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NEERAJ MUDGAL LAW CLASSES
2/75, LALITA PARK, LAXMI NAGAR, DELHI. 9910965137, 9711284246

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NEERAJ MUDGAL LAW CLASSES
2/75, LALITA PARK, LAXMI NAGAR, DELHI. 9910965137, 9711284246

From NEERAJ MUDGAL SIR

FIRST OF ALL, ALL THE VERY BEST FOR THE EXAMS ,WHILE I M WRITING THIS , I WISH YOU ALL HAVE THOROUGLY REVISED YOUR SYLLABUS AS MANY AS 3 TIMES. THIS IS AN ASSIGNMENT IN WHICH SOME QUESTIONS ARE ENLISTED, THROUH WHICH YOU CAN QUICKLY REVISE AND CHECK YOUR CONCEPTS ON TIPS. THIS ASSIGNMENT COVERS ALMOST 80 MARKS OUT OF 120 MARKS OF CORPORATE AND ALLIED LAWS.

STUDENTS ARE ADVISED TO MAKE THOROUGH REVISION OF TOPICS OF DIRECTOR/SEBI ICDR AND FEMA.

WISH U ALL GREAT LUCK & KNOWLEDGE

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NEERAJ MUDGAL LAW CLASSES
2/75, LALITA PARK, LAXMI NAGAR, DELHI. 9910965137, 9711284246

INTER-CORPORATE LOAN, GUARANTEE, SECURITY & INVESTMENT
BY

CS NEERAJ MUDGAL
BEST & EXCLUSIVE FOR CA FINAL LAW
www.neerajmudgal.com Q.1. What are the transactions to which sec. 372A does not apply? A. Provisions of sec. 372A does not apply to loan/ guarantee/ security / investment made by Banking co., insurance co., housing finance co., private company, co established with the object of financing industrial enterprises or providing infrastructural facilities, a co whose principle business is the acquisition of shares, stock, debentures or other securities, made by a holding company in its whollly owned subsidiary, Allotment made in pursuance of section 81(1)(a). Q. 2. WHETHER THE APPROVAL OF SHARE HOLDERS IS REQUIRED FOR INTER- CORPORATE L/G/S/I ? A If (EXISTING L/G/S/I + PROPOSED L/G/S/I) is lesser or equal to HIGHER AMOUNT If (EXISTING L/G/S/I + PROPOSED L/G/S/I ) is more than HIGHER AMOUNT UBR shall be passsed UBR shall be passed and approval of shareholder shall be obtained by passing PRIOR S.R.

HIGHER AMOUNT IS 60% OF ( P.U.C. + FREE RESERVES) OR 100% OF (FREE RESERVES) L/G/S/I =loan/ guarantee/ security / investment, S.R.= Special Resolution UBR = Unanimous Board Resolution ( consent of all the directors present at the board meeting) Q. 3. WHETHER THE APPROVAL OF PUBLIC FINANCIAL INSTITUTION (PFI) IS REQUIRED FOR INTERCORPORATE L/G/S/I ? If EXISTING L/G/S/I + PROPOSED L/G/S/I is PRIOR APPROVAL OF PFI shall be obtained by the more than 60% OF ( P.U.C. + FREE RESERVES) and co the co has not repaid the loan taken from the PFI Page 4 of 56 WHICH EVER IS HIGHER

NEERAJ MUDGAL LAW CLASSES
2/75, LALITA PARK, LAXMI NAGAR, DELHI. 9910965137, 9711284246

Q. 3 . CAN THE APPROVAL OF SHAREHOLDERS BE TAKEN SUBSEQUENTLY ? A Sec. 372A requires prior approval of share holders , however in case of guarantee only , the approval may be taken subsequently (within 12 months by the GM or at the ensuing AGM whichever is earlier.) subject to certain conditions Q. 4. IF A COMPANY IS HAVING THE PUC OF RS. 40 CRORES AND FREE RESERVES OF RS. 160 CRORES. A S.NO. SITUATION HIGHER LIMIT BR SR PFI APPROVAL

1

Where the company wants to make loan 160 of Rs. 20 crores and its existing L/G/S/I are Rs 20 crores If in the above case company wants to 160 make a loan of Rs. 100 crores If in the case 1 the company wants to 160 make a loan of Rs. 200 crores If in the case 3 the company has taken a 160 loan of Rs. 25 crores from IDBI If co wants to make a loan of rs. 120 cr. 160 And its existing L/G/S/I are 20 cr. Also the co has taken a loan of rs. 25 cr from IDBI

U BR

NA

NA

2

U BR

NA

NA

3

UBR

PRIOR SR PRIOR SR NA

NA

4

UBR

PFI APPROVAL

5

UBR

PFI APPROVAL (more than 120)

. Q. 5 CAN THE MANAGING DIRECTOR OF A PUBLIC CO. DECIDE TO MAKE INVESTMENT IN ANOTHER CO. ? A Sec. 372A requires CONSENT OF ALL THE DIRECOTRS PRESENT IN THE BOARD MEETING ,therefore Manging Director can not take the decision on investment. Q.6 CAN THE PUB CO MAKE INVESTMENT IN A CO , IF IT HAS ALREDY DEFAULTED IN THE PAYMENT OF MATURED DEPOSITS AND IT IS STILL UNPAID ? A According to Sec. 372A(4) if the co has defaulted in the payment of the matured deposits under sec. 58A then it can not make L/G/S/I under sec. 372A. however if the L/G/S/I is to be made in wholly owned subsidiary then it can be done. Page 5 of 56

NEERAJ MUDGAL LAW CLASSES
2/75, LALITA PARK, LAXMI NAGAR, DELHI. 9910965137, 9711284246

9 WHETHER THE LOAN GIVEN BY HOLDING CO TO ITS WHOLLY OWNED SUBSIDIARY CO SHALL BE CONSIDERED FOR CALCULATING THE LIMITS UNDER SEC. Q.7 CAN A LISTED CO TAKE APPROVAL OF SHAREHOLDERS FOR INTERCOPORATE L/G/S/I IN THE GENERAL MEETING? A According to RULE 3 of CO. 372A? A YES . Q. Q. 372A does not apply to LOAN GIVEN BY HOLDING CO TO ITS WHOLLY OWNED SUBSIDIARY. 372A(4) if the co has defaulted in the payment of the matured deposits under sec. 7 VOTED IN FAVOUR. IF IT HAS ALREDY DEFAULTED IN THE PAYMENT OF MATURED DEPOSITS AND IT IS STILL UNPAID ? A According to Sec. Page 6 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. LAXMI NAGAR. 9910965137. 372A ? A YES . However for INTER CORPORATE INVESTMENT postal ballot is not compulsory. Q. approval of shareholders for intercorporate L/G/S shall be taken by postal ballot method and not in the physical general meeting. 20011.Q. 8 DIRECTORS WERE PRESENT. Q.7 CAN THE DEBENTURES PURCHASED BE CONSIDERED AS LOAN GIVEN FOR THE PURPOSE OF SEC.SEC.( Passing of Resolution by Postal Ballot) Rules. 372A requires the consent of all the directors present at the meeting . ONE REMAINED SILENT AND DID NOT VOTE. Q. 58A then it can not make L/G/S/I under sec. WHETHER THE UNANIMOUS BOARD RESOLUTION IS PASSED? A SEC. 372A ? A NO. FREE RESERVES include securities premium for the purpose of sec.10 WITH IN HOW MUCH TIME ENTRIES MUST BE MADE IN THE REGISTER OF INTER CORPORATE TRANSACTIONS? A within 7 days. LOAN includes Debentures. 372A. 9711284246 . however if the L/G/S/I is to be made in wholly owned subsidiary then it can be done. DELHI. therefore if one director present at the meeting did not give consent and remained silent . the Unanimous Board Resolution is not passed. LALITA PARK.6 CAN THE PUB CO MAKE INVESTMENT IN A CO . 372A.8 CAN THE SECURITIES PREMIUM BE CONSIDERED AS FREE RESERVE FOR THE PURPOSE OF SEC.11 IN A BOARD MEETING DISCUSSING INTER CORPORATE LOAN.

372A. WHAT ARE REQUIREMENTS UNDER CO ACT? A Such Loan/Guarantee/security can be given by taking approval of Central Government under sec. 295 and following the requirements of sec. LAXMI NAGAR. Page 7 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. 9711284246 .Q. LALITA PARK.12 IF THE LOAN/GUARANTEE/SECURITY IS GIVEN BY A PUBLIC CO TO ANOTHER PUB IN WHICH ITS DIRECTOR HOLD 25% OR MORE VOTING POWER. DELHI. 9910965137.

WHETHER THE APPROVAL OF THE C. BOARD RESOLUTION IS INVALID Q.com Q. WHETHER APPROVAL OF C. LALITA PARK. 2 THE BOARD RESOLUTION FOR APPOINTMENT OF SSA DOES NOT CONTAIN THE CONDITIONAL CLAUSE “SUBJECT TO THE APPROVAL OF SHAREHOLDES.1 WHAT ARE THE REQUIREMENTS UNDER CO ACT 1956 REGARDING THE APPOINTMENT OF SSA ? A APPROVALS REQUIRED FOR APPOINTMENT OF SSA PUC. LATER ON THE CAPITAL OF THE CO INCREASED FROM 3O LACS TO 6O LACS. Q. LAXMI NAGAR. IS REQURIED TO TBE OBTAINED? A NO.neerajmudgal. INT. IS REQUIRED? Page 8 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. SUB.SOLE SELLING AGENT(SSA) BY CS NEERAJ MUDGAL BEST & EXCLUSIVE FOR CA FINAL LAW www. DELHI. WHETHER BOARD RESOLUTION IS VALID? A NO.G. 3 A SSA WAS APPOINTED SUBJECT TO THE APPROVAL OF SHAREHOLDERS . No BR OR (Subsequent) BR SR (subsequent) CG Approval (subsequent) Yes BR Prior CG Approval OR ( sub) BR Prior CG Subsequent SR PUC< 50 LAC PUC 50 LAC OR MORE Q. 9711284246 . 9910965137. 4 A SSA WAS APPOINTED SUBJECT TO THE APPROVAL OF SHAREHOLDERS . LATER ON THE SSA ACQUIRED SUBSTANTIAL INTEREST IN THE CO.G.

