Important Topics for CS Final Examination June, 2014 (With Answers)

8/12/2019 Important Topics for CS Final Examination June, 2014 (With Answers)

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COMPANY SECRETARIAL PRACTICE

1. Explain the procedure for incorporation of a public limited company.

The minimum paid-up share capital at the time of incorporation of a private company has to be Rs. 5,00,000.There is no upper limit on having the authorized share capital and the paid-up share capital.

Ensure that the minimum number of members are seven.

Ensure that the minimum number of directors are three.

Apply for Director Identification Number (DIN) of all the directors and Digital Signatures of the signatories forelectronic signature on all the e-forms.

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 notviolate 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 availablealong with the prescribed fees of Rs. 500/-.

The ROC will ordinarily inform within 3 days from submission of application on the availability of name.

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 theirfathers name, occupation, address and the number of shares subscribed for. The Memorandum and Articles shall

also be witnessed by at least one person.

Arrange for stamping of the Memorandum and Articles with the appropriate stamp duty . Submit the following e-forms duly filled up and signed with the necessary attachments and fees:

- Application and declaration of incorporation of the companyForm-1

- Notice of situation of registered office of the companyForm-18

- Particulars of Director, Manager or SecretaryForm-32

Pay the prescribed Registration and filing fees depending on the authorised share capital of the proposedcompany.

The ROC will then register the company and issue the Certificate of Incorporation on which there will be a 21digit Corporate Identity Number (CIN).

The date of incorporation of the company shall be the date printed on the Certificate of Incorporation issued by

the ROC.

A public company can only commence business under the Companies Act, 1956 after obtaining a certificate of

commencement of business from the ROC.

2. Short note on Section 25 companies, producer companies and govt. companies.

Section 25 companies

An association which is formed not for earning profits but for promoting commerce, art, science, religion,

charity or any other useful social purpose

Such associations when registered as company with limited liability, need a licence by the Central Government(power delegated to RoC)

The RoC may grant a licence subject to the following:

1. that the company to be formed as a limited company, is for the promotion of commerce, art, science, religion,charity or any other useful social purpose

2. that such a company shall apply its profits or other income in promoting its objects

3. it prohibits payment of dividend to its members Section 13 of the Act makes it mandatory for companies to have the words Limited or Private Limited at the end

of their names; Section 25 companies are however exempted from this requirement

Another major feature of such companies is that a firm may be a member of such companies.

Producer companies

Section 581A defines Producer Company as a body corporate having its objects or activities specified in

Section 581B of the Act.

The membership of producer companies is open to such people who themselves are primary producers which is anactivity by which some agricultural produce is produced by such primary producers.

The activities specified in Section 581B, inter alia, include activities of harvesting, drying, preserving, brewing,generation & transmission of power etc.

Any 10 or more individuals, each of them being a producer, any 2 or more producer institutions, i.e. producercompanies or any other institution having only producers or producer companies as its members or a combination of10 or more individuals and producer institutions, can get a producer company incorporated under the Act.


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Government companies

Section 617 defines a Government company as a company in which not less than 51% of the paid-up share

capital is held by the Central Government or State Government.

However a government company is neither a government department nor a government establishmentHindustan

Steel Works Construction Co. Limited vs. State of Kerala.

The employees of a Government company are not government servants and they have no legal right to claim thattheir salary should be paid by the GovernmentA K Bindal vs. Union of India.

Section 620 of the Act empowers the Central Government to grant exemptions to government companies from theapplicability of the provisions of the Act.

3. 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. Lastwords of the name of the company shall be limited or private limited as the case may be. The name should notbe 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 withwhich 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 noticeswill be addressed. This Clause states the name of the State in which the registered office of the company is situatedthe exact address need not be stated.

(c)Objects Clause - This clause defines the sphere of the companys activities and the specific objectives for theformation of the company. All companies registered after 1965 must divide its objects into Main Objects and OtherObjects (ancillary or incidental to the attainment of the main objects). Anything done beyond the objects is ultravires 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 thenumber 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 byshares or by guaranteethis 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 totake 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.

