Taxmann's CRACKER | Company Law | CS-Executive by Taxmann

Contents

E G A P

Chapter-wise Marks Distribution

I-7

Previous Exam Trend Analysis (New Syllabus) (December 2018 Onwards)

I-9

Chapter-wise Comparison with Study Material

I-17

w a l y n a p m o c o t n o i t c u d o r t n I

Chapter 1

1.1

l a t i p a c e r a h s f o n o i t a r e t l a d n a s u t c e p s o r P

Chapter 2 u

2.1

l a t i p a c e r a h s d n a s e r a h S

Chapter 3

3.1

p i h s r e b m e M

Chapter 4

4.1

s t i s o p e d d n a s t n e m u r t s n i t b e D

Chapter 5 u

5.1

s e g r a h C

Chapter 6

6.1

d n e d i v i d d n a s t i f o r p f o n o i t u b i r t s i D

Chapter 7 u

7.1

y t i l i b i s n o p s e r l a i c o s e t a r o p r o C

Chapter 8 u

8.1

s r o t i d u a d n a t i d u a , s t n u o c c A

Chapter 9

9.1

s e r u s o l c s i d d n a y c n e r a p s n a r T

Chapter 10 u

I-5

10.1

S T N E T N O C

I-6

E G A P

Chapter 12

s d r o c e r d n a s r e t s i g e R Chapter 13

n o i t a z i n a g r o e r e t a r o p r o c f o w e i v r e v o n A

L R B X n i g n i l i f d n a 1 2 A C M

Chapter 15

s r o t c e r i D

Chapter 16

n o i t a r e n u m e r r i e h t d n a ) P M K ( l e n n o s r e P l a i r e g a n a M y e K Chapter 17

s e e t t i m m o c s t i d n a d r a o b f o s g n i t e e M

Chapter 18

s g n i t e e M

Chapter 19

s g n i t e e m l a u t r i V

Chapter 20

s e i r a t e r c e s y n a p m o c g n i n r e v o g k r o w e m a r f l a g e L

Chapter 21

d r a o b s d r a d n a t s l a i r a t e r c e S

Chapter 22

s t n e m p o l e v e d l a b o l G

Chapter 23

s m r i F a g e M

Chapter 24

e c i t c a r p r o f s n o i t s e u q d e s a b t n e m d n e m A

P.1

SOLVED PAPER: DECEMBER 2021 (NEW SYLLABUS)

24.1

23.1

22.1

21.1

20.1 u

19.1 u

18.1 u

17.1 u

16.1 u

15.1 u

14.1 o t n o i t c u d o r t n I Chapter 14

13.1 u

12.1 u

11.1 , y t i r u c e s d n a s e e t n a r a u g , s t n e m t s e vs nn i o i ,t s c na as on l a et r t a y r t or pa rp od ce r t e a t l e n r I Chapter 11

& l a t i p a c e v r e s e r n e e w t e b n o i t c n i t s i d f o s t n i o p n i a m e h t e r a : ge nv i r we s oe l l r o l Fa t i p a c special resolution

Balance Sheet Disclosure

nd i a de eh s oe l h. c t s i r d e ed r n a su e t ve r e e h s s e r e l c a n t i a p l aa Cb . et s e oe l h c s s i e d c n oa t l a db en ei na l t oi np a sc i e v er r e e s he Tr

o t d e s u . es be s ns ao cl l sa e t vp i r e a s c e f r f lo a t e i t p i ar Cw

d l u o h s n o i t u M l o G sA e Rt a ld a i e c s es pa Sp

e b

s n o i t i s d t n fi o o r c p h l c a u t i s p a o C N

l a t i p a c d e z i r o h t u A

3.1

“Reserves & Surplus”

d e s u . es be s ts o o nl nl aa t ci lp a a t i c p f af Co ee vi t r r e w s e o Rt

Created out of

s i es . ve r s e a s c e r n i la a t t r i e p ac cn i fy o r o nt oa i d t a n ea r Cm

Need of Creation

s i l a t i p a c e v r e s . y e r r o ft o a d nn oa i t m a eo t r Cn

Specific condition

. teee u vvv r or r e e e ds s s ee e e t r R r a l ella a a r t t i t c i i p p ep a r aac c a Cy s. y r t e r oo v fit o t r u r u e t s t p a a e lt t r a s s t l en ib a p t o ia yn p ca af r mo Co

Meaning

t eys n a m hnh eo t a f vc py e o e tmn e r h oa h a t . pcp t fp m tao nou a i ed hfc t s o t on pp sld e u i e a l t cro t i a i xuw t m p ia p i epg e l aclyl n hi c eba d h t ee e dcr t vl b eoo lh r d fy t a c e i ci s c tdn e nhe o na Ruwd nap

Writing Off Capital Losses

Capital Reserve

Reserve Capital

Points

SHARES AND SHARE CAPITAL

CHAPTER

RESERVE CAPITAL vs. CAPITAL RESERVE

Que. 1: Distinguish between Reserve Capital and Capital Reserve. (December 2009) (June 2012) (December 2012)(4 Marks) Or

‘Reserve Capital’ and ‘Capital Reserve’ are one and the same. (December 2014) (5 Marks) Ans.

