Module-II : Company Law 264

noU No..

Timeallowed:Shours Maximum marlzs.: 100

Total number of questions : B Total number of printed pages : 4

NOTE : 7. Answer SIX questions including Question No.I which is compulsory.

2. All referencesto sectionsrelate to the CompaniesAct, 1956 unlessstated otherwise.

1. Attempt any four of the following :

(i) "Some definite criteria will have to be fulfilled to identify a corporation as State
within the meaning of Article L2 of the Constitution of India." Comment.
(ii) "Diminution of share capital is not always regarded as reduction of capital." Comment.
(iii) "A limited company will have to get certain resolutions passedonly through postal
ballot instead of transacting the business in the general meeting of the company."
Discuss.
(iv) "Oppression nged not be continuous." Discuss.
(v) "Common seal of a company will have to be affixed on all the letters and documents
of the company." Discuss.
'
(S marks each)

2. (a) Choose the most appropriate answer from the given options in respect of the
. following :
(i) Out of the following statements, which one is correct with regard to listing of
securities -
(a) The shares and debenturesof a public company may be quoted on a stock
exchange
ft) The shares and debentures of a private company may be quoted on a
stock exchange
(c) Only the shares and not the debentures of a public company may be
quoted on a stock exchange
(d) Only the shares and not the debentures of a private company may be
quoted on a stock exchange.
(ii) Sweat equity shares issued to employeesor directors of a company shall be
locked-in for a period of -
Iu) Three years from the date of allotment
(b) Two years from the date of allotment
(c) Five years from the date of allotment
(d) Twelve months from the date of allotment.

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(iii) The companies which need not have their own articles of association are
(a) Unlimited companies
(b) Companies limited by guarantee
(c) Private companies limited by shares
(d) Public companies limited by shares.
(iv) According to the SEBI Guidelines, the issue of bonus shares should be made
within a period of -
(a) Three months from the date of approval of the Board of directors
ft) Six months from the date of approval of the Board of directors
(c) Twelve months from the date of approval of the Board of directors
(d) Thirty days from the date of approval of the Board of directors.
(v) Out of the following statements, which one is incorrect as regard to the
Director Identification Number (DIN) -
(a) DIN is a unique identifrcation number and onceobtained is valid throughout
the lifetime of a director
(b) DIN is mandatory for all directors of Indian companieswhether they are
citizens of India or not
(c) DIN is mandatory for directors of foreign company having branch offices
in India
(d) A single DIN is required for an individual irrespective of number of "
directorships held by him.
( I marlz each)
(b) Re-write the following sentencesafter filling-in the blank spaceswith appropriate
word(s)/figure(s) :
(i) In caseof listed companies,where the shares are transferable through electronic
mod.e,transfers are made through - instead of physical transfers.
(ii) The voting power of a guarantee company having share capital is determined
by the and not bY the guarantee.
(iii) is the total of the called-up capital remaining unpaid.
(iv) No person shall hold office at the same time as small shareholders'director
in more than companies.
(v) includes a reorganisationof share capital of companyby consolidation
of shares of different classes or division of shares into shares of different
classes or bv both these methods.
(1 marlz eaclt)
(c) Statb the salient features of a 'limited liability partnership' (LLP).
(6 marles)

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264
3. Distinguish between any four of the following :
(i) 'Reserve capital' and 'capital reserve'.
(ii) 'Sweat equity' and 'issue of capital on preferential basis'
(iii) 'ESOS' and 'ESPS'.
(iv) 'Motion' and 'resolution'.
(v) 'Shelf prospectus' and 'red-herring prospectus'.
(4 marks each)

4. ( a ) Define 'prospectus'. What are the ingredients to constitute a prospectus ?

