Practice Paper on Corporate and Allied Laws for CA Final November 2016 Examination

Question 1 is compulsory (attempt any four sub-parts). Answer any other five questions from rest of the Paper
Q.1.(a).
ABC Limited, an unlisted company, incorporated several years ago with 1100 members, is transiting to the Companies Act,
2013 pursuant to enactment of its various provisions by MCA from time to time. Its paid up share capital as at 31st March,
2014 is Rs. 25 crores (previous year Rs. 25 crores) and the turnover for the period ended on this date is Rs. 550 crores
(previous year Rs. 470 crores). Its application for listing is also pending for vetting before SEBI. Its articles of association
require appointment of SSD on suo motu basis in the next half year next to the year in which its turnover exceeds Rs. 500
crores. At present, the company do have the following directors in its Board of Directors:
1) Mr. A, Managing Director, having 5% shareholding in ABC Limited;
2) Mr. B, Whole Time Director;
3) Mr. C, Director (Finance);
4) Mr. D, Director (Legal)
ABC Limited has approached you to advise about the following appointments for an initial period of 5 years as well as the
changes required to be made in its BOD and/or its committees pursuant to the 2013 Act:
a) Mr. R, brother of Mr. B, as Director (Operations) of the Company at a monthly remuneration of Rs. 3,00,000 p.m. and
CEO of its holding company DEF Limited at a monthly remuneration of Rs. 2,75,000 p.m. (similar appointments made
by other companies in industry at the same amount);
b) Mr. M, brother of Mr. C and a Chartered Accountant in practice to appear before authorities for hearing of income
taxes cases, as and when required, at a fees of Rs. 25,000 per hearing;
c) Mrs. R, as SSD in the Company;
d) Ms. P, as SSD in the Company. Her father is a trustee in NGO which receives 40% of its donations from ABC Limited,
for the education of needy children;
e) Ms. T, as SSD in the Company, who has defaulted in filing of annual accounts and annual returns in PQR Private
Limited for a continuous period of 3 years till the year 2011-2012, while being a director in charge of finance
department in PQR (P) Ltd.;
f) Ms. Q, as SSD in the Company, being a fresh qualified CS, who is already executive director in other rival company.
Assume that none of the proposed appointments in (a) to (f) hold any share in the Company ABC Limited. (5 Marks)
Q.1.(b).
The promoters of a listed public company propose to have the strength of the Board of directors as eleven. They also
propose to make the managing director and whole time directors as directors not liable to retire by rotation. Advise about
the following matters:
(i) Maximum number of persons, who can be appointed as directors not liable to retire by rotation.
(ii) How many of the remaining directors will have to retire by rotation every year at the annual general meeting?
(iii) For the purpose of increasing the strength, certain nominations were received from shareholders to nominate
candidates for contesting elections. One of the nominations was rejected by the Directors because it was received
after sending the notice of AGM and that too after the working hours of the last day on which nomination should have
been received.
(iv) Can the BOD increase the strength of companys directors to eighteen through by appointing additional directors
through passing single resolution. If yes, then whether these additional directors are liable for rotation? (5 Marks)
Or
Total No. of votes polled + 1
If the formula for the minimum number of votes is No. of candidates to be elected + 1 for election of directors through
proportional representation and the number of candidates is six, i.e. A, B, C, D, E and F, advise about the directors who
shall be elected under this method, if the votes casted in favour of these six candidates respectively are: 26, 9, 14, 24, 7,
20. The total number of votes is 100.
Q.1.(c).
Suresh, a director of ABC Ltd. made default in filing of annual accounts and annual returns with ROC for a continuous
period of 3 financial years ending on 31-3-2014. Examine the validity of the following under Companies Act, 2013:
(i) Whether Suresh can continue to be a director of ABC Ltd., and also EF Ltd., where he is a director. Also state
whether he can be reappointed as a director in ABC Ltd. as well as EF Ltd.;
(ii) Would your answer be still the same in case Suresh is a nominee director of a Public Financial Institution;
(iii) What would be your answer in case the defaulting company (i.e. ABC Ltd.) is a private company;
(iv) Can Mr. Suresh be appointed as alternate director for Mr. Dinesh, a director in LMN Limited, who would be out of
India for 4 months, if the company has filed application for rectifying annual filing default under CLSS, 2014, on 10th
August, 2014;
(v) Can Mrs. Suresh be appointed as alternate director for Mr. Vinesh, a director in LMN Limited, who would be out of
India for 4 months. Mrs. Suresh was not elected as director by members of LMN Limited in the election conducted
during last year;
(vi) Can Mr. Naresh, brother of Mr. Suresh, be appointed as alternate director by and for Mr. Jinesh, a director in LMN
Limited, who would be out of India for 4 months. (5 Marks)
CA Kamal Garg [B. Com (H), FCA, DISA (ICAI)], www.kgma.in
Ph.: 9899954015, 9953590104