4. 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 thereason 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.

5. 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 receiptof application.

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

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

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


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6. 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 monthseach), of which not more than 50% is held in monetary assets. If more than 50% of the net tangible assets are heldin monetary assets, the company should make firm commitments to deploy such excess monetary assets in itsbusiness/project.

(b) The company has a minimum average pre-tax operating profit of Rs. 15 crores, calculated on a restated andconsolidated 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 1full 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 doesnot 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 notexceed 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 1full 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

7. 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 berequired 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 allotmentForm 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.

8. Explain the procedure for issuing sweat equity shares.

In terms of Section 79A of the Companies Act, 1956, 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


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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.

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

9. Explain the procedure for making preferential issue by a listed company.

Preferential Issue means issue of specified securities to any select person or group of persons on a privateplacement basis.It does not include an offer of specified securities made through a public issue, rights issue, bonusissue, ESOPs or qualified institutions placement or an issue of sweat equity shares or depository receipts issued in acountry outside India or foreign securities

The company shall pass a SR

All the equity shares held by the proposed allottees are in the dematerialized form

The company shall obtain the PAN of the proposed allottees

In the explanatory statement given to the shareholders the company shall inter alia disclose the objects of thepreferential issue, proposal of promoters / directors to subscribe to the offer, shareholding pattern of the companybefore and after the issue, time within which such issue shall be completed, the identity of the natural persons whoare the ultimate beneficial owners of the shares proposed to be allotted

The Statutory Auditors of the company shall certify that the all requirements have been complied with

Such certificate shall also be laid before the shareholders at their meeting

In case the promoters of the company have sold their shares during the 6 months preceding the relevant date, theyshall be ineligible for allotment of securities on preferential basis.

Such issue can be made at a price not less than the higher of the following:

(a)The average of the weekly high and low of the closing prices of the related shares quoted on the stock exchangeduring the 26 weeks preceding the relevant date;

OR

(b)The average of the weekly high and low of the closing prices of the related shares quoted on a stock exchangeduring the 2 weeks preceding the relevant date.

The resolution passed for such issues shall be valid for 15 days from the date of passing

The company shall not make a preferential issue if the same is not in compliance with the conditions for continuouslisting

The currency of the instruments / warrants which will be converted into equity shares at a later date shall not exceed18 months

Lock-in period of the instruments allotted on preferential basis shall be as follows- to the promoter / promoter group - 3 years from the date of trading approval

- to persons other than the above1 year from the date of trading approval

10. 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 premiumaccount

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 ofrequirements 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 publicnotice.

11. Explain the various grounds for compulsory delisting.

The company has incurred losses during the preceding 3 consecutive years and it has negative networth;

Shareholding of the company held by the public has come below the minimum level applicable to the company asper the listing agreement (i.e. 25%) and the company has failed to raise public holding to the required level withinthe time specified by the Stock Exchange;

Trading in securities of the company has remained suspended for a period exceeding 6 months;

Securities of the company have remained infrequently traded during the preceding 3 years;

Company or any of its promoters or any of its director has been convicted for failure to comply with any of theprovisions of the SCRA or the SEBI Act, 1992 or the Depositories Act, 1996 and awarded a penalty of not lessthan Rs. 10 million or imprisonment of not less than 3 years;


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Addresses of the company or any of its promoter or any of its directors, are not known or false addresses have beenfurnished or the company has changed its registered office in contravention of the provisions of the Companies Act,1956.

12. 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 inwhose names shares are registered in the register of members of the company. following is the procedure for issueof 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.

13. 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 yeartill debentures are redeemed

Debenture Redemption Reserve shall be utilized for redemption of debentures

Debenture Redemption Reserve shall not be required to be created by banks and financial institutions.

Amount of Debenture Redemption Reserve

NBFCs - @ 25% for public issue of debentures and NIL for privately placed debentures

Other companies - @ 25%.

