Company Law Quetion Bank

8/13/2019 Company Law Quetion Bank

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1. Define a company, what are its characteristics?

2. What is the difference between partnership & joint stock company

3. What is the difference between public company & priate company

!. "#plain the followin$%

. 'orei$n company

(. )oernment company

*. +ne an company

-. lle$al /ssociation

0. ublic 'inancial nstitutions

1. /ssociation not for profit

11. "#plain the steps for the formation of a company

12. / certificate of ncorporation is conclusie eidence4. Discuss

13. / company cannot enter into a contract before it has come into e#istence4 comment.

1!. emorandum of association is a charter of the company4 discuss.

1. 5an the contents of emorandum of /ssociation be chan$ed4 elaborate & e#plain the proisions.

1(. "#plain the doctrine of ndoor mana$ement & state its e#ceptions.

1*. Write short notes on the followin$%

1-. /brid$ed prospectus

10. 6helf prospectus

2. 7ed8herrin$ prospectus

21. Deemed prospectus

22. 6tatement in lie of prospectus

23. What is a prospectus? Who are liable for mis8statements in a prospectus? "#plain the ciil &criminal liability for such mis8statement?

2!. Write short notes on the followin$%

2. rre$ular /llotment

2(. inimum subscription

2*. 9ien on shares

2-. :uy back of shares

20. What is the difference between shares & stock?

3. What is the difference between share warrants & share certificates?



31. Difference between ;ransfer & ;ransmission of 6hares.

32. "#plain the cases when a company can refuse re$istration of transfer?

33. Discuss the proision of law relatin$ to the appointment of Directors, /lternatie directors andadditional directors?

3!. / director cannot enter into a contract with the company4?

3. "#plain the powers & responsibilities of Directors?

3(. What is the procedure for remoin$ a director?

3*. Discuss the borrowin$ power of a company?

3-. "#plain the different types of eetin$s alon$ with the proisions?

30. Write short notes on the followin$

!. 7esolutions

!1. ro#y

!2. inutes

!3. /$enda

!!. <otice

!. ;he object clause of the emorandum of /ssociation of 967 riate 9td, 9ucknow authori=ed itto do tradin$ in fruits and e$etables. ;he company, howeer, entered into a artnership with r.> and traded in steel and incurred liabilities to r. >. ;he 5ompany, subseuently, refused toadmit the liability to > on the $round that the deal was @Altra BiresC the company. "#amine thealidity of the companyCs refusal to admit the liability to >. )ie reasons in support of your answer.

!(. B76 5ompany 9td. is holdin$ ! of total euity shares in 6B 5ompany 9td. ;he :oard ofDirectors of 6B 5ompany 9td. Eincorporated on >anuary 1, 2!F decided to raise the sharecapital by issuin$ further "uity shares. ;he :oard of Directors resoled not to offer any shares toB76 5ompany 9td, on the $round that it was already holdin$ a hi$h percenta$e of the totalnumber of shares already issued, in 6B 5ompany 9td. ;he /rticles of /ssociation of 6B5ompany 9td. proide that the new shares be offered to the e#istin$ shareholders of thecompany. +n arch 1, 2* new shares were offered to all the shareholders e#cept B765ompany 9td. 7eferrin$ to the proisions of the 5ompanies /ct, 10( e#amine the alidity of thedecision of the :oard of Directors of 6B 5ompany 9imited of not offerin$ any further shares toB76 5ompany 9imited.Eay 2*F Guestion H, a re$istered shareholder of I 9imited left hisshare certificates with his broker. / for$ed the transfer deed in faour of J, accompanied by theseshare certificates lod$ed the transfer deed alon$with the share certificates with the company forre$istration. ;he 5ompany 6ecretary who had certain doubts, wrote to H informin$ him of theproposed transfer and in the absence of a reply from him EHF within the stipulated time, re$isteredthe transfer of shares in the name of J. 6ubseuently, J sold the shares to > and >Cs name was

placed in the re$ister of shareholders. 9ater on, H discoered that for$ery has taken place.7eferrin$ to the proisions of the 5ompanies /ct, 10(, state the remedy aailable to H and J inthe $ien case. "#plain.