L A T I P A C E R A H S D N A S E R A H S

3.2

SWEAT EQUITY vs. ISSUE OF CAPITAL ON PREFERENTIAL BASIS

e u s s i & y t i u q e t a e w s n e e w t e b n o i t c n i t s i d f: o s t sn t n e i m o po t nl l i a a me c en he t r ef e r e a r gp nn i wo oa l l l t o i Fp a c f o Que. 2: Distinguish between sweat equity and issue of capital on preferential basis. (December 2009) (4 Marks) Ans.

d e u s s I m o h W o T

o t e u s. s s i n no as s r ie ep uf so s i p l a u i t o n r eg r t e c f e e l r e ps Aa d e u s s . i s r eo r t a c se e r r i d a hr So ys t e i e u y qo El tp a m ee wo St

d e u s s I w o H

r o r a p a t a e u s s i l a . i t m n u ei r e m f e e r r pp t Aa , tn a o di ea t ur se s i d es i r a n so e c r r. a o h hf s Sr a yo c t i tn u a qnh eut tor c a s e ei h wdt Sao

n e: e w t e b n o i t c n i t s i d f o s t n i o p n i a m e h t e r a g n i w o l l o F

,eyf ayse o r h nas a t sa,i s d w s npe e en r s ame r e o o eo e yh cp he mc ot r l ows u ap ep h r k m t o c s e ieeu ah h urt rt wost e t s r rsi ado c e n f . i del e u h r n b na g m y o uhuu i e t espoai h sc msfrmi o h r t us ee tt s qe r hf f u a ch rr co pot at s sl et y t mn c eae hrr cgi syd nn aao pi s t. nmps t aoou ec r k mact o ht a cs h i e h g eu wy o or rl e h dpt nmr ueo

Meaning

e ora uete . e ss dru s esnes e i h l i u s t b n ni i i ase at c n r p i onl se i ssb vmr iu enoe uocp hp scdf ca s i i f e o r lot ho p s w a n i r i u l t o e o 1 n y r u 8 esbg s r e s t e s r n i c f e a os i e et i hi t tl r h ec psr fuseg i Ao caSr . lid noa,gea n nlu de atto b i dl eya id ta ac l t l ii mnsa v e a a a r r l ec ov l e od ra spt e ue t l p emc m i s roe gnaa i v n r a r c n f n i o o i h d o r f k a r c o Sy e e rrhar v e yboosmust t sfa tta h r s a c i e e gh ur er oni qa yon er w eho awh y t o y h l sp n httb t n tym r u at , r-ies w o t p ei e e c h n o u oo hn wq s gr si t i i t Se do kr pt i

g n i n a e M

Employee Stock Purchase Scheme “Employee stock purchase scheme or ESPS”

Employees Stock Option Scheme “Employee stock option scheme or ESOS”

Points

Issue of capital on preferential basis Sweat Equity Shares Points

ESOP vs. ESOS

Que. 3: Distinguish between: ESOS and ESOP. (December 2009) (4 Marks)

“Employee Stock

Ans. Option Scheme” & “Employee Stock Purchase Scheme”

L A T I P A C E R A H S D N A S E R A H S

i.e

d e u s s . i e eu bs ns ai ci c Sl Pb Su Ep ra e f do nt ur sa e p r a a hs Sa lf a pni o eec t s ger dnpa eisp v ge oyn b rni t pas s o ppa n amp n eoya bcb c e oh gte . t t nIu . i syt ns a e o s hbe i i tc y u m l Se i l l t Oa o ls b a Sr u r ep Ea e r

s. a t o Sp Ps Se Eh rt on f o sd de or i e r f e f po ge nr i a t s s e e vr a oh Ns r o f d o i r e p g. nr i a t e s ey ve n mo us i mS iO n i S ME

Nominal capital:

; fy o n ma up dm no ac r e oh mt f eo ml a et hp i t ya bc e dr ea s i h r s of ho t t u n au so i sm a la a m t i p u am ci hx ca u sm se nh at ee mb o t y n a p m o c a

)ces l i r b a l o t b t i o u s p t e apl v c a l n daci i r n ee h z h c nc i i r ee h og h tw e t on h u oi att ny . si fmi on o o t a trma f u cp rl i m ose ( ntp o lo pc s a i i ae t t h i a n t h p c fat ai l I y cp n l .p i fps s e o ar me tda r i sa n hs es uv h is i oe gny mc nou aeiib t y r p u es i o r ha b t c Th ns t s yibe ndur s e e at t nn ps e e i mr hs t oe i t cn dh os hi e c os e t i r s h s r e wae r o dp rhn x ow ue f

