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Company Law - Notes, Case Laws and Study Material

This course consists of 5 modules that cover a range of topics from the salient features of the companies act to various doctrines and tribunals..

The history of Indian Company Law began with the Joint Stock Companies Act of 1850 . Thereafter, a cumulative process of amendment and consolidation brought us to the most comprehensive and complicated piece of legislation, the Companies Act, 1956 . As of today, the Companies Act, 2013 has replaced the Companies Act, 1956. The new Act has 470 sections and 7 schedules as against 658 sections and 15 schedules in the 1956 Act.

This course consists of 5 modules that cover a range of topics from the salient features of the Companies Act to various doctrines and Tribunals. To help readers get an in-depth understanding of Indian Company Law, we have also provided well-researched and analytical articles on miscellaneous subjects towards the end of the course.

Important articles and study material on Company Law – Click on the links to Read:

• A Comparative Analysis of the Provisions of Companies Act, 1956 and Companies Act, 2013
• Introduction to Company Law: Meaning, Nature, and Characteristics
• Salomon v. A Salomon and Co. Ltd (1897)
• Companies Act 2013 – Bare Act
• Types of Company
• Comparison of a Company with a Partnership firm and an LLP
• Formation of a Company under the Companies Act, 2013
• Disadvantages of Incorporation of a Company
• A Comprehensive Analysis of Section 9 of the Companies Act, 2013
• Case Study: Foss v Harbottle (1843)
• Promoters of a Company
• Memorandum of Association (MoA)
• Articles of Association: Meaning, Nature, and Explanation
• Doctrine of Ultra Vires in Company Law
• Doctrine of Harmonious Construction: A Comprehensive Analysis
• Doctrine of Indoor Management in Company Law
• Prospectus of the Company
• Meetings under the Companies Act of 2013
• Shares, Share Capital, and Debentures: Explained
• Winding Up of Companies
• Corporate Social Responsibility (CSR)
• National Company Law Tribunal (NCLT)
• National Company Law Appellate Tribunal (NCLAT)
•  Write Short notes on Share Warrant.
• Write Short notes on Share Certificate.

Other important articles and study material on Company Law:

Theories of Corporate Personality

Minority Shareholders & Their Rights in a Company

• Types of Directors in a Company

Power and Liabilities of Directors

• Allotment of shares
• Majority Powers And Minority Rights
• Prevention of Oppression and Mismanagement
• Inspection, Inquiry, and Investigation
• Debenture: Meaning, Features and Kinds
• Debentures and its impact on Company and Shareholders
• Internal Audit under the Companies Act, 2013
• A Comprehensive Study of the Company Law Committee Report 2022
• Difference between Dissolution and Winding Up of a Company

Equity Funding under The Companies Act, 2013

Company Law Mains Questions-Answer Series: Important Questions for Judiciary Exams

• Company Law Mains Question Series Part I
• Company Law Mains Question Series Part III
• Company Law Mains Question Series Part IV

Company Law Mains Question Series Part V

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Home » Blog » [Case Study] Procedure of Conducting Board Meetings

[Case Study] Procedure of Conducting Board Meetings

• Blog | Company Law |
• 12 Min Read
• Last Updated on 22 February, 2023

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Table of Contents

1. Board meeting

2. provisions under the companies act 2013 for conducting board meetings, 3. section 173 of companies act, 2013 – meetings of board, 3.1 minimum number of board meetings, 3.2 gist of section 173, 4. manner of participation by directors, 5. penal provision for any default/violation of section 173.

5.1 Penal provision as per section 450 of Companies Act 2013

6. Regulatory actions

7. the relevant case law on this matter, 8. details of the company, 9. regulator’s inspection/checking procedure on compliance, 10. facts of the case, 11. show cause notice and personal hearing, 12. the findings of the regulators on the submission made by pcs, 13. the order passed by the registrar of companies, 14. conclusion.

The board meeting in a company is a formal meeting of the directors of the company called to debate certain issues and problems and to make decisions to run the company smoothly in order to achieve the desired goals and objectives set. The meetings are held at definite times, at definite places. A board meeting is organized to solve some special issues, taking important decisions, or to make new policies, monitor the progress, taking note of the compliances and such other matters. No doubt planning a board meeting require a meticulous detailed preparation than the usual company / corporate events which are attended by the directors and at times, invites / experts called for the meeting for specific purposes.

Since the companies are incorporated and registered under the framework of the Companies Act, the companies are mandatorily required to follow the laid down procedure of the provisions of the Companies Act, 2013. Relating to conducting of the board meeting in a company, the following are the laid down procedure / provisions under the Companies Act 2013.

Dive Deeper: [Opinion] Consequences of failure to give notice for holding a board meeting under the Companies Act

Following are the rules and conditions laid down by Companies Act 2013 which are mandatorily required to be followed and fulfilled by the companies and board of director of a company

As per section 173(1) of Companies Act 2013, “every company shall hold the first meeting of the board of directors within thirty days from the date of company incorporation and thereafter hold board meetings in such a manner that not more than 120 shall intervene between two consecutive meetings and should be a minimum number of four meetings every year.”

We can conclude the following from the above provision that:-

(i) Every company is required to hold the first meeting of the board of directors within 30 days of the date of company incorporation. (ii) A minimum number of 4 meetings of its board of directors is required to be held every year in such a manner that not more than 120 days shall intervene between two consecutive meetings of the Board. (iii) It is observed that the Central Government may by notification direct that the provisions of this subsection shall not apply to any class or description of companies. (iv) The provisions related to a minimum number of board meetings apply to a company licensed under section 8 company only to the extent that the board of directors of such companies shall hold at least one meeting within every 6 calendar months.

As per sub-section (2) of section 173 of the Companies Act 2013, it says that “the participation of directors in a meeting of the board may be either in person or through video conferencing or other audiovisual means, as may be prescribed, which are capable of recording and recognizing the participation of the directors and recording and storing the proceedings of such meetings along with date and time: Provided that the Central Government may, by notification, specify such matters which shall not be dealt with in a meeting through video conferencing or other audiovisual means.”

Offences for default committed in section 173 of the Companies Act 2013, is not provided specifically in the Act. In such a case, the penalty will be imposable under section 450 of the Act as provided in that section. In this case also, the penalty would be levied for noncompliance as per section 450 of the Companies Act 2013.

5.1. Penal provision as per section 450 of Companies Act 2013

Section 450 of the Companies Act, 2013 spells out that if a company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made thereunder, or any condition, Imitation or restriction subject to which any approval, condition, consent, confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted, and for which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default or such other person shall be table to a penalty of ten thousand rupees, and in case of continuing contravention, with a further penalty of one thousand rupees for each day after the first during which the contravention continues, subject to a maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default or any other person.

To understand the regulatory action in cases of non-compliance relating to the conduct of board meeting, it would be worthwhile to go through a decided case law on this matter.

We shall go through a case relating an adjudication order passed by the Registrar of Companies, Gujarat, Dadra & Nagar Haveli on 13th April 2020, in the matter of M/s. D J. Shah Investment Finance Private Limited of Gandhinagar, Gujarat, under section 454(3) of the companies act 2013 read with rule 3 of the companies (adjudication of penalties) rules, 2014 for violation of section 173(1) of the Companies Act, 2013.

D.J Shah Investment Finance Private Limited is a company incorporated on 1st June 1984 having its registered office at 619, Yash Kamal Building, Sayajigunj Vadodara Gujarat. The company falls under the jurisdiction of Registrar of Companies, Ahmedabad and the Registrar of Company is situated at Ahmedabad. The company operates in the securities, commodity contracts and other financial investments and related activities sector. The company had three directors on its board (being a private company)

As per sub-section (5) of section 206 of the Companies Act 2013, the Central Government carry out the inspection of the books of accounts of the company and after going through the records / documents of the company, the inspecting officer would take note of any non-compliance committed by the company. Such non-compliances would be reported by the inspector to the Registrar of Companies by way of submitting an inspection report.