10 CAN THE C. CG has no power to cancel the sole selling agency. 9910965137. Q.A NO. 7 CAN THE C.G. 12 WHAT IS THE QUANTUM OF COMPENSATION PAYABLE TO THE SSA FOR PREMATUTRE TERMINATION ? A Compensation shall be paid for Lower of the following periods: Unexpired period of the agency Or 3 year Amount of compensation = LOWER PERIOD * 3 YEARS AVERAGE REMUNERATION DRAWN BY SSA Page 9 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. 8 CAN THE C.G. 6 WITHIN HOW MUCH TIME THE SUBSEQUENT APPROVAL OF SHAREHOLDERS MUST BE OBTAINED FOR APPOINTMENET OF SSA ? A approval must be obtained in the first General Meeting held after the appointment.G. 11 CAN SSA CLAIM COMPENSATION ON ACCOUNT OF PREMATURE TERMINATION ? A YES Q. SSA can be appointed max.G. 9711284246 . make variations in the terms and conditions of THE SOLE SELLING AGENCY ? A yes. 5 A SSA CAN BE APPOINTED FOR A PERIOD OF 6 YEARS AT A TIME ? A NO. Q. INQUIRE INTO A SELLING AGENCY AND DELCLARE IT AS THE SOLE SELLING AGENCY ? A YES. PROHIBIT THE APPOINTMENT OF SSA IN A CO ? A YES. LAXMI NAGAR. 9 CAN THE C. for 5 years at a time. CANCEL THE SOLE SELLING AGENCY ? A NO. LALITA PARK. Q. Q. Q. Q. Q. DELHI.

Page 10 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. Where the SSA is guilty of fraud or breach of trust or gross negligence in the conduct of his duties. 13 CAN THE CO REFUSE TO PAY COMPENSATION TO THE SSA? A IN THE FOLLOWING CASES THE SSA SHALL NOT BE ENTITLED TO ANY COMPENSATION: Where the appointment is not approved by the First GM held after the appointment. 9910965137. 9711284246 . DELHI.Q. Where the sole selling agent instigated or is directly or indirectly responsible for the termination of the sole selling agency. Where the SSA resigns because of the reconstruction or amalgamation of the company and is appointed as the SSA of the new company. LAXMI NAGAR. Where the SSA resigns otherwise than on reconstruction or amalgamation of the company ie voluntarily. LALITA PARK.

co can refuse if the director acts malafide. Q 5 CAN THE CO REFUSE TO ALLOW INSPECTION OF ACCOUNTS BY A DIRECTOR? A co act does not give the absolute right to the director to inspect . Q.1. 9910965137. Q 6 WHO IS RESPONSIBLE FOR KEEPING BOOKS OF ACCOUNTS OF A COMPANY? A Managing Director or the Manager and all the officers and employees If the company does not have the Managing director or the manager then all the directors and all the officer and other employees Page 11 of 56 NEERAJ MUDGAL LAW CLASSES 2/75.neerajmudgal. WHAT IS THE MEANING OF BOOKS OF ACCOUNTS UNDER THE CO ACT 1956? A Accounts shall be prepared with respect to the following: Receipt and Payment Sales and Purchase Assets and Liabilities Cost accounts if the company is a manufacturing.D (Other place shall be intimated to ROC with in 7 days) Q.? A The Accounts shall be maintained at the registered office of the company or such other place as may be decided by the B. LALITA PARK. however if the AOA give power then member can inspect the books of accounts of the co.3 CAN A CO KEEP ITS BOOKS OF ACCOUNTS AT A PLACE OTHER THAN ITS REGISTERED OFFICE? A yes Q 4CAN THE MEMBER INSPECT THE BOOKS OF ACCOUNTS OF THE CO? A Co act 1956 does not give the member right to inspect . DELHI.O. mining.2 WHAT IS THE PLACE OF MAINTENANCE OF BOOKS OF ACCOUNTS OF THE CO.com Q.ACCOUNTS BY CS NEERAJ MUDGAL BEST & EXCLUSIVE FOR CA FINAL LAW www. LAXMI NAGAR. 9711284246 . production or processing company(MMPP).

WHETHER THE BOD OF SUCH CO SHALL GIVE EXPLANATION REGARDING SUCH ADVERSE REMARKS? A NO. The revised accounts shall be adopted in the EGM . accounts already adopted can be revised. Q 8 WHAT IS A FINANCIAL YEAR? CAN A CO DECIDE TO HAVE ITS FINANCIAL YEAR FOR A PERIOD OF MORE THAN 12 MONTHS? A it is the period for which the Profit and loss account of the company. Q 13 CAN PERIOD OF FINANCIAL YEAR OF HOLDING CO AND SUBSIDIARY CO BE DIFFERENT? HOW CAN THEY BE COINCIDED? A YES. gap between them can be maximum 6 months. Such gap may be reduced or the financial years may be coincided by taking the approval of CG.M. Board Report. the accounts can not be revised as once adopted they become final. LAXMI NAGAR. 11 CAG MADE ADVERSE REMARKS IN ITS AUDIT REPORT OF A GOVERNMENT COMPANY . 9910965137. Where the ROC so authorizes it can be 18 months maximum. Page 12 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. 9711284246 .Q 7 WHO IS THE COMPETENT AND RELIABLE PERSON? A Person to whom the responsibility of maintenance of books of accounts is entrusted by the Managing Director or Manager. Q.P/L. Following are the documents to be attached: B/S. DELHI.G.g. However to comply with any technical requirements of any law e. Q 12 WHAT DOCUMENTS OF SUBSIDIARY CO ARE REQUIRED TO BE ATTACHED TO THE ACCOUNTS OF HOLDING CO? A The holding company shall attach certain documents of its subsidiary companies. LALITA PARK. A report of inability of the directors of the company to obtain certain information. Auditors Report Statement of Holding Companies’ interest in the subsidiary If the financial year of the holding and subsidiary company does not coincide then a statement of Changes in the holding company’s interest and other material changes. Q 10 CAN THE BOD OF A CO REVISE THE ACCOUNTS WHICH HAVE ALREADY BEEN ADOPTED BY MEMBERS? A In general. it can be 12 months or more however it shall not be more than 15 months unless specifically sanctioned by the ROC. Tax laws so as to give true and fair view . Q 9 CAN THE CO PLACE THE UNAUDITED ACCOUNTS BEFORE THE AGM? A No. they can be different . Only Audited Accounts can be placed in the A.

Q 15 CAN THE COMPANY SECRETARY AUTHENTICATE THE ACCOUNTS OF A CO? A yes. If employed throughout the financial year or not : receives more than the MD or WTD or MGR and holds at least 2% of the equity share capital of the company(either alone or with spouse and dependent children): Q 19 WHAT IS DIRECTORS’ RESPONSIBILITY STATEMENT? A IN THE FOLLOWING CASES THE SSA SHALL NOT BE ENTITLED TO ANY COMPENSATION: Q 20 WHETHER AUDITORS ARE RESPONSIBLE FOR THE CONTENTS OF THE BOARD REPORT? A NO. DELHI. if any Where only 1 director is in India then such director shall sign and shall record the reasons for signing alone . sec. 5 lacs per month or more. If not employed throughout the financial year: if receives Rs. one of whom shall be MD. Q 17 WHO CAN SIGN THE BOARD REPORT? A The report shall be signed by the Chairman If there is no such chairman then by at least 2 directors one of whom shall be MD if there is one. Q 18 WHETHER THE NAMES OF EMPLOYEES OF A CO ARE DISCLOSED IN THE BOARD REPORT? A yes Employee employed throughout the financial year: if he receives Rs. If one director is in India then such director shall sign and state the reasons for doing so.Q 14 WHO CAN AUTHENTICATE THE ACCOUNTS OF A CO? A MGR or Secretary (if any) AND At least 2 directors. 217 provides the contents of the Board Report. LALITA PARK. 9910965137. 60 lacs or more. Q 16 WHAT IS THE BOARD REPORT? WHAT ARE THE CONTENTS OF THE BOARD REPORT? A it is the report prepared by the Board of Directors of every co. 9711284246 . LAXMI NAGAR. Page 13 of 56 NEERAJ MUDGAL LAW CLASSES 2/75.

E.M. 9910965137.g. Page 14 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. Q 25 IS IT MANDATORY TO FILE THE ACCOUNTS EVEN IF THE ACCOUNTS ARE NOT ADOPTED? A Yes. LALITA PARK. auditors. Q 23 WHERE THE CO HOLDS IT AGM.G. accounts must be filed with in 30 days from A. Q 22 CAN A NON MEMBER DEPOSITOR DEMAND THE COPIES OF ACCOUNTS ? A yes. HOWEVER THE SAME ARE NOT PLACED IN IT AND THE MEETING IS ADJOURNED. If they are laid in the AGM and adopted in Adjourned AGM .Q 21 WHO ARE THE PERSONS TO WHOM THE COPIES OF THE ACCOUNTS ARE CIRCULATED? A Every member of the company whether entitled to receive notice or not( including the Preference shareholders) Debenture Trustee All other persons entitled to receive the notice of the AGM. accounts must be filed with in 30 days from the last date of holding the AGM. DELHI. 9711284246 . LAXMI NAGAR. Q 24 IS IT MANDATORY TO FILE THE ACCOUNTS EVEN IF THE AGM IS NOT HELD? A Yes. ACCOUNTS SHALL BE FILED WITH ROC WITH IN 30 DAYS FROM THE DATE OF ORIGINAL AGM OR FROM THE DATE OF ADJOURNED AGM? A Accounts are required to be filed from the date of the AGM in which they are laid.