14. 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 debtinstruments, 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 allthe 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 sixmonths prior to the due date of redemption and has been communicated to the holders of the convertible debtinstruments, before the roll over

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

instruments.15. 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

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

Nomination of sharesSection 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 ismentioned in the nomination form

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


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company.

The nominee is also entitled to transfer such shares.

Transmission of sharesSection 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 inwriting 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. 17. 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 ofshares.

In case of refusal by a public company, the Company Law Board is empowered to direct rectification of register ofmembers 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 SEBIAct, SICA, or any other law, within 2 months from the date of transfer, direct the depository or the company torectify its records.

18.

Explain the procedure for appointment of additional directors and alternate directors.

Procedure for appointment of Additional DirectorsSection 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 alternate directorsSection 313 of the Companies Act, 1956 An alternate director can be appointed to act in place of an original director during the absence of the original

director for a period of 3 months or more from the State in which Board meetings are ordinarily held.

The Board should be authorized either by the Articles or by resolution in general meeting to appoint alternatedirectors.

As and when the original director returns to the State as above, the alternate director shall vacate his office.

Alternate director acts on his righthe is not the agent nor the proxy of the original director.

19. Short note on Independent directors and nominee directors.

Independent DirectorsSEBI has defined Independent Director in Clause 49 of the Listing Agreement as a non-executive director of thecompany who:

apart from receiving directors remuneration, does not have any material pecuniary relationships or transactions

with the company, its promoters, its directors, its senior management or its holding company, its subsidiaries andassociates which may affect independence of the director;

is not related to promoters or persons occupying management positions at the board level or at one level below theboard;

has not been an executive of the company in the immediately preceding three financial years;

is not a partner or an executive or was not partner or an executive during the preceding three years, of any of thefollowing:(i) the statutory audit firm or the internal audit firm that is associated with the company, and(ii) the legal firm(s) and consulting firm(s) that have a material association with the company.

is not a material supplier, service provider or customer or a lessor or lessee of the company, which may affectindependence of the director;

is not a substantial shareholder of the company i.e. owning 2% or more of the block of voting shares; and

has attained 21 years of age.

Nominee Directors

Non-executive Directors appointed by banks or financial institutions which extend financial assistance tocompanies.

They represent the interest of the bank / financial institution on the board of the company.


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20. What are the various grounds of vacation of directors.

A person who has been found to be of unsound mind by a Court of competent jurisdiction AND the finding is inforce

A person who is an undischarged insolvent

A person who has applied to be adjudicated as an insolvent AND his application is pending

A person who has been convicted by a Court of any offence involving moral turpitude AND is sentenced toimprisonment for not less to 6 months, and a period of 5 years has not elapsed from the date of expiry of the

sentence A person who has not paid any call in respect of shares of the company held by him, whether alone or jointly withothers, AND 6 months have elapsed from the last day fixed for the payment of the call

A person who has been disqualified for appointment as a director by an order of the Court under Section 203 of theAct (i.e. he is convicted of any offence in connection with promotion, formation or management of the company orhe is found guilty in the course of winding up proceedings of the company)

A person who fails to obtain qualification shares within the prescribed time

A person who absents himself without obtaining leave of absence from the Board(a)from 3 consecutive meetings of the Board of directors or(b)from all meetings of the Board for a continuous period of 3 months, whichever is longer.

A person who acts in contravention of Section 295 of the Act i.e. loan to a director or a firm in which he is a partneror a private company in which he is a director without complying with Section 295

A person who acts in contravention of Section 299 of the Act i.e. he fails to disclose his interest in any contract or

arrangement A person who is removed by the shareholders in pursuance of Section 284

A person who having been appointed a director by virtue of his holding any office or other employment in thecompany, ceases to hold such office or other employment in the company.

21. Explain the procedure for re-appointment of a retiring director at the AGM.

The vacancy in the office of the retiring director may be filled up by re-appointing the same director or appointingsome other person.