Even if the inspection is not taking place, the Registrar of Companies (RoC) could go through the documents submitted (i.e. financial statements along with the Board report) by the company via e-filing done by the company at the MCA Portal and information could be gathered and where required the RoC could call for further information from the company in order to ascertain the facts.

In this case, the regulators during their procedural scrutiny observed from the documents filed by D.J Shah Investment Finance Private Limited at the MCA portal – from the annual report submitted by the company in form MGT-7, that the company’s board meetings were held as listed below during the financial year 2017-18 (financial year ending as on 31/3/2018)

After the hearing and the oral submissions made by the Learned PCS, the Registrar of Companies has observed from the transfer list of shares attached with MGT-7 filed under the Ministry of Corporate Affair portal vide SRN No. H25987967 dated 24-10-2019 approved through STP mode that date of board resolution i.e. 7.11.2017 as claimed by Learned PCS is not mentioned anywhere in the share transfer form attached with the annual return in form MGT-7 for the financial year 2017-18.

The Registrar of Companies further noted that the date of execution of transfer of shares as 07.11.2017 is mentioned therein, which may not assume board’s resolution date. It was also further felt by the proceeding officer hat this type of activity should be avoided since it revealed that company / directors have not performed their duly as prescribed under the companies Act 2013 and such ignorance of law should not be excused

The conclusions reached by the Registrar of Companies who is an Adjudicating officer The following are the conclusions reached by the Registrar of Companies before he passed the order on this matter.

(a) Under the above circumstances of the case, the Registrar of Companies has reasonable cause to believe that the company and its officers have violated the provisions of the Act, 2013. (b) The company has not complied with the provisions of section 173(1) of the Companies Act 2013 for which company and directors are liable to be penalized under section 450 of the companies Act, 2013 read with Rules made thereunder.

While adjudicating the quantum of penalty under section 450 of the Companies Act 2013, the adjudicating officer has taken into consideration the following factors with due regards – namely: -.

(i) The amount of disproportionate gain or unfair advantage whenever quantifiable made as a result of default. (ii) The amount of loss caused to an investor or group of investors as a result of the default. (iii) The repetitive nature of default,

The Presenting officer also, further submitted that with regard to the above factors to be considered while determining the quantum of penalty, it is noticed that the disproportionate gain or unfair advantage made by the company and its directors or loss caused to the investor as a result of the delay on the part of the company to redress the investor grievance are not available on the record.

Further to this, the Presenting officer also added that it is difficult to quantify the unfair advantage made by the company and its directors for the loss caused to the investors in a default of this nature.

The Presenting Officer further submitted that it is observed from the balance sheet of the company that as at 31.03.2021 that the paid-up capital if the company is Rs 8,50 lacs and the turnover is Rs. 93.76 lacs.

It is also observed that the company D.J Shah Investment Finance Private Limited is a subsidiary of Premier Solution Private Limited. Hence, the company does not fall under the ambit of a “small company”. In view of the above facts, the provisions of imposing lesser penalty as per the provisions of section 446B of the companies Act, 2013 do not apply to the company.

Having considered the facts and circumstances of the case and submissions made by the Presenting officer and reply submitted by the company and its directors, vide letter dated 01-01-2022 along with oral submission made by the Learned practicing company secretary during the hearing and after taking into accounts the factors above, the Registrar of Companies imposed a penalty on company and its directors as per the table below for violation of section 450 of the Companies Act2013 by passing the adjudication order. The order also stated that the ROC is of the opinion that penalty is commensurate with the foresaid failure committed by the company and its directors.

1. Non-compliance reg. gap between Board Meetings more than 120 days during the financial year 2017-18.

(Penalty calculated for reg. gap between Board Meetings more than 120 days during FY 2017-18 between two Boards’ Meeting viz. 15-07-2017 & 12.12.2017)

2. The company and directors shall have to make the payment of penalty individually for the company and by its directors (out of their own pocket) by way of e-payment (available on Ministry website – www.mcs.gov.in) under “pay miscellaneous fees” category in MCA fee and payment services within 90 [ninety] days of this order and the challan/SRN generated after payment of penalty through online mode shall be required to be filed in INC-28 to the office of the RoC.

3. The order also stated that appeal if any against this order may be filed in writing with the Regional Director, North western Region, Ministry of Corporate Affairs, ROC Bhavan, Opp. Rupal Park, NR. Ankur Bus Stand, Namnapura, Ahmedabad, Gujarat, within a period of sixty days from the date of receipt of this order in Form ADJ setting forth the grounds of appeal and shall be accompanied by the certified copy of this order. [section 454 of the companies Act 2013 read the Companies (Adjudicating of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019.)

4. The order also stated the concerned parties may take note that as per the provisions of section 454(8) (i) of the Cornpones Act, 2013, where company does not pay the penalty imposed by the Adjudicating Officer or the Regional Director within a period of Ninety days (90 days) from the date of the receipt of the copy of order, the company shall be punishable with fine which shall not be less than twenty five thousand rupees but which may extend to five lakhs rupees. Further as per of Section 454(8) (ii) of the Companies Act, 2013,where an officer of a company who in default does not pay the penalty within a period of Ninety days (90 days) from the date of receipt of the copy of the order, such officer shall be punishable with imprisonment which may extend to six months or with fine, which shall not be less than twenty five thousand rupees but which may extend to one lakh rupees or with both.

5. The order also further drawn the attention with respect to section 454[8) of the Companies Act, 2013 that in the event of noncompliance of this order, which provides that in case of default in payment of penalty, prosecution will be filed under section 454(8) (ii) the Companies Act, 2013 at the cost of the company and its officers without any further notice.

6. Finally the order ended with a note that the adjudication notice stand disposed of with this order.

From the above decided case, one can come to an conclusion, even though the a minimum number of 4 meetings of the company is conducted every year, it is mandatory that the meetings are to be conducted in such a manner that not more than 120 days shall intervene between two consecutive meetings of the board as required under the provisions of the Companies Act 2013.

It again goes to say that the company and its directors are to be very careful and ensure the absolute compliance called for under the provisions of the Companies Act 2013, failing which the regulators could take action against the company attracting fine and penalty and also spending considerable time on the matter to be resolved.

References:- 1. Companies Act 2013 2. Companies (Meeting of Board and its powers) Rules 2014 3. Companies ( Management and Administration) Amendments Rules 2021 4. Companies (Adjudication of Penalties) Rules 2014 5. Adjudication order dated 13th April 2022 passed by the Registrar of Companies, Gujarat, Dadra & Nagar Haveli in the matter of M/s. D J. Shah Investment Finance Private Limited of Gandhinagar, Gujarat, under section 454 (3) of the companies act 2013 read with rule 3 of the companies (adjudication of penalties) rules, 2014 for violation of section 173(1) of the Companies Act, 2013.

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Company law case studies for CA/CS/CMA examinations

“Unlock insights into Company Law with these CA/CS/CMA case studies. Explore scenarios like subsidiary acquisition, pre-incorporation contracts, and conversion into a private company. Prepare effectively for examinations with real-world applications and strategic solutions.”