(6 marks)
(b) What are the documents required to be attached with the draft red-herring
prospectus to be filed with the Registrar of Companies ?
(6 marks)
(c) Registrar of Companies can refuse registration of prospectus. ExpIain.
(4 marks)

5. (a) State, with reasonsin brief, whether the following statementsare corrector incorrect :
(i) A compdfry,being a body corporate, can sue and be sued in its own name.
(ii) A government company is neither a government department nor a government
establishment.
(iii) Under section t4, ttre memorandum of association of a company may be in
any form.
(iv) A director is liable for acts of his co-directors.
(v) Every shareholder has the right of nomination of shares.
(2 marks each)
(b) Tuff Ltd. is a public limited company, which was registered in the year 1991
under the Companies Act, 1956. After eighteen years of existence as a public
company, the said company now wants to convert itself into a private limited
company. Is it possible ? If yes, explain the legal requirements, if any.
G marks)

6. (a) The power to invest funds of the company is the prerogative of the Board of
directors under section 292. Discuss the limitations on such powers of the Board,
if any, relating to inter-corporate loans and investments under section 3724.
(6 marks)

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264 i 4 :

(b) With the approval of the Board, an amount of Rs.50 crore was spent by SpeedJet
Ltd., in producing a commercial film, not covered under its objects clause. The
film was a complete flop and the company lost an amount of Rs.40 crore. Some
of the members of the company objected to such investments not covered by the
objects clause of the company. They filed a suit in the court of law making the
d.irectors personally responsible and to make good the loss. Will they succeed?
Support your answer with reasons
rc marks)
(c) What is meant by 'doctrine of ultra uires' ?
(4 marh.s)

7. (a) what do you understand by 'transmission of shares' ?

(2 marks)
(b) Fortune Ltd. refused to enter the name of the minor son of a deceasedmember in
the register of members on the ground that the minor cannot enter into a contract
as per section 11 of the Indian Contract Act, L872. The shares are fully paid-up.
Comment on the decision of the company and suggest remedies available.
(4 marks)
(c) Piyush Ltd. decided to buy-back its shares with the approval of the Board of
d.irectors. As the Company Secretary of the company, advise the Board about the
conditions and limitations in this regard.
(70 marks)"

8. (a) Can a company registered under the CompaniesAct, 1956 commencebusiness of

banking in India ? Discuss.
(4 marks)
' :essary? Give reasons in
ft) Can a listed company change its name as and when
support of your answer.
(4 marks)
(c) Grace Ltd., a public limited company has'received an application from Rosy for
transmission of certain shares in her name. Rosy, being a widow of a shareholder,
applies for transmission of the shares standing in the name of her deceasedhusband
wilhout producing a successioncertificate. Can the company transfer the shares
of the deceasedmember'? Discuss.
(4 marlzs)
(d) Vayu Ltd. holds more than 50Voof nominal value of the equity capital of Stream
Ltd. In these circumstances,Stream Ltd. wants to becbmea member of Vayu Ltd.
Can Stream Ltd. do so ? Discuss the rights of the said subsidiary in such a case.
(4 marks)

-o-

2/2009/CL(NS)
 Economic and Labour Laws 265
Roll No..

Timeallowed:Shours Maximum marks : 100

Total number of questions : 8 Total number of printed pages : 6

PART_A
(Answer Question No.L which is compulsory
and any three of the rest from this part.)

1. With reference to the relevant legal enactments,write short notes on any fiae of the
following :
(i) Export Promotion Council
(ii) Combinations
(iii) Advance authorisation scheme
(iv) Calibration
(v) Environmental audit
(vi) Tr-ade effluent
(vii) Commercial Pur'ose
(3 marks each)

2. State, with reasons in brief, whether the following statements are true or false. Attempt
any ftae :
(i) A person can export or import without an importer-exporter code (IEC) number.
(ii) The manufacture of a non-standard weight or measure is prohibited. under the
Standards of Weights and Measures Act, 1976.
(iii) A reasonable opportunity of being heard must be afforded to a person before
ordering confiscationof an essential commodity under the Essential Commodities
Act, 1955.
(iv) Trade practice includes a single or isolated action of any person in relation to any
trade.
(v) The Competition Act, 2002 does not prohibit dominance,but the abuse of dominant
position.
(vi) A trade mark may not distinguish the goods of one manufacturer or trader from
similar goods of other manufacturers or traders

" (3 marks each)

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265 : 2 :

3. (a) Distinguish between any two of the following :

