Corporate and Other Laws (Group I) Model Test Paper - 3 (Answers) - CA Intermediate PDF Download

 Page 1


ANSWERS OF MODEL TEST PAPER 3 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART I CASE SCENARIO BASED MCQS 
1. (c)
2. (b)
3. (a)
4. (c)
5. (c)
6. (b)
7. (c)
8. (b)
9. (a)
10. (b)
11. (a)
12. (c)
13. (b)
14. (b)
15. ( a)
ANSWER TO PART II DESCRIPTIVE QUESTIONS 
1. (a) Section 48 of the Companies Act, 2013, allows the variation of
shareholders’ rights, if three conditions have been met. 
First - There should be a provision in the memorandum or articles of the 
company entitling it to vary such class rights, in absence of same; the 
terms of issue of the shares of that class not prohibiting such a variation. 
Second - The holders of at-least 75% of the issued shares of that class 
must have given their consent in writing or pass a special resolution 
sanctioning the variation at a separate class meeting. 
Proviso to sub-section 1, provides if variation by one class of 
shareholders affects the rights of any other class of shareholders, the 
consent of three-fourths of such other class of shareholders shall also 
be obtained and the provisions of this section shall apply to such 
variation. 
Third – Where the holders of not less than10 per cent of the issued 
shares of a class did not consent to such variation or vote in favour of 
the special resolution for the variation, they may apply to the Tribunal to 
420
Page 2


ANSWERS OF MODEL TEST PAPER 3 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART I CASE SCENARIO BASED MCQS 
1. (c)
2. (b)
3. (a)
4. (c)
5. (c)
6. (b)
7. (c)
8. (b)
9. (a)
10. (b)
11. (a)
12. (c)
13. (b)
14. (b)
15. ( a)
ANSWER TO PART II DESCRIPTIVE QUESTIONS 
1. (a) Section 48 of the Companies Act, 2013, allows the variation of
shareholders’ rights, if three conditions have been met. 
First - There should be a provision in the memorandum or articles of the 
company entitling it to vary such class rights, in absence of same; the 
terms of issue of the shares of that class not prohibiting such a variation. 
Second - The holders of at-least 75% of the issued shares of that class 
must have given their consent in writing or pass a special resolution 
sanctioning the variation at a separate class meeting. 
Proviso to sub-section 1, provides if variation by one class of 
shareholders affects the rights of any other class of shareholders, the 
consent of three-fourths of such other class of shareholders shall also 
be obtained and the provisions of this section shall apply to such 
variation. 
Third – Where the holders of not less than10 per cent of the issued 
shares of a class did not consent to such variation or vote in favour of 
the special resolution for the variation, they may apply to the Tribunal to 
420
have the variation cancelled and where any such application is made the 
variation shall not have effect unless and until it is confirmed by the 
Tribunal. 
(i) In the given question, 40,000 equity shareholders of Class 2 have
given their consent in writing for the variation.
Since, 80% (40,000/ 50,000) of the shareholders have given the
consent, the company can change the rights of Class 2
shareholders provided such change in the rights of Class 2
shareholders is not affecting the rights of any other class of
shareholders i.e. Class 1 shareholders in this case.
(ii) Total number of dissenting shareholders= 50,000- 40,000= 10,000.
Minimum number of shareholders who may apply to the Tribunal
and then variation shall not take effect unless and until it is
confirmed by the Tribunal= 10% of 50,000=5,000.
In the given question, since less than 5,000 (here 4,500)
shareholders are intending to apply to Tribunal, hence, they cannot
apply.
(b) 1. Provisions of section 128 of the Companies Act, 2013, requires
every company to prepare and keep the books of account and other 
relevant books and papers and financial statements at its 
registered office.  
It also provides that all or any of the books of account may be kept 
at such other place in India as the Board of directors may decide. 
Where such a decision is taken by the Board, the company shall 
within seven days thereof file with the registrar a notice in writing 
as per rule 2A of the Companies (Accounts) Rules, 2014 in form 
AOC-5 giving full address of that other place. 
Thus, in the given case, the books of accounts of BBQ Ltd. should 
be prepared and maintained at registered office in Hyderabad. 
However, the same can be maintained at the respective branches 
if the Board of directors have decided so and intimated the registrar 
a notice in writing within 7 days thereof giving full address of that 
other place (i.e. other than the registered office). 
Hence, objection of Mr. Naveen is valid as intimation to registrar is 
not specified in the question. 
