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_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_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.