Companies Act_Practical problems_25

The paid up capital of Needy Private Limited is Rs. 5 lakhs. Liberal Finance Ltd. has agreed to grant a loan or Rs. 2 crores to Needy Private Limited on the condition that Liberal Finance Ltd. shall have a right to nominate Mr. Successful, Mr. Achiever and Mr. Reliable as directors on the Board of Needy Private Limited. The articles of Needy Private Limited require every director to hold qualification shares of a nominal value of Rs. 20,000. Answer the following in view of the provisions of the Companies Act, 1956:

(i) Whether appointments of the three directors by Liberal Finance Ltd. can be made in accordance with the Loan Agreement entered into by Liberal Finance Ltd. and Needy Private Limited?

(ii) Whether the three directors nominated by Liberal Finance Ltd. shall have to obtain the qualification shares. If yes, what will be the value of the qualification shares?

(ii) Assuming that all legal requirements for appointment of the three directors are complied with, and the three directors hold requisite qualification shares, if any, whether these directors are required to disclose their interest in an agreement put for consideration in the Board meeting of Liberal Finance Ltd., and can they vote thereat?

Companies Act_Practical problems_24

Director’s Responsibility Statement is required to be made only when a company has not made compliances with the provisions of the Companies Act, 1956. The contents of the Director’s Responsibility Statement shall be such as deem fit by the directors. Comment.

Companies Act_Practical problems_23

The directors of a company have to travel very often for the company’s business. The company makes some advances to them for this purpose which sometimes exceed the actual requirements. Comment.

Companies Act_Practical problems_22

As a secretary of ST Ltd. advise the Board of directors regarding appointment of an alternate director, an additional director, and a director filling a casual vacancy. The articles of ST Ltd. does not contain any provision regarding appointment of any directors

Companies Act_Practical problems_21

A company failed to file annual accounts and annual return for two consecutive financial years (although such documents were ready for filing). The annual accounts and annual return for third financial year are not ready as on last date of filing annual return. Suggest the course of action to be adopted by the company and consequences if default is made in third year also.

Companies Act_Practical problems_20

Give your views in the following cases:

(i) Mr. A, a whole time director of the company is appointed as a secretary at a remuneration of Rs. 5,600 per month. No approval of shareholders is obtained in the first general meeting. Mr. B, another director of the company contends that Mr. A shall cease to be a director as from the date of first general meeting. Comment.

(ii) Mr. X is already a director in 15 companies. He has been appointed as a director in RT Ltd. on 23.4.2004 and in ST Ltd. on 30.4. 2004. Mr. X resigns from one of his earlier directorships on 13.5.2004. On the same date, he intends to accept the directorship in RT Ltd. and ST Ltd. Comment.

Companies Act_Practical problems_19

The balance sheet of M/s. Hush Hush Ltd., as at 31.3.1999 filed with registrar of companies, Mumbai disclosed that the liabilities amounted to Rs. 2.75 crores as against the assets of Rs. 1.25 crores. On the basis of the scrutiny of the Balance Sheet, the registrar filed a winding up petition against the company stating that it is commercially insolvent and that the company is unable to pay its debts on the ground that the value of liabilities far exceeded the value of assets. Examine whether the company has any case to defend against the winding up petition filed by the registrar.

Companies Act_Practical problems_18

The directors of a company held more than 75% shares in the company. The company was carrying on business of construction of projects. The directors acquired certain contracts in their own name in breach of trust and made profits for themselves. In the annual general meeting, they passed a resolution that the company had no interest in the contract. The minority shareholders filed a case against directors asking them to account for the profits. Discuss.

Companies Act_Practical problems_17

Where the appointment of a sole selling agent is made without a condition that the appointment is subject to approval of members but later on members’ approval is obtained, the appointment of sole selling agent is validated. Comment.

Companies Act_Practical problems_16

Examine whether the quorum is present in the following cases:

(i) In a Board meeting, only 3 directors were present out of the total of 11 directors. None of the 3 directors was interested in any of the items of the agenda.

(ii) In a meeting of the Board, out of the total of 11 directors, 7 directors were present of which only 2 directors were not interested in one of the transactions.

(iii) The articles of association of a company fixed 3 as the quorum for a meeting of the Board. At a meeting of the Board, all the 5 directors were present. They allotted the shares of the company to 3 of the directors. Is the allotment valid?