Subscribed capital:

etl yer y snn h ni o i g s i ataea t r ea p o s r r e rmteu i st s ci i s opnr i yg cuai t i ne p e amm ar hn prhuo t e cmceh oi mf v i t h oe x noe cl r bwaobu ai m a s l s a a l t hn t e l e u co e i brw f i p h pa ss n wscni a ii h e hrfcthd t ce yoloi i a t thd d wo t n i e ed lb w u e p a u ne o a l ( t a i l s mcDt sa l p e ad.iic ai cn edpeo a r famrnc o o a s p o uh l ydma tmms ee n s i.bzfi i uox i l tr oca ta o f o a t momsn hh i p ar e tt r u e d a a er hanaoc h ht t s a h d s s Ti s c e g l i g a z u n etht i i r RIgisc u p . o h ) nh o t es at rai hi e hcwnu t d n t A ha e d fi. e t e f z i ps e irol w i r e m a b si d rotd o s h s i ec es nt g r eo ue faa e np o c r t Ans.

e S t Pma Sud m Ei e h n ni t am m rao e rf r do nfr una i e y dd . eeet uknn scoe s ofm i l o ed t sb o e l o r li l l a ra a hh e f Ss po esf heo r t e a s yh i f s c i c r eee x phe st yro t ao mfn t da yo u ni s ar r peu mpp . ondn ieo ck i ec ut ho sp s Tl o i

Vesting Period

Public Issue

nn eoe vs c i i er g erp a r hd a e sst e en es yau oho l cc p r s mui epd Soa t Pta Snt oo Ei tp rp e s doe nnh Ua t sg ve n i r i g t a s eh e r s v a er ss e e a t eh f yc a or l u. p p mo e et t Sna Ood Si r te Ept rol a d e n o daar i nnt e Ue ap

Lock-in

Purchase of Shares

Employee Stock Purchase Scheme Employees Stock Option Scheme Points

se nh at ey mb d e b i r c s b u s g n i e b e m i t e h t r o f s i h c i h w . ly a n t i a p ap cm eo hc t a ff o o ts r r a e pb hm c ue sm

Section 2(86) of the Companies Act, 2013: “Subscribed capital”

3.3

NOMINAL CAPITAL vs. SUBSCRIBED CAPITAL

Que. 4: Distinguish between nominal capital and subscribed capital. (June 2010) (4 Marks)

i.e

registered capital or authorized capital. Section 2(8) of the Companies Act, 2013: “Authorised capital” or “nominal capital”

s e i n a p m o C e h t f o 2 6) 3 n1 o0 i 2 t c , t ec SA ( rr e . ehe hd t u lcs r uous fhsi e g t sr nh e a i g uhl d i ss r os s igh ynra ni tin asew i h px o t mef n oook ctos i nsie t e er a u r ha s hns Ws ii ds et . i uo e st v s r tae i s ns so e e cor r fse a hore seer d f eo l er r f f h a o et yr sn u e aao r a phs h si smgs a soi nb uct nai s oyx Bbe d e du i s s s ni oe cr sa e s ve i r e ca. h es h r s a ysc nat ans pon i i ma t a or g Ce a

s i e r e h t e u s s i t h g i r f o e s a c n I ys nu an eo vb i f e co ee r s a tc o nn si e n oo dt i ya nr e ad pi . e s mn u oo s s Cc i s i e r e h t e u s s i s u n o b f o e s a c n I

n iho r g i ou t ho u t r l u o hs at e e r u l s a s i i c t e h p g s i . r r y r fmoa o o rys s r efa e s nnc a e coin i d t rs nao z I i l e a h r t e n n e o g . e y n ehma dtop afr f m mon o no c si oi i e tth eaat z i udr f sno o e s hg i mt n s ui umat ode nc oe ne Br am sm t o c eC f f e a h t f o e u l a v t e k r a . my n ea hp t -

e h t f o e u sl e a r v a ht se sk ur na om. bey hn ft a o e p u m s o s C I

s e r a h s y t i u q e t a e w s n e e w t e b n o i t c n i t s i d f o s t n i o p n i a m e h t e r a g n i w o: l l S o O FS E &

ESOS

seshseey e shn n ec eat ameuy a i y h,p t eosl oce el ml s rtm a p p u e o o nhmvmpdc. i e oweg eoeec i rh t r perhrtuti ohocottyp t u i h d koshsgfbe ctrwriadi n one er em c c t , r tei fyi frae Sv o n r f f f i e e f t sgoaotbo p e i ens ,m , fir sd s e eo c e r r n yi o i e t otocoesi r p t t l bbr p u c c o p ua a s e e er ct mei rh ea hrfi Et d d o o s t . ysthgfed t t insnoue i u i l a l u a k l ev oca qoc a r n u ets c syiamtre nndhraom s t ont aaar a h epte weg n a m ho mo hir st e e ohtrv sc y e, e n-nte y r ao t owira a hyli to eh p s p n a Sbm ktow r h r yde e ggp y t e d i n i l r b uri i u a, o s d s qs s sni eun t l r v Ei o o o cobci tst e a r r e a t l c l p l i i o ere e d a f a r r t wh d vn ro i Ss d of ai a

