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Q1. A. Ltd’s extract of financial statements is as follows : Paid-Up Capital and Free Reserves 100 Crores. Sec Premium 10 crores Money Borrowed 50 crores (includes 10 crores temporary loan repayable within 6 months). Money proposed to be borrowed 60 crores. An ordinary resolution at the GM is passed to approve such additional borrowing. Is the treatment correct?
Yes, as aggregate of money borrowed and to be borrowed does not exceed PUC + FR+SP, hence does not require Sp Resolution
No, as Sp Resolution is required for all the times when money is borrowed
Yes, as all borrowing of money requires consent by Ordinary Resolution
Yes, as the money to be borrowed is less than 3/4ths of the total PUC+FR
Q2. Would the contribution be valid if in question no 78 A Ltd was a Company in which CG or SG or partly both held more than 51 % shareholding?
Q3. What penal provisions befall a Director who has not disclosed interest u/s 184
Imprison : <= 1 yr Fine: 1-2 lakh Or Both
Imprison: <= 6 mt Fine: 1-2 lakh Or Both
Imprison: <= 1 yr Fine: <=1 lakh Or Both
Imprison: <= 6 mt Fine: 50000-1 lakh or Both
Q4. Would the treatment be correct in the above case change if instead of net profit of 50 Lakhs in FY 2014-15 the company made net profit of 40 Lakhs.
Yes, as for Charitable fund contribution no consent of Company is required
No, as the Companies Act, 2013 prohibits Charitable fund contribution with or without consent
Yes, as the amount does not exceed 5% of the Avg. N.P of 2 IPFY no approval of Co at GM needed
No, as the amount is equal to or exceeds 5 % of the Avg N.P.of 3 IPFY and hence needs approval of Company at GM
Q5. Board of A Ltd exercised the power to sell its whole undertaking in Ab Ltd its subsidiary. A Ltd’s total net worth as per the preceding financial year audited Balance Sheet was 100 crores. The Investment in Ab Ltd was 30 Crores only. The exercise of such power was through consent of the Company through special resolution. The limits for the sale of investment were not explicitly mentioned in GM-SR. Is the treatment correct?
Yes, the requirement of a Special Resolution is the sole criteria as per the Act
No, as in addition to the Special Resolution what is also required is the mention of the limits of funds
Yes, as the limits are notified for different class of Companies by the Companies Act, 2013
Yes, as the BOD is at liberty to define the financial limits within which to exercise the power
Q6. Board of A Ltd exercised the power to sell its whole undertaking in Ab Ltd its subsidiary. A Ltd’s total income for the previous financial year was 100 crores. The income contributed by Ab Ltd was 15 Crores only. The exercise of such power was through a consent of the Company through ordinary resolution. Is the treatment correct?
Q7. Board of A Ltd exercised the power to remit (ignore) repayment of debt due from Director. The exercise of such power was through consent of the Company through ordinary resolution. Is the treatment correct?
Q8. Board of A Ltd exercised the power to sell its whole undertaking in Ab Ltd its subsidiary. A Ltd’s total income for the previous financial year was 100 crores. The income share contributed by Ab Ltd was 30 Crores only. The exercise of such power was through consent of the Company through ordinary resolution. Is the treatment correct.
Q9. In the above question would the treatment be correct if the Money proposed to be borrowed was 70 crores instead of 60 crores
Q10. A Ltd. with turnover of 100 lakhs Contributed 10 Lakh to the Flower Hand Broom Political Party. The contribution was consented through a BOD resolution . Some members of the Company objected that Company’s consent for the same shall have been obtained. Is the Contribution valid in light of Companies Act, 2013
Q11. Board of Adarsh (Pvt) Ltd sold its undertaking as defined in explanation to Sec 180(1)(a). The Company at the GM objected to such an exercise of power calling it to be a wrongful as it was without approval of Company through Special Resolution as required for sale of undertaking u/s 180(1)(a) of Companies Act, 2013. Owing to the same, the title of the purchaser of the undertaking was brought into question. Is the treatment correct.
