View - Master Minds

No.1 for CA/CWA & MEC/CEC

Dear students,

MASTER MINDS

These suggested answers are meant for easy and quick assessment of possible outcome of IPCC aspirants for their in-advance preparation and future course of planning.

Copyrights on these suggested answers are reserved to MASTER MINDS. No circulation of these suggested answers is permitted by any means. Those who download these suggested answers can only use them for their self assessment and they don’t have any rights to circulate the same through any means.

DISCLAIMER

1. Readers must aware that, these are not the suggested answers issued by ICAI. These suggested answers are only the recommendations by MASTER MINDS, Guntur.

2. ICAI will issue its own suggested answers in future and performs paper valuation based on its own suggested answers. So, if any difference in judgment is found in assessment of the readers based on MASTER MINDS Suggested Answers, then MASTER MINDS holds no responsibility.

3. The Suggested answers issued by both ICAI and MASTER MINDS are purely different and their own opinions. So, there is no guarantee that suggested answers issued by MASTER

MINDS match with the suggested answer to be released by ICAI.

Even if the suggested answers issued by MASTER MINDS match with the Suggested answers to be issued by ICAI, it is purely accidental.

4. These suggested answers are prepared based on the information available to us and with the best of our knowledge. Wherever needed assumptions have been taken.

5. Even after taking maximum care in preparation of these suggested answers, there may be chances for some errors, diverse opinions & judgments. So, MASTER MINDS has no responsibility for any such errors and diverse opinions.

Question No. 1

1a) Provision: where a party to a contract receives a notice of special circumstances affecting the contract, he will be liable not only for damages arising naturally and directly from the breach, but also for special damages.

Such damages are awarded by the court only when, at the time of making the contract, these special circumstances were communicated to the defaulted party.

A compensation can also be claimed for any loss or damage which the party knew when they entered in to the contract, as likely to result from the breach.

That is to say, special damage can be claimed only on a previous notice.

Note: if the special circumstances were already known to the other party then it is not necessary to communicate the same to such other party.

Facts of the Case: X entered with Y to supply him 1000 water bottles @ 5.00 rupees per water bottle, to be delivered at a specified time. Thereafter X contracts with Z for the purchase of 1000 water bottles@ rupees 4.50 per water bottle, and the same time told Z that he did so for the purpose of performing his contract entered into with Y. Z failed to perform his contract is due course and market prise of each water bottle on that day was rupees 5.25 per water bottle.

Consequently X could not procure any after bottle and Y resigned the contract.

Conclusion: If X made an intimation to Z about his contract with Y, then X can recover from Z rupees 750 ( 1000 water bottles X (5.25-4.5)) this type of damages are called special damages.

IPCC May 2015_Suggested Answers_Business Laws, Ethics & Communication _____1

Ph: 98851 25025/26 www.mastermindsindia.com

This can be recover only if special circumstances are intimates to other party at the time of making contract.

If X fails to intimate to Z , X can recover from Z rupees 250( ( 5.25-5.00) X 1000 water bottles) i.e

1b) difference between contract prise and market prise.

1. This doctrine is an exception to the doctrine of constructive notice.

2. Meaning: a) Persons dealing with the Co. are presumed to have read the M&A and to see that the proposed dealing is not inconsistent therewith but they need not do more i.e. they need not enquire into the regularity of internal proceedings as required by M&A. b) They can presume that all this was done regularly. (Doctrine of constructive notice protects the company against outsiders and Doctrine of indoor management tries to protect outsiders against company. Quite naturally, suppose if you desire to buy a ‘bond’ or ‘debenture’ issued by a company, you are not going to ask directors of the company to produce shareholders’ resolution authorizing them to issue such bonds before you subscribe the same.)

3. Conditions for applicability of Doctrine of Indoor Management:



The person dealing with the company must have the knowledge of the MOA and AOA



The person dealing with the company must not have the knowledge of irregularity.



The person dealing with the company must not be put upon an enquiry.



There must be some procedural or internal irregularity.



There must not be any ultra-vires act or illegality.

4. When there are persons conducting the affairs of the company in a manner which appears to be perfectly consonant with the articles of association then those dealing with them externally are not to be affected by any irregularities which may take place in the internal management of the company [Hatherly in Mahony vs. East Holyford Mining Co].

Exceptions (or) The benefit of this doctrine is not available in the following cases: a) Knowledge of irregularity: If a person dealing with the company has notice (whether actual or constructive) of the irregularity as regards internal management then he can’t claim benefit under this rule. b) Where the person dealing with the company is put upon an enquiry, for example, where the transaction is unusual or not in the ordinary course of business. c) Void acts: Where the acts done in the name of the company are void abinitio, this doctrine does not apply. (E.g. MOA/AOA totally prohibits that act.) d) Forgery: When an instrument purporting to be executed on behalf of the company is a forgery. The doctrine of indoor management applies only to irregularities which might otherwise affect a transaction but it cannot apply to forgery which must be regarded as nullity.

e) Lack of authority: If an officer of a company makes a contract with a third party and if such act of the officer falls outside his ordinary authority, the company is not bound. f) Negligence: When a person dealing with the company can avoid the losses if he had acted carefully i.e. he could discover the irregularity if he had made proper enquiries, he cannot claim protection under this rule. (E.g. The outsider should take care for asking copy of resolution of Board/Members when a power can be executed only on the basis of it.) g) No knowledge of Articles: In order to claim protection under the rule of Indoor Management, knowledge about the articles is a must i.e. a person who had not seen the articles cannot claim protection under the rule of indoor management. (Very difficult to prove this).



