Company Law Marathon Latest 2022 PPT NOTES

CHAPTER 1 PRELIMINARY
SECTION The Companies Act,2013

1
▪ SHORT TITLE (always

▪ EXTENT capital)
▪ COMMENCEMENT
▪ APPLICATION
SECTION 1
29TH AUG SIGNED BY PRESIDENT
30TH AUG 2013 – NOTIFIED &
APPLIED
DEFINITIONS
MEANS INCLUDES
(as per law
maker)
• Exhaustive
• Inclusive in nature
• Restrictive • Not defining but
giving example
• Extensible In
nature
• It can be extended
As per The Companies Act, 2013 Section 2 (20) (clause)
Company means a company incorporated under this Act
or under any previous company law
.
Companies Act Is a
general Act. Special Act
and general Act
Bigger for any specific

company
SECTION 1
Short title Extent Commencement
The Sec 1 came into force

Companies Whole Of immediately when Act was
Act, 2013 India notified in Official Gazette
(30.8.2013) & rest sections on
different dates
SECTION 1
Applicability
a) Every company
b) Banking company only to the extent its not inconsistent
with it own specific Act. i.e, Banking Regulation Act, 1949
c) Insurance Company only to the extent its not inconsistent
with it own specific Act. i.e, Insurance Act 1938 &
Insurance Regulatory
SECTION 1
Applicability
c)Electricity Company only to the extent its not inconsistent
with it own specific Act. i.e, Electricity Companies Act,2003.
d)Company formed under special statute or Act of Parliament.
f) Body corporate notified by central government. E.g.,
• Food corporation of India (FCI)
• NHAI
Q. IS COMPANIES ACT , 2013 ALSO APPLICABLE FULLY ON FOREIGN COMPANIES?
As per section 2(20) of the companies act, 2013 company means a

company incorporated under this act or under any previous
company law.
As per section 2(42) foreign company means a company or body
corporate outside India and having a place of business in India either
physically or electronically or itself or through an agent or conducts any
business activity in any other manner.
This means foreign company fails to satisfy the definition of
company,foreign company is not regarded as a
company
Q. CAN THE COMPANIES ACT , 2013 BE MADE APPLICABLE TO NON-COMPANY ALSO?
Yes if both
conditions Satisfied
BODY CORPORATE NOTIFIED BY CG
E.G- FCI, NHAI
Q. WHAT IS A BODY CORPORATE ?
Any entity which has perpetual succession , separate legal entity, right
to use common seal, power to acquire, hold, dispose, property both ,
movable & immovable , tangible & intangible , right to sue & be sued is
a body corporate.
Body corporate is a broader term.
ALL COMPANIES ARE BODY CORPORATE BUT ALL BODY CORPORATES ARE NOT
COMPANIES.
EXAMPLE- FCI, NHAI, SEBI, CCI ARE BODY CORPORATES BUT NOT COMPANY
However , the Companies Act, 2013 is applicable only on those body
corporates which are notified by CG. E.g.- FCI,NHAI and not
CCI,SEBI.
Q. WHAT IS A BODY CORPORATE ?
As per section 2(11)

Body corporate includes a company incorporated
outside India but does not include
• a co-operative society registered under any law
• Such entities notified by CG.
NOTE: ALL DEFINITIONS WILL START
WITH
MEANS INCLUDES
INCLUSIVE
• EXHAUSTIVE
(EXTENSIBLE)
&
• RESTRICTIVE
IS THE COMPANIES
PARTICULARS COMPANY FOREIGN BODY ACT,2013 APPLICABLE?
COMPANY CORPORATE
RIL ✓ ✕ ✓ ✓
MEPL ✓ ✕ ✓ ✓
UNILEVER LTD ✕ ✓ ✓ ✕
COMPANY ✕ ✕ ✓ ✕
INCORPORATED
IN LONDON
COMPANY ✕ ✓ ✓ ✕
INCORPORATED IN USA
& HAVING SHARE
TRANFER OFFICE IN
MUMBAI
FCI ✕ ✕ ✓ ✓
SEBI ✕ ✕ ✓ ✕
PRIVATE COMPANY SEC 2(68)
PRIVATE COMPANY MEANS A COMPANY HAVING

SUCH AMOUNT OF PAID UP SHARE CAPITAL AS
MAY BE PRESCRIBED. (BY RULES)
AND WHICH BY ITS ARTICLES:-
RESTRICTS LIMITS PROHIBITS
THE NUMBER ANY INVITATION TO
BUT NOT PROHIBITED
OF PUBLIC TO COMPANY
MEMBERS TO SUBSCRIBE
THE TRANSFER OF SHARES
200
NOTE: PRIVATE COMPANY SHARES ARE TRANSFERABLE SECURITIES
BUT NOT FREELY TRANSFERABLE. OF
REQUIRED
APPROVAL OF PRIVATE COMPANY
QUESTION ANSWER
CAN A PRIVATE COMPANY ISSUE YES, BY MAKING A SPECIAL OFFER.

SHARES/ DEBENTURES *PRIVATE PLACEMENT &
TO OUTSIDERS ? NOT A GENERAL OFFER TO
PUBLIC.
CAN PRIVATE COMPANY COME OUT WITH NO. BECAUSE IT IS PROHIBITED TO INVITE
IPO OF SHARES/ DEBENTURES? PUBLIC TO SUBSCRIBE ANY SECURITIES OF
THE COMPANY
QUESTION ANSWER
CAN A PRIVATE COMPANY SHARES NO, BECAUSE SHARES OF PRIVATE CO. ARE
BE LISTED? NOT FREELY TRANSFERBLE.
CAN PRIVATE COMPANY COME OUT WITH YES, BECAUSE DEBENTURES OF PRIVATE
IPO OF SHARES/ DEBENTURES? COMPANY ARE FREELY TRANSFERABLE.
e.g., LOTUS CONSTRUCTIONS PRIVATE
LTD.
QUESTION ANSWER
IS EMPLOYEE COUNTED IN LIMIT OF 200? NO.
IS EMPLOYEE CUM SHAREHOLDER COUNTED NO.

IN LIMIT OF 200?
QUESTION ANSWER
WHAT IF EMPLOYEE CUM SHAREHOLDER NO.

RETIRE BUT CONTINUES TO HELD SHARES?
JOINT SHAREHOLDERS? 1 ONLY.

SECTIONS
• SEC 2 (68) PRIVATE COMPANY
• SEC 2 (71) PUBLIC COMPANY
• SEC 2 (62) OPC
• SEC 2 (21) COMPANY LIMITED BY GURANTEE
• SEC 2 (22) COMPANY LIMITED BY SHARES
• SEC 2 (92) UNLIMITED COMPANY
SEC 2(71) PUBLIC COMPANY
Public company means a company which is not a private company

& having such paid up share capital as may be prescribed.
Proviso: provided that a private company which is a subsidiary of

a public company shall be deemed to be a public company.
E.G- X LTD SUBSIDIARY Y PRIVATE LTD ( Y LTD IS
A DEEMED DEEMED PUBLIC COMPANY?

NOTE
MINIMUM PAID UP SHARE CAPITAL BOTH IN

PRIVATE COMPANY & PUBLIC COMPANY IS
NIL
SECTION 2(62) ONE PERSON COMPANY
ONE PERSON COMPANY MEANS A COMPANY HAVING

ONLY ONE PERSON AS A MEMBER
(JUST LIKE PRIVATE COMPANY)

SECTION 2 (21) COMPANY LIMITED BY GUARANTEE
• Member’s liability is limited up to the

amount that they have guaranteed in
moa.
• Amount can be called only t=at the time of
winding up
• E.G- Bharat Egg Producer Association
(section 8 charitable company)
SECTION 2 (22) COMPANY LIMITED BY SHARES
• Means a company in which members

liability is limited upto the amount which is
unpaid on face value of shares held by
them
• Amount can be called any time.
• E.g- MEPL,RIL
SECTION 2 (92) UNLIMITED COMPANY
• Means a company in which members liability is

unlimited
• Amount can be called only at the time of winding
up.
• E.g- Amway India Enterprise Pvt ltd.
Normally liability of every company is unlimited

Note- liability of all three companies is unlimited. Its just that
their members liability is limited in first two types.
ON THE BASIS OF
MEMBERS LIABILITY CONTROL SIZE ORIGIN OWNERSHIP STATUS LISTING NIDHI CO.
OPC COMPANY HOLDING SMAL FOREIGN SEC GOVERNEMENT DORMANT LISTED CO.
SEC 2(62) LIMITED BY SEC 2(46) L SEC 2(42) SEC 2(45) SEC 455 2(52)
GUARANTE 2(85)
E 2(21) STARTU
P CO.
PRIVATE CO. COMPANY SUBSIDIARY
SEC 2(68) LIMITED BY SEC 2(87)
SHARES BIG INDIA NON- ACTIVE UNLISTE
2(22) N GOVERNMEN D CO.
UNLIMITE ASSOCIATE 2(20) T
PUBLIC D SEC 2(6) IFSC
CO. SEC 2 COMPANY
(71) 2(92)
SECTION 2 (46) HOLDING COMPANY
Means a company having one or more

subsidiary company.
Explanation- The Company term shall

include body corporate for purposes of this
clause.
SECTION 2 (87) SUBSIDIARY COMPANY
Means a company in which holding company either-
• Controls the composition of board of directors (BOD)

OR
• Exercise more than 50% of total voting power either on its
own or together with its subsidiary.
PROVISO-
Provided that holding co. cannot have layers of subsidiaries
more than prescribed.
{REFER COMPANIES ( RESTRICTION IN NUMBER OF LAYERS OF SUBSIDIARIES)}
SECTION 2 (87) SUBSIDIARY COMPANY
Explanation:-
a) Subsidiary of subsidiary of holding company is
deemed to be subsidiary of holding company
b) Controls the composition of bod means having the
rights to appoint remove all or any majority of
dreams.
c) The term company shall include body corporate for
the purposes of this clause.
d) Layer means layers of subsidiary
QUESTION 1
B ltd is a company which has issued ( 1 lakh) equity shares of class a (ordinary
shares i.E, 1 shares = 1 vote) & 1 lakh equity shares of class B ( DVR i.e., 1 share
= 1/10 vote )
A ltd holds 90,000 shares of class a in b ltd. Is it a holding company?

BEFORE AMENDMENT AFTER AMENDMENT
>50% * TOTAL PUSC >50% OF TOTAL VOTING POWER

90000/200000 * 100 90000/ 100000 VOTES + 10000 VOTES
=45% = 81.82%
A LTD WAS NOT HOLDING COMPANY OF B LTD A LTD IS HOLDING COMPANY OF B LTD
QUESTION 2
A LTD HAS A RIGHT TO APPOINT THREE DIRECTORS OUT OF

5 DIRECTORS ON BOARD OF B LTD.
A LTD IS HOLDING COMPANY?
YES, BECAUSE A LTD CONTROLS YHE

COMPOSITION OF BOD OF B LTD
QUESTION 3
A LTD SUBSIDIARY B LTD (SUBSIDIARY)
C LTD C
LTD IS SUBSIDIARY OF ?
C LTD IS SUBSIDIARY OF BOTH A LTD & B LTD.

QUESTION 4
A LTD 2 % VOTING POWER
SUBSIDIARY C LTD GOT VOTING

POWER
B LTD 48.5 % VOTING POWER

ANSWER - A LTD IS HOLDING OF C LTD.
C LTD IS SUBSIDIARY OF A LTD ONLY
QUESTION 5
A LTD
1 % VOTING POWER
30% VOTING B LTD C LTD 20% VOTING

POWER SUBSIDIARY POWER
SUBSIDIARY
ALL ATTACKED ON D LTD

GOT VOTING POWER
D LTD IS SUBSIDIARY OF ?
ANSWER - D LTD IS SUBSIDAIRY OF A LTD ONLY
QUESTION 6
MA (PERSON)
50% VOTING POWER
X LTD
MA CANNOT BE HOLDING COMPANY BECAUSE HE IS NOT A COMPANY

QUESTION 6
EXAMPLE
UNILEVER HAS 67% VP (UK)
HUL LTD (INDIA)

AS PER SEC 2(20) NOT ALL A COMPANY. SO, AS 2(42) ITS FOREIGN
COMPANY
QUESTION 6
BUT EXCEPTION
UNILEVER HAS 67% VP (UK)
HUL LTD
i. IS UNILEVER LTD A COMPANY
NO BECAUSE IT DOES NOT SATISFY THE DEFINITION OF COMPANY AS
PER SEC 2 (20)
QUESTION 6
ii. THEN HOW IT IS REGARDED AS A HOLDING COMPANY?
UNILEVER LTD IS A BODY CORPORATE AND AS PER EXPLANATION TO
SEC 2 (46) & EXPLANATION (C ) TO SEC 2(87) THE TERM COMPANY
SHALL INCLUDE BODY CORPORATE FOR THE PURPOSE OF THESE
CLAUSES. SINCE IT HOLDS MORE THAN 50% VOTING POWER IN HUL
LTD. SO,IT’S A HOLDING COMPANY OF HUL LTD.
COMPANIES (RESTRICTION ON NUMBER OF
LAYERS) RULES 2017, W.E.F 20.09.2017
• No company shall have more than 2 layers of subsidiaries
• Nothing in this rule shall prevent a company from
acquiring company incorporated outside India which
has subsidiaries layer more than 2 as per foreign law
• If a layer contains wholly owned subsidiaries then that
layer shall not be counted.
EXISTING COMPANIES WHICH
ALREADY HAVE MORE THAN 2
YEARS AS AON 20.9.17
Shall submit form CRL 1 within
If reduces voluntarily then
150 maximum layers it can have is
days of commencement of Cannot
• No. of layers after such
rules increase its
(20.09.2017) layers reduction
• 2 layers (whiever is higher)
COMPANIES (RESTRICTION ON NUMBER OF
LAYERS) RULES 2017, W.E.F 20.09.2017
SUPPOSE COMPANY HAD 10 LAYERS AS ON 2O.9.2017. LATER ON
VOLUNTARILY IT REDUCES IT TO 9 LAYERS, THEN MAXIMUM LAYERS IT
CAN HAVE IS-
• NUMBER OF LAYERS AFTER REDUCTION (9)

• 2 LAYERS , W.E.F
WHIEVER IS HIGHER = 9 LAYERS.

FINE FOR CONTRAVENTION
10000 + 1000/day till default
continues
NON-APPLICABILITY OF THESE RULES
• BANKING COMPANIES
• INSURANCE COMPANIES
• GOVERNMENT COMPANIES
• SYSTEMATICALLY IMPORANT NBFC
(ASSET SIZE AS PER LATEST AUDITED
BALANCE SHEET MIN 500 CR.
EXAMPLE
A
B C D E L1 LAYER 1
F G H I J K L L2 LAYER 2
L1
L2 L3 M WHIICH IS NOT ALLOWED
HOWEVER SUPPOSE B,C,D,E ARE WOS THEN THEY WON’T BE COUNTED.

ASSOCIATE COMPANY SEC 2 (6)
Associate companies means a company

in which the other company(viz.
Investing company) has a significant
influence and include joint venture.
SIGNIFICANT INFLUENCE
Means holding 20% or more voting
power or upto 50%
JOINT VENTURE
Means joint agreement whereby
parties have joint controls over such
arrangements and have a right to net
asset of such arrangement.
SMALL CO. MEANS A CO. OTHER THAN PUBLIC WHOSE COMPANY
PAID UP SHARE CAPITAL 50 LAKH WHOSE TURNOVER DOES NOT

OR SUCH HIGHER LIMIT AS MAY BE
PRESCRIBED (NEW AMEDNMENT) AND EXCEED AS PER P/L OF
IMMEDIATELY PRECEDING FY
DOES NOT EXCEED 2 CRORE
OR SUCH HIGHER AMOUTN AS
CURRENTLY MAY BE PRESCRIBED 100CR.
PRESCRIBED
2 CRORE
BUT NOT EXCEEDING
10 CR
20 CRORE
MEANS WHOSE COMPANY OTHER THAN PUBLIC COMPANY WHOSE
Means whose company other than public Turnover as per profit & loss of
company whose paid up share capital immediately preceding FY doesn’t
does not exceed 50 lac or such higher exceed 2 cr. Or such higher limit as
limit as may be prescribed (by maybe prescribed.
government through rules now 2 crore (By govt through rules currently
prescribed) but such not exceeding 100 prescribed 20 crore but such not
crore (as may be) exceeding 100 cr. (As maybe)
(LOWEST) 50 LAKH (LOWEST) 2 CRORE
(HIGHEST) 10 CR (HIGHEST) 100 CR
2 CR 20 CR
(NOW) (NOW)
RULES BY GOVT RULES BY GOVT
SMALL COMPANY MEANS A PRIVATE CO. WHOSE OUSC DOES
NOT EXCEED 2 CRORE AND TURNOVER AS P/L OF
IMMEDIATELY
PRECEDING FY DOES NOT EXCEED 20 CRORE.
THREE TYPES OF COMPANIES NOT REGARDED AS SMALL CO.

• HOLDING ; SUBSIDIARY
• SEC 8 COMPANY . I.E, CHARITBALE COMPANY
• COMPANY GOVERNED BY SPECIAL STATUTE.
GOVERNMENT COMPANY SEC 2 (45)
Government co. Means a company whose at least 51% of paid

up share capital held by CG or SG or both
(PARTLY BY CG & PARTLY BY SG).
Provided that any subsidiary of government co. Is

deemed to be government co.
Explanation- if co. Has issued DVR shares then instead of

paid up share capital, voting power will be considered.
EXAMPLE
A LTD B LTD C LTD D LTD
CG 51% SG 51% CG + SG =
CG 30% SG 21% 50.1%
YES, IT IS A GC
NOT GC
YES, IT IS A GC
YES, IT IS A GC
RESTRICTION ON NUMBER OF LAYER
RULES, 2017
• SEC 2 (6) ASSCOCIATE COMPANY

• SEC 2(85) SMALL COMPANY
• SEC 2 (45) GOVERNMENT COMPANY
SECTION 455 DORMANT COMPANY
Dormant company means a company

incorporated for a future project or for
holding any asset or intellectual property
and has no significant accounting
transactions. Such a company or inactive
company is called Dormant company.
All transactions are regarded significant
accounting transactions except the
following:-
• Payment of fees to ROC
• Any other statutory fee. E.g audit fee
• Maintenance of office & records
• Share allotment
Inactive co. means which has not filed
financial statements & annual return for
last 2 Fys continuously. For obtaining
status of formant co submit form MSC 1
to ROC & ROC shall issue certificate of
formant company in form MSC 2.
SECTION 406 NIDHI COMPANIES
Nidhi co. Means company formed with the object of cost cutting &
savings amongst the members, receiving deposits from & lending
to members only for their mutual benefit.
“Nidhi” or “mutual benefit society” means a company which the cg

may, by notification in official gazette, declare to be a Nidhi or
mutual benefit society as the case may be – COMPANIES
(AMENDMENT)ACT 2017 (15.08.2019)
STARTUP COMPANIES (DEFINED BY DPIIT)(DEPARTMENT FOR
PROMOTION OF INDUSTRY & INTERNAL TRADE)
• Working towards improvement or development
of new product /process/service.
• And having a scalable business model having
potential of wealth generation & employment
creation
• Must be a private company/LLP/unregistered
firm.
STARTUP COMPANIES (DEFINED BY
DPIIT)(DEPARTMENT FOR PROMOTION OF INDUSTRY
& INTERNAL TRADE)
• Within 10years of incorporation
• Turnover never exceed 100 crore in
any F.Y
• Not formed by splitting up or
reconstruction
LISTED COMPANY SEC 2(52)
Means a company whose any of the
securities are listed on
RSE.
THE COMPANIES(AMENDMENT) ACT 2020 HAS ADDED A
PROVISO IN ABOBE DEFINITION
Provide that such classes of companies which have issued such
classes of securities as may be prescribed shall be excluded from
definition of listed company.
AS PER COMPANIES (SPECIFICATION DEFINITION DETAILS)
SECOND AMENDMENT RULES WEF 1ST APRIL 2021, following
companies are excluded from definition of listed company
• Public company whose shares are not listed on RSE but
have listed its non-convertible debentures or non-
convertible redeemable preference shares or both.
• Private co. whose NCDs are listed
• Public co. whose equity shares are only listed in a foreign
stock exchange.
BOOKS & PAPER , BOOKS OR
PAPER
SEC 2 (12)
INCLUDES
BOOKS OF REGISTER
DEED DOCUMENTS WHETHER
ACCOUNTS
KEPT IN
ANYTHING
PHYSCIAL OR
VOUCHER MINUTES IN
ELECTRONIC
WRITING
MODE
BOOKS OF ACCOUNTS SEC 2 (13)
INCLUDES
RECEIPTS & ASSETS & PURCHASE & BOOK
PAYMENT LIABILITIES SALES BOOK RECORDING
BOOK BOOK OF GOODS/ OF COST U/S
SERVICES 148
FINANCIAL STATEMENTS SEC 2 (40)
INCLUDES
BALANCE PROFIT /LOSS BUT CASH FLOW SCHEDULES
SHEET FOR
STATEMENT & NOTES OF
NPO ITS INCOME &
STATEMENT ACCOUNTS
EXPENDITURE A/C
OF CHANGES
IN EQUITY
PROVIDED THAT FINANCIAL STATEMENTS OF OPC, SMALL CO., DORMANT
CO., STARUTUP, PRIVATE CO. MAY NOT INCLUDE CASH FLOW STATEMENTS
FINANCIAL YEAR SEC 2(41)
In relation to company or body corporate means a
period ending on 31st day of march every year.
1.1.21---- incorporated then ---- 31.3.21 ✕
31.3.22 ✔
(even more than 12 months)
HOWEVER IF COMPANY GOT
INCORPORATED ON OR AFTER 1ST
JANUARY , THE IT WILL BE 31ST DAY
CO. INCORPORATED ON ST
1 FY END ON
OF MARCH OF (UPCOMING)
31.2.20 31.3.21
1.1.21 FOLLOWING YEAR .
31.3.22
1.2.21 31.3.22
31.3.21 31.3.22
1.4.21 31.3.22
NOTE- ALWAYS THE NEXT YEAR.

E.G- 20 --- 21
22 --- 23
21 --- 22 ONLY THIS
PROVISO-
Provided that a company which is either holding
or subsidiary or associate of a company
incorporated outside India & is following a different
financial year then the company for purposes of
consolidation of accounts can apply to CG (RD) for
following a different FY.
PROCEDURE FOR MAKING AN
APPLICATION TO CG (RD) FOR CHANGE
IN FY :-
I. Submit form RD-1

PROCEDURE FOR MAKING AN APPLICATION TO CG (RD)
FOR CHANGE IN FY :-
2. Attain 4 documents with RD-1
• Minutes of BM in which it was decided to change FY
• Reasons for change of FY
• Memorandum of appearance or power of attorney
to appear in front of RD.
• Details of any applications that were made in last 5
FYs for change FY
PROCEDURE FOR MAKING AN APPLICATION TO CG (RD)
FOR CHANGE IN FY :-
3.If any defects in documents, RD may allow 15
days to rectify & re- submit
4.Maximum 2 such re submissions are allowed.
Within 30 days of receipt of proper documents, RD
shall either allow or reject such request.
If RD has allowed then company shall submit INC 28
to ROC within 30 days of RD’s order.
WHAT ABOUT EXISITNG APPLICATIONS
PENDING WITH NCLT REGARDING
CHANGE OF FY?
WILL BE DISPOSED BY NCLT

IS THEIR ANY EXEMPTION TO IFSC COMPANY?
Yes, if IFSC co. Is a subsidiary
of foreign company then it may
follow different FY just like that
foreign company without any
approval.
TRANSITION PROVISION SEC 2 (41)
Existing companies were
given 2 years to
comply [sec 2 (41)]
CONTRIBUTORY SEC 2 (26)
Means any person who is liable to
contribute to assets of company at the
time of winding up.
CONTROL SEC 2 (27)
RIGHT TO INCLUDES
APPOINT OR CONTROL THE
REMOVE OR CONTROL THE
MANAGEMENT POLICY DECISION
MAJORITY OF
OR
DIRECTIONS
COURT SEC 2 (29)
HIGH COURT SPECIAL COURT
SESSION COURT DISTRICT COURT
METROPOLITIAN COURT
OR JUDICIAL MAGISTRATE OF
1ST CLASS
DEPOSITORY SEC 2 (32)
Means a depository as defined
under sec 2 (1)(e) of The
Depositories Act, 1996
TWO TYPES OF DEPOSITIORIES IN INDIA
• NSDL (NATIONAL SECURITIES DEPOSITORY
LTD)
• CDSL (CENTRAL DEPOSITORY SERVICES
LTD)
DEPOSITORIES
RBI (NSDL, CDSL)
COMMERCIAL DEPOSITORY
BANKS PARTICIPANTS
BANK A/C DEMAT A/C
DEPOSITOR’S MONEY IS INVESTOR’S SHARES ARE

ELECTRONICALLY CREDITED ELECTRONICALLY
CREDITED DEMAT A/C
PROMOTER SEC
2 (69)
PROMOTER MEANS
PERSON WHOSE NAME AS PER WHOSE
HAS BEEN MENTIONED WHO CONTROLS DIRECTIONS THE
AS SUCH IN OR THE AFFAIRS OF OR DIRECTORS ARE
PROSPECTUS OR COMPANY
ANNUAL RETURN
ACCUSTOMED
TO ACT
KEY MANAGERIAL PERSONNEL
SEC 2 (51)
MEANS
ANY PERSON SUCH

CEO, MD WHOLE CFO
WORKING ONE
OR TIME OTHER
LEVEL BELOW BOD
MANAGER MANAGER CS IN WHOLE TIME PERSONS AS
EMPLOYMENET & MAY BE
DESIGNATED AS PRESCRIBED
KMP BY BOARD
MEMBER SEC 2 (55)
LATER ON
AGREES IN WHOSE
SUBSCRIBERS TO WRITING & SHARES ARE
MOA AT THE TIME OR COMPANY OR HELD WITH
OF ALLOTS SHARES
O NAME IS DEPOSITORY
INCORPORATION & HIS
OF COMPANY R
ENTERED IN
ROM
NET WORTH SEC 2 (57)
MEANS :
PAID UP SHARE CAPITAL
+ P/L / FREE RESERVES
+ SECURITIES PREMIUM (-
) ACCUMULATED
(-) P & L (DR.)
(-) MISCELLANEOUS EXPENDITURE NOT WRITTEN OFF
GLOBAL DEPOSITORY RECEIPTS SEC 2 (44) READ
WITH SEC 41 OF COMPANIES ACT, 2013
It may so happen that foreign investors may went to
invest in Indian company but may not want to trade in
Indian stock market because of its validity.
Here comes the concept of GDRs which are the
shares issued by Indian company to foreign investors
and are listed in foreign stock market.
GDRs are also called “euro issues” because they are
listed European Stock Market.
4 PARTICIPANTS ARE INVOLVED
CREDITS GDR IN
ISSUES SHARES INSTRUCTS TO ISSUE GDR DEMAT
INDIAN DOMESTIC FOREIGN FOREIGN

COMPANY CUSTODIAN DEPOSITORY INVESTOR
APPROVAL REQUIRED
OF:-
• BR AT BM
• SR IN GM
• MINISTRY OF FINANCE
• MCA
• RBI
• INDIAN STOCK EXCHANGE WHERE COMPANY
IS LISTED.
Entire concept is same in case of
American depository receipts except
the fact that this time shares of Indian
company will be listed on American
stock market
INDIAN DEPOSITORY RECEIPTS
FOREIGN
ISSUES
COMPANY
SHARES
FOREIGN INSTRUCTS TO ISSUE IDR
CUSTODIAN
INDIAN DEPOSITORY
PARTICIPANT CREDITS DEMAT A/C
INDIAN
INVESTOR
GDR/ADR IDR
ISSUED BY INDIAN COMPANY ISSUED BY FOREIGN COMPANY
PURCHASED BY FOREIGN INVESTOR PURCHASED BY INDIAN INVESTOR
TRADED IN FOREIGN STOCK MARKET TRADED IN INDIAN STOCK MARKET
POPULAR CONCEPT NOT POPULAR
E.G- RIL,GDR, INFOSYS, ADR ONLY 1 COMPANY ISSUED IDR

“ST. CHARTERED PLC” BUT NOT
NOW
OFFICER WHO IS IN DEFAULT
MEANS SHARE TRANSFER
WHOLE AGENT OR
MERCHANT
TIME BANKER
DIRECTOR KMP
IF THERE IS NO KMP ANY PERSON WORKING ANY PERSON AS PER

THEN SUCH IMMEDIATELY BELOW ONE WHOSE ADVICE BOD IS
DIRECTOR LEVEL OF BOD/KMP & ACCUSTOMED TO ACT
AUTHORISED AUTHORISED TO
BY BOD MAINTAIN ACCOUNT’S
RECORD.
PUBLIC FINANCIAL INSTITUTION SEC 2 (72)
LIFE INSURANCE ANY FINANCIAL

CORPORATION ISNTITUTION
OF INDIA(LIC) NOTIFIED BY CG IN
UNIT TRUST OF INDIA CONSULTATION WITH
(UTI) RBI WHICH SATISFIES
INFRASTRUCTURE
DEVELOPMENT
FINANCE COMPANY
LTD (IDFC)
MIN 51% PUSC ESTABLISHED
HELD BY OR UNDER CENTRAL
CG/SG/PARTLY ACT/ STATE ACT
QUESTIONS
Naveen Incorporated A “One Person Company” Making His Sister Navita As The
Nominee. Navita Is Leaving India Permanently Due To Her Marriage Abroad .
Due To This Fact, She Is Withdrawing Her Consent Of Nomination In The Said One Person
Company. Taking Into Consideration The Provisions Of The Companies Act, 2013 Answer
The Questions Given Below.
A) If Navita Is Leaving India Permanently , Is It Mandatory For Her To Withdraw Her

Nomination In The Said One Person Company?
A) If Navita Maintained The Status Of Resident Of India After Her Marriage, Then Can
She Continue Her Nomination In The Said One Person Company?
QUESTIONS
MR. RAM LAL AND HIS FRIEND DESIRE TO INCORPORATE A PUBLIC

COMPANY AND APPROACH YOU FOR HELP. ADVISE.
EXPLAIN THE CONCEPT OF “DORMANT COMPANY” AS

ENVISAGED IN THE COMPANIES ACT, 2013.
QUESTIONS
MNP Private Ltd Is A Company Registered Under The Companies Act, 2013 With A
Paid Up Share Capital Of Rs. 45 Lakhs And Turnover Of Rs.3 Crore .
Explain The Meaning Of The “ Small Company” And Examine The Following In
Accordance With The Provisions Of The Companies Act 2013.
A) Whether The MNP Private Limited Can Avail The Status Of Small Company?
B) What Will Be Your Answer If The Turnover Of The Company Is Rs.1.50 Crore?
QUESTIONS
TERESA LTD. IS A COMPANY REGISTERED IN NEW YORK (U.S.A) . THE

COMPANY HAS NO PLACE OF BUSINESS ESTABLISHED IN INDIA, BUT IT IS
DOING ONLINE BUSINESS THROUGH DATA INTERCHANGE IN INDIA.
EXPLAIN WITH REFERENCE TO RELEVANT PROVISIONS OF THE COMPANIES

ACT, 2013 WHETHER TERESA LTD, WILL BE TREATED AS FOREIGN COMPANY.
QUESTIONS
WHO SHALL BE CONSIDERED AS PROMOTER ACCORDING TO THE DEFINITION

GIVEN IN COMPANIES ACT, 2013.
QUESTIONS
EXPLAIN CLEARLY THE CONCEPT OF “PERPETUAL SUCCESSION” AND

“COMMON SEAL” IN RELATION TO A COMPANY INCORPORATED UNDER THE
COMPANIES ACT, 2013.
QUESTIONS
STATE WHETHER THE FOLLOWING STATEMENT IS CORRECT OR

INCORRECT.
A COMPANY IS A LEGAL PERSON BUT NOT A CITIZEN

QUESTIONS

INCORRECT.
THE CONCEPT OF LEGAL PERSONALITY OF A COMPANY IS ABSOLUTE

IN NATURE.
Chapter - 2
INCORPORATION OF COMPANY AND
MATTERS INCIDENTAL THERETO
Sec 4 → MOA
Memorandum Of Association is a charter of a company
(constitutional document) which lays down the limits &
boundaries within which company must operate & any activity
beyond that is ultra vires i.e. null & void.
Clauses of MOA :
(a) Name clause → It contain name of the company. If it’s a OPC or PVT company or
public company ,its name shall end with OPC PVT LTD or Pvt ltd or ltd
respectively. Sec 8 company is exempted to write these at end of its name.
(b) Registered office clause /situation clause /Domicile clause →It contains name of
state where Co’s Registered Office is proposed to be situated.
(C) Object clause →It contain object of company.
(d)Liability clause → (i)In case of company limited by guarantee members liability
shall be limited up to unpaid guarantee amount
(ii)In case of company limited by shares ,members liability shall be limited upto
unpaid Face Value of share held by member .
(iii)In case of unlimited company, members liability shall be unlimited.
(E) Capital clause →Contains details of capital structure of company.
(F) Subscription clause→ contains signature of first subscribes of company.
(G)Nominee clause →In case of OPC name of nominee shall also be mentioned
Ashbury Railway Carriage & Iron company LTD VS Riche (1875) (DCN)
The object clause of Ashbury mentioned making ,hiring, selling railway carriage
& wagons ,mechanical engineering & other contracts.
Ashbury entered contract with Riche to Finance it for laying down railway tracks
at Belgium.
Court held such contract as ultravires, null & void.
Court applied the Rule of Ejusdem Generis which means general word will take
its meaning from preceeding specified words
Here the other contracts can not include Finance further Riche will not get any
compensation because of Doctrine of Constructive Notice .
Doctrine of constructive Notice
It is necessary for every company to get registered the MOA & AOA with the Registrar
of companies . The Registrar’s office is public office and on registration the MOA &
AOA becomes Public Documents. So they are open and accessible to all.
On the payment of the nominal fee any one can inspect the documents. Those
dealing with company whether a shareholder or an outsider is presumed to have
read two document and understood them in their true meaning .This deemed
knowledge of two document and their contents its know as the “Doctrine of
Constructive Notice”.
When a person deals with a company in a way which is not in accordance with
the provision of the MOA & AOA or enters into a transaction that is beyond the
scope of the power of the company he must take the consequences in respect
of such dealing.
The doctrine of constructive Notice is not a positive doctrine but a Negative
one. It does not work against the company but only an outsider dealing with
the company.
Doctrine of Indoor Management
Is a exception of doctrine of constructive Notice because it protect the outsiders so
it’s a Positive Doctrine .
As per the doctrine of indoor Management ,the person dealing with the company
have right to assume that as far as the internal proceeding of the company are
concerned everything has been done properly .It is necessary to read the
registered document and see that the proposed dealing is not inconsistent
therewith . They are not required to do anything more as per the regularity of the
internal proceeding.
Case law →Royal British Bank VS Turquand

5 Exceptions of Doctrine of Indoor Management
1.Knowledge of Irregularity : Howard VS patent Ivory Manufacturing co.
2.Negligance
3.No knowledge (MOA/AOA)
4.Forgery
5.Act outside the scope of apparent authority : Anand Bihar Lal VS Dinshaw
Royal British Bank VS Turquand
In this case itself Doctrine of indoor Management was established.
Co’s BOD took loan from Bank beyond their borrowing power without shareholder’s
approval later on co. went into liquidation & liquidator denied the repayment of
loan to bank saying that its ultra vires & so null & void.
The court however directed the co. to repay back loan to bank being an outsider
cannot be expected to know about internal irregularities of company .
Q → What if in the above loan was given by one of the directors
instead of bank ?
Ans →In such case DIM shall not apply because director (outsider)had the
knowledge of irregularity. The case law is Howard VS patent Ivory Manufacturing
company.
Anand Bihari Lal VS Dinshaw
Company’s accountant sold the land of company to the outsider such a contract
was held to be null & void & no protection was available to outsider of DIM as he
entered contract with a person outside the scope of apparent authority .
STEPS TO INCORPORATE A COMPANY → Sec – 7
(OPC/PVT CO. / PUBLIC CO. /SEC – 8 CO. /IFSC CO. /SECTORAL CO. /NIDHI CO.)
(1)For incorporation of company submit web Form SPICE + INC 32 in 2 Parts :-

(Simplified Proforma for Incorporating Companies Electronically)
(2) Part A is for name reservation – 2 names can be reserved @ Rs. 1000.
(3) Part B of SPICE + INC 32 is for
Application
Name for Maximum
PAN TAN
Reserved Incorporation 3 DINs
of Company
Within 20 days of name reserved in Part A
• Existing Co. can change its name using

RUN(Reserved Unique Name) application
Imp Note 1 in MCA Portal & such name will be
reserved for 60 days.
• To become director in existing company, if a

Imp Note 2 person wants to apply for DIN, then he shall
apply in DIR 3.
(4) Attach eMOA (INC 33) & eAOA (INC 34) with SPICE + INC 32
(5) However, if company is having more than 7 subscribers then MOA &
AOA will be Physically Prepared , Scanned , Uploaded & attached.
(6) Attach AGILE PRO (INC 35) which contains application for
Professional Tax
Registration
(Mandatory for
GSTIN Karnataka &
Maharashtra)
Employee Employee
Provident Fund State Opening of
Organisation Insurance Bank A/c
Registration Corporation
Registration
Application for Registration of the Goods and Services Tax Identification Number
(GSTIN), Employees' State Insurance Corporation PLus registration and Employees
Provident Fund Organization registration, Professional tax Registration no. and
Opening of bank account. (AGILE PRO FULL FORM)
(7) Attach declaration in form INC 8 i.e. declaration Form signed by CA/CS/CMA in
Practice/Advocate mentioning the company is being incorporated by complying
the Act & Rules.
(8) Attach Form No INC 9 which contains declaration by all subscribers & 1st
Directors of Company that they have not been convicted of any offence related to
Promotion , Formation , Management of Company & guilty of fraud in last 5 years.
(9) If all documents Properly submitted then Central Registration Centre(CRC) shall
issue Certificate of Incorporation in Form No. INC 11 containing company’s Name,
Date of Incorporation, PAN, TAN.
(10) Within 30 Days of Incorporation submit INC 22 to ROC informing exact address
of Company’s Registered Office.
INC 22 not required to be submitted if company opened its registered office in same
address that was filled up in SPICE + INC 32.
(11) Extra/Different Points
OPC SEC 8 Sectoral Company
Attach nominee’s Instead of MOA & Attach No objection

consent Form No. AOA Form No. INC 33 Certificate(NOC)
INC 3 with SPICE + & 34 it shall be MOA , receive from
INC 32 AOA form No. INC 13. Sectoral Regulator.
(12) Filing Fees of SPICE + INC 32
Co. having share capital Fees
Authorised Share Capital upto 15 Lac 0
Authorised Share Capital > 15 Lac 500
Co. without having share capital Fees
Upto 20 Members 0
> 20 Members 500
Note : SPICE + INC 32 if both Part A & Part B are simultaneously filed then
Rs.1000 fees not attracted
Sec – 3 → Formation of Company
Company may be formed for a lawful object with minimum 7
members in case of Public Co. – minimum 2 in case of Private Co. & 1
in case of OPC.
Rule 3 of the Companies (Incorporations) Rules 2014
(1)MOA of OPC shall contain name of nominee who in the event of
subscribers death or incapacity to contract shall become member of
company.
(2)Nominee’s consent will be taken in Form No. INC 3.
Procedure For Change Of Nominee As Per Companies Rules:-
Nominee have Nominee

given written becomes
Member wants to
change Nominee OR consent to OR member due to
Company to death/incapacity
withdraw his name of member.
In all these 3 cases, new nominee’s consent within 15 days in form
INC 3 will be filed with company.
Company within 30 Days of receiving such consent shall submit INC

4 with INC 3 attached to ROC.
(4) Both Member & Nominee shall be
Natural Person OR Citizen of India
They may or may not be Resident of India.

