Important Topics for CS Final Examination June, 2013 (With Answers)

CS Professional Examinations June, 2013

CS Solutions Hazra & Girish Park, Kolkata Study CS from the Experts

Classes by Ms. Nidhi Bajaj

(All India Topper, Gold Medallist)

CS Solutions Hazra & Girish Park, Kolkata [email protected] (M) 98307 25551

C S Examinations

(Inter & final All Law papers)

High Quality Notes/ Practice Workbooks Elegant Modern AC Classrooms Mock Examination Use of Audio-Visual Aid & Modern

Technology

Classroom Ms. Nidhi Bajaj

COMPANY SECRETARIAL PRACTICE

1. Write short note on MCA 21.

Keeping in tune with the e-Governance initiatives the world over, the Ministry of Corporate Affairs (MCA),

Government of India, has initiated the MCA21 project, to enable an easy and secure access to MCA

services in a manner that best suits the corporate entities and professionals besides the public. The

MCA21 project is designed to fully automate all processes related to the proactive enforcement and

compliance of the legal requirements under the Companies Act, 1956.

The key benefits of MCA21 project are as follows:

(a) On-line incorporation of companies

(b) Simplified and easy mode of filing of Forms / Returns

(c) Registration as well as verification of charges anytime and from anywhere

(d) Inspection of public documents of companies anytime from anywhere

(e) Corporate-centric approach

(f) Building up a centralized database repository of corporate operating in India

(g) Enhanced service level fulfillment and customer relationship building

The following services are available under the MCA21 Project:

Registration and incorporation of new companies

Filing of Annual Returns and Balance Sheets

Filing of forms for change of names/address/Directors details

Registration and verification of charges

Inspection of documents

Applications for various statutory services from MCA

Investor grievance redressal.

2. Explain the procedure for incorporation of a Section 25 company.

Select, in order of preference, a few suitable names, maximum 6, indicative of the main objects of the company.

Ensure that the name does not resemble the name of any other company already registered and also does not violate the provisions of Emblems and Names (Prevention of Improper Use) Act, 1950.

Apply to the Registrar of Companies (ROC) in e-Form-1A to ascertain which of the names selected are available along with the prescribed fees of Rs. 500/-.

Arrange for the drafting of the Memorandum and Articles of Association of the company.

Get the Memorandum and Articles signed by at least two subscribers filling in the relevant details like their fathers name, occupation, address and the number of shares subscribed for. The Memorandum and Articles shall also be witnessed by at least one person.

Make an application to the Regional Director for grant of license u/s 25 of the Companies Act, 1956 in e-form 24A alongwith MOA, AOA, future annual income and expenditure estimates, details of the proposed

promoters and directors of the company, declaration by advocate of Supreme Court / High Court / a

company secretary or chartered accountant in whole-time practice that the MOA and AOA have been

drawn in conformity with the Companies Act, 1956 etc.

According to Section 25, the applicants have to prove to the satisfaction of the Regional Director that an association is to be formed as a limited company for promoting art, science, religion, literature, charity or any

other useful object and that the association intends to apply its profits for promoting its objects and it prohibits

distribution of dividend to its members.

Simultaneously with the making of application, the applicants shall also furnish a copy of the application to the RoC.






C S Examinations



Technology


Within a week of submitting the application, the applicants shall publish in two newspapers (one regional and the other in English), a notice of the application made to the Regional Director.

The Regional Director being satisfied on all accounts, may by a license direct that the association may be registered as a company with limited liability.

After obtaining the license from the Regional Director file the following Forms with the RoC:

(a) E-form 1 application for declaration and incorporation of the company

(b) E-form 18 notice of situation of registered office of the company

(c) E-form 32 particulars of directors, manager, secretary etc.

The RoC on being satisfied will register the company and issue the Certificate of Incorporation alongwith CIN.

3. Short note on holding and subsidiary companies and companies limited by guarantee.

Holding and Subsidiary companies

In terms of Section 4 of the Companies Act, 1956, a company (Company A) shall be deemed to a subsidiary of

another company (Company B):

if that other Company B controls the composition of Board of directors of Company A

if Company B holds majority shares (> 50% of the equity share capital) of Company A

if Company B is a subsidiary of Company C, Company A shall be deemed to be a subsidiary of Company C (chain subsidiaries)

Both holding and subsidiary companies enjoy separate legal entities Turner Morison & Co. Ltd vs. Hungerford Investment Trust Ltd.

A subsidiary company cannot be a member of the holding company Section 42 of the Act

Companies limited by guarantee

A company limited by guarantee is a company having the liability of its members limited to the amount undertaken under the Memorandum to contribute to the assets of the company in the event the company is

being wound up.

The Memorandum of such companies contains an undertaking by its members to contribute a specified amount towards the payment of its debts and other expenses of winding it up in case the company is wound up while he is a

member or within one year after he ceases to be a member.

Types of companies limited by guarantee include charitable, social or other non-commerical objects.

A company limited by guarantee may or may not have a share capital.

In case of a guarantee company with share capital, its members are under double liability of having to pay the issue price of their shares and also honor the guarantee in case the company is wound up.

4. Explain the procedure for commencement of business by a public company which has issued prospectus.

Issue the prospectus

The minimum subscription amount, as stated in the prospectus, should have been received by the company in cash

In case the directors of the company have applied, they should pay the same amount per share as is payable by the other shareholders

Shares issued for cash to the public must have been allotted

Company will need to file Form 19 alongwith the following:

a) Declaration that shares payable in cash have been allotted upto the amount of minimum subscription

b) Declaration that directors have paid, in respect of the shares taken by them, an amount which is equal to what has been paid by the public

c) Statutory declaration verified by 1 director or secretary (if no CS then PCS) that all the above has been complied with.






C S Examinations



Technology


5. What are the various clauses of Memorandum of Association?

(a) Name Clause - A company being a distinct entity must have a name of its own to establish its separate entity. Last words of the name of the company shall be limited or private limited as the case may be. The name should not be undesirable in the opinion of the Government. It should not be prohibited under The Emblems and Names

(Prevention of Improper Use) Act, 1950. Also the name should not be identical with or too resemble the name with

which another company is registered or a registered trademark - Section 20 of the Act.

(b) Registered office Clause - Every company must have a registered office to which all communications and notices will be addressed. This Clause states the name of the State in which the registered office of the company is situated

the exact address need not be stated.

(c) Objects Clause - This clause defines the sphere of the companys activities and the specific objectives for the formation of the company. All companies registered after 1965 must divide its objects into Main Objects and Other

Objects (ancillary or incidental to the attainment of the main objects). Anything done beyond the objects is ultra

vires and void and cannot be ratified even by assent of the whole body of shareholders.

(d) Capital Clause - This states the amount of capital with which the company is to be registered. It also states the number and value of shares into which the capital of the company is divided.

(e) Liability Clause - This clause states the liability of the members of the company. In case of a company limited by shares or by guarantee this clause shall state that the liability of the members is limited.

