NEW SYLLABUS

522
Roll No. ..................................... : 1 :

Time allowed : 3 hours Maximum marks : 100

Total number of questions : 6 Total number of printed pages : 15

NOTE : 1. Answer ALL Questions.

2. All references to sections relate to the Companies Act, 2013 unless stated otherwise.

PART–I

1. Case Study :
Background :

Lalit, Bisen, Roma, Raunak, and Rasik, a practicing company secretary, have formed a
brainstorming group to discuss, deliberate, and resolve various issues they encounter in their
daily works related to company law. They decided to meet every Sundary evening to share
their views on issues brought before the group. Several meetings have taken place, and the
important issues discussed in detail are outlined below :
(i) Change in the name of the company and issues connected therewith :
Lalit began the discussion by informing the group that his client, Roopam Leathers
Limited (the Company), changed its name to Rakshak Leathers Limited in January
2024, following the due process of law. Before this change, the company had filed
a suit against one of its suppliers in May 2023 to recover compensation due to
a breach of contract. However, in April 2024, the supplier applied to the Court
for dismissal of the suit, arguing that Roopam Leathers Limited ceased to exist after
the name change and the issuance of a new certificate of incorporation by the Registrar.
The Managing Director of the Company has expressed concern about the fate of
the litigation against the supplier.
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(ii) Employees Stock Option Scheme (ESOP/Scheme) :

Bisen mentioned that his client, JK Aluminium Limited, is planning a public issue of
equity shares and intends to offer options to the directors, officers, or employees
of the company under an ESOP. The CFO of the company expressed doubt about
whether all employees, directors, and independent directors are eligible for share allotment
under this scheme. He also questioned whether the vesting period can be set at
2 years and if a lock-in period of five years can be provided in the scheme.
(iii) Books of Account in respect of Branch Office :
Roma stated that she has been appointed as the Secretarial Auditor of Janak Textile
Limited, which has its registered office in Chennai, India, and a branch office in California,
USA. While conducting the secretarial audit for the financial year 2023-24, she noticed
that one director of the company had requested financial information beyond the financial
returns maintained at the registered office concerning the branch office. However, his
request was denied by the Board, which contended that a director can only inspect
the summarized quarterly returns sent by the branch office to the registered office.
She asked the other group members to analyse the situation.
(iv) Dormant status of the company by ROC :
Raunak brought up the issue of a dormant company for discussion. He said that
his client MM Consultancy Ltd. (the company) received a notice from the Registrar
of Companies (the ROC/Registrar) for entering its name in the register maintained
for dormant companies. Upon reviewing the company’s records, he found that it had
not filed its financial statements for two consecutive financial years and an annual return
for the preceding financial year i.e. for only one year. He requested the group to
discuss and deliberate on this situation, particularly in light of the Managing Director’s
concern about the validity of the Registrar’s notice, and sought clarification on the
provisions governing the status of a dormant company at the Registrar’s behest.

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(v) Inviting deposits from public by a government company :

Rasik mentioned that he is a legal advisor to MNO Corporation Ltd; a government
company. The balances extracted from the latest audited financial statements of the
company are as follows :

Sr.No. Particulars ` in crore

1 Paid-up equity share capital 10
2 Free Reserves 4
3 Securities Premium Account 2
4 Turnover 300

The company proposes to invite deposits of ` 4 crore from public. He analysed

the proposal and observed that the deposit amount is within the prescribed statutory
limit. He then invited comments from the other group members on the proposal.

Based on the above scenarios, analyse the issues, and provide legal opinions
on each case, sequentially, in accordance with the provisions of the Companies
Act, 2013, as detailed below :
(a) Explain the effect of the change in the company’s name and advise the Managing
Director on whether the Supplier’s application for dismissal of the case is tenable.
(3 marks)
(b) Regarding the Employees Stock Option Scheme (ESOP), explain the following :
(i) Whether all employees, directors, and independent directors are eligible for
allotment of shares under this scheme ?
(ii) Whether a lock-in period of five years can be provided under the
ESOP ?
(3 marks)

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(c) As brought up by Roma, the request of a director for financial information related
to a branch office—beyond the summarized quarterly returns maintained at the registered
office of Janak Textile Limited—was rejected by the Board. Analyse the situation
and determine, whether the Board’s decision to deny the requested information to
the director is valid.
(3 marks)
(d) Considering the discussion on the topic of dormant companies, elucidate the provisions
under which the Registrar may declare a company as dormant. Also, determine the
validity of the notice issued by the Registrar to MM Consultancy Ltd.
(3 marks)
(e) As informed by Rasik under Para (v), the government company proposes to invite
deposits of ` 4 crore from the public. Explain the prescribed limit up to which a
government company can invite deposits from the public, and assess whether MNO
Corporation Ltd. can invite deposits of ` 4 crore.
(3 marks)
2. (a) NSG Ltd. created a charge in favour of Bank A for a loan it took, and the particulars
of the charge have already been registered with the Registrar of Companies. Later,
Bank A transferred or assigned this charge to Bank B as part of a loan portfolio
sale, without altering any other terms and conditions of the original loan agreement.
Are there any compliance requirements related to the registration of charges under
the Companies Act, 2013, in this case ?
(3 marks)
(b) Abbas is a member of PTR Ltd., an unlisted company that has adopted Articles
of Association as per Article 84 of Table F of Schedule I under the Companies
Act, 2013, concerning the adjustment of dividends. Abbas owes to the company a
total sum of ` 10,000, broken down as follows :

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(1) Calls in arrears : ` 3,000