1c) i) Incorrect

MASTER MINDS

Copy Rights Reserved

To MASTER MINDS , Guntur

The Fairness / Justice Approach:

Fairness and justice are not two different approaches as a source of ethical standards. a) Greek Philosophers like Aristotle contributed this idea.

b) According to this, ethical actions should treat all human beings equally. c) We pay people more based on their harder work or the greater amount that they contribute to an organization, and say that is fair. d) But there is a debate over CEO salaries that are hundreds of times larger than the pay of others; many ask whether the huge disparity is based on a defensible standard or whether it is the result of an imbalance of power and hence is unfair. e) The success of the business depends very much on fairness and honesty in the business.

Fairness and honesty are at the heart of the business ethics and relate to the general values of decision makers. ii) Correct a) Environmental consideration have become a part of corporate strategy, which means incorporating environmental issues in the process of developing a product, in new investments and in the organizational set up. b) A good environmental practice improves corporate performance. In many industries it has been found that environmental friendly practices have resulted in more saving;

E.g.: The process of recycling the waste. Thus environmental considerations play a key role in corporate strategy. Markets of new millennium will be able to create wealth if they respond to the challenges of sustainable development, as unsustainable products will become obsolete.

1d) THE CONCEPT OF GRAPEVINE PHENOMENON (INFORMAL COMMUNICATION)

1. The formal channel of communication exists, along with the informal channels of communication. Its source lies in man’s natural ability to communicate or talk out ‘whatever he feels and thinks with his fellow beings.

2. Communication may be oral or written for direct contact. It may be informal also. The

“Grapevine” is one of the recognized channels of informal communication. People interact on serious and non- serious issues and they spread it fast whether the information is correct or not.

3. This tendency is more visible in the lower levels of the organisation. Here, people are fond of floating rumors, regarding all matters under the Sun.

4. The rumor mill is always ‘working in any organisation. The larger the organisation is, the more active the rumor mills. This has been called the ‘grapevine’ in management literature. Quite often it also contains some useful information. That is why it cannot be ignored altogether.

FACTORS LEADING TO GRAPEVINE PHENOMENON: a) Lack of sense of direction: Feeling of uncertainty or lack of sense of direction when the organization is passing through a difficult phase. b) Lack of self confidence: Feeling of inadequacy or lack of self confidence on the part of the employees, leading to the formation of groups.

Feeling of insecurity: Formation of a favoured group by manager, giving other employees a feeling of insecurity or isolation.



Question No. 2

2a)

1. In the case of every contract, the Promisor voluntarily undertakes an obligation in favour of the

Promisee. A similar obligation may be imposed by law upon a person for the benefit of another, even in the absence of a contract. In certain circumstances, the law presumes the existence of contract even though no agreement was made between the parties.

2. Such cases are known as Quasi contracts. The obligation created in either of the cases is identical.

3. A quasi contract is a fictitious contract created under legal obligations, similar to a valid contract.

4. The Contract Act recognises certain cases in which an obligation is created without a contract. Such obligations arise out of certain relations which cannot be called as contracts in the strict sense.

5. Quasi contracts are based on the principles of equity, justice and good conscience.

6. In such cases, Law creates legal relations on the ground of equity saying that the person receiving the benefit must make compensation to the other. The maxim used is “ no man must grow rich o ut of another person’s cost / loss”

. Quasi contracts are also called as

'constructive contracts' under the English law and " certain relations resembling those created by contracts" under the Indian law.

7. Law of Quasi contracts is also known as ‘Law of Restitution.' Sometimes, quasi contracts are also called as ‘Contracts Implied in Law’.

8. In case of Quasi Contracts, there is no offer, no acceptance, no consensus ad idem and in fact neither agreement nor promise and yet the law imposes an obligation on one party and confers a right in favour of the other.

9. When an obligation created by a Quasi-contract is not discharged, the injured party can claim damages from the other party as if it is an ordinary contract.

E.g.: P supplies milk to his customer R who receives and consumes it. R is bound to pay the price. R’s acceptance of the milk constitutes an implied promise to pay. These relations are called as quasi contractual obligations.

Features: The salient features of quasi contractual right, are as follows: a) Firstly, it does not arise from any agreement of the parties concerned, but is imposed by the law; and b) Secondly, it is a right which is available not against the entire world, but against a particular person or persons only. c) The duty of a party and not the promise of any party is the basis of such contract. d) The right under it is always a right to money and though not always to a liquidated sum of e) money. f) A suit for breach may be filed in the same way as in case of a complete contract.

