CA Inter Suggested Answers | September 24 Corporate Laws
Table of Content
Question 1 (A)
SAB Health Products Limited issued equity shares worth ₹ 5,00,00,000 (5,00,000 equity shares of ₹ 100 each) and it was fully subscribed and partly paid at ₹ 50 each. The company made a call to all its subscribers to pay a sum of ₹ 30 for each share held by them. Mr. GH, a subscriber to the shares of a company, holding 10,000 shares, paid all the money due on the shares held by him in advance. Later, Mr. GH claimed interest on the money advanced by him and also dividend in respect of the advance money paid. Is his claim justified? Another shareholder Mr. LK holding 15,000 shares did not pay the first call. So, the directors called upon him to pay the entire amount due by him in respect of the shares held by him. Referring to the provisions of the Companies Act, 2013 and Rules made there under, examine whether the directors of SAB Health Products Limited permitted to do so ?
Answer :
Question 1 (B)
(i) M/s Right Trading Limited is a company engaged in trading of automobile spare parts. During the current financial year 2024-25, Mr. J the CFO retired due to bad health. The Company appointed Mr. C as the new CFO. On verification of the financial statements and statutory returns of the Company, Mr. C advised the Board of M/s Right Trading Limited to revise the financial statements for the years 2021-22.
Examine, with reference to the applicable provisions of the Companies Act, 2013, whether./s Right Trading Limited cando so ?
Answer :
Question 1 (B)
(ii) M/s Strong Steels Limited Liability Partnership firm was incorporated on 01/04/2010 with ten partners. The L.LP had very good business and made considerable profits during the past years. Recently due to obsolcte practices, M/s Strong Steels Limited L.LP started making loss. Also, Mis Strong Stsels Limited LLP did not file its annual retums from 2020-21. Three partners decided that the LLP be wound up by the Tribunal. The remaining partners objected to it. Referring to Section 64 of the Limited Liability Partnership Act, 2008, can the Tribunal pass an order to wound up M/s Strong Steels Limited LLP ?
Also state the provisions and penalty for not filling annual return with the Registrar.
Answer :
Queston 1 (C)
Ms. Rose was an Indian citizen who got a job in a software company in the USA. She went to USA and stayed there for 12 years. During her stay, she purchased a house in USA for her residence. Then due to some personal issues she moved back to India and joined a software company in India. As she had moved back to India, she let out her house in USA and deposited the rent in her account in USA. Out of that amount, she purchased another house in USA.
Based on the above facts, answer the following referring to the provisions of the Foreign Exchange Manugement Act, 1999,
(i) Whether Ms. Rose can purchase the house in USA and continue to retain it even after returning to India ?
(ii) Whether Ms. Rose can purchase another house in USA after returning to India ?
Answer :
Question 2 (A)
Stuti Ceramic Pvt. Ltd. (SCPL) manufactures crockery items which are predominantly used only by the domestic household customers. Now the company wants to expand its area of operation to manufacture all types of crockery items and cutlery for the use of big hotels. For this expansion plan, the company needs funds of around ₹ 500 lakh. The company does not want to convert itself from private company to public company since the promoters do not want to dilute their equity stake otherwise the public company have the option to raise the funds through public issue. The company explored the other avenue E raising funds by issue of right shares to the existing shareholders, however only ₹ 100 lakh could be generated. The banks and financial institutions are also reluctant to increase their exposure in the company.
Referring to the provisions of the Companies Act, 2013, advise the SCPL, whether the Company can raise further funds through private placement issue. If so, are there any limit for fresh offer and time limit of allotment of securities ?
Answer :
Question 2 (B)
Dolls Toys Limited is having a net-worth of ? ₹ 310 crore, paid up share capital of ₹ 200 crore, free reserves and security premium of ₹ 110 crore and turnover of ₹ 300 erores. Dolls Toys Limited wants to accept deposits from public other than its members.
(i)Referring to the provisions of the Companies Act, 2013, state whether Dolls Toys Limited is permitted to accept the deposits from public other than its members
(ii) It is further mentioned that Dolls Toys Limited is in urgent need of funds as one of its contract is on the verge of completion and it is promising to repay the deposits within a period of four months.
Is Dolls Toys Limited permitted to accept deposits with repayment period of 4 months ?