!*. ;he paid8up 6hare 5apital of /B6 riate 9imited is 7s. 1 crore, consistin$ of - lacs "uity6hares of 7s. 1 each, fully paid8up and 2 lacs 5umulatie reference 6hares of 7s. 1 each,fully paid8up. HIJ riate 9imited and :59 riate 9imited are holdin$ 3 lacs "uity 6hares and1,, "uity 6hares respectiely in /B6 riate 9imited. HIJ riate 9imited and :59 riate9imited are the subsidiaries of ;67 riate 9imited. With reference to the proisions of the



5ompanies /ct, 10(, e#amines whether /B6 riate 9imited is a subsidiary of ;67 riate9imited ? Would your answer be different if ;67 riate 9imited has - out of total 1 directors onthe :oard of Directors of /B6 riate 9imited?

!-. 6tate the purposes for which the object clause of the emorandum of /ssociation of a publiclimited company, re$istered under the 5ompanies /ct, 10(, can be altered.

!0. "#plain the proisions of the 5ompanies /ct, 10( relatin$ to the @6erice of DocumentsC on a

company and the members of the company. When is serice of document deemed to be effectiein case the document is sent by post? "#plain.

. 6tate any si# char$es which are reuired to be re$istered under the proisions of the 5ompanies/ct, 10(. What is the effect of non8re$istration of a char$e reuired to be re$istered under the/ct ? "#plain.

1. ;hou$h si# out of seen si$natures to the emorandum of /ssociation of a company werefor$ed, the company was re$istered and the 5ertificate of ncorporation was issued. 5an there$istration of the company be challen$ed subseuently on the $round of for$ed si$natures?

2. Who are the persons entitled to receie notice of a $eneral meetin$ of a company, re$isteredunder the 5ompanies /ct, 10(? 6hall the non8receipt of notice of the $eneral meetin$ by any

member inalidate the proceedin$s of the meetin$? "#plain.

3. /:5 9imited sered a notice of a $eneral meetin$ upon its members. ;he notice stated that aresolution to increase the 6hare 5apital of the company would be considered at the meetin$. /member complains to the company that the amount of the proposed increase was not specified inthe notice. n the li$ht of the proisions of the 5ompanies /ct, 10(, e#amine the alidity of thenotice.

!. HIJ 9imited held its /nnual )eneral eetin$ on 6eptember 1, 2(. ;he meetin$ was presidedoer by r. B, the 5hairman of the 5ompanyCs :oard of Directors. +n 6eptember 1*, 2(, r.B, the 5hairman, without si$nin$ the minutes of the meetin$, left ndia to look after his father whofell sick in 9ondon. 7eferrin$ to the proisions of the 5ompanies /ct, 10(, state the manner in

which the minutes of the aboe meetin$ are to be si$ned in the absence of r. B and by whom.

. / limited company is formed with its /rticles statin$ that one r. H shall be the solicitor for thecompany, and that he shall not be remoed e#cept on the $round of misconduct. 5an thecompany remoe r. H from the position of solicitor een thou$h he is not $uilty of misconduct?

(. 'or a special resolution in a 5ompanyKs $eneral meetin$, 1 oted in faour, 2 a$ainst and !abstained. ;he chairman declared the resolution as passed. s it a alid resolution as per theproisions of the 5ompanies /ct, 10(.

*. While sanctionin$ workin$ capital limit of a company, the rate of interest has been fi#ed at aspecified percenta$e aboe the bank rate as notified by the 7esere :ank of ndia. ;here was achan$e in the interest rate due to 7: notification issued later. ;he bank insisted on filin$ a returnof modification of char$es. s the stand of the bank correct? Discuss this in the li$ht of theproisions of the 5ompanies /ct, 10(.

-. Ander what circumstances a company can reduce its share capital?

0. What is the concept of pro#y in relation to the meetin$s of a 5ompany? Decide the appointmentand ri$hts of a pro#y, under the 5ompanies /ct, 10(, in the followin$ cases% EiF When a bodycorporate is a member in the company. EiiF When a forei$n company is a member in thecompany. E<oember 2*F



(. H, a chemical manufacturin$ company distributed 2 lac E7s. ;wenty 9acF to scientific institutionsfor furtherance of scientific education and research. 7eferrin$ to the proisions of the 5ompanies/ct, 10( decide whether the said distribution of money was LAltra iresK the company?

(1. Mow nomination facility shall operate in case of transmission of shares under the proisions of the5ompanies /ct, 10(?

(2. 6unrise 9imited submitted the documents for incorporation on th +ctober, 2(. t was

incorporated and certificate of incorporation of the company was issued by the 7e$istrar on 2th+ctober, 2(. ;he company on 1!th +ctober, 2( entered into a contract which created itscontractual liabilities. ;he company denies the said liability on the $round that company is notbound by the contract entered into prior to issuin$ of certificate of incorporation. Decide under theproisions of the 5ompanies /ct, 10(, whether the company can be e#empted from the saidcontractual liability.

