NEW SYLLABUS

522
Roll No. ..................................... : 1 :

Time allowed : 3 hours Maximum marks : 100

Total number of questions : 6 Total number of printed pages : 15

NOTE : 1. Answer ALL Questions.

2. All references to sections relate to the Companies Act, 2013 unless stated otherwise.

PART–I

1. Case Study :
Background :

Lalit, Bisen, Roma, Raunak, and Rasik, a practicing company secretary, have formed a
brainstorming group to discuss, deliberate, and resolve various issues they encounter in their
daily works related to company law. They decided to meet every Sundary evening to share
their views on issues brought before the group. Several meetings have taken place, and the
important issues discussed in detail are outlined below :
(i) Change in the name of the company and issues connected therewith :
Lalit began the discussion by informing the group that his client, Roopam Leathers
Limited (the Company), changed its name to Rakshak Leathers Limited in January
2024, following the due process of law. Before this change, the company had filed
a suit against one of its suppliers in May 2023 to recover compensation due to
a breach of contract. However, in April 2024, the supplier applied to the Court
for dismissal of the suit, arguing that Roopam Leathers Limited ceased to exist after
the name change and the issuance of a new certificate of incorporation by the Registrar.
The Managing Director of the Company has expressed concern about the fate of
the litigation against the supplier.
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(ii) Employees Stock Option Scheme (ESOP/Scheme) :

Bisen mentioned that his client, JK Aluminium Limited, is planning a public issue of
equity shares and intends to offer options to the directors, officers, or employees
of the company under an ESOP. The CFO of the company expressed doubt about
whether all employees, directors, and independent directors are eligible for share allotment
under this scheme. He also questioned whether the vesting period can be set at
2 years and if a lock-in period of five years can be provided in the scheme.
(iii) Books of Account in respect of Branch Office :
Roma stated that she has been appointed as the Secretarial Auditor of Janak Textile
Limited, which has its registered office in Chennai, India, and a branch office in California,
USA. While conducting the secretarial audit for the financial year 2023-24, she noticed
that one director of the company had requested financial information beyond the financial
returns maintained at the registered office concerning the branch office. However, his
request was denied by the Board, which contended that a director can only inspect
the summarized quarterly returns sent by the branch office to the registered office.
She asked the other group members to analyse the situation.
(iv) Dormant status of the company by ROC :
Raunak brought up the issue of a dormant company for discussion. He said that
his client MM Consultancy Ltd. (the company) received a notice from the Registrar
of Companies (the ROC/Registrar) for entering its name in the register maintained
for dormant companies. Upon reviewing the company’s records, he found that it had
not filed its financial statements for two consecutive financial years and an annual return
for the preceding financial year i.e. for only one year. He requested the group to
discuss and deliberate on this situation, particularly in light of the Managing Director’s
concern about the validity of the Registrar’s notice, and sought clarification on the
provisions governing the status of a dormant company at the Registrar’s behest.

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(v) Inviting deposits from public by a government company :

Rasik mentioned that he is a legal advisor to MNO Corporation Ltd; a government
company. The balances extracted from the latest audited financial statements of the
company are as follows :

Sr.No. Particulars ` in crore

1 Paid-up equity share capital 10
2 Free Reserves 4
3 Securities Premium Account 2
4 Turnover 300

The company proposes to invite deposits of ` 4 crore from public. He analysed

the proposal and observed that the deposit amount is within the prescribed statutory
limit. He then invited comments from the other group members on the proposal.

Based on the above scenarios, analyse the issues, and provide legal opinions
on each case, sequentially, in accordance with the provisions of the Companies
Act, 2013, as detailed below :
(a) Explain the effect of the change in the company’s name and advise the Managing
Director on whether the Supplier’s application for dismissal of the case is tenable.
(3 marks)
(b) Regarding the Employees Stock Option Scheme (ESOP), explain the following :
(i) Whether all employees, directors, and independent directors are eligible for
allotment of shares under this scheme ?
(ii) Whether a lock-in period of five years can be provided under the
ESOP ?
(3 marks)

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(c) As brought up by Roma, the request of a director for financial information related
to a branch office—beyond the summarized quarterly returns maintained at the registered
office of Janak Textile Limited—was rejected by the Board. Analyse the situation
and determine, whether the Board’s decision to deny the requested information to
the director is valid.
(3 marks)
(d) Considering the discussion on the topic of dormant companies, elucidate the provisions
under which the Registrar may declare a company as dormant. Also, determine the
validity of the notice issued by the Registrar to MM Consultancy Ltd.
(3 marks)
(e) As informed by Rasik under Para (v), the government company proposes to invite
deposits of ` 4 crore from the public. Explain the prescribed limit up to which a
government company can invite deposits from the public, and assess whether MNO
Corporation Ltd. can invite deposits of ` 4 crore.
(3 marks)
2. (a) NSG Ltd. created a charge in favour of Bank A for a loan it took, and the particulars
of the charge have already been registered with the Registrar of Companies. Later,
Bank A transferred or assigned this charge to Bank B as part of a loan portfolio
sale, without altering any other terms and conditions of the original loan agreement.
Are there any compliance requirements related to the registration of charges under
the Companies Act, 2013, in this case ?
(3 marks)
(b) Abbas is a member of PTR Ltd., an unlisted company that has adopted Articles
of Association as per Article 84 of Table F of Schedule I under the Companies
Act, 2013, concerning the adjustment of dividends. Abbas owes to the company a
total sum of ` 10,000, broken down as follows :

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(1) Calls in arrears : ` 3,000

(2) Unpaid Securities Premium : ` 5,000
(3) Other Debts : ` 2,000
PTR Ltd. has declared a dividend of ` 10,000 on the shares owned by Abbas.
The company proposes to adjust the total debts of Abbas of ` 10,000 against the
dividend payable to him.
As the Company Secretary of PTR Ltd., how would you respond to the company’s
proposal to adjust the debts against the dividend payable to Abbas in accordance
with the provisions of the Companies Act, 2013 ?
(3 marks)
(c) RK Info Pvt. Ltd. (the company) has the following financial details as of 31st March,
2024, according to its financial statements :
• Paid-up share capital : ` 60 crore
• Turnover : ` 180 crore
• Outstanding deposits : ` 30 crore
The company is planning to appoint Salim, who is currently serving as the whole-
time Company Secretary, as its internal auditor.
You are requested to assess the following :
(i) Is RK Info Pvt. Ltd. mandatorily required to appoint an internal auditor under
the provisions of the Companies Act, 2013 ?
(ii) Can a Company Secretary who is in the whole-time employment with a company
be appointed as the internal auditor of the same company according to the
applicable provisions of the Companies Act, 2013 ?
(3 marks)
(d) The debenture trustee of DC Limited has observed that the company’s management
is suspected of siphoning off funds, leading to financial losses for the debenture holders.

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Is the situation a valid reason for the debenture trustee to make an application to
the Tribunal for an investigation into the affairs of the company ? Is the debenture
trustee competent to make such an application to the Tribunal ? If so, who is the
competent authority to appoint the inspectors to conduct the investigation ? Explain
with reference to the provisions of the Companies Act, 2013.
(3 marks)
(e) S Ltd. has equity shares with voting rights that are pari passu. X Ltd., Y Ltd.,
and Z Ltd. each hold 20% of the equity shares in S Ltd. The remaining 40% of
the shares are held by retail investors. R Ltd. controls the composition of the Board
of Directors of X Ltd., Y Ltd., and Z Ltd. Based on the provisions of the Companies
Act, 2013, determine whether R Ltd. qualifies as a holding company of S Ltd.
(3 marks)
3. (a) Guddi Logistics Limited offered 1,00,000 equity shares of ` 10 each to a select
group of 250 persons, including 60 qualified institutional buyers. The share application
money was received by the company on 1st August 2024. However, the company
failed to allot the shares by 30th September 2024. During this period, the company
utilized this money to pay interest on a cash credit limit sanctioned by its banker.
The company secretary raised an objection to the utilization of the share application
money for interest payment and suggested the CFO to refund it to the share applicants
with interest at 12% per annum, effective from 1st October 2024. The CFO holds
the view that the interest will be payable from 15th October, 2024.
Considering the provisions of the Companies Act, 2013, examine the validity of the
offer made to the select group of 250 persons, as well as the objection and suggestion
made by the company secretary to the CFO.
(5 marks)

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(b) Soya Products Ltd. has been operating successfully for several years. In the financial

year 2020-21, the company reported a significant increase in revenue and profits.