Explanation – Resident of India means who reside in India in immediately preceding
financial year for atleast 120 days.
(5) A person can become member in only 1 OPC & Nominee also in
only 1 OPC.
(6) If a person who is already a member in 1 OPC becomes member in
another OPC because he was a nominee in that OPC & its member
died/incapable then the member shall be allowed 180 days to choose
any 1 OPC in which he wants to continue as a member.
(7) No minor can become a member/nominee.
(8) OPC can’t be Sec-8 Co. & Non Banking Financial Investment
Company.
Sec 3A →Member severally Liable
If anytime the no of member in PVT Co. Get Reduce below 2 or in public co. Get
Reduce below 7 & such company continues with reduce No of Member for More
then 6 Months then all the remaining no of member who are aware of such fact shall
be personally liable for all the liabilities contracted by company after 6 month.
Sec 8 →Formation of company with charitable objects
(1) Sec 8 i.e charitable co. may be incorporated after license from CG(ROC) by
satisfying all 3 condition.
Object of co. must be

Promotion of Whatever income
science/commers/arts/ or profit is earned Prohibition on
religion/research/ will be applied for payment of
education/environment promotion of divided.
/sports/social these objects.
welfare/charity etc.
(2)Step of incorporation will be same as discussed earlier i.e. SPICE+INC32
(3)MOA &AOA : Form no INC13
(4)Declaration by CA/CS/CMA in practice/advocate : form no INC 14 instead of INC 8
(5)Declaration by first directors &subscribe : Form no. INC15 instead of INC9
(6)Sec 8 co. shall be subject to same privileges & other obligation just like any other
limited company.
(7)A firm or LLP may became member in Sec 8 co.
(8)An exiting co. if satisfied all 3 condition of sec 8 can convert itself into sec 8 co.
after approval form CG (ROC) in form no. INC 12
(9)CG(RD) may cancel license of Sec 8 co. on any of the following 5 grounds:
Violation of
condition Violation of Acted
Violation of
subject to objects for Acted against
Provision of
which which it fraudulently public
Sec-8
license was was formed interest
issued
(10) After cancelling license CG (RD) may
Allow the co. to Order

operate by amalgamation
Order winding
adding word PVT with another sec
up.
LTD or LTD as 8 co. having
the case may be. similar objects .
(11) Before Passing any such order ,CG(RD) shall give opportunity of
being heard to the company.
(12) CG(RD) shall decide the management, Assets, Liabilities,
Obligations of new amalgamated company.
(13) Any Sec-8 Company voluntarily may merge with another Sec-8 Co.
having similar object.
(14) Contravention of Section 8
Officer in Default
Company
Min Fine 25000
Min Fine 10 Lac Max Fine 25 Lac
Max Fine 1 Cr & if involved in fraud
then liable u/s 447.
FRAUD U/S 447
Fraud Amount >= 10 Lakh
Or
1% Of Turnover
Whichever Is Lower
Min Fine- Amount Involved In Fraud
Max Fine- 3 Times Of Amount Involved In Fraud
AND
Imprisonment:
Min 6 Months (But If Public Interest Is Involved Then 3 Years)
Max 10 Years
FRAUD U/S 447
Fraud Amount <10 Lakh
Or
1% Of Turnover
Whichever Is Lower
&
Public Interest Is Not Involved
Upto 5 Years Imprisonment

Or
Fine Upto 50 Lakhs
Changes in name clause of MOA - Sec 13
A company may change its name by passing SR in GM and approval form CG(ROC)
Provided that approval of CG (ROC) is not required when the ONLY change in name is
either addition or deletion of the word PVT.
Company cannot change its name if
Defaulted in
It has not submitted repayment of
financial statements
OR deposits OR
or annual return. Debentures OR
Interest on it .
As per sec 4 , new co’s name should not be identical or too near resemble with an
existing co’s name & should not undesirable as per rule & should also not given
impression to public that it is related to CG, SG or local authority unless prior
approval of CG(ROC) is taken.
As per sec 16 ,if CG(RD) finds violation of sec 4 then it can order new co. must change
its name & new co. must change its name within 3 month of such direction by passing
OR in GM
IF company has not yet been incorporated then CG(RD) will cancel its reserved name
if found to be identical /too nearly resemble & penalty of RS.1 lakh shall be imposed.
Further if new company Incorporated has Infringed Trade mark of an existing company
then such existing company can apply of CG (RD) within 3 year of incorporation of new
company & RD shall direct new company to change its name by passing OR in GM
within 3 months of such direction.
If RD’s Direction is not followed it may wind up the company.
Company whose name is changed shall always apply for a new Certificate Of
Incorporation(COI) in form no INC24 to ROC who shall grant new COI in form no INC 25.
SHIFTING OF REGISTERED OFFICE
(1) WITHIN SAME CITY (2) TO DIFFERENT CITY BUT

WITHIN SAME STATE/UT
BR at BM SR IN GM
+ +
FORM INC 22 MGT14
INC 22
(3) FROM 1 STATE /UT TO ANOTHER STATE/ UT
SR IN GM
+
APPROVAL OF CG(RD)
+
INC 23(APPLICATION TO RD)
+
INC 26 ( ADVERTISEMENT IN NEWSPAPER)
+
INC 28 (APPROVAL BY RD)
+
MGT 14 (SR)
+
INC 22( CHANGE OF ADDRESS OF RO )
(4) SHIFTING WITHIN THE SAME STATE/UT BUT
STILL JURISDICTION OF ROC CHANGES
(ONLY POSSIBLE IN TAMIL NADU & MAHARASHTRA)

SAME AS CASE 3
Procedure For Approval Of Rd For Shifting Ro From 1 State/Ut To Another
1 Submit An Application In Form Inc 23 To CG(RD)

Attach Copy Of Minutes Of BM In Which Such Shifting Of RO was
2 decided
3 Attach Copy Of SR
4 Attach Copy Of Moa Containing Proposed Resolution

5 Attach List Of Creditors, Debenture Holders Along WithTheir Details Like Name,
Address, Contact, amount But The List Should Not Be More Than 1 Month Old.
Also Attach Advertisement Copy That Was Made In Last Month In 2 Newspapers
(English Language In English Newspaper, Vernacular Language In Vernacular
6
Language Both Having Wide Circulation In District In Which Ro Is Situated). Also
Mention Whether Any Objections Regarding Shifting Of Ro Was Received Or Not.
7 Within 60 Days, RD Shall Either Approve Or Disapprove Such Application.

If Approved It Will Issue INC 28 Which Co. Must File With Roc Within 30 Days.
Changes in Capital Clause – Sec 61 & Sec 66
Refer Chapter 4
Changes in Object Clause – Sec 13
Change of object & Change of object & Company is having

Company having no unutilized amount of Public issue which was
unutilized amount of made by issue of Prospectus
Public issue
SR in GM + Advertisement in 2 Newspapers
SR in GM (INC 26) + exit opportunity to dissenting
+ Shareholders by Purchasing their shares by
MGT 14 Promoter/Majority Shareholders having
majority shares + MGT 14.
Entrenchment provision in Articles of Association
Absolute entrenchment Condition entrenchment

Means a particular decision can Means a particular decision can
never be taken by members. be taken by higher NO. of votes
Absolute entrenchment is then that specified by law.
disallowed.
Example of condition entrenchment : For winding up ; SR in GM
is required but if articles of company mention that atleast 90% of
votes must be in the favor for winding up decision then it is called
condition entrenchment & it is allowed.
Q. When can company make entrenchment provision in AOA?
After incorporation
Pvt co → 100% votes in favor
At the time of incorporation
Public co → 75% votes in favor
SPICE + INC32
Submit MGT 14 within 30 days
of entrenchment to inform ROC
MOA AOA
1. It’s a constitution document within 1. It is a document containing internal
which company must operate. regulation of management of company.
2. Its define relationship between 2. Its define relationship between
company and outsider. company and members.
3. Sec 4 3. Sec 5
4. Its alteration requires 4. Its alteration requires only in
SR in GM + NCLT/CG approval. SR in GM.
MOA AOA
5. Any act beyond MOA is ultra vires i.e. 5. Any act beyond AOA can be ratified by
null & void & cannot be ratified even by atleast 75% votes in favor.
100% members.
6. It has 6 clauses (in case of OPC 7 6. No limit on No of clauses.
clauses).
7. No entrenchment provision possible. 7. Entrenchment provision possible.
Section 6 → Act to override memorandum article.
Act shall always over-ride MOA & AOA

Sec - 7(4)
Company shall preserve all documents related to its incorporation at its registered
office till its dissolution i.e. permanently .
If wrong information furnished for incorporation of company.
Company incorporated
Company not incorporated
Sec7(6) attracted as per
Sec 7(5) attracted as per
which promoter ,first director
which person liable under
& persons who gave
section 447
declaration liable u/s 447
Company incorporated fraudulently /furnishing incorrect information ,NCLT an
application made by any person can pass any of following 5 orders u/s 7(7):
5 orders u/s 7(7)
Directions for
regulation of Remove the
Order than Any other
Management name of
members Winding up order as
of company company
liability shall of company NCLT may be
including from Register
be unlimited deemed fit .
alteration of of company
MOA & AOA
Before passing any of the above order, NCLT will
Give an opportunity of
Will take into
being heard to company.
consideration any contract
(Audi Alteram Partem)
/ transaction / liability
(It is one of the principles
incurred with 3rd party.
of natural justice)
SEC - 9 → Effect of Registration
Once company is incorporated then from the date of incorporation mentioned in COI, it
become a Body corporate having
Power to acquire
hold, dispose
To sue & be Power to
Separate legal Perpetual property both
sued by its enter into
entity succession movable,
immovable, tangible own name. contracts.
& intangible.
Q. Co is a legal person but not a citizen. Comment.
Ans. The given statement is correct, because company is an artificial
legal person created by law. However it is not a citizen & so company
does not get fundamentals right under constitution of India to file
writ petition to High Court under Article 226 or to supreme court
under Article 32.
Case law to support separate entity concept
Hari Nagar sugar Heavy electrical

mills ltd. union
State trading Spencer &co. ltd
corporation
Co is separate If govt/president
If entire share
from its holds entire share
Co is separate capital is held by
incorporators & capital of company
from its members. another company,
those exists still company is
still both will have
contract between separate & not its
separate entity.
company & its agent.
members
SEC 10 → Effect of MOA & AOA
Once company is Any such due

registered MOA & under MOA or
AOA becomes AOA is treated as a
binding on all the
AND debt due to
members of company from its
company. members.
SEC - 10A → Commencement of business etc.
Applicability → applicability on company having share capital incorporated on after
2nd November 2018
ROC can strike off

Penalty
Cannot commence co’s name from
business or borrow (a) Company → RS 50000 register of
money unless (b) Officer in Default →1000/day company, if default
Max 1 lac
u/s 10A(i)(a)
Cannot commence business or borrow money unless
Within 180 days of Incorporation

declaration in form INC20A is
submitted by a director that
subscribers have paid money on AND Submit ver. Of RO in
shares subscribes have paid INC22 U/S 22
money on share subscribed.
INC 20A will be certified by
CA/CS/CMA in practice.
Sec 11 → Removed from the Act.
Sec 12 → Registered office of company
1. Every company shall within 30 days of incorporation have a RO at all times to

receive all the correspondences addressed to it.
2. Submit INC22 within 30 days of incorporation for verification of its RO to ROC.
However if RO address is same as in SPICE +INC32 then no need to submit INC22.
3. Company shall paint/affix & keep the same painted/affixed its Name & RO address
outside its every place of business in languages which shall also include local
language of that area in conspicion position & legible characters.
4. If company fails to verify its RO within 30 days of incorporation then ROC has the
power to strike off company’s name from the Register of Company.
SEC - 19 → Subsidiary Company not to hold shares in its holding company.
No subsidiary is allowed to hold shares in its holding

company & also no holding company shall issue shares to its
subsidiary company.
3 Exceptions of above
If subsidiary was
holding the shares in Sub-holding shares as
Sub–holding shares as
holding before holding a legal representative
trustee of shareholder
-subsidiary relation of deceased share of
of holding company.
came into existence holding company.
Voting right available.
Voting right not Voting right available.
available.
SEC - 20 → Service of documents
Any document or notice etc addressed to Company or its directors or KMP shall
be served at Co's Registered office by hand delivery or Registered Post or speed
post or courier or email or fax.
SEC21 → Authentication of documents by company
All the contracts, documents, notice etc. shall be authenticated on behalf of

company by its
Any officer
or employee
Any KMP OR
authorized
by BOD
SEC - 22 → Execution of BOE etc
IF Company having no common

IF Company having common seal.
seal.
Company may authorize any
Must be signed by 1 CS and 1
person as its attorney to sign BOE
director but if no CS in company
etc whether in or outside India.
then by atleast 2 director.
SEC - 14 → Alteration of AOA
Company can alter its AOA by passing SR in GM Provided that if article are being
altered for converting public company into private company then CG(RD) approval
is required for which company shall make an application in form NO. INC27
Provided further that before amendment if any such application was made to NCLT
which is pending with it, shall be disposed by NCLT only.
Within 15 days of any alternation of AOA, a copy of altered articles shall be
submitted by company to ROC (Form INC 27)
SEC - 15 → Alteration to be noted in every copy
MOA or AOA if altered shall be noted in every copy of MOA or AOA

as the case may be failing which penalty on company & every officer
in default shall be RS 1000/ unaltered copy of MOA or AOA.
Sec 16 → Ratification of name of Company
- Refer Change of Name Clause
SEC - 17 → Copies of AOA & MOA to be given to members
Company shall furnish copy of MOA or AOA on members request within 7 days of
such request on payment of fees by the members failing which penalty on company
& every OID shall be RS 1000/ day subject to max 1 lac.
SEC 18
Not in syllabus
SEC 42
1. It means a specific offer of securities

made to identified persons to subscribe
the securities of company
SEC 42
2. The Persons To Whom Private

Placement Shall Be Made Are Identified
By BOD And Approved By Shareholders
By Passing SR In GM
SEC 42
3. Private placement offer shall be made

to identified persons in Form PAS 4 and
details of those identified persons shall
be maintained in register in form PAS 5
SEC 42
4. Maximum number of persons to whom

such private placement offer can be made in
a financial year cannot exceed 50 or such
higher number of persons as may be
prescribed by rules [rules have prescribed
200 persons] therefore current limit is 200
persons.
SEC 42
5. Private placement made to qualified

institutional buyers (example mutual fund
company, banks, insurance company, PFI,
venture capitalist) and employees are not
counted in limit of 200.
SEC 42
6. If offer is made to more than 200

persons in a FY then it will deemed to be
a public issue.
SEC 42
NO
7. Cash Is Allowed In Case Of
Private Placement . I.E,
Proceeds Must Be Received
Only Through Banking
Channels
8. Advertisement Of Private
Placement Is Allowed
SEC 42
NO
9. Renounciation Of
Private Placement
Offer Is Allowed
10. New Private Placement
Is Allowed Unless Private
Placement Allotment Is
Done Or Previous Private
Placement Is Abandoned.
SEC 42
11. Allotment shall be made within 60 days of

receipt of application money failing which
entire money must be refunded back within
next 15 days failing which interest @ 12% p.a
will be charged from the expiry of 60 th day of
receipt of application money
SEC 42
12. Company cannot use the proceeds of

private placement & shall be kept in a
separate scheduled bank A/c (escrow A/c)
until & unless allotment is made and return
of allotment is submitted to ROC
SEC 42
HOWEVER, NOTHING SHALL PREVENT CO. FROM

USING ABOVE MONEY FOR-
REFUND, OR
ADJUSTMENT
TOWARDS
ALLOTMENT
SEC 42
13. Co. Shall Submit Return On Allotment In

Form PAS-3 Within 15 Days Of Allotment
Containing Details Of Allotees, Securities
Issues, Amount Received , Etc
SEC 42
PENALTIES FOR NOT SUBMITTING PAS 3-
COMPANY , EVERY PROMOTER & DIRECTOR

LIABLE TO PAY PENALTY 1000/DAY BUT
SUBJECT TO MAXIMUM 25 LACS.
14. FOR CONTRAVENTION
CO, PROMOTERS, CO. SHALL ALSO BE LIABLE

DIRECTORS SHALL BE TO REFUND ENTIRE
LIABLE TO PENALTY OF AMOUNT OF PRIVATE
AMOUNT RECEIVED BY PRIVATE PLACEMENT WITHIN 30
PLACEMENT DAYS OF PENALTY’S ORDER
0R TOGETHER WITH INTEREST
2 CRORES , WHICHEVER IS LOWER @ 12% P.A FROM EXPIRY OF
60TH DAY OF RECIEPT OF
APPLICATION MONEY
SEC 23
TYPES OF
ISSUE
PUBLIC RIGHTS & PRIVATE

ISSUE BONUS ISSUE PLACEMENT
ONLY DONE BY PUBLIC BY BOTH PUBLIC & PVT

CO. CO.
BY BOTH PUBLIC & PVT
CO.
SEC ISSUE
PUBLIC 23
INITIAL PUBLIC FURTHER PUBLIC OFFER FOR

OFFER (IPO) OFFER/ FOLLOW SALE (OFS)
ON PUBLIC OFFER
(FPO)
WHEN SHARES ARE WHEN SHARES ARE
OFFERED TO PUBLIC FOR WHEN SHARES SOLD TO PUBLIC BY
1ST TIME ARE OFFERED TO CO. OR BEHALF OF
PUBLIC EXISTING
SUBSEQUENTLY SHAREHOLDERS LIKE
PROMOTERS OF
COMPANY.
SEC 24 – POWERS OF SEBI
COMPANY
LISTED CO. OR AN UNLISTED CO. UNLISTED

WHICH HAS APPLIED FOR LISTING TO COMPANY
A RECOGNISED STOCK EXCHANGE
ON ALL MATTERS
FOR OTHER FOLLOW THE
FOR MATTERS RELATED TO ISSUE MATTERS COMPANIES ACT 2013
& TRASNFER OF SECURITIES,NON & CG’S RULES
PAYMENT OF DIVIDEND
FOLLOW SEBI FOLLOW COMPANIES ACT
2013 & CG’S RULES
PROSPECTUS IS A WRITTEN
INVITATION TO PUBLIC TO
SUBSCRIBE THE
SECURITIES OF COMPANY.
TYPES OF
PROSPECTUS
ABRIDGED SHELF RED HERRING DEEMED

PROSPECTUS PROSPECTUS PROSPECTUS PROSPECTUS
IT IS A CONDENSED PROSPECTUS
CONTAINING SALIENT FEATURES AS
PRESCRIBED BY SEBI.
IT CONTAINS ALL IMPORTANT INFORMATION

BUT IN CONCISE MANNER.
ITS COMPULSORY FOR EVERY CO. TO ANNEX
ABRIDGED PROSPECTUS WITH APPLICATION
FORM GIVEN TO PUBLIC TO SUBSCRIBE THE
SECURITIES OF CO. & IT SHALL BEAR THE
SAME SERIAL NO. AS IN APPLICATION FORM.
ANY DEFAULT IN ANNEXING ABRIDGED
PROSPECTUS THEN CO. & OFFICER IN
DEFAULT SHALL BE LIABLE TO PENALTY OF
RS. 50,000/ DEFAULT
ABRIDGED PROSPECTUS IS NOT REQUIRED TO
BE GIVEN IN 2 CASES:-
WHEN IT IS BEING OFFERED TO

UNDERWRITER
WHEN IT IS BEING OFFERED TO

PROMOTERS OR QIBs
1. Shelf prospectus means of prospectus
containing details of securities to be issued in
tranches i.e more than one issue over a period
of time without issuing prospectus again.
2. . Only Companies Approved By Sebi

Can Issue Shelf Prospectus.
3. Company can bring public issues as
mentioned in Shelf prospectus for next 1 year
without issuing prospectus again.
4. However, Co Shall Have To Submit Information
Memorandum.
i.e, PAS 2 To ROC Within 30 Days Prior To
Subsequent Issue Containing Details About
Material changes
New charges
in the financial
created
position of co.
1. It is an incomplete prospectus and does not
contain details of:-
Quantum Of
Securities To Be Issue Price
Issued
2.Copy of Red herring Prospectus must be
submitted to ROC at least 3 days prior to
opening of subscription.
3. Any variation between Red herring

Prospectus and prospectus should be
highlighted as variation in prospectus
otherwise it will be treated as fraud u/s 447
If company appoints an issuing house to
comply all formalities relating to public issue
and issuing house (agency) shall issue
securities to public on behalf of company and
also comply all legal formalities.
Even the underwriters will be appointed by
issuing house and prospectus will also be
issued by deemed prospectus which will be
signed by
At least 50% At least 2 Directors,

partners if issuing OR if issuing house is a
house is a Firm Co.
MIS STATEMENT IN PROSPECTUS
Means An Untrue Statement In The

Form Or Context In Which It Is
Included In Prospectus Or Omission
Of Material Fact Which Misleads The
Public.
MIS STATEMENT IN PROSPECTUS
LIABILITY FOR MIS-STATEMENT IN
PROSPECTUS
CRIMINAL LIABILITY CIVIL LIABILITY
Sec 34 Sec 35
Mens Rea . I.E, Guilty Mind Is Mens Rea May Or May Not Be
Essential For Criminal Liability To There.
Attract Civil Liability Arises When
Because Of Mis-statement In
Prospectus Any Person/ Public
Have Suffered Loss.
LIABILITY FOR MIS-STATEMENT IN PROSPECTUS
FRAUD U/S 447 WILL BE DAMAGES TO THE

ATTRACTED EXTENT OF LOSS WILL BE
PAID
ONLY THE PERSONS WHO CO. , PROMOTERS & ALL
AITHORISED ISSUE OF THOSE PERSONS WHO
SUCH PROSPECTUS AUTHORISED ISSUE OF
SHALL BE LIABLE PROSPECTUS SHALL BE
LIABLE.
LIABILITY FOR MIS-STATEMENT IN PROSPECTUS
EXCEPTIONS
WHEN MIS- STATEMENT IN WHEN DIRECTOR WAS NOT AWARE
PROSPECTUS IS IMMATERIAL ABOUT SUCH ISSUE OF
PROSPECTUS & WHEN HE BECAME
TILL THE TIME OF ISSUE OF AWARE HE IMMEDIATELY ISSUED A
PROSPECTUS IF THE PERSON PUBLIC NOTICE THAT HE WAS
BELIEVED THAT WHATEVER IS UNAWARE.
MENTIONED IN PROSPECTUS IS
CORRECT OR OMMISSION WAS WHEN A PERSON GAVE THE
NECESSARY CONSENT TO ACT AS A DIRECTOR
BUT WITHDRAW IT BEFORE ISSUE
OF PROSPECTUS
RELATED CASE LAWS
REX VS LORD KYLSANT
IN IT COMPANY MENTIONED IN ITS PROSPECTUS
THAT IT HAS BEEN DISTRIBUTING DIVIDEND FOR PAST
FEW YEARS BUT FAIL TO MENTION THAT THEY WERE
DISTRIBUTED FROM CAPITAL PROFIT AND ACTUALLY
COMPANY WAS HAVING LOSSES.
COURT HELD THAT ITS MISSTATEMENT IN

PROSPECTUS AND BOTH CRIMINAL AND CIVIL
LIABILITY ATTRACTED
RELATED CASE LAWS
PEEK VS GURNEY
A brought the shares from stock exchange shares
were partly paid up later on misstatements proved in
prospectus.
Can A Sue Company For Mis-statement?

No Because It Did Not Buy From Company
Will A Be Liable To Pay Call Money?
Yes, When Company Make Call.
SECTION 36
Any person who fraudulently induces to invest

money in co by making false statements,
deception, omission of material facts shall be
liable for Fraud u/s 447
SECTION 37
Any person or group of persons who are

aggrieved due to mis-statements can take
action u/s 34 or 35 or 36
SECTION 38
Any person who makes an application in

fictitious name/names shall be liable for fraud
u/s 447.
SECTION 39
ALLOTMENT OF SECURITIES
Allotment means acceptance of

application by a person to subscribe the
securities of company.
SECTION 39
Following conditions must be satisfied
related to allotment failing which it shall
be treated as an irregular allotment:-
1. Minimum amount of subscription
mentioned in the prospectus (at
least 90% of the issue size) must be
subscribed by public.
2. Min application money cannot be
less than 5% of face value or any
other sum as specified by SEBI
(i.e 25% x issue price in case of
listed co has been specified by
SEBI)
3. Min subscription must be
achieved by co within 30 days of
issue of prospectus failing which
entire amount received must be
refunded back within 15 days of
closure of issue failing which co and
every other officer in default shall
be liable to refund with int@15% p.a
4. Co shall submit return of
Allotment in Form PAS 3 within 30
days of allotment (in private
placement u/s 42 it was 15 days)
5. If any default then co and every
other officer in default liable to
penalty 1000/day or Rs 1 lac
whichever is less
SEC 40 APPLICATION TO STOCK EXCHANGE , ETC
Every Company Shall Make An

Application For Listing To A Recognised
Stock Exchange Before A Public Issue Of
Securities
The Names Of Stock Exchange Listing
Application Has Been Made By Company
Must Be Mentioned In The Prospectus
Application Money Received Shall Kept

In A Separate Schedule Bank Account
And Listing Approval And Allotment Is
Done
Till Then Such Money Can Be Used Only For
 Refund
 Adjustment Towards Allotment
If Any Of The Stock Exchange Where

Listing Application Was Made With The
Listing Application And Their Application
Money Must Be Refunded
ANY CONTRAVENTION OF ABOVE PROVISIONS-
COMPANY OFFICERS IN
DEFAULT
MIN FINE 5 LACS 50,000
MAX FINE 50 LACS 3,00,000
UNDERWRITING COMMISSION SHALL BE PAID BY CO.AS MAY
BE PRESCRIBED-
RULE 3 OF COMPANIES ( PROSPECTUS AND ALLOTMENT OF
SECURITIES ) RULES, 2014-
UNDERWRITING COMMISSION CAN BE

PAID BY CO. TO UNDERWRITERS ONLY
IF ARTICLES AUTHORISE
SUCH COMMISSION WILL BE PAID OUT OF

ISSUE PROCEEDS , OR
PROFITS OF COMPANY
MAXIMUM UNDERWRITING
COMMISSION
IN CASE OF IN CASE OF
SHARES DEBENTURES
5 % * ISSUE 2.5 % * ISSUE

PRICE, PRICE
OR ARTICLES, OR ARTICLES,
WHICHEVER IS WHICHEVER IS
LOWER LOWER
PROSPECTUS ISSUED BY COMPANY

SHALL MENTION THE FOLLOWING-
NAME OF DETAILS OF
UNDERWRITER UNDERWRITING
COMMISSION
DETAILS OF SECURITIES
OFFERED TO PUBLIC WHICH
HAVE BEEN UNDERWRITTEN
BY COMPANY.
SEC 41:-
GDR
1. Prospectus Issued By A Public Company Private
Company Cannot Issue Prospectors Shall Contain
Such Details As May Be Specified By SEBI In
Consultation With CG.
AND IT SHALL ALSO CONTAIN A DECLARATION THAT COMPANY
IS MAKING THE PUBLIC ISSUE BY COMPLETING THE
REQUIREMENTS OF THIS ACT , SEBI ACT 1992 AND
SECURITIES CONTRATCT REGULATION ACT 1996
2. EXCEPTIONS:- NOTHING IN SEC
26(1)SHALL APPLY TO-
Issue Of Securities
Made To Existing Issue Of Securities
Members Or Having Uniform Rights
Debenture Holders With Securities Already
Or Right Issue Issued And Listed On
Under Section 62 RSE
3. Prospectus Can Be Issued By Company At
The Time Of Its Formation Or Even
Subsequently When New Public Issue Is
Brought
4. No Prospectus Shall Be Issued To Public

Without Filing It Without ROC
5.Expert’s Consent If Any Related To Any
Matter Can Be Mentioned In Prospectus
Provided That He Has Not Withdrawn Such
Consent Before Filing Of Prospectus With Roc
6. Prospectus Is Issued To Public And Mention

That A Copy Of It Has Been Filed With Roc.
7. OMMITTED
8. Prospectus Must Be Issued To Public Within

90 Days From The Date Of Its Filing With ROC
Otherwise It Shall Be Invalid.
9. Fine for contravention
COMPANY OFFICER IN DEFAULT
MIN FINE 50,000 50,000
MAX FINE 3 LACS 3 LACS

SEC 27
VARIATION IN TERMS OR OBJECTS MENTIONED IN
PROSPECTUS
PASS PUBLISH GIVE AN EXIT OPPROTUNITY TO

ADVERTISEMENT THE DISSENTING
SR IN GM IN SHAREHOLDERS BY MAKING
FORM PAS 1 IN 2 PROMOTERS OR
NEWSPAPERS SHAREHOLDERS HAVING
CONTROL PURCHASE THE
SHARES OF DISSENTING
SHAREHOLDERS AT FAIR VALUE
OFFER FOR SALE
(REFER CHART U/S 23)
PUBLIC ISSUE OF SHARES BE

MADE IN DEMAT FORM & NOT
PHYSICALLY
WHEREVER, CO. PUBLISHES
ADVERTISEMENT OF PROSPECTUS , IT
SHALL ALSO MENTION CONTENTS OF
ITS MOA LIKE OBJECT, LIABILITY OF
MEMBERS, CAPITAL STRUCTURE,
DETAILS OF SIGNATORIES & SHARES
SUBSCRIBED BY THEM.
CDS Ltd is planning to make a private placement of securities. The Managing
Director arranged to obtain a brief note from some source explaining the salient
features of the issue of private placement that the Board of Directors shall keep in
mind while approving the proposal on this subject. The brief note includes, inter alia,
the information/ suggestions on the following points:
(1) A private placement shall be made only to a select group of identified persons
not exceeding 200 in a financial year. The aforesaid celling of identified persons
shall not apply to the offer made to the qualified institutional buyers but is
applicable to the employees of the Company who will be covered under the
Company's Employees Stock Option Scheme.
(2) (2) The offer on private placement basis shall be made only once in a financial
year for any number of identified persons not exceeding 200.The Company
solicits your remarks on the points referred above as to whether they are valid or
not? Reasoned remarks should be given in accordance with the provisions of the
Companies Act, 2013. (JAN 2021)
The Board of Directors of Chandra Ltd proposes to issue the
prospectus inviting offers from the public for subscribing the
shares of the Company. State the reports which shall be
included in the prospectus for the purposes of providing
financial information under the provisions of the Companies
Act, 2013.
(2019 NOV)
State the conditions where under the issuing of prospectus is
not necessary under the provisions of the Companies Act,
2013.
(MAY 2021)
State the provisions relating to " Information Memorandum "
under the provisions of Companies Act, 2013.
(MAY 2014)
Prakhar Ltd. intends to raise share capital by issuing Equity
Shares in different stages over a certain period of time.
However, the company does not wish to issue prospectus each
and every time of issue of shares.
Considering the provisions of the Companies Act, 2013,discuss

what formalities Prakhar Ltd. should follow to avoid repeated
issuance of prospectus?
(RTP)
Explain the concept of Deemed Prospectus under the
Companies Act, 2013.Under what circumstances such
prospectus need not be issued? 2015- Nowhen is an allotment
of shares treated as an irregular allotment? Briefly state the
effects of an irregular allotment.
(NOV 2015)
Explain the concept of "Shelf Prospectus" in the light of
Companies Act, 2013.What is the law relating to issuing and
filing of such prospectus?
(MAY 2003)
What is meant by "Shelf Prospectus"? Who can file a "Shelf
Prospectus" to the Registrar of Companies? Stating the
provisions of Companies Act, 2013 point our the circumstances
under which such prospectus is required to be filed with the
Registrar of Companies.
(NOV 2008)
Explain the meaning of "Shelf Prospectus". State the law
relating to Shelf Prospectus contained in the Companies Act,
2013 .
(NOV 2013)
When is a company required to issue a "Shelf Prospectus"
under the provisions of the Companies Act, 2013? Explain the
law relating to issuing and filing of such prospectus.
(NOV 2016)
What is a Shelf Prospectus? State the important provisions
relating to the issuance of Shelf Prospectus under the
provisions of Companies Act, 2013.
(NOV 2018)
Define the term underwriting and state the circumstances in
which underwriting commission can be paid as per provisions
of Sec 76 of the Companies Act, 2013.
(NOV 2014)
TDL Ltd, a public company is planning to bring a public issue of
equity shares in June 2018.The company has appointed
underwriters for getting it shares subscribed. As a Chartered
Accountant of the company appraise the Board of TDL Ltd,
about the provisions of payment of underwriters commission as
per Companies Act, 2013.
(MAY 2018)
Examine the validity of the following referring to the provisions
of the Companies Act, 2013 and/ or Rules: "The Articles of
Association of X Ltd. contained a provision that upto 4%of
issue price of the shares may be paid as underwriting
commission to the underwriters.
The Board of Directors of X Ltd decided to pay 5% underwriting

commission".
(2015 MAY)
What is meant by 'Red - herring prospectus'? State the
circumstances under which such prospectus is required to be
filled with the Registrar of Companies. What is the requirement
relating to filing of final prospectus in such cases?
(2008 MAY)
What is meant by "Abridged Prospectus"? Is it necessary to
furnish abridged form of prospectus along with the application
form for shares. Under what circumstances an abridged
prospectus need not accompany the detailed information
regarding prospectus along with the application form?
(MAY 2019)
A Ltd. issued 1,00,000 equity shares of ₹100 each at par to the public
by issuing a prospectus. The prospectus discloses the minimum
subscription amount of ₹15, 00,000 required to be received on
application of shares and share application money shall be payable at
₹20 per share.
The prospectus further reveals that A Ltd. has applied for listing of
shares in 3 recognized stock exchanges of which 1 application has been
rejected. The issue was fully subscribed and A Ltd received an amount of
₹20, 00,000 on share application.
A Ltd then proceeded for allotment of shares. Examine the three

disclosures in the above case study which are the deciding factors in an
allotment of shares and the country consequences for violation, if any
under the provisions of the Companies Act, 2013.
(JAN 2021)
State the liability of an 'Expert' in case of misrepresentation in the
prospectus. When ab expert will not be liable for his untrue statements
made in the prospectus?
(NOV 2012)
Explain various instances which make the allotment of securities as
irregular allotment under the Companies Act, 2013.
(MAY 2019)
Modern Jewellery Ltd decides to pay 5% of the issue price gap of shares
as underwriting commission to the underwriters, but the Articles of the
company authorize only 4% underwriting commission on shares.
Examine the validity of the above decision under the provision of the
Companies Act, 2013.
(MAY 2019)
P Ltd issued and published its prospectus to invite the investors to
purchase it's shares. The said prospectus contained a false statements
X purchased some partly paid shares of the company in good faith from
the Stock Exchange. Subsequently, the company was wound up and the
name of Mr. X was included in the list of contributories.
Decide:-
(1)Whether Mr. X is liable to pay the unpaid amount?
(2) Can Mr. X sue the directors of the company to recover damages?
(2016 MAY)
XYZ Ltd issued a prospectus inviting the public for subscription of its
equity shares stating in it that company possesses good financial health
and paying dividends to its equity shareholders consistently and
regularly @20 percent over the last five years.
The fact was, company was running in loss since last three years and it
was paying dividends to its shareholders out of accumulated profits. Mr.
Amit read the prospectus and bought 500 shares from the company.
Discovering the misstatement made by the company in the prospectus,
he wants to rescind the contract and claim the damages from the
company.
Referring the provisions of the Companies Act, 2014,decide whether Mr.

