COMPANY LAW-I

ASSIGNMENT
Ms Sadboo Zara, a successful entrepreneur, was the founder of a clothing
company FlufIndia incorporated in the Union of Kritwa. Important
provisions of FlufIndias Articles of Association [AoA] read as follows:
4.1. The Company shall appoint its director keeping in mind his
professional experience and commercial knowledge.
4.2. Salary of the director shall depend on the success of the Company and
thus, is not fixed.
..
4.8. In case the Company wishes to remove the director, it shall send a
written notice along with three months remuneration.
FlufIndia appointed Mr. Probe Shah as its director on April 14, 2015. Clause
9.6 of the contract between FlufIndia and Mr. Probe stated that in case of
any disputes regarding rights and liabilities under the contract, the parties
may refer to FlufIndias AoA. Due to his nonchalant behavior, FlufIndia
removed Mr. Probe without payment of any remuneration. Aggrieved by
such an action, Mr. Probe approached the Company Law Board [CLB] and
received a favorable order from the same on October 13, 2015. According to
the CLB, since an AoA is also a contract between a company and its
directors, FlufIndia should remunerate Mr. Probe. Such an assumption by
the CLB was disputed by Ms. Sadboo.
Separately, on October 18, 2015, in order to raise funds for its expansion,
FlufIndia

approached

ApnaSapnaFunnyMoney,

digital

platform

for

soliciting funds, and got itself listed on the same. Securities & Exchange
Board

of

Kritwa

[SEBK],

after

becoming

aware

of

ApnaSapnaFunnyMoneys venture, sent a notice prohibiting it from

continuing such operations. SEBK stated that a company cannot solicit

funds from the public through internet without issuing a prospectus. Hence,
SEBK ruled that such crowdfunding process is in violation of the
Companies Act, 2013 and the SEBK Act, 1992.
Ms. Sadboo, affected by the aforementioned instances, has approached you
for an advice on the legality of the orders given by CLB and SEBK.
NOTE:
1. Laws of Union of Kritwa are pari materia to those of Union of India.
2. Word limit of the assignment is 1000 words (excluding footnotes).
3. Students are encouraged to cite legal authorities to support their
stance.