Basis of Sweat Equity Shares Distinction Meaning

pro

rata

does not Right Issue of shares affect

Market Value

cash inflow to the company. Consideration

members

Board

Authorization

no cash flow. Cash Flow

s e i n a p m o C e h t f o 3 6) 3 n1 o0 i 2 t c , t ec SA (

Meaning

Right Shares Bonus Shares Basis of Distinction

d nf eeao udce se el u s rc i a epi b rv napc e i atu s cas n nts i r h i og t i en t ih p i r o Te kn.h coet i c os i n r t r e S . pas ev he endtr e yon sa oci s h l e s p hml t e mi reh e Ewt bt t-y a w. d n o a en p uk sr m s i eoo bfC e e ne h ar t cf o srt e o r s e a e c hi c i sr v yp r t i de u es qt d Enn tua a o ec w so wi Sd h

Issue

L A T I P A C E R A H S D N A S E R A H S

3.4

BONUS SHARES vs. RIGHT SHARES

Que. 5: Distinguish between bonus shares and right shares. (Dec. 2010) (June 2011)(4 Marks) Ans.

SWEAT EQUITY SHARES vs. ESOP

Que. 6: Distinguish between sweat equity shares and employees stock option scheme. (December 2010) (June 2015) (4 Marks)

Ans.

L A T I P A C E R A H S D N A S E R A H S

ey ct i nu eq r e e r f e e r v po t an te e gm y . sas r p r e e dd dn l l o eo hdh eie v r r i a d a hn h Si s se e c r n a e hr se f. ye t d ri i pa u qep ehn te nr e ot eb dfs naa y el h dn i d o v n i de d i d a i ep v hs i Ti d -

Rate of dividend

v i d f o e t a r d e x fi a o t d e. l d t i n t e n d Ei fs. o dy nn tu a n ufp oem mho atC de en h ha t t f eo nl ob s t an pl ua ie svm dae n i r t e fi u po q er e Dp r -

a l u m u c . rs oe f r ea vh i s t a e l c u n me r ue cf e er bp ye av i Mt

. e v i t a l u m u c e b t o n n a C

s e m r o a hC se eh ct ny eb r e d f e e r m pe ee l d b e ar me e . eby dyn eaa Rmp sg e n r i a v hl so yv n t i i e u . qml eea t fhi o cp s a na c or i f t eo p dn mno eui t dtc epu e r c d ox e Ne r

t o n n a c r e d. l n o o ht i eu r l a o hs se er cl nl ea r n e o f e e r t p o Av ee t h o vt g nn ai ct c re e f df l a o hs er r e a t ht sa . ymy t n i u la ql p eam nno Aoc

d n a l a t i p a C e r a h S ( s e i n a p m o C f o ) 1 ( 8 e l u r o t : 4 1 0 2 , s e l u R o) t s e gr nu i t d rn oe cb ce AD

Explanation

srge e on u r f ia l a k hr v soar ytmo n t r i u os u o t qc wh es og hihi cd-r y uawt stor nane askp e ee o rr i my e p hl ot sl e a p r gu a nt hmi c de sei l yrv l o t e o i t s u r . n d qrpi o e et r l l ofa tc a efoc ei r ee hr wd su a ss m cta ,t ) inan oanr (t hee 2 t h y v nn rte e oa t na i h p i t t h c mo sw eo t ,h s n y oco g t iib gatrs , a y nb e r n i l e d b o d rdi i at l oes i i cun d a cs sov d Ai caa

Ans.

Preference Share Capital Points Equity Share Capital Preference in Dividend Payment

In case of winding-up

np i u ecg n ni ed s r r ne e i f d wl e r o pnh e tir t e gna h ses m r e y yt da i l pu o q hle ea t r r i a e p ha v Sc o . fps o r ae tcd n fl eo o h mte ynr aea pmh ys tae e c gpn e he st r r re e e f dt e l fr o a p hl ea o t r t il ap ha a t Sc i

Voting rights

r o f d e fi i c e p s t o n s i d o i r e . pS O n i S E k ce oh Lt l u p . ms or ca ee vy a3 hf so e d r o a i hr se p yt n i i u qk ec o tl a y er wo Ss

(December 2015) (4 Marks)

Dividend Accumulation Redemption

Lock-in-period

d i a p e b o t s a h n o i t a r e d i s n. oh cs a ec hn Ti hr so a cn yo. i l tn t i r d o a i t pda ear bee d nui l aa s cv n n/ o os c i R t h a P s r I a e c dy ln i t s nro oan cpy edl l hnu Taf Consideration

3.5

PREFERENCE SHARE CAPITAL vs. EQUITY SHARE CAPITAL

Que. 7: Distinguish between preference share capital and equity share capital.