  Q 1 Masons (Pvt.) Ltd. is a private limited company as per the articles of association of the company. However, a  public company acquired shares in Masons (Pvt.) Ltd. Thereby making the  company, Masons (Pvt.) Ltd., a subsidiary of that public company. State the impact of such acquisition of shares by a public company on Masons (Pvt.) Ltd

Q 2 Based on the information given in the memorandum of association, Smart Ltd. Was incorporated and the certificate of incorporation was issued by the Registrar of Companies, New Delhi. The memorandum of association was duly signed, except that X, Y and Z signed it on behalf of five minors. Examine the validity of the certificate of incorporation issued by the Registrar of Companies [hint : certificate is valid, moosa goolam ariff vs ebrahim goolam ariff]

Q 3 Good Homes Ltd. was registered as a public company with 205 members as follows :

No. of members

Board of directors of the company takes a decision to convert the company into a private company. Being a legal advisor, the Board of directors seeks your advice about the steps to be taken for conversion of the company into a private company including reduction in the number of members, if necessary, as per the Companies Act, 2013. Advise the Board. [hint : no reduction required]

Q 4 A group of persons, called promoters have submitted an application to the Registrar of Companies, New Delhi for getting a company incorporated as a public company. Pending the Registrar’s decision of granting certificate of incorporation, the promoters enter into certain contracts for the purchase of some assets for the proposed company. Explain the legal position of promoters’ liability and the liability of the proposed company after  its incorporation,  in this regard. [hint : pre incorporation contracts]

Q 5 Kamal, the promoter of Desire Ltd., has incurred 1 lakh for formation of the company.The company refuses to pay all the expenses so incurred by Kamal since the company does not have any provision in the Articles of Association for such payment. Advise Kamal regarding the remedy available to him for his claim

Q 6 ABC Ltd. is a company incorporated under the Companies Act, 2013. The paid-up share capital of the company is held as under :

Explaining the provisions of the Companies Act, 2013, state whether the said company be called a ‘Government company’ and also state whether the employees of a Government company can claim their salaries from the Government of India [hint : govt co, can’t claim from GOI]

BOOKS OF ACCOUNT AND AUDIT

Q 1 Mr shyam is a small shareholder of ABC LIMITED and after that he was appointed as the small shareholder director ABC LIMITED and as on 1 aug 2016 went to company to inspect the books of accounts but accounts manager object that he can’t inspect because it is prejudicial to the interest of company if Mr shaym would be allowed to inspect. Explain as per provisions of companies act 2013 whether Mr shyam has a power to inspect ? [ hint : sec 209(3) of co act 2013, director has a power to inspect ]

Q 2 District court pass an order to recasting the books of accounts of the pasco india limited on the application filled by the income tax department and company raised objection that district court doesn’t have a power to pass such type of order, clarify as per provisions of companies act? [ hint : district court doesn’t have a power to recast the account, NCLT have a power to recast ]

Q 3 Board of director of ITC LTD has approved the financial statement on which Mr sumit has signed as chairman, for which is no authorization has been received by the BOD for signed, ROC issued the show cause notice to the company why penalty under sec 134(8) shall not to be imposed. Explain the action of ROC is tenable under law ? [ hint : yes, penalty can be imposed ]

Q 4 financial statement of ITC LTD specified that net worth of the company for the FY ended 31 march 2016 600 crore, company wants to spend in the financial year 16-17 in Corporate Social Responsibility Policy, information in regards of profits of all preceding 3 financial years are as under :-

BOD didn’t specified in board report about the amount and details of expenditure in CSR policy explain as per provisions of companies act, 2013 [ hint : Rs 2.5 crore and required to disclose otherwise liable to impose penalty ]

Q 5 Prism Ltd. has accepted Rs10 lakh as advance towards the supply of goods to certain parties. As per the agreement, the company will supply the goods after two years from the date of deposit. Later on, internal auditors qualified their report on the ground that the company has violated the provisions of the Companies Act, 2013. Directors explained that this is required to complete the order. Examining the relevant provisions of the Companies Act, 2013 state whether the explanation given by the directors is justified [ hint: not justified, consider as deposit otherwise punishable with fine which shall not be less than one crore rupees but which may extend to ten crore rupees ]

Q 6 Karnataka bank limited engaged in the business of banking provides a loan to the one of its director i.e. mukesh, amount Rs 20 crore as on 10 sep 2016 for it statutory auditor made an objection that it is violated the provision of companies act and BOD REQUIRED to give explanation on it. Explain as per provisions of companies act 2013 [hint: banking company can give a loan to director, sec 185]

Q7 on examination of books of accounts of DLF LTD Statutory auditor specify in the audit report that there is likely an amount of Rs 1 crore but BOD has not provided any explanations in the board report about the such fraud, BOD contented that it is not actual figure it is an expected figure. Explain as per provisions of companies act 2013 [hint: mandatory to explain]

Q8 Mr krishnamurty, statutory auditor of the coca cola (india) pvt ltd, has attend the EGM of the company, for which company didn’t made any notice to the auditor, company has made objection that mandatory to issue notice only in case of annual general meeting. Explain as per provisions of companies act 2013 statutory auditor can attend meeting without receiving a notice? [hint: can attend]

Q 1   ABC pvt ltd has equity paid up share capital amount of Rs 40 lacs and preference paid up share capital Rs 30 lacs and the turnover for the period ended 31 march 2016 Rs 2.5 crore

Explain whether there is a mandatory to convert in to public company or private company ? and time required for conversion ? [ hint: yes and in 6 months i.e. 30 sep 2016 ]

Q 2 ABC pvt ltd has equity paid up share capital amount of Rs 40 lacs and preference paid up share capital Rs 30 lacs and the turnover for the period ended 31 march 2016 Rs 2.5 crore

If within 6 months conversion will not be made whether company liable to struck off, explain the consequences? [ hint: no, One Person Company or any officer of the One Person Company shall be punishable with fine which may extend to ten thousand rupees and with a further fine which may extend to one thousand rupees for every day ]

Q 1 jaypee industries ltd made a public issue amount of Rs 100 crore and received an application money amount Rs 10 crore as on 1 jan 2016 and company unable to made allotment, due to strike made by the employees of merchant bankers, upto 31 jan and company made an refund  2 april 2016.CFO contended that required to show the amount in the as a deposit. Explain as  per provisions of companies act 2013 [ hint : considered as deposits ]

Q 2 pioneer Ltd. has accepted Rs10 lakh as advance towards sale of land . As per the agreement, the company will transfer the possession of land after two years from the date of deposit. Later on, internal auditors qualified their report on the ground that the company has violated the provisions of the Companies Act, 2013. Directors explained that this is required to complete the order. Examining the relevant provisions of the Companies Act, 2013 state whether the explanation given by the directors is justified [ hint: not consider as deposit ]

Q3 pioneer Ltd. , is an eligible company, has accepted Rs10 lakh as deposit for a term 24 months from member as on 1 april 2016 financial statements provided the following information for the year ended 31 march 2016 as as under

Examine the validity of amount of deposit took by the company ? [hint: deposit up to 9.5 lacs is valid]

Q 1 Mr suresh applied for 4,000 shares in a company i.e. JAR aluminum ltd but no allotment was made to him. Subsequently 4,000 shares were transferred to him without his request and his name was entered in the register of members. He knew it but took no steps for rectification of the register of members. The  company went into  liquidation and he was held liable  as a contributory, explain [ hint : liable for contribution ]

APPLICATION OF COMPANY LAW TO DIFFERENT SECTORS

Q 1 Section 129 (1) states that the financial statements shall give a true and fair view of the state of affairs of the company or companies, comply with the accounting standards notified under section 133 but ICICI bank denies to follow that such provisions shall not apply on it. explain ? [ hint: view of icici bank is correct ]

DEBT CAPITAL

Q 1 SAHARA investment limited issued a debenture on private placement basis amount if Rs 100 crore on  which 5% issued to the promoter i.e. subrata roy sahara with a specific rights of voting in general meeting, one of the shareholder objected that such type of issue against the law, company contended that objection is valid if such type of issue made to outsider, explain the validity of objection [ hint : no company shall issue any debentures carrying any voting rights ]

Q 2 Alok, the Managing Director of Yellow Ltd., borrowed a large sum of money and misappropriated the same. Later, when the lender demanded his money, the company refused to repay, contending that the money borrowed by Managing Director was misappropriated by him and the company is not liable for repayment. Decide, giving reasons, whether the lender would succeed in recovering the money from the company

Q 3 Board of directors of Joy Ltd., by a resolution passed at its meeting, decide to provide a loan of 50 crore to Happy Ltd. The paid-up share capital of Joy Ltd. on the date of resolution was 100 crore and the aggregate balance in the free reserves and securities premium account stood at 40 crore. Examining the provisions of the Companies Act, 2013, decide whether the Board’s resolution to provide a loan of 50 crore to Happy Ltd. is   valid [hint: valid ]

Q 4 Board of directors of Prince Ltd. decides to go for the issue of secured debentures of Rs100 each, to the extent of Rs 10 crore. Further, as the company is going for the issue of secured debentures, it is required to create a debenture redemption reserve. The Board seeks your advice on the conditions to be fulfilled and compliance of the provisions of the Companies Act, 2013. Advise the Board

Q 5 Manohar Motors Ltd. has a paid-up share capital of Rs 10 crore and free reserves of Rs 5 crore. The Board of directors want to borrow a sum of Rs 20 crore for its long-term capital requirements from the market.