Amit will succeed. (MAY 2013)
What is "Return of Allotment"? List the documents which have to be
enclosed when shares are allotted on discount.
(MAY 2014)
Explain the conditions and the manner in which a company may issue
depository receipts in a foreign country under the Companies ( Issue of
Global Depository Receipts) Rules, 2014.
(MAY 2015)
Explain the conditions and the manner in which a company may issue
Global Depository Receipts in a foreign country.
(2018 NOV)
With a view to issue shares to the general public a prospectus
containing some false information was issued by company. Mr. Damu
received copy of the prospectus from the company, but did not apply for
allotment of any shares. The allotment of shares to the general public
was completed by the company within the stipulated period. A few
months later, Mr. Damu bought 4,000 shares through the stock
exchange at a higher price which later on fell sharply.
Damu sold these shares at a heavy loss. Mr. Damu claims damages
from the company for the loss suffered on the ground that the
prospectus issued by the company contained a false statement.
Referring to the provision of the Companies Act, 2013 examine whether
Damu's claims for damages is justified.
(MAY 2015)
Modern Furnitures Limited was willing to purchase teak wood estate in
Chhattisgarh state. It's prospectus contained important extracts from an
expert report giving the number of teakwood trees and other relevant
information in the estate in Chhattisgarh State.
The report was found inaccurate Mr. X purchased the shares of Modern
Furnitures Limited on the basis of the above statement in the
prospectus.
Will Mr. X have any remedy against the company?
When an expert will not be liable? State the provisions of the Companies
Act, 2013 in this respect.
(MAY 2009)
CHAPTER IV SHARE CAPITAL & DEBENTURES
(SEC 43 TO 72)
RIGHTS ISSUE U/S 62
1) Whenever Any Company Comes Out With Further
Issue Of Shares It Must Be Offered To
A) Existing Equity Shareholders And Proportion To

PUSC As Nearly As Circumstances Admit Subject To
The Following Three Conditions:-
RIGHTS ISSUE U/S 62
i) OFFER PERIOD WILL BE OF MINIMUM 15 DAYS AND MAXIMUM 30 DAYS.
EXEMPTION HAS BEEN GIVEN IN CASE OF PRIVATE COMPANY AND IFSC PUBLIC
COMPANY THAT OFFER PERIOD CAN BE LESS THAN 15 DAYS IF AGREED BY AT
LEAST 90% MEMBERS
ii) UNLESS THE ARTICLES OTHERWISE PROVIDED RENOUNCIATION IS ALLOWED

PARTLY ALSO FULLY ALSO
iii) REMAINING UNSUBSCRIBE SHARES WILL BE DISPOSED BY BODY TO THE BEST

OF INTEREST OF COMPANY
RIGHTS ISSUE U/S 62
B) To Employees Under Scheme Of ESOP
By passing SR In GM .
For Private Company And IFSC Public Company Instead
Of SR its OR IN GM
C) To Any Other Person By Passing SR IN GM
And Valuation Of Share To Be Done By Registered
Valuer
RIGHTS ISSUE U/S 62
2) Offer Letter Shall Be Dispatched By Speed Post/
Courier/ Registered Post /Email Atleast Three Days
Before The Offer Period Starts
3) Company Can Convert Its Convertible Debentures
Or Loan Into Equity Shares On The Date Of
Conversion Provided That Before The Issue of such
convertible debenture /loan SR IN GM was passed.
RIGHTS ISSUE U/S 62
4) Government On The Grounds Of Public Interest Can Direct
The Company To Convertible Non-convertible Debentures All
Loans Which Were Issued By Company To Government Into
Equity Shares
Provided That If Company Feels Aggrieved By Government’s

Order Then Within 60 Days Of Receipt Of Such Order It Can
Apply To NCLT And NCLT After Hearing Both The Parties
Shall Pass Such Order As It Deems Fit
RIGHTS ISSUE U/S 62
5) Government While Passing Order Under Subsection

(4) Will Give Due Regard To The Financial Position Of
The Company
6) The Authorised Share Capital Of Company Is

Deemed To Be Increased By The Amount Of Share
Capital Issued To Government Under Subsection (4)
BONUS ISSUE U/S 63
IT MEANS EQUITY SHARES ISSUED FREE OF COST TO
EQUITY SHAREHOLDERS OF COMPANY.
NO BONUS SHARES
SOURCES CAN BE ISSUED FROM
A RESERVE CREATED
OUT OF REVALUATION
FREE SECURITY CAPITAL OF ASSETS.
RESERVES PREMIUM REDEMPTION
RESERVE
BONUS ISSUE U/S 63
FORMALITIES
Articles Must Authorise Otherwise Alter The Articles
By Passing SR In GM
Bonus Shares Can Be Recommended By BOD BY

PASSING BR AT BM
Bonus Share Will Be Approved By Shareholders By

Passing OR IN GM
Company Should Not Have Defaulted In Payment Of

Fixed Deposit Or Debt Securities
BONUS ISSUE U/S 63
FORMALITIES
Company Should Not Have Default In Payment Of Statutory Dues Of
EES Like Bonus ,PF ,Gratuity
Bonus Share Can Be Given Only On Fully Paid Up Shares
Bonus Share Cannot Be Given In Lieu Of Dividend
Company Must Satisfy Such Other Conditions As May Be Prescribed
Companies ( Share Capital And Debentures )Rules Prescribed That Bonus Share Once Recommended
Cannot Be Withdrawn
BONUS ISSUE U/S 63
EXAMPLE
ESC 50 LACS
( 5 LACS EQUITY SHARES OF 10
EACH)
R&S 450 LACS BEFORE BONUS
NET WORTH 500 LACS BV/SHARE =
BONUS = 1:1 500 LACS/ 5 LACS EQUITY

SHARE
R & S A/C ----- dr 50 LACS
TO ESC 50 LACS = 100/SHARE
( 5 LACS SHARE * 10)
BONUS ISSUE U/S 63
EXAMPLE
BALANCE SHEET AFTER BONUS SHARES
ESC 50 LACS + 50 LACS = 100 LACS
AFTER BONUS
R&S 450 LACS – 50 LACS = 400 LACS
BV/SHARE =
500 LACS/ 10 LAC EQUITY

SHARE
500 LACS
= 50/SHARE
BUYBACK U/S 68
BUYBACK MEANS COMPANY BUYING ITS OWN SECURITIES
REASONS OF BUYBACK
A. TO USE IDLE CASH TO IMPROVE EPS

E.G- 1 LAC EQUITY SHARES @ RS 100 EACH
(HOWEVER 20000 SHARES PROCEEDS . IE., 20 100 LACS

LACS ARE LYING IDLE)
COMPANY EARNED PAFESH RS.200 LACS

BUYBACK U/S 68
EPS BEFORE BUYBACK AFTER BUYBACK
PAFESH 200 LACS 200 LACS

NO.OF EQUITY SHARES 1 LAC SHARE 80,000 SHARES
= 200/SHARE = 250/SHARE
B. TO CONCENTRATE THE DILUTED CONTROL

C. TO GIVE CONFIDENCE TO SHAREHOLDERS AT THE
TIME OF FALLING PRICES
D. TO INCREASE PROMOTERS SHAREHOLDING TO
REDUCE THE CHANCES OF TAKEOVER
BUYBACK U/S 68
EXAMPLE
BEFORE BUYBACK AFTER BUYBACK
PROMOTER 40,000 SHARES 40,000 SHARE

PUBLIC 60000 SHARES 35,000
-25,000
(FREE FLOAT)
1,00,000 SHARES 75000 SHARES
SAY CO. TO SAVE ITSELF FROM T/O BUYS 25000 SHARES FROM PUBLIC
BEFORE BUYBACK AFTER BUYBACK
PROMOTER’S 40,000/1,00,000 * 100 40,000/75,000 * 100

SHAREHOLDING
= 40% = 53.33%
MODES OF BUYBACK
4 MODES
MODES
EMPLOYEE’S
ODD LOT
OPEN MARKET OPEN OFFER STOCK OPTION
SHAREHOLDERS PLAN
LISTED COMPANY- UNLISTED COMPANY-

ALL 4 MODES 2,3,4 MODES
PRE BUYBACK FORMALITIES U/S 68 READ WITH THE
COMPANIES (SHARE CAPITAL & DEBENTURES ) RULES:-
1. ARTICLES WAS AUTHORISED BY BACK OTHERWISE FIRST

AND ARTICLES BY PASSING SR IN GM
2. PASS SR IN GM FOR BUYBACK PROVIDED THAT IF BUY

BACK IS ONLY UP TO 10% (PUSC + FR) THEN PASS BR AT
BM.
3. MAX BUYBACK AMOUNT EXCEED 25% (PUSC + FR)
EXPLANATION-
FOR BUYBACK OF EQUITY SHARE THE ABOVE PUSC WILL BE PUES
AS PER SEBI GUIDELINES LISTED COMPANY IN CASE OF BUY BACK

FROM OPEN MARKET MAXIMUM AMOUNT SHALL BE 15% (PUSC + FR)
4. THE RATIO OF SECURED AND UNSECURED LOAN -

PUSC + FR CANNOT EXCEED 2:1
HOWEVER FOR GOVERNMENT COMPANIES WHICH ARE

ENGAGED IN NBFC HOUSING FINANCE ACTIVITIES THE
ABOVE RATIO WILL BE 6:1 INSTEAD OF 2:1
5. BUYBACK CAN BE DONE ONLY ON FULLY PAID UP

SHARES
DECLARE SOLVENCY TO ROC BY SUBMITTING FORM SH 9

SIGNED BY ATLEAST 2 DIRECTORS OUT OF WHOM ONE
SHALL BE MANAGING DIRECTOR IF ANY
PRACTICAL ILLUSTRATION
ESC ( 1 LAC SHARES * 10) 10 LACS
FREE RESERVE 10 LACS
DEBTS 38 LACS
COMPUTE MAXIMUM SHARES TO BE BROUGHT BACK @ 50/SHARE
25 % OF (PUESC + FR)
= 25% OF ( 10 LACS + 10 LACS)

= 25 % OF 20 LACS
MAX BUYBACK AMOUNT = = RS 5 LACS

DIVIDE
50/SHARE
= 10,000 SHARES
PRACTICAL ILLUSTRATION
CURRENTLY PUSC + FR = RS 20 LACS
AFTER BUYBACK PUSC + FR = 19 LACS
SL + UL = 2
PUSC + FR 1 BUYBACK - RS 1 LACS
DIVIDE 50/SHARE
OR,
20000/SHARE
38 LAC = 2
PUSC + FR 1 THUS BUYBACK CAN BE LOWER OF 10,000 SHARE
OR 2000 SHARE. I.E, 2000 SHARES
*PUSC + FR AFTER BUYBACK CANNOT BE LESS

THAN RS.19 LACS
POST BUYBACK FORMALITIES U/S 68
1. Maintainer Register Of Buyback Inform SH 10

(It Will Contain Details Like Number Of Shares Of
Buyback ,Date Of Buyback, Price, Mode , Name Of
Shareholders Who Share Bought Back)
2. Submit Return Of Buyback To Roc In Form Sh-11

Annexed With Sh-15 Which Certifies The Correctness Of
Sh-11 And Signed By At Least Two Directors One Of
Whom Shall Be Managing Director If Any
3. Cancel The Shares Brought Back Within 7 Days Of

Buyback
4. Observe Cooling Period Of Six Months.

i.e, Company Cannot Make Fresh Issue Of Shares Except
Bonus Issue, Sweat Equity ,Shares Of Conversion Of
Convertible Debenture Or Preference Share
5. No Buyback Is Allowed For Next One

Year From The Closure Of A Period Of Last
Buyback
6. Complete All The Buyback Formalities

Within One Year From The Date Of Passing
Of Resolution Authorising The Buyback
SOURCES OF BUYBACK
SOURCES
PROCEEDS OF
SECURITY FRESH ISSUE OF
FREE RESERVES
PREMIUM OTHER CLASS
OF SHARES
TRANSFER TO CAPITAL REDEMPTION RESERVE U/S 69
WHEN BUYBACK IS MADE OUT OF FREE RESERVES, S/P THEN AN
AMOUNT EQUAL TO NOMINAL VALUE OF SHARES BROUGHT
BACK SHALL BE TRANSFEREED TO CAPITAL REDEMPTION
RESERVE.
EXAMPLE – IF 2000 SHARE BUYBACK @ 50/SHARE ( FACE VALUE 10/SHARE)
THEN TRANSFER TO CRR SHALL BE
2000 SHARES * 10 = RS 20,000
THE ONLY PURPOSE FOR WHICH CRR IS USED TO ISSUE BONUS SHARES
SEC 70 PROHIBITION OF BUYBACK
1. No Buyback Is Allowed To Any Subsidiary

Company Including His Own Subsidiaries
2. No Buyback Is Allowed Through Any Investment

Company Or Group Of Investment Companies
3. If Company Has Defaulted In Repayment Of Deposits

Or Interest Thereon Or Failed To Redeem Debentures Of
Preference Shares Or Their Interest Or Dividend Or Failed
To Repay Loan Or Interest Of Bank Of Financial Institution ,
Then Buy Back Is Not Allowed Till 3 Years From The Date
When Such Default Has Been Remedied
4. NO BUYBACK IS ALLOWED IF COMPANY HAS DEFAULTED

THE PROVISIONS OF:-
SEC 92
SEC 129
OR OR
FILING OF PREPARATION OF
OR SEC 127
ANNUAL SEC 123 FINANCIAL
RETURN PUNISHMENT OF STATEMENT
DECLARATION OF FAILURE TO PAY
DIVIDEND DIVIDEND
PUNISHMENT FOR CONTRAVENTION OF BUYBACK
PROVISIONS:-
OFFICER IN
COMPANY DEFAULT
1 LAC
MIN FINE 1 LAC
MAX FINE 3 LAC 3 LAC

OR
UPTO 3 YEARS
IMPRISONMENT
OR BOTH
COMPANIES (SHARE CAPITAL & DEBENTURES ) RULES
RELATED TO BUYBACK DONE THROUGH OPEN OFFER:-
Submit An Offer Letter To Roc In Form Sh 8
Within 20 Days Of Offer Letter Being Submitted To Roc, Dispatch To All The
Shareholders Giving Them An Offer Period Of Minimum 15 Days And Maximum 30
Days
Offer Period Can Be Less Than 15 Days Also If Agreed By All The Members
Now Within The Offer Period Interested Shareholders Will Surrender The Shares For
Buyback
COMPANIES (SHARE CAPITAL & DEBENTURES ) RULES
RELATED TO BUYBACK DONE THROUGH OPEN OFFER:-
OFFER
PERIOD
CLOSES
WITHIN 15 DAYS COMPLETE THE

VERIFICATION OF SHARE
CERTIFICATES WITHIN 21 DAYS RETURN
IMMEDIATELY DEPOSIT
BACK THE SHARE
ENTIRE BUYBACK AMOUNT
ONCE VERIFICATION IS CERTIFICATE OF THOSE
IN A SEPARATE SCHEDULE
COMPLETED, MAKE THE PAYMENT SHAREHOLDERS WHOSE
BANK A/C CALLED EXCROW
WITHIN 7 DAYS BUYBACK HAS BEEN
A/C
REJECTED
KINDS OF SHARE CAPITAL
EQUITY SHARE PREFERENCE

CAPITAL SHARE CAPITAL
IT GETS PRIOTITY OVER EQUITY

SHARES CARRYING SHAREHOLDERS
ORDINARY DIFFERENTIAL RIGHTS AS • PAYMENT OF DIVIDEND
SHARES TO DIVIDEND , VOTING.
AND
i.e, DVR
• REPAYMENT OF CAPITAL AT
THE TIME OF WINDING UP
EXAMPLE OF KINDS OF SHARE CAPITAL
TATA MOTOR LTD
ORDINARY DVR
SHARES
1 SHARE = 1/10TH VOTE
1 SHARE = 1 VOTE
RULE 4 OF THE COMPANIES (SHARE CAPITAL AND DEBENTURES ) RULES
2014-
A COMPANY CAN ISSUE DVR SHARES BY COMPLYING ALL 7 CONDITIONS
1. ARTICLES MUST AUTHORISE OTHERWISE AMONG THEM

BY PASSING SR IN GM
2. PASS OR IN GM TO ISSUE DVR
3. VOTING RIGHTS ON DVR CANNOT EXCEED 74% OF

TOTAL VOTING POWER ON ALL SHARES INCLUDING DVR
SHARES
4. Company Has Not Defaulted In Filing Financial Statement And Annual

Returns In Immediately Preceding Three Financial Year
5. Company Has Not Been Penalized By Any Court Or Tribunal In

Immediately Preceding Three Financial Year For Violation Of Securities
Exchange Board Of India Act 1992, Securities Contract Regulation Act 1956,
Reserve Bank Of India Act 1934 , Foreign Exchange Management Act 1999.
6. No Subsisting Default In Payment Of Declared Dividend Or Repayment

Of Matured Deposit Or Debentures Or Interest Thereon Or Preference
Shares
7. Company Should Not Have Default In Payment Of Preference

Dividend Or Repayment Of Loan To Public Financial Institutions Or State
Level Financial Institutions Or Scheduled Bank Or Statutory Dues Of
Employees Are Transferred To Investor Education And Protection Fund
Provided That In Case Of Above Default DVR Can Only Be Issued After 5
Years Once Such Default Has Been Remedied.
DEFFERED SHARES / FOUNDER SHARES-
These are such type of DVR equity share in

which dividend& repayment of capital at the
time of winding up is made at very last after
ordered equity shares has been paid.
Generally these types of shares are taken by

promotion of company & so it's called founder
shares.
PHANTOM STOCK
It's A Type Of Share Issued Payment Made To

EES/Kmps As Per Which Market Price Of Fixed
No Of Shares After Certain No. Of Years Will Be
Paid By Company.
No Shares Are Issued Here & So It's Called

Phantom Stock.
SEC 44 SHARES & DEBENTURES
Shares & debentures held by the

members of company are movable
property & transferrable in the
manner provided in articles of
company.
SEC 45 NUMBERING OF SHARES
Every share in company having

share capital will have a distinctive
number/ folio number.
Provided that nothing in this section

shall apply if shares are held in
demat with depository.
SEC 46 SHARE CERTIFICATE
1) Is A Title Deed Containing Name Of The Shareholder Number

Of Shares Held & F. V Of Shares.
(2) Common Seal If Any Will Be Affixed On It.
(3) Share Certificate Will Be Signed By Atleast 1 CS &1 Director

But If No CS , Then By Atleast 2 Directors.
(4) In Case Of OPC, It Shall Be Signed Only By

Either 1 CS Or 1 Director.
(5) Share certificate is issued in form No SH 1.

(6) If original share certificate is destroyed/mutiliated / lost then SH

can apply for duplicate share certificate by submitting necessary
documents along with an indemnity bond if company asks for it &
once company receives all these documents,
it will issue duplicate share certificate within 3 months ( incase of
unlisted company ) & within 45 days( listed company)
(7) Company shall maintain register of duplicate share certificate

issued in Form SH 2 .
SECTION 47 VOTING RIGHTS
EQUITY SHAREHOLDERS PREFERENCE

ON ALL MATTERS SHAREHOLDERS
ONLY ON MATTERS WHICH
DIRECTLY AFFECTS THEM
(WINDING UP, CAPITAL
MAX VOTING POWER TO ANY REDUCTION)
PARTICULAR MEMBER OF PROVIDED THAT IF PSH ARE NOT PAID
NIDHI CO. CANNOT EXCEED DIVIDEND FOR 2 YEARS, THEN THEY SHALL
GET VOTING RIGHTS ON ALL MATTERS JUST
5% * TOTAL VOTING POWER
LIKE ESH
SEC 48 VARIATION OF SHAREHOLDER’S RIGHT
(1) When A Co's Share CapitaI is Divided Into Different Classes Of Shares & Co. Wants To Very The Rights
Attached To Particular Class Of Shares Then It Can Be Done With The
Written Consent Of By Passing SR In Class

Shareholders Holding Atleast Meeting
3/4th Of Issued Shares Of
That Class
Also, such variation should be allowed in MOA/AOA of Co.

or should not be prohibited by the terms of issue of that class of
shares.
Provided that if variation of rights of one class of shares affects the rights of another
class of shares, then it's also a variation of that another class of shares & consent u/s
48 shall be required from them also.
(2). The Share Holders Who Are Against Such Variation &Did Not Give Their Consent Or Voted In Favour May
Apply To NCLT If They Hold Atleast 10%× Issued Shares Of That Class, To Get The Variation Cancelled.
Such Variation Shall Not Take Effect Unless Confirmed By NCLT.
Provided That Such Application Must Be Made To NCLT Within 21 Days Of Obtaining Of Written
Consent/ SR Passed.
(3). Nclt's Order Shall Be Binding On All Shs
(4). Co. Shall Submit Nclt's Order Copy To ROC Within 30 Days Of Nclt's Order.
SEC 49 CALLS TO BE MADE UNIFORMLY
WHENEVER ANY CO. MAKES ANY CALL ON

PARTLY PAID UP SHARES, IT SHALL BE MADE
UNIFORMLY ON ALL SHARES OF THAT CLASS
SEC 50 CALLS IN ARREAR
1) IF AUTHORISED BY ARTICLES , CO. MAY RECEIVE

FROM ANY SHAREHOLDER BY AMOUNT THAT HAS
NOT YET BEEN CALLED BY COMPANY.
1) NO VOTING RIGHT SHALL BE GIVEN ON CALLS IN

ADVANCE
SEC 51 DIVIDEND
DIVIDEND MAY BE IF SO AUTHORISED BY ARTICLES BE

GIVEN ON PUSC OF CO.
CALLED UP SHARE CAPITAL – CALLS IN ARREAR

(CALLS IN ADVANCE)
SEC 52 SECURITIES PREMIUM
(1) WHEN THE SHARES OR ANY OTHER SECURITIES ARE

ISSUED ABOVE FACE VALUE, THEN THE EXTRA
PROCEEDS ABOVE THE FACE VALUE REFERS TO
SECURITIES PREMIUM.
To Issue Bonus To Write Off Securities Issue

Shares Expenses Including
Underwriting Commission,
Discount In Issue Of Shares
& Debentures
Used In Buyback
U/S 68
To Write Off
To Write Off
Preliminary
POROPS, POROD
Expenses
(3)Notwithstanding Anything Mentioned In (1) & (2) Co. Can Comply
Accounting Standard As Prescribed U/S 133 Shall Issue S/P Only For
3 Purposes-
3 PURPOSES
For Buyback
To Issue Bonus U/S 68 To Write Off Securities Issue
Shares Expenses Including
Underwriting Commission,
Discount On Issue Of Share
SEC 53 ISSUE OF SHARES AT DISCOUNT
No Co. Shall Issue Shares At Discount Except Sweat Equity Shares U/S 54
Any Share Issued At Discount Shall Be Void
Notwithstanding Anything Contained In (1) And (2), Co. May Issue Share At Discount
To Creditors To Convert Debt Into Equity Under A Statutory Resolution Plan Or Debt
Restructuring Scheme Of Rbi Act 1934, Or Banking Regulations Act 1949
SEC 53 PENALTY FOR CONTRAVENTION
CO. & OFFICER IN
DEFAULT CO. SHALL ALSO BE LIABLE TO
AND REFUND SUCH AMOUNT RAISED
AMOUNT RAISED BY ISSUE ALONG WITH INTEREST @ 12% P.A
OF SHARES AT DISCOUNT FROM DATE OF ISSUE TILL DATE OF
REFUND
OR
5 LACS ,
WHICHEVER IS LOWER
EXAMPLE OF ISSUE OF SHARE AT DISCOUNT TO CREDITORS
EQUITY SHARE CAPITAL LACS
1 LAKH FACE VALUE 100 100
ACCUMULATED LOSS (40)
NET WORTH 60 LACS
. 1 LAC SHARES
.
BOOK VALUE/ SHARE 60/SHARE
WHICH IS LESS THAN FV OF RS. 100/SHARE
Thus, No Creditor Would Be Willing To Accept Equity Shares @ 100 / Share When
Book Value Is Only 60/Share/
Thus, Co. Can Issue Shares In Such Cases At Below Face Value . I.E, AT DISCOUNT
UNDER DEBT RESTRUCTURING SCHEME
SEC 54 SWEAT EQUITY SHARES
AS PER SEC 2(88) SWEAT EQUITY SHARES MEANS SUCH

EQUITY SHARES WHICH ARE ISSUED TO EMPLOYEES OR
DIRECTORS AT DISCOUNT OR FOR CONSIDERATION
OTHER THAN CASH OR FOR PROVIDING TECHNICAL
KNOW HOW OR VALUE ADDITIONS OR MAKING
AVAILABLE THE RIGHTS IN THE NATURE OF INTELLECTUAL
PROPERTY RIGHTS
SEC 54 CONDITIONS FOR ISSUE OF SWEAT EQUITY SHARES
1. PASS SPECIAL RESOLUTION IN GENERAL MEETING
2. RESOLUTION MUST
SPECIFY
NO. OF SHARES TO
CLASSES OF DIRECTORS AND CONSIDERATION
EMPLOYEES TO WHOM
BE ISSUED MARKET
PRICE/SHARE IF ANY
SWEAT EQUITY SHARES WILL
BE ISSUED
SEC 54 CONDITIONS FOR ISSUE OF SWEAT EQUITY SHARES
3. COMPANY
LISTED
UNLISTED
FOLLOW SEBI GUIDELINES TO ISSUE
SWEAT EQUITY SHARES FOLLOW COMPANIES RULES TO
ISSUE SWEAT EQUITY
SHARE.
4. THE RIGHTS LIMITATION, RESTRICTIONS AND PROVISIONS ON SWEAT
EQUITY SHARE SHALL BE SAME AS OTHER EQUITY SHARE OF CO.
AND RANK PARI PASSU ( AT PAR SAME STATES) WITH THEM.
Companies ( Share Capital & Debentures) Rules 2014 Rule 8
Related To Sweat Equity Share:-
(1) Employees Will Mean Permanent Employees Whether
Working In Or Outside India.
(2) Directors Will Mean Both Whole Time & Part Time.
(3) Sweat Equity Share Can Be Issued To Eess/Directors Of

Company Or It's Holding Or Subsidiary In Or Outside India.
(4) Validity Of SR Shall Be 12 Months.

(5) Lock In Period Of Sweat Equity Share Shall Be 3
Years Which Means Ees/ Directors Cannot Transfer
It.
(6) Register Of Sweat Equity Share In Form SH 3.
(7) Fair Value/ Equity Share Shall Be Determined By

Registered Valuer.
(8) Maximum sweat equity share that can be issued in a

year:-15%×PUESC or issue value ₹5 crore whichever is
higher.
(9) Overall sweat equity shares cannot exceed 25% PUESC.

Provided that in case of start up company it can be 50%
PUESC upto 10 years incorporation.
SEC- 55 ISSUE & REDEMPTION OF PREFERENCE SHARES
(1) No Co Can Issue Irredeemable Preference Shares
(2) Redeemable Preference Shares Can Be Issued If

Articles Authorize.
(3) SR In GM Is Required For Issuing Redeemable

Preference Shares
(4) Preference Shares Tenure Cannot Exceed 20 Years.

(5) For Infrastructure Related Projects It Can Be 30 Yrs With An Option Given To
Preference Shareholders To Redeem 10% Annually Starting From 21 St Year.
(6) Only Fully Paid Preference Shares Can Be Redeemed.
(7) CRR Shall Be Created Out Of Free Reserves By An Amount Equal To Nominal
Value Of Preference shares Redeemed.
(8) The Only Purpose Of CRR Shall Be To Issue Fully Paid Up Bonus Share Can Be
Redeemed.
9) If Co. Is Unable To Redeem

Preference Shares On Due Date
Then New Preference Shares Consent Required From

Can Be Issued For Amount NCLT’S APPROVAL Those Preference
Preference ALSO REQUIRED Shares Who Did Not
O/S Including Dividend In
Respect Of Unredeemed Shareholders Holding Give Consent Shall
Preference Shares Them Atleast ¾Th Of Paid Up Have To Redeemed
Shares Forthwith
(Immediately By
Paying Cash)
PROVISIONS RELATED TO TRANSFER/TRANMISSION OF SHARES
(SEC- 56-59)
TRANSFER TRANSMISSION
MEANS SALE OF SHARES MEANS INHERITANCE OF SALE
IT’S A VOLUNTARY ACT IT TAKES PLACE BY OPERATION OF

LAW
INVOLVES CONSIDERATION NO CONSIDERATION
INVOLVES STAMP DUTY NO STAMP DUTY
VALID TRANSFER DEED IS REQUIRED NO SUCH DEED REQUIRED

SEC- 56
CASES TIME LIMIT OF ISSUE OF SHARE CERTIFICATE /
DEBENTURE CERTIFICATE
SUBSCRIBERS TO THE MEMORANDUM 2 MONTHS OF INCORPORATION
FURTHER ISSUE OF SHARES 2 MONTHS OF ALLOTMENT OF SHARES
TRANSFER/ TRANSMISSION OF SHARES 1 MONTH OF RECEIPT OF SHARE TRANSFER

FORM SH-4
ISSUE OF DEBENTURES 6 MONTHS FROM ALLOTMENT OF DEBENTURES
NOTE- FOR IFSC PRIVATE CO. & IFSC PUBLIC CO.

ALL THE ABOVE TIME LIMITS SHALL BE 60 DAYS
FOR TRANSFER/ TRANSMISSION OF SHARES WHAT FORM HAS TO BE
SUBMITTED.
FORM SH-4 SIGNED BY TRANSFEROR & TRANSFEREE BOTH HAS TO BE

SUBMITTED WITHIN 60 DAYS OF SIGNING TO CO. AT ITS REGISTERED OFFICE
ALONG WITH OLD SHARE CERTIFICATE
WHAT IF SHARE TRANSFER SH-4 SIGNED BUT LOST BY TRANSFERRE?
CO. MAY ISSUE NEW SHARE CERTIFICATE TO TRANSFERRE BY MAKING HIM

SIGN AN INDEMNITY BOND.
SEC 57 PUNISHMENT FOR IMPERSONATION OF SHARE CERTIFICATE ETC-
IF ANY PERSON WRONGFULLY OBTAIN OR ATTEMPT TO OBTAIN OTHER

SHAREHOLDER’S CERTIFICATE OR DIVIDEND COUPONS OR RECEIVES
WRONGFULLY MONEY ON THEIR BEHALF THEN PUNISHMENT SHALL BE -
IMPRISONMENT FINE
MIN 1 YEAR AND
MIN 1 LAKH
MAX 3 YEARS MAX 5 LAKH
SEC 58 REFUSAL OF REGISTRATION OF TRANSFER / TRANSMISSION & APPEAL
SH 4 SHARE TRANSFER FORM SUBMITTED TO COMPANY WITHIN 60 DAYS OF SIGNING-
COMPANY
ALLOW THE TRANSFER REFUSES TO TRANSFER
CO. SHALL ISSUE NEW SHARE CO. WILL SEND REFUSAL NOTICE TO BOTH TRANSFEROR
CERTIFICATE TO TRANSFERRE & TRANSFERRE WITHIN 30 DAYS OF RECEIPT OF SH-4
WITHIN 1 MONTH OF RECEIPT OF PRIVATE CO.
SH-4 PUBLIC CO.
NOT SENT CO. SENT

NOT SENT
CO. SENT REFUSAL NOTICE
TRANSFERRE CAN TRANSFEREE CAN
REFUSAL NOTICE TRANSFEREE CAN
APPEAL TO NCLT APPEAL TO NCLT
APPEAL TO NCLT
TRANSFEREE CAN APPEAL WITHIN 60 DAYS OF WITHIN 90 DAYS
WITHIN 60 DAYS
TO NCLT WITHIN 30 DAYS DELIVERY OF SH-4 OF RECEIPT OF
OF RECEIPT OF
REFUSAL NOTICE
OF RECEIPT OF NOTICE REFUSAL NOTICE
NOW NCLT AFTER HEARING CO. & TRANSFEREE SHALL-
1) EITHER DISMISS THE APPEAL, OR

2) ORDER THE CO. TO REGISTER SUCH TRASNFER.
CO. SHALL REGISTER THE TRANSFER WITHIN 10 DAYS OF ORDER OF NCLT

FAILING WHICH
FINE – MIN 1 LAKH, MAX 5 LAKH

AND
IMPRISONMENT - MIN 1 YEAR, MAX- 3 YEARS
Sec 59 Ratification Of Register Of Members
If Member's Name Has Been Removed From Registration Of Members Or Delay In

Entering A Persons Name In Registration Of Members Without Any Sufficient Cause
Then Such Member Or Person Can Apply To NCLT Who After Hearing The Parties:-
(1) Either Dismiss The Application ,Or
(2) (2) Order Company To Rectify It's Register Of Members.
Company Shall Comply Nclt's Order Within 10 Days Of Order Failing Which
Fine Minimum 1 Lakh Maximum 5 Lakh

And
Imprisonment Minimum 1 Year And Maximum 3 Years
SEC 61 ALTERATION OF SHARE CAPITAL
SEC 61
DIMINUTION OF SHARE
CONSOLIDATION OF
CONVERTING CAPITAL
INCREASE THE SHARES INTO
SHARES
AUTHORISED SUB DIVISION OF SHARES STOCK CANCELLING THE
SHARE CAPITAL UNSUBSCRUBED SHARES.
E.G- 10 SHARE OF RS. 10
EACH . E.G- 1 SHARE OF RS.100
CONSOLIDATED INTO 1 INTO 10 SHARES PF RS.10 E.G- CO. ISSUED 10,000
SHARE RS.100 EACH. EACH SHARES
PUBLIC SUBSCRIBED (9600)
IN PRACTICAL LIVES- ICICI UNSUBSCRIBED 400 SHARES
BANK LTD, SBI, INFOSYS,
TCS HAVE ALL DONE CO. IF CANCELS 400 SHARES,
SUBDIVISION OFSHARES
ITS CALLED DIMINUTUON
/ALTERATION OF SHARE
APITAL
SHARE STOCK
IT IS THE SMALLEST UNIT OF CAPITAL ITS GROUP OF FULLY PAID SHARES
CAN BE PARTLY/ FULLY PAID UP ALWAYS FULLY PAID UP
HAVE DISTINCTIVE NO. / FOLIO NO. NO SUCH THING
CANNOT BE IN FRACTION/ DECIMAL CAN BE IN FRACTION/DECIMAL

FORMALITIES / CONDITIONS FOR ALTERATION OF SHARE CAPITAL

1. ARTICLES MUST AUTHORISE OTHERWISE AMEND THEM BY PASSING SR IN GM
(SEC 61)
2. PASS OR IN GM FOR ALTERATION SHARE CAPITAL (SEC 61)
3. SUBMIT FORM SH-7 TO ROC WITHIN 30 DAYS OF ALTERATION OF SHARE CAPITAL

(SEC 64)
SEC 66 REDUCTION OF SHARE CAPITAL
FORMALITIES / CONDITIONS
1. PASS SR IN GM FOR REDUCTION OF SHARE CAPITAL
2. NCLT’S APPROVAL REQUIRED
3. FORM NO. RSC 1 TO RSC 7 REQUIRED
4. THE WORDS “AND REDUCED” HAVE TO BE ADDED AFTER THE NAME OF CO. FOR 5
YEARS FROM DATE OF REDUCTION OF SHARE CAPITAL
CASE 1 -
CANCELLING PART OF SHARE CAPITAL NOT YET PAID UP
EQUITY SHARE CAPITAL
1 LAKH FACE VALUE 100/SHARE
PV 60/SHARE
CO. WANTS TO CANCELL UNPAID RS.40/SHARE THEREBY MAKING FV
ALSO RS/60/SHARE
I.E, ESC
1 LAC SHARE FV 60/SHARE
PV 60/SHARE
CASE 2 -
CANCELLING PORTION OF PUSC THAT HAS LOST ITS VALUE DUE TO FALL IN
MARKET VALUE OF ITS ASSETS (FV/SHAEE REMAINING SAME)
EQUITY SHARE CAPITAL - 100 LACS ASSET – 100 LACS
1 LAKH FACE VALUE 100/SHARE (MV 60 LACS)
PV 100/SHARE (40)
CO. WANTS TO CANCELL PV BY 40/SHARE BECAUSE ASSET HAS LOST ITS VALUE BY SUCH AMOUNT
ESC –
1 LAC FV 100/SHARE
PV 60/SHARE
IN THIS CASE CO. MAY AGAIN CALL 40/SHARE FROM SHAREHOLDERS

CASE 3 -
CANCELLING PAID UP & FACE VALUE BOTH BECAUSE OF LOSS DUE TO FALL
IN MARKET VALUE OF ASSETS
EQUITY SHARE CAPITAL - 100 LACS ASSET – 100 LACS
1 LAKH FACE VALUE 100/SHARE (MV 60 LACS)
PV 100/SHARE (40)
NOW CO. WANTS TO CANCELL BOTH FV & PV BY 40/SHARE
ESC –
1 LAC FV 60/SHARE
PV 60/SHARE
CO. IN FUTURE CANNOT MAKE ANY CALL FROM SHAREHOLDERS

CASE 4 -
CO. CANCELLS PART OF PUSC BY REFUNDING AMOUNT TO SHAREHOLDERS

( FV REMAINING SAME)
PV 100/SHARE
CO. REFUNDS 40/SHARE TO SHAREHOLDERS THEREBY MAKING PV 60/SHARE
I.E, ESC
PV 60/SHARE
IN FUTURE CO. CAN CALL 40/SHARE

CASE 5 -
CO. CANCELLS PART OF PUSC & FV/SHARE BOTH BY REFUNDING AMOUNT

TO SHAREHOLDERS
PV 100/SHARE
CO. REFUNDS 40/SHARE TO SHAREHOLDERS & REDUCES ITS FV/SHARE & PV/SHARE BOTH TO
60/SHARE
I.E, ESC
PV 60/SHARE
IN FUTURE CO. CANNOT MAKE ANY CALL FROM SHAREHOLDERS.

PROCEDURE FOR REDUCTION OF SHARE CAPITAL AS PER
COMPANIES (NCLT ) RULES-
1. Co Shall Apply To NCLT For Reduction Of Share Capital By Submitting Form RSC
1 Attached With:-
(A) Auditors Certificate That Accounts Have Been Prepared By Company By

Complying Accounting Standards U/S 133
(B) List Of Creditors (Not More Than 15 Days Old) Along With Accounts And
Maintaining Weather Creditors Paid Or Not/ Secured Or Not/Consent Obtained
Or Not
2. Within 15 Days If Reserving RSC/NCLT Shall Direct The Co To Issue Notices To
CG(RO), ROC, SEBI (In Case Of Listed Co) & Creditors
3. Co Within 7 Days Of Receiving Such Direction Shall
PUBLISH ADVERTISEMENT ISSUE NOTICE TO CG, ROC, ISSUE NOTICE TO CRS IN

IN 2 NEWSPAPER IN FORM SEBI (IN CASE OF LISTED CO) IN FORM RSC 3
RSC 4 FORM RSC 2
4. Company Within 7 Days Of Publishing Advertisement Into 2

newspapers, Inform NCLT By Way Of Affidavit In Form RSC 5.
5. CG(RD), ROC, SEBI, Creditors Within 3 Months Of Receipt Of

Notice Can File Their Objective Against Reduction To NCLT
Failing Which NCLT Will Deem That They Have No Objection
6. NCLT Shall Pass Order Of Reduction In Form RSC 6.
7. Company Shall Submit NCLT Order To RSC Within 30 Days Of Order
8. ROC Shall Issue Certificate Of Reduction In RAC 7
9. If Officer Of Company Knowingly Contravenes, Then Fraud U/S 447

Attracted
SEC 71 DEBENTURES
1)A CO. MAY ISSUE CONVERTIBLE DEBENTURES WHICH ARE

EITHER FULLY OR PARTLY CONVERTIBLE.
PROVIDED THAT BEFORE ISSUE OF SUCH CONVERTIBLE

DEBENTURES, CO. SHALL PASS SR IN GM
2. NO CO. SHALL ISSUE DEBENTURES CARRYING VOTING

RIGHTS
SEC 71 DEBENTURES
3. CO. MAY ISSUE SECURED DEBENTURES HAVING TENURE

MAXIMUM 10 YEARS BUT IN CASE OF
INFRASTRUCTURE INFRASTRUCTURE
PROJECTS, OR FINANCE AFTER APPROVAL OF
INFRASTRUCTURE DEBT COMPANIES, OR MCA OR
FUND NBFC, OR GOVERNMENT
MAXIMUM TENURE CAN BE 30 YEARS

SEC 71 DEBENTURES
4. Creation Of Debenture Redemption Reserve

DRR Is Created For The Purpose Of Redemption Of Debenture In The Manner Specified By The
Companies (Share Capital & Debenture) Rules, 2014 Only Be Companies Prescribed In These
Rules
DRR Is Created Out Of Profits Available For Distribution Of Dividend. I.E, P/L & Free Reserves.
P/L / FR A/C-----------dr
To DRR A/C
THE AMOUNT CREDITED IN DRR CANNOT BE USED FOR ANY OTHER PURPOSE EXCEPT FOR
REDEMPTION OF DEBENTURE
COMPANIES (SHARE CAPITAL & DEBENTURES) RULES 2014 RELATION TO
CREATION OF DRR & DRI
TYPES OF COMPANY DRR DRI
ALL INDIA FINANCIAL INSTITUTIONS REGISTERED NIL NIL
WITH RBI
(E.G0 NABARD.EXIM, SIDBI)
BANKING COM. NIL NIL
PFI U/S 2 (72) (E.G- LIC, LDFC, UTI) NIL NIL
LISTED NBFC & HOUSING FINANCE CO.

(i) PUBLIC ISSUE NIL 15%
(ii) PRIVATE PLACEMENT NIL 15%
OTHER LISTED CO.

(i) PUBLIC ISSUE NIL 15%
(ii) PRIVATE PLACEMENT NIL 15%
UNLISTED NBFC & HOUSING FINANCE CO. NIL NIL
OTHER UNLISTED CO. 10% * DEBENTURE AMOUNT 15%
THE ABOVE DRI OF 15% SHALL BE MADE BY CO. ON OR BEFORE 30TH APRIL ON THE AMOUNT OF DEBENTURES
MATURING TILL 31ST MARCH OF THE FOLLOWING YEAR
COMPANIES (SHARE CAPITAL & DEBENTURES) RULES 2014 RELATION TO
CREATION OF DRR & DRI
EXAMPLE- IN FY 21-22 TOTAL RS. 10 CRORE DEBENTURES ARE

MATURING,
SO CO. SHOULD MAKE DEBENTURE REDEMPTION RESERVE
INVESTMENT (DRI) OF 15% OF 10 CRORE = RS. 1.5 CRORES ON OR
BEFORE 30.4.21
DRI SHOULD BE
INVESTED IN
DEPOSITED IN A SEPARATE GOVERNMENT
SCHEDULE BANK A.C SECURITIES
THE AMOUNT OF DRI SHOULD NOT FALL BELOW 15% UNTIL

DEBENTURES ARE REDEEMED.
SEC 71 DEBENTURES
5. A Co Cannot Issue Prospectus Or Make An Invitation To Offer To Public To

Subscribe Debenture For Its Members Exceeding 500 Unless It Up Points And
Debenture Trustee (S)
6. Debenture Trustee Shall Protect The Interest Of Debenture Holders &

Redress Their Grievances
7. Debenture Trustee Shall Be Liable To Conduct Its Duty Will Skill And Care.
Any Exemption From Liability Of Debenture Trustee Can Be Given Only By
Majority Of Debenture Holders Holding At Least 3/4 In Value Of Debentures
SEC 71 DEBENTURES
8. A Co Shall Pay Interest & Redeem Debentures On Due Date
9. Debenture Trustee May Apply To NCLT If He Finds That Company's Assets Value
Have Become Insufficient Or Are Likely To Become Insufficient To Redeem The
Debentures Where After They Become Due & NCLT After Hearing Co & Other
Interested Parties May Restrain Co. For Incurring Further Liability.
10. If On The Due Date Co. Fails To Redeem The Debentures Or Interest Then On
Application Filed By All Or Any Debenture Holders Or Debenture Trustee, NCLT May
Order Co To Redeem Debentures Forthwith.
SEC 71 DEBENTURES
( 11. If Nclt's Order Is Contravened Fine 2 Lac To 5 Lac Or 3

Years Imprisonment Or Both ) - Deleted
12. Co Will Specifically Perform Contract Entered With

Debenture Holders.
13. CG May Prescribe Rules Related To Debentures.

