LAW TEST – 4
CH 4, 7
Total 35 Marks
Part – A Multiple Choice Question
1. Being in need of further capital, Rimsi Cotton-Silk Products Limited offered 50 lacs
equity shares of Rs. 1 each to 50 identified persons on ‘private placement’ basis and
accordingly a letter of offer accompanied by application the necessary form was sent to
them after fulfilment of due formalities including passing of special resolution. One of the
applicants Rajan made a written complaint to the company highlighting the fact that the
offer letter was incomplete as well as illegal, as it did not contain ‘renunciation clause’ as
he wanted to exercise his ‘right of renunciation’ in favour of his son Uday. By choosing the
correct option, advise the company in this matter.
a) As the ‘Right of Renunciation’ cannot be denied, the company needs to rectify its
mistake by including the same in the offer letter and the application form.
b) The company is prohibited from providing ‘Right of Renunciation’ so the offer letter
and the application form need not include any such clause.
c) Instead of absolute prohibition, the company can provide ‘Right of Renunciation’
limited to twenty five percent of offering.
d) Instead of absolute prohibition, the company can provide ‘Right of Renunciation’
limited to fifty percent of offering.
2. Neptune Metal Tools Limited was incorporated on 2nd December, 2018 with twenty-
five subscribers and authorised capital of Rs 50,00,000 (5,00,000 equity shares of Rs 10
each). The directors of the company are in a dilemma whether to issue share certificates
to the subscribers in physical form or in dematerialized form. Advise them correctly on
this matter:
a) Being an unlisted company, Neptune may either issue physical share certificates to
the subscribers or alternatively, issue them in dematerialized form.
b) Neptune needs to issue shares to the subscribers only in dematerialized form.
c) A company having more than 100 shareholders needs to issue shares in
dematerialized form and therefore, Neptune may issue physical share certificates to
the subscribers.
d) A company having authorized capital of fifty lakhs and above needs to issue shares in
dematerialized form and therefore, Neptune may issue physical share certificates to
the subscribers.
3. Shares issued by a company to its directors or employees at a discount or for a
consideration other than cash for their providing know-how or making available rights in
the nature of intellectual property rights or value additions, by whatever name called are
known as:
a) Equity Shares
b) Preference Shares
c) Sweat Equity Shares
d) Redeemable preference shares
4. Mr. N is a company secretary of Mayo private limited. For calling company’s annual
general meeting before stipulated period of time. Draft notice is ready with him. However,
he is confused on agenda items for which he has to attach explanatory statement to the
notice. Please help him to understand which agenda item needs explanatory statement?
a) Consideration of Auditors report.
b) Fixing remuneration of auditor
c) Fixing remuneration of manager
d) Declaration of any dividend
5. Red Flag Ltd., which has its registered office at Delhi and having 12,500 members is
holding its Annual general meeting in Ashoka hotel. Despite swanky arrangements most
of the members did not turn up and quorum was not present within half an hour of the
schedule time of the meeting, as a result meeting was adjourned. However, due to heavy
booking schedule, hotel authorities could not make available, for adjourned meeting,
sufficient space in the same hall where meeting was originally called but allowed conduct
of meeting in a different hall on a different floor next week at same time. Please advise
the option available to board:
a) The meeting stands adjourned automatically to the same place and time next week
as per provisions of law. There is no alternate but to hold meeting in the same hall.
b) As same banquet hall is not available meeting can be held at different place as may
be decided appropriate by the board.
c) As the same hall is not available to conduct meeting after one week, a fresh notice of
21 days is needed for a different location.
d) As the same hall is not available to conduct the meeting, the company needs to
conduct meeting electronically through internet and give sufficient notice to
shareholders.
(5 x 1 = 5 Marks)
Q-1 What are provisions of the Companies Act, 2013, relating to the appointment of
‘Debenture Trustee’ by a company? Whether the following can be appointed as ‘Debenture
Trustee’?
(i) A shareholder who has no beneficial interest..
(ii) A creditor whom the company owes Rs 499 only.
(iii) A person who has given a guarantee for repayment of amount of debentures issued by
the company
(5 Marks)
Q-2 ABC Limited is a public company incorporated in New Delhi. The Board of Directors
(BOD) of the company wants to bring a public issue of 100000 equity shares of Rs 10 each.
The BOD has appointed an underwriter for this issue for ensuring the minimum subscription
of the issue. The underwriter advised the BOD that due to current economic situation of the
Country it would be better if the company offers these shares at a discount of Rs 1 per share
to ensure full subscription of this public issue. The Board of Directors agreed to the
suggestion of underwriter and offered the shares at a discount of Rs 1 per share. The issue
was fully subscribed and the shares were allotted to the applicants in due course.
i) Decide whether the issue of shares as mentioned above is valid or not as per Section
53 of Companies Act 2013.
ii) What would be your answer in the above case if the shares are issued to employees
as Sweat equity shares?
(3 Marks)
Q-3 Anika Limited has an Authority Capital of 10,00,000 equity shares of the face of Rs 100
each. Some of the hides expressed their opinion in the Annual General Meeting that it is
very difficult for them to trade in the shares of the company in the mock made and
requested the company to reduce the face value of each share to Rs 10 and increase the
number of shares to 1,00,00,000. Examine, whether the request of the shareholders is
considerable and if so, how the company can alter its capital as per the provisions of the
companies Act 2013?
(5 Marks)
Q-4 Mr. Laurel, a shareholder in Hardly Limited, a listed company, desires to inspect the
minutes book of General Meetings and to have copy of some resolutions. In the light of the
provisions of the Companies Act, 2013 answer the following:
(i) Whether he can inspect the minutes book and to have copies of the minutes at free of
cost?
(ii) Whether he can authorize his friend to inspect the minutes book on behalf of him by
signing a power of authority? (5 marks)
Q-5 ABC Limited is an unlisted company, having its registered office at Kolkata. The Annual
General Meeting was held at Goa on 1st July 2021 at 3.00 PM and concluded at 8.00 PM.
Consent of all the members to conduct AGM at Goo were received by 24th June 2021 by
Email.
(i) Examine the validity of the meeting as per the provisions of the Companies Act, 2013
(ii) State, the consequences if a resolution has passed in such meeting, without sufficient
disclosure regarding interest of a director.
(6 marks)
Q-6 With a view to transact some urgent business, Ratna, Rimpi and Ratnesh, the three
directors of Shilpkaar Constructions Limited are desirous of calling a general meeting of
shareholders by giving shorter notice than 21 days' clear notice. The fourth director, Nilesh
is of the opinion that such an action will attract penalty provisions since there is
contravention. The paid-up share capital of the company is 30 crores divided into Rs 3 crores
shares of 10 each. Keeping in view the applicable provisions of the Companies Act, 2013,
discuss the possibility of calling a general meeting by giving shorter notice.
(6 marks)
