CA Intermediate (Batch Feb 2024)
Solution of Test of Chapter 7 – Management & Administration
Maximum Time = 1 hour
Part A - MCQ
Q1. c
Q2. b
Q3. c
Q4. c
Q5. b
Q6. d
Q7. c
Q8. c
Q9. c
Q10. a
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Part B – Subjective
1.
(i) Section 88 (4) of the Companies Act, 2013, permits a company to keep in any country outside India, a part of
the register of members, called ‘foreign register’, containing the names and particulars of the members,
debenture-holders, other security holders or beneficial owners residing outside India.
Rule 7 of the Companies (Management and Administration) Rules, 2014 requires that the company shall, within
30 days from the date of the opening of any foreign register, file with the Registrar notice of the situation of the
office along with the fee where such Register is kept.
Accordingly, Golden Shoes Limited is required to file with the jurisdictional Registrar of Companies a notice of
situation of the London office within 30 days from November 1, 2022 (i.e. the date on which the ‘foreign register’
is opened) along with requisite fee.
(ii) According to section 103(1) of the Companies Act, 2013, unless the articles of the company provide for a larger
number, in case of a public company:
a. five members personally present if the number of members as on the date of meeting is not more than
one thousand,
b. fifteen members personally present if the number of members as on the date of meeting is more than one
thousand but up to five thousand,
c. thirty members personally present if the number of members as on the date of the meeting exceeds five
thousand, shall be the quorum for a meeting of the company.
The term ‘members personally present’ as mentioned above refers to the members entitled to vote in respect
of the items of business on the agenda of the meeting.
2.
a. Rule 17 of the Companies (Management and Administration) Rules, 2014 provides that no explanatory
statement as required under section 102 of the Companies Act, 2013, need be annexed to the notice of an
extraordinary general meeting convened by the requistionists and the requistionists may disclose the reasons
for the resolution(s) which they propose to move at the meeting.
Hence, the Board of Directors cannot refuse to convene the extraordinary general meeting of the members on
the ground that the requistionists have not given the explanatory statement for the resolution proposed to be
passed at the meeting.
b. The notice shall be signed by all the requistionists or by a requistionists duly authorised in writing by all other
requistionists on their behalf or by sending an electronic request attaching therewith a scanned copy of such
duly signed requisition.
Hence, it is imperative for joint holders (or by requistionist duly authorised in writing by joint holder) also to sign
the notice to call the meeting. Thus, Board of directors are correct in refusing to convene the extra ordinary
general meeting on the ground that the requisitions have not been signed by the joint holder of shares.
c. According to section 103(2)(b) of the Companies Act, 2013, if the quorum is not present within half-an-hour from
the time appointed for holding a meeting of the company the meeting, if called by requisitionists under section
100, shall stand cancelled.
Thus, if quorum is not present for the meeting called by requisitionists, it shall stand cancelled and cannot be
adjourned.
3. Normally, general meetings are to be called by giving at least 21 clear days’ notice as required by section 101 of the
Companies Act, 2013.
As an exception, first proviso to Section 101 states that a general meeting may be called after giving shorter notice
than that specified in section 101, if consent, in writing or by electronic mode, is accorded thereto –
In the case of any other general meeting (i.e. other than annual general meeting), by members of the company –
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(a) holding, if the company has a share capital, majority in number of members entitled to vote and who represent
not less than 95% of such part of the paid-up share capital of the company as gives a right to vote at the meeting;
or
(b) having, if the company has no share capital, not less than 95% of the total voting power exercisable at that
meeting.
In view of the above provisions, Shilpkaar Constructions Limited is permitted to call the requisite general meeting by
giving a shorter notice. However, the members holding at least 95% of the paid-up share capital of the company which
gives them a right to vote at the meeting must consent to the shorter notice.
Thus, if the meeting is called after obtaining the consent from members holding at least 95% of the paid-up share
capital of the company, the meeting can be validly called a shorter notice.
4. Section 96(2) of the Companies Act, 2013, states that every Annual General Meeting (AGM) shall be called
on any day that is not a National Holiday and shall be held either at the registered office of the company or
at some other place within the city, town or village in which the registered office of the company is situated.
However, AGM of an unlisted company may be held at any place in India if consent is given in writing or by
electronic mode by all the members in advance.
Explanation - For the purposes of this sub-section, ‘National Holiday’ means and includes a day declared
as National Holiday by the Central Government.
In the instant case,
(i) Sunshine Limited, an unlisted company, can hold its AGM on 28th September, 2023 which happens
to be a holiday declared by U.P. Government because this is not a national holiday.
(ii) Sunshine Limited cannot hold its AGM in Lonavala, a hill resort in Maharashtra because consent for
this has to be given by all the members in advance and here only 38 members out of 40 has given
their consent for conducting the meeting in Lonavala.