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Q.1.(d).

Q.1.(e).

Q.2.(a).

Q.2.(b).

Mr. R, S, T, U and V are the directors in RST Limited (Paid up capital Rs. 8 crores and average turnover Rs. 1,000 crores).
Each one is drawing a remuneration of Rs. 75,000 p.m. On the secretarial audit of this Company for the financial year
2014-2015, the following information was identified by the secretarial auditor:
(i) RST Limited has rectified its 2013-14s default in repayment of statutory dues and public deposits in the current year;
(ii) A mortgage was created over the property of the company. The loan was advanced by the son of Mr. R. All the
directors already knew this fact. But he neither disclosed his interest nor abstained from voting while approving the
said transaction;
(iii) RST Ltd. entered into a contract with M and Co. Ltd. for purchase of raw materials of Rs. 2,50,000 at the prevailing
market rate. Mr. S and Mrs. S were respectively holding shares of the value of 1% and 1.5% of the paid up capital of
M and Co. Ltd. Mr. S did not disclose the nature of interest;
(iv) 60% of equity share capital in RST Limited was allotted to ZEN Limited. Aggrieved with this, Mr. T, U and V offered
their resignations and the following terms were settled:
Mr. T would be given consideration for his resignation for his unexpired tenure of 3 years;
The firm of Mr. U would be appointed as sole selling agent of RST Limited whereby the firm would be paid a
commission of 5% of sales affected by it. The sales quota fixed for the firm is Rs. 250 crores;
Mr. V shall continue in the office subject to the condition(s) that he would be acquiring 3% equity in ZEN Limited
after 6 months at face value
Advise in brief the legal implications involved in above mentioned information pursuant to Companies Act, 2013. (5 Marks)
An Inter-state co-operative society was incorporated on 1st May 2013 as a Producer company under the provisions of the
Companies Act, 1956/ 2013. Advise the company in respect of the following proposals:
1. The company decides to have 18 Directors on its Board after incorporation.
2. Transferability of shares and voting rights;
3. Process for reconversion from Producer Company to Inter-state co-operative society;
4. Issue of bonus shares; and
5. Position of directors in the following circumstances:
X a Director of ABC Ltd., a producer company has made a default in payment of loan taken from a company and
default continues for 60 days.
Z a Director of the above company could not call the AGM for the company due to some natural calamity occurred
three days before the Schedule date. (5 Marks)
The Board of directors of ABC Ltd. met thrice in the year 2014 and the 4th meeting, though called could not be held for
want of quorum. Examine with reference to the relevant provisions of the Companies Act, 2013, the following:
(i) Whether any provisions of the Companies Act, 2013 have been contravened?
(ii) Is a director bound to attend the Board meetings and when his frequent absence there-from may be excused?
Further, the articles of association of a company provide that the meeting of the Board of Directors of the company will be
held on the last Friday of every month. The secretary of the company as a result does not serve the notice to the individual
directors of the company. Consequently, a meeting of the Board of directors was held on 23-2-2014. The meeting was
attended by all the directors with the exception of two directors out of a total of 10 directors and certain resolutions were
passed. The two absentee directors object to the meeting and the proceedings of the meeting for want of notice. Decide:
(i) Whether the objection raised by the two absentee directors is valid?
(ii) Would your answer be the same in case the secretary of the company, instead of sending notice on a usual
format to the individual directors, sent a copy of the articles of association to each one of the directors?
In the second BOD meeting during the year 2014 of ABC Ltd. 4 directors were physically present and 4 participated
through video conferencing to discuss buy back of shares and approval of financial statements. After completion of
discussion on a matter voting was done. 3 (1 through e mode) directors voted in favour of the motion, 2 directors voted
against the motion while 3 (1 through e mode) directors abstained from voting.
(i) State w.r.t. the provisions of the Companies Act, 2013 whether the motion was carried or not.
(ii) If the motion is carried out with majority, then whether it will remain valid if the minutes in this respect were not signed
even in the subsequent Board Meeting.
(iii) Would your answer be different if this Board Meeting agenda was carried through circulation instead of video
conferencing
In the third Board meeting of ABC Ltd. held in the year 2014, at Chennai at 11 a.m., at the starting of meeting, the numbers
of directors present were 7. The total directors were 10. The board transacted 10 items in the meeting. At 12 noon after the
completion of 4 items in the agenda, 4 directors left the meeting. Examine the validity of these transactions. (4 Marks)
Premier Housing Finance Co. Limited is prepared to give housing loans to the employees of Supreme Chemicals Limited
subject to the condition that the loans are guaranteed by Supreme Chemicals Limited. Supreme Chemicals Limited is not a
listed company and the company will be exceeding the limits prescribed under the Companies Act, 2013 by providing such
guarantee. Advise the company about the legal requirements under the Companies Act, 2013 to give effect to the above
proposal. What would be your advice, if the company was required to provide security instead of guarantee? (4 Marks)

