Management and Administration

(b)(i) According to section 103(1) of the Companies Act, 2013, unless the articles of the company provide for a larger number, in case of a public company,

(a)five members personally present if the number of members as on the date of meeting is not more than one thousand,

(b)fifteen members personally present if the members as on the date of meeting is more than one thousand but upto five thousand,

(c)thirty members personally present if the number of members as on the date of the meeting exceeds five thousand, shall be the quorum for a meeting of the company.

In the given question, Six Sigma Power Zone Ltd. has 7,000 members (i.e., more than 5,000), the required quorum is 30 members personally present.

In the present case, 70 members were present at the AGM, which is above the required quorum of 30. Thus, the quorum of the Annual General Meeting was proper and valid.

(ii)According to section 114(2) of the Companies Act, 2013, a resolution shall be a special resolution when:

(a)the intention to propose the resolution as a special resolution has been duly specified in the notice calling the general meeting or other intimation given to the members of the resolution;

(b)the notice required under this Act has been duly given; and

(c)the votes cast in favour of the resolution, whether on a show of hands, or electronically or on a poll, as the case may be, by members who, being entitled so to do, vote in person or by proxy or by postal ballot, are required to be not less than three times the number of the votes, if any, cast against the resolution by members so entitled and voting.

(iii)

For a special resolution, votes in favour must be at least three times the votes against.

Here:

Three times of 15 = 45

Votes in favour = 45 Since, the votes in favour (45) are equal to three times the votes against, the declaration of the Chairman that the resolution has been passed as a special resolution is valid.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2026, 3(b) (New Scheme).

(a)(i) According to section 96(1) of the companies Act, 2013, every company other than a One Person Company shall in each year hold in addition to any other meetings, a general meeting as its annual general meeting.

Under Section 122(3) of the Companies Act, 2013, any business which is required to be transacted at an annual general meeting or other general meeting of a company by means of an ordinary or special resolution, it shall be sufficient if, in case of One Person Company, the resolution is communicated by the member to the company and entered in the minutes-book required to be maintained under section 118 and signed and dated by the member and such date shall be deemed to be the date of the meeting for all the purposes under this Act.

Further, Under Section 122(4), where there is only one director on the Board of Director of a One Person Company, any business which is required to be transacted at the meeting of the Board of Directors of a company, it shall be sufficient if, in case of such One Person Company, the resolution by such director is entered in the minutes book required to be maintained under section 118 and signed and dated by such director and such date shall be deemed to be the date of the meeting of the Board of Directors for all the purposes under this Act.

Monika Solutions PVT Ltd. (OPC) can without holding an Annual General Meeting for any business which is required to be transacted at an annual general meeting or other general meeting of a company can transact as per the provisions stated above.

(ii)Difference between Motion and Resolution

•Most matters come before a meeting by way of a motion

recommending that the meeting may express approval or disapproval or take certain action or order something to be done.

•A motion is a proposal, and a resolution is the adoption of a

motion duly made and seconded. But every motion need not be followed by a resolution, e.g. where a motion is made for the adjournment of the meeting.

•A motion whether it is passed for the closure of discussion or

adjournment, etc. can be passed by an ordinary resolution unless there is a specific provision in the articles.

OR

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, January 2026, 6(a) (New Scheme).

(a)(i) According to section 115 of the Companies Act, 2013, where, by any provision contained in this Act or in the Articles of a company, special notice is required for passing any resolution, then the notice of the intention to move such resolution shall be given to the company by such number of members holding not less than 1% of the total voting power, or holding shares on which such aggregate sum not exceeding five lakh rupees, as may be prescribed, has been paid-up and the company shall give its members notice of the resolution in such manner as may be prescribed.

Rule 23 of the Companies (Management and Administration Rules), 2014, specifies the procedure to be followed in respect of serving of the Special Notice as under:

The afore-mentioned notice shall be sent by members to the company not earlier than 3 months but at least 14 days before the date of meeting at which the resolution is to be moved, exclusive of the day on which the notice is given and the day of the meeting. The company shall immediately after receipt of the notice, give its members notice of the resolution at least seven days before the meeting exclusive of the day of dispatch of notice and day of the meeting, in the manner it gives notice of any general meeting.

Accordingly, in the given question, following are the aspects to be considered:

1.Number of the shareholders/ members expressed notice of the intention to for removal of the Director, Mr. Ankur Chabra, with the holding of 1.2% of the total voting power-This condition is met.

2.Special notice was received by the company on 1st August 2025

with the proposal for removal at the scheduled AGM on 25th August 2025, which implies it was received at least 14 days

before the date of meeting- This condition is met.

In the light of the provisions discussed above, we can conclude that the special notice given by the members to remove the director is valid since it was given by the required majority and was also given to the Company in time.

(ii)Even if the special notice is valid, failure to inform the members at least 7 clear days before the meeting violates Rule 23 as given above, and the consequences of the same may include;

•Invalidation of the resolution

•Regulatory penalties under the Companies Act, 2013

Section 115 itself does not create a specific penalty for noncirculation; however, the consequences may lead to procedural invalidity / litigation risk.

Alternate Answer to Part (i)

Rule 23 of the Companies (Management and Administration) Rules, 2014 provides that where it is not practicable to give notice to members in the prescribed manner, the notice shall be published in English language in an English newspaper and in a vernacular language in a vernacular newspaper, both having wide circulation in the State where the registered office of the company is situated. Such notice shall also be posted on the website of the company, if any.

Further, as per Rule 23(5), the notice must be published at least seven days before the meeting, excluding the day of publication of the notice and the day of the meeting.

Thus, as the question does not explicitly stated that the company has published the notice in an English newspaper and a vernacular newspaper, or that the notice has been posted on the company’s website, if any, the notice may be deemed to be invalid.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, January 2026, 6(a) OR (New Scheme).

(a)(i) As per sub-rule (2) of Rule 20 of the Companies (Management and Administration) Rules, 2014, (w.e.f. 19.03.2015), every company which has listed its equity shares on a recognised stock exchange and every company having not less than one thousand members shall provide to its members facility to exercise their right to vote on resolutions proposed to be considered at a general meeting by electronic means.

The conditions stated above are disjunctive, not cumulative.

Applying the above rule, since its shares are listed on stock exchange, Fabulous Fabricators and Mechanics Ltd. will have to mandatorily provide option of E-Voting to its members although it is having less than 1,000 members. Therefore, the contention of Ms. Riddhi was not correct.

(ii)As per sub-rule (4)(iii)(B) of Rule 20 of the Companies (Management and Administration) Rules, 2014, the notice of the meeting shall clearly state- that the facility for voting, either through electronic voting system or ballot or polling paper shall also be made available at the meeting and members attending the meeting who have not already cast their vote by remote e-voting shall be able to exercise their right at the meeting.

Also as per sub-rule (4)(xi), the Chairman shall, at the general meeting, at the end of discussion on the resolutions on which voting is to be held, allow voting, with the assistance of scrutinisers, by use of ballot or polling paper or by using an electronic voting system for all those members who are present at the general meeting but have not cast their votes by availing the remote e-voting facility.

In the given question, since Mr. Mohan could not exercise his option of e-voting, he can physically vote at the meeting. Thus, as per the circumstances given in the question, the Chairman cannot deprive Mr. Mohan from physically voting at the meeting as he has not cast his vote by remote e-voting earlier.

(iii)As per section 110(1)(a) of the Companies Act, 2013, a company shall, in respect of such items of business as the Central Government may, by notification, declare to be transacted only by means of postal ballot.

As per section 110(1)(b) a company may, in respect of any item of business, other than ordinary business and any business in respect of which directors or auditors have a right to be heard at any meeting, transact by means of postal ballot,

Pursuant to Rule 22(16)(h) of the Companies (Management and Administration) Rules, 2014, election of a director under section 151 of the Act (i.e. appointment of a director elected by small shareholders) shall be transacted only by means of voting through a postal ballot.

As per section (65) of the Companies Act, 2013, “postal ballot” means voting by post or through any electronic mode.

Considering the above provisions, we can conclude that the suggestion of the legal team that appointment of Mr. Keshav as a small shareholders director can only be undertaken by voting through postal ballot is valid.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2025, 3(a) (New Scheme).

(a)According to section 27(1) of the Companies Act, 2013 (the Act), the terms of a contract referred to in the prospectus or objects for which the prospectus has been issued can be varied, but only with the authority of the company given by it in a general meeting by way of a special resolution passed through Postal Ballot.

The first proviso to sub-section (1) requires that prescribed details of the notice which has been given to the shareholders are to be published in newspapers (one in English and one in vernacular language) circulating in the city where the registered office of the company is situated indicating clearly the justification for such variation.

The second proviso to sub-section (1) also prescribes that such company is not to use any amount raised by it through prospectus for buying, trading or otherwise dealing in equity shares of any other listed company.

Section 27(2) of the Act provides that the dissenting shareholders (i.e. those who did not agree to the variation) are to be given an exit offer by promoters or controlling shareholders at such exit price and in such manner and conditions as may be specified by SEBI by making regulations for this purpose.