Kinds of Quasi Contracts: a) Claim for necessaries supplied to a person incapable of contracting or on his behalf (Sec.68) b) Reimbursement of money paid, due by another (Sec.69) c) Obligation of persons enjoying benefits of non-gratuitous act (Sec.70) d) Responsibility of finder of lost goods (Sec.71) e) Liability for money paid or things delivered by mistake or under coercion (Sec.72)

In each of the above cases, contractual liability is the creation of law and does not depend upon any mutual agreement between the parties.



MASTER MINDS

2b) The United Nations Organization, the leading international organization of the world, has initiated to provide some guidelines to protect the interests of the consumers, through out the world. They are:

1. Guidelines: a) ‘The United Nations Guidelines for Consumer Protection’ represents an International

Regulatory Framework for the Governments.

b) They are to be used for the development, and strengthening of Consumer Protection

Policy and Legislation.

c) They are aimed at promoting consumer welfare.



2. Themes: a) The UN Guidelines call upon the Governments, to develop, strengthen and maintain a strong consumer policy.

b) It further urges the Governments to provide enhanced protection for the consumers, by enunciating various steps and measures, around 8 themes. They are : i) Physical Safety.

ii) Economic Interests.

v) vi)

Redress.

Education and Information.

iii) Standards.

iv) Essential Goods and Services.

vii) Specific areas concerning health viii) Sustainable Consumption.

3. Rights: The guidelines have implicitly recognized 8 Consumer Rights. They were made explicit in the character of Consumers International They are : i) Right to basic needs. ii) Right to safety. v) vi)

Right to Information.

Right to Consumer Education. iii) Right to choice. iv) Right to Redressal.

2c)

1. Self directed teams: vii) Right to Representation. viii) Right to Healthy Environment. a) In an organization, the authority of making the decisions is with the Autonomous and Self

Regulated Groups of Employees.

b) The members in these groups are given utmost freedom.

c) The goals, which are to be fulfilled, are made aware to all the members. The work is delegated suitably among all the members, with a suitable deadline. The members are given utmost freedom to use any method or technique, to achieve their targets.

2. Quality Circles: a) It is a recent group dynamics technique. b) This represents a significant productivity and work life in organizational settings. c) Quality circle has been defined "as a group of workers, from the same area, who usually meet for an hour each week, to discuss their quality problems, investigate causes, recommend solutions and take corrective actions when authority is in their purview". d) In other words quality circle is a small group to perform voluntarily quality control activities within their work areas.

3. Committees: Committees are of various types: a) Standing committee : Permanent in nature and highly empowered b) Advisory committee : Comprises experts in particular fields c) Adhoc committee : Set up for a particular purpose and after the goal is achieved it is dissolved.



4. Task force: a) A task force is a temporary grouping of individuals or representatives of groups. b) It has to perform a specific task and submit its report to its appointing body. c) It is responsible for investigation and accomplishment of results.

It is like a committee, but it is usually temporary. Task force has wide power to take action. Task force groups are very important in government organizations, to tackle specific administrative problems.

Question No. 3

3a) i) Time limit for payment of Bonus:

Bonus shall be paid in cash by the employer:


To MASTER MINDS , Guntur a) Within a period of 8 months from the close of the accounting year. b) This period of 8 months may be extended upto a maximum of 2 years by the appropriate government, on an application being made by the employer. c) In case of dispute: Where there is a dispute regarding payment of bonus pending before any authority under Sec.22, within 1 month from the date on which the award / settlement comes into operation. (To know the meaning of the word AWARD refer the question

DEFINITIONS.)

Interest: Interest at 9% p.a. will be awarded on the arrears of bonus from the date it became due till the date of payment.

Certification proceedings for recovery of bonus due from an employer (Sec.21):



Sometimes the employer may not pay the bonus due to the employee.



In such cases the employee can make an application to the appropriate government.



When the employee is dead, the application can be made even by his assignee or heirs.



The application is to be made within 1 year from the date on which the bonus becomes due. Late application may be accepted, if the appropriate government is satisfied that the applicant was prevented from making the application with in 1 year.



The Appropriate Government is to be satisfied that the bonus is so due.



On such satisfaction, it must issue a certificate for that amount to the collector.



Thereupon, collector shall proceed to recover the same as an arrear of land revenue.

Explanation: Employee includes ex-employee also. ii) Facts of the case: A seasonal establishment was in operation for 4 months in an accounting year. An employee of the establishment had worked only for 95 days.

Provisions of Law: Sec 2A – Continuous service.

Analysis: Sec 2A (3) of the Payment of Gratuity Act, 1972, provides that “where an employee employed in a seasonal establishment is not in a continuous service for a period of one year or six months he shall be deemed to be in continuous service under the employer for such period if he has actually worked for not less than 75% of the number of days on which the establishment was in operation during su ch period”.

Considering the above provision, it may be understood that the employee should have worked for 75% of the number of days on which the establishment was in operation during that period for becoming entitled to get gratuity.



MASTER MINDS

In the given problem,

Establishment was in operation for 4months = 122 days

75% of 122 days = 91.5 days

If employee worked for 95 days > 91.5 days.

The employee worked for 95 days which is more than 75% of the number of days on which the establishment was in operation during the period.