2. Where a company has a branch office in or outside India, it shall
be deemed to have complied with the requisite provisions of section
128(1) if- 
a. Proper books of account relating to the transactions effected
at the branch office are kept at that office, and 
421
Page 3


ANSWERS OF MODEL TEST PAPER 3 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART I CASE SCENARIO BASED MCQS 
1. (c)
2. (b)
3. (a)
4. (c)
5. (c)
6. (b)
7. (c)
8. (b)
9. (a)
10. (b)
11. (a)
12. (c)
13. (b)
14. (b)
15. ( a)
ANSWER TO PART II DESCRIPTIVE QUESTIONS 
1. (a) Section 48 of the Companies Act, 2013, allows the variation of
shareholders’ rights, if three conditions have been met. 
First - There should be a provision in the memorandum or articles of the 
company entitling it to vary such class rights, in absence of same; the 
terms of issue of the shares of that class not prohibiting such a variation. 
Second - The holders of at-least 75% of the issued shares of that class 
must have given their consent in writing or pass a special resolution 
sanctioning the variation at a separate class meeting. 
Proviso to sub-section 1, provides if variation by one class of 
shareholders affects the rights of any other class of shareholders, the 
consent of three-fourths of such other class of shareholders shall also 
be obtained and the provisions of this section shall apply to such 
variation. 
Third – Where the holders of not less than10 per cent of the issued 
shares of a class did not consent to such variation or vote in favour of 
the special resolution for the variation, they may apply to the Tribunal to 
420
have the variation cancelled and where any such application is made the 
variation shall not have effect unless and until it is confirmed by the 
Tribunal. 
(i) In the given question, 40,000 equity shareholders of Class 2 have
given their consent in writing for the variation.
Since, 80% (40,000/ 50,000) of the shareholders have given the
consent, the company can change the rights of Class 2
shareholders provided such change in the rights of Class 2
shareholders is not affecting the rights of any other class of
shareholders i.e. Class 1 shareholders in this case.
(ii) Total number of dissenting shareholders= 50,000- 40,000= 10,000.
Minimum number of shareholders who may apply to the Tribunal
and then variation shall not take effect unless and until it is
confirmed by the Tribunal= 10% of 50,000=5,000.
In the given question, since less than 5,000 (here 4,500)
shareholders are intending to apply to Tribunal, hence, they cannot
apply.
(b) 1. Provisions of section 128 of the Companies Act, 2013, requires
every company to prepare and keep the books of account and other 
relevant books and papers and financial statements at its 
registered office.  
It also provides that all or any of the books of account may be kept 
at such other place in India as the Board of directors may decide. 
Where such a decision is taken by the Board, the company shall 
within seven days thereof file with the registrar a notice in writing 
as per rule 2A of the Companies (Accounts) Rules, 2014 in form 
AOC-5 giving full address of that other place. 
Thus, in the given case, the books of accounts of BBQ Ltd. should 
be prepared and maintained at registered office in Hyderabad. 
However, the same can be maintained at the respective branches 
if the Board of directors have decided so and intimated the registrar 
a notice in writing within 7 days thereof giving full address of that 
other place (i.e. other than the registered office). 
Hence, objection of Mr. Naveen is valid as intimation to registrar is 
not specified in the question. 
2. Where a company has a branch office in or outside India, it shall
be deemed to have complied with the requisite provisions of section
128(1) if- 
a. Proper books of account relating to the transactions effected
at the branch office are kept at that office, and 
421
b. Proper summarised returns are sent on periodical basis by
branch office to the company at its registered office or other
place.
As per Rule 4(1) of the Companies (Accounts) Rules, 2014, the 
summarized returns of the books of account of the company kept 
and maintained outside India shall be sent to the registered office 
at quarterly intervals, which shall be kept and maintained at the 
registered office of the company and kept open to directors for 
inspection. 
Since, London office was sending summarized returns to the 
registered office in Hyderabad on quarterly basis, which is as per 
the requirement of law, hence, the objection of Mr. Naveen is 
invalid.  
(c) According to section 2(v) of the Foreign Exchange Management Act,
1999, “Person resident in India” means a person residing in India for
more than 182 days during the course of the preceding financial year but
does not include a person who has gone out of India or who stays outside
India, for or on taking up employment besides with the other specified
purposes, outside India.
(i) In the given question, Mr. L will be treated as a person resident
outside from 2.4.2024 till the time he works in Jeff Fashion Ltd. in
Paris, as he has gone out of India for or on taking up employment
outside India.
His return to India for 10 days to attend a family function, will not
alter his residential status.