(3. the secretary of a HIJ 9imited issues a 6hare certificate in faour of / purportin$ to be si$nedby the directors and the secretary and the seal of the company affi#ed to it. n fact the secretaryfor$ed the si$nature of the directors and has affi#ed the seal without authority. 5an / hold thecompany liable for the shares coered by the share certificate, under the proisions of the5ompanies /ct, 10(?

(!. "#amine the alidity of the followin$ with reference to the releant proisions of the 5ompanies/ct, 10(% EiF ;he :oard of Directors of a company refuse to conene the e#traordinary $eneralmeetin$ of the members on the $round that the reuisitionists hae not $ien reasons for theresolution proposed to be passed at the meetin$. EiiF ;he :oard of Directors refuse to conenethe e#traordinary $eneral meetin$ on the $round that the reuisitions hae not been si$ned by the

joint holder of the shares. EiiiF /djournment of e#traordinary $eneral meetin$ called upon thereuisition of members on the $round that the uorum was not present at the meetin$.

(. What are the differences between L6hare certificate and 6hare warrantL? E<oember 2*F

((. /:5 t. 9td., 5ompany is a riate 5ompany hain$ fie members only. /ll the members of thecompany were $oin$ by car to umbai in relation to some business. /n accident took place andall of them died. /nswer with reasons, under the 5ompanies /ct, 10( whether e#istence of thecompany has also come to the end?

(*. :efore the incorporation of the company, the promoters of the company entered into ana$reement with r. >ainson to buy an immoable property on behalf of the company. /fterincorporation, the company refused to buy the said property. /dise r. >ainson whether he hasany remedy under the proisions of the 5ompanies /ct, 10(?

(-. "#plain the doctrine of Altra8ires4. What are the le$al effects of ultra8ires transactions underthe 5ompanies /ct, 10(?

(0. Ander the /rticles of /ssociation of 6unshine 9td. 5ompany, directors had power to borrow up to7s.1, without the consent of the $eneral meetin$. ;he Directors themseles lent 7s.3,to the company without such consent and took debentures of the 5ompany. Decide under theproisions of the 5ompanies /ct, 10(, whether the company is liable? f so, what is the e#tent of

liability of the company in this case?

*. "#plain the proisions and main contents of 7eturn of /llotment4 under the 5ompanies /ct,10(.

*1. "#plain the concept of 6weat "uity 6hares4. oint out, under proisions of the 5ompanies /ct,10(, the conditions of issuin$ of such shares and their position in the 6hare8capital of the5ompany.



*2. eek 9td. 5o. issued and published its prospectus to inite the inestors to purchase its shares.;he said prospectus contained false statement. r. H purchased some partly paid shares of thecompany in $ood faith on the 6tock "#chan$e. 6ubseuently, the company was wound up andthe name of r. H was in the list of contributors. Decide% EiF Whether r. H is liable to pay theunpaid amount? EiiF 5an r. H sue the directors of the company to recoer dama$es?

*3. ;he /rticles /ssociation of G7 9td. proided that documents upon the company may be seredonly throu$h "8mail. /rind sent a document to the company by re$istered post. ;he company

did not accept the document on the $round that sendin$ documents to the company by post wasin iolation of the /rticles. /s a result /rind suffered loss. Decide the alidity of ar$ument of thecompany and claim of /rind for dama$es in the li$ht of proisions of the 5ompanies /ct, 10(.

*!. ;he Directors of ars ndia 9td. desire to alter capital clause of emorandum of /ssociation oftheir company. /dise them, under the proisions of the 5ompanies /ct, 10( about the ways in

which the said clause may be altered and the procedure to be followed for the said alteration.

*. ;he 5hairman of the meetin$ of a company receied a ro#y ! hours before the time fi#ed forthe start of the meetin$. Me refused to accept the ro#y on the $round that the /rticles of thecompany proided that a ro#y must be filed ( hours before the start of the meetin$. Decide,under the proisions of the 5ompanies /ct, 10( whether the ro#y holder can compel the5hairman to admit the ro#y?

*(. 7amesh, who is a resident of <ew Delhi, sent a transfer deed, for re$istration of transfer ofshares to the company at the address of its 7e$istered +ffice in umbai. Me did not receie theshares certificates een after the e#piry of four months from the date of dispatch of transfer deed.Me lod$ed a criminal complaint in the 5ourt at <ew Delhi. Decide, under the proisions of the5ompanies /ct, 10(, whether the 5ourt at <ew Delhi is competent to take action in the saidmatter?