Discuss whether they can do so and if yes, what are the requirements under the Companies Act, 2013 which they have to comply with

Q 6 Board of directors of sultan Ltd., by a resolution passed at its meeting, decide to provide a loan of 50 crore to jayshree Ltd. Information in regards of sultan limited are as under for the year ended 31 march 2017

Examining the provisions of the Companies Act, 2013, decide whether the Board’s resolution to provide a loan of 50 crore to jayshree Ltd. is valid [hint: valid]

Q 7 Manohar Motors Ltd. provides Information for the year ended 31 march 2017

company decide to take a loan amount of Rs 90 crore from ICICI BANK. Examining the validity of the provisions of the Companies Act, 2013 [ hint : upto 80 crore BOD pass a resolution, for excess required to pass special resolution ]

Q 8 jaypee industries ltd made a public issue amount of Rs 100 crore and received an application money amount Rs 10 crore as on 1 jan 2016 and company unable to made allotment, due to strike made by the employees of merchant bankers, upto 31 jan and company made an refund 2 april 2016.CFO contended that required to show the amount in the as a deposit. Explain as per provisions of companies act 2013 [ hint : considered as deposits ]

Q 9 pioneer Ltd. has accepted Rs10 lakh as advance towards sale of land . As per the agreement, the company will transfer the possession of land after two years from the date of deposit. Later on, internal auditors qualified their report on the ground that the company has violated the provisions of the Companies Act, 2013. Directors explained that this is required to complete the order. Examining the relevant provisions of the Companies Act, 2013 state whether the explanation given by the directors is justified [ hint: not consider as deposit ]

Q 10 pioneer Ltd. , is an eligible company, has accepted Rs10 lakh as deposit for a term 24 months from member as on 1 april 2016 financial statements provided the following information for the year ended 31 march 2016 as as under

Q11 PQR pvt Ltd. has accepted Rs10 lakh as deposit for a term 24 months from member as on 1 april 2016 financial statements provided the following information for the year ended 31 march 2016 as as under

Examine the validity of amount of deposit took by the company ? [hint: deposit up to 95 lacs is valid]

Q 12 Ajay Ltd. had given a loan of Rs 10 crore to Binoy Ltd. and created a charge on the assets of the company. But Binoy Ltd. failed to register the charge within the stipulated time. Can Ajay Ltd. register the charge with the Registrar of Companies ? If yes, what shall be the procedure ? [ hint: can register it ]

SMALL SHAREHOLDER DIRECTOR

Q 1 Infosys ltd has listed the BSE has total number of registered shareholder are 36 thousands out of which 1244 are such shareholder who acquire the equity shares 1800 each per person nominal value per share Rs10, having market value 120 per share in BSE, ROC objected that company is required to appoint a small shareholder director, explain as per provision of companies act, 2013, there is mandatory to appoint small shareholder director ?

Q 2 Infosys ltd has listed the BSE has total number of registered shareholder are 36 thousands out of which 1244 are such shareholder who acquire the preference shares 1800 each per person nominal value per share Rs10, having market value 120 per share in BSE, ROC objected that company is required to appoint a small shareholder director, explain as per provision of companies act, 2013, there is mandatory to oppoint small shareholder director and company objected mandatory to appoint, when small shareholder, who acquired equity share of the company exceeded 1000. Explain

Q 3 Infosys ltd has listed the BSE has total number of registered shareholder are 36 thousands out of which 1244 are such shareholder who acquire the preference shares 1800 each per person nominal value per share Rs10, having market value 120 per share in BSE, all small shareholder made a notice to company for appointment of Mr A as a small shareholder director, who didn’t purchased any share in the company, whether Mr A can appoint as a small share holder director

APPOINTMENT OF DIRECTOR

Q 4 wipro ltd has no provision in AOA for the appointment of director 5 subscriber become the director of a company but another 2 didn’t want to become a director Mr rohan the company secretary of the company specify that subscribers to the memorandum who are individuals shall be deemed to be the first directors of the company until the directors are duly appointed, it is mandatory that all subscriber shall be consider as director. Clarify contention of Mr rohan is correct as per provision of companies act 2013

Q 5 Mr ram file the application for the allotment of DIN as on 1 july 2016 in meanwhile TCS limited has passed a resolution in the extra ordinary general meeting as on 27 july 2016 for Mr ram appointed as director on the basis of application number generated after filing of application. ROC made an objection for such appointment that on the basis of application number no individual can be appointed as a director as per sec 152(2) appointment of director, whether contention of ROC tenable as per law? Clarify

Q 6 bharat electronics LIMITED which is wholly owned by the central govt in which half director in the BOD are rotational director ROC OBJECTED that minimum 2/3 of total director require to be rotational.Mr B, CS in practice, objected that provision of sec 152(6) shall not apply to government company. Clarify

DISQUALIFICATION OF DIRECTOR

Q 7 bharat electronics LIMITED which is wholly owned by the central govt in the company when Mr ram has a director financial statements or annual returns for any continuous period of three financial years i.e. 12-13, 13-14 and 14-15 Mr ram are going to be appointed as director in reliance industries limited for it resolution has been passed in 30 sep 2015.ROC objected that appointment against the provisions of sec 164(2)? Clarify

Q 8 reliance industries ltd, in the company when Mr ram has a director financial statements or annual returns for any continuous period of three financial years i.e. 12-13, 13-14 and 14-15 Mr ram are going to be appointed as director in IRCTC limited for it resolution has been passed in 30 sep 2015.ROC objected that appointment against the provisions of sec 164(2)? Clarify

Q 9 Reliance Clothing India Private Limited is a subsidiary of reliance industries limited has made an additional ground of disqualification of director that director should be post graduate, small shareholder are going to appoint a representative, i.e. Mr harish , of small shareholder in BOD but who is only a graduate, whether he can be appointed as director ? clarify as per provisions of companies act 2013

SECRETARIAL AUDIT

Q 10 ABC LTD listed in the BSE having the equity paid capital Rs 30 crore and preference paid up capital Rs25 crore.it has not annexed the secretarial audit report with board report because of non conduct of such audit. ROC objected that mandatory to conduct and file the secretarial audit. Explain as per provision of companies act 2013

AUDIT COMMITTEE

Q 11 ABC LTD having the equity paid capital Rs 6 crore and preference paid up capital Rs 3 crore as on 31 march 2016 audited financial statement and first quarter for the FY 16-17 ended 30 june 2016 unaudited financial statement provides that equity paid capital Rs 6 crore and preference paid up capital Rs 4 crore (incl 1 cr through private placement basis).whether BOD of the company are mandatory to constitute the audit committee. Explain with reasons

CONTRIBUTION TO POLITICAL PARTY

Q 12 reliance jio telecommunication ltd contributed to own formed the People’s Electoral Trust and claim deduction 1 crore in FY 16-17 on the basis of information of last preceding financial year profit are as under 13-14 Rs 10 crore, 14-15 Rs 20 cr and 15-16 Rs 20 cr. ROC objected on the basis of information that company can’t claim deduction for own formed electoral trust, explain as per provision of companies act 2013

