Corporate and Other Laws (Group I) Model Test Paper - 5 (Answers) | Model Test Papers for CA Intermediate PDF Download

 Page 1


ANSWER OF MODEL TEST PAPER 5
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART – I CASE SCENARIO BASED MCQS 
1. (b)
2. (b)
3. (a)
4. (a)
5. (a)
6. (c)
7. (d)
8. (b)
9. (b)
10. (b)
11. (b)
12. (d)
13. (c)
14. (c)
15. (b)
ANSWERS OF PART – II DESCRIPTIVE QUESTIONS 
1. (a) According to section 19 of the Companies Act, 2013 a company shall not
hold any shares in its holding company either by itself or through its 
nominees. Also, holding company shall not allot or transfer its shares to 
any of its subsidiary companies and any such allotment or transfer of 
shares of a company to its subsidiary company shall be void. 
Following are the exceptions to the above rule: 
(a) where the subsidiary company holds such shares as the legal
representative of a deceased member of the holding company; or
(b) where the subsidiary company holds such shares as a trustee; or
(c) where the subsidiary company is a shareholder even before it
became a subsidiary company of the holding company but in this
case it will not have a right to vote in the meeting of holding
company.
438
Page 2


ANSWER OF MODEL TEST PAPER 5
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART – I CASE SCENARIO BASED MCQS 
1. (b)
2. (b)
3. (a)
4. (a)
5. (a)
6. (c)
7. (d)
8. (b)
9. (b)
10. (b)
11. (b)
12. (d)
13. (c)
14. (c)
15. (b)
ANSWERS OF PART – II DESCRIPTIVE QUESTIONS 
1. (a) According to section 19 of the Companies Act, 2013 a company shall not
hold any shares in its holding company either by itself or through its 
nominees. Also, holding company shall not allot or transfer its shares to 
any of its subsidiary companies and any such allotment or transfer of 
shares of a company to its subsidiary company shall be void. 
Following are the exceptions to the above rule: 
(a) where the subsidiary company holds such shares as the legal
representative of a deceased member of the holding company; or
(b) where the subsidiary company holds such shares as a trustee; or
(c) where the subsidiary company is a shareholder even before it
became a subsidiary company of the holding company but in this
case it will not have a right to vote in the meeting of holding
company.
438
In the given case one of the shareholders of holding company has 
transferred his shares in the holding company to a trust where the 
shares will be held by subsidiary company. It means now subsidiary 
will hold shares in the holding company. But it will hold shares in 
the capacity of a trustee. Therefore, we can conclude that in the 
given situation New Ltd. can hold shares in Old Ltd. 
(b) According to first  proviso to section 137(1) of the Companies Act, 2013,
where the financial statements are not adopted at annual general
meeting or adjourned annual general meeting, such unadopted financial
statements along with the required documents shall be filed with the
Registrar within thirty days of the date of annual general meeting and the
Registrar shall take them in his records as provisional till the financial
statements are filed with him after their adoption in the adjourned annual
general meeting for that purpose.
According to second proviso to section 137(1) of the Companies Act,
2013, financial statements adopted in the adjourned AGM shall be filed
with the Registrar within thirty days of the date of such adjourned AGM
with such fees or such additional fees as may be prescribed.
In the instant case, the accounts of Surya Ltd. were adopted at the
adjourned AGM held on 29
th
 September, 2024 and filing of financial
statements with Registrar was done on 20
th
 October, 2024 i.e. within 30
days of the date of adjourned AGM.
Hence, Surya Ltd. has not complied with the statutory requirement
regarding filing of unadopted accounts with the Registrar, but has
certainly complied with the provisions by filing of adopted accounts within
the due date with the Registrar.
(c) Under provisions of section 5 of the Foreign Exchange Management Act,
1999 certain Rules have been made for drawal of Foreign Exchange for
Current Account transactions. As per these Rules, Foreign Exchange for
some of the Current Account transactions is prohibited. As regards some
other Current Account transactions, Foreign Exchange can be drawn
with prior permission of the Central Government while in case of some
Current Account transactions, prior permission of Reserve Bank of India
is required.
