“Company has an independent corporate existence.

”
Explain it with case laws.

Introduction:

● The "independent corporate existence" principle asserts that a company is

legally separate from its shareholders and directors.

Key Points:

1. Separate Legal Entity: As per Section 2(20) of the Companies Act 2013, a
company is recognized as a distinct legal entity.
2. Salomon v Salomon & Co. Ltd: Confirmed separate legal personality,
protecting shareholders (Section 2(20)).
3. Limited Liability: Section 2(87) provides limited liability, safeguarding
shareholders' personal assets.
4. Corporate Veil: Maintains separation of the company's legal identity from
shareholders.
5. Macaura v Northern Assurance Co.: Highlighted the distinction between
company and shareholder assets.
6. Capacity to Sue and Be Sued: Section 149 allows companies to litigate in
their own name.
7. Contracts and Obligations: Companies can independently enter contracts and
incur obligations.
8. Corporate Governance: Directors must prioritize the company's interests
(Section 166).
9. Piercing the Corporate Veil: Courts may pierce the corporate veil in
exceptional cases.

Conclusion:

● The principle of independent corporate existence, governed by the Companies

Act 2013, safeguards shareholder interests and fosters transparency in
corporate operations. Independent corporate existence ensures clarity and
accountability.

Explain briefly the different kinds of company.

Introduction:
 ● The Companies Act 2013 in India defines various types of companies, each
with distinct characteristics and requirements.

Key Points:

1. Private Company:
a. Governed by Section 2(68) of the Companies Act 2013.
b. Requires a minimum of two members and a maximum of 200.
c. Example: "ABC Pvt. Ltd." with limited shareholders.
2. Public Company:
a. Defined under Section 2(71) of the Act.
b. Requires a minimum of seven members.
c. Shares are freely transferable.
d. Example: "XYZ Ltd." listed on the stock exchange.
3. One Person Company (OPC):
a. Introduced by the Act.
b. Allows a single individual to form a company.
c. Illustration: "John Enterprises OPC Pvt. Ltd."
4. Small Company:
a. Defined in Section 2(85).
b. Lower turnover, capital, and employee criteria.
c. Example: "SmallTech Innovations Pvt. Ltd."
5. Producer Company:
a. Governed by Chapter 11-A.
b. Formed by farmers or producers.
c. Example: "GreenGrow Producer Co. Ltd."
6. Government Company:
a. Defined under Section 2(45).
b. Majority shareholding by the government.
c. Illustration: "National Power Corporation."
7. Foreign Company:
a. Governed by Section 2(42).
b. Incorporated outside India, operates within.
c. Example: "Google LLC" operating in India.
8. Listed Company:
a. Shares listed on a recognized stock exchange.
b. Subject to additional regulatory requirements.
c. Illustration: "TechCorp Ltd." listed on BSE.
9. Unlisted Company:
a. Shares not listed on any exchange.
b. Lesser regulatory obligations compared to listed companies.
c. Example: "Sunrise Builders Pvt. Ltd."
 10.Section 8 Company:
a. Governed by Section 8.
b. Formed for promoting charitable objectives.
c. Illustration: "Helping Hands Foundation."

Conclusion:

● Understanding the diverse types of companies under the Companies Act 2013
is crucial for compliance and selecting the appropriate legal structure for
business operations.

P, Q, R are the members of the company and hold all the

shares of that company. They transferred all the shares to
S, T, U. Is the company having perpetual succession?
Decide.

Introduction:

● Perpetual succession in a company means its uninterrupted existence,

unaffected by changes in its membership.

Key Points:

1. Perpetual Succession: According to Section 2(87) of the Companies Act

2013, a company has perpetual succession unless dissolved.
2. Transfer of Shares: Shares in a company can be transferred as movable
property (Section 44).
3. Effect of Share Transfer: The transferee becomes a member of the company
upon share transfer.
4. Continuity of Membership: Despite share transfer, the company's
membership continues.
5. Case Law - Salomon v Salomon & Co. Ltd: Established that a company is a
separate legal entity from its shareholders.
6. Conclusion: The company maintains perpetual succession despite share
transfer.