RELATED PARTY TRANSACTION

Q 13 Infosys (india) LTD having made a sale to Infosys china, NR narayanmurti, who is the promoter of Infosys india,has acquired the equity share 2%, amount of Rs 31 crore in the financial year 16-17 without confirmation in general meeting and turnover of the Infosys (india) ltd for the FY 16-17 300 CRORE. Whether it is covered under related party transaction u/s 188? Explain

Q 14 rohit murty, son of NR narayanmurti, who is the promoter of Infosys india,appointed as chief financial officer in the financial year 16-17 for a salary amount of Rs 2.6 lacs month, whether rohit murty can be appointed as CFO with such remuneration, explain as per provision of companies act 2013

Q 1 Due to inadequacy of profits, the Board of directors of Rise Ltd. decided not to recommend any dividend for the financial year ended 31stMarch, 2015.Certain shareholders of the company complained to the Company Law Board/Tribunal regarding mismanagement of the affairs of the company, since the Board of the company did not recommend any dividend. Explaining the provisions of the Companies Act, 2013,examine whether the contention of the shareholders is tenable. [ hint : not consider mismanagement ]

Q 2 BOD OF reliance industries ltd has passed a resolution to declare an interim dividend during the financial year 16-17 as on 30 sep 2016 @ 120% of the face value of the share i.e. Rs 10 but before payment of dividend BOD rescind the such resolution i.e. 16 oct 2016, on it shareholders made an objection that after passing a resolution of dividend it is a debt against the company, company can’t rescind after that. Explain [ hint : VAZIR SULTAN TOBACCO CO. LTD vs CIT 1981, not a debt to the company ]

Q 3 RR METALS limited has no profits in the financial year for the year ended 31march 2017, for declaring a dividend company made a public issue amount of Rs 1 crore out of which 70 lacs has been utilised for the payment of dividend for such financial year, statutory auditor made an objection it is not tenable in law, clarify as per provisions of companies act 2013 [ hint: it is not tenable in law as per sec 123(1) ]

Q 4 RR METALS limited has no profits in the financial year for the year ended 31march 2017, for declaring a dividend company intended to utilize the amount of general reserve, information are as under

Company declared the dividend for the FY 2015-16- 50%, 14-15 70% & 13-14 90%. Advise the company maximum amount can be utilised for payment of dividend to equity shareholder as per provisions of companies act, 2013[ hint : Rs 140 lacs ]

Q 5 In Evergreen Ltd., the Board of directors declared an interim dividend but could not distribute the dividend due to objections of audit committee that the accounts considered by the Board were false; and true financial results were inflated by not incorporating outstanding liabilities and over-valuation of inventories. A shareholder filed a suit for non-payment of dividend. One of the directors contended that he never attended the Board meeting where the issue relating to payment of interim dividend was declared on the basis of false accounts. Discuss about the validity of contention of the director [ hint : VAZIR SULTAN TOBACCO CO. LTD vs CIT 1981, not a debt to the company ]

GENERAL MEETING

Q 1 Infosys ltd has not hold its AGM for the financial year ended 31 march 2017, one of the member of the company who holds 15% voting power in the company has filled the petition in front of company law tribunal in regards of holding a AGM, RESPONDENT  i.e. Infosys objected that member doesn’t have a power to compel only the ROC has the power. Explain as per provision of companies act 2013 [hint : sec 97 : any member can filled to hold AGM]

Q 2 Infosys ltd has not hold its AGM for the financial year ended 31 march 2017, one of the member of the company who holds 1% voting power in the company has filled the petition in front of company law tribunal in regards of holding a AGM, RESPONDENT i.e. Infosys objected that member holding below 10% voting power can’t enforce. Explain as per provision of companies act 2013 [hint : sec 97 : any member can filled to hold AGM]

Q 3 Infosys ltd has not hold its AGM for the financial year ended 31 march 2017, one of the creditor of the company has filled the petition in front of company law tribunal in regards of holding a AGM, RESPONDENT i.e. Infosys objected that creditor can’t Explain as per provision of companies act 2013 [hint : sec 97 : any member can filled to hold AGM]

Q 4   AOA  of Infosys ltd specify that power to call AGM are on the BOD of the company and member holds 10% or more voting power in the company, one of the member filled petition to tribunal for call AGM and tribunal pass order, company challenge that only authorized person who specified in the AOA can only call AGM, YOU are the legal advisor advise on such matter. [hint : sec 97 : notwithstanding anything contained in this Act or the articles of the company, any member can filled to hold AGM]

Q 5 Infosys ltd has not hold its AGM for the financial year ended 31 march 2017, one of the member of the company who holds 1% voting power in the company has filled the petition in front of company law tribunal in regards of holding a AGM, RESPONDENT i.e. Infosys hold AGM as per direction of tribunal, ROC objected that meeting for the financial year 16-17 has not been held by the company. Explain as per provision of companies act 2013 [hint : sec 97(3): Agm As Per direction of the tribunal deemed to be an annual general meeting of the company]

Q 6 Bright Products Ltd. wishes to sell one of its undertakings for which it decides to call an extra-ordinary general meeting (EGM) and to pass a resolution thereat. State the material facts to be set out in the explanatory statement to be annexed to the notice of the EGM on this special business to be transacted at the meeting. [hint : matter to be stated in explanatory statement in case of selling of undertaking]

Q 7 Pioneer Fisheries Ltd. has borrowed an amount of Rs 50 crore from a financial institution. The annual general meeting of the company was held on 1st September, 2015.Examining the provisions of the Companies Act, 2013, state as to who will sign and certify the annual return while filing the same with the Registrar of Companies after the annual general meeting. [hint : signed by a director and the company secretary, or where there is no company secretary, by a company secretary in practice ]

Q 8 Pioneer Fisheries pvt. Ltd. has turnover for the financial year ended 15-16 Rs 1.2 cr. The annual general meeting of the company was held on 1st September, 2016.Examining the provisions of the Companies Act, 2013, state as to who will sign and certify the annual return while filing the same with the Registrar of Companies after the annual general meeting [hint: incase of small company, shall be signed by the company secretary, or where there is no company secretary, by the director of the company]

Inspection and investigation

Q 1 Sudarsan Trading Co. Ltd. is a company mainly transacting non-banking financial business, the Joint Director, Inspection issue notice of examination of books of accounts of the company and the mail which has interchanged between the director group of the company, because it is relevant, company objected on examination of letter, explain as per provisions of companies act 2013 [hint : C.V. Karuppunni And Ors. vs Joint Director, contention of company is correct]

Q 2 Sudarsan Trading Co. Ltd. is a company mainly transacting non-banking financial business, the Joint Director, Inspection issue notice that “you are hereby required personally to attend at the office of the Regional Director 14th may 2016 at 11 am to produce either personally or through an authorized representative the books of account or other documents specified overleaf and not to depart until you receive my permission to do so”, company object that it is not open for department to call books of accounts in his office, explain ? [hint: it is within power of department to call records in his office]

Q 3 Search and seizure conducted by the inspecting officer in pioneer company limited with the permission of central govt but for seizure conducted without the permission of special court, such company made an objection that serach conducted by the inspecting officer is against the law, explain as per provisions of companies act 2013 [ hint : seizure may be conducted after obtaining an order from the Special Court ]

Q 4 Inspecting officer i.e. Mr ravinder seize the books of accounts after conducting the search as on 1 july 2016 in the amtee properties limited and such books of accounts had not been returned by Mr ravinder upto 31 dec 2016, company made an objected that it is holding more than authorized period as specified by the law, whether contention of company is correct [ hint: sec 209(2): inspector shall return the books and papers seized in any case not later than 180 days after such seizure]

Q 5 144 members holding 9% paid up share capital of the ABC limited has apply to the tribunal of investigate the affairs of the company, company object that minimum holder of 10% paid up share capital shall required to apply for investigate the affairs of the company, explain whether the contention [ hint: sec 213: member can apply to tribunal ]

Q 6 Investigating officer i.e. Mr ravinder appoints to examine the affairs of the ABC limited, wants to examine the papers related to group of suppliers, which are in under possession of Mr sohan Sharma, who is the former employee of the company, whether Mr ravinder succeed to examine the documents explain? [ hint : sec 217 : can examine the documents ]

Q 7 During the pendency of the investigating process the company pass the special resolution to winding up the company, for which company deny to provide the some documents because of process of winding up has been initiated, whether investigating officer can examine the documents after commencement of winding up process?