(2) Unpaid Securities Premium : ` 5,000
(3) Other Debts : ` 2,000
PTR Ltd. has declared a dividend of ` 10,000 on the shares owned by Abbas.
The company proposes to adjust the total debts of Abbas of ` 10,000 against the
dividend payable to him.
As the Company Secretary of PTR Ltd., how would you respond to the company’s
proposal to adjust the debts against the dividend payable to Abbas in accordance
with the provisions of the Companies Act, 2013 ?
(3 marks)
(c) RK Info Pvt. Ltd. (the company) has the following financial details as of 31st March,
2024, according to its financial statements :
• Paid-up share capital : ` 60 crore
• Turnover : ` 180 crore
• Outstanding deposits : ` 30 crore
The company is planning to appoint Salim, who is currently serving as the whole-
time Company Secretary, as its internal auditor.
You are requested to assess the following :
(i) Is RK Info Pvt. Ltd. mandatorily required to appoint an internal auditor under
the provisions of the Companies Act, 2013 ?
(ii) Can a Company Secretary who is in the whole-time employment with a company
be appointed as the internal auditor of the same company according to the
applicable provisions of the Companies Act, 2013 ?
(3 marks)
(d) The debenture trustee of DC Limited has observed that the company’s management
is suspected of siphoning off funds, leading to financial losses for the debenture holders.

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Is the situation a valid reason for the debenture trustee to make an application to
the Tribunal for an investigation into the affairs of the company ? Is the debenture
trustee competent to make such an application to the Tribunal ? If so, who is the
competent authority to appoint the inspectors to conduct the investigation ? Explain
with reference to the provisions of the Companies Act, 2013.
(3 marks)
(e) S Ltd. has equity shares with voting rights that are pari passu. X Ltd., Y Ltd.,
and Z Ltd. each hold 20% of the equity shares in S Ltd. The remaining 40% of
the shares are held by retail investors. R Ltd. controls the composition of the Board
of Directors of X Ltd., Y Ltd., and Z Ltd. Based on the provisions of the Companies
Act, 2013, determine whether R Ltd. qualifies as a holding company of S Ltd.
(3 marks)
3. (a) Guddi Logistics Limited offered 1,00,000 equity shares of ` 10 each to a select
group of 250 persons, including 60 qualified institutional buyers. The share application
money was received by the company on 1st August 2024. However, the company
failed to allot the shares by 30th September 2024. During this period, the company
utilized this money to pay interest on a cash credit limit sanctioned by its banker.
The company secretary raised an objection to the utilization of the share application
money for interest payment and suggested the CFO to refund it to the share applicants
with interest at 12% per annum, effective from 1st October 2024. The CFO holds
the view that the interest will be payable from 15th October, 2024.
Considering the provisions of the Companies Act, 2013, examine the validity of the
offer made to the select group of 250 persons, as well as the objection and suggestion
made by the company secretary to the CFO.
(5 marks)

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(b) Soya Products Ltd. has been operating successfully for several years. In the financial

year 2020-21, the company reported a significant increase in revenue and profits.

However, in 2024-25, a whistleblower within the company revealed that the financial

statements for 2020-21 were manipulated by the company’s top management to inflate

profits and conceal losses. The whistleblower filed a complaint with the Central

Government, providing supporting documents. The Central Government conducted an

investigation based on the whistleblower’s evidence and concluded that the accounts

for 2020-21 should be re-opened and the financial statements re-cast. Referring to

the provisions of the Companies Act, 2013, examine the feasibility of re-opening the

accounts and re-casting the financial statements for the financial year 2020-21.

(5 marks)

(c) RSV Private Limited., incorporated five years ago, passed a special resolution during

its Annual General Meeting (AGM) held on 30th September, 2024, to issue 10 lakh

sweat equity shares at a discount to a class of directors and permanent employees.

The company’s latest financial statement shows an issued, subscribed, and paid-up

equity share capital of ` 5 crore, divided into 50 lakh equity shares of ` 10 each.

Considering the provisions of the Companies Act, 2013 :

(i) Assess the validity of issuing 10 lakh sweat equity shares with a lock-in period

of 5 years.

(ii) Would your answer change, if RSV Pvt. Ltd. were classified as a Start-up

company as defined by the Ministry of Commerce and Industry, Government

of India ?

(5 marks)

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Attempt all parts of either Q. No. 4 or Q. No. 4A

4. (a) Chitra Developers Limited, a listed company, adopted Articles of Association as per
Article 84 of Table F of Schedule I under the companies Act, 2013, held a Board
of Directors meeting on 1st February 2024, during which an interim dividend of 10%
was declared. The dividend amount was transferred to a separate bank account within
the prescribed timeline. However, in a subsequent Board meeting on 10th February
2024, the Board resolved to revoke the declared interim dividend. The separate bank
account was closed, and the dividend amount was transferred back to the company’s
general bank account.
In the Board meeting held on 5th August 2024, the financial statements for the year
ending 31st March 2024 were approved, and the Board proposed a final dividend
of 10%. At the Annual General Meeting (AGM) held on 10th September 2024, the
shareholders decided to declare a final dividend at a rate of 20%, considering the
earlier revocation of the interim dividend. Considering the provisions of the Companies
Act, 2013 :
(i) Discuss the validity of the Board’s decision to declare and subsequently revoke
the interim dividend. Additionally, specify the date by which the company should
have deposited the interim dividend amount into a separate bank account.
(ii) Evaluate whether the shareholders’ decision to declare a final dividend at the
rate of 20%, instead of the 10% proposed by the Board, is legally valid.
(5 marks)
(b) Alpha Ltd., a parent company, owns 100% of the equity shares of Beta Ltd., its
wholly owned subsidiary. The companies have proposed a scheme of merger/amalgamation
under Section 232 of the Companies Act, 2013, whereby Beta Ltd. will be merged
into Alpha Ltd.
Both companies have submitted an application before the National Company Law
Tribunal (NCLT), seeking approval of the scheme without convening meetings of their
equity shareholders, secured creditors, and unsecured creditors.

