CSP062003

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(Guideline Answers)
INTERMEDIATE EXAMINATION
JUNE 2003
Time allowed : 3 hours Maximum marks : 100
NOTE : Answer SIX question including Question No. 1 which is COMPULSORY.
Question 1
Draft specimen resolutions for transacting the following items of business

indicating the kind of meeting at which each resolution is to be passed and the type
of resolution required for:
i. alteration of the objects clause.

ii. disposal of forfeited shares.
iii. declaration of final dividend where an interim dividend for the year
has been paid.
iv. making final call on shares on which 80% money was collected at the
time of issue. (5 marks each)
Answer 1(i)
Alteration of the objects clause
Kind of Meeting: General Meeting
Type of Resolution: Special Resolution
“RESOLVED that pursuant to the provisions of Section 17 of the Companies

Act, 1956, the objects clause of the Memorandum of Association of the company
be altered by adding the following new Clause 3(b) after the existing Clause 3(a)
thereof:
“3(b) To carry on the business of purchase, sale, manufacture and otherwise deal
in all kinds of oil, petroleum oil and lubricants and also liquid and solid
hydrocarbon and all products thereof.”
RESOLVED Further that the existing Clauses 3(b), 3(c) and 3(d) be re-numbered
as Clauses 3(c), 3(d) and 3(e) respectively.”
Answer 1(ii)
Disposal of forfeited shares
Kind of Meeting: Board Meeting
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Type of Resolution: Resolution by simple majority
“RESOLVED that ______equity shares of Rs. 10 each, now forfeited and bearing
consecutive numbers from _____________ to ___________ (both inclusive) be
allotted to Shri __________________ who has applied for the shares upon
payment of full face value of such shares, which payment has already been
tendered along with the application and be accordingly transferred to Mr.
______________ and a fresh certificate for ____________equity shares, credited
with Rs. 10/- paid-up per share be issued to Shri _________.”
Answer 1(iii)
Declaration of final dividend where an interim dividend for the year has been
paid
Kind of Meeting: General Meeting
Type of Resolution: Ordinary Resolution
“RESOLVED that a final dividend of ________ per cent absorbing Rs.

______________(in addition to the interim dividend of ___________ per cent
paid during the year, making a total of ______________ per cent for the year) be
and is hereby declared out of the current profits for the year ended _______ on
the equity shares of the company and the same be paid to those shareholders
whose names appear on the register of members as on _____________.
Answer 1(iv)
Making final call on shares on which 80% money was collected at the time of
issue
Kind of Meeting: Board Meeting
Type of Resolution: Resolution by simple majority
“RESOLVED that the final call of Rs. ____ per equity share on _________
equity shares on which Rs. _______ per share has been paid-up be and is hereby
made on all holders of equity shares thereof payable on or before _____________
to the company’s Banker namely _____________.
RESOLVED Further that the Secretary of the company be and is hereby

authorized to issue call notice to the members and make necessary arrangement
with the said Bankers for the collection of call money and that in the case of non-
payment of call money on or before the said date, interest @ ______ per annum
be charged from such members.”
Question 2
Explain the legal position in the following circumstances:
i. Harsh (Pvt.) Ltd. was incorporated on 1st January, 2002. Later on it

was observed that all the signatures on the memorandum of
association filed with the Registrar of Companies were forged. Is the

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incorporation of the company valid? (4 marks)

ii. Anant Ltd., a public company, is having paid up share capital of Rs. 20
crore and free reserves amounting to Rs. 10 crore. The Board of
directors made a loan of Rs. 15 crore to a body corporate. Has the
company violated any provision of the Companies Act, 1956? (4
marks)
iii. X (aged 52 years) and Y (aged 60 years) were appointed at the annual
general meeting as directors of ABC Ltd. on the same day. At the next
annual general meeting, one director is liable for retirement by
rotation under Section 256 of the Companies Act, 1956. The Board
seeks your advice as to who should retire. Advise. (4 marks)
iv. Only two members were personally present at an adjourned general
meeting of a public limited company. Is the meeting valid? (4 marks)
Answer 2(i)
Section 35 of the Companies Act, 1956 states that a certificate of incorporation

