ASSIGNMENT OF COMPANY

LAW

SUBMITTED TO SUBMITTED
BY:-
ABHISHEK DUTTA CHANDAN
KUMAR ROY
CLASS-
BBA
ROLL
NO:-RT1909A03
Case 1:
The board of directors of F.G. Limited has the following proposals to be discussed at the board’s
meeting:

(i) Appointment of “A” relative of one of the directors, on a salary of Rs. 25,000 p.m, as a
chief accountant of the company

(ii) To give guarantee to state bank of India on behalf of AB private ltd. in which a director
of the company is also a director

(iii) To borrow Rs. 50 lakhs from state bank by mortgaging the fixed assets of the
company. The company’s paid –up capital is Rs. 25 lakhs and it has no reserves.

Advice the board in respect of above proposals in the light of provisions of the companies
Act.

(I)Appointment of “A” relative of one of the directors, on a salary of Rs. 25,000 p.m, as a
chief accountant of the company can be appointed but there must not be any personal
interest by ‘A’ on his relatives salaries or any other case.

(II) To give guarantee to state bank of India on behalf of AB private ltd. in which a
director of the company is also a director the statement is absolutely valid and can be
guaranteed on the behalf of AB private ltd.

(III) If the company has no reserve than the bank can’t pass the loan acc. To the law but
in special case it may possible if the board of directors take their personally
responsibility, than onlythe company can borrow Rs. 50 lakhs from state bank by
mortgaging the fixed assets of the company. The company’s paid –up capital is Rs. 25
lakhs and it has no reserves.

Answer: 2)
As per the sec 260, Provided that such additional directors shall hold office only up to the date of
the next annual general meeting of the company : Provided further that the number of the
directors and additional directors together shall not exceed the maximum strength fixed for the
Board by the articles.
Answer: 3)

As per the sec 397, Any member of a company who complain that the affairs of the
company are being conducted in a manner prejudicial to public interest or in a manner
oppressive to any member or members (including any one or more of themselves) may apply to
the [Tribunal] for an order under this section, provided such members have a right so to apply in
virtue of section 399.
Answer: 4)

As per the sec 433, A company may be wound up by the Tribunal.

➢ if the company has, by special resolution, resolved that the company be wound up
by the Tribunal;

➢ if default is made in delivering the statutory report to the Registrar or in holding

the statutory meeting

➢ if the company does not commence its business within a year from its
incorporation, or suspends its business for a whole year;

➢ if the number of members is reduced, in the case of a public company, below

seven, and in the case of a private company, below two;

➢ if the company is unable to pay its debts;

➢ if the Tribunal is of the opinion that it is just and equitable that the company should
be wound up;

➢ if the company has made a default in -filing with the Registrar its balance sheet and
profit and loss account or annual return for any five consecutive financial years;

➢ if the company has acted against the interests of the sovereignty and integrity of
India, the security of the State, friendly relations with foreign States, public order,
decency or morality;

Answer:5)

As per the sec 198, he total managerial remuneration payable by a public company or
a private company which is a subsidiary of a public company, to its directors and
its manager in respect of any financial year shall not exceed eleven per cent of the net
profits of that company for that financial year computed in the manner laid down in
sections 349 except that the remuneration of the directors shall not be deducted from
the gross profits.

Answer: 6)
➢ As per the sec 275, No person to be a director of more than fifteen companies
No person to be a director of more than 15 companies.

After the commencement of this Act, no person shall, save as otherwise provided in section 276,
hold office at the same time as director in more than.15 companies.
➢ As per the sec 277, Where a person already holding the office of director in fifteen
companies is appointed, after the commencement of the Companies (Amendment)
Act, 2000, as a director of any other company, the appointment-
 (a) shall not take effect unless such person has, within fifteen days thereof, effectively
vacated his office as director in any of the companies in which he was already a director; and
(b) shall become void immediately on the expiry of the fifteen days if he has not,
before such expiry, effectively vacated his office as director in any of the other companies
aforesaid.
➢ As per the sec 279, any person who holds office, or acts, as a director of more than
[fifteen companies] in contravention of the foregoing provisions shall be punishable
with fine which may extend to fifty thousand rupees in respect or each of those
companies after the first twenty.
Answer: (7)

As per the sec, 284, A company may, by ordinary resolution, remove a director (not being a
director appointed by the Central Government in pursuance of section 408) before the expiry of
his period of office, The shareholder may remove a director before the expiry of his period of the
office by passing an ordinary resolution.