Answer :
Question 2 (C)
Referring to the provisions of the General Clauses Act, 1897, answer the following questions :
(i) Whenever a new law is enacted by the Government of India, what shall be its date of coming into force ?
(i) Whenever a ray law is enacted to replace the existing law, it repeals the old enactment. Describe the points which shall not have any effect of repeal of the old enactment.
Answer :
Question 3 (A)
The paid up share capital of Star Furnishing Limited is ₹ 1,00,00,000 divided into 10,00,000 equity shares of ₹ 10 each as at 31st March, 2024, Out of this, Home Dècor Limited is holding 6,00,000 equity shares and the remaining equity shares of 4,00,000 held by others. Simultaneously, Star Funishing Limited is holding 7% equity shares of Home Dècor Limited out of which 2% equity shares are held as a legal representative of a deceased member of Home Dècor Limited On the basis of the given information, examine and answer the following querieswith reference to the provisions of the Companies Act, 2013 :
(i) Can Star Furnishing Limited make further investment in equity shares of Home Dècor Limited during 2024-25 ?
(il) Can Star Furnishing Limited exereise voting rights at the Annual General Meeting of Home Dècor Limited
Answer :
Question 3 (B)
Naveen Tools Ltd (NTL) mortgaged its factory land and building (by equitable morigage) on 1st March, 2023 to Goodwill Bank and availed a credit limit of ₹ 200 lakh. Although the credit limit was sanctioned by the Bank, but the NTL actually availed such credit facility only in the month of August, 2023, when it issued a cheque in favour of a creditor towards the payment of raw material purchased from it.
During the course of statutory audit, the auditor pointed out before the management of the NTL about the non-compliance of registration of charge with the Registrar within the stipulated time. The company officials informed that although the mortgaged backed credit limit was sanctioned in March 2023, but the company had not availed the facility till the month of August, 2023. So the liability of registration of charge arises from the date of availment only when the company issued a cheque from the mortgaged backed credit limit account and not when the loan was sanctioned and credit limit was assigned.
Further, the company management pleaded that it is the responsibility of the financier i.e. Goodwill Bank to get the charges registered with the Registrar since the registration of charge is to be effected in favour of the Bank and for Bank's own benefit, so the NTL is in no way responsible for getting registration or for delayed registration.
In the light of above facts, referring to the provisions of the Companies Act, 2013, discuss:
(i)When trigger point for the registration of charge shall arise,
(a) at the time of credit limit sanctioned by the Bank; or
(b) at the tine of availing of credit limit when cheque was isstedby the company ?
(il)What are the consequences for non-registration of charge on the Naveen Tools Ltd?
Answer :
Question 3 (C)
Explain the rule which suggests that the 'Plain word requires no explanation' and 'Technical words be understood in technical sense only'.
Answer :
Question 4 (A)
XYZ Limited is a company having a paid up equity share capital of ₹ 75 crores. Though it was performing well in the recent years it suffered losses in the first and second quarter of the financial year 2023-2024. In order to sustain its image, the Board of Directors declared an interim dividend at the rate of 30 percent on the paid-up equity share capital on 4/10/2023. The following are the additional information extracted from the books of account for the past 5 Financial Years :
| Financial year ending 31st March 1 | Rate of Dividend declared |
| 2019 | 20% |
| 2020 | 15% |
| 2021 | 15% |
| 2022 | 15% |
| 2023 | 30% |
Examining the provisions of the Companies Act, 2013, decide the validity of the Board's declaration of 30% interm dividend.
Answer :
Question 4 (B)
M/s Strong Steels Limited Liability Partnership firm was incorporated on 01/04/2010 with ten partners. The L.LP had very good business and made considerable profits during the past years. Recently due to obsolcte practices, M/s Strong Steels Limited L.LP started making loss. Also, Mis Strong Stsels Limited LLP did not file its annual retums from 2020-21. Three partners decided that the LLP be wound up by the Tribunal. The remaining partners objected to it. Referring to Section 64 of the Limited Liability Partnership Act, 2008, can the Tribunal pass an order to wound up M/s Strong Steels Limited LLP ?
Also state the provisions and penalty for not filling annual return with the Registrar.
Answer :
Question 4 (C)
(i) What is the purpose of inclusion of "definitions" of certain and expressions in the body of any statute ?
(i) The definition sometimes includes the words 'mean", "include"."means and include" and "to apply to and include". What is the meaning of such words?
Answer :
Question 5 (A)
Sanjana joined a company named as Designers Cloths (I) Ltd. as an Independent Director. In order to know more about the compeny, she wanted to inspect the books of account and minutes books of the Board Meetings held during the previous three years. The company is keeping the books of account and other records at its Registered Office, which is at Mumbai whereas Sanjana resides in Kolkata. Therefore, through power of attorney, Sanjana authorised her friend Avantika, who is a Chartered Actountant and does practice in Mumbai, to make an inspection of the books of accounts and minutes books of the meetings of the Board.
Giving the relevant provisions of the Companies Act, 2013 and its Rules, examine, whether Avantika can make inspection on behalf of Sanjana.
Answer :
Question 5 (B)
A, B, C and D are the partners of Alpha LLP and have equal shore in the profits and losses of the LLP. A hus made an agreement to transfer 70% of his share in the profits of Alpha LLP to his daughter X.
X wanted to nocess information about the truding transactions of Alpha LLP claiming that she is entitled to the information as she receives a percentage of profits from the LLP. The partners refused to grant her access. Does X. have any remedy against the denial necording to the provisions of the Limited Liability Partnership Aet, 2008 7 Are the partners correct in denying access to X.
Answer :
Question 5 (C)
(i) In a contract of sale, Mr. A fraudulently sold certain unmarketable goods to Mr. B. Now Mr. A is liable for the fraudulent activity under both The Indian Contract Act, 1872 and the Sale of Goods Act, 1930, State the provision as per the General Clauses Act, 1897 as to whether his offence is punishable under the both the Acts ?
Answer :
Question 5 (C)
(ii) Mr. P bought a car from Mr. G who was his friend. Mr. P did not check the car or test drive it. Whether the purchase made could be said to be made in good faith ? Explain with reference to the provisions of the Generul Clauses Aet, 1897.
Answer :
Question 6 (A)
Silk Textile Limited is a company which is incorporated in India. It holds two subsidiaries- Print Limited (in which it holds 80% of shares) and Stitch Limited (a wholly owned subsidiary). Both the subsidiaries are incorporated outside India. The Board of Directors of Silk Textile Limited intends to call an Extraordinary General Meeting (EGM) of Silk Textile Limited. During the same time, the Board of Print Limited also wanted to hold an EGM on urgent basis at Dubai. The Chairman with the consent of his Board wanted to hold the EGM of Silk Textile Limited at Dubai so that he can attend both the EGM. But the Company Secretary advised the Chairman that he cannot hori, the EGM outside India.
Referring to the provisions of the Companies Act, 2013, advise the Board of Directors on the following :
(i) Whether the Board of Silk Textile Limited can hold its EGM at Dubai?
(ii) Whether the EGM of Print Limited can be held at Dubai?
Answer :
OR
Question 6 (A)
Creative Textiles Ltd, is an unlisted public company. The company's 5 paid-up share capital is ₹ 50 lakh consisting of 5 lakh shares having face value of ₹ 10 each.
Raman is having 50,000 shares in the company. He is not happy with Somnath, who is a director in the company. He believed that Somnath is acting against the interest of the Company. Raman wanted to remove Somnath from the directorship. Removal of a person from the directorship requires the approval of the shareholders in the general meeting. The Annual General Meeting (AGM) of the company has recently been concluded and the next AGM will be held in the next year. Considering the case and referring to the provisions of the Companies Act, 2013, advise :
(i) Can Raman as an individual shareholder make a requisition to the company for calling of the Extra-ordinary General Meeting for putting such resolution ?
(ii) If the Company does not call the EGM on the requisition of Raman, whether Raman can himself call the EGM ?
Answer :
Question 6 (B)
Beauty Cosmetics, a company incorporated in Korea has established its branch office in Chennai for conducting its business in India,
The structure of paid-up share capital of Beauty Cosmetics as at 31/03/2024 is as below :
The Company does not have any Preference Share Capital.
Equity share capital held by Mr. L, an Indian citizen: 10%
Equity share capital held by Mr. R, an Indian Citizen: 20%
Equity share capital held by Fairess Cosmetics Limited, an Indian company: 20%
You being a Chartered Accountant are asked to explain with reference to the provisions of the Companies Act, 2013
(i) whether Beauty Cosmetics shall be deemed to be a Foreign Company or an Indian Company for the business carried on by it in India and
(ii) for the business carried on by it in India, will it be required to comply with the relevant provisions of the Companies Act, 2013 as if it is an Indian Company ?
Answer :
Questin 6 (C)
Mitali Diamonds Ltd, is a company engaged in the business of cutting, polishing and trading of diamonds in and outside India. The company exports the diamonds to USA. For the last five financial years, the foreign exchange carned by the company in exporting the diamond are as under :
| FY 2023-24 | : USD 1,25,000 |
| FY 2022-23 | : USD 1,10,000 |
| FY 2021-22 | : USD 95,000 |
| FY 2020-21 | : USD 98,000 |
| FY 2019-20 | : USD 93,000 |
The Company wants to give donation of USD 10,000 to an institution situated in USA which provides technical support and training in the field of cutting and polishing of raw diamonds. This will help the company in guiding its own employees, posted in USA to get the requisite training.
Referring to the provisions of the Foreign Exchange Management Act, 1999, state whether the Company can give donation to such institution in USA ?
Answer :
Ruchika Saboo
An All India Ranker (AIR 7 - CA Finals, AIR 43 - CA Inter), she is one of those teachers who just loved studying as a student. Aims to bring the same drive in her students.
Ruchika Ma'am has been a meritorious student throughout her student life. She is one of those who did not study from exam point of view or out of fear but because of the fact that she JUST LOVED STUDYING. When she says - love what you study, it has a deeper meaning.
She believes - "When you study, you get wise, you obtain knowledge. A knowledge that helps you in real life, in solving problems, finding opportunities. Implement what you study". She has a huge affinity for the Law Subject in particular and always encourages student to - "STUDY FROM THE BARE ACT, MAKE YOUR OWN INTERPRETATIONS". A rare practice that you will find in her video lectures as well.
She specializes in theory subjects - Law and Auditing.
Yashvardhan Saboo
A Story teller, passionate for simplifying complexities, techie. Perfectionist by heart, he is the founder of - Konceptca.
Yash Sir (As students call him fondly) is not a teacher per se. He is a story teller who specializes in simplifying things, connecting the dots and building a story behind everything he teaches. A firm believer of Real Teaching, according to him - "Real Teaching is not teaching standard methods but giving the power to students to develop his own methods".
He cleared his CA Finals in May 2011 and has been into teaching since. He started teaching CA, CS, 11th, 12th, B.Com, M.Com students in an offline mode until 2016 when Konceptca was launched. One of the pioneers in Online Education, he believes in providing a learning experience which is NEAT, SMOOTH and AFFORDABLE.
He specializes in practical subjects – Accounting, Costing, Taxation, Financial Management. With over 12 years of teaching experience (Online as well as Offline), he SURELY KNOWS IT ALL.
"Koncept perfectly justifies what it sounds, i.e, your concepts are meant to be cleared if you are a Konceptian. My experience with Koncept was amazing. The most striking experience that I went through was the the way Yash sir and Ruchika ma'am taught us in the lectures, making it very interesting and lucid. Another great feature of Koncept is that you get mentor calls which I think drives you to stay motivated and be disciplined. And of course it goes without saying that Yash sir has always been like a friend to me, giving me genuine guidance whenever I was in need. So once again I want to thank Koncept Education for all their efforts."
"Hello everyone, I am Kaushik Prajapati. I recently passed my CA Foundation Dec 23 exam in first attempt, That's possible only of proper guidance given by Yash sir and Ruchika ma'am. Koncept App provide me a video lectures, Notes and best thing about it is question bank. It contains PYP, RTP, MTP with soloution that help me easily score better marks in my exam. I really appericiate to Koncept team and I thankful to Koncept team."
"Hi. My name is Arka Das. I have cleared my CMA Foundation Exam. I cleared my 12th Board Exam from Bengali Medium and I had a very big language problem. Koncept Education has helped me a lot to overcome my language barrier. Their live sessions are really helpful. They have cleared my basic concepts. I think its a phenomenal app."
"I cleared my foundation examination in very first attempt with good marks in practical subject as well as theoretical subject this can be possible only because of koncept Education and the guidance that Yash sir has provide me, Thank you."
