Companies Act_practical problems_6

The paid up share capital of AJD Limited is Rs. 10 crores consisting of 70 lakhs equity shares of Rs. 10 each fully paid-up and 30 lakhs preference shares of Rs. 10 each, fully paid up. Nationalised Banks, LIC and IDBI hold among themselves 30 lakhs equity shares and 25 lakhs preference shares. With reference to the provisions of the Companies Act, 1956, examine whether AJD Limited is a Government company. Explain the manner in which you would proceed in the matter of appointment of auditors for the said company.

The paid up share capital of AJD Limited is Rs. 10 crores (Paid up capital includes both equity share capital and preference share capital). Rs. 5.5 crores of paid up share capital of AJD Limited is held by Nationalised banks, LIC and IDBI. However, no share in AJD Limited is held by the Central Government or any State Government and therefore AJD Limited is not a Government company.

LIC and IDBI are the corporations owned by the Central Government, which hold more than 51% of the paid up share capital of AJD Limited. Therefore, the appointment of auditors of AJD Limited will be made in the same manner in which auditors of a Government company are appointed, i.e., the appointment of auditors shall be made by the Controller and Auditor General of India and the remuneration of auditors shall be determined in the general meeting.