Conclusion:

● The transfer of shares doesn't affect the company's perpetual succession, as

per the Companies Act 2013 and Salomon case.
Short note on Company Promoter.

Introduction:

● Company promoters are essential figures in the formation process, with

specific responsibilities and duties.

Key Points:

1. Definition: Promoters initiate the idea of forming a company.

2. Fiduciary Duties: They owe utmost good faith and must disclose all material
facts.
3. Section 35: Promoters must disclose their interests in company formation
contracts or property.
4. Case Law - Twycross v Grant: Promoters have fiduciary duties toward the
company.
5. Remuneration and Benefits: They may receive remuneration, subject to
disclosure and approval.
6. Liability: Promoters may be personally liable for misrepresentations or fraud
during formation.

Conclusion:

● Company promoters play a vital role in formation, carrying duties, and

potential liabilities.

Explain the doctrine of Ultra Vires with case laws.

Introduction:

● The doctrine of Ultra Vires concerns actions by a company exceeding its legal
authority.

Key Points:

1. Definition: Ultra Vires means actions beyond authorized powers.

2. Objects Clause (Section 4): Outlines a company's authorized activities.
3. Ultra Vires Acts: Actions beyond the objects clause are invalid.
4. Case Law - Ashbury Railway Carriage and Iron Co. Ltd. v. Riche: Example of a
company lending money for unauthorized purposes.
 5. Consequences: Ultra Vires acts are typically void.
6. Purpose: Prevents companies from engaging in unauthorized activities,
protecting stakeholders.
7. Amendment Provision (Section 12): Allows companies to modify their objects
clause.
8. Case Law - Hickman v Kent: Members cannot wholly approve Ultra Vires acts.
9. Legal Challenges: Ultra Vires actions can be challenged in court.
10. Conclusion: Understanding Ultra Vires is vital for legal compliance.

Conclusion:

● Ultra Vires prevents companies from overstepping legal boundaries, ensuring

compliance.

Explain the doctrine of Indoor Management with case laws

and exceptions.

Introduction:

● Indoor Management shields third parties from internal inconsistencies in

company dealings.

Key Points:

1. Definition: It allows outsiders to assume internal protocols are followed.

2. Turquand Rule: External parties can trust internal regularities.
3. Section 128: Assumes regularity in internal company affairs.
4. Case Law - Royal British Bank v. Turquand: Third parties not obligated to
investigate internal regularities.
5. Exceptions: Not applicable if irregularities or ultra vires acts are evident.
6. Ashbury Railway Carriage and Iron Co. v. Riche: Indoor Management not valid
with third-party knowledge of irregularities.
7. Clear Contravention: No protection if third parties are aware of
inconsistencies.
8. Knowledge: Third parties cannot rely on Indoor Management if they are aware
of irregularities.
9. Ultra Vires Acts: Doctrine not relevant to transactions beyond the company's
legal powers.
10. Conclusion: Balances third-party protection and corporate governance.

Conclusion:
 ● Indoor Management safeguards third parties with exceptions, maintaining a
balance between legal protection and corporate governance.

Statement in lieu of prospectus.

Introduction:

● A Statement in Lieu of Prospectus is a substitute document used when a

company opts not to issue a prospectus for its public share offering.

Key Points:

1. Definition: It provides essential information to investors in place of a

prospectus.
2. Sections 70 and 32: Govern the requirement and filing procedure.
3. Content: Includes necessary details about the share offering.
4. Format: Signed by directors, filed before share allotment.
5. Purpose: Protects investors, ensures transparency.

Conclusion:

● The Statement in Lieu of Prospectus substitutes for a prospectus, offering

vital details to investors in a company's public share offering.

Pre Incorporation Contracts

Introduction:

● Pre-incorporation contracts are agreements made by promoters before a

company's formal registration.

Key Points:

1. Definition: These contracts are made prior to the company's incorporation.

2. Section 11: Companies Act 2013, Section 11, outlines the incorporation
process.
3. Liability: Promoters are initially liable for these contracts.
4. Ratification: The company can choose to ratify these contracts after
incorporation.
5. Case Law - Kelner v Baxter: A company isn't bound by pre-incorporation
contracts unless it adopts them.
6. Registration: After registration, the company becomes a separate legal entity.
Conclusion:

● Pre-incorporation contracts are made before a company's registration, with

promoters initially liable until the company ratifies the contracts after
incorporation.