Ans. The main points of distinction between preference and equity share capital:

SWEAT EQUITY SHARES

Que. 8: Write a short note on sweat equity shares. (December 2014) (4 Marks)

— s n a e m ’ ’ e e y o l p m E ‘ ‘ s n o i s s e r p x e e h T e l u r s i h t f o s e s o p r u p e h t r o F

a i d n I n i g n i k r o w n e e b s a h o h w y n a p m o c e h t f o e e y o l p ; mi a ed tn n I ee nd as i mt ru e o pr ao ) ( r o ; t o n r o r o t c e r i d e m i t e l o h w a r e h t e h w , y n a p m o c e h t f o r o t c e r i d a ) (

fe o h et vf oo by an )a (p rm oo )c g (n si e d l s uo ah l a c f b uo sr o n, i a di ed nn fiI ee di d s st a ru oo t r c o ea r i i d d n aI rn oi e, ey yr. a oi y l d n p i a s mb p eum nso aac ) ( u

ds: d d s ea e e s nl s i c fia s a i at t p n a n ofs o co , e i s t r ge u a nr l i as o h hn s t e o s y r i nyt l . ati a d g i i n gun c i q e o ne t pe i c s d t e g na n am aei y t l ww b s a hso dr t l ee el i n wuo ze i s f ts r g o ie o h h nnt e th af tc u t a i a hy, n t d ni ne ey sa u en e dps ba s m i sp i v a m oo rcy ho p d ec a a ),e ue 3 s r 1 s 5l h ( i a 4 t ns ey 5o hb e t i nt r oc a ) i eh ( t s S c enf Si o

,o mnt o s i ut e na e )ry a e o ( dl : i p n s on m i o t ce u r l o. ) o c d s( se e r ; r ou e t ec s c s hi i r e t r e npi b i td de o f ko er t fia e sr i e c emsa p ss t a sn e l r ye c l a r rh r r o a s u ec s l y s c t a i e)c l b u r ( q a )e sd ge (h nr i adc wh nu osas l l ;m fy o o f no r ee ah hb fw t i ) ( ,y e gl np am ho cc xd. I el kuB coE ohS s t y s s b e dr f ea l z a i hh n gse oyb t ci s i eu h r qt aen ti na e oe d dwa esm t gs s i nn l eio u r i st a s a i l sy u e ng r a ae hpr sm e h eot r ch e het i hw Wt ) ( ti se a r eha wth snS ei( s uee sdi s an i dma l p u sm oe hlo suC dr, ee. . t h 4 s t i t1 l ohn0 ste2 i tw m, s o e n nl e r u ece r n R v a a o ) si s l G e p e r l r m a a u h r t sot n n ece e s nCb oi e hseD weh r td ya n nh ya as bl p fa y li t mt a i ou hp cq ea aebC ) (

,f 9 o 0t 3r ,a 8 9p 1a ss na od i e t c u es s s i fe o : s bd el s ln oi u pwo rer ur g pa g ehn hsi t yw rt o il ou l f qo sef i te ta h i det ewn dso i fy v ool rtn pno u n to o o i l t lma a a r nee ah n ct u y7 n8m a3e pdR l mna i oar C1e 1g s3 a e ,n Y0 )1a (3M

L A T I P A C E R A H S D N A S E R A H S

3.6

b c

iii

i.e

Que. 9: The share capital of Raney Ltd. is INR 30 Crore. ‘Russel’ is appointed as Managing Director of the company, the company wants to compensate him by issue of shares for supplying technical know-how without any cost. In this context, answer the following:

I. Whether the Company is allowed to allot such shares? II. Is approval of shareholders required for issuing such shares? III. If found eligible to allot such shares, what will be the quantum (value) of shares that can be allotted? IV. Can Russel sell such allotted shares in the market? V. Will the amount that he receives on sale of his shares be considered a part of his remuneration? (December 2019) (1 × 5 = 5 Marks) Ans. In terms of section 54 of the Companies Act, 2013: Issue of Sweat Equity Shares:

L A T I P A C E R A H S D N A S E R A H S

d n a ; r e g a n a m r o r o t c e r i d y n a o t d e u s s i s i e r a h s y t i u q e t a e w s e h T . g n i t e e M l a r e n e G n i d e s s a p e b o t n o i t u l o s e R l a i c e p S , s e Y ) (

. r e h g i h s i r e v e h c i h w , e r o r c 5 . s R r o l a t i p a C p u d i a p f o % 5 1 ) ( . s r a e Y 3 f o d o i r e p n i k c o L , o N ) ( . l l i w t i , s e Y ) (

tn h gi i e r h “ t af so a f l da eh we eb i v n eo by n ya ap mm e uo sc s e i . hs st e u v nyr obe s bi de ta r a ps hs t t i i yy m ae o s nr oof t s r tme c td ea l r ho r oth te cp r se a i ch tx s i ,eg e n c”i e t nu s es e sv Hi

Section 43(2) of the Companies Act, 2013

Ans.