(f) Association Clause - In this clause the subscribers declare that they desire to be formed into a company & agree to take the shares stated against their names. The names, addresses and occupations of the subscribers must be given.

Each subscriber must sign in the presence of atleast one witness who shall attest his signature.

6. Explain the steps for change of name of a company.

Hold a Board meeting to propose 6 names in order of preference.

Make an application to RoC in e-form 1A for checking availability of name alongwith a letter explaining the reason and justification of change.

RoC shall intimate availability of name within 3 days of receipt of application.

On receipt of approval hold another Board meeting for calling a general meeting.

Hold a general meeting and pass

1. Special resolution for change of name

2. Special resolution for alteration of MOA.

File e-form 23 with copies of various special resolutions within 30 days of passing the resolutions.

Make an application to CG in e-form 1B.

Issue of fresh Certificate of Incorporation from RoC.

Inform various authorities.

Arrange for a new common seal.

Correct all the records of the company.

7. Explain the procedure for shifting of registered office within one State from one RoC to another.

Hold a Board meeting to pass a board resolution for shifting of registered office and for calling a general meeting.

Hold the general meeting and pass a Special resolution for shifting of registered office.

In case the company is listed, the aforesaid special resolution shall be passed through postal ballot.

File a copy of the special resolution passed with the RoC in e-form 23 within 30 days of passing the resolution.

Make an application to the Regional Director in Form 1AD alongwith a copy of the special resolution and a copy of newspaper advertisement.

The Regional Director shall pass an order in writing confirming the change within 4 weeks from the date of receipt of application.

The company shall file a copy of the order received from the Regional Director with the RoC in Form 21.






C S Examinations



Technology


The RoC shall thereafter issue a certificate of registration confirming the aforesaid shifting within 1 month from the date of filing Form 21.

Such certificate shall be conclusive evidence that the company has complied with all the statutory provisions.

8. Explain the procedure for changing the financial year of a company.

In terms of Section 2(17) of the Companies Act, 1956, financial year means the period in respect of which any

profit and loss account of the body corporate laid before it in annual general meeting is made up, whether that

period is a year or not. In order to change the financial year of a company, it is required to follow the following

procedure:

Convene a Board meeting.

Hold the Board meeting and pass the necessary resolution for change of financial year of the company.

If the financial year is extended beyond a period of 12 calendar months and the company requires more time to finalise its accounts, the company should apply to the RoC for obtaining extension of time for holding AGM.

The application should be made in e-form 61 alongwith the board resolution, reasons for extension of financial year, period for which the extension is required and the detailed application.

The consent of the Assessing Officer of the IT Department is also required.

9. What are the eligibility norms for making IPO / FPO under the SEBI ICDR Regulations?

Eligibility Norms for IPOs

(a) The company has net tangible assets of atleast Rs. 3 crores in each of the preceding 3 full years (of 12 months each), of which not more than 50% is held in monetary assets. If more than 50% of the net tangible assets are held

in monetary assets, the company should make firm commitments to deploy such excess monetary assets in its

business/project.

(b) The company has a minimum average pre-tax operating profit of Rs. 15 crores, calculated on a restated and consolidated basis, during the 3 most profitable years out of the immediately preceding 5years.

(c) The company has a net worth of at least Rs. 1 crore in each of the preceding 3 full years (of 12 months each)

(d) In case the company has changed its name within the last one year, atleast 50% of the revenue for the preceding 1 full year is earned by the company from the activity suggested by the new name

(e) The aggregate of the proposed issue and all previous issues made in the same financial year in terms of size does not exceed 5 times its pre-issue net worth as per the audited balance sheet of the last financial year.

Eligibility Norms for FPOs

The aggregate of the proposed issue and all previous issues made in the same financial year in terms of size does not exceed 5 times its pre-issue networth as per the audited balance sheet of the last financial year.

In case the company has changed its name within the last one year, atleast 50% of the revenue for the preceding 1 full year is earned by the company from the activity suggested by the new name

Companies not complying with the above

The company may make an IPO if the issue is made through the book-building process and the company undertakes:

(a) to allot, at least 75% of the net offer to public, to QIBs and

(b) to refund full subscription money if it fails to make the said minimum allotment to QIBs

The number of prospective allottees should be more than 1000






C S Examinations



Technology


10. Explain the procedure for making bonus issue by a listed company.

A listed company has to comply with the following procedure for issue of bonus shares in terms of SEBI (ICDR)

Regulations, 2009:

Ensure that bonus is made out of free reserves built out of genuine profits.

Ensure that the company has not defaulted in the payment of interest / principal of fixed deposits, debentures, statutory dues to employees etc.

There should be a provision in the AOA permitting issue of bonus shares.

Share capital after bonus must be within the authorised capital otherwise the authorised share capital will be required to be increased.

Hold a board meeting for passing a resolution for bonus issue and for calling a general meeting.

Ensure all partly paid up shares are made fully paid up before bonus issue.

Intimate the results of the Board meeting within 15 minutes to the stock exchange.

Forward copies of notice of general meeting to the stock exchange.

Hold general meeting and pass the resolution for issue of bonus shares.

File a copy of the proceedings of the general meeting with the stock exchange.

File e-form 23 and e-form 5 with the RoC within 30 days of passing the resolution.

Fix record date / book closure.

Give 30 days notice to the stock exchange before record date.

File return of allotment Form 2 with the RoC within 30 days of allotment.

Ensure that the bonus issue is completed within 2 months from the date of approval in case it requires shareholders approval for bonus issue as per its AOA and within 15 days in case it requires no such approval.

Get share certificates printed and issue the same to the members.

Submit an application to stock exchange for listing of bonus shares.

11. Distinguish between ESOP and ESPS.

Employee Stock Option Plan (ESOP) is an option given to the whole-time directors, officers or employees of the company which gives such directors, officers or employees the benefit or right to purchase or subscribe at a future

date, the securities offered by the company at a pre-determine price.

Employee Stock Purchase Plan (ESPS) is a plan under which the company offers directly shares to employees as part of public issue or otherwise.

Shares under ESOP scheme are allotted only after exercise of the option. Whereas in an ESPS plan, shares are allotted outrightly.

The requirements for issuing both ESOP and ESPS are same under the SEBI (ESOP and ESPS) Guidelines, 1999.

12. Explain the procedure for issuing sweat equity shares.

Sweat equity shares means shares issued by a company to its employees / directors at a discount or for

consideration other than cash for providing know-how or making available rights in the nature of IPRs or value

additions.

In terms of Section 79A of the Companies Act, 1956 read with the SEBI (Issue of Sweat Equity) Regulations, 2000,

the following procedure needs to be followed by a listed company for issue of sweat equity shares:

Atleast 1 year must have elapsed from the date on which company is entitled to commence business.

Convene a Board Meeting for passing a resolution to issue sweat equity shares and calling a general meeting. Pass a special resolution at General meeting. The special resolution shall specify the number of shares, current

market price, consideration and the class of employees / directors to whom such shares shall be issued.

