WRITING PRACTICE SESSIONS
COMPANY LAW
Subject: Company Law
Topic: General Meetings > Section 96
Date: 16th January 2024
Question 1:
ABTF Ltd unlisted Co registered in Mumbai wants to hold its AGM in Delhi on 15th Sept
9:30am. Is it allowed
Question 2:
As a company secretary referring to the provisions of Companies Act, 2013 examine the
validity of following propositions :
(a) A company wishes to call its annual general meeting on a working day at 6.30 p.m.
(b) Due to the availability of chairman, the AGM of the company can be held only on 15th
August, 2018. All members are ready to give consent in writing in advance for the same.
(c) Due to technical problem, company wants to hold its AGM at a city other than a city at
which registered office of the company is situated.
Answer to Que 1:
Applicable provisions of law:
As per Section 96 of the Companies Act 2013, Every annual general meeting (AGM)
shall be called during business hours, that is, between 9 a.m. and 6 p.m. on any day
that is not a National Holiday
Further, AGM shall be held either at the registered office of the company or at some
other place within the city, town or village in which the registered office of the
company is situated.
Provided that AGM of an unlisted company may be held at any place in India if
consent is given in writing or by electronic mode by all the members in advance.
Provided further that the Central Government may exempt any company from the
provisions of this subsection subject to such conditions as it may impose.
Conclusion:
As per the above provisions, ABTF Ltd, an unlisted Company having registered office
situated at Mumbai may hold an AGM at Delhi subject to approval of all members of the
Company in advance.
Answer to Que 2:
Applicable provisions of Law
1. According to section 96(2) of the Companies Act 2013, every annual general meeting
(AGM) can be called during business hours, that is, between 9.00a.m. to 6.00p.m. on
any day that is not a National Holiday. The Central Government is empowered to
exempt any company from these provisions, subject to such conditions as it may
impose.
2. AGM should be held either at the registered office of the company or at some other
place within the city, town or village in which the registered office of the company is
situated.
3. Annual general meeting of an unlisted company may be held at any place in India if
consent is given in writing or by electronic mode by all the members in advance.
4. In case of Government Company, the Central Government may approve such other
place for holding AGM, if the place is other than the registered office.
5. In case of Section 8 Company, the time, date and place of each AGM are decided
upon before-hand by the Board having regard to the directions if any, given in this
regard by such company in the general meeting.
Conclusion:
Ans to Que a:
Accordingly, a Company cannot hold AGM at 06:30 pm even it’s a working day.
Ans to Que b:
AGM cannot be held on a National Holiday, unless exempted by the Central Government,
even though the company has consent in writing in advance to conduct AGM on 15th
August, 2018.
Ans to Que c:
AGM can be held only at the city of registered office, unless exempted. Assuming that the
given Company is an unlisted company, annual general meeting may be held at any place in
India if consent is given in writing or by electronic mode by all the members in advance.
Subject: SBILL
Topic: Chapter 2 Types of Companies
Date: 18th January 2024
Question 1:
Raman is an Indian Citizen, and his stay in India during the immediately preceding financial
year is for 130 days. He appoints Sanjay, a foreign citizen, as his nominee, who has stayed in
India for 125 days during the immediately preceding financial year Is Raman eligible to
incorporate a One-Person Company (OPC)? If yes, can he give the name of Sanjay in the
Memorandum of Association as his nominee? Justify your answers with relevant provisions
of the Companies Act, 2013.
Question 2:
Vinod formed a single person economic activity in the form of One Person Company with his
brother Kishor as its nominee. On 18th January, 2024, Kishor withdrew his consent as
Nominee of the One Person Company. Can he do so?
Examine whether the following individuals are eligible for being nominated as Nominee of
the One Person Company as on 18th January, 2024 under the provisions of the Companies
Act, 2013.
(1) Shyam is son of Vinod, who is 15 years old as on 18th January, 2024.
(2) Ashok, an Indian Citizen residing in India who is presently a member of a One Person
Company.
Question 3:
Axar is in plant research and he has invented a process for extracting blo-fuel from certain
plants, now he is proposing to commercialize his invention by promoting a One Person
Company (OPC). But he proposes his name and his wife name as directors of the Company.
As a Company Secretary clarify Axar on number of shareholders and directors OPC can have.
Also brief him the provisions on Board, Annual General Meeting, signing of financial
statements, Board's Report and Annual Return.
Question 4:
(i) Luv Ltd. has entered into a contract with Kush Ltd. by which Kush Ltd. will control
22% of the sale and disposal of the output of Luv Ltd. Enumerate the nature of
relationship between both Companies.
(ii) If Surya Pvt. Ltd. having paid-up share capital of 45 Iakh and annual Turnover of
185 lakh is a wholly owned subsidiary of Hima Ltd. a listed Company, Can Surya
Pvt. Ltd. be called a Small Company? Explain.
Question 5:
TP Pvt. Ltd. registered under the Companies Act, 2013 with paid-up capital of 3.5 Crore and
turnover of 42 Crore. Explain the meaning of 'Small Company' and examine the following in
accordance with the provision of the Companies Act, 2013:
(i) Whether the TP Pvt. Ltd. can avail the status of 'Small Company?
(ii) Will your answer be different if the turnover of the company is 38 Crore?
Question 6:
San Industries Private Limited Company has its paid-up share capital of 3 Crore and turnover
of 45 Crore as per the last audited Balance Sheet. Examining the provisions of the
Companies Act, 2013, decide whether the company will be treated as small company.
Answers
Answer to Que 1:
Applicable provisions of law:
As per Rule 3 of the Companies (Incorporation) Rules, 2014, only a natural person who is an
Indian citizen and whether resident in India or otherwise -
(a) shall be eligible to incorporate a One Person Company;
(b) shall be a nominee for the sole member of a One Person Company.
"Resident in India" means a person who has stayed in India for a period of not less than 120
days during the immediately preceding financial year.
Conclusion:
Considering the above provisions, answer to given case is as follows:
(i) Raman's an Indian Citizen and whose stay in India during the immediately preceding
financial year is more than 120 days i.e. he is resident of India. He is eligible to incorporate
One Person Company in India.
(ii) Sanjay is a foreign citizen and hence he cannot be appointed as nominee in One Person
Company even though his stay in India is more than 120 days.
Answer to Que 2:
Applicable Provisions of law:
Consent of nominee: The subscriber to the memorandum of OPC shall nominate a person,
after obtaining prior written consent of such person, who shall, in the event of the
subscriber's death or his incapacity to contract, become the member of that One Person
Company.
Withdraw of consent by nominee: The person nominated by the subscriber or member of
OPC may, withdraw his consent by giving a notice in writing to such sole member and to the
One Person Company.
However, the sole member shall nominate another person as nominee within 15 days of the
receipt of the notice of withdrawal and shall send an intimation of such nomination in
writing to the Company, along with the written consent of such other person so nominated
in Form INC-3.
Filing with ROC: The company shall within 30 days of receipt of the notice of withdrawal of
consent file with the ROC, a notice of such withdrawal of consent and the intimation of the
name of another person nominated by the sole member in Form INC-4 and the written
consent of such another person so nominated in Form INC-3.
Further, as per the Rules 3 & 4 of the Companies (Incorporation) Rules, 2014 in relation to
given case are as follows:
Nominee: Only a natural person who is an Indian citizen and resident in India shall be a
nominee for the sole member of OPC.
For this purpose "Resident in India" means a person who has stayed in India for a period of
not less than 120 days during the immediately preceding financial year.
A natural person shall not be member of more than a One Person Company at any point of
time and the said person shall not be a nominee of more than a One Person Company.
No minor shall become member or nominee of the One Person Company or can hold share
with beneficial interest.
Conclusion:
Kishor can withdraw his consent as nominee from One Person Company by following the
procedure as given above.
Further, Considering the above provisions answer to given case is as follows:
(I) Shyam, who is minor, cannot be appointed as nominee.
(II) Ashok cannot be appointed as nominee as a natural person shall not be member or
nominee of more than a One Person Company.