(i) 'Certifrcation trade marks' and lcollective trade marks'.
(ii) 'Duty free replenishment certificate' and 'duty entitlement passbookscheme'.
(iii) 'Provisional specification'and 'complete specification'under the Patents Act,
1970.
(5 marks each)
(b) Re-write the following sentencesafter filling-in the blank spaceswith appropriate
word(s)/figure(s):
(i) The Consumer Disputes RedressalForum shall not admit a complaint unless
it is frled within vears from the date on which the cause of
action has arisen.
(ii) Indian parties are prohibited from making investment in a foreign entity
engaged in
(iii) The company which has exported goods is required to realise the full value
of goods within days.
(iv) For setting-up an EOU, three copiesof the application in the prescribedform

(v)#:H*:frilih:;1$:'J^'"':,:",T_H::$:
mav be submitted to the

(1 mark each)

4. (a) With reference to the relevant provisions of the F oreign Exchange N{anagement
Act, 1999 and the rules and regulations made thereunder, advise on the following :
(i) Naresh, an Indian citizen, is interested in sending Rs.10,000 to his sister
residing in USA as birthday gift.
(ii) A person resident outside India desires to contribute Rs.10 lakh as capital in
a firm engaged in software business in India.
(iii) An Indian company intends to open a foreign currency account in India as
well as outside India.
(iv) A company incorporated in USA desires to establish its manufacturing unit
in special economiczone in India.
(v) Dinesh, an Indian citizen, wants to use his international debit card for withdrawal
of cash during his visit abroad.
(1 mark each)
(b) Enumerate the heads under which compensation for damages may be claimed
from the National Environment Tribunal constituted under the National Environment
Tribunal Act. 1995.
(5 marks)

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(c) Do the following acts constitute infringement of copyright
under the Copyright
Act, Lg57 :
(i) Making or publishing of a painting, drawing, engraving
or photograph of a
work of architecture.
(ii) Reproduction of a literary, dramatic, musical or artistic
work in the form of
a cinematograph film.
(iii) Reconstructionof a building or structure in accordancewith
the architectural
drawings or plans by referenceto which the buildine or structure was originally
constructed.
(iv) Making of any sound recording or visual recording for
the private use of the
person making such recording, or solely for the purposes of bona
fid,eteaching
or research.
(v) Making translation of a literary work

(1 marle each)

5. (a) Raman purchased a car by taking a loan from a bank and gave post-dated
cheques
to the bank not only in respect of repayment of loan instalments but also towards
premium of insurance policy for succeeding3 years. On the expiry of the policy
in the first year, the bank failed to get the policy renewed for the secondyear. In
the meantime, the car met with an accident. Raman brought an action against
the bank for 'deficiencyin service'under the Consumer Protection Act, 1986. Will
he succeed?
(5 marks)
(b) what is the objective of 'know your customer' (Kyc) guidelines
? when do the
KYC guidelines apply ?
(5 marks)
(c) Mention the provisions of the Essential CommoditiesAct, 1g5bregarding
confiscation
of essential commodities seized in contravention of section 3 of the Act.
(5 marlzs)

PART-B
(Answer ANY TWO questions from this part.)

6. Write notes on any four of the following :

(i) 'Concept of continuous service for the payment of gratuity' under the Pavment
of
Gratuity Act, t972.
(ii) 'Manner of fixation and revision of minimum wages' und.er
the Minimum Wages
Act, 1948.

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265 : 4 :

(iii) 'Authorities for the investigation and settlement of industrial disputes' under the
Industrial Disputes Act, L947.
(iv) 'Hazardous process'under the Factories Act, 1948.
(v) 'Benefits to which insured personsare entitled'under the Employees'State Insurance
Act, 1948.
(vi) 'Payment of subsistenceallowance' under the Industrial Employment (Standing
Orders) Act, 1946.
(5 marlzs each)

7. (a) Distinguish between any two of the following :