Briefly explain the different kinds of meetings held in a

company.

Introduction:

● Meetings are vital for corporate governance in a company, as per the

Companies Act 2013.

Key Points:

1. Board Meetings (Section 173): Essential for decision-making.

a. Case Law: In Re: Duomatic Ltd., unanimous informal agreement
among shareholders validated decisions made outside formal
meetings.
2. Annual General Meeting (AGM) (Section 96): Conducted yearly for financial
discussions.
a. Case Law: Burland v. Earle emphasized AGM's importance in
protecting shareholders' interests.
3. Extraordinary General Meeting (EGM) (Section 100): Held for urgent matters.
4. Class Meetings (Section 106): Address specific shareholder classes'
concerns.
a. Case Law: Re Horsley & Weight Ltd. protected minority shareholders'
rights.
5. Committee Meetings (Section 177): Address specific company issues.
a. Case Law: Lancelot Smithers Ltd. v. Guinness plc highlighted the audit
committee's role.

Conclusion:

● These meetings ensure transparency and accountability in company affairs.

What are the duties of a director in a company?

Introduction:
 ● Directors in a company shoulder significant responsibilities as defined in the
Companies Act 2013.

Key Points:

1. Duty of Care and Skill (Section 166): Directors are mandated to act diligently.
a. Case Law: In Re City Equitable Fire Insurance Co. Ltd., negligence by
directors led to liability.
2. Fiduciary Duty (Section 166): Directors must prioritize the company's
interests, avoiding conflicts.
a. Case Law: Boardman v. Phipps established the duty to avoid conflicts.
3. Authority (Section 166): Directors operate within their authorized powers.
4. Promoting Company Success (Section 172): Directors work for the
company's benefit.
5. Independent Judgment (Section 166): Directors exercise independent
judgment.
6. Declaration of Interest (Section 184): Directors disclose personal interests in
transactions.
7. Avoiding Improper Benefits (Section 166): Directors refuse improper personal
benefits.
8. Bookkeeping (Section 128): Directors maintain accurate financial records.
9. Meeting Attendance (Section 173): Directors attend board meetings regularly.
10. Insider Trading (Section 195): Directors avoid trading based on undisclosed
information.

Conclusion:

● Directors' adherence to these duties under the Companies Act 2013 is pivotal
for company governance, supported by relevant case laws.

Removal of Directors.

Introduction:

● The process for removing directors in a company is defined by the Companies

Act 2013.

Key Points:

1. Resolution by Shareholders (Section 169): Directors can be removed through

a resolution at a general meeting.
 2. Special Notice (Section 115): A notice must be provided 14 days prior to the
meeting.
3. Opportunity to be Heard (Section 169): Directors have the right to present
their case before the decision is made.
4. Ordinary Resolution (Section 114): Removal typically requires a simple
majority vote.
a. Case Law: In Re Denholm & McKay Ltd., court upheld the Companies
Act provisions over company articles.
5. Immediate Effect (Section 169): Removal takes effect immediately after the
resolution is passed.

Conclusion:

● The Companies Act 2013 ensures transparency and fairness in director

removal procedures.

Write a note of corporate social responsibility.

Introduction:

● Corporate Social Responsibility (CSR) is a legal mandate under the

Companies Act 2013, emphasizing companies' societal and environmental
responsibilities.

Key Points:

1. Definition (Section 135): CSR integrates social and environmental concerns

into business operations.
2. Mandatory Spending (Section 135): Qualifying companies must allocate a
percentage of profits to CSR activities.
3. Areas of Focus: Companies may target education, healthcare, environment, or
poverty alleviation.
4. Reporting (Section 135): Annual reports must detail CSR spending and
projects undertaken.
5. Impact Assessment: Companies should evaluate the societal and
environmental impact of CSR initiatives.
a. Case Law: Charan Lal Sahu v. Union of India upheld the constitutional
validity of mandatory CSR provisions.

Conclusion:
 ● CSR obligations ensure companies positively impact society and the
environment, as mandated by the Companies Act 2013.