In the given question, PQR Limited has raised amount through issue of equity shares. It was specified that the amount so received will be used exclusively for manufacturing and distributing some life saving drugs. However, now the company wants to use the surplus money left from the mentioned issue of shares, for development of Artificial Intelligence software and for investing in Equity Shares of X Limited (a listed company).

As per facts of the question and the provisions of the Act:

The company called an extraordinary general meeting for the above proposals of using the surplus amount. In this meeting, votes cast in favor were in excess of votes cast against.

Section 27(1) requires that a special resolution be passed in case of variation of terms of objects for which the prospectus has been issued can be varied.

In view of the above provisions, the contentions of the shareholders are discussed as below:

(i)In terms of the provisions of sub-section (1) of section 27 stated above, the first contention of the shareholders is tenable since the resolution passed in the extra ordinary general meeting was not proper as it was not passed by the required majority.

(ii)In terms of the first proviso to sub-section (1) of section 27 stated above, the second contention of the shareholders is also tenable since the required publication was not made in the newspapers as mentioned in the above referred proviso.

(iii)In terms of the second proviso to sub-section (1) of section 27 stated above, the third contention of the shareholders is also tenable since the Act prohibits the company to use any amount raised by it through the prospectus for buying, trading or otherwise dealing in equity shares of any other listed company.

In the given case, X Ltd., is a listed company, hence PQR Ltd., cannot invest in the equity shares of X Ltd.

Hence, the resolution passed for investing ₹ 5,00,000 in the equity

shares in X Limited is not valid.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, January 2025, 1(a) (New Scheme).

(a)(i) Can Star Furnishing Limited, make further investments in equity shares of Home décor Limited during 2024-25?

According to section 19 of the Companies Act, 2013, a subsidiary company is not allowed to hold shares of its holding company. The prohibition also extends up to the nominees of the subsidiary company. Also, a holding company shall not allot or transfer its shares to any of its subsidiary companies and any such allotment or transfer of shares of a company to its subsidiary company shall be void.

The prohibition does not apply to the following cases:

(a)Where the subsidiary company holds such shares as the legal representative of a deceased member of the holding company; or

(b)Where the subsidiary company holds such shares as a trustee; or

(c)Where the subsidiary company is a shareholder even before it became a subsidiary company of the holding company, but in this case, it will not have a right to vote in the meeting of holding company.

It is also provided that the subsidiary company shall have a right to vote at a meeting of the holding company only in respect of the shares held by it as a legal representative or as a trustee.

In the given question Star Furnishing Limited is a subsidiary of Home Décor Limited as it holds 60% (6,00,000/10,00,000 shares) shares of Star Furnishing Limited. Simultaneously, Star Furnishings Limited is holding 7% equity shares in Home Décor Limited out of which 2% are held as a legal representative of a deceased member of Home Décor Limited.

These shares are held by Star Furnishings Limited before Home Décor Limited became its holding company. However, after becoming its subsidiary, Star Furnishings Limited cannot make further investment in Home Décor Limited.

(ii)As per second proviso to section 19, a subsidiary company shall have a right to vote at a meeting of the holding company only in respect of the shares held by it as a legal representative or as a trustee.

Accordingly, Star Furnishings Limited can exercise voting rights at the Annual General Meeting of Home Décor Limited only in respect of 2% shares held in the capacity of legal representative and not for other 5% shares.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2024, 3(a) (New Scheme).

(a)(i) Can the Board of Silk Textile Limited can hold its EGM at Dubai?

As per section 100 of the Companies Act, 2013, the Board may, whenever it deems fit, call an extraordinary general meeting of the company.

Provided that an extraordinary general meeting of the company, other than of the wholly owned subsidiary of a company incorporated outside India, shall be held at a place within India.

As per the facts given in the question, Silk Textile Limited is a Company incorporated in India and has two subsidiaries incorporated outside India. In Print Limited, it holds 80% of the shares and Stitch Limited is its wholly owned subsidiary. As Silk Textile Limited is incorporated in India the Company can call the EGM anywhere only in India. Hence, it cannot hold its EGM at Dubai (outside India).

(ii)Whether the EGM of Print Limited can be held in Dubai?

Print Limited is incorporated outside India and its 80% shares are held by Silk Limited (incorporated in India).

Hence, it is not a wholly owned subsidiary of Silk Limited. Only a wholly owned subsidiary of a company incorporated outside India, can hold its EGM outside India. In view of the above, Print Limited cannot hold its EGM in Dubai.

OR

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2024, 6(a) (New Scheme).

(a)(i) Can Raman, as an individual shareholder make a requisition for calling an EGM?

According to section 100 of the Companies Act, 2013, in the case of company having a share capital, EGM may be called by the Board of Directors at the requisition of such number of members who hold, on the date of receipt of requisition, at least 1/10th of such paid-up share capital of the company as on that date carries the right of voting.

If the Board does not, within 21 days from the date of receipt of a valid requisition in regard to any matter, proceed to call a meeting for the consideration of that matter on a day not later than 45 days from the date of receipt of such requisition, the meeting may be called and held by the requisitionists themselves within a period of three months from the date of the requisition.

In the given question, Raman is holding 1/10th [5,00,000/50,00,000] of the paid up share capital. Hence, he can, even as a single shareholder (holding 1/10th of the paid up share capital), make a requisition to the company for calling the EGM.

(ii)If the company does not call the EGM on the requisition of Raman

If the company does not within 21 days from the date of receipt of a valid requisition from Raman, proceed to call the EGM for the consideration of the matter of removal of Somnath, on a day not later than 45 days from the date of receipt of such requisition, the meeting may be called by Raman himself within a period of 3 months from the date of the requisition.[Section 100(4)].

In this regard, Rule 17 of the Companies (Management and Administration) Rules, 2014 containing the provisions with regard to calling of EGM by requisitionists shall be followed.

Further, section 100 (5) of the Act provides that a meeting under subsection (4) by the requisitionists shall be called and held in the same manner in which the meeting is called and held by the Board.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2024, 6(a) OR (New Scheme).

(a)(i) According to section 103 of the Companies Act, 2013, in case of a public company, unless the articles of the company provide for a larger number, if the number of members is more than 1000 but upto 5000, then the quorum shall be 15 members personally present.

If the quorum is not present within half-an-hour from the time appointed for holding a meeting of the company:

(a)the meeting shall stand adjourned to the same day in the next week at the same time and place, or to such other date and such other time and place as the Board may determine; or

(b)the meeting, if called by requisitionists under section 100, shall stand cancelled:

Provided that in case of an adjourned meeting or of a change of day, time or place of meeting under clause (a), the company shall give not less than thre e days’ notice to the members either individually or by publishing an advertisement in the newspapers (one in English and one in vernacular language) which is in circulation at the place where the registered office of the company is situated.

Quorum not present at the adjourned meeting also: Where

quorum is not present in the adjourned meeting also within half an hour, then the members present shall form the quorum.

In the given question, the quorum for the given company having 3500 members shall be 15 members personally present.

Where quorum is not present in the adjourned meeting (i.e. 13.05.2023) also within half an hour, then the two members present shall form the quorum.

(ii)The meeting held on 6.05.2023 had 16 members present. Hence, the quorum was present. However, the meeting was adjourned due to unruly behaviour of some members and not for want of quorum. In the said meeting (13.05.2023), only 3 members in person were present. In such a case, these 3 members shall not constitute the quorum and hence, shall stand further adjourned.

(iii)If the quorum is not present within half-an-hour from the time appointed for holding a meeting of the company, the meeting, if called by requisitionists under section 100, shall stand cancelled.

OR

Answer

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2024, 6(a) (New Scheme).

(a)This given question is based on section 2(87) read with section 19 of the Companies Act, 2013.

As per section 2(87) of the Companies Act, 2013 "subsidiary company" or "subsidiary", in relation to any other company (i.e., the holding company), means a company in which the holding company -

(i)controls the composition of the Board of Directors; or

(ii)exercises or controls more than one-half of the total voting power either at its own or together with one or more of its subsidiary companies.

For the purposes of this clause, Explanation is given providing that a company shall be deemed to be a subsidiary company of the holding company even if the control referred to in point (i) or point (ii) above, is of another subsidiary company of the holding company.

Whereas section 19 provides that, no company shall, hold any shares in its holding company and no holding company shall allot or transfer its shares to any of its subsidiary companies and any such allotment or transfer of shares of a company to its subsidiary company shall be void.

Provided that nothing in this sub-section shall apply to a case where:

(a)where the subsidiary company holds such shares as the legal representative of a deceased member of the holding company; or

(b)where the subsidiary company holds such shares as a trustee

(c)the subsidiary company is a shareholder even before it became a subsidiary company of the holding company.

Provided further that the subsidiary company referred to in the preceding proviso shall have a right to vote at a meeting of the holding company only in respect of the shares held by it as a legal representative or as a trustee, as referred to in clause (a) or clause

(b)of the said proviso.