(i) and'totalforfeiture
ofgratuity'underthePayment
i|fr?tuity'
"}%Tllffff:i:
(ii) 'Model standin^gorders' gnd 'certified standing orders' und.er the Industrial
Employment (Standing Orders) Act, L946.
(iii) '+nffi'Ji "f"Xi"J"T in thecourseor emp1ovment' under
rff :;fi#ffi:T;; g
(5 marks each)
(b) Re-write the following sentencesafter filling-in the blank spaceswith appropriate
word(s)/figure(s) :
, (i) Bonus must be paid to employeeswithin a period of months from
the close of the accounting year.
(ii) means termination of the services of a workman by the employer
for any reason whatsoever, otherwise than as a punishment inflicted by way
of disciplinary action.
(iii) A minimum of contributory service is required for entitlement to
pension under the Employees'Provident Funds and MiscellaneousProvisions
Act, L952.
(iv) The employer is not liable for compensationwhen injury to the workman does
not result in disablement for a period exceeding days.
(v) The employer is required to send a report to the Commissionerfor workmen's
compensation within days of the death or serious injury of the
workman.
(1 marlz each)
(c) Choose the most appropriate answer from the given options in respect of the
following :
(i) The 'occupier' of a factory is required to appoint a Welfare Officer where
(a) 250 workers are employed
(b) 100 workers are employed
(c) 200 workers are employed
(d) 500 or more workers are employed.

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 : 5 : 265
(ii) out of the following which is
not a manufacturing process _
(a) Finished goods and packing thereof
(b) The making of bid,is
(c) stitching old gunny bags and making
thern fit for use
(d) Pumping of water from a tubewell.
(iii) From the date on which the Industrial
Employment (standing orders) Act,
1946 becomesapplicable to an industrial establisirme_nt,
an employer
-'- is required
to submit to the Certifying Officer the draft
standing ord"r,
(a) Within B months
ft) Within 6 months
(c) Within a month
(d) Immediately on receipt.
(iv) The Contract Labour (Regulation
and Abolition) Act, lg70 applies to every
establishment wherein workmen employed -the
on any duy of preceding
12 months are -
(a) 100 or more
ft) 50 or more
(c) 20 or more
(d) 200 or more.
(v) The maximum amount of gratuity payable
under the payment of Gratuity
Act, 1972 is -
(a) Rs.5,00,000
ft) Rs.3,50,000
(c) Rs.2,50,000
(d) Rs.2,00,000.

(1 mark each)
8' Attempt any fiae of the following stating relevant
legal provisions and decided case
law, if any :

succeed?
(ii) Raju h_asbeen employed by Fancy
Ba
twice during the day. The provident
' raised objections
for non:inclusion of
provident fund contributions. Is the

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(iii) Designers-L-td. is engaged in fabrication

work oi window grills with the aid of
power and has employed 19 workers. Recently, it
appoiited 2 gard,enersfor
gardening in its factory premises. Is the.o-puny liableio
extend #;U"""nt, to
the gardeners as applicabre to other factory workers ?
(iv) The workmen went on sympathetic strike
by absenting themselves from work in
support of the workmen belonging to some other
The management
intends to take disciplin ary action against those workmtn.
"-ploy"r.Is the
intention of the
management justifred and legal ?
(v) Efficiency Ltd. is in the processof reorganising
its business. It is likely to result
in some labour being ,"th"r"d surplus. It has
iroposed retrenchment of economic
dead weight. Can the company do so ?
(vi) ..ltrrtal, a railways employee was orderr
pipeline there. After finishing the wo:
when he slipped and fell and died as a
pay compensation under the Workmer
(vii) An employee was dismissed from service
for an act of misconduct. The company
d-idnot pay any bonus to the dismissed employee for the accounting
year in which
the dismissal took place. Is the action of tnl company justified
?
(4 marks each)

2/2009nLL (NS)
 Securities Laws and Compliances 266
RolI No..

Timeallowed:Shours Maximum marks : 100

Total number of questions : 8 Total number of printed. pages : 4

PAR,T-A
(Answer Question No.I which is compulsory
and any three of the rest from this part.)