If the place of the retiring director is not filled up AND the meeting does not expressly resolve not to fill up thevacancy, the AGM shall be adjourned to the next week, same day, time and place (if that day is a public holiday,then to next succeeding day which is not a public holiday).

If at the adjourned meeting also the place of the retiring director is not filled up and the meeting does not expresslyresolve not to fill up the vacancy then the retiring director shall be deemed to be reappointed.

22. 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 orwhole-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 andfree reserves of ` 10 crores or more orturnover 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 amere 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) By special resolution, if the Articles so provide

Mode of payment

(a) Monthly payment and / or


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(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 timeDirector

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 aprofessional nature, the remuneration payable to a director for that will not come within the provisions of Section309 of the Act.

23. Can a company give loans to its directors ?

Section 295 is attracted if

Company X gives any loan or any security or guarantee for any loan taken or given by :

Any director (Mr. A) of Company X (or its holding company)

Partner or relative of Mr. A

Firm (A & B Associates) in which Mr. A or relative of Mr. A is partner

Private Company in which Mr. A is a director or member

A company where Mr. A or 2 or more of other directors of Company X exercises 25% voting power

A company, where the Board is accustomed to act in accordance with the instructions of BOD of Company XExemptions:

A private company

A banking company

A loan given by a holding company to its subsidiary company or security or guarantee provided in connection witha loan given to its subsidiary.

Condition to be complied

Prior approval of Central Government is required in Form 24AB

24. What do you mean by office or place of profit ?

Held by a director

If the director holding it obtains from the company anything over and above the remuneration to which he is entitled

as a director.Held by any other person

If such person obtains from the company anything by way of remuneration by whatever name called.

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 contractat the Board meeting when the contract is first considered by the Board (if thenthe director is interested) or at the meeting held first after he became interested (if he later on becomesinterested)

(b) In case of an existing contractat 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 onefinancial 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 othercompany

If the cumulative holding of all the directors together with their relatives does not exceed 2% of the paid-up capitalof 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,


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(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 inpractice.

27. What is the difference between MD and Manager?

Managing Director Manager

He is entrusted with substantial powers of management He has the management of whole or substantially wholeof the affairs of the company

A company can have > 1 MD A company cannot have > 1 Manager

He is appointed either under an agreement or by a Boardresolution or general meeting or under the provisions ofMOA / AOA

He is appointed either under a contract of service or byBoard

He must be a director He cannot be a director

He, on ceasing to be a director, shall automatically ceaseto be a MD Not Applicable

The grounds of disqualification of a MD as prescribedu/s 267 remain effective for the whole life and cannot bewaived by the Govt.

The grounds of disqualification of a manager asprescribed u/s 385 are only valid for 5 years and can bewaived by the Govt.

28. 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 theprofession 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 thehours 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 ofAssociation of a company the objects of which include areas, which fall within the scope of the profession ofCompany Secretaries irrespective of whether or not the practising member holds substantial interest in thatcompany.

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

29. Short note on casual vacancies in the position of auditors.

Casual vacancyvacancy due to death, insanity or insolvency etc. of the auditor

Such casual vacancy will be filled by the BOD

However in case of resignation by auditor such vacancy can only be filled up at the general meeting


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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 3rdJune, 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 1stApril, 2011.

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

Appointment of cost auditor

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

Such cost auditor 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.

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 30days of posting the letter.

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

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

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 thecompulsory 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 yearsimmediately preceding, whichever is greater.


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

Explanatory StatementSection 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 theshareholders can exercise an intelligent judgment Balasundaram vs. New Theatres Carnatic Talkies PrivateLimited

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

nullification of the action takenFirestone 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 truefacts have taken a different course from that which he took on the basis of the explanatory statement which did notdisclose the true facts Jessel Trust Limited

PollSection 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 furtheropportunity 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 asfollows:

(a) Public company with share capitalmembers holding not less than 1/10th of the voting power or on which anaggregate 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 arepresent

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

Proxies may also demand a pollBerar 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. What are the various methods of voting at a general meeting ?

