Attempt MCQs Based on Corporate and Other Laws Case Scenario #1
Mr. Varinder Singh is a philanthropist apart from being the owner of the renowned textile brand ‘Paridhaan’. He is running an old age home, a shelter-home for orphans apart from a chain of art and language schools. These philanthropic initiatives and educational institutions established by him are operating under the banner of a charitable trust, in which he himself is one of the trustees. The textile business ‘Paridhaan’ is owned by a private limited company with paid-up share capital of INR 60 lakhs. ‘Paridhaan is losing market share due to stiff competition from readymade brands resulting decline in turnover to Rs. 180 lakhs during the immediately preceding financial year, out of which 45% is export sales.
His son Jimmy who is also a shareholder and director in ‘Paridhaan’, wishes to start a new business of e-learning platform and research-based technical education. He has opted fora corporate form for this business, because this may help in reaching out to leading global universities to sign MoUs for student and faculty exchange programs, in order to establish a global brand, especially after the rollout of the new education policy. Jimmy wants to retain the entire control of education activities. Jimmy met their family friend Mr. Chawla, who is a renowned practicing Chartered Accountant. Mr. Chawla explains the various kinds of companies, including One Person Company (OPC) with the procedural requirements for each which could be considered by Jimmy for his education business. Jimmy decided to form OPC after considering the various pros and cons.
Jimmy appoints Mr. Wilson as a nominee to his OPC. Mr. Wilson who is in his 30s, is an academician and scholar, a graduate from MIT in CSE, and has done his masters with Jimmy. Mr. Wilson is from Cambridge, Massachusetts, USA and is basically a US national. But, he has been residing in India for the last couple of years. Mr. Wilson helps Jimmy in the promotion of OPC.
Mr. Chawla is an auditor of Sirmaur Pharma Limited, the AGM of which was convened on 31st August 2020. As he had already confirmed his appointment with Jimmy to meet him on that day, he asked his paid assistant, Mr. Anup, to attend the AGM on his behalf. Mr. Anup is Chartered Accountant, but in employment with Mr. Chawla’s firm for the last year or so. Mr. Anup is not holding a certificate of practice. At that AGM, based upon the board’s recommendation, Sirmaur Pharma Limited decided to issue fully paid-up bonus share to its members out of its reserve and surplus available with it, which are as follows: