PRACTICE QUESTIONS ON COMPANY LAW



PRACTICE QUESTIONS ON COMPANY LAW

Enumerate the five (5) principal theories which are used to explain corporate personality

Corporate personality is the fact stated by the law that a company is recognized as a legal entity distinct from its members. A company with such personality is an independent legal existence separate from its shareholders, directors, officers and creators. This is famously known as the veil of incorporation.  The 'veil of incorporation' can be described as being the separation between a company and its members. Due to the separate legal status of a company from its members this is usually very strictly maintained.

 (i) The Fiction Theory,
 (ii) The Realist Theory,
(iii) The Purpose Theory,
(iv) The Bracket Theory,  
(v) The Concession Theory.


Enumerate the methods of attaining membership of a company and discuss any four of them
(a)  By Allotment
(b) By Subscribing to the Memorandum
(c) By agreeing to purchase qualification shares
(d) By Transfer
(e) By Transmission or Succession
(f) By Principle of Estoppel


Enumerate five rights of members of a company?

The Rights of Members
  • Passing resolutions at shareholder meetings
  • Voting out directors
  • Electing to sell their shares
  • Exercising minority buy-out rights
  • Voting on key issues
  • Right to transfer ownership (often in restricted circumstances)

Briefly discuss the provisions relating to the appointment and removal of a company secretary

appointment and removal of company secretary
  • Resolutions should be passed by the Board of Directors during the board meeting.
  • Agreement and Approval of terms and conditions of service
  • Obtain a written consent from the person who is to be appointed as Company Secretary.
  • Details of the company secretary must be recorded in the KMP
  • Inform the Stock Exchange within 15 minutes of the board Meeting about management decision
  • File [e-form no 32] with the concerned ROC within 30 days from the date of Appointment.
  • Payment of requisite fee to the corporate affairs commission
  • Make necessary entries in the Register of Directors

Removal of a Company Secretary
  • Convene Board Meeting
  • Intimate the Secretary
  • Convene Board Meeting 2
  • Inform the ROC
  • Sign and Certify the e-form
  • Penal Provisions



“A secretary is a mere servant, his position is that he is to do what he is told and no person can assume that he has any authority to represent anything at all…” how correct is this statement?

Responsibilities of a Company Secretary

Functions of secretary:
  • Secretarial Functions:  To ensure compliance of the provisions of Companies Law and rules made there-under and other statutes and bye-laws of the company.
  • To ensure that business of the company is conducted in accordance with its objects as contained in its memorandum of association and articles of association.
  • To attend the board meetings in order to ensure that the legal requirements are fulfilled, and provide such information as are necessary.
  • To carry out all matters concerned with the allotment of shares, and issuance of share certificates and share transfers.
  • To prepare, approve, sign and seal agreements leases, legal forms, and other official documents on the company’s behalf, when authorized by the board of the directors.


Legal Obligations of Secretary:
  • Filling of various documents/returns as required under the provisions of the Companies Law.
  • Proper maintenance of books and registers of the company as required under the provisions of the Companies Law.
  • To see whether legal requirements of the allotment, issuance and transfer of share certificates, mortgages and charges, have been complied with.
  • To convene/arrange the meetings of directors, on their advice.
  • To issue notice and agenda of board meetings to every director of the company.
  • To record the minutes of the proceedings of the meetings of the directors.
  • To implement the policies formulated by the directors.

Other duties:
  • Ensuring that statutory forms are filed promptly.
  • Providing members and auditors with notice of meeting.
  • Filing of copy of special resolutions on prescribed form within the specified time period.
  • Supplying a copy of the accounts to every member of the company, every debenture holder and every person who is entitled to receive notice of general meetings. You must send annual audited accounts.
  • Custody and use of the common seal. Companies are required to have a common seal and the secretary is usually responsible for its custody and use.

Conclusively, with the above points discussed it is glaring that a secretary is not a mere servant.

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