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Posted By: Praveen Kumaar Member Level: Gold Posted Date: 28 Mar 2008
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2003 ICSI Inter – II Company Law & Practice- Paper I Dec 2003 Question paper
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ICSI - Intermediate Examination Old Syllabus
Company Law & Practice- Paper I
December 2003
Answer 6 questions including question No.1, which is compulsory.
Q 1. Comment on the following statements: (i) All companies are required to issue further shares to the existing equity shareholders. (ii) The property of the company is not the property of the shareholders. (iii) A company is no longer prohibited from issuing shares with differential rights. (iv) Application for shares in fictitious name is prohibited [5 x 4 = 20 marks].
Q 2. (a) Article 10 of the Articles of Association of Rosy Ltd. reads as follows: (i) No member shall hold shares exceeding one-tenth of the total number or value of shares issued by the company: and (ii) If any shareholder held shares above the limit prescribed, the excess of shares held shall not be counted for the purpose of voting. Can a shareholder holding shares in excess of the limit prescribed by the articles of association legitimately claim voting rights for his entire holding? Discuss. (b) Under what circumstances, a company shall not pay or be liable to pay any compensation to its sole selling agent for the loss of office? (c) What is the ceiling upto which a company can pay to its sole selling agent for loss of office? [6+6+4 = 16 marks]
Q 3. Distinguish between any four of the following: (i) ‘Employees stock option scheme’ and ‘employees stock purchase scheme’. (ii) ‘Transfer of shares’ and ‘transmission of shares’ (iii) ‘Reserve capital’ and ‘capital reserve’. (iv) ‘Member’ and ‘shareholder’. (v) ‘Issued capital’ and ‘paid-up capital’ [4 x 4 = 16 marks]
Q 4. (a) Who can issue a ‘shelf prospectus’? Explain the term ‘information memorandum’ in relation to a shelf prospectus. (b) What are the requirements under the listing agreement relating to publication of un-audited quarterly results? (c) Explain the provisions relating to satisfaction of charges registered with the Registrar of Companies. [6+6+4 = 16 marks]
Q 5. (a) Global Overseas Ltd., in addition to its Indian operations, have overseas operations in United Arab Emirates (UAE). The managing director informs you that the business of the company entails carrying out multiplicity of transactions and execution of documents on behalf of the company by the principal officer designated in Dubai (UAE). The managing director seeks to know whether the official seal of the company can be used in UAE and the procedure to be followed for this purpose. Advise the managing director of Global Overseas Ltd. (b) Cipher Pvt. Ltd. informs you that the equity shares of the company are held by the following: (i) Foreign holding company holding shares through its two nominees. (ii) 2 Directors holding shares in their individual capacity. (iii) 10 Present employees. (iv) 10 Past employees who continue to hold shares in the company. (v) 25 Shareholders holding shares in their sole name. (vi) 10 Shareholders holding shares jointly with 10 other shareholders. The company seeks to raise further capital and the members have resolved that the same may be raised privately. The managing director of Cipher Pvt. Ltd. seeks to know what is the maximum number of new members that can be admitted to the company, while continuing to remain as a private company. Advise. (c) Investrix Ltd. has surplus funds for investment. The net worth of the company is Rs. 500 lakh and its reserves and surplus is four times the paid up capital as per the latest audited balance sheet. The finance director seeks answers to the following questions: (i) What is the maximum limit up to which Investrix Ltd. can make investment in equity shares of other companies, without being required to approach the shareholders for their approval, given that : - Investrix Ltd. has already invested upto Rs. 100 lakh in equity shares of other companies and Rs. 50 lakh in its wholly owned subsidiary Investrokes Ltd.; and – Lent Rs. 70 lakh to its subsidiary Investron Ltd. in which it holds 64% of the paid up equity share capital and the company does not have institutional dues? (ii) What are the formalities required to be complied with for implementing the proposal for investment upto the maximum limit as per (i) above? [5+5+(4+2) = 6 = 16 marks]
Q 6. (a) Multi-four Ltd., a closely held public limited company, seeks to diversify into the business of export of software and manufacture of hi-tech surgical instruments. Though the memorandum of association of the company does not cover the business of export of software and manufacture of hi-tech surgical instruments, these are covered under the head ‘other objects’ of the memorandum of association. Advise Multi-four Ltd. about the procedural steps to be taken under the Companies Act, 1956 before commencing these business. (b) Rahul and Sanjay are the only two directors of Bibrant Pvt. Ltd. Rahul, designated as chief executive, has been given substantial powers of management by the Board of Directors and Sanjay is on the Board only as a financial investor. Sanjay seeks to know from you about the business decisions for which a Board meeting must be convened. Prepare a brief note for the perusal of Sanjay. (c) Varun holds debentures of Downturn Ltd., which has continuously defaulted in payment of interest due on the debentures. The debentures held by Varun are not secured. Advise Varun about the remedies available to him against Downturn Ltd. [8+5+3 = 16 marks]
Q 7. (a) State the benefits of ‘depository system’. (b) What are the steps involved in dematerialisation of securities? (c) Can the investor pledge his dematerialized securities? If so, how. [4+7+5 = 16 marks]
Q 8. You are a company secretary of a listed company. Make a note for the consideration of the Board of directors explaining the provisions of section 77A relating to power of a company to purchase its own shares [16 marks]
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