given by the Registrar in respect of any association shall be conclusive evidence
that all the requirements of the Act have been complied with in respect of
registration and matters precedent and incidental thereto and that the association
is a company authorized to be registered and duly registered under the Act.
Accordingly, if all the signatures on the memorandum of association were found
to be forged, the certificate would nevertheless be conclusive evidence of the
incorporation and the forgery of the signatures would not affect the status and
existence of a company as a legal person. Thus in the instant case the
incorporation of Harsh (Pvt.) Ltd. is valid.
Answer 2(ii)
Section 372A(1)(a) of the Companies Act, 1956 provides that no company shall,
directly or indirectly, make any loan to any other body corporate exceeding sixty
per cent of its paid-up share capital and free reserves or hundred per cent of its
free reserves, whichever is more. Provided that where the aggregate of loans etc,
along with loan etc. proposed to be made or given by the Board exceeds the
aforesaid limits, no loan etc. shall be made unless previously authorized by a
special resolution passed in a general meeting. Further sub-section (2) of said
section disallows making of inter-corporate loans etc. by the Board of directors of
a company unless the resolution sanctioning the loan is passed at a meeting of the
Board with the consent of all the directors present at the meeting.
In the given case 60% of the paid-up capital and free reserves of Anant Ltd.
would amount to Rs. 18 crores. However, the Board has made a loan of Rs. 15
crores to a body corporate, which does not exceed the ceiling specified in the said
section. Thus the company has not violated any provision of the Companies Act,
1956 provided that the amount of loan had been approved by the Board by means
of passing unanimous resolution at the Board meeting.
Answer 2(iii)
Section 256(2) of the Companies Act, 1956, provides that the directors to retire
by rotation at every annual general meeting shall be those who have been longest
in office since their last appointment, but as between persons who became
directors on the same day, those who are to retire shall, in default of and subject

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to any agreement among themselves, be determined by lot. Hence, seniority in

age is not the criterion. Thus in given case, retirement may be either by mutual
consent or by draw of lots.
Answer 2(iv)
In terms of Section 174(1) of the Companies Act, 1956 unless the articles of the
company provide for a large number, five members personally present in the case
of public company shall be the quorum for a meeting of the company. Sub-
section (5) of said Section provides that if a meeting is adjourned for want of
quorum and at the adjourned meeting also, a quorum is not present within half an
hour from the time appointed for holding the meeting, the members present shall
be a quorum.
In the given case the reasons for adjournment of original general meeting are not
specified. Therefore if the meeting was adjourned due to lack of quorum then in
the adjourned general meeting two members personally present shall be quorum
for the meeting. However if the original meeting was adjourned due to any other
reason and not due to want of quorum, two members personally present will not
form the quorum in case of public company.
Question 3
Draft the minutes of the Board meeting of a company in which the accounts for
the financial year were considered. Assume any other four items of business.(16
marks)
Answer 3
Minutes of the Board Meeting of X Ltd., held on 20th May 2003 at 11.00 A.M. at
New Delhi.
Present
1. Mr. A, Chairman
2. Mr. B, Managing Director
3. Mr. C, Director
4. Mr. D, Director
5. Mr. E, Director
In attendance Mr. H, Secretary
Mr. A, Chairman of the Board took the chair.
1. Leave of Absence
Leave of absence was granted to Mr. P and Mr. Q, directors of the

company.
2. Confirmation of the Minutes of Board meeting held on ______.
The minutes of the Board meeting held on ___________, a copy of

which was circulated to all the Directors were taken as read and

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confirmed and then signed by the Chairman in token thereof.
3. Consideration of Annual accounts
The Balance sheet as at 31st March 2003 and the Profit and Loss
Account for the year ended as on that date as placed before the
meeting were considered and adopted by the Board. After due
deliberations the following resolution was passed:
“RESOLVED that the draft balance-sheet of the company as at 31st