Here, in the instant case, ABC Limited issued 10,000 equity shares on 1st April, 2023 whereby XYZ Limited & PQR Limited holds 3,500 & 2,500 shares respectively in ABC Limited. Considering 1 share = 1 vote, XYZ Limited and PQR Limited together holds 60% of the total voting power [i.e. more than one-half (50%)].

Further, MNP Limited controls the composition of Board of Directors of XYZ Limited and PQR Limited from 01.07.2023. In the light of section 2(87), MNP Limited is a holding company of XYZ Limited and PQR Limited (Subsidiary companies).

Following are the answers to the questions:

(i)ABC Limited shall be deemed to be a subsidiary company of the holding company (MNP Limited) as MNP Limited controls the composition of subsidiary companies XYZ Limited & PQR Limited as per explanation to section 2(87).

(ii)The subsidiary company shall have a right to vote at a meeting of the holding company only in respect of the shares held by it as a legal representative or as a trustee but not where the subsidiary company is a shareholder even before it became a subsidiary company of the holding company. Therefore:

1.ABC Limited cannot vote at AGM of MNP Limited held on 30th September, 2023.

2.XYZ Limited can vote at AGM of MNP Limited held on 30th September, 2023.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, November 2023, 1(a) (Old Scheme).

(d)Section 96(2) of the Companies Act, 2013, states that every Annual General Meeting (AGM) shall be called on any day that is not a National Holiday and 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.

However, 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.

Explanation - For the purposes of this sub-section, ‘ National Holiday ’ means and includes a day declared as National Holiday by the Central Government.

In the instant case,

(i)Sunshine Limited, an unlisted company, can hold its AGM on 28th September, 2023 which happens to be a holiday declared by U.P. Government because this is not a national holiday.

(ii)Sunshine Limited cannot hold its AGM in Lonavala, a hill resort in Maharashtra because consent for this has to be given by all the members in advance and here only 38 members out of 40 has given their consent for conducting the meeting in Lonavala.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, November 2023, 3(d) (Old Scheme).

(a)According to Section 61(1)(d) of the Companies Act, 2013 (the Act), a limited company having a share capital may, if so authorised by its articles, alter its memorandum in its general meeting to sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the memorandum, so, however, that in the sub-division the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived.

Section 64 of the Act states that a company shall, within 30 days of its share capital having been altered in the manner provided in Section 61 (1), give notice to the Registrar in the prescribed form along with an altered memorandum.

In the given situation, shareholders of Anika Limited, in the AGM requested the Company to reduce the face value of each share (from INR 100 to INR 10) and increase the number of shares than fixed by the memorandum (i.e. from 10 Lakh to 1 crore).

According to the above provision, Anika Limited, having authorized capital of 10,00,000 equity shares (face value ₹ 100 each) can reduce the face value of each share to ₹ 10 each and increase the shares to 1,00,00,000 [thereby keeping the total amount of authorized share capital to ₹ 10,00,00,000], if authorised by the articles of association. Hence, the request of the shareholders is considerable.

How the company can alter its Share Capital

The company has to alter its memorandum in its general meeting as per the procedure contained in Section 13 of the Companies Act, 2013 and give notice to the Registrar along with an altered memorandum.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, November 2022, 4(a) (Old Scheme).

(b)(i) Section 96(2) of the Companies Act, 2013, states that every annual general meeting 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 and 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 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.

In the given question, ABC Limited is an unlisted company and consent of all members to conduct the AGM at Goa has been received in advance (24th June, 2021). Also, the meeting was started well within the prescribed time i.e. at 3.00 PM. Hence, the meeting was validly called.

(ii)Section 102 of the Companies Act, 2013 mentions that where any special business is to be transacted at the company’s general meeting, then an ‘Explanatory Statement’ should be annexed to the notice ca lling such general meeting, which must specify, the nature of concern or interest, financial or otherwise, if any, in respect of each item of every director and the manager, if any.

Effect of non-disclosure : As per section 102(4), if as a result non-disclosure or insufficient disclosure in explanatory statement, any benefit accrues to a director, such director shall hold such benefit in trust for the company, and shall be liable to compensate the company to the extent of the benefit received by him.

If any default is made in complying with the provisions of this section, every such director who is in default, shall be liable for such contravention with penalty [Section 102(5)].

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2022, 4(b) (Old Scheme).

(b)(i) Rule 17 of the Companies (Management and Administration) Rules, 2014 provides that no explanatory statement as required under section 102 of the Companies Act, 2013, need be annexed to the notice of an extraordinary general meeting convened by the requistionists and the requistionists may disclose the reasons for the resolution(s) which they propose to move at the meeting.

Hence, the Board of Directors cannot refuse to convene the extraordinary general meeting of the members on the ground that the requistionists have not given the explanatory statement for the resolution proposed to be passed at the meeting.

(ii)The notice shall be signed by all the requistionists or by a requistionists duly authorised in writing by all other requistionists on their behalf or by sending an electronic request attaching therewith a scanned copy of such duly signed requisition.

Hence, it is imperative for joint holders (or by requistionist duly authorised in writing by joint holder) also to sign the notice to call the meeting. Thus, Board of directors are correct in refusing to convene the extra ordinary general meeting on the ground that the requisitions have not been signed by the joint holder of shares.

(iii)According to section 103(2)(b) of the Companies Act, 2013, if the quorum is not present within half-an-hour from the time appointed for holding a meeting of the company the meeting, if called by requisitionists under section 100, shall stand cancelled.

Thus, if quorum is not present for the meeting called by requisitionists, it shall stand cancelled and cannot be adjourned.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, December 2021, 2(b) (Old Scheme).

(b)(i) In terms of Rule 2 (1)(c)(xvii) of the Companies (Acceptance of Deposits) Rules, 2014, if a start-up company receives rupees twenty-five lakh or more by way of a convertible note (convertible into equity shares or repayable within a period not exceeding ten years from the date of issue) in a single tranche, from a person, it shall not be treated as deposit.

In the given case, Moon Technology Private Limited, a start-up company, received ₹ 20.00 lacs from Paras in a single tranche by way of a convertible note which is repayable within a period of six years from the date of its issue. The amount received is below threshold limit of ₹ 25.00 lacs. Hence, the amount of ₹ 20.00 lacs shall be considered as deposit and the provisions for acceptance of deposit will apply accordingly.

(ii)According to Rule 3 (1) of the Companies (Acceptance of Deposits) Rules, 2014, a company is not permitted to accept or renew deposits (whether secured or unsecured) which is repayable on demand or in less than six months. Further, the maximum period of acceptance of deposit cannot exceed thirty six months.

However, as an exception to this rule, for the purpose of meeting any of its shortterm requirements of funds, a company is permitted to accept or renew deposits for repayment earlier than six months subject to the conditions that:

(1)such deposits shall not exceed ten per cent. of the aggregate of the paid-up share capital, free reserves and securities premium account of the company; and

(2)such deposits are repayable only on or after three months from the date of such deposits or renewal.

In the given case of Shriram Readymade Garments Limited, it wants to accept deposits of ₹ 50.00 lacs from its members for a tenure which is less than six months. It can do so if it justifies that the deposits are required for the purpose of meeting any of its short-term requirements of funds but in no case such deposits shall exceed 10% ten per cent of the aggregate of its paid-up share capital, free reserves and securities premium account and further, such deposits shall be repayable only on or after three months from the date of such deposits.

(iii)As per Rule 2 (1) (e) of the Companies (Acceptance of Deposits) Rules, 2014, the term “eligible company” means a public company as referr ed to in section 76 (1), having a net worth of not less than one hundred crore rupees or a turnover of not less than five hundred crore rupees and which has obtained the prior consent in general meeting by means of a special resolution and also filed the said resolution with the Registrar of Companies before making any invitation to the public for acceptance of deposits:

However, an eligible company, which is accepting deposits within the limits specified under section 180 (1) (c), may accept deposits by means of an ordinary resolution.

Thus, a public company can accept deposit from public if it is an eligible company.

In the given question, Y Ltd. has a turnover of ₹ 400 crore and net worth of ₹ 50 crore. Hence, it cannot be termed as an eligible company and thus can not accept deposits from the public.

OR

According to section 101(1) of the Companies Act, 2013, a general meeting of a company may be called by giving not less than clear twenty-one days' notice either in writing or through electronic mode in such manner as may be prescribed.

Also, it is to be noted that 21 clear days mean that the date on which notice is served and the date of meeting, are excluded for sending the notice.

Further, Rule 35(6) of the Companies (Incorporation) Rules, 2014, provides that in case of delivery by post, such service shall be deemed to have been effected-in the case of a notice of a meeting, at the expiration of forty eight hours after the letter containing the same is posted.

Hence, in the given question:

(i)A 21 days’ clear notice must be given. In the given question, only 19 clear days’ notice is served (after excluding 48 hours from the time of its posting and the day of sending and date of meeting). Therefore, the meeting was not validly called.

(ii)As explained in (i) above, notice falls short by 2 days.