MEMBERSHIP IN A COMPANY

Q 1 Mr. sohan is the one of the subscriber of the MOA, of the interior investment ltd, out of the 7 subscriber but his name is not mentioned in the register of member of the company at the time of declaring the dividend company had not declared the dividend after arguing that Mr is not the registered shareholder of the company, explain as per provisions of the companies act 2013 [ hint: subscriber is the member, mandatory to distribute the dividend ]

Q 2 Mrs  sujata holds 52% equity  share capital in the DEF ltd, which is registered under ROC  Mumbai, remaining shareholding acquire by the 48 shareholders, every member holds 1% share in the company and 20 member resides delhi and decides to registers of member required to be maintained in delhi Mrs sujata object that it is against the law to maintain the register other than place of registered office, explain [ hint: after passing a special resolution can maintain any other place in india, where more than 1/10 member resides, proviso of sec 94(1) ]

Q 3 icici bank lend a loan to NTPC ltd amount of Rs 150 crore, after making a public issue share certificate has been allotted by the company and for which representatives of icici bank went to such company for examination of register of member nut the company made objection only security holder has as right to inspect, whether contention of company is as per law, clarify as per provisions of companies act 2013[ hint: any other person can inspect the register on payment of the requisite fee ]

Q 4 Satish, outsider, who is not a member of dayal Ltd., wants to inspect the register of deposits maintained by the company as required under the provisions of the Companies Act, 2013. The company refused to provide the register for inspection without assigning any reason. Referring to the provisions of the Act, examine the validity of the company’s refusal [ hint : any other person can inspect the register on payment of the requisite fee ]

Q 5 Mr suresh applied for 4,000 shares in a company i.e. JAR aluminum ltd but no allotment was made to him. Subsequently 4,000 shares were transferred to him without his request and his name was entered in the register of members. He knew it but took no steps for rectification of the register of members. The company went into liquidation and he was held liable as a contributory, explain [ hint : liable for contribution ]

Q 6 Satish, legal heirs, son of deceased member i.e. Mr sagar of dayal Ltd. wants to inspect the register of deposits maintained by the company as required under the provisions of the Companies Act, 2013. The company refused to provide the register for inspection without assigning any reason. Referring to the provisions of the Act, examine the validity of the company’s refusal [ hint: shares transmitted to satish, he become member, he can inspect the register ]

Q 1 Reliance industries limited has listed in Bombay stock exchange and its subsidiary Reliance Jio Infocomm Limited which has a paid share capital 4 crore as on the 31 march 2017 for the financial year 16-17, explain as per provision of companies act 2013 whether for Reliance Jio Infocomm Limited is a mandatory to file financial statements in XBRL taxonomy [ hint : yes ]

Q 2 Reliance industries limited has listed in Bombay stock exchange and its associate Reliance Industrial Infrastructure Limited which has a paid share capital 4 crore as on the 31 march 2017 for the financial year 16-17, explain as per provision of companies act 2013 whether for Reliance Industrial Infrastructure Limited is a mandatory to file financial statements in XBRL taxonomy [ hint: no ]

Q 3 In relation to filing of financial statements of a company in XBRL mode and by usingthe XBRL taxonomy, decide whether the following companies are required to file the financial  statements in the said mode :

(i) Grand , the subsidiary company of Tiny Ltd. which is listed at Kolkata Stock Exchange. [ hint : yes ]

(ii) Prime, a company which has paid-up share capital of Rs 100 crore. [ hint : yes ]

(iii) Crafty , a company which has a turnover of Rs 400 crore. [ hint : yes ]

(iv) Comfort , a non-banking financial company [ hint: no ]

For Any Query/ Solutions Contact : CA Amit Aggarwal Ashwini Commerce Paradise U-87, Ground Floor, Near Laxmi Nagar Metro Gate 3, Shakarpur, Delhi 92 9643547868, 9210617186

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Name: CA AMIT AGGARWAL

Qualification: ca in practice, company: ashwini commerce paradise limited, location: new delhi, in, member since: 27 apr 2017 | total posts: 2, my published posts, join taxguru’s network for latest updates on income tax, gst, company law, corporate laws and other related subjects..

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14 Comments

Help me with the Debt capital question no.1(SAHARA)

Mr suresh applied for 4,000 shares in a company i.e. JAR aluminum ltd but no allotment was made to him. Subsequently 4,000 shares were transferred to him without his request and his name was entered in the register of members. He knew it but took no steps for rectification of the register of members. The company went into liquidation and he was held liable as a contributory, explain

I need all answers

Q 3 Good Homes Ltd. was registered as a public company with 205 members as follows : No. of members Directors and their relatives 45 Employees 12 Ex-employees 08 (shares were allotted when they were employees) Others 140 Total number of members 205 Board of directors of the company takes a decision to convert the company into a private company. Being a legal advisor, the Board of directors seeks your advice about the steps to be taken for conversion of the company into a private company including reduction in the number of members, if necessary, as per the Companies Act, 2013. Advise the Board.[hint : no reduction required] i want this answer..

Read more at: https://taxguru.in/chartered-accountant/company-law-case-studies-cacscma-examinations.html Copyright © Taxguru.in

financial statement of ITC LTD specified that net worth of the company for the FY ended 31 march 2016 600 crore, company wants to spend in the financial year 16-17 in Corporate Social Responsibility Policy, information in regards of profits of all preceding 3 financial years are as under :- 15-16Rs 100 crore14-15Rs 160 crore13-14Rs 120 crore BOD didn’t specified in board report about the amount and details of expenditure in CSR policy explain as per provisions of companies act, 2013 [hint : Rs 2.5 crore and required to disclose otherwise liable to impose penalty ]

Please share the answers.

Kindly provide solutions for all the case studies

wipro ltd has no provision in AOA for the appointment of director 5 subscriber become the director of a company but another 2 didn’t want to become a director Mr rohan the company secretary of the company specify that subscribers to the memorandum who are individuals shall be deemed to be the first directors of the company until the directors are duly appointed, it is mandatory that all subscriber shall be consider as director. Clarify contention of Mr rohan is correct as per provision of companies act 2013 I want solution of this.

I need solutions.

I want this answer asap

I need solution also

I want solution of this case study

here is only questions i need the answer also.

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Case Study - CSR (Companies Act 2013)

Growmart, a grocery and general merchandise store and the global retailer has more than 5000 retail units in 20 different countries. In 2017, Growmart was caught using child labour in a developing country X-Land. At the end of year, media made public the news that Growmart was using child labour at two factories in X-Land. Children aged 10-14 years old were found to be working in the factories for less than $50 a month making products of the Growmart brand for export. The company had zero tolerance policy for underage workers and ceased business with the two factories immediately and alleged that despite its effort to inspect all factories, it is difficult to enforce its own corporate code of conduct with thousands of subcontractors around the world. Now, on the basis of advice from an NGO from country X-Land that if Growmart cuts business with these factories, many workers could be laid off for lack of production, suppliers will hide abuses and workers will not tell the truth to auditors in order not to lose their jobs; Growmart resumed operations with two factories after giving warning that if underage workers were found or the company did not make corrections, the factory would be permanently banned from Growmart's production.

