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1 GCL & COMPANY LAW CASES SOLVED!!!!!!! on Mon 4 Oct 2010 - 23:53

anishgunchala


PLZ HELP IF ANY ONE HAVE NOTES OF GCL & COMPANY LAW CASES SOLVED... PLZ SEND ME @ [You must be registered and logged in to see this link.] Exclamation Exclamation

2 Re: GCL & COMPANY LAW CASES SOLVED!!!!!!! on Tue 5 Oct 2010 - 15:52

ANIKET

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anishgunchala wrote:PLZ HELP IF ANY ONE HAVE NOTES OF GCL & COMPANY LAW CASES SOLVED... PLZ SEND ME @ [You must be registered and logged in to see this link.] Exclamation Exclamation

DIMPLE


PLZZ PROVIDE ME D SAME NOTES...
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4 Re: GCL & COMPANY LAW CASES SOLVED!!!!!!! on Wed 6 Oct 2010 - 10:34

eva.gupta1987


plz mail me the notes on
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5 Re: GCL & COMPANY LAW CASES SOLVED!!!!!!! on Wed 6 Oct 2010 - 12:26

smartshamli14

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me too...
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6 Re: GCL & COMPANY LAW CASES SOLVED!!!!!!! on Sat 9 Oct 2010 - 11:15

vikas


PLZ HELP IF ANY ONE HAVE NOTES OF GCL & COMPANY LAW CASES SOLVED... PLZ SEND ME @ [You must be registered and logged in to see this link.]

7 Company law case laws on Mon 11 Oct 2010 - 17:40

bhomiavarun


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Practical Questions in Corporate Laws

Q.No.1. Both the shareholders of the Private Company died in a car accident. Decide whether Company’s existence also comes to an end.

Sol.: The Company’s existence is not affected by the death of its shareholders, since the Company has separate legal entity. This is clearly established in Salomon Vs. Salomon & Co. Ltd, Lee Vs. Lee Air farming Ltd & Kandoli tea Co. Ltd. cases. Further the Company has having perpetual succession.

Q.No.2. In a private Company, after the death of Mr.X entire capital of the company is held by his son Y. Decide, whether Y can continue business of the co. with single shareholder.

Sol.: In such a situation, Y can continue to carry on the business of the Company but, in accordance with the provisions of Sec.45 of the Act, if the same position continues for more than six months, then y will become personally liable for all the liabilities of the Company contracted after six months from the date he becomes only shareholder.

Q.No.3. The number of members in a public Company became reduced to six on the 10th September, 1988, the Company incurs trade debts on 11th September, 1988, 2nd February, 1989 and 17th March, 1989. How far are the remaining six members liable for the debts?

Sol.: The remaining six members are liable for the debts incurred after 6 months of the reduction in the number of members below the statutory minimum specified in Sec. 45 of the Companies Act, 1956 i.e., for debt contracted on 17th March, 1989.

Q.No.4. A public limited Company has only seven shareholders, all the shares being paid in full. All the shares of one such shareholder are sold by the court in an auction and purchased by another shareholder. The Company continues to carry on its business thereafter. Discuss the liabilities of the shareholders of the Company.

Sol.: The problem in question relates to reduction of membership below the statutory minimum. Section 12 of the Companies Act requires a public Company to have a minimum of seven members. If at any time the membership of a public Company falls below seven and it continues’ for more than six months, then according to Section 45 of the Companies Act, 1956, every such member who was aware of this fact, would be individually (personally) liable for the debts contracted after six months.
Thus, in the above problem the remaining members shall incur personal liability for the debts contracted by the Company:
a. If they continued to carry on the business of the Company with that reduced membership (i.e., 6) beyond six months period.
b. Only those members who knew this fact of reduced membership shall be liable, for instance, one of the members who was abroad and thus not aware of these developments, shall not be liable.
c. The liability shall extend only to the debts contracted after six months from the date of auction of that member’s shares.

Q.No.5. In a private limited Company it is discovered that there are, in fact, 54members. On an enquiry, it is ascertained that 6 of such members have been employees of the Company in the recent past and that they acquired their shares while they were still employees of the Company. Is it necessary to convert the Company into a public limited Company?

Sol.: As per Section 3(1)(iii), a Company to be registered as a private Company must restrict its membership to 50 only. But, however, in counting this number of 50 members, employee members and ex-employee members (i.e., those who become members while in the employment of the Company but now having retired still continue to retain membership) are to be excluded. Thus, in the given case, the Company shall continue to be a private Company. There is no need for conversion.

Q.No.6. BS & Co. Ltd. is registered as a Public Limited Company. The shareholding pattern of the Company is under.

Category
Directors & their relatives
Employees
Ex-employees (shares were allotted when they were employees)
Six couples holding shares jointly in the names of husband and wife (6 x 2)
Others
Total: 36
18
09
12
06
81

The Board of directors of the Company proposes to convert it into a private Company. Advise the Board of directors about the steps to be taken for its conversion into a private Company including reduction in the numbers of members, if necessary.