Rights Issue

Bonus Shares:

/ d i a p s i r e d l o h e r a h s o t g n o l e b h c i h w s e v. r s e e s r e a r h ,s e y ut si s u i sq ue o nt on bi fd o e t er s e a v cn o nc I

ldh a t ei t i u p sw as t ci h eei g h r r t a l hfa sot i etn cre nar epe t r f a e e h f r t e r sp pn a ,ay er r ma ,c s e d r l a u ho sw yr bo ds ee t i i r mr ia l yc nh c ai ph mw oy cn ya np am oo t ec c e nh ret e r o ft pe o t sf c l e Ar a e t hi p p t s i ae wc r

(December 2010) (5 Marks)

elohy gatc b t r i nus p a t o s fi l ai ro scr to e o t ofr t a ptp l n ont s u i r u i msp o t e u fi z conmi i l a crs a apr yt i ddenp ebaa nt aa myc , sleae uu pd ommoi rugt v e o n pci er t scs v p oai a s r x he pee s l tc e sh eot i i ythnr nstoAs t g d ar s e n pe t r si a mvor f h onmei s , coaby c s lma ata u e n i t n, i Mmo sp et yb . a h fi snd Woct i r naa peepp h etmmy o l e sl l b cl e t ad u iAf t it n u v . g s biee d n i rr i r i t u d as e s nh i hs d at si u

d l o h e r a h s g n i t s i x e e h t o t d r ee r f e f f o f o f eo br e ot t t le a l t i a p ah cg u fo o r eh ut sy s i n na ap sm i o c e h t f o s r e Ans.

. h s a c n a h t r e h t o n o i t a r e d i s n o c s a d e u s s i e r a y e h T u

3.7

iii

RIGHT ISSUE

Que. 10: Bonus issue may be viewed as a ‘right issue’ except that money is paid by the company on behalf of the investing shareholders from its reserves. Comment (December 2008) (5 Marks)

PREFERENCE SHARES

Que. 11: Redeemable preference shares are not preference shares. Comment.

d e d i fi n c a e , p e s t l a a r t i d p e a x c fif a o t t n a r e. o my t yn n aa u pp o em m ro r c a o e d ph e t x uf fig o n i a d s s n e l a ic i r wt e r aa h f t i or e eo , s d m n au e cd d en i ha v t i r d n o i f t m o n e t e n m e me m yh a y p t a e n p r i ) ) ( (

a b

Thus, it is in correct to say that redeemable preference shares are not preference shares.

L A T I P A C E R A H S D N A S E R A H S

3.8

Que. 12: Preference share are cumulative unless expressly stated to be non-cumulative. Comment (June 2011)(5 Marks) u

u c n o n e b o t d e t a t s y l s s e r p x e s s e l n u e v i t a l u m u c e r a s e r a h s e c n e r e f . e e r v Pi t ,a s ul hu Tm

n i g n i k r o w n e e b s a h o h w y n a p m o c e h t fr o o e; ei a yd on l p I me d ei s tt n eu no ar mo a ri e d pn aI

t o n r o r o t c e r i d e m i t e l o r ho ; wr o at c re e r hi t d e t hn we , d yn ne ap pe md on ci en ha t g fi n o d ru ol t c c x ee r i t d u ab

,y . y r n a a i p d i m s bo uc se ah t ff o so t y n n i a o pp dm eo nc og i t n n i d el mo eh va of bo ar o n, i a di ed nn fiI ee di d ss a t eu eo yr oo l a p i md n eI nn ai

hn ge ut o rn ha. h t y t ren or a eop vmm i t o a s c l de e l r o h sht i f ,o h y hl s te gc r uea r oi h rd s hn t y t rii oru o f q l y e e l t s g c me n i ii r d h n rda , e e t ht s t t au i r e oo op e hr h ot wc r f oyo d t t c on eb e r c i yr d ne Aap

e h t o t g n i g n o l e b n o s r e p a r o r e t o m o r p a s i r oo h; p wu eo er yg or l e p t mo em o nr Ap

Following persons cannot participate:

,ra as feot i o ta n fi sa ey e epnn ymea oobp l m c e p rh o mo t c ey,e s rne h oae t spyf r oo d emls e cope n h fic m r fic f y e a eiorrh h , a s dw i os r d n o i se s eot r h etcbet bgeuc, . n r s fir e i si f o c a ddro f i hr r eo, ep ohys b ctnri d a o cop r e t at c c n s i nmeb rum eoi vc r d se i g g hoe t nc ni td d ol u ri t e osor p s ,p ohee s s v et a i a hig f h t t ca hr soc e nri ut aoh ey pa w n od ma ,t e py r ntu h ma t gu of i ci r f Ans.

r o n , g n i h t o n t e . r ga se r y e dt l n o e hu eq r e a s hb su es hy t ,n r a a en yi d yn ne ad nv i i i ed l b d ai l a i p a vn au e, r m a i a sl t c fi oy re ph ot n na fc I u

dh ec xa fie af oo t s t r fi e o dr l p o he sh t t i f oo t tt h u go i r s sd e n ve i g d i ev r i a d h sf eo ce ng a et r n e f e e c r r pe ep vd i t e a x l fi u ma ur co n t on nur . eoa hme Tay u

d e x. fis t m fi io a r l p c oe t r ru . d e t i du a l f p o f ho y l st l t u i u no f s od i tn t h i ga i l i r t r a n ae u sy r g t n e n f i e t n a or l r cu u ec m r a e u hh c st c e cd a nn n ea o t r s s e p a f e p e e r pe k eh d vt n f i e o t a d d i l u v n i e d md ui e v h ci Ad T Ans.