(c) a person who is a partner. then he shall be disqualified. whether he is qualified to be an auditor? A Yes. Firm of CAs. or who is in the employment. of an officer or employee of the company. DELHI. or who has given any guarantee or provided any security in connection with the indebtedness of any third person to the company for an amount exceeding one thousand rupees. Q. (e) a person holding any security carrying voting right.5 Whether the ceiling limit is applicable in respect of the branch audit? A no Page 15 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. SUBSUB-SECTION 3 following persons shall not be qualified for appointment as auditor of a company(a) a body corporate.neerajmudgal.4 what is the ceiling limit on no of companies that can be audited by an auditor? A 20 public co and total 3o (pub + pvt) Q. (d) a person who is indebted to the company for an amount exceeding one thousand rupees. (b) an officer or employee of the company. LAXMI NAGAR. LALITA PARK. Q. 9711284246 . Q 2 If the auditor takes the audit fees in advance on progressive basis where as the audit work will be completed in future. of which all the partners are qualified for appointment.AUDIT BY CS NEERAJ MUDGAL BEST & EXCLUSIVE FOR CA FINAL LAW www.3 If the auditor purchases the goods on credit from the auditee company.com Q 1 Who can be an auditor? A In terms of section 226 of the act following can be appointed as the auditor: CA holding the certificate of practice. 9910965137. whether he is qualified? A if the value is more than 1000.

or a special notice is served upon the co for not reappointing the retiring auditor. 9910965137.12 A company has a joint auditors. Q. however if the Board of Directors do not appoint the first auditor with in one month of incorporation . Till the vacancy is filled . by: (a) a public financial institution or a Government company or Central Government or any State Government.13 In which co appointment of the auditor is done by passing Special Resolution. or (b) any financial or other institution established by any Provincial or State Act in which a State Government holds not less than fifty-one per cent of the subscribed share capital.M. 11 The auditor of a co died in a car accident. LALITA PARK. If the special notice of appointing another person as auditor in his place is given .10 Can the CG make the appointment of Auditor ? A Yes.7 Can the general meeting remove the first auditor of the co ? A Yes.9 can the retiring auditor be stopped from being reappointed? A Yes. Q. If the co fails to make the appointment of an auditor. Q. Page 16 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. Can the General meeting appoint the first auditor of a co ? A no. If the vacancy had been due to the resignation then it shall be filled by the shareholders in the G. 9711284246 . ? A company in which not less than twenty-five per cent of the subscribed share capital is held. how can the casual vacancy be filled ? A the casual vacancy can be filled by the Board of Director. then GM can appoint the first auditor. whether singly or in any combination.6. Q. from the conclusion of one AGM to the conclusion of the next AGM. the remaining the auditor can continue. Q. Q 8What is tenure for which an auditor may be appointed? A in general . Q. one of the joint auditors died in an accident. DELHI. or (c) a nationalised bank or an insurance company carrying on general insurance business.Q. discuss the position of the other joint auditors ? A Yes. LAXMI NAGAR.

9711284246 .. he is also a practicing CA. 226(3).e. 15 Can the CG remove the auditor? A Yes.M. can Mr. i. However it shall amount to the professional misconduct in terms of para 4 of part I of second schedule to CA Act 1949. DELHI. Q.24.22 What is National Advisory Committee on Accounting Standards ? A see assignment. Praveen is the director of the company SLP India Ltd. Page 17 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. Mr..17 Discuss the provisions of branch audit? A see assignment.M.14 Whether approval of CG is compulsory for removal of an auditor before the expiry of the tenure? A Yes. can he become the auditor of SLP India Ltd.M.if it makes the appointment G. the company in which he. LAXMI NAGAR.D.if it makes the appointment G. CG can remove the auditor by giving direction under sec. However first auditor can be removed by G. -if CAG makes the appointment Q. Q 23. his firm.16 Who fixes the remuneration of the auditor ? A B. Q. or a partner has substantial interest and he does not disclose his interest in the report. 408. Q. 9910965137. if the relative is holding the shares then he shall not be disqualified under sec.Q.O. 18How to take exemption from the branch audit? A see assignment Q 19 Discuss the provisions of cost audit? A see assignment Q 20 Discuss the provisions of special audit? A see assignment Q 21 What is audit committee ? A see assignment Q. Praveen be appointed as auditor of the company if his brother is holding the shares of the company? A. LALITA PARK. Q.

226(3) an officer or employee shall be eligible to become the auditor of the company. tenure of the auditor is from the conclusion of AGM of appointment till the conclusion of next AGM. 9711284246 . DELHI. In view of the above as the director is a officer of the company and as an officer cannot become the auditor. LALITA PARK. can the auditor continue as such where the AGM of a particular year is not convened? A. 9910965137. Praveen cannot become the auditor of the company SLP India limited. the auditor shall not retire.A. further in terms of sec. Mr. in terms of section 2(30) a director is an officer of the company. LAXMI NAGAR. Page 18 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. Q.25.. Therefore where the AGM is not held .

? A. Ltd. 9711284246 .neerajmudgal. The CG may itself or through an authorized person make an application u/s 397 or398. [ Sec. LALITA PARK. Q. NO. 401] Q.5 can the CG itself make an application to the CLB under sec. Whether the application is invalid ? A. yes. any one or more eligible member(s) can obtain consent of the other members in writing. 9910965137. if in its opinion circumstances exist which make it just and equitable so to do.4 can the CG permit lesser no of member s to file an application u/s 397 and 398. [sec. Q2 a member makes an application to the CLB under sec. The applicants should not have defaulted in the payment of calls due on their shares. LAXMI NAGAR. yes. 397/398? A. notwithstanding the requirements of clause (a) or (b) of subsection 1 of Section 399. however later on his name is struck off the register of member. DELHI.1 ? who can make application to the CLB under sec. CG may . [Sec. authorize any member or members to apply to the CLB after obtaining adequate security as it may deem fit. 397 . IN CASE OF Company not having share capital At least 1/5th of the total no of members. (Sayedabad Tea Co. vs Samarendra Nath Ghattak) Q 3 can the application be filed by a member by taking the consent of other members? A.6 can CG make a representation in respect of an application filed by member(s) u/s 397 or 398? Page 19 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. 399(3)]. and may make the application on behalf and for the benefit of all of them. 397/398? A IN CASE OF Company having Share Capital At least100 members or 1/10th of the total no of members OR Any member(s) holding not less than 1/10th of the issued capital of the company.com Q. the application is valid.PREVENTION OF OPPRESSION AND MISMANAGEMENT BY CS NEERAJ MUDGAL BEST & EXCLUSIVE FOR CA FINAL LAW www. 399(4)] Q.

made to it by the government before passing the final order Q. Section 398 Any Member(s) May apply to the CLB. 9711284246 . (b) if there has taken place a material change in the ownership or control of the company and because of such change it is likely that the affairs of the company will be managed in the aforesaid manner if the CLB is of the opinion that the affairs of the company are being managed or likely to be managed in the aforesaid manner then the CLB may pass the suitable order under section 402 Page 20 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. DELHI. if any. LALITA PARK.A. 9910965137. CLB shall give notice of every application made to it u/s 397 or 398 to the CG. (a) if affairs of the company are being managed in a manner: Prejudicial to the interests of the company OR Prejudicial to the public interest If on receiving the application CLB is satisfied that circumstances are such that it is Just and Equitable to Wind up the company. and shall take into consideration the representation. 7 what are the grounds on which application can be made to the CLB u/s 397/398? A Section 397 Any Member(s) May apply to the CLB if The Affairs of the company are being managed in a manner oppressive to any member(s) OR The affairs of the company are being managed in a manner which is Prejudicial to the Public Interest. but the winding up of the company will rather be prejudicial to the applicants then CLB may pass an order under section 402. LAXMI NAGAR.

it was held by CLB that non delivery of notice to the member is oppressive to such member. 284) Q13. illegal acts are not per se oppression.Q. even though they are no longer continuing wrongs.8 can the CLB look into the past acts of oppression? A. in general CLB does not have jurisdiction to look in to the past acts except : (i) As per clause (f) of section 402 of the Companies Act. act [ Shantidevi Gaikwad] Q. giving of shorter notice is prescribed under the provisions of the co. (ii) As per provisions of section 406 read with Schedule XI to the Companies Act. 1956. 9 can the CLB look into the Past acts of oppression which has a continuous impact? A. Whether non declaration of dividend is oppression? A declaration of dividend is not mandatory under co act. on an application made to it under sections 397 and 398 of the said Act. the CLB. LALITA PARK. term “ affairs are being conducted” include past and concluded acts which has a continuous impact [ Sindhri Iron Foundry private limited] Q. the CLB can set aside any transfer. therefore if the co does not declare the dividend in any year . Q. execution or other act relating to property made or done by or against the company within three months before the date of the application under sections 397 and 398 of the said Act. no. 1956. Whether giving shorter notice of the general meeting is oppression? A. yes . 9910965137. managers and other office bearers of the company and to enforce the company's claim against them if they have misplaced or retained the company's money or have committed any misfeasance or breach of trust in relation to the company. therefore there is no oppression. Q. 15. 397/ 398? Page 21 of 56 NEERAJ MUDGAL LAW CLASSES 2/75.12 whether removal of a member director by the majority shareholders is an act of oppression? A NO (removal of director is matter of right under sec. 14. has power to book the delinquent directors. LAXMI NAGAR. “Where a member is not given the notice of the general meeting” does this amount to oppression? A. the CLB did not accept the UPC as proof of sending the notice as the circumstances indicated otherwise. 11 whether illegal acts are acts of oppression ? A. payment. DELHI. delivery of goods. no. [ Allianz Securities Limited] Q. 9711284246 . Q. 16 can the majority shareholders file complaint against minority shareholders and claim relief under the provisions of sec. yes.