(i) In respect of item No.(i), i.e., remittance out of lottery winnings,
such remittance is prohibited and the same is included in First
Schedule to the Foreign Exchange Management (Current Account
Transactions) Rules, 2000. Hence, Mr. A cannot withdraw Foreign
Exchange for this purpose.
(ii) Foreign Exchange for meeting expenses of cultural tour can be
withdrawn by any person after obtaining permission from
Government of India, Ministry of Human Resources Development,
(Department of Education and Culture) as prescribed in Second
Schedule to the Foreign Exchange Management (Current Account
Transactions) Rules, 2000. Hence, in respect of item (ii), Mr. A can
withdraw the Foreign Exchange after obtaining such permission.
439
Page 3


ANSWER OF MODEL TEST PAPER 5
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART – I CASE SCENARIO BASED MCQS 
1. (b)
2. (b)
3. (a)
4. (a)
5. (a)
6. (c)
7. (d)
8. (b)
9. (b)
10. (b)
11. (b)
12. (d)
13. (c)
14. (c)
15. (b)
ANSWERS OF PART – II DESCRIPTIVE QUESTIONS 
1. (a) According to section 19 of the Companies Act, 2013 a company shall not
hold any shares in its holding company either by itself or through its 
nominees. Also, holding company shall not allot or transfer its shares to 
any of its subsidiary companies and any such allotment or transfer of 
shares of a company to its subsidiary company shall be void. 
Following are the exceptions to the above rule: 
(a) where the subsidiary company holds such shares as the legal
representative of a deceased member of the holding company; or
(b) where the subsidiary company holds such shares as a trustee; or
(c) where the subsidiary company is a shareholder even before it
became a subsidiary company of the holding company but in this
case it will not have a right to vote in the meeting of holding
company.
438
In the given case one of the shareholders of holding company has 
transferred his shares in the holding company to a trust where the 
shares will be held by subsidiary company. It means now subsidiary 
will hold shares in the holding company. But it will hold shares in 
the capacity of a trustee. Therefore, we can conclude that in the 
given situation New Ltd. can hold shares in Old Ltd. 
(b) According to first  proviso to section 137(1) of the Companies Act, 2013,
where the financial statements are not adopted at annual general
meeting or adjourned annual general meeting, such unadopted financial
statements along with the required documents shall be filed with the
Registrar within thirty days of the date of annual general meeting and the
Registrar shall take them in his records as provisional till the financial
statements are filed with him after their adoption in the adjourned annual
general meeting for that purpose.
According to second proviso to section 137(1) of the Companies Act,
2013, financial statements adopted in the adjourned AGM shall be filed
with the Registrar within thirty days of the date of such adjourned AGM
with such fees or such additional fees as may be prescribed.
In the instant case, the accounts of Surya Ltd. were adopted at the
adjourned AGM held on 29
th
 September, 2024 and filing of financial
statements with Registrar was done on 20
th
 October, 2024 i.e. within 30
days of the date of adjourned AGM.
Hence, Surya Ltd. has not complied with the statutory requirement
regarding filing of unadopted accounts with the Registrar, but has
certainly complied with the provisions by filing of adopted accounts within
the due date with the Registrar.
(c) Under provisions of section 5 of the Foreign Exchange Management Act,
1999 certain Rules have been made for drawal of Foreign Exchange for
Current Account transactions. As per these Rules, Foreign Exchange for
some of the Current Account transactions is prohibited. As regards some
other Current Account transactions, Foreign Exchange can be drawn
with prior permission of the Central Government while in case of some
Current Account transactions, prior permission of Reserve Bank of India
is required.
(i) In respect of item No.(i), i.e., remittance out of lottery winnings,
such remittance is prohibited and the same is included in First
Schedule to the Foreign Exchange Management (Current Account
Transactions) Rules, 2000. Hence, Mr. A cannot withdraw Foreign
Exchange for this purpose.