However, in 2024-25, a whistleblower within the company revealed that the financial

statements for 2020-21 were manipulated by the company’s top management to inflate

profits and conceal losses. The whistleblower filed a complaint with the Central

Government, providing supporting documents. The Central Government conducted an

investigation based on the whistleblower’s evidence and concluded that the accounts

for 2020-21 should be re-opened and the financial statements re-cast. Referring to

the provisions of the Companies Act, 2013, examine the feasibility of re-opening the

accounts and re-casting the financial statements for the financial year 2020-21.

(5 marks)

(c) RSV Private Limited., incorporated five years ago, passed a special resolution during

its Annual General Meeting (AGM) held on 30th September, 2024, to issue 10 lakh

sweat equity shares at a discount to a class of directors and permanent employees.

The company’s latest financial statement shows an issued, subscribed, and paid-up

equity share capital of ` 5 crore, divided into 50 lakh equity shares of ` 10 each.

Considering the provisions of the Companies Act, 2013 :

(i) Assess the validity of issuing 10 lakh sweat equity shares with a lock-in period

of 5 years.

(ii) Would your answer change, if RSV Pvt. Ltd. were classified as a Start-up

company as defined by the Ministry of Commerce and Industry, Government

of India ?

(5 marks)

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Attempt all parts of either Q. No. 4 or Q. No. 4A

4. (a) Chitra Developers Limited, a listed company, adopted Articles of Association as per
Article 84 of Table F of Schedule I under the companies Act, 2013, held a Board
of Directors meeting on 1st February 2024, during which an interim dividend of 10%
was declared. The dividend amount was transferred to a separate bank account within
the prescribed timeline. However, in a subsequent Board meeting on 10th February
2024, the Board resolved to revoke the declared interim dividend. The separate bank
account was closed, and the dividend amount was transferred back to the company’s
general bank account.
In the Board meeting held on 5th August 2024, the financial statements for the year
ending 31st March 2024 were approved, and the Board proposed a final dividend
of 10%. At the Annual General Meeting (AGM) held on 10th September 2024, the
shareholders decided to declare a final dividend at a rate of 20%, considering the
earlier revocation of the interim dividend. Considering the provisions of the Companies
Act, 2013 :
(i) Discuss the validity of the Board’s decision to declare and subsequently revoke
the interim dividend. Additionally, specify the date by which the company should
have deposited the interim dividend amount into a separate bank account.
(ii) Evaluate whether the shareholders’ decision to declare a final dividend at the
rate of 20%, instead of the 10% proposed by the Board, is legally valid.
(5 marks)
(b) Alpha Ltd., a parent company, owns 100% of the equity shares of Beta Ltd., its
wholly owned subsidiary. The companies have proposed a scheme of merger/amalgamation
under Section 232 of the Companies Act, 2013, whereby Beta Ltd. will be merged
into Alpha Ltd.
Both companies have submitted an application before the National Company Law
Tribunal (NCLT), seeking approval of the scheme without convening meetings of their
equity shareholders, secured creditors, and unsecured creditors.

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Discuss, whether the National Company Law Tribunal (NCLT) has the jurisdiction
to dispense with the requirement of conducting such meetings for the purpose of
sanctioning the scheme of amalgamation. Additionally, identify and elaborate on the
key factors the Tribunal will consider before issuing an appropriate order. Justify your
answer with reference to the provisions of the Companies Act, 2013.
(5 marks)
(c) Greenfield Infrastructure Ltd., a company engaged in large-scale infrastructure projects,
decides to raise funds by issuing 1,00,000 non-convertible secured debentures with
a face value of ` 100 each, amounting to ` 1 crore. The debentures carry an interest
rate of 9% per annum, payable annually, and are redeemable after 17 years from
the date of issue. The prospectus for subscription of debentures was issued on 1st
April, 2022.
To protect the interests of the debenture holders, the company appoints SafeGuard
Trustees Ltd. as the debenture trustee. The debenture trustee noted that the company
defaulted on the payment of interest for two consecutive years, specifically for the
payments due on 31st March 2023 and 31st March 2024.
Considering the facts given above and the provisions of the Companies
Act, 2013 :
(i) Assess the validity of the redemption period for the debentures.
(ii) Discuss the mandatory compliance requirements for appointing a debenture
trustee, including the time limit for such appointment and the execution of the
trust deed.
(iii) Identify the circumstances under which it is the duty of the debenture trustee
to appoint a nominee director on the Board of the Company.
(5 marks)