**. / company was started with the object of buildin$ @/ mall with shopsC. ;he buildin$ was destroyedby fire and the company wanted to alter the objects clause in the memorandum by substitutin$the words @/ mall with shopsC with the words 6hops, 7esidential buildin$s and Warehouses forlettin$ purposes.C Will this alteration of the memorandum for the purpose be permissible? Decidereferrin$ to the proisions of the companies /ct, 10(.

*-. ;he emorandum of /ssociation of a company was presented to the 7e$istrar of 5ompanies forre$istration and the 7e$istrar issued the certificate of incorporation. /fter complyin$ with all thele$al formalities a company started a business accordin$ to the object clause, which was clearlyan ille$al business. ;he company contends that the nature of the business cannot be $one intoas the certificate of incorporation is conclusie. /nswer the uestion whether companyCscontention is correct or not.

*0. applies for share on the basis of a prospectus which contains misNstatement. ;he shares areallotted to him, who afterwards transfers them to <. 5an < brin$ an action for a rescission on the$round of mis8statement? Decide under the proisions of the 5ompanies /ct, 10(.

-. What is meant by a floatin$ char$e? 6tate the characteristics of a floatin$ char$e. When does afloatin$ char$e crystallise?

-1. Discuss the concept of shelf prospectus, the proisions for issue and filin$ of such prospectusunder the 5ompanies E/mendmentF /ct, 2

-2. / public limited company has only seen shareholders, all the shares bein$ fully paidNup. /ll theshares of one such shareholder are sold by the court in an auction and purchased by anothershareholder. ;he company continues to carry on business thereafter. Discuss the liabilities of theshareholders of the company under the 5ompanies /ct, 10(.



-3. What are the conditions for the company for the buyNback of its own shares? Whether there isany time limit for the completion of buyNback of its shares?

-!. /pe# etals 9imited wants to proide financial assistance to its employees, to enable them tosubscribe for certain number of fully paid shares. 5onsiderin$ the proision of the 5ompanies/ct, 10(, what adice would you $ie to the company in this re$ard?

-. 6tate whether the followin$ statements are correct or incorrect. )ie reasons% EiF 7i$ht shares

means shares which are issued by a newly formed company. EiiF / company should file its annualreturn within si# month of the close of the financial year. EiiiF / bearer of a share warrant of acompany is not member of the company. Ei ;he shareholder of the company is $eneral meetin$can increase the rate of diidend recommended by the :oard of Directors. EF Debenture withotin$ ri$hts can be issued only if permitted by the /rticles of /ssociation.

-(. 6tate the le$al position in the followin$ circumstances with reference to the proisions in the5ompanies /ct, 10(. /t an adjourned e#traordinary $eneral meetin$ of a ublic 9td. 5ompanyadjourned for want of uorum, only 3 members are personally present.

-*. What do you mean by ;ransmission of shares? Differentiate between ;ransfer of shares and;ransmission of shares.

--. / 5ompany inserted an adertisement in a newspaper statin$ that some shares were stillaailable for sale accordin$ to the terms of the prospectus of the company which could beobtained on application. Do you consider it as a prospectus?

-0. /rticles of /ssociation are altered so as to result in breach of contract entered into by a company with its .D. s the alteration alid?

0. "#plain the doctrine of Altra8ires. What are the effects of Altra8ires a$reements?

01. "#plain the procedure and reuisites of a alid $eneral meetin$.

02. / 5ompany was incorporated for the purpose of manufacturin$ chemicals as its main business. tdistributed 7s. ,O8 to Aniersity and scientific institutions for scientific and educationresearch. s it alid?

03. L/ certificate of incorporation is conclusie eidence that all the reuirements of the 5ompanies/ct, 10( hae been complied withL. "#plain.

0!. "#plain the doctrine of K9iftin$ the corporate eilK

0. :riefly discuss the circumstances under which a company may be wound up by the court.

0(. / 'ilm 5ompany borrowed a sum of money on the security of all its assets includin$ machineryetc. now lyin$ or that may be brou$ht hereafter until repayment. What kind of char$e is it createdby the film company?

0*. KHK had subscribed the .+./. of a company for 1 shares. ;he company was duly re$isteredbut ultimately he took only 1 shares. ;he company was wound up. What is the e#tent of KHKsliability?

0-. Discuss the different types of meetin$s.

00. Discuss the proisions of the 5ompanies /ctC 10( for the preention of oppression andmismana$ement.



1. What is Debenture? "#plain its characteristics. ention arious kinds of Debentures.