NPA

Answer ALL Questions. Time 3 hours

1. (a)The Articles of Association of M/s XYZ Limited states that all the company documents needs to be signed
by the MD, Company secretary and executive director on behalf of the company. A mortgage deed was
executed by the secretary and executive director. Determine its enforceability against the company
(4 marks)

(b). Mr. Raj who is a resident of Bengaluru, sent a Transfer Deed for registration of transfer of shares, to the
company at the address of its registered office in Delhi. He did not receive the share certificates even after
the expiry of six months from the date of dispatch of transfer deed. He lodged a criminal complaint in the
court at Bengaluru. Decide under the provisions of the Companies Act, 2013, whether the court at Bengaluru
is competent to take action in the said matter ? (4 marks)

(c). The Board of directors of ZED Ltd. (Listed Company) is actively considering a proposal to buy back its shares.
Naveen has recently joined the Board as an Additional Director. You are the senior partner of a firm of
Company Secretaries and Naveen has sought your views, if there is any requirement for filing Declaration of
Solvency by the company with any regulatory authority and particulars thereof. Also, what would be the
time gap between two buy-backs. Advise Naveen in the light of the provisions of the Companies Act, 2013.
(4 marks)

(d) While sanctioning working capital limits, the rate of interest has been fixed at a specified percentage above
the bank rate as notified by the Reserve Bank of India (RBI). But later on, there was a change in the interest
rate due to RBI notification. Thelending bank insisted on filing necessary documents and forms for
modification of charge under section 79 of the Companies Act, 2013. Decide if the claim of the lending bank
is tenable.
(4 marks)

(e) ARC Finance and Investments Ltd (ARCFIL) registered with the RBI under Section 45-IA of the RBI Act as a
non-banking finance company (NBFC), has about ` 100 crore of debenture maturing in the current year
which was issued 5 years before as a public offer. What is the debenture redemption reserve (DRR) to be
created by such a company ? In case ARCFIL is a listed company and the above amount was obtained by
privately placed debentures, what is the DRR to be created now ? (4 marks)

2. (a) Green Commercial Ltd., an unlisted company, has made a preferential offer of shares for
consideration other than cash. A question has been raised by the accounts department as to the valuation
of consideration at allotment and the manner of treatment of noncash consideration in books of account.
As a practising company secretary advise the company with reference to the provisions of the Companies
Act, 2013. (3 marks)

(b) What would be the status of AV Pvt. Ltd. under the Companies Act, 2013, if TV Ltd. has appointed six (6) out
of ten (10) directors on the Board of AV Pvt. Ltd. by exercising some powers at its discretion ? (3 marks)
(c) In a case pertaining to oppression and mismanagement, the respondents pleaded that the legal heirs of a
deceased member whose name is still on the register of members are not entitled to apply before Tribunal,
as only member of the company can complain about oppression and mismanagement. Thus, legal heirs have
no locus standi. Examine this argument in the light of decided cases.
(3 marks)

(d) ln October 2020, Tarun deposited ` 100000 for a term of three years with Fun Ltd., an unlisted company.
Tarun seeks your advice on the following :
(i) He has an emergency in August 2021, for which he needs to withdraw the above funds
immediately. Will he get the amount along with accrued interest without any deduction ?
(ii) Suppose, if during February 2021, the Reserve Bank of India (RBI) declared the deposit scheme of
Fun Ltd. as invalid as the company had paid brokerage in excess of the limits prescribed by the RBl.
Will he get the amount along with accrued interest without any deduction ?
(3 marks)

(e) Subhash is a debtor as well as a member of JUMBO Ltd., a listed company. The company declares a dividend
of ` 2500 on the shares owned by Subhash and proposes to adjust the said amount against the debt of ` 5000
due from him. ls this adjustment valid ? Would your answer differ if JUMBO is a Private limited company ?
(3 marks)

Q.3 (a) Red Entertainment Ltd. received a transfer deed for registration of transfer of shares to Sakshi,
daughter of Arun. After registering the transfer, the company sent the certificate to another Sakshi,
daughter of Barun. The Sakshi, daughter of Barun, refused to part with share certificate and pledged the
certificate to Pyramid Bank. Discuss the remedy, if any, available to Sakshi, daughter of Arun, in this case.
(5 marks)