The shares and transfer deed were handed over to an escrow agent. an NRI. 17 what is deadlock? Whether it is oppression? A. According to sec. chand wants to sue the co for “ oppression” Discuss.20 Can the CG appoint Additional Director in a company to remove oppression & mismanagement? A if the CLB passes an order for adoption of Sec.22 Can the CG appoint a Director in a company to remove oppression & mismanagement for a period of 5years? A. yes . only for 3 years at a time. provisions of sec. authorize any member or members of the company to apply to the CLB even if they do not satisfy the criteria under sec.18 A Share Sale Agreement was executed by Chand. therefore it has power to direct such appointment. CG may appoint persons as additional director until the directors are appointed under sec. The shares were not transferred for 6 years since RBI permission was not received. where such person is the relative of a director of such company? A. raises th e issue and complains of oppression in the capacity of a member. Now. Chand. 265 Q. 408 CG can appoint directors on the board of a company to remove oppression and mismanagement. sec 408 starts with the words “notwithstanding any thing contained in the co act. DELHI. Jameela Bevi vs Narmada Building Enterprises ] Q. Q. 265 (proportional representation method). parties involved are equally powerful therefore one party can not be oppressed by the other. LALITA PARK. yes Q. 9910965137. A NO. 399(4) the central government may.21 Can the CG appoint a person as director in a company to remove the oppression & mismanagement. The sale was subject to RBI permission. Q. 314 shall not apply as . 9711284246 . Q. no . Deadlock is a situation in which no progress could be achieved . chand did not exercise any right as shareholder.22 Can persons not satisfying the criteria under section 399 make the application to the CLB ? A. During the above period. under sec. As per the agreement the sale was unconditional. There is no oppression[ Mrs. if in its opinion circumstances exist which make it just and equitable . after waiting for a long period of time.nor did the company treat him as a member.A. Can the CG appoint Director in a company to remove oppression & mismanagement? A yes . LAXMI NAGAR.19. 399(1) Page 22 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. then until the appointments are made by such method. Therefore deadlock is not oppression. Q.

any one or more of them having obtained the consent in writing of the rest. 399(1). Page 23 of 56 NEERAJ MUDGAL LAW CLASSES 2/75.22 Can member make the application under sec. DELHI. may make the application on behalf and for the benefit of all of them .Q. 399(3) where any member(s) of a company are entitled to make an application in sec. 397 or 398 by taking the consent of other members ? A. 9910965137. LAXMI NAGAR. LALITA PARK. ACCORDING TO SEC. 9711284246 .

The court may pass the order for sanctioning the scheme. summon of the judge and the affidavit. the company shall file the application to the court for sanctioning the scheme along with 3 annexures : o Latest Balance Sheet. 9711284246 . Others can also file the application. The members/creditors as the case may be shall approve the Compromise / Arrangement by : o Majority in number & o Holding 3/4th by value amongst those who are present and voting.com Q. LAXMI NAGAR.5 Whether approval of equity shareholders or preference shareholders shall be obtained? A. Majority in number & 3/4th in value amongst those who are present and voting. Q. SEC. The court may by order fix the date and time of the class meeting and also appoint the chairman of the meeting.but it is not its exclusive right. Within 7 days of the class meeting the chairman shall submit his report to the court. Within 7 days after the chairman has filed his report to the court. LALITA PARK.neerajmudgal. ARRANGEMENT.6 Can the liquidator make an application for compromise or arrangement? Whether it is exclusive right of the liquidator to make the application of compromise or arrangement in a company being wound up? A. The company shall file the copy of the order with ROC along with the copy of the scheme in form no.4 What is the number of members by whom the scheme of compromise or arrangement shall be approved? A. o Latest Audit Report. Approval of both is required. 21.COMPROMISE.1 What is the difference between Compromise & Arrangement? A. Compromise is always due to some disputes. Q.2 What is the procedure of compromise or arrangement? A. Page 24 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. o Statement of Pendency of investigation under earlier suits under section 235-251 and the like. 9910965137.3 Can a shareholder who is not a member make an application for compromise or arrangement? A. liquidator can make the application. DELHI. 391 PROCEDURE FOR COMPROMISE/ ARRANGEMENT The company / member/ creditor/ liquidator may make an application to the court along with the Draft scheme. Q. AMALGAMATION & RECONSTRUCTION BY CS NEERAJ MUDGAL BEST & EXCLUSIVE FOR CA FINAL LAW www. whereas the arrangement is without any dispute. Q. only member can make an application under section 391 . Q.

vs.8 What is the Share Exchange Ratio & how it is determined? A. but such shares shall not carry the voting right. Pravin Kantilal Vakil] Modification : can pass the resolution but it is at the discretion of the court to modify or not. [ Pravin Kantilal Vakil Vs. Rohini Ramesh Save] Q 14 Can the employees object the scheme of the amalgamation? A.C. [ HINDUSTAN LEVER LIMITED] Q10 Whether the share valuation report must be circulated to the members along with the notice of the class meeting ? A. Q. [ Centron Industrial Alliance Ltd. such notice is valid. Yield Method or 3. LALITA PARK. YES [In re: Mcleod Russel] Q 12 Can the holding co issue shares to its subsidiary co in the scheme of amalgamation? A. 9910965137. 9711284246 . [ C W T vs.O. Whether such notice is valid? A. [ HLL & Brook Bond Limited Vs. it is the ratio in which the shares of the transferor co are exchanged for the shares of the transferee co. YES. YES. Their Workman] Page 25 of 56 NEERAJ MUDGAL LAW CLASSES 2/75.O. 391 procedure given under Q 2 shall be followed and N. DELHI. Prevailing Market price or 2.L. [ HINDUSTAN LE VER LIMITED] Q 11 Can the two companies which have different object clause be amalgamated ? A. MAHADEV JALAN] Q 9 The notice of the class meeting for approval of amalgamation contains the share exchange ratio & not the method of its calculation. Break Up Value Method. but it is the discretion of the court to accept the objection or not. being wound up. [Consolidated Coffee Vs Arun Kumar Aggarwal] Q 13 Where the co has filed the application with the court for the purpose of approval of scheme of amalgamation.7What is the procedure of amalgamation? A. from R.C. NO.Q. It can be determined by 1.O. Mrs. can the company withdraw or modify the application by passing a resolution in the EGM? A. sec. yes. WITHDRAWL : NO.B shall be taken in case of a co. from official liquidator shall be taken for dissolution of the company without winding up and N.C. NAV Method 4. LAXMI NAGAR./ C.

A. NO. contract of personal service do not get transferred automatically in the scheme of amalgamation like other assets and liabilities.Q 15 Can the CG make representation to the court . NO. YES [ SEC. 396 in the public interest. NO. Appointed date is the date on which the assets and liabilities stands transferred from transferor co to transferee co. Q 21 Can an Indian co be amalgamated in a foreign co? A. YES. the employees of one co refuse to join the amalgamated co. LAXMI NAGAR. the can file the appeal to the CLB with in 30 days from the date of publication of notification. Q 22 Two companies are amalgamated with each other. As a result they lost the employment. 9910965137.] Q 23 Can the court while approving the scheme of amalgamation approve the disposal of documents of the amalgamating co. Under sec. 9711284246 . Doucaster Amalgamated Colleries Ltd. where an application is filed by a co with the court for amalgamation? A. [SEC. YES . Now the employees want to claim the compensation for loss of office. They can claim the compensation. 396A] Q 24 What is the required Majority for takeover of a co under the co act 1956? Page 26 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. Q 19 Certain persons are aggrieved by the amount of compensation mentioned in the draft order of amalgamation notified by CG under sec. 394A] Q 16 What is the difference between effective date and appointed date? A effective date is the date on which form no. Can they do so. DELHI. 21 is filed with the ROC . Q 17 Can the court substitute its own share exchange ratio in place of the ratio specified in the scheme? A. 396. YES. LALITA PARK.[ PIRAMAL SPINNING AND WEAVING MILLS] Q 18 Can the CG order the amalgamation of 2 or more companies? A. Q20 Can a foreign co be amalgamated in an Indian co. can they object and file appeal for increasing the amount of compensation? A. [ Nokes vs.? A. A .

395(1). 9910965137. the acquirer company can compel the dissenting shareholders to sell their shares to it by sending the notice under sec. in case of a company which is being wound up ? A. 395(1). LAXMI NAGAR. reconstruction can be done with the approval of shareholders by S. LALITA PARK. Q 25 Can the acquirer compel the dissenting shareholders to sell their shares to him? A. which are not already held by acquirer Q 27 What is friendly takeover and hostile takeover? A. Q. not less than 9/10th (90%) of the shares of which the transfer is involved. are not less than three-fourths in number of the holders of those shares. 25A Can the dissenting shareholders compel the acquirer to take their shares? A.R. the dissenting shareholders can compel the acquirer company to purchase their shares by sending a positive reply to the notice under sec 395(2). Arrangement with creditors can be done if it is sanctioned by a special resolution of the company and acceded to by three-fourths in number and value of the creditors.A. Page 27 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. Yes. Q 28 Explain the procedure of reconstruction in a co being wound up voluntarily? A. Yes. A. TAKEOVER with the consent of the owner is called as friendly takeover and without the consent of the owners is hostile takeover. DELHI. 9711284246 . And If acquirer is already holding more than one-tenth of the aggregate of the values of all the shares in the company then not less than nine-tenths in value of the shares (other than those already held as aforesaid) whose transfer is involved. [ 494/507] Q 29 Explain the procedure for arrangement with the creditors. Q 26 What is the meaning of the phrase “ shares of which transfer is involved” under the provisions of sec.