(ii) Mr. L will be treated as a person resident in India from the day he
joins employment in India (after arriving on 30.4.2024).
2. (a) (i) Rule 14 (1) of the Companies (Prospectus and Allotment of
Securities) Rules, 2014, requires prior approval of the shareholders 
of the company, by a special resolution for each of the private 
placement offers or invitations.  
Provided further that this sub-rule shall not apply in case of offer or 
invitation for non-convertible debentures, where the proposed 
amount to be raised through such offer or invitation does not 
exceed the limit as specified in clause (c) of sub-section (1) of 
section 180 in such cases relevant Board resolution under clause 
(c) of sub-section (3) of section 179 would be adequate.
Provided also that in case of offer or invitation for non-convertible 
debentures, where the proposed amount to be raised through such 
offer or invitation exceeds the limit as specified in clause (c) of sub-
section (1) of section 180, it shall be sufficient if the company 
passes a previous special resolution only once in a year for all the 
offers or invitations for such debentures during the year. 
422
Page 4


ANSWERS OF MODEL TEST PAPER 3 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART I CASE SCENARIO BASED MCQS 
1. (c)
2. (b)
3. (a)
4. (c)
5. (c)
6. (b)
7. (c)
8. (b)
9. (a)
10. (b)
11. (a)
12. (c)
13. (b)
14. (b)
15. ( a)
ANSWER TO PART II DESCRIPTIVE QUESTIONS 
1. (a) Section 48 of the Companies Act, 2013, allows the variation of
shareholders’ rights, if three conditions have been met. 
First - There should be a provision in the memorandum or articles of the 
company entitling it to vary such class rights, in absence of same; the 
terms of issue of the shares of that class not prohibiting such a variation. 
Second - The holders of at-least 75% of the issued shares of that class 
must have given their consent in writing or pass a special resolution 
sanctioning the variation at a separate class meeting. 
Proviso to sub-section 1, provides if variation by one class of 
shareholders affects the rights of any other class of shareholders, the 
consent of three-fourths of such other class of shareholders shall also 
be obtained and the provisions of this section shall apply to such 
variation. 
Third – Where the holders of not less than10 per cent of the issued 
shares of a class did not consent to such variation or vote in favour of 
the special resolution for the variation, they may apply to the Tribunal to 
420
have the variation cancelled and where any such application is made the 
variation shall not have effect unless and until it is confirmed by the 
Tribunal. 
(i) In the given question, 40,000 equity shareholders of Class 2 have
given their consent in writing for the variation.
Since, 80% (40,000/ 50,000) of the shareholders have given the
consent, the company can change the rights of Class 2
shareholders provided such change in the rights of Class 2
shareholders is not affecting the rights of any other class of
shareholders i.e. Class 1 shareholders in this case.
(ii) Total number of dissenting shareholders= 50,000- 40,000= 10,000.
Minimum number of shareholders who may apply to the Tribunal
and then variation shall not take effect unless and until it is
confirmed by the Tribunal= 10% of 50,000=5,000.
In the given question, since less than 5,000 (here 4,500)
shareholders are intending to apply to Tribunal, hence, they cannot
apply.
(b) 1. Provisions of section 128 of the Companies Act, 2013, requires
every company to prepare and keep the books of account and other 
relevant books and papers and financial statements at its 
registered office.  
It also provides that all or any of the books of account may be kept 
at such other place in India as the Board of directors may decide. 
Where such a decision is taken by the Board, the company shall 
within seven days thereof file with the registrar a notice in writing 
as per rule 2A of the Companies (Accounts) Rules, 2014 in form 
AOC-5 giving full address of that other place. 
Thus, in the given case, the books of accounts of BBQ Ltd. should 
be prepared and maintained at registered office in Hyderabad. 
However, the same can be maintained at the respective branches 
if the Board of directors have decided so and intimated the registrar 
a notice in writing within 7 days thereof giving full address of that 
other place (i.e. other than the registered office). 
Hence, objection of Mr. Naveen is valid as intimation to registrar is 
not specified in the question. 
2. Where a company has a branch office in or outside India, it shall
be deemed to have complied with the requisite provisions of section
128(1) if- 
a. Proper books of account relating to the transactions effected
at the branch office are kept at that office, and 
421
b. Proper summarised returns are sent on periodical basis by
branch office to the company at its registered office or other
place.
As per Rule 4(1) of the Companies (Accounts) Rules, 2014, the 
summarized returns of the books of account of the company kept 
and maintained outside India shall be sent to the registered office 
at quarterly intervals, which shall be kept and maintained at the 
registered office of the company and kept open to directors for 
inspection. 