CA Kamal Garg [B. Com (H), FCA, DISA (ICAI)], www.kgma.in

Ph.: 9899954015, 9953590104

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Q.2.(c).

Q.2.(d).

Q.3.(a).

Q.3.(b).

M/s ABC Ltd. had power under its memorandum to sell its one of the undertaking out of ten undertakings to another
company having similar objects. The net worth of ABC Limited is Rs. 1000 crores and its total investment in its various
undertakings is Rs. 200 crores in equal proportion. One of its undertakings generates 30% of total income for the company
but its value in line with ABC Limited is only 10% of company's value. The Articles of company empower the directors to
sell or otherwise deal with the property of the company. The Shareholders passed an ordinary resolution for the sale of its
assets on certain terms and required the directors to carry out the sale. The Directors refused to comply with the wishes of
the shareholders where upon it was contended on behalf of the shareholders that they were the principal and directors
being their agents were bound to give effect to their decision. Decide:
(i) Whether the contention of shareholders against the non-compliance of their wishes by the directors is tenable.
(ii) Can shareholders usurp the powers which by articles are vested in directors by passing a resolution in GM (4 Marks)
ABC Limited filed its incorporation document with Registrar of Companies (ROC) on 28th September, 2015 with its
registered office to be located in SEZ. Its application for incorporation was rejected by the ROC because all its proposed
directors were foreign national and only 1 of such foreigner directors (Mr. X) resided in India during calendar year 2014 for
a total of 140 days. Advise about the legal validity of ROC action. Would your answer be different if company would have
been given the certificate of incorporation and Mr. X is proposed to be appointed as MD in the Company? (4 Marks)
Or
NGR Co. Limited made a loss of `20 lakhs after providing for depreciation for the year ended 31-3-2015 and as a result the
company was not in a position to declare any dividend for the said year out of the profits. However, the Board of the
company announced the declaration of dividend at the rate of 15% on the equity shares payable out of the free reserves.
The paid up share capital of the company and its free reserves as on 31-3-2015 are `2 crores and 10 crores respectively.
The average dividend declared by the company in the last five years is 25%. Examine the validity of declaration of dividend
(4 Marks)
Following is the latest audited Balance Sheet of XYZ Ltd.:
Capital and Liabilities