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Discuss, whether the National Company Law Tribunal (NCLT) has the jurisdiction
to dispense with the requirement of conducting such meetings for the purpose of
sanctioning the scheme of amalgamation. Additionally, identify and elaborate on the
key factors the Tribunal will consider before issuing an appropriate order. Justify your
answer with reference to the provisions of the Companies Act, 2013.
(5 marks)
(c) Greenfield Infrastructure Ltd., a company engaged in large-scale infrastructure projects,
decides to raise funds by issuing 1,00,000 non-convertible secured debentures with
a face value of ` 100 each, amounting to ` 1 crore. The debentures carry an interest
rate of 9% per annum, payable annually, and are redeemable after 17 years from
the date of issue. The prospectus for subscription of debentures was issued on 1st
April, 2022.
To protect the interests of the debenture holders, the company appoints SafeGuard
Trustees Ltd. as the debenture trustee. The debenture trustee noted that the company
defaulted on the payment of interest for two consecutive years, specifically for the
payments due on 31st March 2023 and 31st March 2024.
Considering the facts given above and the provisions of the Companies
Act, 2013 :
(i) Assess the validity of the redemption period for the debentures.
(ii) Discuss the mandatory compliance requirements for appointing a debenture
trustee, including the time limit for such appointment and the execution of the
trust deed.
(iii) Identify the circumstances under which it is the duty of the debenture trustee
to appoint a nominee director on the Board of the Company.
(5 marks)

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OR (Alternate question to Q. No. 4)

4A. (i) (a) Rocky Images Ltd. has Varun, –Chief Financial Officer (CFO) and Prateek–
Managing Director (MD). There is no wholetime director in charge of finance
in the company. Varun (CFO) is of the opinion that if there is any allegation
by shareholders for financial statements not complying with accounting standards
then MD Prateek will be held responsible and punished whereas Prateek (MD)
believes that Varun (CFO) would be held, so an argument started between
the two. Discuss the above scenario in line with provisions of Companies
Act, 2013.
(b) Unlisted Resham Cements Ltd. had achieved a turnover two hundred crore
in FY 2017-18 and had to file their balance sheet and statement of profit
and loss in XBRL mode. Gradually their turnover started declining due to
inadequate demand of cements every year and in FY 2023-24 the company
could achieve only rupees forty crore turnover. The accountant of the company
is of the view that now XBRL mode of filing is not needed any more as
the XBRL limit is not reached and five years have expired. Comment on the
view of the accountant under Companies Act, 2013.
(3+2=5 marks)

(ii) Explain the meaning of a “member” under the provisions of the Companies Act, 2013.
Can a subsidiary company become a member and shareholder of its holding
company ? Can a foreigner be a member of a company ? You are requested to
clarify these points with reference to the provisions of the Companies Act, 2013.
(5 marks)

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(iii) The Companies Act, 2013 provides certain protections to employees during the
investigation of a company’s affairs and grants a remedy of appeal against actions
taken by the management. Explain.
(5 marks)
PART–II
5. Case Study :
Introduction :
Disha Beauty Products Limited (the company), incorporated five years ago with its registered
office in Mumbai, India, began manufacturing cosmetic products under the brand name ‘Kasturi.’
The product range includes nail enamel, foundation cream, compact, mascara, eye pencil,
etc. Due to its organic composition and maintaining the consistency in the quality the company’s
products quickly gained popularity, capturing a significant share of the Indian market. Under
the leadership of Disha, the Managing Director, the company experienced growth in turnover
and profitability, earning a strong reputation in both consumer and industry circles.
Additional Directors :
To facilitate future expansion, the company intended to appoint Joe and Jogesh as additional
directors due to their extensive experience and business acumen. Disha had previously proposed
Joe for a regular director position at the Annual General Meeting (AGM), but the motion
failed, and Joe was not appointed, Jogesh is proposed to be appointed as an additional
director for the first time. The Board of Directors, exercising powers conferred by the Articles
of Association, appointed both Joe and Jogesh as additional directors in the board meeting
held on 31st March 2024.
The AGM, originally due on 30th September 2024, could not be held on the due date.
The company obtained a three-month extension from the Registrar of Companies and held
the AGM on 31st December 2024.

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Loan/Security to other Company :

The company provided security for a loan of ` 25 lakh taken by Rupa Chemicals Limited

(RCL), in which Harshal and Sujit, directors of the company, hold 10% and 15% equity

shares, respectively, with voting rights. The Secretarial Auditor observed that this transaction

might be invalid. The company argues that it has complied with all legal formalities and asserts

that none of the directors is interested in RCL as per the law.

Board Meeting :

The Board of Directors planned to issue equity shares to the public and held a meeting

on 15th May 2024 to approve the prospectus. Out of the 12 directors, three attended the

meeting physically, and one attended via audio-visual means. One other director had informed

the company secretary on 1st April 2024, of his intention to attend the next board meeting

electronically. The company advised him to attend in person, stating that electronic arrangements

could not be made as the intimation of his intention to attend the meeting electronically was

not given at the beginning of the calendar year 2024.

Appointment of relative of the Managing Director :

Juley, a company secretary and sister of Disha, the Managing Director, is proposed to be

appointed as a ‘Consultant’ with a monthly remuneration of ` 2.75 lakh. Disha seeks clarification

on the applicable legal provisions concerning this appointment.

Based on the above information and referring to the provisions of the Companies

Act, 2013 you are requested to address the following :

(a) Examine the validity of the appointment of Joe and Jogesh as additional directors

of Disha Beauty Products Limited. Also, discuss the tenure of their appointment.

(5 marks)

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(b) The Secretarial Auditor has observed that the transaction involving Disha Beauty Products

Limited providing security for a ` 25 lakh loan taken by Rupa Chemicals Limited

is invalid. Analyse the validity of this transaction.

(5 marks)

(c) Determine, whether the quorum was present at the Board meeting held on 15th May,

2024 for the approval of the Prospectus. Additionally, assess whether the company’s

advice to a director to attend the meeting in person instead of electronically—due

to the notice of electronic participation not being given at the beginning of the calendar

year—was valid.