March, 2003 and the Profit and Loss account for the year ended on
that date as placed at the meeting be and are hereby approved and
that the same be signed by Mr. B, Managing Director, Mr. C,
Director and Mr. H, Secretary of the company and that the same be
forwarded to the auditors of the company for their report thereon.”
4. Approval of Directors’ Report
The draft of the Directors’ Report placed on the table was considered
and approved. In this connection the following resolution was
passed:
“RESOLVED that the draft Directors’ Report for the year ended 31st
March 2003 as placed before the Board, be and is hereby approved
and Mr. A, Chairman be and is hereby authorized to sign the same
on the behalf of Board of Directors.”
5. Appointment of Alternate Director
The Board was informed that Shri E, director of the company will be
away to U.K. for a period of four months that is, from ____ to
_________ and that during his absence Shri D be appointed as an
alternate director in his place under article_________ of the Articles
of Association. In this connection the following resolution was
passed:
“RESOLVED that pursuant to Section 313 of the Companies Act,
1956 read with article _______ of the Articles of Association of the
company Shri D be and is hereby appointed as an alternate director
in place of Shri E and allowed to attend the Board meetings in his
absence.
6. Next Board meeting
The next meeting of Board will be held on _____________ at New
Delhi.
Vote of Thanks
There being no other item on the agenda, the meeting concluded with
a vote of thanks to the Chair.
Dated _________________
CHAIRMAN
Question 4
a. Write short notes on-

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i. Investor education and protection fund; and

ii. Statutory books and registers. (3 marks each)
b. At a Board meeting of Aapur Ltd., 7 out of 9 directors were interested in one

particular item of agenda. Can they discuss the item and take decision.
c. State the procedure for approving contracts in which directors are interested.(2
marks)
d. The secretary of a listed company while sending notices to all members and other
concerned in respect of a special resolution to be proposed at the annual(6 marks)
e. general meeting, inadvertently omitted to send notice to few members. The
resolution was passed at the annual general meeting. Discuss whether the
resolution is valid or not. (2 marks)
Answer 4(a)(i)
Investor Education and Protection Fund
Section 205C of the Companies Act, 1956 empowers the Central Government to
establish a Fund to be called the ‘Investor Education and Protection Fund’. There
shall be credited to the Fund the following amounts, namely:
a. amounts in the unpaid dividend accounts of companies;

b. the application moneys received by companies for allotment of any
securities and due for refund;
c. matured deposits with companies;
d. matured debentures with companies;
e. the interest accrued on the amounts referred to in clauses (a) to (d);
f. grants and donations given to the Fund by the Central Government, State
Governments, companies or any other institutions for the purposes of the
Fund; and
g. the interest or other income received out of the investments made from the
Fund.
Provided that no such amounts referred to in clauses (a) to (d) shall form part of
the Fund unless such amounts have remained unclaimed and unpaid for a period
of seven years from the date they became due for payment.
Answer 4(a)(ii)
Statutory books and registers
The Companies Act, 1956 requires a company to keep at its registered office
certain books known as statutory books and also to keep copies of certain
documents and deeds. The statutory books and registers required to be
maintained by company are as follows:
1. Register of fixed deposits;

2. Register of charges;
3. Register of Members;
4. Register of Debenture holders;
5. Minutes book containing minutes of proceedings of general meetings;

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6. Minutes book containing minutes of proceedings of Board meetings;

7. Register of directors, managing director, manger and secretary;
8. Register of directors’ shareholdings;
9. Register of securities bought back;
10. Register of contracts with companies/firms in which directors are
interested.
Answer 4(b)
According to Section 287(2) of the Companies Act, 1956, the quorum for
meeting of the Board of directors of a company shall be one-third of its total
strength (any fraction contained in that one-third being rounded off as one) or
two directors, whichever is higher. As per proviso to said section where at any
time the number of interested directors exceeds or is equal to two-thirds of the
total strength, the number of remaining directors, that is to say, the number of
directors who are not interested, present at the meeting being not less than two
shall be the quorum during such time.
In the given case, of the nine directors seven directors are interested. This number
is exceeding two-third of the total strength, which is nine. Assuming that the total
strength of directors is nine, the presence of two directors not interested in the
agenda shall form a quorum and hence the meeting can be validly held.
Answer 4(c)
The procedure for approving contracts in which directors are interested is as