Rs.
Assets
Rs.
Equity Share Capital (10,000 shares of Rs.
10,00,000 Goodwill
3,00,000
100 each)
Land and buildings
10,50,000
10,000 Plant and Machinery
20,25,000
Less: Calls unpaid
1,25,000
9,90,000 Equity Shares in A Ltd.
Preference Share Capital
Preference
Shares
in
B
Ltd.
50,000
1,50,000
Share Application Money
Debentures
in
C
Ltd.
1,00,000
2,00,000
Securities Premium A/c
2,25,000
1,50,000 Shares in P Ltd.
Capital Redemption Reserves
1,00,000
2,25,000 Capital in Z and Co.
General Reserve
55,000
5,00,000 Current Assets
Profit and Loss A/c
2,20,000
Sinking Fund Reserve
1,10,000
Dividend Equalisation Reserve
60,000
Loan from Public Financial Institutions (P.F.I.)
10,00,000
Deposits from S Ltd
2,00,000
Current Liabilities
1,25,000
Provision for Taxation
1,00,000
40,30,000
40,30,000
The following is the additional information:
(i) Of the equity share capital, 3,000 shares have been issued as rights shares and 2,000 shares as bonus shares.
(ii) B Ltd. is subsidiary of XYZ Ltd. with 90% shareholding, whereas A Ltd. is wholly owned subsidiary of XYZ Ltd.
(iii) Z and Co. is a partnership firm.
The directors seek yours advice about proposal of following additional investments, etc. to be considered in Board Meeting:
(i) Loan to A Ltd.: Rs. 10,00,000 and Guarantee to be given by A Limited for Loan from P.F.I: Rs. 5,00,000;
(ii) Debentures in B Ltd.: Rs. 2,25,000 and Guarantee to be given by B Limited for Loan from P.F.I: Rs. 5,00,000;
(iii) Purchase of 80% equity shares of Shree Investment Company Limited in the open market: Rs. 95,000;
(iv) Shree Investment Company Limited has been directed by XYZ Limited to invest the money invested by it, in 60%
equity of Devi Investment Company Limited and pursuant to this Devi Investment Company Limited would be making
further investments of XYZ Limited money received through Shree Investment Company Limited, in the preference
share capital of ITC Limited, a FMCG Company.
Would your answer be different if Mr. X is a common director in XYZ Limited and A Limited and B Limited (5 Marks)
Mr. X, a Chartered Accountant in practice had access to financial statements of M/s Grow Big Limited, a listed entity for the
purpose of limited review. Mr. X was not the statutory auditor of M/s Grow Big Limited. Mr. Y, brother of Mr. X had
purchased 60,000 shares of Rs. 8/- face value with a market value of Rs.12/-, contributing to a market capitalization of the
company to the tune of Rs. 7,20,000 of M/s Grow Big Limited.

CA Kamal Garg [B. Com (H), FCA, DISA (ICAI)], www.kgma.in

Ph.: 9899954015, 9953590104

Page 3

Q.3.(c).

Q.4.(a).

Q.4.(b).

Q.4.(c).