(iii)The Companies Act, 2013 does not provide anything specific regarding the condonation of delay in giving of notice. Hence, the delay in giving the notice calling the meeting cannot be condoned.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, December 2021, 5(b) (Old Scheme).

(b)Section 23(2)(b) of the Companies Act, 2013 provides that a private company may issue securities through private placement by complying with the provisions specified in section 42 of the Act along with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

Meaning of Private Placement

According to the Explanation I to section 42(3) of the Act, “private placement” means any offer or invitation to subscribe or issue of securities to a select group of persons by a company (other than by way of public offer) through private placement offer- cum-application, which satisfies the conditions specified in this section.

Offer to be made only to a select group of persons

According to Rule 14(2) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, a private placement shall be made only to a select group of not more than two hundred (200) persons (referred to as “identified persons”) in a financial year who have been identified by the Board after passing a special resolution.

Provided that any offer or invitation made to qualified institutional buyers, or to employees of the company under a scheme of employees’ stock option as per provisions of section 62(1)(b) shall not be considered while calculating the limit of two hundred persons.

Limit on Fresh Offer

As per section 42(5) of the Act, no fresh offer or invitation under this section shall be made unless the allotments with respect to any offer or invitation made earlier have been completed or that offer or invitation has been withdrawn or abandoned by the company.

(i)Yes, ARTICA Web Solutions Pvt. Ltd. can raise funds through the private placement of shares after the allotments with respect to right issue for ₹ 5 crore have been completed and subject to the maximum

number of 200 persons (identified persons) under section 42(2) and by complying with the procedures stated in Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

(ii)In the given question,

•Total identified persons = 50

•QIBs = 5

•Persons to be counted for the limit = 50 - 5 = 45 Since 45 persons are within the prescribed limit of 200 persons, the

offer-cum-application letter sent to the identified persons is within the permissible limit.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2026, 1(b) (New Scheme).

(a)(i) Rule 8 of the Companies (Share Capital and Debentures) Rules, 2014, deals with the Issue of Sweat Equity Shares.-

(1)Rule 8(1) states that a company other than a listed company, which is not required to comply with the Securities and Exchange Board of India Regulations on sweat equity, shall not issue sweat equity shares to its directors or employees at a discount or for consideration other than cash, for their providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called, unless the issue is authorised by a special resolution passed by the company in general meeting.

Rule 8(6) states that the sweat equity shares to be issued shall be valued at a price determined by a registered valuer as the fair price giving justification for such valuation.

Rule 8(4) provides that the company shall not issue sweat equity shares for more than fifteen percent of the existing paid up equity share capital in a year or shares of the issue value of rupees five crore, whichever is higher.

Provided that the issuance of sweat equity shares in the company shall not exceed twenty five percent, of the paid up equity capital of the company at any time.

In the given question,

•Paid-up equity share capital = ₹ 20 crore

•Proposed sweat equity shares = ₹ 4 crore

15% of paid-up equity share capital= 15% of ₹ 20 crore= ₹ 3 crore

The higher of:

•₹ 3 crore, or

•₹ 5 crore

is ₹ 5 crore.

Since the proposed issue is of ₹ 4 crore, it is within the permissible annual limit of ₹ 5 crore.

Further, the overall ceiling of 25% of paid-up equity share capital is, 25% of ₹ 20 crore= ₹ 5 crore.

The proposed issue of ₹ 4 crore does not exceed this limit.

ABC Tech Solutions Ltd. has also passed a special resolution for the above purpose.

Moreover, the shares are proposed to be issued to the CTO for providing specialized technical know-how and developing proprietary software generating future economic benefits, which amounts to know-how and value addition. Therefore, the purpose is also valid under the above mentioned Rules.

Hence, the proposed issue of sweat equity shares is valid with respect to both:

•the maximum permissible limit; and

•the purpose for which such shares are proposed to be issued.

(ii)As per Rule 8(3) of the Companies (Share Capital and Debentures) Rules, 2014, the special resolution authorising the issue of sweat equity shares shall be valid for making the allotment within a period of not more than twelve months from the date of passing of the special resolution.

In the given case:

•Date of special resolution is 1st January 2025

•Proposed allotment date is 15th February 2026

Since the allotment is proposed to be made after expiry of 12 months from the date of passing the special resolution, the special resolution passed on 1st January 2025 will not remain valid for the proposed allotment on 15th February 2026.

Therefore, ABC Tech Solutions Ltd. will be required to pass a fresh special resolution before making the allotment on 15th February 2026.

OR

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2026, 2(a) (New Scheme).

(b)(i) As per the provision of section 67(2) of the Companies Act, 2013, no public company shall give, whether directly or indirectly and whether by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of, or in connection with, a purchase or subscription made or to be made, by any person of or for any shares in the company or in its holding company.

But as per the provision of section 67(3)(b), the above provision of section 67(2) shall not apply to the provision by a company of money in accordance with any scheme approved by company through special resolution and in accordance with such requirements as may be prescribed, for the purchase of, or subscription for, fully paid-up shares in the company or its holding company, if the purchase of, or the subscription for, the shares held by trustees for the benefit of the employees or such shares held by the employee of the company.

As per Rule 16 of the Companies (Share Capital and Debentures) Rules, 2014, which deals with the provision of money by company for purchase of its own shares by employees or by trustees for the benefit of employees, states that:

Rule 16 (1)- A company shall not make a provision of money for the purchase of, or subscription for, shares in the company or its holding company, if the purchase of, or the subscription for, the shares by trustees is for the shares to be held by or for the benefit of the employees of the company, unless it complies with some conditions including that the scheme of provision of money for purchase of or subscription for the shares as aforesaid is approved by the members by passing special resolution in a general meeting and the value of shares to be purchased or subscribed in the aggregate shall not exceed five per cent, of the aggregate of paid up capital and free reserves of the company.

In terms of the provisions of section 67(2), section 67(3)(b) read with the Rule 16 (1) as stated above, the value of shares that can be purchased or subscribed in the aggregate shall not exceed ₹ 107.85 crore, i.e. [5% of ( ₹ 1145+ ₹ 1012) crore]. Therefore, the decision by

the Board of Directors of Forward Troopers Limited suggested to provide a loan of ₹ 110 crore to the Trust (responsible for purchase of

shares of the Company itself), to aid the employees to buy its shares is not valid as the amount is beyond the maximum permissible limit.

(ii)As per the provision of section 67(3)(c), the above provision of section 67(2) shall not apply to the giving of loans by a company to persons in the employment of the company other than its directors or key managerial personnel, for an amount not exceeding their salary or wages for a period of six months with a view to enabling them to purchase or subscribe for fully paid-up shares in the company or its holding company to be held by them by way of beneficial ownership.

In terms of the above provision, the contention of Mr. Strong opposing the plan of the Board of Directors of Forward Troopers Limited providing loan directly to the employees to the maximum of their 5 months’ salary to enable them to buy fully paid shares in its holding company Security Troopers Ltd. is not valid.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2025, 1(b) (New Scheme).

(b)(i) As per the provision of section 68(1) of the Companies Act, 2013, subject to the provisions of sub-section (2), a company may purchase its own shares or other specified securities (hereinafter referred to as buy-back) out of:

(a)its free reserves;

(b)the securities premium account; or

(c)the proceeds of the issue of any shares or other specified securities:

As per the provision of section 68(2), no company shall purchase its own shares or other specified securities under sub-section (1), unless:

(a)the buy-back is authorised by its articles;

(b)a special resolution has been passed at a general meeting of the company authorising the buy-back:

Provided that nothing contained in this clause shall apply to a case where:

(i)the buy-back is ten per cent or less of the total paid-up equity capital and free reserves of the company;

(ii)such buy-back has been authorised by the Board by means of a resolution passed at its meeting;

Analysing the above provisions we can conclude that Apirock Limited can buy-back 10% of its shares under the given circumstances since it is well within the stipulated limit of 10% of its the total paid-up equity capital and free reserves, which has been authorised by the Board by means of a resolution passed at its meeting and here passing of a special resolution is not required in terms of the proviso to section 68(2).

(ii)As per the provision of section 68(2)(c) of the Companies Act, 2013, no company shall purchase its own shares or other specified securities under sub-section (1), unless the buy-back is twenty-five per cent or less of the aggregate of paid-up capital and free reserves of the company.

Provided that in respect of the buy-back of equity shares in any financial year, the reference to twenty-five per cent in this clause shall be construed with respect to its total paid-up equity capital in that financial year.

In terms of the above provisions, the maximum eligible amount allowed to be used by Apirock Limited for buy-back of shares is: 25% of ₹ (50+ 100) crore = ₹ 37.5 crore subject to passing of a special

resolution.

Note for (ii)-

Assumption 1. - Only ordinary resolution has been passed.

In this case, authorisation by a resolution passed at a meeting of the Board of Directors authorising the same is sufficient when the buyback amounts are up to 10% of the total paid-up equity capital and free reserves of the company, then the answer will be 10% of paid-up equity share capital and free reserves i.e., 10% of ₹ (50+100) crore i.e. ₹ 15 crore.