(ii) Foreign Exchange for meeting expenses of cultural tour can be
withdrawn by any person after obtaining permission from
Government of India, Ministry of Human Resources Development,
(Department of Education and Culture) as prescribed in Second
Schedule to the Foreign Exchange Management (Current Account
Transactions) Rules, 2000. Hence, in respect of item (ii), Mr. A can
withdraw the Foreign Exchange after obtaining such permission.
439
In all the cases, where remittance of Foreign Exchange is allowed, either 
by general or specific permission, the remitter has to obtain the Foreign 
Exchange from an Authorised Person. 
2. (a) Section 83 of the Companies Act, 2013 empowers the Registrar to make
entries with respect to the satisfaction and release of charges even if no 
intimation has been received by him from the company. 
This situation would arise where the property subject to a charge is sold 
to a third-party and neither the company nor the charge-holder has 
intimated the Registrar regarding satisfaction of the earlier charge.  
Accordingly, with respect to any registered charge if evidence is shown 
to the satisfaction of Registrar that the debt secured by charge has been 
paid or satisfied wholly or in part or that the part of the property or 
undertaking charged has been released from the charge or has ceased 
to form part of the company’s property or undertaking, then he may enter 
in the register of charges a memorandum of satisfaction that:  
? the debt has been satisfied in whole or in part; or 
? part of the property or undertaking has been released from the 
charge or has ceased to form part of the company’s property or 
undertaking.  
This power can be exercised by the Registrar despite the fact that no 
intimation has been received by him from the company. 
According to section 82 (4), section 82 shall not be deemed to affect the 
powers of the Registrar to make an entry in the register of charges under 
section 83 or otherwise than on receipt of an intimation from the 
company i.e. even if no intimation is received by him from the company. 
Information to affected parties: According to section 83 (2), the 
Registrar shall inform the affected parties within 30 days of making the 
entry in the register of charges.  
Issue of Certificate: As per Rule 8 (2) of the Companies (Registration 
of Charges) Rules, 2014, in case the Registrar enters a memorandum of 
satisfaction of charge in full, he shall issue a certificate of registration of 
satisfaction of charge. 
(b) Save as provided in the Companies Act, 2013 or the rules made
thereunder for filing of documents with the Registrar in electronic mode,
a document may be served on Registrar or any member by sending it to
him by:
1. Post, or
2. registered post, or
3. speed post, or
4. courier, or
5. by delivering at his office or address, or
440
Page 4


ANSWER OF MODEL TEST PAPER 5
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART – I CASE SCENARIO BASED MCQS 
1. (b)
2. (b)
3. (a)
4. (a)
5. (a)
6. (c)
7. (d)
8. (b)
9. (b)
10. (b)
11. (b)
12. (d)
13. (c)
14. (c)
15. (b)
ANSWERS OF PART – II DESCRIPTIVE QUESTIONS 
1. (a) According to section 19 of the Companies Act, 2013 a company shall not
hold any shares in its holding company either by itself or through its 
nominees. Also, holding company shall not allot or transfer its shares to 
any of its subsidiary companies and any such allotment or transfer of 
shares of a company to its subsidiary company shall be void. 
Following are the exceptions to the above rule: 
(a) where the subsidiary company holds such shares as the legal
representative of a deceased member of the holding company; or
(b) where the subsidiary company holds such shares as a trustee; or
(c) where the subsidiary company is a shareholder even before it
became a subsidiary company of the holding company but in this
case it will not have a right to vote in the meeting of holding
company.
438
In the given case one of the shareholders of holding company has 
transferred his shares in the holding company to a trust where the 
shares will be held by subsidiary company. It means now subsidiary 
will hold shares in the holding company. But it will hold shares in 
the capacity of a trustee. Therefore, we can conclude that in the 
given situation New Ltd. can hold shares in Old Ltd. 