(5 marks)

(d) Determine, discussing the relevant provisions of the Companies Act, 2013, whether

the appointment of Juley as a consultant for Disha Beauty Products Limited constitutes

a related party transaction. Additionally, explain the necessary approval and disclosure

compliance requirements for such transactions.

(5 marks)

Attempt all parts of either Q. No. 6 or Q. No. 6A

6. (a) Draft a specimen notice for the Annual General Meeting (AGM) in accordance with

the provisions of the Companies Act, 2013, ensuring that there is no special business

to be transacted.

(5 marks)

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(b) Explain the requirement for constitution, composition, and functions of the Stakeholders
Relationship Committee as per the provisions of the Companies Act, 2013 and SEBI
(LODR) Regulations, 2015.
(5 marks)
(c) XYZ Ltd. intends to allot equity shares on a private placement basis. These equity
shares will rank pari-passu with the existing equity shares in all respects. You are
requested to provide a specimen draft of the board resolution approving the private
placement of shares, in compliance with the provisions of the Companies Act, 2013.
(5 marks)
(d) You are requested to draft sample minutes of a board meeting in which the transaction
of a share transfer, along with the usual items of business, was conducted, in accordance
with the provisions of the Companies Act, 2013
(5 marks)

OR (Alternate to Q. No. 6)

6A. (i) Some members of a company with share capital intend to request the Board of Directors
to convene an Extraordinary General Meeting (EGM) to transact the business of buying
back shares. If the Board fails to convene the EGM, the members plan to call the
meeting themselves.
You are requested to explain the provisions of the Companies Act, 2013, regarding
the calling and holding of an EGM by the Board upon requisition by members, and
the timeline for calling an EGM by the requisitionists, if the Board fails to do so.
Additionally, examine the feasibility of conducting such an EGM for the buy-back
of shares and outline the consequences, if the quorum is not present at a meeting
called by the members.
(5 marks)
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(ii) You are requested to explain the provisions of the Companies Act, 2013, and the
SEBI (LODR) Regulations, 2015, regarding the vigil mechanism/whistleblower policy,
addressing the following points :
(a) Which companies are required to establish a vigil mechanism ?
(b) What safeguards against victimization must be provided, and who are they
meant to protect ?
(c) Who is responsible for overseeing the vigil mechanism in companies with and
without an audit committee ?
(d) What are the disclosure requirements related to the vigil mechanism ?
(5 marks)
(iii) Explain the provisions of Rule 7 of the CSR Rules, 2014, under the Companies
Act, 2013, concerning :
(i) the CSR expenditure,
(ii) the ceiling on administrative overheads,
(iii) the treatment of surplus arising from CSR activities,
(iv) the handling of excess CSR spending, and
(v) the acquisition of capital assets.
(5 marks)
(iv) Describe the disqualifications for a person to be appointed or to continue as a Managing
Director, Whole-time Director, or Manager under the provisions of the Companies
Act, 2013, read with the relevant conditions stipulated in Part I of Schedule V thereto.
(5 marks)

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NEW SYLLABUS
523
Roll No. ..................................... : 1 :

Time allowed : 3 hours Maximum marks : 100

Total number of questions : 6 Total number of printed pages : 12

NOTE : Answer ALL questions.

PART–I

1. XYZ Appliances Pvt. Ltd. is carrying on the business of manufacturing and trading of kitchen
appliances at Sadar Bazar, Delhi. X, Y and Z are the three directors of the company who
also hold shares of the company in the ratio of 35 : 35 : 30. The business of the company
is flourishing and the company has opened its branches in the cities of Noida, Gurgaon and
Faridabad.

In order to protect their personal interests, X, Y and Z propose that any amendment in
the Articles of Association of the company should be made only with the approval of all
the shareholders of the company. They approach M, a practicing company secretary to seek
his advice on the alteration of Articles of Association of the company only with the approval
of all the shareholders. M advises them suitably.

XYZ Appliances Pvt. Ltd. receives an export order from a company based at France. In
order to export the goods, the company requires Importer Exporter Code (IEC). The directors
of the company again approach M who explains them the procedure to apply for IEC on
the DGFT portal. After getting the IEC in the name of the company, the export order is
successfully completed by the company.

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A company based at Japan approaches XYZ Appliances Pvt. Ltd. to form an alliance for
sharing of latest technical advancements in the industry for mutual benefit of both the companies.
The directors of XYZ Appliances Pvt. Ltd. discuss on the objectives of the foreign collaboration.
Thereafter, a technical collaboration is made between both the companies.

The scale of operations of XYZ Appliances Pvt. Ltd. increases multifold and the directors
intend to convert it into a public limited company. With the professional assistance of M,
the company is converted into a public limited company. M also advises on the post conversion
requirements to be arranged by XYZ Appliances Ltd.

Y goes on a business trip to Singapore and meets his friend John, who is a director in
a company based at Singapore in the name of JSS Realtech Pte. Ltd. JSS Realtech Pte.
Ltd. is engaged in the development of townships, construction of residential or commercial
premises, roads or bridges for selling or leasing. John advises Y that the company, XYZ
Appliances Ltd. may invest in JSS Realtech Pte. Ltd. to earn more profits. On return, Y
informs X and Z that XYZ Appliances Ltd. may invest in JSS Realtech Pte. Ltd., engaged
in real estate activity at Singapore. However, Z is of the view that the Overseas Direct
Investment (ODI) in a foreign entity engaged in real estate activity is prohibited.

In view of the above, answer the following :

(a) What is the advice of M to X, Y and Z on their proposal regarding alteration of

Articles of Association of XYZ Appliances Pvt. Ltd. only with the approval of all
the shareholders ?

(3 marks)

(b) What is the process to apply for Importer Exporter Code (IEC) on the DGFT portal
as advised by M to the directors of XYZ Appliances Pvt. Ltd. ?

(3 marks)

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(c) What are the objectives of the foreign collaboration as discussed by the directors
of XYZ Appliances Pvt. Ltd. ?