(b) The Board of Customer last Limited, an unlisted public company is exploring ways to increase its paid-up
share capital from ` 125 crore to ` 150 crore. The CFO of the company suggested that instead of offering
shares to all existing shareholders as a rights issue the company can issue further shares by private
placement to four identified Qualified Institutional Buyers and the top 250 existing shareholders by
receiving cash without offering shares to other shareholders.
The company secretary of the company objects to the manner of raising further capital, i.e. the offerings to
the select shareholders as well as receiving cash. Referring to the provisions of Companies Act, 2013 decide
(5 marks)

(c) Mercury Limited is incorporated in USA and having its registered office in Los Angeles. Board of directors of
Mercury Limited taken a decision to merge Mercury Limited with Mars Limited, a company incorporated in
India having its registered office in New Delhi. Referring to the provisions of the Companies Act 2013, advise
the Board of directors of Mercury Limited for Merger. (5 marks)

Q.4 (a) The issued, subscribed and paid up capital of Trustwell HR Solutions Ltd. is ` 5 lakh consisting of
45,000 equity shares of ` 10 each fully paid up and 5,000 preference shares of ` 10 each fully paid up. Out of
members of the company, 400 members holding one preference share each and 50 members holding 500
 equity shares applied for relief from oppression and mismanagement under the Companies Act, 2013. The
company had 300 equity shareholders and 2,500 preference shareholders as per information obtained from
its register of members. State if the above petition is maintainable under the Companies Act, 2013
(5 marks)

(b) Net India Ltd. has been under investigation by the Central Bureau of Investigation (CBI) in the public
interest. However the investigation was assigned by central government to Serious Fraud Investigation
Office (SFIO). The CBI continued to carry out the investigation contenting that it had superseding powers
over the SFIO. Will CBI be justified in its contention (5 marks)

(c) Under what circumstances may the National Company Law Tribunal (NCLT) order an investigation of a
company under S. 213 of the Cos. Act, 2013 ? What is the security, if any, required to be provided by the
applicants towards the cost and expenses of such investigation ? Is it refundable ? (5 marks)

OR
Q.4A (a)The share capital of Raney Ltd. is ` 30 crore. ‘Russel’ is appointed as the managing director of the
company, the company wants to compensate him by issue of shares for supplying technical know-how
without any cost. In this context, answer the following :
(i) Whether the company is allowed to allot such shares ?
(ii) Is approval of shareholders required for issuing such shares ?
(iii) If found eligible to allot such shares, what will be the quantum (value) of shares that can be
allotted ?
(iv) Can Russel sell such allotted shares in the market ?
(v) Will the amount that he receives on sale of his shares be considered a part of his remuneration ?
(5 marks)

(b) 1000 shares of a company are presently held jointly by A, B and C their names appearing in the share
certificates in this order. The joint shareholders want a transposition of the names in the order C, B and A.
Can it be effected ? Explain the procedure. Will your answer be different if the changes were required to be
made only in respect of 500 shares ? (5
marks)

(c) A person holds 90% of the issued shares of a company. He wants to acquire the balance 10% of the shares
from the existing shareholders. As a Company Secretary in practice, advise him. (5 marks)

Q.5 (a)Advise the Board of directors of Clean Ltd. regarding appointment in the following scenarios :
(i) Can Ram who is already director of Clean Ltd. be appointed as Chief Executive Officer (CEO) or
Chief Financial Officer (CFO) of the same company ?
(ii) Is it possible to appoint Ram as Managing director of Clean Ltd. when Shyam is already a Manager
of the same company ? (5 marks)

(b) Shortwalkers Limited was a listed company operating fitness centres all over India. In their Meeting on 1st
April, 2022 the Board of directors of the company approved purchase of gym equipment for ` 75 crore from
 Fitness Solutions (Private) Limited a company managed by Anita, wife of Sunil, the CFO of Shortwalkers
Limited. The annual turnover of Shortwalkers Limited for the last financial year is ` 500 crore.
The entire shareholding of Fitness Solutions (Private) Limited was held by Anita and two other directors. In
his report to the shareholders of Shortwalkers Limited, the auditor of the company made adverse remarks
on the transaction stating that the approval of the Audit Committee and special resolution were not
obtained before approving the deal. The Board, in their report to the shareholders remarked that the
purchase transaction was at arm’s length price and Sunil, was not a related party and approval of audit
committee and the shareholders was not necessary.
Referring to provisions of Companies Act, 2013, examine the submissions of the Board. (5 marks)