Assumption 2- A special resolution has been passed.

In this case, the maximum amount of buyback shall be 25% of the paidup equity share and free reserves, i.e., 25% of ₹ (50+100) crore i.e. ₹ 37.5

crore.

Assumption 3- When the buy-back is of only equity shares .

If all the shares in the question are assumed to be equity shares, the maximum amount of buyback shall be 25% of the paid-up equity share, i.e., 25% of ₹ 50 crore i.e. ₹ 12.5 crore in that financial year.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2025, 3(b) (New Scheme).

(a)According to section 16 of the Companies Act, 2013, if, through inadvertence or otherwise, a company on its first registration or on its registration by a new name, is registered by a name which:

in the opinion of the Central Government (Power delegated to the Regional Director), is of opinion that name (original or revised/new) of company is identical with or too nearly resembles to the name by which a company in existence, then, either:

(i)On its own or

(ii)On an application by a proprietor of already registered trade mark under the Trade Marks Act, 1999, it may direct the company to change its name.

The company shall change its name or new name, as the case may be, within a period of three months from the issue of such direction, after adopting an ordinary resolution for the purpose.

Application by a proprietor of registered trade mark shall be made within three years of incorporation or registration or change of name of the company.

In the given question, UINA Infra Projects Private Limited was incorporated on 1st June, 2022. The trade mark of UINA Infra Projects was registered on 1st April, 2018.

In terms of the above stated provisions and facts of the question, we can answer the questions as under:

Part (i) - First Ground of Objection:

In the first instance, the contention of Mr. D (a director of UINA Infra Projects Private Limited) is not tenable due to the fact that the restriction is not only with respect to the name of an existing company, but also as a result of an application filed before the appropriate authority by the proprietor of a registered trademark.

In other words, the name of the company ”UINA Infra Projects” is verbatim identical to the trademark registered by Mr. X. Hence, the contention of Mr. D is not tenable.

Part (ii) - Second Ground of Objection:

In the second instance also, the contention of Mr. D is not tenable. The application should be made by the proprietor of a registered trademark within three years of incorporation or registration or change of name of the company and not within two years.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, January 2025, 3(a) (New Scheme).

(a)Whether Stuti Ceramic Pvt Ltd (SCPL) can raise funds through Private Placement?

Yes, SCPL can raise funds through the private placement of shares.

Section 23(2)(b) of the Companies Act, 2013 (the Act) provides that a private company may issue securities through private placement by complying with the provisions specified in section 42 of the Act in supplement with those stated under Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

Meaning of Private Placement

According to the Explanation I to section 42(3) of the Act, “private placement" means any offer or invitation to subscribe or issue of securities to a select group of persons by a company (other than by way of public offer) through private placement offer- cum-application, which satisfies the conditions specified in this section.

Offer to be made only to a select group of persons

A private placement shall be made only to a select group of not more than two hundred (200) persons (referred to as “identified persons”) in a financial year who have been identified by the Board after passing a special resolution [Section 42(2) read with Rule 14(1) of the Companies (Prospectus and Allotment of Securities), Rules 2014].

Limit on Fresh Offer

As per section 42(5) of the Act, no fresh offer or invitation under this section shall be made unless the allotments with respect to any offer or invitation made earlier have been completed or that offer or invitation has been withdrawn or abandoned by the company.

Thus, Stuti Ceramic Pvt. Ltd. can raise further funds through private placement issue after the allotments with respect to right issue for ₹ 100

lakh have been completed and subject to the maximum number of 200 persons (identified persons) under section 42(2) and by complying with the procedures stated in Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

Time Limit for Allotment of Securities

As per section 42(6) of the Companies Act, 2013, a company making an offer or invitation under this section shall allot its securities within 60 days from the date of receipt of the application money for such securities and if the company is not able to allot the securities within that period, it shall repay the application money to the subscribers within 15 days from the expiry of 60 days and if the company fails to repay the application money within the aforesaid period, it shall be liable to repay that money with interest at the rate of 12% per annum from the expiry of the sixtieth day.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2024, 2(a) (New Scheme).

(b)(i) Whether Dolls Toys Limited is permitted to accept deposits from Public other than its members?

Section 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 deal with acceptance of deposits from public other than its members by ‘eligible companies’.

Accordingly, a public company, having net worth of not less than ₹ 100 crore or turnover of not less than ₹ 500 crore, and which has

obtained the prior consent by a special resolution and filed it with the Registrar of Companies before making any invitation to the Public for acceptance of deposit can accept deposits from persons other than its members.

Eligible Company: As per Rule 2(1)(e) of the Companies (Acceptance of Deposits) Rules, 2014, a public company, having net worth of not less than one hundred crore rupees or a turnover of not less than five hundred crore rupees, may accept deposits from persons other than its members. Such type of public company is known as ‘eligible company’.

In the given question, Dollys Toys Limited has a net-worth of ₹ 310 crore and turnover of ₹ 300 crore.

Since at least one condition is satisfied that is net worth is ₹ 310 crore

which is more than the prescribed limit, and assuming it has obtained the prior consent by a special resolution and filed it with the Registrar of Companies, it is permitted to accept deposits from public other than its members.

Thus, Dollys Toys Limited is an eligible company and hence can accept deposits from public other than its members.

(ii)Whether Dolls Toys Limited permitted to accept deposits with repayment period of 4 months?

As per Rule 3(1) of the Companies (Acceptance of Deposits) Rules, 2014, a company is not permitted to accept or renew deposits (whether secured or unsecured) which is repayable on demand or in less than six months. Further, the maximum period of acceptance of deposits cannot exceed thirty- six months.

Exception to the rule of tenure of six months: For the purpose of

meeting any of its short-term requirements of funds, a company may accept or renew deposits for repayment earlier than six months subject to the condition that:

(i)such deposits shall not exceed ten per cent of the aggregate of the paid-up share capital, free reserves and securities premium account of the company; and

(ii)such deposits are repayable only on or after three months from the date of such deposits or renewal.

Conclusion:

Hence, Dolly Toys Limited is permitted to accept deposits with repayment period of 4 months in compliance to the stated provisions.

However, by virtue of exception to the rule of tenure of six months as stated above, since the company cannot accept the deposit exceeding 10% of the aggregate of the paid up share capital, free reserves and security premium account which is ₹ 310 crore therefore the company can accept the deposits to the extent of ₹ 31 crore only.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2024, 2(b) (New Scheme).

(a)(i) Rule 14 (1) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 , requires prior approval of the shareholders of the company, by a special resolution for each of the private placement offers or invitations.

Provided further that this sub-rule shall not apply in case of offer or invitation for non-convertible debentures, where the proposed amount to be raised through such offer or invitation does not exceed the limit as specified in clause (c) of sub-section (1) of section 180 in such cases relevant Board resolution under clause (c) of sub-section

(3)of section 179 would be adequate.

Provided also that in case of offer or invitation for non-convertible debentures, where the proposed amount to be raised through such offer or invitation exceeds the limit as specified in clause (c) of subsection (1) of section 180, it shall be sufficient if the company passes a previous special resolution only once in a year for all the offers or invitations for such debentures during the year.

Thus, based on above, the resolution will be passed.

As per section 42(2) of the Companies Act, 2013, a private placement shall be made only to a select group of persons who have been identified by the Board, whose number shall not exceed 50 or such higher number as may be prescribed, in a financial year.

Rule 14 (2) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 has prescribed ‘an offer or invitation to subscribe securities under private placement shall not be made to persons more than two hundred (200) in the aggregate in a financial year’.

Provided that any offer or invitation made to Qualified Institutional Buyers and Employees of the company being offered under a scheme of ESOP under section 62(1)(b) shall not be considered while calculating the limit of two hundred persons.

As per rule 14(7), NBFCs which are registered with the RBI and Housing Finance Companies which are registered with the National Housing Bank; if they are complying with any regulations made by the RBI or National Housing Bank in respect of offer or invitation to be issued on private placement basis, then need not to comply with the rule 14(2) above.

Thus, based on above, the maximum number of persons to whom an offer by private placement in a financial year will be determined.

(ii)As per section 42(6) of the Companies Act, 2013 provides that a company making an offer or invitation under private placement shall allot its securities within sixty days from the date of receipt of the application money.

If company fails to make allotment within 60 days, then repayment of the application money to the subscribers shall be made within fifteen days from the expiry of sixty days and if the company fails to repay the application money within the aforesaid period, it shall be liable to repay that money with interest at the rate of twelve per cent per annum from the expiry of the sixtieth day.

(iii)Company shall not utilise monies raised through private placement unless allotment is made and the return of allotment is filed with the Registrar in accordance with section 42(8). The return of allotment shall be filed with the Registrar within 15 days from the date of the allotment under section 42.

Hence, it can utilize the money thus received once the return has been filled with the Registrar.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2024, 2(a) (New Scheme).

(a)Issue of Sweat Equity Shares: As per section 53, a company shall not issue shares at a discount, except as provided in section 54.