BOOK OF ACCOUNTS AND OTHER BOOKS AND PAPERS. In terms of sec. Any other officer authorized by the CG. ROC can seize after taking the permission from the Magistrate . ROC shall return within 30 days. 209A(1) following are entitled to do inspection: The registrar.2. and in the case of a company having no share capital. LAXMI NAGAR.yes. Can the ROC seize the documents during inspection & when the ROC shall return the seized documents? A. Page 28 of 56 NEERAJ MUDGAL LAW CLASSES 2/75.com Q.INSPECTION & INVESTIGATION BY CS NEERAJ MUDGAL BEST & EXCLUSIVE FOR CA FINAL LAW www.neerajmudgal. .1 Who can do the inspection? A. an application has been received from not less than two hundred members or from members holding not less than one-tenth of the total voting power therein. DELHI. What are the documents that can be inspected? A.3.4 What is investigation & what are the types of investigation? A. 235(1)] investigation on the opinion of the CLB[sec.[sec.5 Can the member demand for investigation? A. an application has been received from not less than one-fifth of the persons on the companies register of members. Any other officer authorized by the SEBI. YES. it is a fact finding exercise investigation on the report of the ROC[sec. LALITA PARK. 234A] Q. 237(a)] investigation of ownership of company[ sec. Q. 9910965137. Q. 247] Q. in the case of a company having a share capital. Investigation is a form of deeper probe into the affairs of the company. 9711284246 . 237(b)] investigation on the application of the members 235(2) investigation on special resolution/ court order [ sec.

application can be made to the CLB. as due to the disclosures made by him to the authorities. yes [ sec.[ sec.8 Can the CG itself investigate into the ownership of a company? A.5 Q.13 Can the Inspector investigate the connected companies or persons of a company under investigation? A.9 During an investigation of a company it is found that certain persons are trying to take over the company. 247] Q. [ sec. 250] Q.7A Can the inspector during an investigation SEIZE the documents? A.10 Where a company is being investigated & the company passes special resolution for voluntary winding up. YES. Retention is possible for a period of 6 months. how can the company terminate the employee? A.7 Can the inspector during an investigation retain the documents presented before it & for how much period? A.11 Can the legal advisor be compelled to deliver the copy of the written advices given by him to a company which is being investigated? A NO. YES. Q. SAME CRITERIA AS ABOVE IN A. 251] Q.Q.12 An employee is proposed to be terminated. YES. investigation shall remain unaffected.14 On the basis of the report of investigation the CG launched the prosecution against the person who has been found guilty.[ sec. YES. However such persons challenged the prosecution on the ground that the CG Page 29 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. DELHI. [sec. whether the investigation is affected or not? A.6 Can a member demand the investigation of the subsidiary company of their company? A. co can terminate the employee after taking the approval of CLB [ sec. LALITA PARK. an investigation of the company was ordered under the provisions of the Companies Act 1956. how can the takeover be avoided? A. 9711284246 . 239] Q. [ sec. it may pass an order declaring the transfer of shares as null and void. 635 B] Q. 240A] Q. 240] Q. privileged communication can not be required to be disclosed. LAXMI NAGAR. 9910965137. with the approval of Magistrate.

Union of India] Q. Whether the CG is required to give such notice? A. [Titagarh Paper Mills Co.didn’t give notice to them before filing the suits against them. yes sec. 9910965137.15 Can the CG order the winding up of a company on the basis of the report of investigation? A. LALITA PARK. Page 30 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. Ltd v. 9711284246 . yes [ sec 243] Q.16 Can the CG file application under Sec-397 or 398 for grant of relief against oppression or mismanagement of the company on the basis of report of investigation? A. sec 244. 243 Q.17 Can the CG itself make an application on behalf of the company to recover the money & the property misappropriated or wrongfully retained by the management of the company? A. LAXMI NAGAR. no . yes . DELHI.

DELHI. Accumulated profits of previous financial years( revenue) after providing for the depreciation.1. yes [if the AOA makes the provision for the it. 205] Page 31 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. Can the dividend be paid out of the balance available in the Profit and Loss Account? A.4. Board of directors recommends the dividend and Shareholders declare the dividend.Can the equal dividend be paid on shares while the paid up value of some shares is larger than on others? A. Q.] Q. with the approval of C. sources of dividend Current financial year profit ( revenue profit) after providing for depreciation. in general once declared dividend shall not be revoked .5. NO. Q.G.Can the shareholders declare dividend at a rate more than recommended by B. 9711284246 .Can the dividend be revoked after declaration? A.Who declares the dividend? A. however if the co ceases to be a going concern or if the declaration is ultra vires then dividend cane be revoked.2.[ sec. 9910965137.8 Can the dividend be paid without providing for depreciation? A.6. Q. Amount provided by CG or SG for the payment of dividends in pursuance of a guarantee given by that government.? A.What are the sources of dividend? A. yes Q.O. LAXMI NAGAR.3. yes.D. LALITA PARK.7. Q. Can the dividend be paid out of past years accumulated profits? A.DIVIDEND BY CS NEERAJ MUDGAL BEST & EXCLUSIVE FOR CA FINAL LAW Q. yes Q.

Page 32 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. 10% or less More than 10 but upto 12. 9910965137. 20% or more of Average PAT of previous 2 financial years.11. 95% of the original cost to be written off over the specified period of time 3.10.5%(min) 10% (min) . if the company intends to declare the dividend the company shall ensure the minimum distribution the rate of dividend intended to be declared shall not be less than the Average rate of dividend declared in immediately preceding 3 financial year.What are provisions in relation to transfer of profits to reserves ? A. Depreciation as per sec.Q.How can a co transfer more than 10% of its profits to reserves ? A 1. In terms of companies (transfer of profits of reserves) rules 1975 Dividend proposed (%of PUC) Transfer to reserves(as % of current profits) Nil 2. 350 Straight line method or Written down value method.5 More than 12.e. DELHI. any other method approved by the CG for writing off 95% of original cost in the specified period of time Q. However condition of minimum distribution shall not be applicable if the current year profit after tax has fallen down substantially i.9 What are the methods of providing depreciation under the co act 1956? A 1. 2.5 but upto 15 More than 15 but upto 20 More than 20 Q. LALITA PARK. Where the company has declared any bonus issue of shares in the current financial year or in the preceding 3 financial year than the amount of dividend intended to be declared shall not be less than the average amount of dividend declared in the immediately preceding 3 financial years. LAXMI NAGAR. 9711284246 .5%( min) 5%(min) 7.

20% or more of Average PAT of previous 2 financial years. where the company does not intend to declare dividend amount to be transferred to reserves shall be less than the Average amount of dividend declared in the preceding 3 financial years. 208] Q. Can the dividend be paid in kind? A. for such period as may be decided by the CG . LALITA PARK.R. [sec. yes.[ Hanuman prashad gupta vs. 9910965137. 16 In which court a shareholder complain against the co if it refuses to pay dividend to him? A.14 Can the dividend be paid on new shares? A. 9711284246 . Hiralal] Q. Yes Q. 208] Page 33 of 56 NEERAJ MUDGAL LAW CLASSES 2/75.2. interest can be paid out of capital in case of companies having long gestation period. 18 Can a co pay interest out of capital? A yes. in the court with in whose jurisdiction the registered office of the company is situated. [sec.13. LAXMI NAGAR. 20 Whether payment of interest out of capital is reduction of capital? A no. or it has authority in the AOA and the CG gives the approval. Q. Q. 19 What is period over which the interest out of capital can be paid? A.12 When the requirement of minimum distribution shall not apply to a company? A condition of minimum distribution shall not be applicable if the current year profit after tax has fallen down substantially i. [sec. dividend shall be paid in cash only Q.e. DELHI. yes . proportionately. such period shall not go beyond the half year next after the half in which the construction is completed. 208] Q. if the co obtains the approval of shareholders by S. Q. 17 Can the dividend be paid on the shares allotted on the last day of the financial year? A. proportionately. 15 Can the dividend be paid electronically? A. Q.

shall be punishable with imprisonment upto 3 years and fine of rs. State Governments. 9910965137.a. 1000 per day Co : shall be liable to pay interest at the rate of 18% p. DELHI. 9711284246 . LAXMI NAGAR. companies or any other institutions for the purposes of the Fund: and (g) the interest or other income received out of the investments made form the Fund: Provided that no such amounts referred to in clauses (a) to (d) shall form part of the Fund unless such amounts have remained unclaimed and unpaid for a period of seven years from the date they become due for payment. Page 34 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. LALITA PARK. director : if knowingly party to the default . yes Q. There shall be credited to the Fund the following amounts. 206A Q 22 What are the amounts that are transferred to the IEPF (investor Education and Protection Fund)? A. namely:(a) amounts in the unpaid dividend accounts of companies: (b) the application moneys received by companies for allotment of any securities and due for refund: (c) matured deposits with companies: (d) matured debentures with companies: (e) the interest accrued on the amounts referred to in clauses (a) to (d): (f) grants and donations given to the Fund by the Central Government. Q 23 Can the amount once transferred to the IEPF be recovered ? A.Q 21 Can a co keep the payment of dividend in abeyance ? A yes sec. 24 What are the penalties for non-payment of dividend? A.

statutes. (a) the charter. or (c) the directors or secretary of a foreign company. within 30 days of the alteration with respect to: Person authorized to accept service of notice on behalf of the company principal place of business in India st Page 35 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. 591(1) Foreign company means a company registered outside AND having PLACE OF BUSINESS in India Q 2 what is india controlled foreign co. in terms of section 591(2). or memorandum and articles of a foreign company or other instrument constituting or defining the constitution of a foreign company.FOREIGN COMPANY BY CS NEERAJ MUDGAL BEST & EXCLUSIVE FOR CA FINAL LAW Q 1 What is a foreign co. ? A Sec. LAXMI NAGAR. or (d) the name or address of any of the persons authorised to accept service on behalf of a foreign company. ? A. Q. company incorporated outside India And having a place of business in India in which at least 50 % of the PUC (equity or preference or partly in both) is held by Indian Citizens or bodies corporate incorporated in India. Prescribed time 31 January of the following year with respect to: constitution of the company address of the registered or principal office of the company directors and secretary of the company. 4 what are the documents required to be filed by a foreign co ? A. Q. LALITA PARK. DELHI. 9910965137. or (b) the registered or principal office of a foreign company. ROC DELHI and 2. Q 3 foreign co files its documents with which ROC? A. ROC of the state in which the principle place of business is situated. 1. 9711284246 .5 what is the time limit for intimating any alteration in the information filed with ROC? A. or (e) the principal place of business of the company in India. it shall be treated as an Indian company in respect of its Indian business.

603 and SEC. drawn up in rupees. Q. Further the co shall not be entitled to file any case until it complies with the provisions of Part XI. 9910965137. 596] Q. or sent by post to. YES [ SEC. in the form prescribed in schedule VI. 1000 per day. including documents relating to every subsidiary of the foreign company as submitted by it to the prescribed authority in the country of its incorporation under the provisions of the law in that country. shall be filed with the registrar within 9 months of the closure of the financial year. Q.[ sec. the address which has been so delivered: Otherwise it may be served at any place of business established by the company in India. LAXMI NAGAR. Indian Business Account 3 copies of the Balance sheet and profit and loss account of Indian business duly audited by the PCA in India. shall be filed with its registrar within a period of 9 months form the closure of the financial year of the foreign company.8 what are the books of accounts to be maintained by a foreign co. 9711284246 . any notice is addressed to any person whose name has been delivered to the Registrar under the provisions of Part xi t.6 where a notice or service be served on the foreign co ? A. 594 World Accounts 3 copies of the balance sheet and profit and loss account. shall be liable to a fine up to rs.? A sec. 9 can a foreign co issue prospectus In india A.Q. 10000 and in the case of continuing offence fine upto rs. DELHI. LALITA PARK.7 what are the penalties if the foreign co does not file the documents required to be filed? A co and every officer or agent in default. 595] Page 36 of 56 NEERAJ MUDGAL LAW CLASSES 2/75.