Mr. X discussed the findings of his limited review with his brother Mr. Y and warned him of the negative impact of its
quarterly results on the market capitalization and the stock of the company. Mr. Y thereafter, sold his shares of M/s Grow
Big Limited before the disclosure of such unpublished price sensitive information in the public domain.
One of the directors of M/s Grow Big Limited, Mr. A, also had access to the said documents and accordingly undertook a
forward dealing for sale of a part of his shareholding in the stock market, one day prior to announcement of results in the
stock market in order to capitalize his profits. He was aware, that subsequent to announcement of financial results, the
stock price shall go down considerably. He therefore, decided to undertake a prudent step to avert the possible future loss
due to downfall in share price.
Mr. A, on behalf of the company, submitted a copy of the said financials to PQR Bank Limited for renewal of its overdraft
limit and also for grant of a loan. Basis the aforementioned, advise on the following:
a. Does the act of Mr. X of disclosing unpublished price sensitive information of his client M/s Grow Big Limited to his
brother Mr. Y, who holds shares of M/s Grow Big Limited, amount to insider trading?
b. If Mr. Y is guilty of insider trading, what is the penalty and prosecution provision for which he is liable?
c. In (b) above, if Mr. Y is guilty then what are remedies which can be resorted to by him?
d. In (b) above, if Mr. Y is proved as not guilty before the Court and acquitted from the offence of insider trading then
what is recourse available before the Central Government under Companies Act, 2013? (6 Marks)
Advise M/s Super Specialities Ltd. having multiple business segments in respect of the following proposals under
consideration of its Board of directors:
(i) Appointment of a whole time director aged 18 years and a managing director cum chairman who is more than 70
years of age;
(ii) Appointment of a manager who was convicted of an offence under Negotiable Instruments Act, 1881 due to bouncing
of cheque for insufficient funds;
(iii) Payment of commission of 4% of the net profits per annum to the ordinary directors of the company;
(iv) Payment of remuneration to an ordinary director for rendering professional services;
(v) Payment of remuneration of Rs. 40,000 per month to the whole time director of the company running in loss and
having an effective capital of Rs. 95.00 lakhs;
(vi) Payment of sitting fees to independent director for an amount of Rs. 50,000 per Board Meeting when other directors
are entitled to sitting fees of Rs. 75,000 per Board Meeting;
(vii) Waiver of recovery of (a) fidelity insurance premium paid on behalf of its managerial persons for the indemnification of
the Company; and (b) excess remuneration paid due to incorrect profits computed for the fraudulent financial
reporting made in the previous year. (5 Marks)
Or
Examine w.r.t. the provisions of Co. Act, 2013 whether the following companies can be treated as foreign companies:
a) A company incorporated outside India having a share registration office at Mumbai.
b) Indian citizens incorporated a company in Singapore for the purpose of carrying on business there.
c) A company which is incorporated outside India employs agents in India but has no place of business in India.
d) A company incorporated outside India, having shareholders who are all Indian citizens.
e) A company incorporated in India but all the shares are held by foreigners.
(i) State the documents that are required to be filed with the ROC under the Co. Act, 2013, by foreign companies identified
above, initially when they establish a place of business in India and later on periodically or on happening of certain events.
(ii) 20% of equity share capital and 50% of preference share capital of ABC Limited (a company incorporated outside India)
is held by companies incorporated in India. While issuing prospectus for inviting subscriptions in India, it did not mention
the country where it is incorporated. Examine the validity of such prospectus. (5 Marks)
An inspector was appointed under the Companies Act, 1956/ 2013 to investigate the affairs of a public company. Mr. WM,
the works manager of the company, who is aware of certain misdeeds of the management, desires to know whether he is
entitled to any protection against dismissal by the company, if he discloses the misdeeds during the course of
examination by the inspector. Advise him explaining the relevant provisions of the Companies Act, 1956/ 2013. (4 Marks)
The report submitted by the inspector appointed under the Co. Act, 1956/ 2013 to investigate the affairs of a Company
revealed that substantial funds of the Company have been misappropriated by the MD of the Company. The Central
Government is of the opinion that effective action may not be taken the company for recovery of the funds misappropriated
by the MD. Examine with reference to the provisions of the Companies Act, 1956/ 2013 the action that can be
taken by the Central Government for recovery of damages or funds misappropriated by the Managing Director. (4 Marks)
A group of creditors of a company lodged a complaint with the ROC alleging that the Directors of the company are
engaged in falsification and destruction of account books and records of the company and urged the Registrar to seize the
account books and records of the company. It was also alleged that one of the director was in wrongful possession of
companys property for which the recovery application was filed before the Court. Discuss the power available to ROC and
Company in this regard under Companies Act, 1956/ 2013. (4 Marks)

CA Kamal Garg [B. Com (H), FCA, DISA (ICAI)], www.kgma.in

Ph.: 9899954015, 9953590104

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Q.4.(d).

Q.5.(a).

Q.5.(b).

Q.5.(c).

Q.6.(a).

Q.6.(b).

