COMPANY LAW Time allowed: 3 hours Maximum marks: 100 Total number of questions: 6 Total number of printed pages: 6 NoTi 1. Answer ALL Questions. 2. All references to sections relate to the Companies Act, 2013 unless stated otherwise. 1, Comment on the followin: [a) Ajay. Sanjay & Vijay LLP was formed in 2012. It was observed that the LLP filed Statement of account & Solvency for year ended 31st March, 2013, 31st March 2014, 31st March, 2015 and 31st March, 2016 while filing status of Its annual returns are up-to-date since the formation However, Sanjay and Vijay resigned from the position of partners 4 months ago Le. on 31st July, 2018. The Tribunal has served a notice on the LLP to wind up its business. ‘As per Section 64 of LLP Act, 2008; LLP may be wound up by Tribunal; (a) If LLP decides that LLP be wound up by Tribunal, (b) If, for a period of more than 6 months, the number of partners of LLP is reduced below two; (c) if LLP is unable to pay its debt; (a) if LLP has acted against the interest of the sovereignty and integrity of India, the security of state or public order; (c) if LLP has made a default in filling with Registrar the Statement of Account and Solvency or Annual Return for any 5 consecutive financial years or (8 if Tribunal is of the opinion that it is just and equitable that LLP be wound up; ‘Thus, it can be said that Tribunal has the power to wind up the LLP if number of partners are reduced below for more than 6 months. But in the current situation, number of partners are reduced below two, four months ago and six months has not yet lapsed. Hence, the tribunal cannot serve the notice to wind up the business of LLP before the expiry of 6 months as also the filling status is up to date {b) Banking and insurance companies are exempted from certain financial disclosures under the Companies Act, 2013. Section 129 (1) states that the financial statements shall give a true and fair view of the state of affairs of the company or companies, comply with the accounting standards notified under section 133 and shall be in the form or forms as may be provided for different class or classes of companies in Schedule Il ‘The proviso to Section 129(1) states that nothing contained in this 129(1) shall apply to any insurance or banking company or any company engaged in the generation or supply of electricity, or to any other class of company for which a form of financial statement has been specified in or under the Act governing such class of company. Further the financial statements shall not be treated as not disclosing a true and fair view of the state of affairs of the company, merely by reason of the fact that they do not disclose— (a) in the case of an insurance company, any matters which are not required to be disclosed by the Insurance Act, 1938, or the Insurance Regulatory and Development Authority Act, 1999; (b) in the case of a banking company, any matters which are not required to be disclosed by the Banking Regulation Act, 1949;CS EXECUTIVE fCSsCca rtIndia OLD/ NEW SYLLABUS One Stop Solution for CS Students JUNE 2019 RS. 1000/- OFF CA. AMIT TALDA eee Only © WWW.CSCARTINDIA.COM(c) in the case of a company engaged in the generation or supply of electricity, any matters which are not required to be disclosed by the Electricity Act, 2003; (d) in the case of a company governed by any other law for the time being in force, any matters which are not required to be disclosed by that law. ‘Thus, Banking & Insurance Companies are not required to prepare their financial statements as per Schedule Ill of Companies and also not required to follow Accounting Standards notified under Companies Act, 2013. [¢) Aarav Ltd. (a listed company) is having an audit committee consisting of six directors and the Board of Directors of the Company consists of eight directors of which three are independent directors. As a Practicing company secretary, clarify whether Aarav Ltd. has complied with the requirement of appointment of independent directors with regard to Audit Committee. As per Section 177(2) of Companies Act, * Audit Committee shall consist of a minimum of three directors. * Independent directors should form a majority. (Not applicable for Section 8 companies vide notification no. GSR 466(E), dated 5-6-2015). * Majority of members of Audit Committee including its Chairperson shall be persons with ability to read and understand the financial statements. Applying the above provisions, An Audit Committee of 6 directors must have at least 4 Independent Director to form a Majority. However, Aarav Ltd has only 3 Independent Directors, Hence, the requirement of appointment of Independent Directors with regard to Audit committee is not proper. [d)X is a shareholder of Company A. At the AGM held on 27th Sep. 2018, Company A declared a Dividend of € 20 per equity share. X wrote to the company saying that he does not want to take the dividend and advised the company not to send the dividend amount. Comment whether the waiver of dividend by X is tenable under the provisions of the Companies act, 2013? (5 marks each) Companies Act, 2013 does not contain any specific provision regarding waiver of dividend by a shareholder. Law does not specifically allow or provide for the procedure for waiving dividend. But it is pertinent to note that Law also does not prohibit a Shareholder from waiving his dividend. Hence, if Articles of Association has the requisite power then company may accept the waiver of Dividend by Shareholders in writing Presently, there is no legislation in India which deals with such a scenario. However, certain companies like Sun Pharmaceutical Industries Limited (“Sun Pharma”) have exercised the option of dividend waivers. A dividend waiver is considered to be a gratuitous act and should be executed without in return for anything. The Articles of Association of the company must contain a clause in regard to this where the shareholder has the right to waive the right to receive dividend, either final or interim, to which it is entitled, on some or all the shares held in the company. Now, the question arises as to when can a shareholder exercise his right to waive dividend in case of final or interim dividends. In the case of interim dividend, right to claim dividend will only arise once it has been declared by the board of directors of the company. Normally the directors have authority to pay an interim dividend without reference to the shareholders. If the directors resolve to pay an interim dividend, that resolution gives no rights to the