(b) According to first  proviso to section 137(1) of the Companies Act, 2013,
where the financial statements are not adopted at annual general
meeting or adjourned annual general meeting, such unadopted financial
statements along with the required documents shall be filed with the
Registrar within thirty days of the date of annual general meeting and the
Registrar shall take them in his records as provisional till the financial
statements are filed with him after their adoption in the adjourned annual
general meeting for that purpose.
According to second proviso to section 137(1) of the Companies Act,
2013, financial statements adopted in the adjourned AGM shall be filed
with the Registrar within thirty days of the date of such adjourned AGM
with such fees or such additional fees as may be prescribed.
In the instant case, the accounts of Surya Ltd. were adopted at the
adjourned AGM held on 29
th
 September, 2024 and filing of financial
statements with Registrar was done on 20
th
 October, 2024 i.e. within 30
days of the date of adjourned AGM.
Hence, Surya Ltd. has not complied with the statutory requirement
regarding filing of unadopted accounts with the Registrar, but has
certainly complied with the provisions by filing of adopted accounts within
the due date with the Registrar.
(c) Under provisions of section 5 of the Foreign Exchange Management Act,
1999 certain Rules have been made for drawal of Foreign Exchange for
Current Account transactions. As per these Rules, Foreign Exchange for
some of the Current Account transactions is prohibited. As regards some
other Current Account transactions, Foreign Exchange can be drawn
with prior permission of the Central Government while in case of some
Current Account transactions, prior permission of Reserve Bank of India
is required.
(i) In respect of item No.(i), i.e., remittance out of lottery winnings,
such remittance is prohibited and the same is included in First
Schedule to the Foreign Exchange Management (Current Account
Transactions) Rules, 2000. Hence, Mr. A cannot withdraw Foreign
Exchange for this purpose.
(ii) Foreign Exchange for meeting expenses of cultural tour can be
withdrawn by any person after obtaining permission from
Government of India, Ministry of Human Resources Development,
(Department of Education and Culture) as prescribed in Second
Schedule to the Foreign Exchange Management (Current Account
Transactions) Rules, 2000. Hence, in respect of item (ii), Mr. A can
withdraw the Foreign Exchange after obtaining such permission.
439
In all the cases, where remittance of Foreign Exchange is allowed, either 
by general or specific permission, the remitter has to obtain the Foreign 
Exchange from an Authorised Person. 
2. (a) Section 83 of the Companies Act, 2013 empowers the Registrar to make
entries with respect to the satisfaction and release of charges even if no 
intimation has been received by him from the company. 
This situation would arise where the property subject to a charge is sold 
to a third-party and neither the company nor the charge-holder has 
intimated the Registrar regarding satisfaction of the earlier charge.  
Accordingly, with respect to any registered charge if evidence is shown 
to the satisfaction of Registrar that the debt secured by charge has been 
paid or satisfied wholly or in part or that the part of the property or 
undertaking charged has been released from the charge or has ceased 
to form part of the company’s property or undertaking, then he may enter 
in the register of charges a memorandum of satisfaction that:  
? the debt has been satisfied in whole or in part; or 
? part of the property or undertaking has been released from the 
charge or has ceased to form part of the company’s property or 
undertaking.  
This power can be exercised by the Registrar despite the fact that no 
intimation has been received by him from the company. 
According to section 82 (4), section 82 shall not be deemed to affect the 
powers of the Registrar to make an entry in the register of charges under 
section 83 or otherwise than on receipt of an intimation from the 
company i.e. even if no intimation is received by him from the company. 
Information to affected parties: According to section 83 (2), the 
Registrar shall inform the affected parties within 30 days of making the 
entry in the register of charges.  
Issue of Certificate: As per Rule 8 (2) of the Companies (Registration 
of Charges) Rules, 2014, in case the Registrar enters a memorandum of 
satisfaction of charge in full, he shall issue a certificate of registration of 
satisfaction of charge. 
(b) Save as provided in the Companies Act, 2013 or the rules made
thereunder for filing of documents with the Registrar in electronic mode,
a document may be served on Registrar or any member by sending it to
him by:
1. Post, or
2. registered post, or
3. speed post, or
4. courier, or
5. by delivering at his office or address, or
440
6. by such electronic or other mode as may be prescribed.