Section 54 of the Companies Act, 2013 states that sweat equity shares are issued to keep the employees of a company motivated by making them partner in the growth of the company.

Section 54 mentions the provisions which need to be adhered to by a company if it desires to issue sweat equity shares.

Conditions: According to section 54 (1), a company may issue sweat equity shares of a class of shares already issued, if the following conditions are fulfilled, namely -

(a)the issue is authorised by a special resolution passed by the company;

(b)the resolution specifies the number of shares, the current market price, consideration, if any, and the class or classes of directors or employees to whom such equity shares are to be issued.

Limit on issue of Sweat Equity Shares: According to proviso to Rule 8 (4) of the Companies (Share Capital & Debentures) Rules 2014, w.r.t a start-up company, it may issue sweat equity shares not exceeding fifty percent of its paid-up capital up to ten years from the date of its incorporation or registration.

Lock-in Period: Rule 8 (5) of the Companies (Share Capital & Debentures) Rules 2014, states that the sweat equity shares issued to directors or employees shall be locked in/non-transferable for a period of three years from the date of allotment.

Accordingly, in the given instance,

(i)Size of issue of sweat equity shares was appropriate, as the decision of the company to issue 30% sweat equity shares to a class of directors and employees was within the prescribed limit. Resolution containing 15 lakh sweat equity shares was also within the limit of 25 lakh sweat equity shares (i.e.,50% of paid-up capital) with the details as to the current market price and with the consideration to be issued.

(ii)No, as per law, lock-in period will be of three years from the date of allotment. Here, it states five years which is against the law.

Alternate Answer

Issue of Sweat Equity Shares

As per section 53, a company shall not issue shares at a discount, except as provided in section 54.

Section 54 of the Companies Act, 2013 states that sweat equity shares are issued to keep the employees of a company motivated by making them partner in the growth of the company.

Section 54 mentions the provisions which need to be adhered to by a company if it desires to issue sweat equity shares.

Conditions: According to section 54 (1), a company may issue sweat equity shares of a class of shares already issued, if the following conditions are fulfilled, namely -

(a)the issue is authorised by a special resolution passed by the company;

(b)the resolution specifies the number of shares, the current market price, consideration, if any, and the class or classes of directors or employees to whom such equity shares are to be issued;

Limit on issue of Sweat Equity Shares: According to proviso to Rule 8 (4) of the Companies (Share Capital & Debentures) Rules 2014, w.r.t a start-up company, as defined in notification number G.S.R. 127(E) dated the 19th February, 2019 issued by the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India, it may issue sweat equity shares not exceeding fifty percent of its paid up capital up to ten years from the date of its incorporation or registration. A company which is not a start-up company shall not issue sweat equity shares for more than fifteen per cent of the existing equity paid-up share capital in a year or shares of the issue value of rupees five crore, whichever is higher, provided that the issuance of sweat equity shares in the company shall not exceed twenty-five per cent, of the paid-up equity capital of the company at any time.

As per the aforesaid notification number G.S.R. 127(E) dated the 19th February, 2019 an entity shall be considered as a Start-up, if it is incorporated as a private limited company (as defined in the Companies Act, 2013).

Lock-in Period: Rule 8 (5) of the Companies (Share Capital & Debentures) Rules 2014, states that the sweat equity shares issued to directors or employees shall be locked in/non-transferable for a period of three years from the date of allotment.

Accordingly, in the given instance,

(i)Size of issue of sweat equity shares i.e., 30% to be issued by a start-up entity would be appropriate. However, Innovative Ltd. being a public company cannot assume the status of a start-up entity. Hence, the decision of the company to issue 30% sweat equity shares to a class of directors and employees was not within the prescribed limit. Hence, the size of issue of sweat equity shares of the company was not appropriate.

(ii)No, as per law, lock-in period will be of three years from the date of allotment. Here, it states five years which is against the law.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2023, 1(a) (Old Scheme).

(a)The amount that can be raised by the Company by issuing Debentures:

Section 71 of the Companies Act, 2013 (the Act), deals with the manner in which a company may issue debentures. Before the issue of debentures, the Board of Directors of the Company in compliance with Section 180(1)(c) of the Act, shall obtain approval of the shareholders through special resolution if the borrowings by issuing debentures together with th e amount already borrowed exceed the aggregate of company’s paid -up share capital, free reserves and securities premium amount. Temporary loans obtained from the company’s bankers in the ordinary course of business are not to be in cluded in the borrowings.

The Amount that can be raised by the Company by issuing Debentures: In view of

the above provisions, SRD Limited can raise money to the extent of the following amounts without the approval of the shareholders through a special resolution:

*General Reserve and Balance in Profit and Loss Account is in the capacity of Free Reserve.

Since in the question, no pre-condition, is provided for issue of debenture with an option to convert such debentures into shares, so accordingly, the amount that can be raised by the company by issuing debentures will be:

Here, Short - te rm Cash Credit loan from XYZ Bank Ltd. is a ‘Temporary Loan’ obtained from the company’s bankers.

Debentures that can be issued by the Board of Directors in the Board Meeting without obtaining approval of the shareholders through special resolution passed in the General Meeting

= (A) - (B) = ₹ 90,00,000.

Further, the Board of Directors of the company shall obtain approval of the shareholders through special resolution if the borrowings by issuing debentures exceed ₹ 90,00,000.

(ii)Issue of Debentures with an Option to Convert into Shares: According to

Section 71(1) of the Companies Act, 2013 a company may issue debentures with an option to convert such debentures into shares, either wholly or partly at the time of redemption. It is also provided that the issue of debentures with an option to convert such debentures into shares, wholly or partly, shall be approved by a special resolution passed at a general meeting.

Thus, in case SRD Limited desires to issue debentures with an option to convert such debentures into shares, it has to pass the special resolution irrespective of the amount to be raised.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, November 2022, 1(a) (Old Scheme).

(a)According to section 61 of the Companies Act, 2013, a limited company having a share capital is empowered to alter its capital clause of the Memorandum of Association. The provisions are as under:

(1)According to the section, a limited company having a share capital may, if so authorised by its articles, alter its memorandum in its general meeting to cancel shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled.

(2)It provides that the cancellation of shares shall not be deemed to be a reduction of share capital.

According to the given facts, in the said question, the company reduced its share capital without obtaining the confirmation from the NCLT. The Company amended its memorandum by passing the requisite resolution at the duly convened meeting. However, Company Secretary refused to certify stating that action of company reducing the share capital without confirmation of the Tribunal, is invalid.

Accordingly, in the light of the stated facts, following shall be the answers:

(i)Decision of the company is valid, as for alteration of share capital by cancellation of shares and diminishing of amount of share capital by the amount of the shares so cancelled, does not require confirmation of the Tribunal. As per the law, passing of the resolution in that behalf at the duly convened meeting by amending Memorandum of Association, is the sufficient compliance. Therefore, contention of practicing Company Secretary is not valid.

(ii)According to section13, save as provided in section 61 of the Companies Act, 2013, company may alter the provisions of its memorandum with the approval of the members by a special resolution.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2022, 3(a) (Old Scheme).

(a)(i) As per the provision of section 100(2) of the Companies Act, 2013, in the case of a company having a share capital, the Board shall, at the requisition made by such number of members who hold, on the date of the receipt of the requisition, not less than one-tenth of such of the paid-up share capital of the company as on that date carries the right of voting, call an Extra Ordinary General Meeting (EGM) of the company within the specified period.

As per the provision of section 100(4), if the Board does not, within twenty-one days from the date of receipt of a valid requisition in regard to any matter, proceed to call a meeting for the consideration of that matter on a day not later than forty five days from the date of receipt of such requisition, the meeting may be called and held by the requisitionists themselves within a period of three months from the date of the requisition.

The requisition for calling of EGM was placed by members holding share capital worth ₹ 36.52 crore, which is more than 1/10th of paid-up share capital of Autumn and Spring Limited, i.e. [(1/10th of ₹ 200.56 crore)] = ₹ 20.056 crore. Therefore, the required number of

members have validly presented the requisition for calling of EGM on 1.7.2024. The Board of Directors must start the process of calling the EGM within 21 days from 1.7.2024 i.e. by 22.7.2024. Since, the directors did not pay heed to call the EGM by 24.7.2024, the requisitionists were correct in calling the EGM on their own.

(ii)Rule 17 of the Companies (Management and Administration) Rules, 2014 deals with the provisions relating to Calling of Extraordinary general meeting by requistionists.

As per sub rule (4) of the above Rule, the notice (if given by requisitionists) shall be signed by all the requistionists or by a requistionist duly authorised in writing by all other requistionists on their behalf or by sending an electronic request attaching therewith a scanned copy of such duly signed requisition.

As per sub rule (5) of the above Rule, no explanatory statement as required under section 102 need be annexed to the notice of an extraordinary general meeting convened by the requistionists and the requistionists may disclose the reasons for the resolution(s) which they propose to move at the meeting.

As per sub rule (6) of the above Rule, the notice of the meeting shall be given to those members whose names appear in the Register of members of the company within three days on which the requistionists deposit with the company a valid requisition for calling an extraordinary general meeting.