Sol.: A public limited Company may be converted into private limited Company only if the number of members is limited to 50 excluding Sec.3(1)(iii):
a. Persons who are in the employment of the Company
b. Persons who became members during the course of their employment & continue to be members even after their employment ceases.
c. Further if two or more members hold shares in a Company jointly they shall be treated as a single member.
The number of members is only 48 for this purpose as noted below:

Directors and their relatives
Joint holding treated as single
Others 36
6
6
48
Hence the Company can be converted into private limited Company.

Q.No.7. The paid up share capital of Advanced Castings Pvt. Ltd is Rs.1,00,00,000 consisting of 8,00,000 Equity shares of Rs.10 each fully paid up and 2,00,000 cumulative Preference shares of Rs.10 each fully paid up. Quality Forgings Pvt. Ltd. and Supreme Engineering Pvt. Ltd. are holding 3,00,000 Equity shares and 1,50,000 Equity shares respectively in Advanced Castings Pvt. Ltd. Quality Forgings Pvt. Ltd. and Supreme Engineering Pvt. Ltd are the subsidiaries of Unique Machineries Pvt. Ltd. Examine whether Advanced Castings Pvt. Ltd. is a subsidiary of Unique Machineries Pvt. Ltd. Will your answer be different, if Unique Machineries Pvt. Ltd. controls composition of Board of Directors of Advanced Casting Pvt. Ltd.?

Sol.: Holding & Subsidiary Co.’s. According to section 4 of the Companies Act, a Company (Assume S Ltd.) shall be deemed to be a subsidiary of another Company (Assume H Ltd.), if & only if:
1. Control on BOD. That the H Ltd. controls the composition of Board of directors of S Ltd. Or
2. Control by ownership.
a. Where S Ltd. is an existing Company in which the preference shareholders are having voting rights, H Ltd. controls more than half of the total voting power of S Ltd. (E + P)
b. Where S Ltd. is a newly formed Company, H Ltd. holds more than half in the nominal value of S Ltd. equity share capital (Only E) Or
3. Chain relation. If S Ltd. is a subsidiary of A Ltd. which is subsidiary of H Ltd., then the Company S Ltd. is subsidiary of H Ltd.
Further shares held by any person as a nominee for the Co. shall be treated as being held by the said Co. Thus, the shares held by a subsidiary shall be treated as held by the Holding Co. In this case, the equity share capital of Advance Castings Private Ltd. is Rs.80,00,000 consisting of 8,00,000 Equity shares of Rs.10 each fully paid up. Quality Forgings Pvt. Ltd. and Supreme Engineering Pvt. Ltd. are holding 4,50,000 (3,00,000+1,50,000) Equity shares in Advance Castings Pvt. Ltd. As these two Companies are the subsidiaries of Unique Machineries Pvt. Ltd., it will be treated as holding more than half in nominal value of the Equity share capital of Advance Castings Pvt. Ltd. and hence Advance Castings Pvt. Ltd. is a subsidiary of Unique Machineries Pvt. Ltd.
If Unique Machineries Pvt. Ltd. control the composition of the Board of Directors of Advance Castings Pvt. Ltd., it will also be treated as holding Company by virtue of Sec.4. Hence the answer will not be different.

Q.No.8. The paid-up share capital of XYZ (Private) Co. Limited is Rs.20 lakhs consisting of 2,00,000 Equity Shares of Rs.10 each fully paid up. ABC (Private) Limited and its subsidiary DEF (Private) Limited are holding 60,000 and 50,000 shares respectively in XYZ (Private) Co. Limited. Examine with reference to the provisions of the Companies Act, 1956, whether XYZ (Private) Limited is subsidiary of ABC (Private) Limited. Would your answer be difference if DEF (Private) Limited is holding 1,10,000 shares in XYZ (Private) Co. Limited and no shares are held by ABC (Private) Limited in XYZ (Private) Co. Limited?
Sol.: Write about Holding & Subsidiary Companies in the above Question.
Further shares held by any person as a nominee for the Company shall be treated as being held by the said Company. Thus, the shares held by a subsidiary shall be treated as held by the holding Company.
Here ABC Private Limited is holding 60,000 shares in XYZ Private Limited and 50,000 shares held by DEF private limited. Therefore, ABC Limited will be deemed to be holding 1,10,000 Equity shares in XYZ Limited i.e. more than half in nominal value of the Equity Share Capital of XYZ Private Ltd. Hence XYZ Private Limited is subsidiary of ABC Private Limited.
The answer will remain the same in the second case but holding-subsidiary relationship is established by virtue of Chain relationship i.e. a subsidiary of one Company’s subsidiary will also be considered as the subsidiary of the second mentioned Company.

Q.No.9. Due to oversight some of the share transfers were registered in the Company due to which the number of members in a private Company increased from 28 to 52. What is the effect of such transfers and what is the remedy available to the Company.

Sol.: In that case, since the number of shareholder’s has crossed 50, the Company will be named as public Company. However the NCLT, on being satisfied that the failure to comply with the conditions laid down by Sec.3 was accidental or un intentional and it is just and equitable to grant relief, may, on the application of the Company or any other person interested and on such conditions as seem to the NCLT reasonable, order that the Company be relieved from such consequences as aforesaid.