However, a member may request for delivery of any document through 
a particular mode, for which he shall pay such fees as may be 
determined by the company in its annual general meeting. 
(c) Provisions applicable to making of rules or bye-laws after previous
publications [Section 23 of the General Clauses Act, 1897]:
Where, by any Central Act or Regulation, a power to make rules or bye-
laws is expressed to be given subject to the condition of the rules or bye-
laws being made after previous publication, then the following provisions
shall apply, namely:-
(1) Publish of proposed draft rules/ bye- laws: The authority having
power to make the rules or bye-laws shall, before making them,
publish a draft of the proposed rules or bye-laws for the information
of persons likely to be affected thereby;
(2) To publish in the prescribed manner: The publication shall be
made in such manner as that authority deems to be sufficient, or, if
the condition with respect to previous publication so requires, in
such manner as the Government concerned prescribes;
(3) Notice annexed with the published draft: There shall be
published with the draft a notice specifying a date on or after which
the draft will be taken into consideration;
(4) Consideration on suggestions/objections received from other
authorities: The authority having power to make the rules or bye-
laws, and, where the rules or bye-laws are to be made with the
sanction, approval or concurrence of another authority, that
authority also shall consider any objection or suggestion which may
be received by the authority having power to make the rules or bye-
laws from any person with respect to the draft before the date so
specified;
(5) Notified in the official gazette: The publication in the Official
Gazette of a rule or bye-law purporting to have been made in
exercise of a power to make rules or bye-laws after previous
publication shall be conclusive proof that the rule or bye-laws have
been duly made.
3. (a) Application of Premium received on Issue of Shares
The provisions of the Companies Act, 2013, allow the companies to 
apply securities premium account for: 
1) Issue of fully paid bonus shares;
2) Writing off the preliminary expenses;
3) Writing off the issue expenses (expenses including commission
paid or discount allowed on any issue of shares or debentures);
4) Premium payable on the redemption (of any preference shares or
of any debentures); or
441
Page 5


ANSWER OF MODEL TEST PAPER 5
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART – I CASE SCENARIO BASED MCQS 
1. (b)
2. (b)
3. (a)
4. (a)
5. (a)
6. (c)
7. (d)
8. (b)
9. (b)
10. (b)
11. (b)
12. (d)
13. (c)
14. (c)
15. (b)
ANSWERS OF PART – II DESCRIPTIVE QUESTIONS 
1. (a) According to section 19 of the Companies Act, 2013 a company shall not
hold any shares in its holding company either by itself or through its 
nominees. Also, holding company shall not allot or transfer its shares to 
any of its subsidiary companies and any such allotment or transfer of 
shares of a company to its subsidiary company shall be void. 
Following are the exceptions to the above rule: 
(a) where the subsidiary company holds such shares as the legal
representative of a deceased member of the holding company; or
(b) where the subsidiary company holds such shares as a trustee; or
(c) where the subsidiary company is a shareholder even before it
became a subsidiary company of the holding company but in this
case it will not have a right to vote in the meeting of holding
company.
438
In the given case one of the shareholders of holding company has 
transferred his shares in the holding company to a trust where the 
shares will be held by subsidiary company. It means now subsidiary 
will hold shares in the holding company. But it will hold shares in 
the capacity of a trustee. Therefore, we can conclude that in the 
given situation New Ltd. can hold shares in Old Ltd. 
(b) According to first  proviso to section 137(1) of the Companies Act, 2013,
where the financial statements are not adopted at annual general
meeting or adjourned annual general meeting, such unadopted financial
statements along with the required documents shall be filed with the
Registrar within thirty days of the date of annual general meeting and the
Registrar shall take them in his records as provisional till the financial
statements are filed with him after their adoption in the adjourned annual
general meeting for that purpose.