Hence, signing on the notice by only one requisitionist (duly authorised by all requisitionists via email) and non- attachment of the explanatory statement will not have any effect on the validity of the above notice.

Also, since Sohan Lal became a member of the company on 10.7.2024 and the requisition was presented to the Board on 1.7.2024, the contention of Sohan Lal raising the issue of legality of the meeting on the ground that the notice was not mailed to him, is not correct.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2025, 2(a) (New Scheme).

(b)Exemption to certain Private Companies:

Notification No. GSR 464 (E) dated 5th June 2015, provided certain exemptions to Private Limited Companies relaxing the provisions of the Companies Act 2013 with respect to certain restrictions for acceptance of deposits.

The restrictions specified in the clauses (a) to (e) of sub-section (2) of section 73 with respect to certain restrictions for acceptance of deposits like issue of circular, filing the copy of such circular with the Registrar, depositing of certain amount and certification as to no default committed shall not apply to a private company. They are as follows:

(A)which accepts from its members monies not exceeding one hundred percent of the aggregate of the paid-up share capital, free reserves and securities premium account; or

(B)which is a start-up, for five years from the date of its incorporation; or

(C)which fulfils all of the following conditions, namely:-

(a)which is not an associate or a subsidiary company of any other company;

(b)if the borrowings of such a company from banks or financial institutions or any body corporate is less than twice of its paid-up share capital or fifty crore rupees, whichever is lower; and

(c)such a company has not defaulted in the repayment of such borrowings subsisting at the time of accepting deposits under this section.

In the present case, BUI Private Limited was not in support of depositing any amount in any Deposit Repayment Reserve Account for the purpose of repayment of the deposits.

Also, since BUI Limited does not satisfy the conditions given in clause (C) above, as its borrowings from banks is not less than twice of its paid-up share capital or fifty crore rupees, whichever is lower, (i.e. 8 crore*2= ₹ 16 crore and amount already borrowed is ₹ 17 crore (i.e Term Loan of ₹ 12 crore and Working Capital of ₹ 5 crore), it has to go for the restricted

amount as stated in clause (A) above, i.e. not exceeding one hundred percent of aggregate of the paid-up share capital, free reserves and securities premium account.

Therefore, the maximum amount of deposit it can accept from members will be limited to ₹ 15 crore.

In terms of the options given in the question, the company has no option but to choose Proposal 2 - Acceptance of Deposits of ₹ 14,00,00,000, to

be repaid with interest @ 8% per annum.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, January 2025, 2(b) (New Scheme).

(b)(i) As per the Companies Act, 2013, in case of joint shareholders, they must concur in voting unless the articles provide to the contrary.

As per Regulation 52 of Table F, the voting in case of joint shareholders is done in the order of seniority, which is determined on the basis of the order in which their names appear in the register of members. The joint-holders have a right to instruct the company as to the order in which their names shall appear in the register of members.

Accordingly, in case of Mr. M and Mr. P, it is to be seen as to whose name appears first in the register of members; and then to decide whether the vote is cast in favour of resolution or against it.

(ii)According to section 76 (1) of the Companies Act, 2013, an “eligible comp any” means a public company, having a net worth of not less than one hundred crore rupees or a turnover of not less than five hundred crore rupees and which has obtained the prior consent of the company in general meeting by means of a special resolution and also filed the said resolution with the Registrar of Companies before making any invitation to the public for acceptance of deposits.

Okara Limited is having net worth of ₹ 110 crore. Hence, it falls in the category of ‘eligible company’ and thus can a ccept the deposits from public.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2024, 2(b) (New Scheme).

(a)1. According to section 92(4) of the Companies Act, 2013, every company shall file with the Registrar a copy of the annual return, within 60 days from the date on which the annual general meeting is held or where no annual general meeting is held in any year within 60 days from the date on which the annual general meeting should have been held together with the statement specifying the reasons for not holding the annual general meeting.

In the instant case, the idea of the directors that since the Annual General Meeting (AGM) was cancelled, the provisions requiring the company to file annual returns within 60 days from the date of AGM would not apply, is incorrect.

2.Section 92(5) states that if any company fails to file its annual return under subsection (4), before the expiry of the period specified therein, such company and its every officer who is in default shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with further penalty of one hundred rupees for each day during which such failure continues, subject to a maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default.

In the given situation, Wills Private Limited has contravened the provisions of section 92(4). Thus, the company and its every officer in default may face the penalties as specified in section 92(5) of the Act.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, November 2023, 2(a) (Old Scheme).

(d)(i) As per section 94(1) of the Companies Act, 2013, the registers required to be kept and maintained by a company under section 88 shall be kept at the registered office of the company. Section 88(1) provides that every company shall keep and maintain the register of members.

However, such registers may also be kept at any other place in India in which more than one-tenth of the total number of members entered in the register of members reside, if approved by a special resolution passed at a general meeting of the company.

So, Majboot Cement Limited (MCL) can keep the Registers of Members at Faridabad (as around 15% of total members are resident of Faridabad) by passing a Special Resolution at a general meeting.

(ii)A ‘Floating Charge’ is created on assets or a class of assets which are of fluctuating nature or changing in nature like raw material, stock-in-trade, debtors, and the like. The assets under floating charge keep on changing because the borrowing company is permitted to use them for trading or producing final goods for sale.

In the instant case, since charge was created on all the assets of company on that date (i.e. on 18th June, 2023) for loan of ₹ 325 crore, it is type of Floating Charge.

As per section 77 of the Companies Act, 2013, if the registration of charge was not effected within the original period of 30 days, the Registrar may, on an application by the company, allow such registration to be made within a period of 60 days of such creation (i.e. a grace period of another 30 days is granted after the expiry of the original 30 days), on payment of additional fees as prescribed.

If the charge is not registered within the extended period as above, the company shall make an application and the Registrar is empowered to allow such registration to be made within a further period of sixty days after payment of prescribed ad valorem fees.

In the instant case, MCL created a charge on 18th June, 2023 but failed to register it. On 18th August, it filed the application for registration of charge. Since the charge has to be filed by 17th August, 2023 (within 60 days from 18th June, 2023) with additional fees, the application can be filed within a further period of sixty days i.e. by 17th October, 2023 after payment of prescribed ad valorem fees.

(iii)According to section 101(1) of the Companies Act, 2013, general meetings need to be called by giving at least a notice of 21 clear days.

However, a general meeting may be called after giving shorter notice than that specified in this sub-section if consent, in writing or by electronic mode, is accorded thereto in the case of an annual general meeting, by not less than 95% of the members entitled to vote thereat.

In the instant case, MCL wants to convene its AGM on 10th September, 2023 by giving shorter notice which is consented by only 78% of the members. Hence, shorter notice is not in compliance with the provisions of the Act.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, November 2023, 4(d) (Old Scheme).

(a)(i) Joint shareholders must concur in voting unless the articles provide to the contrary.

The voting in case of joint shareholders is done in the order of seniority, which is determined on the basis of the order in which their names appear in the register of members/ shareholders. The joint- holders have a right to instruct the company as to the order in which their names are to appear in the register.

As per Rule 21 of the Companies (Management and Administration) Rules, 2014, the Scrutinizers shall arrange for Polling papers and distribute them to the members and proxies present at the meeting; in case of joint shareholders, the polling paper shall be given to the first named holder or in his absence to the joint holder attending the meeting as appearing in the chronological order in the folio.

Thus, in the given case, ‘ A ’ or his wife ‘B’, whosoever names appears first in chronological order in the register of members/ shareholders shall be entitled to vote.

(ii)Time period for e-voting: The facility for remote e-voting shall remain open for not less than three days and shall close at 5.00 p.m. on the date preceding the date of the general meeting.

Thus, if the Annual General Meeting is going to be held on 7.9.2020, the facility for remote e- voting shall open on 4.9.2020 and close at 5.00 p.m. on 6.9.2020.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, December 2021, 2(a) (Old Scheme).

(a)According to section 48 of the Companies Act, 2013,

(1)Where a share capital of the company is divided into different classes of shares, the rights attached to the shares of any class may be varied with the consent in writing of the holders of not less than threefourths of the issued shares of that class or by means of a special resolution passed at a separate meeting of the holders of the issued shares of that class,-

(a)if provision with respect to such variation is contained in the memorandum or articles of the company; or

(b)in the absence of any such provision in the memorandum or articles, if such variation is not prohibited by the terms of issue of the shares of that class:

Provided that if variation by one class of shareholders affects the rights of any other class of shareholders, the consent of three-fourths of such other class of shareholders shall also be obtained and the provisions of this section shall apply to such variation.

(2)Where the holders of not less than ten per cent of the issued shares of a class did not consent to such variation or vote in favour of the special resolution for the variation, they may apply to the Tribunal to have the variation cancelled, and where any such application is made, the variation shall not have effect unless and until it is confirmed by the Tribunal:

Provided that an application under this section shall be made within twenty-one days after the date on which the consent was given or the resolution was passed, as the case may be, and may be made on behalf of the shareholders entitled to make the application by such one or more of their number as they may appoint in writing for the purpose.