follows:
1. Convene Board meeting after giving notice to all directors of the company
as per Section 286 and place the terms of contract for consideration.
2. Obtain the previous approval of Central Govt., if the paid-up share capital
of the company is not less than Rs. one crore. For such purpose make an
application in Form No. 24A and attach the following documents to it:
i. A certified true copy of the Board resolution approving the contract;
ii. A certified true copy of the agreement containing particulars of the
contract entered into;
iii. A certified true copy of Memorandum and Articles of Association of
the company;
iv. A certified true copy of latest audited balance-sheet and Directors’
and Auditors’ Reports.
3. If a contract is entered into without the consent of Board in case of urgent
necessity then such consent must be obtained at a meeting
within three months of date on which it was entered.
4. Make necessary entries in the register to be kept for this purpose in
accordance with Section 301 of the Act.
Answer 4(d)
Section 172 of the Companies Act, 1956 requires that proper notice must be
served on all the persons entitled to receive such notice. Deliberate omission to
give notice even to a single member entitled to notice shall invalidate the
proceedings of the meeting. However sub-section (3) of Section 172 provides that
the accidental omission to give notice to, or the non-receipt of notice by, any

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member or other person to whom it should be given shall not invalidate the
proceedings at the meeting. Thus in the present case the resolution shall be valid
and binding since the omission is stated to be inadvertent.
Question 5
Draft a notice along with explanatory statement for annual general meeting
of a public limited company to transact, in addition to the normal items, the
following business for according consent/authority to the Board of directors
to-
i. appoint a managing director in terms of Schedule XIII of the

Companies Act, 1956; and
ii. further issue of shares to the persons other than the existing
shareholders.(16 marks)
Answer 5
Notice for Annual General Meeting
ABC Limited
(Registered Office…………………..……………….)
Notice is hereby given that ……Annual General meeting of the Members of the
Company shall be held at…………(Venue) on.…………..(Date) at.…………..
(Time) to transact the following Businesses:
Ordinary Business:
1. To consider and adopt the Balance Sheet as at……………..

(date) and Profit and Loss Account for the year ended on that
date together with the Report of Directors and Auditors’
Report thereon.
2. To declare dividend.
3. To appoint a director in place of Mr. Y, who retires by rotation
and being eligible offers himself for reappointment.
4. To appoint auditors and fix their remuneration.
Special Business:
5. To consider and if thought fit to pass with or without

modification(s) the following resolution as “ordinary
resolution”.
6. “RESOLVED that Mr. P who fulfills the conditions specified
in Part I, II and Part III of Schedule XIII to the Companies
Act, 1956, be and is hereby appointed as the Managing
Director of the company for a period of five years effective
from _____________and that he may be paid remuneration by
way of salary, commission and perquisites in accordance with
Part II of Schedule XIII of the Act.”
7. To consider and if thought fit to pass with or without
modification(s) the following resolution as “Special

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Resolution”:
“RESOLVED that pursuant to Section 81(1A) of the Companies Act, 1956 and
other applicable provisions, if any, and subject to grant of statutory permissions
and approvals, as may be required, the consent of the company be and is hereby
accorded to the Board of Directors of the company to further issue and allot upto
______ Equity Shares of Rs.10/- each aggregating Rs. ___________ for cash at
par to the public in order to finance the capital cost of the new project at______
(Place) of the Company.
RESOLVED FURTHER that the Board of Directors be and is hereby authorised

to take such steps as may be required and to do all acts, deeds and things as may
be necessary to implement this resolution”.
By Order of the Board

Company Secretary
Date:
Place:
Notes:
1. A MEMBER WHO IS ENTITLED TO ATTEND AND VOTE AT THE

METING IS ALSO ENTITLED TO APPOINT A PROXY TO ATTEND
AND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT
BE A MEMBER OF THE COMPANY. Proxy in order to be effective must
be deposited with the Company not less than 48 hours before the meeting.
2. The share transfer books of the company and register of members shall
remain closed w.e.f…………….to …………….(both days inclusive).
3. The members are requested to notify any change in their address
immediately.
4. The Explanatory Statement pursuant to Section 173(2) of the Companies
Act, 1956 is annexed hereto.
Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956
Item No.5
In view of the increasing activities and the future expansion programme of the
company, it is proposed to appoint Mr. P as Managing Director of the Company.
Mr. P is a fellow member of ICSI and ICAI. He has extensive experience in
general and financial management of corporate bodies. He is very well versed in
all aspects of production and technical administration. Mr. P has never been
imprisoned or fined under any of Acts specified in Part I of Schedule XIII to the
Act. He is 45 years old and is neither a managing director nor a whole-time
director or manager in any other company. He is therefore, entitled to be
appointed by a resolution passed in the meeting and without the approval of
Central Government. The remuneration to be paid to Mr. P will be in conformity
with Part II of Schedule XIII. Copy of the terms and conditions governing the
appointment is available for inspection by members during business hours on any
working day before the date of Annual General meeting. None of the directors of
your company is interested in the aforesaid resolution. Your directors recommend
the resolution for your approval.