SEC 72 POWER TO NOMINATE
Every security holder shall

have power to appoint a
nominee, in Form SH 13
SEC 67 RESTRICTIONS ON GIVING LOANS FOR
PURCHASING SHARES OF COMPANY
NO CO. SHALL GIVE LOANS & ADVANCES OR

PROVIDE GUARANTEE OR SECURITY RELATED TO
LOAN TO ANY PERSON FOR PURCHASING
SHARES OF THE COMPANY.
REASON- TO PREVENT MAINPULATION IN SHARE

PRICE
SEC 67 SHALL NOT APPLY IN FOLLOWING CASES-
(i) PRIVATE CO. SATISFYING ALL 3 CONDITIONS
NO BODY
NO DEFAULT IN
CORPORATE IS
SUCH LOANS.
THE
SHAREHOLDER LOAN O/S FROM BANK OR
FIANNCIAL INSTITUTION OR BODY
CORPORATE SHOULD BE LESS THAN
2* PUSC OR 50 CRORE , WHICHEVER
IS LOWER
(ii) IFSC PUBLIC CO. SATISFYING ALL 3
CONDITIONS- (SAME AS ABOVE)
(iii) LENDING OF MONEY BY BANKING CO. IN THE
ORDINARY COURSE OF BUSINESS
(iv) LOAN GIVEN TO EMPLOYEES AN AMOUNT EQUIVALENT
TO 6 MONTHS SALARY OF THAT EMPLOYEE. HERE,
EMPLOYEES WILL NOT INCLUDE DIRECTOR & KMP.
(V)BY PASSING SR IN GM, LOAN GIVEN TO

TRUST CREATED FOR EE’S WELFARE.
(vi) NIDHI CO..

FINE FOR CONTRAVENTION
OFFICER IN
COMPANY
DEFAULT
MIN 1 LAC MIN 1 LAC
MAX 25 LAC MAX 25 LAC
AND
IMPRISONMEMT
UPTO 3 YEARS
SEC 60
WHENEVER CO. MENTIONS ITS AUTHORISED SHARE
CAPITAL IN ANY OFFICIAL PUBLICATION / DOCUMENT/
LETTER HEAD/ BILL PAD ETC. IT SHALL ALSO MENTION ITS
SUBSCRIBED & PUSC
PENALTY FOR CONTRAVENTION
10,000 5000
SEC 64
FORM NO. SH-7 IS REQUIRED TO BE SUBMITTED TO ROC
WITHIN 30 DAYS
REDEMPTION OF
ALTERATION OF PREFERENCE
SHARE CAPITAL U/S SHARES U/S 55
COMPULSORY CONVERSION
61
OF NON-CONVERTIBLE
DEBENTURES / LOAN INTO
SHARES TO GOVERNMENT
U/S 62
SEC 64

500/DAY SUBJECT TO 500/DAY SUBJECT TO
MAX 5 LAC MAX 1 LAC
SEC 65
Unlimited company to provide for Reserve
capital on it's conversion into a limited
company.
If an unlimited company gets converted into a

limited company that then it shall increase the
nominal value/share and such amount can be
called only at the time of winding up
i.e such amount is the Reserve Capital
DISQUALIFICATIONS OF DEBENTURE TRUSTEE
1. Shareholder Who Is Beneficiary.
2. Creditor
3. Guarantor
4. Any Person Who Is Indebted To Co, Holding,

Subsidiary, Associate, Fellow Subsidiary
DISQUALIFICATIONS OF DEBENTURE TRUSTEE
5. Any Person Who Is Promotor/Director/Kmp/Officer/Ees
Of Co, Holding, Subsidiary, Associate
6. Relatives Of Promotor/Director/Kmp Of Co
7. Any Person Having Pecuniary(business) Relationship

Amounting To-
( 2% of T/O Or 50 Lac ) Whichever Is Lower

QUESTIONS
STATE WHETHER THE FOLLWING

STATEMENT IS CORRECT OR INCORRECT:-
DEFFRED SHARES ALSO CALLED FOUNDER

SHARES.
(MAY 2015)
QUESTIONS
CAN EQUITY SHARES WITH DIFFERENTIAL
VOTING RIGHTS BE ISSUED?
IF YES, STATE THE CONDITIONS UNDER
WHICH SUCH SHARES MAY BE ISSUED?
(MAY 2018)
QUESTIONS
WHAT IS THE LAW AND PROCEDURE FOR ISSUING

A DUPLICATE SHARE CERTIFICATE UNDER THE
PROVISIONS OF THE COMPANIES ACT, 2013 IN
CASE THE ORIGINAL SHARE CERTIFICATE IS LOST
OR DESTROYED? ( NOV 2011)
QUESTIONS
STATE THE REASONS FOR THE ISSUE OF

SHARES AT PREMIUM OR DISCOUNT. ALSO
WRITE IN BRIEF THE PURPOSED FOR WHICH
THE SECURITIES PREMIUM ACCOUNT CAN BE
UTILIZED? (JAN 2021)
QUESTIONS
“V” THE TRANSFERRE, ACQUIRED 300 EQUITY SHARES OF ABC LIMITED FROM “S” THE
TRANSFEROR.
BUT THE SIGNATURE OF ‘S’ THE TRANSFEROR , ON THE TRANSFER DEED WAS
FORGED. ‘V’ AFTER GETTING THE SHARES REGISTERED BY THE CO. IN HIS NAME AND
SUBSEQUENTLY SOLD 250 SHARES TO ‘X’ ON THE BASIS OF THE SHARE CERTIFICATE
ISSUED BY ABC LTD. ‘V’ AND ‘X’ WERE NOT AWARE OF THE FORGERY.
EXPLAIN THE RIGHTS ‘S’ ‘V’ AND ‘X’ AGAINST THE COMPANY WITH REFERENCE TO
THE AFORESAID EQUITY SHARES UNDER THE PROVISIONS OF THE COMPANIES
ACT,2013. (NOV 2016)
QUESTIONS
STATE WHETHER THE FOLLOWING STATEMENT IS

TRUE OR FALSE AND GIVE REASONS-
A PUBLIC COMPANY CAN ISSUE EITHER

REDEEMABLE OR IRREDEEMABLE PREFERENCE
SHARES. (MAY 2008)
QUESTIONS
A PUBLIC COMPANY PROPOSES TO ISSUE “SWEAT

EQUITY SHARES” TO ITS EMPLOYEES. REFERRING TO THE
PROVISIONS OF THE COMPANIES ACT,2013, STATE THE
CONDITIONS REQUIRED TO BE FULFILLED BY THE
COMPANY. (MAY 2008)
QUESTIONS
A PUBLIC COMPANY PROPOSES TO ISSUE “SWEAT

EQUITY SHARES” TO ITS EMPLOYEES. REFERRING
TO THE PROVISIONS OF THE COMPANIE
ACT,2013,STATE THE CONDITIONS REQUIRED TO
BE FULFILLED BY THE COMPANY. ( MAY 2008)
QUESTIONS
Abc Ltd Is A Public Company Incorporated In New Delhi. The Bod Of The
Co. Wants To Bring A Public Issue Of Rs.1,00,000 Equity Shares Of Rs. 10
Each. The Bod Has Appointed An Underwriter For This Issue For Ensuring
The Minimum Subscription Of The Issue. The Underwriter Advised The
Bod That Due To Current Economic Situation Of The Country It Would Be
Better If The Co. Offers These Shares At A Discount Of Rs.1 Per Share To
Ensure Full Subscription Of This Public Issue. The Bod Agreed To The
Suggestion Of Underwriter And Offered The Shares At A Discount Of Rs.
1 Per Share. The Issue Was Fully Subscribed And The Shares Were
Allotted To The Applicants In Due Course . (NOV 2020)
QUESTIONS
EXPLAIN THE MEANING OF “TRANSMISSION OF SHARES” UNDER THE

COMPANIES ACT , 2013. IN WHAT WAYS IS “TRANSMISSION OF
SHARES” DIFFERENT FROM “TRANSFER OF SHARES”. (MAY 2006)
QUESTIONS
STATE WHETHER THE FOLLOWING STATEMENT IS TRUE OR FALSE AND

GIVE REASONS-
A TRANSFERRE BECOMES A MEMBER OF THE COMPANY WHEN THE

INSTRUMENT OF TRANSFER IS SUBMITTED WITH THE CO. (NOV 2009)
QUESTIONS
A CO. REFUSES TO REGISTER TRANSFER OF SHARES MADE BY MR. X TO

MR.Y . THE CO. DOES NOT EVEN SEND A NOTICE OF REFUSAL TO MR. X
OR MR.Y RESPECTIVELY WITHIN THE PRESCRIBED PERIOD. HAS THE
AGGRIEVED PARTY ANY RIGHT(S) AGAINST THE COMPANY FOR SUCH
REFUSAL ? ADVICE AS PER THE PROVISIONS OF THE COMPANIES ACT,
2013.
(NOV 2015)
QUESTIONS
HARSH PURCHASED 1000 SHARES OF SINGHANIA LTD FROM PRATIK AND SENT
THOSE SHARES TO THE CO. FOR TRANSFER IN HIS NAME. THE CO. NEITHER
TRANSFERRED THE SHARES NOR SENT ANY NOTICE OF REFUSAL OF TRANSFER TO
ANY PARTY WITHIN THE PERIOD STIPULATED IN THE COMPANIES ACT,2013.
WHAT IS THE TIME FRAME IN WHICH THE CO. IS SUPPOSED TO REPLY TO

TRANSFERRE?
DOES HARSH, THE TRANSFERRE HAVE ANY REMEDIES AGAINST THE CO. FOR NOT
SENDING ANY INIMATION IN RELATION OF SHARES TO HIM? (MAY 2018)
QUESTIONS
STATE WITH REASONS WHETHER THE FOLLOWING STATEMENT IS

CORRECT OR NOT-
ISSUE OF DEBENTURE WITH VOTING RIGHTS IS NOT PERMISSIBLE.

(MAY 2010)
QUESTIONS
CAN A COMPANY LIMITED BY SHARES OR GUARANTEE AND HAVING

SHARE CAPITAL REDUCE ITS SHARE CAPITAL?
(MAY 2013)
QUESTIONS
BOD OF PQR LTD WANTS TO CREATE A “DEBENTURE REDEMPTION

RESERVE” FOR THE REDEMPTION OF DEBNTURES ISSUES BY THE
COMPANY UNDER THE PROVISIONS OF THE COMPANIES ACT, 2013.
EXPLAIN THE PROVISIONS OF THE COMPANIES (SHARE CAPITAL AND
DEBENTURES ) RULES, 2014 IN THIS REGARD. ( MAY 2015)
QUESTIONS

INCORRECT-
DEBENTURES WITH VOTING RIGHTS CAN BE ISSUED ONLY, IF

PERMITTED BY THE AOA.
(MAY 2015, NOV 2017, NOV 2016)
QUESTIONS
DIMINUTION OF SHARE CAPITAL DOES NOT CONSTITUTE A REDUCTION

WITHIN THE MEANING OF COMPANIES ACT, 2013. STATE IN WHAT
RESPECT THEY DIFFER FROM EACH OTHER. (NOV 2015)
QUESTIONS
WHAT ARE THE PROVISIONS OF THE COMPANIES ACT, 2013 RELATING

TO THE APPOINTMENT OF “DEBENTURE TRUSTEE” BY A COMPANY?
(NOV 2016)
QUESTIONS
EXPLAIN PROVISIONS FOR “APPOINTMENT OF TRUSTEE FOR

DEPOSITORS” UNDER THE COMPANIES ACT, 2013. (MAY 2018)
QUESTIONS

INCORRECT-
RIGHT SHARES ARE THOSE SHARES WHICH ARE ISSUED BY NEWLY

FORMED COMPANY. (MAY 2017)
QUESTIONS
WHAT DO YOU MEAN BY ‘PARI PASSU’ CLAUSE IN DEBENTURE.
STATE THE PARTICULARS THAT ARE REQUIRED TO BE FILED WITH ROC

IN CASE SUCH DEBENTURES ARE SECURED BY WAY OF CHARGE ON
CERTAIN IMMOVABLE ASSETS OF COMPANY. (NOV 2017)
QUESTIONS
WHICH FUND MAY BE UTILIZED BY PUBLIC LIMITED COMPANY FOR

PURCHASING (BUYBACK) ITS OWN SHARES? ALSO EXPLAIN THE
PROVISIONS OF THE COMPANIES ACT, 2013 REGARDING THE
CIRCUMSTANCES IN WHICH A CO. IS PROHBITED TO BUYBACK ITS OWN
SHARES? (MAY 2019)
QUESTIONS
GERMAN PHARMACEUTICALS LIMITED IS A ZERO DEBT COMPANY

HAVING 10 LAKHS EQUITY SHARES OF RS. 10 EACH. THE DIRECTORS
DESIRE TO BUYBACK ITS OWN SHARES. CAN IT DO SO? IS OS, HOW? (
(MAY 2007)
QUESTIONS
ADJ COMPANY LIMITED DECIDED TO BUYBACK ITS OWN SHARES .

ADVISE THE COMPANY’S BOARD OF DIRECTORS ABOUT THE SOURCES
OUT OF WHICH THE COMPANY CAN BUYBACK ITS OWN SHARES. WHAT
CONDITIONS ARE ATTACHED TO THE BUYBACK SCHEME OF THE
COMPANY IN ACCORDANCE WITH THE PROVISIONS OF THE COMPANIES
ACT, 2013. EXPLAIN. ( NOV 2007)
QUESTIONS
WHETHER A COMPANY CAN BUYBACK ITS OWN SHARES? DISCUSS THE

LEGAL PROVISIONS AS REGARDS TO THE CONDITION FOR BUYBACK
CONTAINED IN THE COMPANIES ACT, 2013. ( NOV 2013)
QUESTIONS
ABC LTD HAS FOLLOWING BALANCES IN THEIR BALANCE SHEET AS ON 31ST
MARCH’2018-
1 EQUITY SHARE CAPITAL ( 3.00 LAKHS 30.00 LACS
EQUITY SHARES OF RS.10 EACH)
2 FREE RESERVES 5.00 LACS
3 SECURITIES PREMIUM PATEL 3.00 LACS
4 CAPITAL REDEMPTION RESERVE 4.00 LACS
ACCOUNT
5 REVALUATION RESERVE 3.00 LACS
DIRECTORS OF THE CO. SEEKS YOUR ADVISE IN FOLLOWING CASES-
I. WHETHER THE CO. GIVE BONUS SHARES IN THE RATIO OF 1:3
II. WHAT IF CO. DECIDE TO GIVE BONUS SHARES IN THE RATIO OF 1:2?
(NOV 2018)
QUESTIONS
X. LTD ISSUED A NOTICE ON 1ST FEB, 2018 TO ITS EXISTING

SHAREHOLDERS OFFERING To Its Existing Shareholders Of Ring To
Purchase One Extra Share For Every 5 Shares Held By Them.
The Last Date To Accept The Offer Was 15th 2018 Only Mr Kavi Has
Given An Application To Renounce The Shares Offered To Him In Favour
Of Mr Ravi Who Is Not A Shareholder Of The Company.
Examine The Validity Of Application Of Mr Kavi Under The Provisions
Of The Companies Act 2013 Would Your Answer Difference Mr Kavi Is A
Shareholder Of X Ltd.? (NOV 2019)
QUESTIONS
XYZ Unlisted Company Passes Special Resolution In The General Meeting On January
5th 2019 To Buy Back 30% Of Its Own Equity Shares The Articles Of Association
Empowers The Company To Buy Back Its Own Shares.
Earlier The Company Has Also Passed Special Resolution To Buy Back Its Own Shares
On January 15th 2018 . The Company Further Decided That The Payment For
Buyback Be Made Out Of The Proceeds Of The Companies Earlier Issue Of Equity
Share In The Light Of The Provisions Of The Companies Act 2013-
1)decide Whether The Company Is Proposal Is An Order

2) What Will Be Your Answer If Buyback Offer Date Is Revised From January 5th
2019 To January 25th 2019 And Percentage Of Buyback Is Reduced From 30 % To
25% Keeping The Source Of Purchase As Above. (Nov 2019)
QUESTIONS
The Authorised Share Capital Of SSP Limited Is Rupees 5 Crore Divided Into 50 Lacs Equity Shares Of
Rupees 10 Each The Company Issued 30 lakhs equity Shares For Subscription Which Was Fully
Subscribed . The Company Called So far Rs 8 per Share And It Was Paid Up. Later On The Company
Propose To Reduce The Nominal Value Of Equity Shares From Rupees 10 Each To Rupees 8 each And
To Carry Out The Following Proposal -
a. Reduction In Authorised Capital From Rupees 5 Crore Divided Into 50 lakhs Equity Shares Of
Rupees 10 Each To Rupees 4 Crore Divided Into 50 Lacs Equity Shares Of Rupees 8 Each
b. Conversion Of 30 lakhs Partly Paid Up Equity Shares Of Rupees 8 Each To Fully Paid-up Equity
Shares Of Rupees 8 Each Thereby Relieving The Shareholders From Making For The Payment Of
Rupees 2 Per Share
State The Procedures To Be Followed By The Company To Carry On The Above Proposal Under The
Provisions Of The Companies Act 2013. (Nov 2020)
QUESTIONS
HEAVY METALS LTD WANTS TO PROVIDE FINANCIAL ASSISTANCE TO ITS

EMPLOYEES TO ENABLE THEM TO SUBSCRIBE FOR CERTAIN NO. OF
FULLY PAID SHARES.
CONSIDERING THE PROVISIONS OF THE COMPANIES ACT,2013.
WHAT ADVICE WOULD YOU GIVE TO THE CO. IN THIS REGARD? (RTP)
QUESTIONS
ELUCIDIATE THE CIRCUMSTANCES IN WHICH A COMPANY CANNOT

BUYBACK ITS OWN SHARES AS PER THE PROVISIONS OF THE
COMPANIES ACT 2013, M/S GROWMORE PHARMA LTD IS PLANNING TO
BUYBACK ITS SHARES DURING THE CURRENT YEAR BUT THE CO.HAS
DEFAULTED IN THE PAYMENT OF TERM LOAN & INTEREST THEREON TO
ITS BANKERS. THE CO. SEEKS YOUR ADVISE AS TO HOW AND WHEN THE
CO. CAN BUYBACK ITS SHARES UNDER THESE CIRCUMSTANCES AS PER
THE PROVISIONS OF THE COMPANIES ACT,2013. (NOV 2014)
QUESTIONS
DJA COMPANY LTD DESIROUS OF BUYING BACK OF ALL ITS EQUITY

SHARES FROM THE EXISTING SHAREHOLDERS OF THE COMPANY, SEEKS
YOUR ADVISE. EXAMINING THE PROVISIONS OF THE COMPANIES
ACT,2013 ADVISE WHETHER THE ABOVE BUYBACK OF EQUITY SHARES
BY THE CO. IS POSSIBLE. ALSO STATE THE SOURCES OUT OF WHICH
BUYBACK OS AHRES CAN BE FINANCED. (MAY 2008)
QUESTIONS
THE BOD OF XYZ PRIVATE LTD , A SUBSIDIARY OF SRN LIMITED, DECIDED TO GRANT
A LOAN OF RS.2.00 LAKH TO P, THE FINANCE MANAGER OF THE COMPANY GETTING
SALARY OF RS,30,000 PER MONTH TO BUY 400 PARTLY PAID UP EQUITY SHARE OF
RS.1000 EACH OF XYZ LTD .
EXAMINE THE VALIDITY OD BOARD’S DECISION WITH REFERENCE TO PROVISIONS
OF THE COMPANIES ACT,2013 (NOV 2010)
QUESTIONS
XYZ Company Limited At A General Meeting Of Members Of The Company Passed
Ordinary Resolution To Buy Back 30% Of Its Equity Share Capital. The Articles Of The
Company And Empower The Company For Buyback Of Equity Shares. The Company
Further Decides That The Payment For Buyback Be Made Out Of The Proceeds Of
The Companies Earlier Issue Of Equity Shares.
Explaining The Provisions Of The Companies Act 2013 And Stating The Sources
Through Which The Buyback Of Companies On Share Be Executed.
• Whether Companies Proposal Is In Order ?
• Will Your Answer We Still The Same Interest The Company Instead Of 30% Decide
To Buy Back Only 20% Of Equity Share Capital? ( Nov 2016)
QUESTIONS
ABC Company Limited Is Holding 46% Of Total Equity Shares In SBS Company Limited
The Board Of Directors Of SBS Company Limited Incorporated On January 1st 2014
Decided To Raise The Share Capital By Issuing For The Equity Shares.
The Board Of Directors Resolved Not To Offer Any Shares To Abc Company Limited
On The Ground That It Was Already Holding A High Percentage Of The Total Number
Of Shares Already Issued In SBS Company Limited.
The Articles Of Association Of SBS Company Limited Provide That The New Shares
Be Offered To The Existing Shareholders Of The Company On March 1st 2014 New
Shares Were Offered To All The Shareholders Except ABC Company Limited.
Referring To The Provisions Of The Companies Act 2013 Exam In The Validity Of The
Decision Of The Board Of Directors Of SBS Company Limited Of Not Offering Any For
The Shares To Abc Company Limited (May 2017)
QUESTIONS
MN Limited Is Engaged In The Manufacture Of Consumer Goods And Has Got A
Good Brand Value Over The Years It Has Built A Good Reputation And Its Balance
Sheet As At March 31st 2017 Shows The Following Position-
Authorised Capital
(25,00,000 Equity Shares Of Face Value Of Rupees 10 Each )- Rs. 2,50,00,000)
Issued subscribed and paid up capital
(10,00,000 Equity Shares Of Face Value Of Rs. 10 Each , Fully Paid Up) - 1,00,00,000
free Reserves Rs 3,00,00,000
The Board Of Directors Are Proposing To Declare A Bonus Issue Of One Share For
Every Two Shares Held By The Existing Shareholders The Board Wants To Know The
Conditions And The Manner Of Issuing Bonus Shares Under The Provisions Of The
Companies Act 2013 Advice (Nov 2017)
QUESTIONS
A Limited Has An Authorised Share Capital Of 10 Lakh Equity Shares Of

The Face Value Of Rs. 100 Each Some Of The Shareholders Express Their
Opinion In The Annual General Meeting That It Is Very Difficult For
Them To Trade In The Shares Of The Company In The Share Market And
Requested The Company To Reduce The Face Value Of A Share To
Rupees 10 And Increase The Number Of Shares To 1 Crore.
Examine Whether The Request Of The Shareholder Is Possible And It's
So How The Company Can Alter Its Share Capital As Per The Provisions
Of The Companies Act 2013 (Nov 2017)
QUESTIONS
Shyam Dairy Limited A Dairy Products Manufacturing Company Wants

To Set Up A New Processing Unit At Jaipur . Due To Paucity Of Funds
The Existing Shareholders Are Not Willing To Fund For Expansion And
The Company Approach Xyz Limited For Subscribing To The Shares Of
The Company For Expansion.
Can Shyam Dairy Limited Issue Shares Only To Xyz Limited Under The
Provisions Of The Companies Act 2013?
If So, State The Conditions ( 2017 Nov)
QUESTIONS
Xgen Ltd Has A Paid-up Equity Capital And Free Reserves To The Extent
Of 50,00,000 The Company Is Planning To Buy Back Shares To The
Extent Of 450000 .
The Company Approaches Used For Advice With Regard To The
Following –
Is Special Resolution Required To Be Passed ?
What Is The Time Limit For Completion Of Buyback ?
What Should Be The Ratio Of Aggregate That's To The Paid Up Capital
And Free Reserves After Buyback? (May 2018)
QUESTIONS
London Limited At A General Meeting Of Members Of The Company Past And
Ordinary Resolution To Buy Back 30% Of Its Equity Share Capital .
The Articles Of The Company Empower The Company For Buyback Of Shares Explain
The Provisions Of The Companies Act 2013 Examine-
1)whether Companies Proposal Is An Order
2)would Your Answer Be Still The Same In Case The Company Instead Of 30% Decide
To Buy Back Only 20% Of Its Equity Share Capital (Jan 2021)
QUESTIONS
The BOD Of Rajesh Exports Limited A Subsidiary Of Manish Limited

Decide To Grant A Loan Of Rupees 302006 Manager Of Manish Limited
Getting Salary Of 40,000 For Month To Buy 500 Partly Paid Up Equity
Shares Of Rupees 2008 Of Rajesh Export Limited.
Examine The Validity Of Board's Decision With Reference To The
Provisions Of The Companies Act 2013. ( Jan 2021)
QUESTIONS
Earth Limited Public Company Of The New Sales For The Issue Of Shares
To Person Other Than The Existing Shadow Days Of The Company
Explain The Conditions When Shares Can Be Issued And To Persons
Others Than Existing Shareholders .
Discuss Whether This Shares Can Be Offered To The Preference
Shareholders( Rtp)
MULTIPLE CHOICE QUESTIONS
SHARES & DEBENTURES ARE JOINTLY REFFERED AS -
A)SHARE CAPITAL
B)SECURITIES
C)BONUS SHARES
D)DIVIDEND
SHARES DEPICT IN A COMPANY-
A.NO RISK AND REWARD)
B)RETURN ON INVESTMENT
C)ONWERSHIP INTEREST WITH ENTREPRENEURIAL RISK

& REWARDS
D)VOTING RIGHTS
DEBENTURES DEPICTS IN A COMPANY
A)LENDER IS INTEREST WITH LIMITED RISKA &

A)REWARDS
B)ENTREPRENEURIAL RISK AND REWARDS
C)OWNERSHIP INTEREST WITH UNLIMITED RISK AND

C)REWARDS
D)NO. OF EQUITY SHARES AND PREFRENCE SHARES

SHARES AND DEBENTURES ARE PRESENTED ON THE
A)ASSET SIDE OF THE ISSUER CO. & LIBAILITY SIDE OF

THE LENDER
B)LIABILITY SIDE OF THE ISSUER CO. & ASSET SIDE OF

THE LENDER
C)ASSET SIDE OF THE ISSUER CO. & ASSET SIDE OF

THE LENDER
D)LIABILITY SIDE OF THE ISSUER CO. & LIABILITY SIDE

OF THE LENDER
LEGAL PROVISIONS RELATED TO THESE INSTRUMENTS ARE COVERED IN-
A) CHAPTER IV OF THE COMPANIES ACT 2013
B)CHAPTER IV OF THE COMPANIES ACT 1956
C)CHAPTER VI OF THE COMPANIES ACT 1956
D)CHAPTER V OF THE COMPANIES ACT 2013

ACCORDING TO ___ BROADELY, THERE ARE TWO KINDS OF SHARE CAPITAL OF A
COMPANY LIMITED BY SHARES-
A) SECTION 51
B)SECTION 49
C)SECTION 43
D)SECTION 30
PREFERENCE SHARE CAPITAL HAVE
A) PREFERNTIAL RIGHTS
B)VOTING RIGHTS
C) DIFFERENTIAL RIGHTS
D)HUMAN RIGHTS
THE _______ OF A COMPANY, AUTHORISES THE ISSUE OF SHARES WITH
DIFFERENTIAL RIGHTS AT A ___ OF SHAREHOLDERS
A)AOA, GENERAL MEETING
B)MOA, AGM
C)CERTIFICATE OF INCORPORATION, EGM
D)MEMORANDUM OF UNDERSTANDING, GENERAK

MEETING
THE SHARES WITH DIFFERENTIAL VOTING RIGHTS SHALL NOT EXCEED __ PERCENT
OF THE TOTAL POST ISSUE PAID UP EQUITY SHARE CAPITAL
A) 25%
B)27%
C) 25%
D)26%
ACCORDING TO __ WHERE A CO. ISSUES EQUITY SHARES WITH DIFFERENTIAL
RIGHTS , THE REGISTER OF MEMBERS ARE MAINTAINED UNDER
A) RULE 4(7), SECTION 87
B)RULE 4(6), SECTION 88
C)RULE 4(6), SECTION 87
D)RULE 4(7), SECTION 88

PHYSICAL ENTITLEMENT TO A PARTICULAR PORTION OF SHARE CAPITAL IS ___
EVIDENCED BY WAY OF A SHARE CERTIFICATE
A) PRIMA FACIE
B)UNCLEAR
C)BONAFIDE
D)MALAFIDE
NOWADAYS, MOST OF THE LOSTED SHARES ARE HELD IN
A) MANUAL FORMAT
B)DIGITAL FORMAT
C)OPEN SOURCE FORMAT
D)ELECTRONIC FORMAT
AT PRESENT, THERE ARE ___ DEPOSITORIES IN INDIA
A) 2
B)3
C)4
D)5
_______ ARE HELD BY INVESTORS IN THEIR RESPECTIVE ACCOUNTS WITH THE DP
A) PHYSICAL SECURITIES
B)DEMATERIALISED SECURITIES
C)DERIVATIVE SECUIRITIES
D)DEBT SECURITIES
____ GOVERNS THE VOTING RIGHTS OF MEMBERS
A) SECTION 47
B)SECTION 48
C)SECTION 49
D)SECTION 50
VOTING RIGHT OF MEMBERS HOLDING PREFERNCE SHARE CAPITAL ON A POLL
SHALL BE IN PROPORTION TO HIS SHARE IN THE
A) PAID UP PREFERENCE SHARE CAPITAL OF THE CO.
B)PAID UP EQUITY SHARE CAPITAL OF THE CO.
C) BOTH (A) & (B)
D)NONE
VOTING RIGHTS FOR SECURITIES ARE BASED ON-
A) CLASS OF SHARES
B)THE MONETORY VALUE OF INVESTMENT AT FACE

VALUE
C)BOTH (A) & (B)
D)ONE PERSON ONE VOTE

THE CO. SHALL WITHIN ____ DAYS OF THE DATE OF ORDER OF THE TRIBUNAL , FILE
C OPY THEREOF WITH THE REGISTRAR
A) 30
B)40
C)28
D)23
CALLS ARE MADE BY CO. ON SECURITY HOLDERS TO PAY THE AMOUNT CALLED
UP IN RESPECT OF -
A) PARTLY PAID UP SECURITIES
B)PAID UP SHARES
C)BOTH (A) & (B)
D)UNPAID SHARES
AS PER SECTION ___ THESE CALLS HAVE TO BE UNIFORMLY MADE AND THERE
SHOULD BE NO DIFFERENTIATION FOR A GIVEN CLASS OF SECURITY HOLDERS
A) 50
B)49
C)51
D)48
AS PER SECTION ____ IF AUTHORISED BY THE ARTICLES , A CO. CAN KEEP
ADVANCE SUBSCRIPTION OR CALL MONEY RECEIVED IN ADVANCE
A) 51
B)49
C)50
D)52
AS PER SECTION___ THE CO. COULD PROPORTIONATE DIVIDENDS IN
PROPORTION TO AMOUNT PAID ON EACH SHARE
A) 51
B)50
C)49
D)52
WHEN A SECURITY OF A GIVEN FACE VALUE IS ISSUED AT A PRICE __THAN TO ITS
FACE VALUE, THE ISSUE IS CALLED AS PREMIUM
A) HIGHER
B)LOWER
C)EQUAL
D)BELOW
WHERE THE ISSUE PRICE IS ___ TO THE FACE VALUE , THE ISSUE IS REGARDED AS
DISCOUNT
A) LOWER
B)HIGHER
C)ABOVE
D)EQUAL
ACCORDING TO SECTION ___ A COMPANY SHALL NOT ISSUE SHARES AT DISCOUNT, EXCEPT IN
THE CASE OF AN ISSUE OF SWEAT EQUITY SHARES GIVEN UNDER SECTION ___ OF THE
COMPANIE ACT,2013
A) 53,54
B)54,53
C)52,53
D)54,55
EMPLOYEE MEANS
A) A PERMANENT EMPLOYEE OF THE CO. WHO HAS

BEEN WORKING IN INDIA OR OUTSIDE INDIA
B) A DIRECTOR OF THE CO. WHETHER A WHOLE TIME

DIRECTOR OR NOT.
C)BOTH (A) AND (B)
D)NEITHER (A) AND (B)

____ OF THE COMPANIEST ACT,2013 SEALS WITH THE TRANSFER AND TRANSMISSION OF
SECURITIES OF A MEMBER IN THE COMPANY
A) SECTION 56
B)SECTION 59
C)SECTION 58
D)SECTION 57
WHERE ANY DEPOSITORY PARTICIPANT WITH AN INSTRUCTION TO DEFRAUD A PERSON HAS
TRASNSFERRED SHARES, IT SHALL BE LIABLE UNDER ___ OF THE COMPANIES ACT, 2013 WITH
THE LIABILITY MENTIONED UNDER THE
A) SECTION 447. DEPOSITORIES AT 1996
B)SECTION 448. DEPOSITORIES AT 1996
C)SECTION 446. DEPOSITORIES AT 1956
D)SECTION 447. DEPOSITORIES AT 1956

__ OF THE COMPANIES ACT , 2013 DEALS WITH THE PROCESS OF THE CO. TO BE FOLLOWED BY ON
REFUSAL TO REGISTER THE TRANSFER OF SECURITIES
A) SECTION 56
B)SECTION 57
C)SECTION 59
D)SECTION 58
___ OF THE COMPANIES ACT . 2013 PROVIDES THE PROCEDURE FOR THE RECTIFICATION OF
REGISTER OF MEMBERS AFTER THE TRANSFER OF SECURITIES
A) SECTION 58
B)SECTION 56
C)SECTION 59
D)SECTION 57
ACCORDING TO ____ AUTHORISED CAPITAL “NOMINAL CAPITAL” MEANS SUCH CAPITAL AS IS
AUTHORISED BY THE MEMORANDUM OF COMPANY TO BE THE MAXIMUM AMOUNT OF SHARE
CAPITAL OF THE CO.
A) SEC 2 (8)
B)SEC 2 (64)
C)SEC 2 (86)
D)SEC 2 (7)
___ DEFINED “PAID UP SHARE CAPITAL” MEANS SUCH AGGREGATE AMOUNT OF MONEY
CREDITED AS PAID UP AS IS EQUIVALENT TO THE AMOUNT RECEIVED AS PAID UP IN RESPECT
OF SHARES ISSUED-
A) SECTION 2(8)
B)SECTION 2(64)
C)SECTION 2(86)
D)SECTION 2(15)
ACCORDING TO ___ “SUBSCRIBED CAPITAL” MEANS SUCH PART OF THE CAPITAL WHICH IS FOR
THE TIME BEING SUBSCRIBED BY THE MEMBERS OF A COMPANY
A) SECTION 2(64)
B)SECTION 2(86)
C)SECTION 2(15)
D)SECTION 2(8)
____ STATES THAT CALLE UP CAPITAL MEANS SUCH PART OF THE CAPITAL, WHICH HAS BEEN
CALLED FOR PAYMENT
A) SECTION 2(15)
B)SECTION 2(64)
C)SECTION 2(86)
D)SECTION 2(8)
ACCORDING TO ___ OF THE COMPANIES ACT,2013 A LIMITED CO. HAVING A SHARE CAPITAL
MAY ALTER ITS CAPITAL PART IN MOA
A) SECTION 61
B)SECTION 62
C)SECTION 63
D)SECTION 64
SECTION 63 SAYS THAT A CO. MAY ISSUE FULLY PAID UOP BONUS SHARES TO ITS MEMBERS IN
MANNER OF-
A) ITS FREE RESERVES
B)THE SECURITIES PREMIUM ACCOUNT
C)THE CAPITAL REDEMPTION RESERVE A\C
D) ALL THE ABOVE

___ OF THE COMPANIES ACT,2013 PROVIDES THE POWER OF A COMPANY TO PURCHASE ITS OWN
SECURITIES SUBJECT TO CERTAIN CONDITIONS-
A) SECTION 68
B)SECTION 67
C)SECTION 66
D)SECTION 65
COMPANIES
ELIGIBLE PUBLIC
COMPANY
NON-GOVT
CO.
GOVT CO.
A) DESPOSIT
FROM MEMBERS 10%
A+B=
B)
DESPOSIT FROM 25% 35%
OUTSIDERS
COMPANIES
PUBLIC COMPANY PRIVATE COMPANY
A) DESPOSIT
FROM MEMBERS
35% 100%
B)
DESPOSIT FROM 0% 0%
OUTSIDERS
COMPANIES
IFSC PUBLIC CO. STARTUP PVT CO.
A) DESPOSIT UNLIMITED
FROM MEMBERS 100%
B)
DESPOSIT FROM 0% 0%
OUTSIDERS
COMPANIES
PVT CO. SATISFYING ALL 3 CONDITIONS:-
ITS NEITHER A SUBSIDIARY NOR AN ASSOCIATE CO.
LOAN O/S FROM BANK, FINANCIAL INSTITUTIONS , BODY CORPORATE

IS LESS THAN 2 TIMES OF PUSC OR 50 CRORE , WHICHEVER IS LESS
NO DEFAULT IN SUCH LOAN
A) DESPOSIT
FROM MEMBERS UNLIMITED
B)
DESPOSIT FROM 0%
OUTSIDERS
All the above % are calculated on
(PUSC + FR + SP)
AS PER SECTION 73(1) NO COMPANY CAN
ACCEPT DEPOSITS FROM PUBLIC EXCEPT
ELIGIBLE PUBLIC CO. U/S 76
ELIGIBLE PUBLIC CO. HAS BEEN DEFINED U/S 76 TO
MEAN A PUBLIC CO. WHICH HAS
NET WORTH OR TURNOVER MIN

MIN 100 CRORE 500 CRORE
ELIGIBLE PUBLIC CO. CAN ACCEP DEPOSITS FROM
PUBLIC (OUTSIDERS) U/S 76 BY
•Passing SR In Gm
•However, If
Present Borrowing + Proposed Borrowing < =
PUSC + FR + SP
Then Instead Of SR In Gm, Pass OR In Gm
•Obtain Credit Rating From A Credit Rating
Agency.
SEC 73(1) SHALL NOT APPLY ON
BANKING CO.
NBFC
HOUSING FINANCE CO.
SUCH OTHER CLASS OF COMPANIES PRESCRIBED

BY CG IN CONSULTATION WITH RBI
AS PER SEC 73(2) ANY CO. CAN ACCEPT DEPSOITS FROM
ITS MEMBERS BY COMPLYING CLAUSES
(a) TO (f)
a) CO. shall circulate to its members a

circular of deposit in form DPT-1
containing details of latest financial
position of co. , total no. of deposits and
amount of deposits outstanding
(a) TO (f)
b) Co. shall first submit DPT 1

to ROC & then within 30 days,
circulate to its members
(a) TO (f)
c) Deposit By 30th April Every Year

Min 20% Of Total Deposits Maturing
In The Next Financial Year In A
Separate Schedule Bank A/C Called
Deposit Repayment Reserve
(a) TO (f)
d)Omitted
e) No Default In Repayment Of Deposits

Or Its Interests Or If Co. Had Defaulted
Period Of 5 Years Have Elapsed From The
Date When Such Default Was Remedied
(a) TO (f)
F) Deposits Should Be Fully

Secured & If Not Then Co.
Should Mention It
Everywhere That Deposits
Are Unsecured
EXEMPTION GIVEN TO ALL PRIVATE COMPANIES , IFSC
PUBLIC CO. & STARTUP THAT THEY CAN ACCEPT FROM
MEMBERS WITHOUT COMPLYING
SEC 73(2) (a) TO (e) WHICH MEANS THEY HAVE TO
COMPLY ONLY SEC 73 (2) (f)
SEC 73(3)
CO. SHALL PAY INTEREST ON DEPOSITS

TIMELY & REPAY THE DEPOSITS ON ITS
MATURITY
SEC 73(4)
IF CO. FAILS TO PAY INTEREST TIMELY OR

REPAY DEPOSITS ON MATURITY THEN ANY
DEPOSIT HOLDER CAN APPLY TO NCLT FOR
NECESSARY ORDERS.
SEC 73(5)
DEPOSIT REPAYMENT RESERVE AMOUNT

CANNOT BE USED FOR ANY OTHER
PURPOSE EXCEPT REPAYMENT OF DEPOSITS
WHAT DO YOU MEAN BY DEPOSITS
As Per Sec 2(31) Deposits Includes Any

Amount Of Money Received By Way Of
Deposits Or Loan Or Any Other Form But
Does Not Include Following Categories
Prescribed By Cg In Consultation With RBI-
AMOUNT RECEIVED FROM CG,SG,
LOCAL AUTHORITY OR STATUTORY
CORPORATION OR FROM ANY OTHER
SOURCE BUT GUARANTEED BY
GOVERNMENT
AMOUNT RECEIVED FROM FOREIGN

GOVERNMENT , INTERNATIONAL
AGENCY, FOREIGN BODY
CORPORATE, FOREIGN CITIZENS
LOAN FROM BANKING CO.
LOAN FROM PFI
LOAN FROM OTHER CO.