Que. 13: Every employee of the company is eligible to participate in Employee Stock Option Scheme (ESOS). Comment (December 2012) (5 Marks)

under Section 2(37) “employees’ stock opu

‘Employee Stock Option’ (ESOP) of the Companies Act, 2013, tion”

As per Section 62(1)(b) of the Companies Act, 2013: Following persons can participate:

Hence, it is not correct to say that “Every employee of the company is eligible to participate in Employee Stock Option Scheme” (ESOS)

L A T I P A C E R A H S D N A S E R A H S

. ee3 bh1 t 0 ot 2 t p , eo t r c dA a a s s o e e t r i a n ya hr sa p sm ys t eo i u cC qee enh est haf t wo et6 r i6 e hsn e o wr i a t th c a e hsS t er ce dn l e d en hr e u sf a l e a r wp t i te p i a lC b af mo en eo i dt ec r u od t e n R i df eo t s r s e e vc no or cp e h t f o 6 6 n o i t c e S r e d n u l a t i p a C f O n o i t . c h ut di ew Rd e fi o l p em r uo dc es ci o3 r1 p0 2 , t c A s e i n a p m o C u

s t c e j o r p e r u t c u r t s a r f n i e h t s n a e m

e dc nn ae t ns oi i x t e a r di i e u h qt i l t . ,us d b e n, l ed c i et ds i r ia v n i d ge oh ec t t en a nri ons i e n t t r o i ofs poi e v or o ra r ps tp ’h s y r gb e i dr d l ee o vt ht i c ep e r f a mf hee se eeb hrn p t ,a s et c vh e r gp e i s ro e gc r ns pi d tn oo Tva

. I V e l u d e h c S n i d e fi i c e p s

Ans.

The term ‘‘infrastructure projects’’

lsms te a r r h r a u t ue m fif t yi y c o t uyn t n i n rn t o emet s i a wawp r tfto f e o g n he i nnt fi h o t d o ei tmt he p o t a c i r wxmfs , rs i geea d nde a eb o i r l i y r a er eeh e t ea dpt daopn nrtso o e t i af t c r r pse a o uejhp b r so ga ue nh sc r i s , t s t np er e en ca s r eneeo. e y , f hr r s e t r e eyr t i e f ne l pr r d i i l drhhao eptceh gegure u ns as or i gs a f d sh ni o e ds eye tre yac nmxnac a eewn c s n pt r te e or co me e np f r oj t a o e ne cr u r ey Ap bt p u

Exception: Issue and redemption of preference shares by company in infrastructure projects:u

oef sbo fot e i ta , y ed ab l e ma h it sl . e e d m r r e a o b har i shf r c c ss yi r bh e a dwer esyp t e e yb i r t ma n ih l ey yswa netm acgs pnn a meis r oedn e f ce o ei ci ar t tpxd e a et n hu o o t s nc si s e h dc , t s ou a e i t r l s s c e ri o p t e t r a ha t t c n r s e i t ui j h fy b t i )b u 2 ws ( d 5 e edu 5s e s ims nr i oo er i t hei c t de eu eh Sar t u

y n a e u s s i l l a h s s e r a h s y b d e. t e i l mb ia l ym ne ae pd e mr or ci e or na th a c hi t h sw e t s a e t r s a )h 1 s ( e 5c 5n ne r oe i t f c e er Sp Ans.

3.9 Que. 14: Whether equity shares already issued can be converted into redeemable preference shares? (December 2012) (4 Marks)

Ans. As per Chowgule & Co. (P.) Ltd. 1972 Tax LR 2163, St. James Court Estates Ltd. [1944] Ch. 6,

Yes, equity shares already issued can be converted into redeemable preference shares only when Que. 15: In no circumstances a company can issue redeemable preference shares with a redemption period of 20 years. (June 2015) (5 Marks)

FURTHER ISSUE OF SHARE CAPITAL

Que. 16: Section 62 ensures pre-emptive rights of shareholder. Discuss (December 2012) (4 Marks)