ABC Limited, over years, enjoys high reputation and its General Reserve is many times more than the paid-up capital of
the company. There is apprehension of cornering the shares of the company by some persons likely to result in change in
the Board of Directors which may be prejudicial to the Public interest. Advise, as to how can, ABC Limited block the
transfer of shares of the company under the provisions of the Companies Act, 1956/ 2013. (4 Marks)
A group of shareholders consisting of 25 members decide to file a petition before CLB for relief against oppression and
mismanagement by Board of Directors of M/s Fly By Night Operators Ltd. The company has a total of 300 members and
the group of 25 members holds 1/10th of the total paid up share capital accounting for 1/15th of the issued share capital.
The main grievances of the group are as follows:
1. due to mismanagement by the Board of directors, the company is incurring losses and the company has not declared
any dividends even when profits were available in the past years for declaration of dividend;
2. the minority shareholders are continuously creating hurdles for the majority in availing loans from the Bankers for
companys expansion activities
Advise the group of shareholders regarding the success of:
(i) getting the petition admitted and obtaining relief from the Company Law Board
(ii) members right to inspect of Books and other records of the Company in this regard (4 Marks)
ABC Co. Ltd. was amalgamated with, and merged in XYZ Co. Ltd. Some workers of ABC Co. Ltd. refuse to join as workers
of XYZ Co. Ltd. and claim compensation for premature termination of services. XYZ Co. Ltd. resists the claim on the
ground that their services are transferred to XYZ Co, Ltd. by the order of amalgamation and merger and, therefore, the
workers must join service of XYZ Co. Ltd. and cannot claim any compensation. State whether the workers of ABC Co. Ltd.
will succeed in their claim. Give reasons. (4 Marks)
M/s Info-tech Overtrading Ltd. was ordered to be wound up compulsorily by an order dated 15-10-2014 of the Delhi High
Court. The OL who has taken control of the assets and other records of the company, has noticed the following:
(i) The MD of the company has sold certain properties belonging to the company to a private company in which his
son was interested causing loss to the company to the extent of Rs. 50 lakhs. The sale took place on 10-5-2014.
(ii) The company created a floating charge on 1-1-2014 in favour of a private bank for the overdraft facility to the
extent of Rs. 5 crores, by hypothecating the current assets viz., stocks and book debts.
(iii) The company has a property located at the outskirts of the city which is worthless and the liquidator wants to
disclaim such property.
(iv) A cheque drawn by the director of the company in favour of a creditor was bounced due to insufficient funds for
which suit against him was pending under Negotiable Instruments Act, 1881. Examine what action the official
liquidator can take in this matter having regard to the provisions of the Companies Act, 1956.
The Official Liquidator after realisation of assets (other than above) has an amount of Rs. 28,00,000 at his disposal towards
payment to the creditors of the company. The list of creditors is given below:
(i) Dues to secured creditors: 20,00,000
(ii) Dues to workers: 15,00,000
(iii) Taxes, etc, payable to the government authorities: 2,00,000
(iv) Unsecured creditors: 40,00,000
Explain the procedure to be followed for payment of dues as provided in the Companies Act, 1956, assuming that (i). the
liquidation is not expected to be completed within the prescribed time frame; and (ii). one of the person has falsely claimed
himself as companys creditor on the basis of forged invoices. (8 Marks)
The BOD of ABC Limited having average profit of Rs. 1 crore during the last 3 financial years and the consistent paid up
capital plus free reserves amounting to Rs. 10,00,000 propose to enter into following transactions during 2014-2015:
(i) Rs. 1,00,000 donation to a school run exclusively for the benefit of employees;
(ii) Rs. 40,000 to a general charitable fund;
(iii) Rs. 50,000 for an advertisement in a magazine of political party;
(iv) Rs. 15,00,000 of borrowings from Public Financial Institutions;
(v) Rs. 2,50,000 as a personal loan to its Managing Director;
(vi) Guarantee of Rs. 10,00,000 for a house building loan taken by its Whole time Director;
(vii) Rs. 5,00,000 of loan to one of the relative of director of its holding company;
(viii) Rs. 2,50,000 of loan to ABC (P) Limited in which one of its director is a manager
Advise the Board of directors about their powers in respect of the above under the Companies Act, 2013. (6 Marks)
A Company M/s Flight Up Limited wants to get its shares listed on the stock exchange. The Post issue face value of the
capital of the company shall be Rs. 9.50 crores. With this background, answer the following:
(i) Can the shares of the company be listed on a stock exchange and under what regulations shall it proceed for listing?
(ii) What shall be the minimum application value?
(iii) What shall be the minimum number of allottees in such a case?
(iv) Discuss the underwriting obligations of merchant bankers and underwriters in such a case.
(v) What shall be the minimum face value of such shares? (6 Marks)

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Q.6.(c).
Q.7.(a).