Since, London office was sending summarized returns to the 
registered office in Hyderabad on quarterly basis, which is as per 
the requirement of law, hence, the objection of Mr. Naveen is 
invalid.  
(c) According to section 2(v) of the Foreign Exchange Management Act,
1999, “Person resident in India” means a person residing in India for
more than 182 days during the course of the preceding financial year but
does not include a person who has gone out of India or who stays outside
India, for or on taking up employment besides with the other specified
purposes, outside India.
(i) In the given question, Mr. L will be treated as a person resident
outside from 2.4.2024 till the time he works in Jeff Fashion Ltd. in
Paris, as he has gone out of India for or on taking up employment
outside India.
His return to India for 10 days to attend a family function, will not
alter his residential status.
(ii) Mr. L will be treated as a person resident in India from the day he
joins employment in India (after arriving on 30.4.2024).
2. (a) (i) Rule 14 (1) of the Companies (Prospectus and Allotment of
Securities) Rules, 2014, requires prior approval of the shareholders 
of the company, by a special resolution for each of the private 
placement offers or invitations.  
Provided further that this sub-rule shall not apply in case of offer or 
invitation for non-convertible debentures, where the proposed 
amount to be raised through such offer or invitation does not 
exceed the limit as specified in clause (c) of sub-section (1) of 
section 180 in such cases relevant Board resolution under clause 
(c) of sub-section (3) of section 179 would be adequate.
Provided also that in case of offer or invitation for non-convertible 
debentures, where the proposed amount to be raised through such 
offer or invitation exceeds the limit as specified in clause (c) of sub-
section (1) of section 180, it shall be sufficient if the company 
passes a previous special resolution only once in a year for all the 
offers or invitations for such debentures during the year. 
422
Thus, based on above, the resolution will be passed. 
As per section 42(2) of the Companies Act, 2013, a private 
placement shall be made only to a select group of persons who 
have been identified by the Board, whose number shall not exceed 
50 or such higher number as may be prescribed, in a financial year. 
Rule 14 (2) of the Companies (Prospectus and Allotment of 
Securities) Rules, 2014 has prescribed ‘an offer or invitation to 
subscribe securities under private placement shall not be made to 
persons more than two hundred (200) in the aggregate in a financial 
year’. 
Provided that any offer or invitation made to Qualified Institutional 
Buyers and Employees of the company being offered under a 
scheme of ESOP under section 62(1)(b) shall not be considered 
while calculating the limit of two hundred persons. 
As per rule 14(7), NBFCs which are registered with the RBI and 
Housing Finance Companies which are registered with the National 
Housing Bank; if they are complying with any regulations made by 
the RBI or National Housing Bank in respect of offer or invitation to 
be issued on private placement basis, then need not to comply with 
the rule 14(2) above. 
Thus, based on above, the maximum number of persons to whom 
an offer by private placement in a financial year will be determined. 
(ii) As per section 42(6) of the Companies Act, 2013 provides that a
company making an offer or invitation under private placement
shall allot its securities within sixty days from the date of receipt of
the application money.
If company fails to make allotment within 60 days, then repayment
of the application money to the subscribers shall be made within
fifteen days from the expiry of sixty days and if the company fails
to repay the application money within the aforesaid period, it shall
be liable to repay that money with interest at the rate of twelve per
cent per annum from the expiry of the sixtieth day.
(iii) Company shall not utilise monies raised through private placement
unless allotment is made and the return of allotment is filed with the
Registrar in accordance with section 42(8). The return of allotment
shall be filed with the Registrar within 15 days from the date of the
allotment under section 42.
Hence, it can utilize the money thus received once the return has
been filled with the Registrar.
(b) (i) As per the Companies Act, 2013, in case of joint shareholders, they
must concur in voting unless the articles provide to the contrary. 
As per Regulation 52 of Table F, 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. The joint-holders have a right to instruct the company 
423
Page 5


ANSWERS OF MODEL TEST PAPER 3 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART I CASE SCENARIO BASED MCQS 
1. (c)
2. (b)
3. (a)
4. (c)
5. (c)
6. (b)
7. (c)
8. (b)
9. (a)
10. (b)
11. (a)
12. (c)
13. (b)
14. (b)
15. ( a)
ANSWER TO PART II DESCRIPTIVE QUESTIONS 
1. (a) Section 48 of the Companies Act, 2013, allows the variation of
shareholders’ rights, if three conditions have been met. 