File a copy of the special resolution passed with the RoC in e-form 23 within 30 days of passing the resolution.






C S Examinations



Technology


Forward a copy of the proceedings of general meeting to stock exchanges where the company is listed.

13. What are the steps for redemption of preference shares?

No authorization is required to redeem preference shares.

Fully paid-up shares may be redeemed

- out of profits

- out of fresh issue of shares

The premium payable on redemption, if any, may be taken out from profits of the company or securities premium account

Creation of Capital Redemption Reserve (CRR) is mandatory if preference shares are redeemed out of profits

Nominal amount of preference shares is required to be transferred to CRR

CRR may be utilized for issuing fully paid up bonus shares or for any other purpose (subject to compliance of requirements applicable to reduction of share capital)

The company is required to give notice to the RoC in e-form 5 within 30 days from redemption.

The company will also be required to inform the preference shareholders individually and also through a public notice.

14. Explain the procedure for issue of share certificates.

Share Certificate is a document of title to the shares in a company. It is issued by a company to its members in

whose names shares are registered in the register of members of the company. following is the procedure for issue

of share certificates:

Pass a resolution at the board meeting for issue and allotment of share certificates.

The Board will approve the numbers and authorise by resolution for their printing.

In case of listed companies, forms of share certificates shall also be approved by the stock exchanges.

All blank form of share certificates will be in the custody of the company secretary.

The depository shall be immediately informed after the shares are issued.

Necessary entries will be made in the register of members.

They shall be issued within the specified time limit

Share certificates are issued under the signatures of at least 2 directors, one of whom shall be MD, and the CS / Authorised signatory

Share certificates is issued under the common seal of the company.

15. Short note on Debenture Redemption Reserve.

In terms of Section 117C of the Companies Act, 1956:

Creation of Debenture Redemption Reserve is mandatory for every company which issues debentures

Adequate amounts shall be created to Debenture Redemption Reserve out of the profits of the company every year till debentures are redeemed

Debenture Redemption Reserve shall be utilized for redemption of debentures

16. What are the requirements relating to redemption and roll over of convertible debentures?

The non-convertible portion of partly convertible debt instruments issued, the value of which > Rs.50 lakhs may

be rolled over without change in the interest rate, subject to compliance with the following conditions:

75% of the holders of the convertible debt instruments of the issuer have approved the rollover through postal ballot

The company has, along with the notice for passing the resolution, sent to all holders of the convertible debt instruments, an auditors certificate on the cash flow of the issuer and with comments on the liquidity position of the issuer

The company has undertaken to redeem the non-convertible portion of the partly convertible debt instruments of all






C S Examinations



Technology


the holders of the convertible debt instruments who have not agreed to the resolution

Credit rating has been obtained from at least one credit rating agency registered with SEBI within a period of six months prior to the due date of redemption and has been communicated to the holders of the convertible debt

instruments, before the roll over

The creation of fresh security and execution of fresh trust deed shall not be mandatory if the existing trust deed or the security documents provide for continuance of the security till redemption of secured convertible debt

instruments.

17. What are the various modes of acquiring membership in a company?

By subscribing to the MOA

By agreement and registration

By agreeing to purchase qualification shares

By application and allotment

By transfer / transmission of shares

By estoppel

18. Short note on nomination of shares and transmission of shares.

Nomination of shares Section 109A and 109B

Every member who is an individual can make a nomination at anytime

The nominee shall be an individual; a minor may be named as a nominee provided the name of a guardian is mentioned in the nomination form

After the death of the holder, an application signed by the nominee alongwith a death certificate of the member shall be submitted to the company. The application shall state that the nominee has elected to become a member of the

company.

The nominee is also entitled to transfer such shares.

Transmission of shares Section 109

Transmission means passing of the title to a person to another by operation of law

In case of joint holding, transmission shall only take place when all the joint holders die

A person entitled to shares as a consequence of death or insolvency of a member needs to make an application in writing to the company requesting the company to admit him as a member

Such person may also chose to transfer such shares without becoming a member by executing a transfer deed.

19. What are the rights of joint members?

Joint holders of shares in a public company are not a single member. Each of such joint holders is a member of the company Narandas vs. India Manufacturing Co.

Notices and other documents required to be served by the company will be deemed to be properly served if the same is effected on the first named joint holder.

Unless instructions have been received to the contrary, the company can pay dividend to the first named shareholder.

Any joint holder is entitled to be present in the general meeting and take part in the proceedings and vote. In the event of poll, voting right can only be exercised by one of the joint holders.

Joint holders are jointly and severally liable to pay the calls.

Proxy form to be valid should be signed by all the joint shareholders.






C S Examinations



Technology


20. Short note on Refusal of registration of transfer by a public company and a private company.

Private company may by its Articles or otherwise refuse to register transfer or transmission of shares.

However in the case of a public company, shares are freely transferable and it cannot refuse to register transfer of shares.

In case of refusal by a public company, the Company Law Board is empowered to direct rectification of register of members to give effect to the transfer.

Section 111A of the Companies Act, 1956 provides that the CLB may, on an application made by a depository, company, participant, investor or SEBI, if the transfer of shares is in contravention of any provisions of the SEBI

Act, SICA, or any other law, within 2 months from the date of transfer, direct the depository or the company to

rectify its records.

21. Explain the procedure for appointment of additional directors and directors to fill casual vacancy.

Procedure for appointment of Additional Directors Section 260 of the Companies Act, 1956

Ensure that the AOA authorise the Board to appoint additional directors.

Ensure that the person proposed to be appointed as additional director does not suffer from any disqualifications.

Ensure that such appointment of additional director is within the maximum limit mentioned in AOA.

BOD shall appoint the director either at a board meeting or through circulation.

Ensure that the director has given his DIN and his consent to the company.

Company has to file e-form 32 within 30 days of appointment.

Particulars of the director shall be entered in all the registers.

In case the company is listed, it shall also inform the Stock Exchanges.

Procedure for appointment of filling casual vacancy Section 262 of the Companies Act, 1956

Casual vacancy vacancy caused due to death, insolvency, resignation or disqualification.

A causal vacancy occurring in the position of a director appointed in general meeting may be filled up by the Board at a Board meeting.

Ensure that the person proposed to be appointed as additional director does not suffer from any disqualifications.

Ensure that the director has given his DIN and his consent to the company.

Such person shall hold office till the time the person in whose place he is appointed would have held the office.

The Section ONLY applies to public companies.

Company has to file e-form 32 within 30 days of appointment.

Particulars of the director shall be entered in all the registers.


22. Short note on small shareholder directors.

In terms of Section 252 of the Companies Act, 1956 read with Companies (Appointment of the Small

Shareholders Director) Rules, 2001:

A public company having paid-up share capital of Rs.5 crores or more AND 1000 or more shareholders may have a small shareholder director.

Small shareholder means a shareholder holding shares of nominal value of Rs. 20,000/- or less.