Q.7.(b).

Q.7.(c).

Q.7.(d).

Q.8.

What are the obligations of banking companies, financial institutions, etc. under PMLA, 2002 (4 Marks)
M/s Ganesham & Co. is a member of recognized stock exchange. Nova Crafts Export Limited desires that shares of the
company may be bought and sold by M/s Ganesham & Co. on their own as well as on behalf of the investors. Advise M/s
Ganesham & Co. whether it can do so under the provisions of the Securities Contracts (Regulation) Act, 1956. (4
Marks)
Mr. Patel has transferred his shares of a listed company registered in his name to Mr. Mehta. Mr. Mehta has failed to
get the shares registered in his name before the company declared and paid the dividend on the shares. Examine
with reference to the provisions of Securities Contracts (Regulation) Act, 1956 whether Mr. Patel is entitled to retain
the dividend even though he has transferred the shares before declaration of dividend. (4 Marks)
A group of investors are upset with the functioning of two leading stock brokers of Calcutta Stock Exchange and want
to make a complaint to SEBI for intervention and redressal of their grievances. Explain briefly the purpose of
establishing SEBI and what type of defaults by the stock brokers come within the purview of SEBI Act, 1992
alongwith the possible remedies for them therein. (4 Marks)
Mr. G, an Indian national desires to obtain Foreign Exchange for following current account transactions:
(i) Payment of commission on exports made towards equity investment in wholly owned subsidiary abroad of an Indian
Company.
(ii) Remittance of hiring charges of transponder.
(iii) Remittance for use of trade mark in India.
Advise G whether he can obtain Foreign Exchange and, if so, under what conditions?
Mr. G, has also failed to realise and repatriate foreign exchange worth more than Rs. 2 crores in respect of goods exported
on lease to ABC Plc., USA. Mr. G having realised that he had committed a contravention of the provisions of the Foreign
Exchange Management Act, 1999, desires to compound the said offence. Advise Mr. G (4 Marks)
Or
Referring to the provisions of the Foreign Exchange Management Act, 1999, examine whether V, an exporter is bound to
make declaration of the following goods exported from India to United Kingdom:
(i) Exports software valuing Rs. 50,000.
(ii) V gifts certain items of jewellery valued at Rs. 20,000 to his friend in Australia.
Or
Mr. Raman is a software engineer of Armtek Ltd. The company sent him to Japan to develop a software programme there
on deputation for 2 years. He earned a sum of US $ 3,000 as an honorarium there. On his return to India he wants to hold
this foreign currency with him. Whether Mr. Raman will be allowed to keep the foreign currency with him.
Write short notes on any four of the following: (16 Marks = 4 x 4)
a) Dormant Company;
b) Fraud u/s 447 vis--vis celebrity endorsements for the Companies;
c) Non-cognizable offences;
d) Serious Fraud Investigation Office powers vis--vis Letter of Request;
e) Alternate Dispute Resolution under Companies Act, 2013
f) SEBI Guidelines for (i) Green Shoe Option, (ii) Issuing Share Warrants, (iii) Fast Track Issues, (iv) Public Issues
through Institutional Trading Platform and (v) Safety Net Arrangements
g) Committees of Board of Directors
h) National Financial Reporting Authority (NFRA)
i) Auditors appointment where he shareholding of LIC and UTI increased from 23% to 27% of the subscribed share
capital of the company after issue of the notice of annual general meeting
j) Competent Authority under FEMA, 1999
k) Penalties for improper use of Limited or Private Limited as a part of entitys name

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Ph.: 9899954015, 9953590104

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