Conclusion: In the given problem Mr. N is eligible for gratuity as he worked for more than

75% of the actual working days of ABC Ltd.

3b) Definition of Corporate Governance:

The term governance relates to a process of decision making and implementing the decisions in the interest of all stakeholders.

It basically relates to enhancement of corporate performance and ensures proper accountability for management in the interest of all stakeholders.

According to J.Wolfensohn, Presid ent of the World Bank “Corporate governance is about promoting (upholds) corporate fairness, transparency and accountability". It is concerned with structures and processes for decision making, accountability, control and behavior at the top level of organisations. It influences how the objectives of an organisation are set and achieved, how risk is monitored and assessed and how performance is optimized.

Corporate Governance is defined as “the formal system of accountability and control for ethical and soc ially responsible organisational decisions and use of resources”

Corporate Governance Measures:

In general, corporate governance measures include appointing non-executive directors, placing constraints on management power and ownership concentration, as well as ensuring proper disclosure of financial information and executive compensation. Many companies have established ethics and /or social responsibility committees on their Boards to review strategic plans, assess progress and offer guidance on social responsibilities of their business. In addition to having committees and boards, some companies have adopted guidelines governing their own policies and practices around such issues like board diversity, independence, and compensation.

Indian Companies are required to comply with Clause 49 of the listing agreement primarily focusing on following areas:



Board composition and procedure



Audit Committee responsibilities





Subsidiary companies



Risk management

3c)



CEO/CFO certification of financial statements and internal controls



Legal compliance



Other disclosures i) Incorrect


To MASTER MINDS , Guntur a) Gossip and rumors are an unavoidable element of everyday corporate life. b) Generally, same communication networks are used in rumors and gossip. c) But gossips focus on people, whereas rumors focus on events. d) Even though managers usually treat the information as “yet to be confirmed”


Ph: 98851 25025/26 www.mastermindsindia.com e) Both are unconfirmed pieces of information and affect human judgment even if unintentional. f) Decisions regarding performance and promotion of an employee may become biased

(favorable on one side), due to rumors and gossip. ii) Correct a) The false statements, which are used to deceive, are known as lies. b) Most would agree that “one ought not to lie” c) In business, lies are often used to avoid weak pressure and ethical dilemmas. d) Lies destroy trust between people and collapse/shake foundation of ethical communication. e) This could shake the very foundation of ethical communication.

Question No. 4

4a) As per the Companies (Share Capital and Debentures) Rules, 2014, the company shall create a

Debenture Redemption Reserve for the purpose of redemption of debentures, in accordance with the conditions given below:

1. The Debenture Redemption Reserve shall be created out of the profits of the company available for payment of dividend;

2. The company shall create Debenture Redemption Reserve (DRR) in accordance with following conditions:- a) Not required: No DRR is required for debentures issued by i) All India Financial Institutions (AIFIs) regulated by Reserve Bank of India and Banking

Companies for both public as well as privately placed debentures. ii) For other Financial Institutions (FIs) within the meaning of clause (72) of section 2 of the Companies Act, 2013, DRR will be as applicable to NBFCs registered with RBI. b) DRR for NBFC’s: i) For NBFCs registered with the RBI under Section 45-IA of the RBI (Amendment) Act,

1997, ‘the adequacy’ of DRR will be 25% of the value of debentures issued through public issue as per present SEBI (Issue and Listing of Debt Securities) Regulations,

2008, and ii) No DRR is required in the case of privately placed debentures. c) DRR for other’s: i) For other companies including manufacturing and infrastructure companies, the adequacy of DRR will be 25% of the value of debentures issued through public issue as per present SEBI (Issue and Listing of Debt Securities), Regulations 2008 and ii) Also 25% DRR is required in the case of privately placed debentures by listed companies. iii) For unlisted companies issuing debentures on private placement basis, the DRR will be 25% of the value of debentures.

3. Maintenance of liquid assets: every company required to create Debenture Redemption

Reserve shall on or before the 30th day of April in each year, invest or deposit, as the case may be, a sum which shall not be less than 15 percent, of the amount of its debentures maturing during the year ending on the 31st day of March of the next year, in any one or more of the following methods, namely:-



MASTER MINDS a) In deposits with any scheduled bank, free from any charge or lien; b) In unencumbered securities of the Central Government or of any State Government; c) In unencumbered securities mentioned in sub-clauses (a) to (d) and (ee) of section 20 of the Indian Trusts Act, 1882; d) In unencumbered bonds issued by any other company which is notified under sub-clause

(f) of section 20 of the Indian Trusts Act, 1882; e) The amount invested or deposited as above shall not be used for any purpose other than for redemption of debentures maturing during the year referred above:

Provided that the amount remaining invested or deposited, as the case may be, shall not at any time fall below 15 percent of the amount of the debentures maturing during the year ending on the 31st day of March of that year;

4. In case of partly convertible debentures, Debenture Redemption Reserve shall be created in respect of non-convertible portion of debenture issue in accordance with this subrule.

5. The amount credited to the Debenture Redemption Reserve shall not be utilised by the company except for the purpose of redemption of debentures.