By acclamation

By voice vote

By division

By show of hands

By ballot

By poll

35. What do you mean by statutory meeting?

Every public company having is required to hold statutory meeting within a period of not less than 1 month

and not more than 6 months from the date the company is entitled to commence business.

Section 165 allows members to discuss any matter relating to the formation of the company or arising out of thestatutory report, whether previous notice has been given or not.

The Board of directors is required to cause a list showing the names, addresses and occupations of the members ofthe company, and the number of shares held by them respectively, to be produced at the commencement of thestatutory meeting and to remain open and accessible to any member of the company during the continuation of themeeting.

A statutory report is required to be sent to each member along with the notice of the statutory meeting. A

copy of the statutory report should also be sent to the Registrar after the same is sent to the members.

The Statutory Report contains information regarding:

1. the total number of shares allotted-fully paid-up and partly paid-up; allotted for cash and consideration otherthan cash;

2. the total cash received by the company in respect of all allotments;

3. an abstract of receipts and payments up to a date within 7 days of the Report, and the balance of cash in hand;


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4. any commission or discount paid in the issue of shares or debentures;

5. the names, addresses, and occupations of directors, auditors, manager and the secretary of the company;

6. the extent to which any underwriting contact has not been carried out;

7. the arrears due on calls from every director; and

8. the particulars of any commission or brokerage paid to any director or manager on the issue of shares anddebentures.

36. Short notes on powers of the Chairman of a general meeting.

To maintain order and decorum To give ruling as to points of order

To decide priority of speakers

To maintain relevancy and order in debate

To adjourn a meeting

To exercise a casting vote

To ascertain the sense of the meeting and declare the results of voting

37. 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.

38. 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 specifiedcompliance 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 theprescribed format.

39. 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 withproper explanations relating to material departures

- that the directors have selected such accounting policies and applied them consistently and made judgementsand estimates that they are reasonable and prudent so as to give a true and fair view of the state of affairs of thecompany 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 forsafeguarding 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

40. Short notes on liabilities of auditor.

Civil Liability of an auditor

The term officer as defined in the Companies Act also includes an auditor

Liability for mis-statement in prospectus Section 62 provides that an auditor shall be liable to compensate every person who subscribes for the shares /

debentures of the company on the faith of the prospectus containing an untrue statement made by the auditor

Liability for misfeasance

Section 534 provides that the auditor may be held liable for misfeasance or breach of trust

Criminal Liability

Various Sections of the Act provide for criminal liability of auditors

41. 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 fromthe 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 offnotice in official gazette.


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42. 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 particularbusiness 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 thaninterested 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 maybe, 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 meetingof 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.

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 situatedengraved in legible characters.

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

The common seal should be affixed in the presence of managing director or any two directors, and the companysecretary 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 isso 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 theday 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 asany part of the call or instalment remains unpaid, serve a notice on him requiring payment of the call remainingunpaid, 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 thesecretary to make a declaration of such forfeiture.

The Notice should also specifya day not being earlier than the expiry of twenty-one days from the date of postingof 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 amountalready paid thereon will be forfeited.

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

The declaration shall be conclusive evidence of forfeiture as against all persons claiming to be entitled to the sharesof 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 toforfeited 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.


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

The declaration shall be conclusive evidence of forfeiture as against all persons claiming to be entitled to the sharesof 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 toforfeited 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.

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 stepsproposed to be taken.

The Report should disclose specified details of issue of sweat equity shares. The Report should specify the reasonsfor 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 ondue 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 theprovisions 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 ProtectionFund.

The Report should, in case of payment of managerial remuneration in excess of prescribed limits, disclose theparticulars 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 companysperformance.

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

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

43. 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

44. 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 mustsatisfy 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 informthe stock exchanges.

Close the register of members of the company.

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


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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 daysperiod.

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.

45. 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

46. 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.