A small shareholder director may be appointed by :

(a) the company on its own motion

(b) the small shareholders through a notice by 1/10th or more small shareholders atleast 14 days before the meeting in which case the company shall be bound to act on such notice

(c) in case of listed companies, such appointments shall be made by postal ballot

The small shareholder director has to be a small shareholder and he cannot become a small shareholder director in






C S Examinations



Technology


more than 2 companies.

The maximum tenure of appointment is 3 years after which he can be re-appointed.

He is not liable to retire by rotation and Section 274 of the Act dealing with disqualifications of directors [except Section 274(1)(g)] applies to him.

23. Explain the procedure for removal of director by shareholders.

The company is required to comply with the following procedure for removal of director by shareholders u/s

284 of the Companies Act, 1956:

Special notice should be received from a member of the company atleast 14 days before the general meeting for removal of a director.

A copy of the notice shall also be given to the concerned director he has a right of being heard in the general meeting before he is removed.

Representation if any given by the director shall be sent by the company atleast 7 days before the general meeting to all the members of the company.

If the same is not sent, then the company at the instance of the director shall read out the same at the meeting.

Call a general meeting by issuing 21 days notice before the general meeting.

The director shall be removed if an ordinary resolution for his removal is passed by the shareholders of the company.

In case the company is listed, a copy of the proceedings of the general meeting shall be sent to the stock exchange. Company has to file e-form 32 within 30 days of appointment.

Particulars of changes in directors shall be entered in all the registers.


24. Explain the kinds and limits on remuneration payable to executive and non-executive directors.

Remuneration of a director who is not a MD / WTD i.e. non-executive directors Section 309 of the Act:

He can be paid :

(a) Monthly, quarterly or annual payment with approval of the CG

(b) Commission with approval of members through special resolution (this SR is valid for 5 years)

Quantum of payment

In case the company has a managing or

whole-time director

1% of the net profits of the company

In any other case 3% of the net profits of the company

The NEDs can also be paid sitting fees (no sitting fees can be paid to MD / WTD) subject to the following ceilings:

Companies with a paid-up share capital and

free reserves of ` 10 crores or more or turnover of ` 50 crores or more

Sitting fees not to exceed ` 20,000/-

Other companies Sitting fees not to exceed ` 10,000/-

Where Board meeting is adjourned and again held, sitting fees shall be paid only once, since adjourned meeting is a mere continuation of the original meeting.

Remuneration of a MD / WTD / Manager - Section 309 of the Act

Determination of managerial remuneration

(a) By Articles of Association

(b) By ordinary resolution






C S Examinations



Technology


(c) By special resolution, if the Articles so provide

Mode of payment

(a) Monthly payment and / or

(b) Specified % of net profits

Quantum of payment

Particulars % of Net Profit

Single Managing Director or Manager or Whole time Director 5%

More than One Managing Director or Manager or Whole time

Director

10%

In case of payment of remuneration to a director for services rendered in any capacity other than that of a director, his total remuneration cannot go above the ceiling fixed by Section 198. But if the services rendered are of a

professional nature, the remuneration payable to a director for that will not come within the provisions of Section

309 of the Act.

25. Short note on disclosure of interest by directors.

In terms of Section 299 of the Companies Act, 1956, every director who is interested in any contract or arrangement or any proposed contract or arrangement shall disclose his interest.

Such disclosure is required to be made as follows:

(a) In case of a proposed contract at the Board meeting when the contract is first considered by the Board (if then the director is interested) or at the meeting held first after he became interested (if he later on becomes

interested)

(b) In case of an existing contract at the Board meeting held first after the director becomes interested

(c) Alternatively the director can given a general notice of disclosure which shall remain till the expiry of one financial year after which the same can be renewed.

Disclosure is not required if interest of one or more directors is less than 2% of the paid-up capital of the other company

If the cumulative holding of all the directors together with their relatives does not exceed 2% of the paid-up capital of the other company.

26. Define the term Company Secretary in Practice as defined under the CS Regulations.

Section 2(2) of the Company Secretaries Act, 1980, provides that a member of ICSI shall be deemed to be in

practice, when individually or in partnership with one or more members of the Institute,

engages himself in the practice of the profession of Company Secretaries to, or in relation to, any company; or

offers to perform or performs services in relation to the promotion, forming, incorporation, amalgamation, reconstruction, reorganization or winding up of companies; or

offers to perform or performs such services as may be performed by

(a) an authorized representative of a company with respect to filing, registering, presenting, attesting or verifying any documents (including forms, applications and returns) by or on behalf of the company,

(b) a share transfer agent,

(c) an issue house

(d) a secretarial auditor or consultant,

(e) an adviser to a company on management, including any legal or procedural matter,

(f) issuing certificates on behalf of, or for the purposes of, a company;

holds himself out to the public as a Company Secretary in practice; or

renders professional services or assistance with respect to matters of principle or detail relating to the practice of the profession of Company Secretaries; or

renders such other services as, in the opinion of the Council, are or may be rendered by a Company Secretary in






C S Examinations



Technology


practice.

27. What are the various kinds of services which a PCS can render under the CS Regulations?

Regulation 168 prohibits a company secretary in practice from engaging in any business or occupation other than the

profession of company secretary unless it is permitted by a general or specific resolution of the Council.

Following services are permitted generally -

Private tutorship.

Authorship of books and articles.

Holding of Life Insurance Agency Licence for the limited purpose of getting renewal commission.

Holding of public elective offices such as M.P, M.L.A., M.LC.

Honorary office-bearership of charitable, educational or other non-commercial organisations.

Acting as Justice of Peace, Special Executive Magistrate and the like.

Teaching assignment under the Coaching Organisation of the Institute or any other organisation, so long as the hours during which a member in practice is so engaged in teaching do not exceed average four hours in a day

Valuation of papers, acting as a paper-setter, head examiner or a moderator, for any examination.

Editorship of professional journals.

Acting as ISO lead auditor.

Providing Risk Management Services for non-life insurance policies except marketing or procuring of policies.

Acting as Recovery Consultant in the Banking Sector.

Becoming non-executive director / promoter / promoter director / subscriber to the Memorandum and Articles of Association of a company the objects of which include areas, which fall within the scope of the profession of

Company Secretaries irrespective of whether or not the practising member holds substantial interest in that

company.

Becoming non-executive director / promoter / promoter director / subscriber to the Memorandum and Articles of Association of a company which is engaged in any other business or occupation provided that the practising

member does not hold substantial interest in the company.

Permission to be granted specifically

Interest or association in family business concerns provided that the member does not hold substantial interest in such concerns.

Interest in agricultural and allied activities carried on with the help, if required, of hired labour.

Editorship of journals other than professional journals. 28. Explain the procedure for appointment of auditors other than retiring auditors.

In terms of Section 225 of the Companies Act, 1956, the company shall comply with the following procedure for

appointment of auditor other than retiring auditors:

Special notice u/s 190 is required for this purpose atleast 14 days before the meeting.

Company shall give atleast 7 days notice to the members.