(3 marks)

(d) What are the post conversion requirements to be arranged by XYZ Appliances Ltd.
after conversion from a private limited company to a public limited company ?

(3 marks)

(e) Is the view of Z regarding the Overseas Direct Investment (ODI) by XYZ Appliances
Ltd. in JSS Realtech Pte. Ltd. correct ?

(3 marks)

2. (a) ABC Group is a combination of dairy farmers operating in two States, Maharashtra
and Gujarat. They have been operating successfully under separate state cooperative
societies for several years. However, due to growing demand for their products and
the need to streamline operations across state boundaries, the group is considering
the formation of a Multi-State Cooperative Society (MSCS) under the Multi-State
Cooperative Societies Act, 2002.

What are the legal and procedural steps involved in registering a Multi-State
Cooperative Society under the Multi-State Cooperative Societies Act, 2002 ?

(3 marks)

(b) Resilience Asset Reconstruction Company (RARC) emerged in response to the growing
crisis of non-performing assets (NPAs) in the Indian banking sector by offering innovative
solutions for asset recovery and management.

How does RARC contribute to improving the financial health of banks ?

(3 marks)

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(c) MNC LLP, a consulting firm, faced serious allegations of financial misconduct involving
a senior partner, Kumar, who was accused of falsifying financial reports. Employees
felt unsafe reporting these concerns internally until Priya, a junior consultant, decided
to blow the whistle. She submitted a formal complaint along with evidence to the
Whistleblower Committee, citing Section 31(1) of the Limited Liability Partnership Act,
which protects whistleblowers from retaliation.

What are the protections provided to Priya for reporting misconduct under Section
31(1) of the LLP Act, 2008 ?

(3 marks)

(d) GreenTech Innovations is a micro enterprise founded in 2020 by Raj, an engineering

graduate with a passion for renewable energy. Based in a small town, the company
specializes in manufacturing solar-powered lamps aimed at rural areas that lack reliable
access to electricity. Raj’s vision is to provide affordable, sustainable lighting solutions
that improve the quality of life in these communities.

Explain the role of Micro, Small, and Medium Enterprises (MSMEs) like GreenTech
Innovations in economic development and community empowerment.

(3 marks)

(e) Global Tech Solutions, a prominent software development company headquartered in

the United States, has successfully established its initial branch office in Bengaluru.
Following the success of this office, the company has identified the need to establish
an additional branch office in Hyderabad to further expand its market presence and
enhance service delivery.

What are the critical steps and activities involved in establishing an additional branch
office in India for foreign entities like Global Tech Solutions ?

(3 marks)

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3. (a) Anil wants to incorporate a company in the name ‘National Electricity Corporation

Limited’. However, the application was rejected with the reason that the name is

identical to the name of an existing company i.e., ‘Rashtriya Vidyut Nigam Limited’.

Anil objects to this rejection.

Referring to the provisions of Rule 8 of the Companies (Incorporation) Rules, 2014,

examine the validity of objection of Anil.

(3 marks)

(b) The Green Future Trust operates transparently and focuses on charitable purposes,

adhering to legal requirements for trusts in India. According to the Indian Trust Act,

1882, what are the constituents of The Green Future Trust ?

(3 marks)

(c) Chitra Chit Fund Company, established in 2015, operates in a small town in India,

providing a platform for local residents to save and borrow money through a traditional

chit fund system. With a growing customer base, the company aims to expand its

operations while ensuring compliance with regulatory requirements.

What are the restrictions imposed by the RBI on chit fund companies like Chitra
Chit Fund Company ?

(3 marks)

(d) QuickTech Solutions, a small software development company based in Pune, specializes

in creating customized software applications for businesses across India. Initially, the

company operated under the composition scheme due to its modest revenue. However,

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in the financial year 2022-23, QuickTech’s turnover surpassed ` 30 lakh, and it began

offering services to clients in other states.

What are the implications of Section 24 of the CGST Act, 2017, for QuickTech

Solutions in terms of compulsory GST registration ?

(3 marks)

(e) BrightFuture Foundation wants to apply for section 8 company license while engaging

in commercial activities, such as offering paid online courses, to fund its charitable

activities. How would these commercial activities align with the eligibility criteria

for a section 8 company, which focuses on promoting charitable objectives over

profit-making ventures ?

(3 marks)

Attempt all parts of either Q. No. 4 or Q. No. 4A

4. (a) Differentiate between an Equity based Joint Venture and a Contractual Joint Venture.

(b) Explain the concept of Life Cycle of Start-up.

(c) ‘Contracts lie at the crux of running any business’. Elucidate.

(d) Prepare a note on ‘Infrastructure Debt Fund : Non-Banking Financial Company

(IDF-NBFC)’

(e) What are the benefits of incorporating a Nidhi Company ?

(3 marks each)

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OR (Alternate question to Q. No. 4)

4A. (i) ‘The degree of control and management that an entrepreneur desires to have over
business affects the choice of form of organization’. Explain

(ii) Which are the technological aspects that should be considered before choosing a business
location outside India ?

(iii) State the method of calculating Net Owned Funds as per RBI definition for obtaining
NBFC license.

(iv) Differentiate between Partnership Agreement and Trust Deed.

(v) What is meant by Joint Hindu Family Business ?

(3 marks each)

PART–II

5. Hindustan Power Supply Ltd. (HPSL) is a wholly owned Government Company. The company
employed a diverse workforce, including both full-time employees and contractual workers,
who played important roles in the company’s success. However, as the company expanded,
disparities in pay and benefits between these two groups began to surface.

Rajesh, holds a degree in Electrical Engineering (BE) from UGC recognized university having
over 10 years of experience in the company. He has been working on projects alongside
full-time employees and had been a key contributor to HPSL for over a decade. As an
Assistant Engineer, he worked on numerous high-profile power generation and transmission
projects, often collaborating closely with full-time employees. Despite his contributions being
at par with those of his full-time colleagues, Rajesh’s compensation remained significantly lower.