AMOUNT RECEIVED BY ISSUE OF
COMMERCIAL PAPER
LOAN BY PUBLIC CO. FROM ITS DIRECTOR,

LOAN BY PRIVATE CO. FROM ITS DIRECTOR
OR RELATIVE OF DIRECTOR.
PROVIDED THAT IN ALL THE ABOVE CASES
DIRECTOR/ RELATIVE OF DIRECTOR SHALL
GIVE LOAN BY THEM IS OUT OF SELF
GENERATE FUNDS & NOT BORROWED
FUNDS.
AMOUNT RECEIVED BY ISSUE
OF SECURITIES PROVIDED
THAT ALLOTMENT IS MADE
WITHIN 60 DAYS OF RECEIPT
OF MONEY & IF ALLOTMENT
COULD NOT BE MADE THEN
REFUND WITHIN 15 DAYS
FROM EXPIRY OF 60 DAYS
SECURED DEBENTURES

CONVERTIBLE DEBENTURES OF 10 YEARS
UNSECURED NON-CONVERTIBLE
DEBENTURES BUT LISTED ON
REGULATED STOCK EXCHANGE
AMOUNT RECEIVED IN ORDINARY COURSE
OF BUSINESS AS ADVANCE FOR
GOODS SERVICES
SUPPLY SHOULD BE SHOULD BE PROVIDED

MADE WITHIN 365 WITHIN 5 YEARS OF
DAYS AS PER CUSTOM OF
INDUSTRY
WHICHEVER IS LESS.
AMOUNT RECEIVED FROM EES AS SECURITY DEPOSIT BUT NOT
EXCEEDING HIS ANNUAL SALARY & IT SHOULD BE NON-INTEREST
BEARING SECURITY DEPOSIT
AMOUNT RECEIVED AS A TRUSTEE
AMOUNT RECEIVED FROM CIS
AMOUNT RECEIVED FROM ALTERNATIVE INVESTMENT SCHEME
AMOUNT RECEIVED BY NIDHI CO. FROM MEMBERS
AMOUNT RECEIVED BY STARTUP CO. BY ISSUE OF

CONVERTIBLE NOTES OF 25 LAKHS OR MORE & WILL BE
CONVERTED INTO EQUITY SHARES WITHIN 10 YEARS
AMOUNT RECEIVED BY CHIT FUND CO.

SEC 74
COMPANIES WHICH ACCEPTED DEPOSITS BEFORE THE
COMMENCEMENT OF THIS ACT & IS STILL O/S:-
As Per Sec 74(1) They Shall Submit As per sec 74(2)

Form DPT-4 To Roc Within 3 if It Is Unable To
Months Of 1.4.14 Informing Repay Deposits
Details Of O/S Deposits And Shall Within Time Allowed
Repay The Amount Within 3 Years U/S 74(1) Then It Can
From 1.4.14 Or Due Date Or Apply For Extention To
Deposits, Whichever Is Earlier NCLT
SEC 74
AS PER SEC 74(4) IF CO. FAILS TO REPAY DEPOSITS WITHIN TIME
ALLOWED UNDER SEC 74(1) OR EXTENDED TIME UNDER 74(2) IF
ANY THEN-
OFFICER IN
COMPANY
DEFAULT
FINE FINE
MIN- 25 LAC
MAX- 2 CRORE
MIN- 1 CRORE
OR
MAX- 10 CRORE 7 YEARS IMPRISONMENT
OR BOTH
SEC 75
IF CONTRAVENTION OF SEC 74 IS
INTENTIONAL , KNOWINGLY TO DEFARUD
CO. OR CREDITORS OR SHAREHOLDES OR
TAX AUTHORITIES THEN EVERY OFFICER IN
DEFAULT SHALL BE LIABLE TO FRAUD U/S
447
SEC 76 A
IF A COMPANY CONTRAVENES PROVISIONS SEC 73 OR SEC
76 OR ITS RULES THEN
COMPANY OFFICER IN
DEFAULT
1 CRORE
OR 25 LAKH
MIN FINE 2 TIMES OF DEPOSITS
WHICHEVER IS LOWER
2 CRORE
AND
MAX FINE 10 CRORE UPTO 7 YEARS
IMPRISONMENT
IF CONTRAVENTION WAS
INTENTIONAL OR TO DEFRAUD CO.
OR CREDITORS OR SHAREHOLDES OR
TAX AUTHORITIES
THEN EVERY OFFICER IN DEFAULT
SHALL BE LIABLE FOR FRAUD U/S 447
WHAT IS THE MINIMUM & MAXIMUM
TENURE OF DEPOSITS
As Per Rule 3 Of The Companies (Acceptance

Of Deposits) Rules 2014, Min Tenure Of
Deposits Shall Be 6 Months & Max Tenure 36
Months
WHAT IS THE MINIMUM & MAXIMUM
TENURE OF DEPOSITS
A co. can accept deposits for less than 6

months but not less than 3 months an
amount of maximum 10% (PUSC + FR + SP)
QUESTIONS
Define the term 'deposits' and list out the receipts

of money which are not considered as
deposits.(2016 - Dec)
QUESTIONS
Prism Ltd. has accepted Rs 10 lakhs as advance towards the supply
of goods to certain parties. As per the agreement, the company will
supply the goods after 2 years from the date of deposit.
Later on, internal auditors qualified the report on the ground that
the company has violated the provisions of the Companies Act
2013. Directors explained that this is required to complete the
order. Examining the relevant provisions of the Companies Act
2013 state whether the explanation given by the directors is
justified.
(2016 - June)
QUESTIONS
Define the term 'deposit' under the provisions of the Companies Act 2013 and a
comment with relevant provisions that the following amount received by a
company will be considered as deposit or not.
(i) Rs 5,00,000 raised by Rishi Ltd. through issue of non convertible debenture
not constituting a charge on the assets of the company and listed on a
recognised stock exchange as per applicable regulations made by Securities and
Exchange Board of India.
(ii) Rs 2,00,000 received from Mr. T, an employee of the company who is
drawing annual salary of Rs 1,50,000 under a contract of employment with the
company in the nature of non interest bearing security deposit.
(iii) Amount of Rs 3,00,000 received by a private company from relative of a
Director, declared by the depositor as out of gift received from his mother.
(2019 - Nov)
QUESTIONS
Comment on the following:
Certain companies are exempted from the

provisions of Sec. 73 of the Companies Act,
2013.
(2007- Dec)
QUESTIONS
Comment on the following:
Provisions of 73(1) are not applicable to

guarantee companies and Section 8
companies (i.e. associations not for profit)
(2009 - June)
QUESTIONS
State the procedure to be followed by

companies to accept deposits from it's
members according to the Companies Act,
2013.
What are the exemptions available to
Private Limited Companies ?(2018- Nov)
QUESTIONS
Referring to the provisions of the Companies Act 2013

examine the validity of the following:
Safari Limited having a net worth of Rs 130 crore wants
to accept deposits from its members. It has approached
you to advise whether it falls within the category of an
eligible company?
What special care has to be taken while accepting such
deposits from members? (2021 - Jan)
QUESTIONS
RS Ltd. Received share application money of Rs 50 lakh on 01.06.2019 but failed
to allot shares within the prescribed time limit.
Dussehra application money of Rs 5 lakh received from Mr Khanna customer of
the company was refunded by way of book adjustment towards the dues
payable by him to the company on 30.07.2019.
The Company Secretary of RS Ltd, reported to the Board that the entire amount
of Rs 50 lakh shall be deemed to be 'Deposits' as on 31.07.2019 and the
Company is required to comply with the provisions of the Companies Act, 2013
applicable to acceptance of deposits in relation to this amount.
You are required to examine the validity of the reporting of the Company
Secretary in the light of the relevant provisions of the Companies Act, 2013.
(2021 - Jan)
QUESTIONS
Shine Well Ltd has accepted deposits from the public

under the Companies(Acceptance of Deposits) Rules,
2014.
The company has now decided to repay some of it's
deposits before maturity.
Can the company do so?
If yes, what are the conditions attached thereto? (2011 -
June)
QUESTIONS
Board of directors of Green Field Ltd decides

to accept deposits from the public at a
compound interest rate of 12% per annum.
Examining the provisions of the Companies
Act, 2013, advise whether the Board can go
ahead with it's proposal.(2016 - June)
QUESTIONS
Atul Limited has passed a resolution in its
general meeting regarding accepting
deposits from its members. Can this
company accept deposits from its member
under the Companies Act 2013 ?
If yes, state the conditions to be fulfilled
regarding this. (2016 - May)
QUESTIONS
ABC Ltd having a net worth of Rs 80 crores and

turnover of Rs 30 crores wants to accept deposits
from public other than its members. Referring to
the provisions of the Companies Act 2013, state
the conditions and the procedures to be followed
by ABC Ltd for accepting deposits from public
other than its members. (2017 - Nov)
QUESTIONS
State with reasons whether the following statements are True or
False?
(i) ABC Private Limited may accept the deposits from its members
to the extent of Rs 50 lakh, if the aggregate of its paid up
capital, free reserves and securities premium account is Rs 50
lakh.
(ii) A Government Company which is eligible to accept deposits

under section 76 of the Companies Act 2013 cannot accept
deposits from public exceeding 25% of the aggregate of its paid
up capital, free reserves and securities premium account.
(2019 - May)
QUESTIONS
Suresh, a member of Ruchi Ltd, wants to inspect the register of

deposits maintained by the company as required under the
provisions of the Companies Act 2013. The company refused to
provide the register for inspection without assigning any reason.
Referring to the provisions of the Act, examine the validity of the
company's refusal. What shall be your answer if the same register
is demanded by the statutory auditors of the company for
inspection and for their audit? (2016 - Dec)
QUESTIONS
Viki Limited Engaged In The Business Of Consumer Durables. It Is Managed By A Team Of Professional
Managers. The Company Has Not Made Default In Payment Of Statutory Dues, And Repayment Of
Debenture/Institutional Loan With Interest. The Company Advertise A Circular In The Newspaper Dated
20th September 2020 Inviting The Deposits From The Members And Public For The First Time. The Latest
Audited Financial Statement Of The Company Revealed The Following Date, As On 31.3.2020
Paid Up Share Capital Rs 70 Crore
Securities Premium Rs 20 Crore
Free Reserves Rs 20 Crore
Long Term Borrowing Rs 50 Crore
The Co. In Its Advertisement Invited Public Deposit For A Period Of Months Plan A And Plan B For 36
Months-
I. Explain The Term “Eligible Company” And Calculate The Max Amount Of Deposits That Can Be
Accepted From Public (Non-member) For Plan A And Plan B Based On Latest Audited Financial
Statement Under The Provisions Of The Companies Act,2013.
II. Calculate The Max Amount Of Deposit Viki Limited Can Accept From The Public Under Plan A And
Plan B In Case It Is A Wholly Owned Government Company Under The Provisions Of The Said Act.
(NOV 2020)
DEPOSITS FROM THE ___ ARE AN IMPORTANT MODE OF FINANCE IN
THE CORPORATE SECTOR
A) BANKING INSTITUTIONS
B) PUBLIC
C) EMPLOYEES
D) GOVERNMENT
DEPOSITS ARE NECESSARY TO BE CONTRIBUTED BY THE CO. IN
ORDER TO --
A) TO KEEP A CHECK ON EVERY DEPOSITS MADE
B) TO INCREASE THE WILL OF DEPOSITS
C) TO SAFEGUARD THE GENERAL AND WIDER INTEREST OF PUBLIC AT

LARGE
D) TO ENSURE THE SECURITY OF EMPLOYEES

ACCORDING TO THE DEFINITION GIVEN UNDER SECTION 2(31) OF
THE COMPANIEA ACT, 2013, DEPOSITS INCLUDE-
A) ANY RECEIPTS OF MONEY BY WAY OF DEPOSITS OR LOAN OR IN ANY

OTHER FORM BY A COMPANY
B) IT ONLY INLCUDES RECEIPTS OF MONEY
C) ONLY BY WAY OF LOAN. NO OTHER FORM
D) NONE OF THE ABOVE

DEPOSITS DOES NOT INCLUDE-
A) AMOUNT PRESCIBED BY THE CG
B) AMOUNT PRESCIBED BY COMPANY
C)AMOUNT PRESCIBED IN CONSULTATION WITH THE RBI
D) (A) AND (C)

ACCORDING TO THE COMPANIES (ACCEPTANCE OF DEPOSITS) RULES,
2014 WHICH AMOUNT IS NOT CONSIDERED AS DEPOSITS-
A) AMOUNT RECEIVED FROM FOREIGN GOVERNMENT
B)) AMOUNT RECEIVED FROM INTERNATIONAL BANK
C)) AMOUNT RECEIVED FROM MULTILATERAL FINANCIAL INSTITUTIONS
D)ALL OF THE ABOVE

AN AMOUNT ___ OR MORE RECEIVED BY A START UP COMPANY , BY
WAY OF A CONVERTIBLE NOTE IS NOT INCLUDED IN DEPOSITS
A) 10 LAKH OR MORE
B) 30 LKAH OR MORE
C)25 LAKH OR MORE
D)50 LAKH OR MORE

AN INSTRUMENT EVIDENCING RECEIPTS OF MONEY INITIALLY AS A
DEBT WHICH IS REPAYABLE AT THE OPTION OF HOLDER IS
CALLED-
A) TREASURY NOTE
B)CONVERTIBLE NOTE
C)PROMISSIORY NOTE
D) UN-SECURED NOTE
AN ELIGIBLE CO. AS PER SECTION 76 ACCEPTING DEPOSITS WITHIN
THE LIMITS SPECIFIED UNDER SEC 180(1)(C) MAY ACCEPT
DEPOSITS BY MEANS OF-
A) ORDINARY RESOLUTION
B)UNANIMOUS RESOLUTION
C)SPECIAL RESOLUTION
D) SPECIAL RESOLUTION & APPROVAL OF CENTRAL GOVERNMENT

MEMBER OF COMPANY WHO HAS MADE DEPOSITS WITH COMPANY
IN ACCORDANCE WITH PROVISION OF SUB SECTION ( 2) OF
SECTION 73 OF ACT IS A -
A) SHAREHOLDER
B)FINANCE
C)DEPOSITOR
D)EMPLOYEE
COMPANIES THAT ARE EXEMPTED IN RESPECT TO ACCEPTANCE OR
RENEWAL OF DEPSOIT FROM PUBLC ARE-
A) BANKING COMPANY
B) NON-BANKING COMPANY
C)HOUSING FINANCE COMPANY
D) ALL OF THE ABOVE

AMOUNT OF DEPOSITS WHICH SHALL NOT BE LESS THAN 15% OF THE AMOUNT OF
ITS DEPOSITS MATURING DURING FINANCIAL YEAR IS KEPT IN A SCHEDULED
BANK IN SEPARATE ACCOUNT IS CALLED
A) DEPOSITORY ACCOUNT
B)SAVING ACCOUNT
C)DEPOSIT REPAYMENT RESERVE ACCOUNT
D)NONE OF THE ABOVE

A RESERVE ACCOUNT THAT CAN NOT BE USED BY THE COMPANY
OTHER THAN FOR REPAYMENT OF DEPOSITS-
A) DEBENTURE REDEMPTION RESERVE
B) DEPOSIT REPAYMENT RESERVE
C) CAPITAL RESERVE
D)REVENUE RESERVE
NO COMPANY SHALL ACCEPT OR RENEW ANY DEPOSIT WHICH IS
REPAYABLE ON DEMAND OR UPON RECEIVING NOTICE WITHIN
__ PERIOD OF TIME-
A) 9 MONTH AND MORE
B)3 MONTH
C)LESS THAN 6 MONTH OR MORE THAN 36 MONTH
D)1 MONTH
WHERE DEPOSITOR SO DESIRE, DEPOSITS MAY BE ACCEPTED IN
JOINTS NAMES NOT EXCEEDING-
A) 2
B)6
C)3
D)7
NO DEPOSITS ARE REPAYABLE EARLIER THAN __ FROM THE DATE OF
SUCH DEPOSITS OR RENEWAL THEREFORE
A) 6M
B)1M
C)12M
D)3M
EVERY CO. SHALL PAY A PENAL RATE OF INTEREST ___ FOR THE
OVERDUE PERIOD IN CASE OF DEPOSITS, WHETHER SECURED OR
UNSECURED, MATURED BUT CLAIMED BUT REMAINING UNPAID.
A) 9% p.a
B) 12% p.a
C)17% p.a
D)18% p.a
REPAYMENT OF DEPOSITS FALLS UNDER WHICH SECTION-
A) SECTION 70
B)SECTION 74
C)SECTION 73
D)SECTION 71
IF COMPANY FAILS TO REPAY THE DEPOSITS OR PART OR ANY INTEREST WITHIN
TIME SPEICIFIED IN SUB SECTION (1) OR TRIBUNAL SUB SECTION (2) , CO.
SHALL PAY __ AMOUNT OF FINE WITH THE AMOUNT OF DEPOSIT , PART OR
INTEREST
A) 10 LAKH
B)NOT LESS THAN 1 CRORE BUT CAN EXTEND UPTO 10 CRORE
C) 5 CRORE
D)50 LAKH
A COMPANY SHALL REPAY WITHIN __ FROM SUCH COMMENCEMENT
OR FROM THE DATE ON WHICH SUCH REPAYMENT PAYMENTS
ARE DUE, WHICHEVER IS EARLIER -
A) ONE YEAR
B) 6 MONTHS
C)3 MONTHS
D)2 MONTHS
IF COMPANY FAILS TO REPAY DEPOSITS UNDER SEC 74 WITHIN TIME SPECIFIED OR
SUCH FURTHER TIME ALLOWED BY TRIBUNAL SECTION AND IS PROVIDED
THAT DEPSOIT ARE WITH INTENT TO DEFRAUD DEPOSITORS OR ANY
FRAUDULENT PURPOSE THEN THE PERSON RESPONSIBLE FOR ABOVE IS THE-
A) CHAIRPERSON OF COMPANY
B)SHAREHOLDERS OF COMPANY
C)MANAGING DIRECTOR
D)EVERY OFFICER WHO IS RESPONSIBLE FOR ACCEPTING SUCH

DEPOSITS
COMPANY SHOULD WITHIN __ DAYS OF ACCEPTANCE OF DEPOSITS,
CREATE A CHARGE ON ITS ASSSETS OF AN AMOUNT NOT LESS
THAN THE AMOUNT OF
A) 10
B) 21
C) 30
D) 1
A CO. SHALL BE REQUIRED TO OBTAIN THE RATING INCLUSIVE OF NETWORTH.
LIQUIDITY AND ABILITY TO PAY DUE DATE FROM A __ FOR INFORMING PUBLIC
THE RATING GIVEN TO CO. AT TIME OF INVITATION OF DEPOSITS , WHICH
ENSURES ADEQUATE SAFETY-
A) FROM RBI
B)FROM SHAREHOLDERS
C) FROM A RECOGNISED CREDIT RATING AGENCY
D) FROM EMPLOYEES/ WORKERS

CA CS MOHIT AGARWAL
CHARGE MEANS RIGHT OF A CREDITOR ON THE

ASSET OF COMPANY.
CA CS MOHIT AGARWAL
SEC 77 REGISTRATION OF CHARGE WITH ROC
CHARGE ONCE CREATED ON ANY PROPERTY OR

ASSET OR UNDERTAKING WHETHER IN OR OUTSIDE
INDIA, OF THE COMPANY MUST BE REGISTERED
WITH ROC BY SUBMITTING-
FORM CHG 1
(FOR OTHER THAN FORM CHG 9
DEBENTURE) (FOR DEBENTURE)
CA CS MOHIT AGARWAL
ALONG WITH INSTRUMENT (CONTRACT) CREATING

THE CHARGE WITHIN THE FOLLOWING TIME LIMITS:-
CHARGE CREATED ON OR
AFTER 2.11.18 CHARGE CREATED
(COMMENCEMENT OF THE BEFORE 2.11.18
COMPANIES AMENDMENT
ACT 2019)
CA CS MOHIT AGARWAL
CHARGE CREATED ON OR AFTER 2.11.18

(COMMENCEMENT OF THE COMPANIES
AMENDMENT ACT 2019)
30 DAYS REGISTER
WITH NORMAL FEES
NEXT 30 DAYS
REGISTER WITH
ADDITIONAL FEES
NEXT 60 DAYS
REGISTER WITH
ADVALOREM FEES
CA CS MOHIT AGARWAL
CHARGE CREATED BEFORE 2.11.18
30 DAYS REGISTER
WITH NORMAL FEES
CREATION OF CHARGE 300 DAYS (FROM
CREATION ) REGISTER
WITH ADDITIONAL
FEES
6 MONTHS FROM 2.11.18 ,
WHICHEVER IS LATER
CA CS MOHIT AGARWAL
IF COMPANY FAILS TO REGISTER THE CHARGE

WITHIN 30 DAYS OF CREATION OF CHARGE,
THEN CHARGEHOLDER ALSO GETS AN OPTION

TO REGISTER SUCH CHARGE WITH ROC BY
SUBMITTING CHG-1/9 AS THE CASE MAYBE
ALONG WITH INSTRUMENT CREATING THE
CHARGE ON PAYMENT OF ADDITIONAL FEES OR
ADVALOREM FEES.
CA CS MOHIT AGARWAL
Such Fees Paid By Charge holder Can Be

Recovered By Him From Company.
Co. On Application Made By Charge holder
Before Registering Such Charge Will Issue A Show
Cause Notice To Company Giving 14 Days Time To
Reply Why The Charge Should Not Be Registered.
If No Reply / No Satisfactory Reply Is Received

Roc Shall Register The Charge
CA CS MOHIT AGARWAL
SEC 79- MODIFICATION OF CHARGE

WHENEVER ANY TERMS & CONDITIONS OF LOAN
BETWEEN COMPANY & CHARGEHOLDER GETS CHANGED,
ITS CALLED MODIFICATION OF CHARGE. EXAMPLES:-
CHANGE IN INTEREST RATE

(OTHER THAN BANK OR LOAN INTEREST RATE)
CHANGE IN REPAYMENT SCHEDULE OF LOAN
CHANGE IN TENURE OF LOAN
PARTIAL REPAYMENT OFLOAN

CA CS MOHIT AGARWAL
SEC 79- MODIFICATION OF CHARGE

MODIFICATION OF CHARGE SHALL BE REGISTERED WITH
ROC IN SAME MANNER JUST LIKE CREATION OF CHARGE
WAS REGISTERED U/S 77
ROC SHALL ISSUE
CREATION MODIFICATION OF
OF CHARGE CHARGE
FORM CHG 2 FORM CHG 3

CA CS MOHIT AGARWAL
SEC 86- CONSEQUENCES OF NON

REGISTRATION OF CHARGE
CONTRACT OF CHARGE BECOMES VOID
THE CHARGEHOLDER BECOMES UNSECURED
CONTRACT OF LOAN IS HOWEVER STILL VALID
PENALTY ON CO IS RS. 5 LAKHS ON OFFICER IN

DEFAULT RS.50,000
CA CS MOHIT AGARWAL
SEC 80 :-
ONCE CHARGE IS REGISTERED WITH
ROC, IT’S A DEEMED NOTICE TO
PUBLIC
CA CS MOHIT AGARWAL
SEC 86- CONSEQUENCES OF NON

REGISTRATION OF CHARGE
HOWEVER IF KNOWINGLY THE

CHARGE WAS NOT REGISTERED,
THEN EVERY OFFICER IN DEFAULT
SHALL BE LIABLE FOR FRAUD U/S
447 OF THE COMPANIES ACT 2013.
CA CS MOHIT AGARWAL
SEC 81
ROC SHALL MAINTAIN A REGISTER OF

CHARGES FOR ALL COMPANIES ON MCA’S
WEBSITE
CA CS MOHIT AGARWAL
SEC 82 SATISFACTION OF
CHARGE
Once Co. Repays The Loan Amount Of
Charge holder In Full, The Charge Gets
Satisfied & Co. Will Apply To Roc For
Registration Of Satisfaction Of Charge
Within
30 DAYS OF SATISFACTION IN FULL IN
FORM CHG 4
(FOR IFSC COMPANIES ITS 300 DAYS INSTEAD
OF 30 DAYS)
CA CS MOHIT AGARWAL
CHARGE
IF CO. FAILS TO APPLY WITHIN ABOVE 30 DAYS

THEN IT CAN APPLY WITHIN 300 DAYS FROM
SATISFACTION FOR ITS REGISTRATION TO ROC BY
SUBMITTING
FORM N0. CHG 10.
I.E, REASON OF DEALY & CHG-4 FOR

REGISTRATION OF SATISFACTION
CA CS MOHIT AGARWAL
CHARGE
IF CO. FAILS TO APPLY WITHIN ABOVE 300 DAYS ,

THEN IT CAN APPLY TO CG(RD) FOR ITS
CONDONATION OF DELAY IN FORM CHG-8.
IF CG CONDONES THE DELAY THEN CO. SHALL

SUBMIT INC-28 ALONG WITH CHG-4 TO ROC FOR
REGISTRATION OF SATISFACTION OF CHARGE. (SEC
87)
CA CS MOHIT AGARWAL
SEC 82
SATISFACTION OF CHARGE
FURTHER AS PER SEC 82 ROC ON RECEIVING

APPLICATION FROM CO.
FOR SATISFACTION OF CHARGE,
SHALL CROSS CHECK FROM THE

CHARGEHOLDER ISSUING HIM 14 DAYS
NOTICE TO SHOW THE CAUSE WHY
SATISFACTION SHOULD NOT BE REGSITERED.
CA CS MOHIT AGARWAL
SEC 82
IF PROPER CAUSE IS SHOWN THEN ROC

WILL RECORD SUCH REASONS & NOT
REGISTER SATISFACTION OF CHARGE
CA CS MOHIT AGARWAL
SEC 82
IF NO PROPER CAUSE IS SHOWN THEN ROC WILL

REGISTER THE SATISFACTION & ISSUE A
CERTIFICATE OF SATISFACTION OF CHARGE IN
FORM NO. CHG 5 TO COMPANY.
CA CS MOHIT AGARWAL
SEC 83
ROC ON ITS OWN MOTION CAN REGISTER

THE SATISFACTION OF CHARGE IF IT HAS
RECEIVED EVIDENCE FROM ANYWHERE THAT
THE ASSET IS NOW FREE FROM CHARGE.
ROC SHALL ALSO INFORM THE AFFECTED

PARTIES WITHIN 30 DAYS OF SUCH
REGISTRATION OF SATISFACTION OF CHARGE
CA CS MOHIT AGARWAL
SEC 84
WHENEVER ANY RECEIVER/MANAGER IS

APPOINTED TO MANAGE THE ASSETS ON
WHICH CHARGE EXISTS OR WHENEVER THEY
ARE REMOVED,
SUBMIT CHG-6 TO ROC TO INFORM ABOUT

SUH APPOINTMENT OR REMOVAL
CA CS MOHIT AGARWAL
SEC 85 REGISTER OF CHARGES
CO. SHALL MAINTAIN REGISTER OF CHARGES

AT IS REGISTERED OFFICE IN
FORM NO.CHG – 7.
ENTRY INTO SUCH REGSITER SHALL BE MADE

FORTHWITH (IMMEDIATELY) WHENEVER
CHARGE IS CREATED, MODIFIED, SATISFIED OR
ANY ASSET IS ACQUIRED BY THE
CHARGEHOLDER ON DEFAULT.
CA CS MOHIT AGARWAL
SEC 85 REGISTER OF CHARGES
SUCH ENTRY WILL BE MADE BY CS OR ANY

DIRECTOR APPROVED BY BOD.
CA CS MOHIT AGARWAL
PRESERVATION OF
REGISTRATION OF INSTRUMENT
CHARGES. CREATING CHARGE
PERMANENTLY 8 YEARS FROM THE

DATE OF
SATISFACTION
MEMBERS AND CREDITORS CAN INSPECT REGISTER

OF CHARGES & INSTRUMENT CREATING CHARGE
FREE OF COST
CA CS MOHIT AGARWAL
FORM NO.
CHG 1 APPLICATION FOR REGISTRATION OF CHARGE
(OTHER THAN DEBENTURES)
CHG 9 APPLICATION FOR REGISTRATION OF CHARGE
(FOR DEBENTURES)
CHG 2 CERTIFICATE OF CREATION OF CHARGE
CHG 3 CERTIFICATE OF MODIFICATION OF CHARGE
CHG4 APPLICATION FOR SATISFACTION OF CHARGE
CHG 5 CERTIFICATE FOR SATISFACTION OF CHARGE
CHG 6 APPOINTMENT OF RECEIVER/ MANAGER
CHG 7 REGISTER OF CHARGE
CHG 8 APPLICATION TO CG FOR CONDONATION OF DELAY
CHG 10 REASONS OF DELAY IN APPLICATION FOR SATISFACTION

OF CHARGE TO ROC
CA CS MOHIT AGARWAL
Q1. WHAT ARE THE 2 MODES OF CREATION OF

CHARGE
FIXED FLOATING
CHARGE CHARGE
WHEN CHARGE HAS BEEN WHEN CHARGE

CREATED IN FAVOUR OF CREATED IN FAVOUR OF
CHARGEHOLDERS ON CHARGEHOLDER ON
SPECIFIC ASSET BUSINESS RATHER THAN
PARTICULAR ASSET
CA CS MOHIT AGARWAL
Q2. WHAT ARE THE CIRCUMSTANCES WHEN

FLOATING CHARGE ( LIQUID CHARGE) BECOMES
FIXED (CRYSTALLISES)
ON THE HAPPENING OF ANY EVENT

MENTIONED IN THE CONTRACT
WHEN DEBTOR COMPANY GOES INTO

LIQUIDATION
WHEN DEBTOR CO. CEASES TO CARRY

ON BUSINESS
CA CS MOHIT AGARWAL
Q3. MEANING OF PARI PASSU CHARGE/

PARI PASSU DEBENTURES.
WHEN ON THE SAME ASSET CHARGE HAS BEEN

CREATED IN FAVOUR OF MORE THAN ONE CREDITOR
THEN ITS CALLED PARI PASSU CHARGE WHICH IF IS
MOSTLY FOUND IN CASE OF DEBENTURES ISSUE.
WHENEVER THAT ASSET IS SOLD ITS PROCEEDS WILL BE

DISTRIBUTED IN RATIO OF O/S DUES TO SUCH
CHARGEHOLDERS.
CA CS MOHIT AGARWAL
Q4. MENTION FOR STATUTORY REGISTERS
REGISTER OF CHARGES
REGISTER OF BUYBACK
REGISTER OF DEPOSITS
REGISTER OF MEMBERS
REGISTER OF DEBENTURE HOLDERS
MINUTES REGISTER
CA CS MOHIT AGARWAL
QUESTIONS
What do you understand by the term

'Floating charge'? State the
circumstances under which 'Floating
charge' becomes 'Fixed charge'.
(2012- May)
CA CS MOHIT AGARWAL
QUESTIONS
What is the difference between Fixed

charge and Floating charge.(RTP)
Define charge. What are the two

types of charge?(RTP)
CA CS MOHIT AGARWAL
QUESTIONS
State with reasons whether the

following statement is correct or
incorrect:If a registerable charge is
not registered, the debt is not
recoverable.(2013- May)
CA CS MOHIT AGARWAL
QUESTIONS
Explain the term 'charge'. State the

circumstances under which necessity
to create a change arises. What is the
time limit for registration of charge
with the registrar?(2018-May)
CA CS MOHIT AGARWAL
QUESTIONS
A charge requiring registration with
registrar of companies was created on 1st
February 2008 by XYZ Limited. The
Secretary of the company realised on 15th
March 2008 that the charge was not filed
with the registrar. State the steps to be
taken by the Secretary to get the charge
registered with the registrar. (2008- May)
CA CS MOHIT AGARWAL
QUESTIONS
What is the time limit for registration

of charge with the registrar? Where
should the companies register of
charges be kept? State the persons
who have the right to inspect the
companies register of charges.(2018-
Nov)
CA CS MOHIT AGARWAL
QUESTIONS
Answer the following:MNC Limited realised on 2nd may
2016 that particulars of charge created on 12th March
2016 in favour of a bank where not filed with the
registrar of companies for registration. What procedure
should the company follow to get the charge registered
with the Registrar of Companies?
Would the procedure be different if the charge was
created on 12th February 2016 instead of 12th March
2016? Explain with reference to the relevant provisions
of the Companies Act 2013.(2016- Nov)
CA CS MOHIT AGARWAL
QUESTIONS
Attempt the following:Define the

term "charge" and also explain what
is the punishment for default with
respect to registration of charge as
per the provisions of the Companies
Act 2013(2014 - Nov)
CA CS MOHIT AGARWAL
QUESTIONS
State with reasons, whether the following statements are
true or false?
(iii) The Registrar of Companies is not bound to issue notice to
the holder of charge, if the company gives intimation of
satisfaction of charge in the specified form and signed by the
holder of charge.
(iv) The Registrar of Companies main allowed the company
for holder of charge to file intimation within a period of 300
days of the satisfaction of charge on payment of fee and
additional fees as may be prescribed.(2019- May)
CA CS MOHIT AGARWAL
QUESTIONS
DN Limited hypothecated its plant to a Nationalised Bank
and availed a term loan. The Company registered the charge
with the Registrar of Companies.
The Company settled the term loan in full. The Company
requested the Bank to issue a letter confirming the
settlement of the term loan. The Bank did not respond to the
request. State the relevant provisions of the Companies Act
2013 to register the satisfaction of charge in the above
circumstance.
State the time frame up to which the registrar of companies
may allow the company to intimate satisfaction of
charges.(2019 - Nov)
CA CS MOHIT AGARWAL
QUESTIONS
While sanctioning working limit, the rate of interest
has been fixed at specified percentage of the bank
rate as notified by the Reserve Bank of India. There
was a change in the interest rate due to Reserve
Bank of India notification issued later. The bank
insisted on filing a return of modification of
charges. Is the stand of bank correct? Discuss, in
the light of the provisions of the Companies Act
2013.(2009 - May)
CA CS MOHIT AGARWAL
QUESTIONS
Rose (Private) Limited on 3rd April 2019 obtain Rs 30 lacs
working capital loan by offering its stock and accounts
receivable as security and Rs 5 lacs adhoc overdraft on the
personal guarantee of a Director of Rose (Private) Limited,
from a financial institution.
(i) is it required to create charge for working capital loan
and adhoc overdraft in accordance with the provisions of
the Companies Act 2013?
(ii) State the provisions relating to extension of time and
procedure for registration of charges in case the above
charge was not registered within 30 days of its creation.
(2020- Nov)
CA CS MOHIT AGARWAL
QUESTIONS
Moon Light Ltd. is having it's establishment in USA. It
obtained a loan there creating a charge on the assets of
the foreign establishment. The company received a
notice from the registrar of companies for not filing the
particulars of charge created by the company on the
property or assets situated outside India. The company
wants to defend the notice on the ground that it shall
not be the duty of the company to register the
particulars of the charge created on the assets not
located in India. Do you agree with the stand taken by
the company? Give your answer with respect to the
provisions of Companies Act 2013.(2021- Jan)
CA CS MOHIT AGARWAL

CHARGE IS DEFINED UNDER WHICH SECTION?
A) SECTION 1(16)
B)SECTION 2(16)
C)SECTION 1(14)
D)SECTION 2(14)
CA CS MOHIT AGARWAL

WHAT IT IS A CHARGE?
A) AN INTEREST OR LIEN
B)CREATED ON THE PROPERTY OR ASSET
C)OF A CO. OR ANY UNDERTAKINGS OR BOTH
D)ALL OF THE ABOVE

CA CS MOHIT AGARWAL

CREATION OF A CHARGE ON ASSETS AND PROPERTIES OF THE BORROWER
COMPANIES, IS KNOWN AS-
A) DEPRECIATION
B)INDUCTION
C)CHARGE
D)DEVALUATION
CA CS MOHIT AGARWAL

THE LAW WITH RESPECT TO THE REGISTRATION OF CHARGE ARE DEALT IN WHICH
SECTION?
A) 77 TO 87
B)67 TO 77
C)87 TO 97
D)87 TO 107
CA CS MOHIT AGARWAL

A CHARGE CREATED SHOULD BE RSEGISTERED WITHIN THE LIMIT OF __ DAYS OF
THE CREATION OF CHARGE
A) 30 DAYS
B)3 MONTHS
C)THREE HUNDRED DAYS
D)THIRTY MONTHS
CA CS MOHIT AGARWAL

IN CASE A REGISTRABLE CHARGE IS NOT REGISTERED , THE DEBT IS NOT
RECOVERABLE-
A) TURUE
B)FALSE
C)PARTLY TRUE
D)NONE OF THE ABOVE

CA CS MOHIT AGARWAL

NO CHARGE CREATED BY THE COMPANY SHOULD BE TAKEN INTO ACCOUNT BY?
A) LIQUIDATOR
B)CREDITOR
C)BOTH (A) AND (B)
D)NONE OF THE ABOVE

CA CS MOHIT AGARWAL

DELAYED APPLICATION FOR CHARGE SHALL BE MADE AND SUPPORTED BY A
DECLARATION FROM COMPANY, SIGNED BY ITS-
A) DECRETARY OR DIRECTOR
B)SECRETARY OR SHAREHOLDER
C)DIRECTOR OR SHAREHOLDER
D)SHAREHOLDER OR PROMOTER
CA CS MOHIT AGARWAL

APPLICATION FOR REGISTRATION OF CHARGE COMES UNDER WHICH SECTION OF
COMPANIES ACT?
A) SECTION 78
B)SECTION 77
C)SECTION 79
D)SECTION 27
CA CS MOHIT AGARWAL

IF THE REGISTRATION OF CHARGE IS NOT DONE IN 30 DAYS. THE APPLICATION
SHOULD BE PROVIDED IN HOW MANY DAYS ?
A) 24 DAYS
B)14 DAYS
C)34 DAYS
D)4 DAYS
CA CS MOHIT AGARWAL

IF CO. FAISL TO REGISTER THE CHARGE WHO CAN APPLY TO THE REGISTRAR FOR
THE REGISTRATION?
A) THE PERSON IN WHOSE FAVOUR THE CHARGE IS

CREATED
B)THE PERSON WHO IS CREATING SUCH CHARGE
C)THE COMPANY
D)THE DIRECTORS OF THE COMPANY

CA CS MOHIT AGARWAL

IF THE REGISTRATION IS EFFECTED OF THE SECTION OF THE PERSON, IN WHOSE
FAVOUR THE CHARGE OS CREATED, THAT PERSON SHALL BE ENTITLED TO
RECOVER FROM THE CO. THE AMOUNT OF ANY FEES OR ADDITIONAL
PAYMENT BY HIM TO THE REGISTRAR-
A) YES
B)NO
CA CS MOHIT AGARWAL

MODIFICATION OF CHARGE COMES UNDER WHICH SECTION?
A) SECTION 29
B)SECTION 39
C)SECTION 79
D)SECTION 89
CA CS MOHIT AGARWAL

VARIATION ANY OF THE TERMS OF THE AGREEMENT INCLUDING VARIATION OF
RATE OF INTEREST WHICH MAY BE MUTUAL AGREEMENT OR BY OPERATION
OF LAW IS TERMED AS ?
A) MULTIPLICATION
B)MODIFICATION
C)MODERNISATION
D)MAGNIFICATION
CA CS MOHIT AGARWAL

CHANGE IN THE RATE OF INTEREST (OTHER THAN BANK) IS THE EXAMPLE OF
MODIFICATION?
A) YES
B)NO
CA CS MOHIT AGARWAL

IF THE PARTICULARS OF MODIFICATION OF CHARGE IS REGISTERED UNDER
SECTION 79 THE ROC SHALL ISSUE?
A) CERTIFICATION OF CHARGE
B)CERTIFICATION OF APPLICATION
C)CERTIFICATION OF MODIFICATION
D) NONE OF THESE
CA CS MOHIT AGARWAL

SECTION 79 OF THE COMPANIES ACT, 2013 SAYS THAT SECTION 77 RELATING TO
REGISTARTION OF CHARGES SHALL, SO FOR AS MAY BE APPLY TO-
A) A COMPANY ACQUIRING ANY PROPERTY SUBJECT TO A CHARGE