4b) Introduction: All most all of the human activities are aimed at development, of any kind. But the development we aim at should not be at the cost of future generations.

Sustainable development promotes the idea that social, environmental, and economic progress is all attainable within the limits of our earth’s natural resources.

It approaches everything in the world as being connected through space, time and quality of life.

Meaning:

1. Development that meets the needs of the present, without compromising the ability of future generations, to meet their own needs.

2. The concept of ‘Sustainable Development’ was accepted by United Nations, is Rio-declaration in The Earth Summit, 1992. It is a policy / strategy. It approaches and guarantees that, the economical growth should not proceed in a way, which reduces the ability of future generations, to live well.

Special responsibilities of industries based on natural resources :

Industries that are based on natural resources, like minerals, timber, fiber, and foodstuffs etc. have a special responsibility for : a) adopting practices that have built-in environmental consideration b) introducing processes that minimize the use of natural resources and energy, reduce waste, and prevent pollution. c) making products that are ‘environment-friendly’, with minimum adverse impact on people and ecosystem. d) Inner-city redevelopment. e) f)

Rural development.

Conservation of natural resources.


To MASTER MINDS , Guntur g) Energy conservation. h) Ecosystem management. i) Pollution prevention.


Ph: 98851 25025/26 www.mastermindsindia.com j) Waste reductions and waste management. k) Recycling. l) Green accounting systems: Conventional accounts may result in policy decisions which are non-sustainable for the country. Green accounting on the other hand is, focused on addressing such deficiencies in conventional accounts with respect to environment. If the environmental costs are properly reflected in the prices paid for goods and services then companies and ultimately the consumer would adjust market behavior in a way that would reduce damage to environment, pollution and waste production. Such measures would facilitate the approach of ‘polluter pays principle’. Removing subsidies that encourage environmental damage is another measure.

4c) i) Press Communiques:


To MASTER MINDS , Guntur a) The third type is press communiqués and they are issued when some important government decisions or announcements are made such as cabinet appointments, conclusion of the foreign dignitaries’ visits, international agreement, etc. b) The press communiqué is formal in character. It carries the name of the ministry or department, the place and the date at the bottom left-hand corner of the release.

Generally, the press is expected to reproduce the press communiqué without any substantial change. No heading or subheading is given on press communiqués.

ii) Press Notes: a) Press notes are reasonably informal in character b) They are issued on important matters, e.g., raising or lowering of tariff rates, etc

The press note carries the name of the ministry/department and the place and date at the bottom left-hand corner. Heading or sub-heading is given in press notes.

Question No. 5

5a) i) Sans recourse endorsement: The holder of a bill may endorse it in such a way that he does not incur the liability of an endorser to all subsequent endorsees. He can do so by adding the words ‘sans recourse’ (without recourse) to the endorsement.

Examples of such endorsement are ‘Pay A or order without recourse to me’ or ‘Pay A or order sans recourse’ or ‘Pay A or order at his own risk’.

Here if the instrument is dishonoured the subsequent holder or endorsee can’t claim the endorser for payment of the same.

Sanc Frais endorsement: An endorsement is said to be sans frais endorsement if the endorser endorses the instrument in such a way that no expenses should be incurred on account of the bill.

E.g.: Pay B or his order sans frais.

In the of sans recourse endorsements, the endorser need not to bear any principal amount mentioned in the instrument where as in sans frais endorsement, endorser need not be bear expenditure in relating to dishonour of instrument i.e. legal, xerox expenses.





MASTER MINDS ii) Facts of the Case: ‘P’, a major and ‘Q’, a minor executed a promissory note in favour of ‘R’.

Provision: Sec 26 of NI Act 1881.

Every person capable of contracting, according to the law to which he is subject, may bind himself and be bound by the making, drawing, acceptance, indorsement, delivery and negotiation of a promissory note, bill of exchange or cheque.

(Minor) - A minor may draw, indorse, deliver and negotiate such instruments so as to bind all parties except himself. Nothing herein contained shall be deemed to empower a corporation to make, indorse or accept such instruments except in cases in which, under the law for the time being in force, they are so empowered.

Analysis: In the given case ‘P’ a major (maker), ‘Q’ a minor (maker) executed a promissory note in favour of ‘R’. on dishonour of instruments payee may make liable any party to the instrument or all parties to the instrument . In this situation ‘P’ and ‘Q’ are parties to the instrument. ‘R’ has an option to make liable any party

Conclusion: ‘Q’ a minor hence ‘R’ cannot make him liable however, he can exercise his right against to ‘P’ who is a major and instrument will be valid.

5b) Voting through electronic means [Sec 108 of the Companies Act, 2013]: The Central

Government may prescribe the class or classes of companies and manner in which a member may exercise his right to vote by the electronic means.

As per Companies (Management and Administration) Rules, 2014 the following are the rules relating to voting through electronic means [Rule 20]:

1. Every listed company or a company having not less than 1,000 shareholders shall provide to its members facility to exercise their right to vote at general meetings by electronic means.