According to second proviso to section 137(1) of the Companies Act,
2013, financial statements adopted in the adjourned AGM shall be filed
with the Registrar within thirty days of the date of such adjourned AGM
with such fees or such additional fees as may be prescribed.
In the instant case, the accounts of Surya Ltd. were adopted at the
adjourned AGM held on 29
th
 September, 2024 and filing of financial
statements with Registrar was done on 20
th
 October, 2024 i.e. within 30
days of the date of adjourned AGM.
Hence, Surya Ltd. has not complied with the statutory requirement
regarding filing of unadopted accounts with the Registrar, but has
certainly complied with the provisions by filing of adopted accounts within
the due date with the Registrar.
(c) Under provisions of section 5 of the Foreign Exchange Management Act,
1999 certain Rules have been made for drawal of Foreign Exchange for
Current Account transactions. As per these Rules, Foreign Exchange for
some of the Current Account transactions is prohibited. As regards some
other Current Account transactions, Foreign Exchange can be drawn
with prior permission of the Central Government while in case of some
Current Account transactions, prior permission of Reserve Bank of India
is required.
(i) In respect of item No.(i), i.e., remittance out of lottery winnings,
such remittance is prohibited and the same is included in First
Schedule to the Foreign Exchange Management (Current Account
Transactions) Rules, 2000. Hence, Mr. A cannot withdraw Foreign
Exchange for this purpose.
(ii) Foreign Exchange for meeting expenses of cultural tour can be
withdrawn by any person after obtaining permission from
Government of India, Ministry of Human Resources Development,
(Department of Education and Culture) as prescribed in Second
Schedule to the Foreign Exchange Management (Current Account
Transactions) Rules, 2000. Hence, in respect of item (ii), Mr. A can
withdraw the Foreign Exchange after obtaining such permission.
439
In all the cases, where remittance of Foreign Exchange is allowed, either 
by general or specific permission, the remitter has to obtain the Foreign 
Exchange from an Authorised Person. 
2. (a) Section 83 of the Companies Act, 2013 empowers the Registrar to make
entries with respect to the satisfaction and release of charges even if no 
intimation has been received by him from the company. 
This situation would arise where the property subject to a charge is sold 
to a third-party and neither the company nor the charge-holder has 
intimated the Registrar regarding satisfaction of the earlier charge.  
Accordingly, with respect to any registered charge if evidence is shown 
to the satisfaction of Registrar that the debt secured by charge has been 
paid or satisfied wholly or in part or that the part of the property or 
undertaking charged has been released from the charge or has ceased 
to form part of the company’s property or undertaking, then he may enter 
in the register of charges a memorandum of satisfaction that:  
? the debt has been satisfied in whole or in part; or 
? part of the property or undertaking has been released from the 
charge or has ceased to form part of the company’s property or 
undertaking.  
This power can be exercised by the Registrar despite the fact that no 
intimation has been received by him from the company. 
According to section 82 (4), section 82 shall not be deemed to affect the 
powers of the Registrar to make an entry in the register of charges under 
section 83 or otherwise than on receipt of an intimation from the 
company i.e. even if no intimation is received by him from the company. 
Information to affected parties: According to section 83 (2), the 
Registrar shall inform the affected parties within 30 days of making the 
entry in the register of charges.  
Issue of Certificate: As per Rule 8 (2) of the Companies (Registration 
of Charges) Rules, 2014, in case the Registrar enters a memorandum of 
satisfaction of charge in full, he shall issue a certificate of registration of 
satisfaction of charge. 
(b) Save as provided in the Companies Act, 2013 or the rules made
thereunder for filing of documents with the Registrar in electronic mode,
a document may be served on Registrar or any member by sending it to
him by:
1. Post, or
2. registered post, or
3. speed post, or
4. courier, or
5. by delivering at his office or address, or
440
6. by such electronic or other mode as may be prescribed.
However, a member may request for delivery of any document through 
a particular mode, for which he shall pay such fees as may be 
determined by the company in its annual general meeting. 