First - There should be a provision in the memorandum or articles of the 
company entitling it to vary such class rights, in absence of same; the 
terms of issue of the shares of that class not prohibiting such a variation. 
Second - The holders of at-least 75% of the issued shares of that class 
must have given their consent in writing or pass a special resolution 
sanctioning the variation at a separate class meeting. 
Proviso to sub-section 1, provides if variation by one class of 
shareholders affects the rights of any other class of shareholders, the 
consent of three-fourths of such other class of shareholders shall also 
be obtained and the provisions of this section shall apply to such 
variation. 
Third – Where the holders of not less than10 per cent of the issued 
shares of a class did not consent to such variation or vote in favour of 
the special resolution for the variation, they may apply to the Tribunal to 
420
have the variation cancelled and where any such application is made the 
variation shall not have effect unless and until it is confirmed by the 
Tribunal. 
(i) In the given question, 40,000 equity shareholders of Class 2 have
given their consent in writing for the variation.
Since, 80% (40,000/ 50,000) of the shareholders have given the
consent, the company can change the rights of Class 2
shareholders provided such change in the rights of Class 2
shareholders is not affecting the rights of any other class of
shareholders i.e. Class 1 shareholders in this case.
(ii) Total number of dissenting shareholders= 50,000- 40,000= 10,000.
Minimum number of shareholders who may apply to the Tribunal
and then variation shall not take effect unless and until it is
confirmed by the Tribunal= 10% of 50,000=5,000.
In the given question, since less than 5,000 (here 4,500)
shareholders are intending to apply to Tribunal, hence, they cannot
apply.
(b) 1. Provisions of section 128 of the Companies Act, 2013, requires
every company to prepare and keep the books of account and other 
relevant books and papers and financial statements at its 
registered office.  
It also provides that all or any of the books of account may be kept 
at such other place in India as the Board of directors may decide. 
Where such a decision is taken by the Board, the company shall 
within seven days thereof file with the registrar a notice in writing 
as per rule 2A of the Companies (Accounts) Rules, 2014 in form 
AOC-5 giving full address of that other place. 
Thus, in the given case, the books of accounts of BBQ Ltd. should 
be prepared and maintained at registered office in Hyderabad. 
However, the same can be maintained at the respective branches 
if the Board of directors have decided so and intimated the registrar 
a notice in writing within 7 days thereof giving full address of that 
other place (i.e. other than the registered office). 
Hence, objection of Mr. Naveen is valid as intimation to registrar is 
not specified in the question. 
2. Where a company has a branch office in or outside India, it shall
be deemed to have complied with the requisite provisions of section
128(1) if- 
a. Proper books of account relating to the transactions effected
at the branch office are kept at that office, and 
421
b. Proper summarised returns are sent on periodical basis by
branch office to the company at its registered office or other
place.
As per Rule 4(1) of the Companies (Accounts) Rules, 2014, the 
summarized returns of the books of account of the company kept 
and maintained outside India shall be sent to the registered office 
at quarterly intervals, which shall be kept and maintained at the 
registered office of the company and kept open to directors for 
inspection. 
Since, London office was sending summarized returns to the 
registered office in Hyderabad on quarterly basis, which is as per 
the requirement of law, hence, the objection of Mr. Naveen is 
invalid.  
(c) According to section 2(v) of the Foreign Exchange Management Act,
1999, “Person resident in India” means a person residing in India for
more than 182 days during the course of the preceding financial year but
does not include a person who has gone out of India or who stays outside
India, for or on taking up employment besides with the other specified
purposes, outside India.
(i) In the given question, Mr. L will be treated as a person resident
outside from 2.4.2024 till the time he works in Jeff Fashion Ltd. in
Paris, as he has gone out of India for or on taking up employment
outside India.
His return to India for 10 days to attend a family function, will not
alter his residential status.
(ii) Mr. L will be treated as a person resident in India from the day he
joins employment in India (after arriving on 30.4.2024).
2. (a) (i) Rule 14 (1) of the Companies (Prospectus and Allotment of
Securities) Rules, 2014, requires prior approval of the shareholders 
of the company, by a special resolution for each of the private 
placement offers or invitations.  
Provided further that this sub-rule shall not apply in case of offer or 
invitation for non-convertible debentures, where the proposed 
amount to be raised through such offer or invitation does not 
exceed the limit as specified in clause (c) of sub-section (1) of 
section 180 in such cases relevant Board resolution under clause 
(c) of sub-section (3) of section 179 would be adequate.