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He also lacked the job security and benefits, such as health insurance and paid leave, that

were provided to full-time employees.

Over the years, the disparity between Rajesh's compensation and that of his full-time counterparts,

like Meera, a full-time Executive Engineer, who joined the company around the same time

as Rajesh, enjoying higher pay, benefits, and job security became more pronounced. Meera,

who had great respect for Rajesh’s skills and work ethic, was aware of the inequity but

felt uncertain about how to address it within the corporate structure. Meanwhile, Rajesh's

growing frustration began to affect his motivation and sense of loyalty to the company.

One evening, after discussing his situation with a friend, Rajesh was introduced to Anjali,

a renowned Advocate in service matters and employee related issues. Rajesh shared his concerns

with Anjali, who informed him about a significant legal precedent in India– ‘Dhirendra Chamoli

Vs. State of U.P.’, whereas Hon’ble Apex Court passed the doctrine of equal pay for equal

work. Anjali also referenced the recent judgement of Hon’ble Supreme Court in the matter

of State of Punjab & Ors. vs Jagjit Singh & Ors., in which the Court primarily addressed

the regularization of temporary employees and strongly affirmed the principle of “equal pay

for equal work.” According to this principle, Rajesh, who was performing the same duties
as full-time employees, was entitled to equal compensation, regardless of his contractual status.

Empowered by this information, Rajesh decided to take action. With Anjali’s guidance, he

and several other contractual workers in the company submitted a formal grievance to Patel,

the Chief General Manager, Human Resources of the company. The grievance outlined their

concerns about the pay disparity and referenced the various judgements of Supreme Court,

requesting the company to review its compensation practices to ensure fairness.

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Patel, a seasoned HR professional with a strong commitment to ethical business practices,

took the grievance seriously. He initiated a comprehensive review of the company’s compensation

policies and consulted with legal experts to understand the implications of the judgements

of Supreme Court with respect to ‘Equal pay for Equal work’ in the corporate context.

Recognizing that maintaining the current pay disparity was both legally risky and ethically

questionable, Patel decided to take corrective action.

Over the next few weeks, Patel led the development of a new compensation policy in the

company. The policy introduced a standardized pay scale for all employees, ensuring that

those performing similar roles received equal pay, irrespective of their employment status.

This change was communicated transparently across the company, with efforts made to address

any concerns and ensure a smooth transition. The Management also took the steps for registration

under Atal Beemit Vyakti Kalyan Yojna (ABVKY).

The implementation of the new pay structure had a positive impact on the company’s workforce.

Contractual workers, who had long felt undervalued, now experienced a renewed sense of

commitment and motivation. Rajesh, in particular, felt a deep sense of satisfaction and loyalty
towards the Company, knowing that his contributions were finally being recognized and rewarded

fairly. Meera and other full-time employees also welcomed the change, appreciating the company’s

commitment to fairness.

Under Patel’s leadership, the Company not only resolved the pay disparity but also set a

precedent for other companies in the industry. The company’s proactive approach to addressing

the issue enhanced employee morale, reduced employee turnover, and reinforced its reputation

as a fair and progressive employer.

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In view of the above, answer the following :

(a) Define the term ‘Equal Pay for Equal Work’ in the light of Constitutional provisions.

(b) In the above situation, if some workers, who are on contractual employment, do not
get the regular employment and retrenched by the company, how will they be facilitated
under Atal Beemit Vyakti Kalyan Yojna ?

(c) Discuss the prohibition of employment of contract Labour.

(d) Rajesh and other contractual workers decided to go on strike. However, the company
is in public utility service. Describe the prohibition of strikes and lock-outs in public
utility service.

(5 marks each)

Attempt all parts of either Q. No. 6 or Q. No. 6A

6. (a) ABC Healthcare is a well-established hospital with a workforce of 100 female employees.
One of the nurses, Priya, is expecting her first child and is preparing to take maternity
leave. Priya is not aware of her right to payment of maternity benefits and she is
unsure about the procedure for claiming these benefits and the necessary notice she
needs to provide to her employer.

Advise Priya on her right to payment of maternity benefits and on the requirements
for the notice of claim for maternity benefit under Section 6 of the Maternity Benefit
Act, 1961.

(5 marks)

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(b) Techno Soft Solutions, a software development company, has been in operation for
over a decade and has a workforce of 150 employees. Recently, one of the senior
software engineers, Rajesh, decided to resign after completing 5 years of service with
the company. He is inquiring about his entitlement to gratuity under the Payment of
Gratuity Act, 1972.
Under what circumstances and to whom is the gratuity payable under the Payment
of Gratuity Act, 1972 ?
(5 marks)
(c) Bright Futures Ltd., is imparting education to the students. It has been facing financial
difficulties and has delayed salary payments and other dues to its employees for the
past three months. Several employees have resigned due to the non-payment of wages,
while those remaining are increasingly concerned about their financial stability. The affected
employees have approached the company management several times, but no concrete
measures have been taken to resolve the issue. Consequently, the employees have
decided to take legal action to recover the amounts due to them under the Payment
of Wages Act, 1936.
Explain the measures to be taken by the employees for recovery of amount due
from the employer.
(5 marks)
(d) QualityTech Industries, based in Hyderabad, is a prominent manufacturer of electronic
components. To meet its production needs, the company has employed a significant
number of contract workers in various roles, including assembly and quality control.
In 2023, a Labour Inspector conducted a routine inspection of QualityTech Industries
to assess compliance with the provisions of the Contract Labour (Regulation and
Abolition) Act, 1970.
Describe the powers of Inspector under section 28 of the Contract Labour (Regulation
and Abolition) Act, 1970.

(5 marks)

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OR (Alternate question to Q. No. 6)

6A. (i) Discuss the implications of Section 14 of the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013, regarding punishment for false or
malicious complaints.