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Item No.6
In order to meet the cost of capital of the new project at________(Place) of the
Company, it is proposed to raise additional capital to the tune of Rs.________
from the public by issue of____________ Equity Shares of Rs.10/- each for cash
at par. In terms of the provisions of Section 81(1A) of the Companies Act, 1956,
it is required to obtain approval of the Members in General Meeting to further
issue and allot Equity Shares to the public other than the shareholders on rights
basis.
The proposed resolution is, therefore, placed before the members to consider and
if though fit, to pass with or without modification(s) to authorize the Board of
Directors of the Company in this regard. Your Directors recommend the
resolution for your approval. None of the Directors is interested in the resolution.
Question 6
a. Discuss the procedure for increase in authorised share (4 marks)

capital.
b. Discuss the procedure for making a complaint to the
Company Law Board for non-repayment of deposits. (4 marks)
c. Discuss the procedure for condonation of delay by the
central government in relation to filing of various
(6 marks)
documents with the Registrar of Companies.
d. Discuss the procedure for transmission of shares to
(4 marks)
nominee.
Answer 6(a)
The procedure for increase in authorized share capital is as follows:
1. Ensure that Articles of Association of the company contain a provision

empowering it to increase its authorized share capital. Otherwise take steps
to alter the Articles accordingly.
2. Convene Board meeting after issuing notices to directors of the company
as per Section 286 to decide about the increase in authorized share capital
and to fix up the date, time, place for convening a general meeting for the
same.
3. If shares of company are listed with any of the recognised stock exchange,
then immediately after the Board meeting intimate to the concerned stock
exchange the particulars of proposed increase in the authorized capital.
4. Issue notices in writing at least twenty-one days before the date of general
meeting along with suitable Explanatory Statement.
5. Hold the general meeting and pass resolution for increasing share capital of
the company.
6. In case resolution passed is special resolution, file the same in Form No. 23
with ROC within thirty days of passing of special resolution.
7. File notice of increase in capital in Form No. 5 with the concerned ROC.
8. Make necessary changes in every copy of Memorandum and Articles of
Association.
Answer 6(b)

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The procedure for making complaint to the Company Law Board for non-
repayment of deposits is as follows:
1. Make an application in duplicate in Form No. 4 of the CLB, Regulations

1991.
2. Attach to the application a demand draft of Rs. 50/- as application fee and
copy of the deposit receipt, copy of the correspondence exchanged with the
company.
3. Affix court fee stamps of the requisite value on the original applications
before filing.
Answer 6(c)
The procedure for condonation of delay by the Central Govt. in relation to filing
of various documents with the Registrar of Companies is as follows:
1. Convene Board meeting and pass resolution for seeking condonation of

delay in filing of documents with the ROC.
2. Submit an application to the Central Govt. on a plain paper preferably on
the letter-head of the company giving the detailed description of the
document for which the condonation is asked for and reasons for such
delay and requesting for condonation of the said delay.
3. The application should be accompanied by a copy of Board resolution
seeking condonation of delay, latest audited Balance-sheet and Profit and
Loss Account, certified copy of MOA and AOA and filing fees.
4. On receipt of such application the Central Government may, for reasons to
be recorded in writing, condone the delay.
Answer 6(d)
The procedure for transmission of shares to nominee is as follows ;
1. The Company Secretary shall keep and maintain a register of nominations