(c) The CFO of a well-known public company (one among top 20 listed companies) suggested to the Board of
directors to constitute a Risk Management Committee with only the CFO and General Manager (HR) as its
members. The Company Secretary of the company, however insisted that he should not only be included in
the Risk Management Committee but should also be made the chairman of the committee as he is well
versed in corporate laws. Referring to the provisions of Companies Act, 2013 and the Relevant Rules,
examine the proposal. (5 marks)

(d) With respect to E-Voting, explain the following :

Q.6 (a) Jyoti Prasad obtained two (2) Director Identification Number (DINs) by mistake in 2016 and 2019.
He used his second DIN to become director in two private limited and three public limited companies. Later,
on realisation, he applied to Registrar of Companies for deactivation of his first DIN. The Registrar rejected
the application. Examining relevant legal provisions, discuss. (5 marks)

(b) Sigma Ltd is an unlisted company with a paid up capital of ` 6 Crore and annual turnover of ` 55 Crore. The
company filed its annual return with the ROC within sixty days from the date of AGM duly signed by the
Director Finance only. Is there any lapse in compliance with Section 92 of Companies Act, 2013 ? Comment.
(5 marks)
(c) ABC Ltd is a company where 40% of share capital is held by Central Government, 40% by Uttar Pradesh
Government and 10% each by LIC and ONGC. During secretarial audit it was noticed that the company has
not maintained a register pertaining to particulars of directors and their shareholding. Directors argued that
being a government company, provisions of Section 170 are not applicable and hence no wrong has been
committed. Are the directors right ? (5 marks)

(d) Rajeev and his wife Surekha are the only two directors of Rajsur Pvt. Ltd. Rajeev went abroad for two
months. Before going abroad, he registered a general power of attorney in favour of his son Ranbeer, aged
21 years, to execute all documents on his behalf as an individual as well as director of Rajsur Pvt. Ltd.
Ranbeer signed a contract on behalf of Rajsur Pvt. Ltd. by exercising his power of attorney. Is this contract
binding upon the company ? (5 marks)
Q.6A (a) Owing to the resignation of Prashant, Managing Director of Beauty Herbals Ltd. on 15th October,
2019, the company appointed one of its Senior Deputy General Manager Kristina Kelly, aged 26 years and a
Canadian citizen as its Managing Director with effect from 1st November, 2019 at a meeting of the Board of
Directors held on 31st October, 2019. Kristina Kelly came to India for the first time for the purpose of taking
up employment in India on 1st January, 2018. She got appointed in the Company on 1st April, 2018. From
1st December, 2018 she was sent for a training program for 6 months and she returned to India on 1st June,
2019. Advise the management of the company whether her appointment by the Board of Directors is valid
and if any further compliances are required to validate her appointment. (5 marks)

(b) The Chairman of the Board of Directors of Jagruti Printers Ltd. has sent a draft of Resolution along with
necessary papers to all the ten directors of the company to get it passed through a resolution by circulation.
The last date for signifying the assent or dissent is 20th November, 2019. On 15th November, 2019, six
directors communicated their assent while on 17th November, 2019 the remaining 4 directors requested
that the resolution must be decided at a meeting. Referring to the relevant provisions of the Companies Act,
2013, decide whether the resolution can be deemed to have been passed or requires to be decided at a
Board of Directors meeting ? (5 marks)

(c) Warner Ltd. is an Indian company with a net profit of ` 4, 7, 6 and 7 crores respectively in the last four years.
Net profit for each of last four years included a dividend of ` 1 crore received from WB Ltd. which is an
Indian company. Discuss whether Warner Ltd. is required to spend on CSR activities ? If yes, how much it
should spend ? If no, state the reasons for it. (5 marks)

(d) RPK Ltd. is an unlisted company having ` 9 crore as paid up capital and ` 52 crore as long term loan. The
directors of the company would like to know from you the answers for the following questions :
(1) Would the company be liable to constitute an audit committee ?
(2) If the company is listed after a fresh issue of shares to the tune of ` 50 crore, in such a situation,
would the company be liable to constitute Audit Committee ?
(3) What is the quorum for meetings and number of meetings to be held in a year by the audit
committee ? (5 marks)