’y s b r e l da l t i o p ha ec r a e hr sa sh e s r uf co ee s u s 3s 1i 0r 2e ,h t t c r Au sf e e i h n at o pt md or Ca g ee hr t h ft o i 2w 6s nt oh i g t i . c r y een Sv a ip ,t r pm e v o emc e we e or h Hp t

ra e : dgs n l n i o o d hn i t ee i r d sn a hyo Sb c ge sg nr n i t ai s hw i x so Eel l o ,sf 3 o 1he 0t h 2nt ,o o t t c lt a At c e sij p e ab i n c u aes pr s i mae ohu Css p s eui ht d t h i fa g i o pr )e h 1 ( h c 2 t u 6o S ntr . one i of t i f c to er Sof o rpr o e e prt p t sne Ai l u

sr e o r s a hy sa fd o 5 r1 e bm mu um ni n ei hmd . t e e nb b i i r dyc eas i e fmr i c p h ec e pi b sh ewy c a r i m t e o f s nf o a ygs bn y a i et d dp f aeo c mc r eae b b r om lf l u a hen smr ie rt s e ,s f d e f l e o r h e ef c hf u To s u

ts s y oa Pd de e er eh pt St s ra oe tl s t oa ps r de ed r l e o t h s i e g r ea r h hs gg n ui ot ri s hx t e . d e e u eh s ht s cl li t ae a h pot st i f d co i eng bon r i lt l n c a e ep hl se o ehe cgh i ut t o oe nrr ho et f hr e To b r d ore e f b t i re r odc s hee sbr a op ct o rst oa t f c he rsj e e b hr u t a i s hr e s e nh u oc l i a t u u sv l d fe o sor e e e r c t i lr s i a g i pe c eer pha sTf a.o h t sr ga o nc i p s ne s a ar phn t o yr i t be a shu ntl ooa s v n r e oh e i . t s pa t n y re r o bi e t hi ddi t e d s o n n n i oom o Tc c

; s e l c i t r a s t i y b d e s i r o h t u a s i t i

e h t n i d e s i r o h t u a n e e b , d r a o B e h t f o ; y nn oa i t p a dm no ec me h mt of co eg r n i et he t e nm ol a ,r s e a hn e tg i

d e x fi f o t c e p s e r n i l a p i c n i r p r o t s e ; t r i e t y n b i fd o e tu n s ei s ms yi e ai t pr nu i c de es t t l b u e ad f e r do ts o t ns i so a p he td i

; es hu t n fo o b sd e un da y yt r i u ot t a u r t g a t , s d fn o u tf n t en e md yv i ao pr ep ho t t fn o o tt i c eu pi b sr e t r n no i c , ds ea t l h u c au f s e , ds e te o ny o sl a p hm te i

, t n e m t o l l a f o e t a d e h t n o g n i d n a t s t u o y n a f i , s e . r p a u hsd i pa up d y i l l a u pf ye l d t r a a pm e er ha t

g n i s s a p y bs nn o oi i t t i p d on ko cc od t e s b er i ec ys oe l r p mp h et i fw o eg n mi y el hp cm s eo hc t d rn e a dn no ui t su e l eo ys e or l p l a mi ec e op Ts u

sh re c a ri ea h hw fs o r tee p hn i t e n cta ep r em nc n c oa i r . oomy n etea h s ce t i p t f n o m o i l nc o ec ees hdoe t ph es nh it i d d dt n eaya fih a s t i m r c e en d posl ssro o r t eec h e er mpr iei a t dh ehf s hto t m e h fodt o r ra o yfo t r n i s oBe p i xt e g ea ha t emtn h ,a i d t t ev n ri r d e e r a t f f e f s i Al o i u

fe o h rt un oi vd ae f n ai o t nn i se e m r a y l hl sa c e fi hi t c ee cp ns ue ob nd el r u oo t h ts h t gc i a r f es hi t h et dd un l a c nn i o ls l r a he sp rr e e h f . f t e o o c i eyt hn o Tan u

e v a h o t d e m e e d e b l l a h s t i d e fi i c e p s d o i r e p n i h t i w d e t p e c c. ad te o n nl i sc i e rd e f n f e o e fb I u

L A T I P A C E R A H S D N A S E R A H S

3.10

BONUS SHARES

Que. 17: Referring to the provisions of Companies Act, 2013, state that conditions required to be fulfilled before a company can issue bonus shares to the shareholders of the company. (June 2015) (4 Marks)

Ans. Conditions for issue of Bonus Shares:

In terms of section 63(2), no company shall capitalise its profits or reserves for the purpose of issuing fully paid-up bonus shares, unless—

CRACKER

Company Law AUTHOR PUBLISHER DATE OF PUBLICATION EDITION ISBN NO PAGE NO. BINDING TYPE

: : : : : : :

N.S. ZAD , DIVYA BA JPAI TAXMANN FEBRUARY 2022 4TH EDITION 9789393880321 390 PAPERBACK

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Description This book is prepared exclusively for the Executive Level of Company Secretary Examination requirement. It covers the entire revised, new syllabus as per ICSI. The Present Publication is the 4th Edition for CS-Executive | New Syllabus | June/Dec. 2022 Exams, authored by CS N.S. Zad & CS Divya Bajpai, with the following noteworthy features: u Strictly as per the New Syllabus of ICSI u Coverage of this book includes n

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