CS Inter :: Company Laws : June 2005

The Board of directors of a company having a paid-up capital of Rs.50 lakh by a resolution approved the appointment of a sole-selling agent under section 294AA. The extra-ordinary general meeting of the company disapproved the appointment of the sole-selling agent. Discuss the consequences of such disapproval.

Whether consideration for shares can be paid in kind ? In a company, shares were allotted in return for sugarcane growing land transferred to the company. In the winding-up proceedings, it was alleged that the value of land was one-tenth of the value of shares allotted. Whether a court can interfere in the matter to remedy the position ? Discuss.

One of the joint-holders applied to a company requesting for the splitting of 300 equity shares equally among the joint-holders by issuing fresh share certificates to each of the three joint-holders separately. Is the company bound to comply with this request ? Give reasons.

Amol & Co., a proprietory firm of Amol, a Chartered Accountant in practice, has been appointed as the statutory auditor by a private limited company. Subsequently, it came to light that Mrs. Amol has been holding less than 1% of the shares of that company. Will this vitiate the appointment of the statutory auditor ? Answer with reasons.

Asia Pacific Co. Ltd., called its annual general meeting on 30th September, 2001 and adjourned it to 31st December, 2001 due to delay in completion of audit of accounts for the year ended 31st March, 2001. At the adjourned meeting, the meeting was further adjourned to 31st March, 2002. Subsequently, the annual general meeting was held on 28th January, 2002. State whether the company has complied with section 166 and, if not, whether the company is liable to default and conviction.

ABC Pvt. Ltd. was promoted by three groups A, B and C. Each group was holding one-third of the paid-up capital of the company. The Board of directors comprises of three directors Ajay, Bidur and Chanakaya representing the group A, B and C respectively. The company was engaged in the business of construction of tenements. It had acquired 60 acres of land in the year 1985 for a sum of Rs.60 lakh. The market value of the land as on 31st March, 2005 is Rs.6 crore.
Inspite of the best efforts by the company, the projects could not be completed and all the projects are in haphazard condition. The company is facing financial difficulties. Recently, Chanakya has started feeling that he is being neglected and is not taken into confidence in taking business decisions. Chanakya representing group C on the Board of directors has filed a petition under section 397/398 for not calling him for the Board meetings, irresponsible behaviour of Ajay and Bidur leading to financial distress and has claimed a consideration of Rs.2 crore for transferring his shares to groups A and B. Will he succeed ?

Hum Tum Ltd., a company having a shareholders fund of Rs.80 crore of which Rs.30 crore is free reserves, desires to make a loan of Rs.20 crore to Young Ltd. The company has already investments in and made loans to various other body corporates to the extent of Rs.35 crore. Can this loan be given by a resolution of the Board of directors ?

Ramesh, a shareholder in Mod Ltd., desires to nominate his wife Radha as a nominee in respect of his shareholdings. Can Mod Ltd. accept the nomination so made ? Advise the company.

A representative of a foreign company in India was only receiving orders from customers. State whether the place where the orders so received be termed as a place of business.

While sanctioning working capital limit, the rate of interest has been fixed at a specified percentage above the bank rate as notified by the RBI. There was a change in the interest rate due to RBI notification issued later. The bank insisted on filing a return of modification of charges. Is the stand of the bank correct ? Discuss with reasons.

Articles of association of a company has put a cap of Rs.10,000 on sitting fee. There is a proposal to increase the sitting fee from present amount of Rs.8,000 to Rs.20,000. Advise the company.

A company filed Form Nos.17 and 13 in triplicate duly signed by both the bank and company’s authorised personnel for the satisfaction of charges based on the bank’s letter issued one week after the date of payment of charge (loan) but within 30 days from this payment date. The Registrar of Companies insisted that the letter of the bank for accepting the satisfaction of charge be filed with Form Nos.17 and 13 and also insisted on issue of notice to the holder of the charge, i.e., the bank. He also decided that the date of filing should be computed from the date of bank’s letter. Discuss the correctness of his views.

Teji Pvt. Ltd. received a cheque of Rs.10 lakh towards the share application money from Vinod on 31st March, 2005. On the same day, the Board of directors allotted the shares, filed necessary returns and issued the share certificate. The cheque was subsequently deposited with the bank which bounced. Advise the company.

As per the audited balance sheet of Dowell Ltd. as at 31st March, 2004, the details of share capital, reserves and surplus are as under :

	(Rs. in Lakhs)
Equity share capital Reserves and surplus:   Profit and loss account   General reserves   Share premium   Capital subsidy (Central grant) Revaluation reserve	300.00 62.75 12.00 25.00 10.00 30.00
	139.75

Compute the limits upto which Dowell Ltd. can accept further deposits from the public and shareholders (Answer to the nearest rupees in thousands).

Rana is a director of Urmi Exports Ltd. Urmi Exports Ltd. wishes to enter into a contract with Srilakshmi Creations Pvt. Ltd., a company registered in Mauritius in which Mrs.Rana is a director. What compliances, if any, are required under the Companies Act, 1956 ?

What are the modes of reduction of share capital ? Specify the cases of diminution of share capital which are not regarded as reduction of share capital.

Arun buys 300 shares of a company from Barun on the faith of a share certificate issued by the company. Arun submits to the company a transfer deed, duly executed, along with Barun’s share certificate for transferring the shares in his name. The company discovers that the certificate in the name of Barun has been fraudulently obtained and refuses to register the transfer. Is Arun entitled to get the shares transferred in his name ?