Q.No.10. On acceptance of deposits a private Company becomes a Public Company.

Sol.: False. A private Company becomes a public Co. on acceptance of deposits from public through issue of advertisement. However the private Co. can accept the deposit from its shareholders, directors, from their relatives and even then the private Co. does not become a public Co. (Sec.3)

Q.No.11. By obtaining the license from the Central Government under section 25 of the Act a Company shall dispense with the word “limited” or “private limited” from its name.

Sol.: False. Under section 25, it is not compulsory to dispense with the word Limited or a Private Limited, but it is only an optional at the wish of the Company. Because, the object of registration of a Company u/s 25 is not only to dispense the use of words Limited or Private Limited as a part of its name but to avail the exemption which may be granted to such Companies from the provisions of this Act by the Central Government.

Q.No.12. A firm can also become member of a Company which has been granted license under Section 25 of the Act.
Sol.: Yes, Sec.25 of the Companies Act permits a firm to be a member of any association or Company licensed under this section. Infact this is the only one case which permits the partnership firm to become a member of a Company.

Q.No.13. On revocation of License granted by the Central Government under section 25 the Company may continue to carry on the same Activities which were being carried on by it prior to such revocation.

Sol.: True. On revocation of license granted by the Central Government under Sec.25, the association or the Company may continue to carry on the same activities which were being carried on by it prior to such revocation. The impact of the revocation of license is:
a. The Company will have to add a word ‘Limited’ or ‘Private Limited’ at the end of its name.
b. It will cease to enjoy the exemptions granted by the Central Government to such Companies.

Q.No.14. Two joint Hindu families carry on a business as joint-owners. The first family consists of 3 brothers and their respective sons being 12 in number. The second family consists of the father, 4 major sons and 2 minor sons. Is the association illegal?

Sol.: Sec.11 of the Companies Act, 1956, provides that no firm, association or Company consisting of more than 20 persons for doing any business (10 in case of banking business) shall be formed unless it is registered as a Company under the Companies Act. An association formed in violation of the above provision of the Companies Act is termed as an illegal association and does not have any legal existence and recognition. However, in computing the aforesaid number of members, viz., 10 in case of a banking business and 20 in case of any other business, minor members of the families constituting the association are not taken into account. Accordingly, in the given problem, the first family consists of 15 members (3 brothers + 12 sons) and the second family that of 5 members (1 father + 4 sons and ignoring 2 minor sons). The total number of the members of the two families constituting the association thus comes to 20. The association is not an illegal Association.

Q.No.15. The Registrar of Companies issued a Certificate of Incorporation Actually on 8th January, 1999. However, by mistake, the certificate was dated “5th January, 1999”. An allotment of shares was made before the Company was incorporated?

Sol.: The allotment of shares is valid. Sec.35 of the Companies Act, 1956 provides that a certificate of incorporation issued by the Registrar in respect of any association shall be conclusive evidence of the fact that all the requirements of the Act have been compiled within respect of registration, and that the association is a Company authorised to be registered and duly registered under the Act.
Jubilee cotton mills ltd..
a. The registrar issued a certificate of incorporation on Jan 8th but dated it Jan 6th which was the date he received the documents.
b. On Jan 6th, the Company made an allotment of shares to Lewis.
Held, that the certificate was conclusive evidence of incorporation on Jan 6th and that the allotment was not void on the ground that it was made before the Company was incorporated.

8 Re: GCL & COMPANY LAW CASES SOLVED!!!!!!! on Mon 11 Oct 2010 - 17:46

praveen999


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CSoC Master
thanks for sharing .............

9 Re: GCL & COMPANY LAW CASES SOLVED!!!!!!! on Tue 12 Oct 2010 - 10:19

kaya

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Thanks for sharing this post. Smile

10 gen n com law on Wed 13 Oct 2010 - 13:06

neha mittal


plz send me notes of gen n cmcl law soon my id
n.mittal392yahoo.in

11 Re: GCL & COMPANY LAW CASES SOLVED!!!!!!! on Wed 13 Oct 2010 - 13:37

eva.gupta1987


me the notes at [You must be registered and logged in to see this link.]

12 Re: GCL & COMPANY LAW CASES SOLVED!!!!!!! on Fri 12 Nov 2010 - 12:13

dinesh558

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Please send at [You must be registered and logged in to see this link.]

13 Re: GCL & COMPANY LAW CASES SOLVED!!!!!!! on Fri 12 Nov 2010 - 14:29

anishgunchala


thnx for sharing.... Smile Smile Smile Smile

14 Re: GCL & COMPANY LAW CASES SOLVED!!!!!!! on Tue 16 Nov 2010 - 12:27

dinesh558

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thanks very much

15 Re: GCL & COMPANY LAW CASES SOLVED!!!!!!! on Tue 16 Nov 2010 - 16:07

mione

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thanx 4 sharing

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