A copy of the special notice shall also be furnished to the retiring auditor. The retiring auditor can make a representation.

Company shall state the fact of such representation in the notice to the members.

It shall also send a copy of the representation to the members.

Pass the resolution at the AGM for appointment of other than retiring auditor.

Inform the new auditor within 7 days of his appointment.

Auditor shall file Form 23B with the RoC within 30 days.






C S Examinations



Technology


29. Short note on branch auditor.

In terms of Section 228 of the Companies Act, 1956:

Where a company has a branch office in India the accounts of that office shall be audited by the companys auditors or by any other CA

In case the company has a branch outside India audit may also be conducted by an accountant duly qualified to act as an auditor in accordance with the laws of the country in which the branch office is situated

In case branch audit is to be conducted by a person other than the companys auditors the company in general meeting shall appoint a qualified person as branch auditor or may authorize the BOD

He has got the same rights and duties as a statutory auditor

He shall forward his report to the companys auditor.

30. Explain the steps and requirements for maintenance of cost accounting records and appointment of cost auditor.

In terms of Companies (Cost Accounting Record) Rules 2011 dated 3rd June, 2011, the CG has mandated companies engaged in production, processing, manufacturing, or mining activities and wherein, -

the aggregate value of net worth as on the last date of the immediately preceding financial year > Rs. 5 crores or

the aggregate value of the turnover made by the company from sale or supply of all products or activities during the immediately preceding financial year > Rs. 20 crores or

the companys equity or debt securities are listed

Cost accounting records are required to be maintained in respect of financial years commencing on or after 1st April, 2011.

Exemptions wholesale or retail trading activities, banks, investment and insurance companies, IT services, postal / courier services etc.

In terms of CAB (Cost Accounting Board) Orders, Cost Audit has been mandated for the following industries

Paper

Cement

Tyres and Tubes

Steel

Insecticides

Glass

Paints & Varnishes

Aluminium

Jute, cotton, silk and woolen textiles

Edible oilseeds

Packaged food products

Plantation products

Coal & lignite

Such audit shall be conducted by a cost accountant within the meaning of the Cost and Works Accountants Act, 1949.

Such cost shall be appointed by the Board of Directors with the previous approval of the CG.

The Audit committee of the company shall be the first point of reference for such appointment.

Auditor of the company cannot be appointed as cost auditor.

A person disqualified to be an auditor cannot be appointed as cost auditor.

The company shall disclose full particulars of its cost auditor in its annual report.






C S Examinations



Technology


31. Explain the procedure for passing of resolutions through postal ballot.

In terms of Section 192A read with Companies (passing of the resolution by postal ballot) Rules, 2011:

Notice to all shareholders alongwith a draft resolution and requesting them to send their assent / dissent within 30 days of posting the letter.

It shall be sent by registered post acknowledgement due or through e-mail provided the company obtains the e-mail addresses of its shareholders.

Company shall issue advertisement in one English and vernacular newspaper after despatch of the postal ballot forms.

If it is assented by the majority it shall be deemed to be passed at a meeting.

Voting by electronic mode is also permitted. Further in terms of Clause 35A of the Listing Agreement, every

listed company conducting postal ballot, shall give the facility of e-voting to its shareholders.

Matters which compulsorily need to be passed through postal ballot

Alteration of objects clause of MOA

Alteration of AOA for insertion of provisions re. Private co.

Buy back of shares

Issue of shares with differential voting rights

Change in registered office outside the local limits of the city, town or village

Sale of whole of the undertaking of the co.

Give loans, guarantees, or security in excess of the limits u/s 372A

Election of a small shareholder director

Variation of rights attached to a class of shares / debentures

32. Explain the powers of the Board of Directors which are exercisable only with the approval of shareholders.

In terms of Section 293 of the Companies Act, 1956, the following powers of the Board can only be exercised

with the approval of the shareholders:

Sell, lease or otherwise dispose of whole, or substantially the whole, of the undertaking of the company

Remit, or give time for repayment of any debt due by a director

Invest, otherwise than in trust securities, the amount of compensation received by the company in respect of the compulsory acquisition of any such undertaking as referred above

Borrow moneys, where the moneys to be borrowed, together with the moneys already borrowed by the company (apart from temporary loans obtained from the company's bankers in the ordinary course of business), will exceed

the aggregate of the paid-up capital of the company and its free reserves

Contribute to charitable and other funds not directly relating to the business of the company or the welfare of its employees, any amounts in excess of Rs. 50,000/- or 5% of its average net profits during the 3 financial years

immediately preceding, whichever is greater.

33. Short notes on explanatory statement and poll in general meetings.

Explanatory Statement Section 173 of the Companies Act, 1956

In terms of Section 173 of the Companies Act, 1956, every notice proposing to transact special business in a general meeting, shall be accompanied by an explanatory statement, setting out all material facts concerning

that special business, including the concern / interest of every director / manager.

The object of providing explanatory statement u/s 173 is to secure that all facts which have a material bearing on the question on which the shareholders have to form their judgment are brought to the notice of them so that the

shareholders can exercise an intelligent judgment Balasundaram vs. New Theatres Carnatic Talkies Private Limited

The provision of Section 173 is mandatory in nature and disobedience to its requirements will lead to






C S Examinations



Technology


nullification of the action taken Firestone Tyre and Rubber Co. Ltd. Vs. Synthetics and Chemicals Ltd.

The principle to be applied in case of explanatory statement is that could a reasonable shareholder knowing the true facts have taken a different course from that which he took on the basis of the explanatory statement which did not

disclose the true facts Jessel Trust Limited

Poll Section 179 of the Companies Act, 1956

It is a method of voting in which votes are cast by members (in person or by proxy) in accordance with the number of shares held, by registering their votes on sheets of paper called Poll paper or Ballot paper

distributed to the voters.

The object of a poll is to ascertain the true sense of a meeting and is not to give absent members a further opportunity of voting unless a contrary intention is expressly or impliedly to be gathered from the Articles Liladhar Shamji vs. Rehmubhoy Allana

A poll may be ordered by the Chairman on his own motion or shall be ordered on a demand made by the persons as follows:

(a) Public company with share capital members holding not less than 1/10th of the voting power or on which an aggregate sum of Rs. 50,000/- or more has been paid

(b) Private company with share capital 1 member, if 7 members are present or 2 members if > 7 members are present

(c) Any other company - members holding not less than 1/10th of the voting power

Proxies may also demand a poll Berar Trading Company Limited vs. Gajana G Dixit

In case of poll on election of chairman or on adjournment of the meeting, it has to be taken forthwith

In case of poll on any other question, it must be taken within 48 hours of the time of demand

Chairman should appoint 2 scrutineers (atleast 1 scrutineer should be a member of the company and not an officer / employee) to scrutinize the votes cast on a poll

The results of the poll shall be displayed at the registered office of the company.

34. Explain the steps for holding an EGM.

In terms of Section 169 of the Companies Act, 1956, any general meeting between two annual general meetings

shall be called an extra-ordinary general meeting. An EGM may be called by the following parties:

1. By the Directors

The Board of Directors may call a general meeting of the members at any time by giving not less than 21 days' clear

notice.