(3)The decision of the Tribunal on any application under sub-section (2) shall be binding on the shareholders.

(4)The company shall, within thirty days of the date of the order of the Tribunal, file a copy thereof with the Registrar.

(i)In the given question, the Articles of Association expressly provide that the rights attached to a class of shares may be varied in accordance with the Companies Act, 2013. Further, the variation was approved by a special resolution at a separate meeting of preference shareholders, with holders of 81% of the issued preference share capital voting in favour.

Since 81% is more than the three-fourths threshold, the statutory requirement for approval under section 48(1) has been satisfied.

Further, it is provided in the question that a group of dissenting preference shareholders holding 11% of the issued preference shares objected to the proposal. Since the dissenting shareholders hold not less than 10% of the issued shares of the class, they are entitled to approach the Tribunal under section 48(2) of the Companies Act, 2013. Accordingly, despite the three-fourths threshold being met, the variation of the cumulative dividend rights cannot take effect unless and until it is confirmed by the Tribunal.

(ii)Section 48(2) as given above has provided the remedies available to the dissenting shareholders.

In the given question, it is provided that the dissenting shareholders (11%) have approached the National Company Law Tribunal (NCLT) seeking cancellation of the variation of rights under Section 48, within 14 days from the passing of the special resolution (i.e. within the specified time limit of 21 days).

Section 48 expressly provides that, where any such application is made, the variation shall not have effect unless and until it is confirmed by the Tribunal.

Therefore, BM Networks Limited was not justified in implementing the variation or deferring the cumulative dividend during the pendency of the NCLT proceedings.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2026, 2(a) (New Scheme).

(b)According to section 103 of the Companies Act, 2013, in case of a public company, unless the articles of the company provide for a larger number, if the number of members is more than 1000 but upto 5000, then the quorum shall be 15 members personally present.

As per Secretarial Standard - 2, one person can be an authorised representative of more than one body corporate. In such a case, he is treated as more than one Member present in person for the purpose of Quorum.

Her e, the term ‘members personally present’ refers to the members entitled to vote in respect of the items of business on the agenda of the meeting.

(i)Q Ltd. is a public company, having 1200 members hence, the quorum shall be 15 members personally present.

Mr. Mohan shall be treated as 2 members as he is the authorized representative of two body corporates.

Hence, total 15 members were present at the meeting held on 10.12.2023.

Thus, the requisite quorum was present.

Assumption: It is assumed that these 14 persons are inclusive of Mr. Mohan.

(ii)In the given scenario, even if Mr. Shyam was absent, Mr. Rahi could not adjourn the meeting, as the requisite quorum was present.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2024, 3(b) (New Scheme).

(a)A Proxy is an instrument in writing executed by a shareholder authorizing another person to attend a meeting and to vote thereat on his behalf and in his absence. As per the provisions of section 105 of the Companies Act, 2013, every shareholder who is entitled to attend and vote has a statutory right to appoint another person as his proxy. Section 105(4) provides that a proxy received 48 hours before the meeting will be valid. Further, any provision in the articles of association of the company requiring instrument of proxy to be lodged with the company more than 48 hours before a meeting shall have effect as if 48 hours had been specified therein.

Thus, in case of member X, the proxy Y will be permitted to represent as proxy on his behalf as form for appointing proxy was submitted within the permitted time.

However, in the case of member W , the proxy M will be permitted to represent as the proxy. Whereas submission of form authorizing N to represent as proxy was deposited in less than 48 hours before the meeting, so N will not be allowed to represent W.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2023, 2(a) (Old Scheme).

(b)(i) In terms of Rule 2 (1)(c)(xvii) of the Companies (Acceptance of Deposits) Rules, 2014, if a start-up company receives rupees twenty-five lakh or more by way of a convertible note (convertible into equity shares or repayable within a period not exceeding ten years from the date of issue) in a single tranche, from a person, it shall not be treated as deposit.

In the given case, Moon Technology Private Limited, a start-up company, received ₹ 20.00 lacs from Paras in a single tranche by way of a convertible note which is repayable within a period of six years from the date of its issue. The amount received is below threshold limit of ₹ 25.00 lacs. Hence, the amount of ₹ 20.00 lacs shall be considered as deposit and the provisions for acceptance of deposit will apply accordingly.

(ii)According to Rule 3 (1) of the Companies (Acceptance of Deposits) Rules, 2014, a company is not permitted to accept or renew deposits (whether secured or unsecured) which is repayable on demand or in less than six months. Further, the maximum period of acceptance of deposit cannot exceed thirty six months.

However, as an exception to this rule, for the purpose of meeting any of its shortterm requirements of funds, a company is permitted to accept or renew deposits for repayment earlier than six months subject to the conditions that:

(1)such deposits shall not exceed ten per cent. of the aggregate of the paid-up share capital, free reserves and securities premium account of the company; and

(2)such deposits are repayable only on or after three months from the date of such deposits or renewal.

In the given case of Shriram Readymade Garments Limited, it wants to accept deposits of ₹ 50.00 lacs from its members for a tenure which is less than six months. It can do so if it justifies that the deposits are required for the purpose of meeting any of its short-term requirements of funds but in no case such deposits shall exceed 10% ten per cent of the aggregate of its paid-up share capital, free reserves and securities premium account and further, such deposits shall be repayable only on or after three months from the date of such deposits.

(iii)As per Rule 2 (1) (e) of the Companies (Acceptance of Deposits) Rules, 2014, the term “eligible company” means a public company as referr ed to in section 76 (1), having a net worth of not less than one hundred crore rupees or a turnover of not less than five hundred crore rupees and which has obtained the prior consent in general meeting by means of a special resolution and also filed the said resolution with the Registrar of Companies before making any invitation to the public for acceptance of deposits:

However, an eligible company, which is accepting deposits within the limits specified under section 180 (1) (c), may accept deposits by means of an ordinary resolution.

Thus, a public company can accept deposit from public if it is an eligible company.

In the given question, Y Ltd. has a turnover of ₹ 400 crore and net worth of ₹ 50 crore. Hence, it cannot be termed as an eligible company and thus can not accept deposits from the public.

OR

According to section 101(1) of the Companies Act, 2013, a general meeting of a company may be called by giving not less than clear twenty-one days' notice either in writing or through electronic mode in such manner as may be prescribed.

Also, it is to be noted that 21 clear days mean that the date on which notice is served and the date of meeting, are excluded for sending the notice.

Further, Rule 35(6) of the Companies (Incorporation) Rules, 2014, provides that in case of delivery by post, such service shall be deemed to have been effected-in the case of a notice of a meeting, at the expiration of forty eight hours after the letter containing the same is posted.

Hence, in the given question:

(i)A 21 days’ clear notice must be given. In the given question, only 19 clear days’ notice is served (after excluding 48 hours from the time of its posting and the day of sending and date of meeting). Therefore, the meeting was not validly called.

(ii)As explained in (i) above, notice falls short by 2 days.

(iii)The Companies Act, 2013 does not provide anything specific regarding the condonation of delay in giving of notice. Hence, the delay in giving the notice calling the meeting cannot be condoned.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, December 2021, 5(b) OR (Old Scheme).

(A)Validity of Resolution passed in the EGM called by the Requisitionists

As per Section 100(2) of the Companies Act, 2013, read with Rule 17 of the Companies (Management and Administration) Rules, 2014, the Board shall on the requisition of, in the case of company having a share capital, such number of members who hold, on the date of receipt of requisition, at least 1/10th of such paid-up capital of the company as on that date carries the right of voting, shall call for the meeting.

The requisition made under sub- section 2 shall set out the matters for the consideration of which the meeting is to be called and shall be signed by the requisitionists and sent to the registered office of the company.

The Board must, within 21 days from the date of receipt of a valid requisition, proceed to call a meeting on a day not later than 45 days from the date of receipt of such requisition.

If the Board does not, within twenty one days from the date of receipt of a valid requisition in regard to any matter, proceed to call a meeting for the consideration of that matter on a day not later than forty five days from the date of receipt of such requisition, the meeting may be called and held by the requisitionists themselves within a period of three months from the date of the requisition. [Sub-Section 4].

Sub-section 5 of Section 100 provides that the requisitionists shall call and hold the meeting in the same manner as called and held by the Board and such meeting shall comply with all the requirements of the Act.

Sub-section 6 of Section 100 any reasonable expenses incurred by the requisitionists in calling a meeting under sub-section (4) shall be re-imbursed to the requisitionists by the company.

In the given case, meeting called by requisitionist to pass the resolution to remove the Managing Director in the said meeting can be said to be valid as the requisition moved from Mr. A and Mr. B holding ₹ 30,000 (each holding ₹ 15,000) equity share capital (1/10th of 1,00,000) is in compliance with the legal requirement and will be binding on the company, its officers and members provided if all the conditions for a valid meeting are satisfied.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, November 2022, 2(a) (Old Scheme).