5.
(i) As per section 94(1) of the Companies Act, 2013, the registers required to be kept and maintained by
a company under section 88 shall be kept at the registered office of the company.
However, such registers may also be kept at any other place in India in which more than one-tenth of
the total number of members entered in the register of members reside, if approved by a special
resolution passed at a general meeting of the company.
So, Majboot Cement Limited (MCL) can keep the Registers of Members at Faridabad (as around 15%
of total members are resident of Faridabad) by passing a Special Resolution at a general meeting.
(ii) A ‘Floating Charge’ is created on assets or a class of assets which are of fluctuating nature or changing
in nature like raw material, stock-in-trade, debtors, and the like. The assets under floating charge keep
on changing because the borrowing company is permitted to use them for trading or producing final
goods for sale.
In the instant case, since charge was created on all the assets of company on that date (i.e. on 18 th
June, 2023) for loan of 325 crore, it is type of Floating Charge.
As per section 77 of the Companies Act, 2013, if the registration of charge was not effected within the
original period of 30 days, the Registrar may, on an application by the company, allow such registration
to be made within a period of 60 days of such creation (i.e. a grace period of another 30 days is
granted after the expiry of the original 30 days), on payment of additional fees as prescribed.
If the charge is not registered within the extended period as above, the company shall make an
application and the Registrar is empowered to allow such registration to be made within a further
period of sixty days after payment of prescribed ad valorem fees.
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In the instant case, MCL created a charge on 18th June, 2023 but failed to register it. On 18th August,
it filed the application for registration of charge. Since the charge has to be filed by 17th August, 2023
(within 60 days from 18th June, 2023) with additional fees, the application can be filed within a further
period of sixty days i.e. by 17th October, 2023 after payment of prescribed ad valorem fees.
(iii) According to section 101 of the Companies Act, 2013, general meetings need to be called by giving
at least a notice of 21 clear days.
However, a general meeting may be called after giving shorter notice than that specified in this sub-
section if consent, in writing or by electronic mode, is accorded thereto in the case of an annual general
meeting, by not less than 95% of the members entitled to vote thereat.
In the instant case, MCL wants to convene its AGM on 10th September, 2023 by giving shorter notice
which is consented by only 78% of the members. Hence, shorter notice is not in compliance with the
provisions of the Act.
6.
a. Joint shareholders must concur in voting unless the articles provide to the contrary. The voting in case of joint
shareholders is done in the order of seniority, which is determined on the basis of the order in which their names
appear in the register of members/ shareholders. The joint- holders have a right to instruct the company as to
the order in which their names are to appear in the register.
As per Rule 21 of the Companies (Management and Administration) Rules, 2014, the Scrutinizers shall arrange
for Polling papers and distribute them to the members and proxies present at the meeting; in case of joint
shareholders, the polling paper shall be given to the first named holder or in his absence to the joint holder
attending the meeting as appearing in the chronological order in the folio.
Thus, in the given case, ‘A’ or his wife ‘B’, whosoever name appears first in chronological order in the register
of members/ shareholders shall be entitled to vote.
b. Time period for e-voting - The facility for remote e-voting shall remain open for not less than 3 days and shall
close at 5.00 p.m. on the date preceding the date of the general meeting.
Thus, if the Annual General Meeting is going to be held on 7.9.2020, the facility for remote e-voting shall open
on 4.9.2020 and close at 5.00 p.m. on 6.9.2020.
7.
(i) In terms of section 111 of the Companies Act, 2013, the members of a company are given a statutory right to
propose resolutions for consideration at the general meetings. According to sub-section (1), the number of
members required to make a requisition for moving resolution shall be same as required to requisition a general
meeting as per section 100 (2). The requirement is as under:
“In case of a company having share capital, such number of members who hold minimum 1/10th of the paid-up
share capital that carries right of voting shall be eligible to make a requisition for moving a resolution at the
general meeting.”
Accordingly, Prakash and his friends must hold minimum 1/10th of paid-up share capital (i.e. 10 lakh worth of
share capital carrying right to vote) of Focus Limited in order to be eligible for moving a resolution at the general
meeting.
(ii) The other requirements as per section 111 for making a requisition to move a resolution at the general meeting
which Prakash and his friends should keep in mind are as under:
a. Two or more copies of the requisition are required to contain signatures of all the requisitionists i.e.
Prakash and friends.
b. The requisition must be deposited by them at CP where the registered office of Focus Limited is situated.
c. In the case of a requisition requiring notice of a resolution, it needs to be deposited by them not less than
six weeks before the meeting.
d. In case of any other resolution, the same is to be deposited by them not less than two weeks before the
meeting.
e. A sum reasonably sufficient to meet the expenses to be incurred by Focus Limited in giving effect to
proposing the resolution shall also be deposited by Prakash and his friends along with the requisition.
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