(ii) Explain the provisions for novation of contracts of apprenticeship under Section 5
of the Apprenticeship Act, 1961.

(iii) What are the stipulations regarding the payment of minimum bonus and maximum bonus
under the Payment of Bonus Act, 1965 ?

(iv) Enumerate the matters that need to be provided in Standing Orders under the Industrial
Employment (Standing Orders) Act, 1946.

(5 marks each)

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NEW SYLLABUS
524
Roll No. ..................................... :1:

Time allowed : 3 hours Maximum marks : 100

Total number of questions : 6 Total number of printed pages : 12

NOTE : Answer ALL Questions.

PART–I

1. Komal is a third-generation businesswomen in the dairy business ‘‘Bharat Ghee & Co.’’.

The business is run under the brand "Pure Ghee". The company prepares milk-based products

and is known for good quality in the market. The sales are made through self-owned stores,

other retailers at locations where self-owned stores are not present and online.

The business is run by Komal's family on a strategic and operational basis. However, now

the business is growing at a rapid pace. There is a need to get in professional management

to run the business. ‘‘Bharat Ghee & Co.’’ hires a new CEO - Garima, who has three

decades of experience in the dairy industry. Komal will now be Executive Chairman and

provide a guiding role in the business. The first task that Garima has on hand is to identify

issues that are hindering business growth.

Komal asks Garima to list major concerns that the business is facing :

• Lower margins where sales are made through other retailers and online. Online platforms

are charging a big commission for making sales.

• High chance of spoilage due to perishable nature of the raw material. Due to perishable

nature of material - inventories are kept at a negligible level.

• Capacity increase may be necessitated in the near future for which capital will have

to be raised.
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Garima requests the Accounts Head - Naina for key financial metrics of ‘‘Bharat Ghee &
Co’’. Naina provides the following details to Garima :
Key Financials of Bharat Ghee & Co :

/-

2 : 1

Garima does some quick calculations to derive Return on Equity and Return on Capital Employed.
Komal indicates willingness to contribute fresh equity in the business and payoff the loans.
However, Garima is not in favour of repayment of loans.
Garima has made a business plan to change the strategy to decrease dependence from third
party vendors. The new plan recommends creation of infrastructure to enable sales at locations
which are serviced by channel partners. A new strategic business unit is to be created for
implementation of the business plan
The following infrastructure facilities need to be created :

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• The aforementioned infrastructure will be set up using debt and equity in the ratio

of 2 : 1. The new debt will be raised at a rate of 14%.

• The average depreciation will be 30%.

• The above investment and raising of debt will be done on October 1. The organization

follows an April to March financial year.

• The average receivables at the end of the financial year from the new business will

be ` 10,80,00,000/-. The receivables turnover days will be 45 days. Assume 180

days to calculate receivables turnover ratio.

• The gross profit margin will be 20%.

• lndirect expenses other than depreciation will be ` 2,00,00,000/-.

• lncome tax rate is 25%.

Komal asks for the projected P&L before approving the required investment amount :

(a) Calculate current Net Profit Margin, Return on Equity and Return on Capital Employed.

(b) lf debt is paid off using fresh equity, what will be new Net Profit Margin and Return

on Equity ? Assume debt is repaid on first day of financial year. Comment on change

in return on equity.

(c) Prepare the projected Profit & Loss Account of the new business unit.

(5+5+5=15 marks)
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2. (a) Alpha Ltd. has provided you the following information as on 31st March, 2024 :

Particulars Amt. in `

Calculate lnventory Turnover Ratio and Gross Profit Ratio.

(2+2=4 marks)
(b) Micro Swift Ltd. issued 20,000 8% debentures of ` 100 each as per follows :
(1) Series A of ` 5,00,000 (Nominal) for cash at a premium of 20%
(2) Series B of ` 5,00,000 (Nominal) for cash at 90%
(3) Series C of ` 5,00,000 (Nominal) to Bharat Bank against a loan of ` 4,00,000
as collateral security.
(4) Series D of ` 5,00,000 to creditor for ` 4,50,000 on account of capital
expenditure in satisfaction of his claim
Pass Journal Entries. (Ignore writing off discount on issue of debentures)
(8 marks)
(c) Shree Ltd. issued 5,00,000 equity shares. Applications for 4,50,000 shares were received.
The following are details related to underwriters :

The remaining applications did not have any stamp. Determine the liability of the underwriters.

(3 marks)
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:5:

3. (a) Campa Ltd. issued 4,00,000 shares of ` 50 each at a premium of ` 15 per share.
Application for 4,50,000 shares was received. The amount was payable as
follows :

• On Application ` 15

• On Allotment ` 16 (including premium ` 6)

• On First Call ` 20 (including premium ` 5)

• On Final Call ` 14 (including premium ` 4)

(1) Alpha, who was allotted 6000 shares did not pay allotment and first call and
thereafter his shares were forfeited.

(2) Beta, who was allotted 4000 shares did not pay first call and thereafter his
shares were forfeited.

(3) Gama, who was allotted 15000 shares did not pay flnal call and thereafter
his shares were forfeited.

Half of the shares of Alpha and Beta were reissued at ` 42

You are required to pass journal entries for the forfeiture and reissue of shares.

(6 marks)

(b) Rama Ltd. issued 5,000, 8% debentures of 1,000/- each at a discount of 5% on

April 1, 2020. The debentures are repayable by equal annual drawings in four years.

You are required to show the amount of discount to be written off every year.

(4 marks)
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(c) Central Textiles Ltd. has provided you its historical revenue and cost data :

Central Textiles Ltd. management is attempting to project profitability for next year

under different scenarios. The historical data will be the base case scenario. The details

regarding optimistic scenario and worst-case scenario are given below :

Prepare Profitability projection with the given data.

(5 marks)

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Attempt all parts of either Q. No. 4 or Q. No. 4A

4 (a) Super Star Ltd.
Balance Sheet as at March 31, 2024

On April 1, 2024 – shareholders of the company authorized buyback as under :

(i) 10% of equity shares would be bought back at ` 17/- per share.