Q. * Paid Up Capital includes both the equity and preference share capital. (b) any company which is subsidiary of a government company is also a government company.1 What is a government co ? A. 9910965137. 619B and who does it audit? A company in which not less than 51% of the PUC is held by the one or more of the following or any combination thereof: CG/SG/ CORPORATION OWNED OR CONTROLED BY CG OR SG Page 37 of 56 NEERAJ MUDGAL LAW CLASSES 2/75.? A. LALITA PARK. DELHI. Following documents shall be placed: Annual report Audit Report Any comments or supplement to the Audit Report. Sec. 617: (a)A government company is any company in which at least 51% of the PUC is held by: Central Government State Government Jointly by both of them. Q.3 who has to prepare the annual report of the government co? A. CAG( COMPTROLER AND AUDITOR GENERAL OF INDIA) Q. Annual Report of a Government Company sec. If both the governments are involved than both the government shall prepare the Annual Report and lay before the parliament and State legislature. [619A] The annual report shall be prepared by the government within 3 months of the AGM and shall be laid before both the houses of the parliament in case of the CG. LAXMI NAGAR. If the government is SG then before State Legislature.GOVERNMENT COMPANY BY CS NEERAJ MUDGAL BEST & EXCLUSIVE FOR CA FINAL LAW Q. 9711284246 .2 who does the audit of government co.4 which is the co specified in sec.

6 whether BOD of the government co are required to give explain on the adverse comments made by C. DELHI. LALITA PARK. Page 38 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. 9711284246 . LAXMI NAGAR. 9910965137. YES Q.A.Its audit shall be conducted by C.5 can the government co revise its audited accounts? A. YES.G. Q.G.A.? A.

2(h) Q. yes sec. their prices and intended use. yes. 2(s)"relevant geographic market" means a market comprising the area in which the conditions of competition for supply of goods or provision of services or demand of goods or services are distinctly homogenous and can be distinguished from the conditions prevailing in the neighbouring areas. Sec.1 whether shares are goods for the purpose of competition act 2002? A YES. ? A. LALITA PARK. DELHI.5 what is CCI and how its Chairperson and other members are appointed? A sec.COMPETITION ACT 2002 BY CS NEERAJ MUDGAL BEST & EXCLUSIVE FOR CA FINAL LAW Q. 2(i) Q2 whether a person purchasing the goods for resale purpose is a consumer under the competition act? A. 9910965137. 2(f) Q 3 whether a govt department supplying water for irrigation to the agriculturists after levying charges for water supplied ( and not a water tax) can be considered as an enterprise. 9711284246 . Sec. Sec.4 what is Relevant Market ? A. Sec. LAXMI NAGAR. Q. 2(t)"relevant product market" means a market comprising all those products or services which are regarded as interchangeable or substitutable by the consumer. 8 Page 39 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. 2(r)"relevant market" means the market which may be determined by the Commission with reference to the relevant product market or the relevant geographic market or with reference to both the markets. SEC. by reason of characteristics of the products or services.

{max. ought on such ground or grounds to be removed. has been. 8 A member wants to challenge a decision of CCI given against him on the grounds that the CCI is not properly constituted. no Member shall be removed from his office on the ground specified in clause (d) or clause (e) of that subsection unless the Supreme Court. or (c) has been convicted of an offence which. in any paid employment. or at any time has been. LAXMI NAGAR. held by it in accordance with such procedure as may be prescribed in this behalf by the Supreme Court. DELHI. no. industry. or is qualified to be. has. has special knowledge of. or (f) has become physically or mentally incapable of acting as a Member. age limit 65 years] Q.— (a) is. public affairs. Will he succeed? A. reported that the Member. on an inquiry. or (b) has engaged at any time. economics. or. or (e) has so abused his position as to render his continuance in office prejudicial to the public interest. for period of 4 years. integrity and standing and who. as the case may be. adjudged as an insolvent. LALITA PARK. the Central Government may. on a reference being made to it in this behalf by the Central Government. remove the Chairperson or any other Member from his office if such Chairperson or Member. 9711284246 . management. Q. The Chairperson and other Members shall be whole-time Members. involves moral turpitude. in the opinion of the Central Government.6 a judge of H/C who is of 61 years of age. or (d) has acquired such financial or other interest as is likely to affect prejudicially his functions as a Member. 9910965137. business. law.The Commission shall consist of a Chairperson and not less than two and not more than 6 other Members to be appointed by the Central Government The Chairperson and every other Member shall be a person of ability. Can he be appointed as CCI Chairperson and for what period? A. may be useful to the Commission. Q. in the opinion of the Central Government. Page 40 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. during his term of office. commerce. yes. by order. a judge of a High Court.7 can a member be removed from CCI ? how can the vacancy be filled? A. as one of the member is having experience of only 12 years and therefore disqualified to be member. and professional experience of not less than fifteen years in international trade. accountancy. finance. administration or in any other matter which.

12 Q.9 Mr. 3(4).12 Can CCI inquire the matters covered under agreements made between INDIAN party and FOR EIGN party outside India.36] Q.14 where a contract provides that the purchaser shall not sell the goods outside the city of Agra. which are having adverse effect on the competition in India? A. yes. SEC. It is not covered in sec. K ceased to be a member of CCI on 31 march 2007. 32. 11 can the CCI call an EXPERT of a field . Sec. but CG shall refer the case to Supreme Court and if the Supreme Court declares that the person ought be removed then he can be removed by CG. can the CG do so and how? A. Therefore it is valid. whether the contract is valid ? A it is not resale price maintenance as the person is allowed to sell at price below the price lebel. YES SEC. Q. Q. Can he join the following from 1st july 2007: HLL ltd . L a member of CCI has acquired such financial interest as is likely to affect prejudicially his functions as a member of the CCI and the CG wants to remove him. Sec. 9711284246 . where a contract provides that the purchaser shall sell the goods at a price printed on the goods however he is allowed to sell at a price lower than the price lebel. LAXMI NAGAR.13 where contract provides that a purchaser shall not deal in the goods of persons other than the seller. DELHI. whether the contract is valid? A it is vertical anti competitive agreement and shall be valid if it does not have appreciable adverse effect on competition in india. whose case was disposed off by CCI under competition act 2002 in feb. YES [ SEC. LALITA PARK. 10 Mr.15. 2007 Lic A HLL ltd : NO LIC: YES.no act of CCI shall be invalid merely by reason of vacancy or defect in the constitution of the CCI or defect in the appointment of any member of CCI or irregularity in the procedure of CCI not affecting the merit of the case. Page 41 of 56 NEERAJ MUDGAL LAW CLASSES 2/75.3(4) Q. whether the contract is valid? A it is vertical anti competitive agreement and shall be valid if it does not have appreciable adverse effect on competition in india. 9910965137. Q. while deciding a case before it? A.3(4) Q.

though not intended to be legally enforced. Sec.Q. 28 . by passing a written order. 9711284246 . see assignment. LALITA PARK. Q. 16 Paint manufacturers have made an oral understanding to control the paint prices. 9910965137. Q.18 what is combination? A. can the CCI direct the Division of an enterprise enjoying dominant position? A yes. DELHI. is it an agreement and a valid agreement? A any understanding is agreement for the purpose of the competition act and is to control the price between manufacturers .17. Page 42 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. therefore it is horizontal anti competitive agreement and is void. LAXMI NAGAR.

The does not apply to the following: The government The RBI Local authorities Any corporation set up by special law. where the exemption has been given by the CG Q. 9910965137. withdraw the recognition of the STX. If still satisfied about supercession .it may by NIOG declare the Governing Body as superceded.1 are there any persons or transactions to which this act does not apply? A. DELHI. 11] The CG may by notification intimate that it is considering the Supercession of the governing body of the STX. 9711284246 . any person who has effected any transaction with or through the agency of any such authority as is referred to in this clause any convertible bond or share warrant or any option or right in relation thereto. Page 43 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. It shall give a ROOBH to the governing body of STX.SECURITIES CONTRACTS( REGULATION ) ACT 1956 BY CS NEERAJ MUDGAL BEST & EXCLUSIVE FOR CA FINAL LAW Q.2. CG may appoint the new governing body to perform the functions of STX. And order the property to vest in the stx. Q. 3 can the CG supercede the governing body of the stock exchange? A. Power of CG to withdraw the recognition of the STX SEC. Power of CG to SUPERCEDE the Governing Body of the STX [Sec. LAXMI NAGAR. can the CG withdraw the recognition of the Stock Exchange ? A. 5 The CG may by in the public interest or in the interest of trade. by written notice and specifying the reasons and after giving a ROOBH to the Governing Body. Contracts up to the date of withdrawl shall be valid. LALITA PARK.