2. By the Directors on Requisition

The Board of Directors must convene a general meeting upon request or requisition under the following

conditions :

The requisition must be signed by a member(s) holding at least 1/10th of the paid-up share capital of the company, in the case of companies having a share capital; and by members holding at least 1/10th of the total

voting power in other cases

The requisition must state the objects of the meeting

The requisition must be deposited at the registered office of the company .

The directors must, within 21 days of the receipt of a valid requisition, issue a 21 clear days' notice for the holding

of the meeting on a date fixed within 45 days of the receipt of the valid requisition.

3. By the Requisitionists Themselves

If the directors fail to hold the meeting as aforesaid, the requisitionists may call a meeting within 3 months from

the date of requisition. All reasonable expenses of such a meeting can be recovered from the company which in

turn shall recover the same from the remuneration of the directors at fault.

4. By the Company Law Board Section 186






C S Examinations



Technology


If, for any reason, it is impracticable to call a meeting of the company, other than AGM, the CLB may either of its

own motion or on the application of any director or any member of the company who would be entitled to vote at

the meeting order a meeting of the company to be called, held and conducted in such a manner as the Board

thinks fit. The CLB may also give such ancillary or consequential directions as it thinks expedient including a

direction that one member present in person or proxy shall be deemed to constitute a meeting.

35. Distinguish between motion and resolution.

A motion is a definite proposal put before a meeting for its consideration and adoption.

Notice of a motion is necessary before it is put before the meeting

It must be proposed and seconded

A resolution is the formal expression of the decision of a meeting

When a motion has been voted upon and passed by the requisite majority it is called a resolution.

36. Short notes on Holding of Board and General meetings through video-conferencing.

The MCA, vide Circular No. 28/2011 dated 20th

May, 2011, has permitted directors to participate in Board /

Committee meetings through the video conferencing facility subject to compliance with the following

Every director must personally attend atleast one meeting of the Board / Committee in a financial year

It shall not be mandatory for companies to provide its directors with the facility to attend meetings through video conferencing; the notice of meetings shall contain the necessary information regarding availability of this facility, in

cases where such facility is provided

The Chairman / CS shall be responsible to safeguard the integrity of the meeting conducted via video conferencing

At the commencement of such meetings, the Chairman / CS shall make a roll call where the director attending the meeting through electronic mode shall state his name, location and that he can completely and clearly see and

communicate with the other participants;

The directors participating through electronic mode shall be counted for the purpose of quorum.

At the end of such meeting, the Chairman shall announce the summary of the decisions taken in that meeting and the names of directors who have consented or dissented to those decisions.

Similarly, the MCA has also permitted shareholders to participate in general meetings through the video

conferencing facility subject to compliance with following conditions -

It shall not be mandatory for companies to provide the facility of video conferencing to its shareholders for the general meetings

In such cases also, the notice of general meetings shall contain the necessary information regarding the availability of this facility and the Chairman / CS shall be responsible to safeguard the integrity of the meeting conducted via

video conferencing;

The meeting shall be deemed to be held at the place where the Chairman is physically present.

37. Short note on Corporate Governance Report under Clause 49 of the Listing Agreement.

In terms of Clause 49 of the Listing Agreement :

Annual Report of the Company should comprise a separate section on Corporate Governance wherein specified compliance with Clause 49 is required to be disclosed.

Quarterly Compliance Report to be submitted to Stock Exchanges within 15 days from the close of the quarter in the prescribed format.

38. What do you mean by Directors Responsibility Statement?

In terms of Section 217 of the Companies Act, 1956, the Directors Report of a company shall contain a

Directors Responsibility Statement certifying that

- that in preparation of annual accounts, the applicable accounting standards are being followed together with proper explanations relating to material departures

- that the directors have selected such accounting policies and applied them consistently and made judgements






C S Examinations



Technology


and estimates that they are reasonable and prudent so as to give a true and fair view of the state of affairs of the

company at the end of the year and profit and loss for the period

- that the directors have taken proper and sufficient care for the maintenance of adequate accounting records for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities

- that the directors have prepared the accounts on a going concern basis

39. Explain the procedure for exemption from attaching the accounts of subsidiary company with the holding company.

General exemption has been granted to holding companies vide General Circular No. 2/2011 dated 8th

February,

2011, from attaching accounts of subsidiaries, subject to compliance with the following conditions:

The Board of Directors of the company gives consent for not attaching the accounts of subsidiaries.

The company prepares consolidated financial statements in compliance with Accounting Standards and Listing Agreement.

The holding company shall furnish hard copies of the accounts of subsidiaries to shareholders on demand.

The company shall disclose in the consolidated balance sheet the following information in aggregate for each subsidiary including subsidiaries of subsidiaries:- (a) capital (b) reserves (c) total assets (d) total liabilities (e) details

of investment (except in case of investment in the subsidiaries) (f) turnover (g) profit before taxation (h) provision

for taxation (i) profit after taxation (j) proposed dividend.

40. Explain the power of RoC to strike off names of companies.

Section 560 of the Companies Act, 1956 empowers RoC to strike off the names of those companies which do not carry on any business or operation in the following circumstances:

(a) where a company is being wound up and the RoC has reasonable cause to believe that no liquidator is acting;

(b) if the affairs of the company have been completely wound up and the required returns are not forthcoming from the liquidator appointed for a period of 6 consecutive months.

Any aggrieved member / creditor may apply for restoration of name within 20 years from publication of striking off notice in official gazette.

41. Short notes on SS7, SS8, SS9 and SS10.

Secretarial Standard 7 - Passing of Resolutions by Circulation

Chairman of the Board or the managing director should decide whether the approval of the Board for a particular business should be obtained by means of a resolution by circulation.

A resolution proposed to be passed by circulation should be sent in draft form, together with the necessary papers, individually to all the directors or, in the case of a Committee to all the members of the Committee, at the same

time.

Each business proposed to be passed by way of resolution by circulation should be explained by a note setting out the details of the proposal and the draft of the resolution proposed

The resolution is passed, when it is approved by a majority of directors entitled to vote on the resolution other than interested directors.

The resolution is deemed to have been passed on the date on which it is approved by the majority of the Directors.

Resolutions passed by circulation should be noted at the next meeting of the Board or Committee, as the case may be, and the decision recorded in the minutes of such meeting.

Passing of resolution by circulation should be considered valid as if it had been passed at a duly convened meeting of the Board or of the Committee.

Secretarial Standard 8 - Affixing of Common Seal

The common seal should be adopted by a resolution of the Board.

The impression of the common seal should be made part of the minutes of the meeting in which it is adopted.






C S Examinations



Technology


The common seal should be made of metal and capable of being manually operated.

The common seal should have the name of the company and state in which the registered office is situated engraved in legible characters.

The common seal should be affixed to any instrument only by authority of a resolution of the Board or a committee authorized by the Board.