Answer to Que 3:
Following are the provisions of the Companies Act, 2013 relating One Person Company:
(a) One Person Company: As per Section 2(62), One Person Company means a company
which has only one person as a member.
(b) Eligibility to incorporate OPC: A natural person who is an Indian citizen and resident in
India shall be eligible to incorporate a One Person Company (OPC).
(c) Directors in OPC: As per section 149(1), One Person Company may have more than one
director on its Board. But OPC should have only one member.
(d) Meeting of Board of Directors of OPC: As per section 173(5), it is required to hold at least
one meeting of the Board of Directors in each half of a cal- endar year and the gap between
the two meetings should not be less than 90 days.
For OPC having only one director, the provisions of Section 173 [Meetings of the Board) and
Section 174 [Quorum for meeting of Board] will not apply.
(e) No AGM for OPC: As per Section 96(1), OPC need not hold annual general meeting
(f) Annual return of OPC: As per section 92(1), the annual return shall be signed by the
Company Secretary, or where there is no Company Secretary, by the director of company.
(g) Signing of financial statement & Board's Report: As per Section 134(1), financial
statement and Board's Report can be signed only by one director.
Conclusion:
Hence, Azar may incorporate an OPC and he and his wife may be the directors of the
company subject to compliance of the provisions as given above.
Answer to Que 4:
Applicable provisions of law:
- Associate Company [Section 2(6)]: Associate Company in relation to another
company, means a company in which that other company has a significant influence,
but which is not a subsidiary company of the company having such influence and
includes a joint venture company.
- Significant Influence: Significant Influence means control of at least 20% of total
share capital, or of business decisions under an agreement.
- Small Company [Section 2(85)]: Small company means a private company-
(i) Paid-up share capital of which does not exceed 4 Crore or such higher amount as may be
prescribed which shall not be more than 10 Crore and
(ii) Turnover of which as per its last profit and loss account does not exceed 40 Crore or such
higher amount as may be prescribed which shall not be more than 100 Crore.
Conclusion:
Considering above provisions, answer to given case is as follows:
(i) In the given case, Kush Ltd. controls more than 20% of the sale and disposal of the output
of Luv Ltd. Thus Luv Ltd. is the associate of Kush Ltd. But Luv Ltd. neither influences the
business decision of Kush Ltd. in any manner nor does it control 20% of the total share
capital of Kush. Ltd. Hence Kush Ltd. cannot be called an associate of Luv Ltd.
(ii) Holding or a subsidiary company cannot be treated as small company and thus Surya Pvt.
Ltd. cannot be treated as small company as it is subsidiary of another company Hima Ltd.
Answer to Que 5
Applicable provisions of Law:
Small Company [Section 2(85)]: Small company means a private company-
(i) Paid-up share capital of which does not exceed 4 Crore or such higher amount as may be
prescribed which shall not be more than 10 Crore and
(ii) Turnover of which as per its last profit and loss account does not exceed 40 Crore or such
higher amount as may be prescribed which shall not be more than 100 Crore.
Conclusion:
In view of above, answer to given case is as follows:
(i) Paid-up share capital is 3.5 Crore and turnover is 42 Crore. TP Pvt. Ltd. fulfils only one
criteria and not both and hence it cannot be treated as small company.
(ii) Paid-up share capital is 3.5 Crore and turnover is 38 Crore. TP Pvt. Ltd. fulfils both criteria
and hence it can be treated as small company.
Answer to Que 6:
Applicable provisions of law:
Small Company [Section 2(85)]: Small company means a private company-
(i) Paid-up share capital of which does not exceed 4 Crore or such higher amount as may be
prescribed which shall not be more than 10 Crore and
(ii) Turnover of which as per its last profit and loss account does not exceed 40 Crore or such
higher amount as may be prescribed which shall not be more than 100 Crore.
Nothing in this definition shall apply to: [This means following companies cannot be small
companies]
(a) Holding or a subsidiary company.
(b) Company registered under section 8.
(e) Company or body corporate governed by any Special Act.
Conclusion:
As per facts given in case, paid-up share capital of the company is 3 Crore and turnover is 45
Crore. It fulfils only one criteria and not both and hence it cannot be treated as small
company.