2. A member may exercise his right to vote at any general meeting by electronic means and company may pass any resolution by electronic voting system in accordance with the provisions of this rule.

3. Procedure to be followed by the Company: A company which opts to provide the facility to its members to exercise their votes at any general meeting by electronic voting system shall follow the following procedure, namely; a) Notice to whom? How?: The notices of the meeting shall be sent to all the members, auditors of the company, or directors either - i) by registered post or speed post ; or ii) through electronic means like registered e-mail id;


To MASTER MINDS , Guntur iii) through courier service; b) Notice on website: The notice shall also be placed on the website of the company, if any and of the agency forthwith after it is sent to the members; c) Clearly specify: The notice of the meeting shall clearly mention that the business may be transacted through electronic voting system and the company is providing facility for voting by electronic means; d) Indicate the process: The notice shall clearly indicate the process and manner for voting by electronic means and the time schedule including the time period during which the votes may be cast and shall also provide the login ID and create a facility for generating password and for keeping security and casting of vote in a secure manner; e) Advertisement: the company shall cause an advertisement to be published, not less than

5 days before the date of beginning of the voting period.


Ph: 98851 25025/26 www.mastermindsindia.com f) No. of days: the e-voting shall remain open for not less than 1 day and not more than

3days: However in all such cases, such voting period shall be completed 3 daysprior to the date of the general meeting. g) Option: during the e-voting period, shareholders of the company, holding shares either in physical form or in dematerialized form, as on the record date, may cast their vote electronically:

However once the vote on a resolution is cast by the shareholder, he shall not be allowed to change it subsequently. h) Blocking: at the end of the voting period, the portal where votes are cast shall forthwith be blocked.

Scrutinizers and their role: a) Appointment of scrutinizer: the Board of directors shall appoint one scrutinizer, i) Who may be chartered Accountant in practice, Cost Accountant in practice, or

Company Secretary in practice or an advocate, but not in employment of the company and ii) Who, in the opinion of the Board can scrutinize the e-voting process in a fair and transparent manner: iii) However the scrutinizer so appointed may take assistance of a person who isnot in employment of the company and who is well-versed with the e-voting system; b) Willingness: The scrutinizer shall be willing to be appointed and be available for the purpose of ascertaining the requisite majority; c) Time limit for declaring results: The scrutinizer shall, within a period of not exceeding 3 working days from the date of conclusion of e-voting period, unblock the votes in the presence of at least 2 witnesses not in the employment of the company and make a scrutinizer’s report of the votes cast in favor or against, if any, forthwith to the Chairman; d) Maintenance of particulars: The scrutinizer shall maintain a register either manually or electronically to record the assent or dissent, received, mentioning the particulars of name, address, folio number or client ID of the shareholders, number of shares held by them, nominal value of such shares and whether the shares have differential voting rights. e) Safe custody: The register and all other papers relating to electronic voting shall remain in the safe custody of the scrutinizer until the chairman considers, approves and signs the minutes and thereafter, the scrutinizer shall return the register and other related papers to the company.

Other: a) Results on website: The results declared along with the scrutinizer’s report shall be placed on the website of the company and on the website of the agency within two days of passing of the resolution at the relevant general meeting of members; b) Subject to receipt of sufficient votes, the resolution shall be deemed to be passed on the date of the relevant general meeting of members.

5c) A Finance and Accounting Professional may face some threats, while working as an Auditor,

Consultant or an Employee in an organization. To this, the basic principles cannot be complied with. The threats are classified, as follows.

1. Self Interest Threats: Conflict of self interest and professional Ethics. Such kinds of conflicts occur when, a) Financial Interest in company like, shares, loans etc. b) Incentives based on profits: This encourages the tendency to inflate profits.



MASTER MINDS c) Use of company’s asset for private use: Like the company car, guest house etc. d) Charging personal expenses in company accounts

2. Self-Review Threats: Conflict, when one’s own work, done earlier has to be reviewed. a) A business decision, taken by him earlier, goes wrong, and he has to review it. b) Once, if a person signs a statement or opinion, then it is his duty to support it. He cannot criticize his own statement. c) If a statement prepared by him is found incorrect, then he is asked to review the statement.

3. Advocacy Threats: Advocating / Canvassing his own statement a) Making presentations for loans and credits are incorrect, when he knows that the statements and projections he has made are incorrect. b) Making incorrect statements before tax authorities.

4. Familiarity Threats: a) To take a business decision, where his personal interests are involved. b) Accepting costly gifts and entertainment from suppliers. c) Long term associations, due to which friendship is developed with suppliers and vendors

5. Intimidation Threat: a) Threat of dismissal from employment. b) Pressure from senior persons in the organization. c) Threat of filing civil or criminal suits.


To MASTER MINDS , Guntur d) Threat of physical violence.

Question No. 6

6a) Depositary receipt : A depositary receipt is a negotiable financial instrument issued by a bank to represent a foreign company's publicly traded securities. The depositary receipt trades on a local stock exchange.

Section 41 of the Companies Act, 2013 a company may issue global depository receipts by passing SR to transact business with in a depository mode in any foreign country.