Additional Trading floor [ sec. Q. transfer the duties and functions of a clearing house to a clearing corporation. 13A] Additional Trading Floor' means a trading ring or trading facility offered by a recognized stock exchange outside its area of operation.4 can the CG make or amend the rules of a Stock Exchange ? A. such transfer Sebi may grant the approval if it is in the interest of trade/public. (b)Regulation of voting rights by specifying that each member is entitled to one vote only irrespective of number of shares held. and payment for. being a company incorporated under the Companies Act. Power to put restriction on the rights of the member [ Sec. 9711284246 .. Establishment of Clearing Corporation [ sec. Power of CG(SEBI) to make or amend the rules of STX [sec.7 how can the Stock Exchange establish additional trading ring? A. LALITA PARK. Otherwise the sebi may itself make or amend the rules. the rules shall be valid as if the same were made or amended by the recognized stock exchange itself. with the prior approval of the Securities Exchange Board of India.Q. 6 what is a clearing corporation ? A. 9910965137. or connected with.8] The CG is empowered to make or amend all or any of the rules of STX related to the matters specified in section 3 ( the governing body of such stock exchange. Q. 1956 for the purpose of: (a) (b) (c) The periodical settlement of contracts and differences there under The delivery of. 7] a recognised stock exchange is empowered to amend rules to provide for all or any of the following matters: (a)Restriction of voting right to members only. DELHI. 8A] A recognized stock exchange may. Page 44 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. the powers and duties of the office bearers of the stock exchange. the procedure for the registration of partnerships ) STX shall make or amend the rules with in 2 months . membership of STX. 5 can the stock exchange put the restriction on the voting rights of the members? A. securities. LAXMI NAGAR. (c)Restriction on right of members to appoint proxy. Any other matter incidental to. Q.

and if it is satisfied that it would be in the interest of the trade and also in the public interest.. make enquiry and obtaining further information. Q. 9 what is the process of corporatization and demutualization? A.a Stock Exchange may establish additional trading floor with the prior approval of the Securities Exchange Board of India.8 can the CG suspend the Trading of STX? A. DELHI. the scheme shall have effect and be binding on all persons and authorities. then it may approve the scheme with or without modification.10 can a co file appeal if the listing permission is not given? A. Where the scheme is approved . within the time specified by the Securities and Exchange Board of India. 22A] Where a co makes an application for listing permission to a STX and the Permission is refused then The Appeal may be made to SAT within 15 days of receipt of reasons of refusal. Corporatization and Demutualisation [ sec. the recognised stock exchange in such two daily newspapers circulating in India. 12] Central Government is vested with power to suspend business in case of emergency for a period not exceeding 7 days by notification in Gazette. the scheme so approved shall be published immediately by— the Securities and Exchange Board of India in the Official Gazette. LALITA PARK. LAXMI NAGAR. 4B] All recognised stock exchanges shall. the Securities and Exchange Board of India may. Spot Delivery Contract[sec. extension can be ordered by the Central Government only after giving the ROOBH to the Governing Body of the STX. Q. Within 15 days from the expiry of specified time. Q. as may be specified by the Securities and Exchange Board of India. if no refusal is communicated by STX) Any person aggrieved by the decision of the SAT may file the appeal to the Supreme Court within 60 days from the date of order of SAT. 11 what is Spot Delivery Contract? A. Power to Suspend Trading of the STX [Sec. and upon such publication. Central Government also have power to extend this period by a like notification.2(i)] spot delivery contract” means a contract which provides for.(specified time means 10 weeks from the date of closure of subscription list. However. submit a scheme for corporatisation and demutualisation for its approval: On receipt of the scheme .. 9711284246 . Q. Right to appeal against refusal of Listing permission by STX [ Sec. if the Stock Exchange has furnished the reasons for refusal to the company.— Page 45 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. 9910965137.

Sec. holder of security who is a transferor) cannot receive or retain the dividend if the transfer deed with all other documents required for transfer are lodged with the company within 15 days of the date on which the dividend became due. AN offence for which imprisonment is not provided or if provided but it is optional (ie fine or imprisonment) is an offence which can be compounded. Securities Appellate Tribunal does the compounding of the offences . if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period. 22F. LAXMI NAGAR. the actual period taken for the despatch of the securities or the remittance of money therefore through the post being excluded from the computation of the period aforesaid if the parties to the contract do not reside in the same town or locality.e.] Q.(a) actual delivery of securities and the payment of a price therefore either on the same day as the date of the contract or on the next day. (b) transfer of the securities by the depository from the account of a beneficial owner to the account of another beneficial owner when such securities are dealt with by a depository. 9910965137. Any person aggrieved by any decision or order of the Securities Appellate Tribunal may file an appeal to the Supreme Court within sixty days from the date of communication of the decision or order of the Securities Appellate Tribunal to him on any question of law arising out of such order: Provided that the Supreme Court may. Under SCRA 1956 .12 where can the appeal be filed against the order of Securities Appellate Tribunal? A. LALITA PARK. 9711284246 . However. he (i. allow it to be filed within a further period not exceeding sixty days Q. Title to dividends: [Section 27] a holder of security can legally receive and retain any dividend declared by the company even if he has transferred the security for valuable consideration. DELHI.13 who does the compounding under this Act? A. Page 46 of 56 NEERAJ MUDGAL LAW CLASSES 2/75.

accountancy. LAXMI NAGAR.agriculture and rural economy. in the opinion of the Reserve Bank. Board of Directors to include persons with professional or other experience [10A. this section is not applicable. However for a subsidiary of a banking company and an association of banks.small-scale industry.2 can a banking co hold an immovable property acquired from a client permanently ? A. Mandatory to use the words bank. co-operation. who.1 can a non banking co use the word banking as part of its name? A.BANKING ( REGULATION ) ACT 1949 BY CS NEERAJ MUDGAL BEST & EXCLUSIVE FOR CA FINAL LAW BANKING REGULATION ACT 1949 Q. Q. namely.law. Q. 9711284246 . Others cannot use these words.7] Above mentioned words are mandatorily required to be used as part of the name by a company carrying on the business of banking. 9910965137.. no.3 state the composition of Board of Directors of A banking co ? A.] Minimum fifty-one per cent of the total number of members of the Board of Directors of a banking company shall consist of persons. be useful to the banking company: Page 47 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. LALITA PARK.banking or banking co. banker . DELHI.banking.shall have special knowledge or practical experience in respect of one or more of the following matters.9) A Banking Co may hold the immovable property FOR A PURPOSE OTHER THAN OWN USE for a period of 7 years from the date of acquisition and for an extended period upto 5 year with the permission of RBI.finance. and practical experience. economics. which would. [sec. no Disposal of Non-Banking assets(sec. any other matter the special knowledge of.

how can the terms and conditions of appointment of MD of a banking co be amended ? A. not being a scheduled bank. [Sec. Amendments of provisions relating to appointments of managing directors. However CG may give exemption if the balance of reserve fund and securities together is not less than paid up capital of the co. 1956 or any firm. Rates of interest charged by banking companies not to be subject to scrutiny by courts. DELHI. co-operation or smallscale industry AND shall not have substantial interest in any company. etc. [Sec 21A. Q. 9711284246 . Q. commercial or industrial concern. a [managing director or any other director. which carries on any trade. Q. is not a small-scale industrial concern. Reserve Fund [Sec. to be subject to previous approval of the Reserve Bank. commerce or industry and which. CASH RESERVE.However out of the aforesaid number of Directors.[Sec. 4 what is the minimum amount of profit that must be transferred to reserve fund every year by a banking co? A.7. yes. 17] Every banking co shall transfer to its reserve fund min. not less than two shall be persons having special knowledge or practical experience in respect of agriculture and rural economy. in either case..] — a transaction between a banking company and its debtor shall not be re-opened by any court on the ground that the rate of interest charged by the banking company in respect of such transaction is excessive. 20% of its profits before declaring the dividend. whole-time or otherwise or of a manager or a chief executive Page 48 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. at the close of business on the preceding working day. Q. 35B ]— appointment or re-appointment or termination of appointment or remuneration of a chairman. 18] Every banking company. shall maintain in India by way of cash reserve a sum equivalent to at least three per cent of the total of its demand and time liabilities in India as on the last Friday of the second preceding fortnight and shall submit to the Reserve Bank before the twentieth day of every month a return showing the amount so held on alternate Fridays during a month with particulars of its demand and time liabilities in India on such Fridays or if any such Friday is a public holiday. LALITA PARK. not being a company registered under section 25 of the Companies Act. can the rate of interest charged by the bank be challenged in the court of law? A. not being a small-scale industrial concern. 9910965137.6. or shall not be proprietors of any trading. LAXMI NAGAR. 5 what are the requirements of maintaining Cash Reserve? A.

the order made by the Reserve Bank under sub-section (I). appoint one or more additional director for a period of 3 years at a time and may extend the time in future upto 3 years at a time. or for the better provision of credit generally or of credit to any particular section of the community or in any particular area. by order and after give a reasonable opportunity of showing cause against the proposed action Page 49 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. in the interests of the depositors of such banking company. The aggrieved person may make an appeal within 30 days of RBI order to CG. RBI may appoint a suitable person in place of the removed person. 9910965137. [36AB. shall be final and shall not be called into question in any court. Such director shall not incur any liability. The removed person shall be disqualified for a period upto 5 years in future to hold similar position in any Banking co. If the appointment or reappointment is found to be invalid then the acts done upto such date shall be valid and after such date the acts shall be invalid. Q. Power of Central Government to acquire undertakings of banking companies in certain cases [36AE] RBI may. or in the interest of banking policy. LALITA PARK. and provisions of co act shall not apply.officer by whatever name called. LAXMI NAGAR. 9 can the RBI appoint additional directors on the BOARD of a banking co? A. Q.] RBI may. The decision of the Central Government on such appeal. and subject thereto. 10 can the Central Government acquire the undertaking of the banking companies? A.] chief executive officer (by whatever name called) or other officer or employee of the banking company. shall not be liable to hold the qualification shares and shall not be considered in total no of directors of the banking co. 9711284246 . shall not have effect unless approved by the Reserve Bank.[Sec. in the interest of banking policy or in the public interest or] in the interests of the banking company or its depositors. director.8 can the RBI remove MD of the banking co? A Power of Reserve Bank to remove managerial and other persons from office. Power of Reserve Bank to appoint additional directors. DELHI. 36 AA] — RBI may in the public interest or for preventing the affairs of a banking company being conducted in a manner detrimental to the interests of the depositors or for securing the proper management of any banking company it is necessary so to do By order remove [any chairman. Q.

of the affairs of any banking company and its books and accounts. shall get transferred to the CG or any other banking co as the case may be. Q. such person may. 12 what are the provisions of doing inspection under the banking regulation act 1949? A. such undertaking may vest in the CG or in any other banking co. [Sec. LAXMI NAGAR. Compensation to be given to shareholders of the acquired bank. If the amount of compensation offered is not acceptable to any person to whom the compensation is payable. the Reserve Bank. direct the Reserve Bank to apply under section 38 for the winding up of the banking company: Page 50 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. LALITA PARK.acquire the undertaking of any banking co. to have the matter referred to the Tribunal Q. after giving reasonable opportunity to the banking company to make a representation in connection with the report. and on being directed so to do by the Central Government shall. Inspection. 9711284246 . 9910965137.. all the assets and liabilities and documents etc. sec.11 can the shareholders of acquired bank object the amount of compensation? A. if it is of opinion after considering the report that the affairs of the banking company are being conducted to the detriment of the interests of its depositors. and Central Government. before such date as may be notified by the Central Government in the Official Gazette. 36AG. DELHI. at any time. request the Central Government in writing.35] the Reserve Bank at any time may. by order in writing— prohibit the banking company from receiving fresh deposits. may. cause an inspection to be made of any banking company and its books and accounts. may also cause a scrutiny to be made by any one or more of its officers.