1. (a) State, with reasons in brief, whether the following statements are true or false:
(i) Cumulative convertible preference shares are not hybrid instruments.
(ii) Equity linked saving schemes have lock-in-period of five years.
(iii) A depository is an organisation like Reserve Bank of India.
(iv) In basket trading system, investor buys or sells all the fifty scrips in one go.
(v) Hedge funds employ their funds for speculative trading.
(2 marks each)
(b) Re-write the following sentencesafter filling-in the blank spaceswith appropriate
word(s)/figure(s) :
(i) Direct and indirect control of virtually all aspects of securities trading is
provided by
(ii) Tracking stock is a type of common stock that 'tracks' depending on
(iii) CAMEL model encompasses
(iv) As per SEBI regulations, capital adequacy requirement for merchant banker
shall be a net-worth of not less than Rs._-.
(v) -are imposed on the scrip which witness abnormal price/volume
movements.
' (t marle each)

2. (a) Write short notes on the following :

(i) Corporate restructuring
(ii) Trade to trade
(iii) Margin trading
(iv) Securities Appellate Tribunal.
(2 marlzs each)

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266 i 2 i

(b) Expand the following abbreviations:

(i) DVP
(ii) EDIFAR
(iii) oMo.
(7 mark each)
(c) What are the 'real estate imutual fund'schemes ? Explain their features.
(4 marks)

3. (a) Explain an! tuo of the following terms ih relation to securities reforms and
developments in our country :
(i) Corporate governance
(ii) Financial disclosures
(iii) Rolling settlement.
(3 marks each)
ft) Write a note on 'treasury bills'.
(5 marks)
(c) Explain briefly the following :
(i) BOLT
(ii) NEAT.
(2 marlzs each)

4. (a) Distinguish between any two of the following :

(i) 'Naked debentures' and 'secured debentures'.
(ii) 'Industrial revenue bonds' and 'commodity bonds'.
(iii) 'Indexed rate notes' and 'extendable notes'.
(3 marks each)
ft) Describe briefly the risks involved in mutual funds.
, (4 marles)
(c) What do you mean by 'dematerialisation of securities' ? State its benefits.
(5 marks)

5. (a) Discuss the various functions of 'price monitoring'.

(5 rnaiks)
(b) State the proCedurefor buy-back of securities through stock exchange.
n
(S marks)
(c) Discussthe norms for registration of portfolio managerswith the Securities and
Exchange Board of India (SEBI).
(5 marks)

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6
 : 3 : 266
PART-B
(Answer ANY TWO questions from this part.)

6' (a) Explain the meaning of any two of the following

in the context of international
capital market :
(i) Domestic custodian bank
(ii) Global depository receipts.
(iii) Overseas depository bank.

(3 marks each)
ft) What are the conditions for 'voluntary delisting of securities, ?

(4 marks)
(c) "In issuance of GDRs/FCCBs, pre-marketing exercise
is a tool through which the
syndicate members evaluate the prospects of the issue." Comment.

(5 marks)
(d) Who can access'external commercial borrowings' (ECBs)
under automatic route
as per Reserve Bank of India ?

(5 marks)

7. (a) Discuss briefly the provisions of the SEBI (Prohibition

of Fraudulent and Unfair
Practices Relating to Securities Market) Regulations, 1995 related
to -
(i) Misleading statements;
(ii) Market manipulations;
(iii) Dealings in securities; and
(iv). p"ohibition on certain dearings in securities.

(10 marks)
ft) What are the common grievances of investors in India ? State the authorities
which can be approached by an investor for redressal of these grievances.

(10 marks)

8. Attempt any four of the following :

(i) "PAN has to be the sole identifier number for all
transactions in the securities
market." Comment.

(5 marks)

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(NS)
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266 : 4 :

(ii) State the activities stipulated under the Investor Education and Protection F und
(Awareness and Protection of Investors) Rules, 2001.
(5 marlzs)
(iii) Explain.the regulatory framework of debt market in India.
(5 marks)
(iv) What is the lock-in-period requirement for promoters' contribution ?
(5 marlzs)
(v) What are the rights of securities-holders in case of compulsory delisting of
securities ?
(5 marh,s)

-o-

(NS)
2/200e/sLC