The Companies (Issue of Global Depository Receipts) Rules, 2014, also lays the conditions and the manner in which a company may issue depository receipts in a foreign country.

Eligibility [Rule 3]: A company may issue depository receipts provided it is eligible to do so in terms of the Scheme and relevant provisions of the Foreign Exchange Management Rules and

Regulations.

Conditions for issue [Rule 4]:

1. Resolution of BOD: The Board of Directors of the company intending to issue depository receipts shall pass a resolution authorising the company to do so.

2. SR: The company shall take prior approval of its shareholders by a special resolution to be passed at a general meeting:



3. Depository receipts shall be issued by an overseas depository bank: The depository receipts shall be issued by an overseas depository bank appointed by the company and the underlying shares shall be kept in the custody of a domestic custodian bank.

4. Compliance with all the provisions, schemes, regulations etc.: The company shall ensure that all the applicable provisions of the Scheme and the rules or regulations or guidelines issued by the Reserve Bank of India are complied with before and after the issue of depository receipts.

5. Compliance report to be placed at the meeting: The company shall appoint a merchant banker or a practising chartered accountant or a practising cost accountant or a practicing company secretary to oversee all the compliances relating to issue of depository receipts and the same shall be placed at the meeting of the Board of Directors of the company or of the committee of the Board of directors authorised by the Board in this regard to be held immediately after closure of all formalities of the issue of depository receipts.

Non applicability of certain provisions of the Act:

1. The provisions of the Act and any rules related to public issue of shares or debentures shall not apply to issue of depository receipts abroad.

2. The offer document, if prepared for the issue of depository receipts, shall not be treated as a prospectus or an offer document within the meaning of this Act and all the provisions as applicable to a prospectus or an offer document shall not apply to a depository receipts offer document.

3. Notwithstanding anything contained under section 88(Register of members etc.) of the Act, until the redemption of depository receipts, the name of the overseas depository bank shall be entered in the Register of Members of the company.

6b)

Note: “Scheme” means the Foreign Currency Convertible Bonds and Ordinary Shares (Through

Depository Receipt Mechanism) Scheme, 1993 or any modification or re-enactment thereof. i) True: As per Sec.202 of Indian Contract Act the agency in which the agent has an interest in the subject-matter of the agency is called ‘Agency coupled with interest’. This kind of agency is created to secure the interest of the Agent. Hence Agency coupled with interest is irrevocable ii) False: Depositing of ornaments in a bank locker is not a bailment being absence of one of the character of control i.e., controls remains with bailor.

iii) True: Deferred shares also called founder’s shares. iv) False: As per Sec. 71 of companies Act provides issue of debentures with voting rights is prohibited even it is permitted by the AOA

6c) EMOTIONAL INTELLIGENCE:

1. Emotional intelligence refers to the capacity to recognizing your own feelings and those of others, for motivating yourself, and for managing emotions well in yourself and in your relationships.

2. EQ is the ability to make and deeper connections at three levels: with ourselves (personal mastery), with another person (one-to-one) and within groups/teams.

3. Our EQ or emotional intelligence is the capacity for effectively recognizing and managing our own emotions and those of others.





MASTER MINDS

PERSONAL COMPETENCIES ASSOCIATED WITH EMOTIONAL INTELLIGENCE: a) Self-awareness i) Emotional self-awareness: Reading your own emotions and recognizing their impact; using ‘gut sense’ to guide decisions.

ii) Accurate self-assessment: Knowing your strengths and weaknesses.

iii) Self-confidence: A sound sense of your self-worth and capabilities.

iv) Emotional self-control: Keeping disruptive emotions and impulses under control.

v) Transparency: Displaying honesty and integrity; trustworthiness.

vi) Adaptability: Flexibility in adapting to changing situations or overcoming obstacles.

vii) Achievement: The drive to improve performance to meet inner standards of excellence viii) Initiative: Readiness to act and seize opportunities.

ix) Optimism: Seeing the upside in events. b) Self – Management:


To MASTER MINDS , Guntur i) Using awareness of emotions to manage response to different situations and people. ii) This ensures emotional self-control, adaptability to various situations, initiative and optimism.

Question No. 7

7a) Facts of the case: An Inspector made an inspection at 8 A.M. and seeks to take copies of the shareholder’s register.

Provisions of law: Sec 13

– Inspector

Analysis: According to Sec 13(2) of the Employees Provident Fund and Miscellaneous Act,

1952, an Inspector can inspect and make copies of, or take extract from any books, register or other documents maintained in relation to the establishment and where he has reason to believe that any offence under this Act has been committed by an employer, seize with such assistance as he may think fit, such books, register or other document or portions there of as he may consider relevant in respect of that offence.

Conclusion: In the present case, the inspector had sought to take copies of the “Income Tax

Returns” which may relevant document for the purpose of EPF and MP Act, 1952. but he visited the office before the working hours which are not reasonable.