WITHIN THE MEANING OF THE SECTION
B)ANY MODIFICATION IN THE TERMS OR CONDITIONS OR THE EXTENT

OR OPERARION OF ANY CHARGE REGISTERED UNDER THAT SECTION
C)BOTH A AND B
D)NONE OF THE ABOVE

CA CS MOHIT AGARWAL

DATE OF NOTICE OF CHARGE COMES UNDER WHICH SECTION?
A) END OF 30 DAYS
B)DATE OF APPLICATION THE PROPERTY
C)DATE ACQUIRING THE PROPERTY
D)DATE OF SUCH REGISTRATION

CA CS MOHIT AGARWAL

ACCORDING TO THE SECTION 82 OF THE COMPANIES ACT, COMPANY SHALL GIVE
INFORMATION TO THE REGISTRAR IN THE PRESCRIBED FORM-
A) FORM CHG 1
B)FORM CH 1
C)CHG 11 FORM
D)FORM CHG 1
CA CS MOHIT AGARWAL

IN THE CASE OF A SPECIFIED IFSC PUBLIC CO. THE REGISTRAR MAY, ALLOW THE
REGISTARTION OF FORM CHG-1 TO BE MADE WITHIN A PERIOD OF?
A) 200 DAYS
B)30 DAYS
C)300 DAYS
D)20 DAYS
CA CS MOHIT AGARWAL

THE HOLDER OF CHARGE, UPON RECEIVING TGE NOTICE BY REGISTRAR SHOULD
SHOW CAUSE WITHIN 15 DAYS
A) TRUE
B)FALSE
CA CS MOHIT AGARWAL

COMPANY TO REPORT SATISFACTION OF CHARGE DEALS WITH WHICH SECTION?
A) SECTION 82
B)SECTION 83
C)SECTION 72
D)SECTION 84
CA CS MOHIT AGARWAL

WHICH SECTION SECTION PROVIDED POWER TO THE REGISTRAR TO MAKE
ENTRIES OF SATISFACTION AND RELEASE IN ABSENCE OF INTIMATION FROM
CO.?
A) SECTION 82
B)SECTION 83
C)SECTION 80
D)SECTION 84
CA CS MOHIT AGARWAL

THE REGISTER OF CHARGES IS KEPT UNDER SECTION 81(1)
A) TRUE
B)FALSE
CA CS MOHIT AGARWAL

THE REGITRAR SHALL INFORM THE EFFECTED PARTIED WITHIN ___ DAYS OF
MAKING THE ENTRY IN THE REGISTER OF CHARGES
A) SIXTY
B)FORTY
C)THIRTY
D)THIRTEEN
CA CS MOHIT AGARWAL

REGISTRAT ENTERS A MEMORANDUM OF SATISFACTION OF CHARGE IN SECTION-
A) 83
B)82
C)81
D)EITHER (A) OR (B)

CA CS MOHIT AGARWAL

WHICH SECTION DEALS WITH INTIMATION OF APPOINTMENT OF RECEIVER OR
MANAGER?
A) SECTION 84
B)SECTION 82
C)SECTION 83
D)SECTION 81
CA CS MOHIT AGARWAL

THE REGISTAR SHALL REGISTER PARTICULARS OF THE RECEIVER , PERSON R
INSTRUMENT IN THE REGISTAR OF CHARGES ON PAYMENT OF-
A) 0 FEES
B)NOMINAL FEES
C)PRESCRIBED FEES
D)NO FEES
CA CS MOHIT AGARWAL

EVERY OFFICER OF THE COMPANY WHO IS IN DEFAULT SHALL BE PUNISHABLE FOR
A TERM WHICH MAY EXTEND TO ONE YEAR AND 6 ONTHS
A) TRUE
B)FALSE
CA CS MOHIT AGARWAL

THE SECTION 86 DEALS WITH?
A) PUNISHMENT FOR CONTRAVENTION
B)CP.’S REGISTER OF CHARGES
C)DUTY OF CHARGES
D)APPLICATION FOR REGISTRATION OF CHARGES

CA CS MOHIT AGARWAL

RECTIFICATION BY CG IN ROC IS STATED UNDER WHICH SECTION?
A) SECTION 27
B)SECTION 87
C)SECTION 77
D)SECTION 37
CA CS MOHIT AGARWAL

CONDONATION OF DELAY AND RECTIFICATION OF REGISTER OF CHARGES IS
DESCRIBED IN WHICH RULE?
A) RULE 13 OF THE COMPANIES RULE, 2014
B)RULE 12 OF THE COMPANIES RULE, 2015
C)RULE 12 OF THE COMPANIES RULE, 2014
D)RULE 13 OF THE COMPANIES RULE, 2015

MANAGEMENT AND ADMINISTRATION
(HIGHEST WEIGHTAGE)
QUORUM ( SEC- 103)
TOTAL SECTION
COVERED- 35 VALID MEETING 3 CONDITIONS
PROPERLY
PROPERLY CONSTITUTED PROPERLY
CONVENED PROPER QUORUM CONDUCTED
TO CALL PROPER TO FOLLOW
CHAIRPERSON COMPANIES ACT
(MIN ATTENDANCE)
QUORUM REFERS TO MINIMUM NUMBER OF MEMBERS WHO ARE REQUIRED TO ATTEND THE MEETING,
SO THAT IT IS PROPERLY CONSTITUTED.
TYPES OF COMPANY MINIMUM NO. OF MEMBERS
PRIVATE COMPANY 2 OR ARTICLES , WHICHEVER IS
HIGHER
PUBLIC COMPANY 5,15,30 OR ARTICLES ,
WHICHEVER IS HIGHER
QUORUM NO. OF MEMBERS IN PUBLIC COMPANY ON THE DAY OF MEETING
5 UPTO 1000
15 >1000 <= 5000
30 >5000
OR ARTICLES WHICHEVER IS HIGHER
QUORUM MUST ALWAYS BE PERSONALLY PRESENT.
IF AT THE ADJOURNED MEETING ALSO QUORUM IS NOT PRESENT , THE

MEETING SHALL BE CONDUCTED.
NOTICE ( SEC- 101)
SECTION 101- FOR A MEETING TO BE PROPERLY CONVENED, PROPER NOTICE TO PROPER
PERSON IN PROPER TIME BY PROPER AUTHORITY
PROPER PERSON PROPER NOTICE

• PROPER NOTICE SHOULD CONTAIN DAY, DATE,
TIME AND PLACE
MEMBERS OR LEGAL DIRECTORS AUTHORITY • PROPER NOTICE CONTAINS AGENDA- LIST OF
REPRESENTATIVE OF BUSINESS MATTERS TO BE TRANSACTED.
DECEASED MEMBER OR E.G-
INSOLVENT MEMBERS’S
ASSIGNEE a) CHAIRMAN HAS POWER TO CHANGE ORDER
b) NOTE- CHAIRMAN IS THE CO-ORDINATOR
CHAIMAN CANNOT DISCUSS NEW ITEM
c) OF THE MEETING, HE CAN DISCUSS POINTS
( ANY ITEM LEFT -- TAKEN IN ADJOURNMENT )
d) BY ANY ORDER IN THE MEETING
MEMBER COMPANY
NOTICE
• ACCIDENTAL OMMISSION = MEETING VALID

• DELIBERATE OMMISSION = MEETING INVALID
** NOTICE TO BE SERVED TO 1ST NAME JOINT HOLDER

MEMBER COMPANY
NOTICE SEND THROUGH REGISTERED POST

(MEMBER REQUESTING TO SERVE THE NOTICE IN A
REQUEST PARTICULAR MODE, COMPANY IS NOT BOUND TO
SERVE IN THAT MANNER UNLESS THE MEMBER HAS
DEPOSITED COST OF SERVICE. )
PROPER TIME
ATLEAST 21 CLEAR DAYS BEFORE THE MEETING.
WHILE COMPUTING 21 CLEAR DAYS THE DATE OF SERVICE OF

NOTICE & DATE OF MEETING BOTH ARE EXCLUDED
NOTICE IF SENT BY ADVERTISEMENT/ EMAIL GETS SERVED ON THE

SAME DAY.
NOTICE SENT BY POST-
FOR POST IT IS DEEMED TO BE SERVED AFTER EXPIRY OF 48 HOURS
ADVERTISEMENT- 22ND FEB 23RD FEB
FROM DISPATCH OF POST.
E.G- 1st FEB (ADVERTISEMENT/
E.G- 1st FEB (NOTICE SERVED) 1st FEB (POST)
EMAIL)
+22 DAYS (NOTICE SERVED)

+24 DAYS 3rd FEB (SERVICE)
______
23rd FEB _______
25th FEB 25th FEB
SHORTER NOTICE
1st FEB NOTICE SENT FOR A MEETING ON 10th FEB
MEETING CAN BE CALLED AT A SHORTER NOTICE IF BEFORE SENDING SUCH A SHORTER

NOTICE CONSENT IS OBTAINED.
CONSENT REQUIRED TO CALL A MEETING BY GIVING SHORTER NOTICE
ANY OTHER
AGM GM
COMPANY HAVING
SHARE CAPITAL COMPANY NOT HAVING SHARE
ATLEAST 95% OF TOTAL CAPITAL
MEMBERS ENTITLED TO
VOTE MAJORITY OF MEMBERS HOLDING MEMBERS HOLDING ATLEAST 95% OF
ATLEAST 95% OF PAID UP SHARE VOTING POWER
CAPITAL (PUSC)
SEC 102- EXPLANATORY STATEMENT
IT IS REQUIRED TO BE ANNEXED WITH NOTICE FOR EVERY SPECIAL BUSINESS.
E.G FOR ITEMS (e) EXPLANATORY EXPLANATORY STATEMENT WILL CONTAIN-

STATEMENT IS REQUIRED 1) MEANING, SCOPE, IMPLICATION OF THAT SPECIAL BUSINESS.
AGENDA- 2) WILL CONTAIN DISCLOSURE OF INTEREST WHETHER FINANCIAL OR
a–A NON- FINANCIAL IN THE SPECIAL BUSINESS OF:-
b- D A)EVERY DIRECTOR , MANAGER
c- D B)EVERY KMP (KEY MANAGERIAL PERSONNEL)
d- A C)RELATIVES OF ABOVE
e- (CHANGING NAME OF COMPANY) 3) IF CO. (MEPL) IS ENTERING INTO A TRANSACTION WITH OTHER CO. (X
LTD) WHOSE ATLEAST 2% PUSC IS HELD BY PROMOTERS, DIRECTORS,
MANAGER OR KMP OF MEPL THEN IT MUST BE MENTIONED IN
EXPLANATORY STATEMENT
KMP 2(5)
CEO/MD/MANAGER CFO CS
WHOLE TIME DIRECTOR
(THIS MEANS PART TIME DIRECTOR IS NOT A KMP. STILL HIS INTEREST IF ANY WILL
BE DISCLOSED BECAUSE HE IS A DIRECTOR)
IS EXPLANATORY STATEMENT REQUIRED FOR APPOINTMENT?
MAY OR MAY NOT
APPOINTMENT OF DIRECTOR
IN PLACE OF RETIRING DIRECTOR FRESH APPOINTMENT

(NOT IN PLACE OF RETIRING)
ORDINARY BUSINESS SPECIAL BUSINESS
FOR WHICH EXPLANATORY STATEMENT EXPLANTORY STATEMENT

NOT REQUIRED REQUIRED
WHAT IF SHAREHOLDER HAS NOT BEEN GIVEN
NOTICE
ACCIDENTAL OMMISSION DELIBERATE
MEETING WILL BE VALID INVALID

NOTICE WAS GIVEN ON 1ST FEB FOR A MEETING TO BE CONDUCTED ON 15TH FEB
i) WHAT SHOULD HAVE BEEN THE EARLIEST DAY?
A) IF SERVED BY ADVERTISEMENT/EMAIL = 1st FEB + 22 DAYS = 23rd FEB
B ) IF SERVED BY POST = 1st FEB + 24 DAYS = 25th FEB
ii) CAN THE ABOVE MEETING ON 15TH FEB STILL VALID?
IF BEFORE SENDING SUCH SHORTER NOTICE REQUIRED CONSENT WAS OBTAINED
IMPORTANT NOTES-
1) IN CASE OF SEC 8 COMPANY THEY HAVE BEEN EXEMPTED THAT INSTEAD OF SENDING ATLEAST 21
CLEAR DAYS NOTICE THEY CAN SEND ATLEAST 14 CLEAR DAYS NOTICE.
2) PRIVATE CO. HAVE BEEN EXEMPTED FROM SEC 101 TO 107,109 OF THE COMPANIES ACT 2013, IF
THEY MAKE THEIR OWN PROVISIONS IN ARTICLES
3) IFSC (INTERNATIONAL FINANCIAL SERVICE CENTRE) COMPANIES HAVE ALSO BEEN EXEMPTED
FROM SEC 101 TO 107, 109 IF THEY MAKE THEIR OWN PROVISIONS IN ARTICLES.
IFSC COMPANIES ARE INDIAN COMPANIES WHICH PROVIDE FINANCIAL SERVICES TO FOREIGN
INVESTORS.
SEC 105- PROXY
i. AS PER SECTION 105 OF THE CO. ACT 2013, ANY MEMBER WHO IS ENTITTLED TO ATTEND &
VOTE AT THE MEETING OF COMPANY SHALL ALSO HAVE A RIGHT TO APPOINT PERSON AS
HIS PROXY TO ATTEND & VOTE ON HIS BEHALF.
ii. PROXY CANNOT SPEAK AT THE MEETING & CANNOT VOTE EXCEPT BY POLL. THIS MEANS
PROXY CAN VOTE BY POLL & NOT BY SHOW OFF HANDS.
iii) VOTE BY POLL VOTE BY SHOW OFF HANDS

** VOTING RIGHT IS GIVEN ON THE BASIS OF NO. ** ALL MEMBERS ARE GIVEN EQUAL
OF SHARES HELD BY THAT MEMBER VOTING POWER. i.e. ONE VOTE EACH
** 1 SHARE = 1 VOTE ** 1 MEMBER = 1 VOTE
** PROXY CAN ALSO VOTE ** PROXY CANNOT VOTE
** POLLING PAPER IS GIVEN IN FORM NO. MGT 2 ** NO SUCH FORMS
iv) TO APPOINT A VALID PROXY FORM MGT 11 HAS TO BE DEPOSITED AT
COMPANIES REGISTERED OFFICE ATLEAST 48 HOURS BEFORE THE MEETING.
v) ORIGINAL SHAREHOLDERS CAN HIMSELF ATTEND & VOTE BEFORE HIS
PROXY HAS VOTED.
CASE LAW- COUSINS VS INTERNATIONAL BRICK CO. LTD
vi) SEC 112
MEPL
CG SHAREHOLDER SG SHAREHOLDER
GOVERNOR OF THAT STATE
PRESIDENT WILL SEND RM TO ATTEND GM (REPRESENTATIVE MEMBER)

GENERAL MEETNG
REPRESENTATIVE MEMBER (RM) APPOINTED BY PRESIDENT /GOVERNOR SHALL HAVE ALL THE
RIGHTS OF A MEMBER.
vi) SEC 113
MEPL
SHAREHOLDER
Katrina ltd.
ITS BOD WILL SEND RM TO ATTEND GM.
RM SHALL HAVE ALL THE RIGHTS OF A MEMBER
GM
vii) A PERSON CAN BECOME PROXY FOR MAX 50 MEMBERS PROVIDED
THAT THE SHAREHOLDING SHOULD NOT EXCEED 10% OF PUSC.
HOWEVER IF A SINGLE MEMBER IS HOLDING 10% OR MORE PUSC THEN
HIS APPOINTED PROXY CANNOT BECOME PROXY FOR ANYONE ELSE
IN CASE OF SECTION 8 COMPANY PROXY CAN’T BE AN OUTSIDER i.e, HE
HAS TO BE A MEMBER
• Q) CAN MEMBERS INSPECT PROXY FORM?
• Yes by satisfying 3 conditions
WHEN ONLY 24 HRS ARE LEFT TO AFTER GIVING 3 DAYS WRITTEN

START THE MEETING AND TILL DURING BUSINESS HOURS NOTICE AT COMPANY’S REGISTERED
THE CONCLUSION OF MEETING OFFICE
CAN AN AUDITOR No an auditor cannot appoint
APPOINT PROXY? proxy.
• MR. A , A SHAREHOLDER OF MA LTD APPOINT MR.X (NON MEMBER) AS HIS PROXY 60 HOURS BEFORE
THE MEETING. IS PROXY VALID?
 RELATED PROVISIONS : AS PER SEC.105 OF THE COMPANIES ACT 2013,ANY MEMBER WHO IS ENTITLED
TO ATTEND AND VOTE SHALL ALSO HAVE A RIGHT TO APPOINT ANY PERSON AS HIS PROXY TO ATTEND
& VOTE ON HIS BEHALF. PROXY MAY OR MAY NOT BE A MEMBER. PROXY MUST BE APPOINTED
ATLEAST 48HRS BEFORE THE MEETING BY SUBMITTING FORM MGT 11 AT COMPANIES REGISTERED
OFFICE.
IF COMPANY ON BEHALF OF ANY MEMBER SENDS INVITATION TO OTHER
MEMBERS OR PERSON FOR BECOMING PROXY OF A MEMBER THEN ALL THE
OFFICER IN DEFAULT SHALL BE LIABLE TO PENALTY OF RS 5000.
PROVIDED THAT IF A COMPANY PROVIDES A LIST OF MEMBERS/PERSON WHO
ARE WILLING TO ACT AS A PROXY AND COMPANY HAD ALREADY COMPLIED
SUCH LIST AND IS ELIGIBLE TO EVERY MEMBER FOR FREE OF COST , THE OFFICER
OF COMPANY WILL NOT BE GUILTY.
FACTS & ANALYSIS : IN THE GIVEN CASE STUDY MR. A WHO IS A SHAREHOLDER HAS A
RIGHT TO APPOINT A PROXY. IT DOES NOT MATTER THAT MR. X IS A NON MEMBER.
FURTHER HE HAS BEEN APPOINTED ATLEAST 48 HRS (60 HRS) BEFORE THE MEETING.
CONCLUSION : THUS FROM THE ABOVE DISCUSSION WE CONCLUDE THAT

MR.X IS A VALID PROXY.
QUESTION
MR.A, A SHARE HOLDER OF MA. LTD HAS APPOINTED MR.X & MR.B AS HIS
PROXY, 60 HRS & 50 HRS BEFORE MEETING. COMMENT.
ANSWER
LATEST PROXY IF APPOINTED IN TIME WILL BE VALID. OTHERWISE FORMER
PROXY WHO WAS APPOINTED IN TIME WILL BE VALID. IN THIS CASE ‘B’ IS VALID.
QUESTION
WILL YOUR ANSWER CHANGE IN ABOVE QUESTION IF MR.B WAS APPOINTED 30
HOURS, BEFORE MEETING?
ANSWER
FORMER PROXY ‘X’ WILL BE VALID.
QUESTION
WHAT WILL BE YOUR ANSWER IN ABOVE QUESTION IF MR.A THE ORIGINAL
SHARE HOLDER HIMSELF WANT TO ATTEND THE MEETING, ALTHOUGH MEETING
HAS STARTED?
ANSWER
AS PER THE CASE LAW OF COUSINS VS INTERNATIONAL BRICK CO.LTD, ORIGINAL
SHARE HOLDER CAN ATTEND & VOTE HIMSELF BEFORE HIS PROXY HAS VOTED.
QUESTION
PRESIDENT OF INDIA OR GOVERNER OF STATE,MEMBER OF MA LTD APPOINTED
MR.A TO ATTEND THE MEETING OF MA LTD.MR ‘A’ WANTS TO APPOINT PROXY
MR. B. ADVICE ,ALSO COMMENT ON THE RIGHT OF MR. A & MR. B.
ANSWER
MR. A BEING A REPRESENTATIVE MEMBER CAN APPOINT PROXY (MR.B)
• RIGHTS OF A REPRESENTATIVE MEMBER
He can vote He can RIGHTS OF PROXY:

He can speak He can vote also be Of all the above rights
by show off
at meeting by poll counted in proxy only has right to
hands
quorum vote by poll.
QUESTION
MR. A , A SHAREHOLDER OF MA LTD WANTS TO APPOINT FRESH PROXY FOR
ADJOURNED MEETING?
ANSWER
ALLOWED BUT ATLEAST 48 HOURS BEFORE THE MEETING.
QUESTION
ARTICLE OF MA LTD PROVIDES 60HRS AS A VALID TIME TO APPOINT
PROXY. ADVICE.
ANSWER
IF ARTICLES PROVIDE LONGER TIME THEN 48HRS THEN IT WILL BE READ AS 48
HRS ONLY.
(IF IT WAS PRIVATE COMPANY THEN 60 HOURS MENTION IN ARTICLES WILL BE
VALID)
QUESTION
SRK LTD IS A MEMBER OF MA LTD & HAS APPOINTED MR.SRK.
ANSWER
SRK WILL BE TREATED AS REPRESENTATIVE MEMBER.
QUESTION
DIFFERENT SHAREHOLDERS OF MA LTD HAVE APPOINTED MR.RAVI AS THEIR
PROXY. ADVICE.
ANSWER
YES,PROVIDED THEIR SHAREHOLDING DOES NOT EXCEEDS 10 %
ANNUAL GENERAL MEETING- SECTION : 96
TIME LIMIT OF AGM:

15 MONTHS FROM LAST AGM.
6 MONTHSFROM END OF END OF FINANCIAL YEAR.
WHICHEVER IS EARLIER.
E.G- COMPUTE AGM DUE DATE OF FY 19-20 IF ITS LAST AGM WAS HELD ON 1.5.19
ANS - 15 months from last AGM = 1.5.20
+3 months = 1.8.20
6 months 31/3/20- 30/9/20
EARLIER= 1/8/20
COMPANY MAY APPLY TO ROC FOR EXTENTION OF DUE DATE OF AGM (OTHER THAN FIRST
AGM) IN FORM GNL. 1 ON THE GROUNDS OF SPECIAL REASON(REASONS BEYOND HUMAN
CONTROL) & ROC CAN GRANT MAX 3 MONTHS EXTENSION.
TIME LIMIT OF FIRST AGM:- 9 MONTHS FROM THE END OF A FINANCIAL YEAR.
EXAMPLE
IF COMPANY GOT INCORPORATED ON 1ST NOV 2020 THEN ITS FY WILL END ON 31ST MARCH
2021.
FIRST AGM DUE DATE WILL BE FROM 9 MONTHS FROM 31.3.21≅ 31.12.21.
IF FIRST AGM HELD WITHIN THE ABOVE TIME LIMIT NO NEED TO CONDUCT ANY AGM IN YEAR
OF ITS INCORPORATION
DAY,TIME & PLACE OF AGM:
• DAY= ANY DAY EXCEPT NATIONAL HOLIDAY
• PUBLIC HOLIDAY
SUNDAY NATIONAL
✔️AGM AGM
TIME=BUSINESS HOURS PLACE= AT REGISTERED OFFICE OR WITHIN SAME

(9AM TO 6 PM) CITY/TOWN/VILLAGE IN WHICH REGISTERED OFFICE IS
SITUATED.
EXEMPTIONS GIVEN TO:
UNLISTED COMPANY:
Can conduct its AGM
any place in India
after written consent SEC.8 COMPANY:
of 100% members. Can conduct its AGM
GOVT COMPANY:
on any day/ time, place
Can conduct its AGM at
as its members may
any place as decided by
decide.
CG.
SEC 97: IF COMPANY DEFAULTS IN CALLING AGM U/S 96 THEN ANY MEMBER MAY
APPLY TO TRIBUNAL/NCLT & MAY EITHER CALL AGM OR DIRECT THE COMPANY TO
CALL AGM & GIVE DIRECTIONS THAT EVEN 1 MEMBER PRESENT PERSONALLY OR
PROXY WILL CONSTITUTE A VALID AGM.
SEC 100: EGM
1. BOD MAY WHENEVER DEEMS FIT CALL ON EGM .
2. MEMBER(S) HOLDING ATLEAST 1/10TH PUSC OR VOTING POWER CAN MAKE A
WRITTEN REQUEST TO CALL EGM AT CO’S REGISTERED OFFICE.
 WITHIN 21 DAYS BOD SHALL TAKE STEPS TO CALL MEETING.
 SO THAT MEETING IS CONDUCTED WITHIN 45 DAYS FAILING WHICH
REQUISITIONIST CAN THEMSELVES CALL
 WITHIN 3 MONTHS.
All the above time limits of 21 days, 45 days, 3 months are counted from the date
of receipt of written request.
QUESTION
CAN A SINGLE MEMBER HOLDING 10000 SHARES OUT OF COMPANY’S 100000
SHARES REQUEST EGM?
ANSWER
YES
QUESTION
WHAT IF BOD CALLS EGM IN THE ABOVE QUESTION BUT THAT MEMBER ALONE IS
PRESENT?
ANSWER
MEETING WILL BE CANCELLED.
QUESTION
WILL MEMBERS REQUESTING FOR EGM HAVE TO DISCLOSE THE REASON?
ANSWER
YES
SEC 98: NCLT POWER TO CALL THE EGM
EXAMPLE:
2 DIRECTORS AGREE BUT
2 DIRECTORS DISAGREE I.E, DEADLOACK BETWEEN DIRECTORS)
THEN NCLT ON APPLICATION OF ANY MEMBER OR ANY DIRECTOR OR SUO
MOTU (OWN MOTION)MAY EITHER CALL OR DIRECT THE COMPANY TO CALL
EGM & MAY ORDER THAT EVEN A SINGLE MEMBER PRESENT IN PERSON OR BY
PROXY WILL BE CONSTITUTE A VALID EGM.
PROVIDED THAT AN EGM CALLED BY BOD OTHER THAN OF THE WHOLLY OWNED
SUBSIDIARY OF A COMPANY INCORPORATED OUTSIDE INDIA SHALL BE HELD AT
A PLACE WITHIN INDIA.
WHAT IF BOD REFUSE TO CALL EGM?
REQUISITIONIST CAN THEMSELVES CALL EGM

WITHIN 3MONTHS OF REQUEST & Apply to NCLT U/S 98.
REASONABLE EXPENSES INCURRED BY THEM IN
CALLING SUCHMEETING WILL BE REIMBURSED
BY CO. & WILL RECOVER FROM DEFAULTING
DIRECTORS BY DEDUCTING THEIR FEES.
PARTICULARS AGM EGM CALLED BY
BOD REQUISITIONIST
PLACE RO OR CTV ANY PLACE IN INDIA BUT IF RO ON C/T/V IN WHICH
(CITY/TOWN/VILLAGE) IT WAS OF COMPANY RO IS SITUATED (RULE
IN WHICH RO IS SITUATED INCORPORATED OUTSIDE 17)
(SEC 96) INDIA THEN ANY PLACE IN
WORLD SEC 100
UNLISTED AFTER 100% MEMBERS
COMPANY CONSENT, ANY PLACE IN
INDIA (SEC 96)
DAY ANY DAY EXCEPT NATIONAL ANY DAY ANY DAY EXCEPT
HOLIDAY(SEC 96) NATIONAL HOLIDAY
(RULE 17)
TIME 9AM TO 6PM ANY TIME 9AM TO 6PM (SS2) ICSI
SECRETARIAL
STANDARDS.
SEC 99:
FINE ON CO. & OFFICER IN DEFAULT FOR VIOLATION OF SEC 96 OR 97 OR 98
IS
RS. 1 LAKH (+) 5000/DAY TILL THE DEFAULT CONTINUES.
QUESTION 1
THE CHAIRMAN…..
ANSWER
IF CHAIRMAN CAST HIS ORIGINAL VOTE IN FAVOUR THEN IT BECOMES 7 I.E,
TIE WITH VOTES AGAINST. SINCE ARTICLES ARE AUTHORISING CHAIRMAN GETS
A CASTING VOTE WHICH IF CAST IN FAVOUR THEN RESOLUTION IS PASSED.
QUESTION 2
THE ARTICLES OF ASSOCIATION OF…...
ANSWER
 COUNTED AS ONE.
 NOT COUNTED BECAUSE AS PER SEC 47 THEY CAN BE COUNTED IN QUORUM &
ALLOWED TO VOTE ONLY ON MATTERS WHICH DIRECTLY AFFECT THEM.
 COUNTED AS 3.
 PROXIES ARE NOT COUNTED
TOTAL COUNT IS =1+3=4
WHICH MEANS QUORAM FALLS SHORT BY 2 MEMBERS.SO
MEETING WILL ADJOURNED.
QUESTION 3
NOTICE……
ANSWER
YES BECAUSE IT WAS DECLARED AS A NATIONAL HOLIDAY AFTER DISPATCH OF
NOTICE.
QUESTION 4
CAN 2 AGM BE HELD ON SAME DAY?
ANSWER
IT IS PERMISSIBLE TO HOLD 2 AGM’S ON SAME DAY,PROVIDED TWO DIFFERENT
NOTICES ARE SENT & BOTH THE AGM’S ARE HELD AT DIFFERENT TIME.
SEC 104- CHAIRMAN
READ WITH SS2 (CO. LAWS’S STANDARD APPROVED BY CG, ISSUED BY ICSI)
BUT IF NO
DIRECTOR IS
DIRECTOR PRESENT WITHIN
AMONGST 15 MINUTES OR
THEMSELVES PRESENT BUT DO
BUT IF CM OF BM NOT WANT TO
IS NOT PRESENT IN SHALL APPOINT
ANY DIRECTOR TO BECOME CM THEN
CM OF BM SHALL GM WITHIN 15
MINUTES OR IF BE CM OF GM
BE THE CM OF GM
PRESENT BUT
DOES NOT WANT
TO BECOME CM OF
GM THEN
SEC 104- CHAIRMAN
READ WITH SS2 (CO. LAWS’S STANDARD APPROVED BY CG, ISSUED BY ICSI)
BUT IF MEMBER(S)
HOLDING ATLEAST
1/10TH OF PUSC OR
MEMBERS PRESENT
VOTING POWER OR
SHALL ELECT ONE
PAID UP SHARES OF
AMONGST
BUT IF ARTICLES RS.500000
THEMSELVES AS CM
ARE SILENT THEN DEMAND POLL
BY SHOW OFF
CM WILL BE THEN CM WILL BE
HANDS
APPOINTED AS PER ELECTED BY VOTE
ARTICLES OF CO. BY POLL
QUESTION
AT THE ANNUAL GENERAL MEETING…
ANSWER
MEMBERS OBJECTIONS IS INCCORECT BECAUSE CM OF BM HAS THE RIGHT TO
BECOME CM OF GM
QUESTION
CAN ADJOURNED MEETING (AGM) BE HELD ON PUBLIC HOLIDAY?
ANSWER
YES, IF IT’S A SUNDAY BUT NO IF IT’S A NATIONAL HOLIDAY.
SEC 106 RESTRICTION ON VOTING RIGHT OF SHAREHOLDER
A CO. CAN RESTRICT SHAREHOLDERS’S VOTING RIGHT BY MENTIONING

IN ITS ARTICLES.
RESTRICTION:-
ANY OTHER SUM DUE ON COMPANY HAS EXERCISED

CALLS IN ARREAR
SHARES. RIGHT OF LIEN ON SHARES.
EXAMPLE 1. MR X SHAREHOLDER OF MA LTD --- CALLS IN ARREAR
ARTICLE SILENT
VOTING RIGHT RESTRICT

YES NO
EXAMPLE 2. ARTICLE SOF MEPL MEMBERS 4 GM ABSENT, 5TH AGM CANNOT VOTE
VOTING RIGHTS RESTRICT

YES NO
QUESTION
MR X, A SHAREHOLDER OF MA LTD DEFAULTED A CALL MONEY COMPANY
WANTS TO RESTRICT HIS VOTING RIGHT BUT ARTICLES ARE SILENT. ADVICE.
ANSWER
RELATED PROVISONS- AS PER THE PROVISIONS OF SEC 106 OF THE COMPANIES
ACT 2013, COMPANY CAN RESTRICT SHAREHOLDING VOTING RIGHT BY
MENTIONING IN ITS ARTICLES FOLLOWING 3 GROUNDS-
a)CALLS IN ARREARS
b)ANY OTHER SUM DUE ON SHARES
c)CO. HAS EXERCISED RIGHT OF LIEN ON SHARES
FACTS & ANALYSIS- IN THE GIVEN CASE SHAREHOLDER MR. X DEFAULTED CALL
MONEY I.E. CALLS IN ARREAR WHICH IS ONE OF THE 3 GROUNDS OF
RESTRICTION ON VOTING RIGHTS BUT IT IS TO BE NOTED THAT SUCH
RESTRICTIONS SHOULD HAVE BEEN MENTIONED IN ARTICLES WHICH IN THE
GIVEN CASE IS SILENT.
CONCLUSION: THUS, FROM THE ABOVE DISCUSSION WE CONCLUDE THAT MR.
X’S VOTING RIGHT CAN’T BE RESTRICTED
QUESTION
MA LTD MENTIONED IN ITS ARTICLES THAT IF A SHAREHOLDER ABSENCE
HIMSELF IN 3 GM THEN HE WON’T BE ALLOWED TO VOTE IN 4TH GM. ADVICE
ANSWER
SUCH RESTRICTIONS IS INVALID
QUESTION
MA LTD MENTIONED IN ITS ARTICLES THAT IF A SHAREHOLDER ABSENCE
HIMSELF IN 3 GM THEN HE WON’T BE ALLOWED TO VOTE IN 4TH GM. ADVICE1
ANSWER
SUCH RESTRICTIONS IS INVALID
QUESTION
WHAT IF IN ABOVE QUESTION IT WAS MA PRIVATE LTD.
ANSWER
THEN SUCH RESTRICTIONS IS VALID BECAUSE PVT COMPANY CAN MAKE ITS
PROVISIONS IN ARTICLES RELATED TO SEC 101 TO 107, 109.
SECTION 107- VOTING BY SHOW OFF HANDS
VOTING WILL TAKE PLACE BY SHOW OFF HANDS UNLESS POLL IS

DEMANDED U/S 109 OR VOTING IS CARRIED OUT ELECTRONICALLY
U/S 108.
SECTION 109- VOTE BY POLL
VOTE BY POLL CAN BE DEMANDED BY

CHAIRMAN MEMBER(S) HOLDING
ON ITS OWN ATLEAST 1/10TH OF PUSC
MOTION OR HOLDING SHARES OF
PAID UP VALUE MIN RS.
500000
** POLL CAN BE DEMANDED EVEN AFTER SHOW OFF HANDS

SECTION 108 E-VOTING
APPLICABILITY OF SEC 108
EVERY COMPANY WHOSE EVERY COMPANY HAVING

EQUITY SHARES ARE LISTED AND MIN 1000 MEMBERS
IN RSE
QUESTION
CAN IT BE APPLICABLE ON A PVT COMPANY?
ANSWER
NO, BECAUSE PVT COMPANY’S EQUITY SHARES CANNOT BE LISTED & ALSO THEY
DON’T HAVE MINIMUM NUMBER OF 1000 MEMBERS.
QUESTION
CAN IT BE APPLICABLE ON A PVT COMPANY?
ANSWER
NO, BECAUSE PVT COMPANY’S EQUITY SHARES CANNOT BE LISTED & ALSO THEY
DON’T HAVE MINIMUM NUMBER OF 1000 MEMBERS.
QUESTION
IS SEC 108 APPLICABLE ON ALL LISTED COMPANY’S?
ANSWER
NO, IT APPLIES ONLY ON THOSE LISTED COMPANY’S WHICH HAVE GOT THERE
EQUITY SHARES LISTED ON RSE
THE ENTIRE PROCEDURE OF E-VOTING IS MENTIONED IN RULE 20 OF THE
COMPANIES(MANAGEMENT & ADMINISTRATION) RULES 2014
RULE 20:
1) NOTICE WILL BE SENT TO MEMBERS BY SPEED POST/
DIRECTORS REGISTERED POST
AUDITOR COURIER
EMAIL
2) NOTICE TO BE POSTED ON WEBSITE IF ANY OF COMPANY IS AGENCY.