received from its shareholders. On receipt of nomination in the prescribed
Form No.2B the company secretary shall verify the details filled in
Nomination Form and also tally the signatures of the shareholders with the
specimen available with the company. On verifying the particulars, the
same shall be recorded in the register of nominations and/or Register of
Members.
2. On coming to know about death of shareholder the Company Secretary
should check whether the deceased shareholder had submitted nomination
form and the same was valid on the date of death. If so, the company
secretary should send a notice to the nominee to elect either to be
registered holders thereof or to transfer the shares as the deceased holder
could have made.
3. The company may also receive a notice from the nominee to elect either to
be registered holder or to transfer the shares as the deceased could have
done, along with required documents i.e., death certificates, share
certificates and an application containing full particulars of the nominee
such as name in full, father’s/husband’s name, occupation, age, address in
full, specimen signature duly attested by the magistrate/notary public or
Banker of the nominee with Bank account number etc.
4. The company can act upon such notice after having been satisfied as to the

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request of the nominee as shareholder in place of the deceased as elected

by him or if the nominee has elected to transfer the shares of the deceased,
the company can register the transfer of such shares of the deceased to the
transferee(s).
Question 7
a. Anurag, who is not a member of the company, wants to inspect the

register of directors. Can the company refuse inspection? On refusal,
has Anurag any remedy? (4 marks)
b. Amar, a director of a company, sends his friend Sunil to inspect the
accounts of the company with an authority letter to inspect the
accounts of the company. Can he be allowed to take inspection? (4
marks)
c. Smart, an officer of the Securities and Exchange Board of India,
reaches the registered office of the company for inspection of the books
of account without any prior notice or appointment. Can the officer be
allowed to take inspection? (4 marks)
d. A shareholder wants to inspect the books of account of the company.
Can he do so? (4 marks)
Answer 7(a)
In terms of Section 304 of the Companies Act, 1956, the register of directors
shall be open to the inspection of any member of the company without charge
and of any other person on payment of rupee one for each inspection during
business hours subject to such reasonable restrictions as the company may by its
articles or in general meeting impose, so that not less than two hours in each day
are allowed for inspection. In the event of refusal the Company Law Board may,
by order, compel an immediate inspection of the register. Thus in the given case a
company cannot refuse the inspection of register of directors by Anurag. On
refusal, Anurag may apply to the Company Law Board and the Company Law
Board may by order compel an immediate inspection of the register.
Answer 7(b)
Section 209(4) of the Companies Act, 1956 stipulates that the books of account
and other books and papers shall be open to inspection by any director during
business hours.
In Vakharia v. Supreme General Film Exchange Limited (1948) 18 Com Case 34,
it was held that a director can inspect the accounts either personally or through an
agent provided that there is no reasonable objection to the person chosen and the
agent undertakes not to use the information obtained by him for any purpose
other than the purpose of his principal. However in the aforesaid case inspection
through an agent was allowed because of the physical inability of the director to
inspect books of account personally.
In the case stated in the question Sunil, the authorized representative of Amar, a
director of the company, may be allowed inspection of books of accounts of the
company provided that there is no reasonable objection by the company in this
regard and Sunil undertakes not to use the information obtained by him for any
purpose other than the purpose of Amar.

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Answer 7(c)
As pr Section 209A(1)(iii) of the Companies Act, 1956 the books of account and
other books and papers of every company shall be open to inspection during
business hours by such officers of SEBI as may be authorized by it. However,
inspection by the officers of SEBI shall be made in respect of matters specified in
Section 55A of the Act, in so far as they relate to issue and transfer of securities
or non-payment of dividend. It is further provided that such inspection may be
made without giving any previous notice to the company or any officer thereof.
Thus in the given case Smart, an officer of the SEBI, can be allowed to take
inspection of the books of account only in respect of matters specified in Section
55A of the Act.
Answer 7(d)
Neither Section 209 or Section 209A of the Companies Act, 1956 gives any
statutory right of inspection of books of account to a shareholder. However,
Regulation 95(2) of Table A of Schedule I to the Act provides that no member
(not being a director) shall have any right of inspecting any accounts books or
document of the company except as conferred by law or authorized by Board or
by the company in general meeting. Thus in the absence of any such right in the
articles, a shareholder has no right to inspect the books of account of the
company.
Question 8
State, with reasons, whether the following statements are true or false:
(3 marks)
ii. Minimum five persons are required for formation of a public
(3 marks)
company.
iii. A company having profits must declare at least 10% dividend. (3 marks)
iv. Proxy has no right to speak. (3 marks)
v. A chairman has right of casting vote. (4 marks)
Answer 8(i)
The statement is false. The Companies Act, 1956 does not contain any provision
making it compulsory for director to be a member of the company. However,
where the articles of a company provide for minimum share qualification of
directors then in accordance with Section 270 of the Act, each director must
obtain his qualification shares within two months after his appointment as
director.
Answer 8(ii)
The statement is false. As per Section 12 of the Companies Act, 1956 any seven
or more persons, associated for any lawful purpose may, by subscribing their
names to a memorandum of association and otherwise complying with the
requirements of this Act in respect of registration, form an incorporated
company, with or without limited liability.
Answer 8(iii)