7b) Small company: As per section 2(85) Companies Act, 2013 means a company, other than a public company, — i) Paid-up share capital of which does not exceed 50 lakh rupees or such higher amount as may be prescribed which shall not be more than 5 crore rupees; or ii) Turnover of which as per its last profit and loss account does not exceed 2 crore rupees or such higher amount as may be prescribed which shall not be more than 20 crore rupees:

Provided that nothing in this clause shall apply to — a) A holding company or a subsidiary company; b) A company registered under section 8 of Companies Act, 2013; or c) A company or body corporate governed by any special Act.





7c) Facts of the Case: AOA of the company is silent regarding the quorum of the General meeting.

Only 10 members were personally present in the above meeting. Out of the total 2750 members of the company. The chairman adjourned the meeting for want of quorum.

Provision of Law: Sec 103 of Companies Act,2013-quorom for melting

Analysis: According to sec.103 of the co. ACT 2013, minimum number of members required to be present at a meeting i.e quorum

In case of public company

Quorum for meeting no of members as an date of meeting

5 members personally present

15 members personally present not more than 1000

>1000 but upto5000



30 members personally present >5000

However, if the quorum is not present within half an hour from the time appointed for holding a meeting of the company. i) The meeting shall stand adjourned to the same day in the next week at the same time and place or ii) To such other date and such other time and please as the board may determine.

Conclusion: Based on the above provision, action taken by the chairman is valid regarding adjournment of meeting because of lack of quorum.

7d) INTRODUCTION:

There is no set code of conduct for ethical behavior in the workplace. Yet, it is important for us to observe these subtle yet vital rules in order in order not to offend any workplace sensitivities.

As there are no spoken rules for ethical behavior, the right conduct in business has become rather vague and largely depends on our interpretation of what is right and wrong.

Ethical behavior has a lot to do with being professional in our workplace. A professional individual is responsible, dedicated, thought, accountable, has high integrity, is committed, punctual, and abides by the company’s rules and regulations.

There are three key factors, which can influence the ethical decisions in an enterprise:

Individual

Standards and Values

+

Manager’s

And Co-

Worker’s

Influence

+

Opportunity For

Misconduct and Role of Punishments

=

Ethical / Unethical

Behavior in The

Work place

Various socio-psychological factors could be responsible why individuals could develop negative attitudes or lose personal motivation.

 Negative work or life experiences.

 Employees failing to respect each others unique personalities.

 Overly aggressive financial or business targets.

 Pressures to perform and take quick decisions





MASTER MINDS

Some examples of ethical issues faced by an individual in the workplace are:

1. Relationships with suppliers and business partners: a) Bribery and immoral entertainment b) Discrimination between suppliers c) Dishonesty in making and keeping contracts

2. Relationship with customers a) Unfair pricing b) Cheating customers c) Dishonest advertising d) Research confidentiality

3. Relationship with employees a) Discrimination in hiring and treatment of employees

4. Management of resources


To MASTER MINDS , Guntur a) Misuse of organizational funds b) Tax evasion

7e) People generally resist organizational change. Sometimes there may be an attempt to change a system, belief or value, which has been successful in the past. Then the Resistance is particularly strong.

Resistance to change may occur in several forms. It may be active resistance, in which the people object to change or refuse to cooperate with the change. A less subtle form of resistance arises, when the change is not implemented.

ORGANISATIONAL CHANGE IS RESISTED DUE TO SEVERAL REASONS:

1. Fear of Personal Loss: a) People are likely to resist change, when they perceive that change will cause a personal loss to them. b) Such loss may be risk to income, security, freedom, friendship, authority, pride and satisfaction, status and good working conditions. c) The greater the expected loss, the stronger will be the resistance to change.

2. Uncertainty: a) People are generally afraid of the unknown. b) Ambiguous or uncertain situations trigger anxiety and fear. c) Present situation is known and certain, whereas the new situation, that is to make clear, is unknown and uncertain.

3. Failure to Understand the Need for Change: a) People, who do not understand the need for change, often oppose change. b) Some are inherently cynical about change. c) They doubt the feasibility of change. d) They feel status quo is working well and change is not needed.

4. Habit: The habits developed by an individual are difficult to change.



5. Economic factors : Individuals resist change if it is likely to decrease their income or sources of earnings.

6. Selective Information Processing: Individuals process information selectively to make it compatible with their perceptions.

7. OTHER REASONS: Change may also be resisted due to the following feelings: a) The feeling, that the current working conditions are fine and no change is required. b) Proposed change does more harm than good. c) Agitation towards the person, who is responsible for change. d) Negative attitude towards the organisation before the change. e) A feeling, that their inputs have not been considered in the change being implemented. f) Objectionable manner of implementing the changes.

THE END




View - Master Minds

DISCLAIMER

Question No. 1

Question No. 2

Question No. 3

Question No. 4

Special responsibilities of industries based on natural resources :

Question No. 5

Question No. 6

Conditions for issue [Rule 4]:

Question No. 7

THE END

Related documents

Products

Support

View - Master Minds

DISCLAIMER

Question No. 1

Question No. 2

Question No. 3

Question No. 4

Special responsibilities of industries based on natural resources :

Question No. 5

Question No. 6

Conditions for issue [Rule 4]:

Question No. 7

THE END

Related documents

Add this document to collection(s)

Add this document to saved

Suggest us how to improve StudyLib