Provided also that in case of offer or invitation for non-convertible 
debentures, where the proposed amount to be raised through such 
offer or invitation exceeds the limit as specified in clause (c) of sub-
section (1) of section 180, it shall be sufficient if the company 
passes a previous special resolution only once in a year for all the 
offers or invitations for such debentures during the year. 
422
Thus, based on above, the resolution will be passed. 
As per section 42(2) of the Companies Act, 2013, a private 
placement shall be made only to a select group of persons who 
have been identified by the Board, whose number shall not exceed 
50 or such higher number as may be prescribed, in a financial year. 
Rule 14 (2) of the Companies (Prospectus and Allotment of 
Securities) Rules, 2014 has prescribed ‘an offer or invitation to 
subscribe securities under private placement shall not be made to 
persons more than two hundred (200) in the aggregate in a financial 
year’. 
Provided that any offer or invitation made to Qualified Institutional 
Buyers and Employees of the company being offered under a 
scheme of ESOP under section 62(1)(b) shall not be considered 
while calculating the limit of two hundred persons. 
As per rule 14(7), NBFCs which are registered with the RBI and 
Housing Finance Companies which are registered with the National 
Housing Bank; if they are complying with any regulations made by 
the RBI or National Housing Bank in respect of offer or invitation to 
be issued on private placement basis, then need not to comply with 
the rule 14(2) above. 
Thus, based on above, the maximum number of persons to whom 
an offer by private placement in a financial year will be determined. 
(ii) As per section 42(6) of the Companies Act, 2013 provides that a
company making an offer or invitation under private placement
shall allot its securities within sixty days from the date of receipt of
the application money.
If company fails to make allotment within 60 days, then repayment
of the application money to the subscribers shall be made within
fifteen days from the expiry of sixty days and if the company fails
to repay the application money within the aforesaid period, it shall
be liable to repay that money with interest at the rate of twelve per
cent per annum from the expiry of the sixtieth day.
(iii) Company shall not utilise monies raised through private placement
unless allotment is made and the return of allotment is filed with the
Registrar in accordance with section 42(8). The return of allotment
shall be filed with the Registrar within 15 days from the date of the
allotment under section 42.
Hence, it can utilize the money thus received once the return has
been filled with the Registrar.
(b) (i) As per the Companies Act, 2013, in case of joint shareholders, they
must concur in voting unless the articles provide to the contrary. 
As per Regulation 52 of Table F, 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. The joint-holders have a right to instruct the company 
423
as to the order in which their names shall appear in the register of 
members.  
Accordingly, in case of Mr. M and Mr. P, it is to be seen as to whose 
name appears first in the register of members; and then to decide 
whether the vote is cast in favour of resolution or against it.   
(ii) According to section 76 (1) of the Companies Act, 2013, an “eligible
company” means a public company, having a net worth of not less
than one hundred crore rupees or a turnover of not less than five
hundred crore rupees and which has obtained the prior consent of
the company in general meeting by means of a special resolution
and also filed the said resolution with the Registrar of Companies
before making any invitation to the public for acceptance of
deposits.
Okara Limited is having net worth of ` 110 crore. Hence, it falls in
the category of ‘eligible company’ and thus can accept the deposits
from public.
(c) According to section 16 of the General Clauses Act, 1897, the authority
having for the time being power to make the appointment shall also have
power to suspend or dismiss any person appointed whether by itself or
any other authority in exercise of that power.
In the given question, Mr. Sharad was granted authorization to appoint
the said employees. This implies (in terms of the General Clauses Act,
1897) that he also had the power to dismiss or suspend these
employees. Hence, Mr. Suresh’s argument is not valid.
3. (a) Pre-requisites for issue of bonus shares
As per section 63(2) of the Companies Act, 2013, no company shall 
capitalise its profits or reserves for the purpose of issuing fully paid-up 
bonus shares, unless: 
a. it is authorised by its Articles,
b. it has on the recommendation of the Board, been authorised in the
general meeting of the company.
c. it has not defaulted in payment of interest or principal in respect of
fixed deposits or debt securities issued by it.
d. it has not defaulted in respect of the payment of statutory dues of
the employees, such as, contribution to provident fund, gratuity and
bonus.
e. the partly paid-up shares, if any outstanding on the date of
allotment, are made fully paid-up.
f. it complies with such conditions as prescribed by Rule 14 of the
Companies (Share capital and debenture) Rules, 2014, that a
company which has once announced the decision of its Board
recommending a bonus issue, shall not subsequently withdraw the
same.
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