3) NOTICE SHALL CONTAIN
STATEMENT THAT MEMBERS WHO DON’T

MEMBERS WHO CAST THEIR
REMOTE E-VOTING CAST THEIR VOTE BY
VOTE BY REMOTE E-VOTING
FACILITY IS PROVIDED REMOTE E-VOTING CAN
CAN ATTEND THE MEETING
VOTE AT THE MEETING
BUT NOT VOTING.
4) NOTICE SHALL ALSO CONTAIN
PROCESS OF REMOTE STEPS TO GENERATE TIME SCHEDULE OF

LOGIN ID
E-VOTING. PASSWORD REMOTE E-VOTING.
5) NOTICE WILL BE PUBLISHED IN 2 NEWSPAPER
ENGLISH LANGUAGE IN VERNACULAR LANGUAGE IN

ENGLISH NEWSPAPER. VERNACULAR NEWSPAPER.
BOTH HAVING WIDE CIRCULATION IN THE DISTRICT WHERE COMPANY’S
REGISTERED OFFICE IS SITUATED
• STATEMENT THAT REMOTE E-VOTING IS PROVIDED
• MEMBERS WHO DON’T CAST THEIR VOTE BY REMOTE E-VOTING CAN
VOTE AT THE MEETING
• MEMBERS WHO CAST THEIR VOTE BY REMOTE E-VOTING CAN ATTEND
THE MEETING BUT NOT VOTING
• STEPS TO RECEIVE LOGIN ID
• STEPS TO RECEIVE PASSWORD
• TIME SCHEDULE
• DETAILS OF PERSON WHOM’S SHAREHOLDER CAN CONTACT
6) TIME: REMOTE EVOTING VOTING IS OPEN FOR MINIMUM THREE DAYS AND
CLOSED EXACTLY AT 5 P.M. IMMEDIATELY BEFORE THE DAY OF MEETING.
7) MEMBERS : WHO DID NOT VOTE BY REMOTE E-VOTING CAN ATTEND AND VOTE
AT THE MEETING AND WHO VOTED BY THE REMOTE E-VOTING CAN ATTEND BUT
NOT VOTE AGAIN.
8) BLOCK: E -VOTING TO BE BLOCKED EXACTLY AT 5 PM IMMEDIATELY BEFORE THE
DAY OF MEETING.
9) APPOINTMENT: BOD SHALL APPOINT CA/ CS /CMA IN PRACTICE /ADVOCATE
AS A SCRUTINIZER TO COUNT THE VOTE. SCRUTINIZER MAY TAKE ASSISTANCE OF
ONE PERSON WHO IS NOT IN EMPLOYMENT OF COMPANY.
10) FUNCTION OF SCRUTINIZER: HE SHOULD BE WILLING TO ACT AS A
SCRUTINIZER TO COUNT THE VOTE.
11) ROLE OF CHAIRMAN: IT'S HIS DUTY TO ALLOW THE MEMBERS TO VOTE AT
THE MEETING WHO DID NOT CAST THEIR VOTE BY REMOTE E - VOTING
12) COUNTING OF VOTES: SCRUTINIZER WILL FIRST COUNT THE VOTES CAST IN
MEETING AND THEN REMOTE E- VOTING VOTES.
13) ACCESS OF VOTES ONLY TO SCRUTINIZER
14) MAINTENANCE OF REGISTER: SCRUTINIZER WILL MAINTAIN REGISTER
RECORDING THAT WHICH MEMBER VOTED IN FAVOUR AND WHICH AGAINST.
15) SUBMISSION OF REPORT AND REGISTER: BY SCRUTINIZER TO CM WITHIN 3
DAYS OF MEETING IN FORM MGT 13.
16) DECLARATION OF RESULT: WILL BE DONE BY CM AND DATE OF PASSING
RESOLUTION WILL BE THE DATE OF MEETING
17) E -VOTING RESOLUTION ONCE PROPOSED CANNOT BE WITHDRAWN
TOTAL 17 POINTS
11 POINTS
5 POINTS (NOTICE) 3 POINTS (TMB) 3 POINTS (SCRUTINIZER)

17) E -VOTING RESOLUTION ONCE PROPOSED CANNOT BE WITHDRAWN
TOTAL 17 POINTS
6 POINTS
5 POINTS (NOTICE) 3 POINTS (TMB) 3 POINTS (SCRUTINIZER)

SEC 110 POSTAL BALLOT
IN IT COMPANY INSTEAD OF CONDUCTING GENERAL MEETING WILL SEND A DRAFT

RESOLUTION TO ALL MEMBERS GIVING THEM 30 DAYS TIME TO REPLY WITH A
ASSENT OR DISSENT.
CG HAS PRESCRIBED 10 MATTERS IN RULE 22 WHICH SHALL BE DISCUSSED BY EVERY
COMPANY OTHER THAN :-
A) OPC
B) COMPANY HAVING UPTO 200 MEMBERS
1. SHIFTING OF RO OUTSIDE LOCAL LIMITS OF COMPANY UNDER SECTION 13
2. CHANGE OF OBJECT CLAUSE UNDER SECTION 13
3. USING UNLISTED AMOUNT OF PUBLIC ISSUE FOR SOME OTHER OBJECT UNDER
SECTION 13
4. ISSUE OF SHARES WITH DIFFERENTIAL VOTING RIGHTS SECTION 43
5. VARIATION OF SHAREHOLDER’S RIGHT U/S 48
6. BUYBACK U/S 68
7. ALTERATION OF ARTICLES TO CONVERT PUBLIC CO. TO PRIVATE CO. U/S 14
8. APPOINTMENT OF SMALL SHAREHOLDER’S DIRECTOR U/S 151
9. SALE OF UNDERTAKING U/S 180
10. LOAN, INVESTMENT, GUARANTEE, SECURITY GIVEN BY U/S 186(3)
IMPORTANT- THE PROVISIONS OF RULE 20 (E-VOTING) SHALL MUTATIS MUTANDIS IN
CASE OF POSTAL BALLOT.
POSTAL BALLOT
10 MATTERS COMPULSORY FOR REST MATTERS OPTIONAL FOR

EVERY COMPANY EXCEPT OPC, EVERY COMPANY TO DISCUSS BY
COMPANY HAVING UPTO 200 POSTAL BALLOT EXCEPT 2 MATTERS
MEMBERS WHICH CAN’T BE DISCUSSED BY
POTAL BALLOT
ORDINARY BUSINESS MATTERS IN WHICH

I.E. ADDA AUDITOR, DIRECTOR HAVE
RIGHT TO BE HEARD
E-VOTING POSTAL BALLOT
1) SEC 108 READ WITH RULE 20 1) SEC 110 READ WITH RULE 22
2) GM WILL TAKE PLACE 2) GM WILL NOT TAKE PLACE
3) APPLICABLE ON- 3) 10 MATTERS PRESCRIBED BY
a) COMPANY WHOSE EQUITY CG APPLICABLE ON ALL
SHARE LISTED ON RSE. COMPANY.
b) COMPANY HAVING MIN 1000 EXCEPT OPC AND COMPANY
MEMBERS. HAVING UPTO 200 MEMBERS.
SECTION 111- CIRCULATION OF MEMBERS RESOLUTION
MEMBER (S) NOW CO. WILL DECIDE TO CIRCULATE TO
HOLDING WRITTEN REQUEST REMAINING MEMBERS OR NOT. IF CO. THINKS
MEMBERS DOING FOR PUBLICITY OR
ATLEAST COMPANY
DEFAMATION, THEN TAKE RD’S APPROVAL TO
1/10TH OF NOT TO CIRCULATE
AT RO
PUSC/VP
SIGNED BY ALL REQUISIONISTS
ALONG WITH COST OF CIRCULATING TO

REMAINING MEMBERS
RD OTHERWISE
APPROVED CIRCULATE
PROPOSING A NEW RESOLUTION PROPOSING ANY OBJECTION/

ADDITIONAL VIEW POINT DON’T CIRCULATE
IF AFTER MEMBER HAS PROPOSED A RESOLUTION TO
ATLEAST 6 WEEKS
ATLEAST 2 WEEKS CO. & CO. CALLS AGM WITHIN 6 WEEKS THEN IT WILL BE
BEFORE AGM DEEMED THAT MEMBER HAS PROPOSED SUCH
BEFORE GM
RESOLUTION 6 WEEKS BEFORE AGM
SEC 118 MINUTES
IT REFERS TO THE DECISIONS & PROCEEDINGS THAT TOOK PLACE IN MEETING
BASIS GENERAL MEETING BOARD MEETING
1. TIME LIMIT OF PREPARATION WITHIN 30 DAYS OF CONCLUSION OF WITHIN 30 DAYS OF CONCLUSION OF
MEETING MEETING
2 .TIME LIMIT OF SIGNING WITHIN 30 DAYS OF CONCLUSION OF NO TIME LIMIT
MEETING
3. SIGNING AUTHORITY CM OF THAT MEETING OR IN CASE OF CM OF THAT MEETING OR IN CASE OF
HIS INCAPACITY BY DIRECTOR HIS INCAPACITY CM OF NEXT BM
AUTHORIZED BY BOD
4. WHO WILL KEEP THE SAFE CS OR ANY DIRECTOR AUTHORUIZED CS OR ANY DIRECTOR AUTHORUIZED
CUSTODY BY BOD BY BOD
5. TIME LIMIT OF PRESERVATION PERMANENTLY PERMANENTLY
6. PLACE OF PRESERVATION RO OR SAME C/T/V IN WHICH RO IS ANY PLACE IN INDIA

SITUATED
4 MINUTES BOOKS ARE THERE
COMMITTEE
BOARD MEETING
GENERAL CREDITOR’S
MEETING
MEETING MEETING
WILL BE JUST LIKE

PREPARED MINUTES
JUST LIKE OF BM
MINUTES OF
GM
SEC 118 IS APPLICABLE ON ALL CO. EXCEPT SEC 8 .I.E, CHARITABLE
COMPANIES
HOWEVER IF ARTICLES OF SEC 8 CO. MENTION THAT MINUTES WILL BE
CIRCULATED TO ALL THE MEBERS THEN THEY WILLL HAVE TO PREPARE THE
MINUTES
CM AT HIS ABSOLUTE DISCRETION CAN EXCLUDE 3 TYPES OF MATTERS

FROM MINUTES-F-
i) WHICH IS DETRIMENTAL TO CO’S INTEREST
ii) WHICH IS DEFAMATORY
iii) WHICH IS IRRELEVANT OR IMMATERIAL
CONTRAVENTION OF SECTION 118
TAMPERING OF MINUTES OTHER VIOLATION

2 YEARS IMPRISONMENT
PENALTY ON COMPANY- 25000
AND
PENALTY ON OFFICER IN DEAFULT- 5000
FINE-
MIN 25,000
MAX 1,00,000
SEC 119 INSPECTION OF MINUTES OF GM
1. IS ALLOWED TO MEMBERS FREE OF COST DURING BUSINESS HOURS
2. COMPANY CAN PUT RESTRICTION ON SUCH INSPECTION BY MENTIONING IN ARTICLES OR
BY PASSING A RESOLUTION IN GM BUT ATLEAST 2 BUSINESS HOURS HAVE TO BE
ALLOWED FOR SUCH INSPECTION.
3. IF ANY MEMBER WANTS COPY OF THE MINUTES THEN HE WILL GET IT WITHIN 7 DAYS OF
WRITTEN REQUEST ON PAYMENT OF SUCH SUM AS MENTION IN ARTICLES BUT NOT
EXCEEDING RS.10 /PAGE OR PART OF THE PAGE
4. IF MEMBER WANTS, HE CAN TAKE SOFT COPY OF MINUTES OF IMMEDIATELY PRECEEDING
3 FYS FREE OF COST
5. PENALTY OF CONTRAVENTION-
COMPANY- 25000
OFFICER IN DEFAULT- 5000
SECTION 114 RESOLUTION REQUIRING SPECIAL NOTICE
MEMBER(S) HOLDING ATLEAST 1% VOTING POWER OR PAID UP SHARES MIN

RS. 5 LAKH CAN SERVE SPECIAL NOTICE TO COMPANY ON RESOLUTIONS
/MATTERS FOR WHICH SPECIAL NOTICE IS REQUIRED BY THE ACT.
E.G- FOR REMOVAL OF AUDITOR U/S 140
FOR REMOVAL OF DIRECTOR U/S 169
SUCH SPECIAL NOTICE WILL BE SERVED TO COMPANY ATLEAST 14 DAYS
BEFORE GM & COMPANY WILL SERVE TO ALL MEMBERS ATLEAST 7 DAYS
BEFORE GM BY POST/E-MAIL & IF ITS NOT POSSIBLE FOR CO. TO SERVE THEN
PUBLISH IT IN 2 NEWSPAPER ATLEAST 7 DAYS BEFORE GM
SECTION 116
IF A RESOLUTION IS PASSED IN AN ADJOURNED MEETING,

THEN THE DATE OF PASSING OF SUCH RESOLUTION WILL BE
THE DATE OF ADJOURNED MEETING.
SECTION 117 RESOLUTION REQUIRING INTIMATION TO ROC
CO. SHALL INFORM ROC BY SUBMITTING FORM NO. MGT-14

WITHIN 30 DAYS OF PASSING OF FOLLOWING RESOLUTIONS
MATTERS
SR IN GM U/S
179(3)
ANY
VOLUNTARY RESOLUTION RESOLUTION BOARD
VOTING IN CLASS REQUIRING RESOLUTION
POWER MEETING CONSENT OF TO APPOINT/
100% REAPPOINT
MEMBERS MD
NOTE:
i) IFSC CO. HAS BEEN GIVEN 60 DAYS TIME INSTEAD OF 30 DAYS TIME TO
SUBMIT TO MGT-14
ii) PVT CO. & IFSC CO. ARE EXEMPTED TO SUBMIT MGT-14 IN MATTERS OF
SEC 179(3)
RS 10000 + 100/DAY BUT RS 10000 + 100/DAY BUT

SUBJECT TO RS 2 LAKH SUBJECT TO RS 50000
SEC 120: MAINTENANCE OF REGISTERS, RECORDS ETC
IN ELECTRONIC FORM
LISTED COMPANY, ANY COMPANY HAVING ATLEAST 1000

MEMBERS OR DEBENTURE HOLDERS OR SECURITY HOLDER MAY
MAINTAIN THE RECORDS, REGISTERS IN ELECTRONIC FORM.
SEC 121 : REPORT ON AGM
THIS SECTION APPLIES ONLY ON LISTED PUBLIC COMPANY.

EVERY LISTED PUBLIC COMPANY SHALL SUBMIT A REPORT
ON AGM IN FORM MGT 15 TO ROC WITHIN 30 DAYS OF
AGM MENTIONING THAT AGM WAS PROPERLY CONVENED,
HELD & CONDUCTED.
SIGNING OF MGT 15
CHAIRPERSON
BUT IN CASE OF HIS CS
INCAPACITY THEN BY ATLEAST- AND
2 DIRECTORS OUT OF WHICH 1
SHALL BE MD IF ANY
COMPANY
1 LAKH + 500/DAY OFFICER IN DEFAULT:
SUBJECT TO MAX 5 LAKH 25000 + 500/DAY SUBJECT
TO MAX 1 LAKH
SECTION: 122
NON APPLICABILITY OF CERTAIN SECTIONS ON OPC.
SECTION 98 & SEC 100 TO 111 SHALL NOT APPLY
ON OPC.
**NOTE: OPC IS NOT REQUIRED TO CONDUCT AGM U/S 96 & 97
& 99 ALSO WON’T APPLY.
EFFECTIVELY SEC 96 TO 111 WON’T APPLY.
AN OPC HAVING 1 DIRECTOR ON ITS BOARD CAN TAKE ITS
DECISIONS BY RECORDING IN THE MINUTE BOOK ALONG WITH
DATE & SIGN OF THAT DIRECTOR & SUCH DATE SHALL BE
DEEMED TO BE THE DATE OF BOARD MEETING.
SEC 88: REGISTER OF MEMBERS,DEBENTURE HOLDERS
& SECURITY HOLDERS
REGISTER OF MEMBERS (ROM)
COMPANY HAVING SHARE COMPANY HAVING NO

CAPITAL SHARE CAPITAL
FORM NO. MGT 1 NO SUCH FORM
COMPANY HAVING NO SHARE CAPITAL
NO SUCH FORM
BUT WILL PREPARE FORM CONTAINING DETAILS-

i. NAME OF MEMBERS.
ii. ADDRESS OF MEMBERS.
iii. PAN
iv. CIN IN CASE OF BODY CORPORATE.
v. FATHER/MOTHER/SPOUSE NAME.
vi. GUARDIAN’S NAME IN CASE OF MINOR.
vii. DATE OF BECOMING MEMBER.
viii. DATE OF CESSATION OF MEMBERS.
ix. AMOUNT OF GUARANTEE IF ANY.
TIME LIMIT OF ENTRY IN THE REGISTER OF MEMBERS
WITHIN 7 DAYS FROM THE DATE OF APPROVAL OF SHARE

TRANSFER OR ALLOTMENT GIVEN BY BOD OR ITS COMMITTEE.
PLACE WHERE REGISTER OF MEMBERS ETC.WILL BE KEPT AT
RO BUT BY PASSING SR IN GM IT CAN BE KEPT AT
ANY PLACE IN INDIA WHERE >

C/T/V IN WHICH RO IS
1/10th OF TOTAL MEMBERS
SITUATED
RESIDE.
**INDEX IS REQUIRED IN REGISTER OF MEMBERS-
HOWEVER IF COMPANY HAS LESS THAN 50 MEMBERS,
THEN INDEX IS OPTIONAL.
REGISTER OF DEBENTURE HOLDERS & SECURITY
HOLDERS
FORM NO. MGT 2

IF SHARES,DEBENTURES OR ANY SECURITIES ARE PLEDGED
THEN SUCH INFORMATION WILL ALSO BE RECORDED IN
RESPECTED REGISTER
FOREIGN REGISTER
CAN BE KEPT BY THE COMPANY IF -

(A) AUTHORISED BY THE ARTICLES OF COMPANY.
(B) COMPANY HAVING ITS MEMBERS IN THAT COUNTRY ALSO.
MGT 3 SHALL BE SUBMITTED BY CO & ROC WITHIN 30
DAYS OF
OPENING OF
FOREIGN
REGISTER DISCONTINUING
CHANGE OF OF FOREIGN
ADDRESS OF REGISTER
FOREIGN
REGISTER
WITHIN 15 DAYS OF ANY CHANGES MADE IN FOREIGN
REGISTER COMPANY SHALL IN FORM AT HIS RO.

3 LAKH 50,000
SEC 92: ANNUAL RETURN
MGT 7
EVERY COMPANY SHALL SUBMIT ITS ANNUAL RETURN TO ROC WITHIN
60 DAYS OF AGM & IF AGM IS NOT HELD WITHIN THE DUE DATE THEN
WITHIN 60 DAYS OF DUE DATE OF AGM ALONG WITH THE REASON WHY
AGM ALONG WITH THE REASON WHY AGM WAS NOT HELD.
FORM NO. OF ANNUAL RETURN=
MGT 7 (BUT IN CASE OF OPC)
SMALL CO. ITS MGT 7A
SEC 92: ANNUAL RETURN
CONTENT OF ANNUAL RETURN:-10 MATTERS
1. ITS RO ,PRINCIPAL BUSINESS ACTIVITITY, HOLDING, SUBSIDIARY & ASSOCIATE.
2. ITS SHARES ,DEBENTURES & OTHER SECURITIES ISSUED.
3. LIST OF MEMBERS , DEBENTURE HOLDERS ALONG WITH CHANGES SINCE CLOSE OF
PREVIOUS FY.
4. LIST OF PROMOTERS , DIRECTORS , KMP ALONG WITH CHANGES SINCE CLOSE OF
PREVIOUS F.Y
5. DETAILS OF GM & BM.
6. REMUNERATION OF DIRECTOR , KMP.
7. PENALTY OR FINE IMPOSED ON COMPANY, OFFICER IN DEFAULT.
8. CERTIFICATION OF COMPLIANCES.
9. SHARES HELD BY FII (FOREIGN INSTITUTIONAL INVESTORS)
10. ANY OTHER MATTERS AS MAY BE PRESCRIBED.
Signing of Annual Return
COMPANY WHOSE PUSC
NORMAL OPC, SMALL COMPANY, IS MIN 10 CR AND
LISTED COMPANY
COMPANY DORMANT COMPANY TOTAL TURNOVER IS
MIN 50 CR
SAME AS NORMAL COMPANY

1 DIRECTOR & 1 CS 1 CS BUT IF NO CS +
BUT IF NO CS THEN THEN BY 1 COMPLAINCE FORM MGT 8
BY CS IN PRACTICE. DIRECTOR. SIGNED BY CS IN PRACTICE
MENTIONING THE CONTENT OF
ANNUAL RETURN IN MGT 7 IS
CORRECT.
• A LTD HAVING TURNOVER OF MINIMUM 50 CR. DOES NOT HAVE A CS.
IT GOT ITS ANNUAL RETURN SIGNED BY A DIRECTOR & MR RAVI (CS IN
PRACTICE).
• NOW TO CERTIFY IT IN MGT 8 IT SHOULD BE DONE BY ANOTHER CS IN
PRACTICE & NOT MR. RAVI.
LAW MUST BE FOLLOWED BOTH IN LETTER & SPIRIT.
ANNUAL RETURN WILL BE UPLOADED BY COMPANY ON ITS WEBSITE IF
ANY & ITS LINK (WEBLINK) WILL BE MENTIONED IN BOARD REPORT.
(BEFORE AMENDMENT EXTRACT OF ANNUAL RETURN IF FORM NO. MGT
9 USED TO BE ANNEXED IN BOARD REPORT).
COMPANY OID CS IN PRACTICE
10000 + 100/ DAY 10000 + 100/ DAY

(SUBJECT TO (SUBJECT TO 2 LAKH
MAXIMUM 2 LAKH) MAXIMUM 50000)
SECTION 93 – OMMITTED: FORM NO. MGT 10

SECTION 94- PLACE OF KEEPING REGISTER, RETURNS, ETC
BY PASSING SR IN GM CAN BE KEPT

REGISTERED OFFICE AT ANY PLACE WHERE > 1/10TH OF
TOTAL MEMBERS RESIDE
SUCH MEMBERS, DEBENTURE HOLDERS, SECURITY HOLDERS

CAN INSPECT OR TAKE EXTRACT FOR FREE BUT COPY OF IT
WITHIN 7 DAYS ON PAYMENT OF 10/- PAGE OR PART OF PAGE
TYPE PERIOD OF PRESENTATION
1. REGISTRATION OF MEMBERS PERMANENTELY
2. REGISTRATION OF DEBENTURE 8 YEARS FROM REDEMPTION.
SHAREHOLDER
3. ANNUAL RETURN, OTHER 8 YEARS FROM FILING
DOCUMENTS & RETURNS
SUBMITTED TO ROC
4. FOREIGN REG OF MEMBERS PERMANENTLY
5. FOREIGN REG OF DEBENTURE 8 YEARS FROM RED.
HOLDERS
SECTION 95– REGISTERS, RECORDS INDICICES,
ANNUAL RETURN SUBMITTED TO ROC ARE ONLY
PRIMA FACIE EVIDENCE & NOT CONCLUSIVE
EVIDENCE.
1) COMPANY CAN CLOSE ITS REGISTERS FOR MAXIMUM 45 DAYS IN A FINANCIAL
YEAR BUT.
2) NOT EXCEEDING 30 DAYS AT A TIME.
3) ATLEAST 7 DAYS NOTICE MUST BE GIVEN BY THE COMPANY TO ALL BEFORE
SUCH CLOSURE.
4) LISTED COMPANY SHALL ALSO PUBLISH SUCH NOTICE IN 2 NEWSPAPER.
5) PENALTY FOR CONTRAVENTION
OFFICER IN
DEFAULT
COMPANY
5000/DAY SUBJECT TO SAME
MAXIMUM 1 LAKH
SECTION 91 – CLOSURE OF REGISTER OF MEMBERS, DEBENTURE
HOLDERS, SECURITY HOLDERS
SECTION 89
IF A PERSON IS A MEMBER BUT NOT A BENEFICIARY, HE WILL INFORM
THE COMPANY WITHIN 30 DAYS IN FORM MGT 4 & BENEFICIARY WILL
INFORM THE COMPANY IN MGT 5 WITHIN 30 DAYS. ONCE COMPANY
RECEIVES BOTH FORMS IT WILL SUBMIT
MGT 6 TO INFORM ROC WITHIN 30 DAYS.
AS PER SECTION 2(35)
DIVIDEND INCLUDES
INTERIM DIVIDEND
DIVIDEND IS RECOMMENDED BY BOD BY
PASSING BR AT BM (SEC 123)
DECLARED BY SHAREHOLDERS IN
AGM EITHER AT SAME/LOWER RATE
BY PASSING ORDINARY RESOLUTION
WITHIN 5 DAYS OF DECLARATION

DIVIDEND MUST BE DEPOSITED IN A
SEPARATE SCHEDULE BANK A/C
(ESCROW A/C)
WITHIN 30 DAYS OF DECLARATION ENTIRE
DIVIDEND MUST BE PAID FAILING WHICH
(SEC 127)
DIRECTOR COMPANY
IMPRISONMENT UPTO 2 SIMPLE INTEREST @

YEARS 18% p.a WILL HAVE
TO BE PAID
AND
FINE 1000/DAY TILL THE
DEFAULT CONTINUES
NO OFFENCE WILL BE DEEMED IN 5
EXCEPTIONAL CASES EVEN IF DIVIDEND COULD
NOT BE PAID WITHIN 30 DAYS OF
DECLARATION
SEC 124
WITHIN 7 DAYS ON EXPIRY OF 30 DAYS OF
DECLARATION OF DIVIDEND, WHATEVER AMOUNT OF
UNCLAIMED DIVIDEND IS LEFT, IT SHALL BE
TRANSFERRED TO A SEPARATE BANK A/C CALLED
UNPAID DIVIDEND A/C FAILING WHICH IS @ 12% p.a
WILL BE ATTRACTED FOR THE DELAYED PERIOD.
SEC 124
WITHIN 90 DAYS OF TRANSFER OF UNPAID DIVIDEND
A/S FOLLOWING SHALL BE UPDATED ON COMPANY’S
WEBSITE & CG’S WEBISTE
SHAREHOLDER’S SHAREHOLDER’S LAST

NAME KNOWN ADDRESS &
COMMUNICATION
DIVIDEND DETAILS
AMOUNT
SHARES HELD
SEC 124
AFTER 7 YEARS OF ABOVE TRANSFER ANY UNPAID
DIVIDEND AMOUNT SHALL BE TRANSFERRED TO CG’S
IEPF (INVESTOR EDUCATION & PROTECTION FUND) &
COMPANY SHALL SUBMIT FORM IEPF 1 TO GIVE
DETAILS OF SUCH TRANSFER
SEC 127
5 EXCEPTIONAL CASES WHEN DIVIDEND EVEN IF NOT
PAID WITHIN 30 DAYS OF DECLARATION WILL NOT BE
TREATED AS AN OFFENCE
1) WHEN DIVIDEND COULD NOT BE PAID

BECAUSE OF OPERATION OF LAW
E.G- RBI’S APPROVAL REQUIRED UNDER FEMA 1999 TO
PAY DIVIDEND TO FOREIGN SHAREHOLDERS & SUCH
APPROVAL WAS DELAYED BY RBI
SEC 127
5 EXCEPTIONAL CASES WHEN DIVIDEND EVEN IF NOT PAID
WITHIN 30 DAYS OF DECLARATION WILL NOT BE TREATED AS
AN OFFENCE
2) WHEN SHAREHOLDERS GAVE SOME

INSTRUCTIONS TO FOLLOW BUT COULD
NOT BE FOLLOWED BY CO. & IT WAS
COMMUNICATED TO THAT
SHAREHOLDER
SEC 127
5 EXEPTIONAL CASES WHEN DIVIDEND EVEN IF NOT PAID
AN OFFENCE
3) WHEN THERE IS A DISPUTE

REGARDING TO TITLE OF SHARES
SEC 127
5 EXEPTIONAL CASES WHEN DIVIDEND EVEN IF NOT PAID
AN OFFENCE
4) WHEN CO. ADJUSTED DIVIDEND

LAWFULLY AGAINST
SHAREHOLDER’S DUES
SEC 127
5 EXCEPTIONAL CASES WHEN DIVIDEND EVEN IF NOT PAID
AN OFFENCE
5) ANY OTHER REASON WHERE CO. CAN

PROVE THAT DIVIDEND COULD NOT BE
PAID BECAUSE OF REASONS OTHER
THAN COMPANY’S FAULT
CAN DIVIDEND ONCE APPLIED BE REVOKED?
DIVIDEND ONCE DECLARED ACQUIRES THE

CHARACTER OF A DEBT AND SO IT CANNOT BE
REVOKED HOWEVER IN EXCEPTIONAL
CIRCUMSTANCES LIKE
A) OUTBREAK OF WAR
B) KILLING TAX BURDEN
DIVIDEND CAN BE REVOKED AFTER PRIOR APPROVAL
OF SHAREHOLDER
Declaration And Payment Of Dividend Out Of Past
Accumulated Profits
In Case Of Loss Or Inadequate Profits In The Current
Financial Year Dividend Can Be Paid From Past
Accumulated Profits By Satisfying All The Following
Conditions-
1), Dividend Rate Cannot Exceed Average Rate Of

Dividend In Immediately Preceding Three Financial Year
However The Condition Will Not Be Checked If
Company Has Not Declared Any Dividend In All The
Three Preceding Financial Years
Declaration And Payment Of Dividend Out Of Past
Accumulated Profits
2) Maximum Amount That Can Be Withdrawn Cannot

Exceed 1/10th Of (PUSC + Fr)
3) The Amount That Will Be Withdrawn From
Accumulated Profits Will Be First Used To Set Off
Current Year's Losses If Any
4) Balance In Fr Should Not Fall Below 15% Of PUSC
EXAMPLE- QUESTION
X LTD SUFFERED A LOSS PF 2 LAC IN FY 21-22 . IT
WANTS TO DECLARE DIVIDEND OUT OF PAST
PROFITS . ITS LAST 4 YEARS DIVIDEND
FINANCIAL YEAR DIVIDEND RATE
17-18 6%
18-19 10%
19-20 12%
20-21 17%
CO.’S PUSC = 60 LAKHS, FR = 40 LAKHS

COMPUTE MAXIMUM DIVIDEND IT CAN PAY?
EXAMPLE-ANSWER
MAXIMUM DIVIDEND X LTD CAN PAY SHALL BE LOWER
OF FOLLOWING CONDITIONS:-
1) AVERAGE DIVIDEND RATE OF IMMEDIATELY PRECEDING 3 FY-
10% + 12% + 17%
= 13%
i.e, 13% OF PUSC (60 LACS)

= RS. 7.8 LACS
EXAMPLE-ANSWER
2) MAX AMOUNT THAT CAN BE WITHDRAWN
1/10TH OF PUSC + FR
= 1/10 TH 0F (60 +40)
= 10 LACS
3) CURRENT YEAR LOSS OF 2 LACS HAS TO BE ADJUSTED
MAX DIVIDEND AMOUNT = 10 – 2 LACS

= 8 LACS
EXAMPLE-ANSWER
4) BALANCE IN FREE RESERVES (40 LACS) SHOULD NOT FALL
BELOW 15% OF PUSC ( 15% PF 60 LACS ) = 9 LACS
AMOUNT THAT CAN BE WITHDRAWN = 40 – 9 LACS

= 31 LACS
(-) CY LOSS (2 LACS)
MAXIMUM DIVIDEND = 29 LACS
HENCE LOWER OF ALL THE ABOVE AMOUNTS RS.7.8 LACS CAN BE

PAID AS DIVIDEND
INTERIM
DIVIDEND
ENTIRE CONCEPT IS SAME AS ABOVE EXCEPT THE
FOLLOWING
IT IS RECOMMENDED &
DELCARED BY BOD AT BM
SOURCES OF INTERIM
DIVIDEND
INTERIM
DIVIDEND
DIVIDEND DECLARATION DATE TYPE OF DIVIDEND
(MEPL HELD ITS AGM FOR FY 21-22

ON 31.8.22)
1.11.21 INTERIM DIVIDEND
31.8.22 FINAL DIVIDEND

SOURCES OF
DIVIDEND
SEC 23
INTERIM DIVIDEND FINAL DIVIDEND

DECLARED DURING DECLARED IN AGM
INTERIM DIVIDEND 31.8.22)
CURRENT FY (21-23) DECLARED AFTER
(E.G- 1.11.21, 1.3.22) CURRENT FY BUT •TOTAL FREE
BEFORE AGM (31.7.22)
•TOTAL P/L RESERVES
•TOTAL P/L •CURRENT FY’S
•PROFIT EARNED FROM
•CURRENT FY’S PROFIT PROFIT
BEGINNING OF CURRENT FY
( 1.4.21 TO 31.3.22)
TILL THE END OF QUARTER
IMMEDIATELY PRECEEDING THE
QUARTER IN WHICH INTERIM
DIVIDEND IS DECLARED
FOR INTERIM DIVIDEND DELCARED
IN
1.11.21 1.3.22
•TOTAL P/L •TOTAL P/L
•1.4.21 TO 30.9.21 •1.4.21 TO 30.12.21
IF THERE IS LOSS IN CURRENT FY THEN INTERIM

DIVIDEND CAN BE GIVEN FROM TOTAL P/L BUT
NOT EXCEEDING AVERAGE DIV RATE OF
IMMEDIATELY PRECEDING 3 Fys.
IN CASE OF CY’S LOSS CAN DIVIDEND BE PAID &
FROM WHERE
INTERIM DIVIDEND
TOTAL P/L
1 CONDITION = DIV SHOULD FINAL DIVIDEND
NOT EXCEED AVERAGE
DIVIDEND RATE OF TOTAL FREE RESERVES
IMMEDIATELY PRECEDING 3 4 CONDITIONS-
FYS
IMPORTANT NOTE-.
BEFORE DECLARING ANY DIVIDEND FROM

PROFITS MAKE SURE , DEPRECIATION IS
CHARGED, UNREALISED & NOTIONAL GAINS IF
ANY ARE REMOVED, CY LOSSES IF ANY ARE SET
OFF
AS PER SEC 123(4) DIVIDEND MUST BE
DEPOSITED IN A SEPARATE BANK A/C WITHIN 5
DAYS OF DECLARATION.
HOWEVER IT IS EXEMPTD TO THOSE

COMPANIES WHOSE 100% PUSC IS HELD BY
CG/SG/BOTH/ONE OR MORE GOVT CO.
EXAMPLE-
• A LTD(GOVT CO.)- WOS (B LTD)
A LTD NOT EXEMPTED, B LTD IS EXEMPTED
• C LTD (100% SHARE HELD BY CG)

51% SHARES
D LTD
C LTD IS EXEMPTED
D LTD NOT EXEMPTED
A CO. CANNOT DECLARE & PAY ANY DIVIDEND
IF ANY DEFAULT IN DEPOSITS IS SUBSISTING
MODE OF PAYMENT
CASH CHEQUE DRAFT ANY

DIVIDEND
WARRANT OTHER
BANKING
CHANNEL
IT’S A GOVERNMENT BODY CONSISTING OF 1
CHAIRPERSON & MAX 7 MEMBERS
IT SHALL ALSO HAVE A CEO
CEO WILL BE CONVENOR OF ALL MEETINGS OF IEPF
SECRETARY OF MCA SHALL BE CHAIRPERSON OF IEPF

WHAT FUNDS ARE CREDITED TO IEPF
UNCLAIMED SHARES
UNCLAIMED
DEPOSITS FOR 7
DEBENTURES UNCLAIMED
YEARS GOVT FOR 7 YEARS FOR 7 YEARS
GRANT
INTEREST OR
UNCLAIMED ABOVE AMOUNTS
DIV FOR 7
YEARS
FOR WHAT PURPOSES ABOVE FUNDS ARE
UTILISED?
REFUND OF UNCLAIMED DIV/DEPOSITS/ REIMBURSEMENT

DEBENTURES TO ORIGINAL; CLAIMANTS OF LEGAL COSTS
EXPENSES TO PROMOTE
PAYMENT OF COMPENSATION TO
IEPF AWARENESS
IDENTIFIABLE VICTIMS
HE MUST REGISTER HIMSELF ONLINE IN IEPF PORTAL
SUBMIT CLAIM FORM IEPF 5
ATTACH ADDRESS PROOF, ID PROOF AND PROVE THAT HE IS A

SHAREHOLDER OF THE COMPANY
ALSO SUBMIT THE ABOVE DOCUMENTS TO COMPANY
COMPANY WILL VERIFY WITHIN 30 DAYS
IEPF AUTHORITY SHALL MAKE THE PAYMENT TO INVESTOR

SEC 126
RIGHT TO DIVIDEND RIGHT SHARES AND BONUS

SHARES TO BE KEPT IN ABEYANCE ( HOLD )
PENDING REGISTRATION OF TRANSFER OF
SHARES
SEC 126
If Company Have Received Share Transfer Form (SH 4)

And Registration Of Such Transfer Of Share Is Pending
And Anytime Company Declares Any Dividend, Rights
issues, Bonus Issue Then Company Shall Keep Them On
Hold Relating To Those Shares For Which Sh-4 Has
Been Received Until Company Completes Registration
Of Transfer Unless Transferor In Writing Authorises To
Transfer Them To Transferee
SEC 128 Book of Accounts
1. Meaning:- As per Sec2(13), BOA
includes
Book
Receipts Purchase & Assets
& Sales Book Recording
and items of cost
Payments of Goods &
book Services
liabilities u/s 148
Book
2. PLACE OF BOOKS OF ACCOUNTS
RO OF THE COMPANY PROVIDED THAT IF BOD WANTS IT CAN
KEEP AT ANY PLACE IN INDIA BY PASSING BOARD RESOLUTION AT
BM AND SHALL HAVE TO INFORM ROC THE EXACT ADDRESS OF
SUCH PLACES WITHIN 7 DAYS IN FORM AOC 5.
3. Accrual basis of accounting:- Compulsory
4. Double Entry Book Keeping System:- Compulsory
5. Branch Accounts:- Compulsory outside India shall send

summarized returns of its accounts at company’s RO at quarterly
intervals.
6. Time limit of Preservation:- Minimum 8 years from the end of relevant
FY. However, if CG has directed the company to preserve its BOA for higher
period because of investigation conducted of such company. Under Chapter
XIV of this Act, then company shall preserve for such higher period.
7. Inspection of BOA during business

hours can be done by
Holding Co.
may
Director however if authorise its
ROC any director
wants information of
accounts of Branch to inspect
CG’s officer BOA of
outside India then such
SEBI Member if authorized information shall be subsidiary
by articles given within 15days of
request
8. Can BOA be maintained electronically ?
Yes but not compulsory. However of Co decides to maintain

its BOA electronically then all 7 conditions of the
companies(Accounts) Rules 2014 shall be satisfied:-
a. BOA kept in electronic form should remain accessible in

India.
b. Should be displayed in legible form
c. Original format of accounts should not be allowed.
d. Accounts received from branches shall remain unaltered.
e. Should contain proper system of retrieval, storage &
printout.
f. Server in which back up of accounts is kept should be
located in India.
g. Annual filing to ROC to inform
Name of service Location of service

provider provider IP address Details of Cloud
9. Persons responsible to maintain BOA
Managing Director Any other person entrusted by

Whole time director BOD to maintain accounts
in charge of Finance
Chief Financial Officer
10. Fine for Contravention:- Min 50000 Max 5lakh

Sec 129 Financial Statements
1. Definition:- As per Sec 2(40) financial Statements includes
Balance Sheet
P/L but in case of Non profit Schedules and
seeking organization its Cash Flow explanatory notes
Statement
Income & Expenditure A/C Statement on accounts
of changes
in equity
Provided that finance statements of OPC, Small Company, Dormant Company

& Start Up Private Company may not include Cash Flow Statement.
2. Every Company shall prepare its Financial Statements which
should comply with the following conditions to exhibit true and fair
view:-
In case of banking , insurance

& electricity Co. comply with
SC III on those matters which
Comply all applicable Comply with
are not inconsistent with their
standards on Accounting Schedule III
own Specific acts.
3. Every company shall prepare its financial statements in Form AOC 4.
4. Every having subsidiary, associate, joint venture shall prepare

Consolidated Financial Statements in Form AOC4.
5. Every Company having subsidiary, associate, joint venture salient

features of financial statements of subsidiary, associate, joint venture in
Form AOC 1.
6. AS 22/2nd AS 12 i.e., accounting for deferred taxes
exempted shall following:-
Infrastructure Finance Leasing

Govt Company engaged Company whose atleast 75% of total
PF 9 revenue is due to transactions with
in NBFC
Govt/ Govt Co
7. Segment Reporting in As 17 shall not apply on Govt Co

engaged in defense production. Example: HAL, BEL
8. Consolidated Financial Statements Rules shall not apply
on the following:-
Subsidiary not listed

Holding Co anywhere
having wholly Holding Co having
owned Subsidiary but taken If ultimate holding co
Subsidiary approval from its does its consolidation
members
9. Persons responsible to prepare first:- Exactly Fine Same as Sec 128.
10. Fine for contravention:- Minimum 50000 and maximum 5 lakh or up to

1year imprisonment or both.
Sec 130 Reopening of Books of Accounts on NCLT’s Order
1. No co. shall reopen its BOA and recasts its financial

statements unless ordered by NCLT on an application made by:
CG (MCA)
SEBI Regulatory Body or any
IT Authorities
other person
2. Grounds of such Application
The affairs of the Co during

Relevant earlier accounts relevant earlier years were
Or
were prepared fraudulently mismanaged casting a doubt on the
reliability of financial statements
Before passing any order NCLT will send notice to CG, SIR
& give them opportunity to represent.
3. The accounts so prepared and the financial
statements recasted be final.
4. Such re opening of BOA can be done for Max 8

preceeding FY or such higher number of FYs if
ordered by CG during investigation.
Sec 131 Voluntary Revision of Financial
Statements and Board Report
1.Where to BOD it appears that Financial Statements or Board

Report do not comply with Sec 129 or 134 they may prepare revised
FS or BR after taking NCLT's approval on application made by co to
NCLT. Such revision allowed immediately preceding for maximum
3 immediately FYs.
Provided that NCLT on receiving such application shall send notices
to CG(MCA), IT Authority & SEBI (in case of listed Co) seeking
thereon representation.
2. Where the Financial Statements or Board Report have been the

circulated by the Co to its members then the revision in FS or BR shall
be limited only to make necessary with Sec 129 or 134 respectively.
3. CG has the power to make Rules.
Basis Sec 130 Sec 131
1. Deal with Compulsory reopening of Voluntary revision of FS

BOA and recasting of FS and BR after NCLT’s
on NCLT’s order. approval Co.
2. Who will apply? CG SIR Company
3. To whom NCLT NCLT

Basis Sec 130 Sec 131
4. Grounds Either (a) earlier accounts FS not complying Sec 129

prepared fraudulently or (b) or BR not complying Sec
affairs of co mismanaged 134
during relevant FY casting
on doubt reliability of FS.
5. Time limit Maximum 8 immediately Maximum 3 immediately

preceeding FYs or higher preceeding FYs.
period if ordered by CG
during
6. Changes Any changes may be made. Restricted only to ensure

compliance with Sec 129 &
134.
Sec 134 Signing of Financial Statements
Chairperson if authorized by
CEO & CFO & CS
BOD otherwise by atleast 2
directors out of which 1 shall
be MD if any and
In case of OPC both

Financial Statement &
BR are signed by only 1
Director.
Signing of Board Report
Chairperson if authorized by BOD

otherwise by atleast 2 directors out of
which 1 shall be MD if any.
Contents of Boards Report u/s 134
A. Annual Return’s web link.
B. Number of Board Meeting.
C. C
CSR details
Changes in Contract with Co’s affairs

Conservation of Comments of
material related Parties states
energy, technology BOD on in AOC 2.
absorption & foreign remarks of financial
exchange auditor /CS position
D. D
Director’s Details of Declaration

