registration of company in December, 2019. Now directors of the company are of the view that
provisions of articles regarding forfeiture of shares should not be changed except by a resolution of
90% majority. While as per section 14 of the Companies Act, 2013 articles may be changed by passing
a special resolution only. One of the directors said that they cannot make a provision against the
Companies Act. You are required to advise the company on this matter.
Question 8.
Explain various instances which make the allotment of securities as irregular allotment under the
Companies Act, 2013.
Question 9.
PQR Bakers Limited wants to raise funds for its upcoming project. Accordingly, it has issued private
placement offer letters for issuing equity shares to 55 persons, of which four are qualified
institutional buyers and remaining are individuals. Before the completion of allotment of equity
shares under this offer letter, company issued another private placement offer letter to another 155
persons in their individual names for issue of its debentures.
Being a public company is it possible for PQR Bakers Limited to issue securities under a private
placement offer? By doing so, whether the company is in compliance with provisions relating to
private placement or should these offers be treated as public offers? What if the offer for debentures
is given after allotment of equity shares but within the same financial year?
Question 10.
Unique Builders Limited decides to pay 2.5 percent of the value of debentures as underwriting
commission to the underwriters but the Articles of the company authorize only 2.0 percent
underwriting commission on debentures. The company further decides to pay the underwriting
commission in the form of flats. Examine the validity of the above arrangements under the
provisions of the Companies Act, 2013.
Question 11.
What is a Shelf-Prospectus? State the important provisions relating to the issuance of Shelf-
Prospectus under the provisions of the Companies Act, 2013 and the Companies (Prospectus and
Allotment of securities) Rules, 2014.
Question 12.
Explain the provisions of the Companies Act, 2013 relating to the ‘Service of Documents’ on a
company and the members of the company.

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