THE COMPANIES ACT, 2013 TEST

1. ABC Limited has allotted equity shares with voting rights to XYZ Limited worth Rs 15 Crores and
issued Non-Convertible Debentures worth Rs 40 Crores during the Financial Year 2019-20. After
that total Paid-up Equity Share Capital of the company is Rs 100 Crores and Non-Convertible
Debentures stands at Rs 120 Crores.

Define the Meaning of Associate Company and comment on whether ABC Limited and XYZ Limited
would be called Associate Company as per the provisions of the Companies Act, 2013?

2. SK Infrastructure Limited has a paid up share capital divided into 6,00,000 equity shares of Rs
100 each. 2,00,000 equity shares of the company are held by Central Government and 1,20,000
equity shares are held by Government of Maharashtra. Explain with reference to relevant
provisions of the Companies Act, 2013, whether SK Infrastructure Limited can be treated as
Government Company.

3. Mr. Anil formed a One Person Company (OPC) on 16th April, 2018 for manufacturing electric cars.
The turnover of the OPC for the financial year ended 31st March, 2019 was about Rs 2.25 Crores.
His friend Sunil wanted to invest in his OPC, so they decided to convert it voluntarily into a private
limited company. Can Anil do so?

4. Jagannath Oils Limited is a public company and having 220 members. Of which 25 members were
employee in the company during the period 1st April 2006 to 28th June 2016. They were allotted
shares in Jagannath Oils Limited first time on 1st July 2007 which were sold by them on 1st
August 2016. After some time, on 1st December 2016, each of those 25 members acquired shares
in Jagannath Oils Limited which they are holding till date. Now company wants to convert itself
into a private company. State with reasons:
(a) Whether Jagannath Oils Limited is required to reduce the number of members.
(b) Would your answer be different if above 25 members were the employee in Jagannath Oils
Limited for the period from 1st April 2006 to 28th June 2017?

5. A, B and C has decided to set up a new club with name of ABC club having objects to promote
welfare of Christian society. They planned to do charitable work or social activity for promoting the
art work of economically weaker section of Christian society. The company obtained the status of
section 8 company and started operating from 1st April, 2017 onwards.

However, on 30th September 2019, it was observed that ABC club was violating the objects of its
objective clause due to which it was granted the status of section 8 Company under the
Companies Act 2013.
Discuss what powers can be exercised by the central government against ABC club, in such a
case?

6. An employee Mr. Karan signed a contract with his employer company ABC Limited that he will not
solicit the customers after leaving the employment from the company.

But after Mr. Karan left ABC Limited, he started up his own company PQR Limited and he started
soliciting the customers of ABC Limited for his own business purposes.

ABC Limited filed a case against Mr. Karan for breach of the employment contract and for soliciting
their customers for own business. Mr. Karan contended that there is corporate veil between him,
and his company and he should not be personally held liable for this.

In this context, the company ABC Limited seek your advice as to the meaning of corporate veil
and when the veil can be lifted to make the owners liable for the acts done by a company?

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 THE COMPANIES ACT, 2013 TEST

7. A Company registered under Section 8 of the Companies Act, 2013, has been consistently making
profits for the past 5 years after a major change in the management structure. Few members
contented that they are entitled to receive dividends. Can the company distribute dividend? If yes,
what is the maximum percentage of dividend that can be distributed as per provisions of the
Companies Act, 2013? Also, to discuss this along with other regular matters, the company kept a
general meeting by giving only 14 days’ notice. Is this valid?

8. Mr. Dhruv was appointed as an employee in Sunmoon Timber Private Limited on the condition that
if he was to leave his employment, he will not solicit customers of the company. After some time,
he was fired from company. He set up his own business under proprietorship and undercut
Sunmoon Timber Private Limited’s prices. On the legal advice from his legal consultant and to
refrain from the provisions of breach of contract, he formed a new company under the name
Seven Stars Timbers Private Limited. In this company, his wife and a friend of Mr. Dhruv were the
sole shareholders and directors. They took over Dhruv’s business and continued it. Sunmoon
Timber Private Limited files a suit against Seven Stars Timbers Private Limited for violation of
contract. Seven Stars Timbers Private Limited argued that the contract was entered between Mr.
Dhruv and Sunmoon Timber Private Limited and as company has separate legal entity, Seven
Stars Timbers Private Limited has not violated the terms of agreement. Explain with reasons,
whether separate legal entity between Mr. Dhruv and Seven Stars Timbers Private Limited will be
disregarded?

9. Narendra Motors Limited is a government company. Shah Auto Private Limited is a private
company having share capital of ten crores in the form of ten lacs shares of Rs 100 each.
Narendra Motors Limited is holding five lacs five thousand shares in Shah Auto Private Limited.
Shah Auto Private Limited claimed the status of Government Company. Advise as legal advisor,
whether Shah Auto Private Limited is government company under the provisions of Companies
Act, 2013?

10. Mr. A is an Indian citizen and his stay in India during immediately preceding financial year is for
115 days. He appoints Mr. B as his nominee who is a foreign citizen but has stayed in India for
130 days during immediately preceding financial year.
(i) Is Mr. A eligible to be incorporated as a One Person Company (OPC). If yes, can he give the
name of Mr. B in the memorandum of Association as his nominee to become the member after Mr.
A’s incapacity to become a member.
(ii) If Mr. A has contravened any of the provisions of the Act, what are the consequences?

11.Explain clearly the doctrine of ‘Indoor Management’ as applicable in cases of companies registered
under the Companies Act, 2013. Explain the circumstances in which an outsider dealing with the
company cannot claim any relief on the ground of ‘Indoor Management’.

12.Define OPC (One Person Company) and state the rules regarding its membership. Can it be
converted into a non-profit company under Section 8 or a private company?

13.When a company is registered, it is clothed with a legal personality. Explain

14.A transport company wanted to obtain licences for its vehicles but could not obtain licences if
applied in its own name. It, therefore, formed a subsidiary company and the application for licence
was made in the name of the subsidiary company. The vehicles were to be transferred to the
subsidiary company. Will the parent and the subsidiary company be treated as separate commercial
units? Explain in the light of the provisions of the Companies Act, 2013.

15.Explain the concept of Dormant Company as envisaged in the Companies act, 2013

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