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OR (Alternate question to Q. No. 4)

4A. (i) (a) Rocky Images Ltd. has Varun, –Chief Financial Officer (CFO) and Prateek–
Managing Director (MD). There is no wholetime director in charge of finance
in the company. Varun (CFO) is of the opinion that if there is any allegation
by shareholders for financial statements not complying with accounting standards
then MD Prateek will be held responsible and punished whereas Prateek (MD)
believes that Varun (CFO) would be held, so an argument started between
the two. Discuss the above scenario in line with provisions of Companies
Act, 2013.
(b) Unlisted Resham Cements Ltd. had achieved a turnover two hundred crore
in FY 2017-18 and had to file their balance sheet and statement of profit
and loss in XBRL mode. Gradually their turnover started declining due to
inadequate demand of cements every year and in FY 2023-24 the company
could achieve only rupees forty crore turnover. The accountant of the company
is of the view that now XBRL mode of filing is not needed any more as
the XBRL limit is not reached and five years have expired. Comment on the
view of the accountant under Companies Act, 2013.
(3+2=5 marks)

(ii) Explain the meaning of a “member” under the provisions of the Companies Act, 2013.
Can a subsidiary company become a member and shareholder of its holding
company ? Can a foreigner be a member of a company ? You are requested to
clarify these points with reference to the provisions of the Companies Act, 2013.
(5 marks)

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(iii) The Companies Act, 2013 provides certain protections to employees during the
investigation of a company’s affairs and grants a remedy of appeal against actions
taken by the management. Explain.
(5 marks)
PART–II
5. Case Study :
Introduction :
Disha Beauty Products Limited (the company), incorporated five years ago with its registered
office in Mumbai, India, began manufacturing cosmetic products under the brand name ‘Kasturi.’
The product range includes nail enamel, foundation cream, compact, mascara, eye pencil,
etc. Due to its organic composition and maintaining the consistency in the quality the company’s
products quickly gained popularity, capturing a significant share of the Indian market. Under
the leadership of Disha, the Managing Director, the company experienced growth in turnover
and profitability, earning a strong reputation in both consumer and industry circles.
Additional Directors :
To facilitate future expansion, the company intended to appoint Joe and Jogesh as additional
directors due to their extensive experience and business acumen. Disha had previously proposed
Joe for a regular director position at the Annual General Meeting (AGM), but the motion
failed, and Joe was not appointed, Jogesh is proposed to be appointed as an additional
director for the first time. The Board of Directors, exercising powers conferred by the Articles
of Association, appointed both Joe and Jogesh as additional directors in the board meeting
held on 31st March 2024.
The AGM, originally due on 30th September 2024, could not be held on the due date.
The company obtained a three-month extension from the Registrar of Companies and held
the AGM on 31st December 2024.

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Loan/Security to other Company :

The company provided security for a loan of ` 25 lakh taken by Rupa Chemicals Limited

(RCL), in which Harshal and Sujit, directors of the company, hold 10% and 15% equity

shares, respectively, with voting rights. The Secretarial Auditor observed that this transaction

might be invalid. The company argues that it has complied with all legal formalities and asserts

that none of the directors is interested in RCL as per the law.

Board Meeting :

The Board of Directors planned to issue equity shares to the public and held a meeting

on 15th May 2024 to approve the prospectus. Out of the 12 directors, three attended the

meeting physically, and one attended via audio-visual means. One other director had informed

the company secretary on 1st April 2024, of his intention to attend the next board meeting

electronically. The company advised him to attend in person, stating that electronic arrangements

could not be made as the intimation of his intention to attend the meeting electronically was

not given at the beginning of the calendar year 2024.

