School of Law and Governance

LAW 450 COMPANY LAW-II L T P C

Version: 1.1 4 0 0 4
Pre-requisites//Exposure Constitution-I, Company Law-I
co-requisites SEBI & Investment Laws
Semester VIII
Programme B.A. LL.B.(H) & B.Sc.LL.B.(H)

1.0. Course Description:

Company is one of the forms of businesses in our country. It is a democratic, social and political
institution. It has become very popular business organization throughout the world including
in our country. However, in our country, Company Act, 1956 was the largest legislation. But,
with the passage of time and in order to meet the needs of the changing economic scenario,
government felt it necessary to enact a new company Act. As a result, New Company Act was
enacted in 2013. However, this new company Act has brought about sea changes in the
functioning of company form of business in our country. Not only that, this Act contains many
new provisions in the field of corporate social responsibility, corporate governance and
corporate transparency. In Company Law-II, students will be taught management and control
of companies-meeting, investments, loans and deposits, corporate accountability-accounts and
audit, dividend, boards report, winding up process etc. Students will acquire working
knowledge in this course.

2.0. Course Objectives:

 To acquaint students regarding management and control of companies and
meetings;
 To acquaint students regarding corporate loans, deposits and investments;
 To provide the students the knowledge of board’s report, Corporate
disclosures, and corporate restructuring- Mergers, Takeovers and Demergers;
 To provide the students the knowledge of winding up process of the company.

3.0. Pedagogy:
The pedagogy of the course will be as below:
 Class Room Discussion
 Teaching Assignment
 Presentations
 Case Studies
 Projects
 Seminar

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 Panel Discussion

4.0.Evaluation Scheme:

 Continuous Assessment 30 Points

 Attendance 5 Points
 Mid-Term 15Points
 End Term 50 Points

5.0 Text Books:

 Avtar Singh, Company Law, Eastern Book Company,
 N.D. Kapoor, Company Law, Sultan Chand & Sons,
 A.K. Majumdar and G.K. Kapoor, Company Law and Practice, Taxman.

Reference Books:
1. Gower & Paul L. Davies, Principles of Modern Company Law, Sweet and Maxwell,.
2. A. Ramaiya, Guide to Companies Act, Lexis Nexis Butterworths Wadhwa Nagpur,.
3. Palmer,Palmer’s Company Law, Stevans, London.
4. Robert R. Pennigton, Company Law, Oxford University Press.

6.0. Course Contents:

Module I: Management and control of companies- Meetings

 Meaning and kinds of Company Meetings
 Statutory Meetings, Statutory Report, Contents of Statutory Report, Time and place
for holding a Statutory Meeting;
 Annual General Meeting, Time and place for holding an Annual General Meeting,
Default in holding Annual General Meeting, Business transacted at an Annual
General Meeting;
 Extraordinary General Meetings, Types of business transacted at Extraordinary
General Meeting, Who may convene Extraordinary General Meetings;
 Meetings of Debenture holders & Creditors;
 Meeting of Board of Directors, Notice of Board Meetings, Time and place of Board
Meetings, Agenda and Minutes of Board Meetings, Quorum of Directors, Chairman
of Board Meeting;
 Resolutions, Resolution Requiring Special Notice, Resolutions passed at Adjourned
Meeting, Circulation of Members Resolution, Passing of Resolutions by Postal Ballot;
 Holding of meetings through Teleconferencing and videoconferencing;
 Minutes of Proceedings of Meetings.

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Module II: Investments, Loans and Deposits

 Inter-Corporate Loans and Investments;
 Register of Loans Made, Guarantees Given, Securities Provided and Investments
Made;
 Invitation and Acceptance of Deposits;
 Nomination by Depositors;
 Deposit in the Name of Minor and in Joint Name;
 Deposits and Loan;
 Deposits and Debenture;
 Constitutional Validity of Section 58A of the Act;
 Repayment of Deposits;
 Remedies in case of failure to repay the deposit on due date by the Company.