(c) Provisions applicable to making of rules or bye-laws after previous
publications [Section 23 of the General Clauses Act, 1897]:
Where, by any Central Act or Regulation, a power to make rules or bye-
laws is expressed to be given subject to the condition of the rules or bye-
laws being made after previous publication, then the following provisions
shall apply, namely:-
(1) Publish of proposed draft rules/ bye- laws: The authority having
power to make the rules or bye-laws shall, before making them,
publish a draft of the proposed rules or bye-laws for the information
of persons likely to be affected thereby;
(2) To publish in the prescribed manner: The publication shall be
made in such manner as that authority deems to be sufficient, or, if
the condition with respect to previous publication so requires, in
such manner as the Government concerned prescribes;
(3) Notice annexed with the published draft: There shall be
published with the draft a notice specifying a date on or after which
the draft will be taken into consideration;
(4) Consideration on suggestions/objections received from other
authorities: The authority having power to make the rules or bye-
laws, and, where the rules or bye-laws are to be made with the
sanction, approval or concurrence of another authority, that
authority also shall consider any objection or suggestion which may
be received by the authority having power to make the rules or bye-
laws from any person with respect to the draft before the date so
specified;
(5) Notified in the official gazette: The publication in the Official
Gazette of a rule or bye-law purporting to have been made in
exercise of a power to make rules or bye-laws after previous
publication shall be conclusive proof that the rule or bye-laws have
been duly made.
3. (a) Application of Premium received on Issue of Shares
The provisions of the Companies Act, 2013, allow the companies to 
apply securities premium account for: 
1) Issue of fully paid bonus shares;
2) Writing off the preliminary expenses;
3) Writing off the issue expenses (expenses including commission
paid or discount allowed on any issue of shares or debentures);
4) Premium payable on the redemption (of any preference shares or
of any debentures); or
441
5) Buy-back (purchase of its own shares or other securities under
section 68).
(b) According to section 103 of the Companies Act, 2013, unless the articles
of the company provide for a larger number, the quorum for the meeting
of a Public Limited Company shall be 5 members personally present, if
number of members is not more than 1000.
(i) (1) P1, P2 and P3 will be counted as three members.
(2) If a company is a member of another company, it may
authorize a person by resolution to act as its representative at
a meeting of the latter company, then such a person shall be
deemed to be a member present in person and counted for
the purpose of quorum. Hence, P4 and P5 representing ABC
Ltd. and DEF Ltd. respectively will be counted as two
members.
(3) Only members present in person and not by proxy are to be
counted. Hence, proxies whether they are members or not will
have to be excluded for the purposes of quorum. Thus, P6
and P7 shall not be counted in quorum.
In the light of the provision of the Act and the facts of the question, 
it can be concluded that the quorum for Annual General Meeting of 
KMN Ltd. is 5 members personally present. Total 5 members (P1, 
P2, P3, P4 and P5) were present. Hence, the requirement of 
quorum is fulfilled. 
(ii) The section further states that, if the required quorum is not present
within half an hour, the meeting shall stand adjourned for the next
week at the same time and place or such other time and place as
decided by the Board of Directors.
Since, P4 is an essential part for meeting the quorum requirement,
and he reaches after 11:30 AM (i.e. half an hour after the starting
of the meeting), the meeting will be adjourned as provided above.
(iii) In case of lack of quorum, the meeting will be adjourned as
provided in section 103.
In case of the adjourned meeting or change of day, time or place of
meeting, the company shall give not less than 3 days' notice to the
members either individually or by publishing an advertisement in
the newspaper.
(iv) Where quorum is not present in the adjourned meeting also within
half an hour, then the members present shall form the quorum.
(c) (i) Proviso: The normal function of a proviso is to except something
out of the enactment or to qualify something stated in the
enactment which would be within its purview if the proviso were not
there. The effect of the proviso is to qualify the preceding
enactment which is expressed in terms which are too general. As a
general rule, a proviso is added to an enactment to qualify or create
an exception to what is in the enactment. Ordinarily a proviso is not
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