The common seal should be affixed in the presence of managing director or any two directors, and the company secretary or any other person as the Board may authorize for the purpose.

The persons in whose presence the seal is affixed should sign every instrument to which the seal of the company is so affixed.

Every company should maintain a register, at its registered office, containing particulars of documents on which the common seal of the company has been affixed.

The common seal should be kept in the custody of a director of the company or the company secretary or any other official, as authorized by the Board.

Secretarial Standard 9 - Forfeiture of shares

The Articles should contain a provision for forfeiture of shares.

Forfeiture of shares requires approval of the Board in a duly convened meeting.

A forfeiture of shares held by a member should be made under the authority of the Board, if a call on the shares, together with interest accrued thereon, in accordance with the terms of issue of the shares, remains unpaid after the

day appointed for payment thereof.

If a member fails to pay any call, on or before the day for payment thereof, the company should during such time as any part of the call or instalment remains unpaid, serve a notice on him requiring payment of the call remaining

unpaid, together with interest which may have accrued.

The notice should state the amount of the call due and the interest accrued thereon.

The Board at a duly convened meeting should approve the forfeiture and authorize any director or manager or the secretary to make a declaration of such forfeiture.

The Notice should also specify a day not being earlier than the expiry of twenty-one days from the date of posting of the notice on or before which the payment required by the notice is to be made; and state that in the event of non-

payment on or before the day so specified, the shares in respect of which the call was made including the amount

already paid thereon will be forfeited.

Upon forfeiture, any director or manager or the secretary, authorized by the Board of the company shall make a declaration specifying the particulars of shares forfeited.

The declaration shall be conclusive evidence of forfeiture as against all persons claiming to be entitled to the shares of the company which have been forfeited.

The Board should issue individual notices to the defaulting members whose shares have been forfeited.

Entries in the register of members should be made with regard to forfeited shares and share certificates in relation to forfeited shares shall stand cancelled upon forfeiture.

There should be a reference to the forfeiture of shares in the report of the directors to the shareholders.

A person whose shares have been forfeited would cease to be a member of the company, in respect of those shares. Upon forfeiture, any director or manager or the secretary, authorized by the Board of the company shall make a

declaration specifying the particulars of shares forfeited.

The declaration shall be conclusive evidence of forfeiture as against all persons claiming to be entitled to the shares of the company which have been forfeited.

The Board should issue individual notices to the defaulting members whose shares have been forfeited.

Entries in the register of members should be made with regard to forfeited shares and share certificates in relation to forfeited shares shall stand cancelled upon forfeiture.

There should be a reference to the forfeiture of shares in the report of the directors to the shareholders.






C S Examinations



Technology


A person whose shares have been forfeited would cease to be a member of the company, in respect of those shares.

Secretarial Standard 10 - Boards Report

The Boards Report should include a statement by the Board that the company has devised proper systems to ensure compliance of all laws applicable to the company.

In the event of sickness of the company, the Report should provide the factors leading to such sickness and the steps proposed to be taken.

The Report should disclose specified details of issue of sweat equity shares. The Report should specify the reasons for the failure to implement any proposal relating to preferential allotment.

The Report should specify the reasons for the failure to pay interest or redeem debentures or preference shares on due date(s) and remedial measures taken.

The Report should specify changes in the composition of Board.

The Report should disclose if any director has incurred any disqualification or vacated office pursuant to the provisions of the Act or any other law for the time being in force.

The Report should disclose the amounts, if any, transferred during the year to the Investor Education and Protection Fund.

The Report should, in case of payment of managerial remuneration in excess of prescribed limits, disclose the particulars specified under the Act

The Report should disclose composition of audit committee.

The Report should specify the reasons for not accepting the recommendations of the Audit Committee.

The Report should disclose the amounts to be paid as limited return on share capital.

The Report should disclose the amounts, if any, proposed to be disbursed as patronage bonus.

The Report should state that the consolidated financial statements are also presented in addition to the individual financial statement of the company.

The Report should specify projections made in the previous year and the current status related to the companys performance.

The Report shall be the collective responsibility of all the directors though the report may have been approved only by a majority of the directors.

The Board should ensure consistency of information given in the Report, the Report on Corporate Governance and the explanatory statements to resolutions.

42. Short note on Investor Education and Protection Fund.

In terms of Section 205C of the Companies Act, 1956:

Investor Education and Protection Fund shall be established by CG

Such fund shall be credited with

- amounts in the unpaid dividend accounts of companies

- application moneys received by companies for allotment of any securities and due for refund

- accrued interest on the aforesaid amounts

- grants and donations given to the Fund

- interest or other income received out of the investments made from the Fund

The aforesaid amounts shall be transferred to IEPF only if the same remains unclaimed for 7 years






C S Examinations



Technology


43. Explain the procedure for declaration and payment of interim dividend.

Give notices for board meeting.

Inform the stock exchanges atleast 2 working days in advance.

Hold the Board meeting and declare the interim dividend. Before declaring interim dividend the directors must satisfy themselves about the financial position of the company.

Inform the stock exchanges about the interim dividend declared within 15 minutes of Board meeting.

Publish notice of book closure in newspapers atleast 7 days before the commencement of book closure and inform the stock exchanges.

Close the register of members of the company.

Open bank account and transfer the amount of dividend within 5 days of declaration.

Ensure payment of dividend distribution tax.

Print dividend warrants and despatch them within 30 days of declaration.

Arrange for transfer of unpaid dividend to the unpaid dividend account within 7 days from completion of 30 days period.

Transfer dividend lying in the unpaid dividend account after expiry of 7 years from the date of transfer.

File Form 1 of IEPF Rules with the RoC.

44. What are the consequences of non-registration of charge?

The charge will be void against the creditor and liquidator of the company

The company shall be liable for repayment of the money secured by the charge immediately

The company may create a second charge having priority of the unregistered charge

45. Explain the procedure for satisfaction of a registered charge.

In terms of Section 138 of the Companies Act, 1956, a company is required to comply with the following

procedure for satisfaction of charge:

File Form 17 with the RoC within 30 days of satisfaction of charge.

Attach with Form 17 a certified copy of the document satisfying the charge.

46. Short note on the Model Code of conduct for prevention of insider trading.

In terms of the SEBI (Prohibition of Insider Trading) Regulations, 1992 every listed company is required to

frame a code of internal procedures and conduct as near thereto the Model Code specified in the Regulations

without diluting it in any manner and ensure compliance of the same. The Model Code of Conduct contains the

following terms:

Company shall appoint a Compliance Officer (senior level employee) who shall report to the MD / CEO.

The Compliance Officer shall be responsible for setting forth policies, procedures, monitoring adherence to the rules for the preservation of Price Sensitive Information, pre-clearing of designated employees and their dependents trades (directly or through respective department heads as decided by the company), monitoring of trades and the

implementation of the code of conduct under the overall supervision of the Board of the listed company.

The Compliance Officer shall maintain a record of the designated employees and any changes made in the list of designated employees.