Module III: Corporate Accountability: Accounts and Audit

 Requirement of Keeping Books of Account, Place of Keeping Books of Account,

Books of Accounts in Respect of Branch Office;
 Preservation of Books of Account, Inspection of Books of Accounts, Persons
Responsible for Keeping Books of Accounts;
 Statutory Books, Annual Accounts: Balance Sheet and Profit and Loss Account;
 Appointment of Auditor,
 Qualifications and Disqualifications of Auditors;
 Method of Appointment of Auditors;
 Remuneration and Term of Office of Auditors;
 Resignation and Removal of Auditors;
 Rights, Powers and Duties of Auditors;
 Liabilities of Auditors;
 Cost Audit and Social Audit.

Module IV: Corporate Accountability: Divisible Profits and Dividends

 Definition and Meaning and Types of Dividend;
 Ascertainment of Divisible Profits and Dividends;
 Declaration and Payment of Dividend;

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 Unpaid and Unclaimed Dividend and Investors Education and Protection Fund;
 Payment of Dividend out of Capital;
 Payment of Dividend out of Capital Profits.

Module V: Board’s Report and Corporate Disclosures

 Director’s Report,
 Director’s Responsibility Statement,
 Signing and Dating of the Board’s Report, Filing of the Board’s Report;
 Disclosures under Companies Act;
 Compliance Certificate Under Section 383A;
 Penalty for False Compliance Certificate.

Module VI: Inspection, Inquiry and Investigation

 Power to call for information, inspect books and conduct inquiries;
 What books and papers can be inspected?
 Place and time of inspection;
 Duties of directors, officers, employees of the company to assist in inspection;
 Powers of the inspector;
 Inspection by RBI;
 Who can apply and the scope of investigation;
 Guidelines for ordering investigation into company’s affairs;
 Investigation by SFIO;
 Investigation of ownership of the company[Section 216];
 Protection of employees during investigation;
 Freezing of assets of company;
 Investigations etc. of foreign companies;
 Penalty for furnishing false statements, mutilation or destruction of documents;
 Inspection vs. Investigation.

Module VII: Corporate Collapse – Winding Up

 Meaning of winding up;

 Winding up and Dissolution;
 Modes of winding up-Compulsory winding up and Voluntary winding up;

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 Grounds for winding up;

 Liquidator –Powers and duties;
 Consequences of winding up and dissolution.

Cases:
1. CIT vs. Girdhar Das & Co.(p) Ltd.[1967]21Comp.L.J;SC;
2. Kanti Lal vs. CIT[1956]26Comp.Cas.357;
3. Chuni Lal Khusaldas Patel vs. H.K. Adhyaru[1956]26Comp.Cas.168(SC).
4. Hanuman Prasad Gupta vs. Hira Lal[1970]40Comp. Cas. 1058(SC);
5. Dale & Carrington Investment (P) Ltd. Vs. P.K. prathapan[2004]54SCL601(SC).
6. Queen Kuries & Loans(P) Ltd. Vs. Sheena Jose[1993]76comp.cas.821(ker),
7. Jagdish Prasad vs. Pt. Paras Ram[1942]12Compo.cas.21(All);
8. Dr. Fredie Ardeshir Mehta vs. Union of India[1991]70comp.cas.210(Bom.);
9. Kirloskar Electric Co. Ltd., In Re[2003]43 SCL186(Ker.).
10. Life Insurance Corporation of India vs. Escorts Ltd. AIR 1986 SC 1370;
11. Rising Finance Ltd. Vs. Allied Secin Ventures (P) Ltd.[2010]101 SCL40(CLB-Mum).
12. Kashinath Tapuriah vs. Incab Industries Ltd.[1995]6SCL201(cal.);
13. Lalita Rajya Lakshmi vs. Indian Motor Co. Ltd.[1962]32comp. cas.207;
14. Anita Chadha vs. ROC[1998]18 SCL304;
15. Rameshchandra Manilal Kotla vs. State of Gujrat[1998]30 CLA 313;
16. Devinder K. Jain vs. UOI[2007]78 SCL 268.
17. M.S. Kabli vs. UOI[2011]109 SCL 557;
18. Pawan Jain vs. Hindusthan Club Lid.[2005]62 SCL 610;
19. Indra Prakash Kranani vs. ROC[1985]57 Comp. Cas. 662(Cal);
20. Safia Usman vs. UOI[1999]22 SCL 372(Ker.);
21. Chandrika Prasad Sinha. Vs. Bata India Ltd.[1996]9 SCL 108(CLB).