47. 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 Regulationswithout 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 rulesfor the preservation of Price Sensitive Information, pre-clearing of designated employees and their dependentstrades (directly or through respective department heads as decided by the company), monitoring of trades and theimplementation 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 ofdesignated 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 thesecurities of the company (above a minimum threshold limit to be decided by the company) should pre-clear thetransactions.

All directors / officers / designated employees who buy or sell any number of shares of the company shall not enterinto an opposite transaction i.e. sell or buy any number of shares during the next six months following the priortransaction. All directors/ officers/ designated employees shall also not take positions in derivative transactions inthe 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.48. 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 isreasonably 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.


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

UK Companies Act 2006

One person can form a company

Minimum authorised capital50,000

Minimum members2 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 directorordinarily residing in Australia

Public companyatleast 3 directorsminimum 2 should reside in Australia

Directors minimum age 18 years

Company other than proprietary company must have a CSordinarily 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 Act, 2013.

Companies Act, 2013 was passed by the Lok Sabha on 18th

December, 2012, Rajya Sabha on 8th

August, 2013

and Presidential assent on 29th

August, 2013. Highlights are given below:

Concept of One Person Company and Small companies introduced. These companies have been subjected to lessstringent regulatory framework. Small companies mean companies with paid-up share capital upto Rs. 50 Lakhs orturnover 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 15directors 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.

Key Managerial Personnel, in relation to a company, means

(i) Chief Executive Officer or the managing director or the manager;

(ii) Company Secretary;

(iii) Whole-time Director;

(iv) Chief Financial Officer; and

(v) such other officer as may be prescribed;

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

linked commission subject to limits specified in the Act / 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 ofRs. 5 crores to mandatorily constitute a CSR Committee (comprising of 3 or more directors with atleast oneindependent director). Such companies to endeavour to spend at least 2% of average net profits of the 3immediately preceding financial years on CSR activities. Companies to specify in their Directors Report reasonsfor not spending the said amount.


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Companies to constitute Audit Committee (mandatory for listed companies and other prescribed class ofcompanies) Nomination and Remuneration Committee (mandatory for listed companies and other prescribed class

of companies) and Shareholders Grievance Committee (mandatory for companies having 1000 shareholders /depositors / debenture holders).

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 Inwitness whereof, parties hereto have hereunto set their respective hands and seals thedate 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 soas 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 unencumberedreference thereto should be made in the habendum.

It starts with the wordsThe 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 toanother whereas drafting gives a general meaning relating to preparation of documents. Documents may includeloan agreement, deed of mortgage, bill of lading, summons, notices etc. Different statutes provide differentdefinition for documents.

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 recitalsrelating to past history of the property transferred

2. Introductory recitalsexplaining 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 containthe explanation to the operative part of the deed.

Recitals carry evidentiary importance in the deedit is an evidence against the parties to the instrument and thoseclaiming under and it may operate as estoppelRam 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 parties on the same subject on which there is

a prior document existing and operative for adding new facts to the existing document.

Thus supplemental deed is executed to give effect to the new facts in the deed.


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When a deed or document is required to be supplemented by new facts in pursuance of or in relation to a prior deedthis can be affected by either endorsement on the prior deed when short writing would be sufficient, or by executinga separate deed know as supplemental deed.

5. Distinguish between deed poll and deed pool.

Deed Poola deed made between two or more parties where as many copies are made as there are parties, so thateach party is in possession of a copy.

Deed Polla deed made and executed by a single party for examplePOA.

6. Draft an agreement for sale of house property.

THIS AGREEMENT OF SALE executed on the 10th day of June, 2013, between Mr. Ram Kapoor son ofMr. Atmaram Kapoor, residing at 41 Chowringhee Road, Kolkata 700 071, hereinafter called the vendor of theone part and

Ms. Priya Sharma, daughter of Mr. Shivraj Sharma, residing at 4 Lovelock Place, Kolkata700 019, hereinaftercalled the purchaser of the other part,

(The expressions "vendor" and "purchaser" wherever they occur in these presents, shall unless the context otherwiseadmits, also mean and include their respective heirs, executors, administrators, legal representatives and assigns).