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The statement is false. The Companies Act, 1956 does not contain any provision
requiring a company to declare dividend. The Board of Directors may or may not
recommend dividend. The shareholders cannot compel the company by any
process of law to declare a dividend.
Answer 8(iv)
The statement is true. As per Section 176(1) of the Companies Act, 1956, any
member of a company entitled to attend and vote at a meeting of the company
shall be entitled to appoint another person (whether member or not) as his proxy
to attend and vote instead of himself but a proxy so appointed shall not have any
right to speak at the meeting.
Answer 8(v)
The statement is true. As per Regulation 54 of Table A of Schedule I to the

Companies Act, 1956 in the case of equality of votes, whether on show of hands
or on a poll, the Chairman of the meeting at which the show of hands takes place
or at which the poll is demanded shall be entitled to a second or casting vote.

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CSP062003

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COMPANY

Please purchase SECRETARIAL

COMPANY SECRETARIAL PRACTICE

Time allowed : 3 hours Maximum marks : 100

NOTE : Answer SIX question including Question No. 1 which is COMPULSORY.

Draft specimen resolutions for transacting the following items of business

i. alteration of the objects clause.

Alteration of the objects clause

Kind of Meeting: General Meeting

Type of Resolution: Special Resolution

“RESOLVED that pursuant to the provisions of Section 17 of the Companies

Disposal of forfeited shares

Kind of Meeting: Board Meeting

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Type of Resolution: Resolution by simple majority

Kind of Meeting: General Meeting

Type of Resolution: Ordinary Resolution

“RESOLVED that a final dividend of ________ per cent absorbing Rs.

Kind of Meeting: Board Meeting

Type of Resolution: Resolution by simple majority

RESOLVED Further that the Secretary of the company be and is hereby

Explain the legal position in the following circumstances:

i. Harsh (Pvt.) Ltd. was incorporated on 1st January, 2002. Later on it

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incorporation of the company valid? (4 marks)

Section 35 of the Companies Act, 1956 states that a certificate of incorporation

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to any agreement among themselves, be determined by lot. Hence, seniority in

In attendance Mr. H, Secretary

Mr. A, Chairman of the Board took the chair.

Leave of absence was granted to Mr. P and Mr. Q, directors of the

2. Confirmation of the Minutes of Board meeting held on ______.

The minutes of the Board meeting held on ___________, a copy of

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confirmed and then signed by the Chairman in token thereof.

3. Consideration of Annual accounts

“RESOLVED that the draft balance-sheet of the company as at 31st

4. Approval of Directors’ Report

a. Write short notes on-

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i. Investor education and protection fund; and

b. At a Board meeting of Aapur Ltd., 7 out of 9 directors were interested in one

Investor Education and Protection Fund

a. amounts in the unpaid dividend accounts of companies;

Statutory books and registers

1. Register of fixed deposits;

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6. Minutes book containing minutes of proceedings of Board meetings;

The procedure for approving contracts in which directors are interested is as

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i. appoint a managing director in terms of Schedule XIII of the

Notice for Annual General Meeting

1. To consider and adopt the Balance Sheet as at……………..

5. To consider and if thought fit to pass with or without

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RESOLVED FURTHER that the Board of Directors be and is hereby authorised

By Order of the Board

1. A MEMBER WHO IS ENTITLED TO ATTEND AND VOTE AT THE

Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956

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a. Discuss the procedure for increase in authorised share (4 marks)

The procedure for increase in authorized share capital is as follows:

1. Ensure that Articles of Association of the company contain a provision

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