Appointment & fraud reported by 2nd
Remuneration Policy by auditor Director
Dividend & Transfer to

Development & DRS (Director’s
implementation Responsibility
reserve
of risk mgt Statement)
system
• Loan, Investment, Guarantees , Security
given by company.
• Listed company, unlisted public company
having PUSC 25 Cr shall mention
evaluation of performance of BOD,
Committees , directors.
Such other matters as prescribed under Rule 8 of
Companies(accounts) Rule 2014
Financial Summary Deposits from public

Change in the nature of
Significant orders passed
business
by Tribunal
Change in Dir/ KMP
Whether costing u/s 148 records
Change in Subsidiary/ maintained
Associate
Whether internal complaint
Integrity, Expertise of 2nd committee set up to present sexual
Dir harassment under sexual harassment
of women (Prevention) Act 2013
Director’s Responsibility Statement will contain
6 matters:-
Accounting Standards
Accounts have been prepared
& 2nd AS whenever
on going concern basis
applicable have been
followed
In case of listed entity,
Accounting policies internal financial controls
are proper are adequately made or not
Accounting records
are adequate Compliance of acc
applicable fees have been
ensured
Board Report of OPC & Small Co shall contain only
following matters prescribed under Rule 8A
Accrual return’s D Significant order

weblink passed by Tribunal
DRS Details of
Number of Dir/ KMP
C Details of
Board Meeting Financial Summary
fraud reported
by auditor
Co’s affair status
Changes(material) in Comments of Contract with related

financial position BOD on remarks Parties in Form
of auditor/CS AOC 2.
Punishment for construction of any provisions of
Sec 134
Company OID
Min Fine 50000 Min Fine 50000

Max Fine 25 lakhs Max Fine 5 lakhs
OR
Upto 3yrs imprisonment
OR
Both
Corporate Social Responsibility u/s 135
1. Applicability :- Any Co(including foreign Co)
satisfying any of the 3 conditions in immediately
preceeding FY
T/O Min 100 Cr or

Net Profit Min 5 Cr
NW Min 500 Cr or
Provided that if the above Co ceases to satisfy the

above 3 limits for continuous 3 FYs then CSR
shall not apply unless limit is attracted again.
What are the obligations if Sec 135 attracted?
Constitute of CSR committee Spend atleast 2%*Aug NP of

1. having atleast 3 director out of which/ immediately preceeding 3FYs.
shall be Ind Dir. 1. NP is computed u/s 198.
2. Co not read to appoint Ind Dir shall 2. 2 items shallbeexcludedfromNP.
constitute CSR committee with only 2 a. Profits fromoverseas branches.
Dir. b. Dividend receivedfromcompanies
3. PvtCo shall constitute CSR committee on whichsec135 is applicable.
with only 2 Dir.
4. Foreign Co shall constitute CSR
committee with only 2 persons out of
which shall be resident in India.
Functions/ Role of CSR Committee
Recommend CSR policy

having activities of Schedule Recommendthe amount of Monitor CSR Policy
VII CSR expenditure
Role of BOD
Approve CSR policy Make necessary CSR

recommended by CSR expenditure
committee
What activities will not continue CSR?
Any activityundertakenin
the ordinarycourse of
Activities outside India
business except pharma
Companies for COVID19
Activities done for
vaccination/ drugs
employees & their
family members Political contribution
u/s 182
How to do CSR/ Mode of CSR
By contributing to are registered

Co can directly do CSR society/ trust having good track
expenditure or record in last 3 FYs.
By opening a Sec 8
Company or
Disclosure of CSR
Board Report Company’s Website

8. Schedule VII Activities of CSR (Acronym +
HEEENAS)
1. Eradication of hunger poverty, malnutrition.

2. Promotion of Education.
3. Promotion of Gender Equality.
4. Protection of Environment.
5. Protection of National Heritage.
6. Measures for the benefits of Armed Forces Veterans, war widows.
7. Promotion of Rural Sports, naturally recognized sports, Paralympic & Olympics
sports.
8. Contribution to PM National Relief fund or PM CARES (Citizen's Assistance &
Relief in Emergency situation) fund.
9. Contribution to technology incubators or R&D projects related to development of
COVID 19 vaccination/drugs.
10. Rural Area development.
11. Slum Area development(slum areas is areas notified by CG/SG/Local Authority
as slum).
Sec136 Circulation of Accounts
1. Applicability:- Every Co- shall circulate
Audited financial Statements Other documents like

Auditor's Report and
including Consolidated Board Report
financial statement if any
and
2. To whom shall it be circulated
Members Any other person

Debenture Trustee
required by law
3. Time limit of circulation
Atleast 21 days before AGM But in case of Sec 8 Co it

atleast 14 clear days notice
before AGM
4. Manner of Circulation by listed co or unlisted
public Co having NW > 1Cr & T/o > 10 Cr
SH holding shares –
circulate electronically Others physically
5. It shall be sufficient compliance of low if listed co instead
of circulating all required documents, just keep at Co’s RO
atleast 21 clear days before AGM for inspection during
business hours and circulate only SALIENT FEATURES in
FORM AOC 3.
6. Listed Co. shall upload on its website its audited financial
statement along with Consolidated Financial Statements if
any.
7. Listed Co having one or more subsidiaries subsidiaries
whether in or outside India shall upload their individual
audited financial statements also on its website.
Provided that if listed Co is having Foreign
Subsidiary
Which is not required to prepare stand Which is not required to get its
alone/ individual financial statement & is first audited & so it has not got its
required to prepare only consolidated FSaudited
Financial statement as part foreign law
Listed co shall upload unaudited FS
Listed Co shall upload such of such foreign subsidiary & if its in
Consolidated first only language other than englishthen
translated copy in english also
8. Penalty for contravention
Company OID
Rs 5000
Rs 25000
QUESTIONS
Ravi Limited maintained its book of accounts under

Single Entry System of Accounting. Is it permitted under
the provisions of the Companies Act, 2013? State the
person responsible for complying with the provisions
regarding maintenance of Books of Accounts of a
Company.(i) Whether a Company can keep books of
Accounts in electronic mode accessible only outside
India. (2019 Nov)
QUESTIONS
What does the term Financial Statements include in

relation to a company under the Companies Act, 2013?
Which companies need not prepare a cash flow
statement? (2018 Nov)
QUESTIONS
State any four contents of a Directors

Responsibility Statement as required under
Section 134 of the Companies Act, 2013. (2018
may)
QUESTIONS
The Board of Directors of Dilip Telelinks Ltd.

consists of Mr. Choksey, Mr.Patel (Directors) and
Mr. Shukla (Managing Director). The company has
also employed a full time Secretary. The Profit and
Loss Account and Balance Sheet were signed by Mr.
Choksey and Mr. Patel. Examine whether the
authentication of financial statements of the
company in accordance with the provisions of the
Companies Act, 2013? (Nov 2011)
QUESTIONS
Explain The Following-corporate Social

Responsibilty Committee (Csr)(2020 Nov)
QUESTIONS
Rera Ltd. a company incorporated under the Companies Act, 2013 having turnover of
100 crore, net profit 3 crore, accumulated loss of 50 crore and securities premium 300
crore as per the audited accounts of the company for the Financial Year 2016-17.The
CFO of the company informed the directors of the company that the Corporate Social
Responsibility (CSR) committee is required to be constituted as per the Companies Act,
2013. The directors seek your advice as a professional regarding the criteria required
to constitute CSR committee and whether it is applicable to Rera Ltd. or not.(May
2018)X Ltd. is a listed company having a paid-up share capital of 25 crore as at 31
March 2019 and turnover of 100 crore during the financial year 2018-19. The Company
Secretary has advised the Board of Directors that X Ltd. is not required to appoint
'Internal Auditor' as the company's paid up share capital and turnover are less than
the threshold limit prescribed under the Companies Act, 2013. Do you agree with the
advice of the CompanySecretary?Explain your view referring to the provisions of the
Companies Act, 2013. (jan 2021)
QUESTIONS
Mary Ltd is a listed company having turnover of 1,200 crores

during the financial year 2016-17. The CSR committee of the
Board formulated and recommended a CSR project which was
approved by the Board. The company finalised the project under
its CSR initiatives which require funds @5% of average net
profit of the company for last three financial years. Will such
excess expense be counted in subsequent financial years as a part
of CSR expenditure? Advise the company.(Rtp)
QUESTIONS
The Government of India is holding 51% of the paid-up equity share

capital of Sun Ltd. The Audited financial statements of Sun Ltd. for the
financial year 2017-18 were placed at its annual general meeting held on
31 August, 2018. However, pending the comments of the Comptroller and
Auditor General of India (CAG) on the said accounts the meeting was
adjourned without adoption of the accounts. On receipt of CAG
comments on the accounts, the adjourned annual general meeting was
held on 15 October, 2018 whereat the accounts were adopted. Thereafter,
Sun Ltd. filed its financial statements relevant to the financial year 2017-
18 with the Registrar of Companies on 12 November, 2018.Examine, with
reference to the applicable provisions of the Companies Act, 2013,
whether Sun Ltd. has complied with the statutory requirement regarding
filing of accounts with the Registrar?(May 2019)
QUESTIONS
A Housing Finance Ltd. is a housing finance company having a

paid up Share Capital of 11 crores and a turnover of 145 crores
during the Financial Year 2017-18. Explain with reference to the
relevant provisions and rules, whether it is necessary for A
Housing Finance Ltd. to file its financial statements in XBRL
mode.(Nov 2018)
QUESTIONS
X Ltd. is a listed company having a paid-up share capital of 25

crore as at 31 March 2019 and turnover of 100 crore during the
financial year 2018-19. The Company Secretary has advised the
Board of Directors that X Ltd. is not required to appoint
'Internal Auditor' as the company's paid up share capital and
turnover are less than the threshold limit prescribed under the
Companies Act, 2013. Do you agree with the advice of the
Company Secretary? Explain your view referring to the
provisions of the Companies Act, 2013. (jan 2021)
Section _______ lays down the various provisions related to maintenance
of proper books of account etc. of the companies through required
compliances.
A)The Companies Act, 1956

B)The Companies Act, 2013
C) The Company Rule, 2011
D)The Securities Act, 1956
Among the following documents, which one is not prepared by the
company?
A) Books of accounts
B)Books and papers
C)Financial statements
D)Incorporation certificate
As Defined Under Section 2(12) Include Books Of Account,
Deeds, Vouchers, Writing Vouchers, Documents, Minutes And
Registers Maintained On Paper Or In Electronic Form.
A) Journal And Ledger
B)Book And Paper
C) "Book And Paper" And "Book Or

Paper“
D)NONE OF THE ABOVE

Section 128(3), states that:
A)Place of keeping books of Account
B)Maintenance of Books of account in

electronic form
C)Period for preservation of books
D)Inspection by directors.
The books of account of every company relating to a period of
less than financial years immediately preceding a financial year.
A)8 years
B) 9 years
C) 10 years
D)11 years
As per the financial statements shall give a true and fair view of
the state of affairs of the company or companies-
A)Section 129(1)
B)Section 129(2)
C)Section 129(3)
D)Section 129(4)
Central Government may provide for the consolidation of
accounts of companies in such manner as may be prescribed
under-
A) Rule 4 of Companies (Accounts) Rules,
2014
B)Rule 5 of Companies (Accounts) Rules,
2014
C)Rule 6 of Companies (Accounts) Rules,
2014
D)Rule 7 of Companies (Accounts) Rules,
2014
As per every annual general meeting of a company, the board of
directors of the company shall lay before such meeting financial
statements for the financial year.
A) Section 129(1)
B)Section 129(2)
C)Section 129(3)
D) Section 129(4)
The consolidation of financial statements of the company shall be
made in accordance with the provisions of the Act, and the
applicable accounting standards.
A) Schedule I
B) Schedule II
C)Schedule III
D)Schedule IV
The financial statement with respect to company, small company
and dormant company may not include the cash flow statement
A)Private
B)Public
C)Listed
D) One person
Definition of financial statement is given under section-
A) 129
B)2(40)
C)128
D)2(41)
Section __seeks to provide for the opening of books of accounts

and recasting its financial statements-
A) 130
B)2(40)
C)131
D)2(41)
A company shall not re-open its books of account and not recast
its financial statements unless an application in this regard is
made by:
A) Central govt, income tax authorities
B) Securities and Exchange Board

C) Any other statutory body/any person concerned/ an
order made by a court of competent jurisdiction/Tribunal
to the effect.
D) ALL OF THE ABOVE
E) Only (a) and (b)

Voluntary Revision of financial statement or Board's Report is
described under which section?
A) Section 131
B)Section 313
C)Section 121
D)Section 212
For how many times in as year the financial statement can be
revised or recast?
A) Twice in a year
B)Once in a year
C)Thrice in a year
D)EITHER (A) OR (B)

Where copies of the previous report have been sent out to

members or delivered to the Registrar or laid before the
company in general meeting, the revisions must be confined to:-
A)The correction in respect of which the previous report do not

comply with the provisions of section 129 or Section 134
B) The making of any necessary consequential alteration
C) Both (a) and (b)
D) Either (a) or (b)

The detailed reasons for revision of financial statement shall also

be disclosed in the Board's repot in the relevant financial year in
which revision is made.
A) True
B)False
_____of the Companies Act, 2013 empowers the Central
Government to form a committee for recommendations on
Accounting standards which is National Advisory committee.
A)132
B) 133
C) 131
D)130
NACAS Stands for?
A) National Advisory committee on

B)Nations Account Calculation Association
Scheme
C)National Accounting Calculating in
D) None of these.
NFRA Stands for?
(a)Nation finance Reporting Authority
(b) National financial Reporting authority
(c) National financial Recasting authority
(d) National finance Reporting association

Section 133 of the Companies Act, 2013 deals with the power of
the Central Government to prescribe the accounting standards.
A) True
B)False
C)Partly true
D)None of the above

Section ___ deals with financial statement as well as board's
report
A) 134
B)133
C)132
D)131
The financial statements, shall be approved by the BoD before

they are signed on behalf of the Board at least by following
A) Chair person, authorized by board
B)Chief Executive officer (if he is directed)
C)Company secretary (if appointed)
D)None of these
E)Option (a), (b) and (c)

On contravention of any of this section is subject to fine of not
less than 50,000 which may extend to 25 lacs
A) True
B) False
C) Partly true
D) None of the above

Definition of CSR is given under:
A) The Companies Act, 2013
B)The Companies Act, 1956
C) The Companies (CSR policy) Rules, 2014
D) Section 134 of the Companies Act, 2013.

The statutory provision and provisions of CSR Rules, 2014, is to
ensure that while activities undertaken, in pursuance of the CSR
policy must be relatable to schedule of the Companies Act, 2013
the entries in the said schedule must be interpreted liberally so as
to capture the essence of the subjects.
A) V
B) VI
C)VII
D) VIII
Every company which ceases to be a company covered under sub

Section (1) of section of the Act, for 3 consecutive financial years
shall not be required to constitute CSR committee and is not
required to comply with the provisions as per the section.
A) 132
B) 133
C)134
D)135
Rule __of the Companies (CSR policy) Rules, 2014 states the
various CSR activities that shall be undertaken by the
Companies.
A) 4
B) 5
C)6
D) 7
Calculation of average Net Profit is done in accordance with the
provisions of section-
A) 195
B) 196
C)198
D) 199
A copy of the financial statements, which are to be laid before a
company in its general meeting, shall be sent to:
A) Every member of the company

B) Every trustee of the debenture-holder of
the company
C)To all persons other than such member or
trustee, being the person so entitled.
D) All of the above
E) None of the above.

The financial statements shall be sent in not less than before the
date of the meeting.
A) 14 days
B) 15 days
C)21 days
D) 30 days
If any default is made in complying with the

provisions the company shall be liable to a penalty of-
A) 20,000
B) 25,000
C)30,000
D) 35,000
Provisions for rights to members to copies of audited

financial statement are given under which section-
A) 135
B) 136
C)137
D) 138
Every officer of the company who is in default shall

be liable to a penalty of-
A) 2,000
B) 3,000
C)4,000
D) 5,000
Section provides that copies of financial statement including

consolidated financial statement along with all the documents
annexed to financial statement and adopted at AGM shall be
filed with Registrar.
A) 134
B) 135
C)136
D) 137
Which class of Companies shall file their financial statement and

other documents under Section 137(1) with the registrar in e-
form AOC-4 X BRL given in Annexure. I for the financial years
commencing on or after 1st April, 2014?
A) Companies listed with stock exchanges in India and Indian subsidiaries or
B) Paid up capital 5 crore or above, or turnover 100 crore or above; or

companies covered under Companies Rules, 2011
C)Both (a) and (b)
D) None of the above

The documents duly adopted at the annual general meeting of the

company shall be filed with the registrar within days of the date
of annual general meeting in such manner, with such fees or as
may be prescribed.
A) 7 days
B) 15 days
C) 30 days
D) 45 days
A one person company shall file a copy of the financial

statements duly adopted by its member, along with all the
documents which are required to be attached to such financial
statements, within days from the closure of the financial year.
A) 30 days
B) 45 days
C) 7 days
D) 180 days
Which section contains the laws related to internal audit in a
company.
A) 137
B) 138
C)139
D) 140
An existing company covered under the eligibility criteria shall

comply with the requirements of Section 138 and this rule
within commencement of such section.
A) 7 days
B) 30 days
C)6 months
D) 200 days
SEC 139 APPOINTMENT OF AUDITORS
SUBSEQUENT
AUDITOR CASUAL
FIRST VAC ANC Y
AUDITOR AUDITOR
NON-GOVT C O. GOVT CO.
SEC 139(1) SEC 139(5)
NON-GOVT CO. GOVT CO.

SEC 139(6) SEC 139(7) NON-GOVT CO. GOVT CO.
SEC 139(8) SEC 139(8)
1ST AUDITOROF NON-GOVT COMPANY SEC
139(6)
• 1st Auditor Shall Be Appointed By BOD (Board Of Directors)
Within 30 Days Of Registration Of Company.
• Failing Which BOD Shall Inform Members Of Company &
•Members Of Company Then Shall Appoint Within 90

Days In EGM (Extraordinary General Meeting)
• He Shall Hold The Office Till The Conclusion Of 1st AGM.

•SHALL BE APPOINTED BY COMPTROLLER & AUDITOR
GENERAL OF INDIA (C & AG) WITHIN 60 DAYS OF
REGISTRATION OF COMPANY
•FAILING WHICH THEY SHALL INFORM MEMBERS &

•MEMBERS SHALL APPOINT WITHIN 60 DAYS IN EGM
•HE SHALL HOLD TILL CONCLUSION OF 1ST AGM

SUBSEQUENT AUDITOR OF NON-GOVT COMPANY
SEC 139(1)
1)ShallBe AppointedIn 1st AGM& WillHoldTheOfficeTillTheConclusionOf 6th AGM

& ThereafterTillTheConclusionOf Every6th AGM.
2)BeforeSuchAppointmentCertificateContainingFollowingShallBe ObtainedBy
Company FromThatSubsequentAuditor:-
➢ ThatHe QualifiedFor Appointment& Not DisqualifiedU/S141
➢ He Is AcceptingTheAuditWithinCeilingLimit
➢ No PrecedingsArePendingAgainstHimFor AnyProfessionalMisconduct
➢ HisWillingnessToBe AppointedAs Auditor
➢ AppointmentWill Be As PerAct&Rules
SUBSEQUENT AUDITOR OF NON-GOVT COMPANY
SEC 139(1)
3)Within 15 Days Of Appointment Company

Will Submit FORM ADT 1 To ROC
If Its IFSC Co. , Then Instead Of 15 Days It

Will Submit ADT 1 Within 30 Days
SUBSEQUENT AUDITOR OF GOVERNMENT COMPANY
SEC 139(1)
 SHALL BE APPOINTED BY ‘C & AG’

 WITHIN 180 DAYS OF
 COMMENCEMENT OF EVERY “FY”
 & SHALL BE HOLD OFFICE TILL THE CONCLUSION
OF NEXT AGM
ROTATION OF DIRECTOR
LISTED COMPANY & SUCH CLASSES OF COMPANIES

AS MAY BE PRESCRIBED (OTHER THAN SMALL
COMPANY & OPC)
RULE 5 PRESCRIBES
ANY CO.
HAVING
UNLISTED PRIVATE BORROWINGS
PUBLIC CO. FROM BANK/
CO. HAVING FINANCIAL
INSTITUTION
HAVING PUSC OR PUBLIC
PUSC MINIMUM DEPOSITS
MINIMUM
MINIMUM 50 CRORE
50 CRORE
10 CRORE
RULE 5 PRESCRIBES
CAN APPOINT SAME INDIVIDUAL AS AUDITOR

MAXIMUM TERM OF 5 CONSECUTIVE YEARS
SAME FIRM AS AUDITOR FOR MAX 2 TERMS OF 5

CONSECUTIVE YEARS EACH
COOLING PERIOD IN BOTH THE ABOVE CASES

SHALL BE 5 YEARS
NOTES-
• Tenure of 1st auditor is not counted as a term for purposes of
rotation
• Even if a subsequent auditors term is of less than 5 years, it
still considered as a term.
• If a common partner of firm under cooling period is also a
partner in another firm then that firm will also come under
cooling period
Sec 139(3):
Members in general meeting may resolve to

• Rotate their member
• Appoint more than 1 auditor
Sec 139(4):
Central g0vernment can make rules

for rotationof auditor u/s sec 139(2).
CASUAL VACANCY Sec 139(8):
When An Auditor Vacates His Office Before Normal Expiry
Period Of His Tenure Its Called “Casual Vacancy”
NON- GOVERNMENT COMPANY GOVERNMENT COMPANY
ALL CASUAL VACANCY EXCEPT RESIGNATION ALL CASUAL VACANCY WILL BE FILLED UP BY
SHALL BE FILLED UP BY BOD WITHIN 30 DAYS CAG WITHIN 30 DAYS OF CASUAL AVACANCY
OF SUCH CASUAL VACANCY
IN CASE OF CASUAL VACANCY FAILING WHICH BY BOD WITHIN 30

DUE TO RESIGNATION DAYS.
IT WILL BE FILLED BY SHAREHOLDERS WITHIN 3
MONTHS OF RECOMMENDATION OF BOD
CASUAL VACANCY Sec 139(8):
CASUAL VACANCY AUDITOR SHALL HOLD OFFICE
ONLY
TILL CONCLUSION OF NEXT AGM.
IMPORTANT NOTE:
When auditor has not been appointed by all
prescribed authorities within the prescribed
time, then CG shall appoint the auditor
SEC 140-REMOVAL AND
RESIGNATION OF AUDITOR
• PASS BOARD RESOLUTION AT BOARD MEETING

• WITHIN 30 DAYS SUBMIT FORM ADT-2 TO CG (REGIONAL
DIRECTOR) SEEKING ITS APPROVAL TO REMOVE THE AUDITOR
• WITHIN 60 DAYS OF RECEIVING CG’S APPROVAL , PASS
SPECIAL RESOLUTION IN GENERAL MEETING TO REMOVE
AUDITOR
SEC 140-REMOVAL AND
IN CASE OF IFSC CO. IF REPLY IS NOT RECEIVED

FROM CG (REGIONAL DIRECTOR)
WITHIN 60 DAYS OF SUBMITTING FORM ADT-2
THEN IT’S A DEEMED APPROVAL
SEC 140-REMOVAL AND
U/S140(2) RESIGNATIONOF AUDITOR
AN AUDTIOR CAN RESIGN ANYTIME BUT WITHIN 30 DAYS OF

RESIGNATION , HE WILL SUBMIT FORM ADT-3 TO COMPANY &
ROC INFORMING THE REASON OF RESIGNATION.
IN CASE OF GOVT COMPANY, SUBMIT TO C & AG ALSO.
SEC 140-REMOVAL AND
U/S 140(3)
IF AUDITOR FAILS TO COMPLY SECTION 140(2) .THEN

PENALTY WILL BE RS. 50,000 OR AUDITOR’S
REMUNERATION ,
WHICHEVER IS LESS AND RS 500/DAY TILL THE DEFAULT
CONTINUES SUBJECT TO MAXIMUM RS 2 LAKHS.
SEC 141 QUALIFICATION AND DISQUALIFICATION OF
AUDITOR
U/S 141(1)
• An individual is qualified to be appointed
as an auditor if he is a qualified chartered
accountant
• A firm is qualified to be appointed as an
auditor if majority partners are practicing
in India
SEC 141 QUALIFICATION AND DISQUALIFICATION OF
AUDITOR
U/S 141(2)
If firm including LLP has been appointed as

auditor, then only that partner who is a
qualified Chartered Accountant(CA) shall act
on behalf of firm & sign the audit report.
DISQUALIFICATION OF AUDITOR
U/S 141(3)
1. BODY CORPORATE EXCEPT LLP.
(this is because law makers wanted guilty auditors to be personally
liable which is not possible in case of body corporate , so body
corporate is disqualified)
2. OFFICER OR EMPLOYEE OF COMPANY
3. PARTNER/EMPLOYEE OF OFFICER/EMPLOYEE OF COMPANY

U/S 141(3)
4. IF A PERSONOR HIS PARTNER OR RELATIVE
HOLDING SHARES IN
COMPANY/HOLDING/
SUBSIDIARY/ASSOCIATE/ FELLOW
SUBSIDIARY
PROVIDEDTHATRELATIVE MAYHOLD SHARESIN THE CO. UPTO FACEVALUE OF RS.

1 LAKH.
IF MORE THAN THAT, THEN CORRECTIVE ACTION TO BE TAKEN WITHIN 60 DAYS
U/S 141(3)
• IF A PERSONOR HIS PARTNER OR RELATIVE
INDEBTED TO HOLDING SHARES IN

COMPANY/HOLDING/
SUBSIDIARY/ASSOCIATE/
FELLOW SUBSIDIARY
MORE THAN RS. 5 LAKHS

DISQUALIFICATION
DISQUALIFICATION OFOF AUDITOR
AUDITOR
U/S 141(3)
• IF A PERSONOR HIS PARTNER OR RELATIVE
GIVEN ANY GUARANTEED
SECURITY TO HOLDING SHARES IN
COMPANY/HOLDING/
SUBSIDIARY/ASSOCIATE/
FELLOW SUBSIDIARY
MORE THAN RS 1 LAKHS

U/S 141(3)
5. A PERSON /FIRM WHO HAS DIRECT BUSINESS

RELATIONSHIP WITH COMPANY/HOLDING/SUBSIDIARY/
ASSOCIATE/ FELLOWSUBSIDIARY.
(MERELYBEINGA CUSTOMERIN THEORDINARYCOURSEOF

BUSINESSDOES NOTAMOUNTTOBUSINESS
RELATIONSHIP)
U/S 141(3)
6. A PERSONWHOSE RELATIVE IS A DIRECTOR/KMP IN THE
COMPANY
7. A PERSON/FIRMIS DISQUALIFIED TO CONDUCT AUDIT OF

MORE THAN20 COMPANIES / PARTNER WHOIS NOT IN
FULL TIME (CEILING LIMIT) EMPLOYMENT ELSEWHERE
U/S 141(3)
8. A PERSON WHO IS CONVICTEDFOR FRAUD & SENTECNED
TO IMPRISONMENT & 10 YEARS HAVE NOT ELAPSEDSINCE
CONVICTION
9. A PERSON WHO DIRECTLY OR INDIRECTLY GIVES

SERVICES U/S 144 TO COMPANY/HOLDING/SUBISDIARY
While computing the ceiling limit followingaudits are
excluded:-
• Branch Audit
• Internal Audit
• Tax Audit ( As Per ICAI Regulation Its 60/ Partner Who Is
Not In Full Time Employment Elsewhere)
• OPC
• Small Company
• Dormant Company
• Private Company HavingPUSC More Than 100 Crore
EXAMPLE- A CA FIRM HAS 3 PARTNERS .
“K” WHOIS IN FULL TIME EMPLOYMENT ELSEWHERE)
“B” (PART TIME EMPLOYMENT ELSEWHERE)
“C” (WHO IS ALSOPARTNER IN ANOTHER CA FIRM HAVING
12 AUDIT IN HIS NAME THERE).
COMPUTE CEILING LIMIT
K B C
0 + 20 +(20-12)8 = 28 AUDITS.
If after becoming the auditor , any of the
disqualifications of section 141(3) get attracted , then
auditor shall be deemed to have vacated the office it
shall be treated as a casual vacancy
SEC 142 REMUNERATION OF AUDITOR
Section 142 of the Act prescribed that the remuneration of the
auditor of a company shall be fixed in its general meeting or in such
manner as may be determined therein .
Board may fix remuneration of the first auditor appointed by it.
The remuneration will be in addition to the out of pocket expensed

incurred by the auditor in connection with the audit of the company and
any remuneration paid to him for any other service rendered by him at
the request of the company.
SEC 143 POWER & DUTIES OF AUDITOR
U/S 143(1) AUDITOR HAS A RIGHT TO ACCESS
BOOKS OF ACCOUNTS OF CLIENT, COMPANY
WHETHER KEPY AT REGISTERED OFFICE OR
BRANCH OR ANY OTHER PLACE.
SUCH RIGHT ALSO EXTENDS TO COMPANY’S

SUBSIDIARY & ASSOCIATE
AUDITOR ALSO HAVE RIGHT

TO SEEK INFORMATION &
EXPLANATION FROM
OFFICER/ EMPLOYEE OF
COMPANY
AUDITOR’S DUTY TO INQUIRE INTO 6 MATTER U/S 143(1)
• WHETHER CLIENT SOLD ITS INVESTMENT BELOW COST

INTO APPLICABLE ON BANKING
& INSURANCE COMPANY
• WHETHER LOANS SHOWNAS DEPOSITS

• WHETHER CLIENT COMPANY HASGIVEN LOANS &

ADVANCES WITHOUT ADEQUATE SECURITY OR AGAINST
THE INTEREST OF COMPANY
• WHETHER ANY BOOKENTRIES MADE BY CLIENT WHICH ARE

PREJUDICIAL TO COMPANIES INTEREST.
• WHETHER PERSONAL EXPENSES OF DIRECTOR

CHARGED TO P/L A/C
• WHETHER PROPER DETAILS OF

SHREHOLDERS MAINTAINED IF SHARES
ISSUED BY COMPANY FOR CASH
U/S 143(2)
IT IS THE DUTY OF THE AUDITOR TO COMMENT &
FORM AN OPINION THAT ACCORDING
TO BEST OF HIS KNOWLEDGE & BELIEF & AS PER THE
INFORMATION & EXPLANATION RECEIVED BY HIM.
WHETHER THE FINANCIAL STATEMENTS OF
COMPANY ARE SHOWING TRUE & FAIR VIEW OR NOT.
AUDITOR’S DUTY TO REPORT ON
THESE MATTERS
• Whether auditor has received all necessary information &

explanation which were necessary for conduct of audit & if not
then details there of.
• Whether client has maintained proper books of accounts as
required by the law.
• Whether branch audit report u/s 143(8) received by auditor of
company or not.
THESE MATTERS
• Whether P/L a/c, B/S prepared as per BOA.

• Whether financial statements comply with accounting standards
• Auditor’s observation , comment on qualification on those financial
transactions which have adverse impact on functioning of company.
• Whether any director is disqualified u/s 164 (2)
THESE MATTERS
• Adverse remarks of auditor on maintenance of accounts

• Whether client has maintained its internal financial control
in relation to financial statements properly or not
Reporting under clause (i) not applicable on
OPC SMALL PRIVATE

COMPANY COMPANY
WHERE TURNOVER <50 CRORE AND

BORROWING FROM BANKS/FINANCIAL
INSYTUTIONS/BANKING COMPANY < 25
CRORE
THESE MATTERS
• SUCH OTHERMATTERSAS MAY BE PRESRIBED

RULE 11
Impact of pending Whether Whethertherewas

litigation on company has any delay in transfer
financial position made provisions to investorto
whether disclosed in “investor
for forseeable information
financial statements loss. protectionfund
U/S 143(4)
IF AUDITOR ISSUES A MODIFIED

OPINION THE REASON HAS TO BE
MENTIONED IN THE AUDIT REPORT
SEC 144 AUDITOR NOT TO RENDER CERTAIN SERVICES
(PROHIBITED SERVICES)
An auditor shall provided to the company only such other services as are approved
by the Board of directors/ the audit committee, but which shall not include any of
the following services (whether such services are rendered directly or indirectly to
the company or its holding company or subsidiary company , namely-
1 3
Accounting and
Investment banking
book keeping
services;
services
4
2
Design and implementation
Investment of any financial
Advisory services information system;
5 7
Internal audit; Actuarial services
6
8
Rendering of
services Any other kind of
services as maybe
prescribed
SEC 145 SIGNING OF AUDITOR’S REPORT
Auditor shall sign the auditor’s report of the
company .
Any qualification observation or comments on

financial transaction matters , which have any
adverse effort on the functioning of the company
mentioned in the auditor’s report
•shall be read before the Company in general
meeting AND
•shall be open to inspection by any member of the
company.
SEC 146
AUDITOR’S RIGHT TO ATTEND GENERAL MEETING
ALL NOTICE OF ANY GENERAL MEETING SHALL BE FORWARDED TO

THE AUDITOR OF THE COMPANY
AND
HE MUST ATTEND ANY GENERAL MEETING EITHER BY HIMSELF OR

THROUGH HIS AUTHORIZED REPRESENTATIVE (QUALIFIED TO BE
AN AUDITOR)
AND
SHALL HAVE RIGHT TO BE HEARD AT SUCH MEETING ON ANY PART

OF THE BUSINESS WHICH CONCERNS HIM AS THE AUDITOR
SEC 147 PUNISHMENT FOR CONTRAVENTION
COMPANY
(1) IF ANY OF THE PROVISIONS OF SECTIONS 139 TO 146 (BOTH INCLUSIVE) IS CONTRAVENED
THE COMPANY SHALL

BE PUNISHABLE WITH SHALL NOT BE LESS THAN
TWENTY-FIVE THOUSAND RUPEES
FINE WHICH
BUT WHICH MAY EXTEND TO-
FIVE LAKH RUPEES
AND EVERY OFFICER OF THE COMPANY

WHO IS IN DEFAULT
IF ANY OF THE PROVISIONS OF SECTIONS 139 TO 146 (BOTH INCLUSIVE) IS CONTRAVENED
EVERY OFFICER OF THE SHALL NOT BE LESS THAN

COMPANY WHO IS IN TEN THOUSAND RUPEES
DEFAULT SHALL BE BUT WHICH MAY EXTEND TO
PUNISHABLE ONE LAKH RUPEES
WITH FINE
AUDITOR
(2) IF AN AUDITOR OF A COMPANY CONTRAVENES ANY OF THE PROVISIONS OF

SECTION 139, SECTION 144 OR SECTION 145,
FINE SHALL NOT BE LESS THAN

TWENTY-FIVE THOUSAND RUPEES
BUT WHICH MAY EXTEND TO
THE AUDITOR SHALL BE FIVE LAKH RUPEES
PUNISHABLE WITH
WHICHEVER IS
OR LESS
FOUR TIMES THE REMUNERATION OF

THE AUDITOR,
AUDITOR
Provided that if an auditor has contravened such provisions knowingly or wilfully

with the intention to deceive the company or its shareholders or creditors or tax authorities, he
shall be punishable with
FINE WHICH SHALL NOT BE LESS

IMPRISONMENT THAN
FOR A TERM WHICH MAY EXTEND FIFTY THOUSAND RUPEES
TO BUT WHICH MAY EXTEND TO
ONE YEAR TWENTY-FIVE LAKH RUPEES WHICHEVER
IS LESS
OR
EIGHT TIMES THE REMUNERATION OF
THE AUDITOR
AUDITOR
(3) Where an auditor has been convicted under sub-section (2),

he shall be liable to—
(i) REFUND THE REMUNERATION RECEIVED BY HIM TO THE COMPANY

AND
(ii) PAY FOR DAMAGES TO THE COMPANY, STATUTORY BODIES OR
AUTHORITIES [OR TO MEMBERS OR CREDITORS OF THE
COMPANY] FOR LOSS ARISING OUT OF INCORRECT OR MISLEADING
STATEMENTS OF PARTICULARS MADE IN HIS AUDIT REPORT.
AUDITOR
(4) The Central Government shall, by notification, specify any

statutory body or authority or an officer for ensuring prompt
payment of damages to the company or the persons under
clause (ii) of sub-section (3) and such body, authority or officer
shall after payment of damages to such company or persons file
a report with the Central Government in respect of making such
damages in such manner as may be specified in the said
notification.
AUDITOR
(5) Where, in case of audit of a company being conducted by an audit firm,

•it is proved that the partner or partners of the audit firm has or have acted in a
fraudulent manner
• or, abetted or colluded in any fraud by, or in relation to or by, the company or
its directors or officers, the liability, whether civil or criminal as provided in
this Act or in any other law for the time being in force,
•for such act shall be of the partner or partners concerned of the audit firm and
of the firm jointly and severally.

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CHAPTER 1 PRELIMINARY

SECTION The Companies Act,2013

▪ SHORT TITLE (always

Bigger for any specific

The Sec 1 came into force

As per section 2(20) of the companies act, 2013 company means a

As per section 2(11)

PRIVATE COMPANY MEANS A COMPANY HAVING

CAN A PRIVATE COMPANY ISSUE YES, BY MAKING A SPECIAL OFFER.

IS EMPLOYEE COUNTED IN LIMIT OF 200? NO.

IS EMPLOYEE CUM SHAREHOLDER COUNTED NO.

WHAT IF EMPLOYEE CUM SHAREHOLDER NO.

JOINT SHAREHOLDERS? 1 ONLY.

Public company means a company which is not a private company

Proviso: provided that a private company which is a subsidiary of

E.G- X LTD SUBSIDIARY Y PRIVATE LTD ( Y LTD IS

A DEEMED DEEMED PUBLIC COMPANY?

MINIMUM PAID UP SHARE CAPITAL BOTH IN

ONE PERSON COMPANY MEANS A COMPANY HAVING

(JUST LIKE PRIVATE COMPANY)

• Member’s liability is limited up to the

• Means a company in which members

• Means a company in which members liability is

Normally liability of every company is unlimited

Means a company having one or more

Explanation- The Company term shall

• Controls the composition of board of directors (BOD)

A ltd holds 90,000 shares of class a in b ltd. Is it a holding company?

>50% * TOTAL PUSC >50% OF TOTAL VOTING POWER

A LTD HAS A RIGHT TO APPOINT THREE DIRECTORS OUT OF

YES, BECAUSE A LTD CONTROLS YHE

C LTD IS SUBSIDIARY OF BOTH A LTD & B LTD.

A LTD 2 % VOTING POWER

SUBSIDIARY C LTD GOT VOTING

B LTD 48.5 % VOTING POWER

30% VOTING B LTD C LTD 20% VOTING

ALL ATTACKED ON D LTD

50% VOTING POWER

MA CANNOT BE HOLDING COMPANY BECAUSE HE IS NOT A COMPANY

HUL LTD (INDIA)

• NUMBER OF LAYERS AFTER REDUCTION (9)

WHIEVER IS HIGHER = 9 LAYERS.

HOWEVER SUPPOSE B,C,D,E ARE WOS THEN THEY WON’T BE COUNTED.

Associate companies means a company

PAID UP SHARE CAPITAL 50 LAKH WHOSE TURNOVER DOES NOT

THREE TYPES OF COMPANIES NOT REGARDED AS SMALL CO.

Government co. Means a company whose at least 51% of paid

Provided that any subsidiary of government co. Is

Explanation- if co. Has issued DVR shares then instead of

A LTD B LTD C LTD D LTD

• SEC 2 (6) ASSCOCIATE COMPANY

Dormant company means a company

“Nidhi” or “mutual benefit society” means a company which the cg

NOTE- ALWAYS THE NEXT YEAR.

I. Submit form RD-1

WILL BE DISPOSED BY NCLT

HIGH COURT SPECIAL COURT

SESSION COURT DISTRICT COURT

BANK A/C DEMAT A/C

DEPOSITOR’S MONEY IS INVESTOR’S SHARES ARE

ANY PERSON SUCH

INDIAN DOMESTIC FOREIGN FOREIGN

ISSUED BY INDIAN COMPANY ISSUED BY FOREIGN COMPANY