PREVENTION OF MONEY LAUNDERING ACT 2002 BY CS NEERAJ MUDGAL BEST & EXCLUSIVE FOR CA FINAL LAW Money Laundering [ sec. LAXMI NAGAR.4] Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine which may extend to five lakh rupees: In case of offences in paragraph 2 of Part A of the Schedule.1. in such manner as may be prescribed: The records referred to in sub-section (1) shall be maintained for a period of ten years Page 51 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. DELHI. LALITA PARK.[Sec. directly or indirectly. whether such transactions comprise of a single transaction or a series of transactions within a month (b)furnish information of transactions referred to in clause (a) to the Director within such time as may be prescribed.12 (1) Every banking company. 2(1)(u)] "proceeds of crime" means any property derived or obtained.— Sec. 9910965137. financial institutions and intermediaries to maintain records. imprisonment may extend to 10 years Q. Proceeds of Crime[sec. Punishment for money-laundering. by any person as a result of criminal activity relating to a scheduled offence or the value of any such property. What is the duty of banking companies under the prevention of money laundering act 2002? A. financial institution and intermediary shall— (a) maintain a record of the prescribed transactions.2(1)(p) & 3] Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering. Banking companies. (c)verify and maintain the records of the identity of all its clients. 9711284246 .

[Sec. 9910965137. 2 can the director impose fine on banking companies? A. levy a fine on such banking company or financial institution or intermediary which shall not be less than ten thousand rupees but may extend to one lakh rupees for each failure. 42]-. pass such orders thereon as it thinks fit. Any banking company. finds that a banking company. in the course of any inquiry. Page 52 of 56 NEERAJ MUDGAL LAW CLASSES 2/75.the Director or any person aggrieved by an order made by the Adjudicating Authority under this Act. then. 13] -If the Director.4 where can the appeal be filed against the order of Appeal to the appellate Tribunal? A. DELHI. he may. LALITA PARK. [Sec. allow it to be filed within a further period not exceeding sixty days.Q. Every appeal shall be filed within a period of forty-five days from the date on which a copy of the order made by the Adjudicating Authority or Director is received. modifying or setting aside the order appealed against. financial institution or an intermediary or any of its officers has failed to comply with the provisions contained in section 12. if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period. Powers of Director to impose fine. after giving the parties to the appeal an opportunity of being heard. [Sec.Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law or fact arising out of such order: Provided that the High Court may. Appeal to Appellate Tribunal. 9711284246 . may prefer an appeal to the Appellate Tribunal. 26]-. Q. LAXMI NAGAR. the Appellate Tribunal may. confirming. The appeal filed before the Appellate Tribunal shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within six months from the date of filing of the appeal. may prefer an appeal to the Appellate Tribunal. Q3 where appeal can be filed against the order of director? A. by an order. financial institution or intermediary aggrieved by any order of the Director made under section 13. Appeal to High Court.

Sec 2(v)"reconstruction company" means a company formed and registered under the Companies Act. 1 in which case this section shall not apply? A. Provisions of this Act not to apply in certain cases[Sec 31] The provisions of this Act shall not apply to-(a) (b) (c) (d) (e) (f) (g) Page 53 of 56 a lien on any goods.SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSESTS AND ENFORCEMENT OF SECURITY INTEREST ACT. LAXMI NAGAR. DELHI. Sec. any rights of unpaid seller any properties not liable to attachment NEERAJ MUDGAL LAW CLASSES 2/75. a pledge of movables creation of any security in any aircraft creation of security interest in any vessel any conditional sale. in accordance with the directions or guidelines relating to assets classifications issued by the Reserve Bank. hire-purchase or lease or any other contract in which no security interest has been created. which has been classified by a bank or financial institution as sub-standard. Sec. 2(o)"non-performing asset" means an asset or account of a borrower. whether by raising of funds by such securitisation company or reconstruction company from qualified institutional buyers by issue of security receipts representing undivided interest in such financial assets or otherwise. doubtful or loss asset. Q. LALITA PARK. in any other case.2(z)"securitisation" means acquisition of financial assets by any securitisation company or reconstruction company from any originator.-(a) (b) in such authority or body. 1956 (1 of 1956) for the purpose of asset reconstruction. 9711284246 . 2002 BY CS NEERAJ MUDGAL BEST & EXCLUSIVE FOR CA FINAL LAW “An Act to regulate securitization and reconstruction of financial assets and enforcement of security interest and for matters connected therewith or incidental thereto”. money or security . 9910965137.

2 crores. Registration procedure co shall make an application for registration to the Reserve Bank. 9910965137. is not a holding company of the securitisation company or reconstruction company. securitisation and reconstruction that the board of directors of such company. that the directors of securitisation company or reconstruction company have adequate professional experience in matters related to finance. that securitisation company or reconstruction company has complied with or is in a position to comply with prudential norms specified by the Reserve Bank. Conditions to be satisfied (a) (b) company has not incurred losses in any of the three preceding financial years. 9711284246 . LAXMI NAGAR.2 what is the procedure for registration of securitization or reconstruction co? A. (i) any security interest created in agricultural land. that a sponsor. that company has complied with one or more conditions specified in the guidelines issued by the Reserve Bank for the said purpose.any security interest for securing repayment of any financial asset not exceeding one lakh rupees. or. company has made adequate arrangements for realisation of the financial assets acquired for the purpose of securitisation or asset reconstruction and shall be able to pay periodical returns and redeem on respective due dates on the investments made in the company by the qualified institutional buyers or other persons.3] securitisation company or reconstruction company shall not commence or carry on the business of securitisation or asset reconstruction without-(a) (b) obtaining a certificate of registration and (h) having the owned fund of not less than ( fifteen per cent of total financial assets acquired or Rs 100cr which ever is less). (a) (b) (c) (d) (e) Page 54 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. (j) any case in which the amount due is less than twenty per cent of the principal amount and interest thereon. as the case may be. that any of its directors has not been convicted of any offence involving moral turpitude. does not consist of more than half of its total number of directors who are either nominees of any sponsor or associated in any manner with the sponsor or any of its subsidiaries. However it shall not be less than rs. LALITA PARK. does not otherwise hold any controlling interest in such company. Q. DELHI. Registration of securitisation companies or reconstruction companies [Sec.

LAXMI NAGAR. or submit or offer for inspection its books of account or other relevant documents when so demanded by the Reserve Bank. or d. DELHI. after being satisfied that the conditions are fulfilled. 4 can appeal be filed against the cancellation? A. or b. Any substantial changes and changes in the location of registered office shall be done only with the approval of RBI. or obtain prior approval of the Reserve Bank required under sub-section (6) of section 3: c d Q. On what grounds certificate of registration be cancelled? A. 9910965137. Cancellation of certificate of registration The Reserve Bank may cancel a certificate of registration granted to a securitisation company or a reconstruction company. RBI may also reject the application after giving an opportunity of being heard to the applicant. ceases to carry on the business of securitisation or asset reconstruction. has failed to comply with any conditions subject to which the certificate of registration has been granted to it. within a period of thirty days from the date on which such order of cancellation is communicated to it. 9711284246 . ceases to receive or hold any investment from a qualified institutional buyer. Appeal to Central government A securitisation company or reconstruction company aggrieved by the order of cancellation of certificate of registration may prefer an appeal. if such company-a. fit to impose. or c. or maintain accounts in accordance with the requirements of any law or any direction or order issued by the Reserve Bank under the provisions of this Act. LALITA PARK.Grant of certificate of registration The Reserve Bank may. grant a certificate of registration to commence or carry on business of securitisation or asset reconstruction. at any time fails to fulfil any of the conditions referred to in clauses (a) to (g) of sub-section (3) of section 3. Sec 4. fails to-a b comply with any direction issued by the Reserve Bank under the provisions of this Act. subject to such conditions which it may consider. or e. to the Central Government: Page 55 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. Q3.

Sec. assignment or sale for realising the secured asset. 9711284246 . to manage the secured assets the possession of which has been taken over by the secured creditor. Q 5. LALITA PARK. Where any borrower. to pay the secured creditor. DELHI. who is under a liability to a secured creditor under a security agreement. 13 Enforcement of security interest any security interest created in favour of any secured creditor may be enforced. then. by such creditor in accordance with the provisions of this Act. without the intervention of court or tribunal. the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-section (4). namely:-(a) (b) (c) (d) take possession of the secured assets of the borrower including the right to transfer by way of lease. If the dues of the secured creditor together with all costs. LAXMI NAGAR. ALL THE VERY BEST Page 56 of 56 NEERAJ MUDGAL LAW CLASSES 2/75. what is the procedure of enforcement of security interest ? A. 9910965137. the secured creditor may take recourse to one or more of the following measures to recover his secured debt. the secured asset shall not be sold or transferred by the secured creditor. take over the management of the business of the borrower including the right to transfer by way of lease. makes any default in repayment of secured debt or any instalment thereof. and his account in respect of such debt is classified by the secured creditor as non-performing asset. charges and expenses incurred by him are tendered to the secured creditor at any time before the date fixed for sale or transfer. so much of the money as is sufficient to pay the secured debt.PROVIDED that before rejecting an appeal such company shall be given a reasonable opportunity of being heard. require at any time by notice in writing. In case the borrower fails to discharge his liability in full within the period specified in sub-section (2). assignment or sale for realising the secured asset: appoint any person (hereafter referred to as the manager). any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower. and no further step shall be taken by him for transfer or sale of that secured asset. The notice referred to in sub-section (2) shall give details of the amount payable by the borrower and the secured assets intended to be enforced by the secured creditor in the event of non-payment of secured debts by the borrower.