What is allotment of shares? Explain the statutory

restrictions on allotment of shares.

Introduction:

● Allotment of shares is the process of issuing shares to applicants.

Key Points:

1. Definition (Section 39): Allotment is the allocation of shares after board

approval.
2. Application: Prospective shareholders submit applications for shares.
3. Board Approval: Allotment requires approval from the board of directors.
4. Time Limit (Section 39): Shares must be allotted within 60 days of receiving
application money.
5. Minimum Subscription (Section 39): Allotment is subject to meeting the
minimum subscription amount.
6. Over-Subscription: Excess demand may lead to proportional allotment or
refund of excess funds.
7. Statutory Restrictions: Legal provisions ensure fair and transparent allotment.
8. Insider Trading (Section 195): Directors and personnel are prohibited from
trading on unpublished information.
9. Fraud Prevention: Misrepresentation and manipulation are strictly prohibited.
a. Case Law: SEC v. W.J. Howey Co. sets criteria for identifying
investment contracts, influencing allotment.

Conclusion:

● Allotment of shares, regulated by statutory provisions, maintains fairness and

transparency in the issuance process.

Explain the rules regarding declaration and payment of

dividend

Introduction:

● Dividends are crucial in corporate governance under the Companies Act 2013.
Key Points:

1. Authority to Declare Dividend (Section 123): Only the board can declare
dividends.
2. Sources of Payment (Section 123): Dividends come from profits or reserves.
3. Interim Dividend (Section 123): Board can declare interim dividends based on
financial position.
4. Declaration and Record Date (Section 123): Board specifies dates for
dividend declaration and record.
5. Mode of Payment (Section 123): Dividends can be cash, cheque, or
electronic.
6. Transfer to Unpaid Dividend Account (Section 124): Unclaimed dividends
move to a special account.
7. Dividend Warrant (Section 123): Warrants sent to shareholders
post-declaration.
a. Case Law: Smith v. Anderson: Dividends can't be declared out of
capital.
8. Fraudulent Declaration (Section 447): Legal consequences for fraudulent
dividend declarations.

Conclusion:

● Companies Act 2013 sets clear rules for dividend declaration and payment,
ensuring fairness.

A company has been declared dividend and is not paid

within 30 days from the date of declaration even though
the shareholders asked to pay. Advise them.

Introduction:

● Shareholders facing non-payment of declared dividends within 30 days have

legal options under the Companies Act 2013.

Key Points:

1. Reminder to Company: Shareholders should formally remind the company to

pay dividends.
2. Legal Action (Section 127): Shareholders can take legal action if the company
fails to pay dividends.
 3. Application to Tribunal (Section 127): Shareholders can apply to the NCLT for
an order to compel dividend payment.
4. Consequences of Non-compliance: Failure to comply with tribunal orders may
result in penalties.
a. Case Law: In Re Gujarat Industries Ltd., the NCLT directed dividend
payment after shareholder application.
5. Seek Legal Advice: Shareholders should seek legal advice to understand their
rights and options.

Conclusion:

● Shareholders should take proactive steps and seek legal recourse if dividends
are not paid within the specified timeframe, ensuring compliance with the
Companies Act 2013.

Kinds of Debentures

Introduction:

● Debentures are financial instruments issued by companies for fundraising,

with distinct types outlined under Section 71 the Companies Act 2013.

Key Points:

1. Secured Debentures: Backed by company assets, providing security to

holders.
2. Unsecured Debentures: Not backed by specific assets, relying on company
creditworthiness.
3. Convertible Debentures: Convertible into equity shares, offering potential for
capital appreciation.
4. Non-convertible Debentures: Not convertible into equity shares, offering fixed
returns.
5. Redeemable Debentures: Redeemable by the company after a set period,
ensuring repayment.
6. Irredeemable Debentures: Perpetual debentures with no maturity date or
redemption obligation.

Conclusion:

● Companies Act 2013 delineates various debenture types, accommodating

diverse investor preferences and requirements for fundraising.
When can a company wind up on just and equitable
grounds?

Introduction:

● The Companies Act 2013 allows for winding up a company on just and
equitable grounds in specific situations.