The Growmart has a strict corporate code of conduct in the industry but according to investigations Growmart is not able to enforce its code in developing countries. Thus, Growmart changed its zero tolerance child labour policy due to NGO advice. Now, instead of immediately cutting business relationships with suppliers hiring up to two underage workers, they receive a warning and are obliged to take corrective measures for the next audit. Only when the supplier has hired more than two underage workers and has not corrected the situation does Growmart permanently terminate business relationships.

This new policy was adopted in order assure that suppliers report the reality of working conditions. Also, Growmart requires its suppliers who produce toys in China to sign up to the ICTI CARE Process. The ICTI CARE Process was created by the international toy industry to achieve a safe and human working environment for toy factory workers worldwide. In addition, Growmart conducts internal validation audits by Growmart's Ethical Sourcing team.

These validation audits ensure that the ICTI CARE process is properly implemented and that it meets Growmart's Standards for Suppliers. Growmart has updated policies against discrimination. Its GRI Report emphasizes gender equality, a diverse workforce and appointing women to top management positions.

The report even dedicates a separate paragraph on ‘Empowering women at Growmart'. Based on the above case:

(a) Explain the concept of CSR and why successful companies like Growmart should adopt CSR in its strategy of growth? (b) Explain triple bottom line approach of CSR. (c) Highlight the factors which affect CSR with the examples from the given case.

Being a good corporate citizen , Business entity is expected to undertake those activities, which are essential for betterment of the society. Every aspect of business has a social dimension.

Corporate Social Responsibility means open and transparent business practices that are based on ethical values and respect for employees, communities and the environment. It is designed to deliver sustainable value to society at large as well as to shareholders.

Corporate Social Responsibility is nothing but what an organisation does, to positively influence the society in which it exists. It could take the form of community relationship, volunteer assistance programmes, special scholarships, preservation of cultural heritage and beautification of cities. The philosophy is basically to return to the society what it has taken from it, in the course of its quest for creation of wealth. With the understanding that businesses play a key role of job and wealth creation in society, CSR is generally understood to be the way a company achieves a balance or integration of economic, environmental, and social imperatives while at the same time addressing shareholder and stakeholder expectations.

CSR is generally accepted as applying to firms wherever they operate in the domestic and global economy. The way businesses engage/involve the shareholders, employees, customers, suppliers, Governments, non-Governmental organizations, international organizations, and other stakeholders is usually a key feature of the concept. While an organisation's compliance with laws and regulations on social, environmental and economic objectives set the official level of CSR performance, it is often understood as involving the private sector commitments and activities that extend beyond this foundation of compliance with laws.

Essentially, Corporate Social Responsibility is an inter-disciplinary subject in nature and encompasses in its fold:

• Social, economic, ethical and moral responsibility of companies and managers,
• Compliance with legal and voluntary requirements for business and professional practice;
• Challenges posed by needs of the economy and socially disadvantaged groups, and
• Management of corporate responsibility activities.

Even successful companies like Growmart should incorporate CSR because it is very important strategy as wherever possible, consumers want to buy products from companies they trust;

i) suppliers want to form business partnerships with companies they can rely on; ii) employees want to work for companies they respect; and iii) NGOs, increasingly, want to work together with companies seeking feasible solutions and innovations in areas of common concern.

Growmart's reputation had gone down because of employing child labour. The company adopted CSR approach towards the issue and gave warning to the supplier instead of immediately cutting business relationships with suppliers. Thus, CSR is a tool in the hands of corporate like Growmart to enhance the market penetration of their products, enhance its relation with stakeholders. CSR activities carried out by the enterprises affects all the stakeholders, thus making good business sense, the reason being contribution to the bottom line.

The social responsibility of business can be integrated into the business purpose so as to build a positive synergy between the two.

• CSR creates a favourable public image, which attracts customers.
• It builds up a positive image encouraging social involvement of employees, which in turn develops a sense of loyalty towards the organization, helping in creating a dedicated workforce proud of its company.
• Society gains through better neighborhoods and employment opportunities, while the organisation benefits from a better community, which is the main source of its workforce and the consumer of its products.
• The company's social involvement discourages excessive regulation or intervention from the Government or statutory bodies, and hence gives greater freedom and flexibility in decisionmaking.
• The good public image secured by one organisation by their social responsiveness encourages other organizations in the neighborhood or in the professional group to adapt themselves to achieve their social responsiveness.
• The atmosphere of social responsiveness encourages co-operative attitude between groups of companies. One company can advise or solve social problems that other organizations could not solve.

TRIPLE BOTTOM LINE (TBL) is based on the premise that business entities have more to do than make just profits for the owners of the capital, only bottom line people understand.

"PEOPLE, PLANET AND PROFIT" is used to succinctly describe the triple bottom lines.

• "People" (Human Capital) pertains to fair and beneficial business practices toward labor and the community and region in which a corporation conducts its business.
• "Planet" (Natural Capital) refers to sustainable environmental practices. It is the lasting economic impact the organization has on its economic environment. A TBL company endeavors to benefit the natural order as much as possible or at the least do no harm and curtails environmental impact.
• "Profit" is the bottom line shared by all commerce. The need to apply the concept of TBL is caused due to –

(i) Increased consumer sensitivity to corporate social behaviour Growing demands for transparency from shareholders/stakeholders; (ii) Increased environmental regulation Legal costs of compliances and defaults Concerns over global warming; (iii) Increased social awareness; (iv) Awareness about and willingness for respecting human rights; (v) Media's attention to social issues; (vi) Growing corporate participation in social upliftment

While profitability is a pure economic bottom line, social and environmental bottom lines are semi or non-economic in nature so far as revenue generation is concerned but it has certainly a positive impact on long term value that an enterprise commands. But discharge of social responsibilities by corporates is a subjective matter as it cannot be measured with reasonable accuracy.

The current generation people are well aware of what goes on around them. People today know a lot about environment, how it affects them, how things we do affects the environment in turn. For the aware and conscientious consumers today, it is important that they buy products that do not harm the environment. They only like to deal with companies that believe and do things for the greater good of planet earth.

MANY FACTORS INFLUENCE CSR ACTIVITIES OF COMPANIES

• Globalization: Growmart was a global company and supplier's activities in some other developing part of the world made it to change its policy and work together with suppliers. Thus, focus on cross-border trade, multinational enterprises and global supply chains is increasingly raising CSR concerns related to human resource management practices, environmental protection, and health and safety, among other things.
• Governments and intergovernmental bodies, such as the United Nations, the Organisation for Economic Co-operation and Development and the International Labour Organization have developed compacts, declarations, guidelines, principles and other instruments that outline social norms for acceptable conduct. In the given case advise of NGO was important factor in changing the CSR policy of Growmart.
• Advances in communications technology, such as the Internet, cellular phones and personal digital assistants, are making it easier to track corporate activities and disseminate information about them. Non-governmental organizations now regularly draw attention through their websites to business practices they view as problematic.
• Consumers and investors are showing increasing interest in supporting responsible business practices and are demanding more information on how companies are addressing risks and opportunities related to social and environmental issues.
• Numerous serious and high-profile breaches of corporate ethics have contributed to elevated public mistrust of corporations and highlighted the need for improved corporate governance, transparency, accountability and ethical standards.
• Citizens in many countries are making it clear that corporations should meet standards of social and environmental care, no matter where they operate.
• There is increasing awareness of the limits of government legislative and regulatory initiatives to effectively capture all the issues that corporate social responsibility addresses.
• Businesses are recognizing that adopting an effective approach to CSR can reduce risk of business disruptions, open up new opportunities, and enhance brand and company reputation.

The corporates are nowadays considered as Corporate Citizen and stakeholders expect them to follow rules, regulations and other social welfare statutes of the land same and applicable to the citizen of India. They are using resources such as human, economic, governmental, social and natural to earn profit.

DISCLAIMER: The case study presented here is only for sharing knowledge with the readers. The views are personal, shall not be taken as professional advice. In case of necessity do consult with professionals for more understanding and clarity on the subject matter.