Answer:(8)

As per the sec, 402,

(a) The regulation of the conduct of the company's affairs in future;

(b) The purchase of the shares or interests of any members of the company by other
members thereof or by the company;

(b) In the case of a purchase of its shares by the company as aforesaid, the consequent
reduction of its share capital;

(c) The termination, setting aside or modification of any agreement, howsoever arrived at,
between the company on the one hand; and any of the following persons, on the other,
Viz:

➢ The managing director and any other director.

Answer: 9)
A director of a company, whose articles require the holding of share qualification, has held the
shares within the prescribed time but did not get the shares registered in his name within 2
months of his appointment. It is not in order according to the companies act 1956.

Answer: 10)

✔ As per the sec 262, In the case of a public company or a private company which is a
subsidiary of a public company, if the office of any director appointed by the company in
 general meeting is vacated before his term of office will expire in the normal course, the
resulting casual vacancy may, in default of and subject to any regulations in the articles
of the company, be filled by the Board of directors at the meeting of the Board.

✔ As per the sec, 313, The Board of directors of a company may, if so authorized by its
articles or by a resolution passed by the company in general meeting, appoint an
alternate director to act for a director (hereinafter in this section called "the original
director") during his absence for a period of not less than three months from the State in
which meetings of the Board are ordinarily held. An alternate director appointed under
sub-section (1) shall not bold office as such for a period longer than that permissible to
the original director in whose place he has been appointed and shall vacate office if and
when the original director returns to the State in which meetings of the Board are
ordinarily held.
If the term of office of the original director is determined before he so returns to the State
aforesaid, any provision for the automatic re-appointment of retiring directors in default
of another appointment shall apply to the original, and not to the alternate, director.

✔ As per the sec 260, Provided that such additional directors shall hold office only up to
the date of the next annual general meeting of the company: Provided further that the
number of the directors and additional directors together shall not exceed the maximum
strength fixed for the Board by the articles.

Answer 11)
A director may incur liability for the negligence in the exercise of his duties. There is no
statutory definition of negligence and as such each case has to be decided after due consideration
of the particular fact there of the question of to be answered in each case if he has there can be no
question of liability. It is essential in an action for negligence that the company suffers some
damage, as negligence without damage or damage without negligence is not actionable.

Answer: 12)
Mr. Banerjee is the managing director of a public limited company having a paid-up share capital
of Rs. 2 crores. He is also a director and a member of a private limited company. The public
limited company proposes to enter into a contract with the private limited company to sell to the
latter goods of the value of Rs. 5 Lakhs on credit
Answer: (13)

As per sec 284. A company may, by ordinary resolution, remove a director (not being a director
appointed by the Central Government in pursuance of section 408) before the expiry of his
period of office.

Provided that this sub-section shall not, in the case of a private company, authorize the removal
of a director holding office for life on the 1st day of; April, 1952, whether or not he is subject to
retirement under an age limit by virtue of the articles or otherwise : Provided further that nothing
contained in this sub-section shall apply where the company has availed itself of the option given
to it under section 265 to appoint not less than two-thirds of the total number of directors
according to the principle of proportional representation.

Answer: 14)
As per the section of 262. (a) In the case of a public company or a private company which is a
subsidiary of a public company, if the office of any director appointed by the company in general
meeting is vacated before his term of office will expire in the normal course, the resulting casual
vacancy may, in default of and subject to any regulations in the articles of the company, be filled
by the Board of directors at the meeting of the Board.
Any person so appointed shall hold office only up to the date up to which the director
in whose place he is appointed would have held office if it had not been vacated as
aforesaid.

Answer: (15)

1.Section 297 applies to all companies, public as well as private. However, it does not apply to
the contracts where both the parties to the contract are public companies. The section would
apply where one of the two companies (being parties to the contract) is a private company and
the other is a public company, but in such a case, it will have to be complied with by the public
company only.

2.As per Section 299, every Director of a company must disclose to its Board of Directors at a
meeting of the Board the nature of his / her interest: -

if he / she is any way, whether directly or indirectly, concerned or interested in any contract or
arrangement or proposed contract or arrangement entered into or proposed to be enter into, by or
on behalf of the company.

3. As per the Section 301, Every company shall keep one or more registers in which shall be
entered separately particulars of all contracts or arrangements to which section 297 or section
299 applies, including the following particulars to the extent they are applicable in each case,
namely.-

(a) the date of the contract or arrangement;

(b) the names of the parties thereto;

(c) the principal terms and conditions thereof,

(d) in the case of a contract to which section 297 applies or in the case of a contract or
arrangement to which sub-section (2) of section 299 applies, the date on which it was placed
before the Board;
(e) the names of the directors voting for and against the contract or arrangement and the names
of those remaining neutral.

References:
1. Elements of Company Law – Kapoor ND ( Sultan Chand house)
2. Class Note book on company law