WHEREAS the vendor is the sole and absolute owner of the property more fully set out in the Schedule hereunder:

AND WHEREAS it is agreed that the vendor shall sell and the purchaser shall purchase the said property for a sum of

Rs. 50,00,000/- (Rupees fifty lakhs only) free of all encumbrances.

NOW THIS AGREEMENT OF SALE WITNESSETH AS UNDER:

(a) The price of the property more fully set out in the Schedule hereunder is fixed at Rs. 50,00,000/- (Rupees fiftylakhs only) free of all encumbrances.

(b) The purchaser has paid to the vendor this day, a sum of Rs. 10,00,000/- (Rupees ten lakhs only) by way ofearnest money for the due performance of the agreement, the receipt whereof the vendor doth hereby admit andacknowledge.

(c) The time for performance of the agreement shall be threemonths from the date hereof and it is agreed that thetime fixed herein for performance shall be of the essence of this agreement.

(d) The purchaser shall pay to the vendor the balance sale price of Rs. 40,00,000/- (Rupees forty lakhs only) beforeregistration of the conveyance deed.

(e) The vendor agrees that he will deliver vacant possession of the property to the purchaser before registration of theconveyance deed. Or alternatively, the vendor agrees that he will put the purchaser in constructive possession ofthe property by causing the tenants in occupation of the property to attorn their tenancy to the purchaser.

(f) The vendor shall execute the conveyance deed in favour of the purchaser or his nominee as the purchaser mayrequire.

(g) The vendor shall hand over all the title deeds of the property to the purchaser or an advocate nominated by himwithin ten days from the date of this agreement for scrutiny of title and the opinion of the vendor's advocateregarding title to the property shall be final and conclusive. The purchaser shall duly intimate the vendor about theapproval of title within thirtydays after delivering the title deeds to him or to his advocate.

(h) If the vendor's title to the property is not approved by the purchaser, the vendor shall refund the purchaser theearnest money received by him under the agreement and on failure of the vendor to refund the same within thirtydays, he shall be liable to repay the same with interest thereon at the rate of 15%per annum.

(i)

If the purchaser commits a breach of the agreement, he shall forfeit the earnest amount of Rs. 10,00,000/-(Rupees ten lakhs only) paid by him to the vendor.

(j) If the vendor commits a breach of the agreement, the vendor shall not only refund to the purchaser the sum of Rs.10,00,000/- (Rupees ten lakhs only) received by him as earnest money, but shall also pay to the purchaser anequal sum by way of liquidated damages.

(k) Nothing contained in paras (i) and (j) above shall prejudice the rights of the parties hereto specific performance ofthis agreement of sale/purchase.

IN WITNESS WHEREOF the vendor and the purchaser have set their respective hands to the agreement ofsale/purchase on the day, month and the year above written, in the presence of the following witnesses:

Witnesses:

(1) Name:

Father's Name:

Address:

Mr. Ram Kapoor


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Signature: Vendor

(2) Name:

Father's Name:

Address:

Ms. Priya Sharma

Signature: Purchaser

Schedule of Property

All that one Flat being No. 5/B, containing an area of 1258 square feet more or less on the fifth floor of the buildingcommonly known as Poonam being premises No. 5/2, Russel Street, P.S. - Park Street, in the town of Kolkata.

7. What do you mean by del credere agent ?

Del Credere Agency is a special type of agency which combines agency with guarantee.

A Del Credere Agent is one who for an extra remuneration undertakes the liability to guarantee the due performanceof the contract by the buyer.

He therefore gives additional security to the seller, but he does not shift the responsibility of payment from

the buyer to the seller.

8. Draft an agreement for entering into a collaboration.

Agreement executed this 20thday of August, 2013between M/s. Incos. Limiteda Foreign Company incorporated inthe United Kingdom and having its registered office at 43, Birmingham Place, UK, hereinafter called the U.K.Company of the ONE PART.