Q12. In question No. 69 would the treatment be correct if Money Borrowed previously (i.e.50 crores) had temporary loans component of 20 crores instead of 10.
Q13. Board of A Ltd wishes to exercise the power to sell its whole undertaking in Ab Ltd its subsidiary. A. Ltd’s total net worth as per the preceding financial year audited Balance Sheet was 100 crores. The Investment in Ab Ltd was 30 Crores only. The exercise of such power was done after consent of the Company through ordinary resolution. Is the treatment correct?
No, as the Company shall be required to provide consent by Special Resolution as the total investment exceeds 20 % net worth
No, as the Company shall be required to provide consent by Special Resolution as the total investment exceeds 15 % net worth
Yes, as the Company shall be required to provide consent by Ordinary Resolution as the total investment is less than 40 % net worth
Yes, as the Company shall be required to provide consent by Ordinary Resolution irrespective of %age of investment
Q14. In question No. 69 would the treatment be correct if the Money proposed to be borrowed was 71 crores instead of 60 crores
No, as the aggregate of money borrowed and to be borrowed would exceed PUC + FR+SP, hence consent by Sp Resolution
No, the same treatment would stand
Q15. A Ltd seeks to make contribution to Charitable funds of 5 lakh in FY 2017-18. The Board approved such a resolution without consent of Company at GM. In light of the given extract for the 3 immediately preceding FY, is the treatment correct? FY Net Profits (in lakhs) FY 2014-15 50 FY 2015-16 150 FY 2016-17 100
Yes, as for Charitable fund contribution no consent of Company is required
No, as the Companies Act, 2013 prohibits Charitable fund contribution with or without consent
Yes, as the amount does not exceed 5% of the Avg. N.P of 3 IPFY no approval of Co at GM needed
No, as the amount is equal to or exceeds 5 % of the Avg N.P.of 3 IPFY and hence needs approval of Company at GM
Q16. Board of A Ltd exercised the power to sell its whole undertaking in Ab Ltd its subsidiary through a consent of the Company vide an ordinary resolution. Later it was discovered in 4 months that the situation warranted a special resolution. Owing to the same, the title of the purchaser of the undertaking was brought into question. Is the treatment correct.
Q17. Board of A Ltd exercised the power to sell its whole undertaking in Ab Ltd (its subsidiary). A Ltd’s total net worth as per the preceding financial year audited Balance Sheet was 100 crores. The Investment in Ab Ltd was 15 Crores only. The exercise of such power was through consent of the Company through ordinary resolution. Is the treatment correct.
No, as the Company shall be required to provide consent by Special Resolution irrespective of the % age
No, as the Company shall be required to provide consent by Special Resolution as the total investment exceeds 10 % net worth
Yes, as the Company shall be required to provide consent by Special Resolution only when total investment in undertaking exceeds 20 % net worth
Yes, as the Company shall be required to provide consent by Ordinary Resolution in all cases
Q18. Board of A Ltd exercised the power to invest in trust securities the proceeds of compensation received as a result of merger/amalgamation. The exercise of such power was through consent of the Company through ordinary resolution. Is the treatment correct?
Q19. Would the contribution be valid in question no. 78 if A Ltd was incorporated 364 days before making such a contribution?
No, as company is in existence for less than 1 FY it is prohibited to make any political contributions
No, as company is in existence for less than 3 FY it is prohibited to make any political contributions
Yes, as the contribution is independent of the time for which the Company has been in existence
Yes, as the Company has completed 180 days as stipulated in the Companies Act, 2013
Q20. Mr. A was interested in a contract. He was a Director of A.Ltd. The interest was not disclosed. On prospective discovery of his interest the Director, the BOD wanted to annul the contract. Can it do so?
Yes, the contract is voidable at the option of the Company
Yes, the contract is voidable by the party in which the Director has interest, failing which the Director shall indemnify
No, the contract cannot be voided on a technicality and the outsiders are protected by Doctrine of Indoor Management
Yes, the contract is voidable and the Company shall bear all costs that may have unduly befallen on the other party as a result of voiding