Published by

FCS Deepak Pratap Singh (Manager Compliance -SBI General Insurance Co. Ltd.) Category Corporate Law   Report

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HOW TO WRITE ANSWERS FOR COMPANY LAW CASE STUDY QUESTIONS IN CS EXECUTIVE EXAMS UNDER ICSI NEW SYLLABUS

Midhasaya purohit.

• March 18, 2021

CS EXECUTIVE CASE STUDY QUESTIONS UNDER NEW SYLLABUS BY ICSI

Writing excellent answers for CS Executive Company Law Case Studies questions is one of the most important skill for a CS aspirant. After reading this article you will write better answers in professional exams for case study type questions.

Before we begin, I assume that you have already read law subjects and remember all the provisions. Now the challenge you might be facing is to convert your knowledge of provisions into an excellent answer for a case based questions. Remember that a case based question in your professional exams tests 2 primary skills:

• Your capability to identify the governing law
• Apply the relevant legal principles to a given situation.

So the key to securing good marks in such type of questions is:

First: Remember The Law

You should have thorough knowledge of the relevant law. Identify the underlying legal issues hidden beneath the layers of facts in a problem;

Second: Understanding of The Law

Understanding of the law by applying the relevant law to the facts in question.

To conquer such questions in your exams, planning your answer plays a crucial role. In this process of planning there is no ‘right answer’ but there is what you call a ‘right approach’. So what is the right approach? We call it PAC Method in Pareeksha Commerce Academy . This method was invented by CS Midhasaya Purohit for CS Executive students.

THE PAC METHOD FOR CS EXECUTIVE COMPANY LAW CASE STUDIES QUESTIONS

• Step 1: Identifying the P rovision
• Step 2: A pply the same to the facts
• Step 3: C onclusion with cause & effect

Let us understand the 3 steps in some detail.

STEP 1: IDENTIFYING THE PROVISION

This is a very important step where you need to identify what the question is about from a legal point of view. While going through the question you should pay close attention to hot spots and make note of the issues for which advice is sought. Now when you write your answer make sure you deal with each identified issue separately. This will give your answer a clear structure & provide a reference points helpful for examiner. Once you have identified the issues you need to match the same with the relevant provision of law by filtering through irrelevant provisions.

STEP 2: APPLYING THE PROVISION TO THE FACTS

In this step the identified provision must be applied to the facts of the case as stated in the question. This part of the answer should focus on constructing a logical argument. So make a sensible attempt to apply the law to the factual issues.

STEP 3: CONCLUSION WITH CAUSE & EFFECT

This step is very simple, if you have followed the first two with utmost care. Conclusion of your answer need not be lengthy. It should precisely contain your advice as demanded by the question. You need to make your conclusion based on the reasons that why an issue was raised basing on the rule of law and using the judgment of relevant case laws.

LETS UNDERSTAND WITH AN EXAMPLE

Warner Ltd is an Indian Company with a net profit of ₹ 4, 7, 6 and 7 crores respectively in the last four years. Net profit of each of last four years included a dividend of ₹ 1 crore received from WB Ltd which is an Indian company. Discuss whether Warner Ltd is required to spend on CSR Activities. If yes, how much should it spend? If no, state the reasons for it.

Step 1 – Identify the provision

As per Section 135 of The Companies Act, 2013, the CSR provision is applicable to companies which fulfills any of the following criteria during the immediately preceding financial year

• Companies having net worth of ₹500 crore or more;
• Companies having turnover of ₹1000 crore or more;
• Companies having a net profit of ₹5 crores or more

As per explanation to Section 135, the net profit for the purposes of this section is calculated as per the provisions of Section 198 of the Companies Act, 2013 . As per Section 198 read with CSR rules,

• “Net profit” shall not include dividend income received from another Indian Company (which are covered under and complying with the provisions of Companies Act, 2013)
• The 2% CSR is computed as 2% of the average net profits made by the company during the preceding three financial years.

Step 2 – Apply the Provision

• Here, the net profit of Warner Ltd shall be calculated by deducting ₹ 1 crore which is the dividend income received from WB Ltd. Hence, the net profit for the immediately preceding financial year is ₹ 6 crore (₹7 crore- ₹1 crore) and it thus fulfils the third criteria of Section 135 for applicability of CSR.
• Based on the above explanation, the net profit of the last 4 years is ₹3, 6, 5 and 6 crores.

Step 3 – Draw Conclusion with cause and effect

• Warner Ltd is thus liable to spend on CSR activities as the average net profit for the immediately preceding three financial year exceeds ₹5 crores.
• The amount required to be spent can be calculated as 2% of the average of net profits of the three immediately preceding financial years. The CSR amount to spent is 2% of (6+5+6/3) crores = 11.33 lakhs.

So now that you know how to approach CS Executive Company Law Case Studies question, why not give some questions a try. Let me know in comments section if you face any difficulty or have any queries. Happy Learning.

Want 100 Amazing Case Study Questions & Model Answers for CS Executive Company Law Paper?

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WATCH THE VIDEO VERSION OF THIS ARTICLE BY CS MIDHAS PUROHIT

ABOUT AUTHOR: CS MIDHAS PUROHIT

• Business Laws (CA Foundation)
• Corporate and Other Laws (CA Inter)
• Corporate and Economic Laws (CA Final)
• Company Law (CS Executive)
• Setting up of Business Entities and Closure (CS Executive)
• Governance, Risk Management, Compliances and Ethics (CS Professional)
• Secretarial Audit, Compliance Management and Due Diligence (CS Professional)
• Law & Ethics (CMA Intermediate)
• Corporate Laws and Compliance (CMA Final)

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1 thought on “ HOW TO WRITE ANSWERS FOR COMPANY LAW CASE STUDY QUESTIONS IN CS EXECUTIVE EXAMS UNDER ICSI NEW SYLLABUS ”

Thank you sir 🙂. I was really confused abt the writing the conclusion wala part. Never thought of cause effect method. Sir can you give more sample case study questions plzzz? I need them for practicing such questions.

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Case Studies on Corporate Laws

The ‘Case Study’ Model of discussion and analysis has been widely accepted and acknowledged as a celebrated mode of teaching by premier institutions like the Harvard Business School and the Kennedy School of Business. Off late, its relevance has massively increased as more and more academic institutions, especially those focusing on business and law, have made the shift from the traditional Q/A pattern to a more cohesive ‘Case Study Model’

Cases are narratives, situations, selective data and statements that present real-life simulations and as such, put to fore unresolved and thought-provoking issues, which are likely to occur, in varying magnitude and complexities, in our practical lives also. As against the traditional Q/A pattern, where more often than not, the problems have a single solution, Case Studies encourage participants to engage in critical thinking and to identify the several solutions for a given set of facts. Unlike problem sets, they do not break the problem down into clear steps, and frequently have no single “right” answer. Cases provide a rich contextual way to introduce new material and create opportunities to apply the law – they not only encourage an out-of-the-box thinking, but also help the participants to identify the problems in the first place, which are generally hidden beneath the usual facts and figures.

This concept is very similar to the practical situations, we as professionals, come across in our everyday lives – as professionals and consultants, we are expected to pinpoint such opportunities/ problems camouflaging behind routine statements and facts, so as to deliver holistic and efficient solutions, which are not necessarily limited to any singular act and/ or provision thereof.

In view of increasing relevance of the Case Study Method, we at Vinod Kothari & Company bring to you our weekly analysis of diverse cases which encapsulate practical situations and complexities so as to understand the hands-on application of the provisions under various laws – all at once. In our two-fold exercise, we invite the varying views of professionals, India and abroad, on the cases put up – which shall thereafter, be discussed and deliberated via audio-video discussions on our YouTube Channel – “Vinod Kothari & Company”

• Case Study I – Related Party Transactions [Case 1]

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