Appointment of relative of the Managing Director :

Juley, a company secretary and sister of Disha, the Managing Director, is proposed to be

appointed as a ‘Consultant’ with a monthly remuneration of ` 2.75 lakh. Disha seeks clarification

on the applicable legal provisions concerning this appointment.

Based on the above information and referring to the provisions of the Companies

Act, 2013 you are requested to address the following :

(a) Examine the validity of the appointment of Joe and Jogesh as additional directors

of Disha Beauty Products Limited. Also, discuss the tenure of their appointment.

(5 marks)

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(b) The Secretarial Auditor has observed that the transaction involving Disha Beauty Products

Limited providing security for a ` 25 lakh loan taken by Rupa Chemicals Limited

is invalid. Analyse the validity of this transaction.

(5 marks)

(c) Determine, whether the quorum was present at the Board meeting held on 15th May,

2024 for the approval of the Prospectus. Additionally, assess whether the company’s

advice to a director to attend the meeting in person instead of electronically—due

to the notice of electronic participation not being given at the beginning of the calendar

year—was valid.

(5 marks)

(d) Determine, discussing the relevant provisions of the Companies Act, 2013, whether

the appointment of Juley as a consultant for Disha Beauty Products Limited constitutes

a related party transaction. Additionally, explain the necessary approval and disclosure

compliance requirements for such transactions.

(5 marks)

Attempt all parts of either Q. No. 6 or Q. No. 6A

6. (a) Draft a specimen notice for the Annual General Meeting (AGM) in accordance with

the provisions of the Companies Act, 2013, ensuring that there is no special business

to be transacted.

(5 marks)

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(b) Explain the requirement for constitution, composition, and functions of the Stakeholders
Relationship Committee as per the provisions of the Companies Act, 2013 and SEBI
(LODR) Regulations, 2015.
(5 marks)
(c) XYZ Ltd. intends to allot equity shares on a private placement basis. These equity
shares will rank pari-passu with the existing equity shares in all respects. You are
requested to provide a specimen draft of the board resolution approving the private
placement of shares, in compliance with the provisions of the Companies Act, 2013.
(5 marks)
(d) You are requested to draft sample minutes of a board meeting in which the transaction
of a share transfer, along with the usual items of business, was conducted, in accordance
with the provisions of the Companies Act, 2013
(5 marks)

OR (Alternate to Q. No. 6)

6A. (i) Some members of a company with share capital intend to request the Board of Directors
to convene an Extraordinary General Meeting (EGM) to transact the business of buying
back shares. If the Board fails to convene the EGM, the members plan to call the
meeting themselves.
You are requested to explain the provisions of the Companies Act, 2013, regarding
the calling and holding of an EGM by the Board upon requisition by members, and
the timeline for calling an EGM by the requisitionists, if the Board fails to do so.
Additionally, examine the feasibility of conducting such an EGM for the buy-back
of shares and outline the consequences, if the quorum is not present at a meeting
called by the members.
(5 marks)
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(ii) You are requested to explain the provisions of the Companies Act, 2013, and the
SEBI (LODR) Regulations, 2015, regarding the vigil mechanism/whistleblower policy,
addressing the following points :
(a) Which companies are required to establish a vigil mechanism ?
(b) What safeguards against victimization must be provided, and who are they
meant to protect ?
(c) Who is responsible for overseeing the vigil mechanism in companies with and
without an audit committee ?
(d) What are the disclosure requirements related to the vigil mechanism ?
(5 marks)
(iii) Explain the provisions of Rule 7 of the CSR Rules, 2014, under the Companies
Act, 2013, concerning :
(i) the CSR expenditure,
(ii) the ceiling on administrative overheads,
(iii) the treatment of surplus arising from CSR activities,
(iv) the handling of excess CSR spending, and
(v) the acquisition of capital assets.
(5 marks)
(iv) Describe the disqualifications for a person to be appointed or to continue as a Managing
Director, Whole-time Director, or Manager under the provisions of the Companies
Act, 2013, read with the relevant conditions stipulated in Part I of Schedule V thereto.
(5 marks)

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