Employees / directors shall maintain confidentiality of price sensitive information.

Price sensitive information shall be dealt on a need to know basis.

Company shall specify a period called trading window for trading in the companys securities.

The window shall be closed during which the price sensitive information shall be unpublished.

It shall open 24 hours after information is made public.

All directors /officers / designated employees of the company and their dependants who intend to deal in the






C S Examinations



Technology


securities of the company (above a minimum threshold limit to be decided by the company) should pre-clear the

transactions.

All directors / officers / designated employees who buy or sell any number of shares of the company shall not enter into an opposite transaction i.e. sell or buy any number of shares during the next six months following the prior

transaction. All directors/ officers/ designated employees shall also not take positions in derivative transactions in

the shares of the company at any time. All directors / officers / designated employees shall hold their investments for minimum period of 30 days.

All directors / officers / designated employees shall disclose their holdings at the time of joining and on an annual basis.

Any employee/ officer / director who trades in securities or communicates any information for trading in securities in contravention of the code of conduct may be penalised and appropriate action may be taken by the company.

47. What do you mean by the term insider?

In terms of Regulation 2(e) of the SEBI (Prohibition of Insider Trading) Regulations, 1992 -

insider means any person who,

is or was connected with the company or is deemed to have been connected with the company and who is reasonably expected to have access to unpublished price sensitive information in respect of securities of a company,

or

has received or has had access to such unpublished price sensitive information.

48. What are the exceptions to Section 372A of the Companies Act, 1956.

Banking company, insurance company or housing finance company in the ordinary course of its business

A company established with the sole object of financing industrial enterprises or of providing infrastructural facilities

A company whose principal business is acquisition of shares / securities

A private company

Investments made in rights issue

Loan / investment / guarantee by a holding company to its wholly owned subsidiary company






C S Examinations



Technology


49. Salient features of UK Companies Act 2006 and Australian Corporations Act.

UK Companies Act 2006

One person can form a company

Minimum authorised capital 50,000

Minimum members 2 members

Minimum 2 directors

Directors duty to act in accordance with the companys constitution and exercise powers for the purpose of which they are given

Company to prepare a directors remuneration report

Public company must have a secretary

Companies to lay and file accounts

Private company within 9 months

Public company within 6 months

Small companies exempt from audit

Shareholders holding atleast 10% shares may requires companies to do audit.

Australian Corporations Act

Proprietary company

having not more than 50 non-employee shareholders

Minimum 1 director ordinarily residing in Australia

Public company atleast 3 directors minimum 2 should reside in Australia

Directors minimum age 18 years

Company other than proprietary company must have a CS ordinarily residing in Australia

CS has the responsibility to notify ASIC

Changes in directors and CS

Changes to register of members

Changes of holding company. 50. Short notes on Companies Bill 2012.

Companies Bill, 2012 was passed by the Lok Sabha on 18th

December, 2012. Highlights are given below:

Concept of One Person Company and Small companies introduced. These companies have been subjected to less stringent regulatory framework. Small companies mean companies with paid-up share capital upto Rs. 50 Lakhs or

turnover upto Rs. 2 Crores.

Maximum number of members in case of private companies enhanced to 200 (from 50). Private companies to also require a certificate of commencement of business by the RoC.

Maximum number of directors in a company restricted to 15. Companies permitted to appoint more than 15 directors after taking approval of the shareholders by way of special resolution.

Prescribed class of companies to have atleast one woman director.

All listed companies are required to appoint atleast 1/3rd of the total number of directors as independent directors.

Prescribed class of companies are required to have the following whole-time key managerial personnel,

(i) Managing director, or Chief Executive Officer or manager and in their absence, a whole-time director; and

(ii) Chief Financial Officer and

(iii) Company Secretary.

Independent Directors have been prohibited from getting Stock options but may get sitting fees and profit






C S Examinations



Technology


linked commission subject to limits specified in the Bill / Rules.

Secretarial Standards on Board and General Meetings (issued by ICSI and approved by Central Govt.) to be made mandatory.

Companies having minimum net worth of Rs. 500 crores or turnover of Rs.1000 crores or net profit of Rs. 5 crores to mandatorily constitute a CSR Committee (comprising of 3 or more directors with atleast one

independent director). Such companies to endeavour to spend at least 2% of average net profits of the 3 immediately

preceding financial years on CSR activities. Companies to specify in their Directors Report reasons for not spending the said amount.

Financial statements to include Balance Sheet, P/L Account, Cash Flow Statement and Statement of changes in equity.

Companies permitted to make investment only through maximum two layers of investment companies.

Central Govt. empowered to prescribe maximum permissible layers of subsidiaries for prescribed class of companies.

DRAFTING, APPEARANCES AND PLEADINGS

1. Short notes on Testimonium clause, Indenture, Deed Escrow and Habendum.

Testimonium Clause

This clause signifies that the parties to the document have signed the deed.

It marks the close of the deed and is an essential part of the deed.

In usual form, it states In witness whereof, parties hereto have hereunto set their respective hands and seals the date and year first above written.

Indentures

They are those deeds in which there are two or more parties.

It is an old concept where they were written in duplicate upon one piece of parchment and two parts were served so as to leave an indented edge.

Indentures are so called as at one time they were indented or cut with uneven edge at the top.

Deed escrow

A deed signed by one party is delivered to another as an escrow for it is not a perfect deed.

It is only a mere writing unless signed by all parties and dated when the last party signs it.

Habendum

Habendum states the interest the purchaser is to take in the property if the property conveyed is unencumbered reference thereto should be made in the habendum.

It starts with the words The have and to hold.

It limits the estate mentioned in the parcels.

The transferee is mentioned again in the habendum for whose use the estate has been conveyed.

2. Distinguish between drafting and conveyancing.

Both the terms drafting and conveyancing convey the same meaning, although these terms are not interchangeable.

Conveyancing gives more stress on documentation much concerned with transfer of property from one person to another whereas drafting gives a general meaning relating to preparation of documents. Documents may include

loan agreement, deed of mortgage, bill of lading, summons, notices etc. Different statutes provide different

definition for documents.






C S Examinations



Technology


3. Short notes on the recital clause.

Recitals - short story of the property upto its vesting into the last transferor

Recitals are of two types

1. Narrative recitals relating to past history of the property transferred

2. Introductory recitals explaining the motive and intention behind execution of a deed

Recitals should be inserted with great caution because they precede the operative part and as a matter of fact contain the explanation to the operative part of the deed.

Recitals carry evidentiary importance in the deed it is an evidence against the parties to the instrument and those claiming under and it may operate as estoppel Ram Charan vs. Girija Nandini

4. What do you mean by endorsements and supplemental deeds?

Endorsement means to write on the back / face of a document wherein it is necessary in relation to the contents of that document.

The term endorsement is used with reference to negotiable instruments like cheques, bill of exchange etc.

It is used to give legal significance to a particular document with reference to new facts to be added to it.

Supplemental Deed is a document which is entered between the pa