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(ii) 12% debentures to be issued for ` 1,00,000/- to finance the buyback and
balance from general reserve to be utilized for this purpose.
(iii) Premium on buyback to be met from securities premium account.
(iv) lnvestments would be sold for ` 11,75,000/-.
Pass necessary journal entries to record above transactions.
(5 marks)
(b)
Balance Sheet of S Ltd. is given below

Other information :
• Holding company H Ltd. has bought 48,000 shares in its subsidiary S Ltd.
• Consideration for purchase of shares in S Ltd. ` 9,00,000/-

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• General Reserve of S Ltd. on date of acquisition ` 1,20,000/-

• Profit and Loss Account on date of acquisition ` 24,000/-
Calculate :
(i) Minority lnterest and Goodwill.
(ii) How will goodwill be treated in consolidated books of accounts ?
(4+1=5 marks)
(c) The Capital structure of Sangam Ltd. is given below :

ln the next year the company is undertaking an expansion project of ` 1,500/- crore.
The project is to be financed in the ratio of 40% infusion of fresh owner capital
and 60% secured debt capital. No old debt is repaid during the year.
The equity capital will be raised at ` 15/- per share. The average interest rate of
the debt (old + new) will be 13%.
The income tax rate is 25%.
Prepare a statement showing forecast cash flow from financing activities.
(5 marks)
OR (Alternate question to Q. No. 4)
4A. (i) What are the conditions required to be fulfilled by a company in order to issue
ESOP ?
(ii) What are requirements for consolidation of a subsidiary which is LLP or partnership ?
(iii) Write a short note on issue of bonus shares. Provide proforma journal entries.
(5 marks each)

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PART–II
5. Metadex Ltd. is a clean-tech start-up focused on affordable solar energy solutions for urban
households. Founded by two engineers, Amit and Sumit, in 2021, the company developed
a new solar panel design that is highly efficient and affordable. The journey begins with Amit,
an engineer working in a traditional energy company. For years, Amit had seen the damaging
environmental impact of fossil fuels and the inefficiency of the power grid. Concerned about
climate change and driven by the desire to make a difference, he started researching alternative
energy solutions. Solar energy stood out as an abundant and clean source of power that
remained underutilized, especially in underserved communities. In 2020, Amit quit his job and
partnered with his college friend—Sumit, an expert in renewable energy policy and a software
engineer. Their vision is to revolutionize the energy industry by making solar power accessible
to middle-income families across the globe.
Starting the company was tough. The team faced numerous challenges, including high upfront
costs for solar panels, stiff competition from larger energy companies, and difficulties in navigating
government regulations. They initially struggled to secure funding, as many investors were sceptical
of renewable energy start-up, thinking the market was oversaturated or too slow to provide
returns.
Early-stage solar hardware companies often require significant capital for research, development,
and manufacturing, making it a tough sell to investors looking for faster returns. The company
navigated through the initial stages of challenges. They developed a robust marketing plan
to target eco-conscious communities, partnering with influencers in the sustainability space and
running ads on social media. The team scaled their operations by working with local solar
panel manufacturers, reducing costs, and creating jobs in the communities they served.
Currently in the expansion process, Metadex needed around ` 15 lacs to scale up production
and penetrate further in the market. Amit and Sumit decided to explore alternative fundraising
options that would allow them to keep control of their company and align with their long-
term vision.
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The firm's condensed Balance sheet for the current year is as follows :

Currently Earnings Before Interest and Tax (EBIT) = ` 8,00,000. Tax Rate 50%. Current
Market Price per equity share ` 25, market value of debt equals its book value and cost
of equity is 14%.
The financial advisors of Metadex Ltd. is assigned the task to calculate :
(i) the value of the firm and overall cost of capital before infusion of funds.
(ii) the Economic Value Added and Market Value Added.
The company has proposed to issue 8% 5000 Preference shares of ` 100 each and for
the balance ` 10 lacs, it is considering two alternatives.
Alternative 1 : Raise 90% of funds required by issuing equity shares at current market
price and the remaining by issuing 8% redeemable Debentures of ` 100 at par.
Alternative 2 : Raise 80% of the funds by issuing 9% Debentures of ` 100 at par and
redeemable at a premium of 10% after 10 years and the balance by issuing Equity shares
at 33.3333% premium.
Again, the financial advisor is asked to :
(i) Draft the final Capital Structure
(ii) Calculate the Earnings Per Share and Financial Leverage.

(4+4+8+4=20 marks)
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Attempt all parts of either Q. No. 6 or Q. No. 6A

6. (a) Calculate Holding period returns for the following security :
Particulars

(b) Zen & Co made sales for a certain period for ` 25,00,000/-. The net profit for
the same period was ` 2,50,000/-. Fixed overheads were ` 3,75,000/-.
Calculate :
(i) P/V Ratio
(ii) Sales needed to generate a profit of ` 3,75,000/-
(iii) Net profit when sales are ` 37,50,000/-
(iv) Break Even Point.
(c) A company has an EBIT of ` 10,00,00,000 and belongs to a risk class of 15% i.e.,
its overall cost of capital is 15%. What is the cost of equity capital if it employs 10%
debt to the extent of 30%, 40% or 50% of total capital of ` 50,00,00,000/-
Assume net operating income approach applies.
(d) Calculate Economic Order Quantity from the following details and also state the number
of orders to be placed in a year :

(5 marks each)
OR (Alternate to Q. No. 6)
6A. (i) Write a short note on Present Value of Annuity.
(ii) What are Primary Trends in terms of the "Dow Theory" related to Technical Analysis ?
(iii)Define Risk Adjusted Discount Rate and Certainty Equivalent Technique.
(iv) What is the connection between Risk and Leverage in terms of capital structure ?
(5 marks each)
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2/2024/CAFM/NS Contd. ........