AND

M/s. Prem Works Limited, a company incorporated in India and having its registered office at 43, V.I.P Road,

Kolkata700 056, hereinafter called the Indian company of the OTHER PART.

WHEREAS the Indian company has been incorporated having for its object the manufacture and production of steelrolls; WHEREAS the Indian company has already constructed factory buildings, installed plant and machinery andcommenced manufacture and production of steel rolls; WHEREAS the Indian company with a view to improve stillfurther the quality of the commodities manufactured and to increase production are desirous of procuring the latest

technique and know-how relates to the manufacture of the above said commodities; WHEREAS the Indian companytherefore approached the U.K. company who have considerable experience in the line of manufacture engaged in bythe Indian company, and requested them to extend to them necessary technical assistance in that behalf; ANDWHEREAS the U.K. company has agreed to extend technical assistance and to furnish to the Indian company forimprovement of their business the requisite know-how in the form of designs, plans, engineering drawings, technicaladvice and also to supply technicians to advice for improvement of the existing factories, machineries and plant andalso to provide to the Indian personnel necessary technical training to enable them to successfully handle and exploitthe technical know-how to be imparted to the Indian company subject to the terms and conditions set out hereunder:

NOW THIS AGREEMENT WITNESSES AS FOLLOWS:

(a) In consideration of the remuneration paid by the Indian company to the U.K. company as described hereinafter theU.K. company shall supply to the Indian company:

technical advice and know-how for the purpose of improving or adding to the existing factories and installingadditional plant and machineries if necessary for the manufacture of steel rolls;

further the necessary plans, factory-design and layouts, charts and drawings,

documentation and other forms of technical know-how for the said purpose;

render advice in the matter of purchase of the further plant and machinery suitable and necessary for thefactory;

lend the services of their technicians to assist the Indian company in carrying out the improvement to thefactories and for installing additional plants and machinery;

provide technicians from their own staff to attend at the Indian company's factory in India whenever necessary;

impart technical training to selected Indian personnel at their works in England or in their associatedcompanies, to enable them to operate the machinery and plant to be installed and to exploit the importedtechnical know-how to the best advantage;

advise the Indian company, promptly and to the best of their ability, in connection with any technical ormanufacturing problems or difficulties which may be referred to it by the Indian company during thecontinuance of this agreement.

(b) For technical know-how and data supplied by the U.K. company to the Indian company as above, the Indian


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company shall make a lump sum payment of Rs. 50 lakhsto the U.K. company phased as follows:

one-third on approval of the agreement by the Central Government;

one-third, on the U.K. company supplying the Indian company necessary charts, plans, engineering drawings,documentation and other technical data and know-how, which shall be done within 15 days from the date ofapproval, of this agreement by the Central Government;

the balance one-third in three equal annual instalments thereafter after commencement of production.

(c) This Agreement shall be in force for a period of 5 years at the first instance, subject to extension for a furtherperiod of 5 years by mutual agreement and subject to approval by the Central Government.

(d) The Indian company may but not bound to use foreign brand names on their products for internal sale or onproducts to be exported.

(e) There shall be no restriction on the Indian company exporting their products to foreign countries.

(f) The Indian company shall not have the right to pledge, mortgage or assign or to sub-licence the technical know-how, data, engineering designs, layouts etc. to other parties, without the consent in writing of the U.K. company.

(g) There shall be no restraint on the Indian company having their own arrangements for procurement of rawmaterials, purchase of spares and components and for pricing their products and the sale thereof.

(h) Technicians who may be deputed by the U.K. company to the Indian company to advise and assist the Indiancompany under this agreement shall be paid their salary, travelling expenses and boarding and lodging by theIndian company.

(i) The Indian company shall likewise bear all the expenses of the persons sent by them to the U.K. company fortraining in their works under clause (a) supra.

(j) The parties hereto mutually agree that they will each inform the other of any new development in design ormethods of manufacture which they respectively may discov