Key Points:

1. Sec. 241 - Grounds for Winding Up: Specifies reasons for winding up,
safeguarding shareholder interests.
2. Sec. 242 - Oppression of Minority: Orders winding up if minority shareholders
are oppressed.
3. Sec. 242 - Mismanagement: Winding up warranted for persistent
mismanagement.
4. Sec. 242 - Deadlock in Management: Winding up may occur in management
deadlock.
5. Sec. 241 - Fraud or Misconduct: Fraud or misconduct may justify winding up.
6. Sec. 241 - Loss of Substratum: Winding up allowed if the company loses its
essential purpose.
7. Sec. 241 - Unfair Prejudice: Actions causing unfair prejudice can lead to
winding up.
a. Case Law: Needle Industries (India) Ltd. v. Needle Industries Newey
(India) Holding Ltd.: Court’s jurisdiction for winding up emphasized.
8. Sec. 242 - Remedial Measures: Courts explore alternatives before ordering
winding up.
9. Court Discretion: The court decides based on each case's facts and
circumstances.

Conclusion:

● The Companies Act 2013 empowers the court to wind up a company on just
and equitable grounds, protecting shareholder interests in cases of
oppression, mismanagement, fraud, or loss of substratum.

Who can apply for winding up of a company?

Introduction:
 ● Winding up proceedings under the Companies Act 2013 can be initiated by
specific parties.

Key Points:

1. Sec. 272 - Applicants: Parties eligible to apply for winding up include

creditors, contributories, the company, Registrar of Companies, and the
Central Government.
2. Creditors: Unpaid creditors can apply if debts exceed Rs. 1,00,000.
3. Contributories: Shareholders can apply if they believe the company cannot
pay its debts.
4. Company: The company may apply if unable to continue due to financial
difficulties.
5. Registrar: May apply if the company fails to commence business within one
year.
6. Central Government: May apply if in the public interest.
7. Sec. 271 - Special Resolution: Shareholders can pass a special resolution for
winding up.
8. Case Law - Sir Dinshaw Maneckjee Petit v. Dominion of India: Illustrates the
Central Government's authority to initiate proceedings.
9. Voluntary Winding Up: Shareholders can opt for voluntary winding up.
10. Sec. 273 - Application to Tribunal: All applications are made to the NCLT for
adjudication.

Conclusion:

● Winding up proceedings can be initiated by creditors, contributories, the

company, Registrar of Companies, or the Central Government, ensuring proper
resolution of company affairs.

Powers exercised by the liquidator without the permission

of the tribunal.

Introduction:

● The liquidator in company winding up holds specific powers under the

Companies Act 2013.

Key Points:

1. Sec. 236 - Asset Collection: Authority to collect and realize company assets.
 2. Sec. 238 - Investigation: Power to investigate company affairs for
irregularities.
3. Sec. 240 - Witness Summoning: Ability to summon and examine witnesses
under oath.
4. Sec. 239 - Asset Sale: Permission to sell company assets for creditor
repayment.
5. Sec. 247 - Claims Compromise: Negotiation power to compromise claims.
6. Sec. 245 - Asset Distribution: Responsibility to distribute remaining assets
among shareholders.

Conclusion:

● The liquidator's powers under the Companies Act 2013 enable effective
winding up, ensuring fair treatment of creditors and shareholders.

Duties and powers of the tribunal with respect to

reconstruction and amalgamation of the company.

Introduction:

● The NCLT plays a key role in overseeing company reconstruction and

amalgamation under the Companies Act 2013.

Key Points:

1. Sec. 230 - Scheme Sanction: NCLT sanctions proposed reconstruction and

amalgamation schemes.
2. Sec. 232 - Application Hearings: Tribunal conducts hearings to assess
scheme feasibility.
3. Sec. 233 - Investigation: NCLT may order investigations for transparency.
4. Sec. 234 - Stakeholder Protection: Ensures protection of stakeholders'
interests.
5. Sec. 235 - Implementation Control: NCLT controls scheme implementation.
6. Sec. 241 - Judicial Review: Decisions subject to judicial review for legality.

Conclusion:

● NCLT's duties and powers ensure transparency and fairness in company

reconstruction and amalgamation processes.