Page 27 - DCOM106_COMPANY_LAW

Company Law

Notes Investigation into related companies: Section 239 provides that if it is necessary for the
satisfactory completion of the investigation into the affairs of a company, the Inspector
appointed to investigate may look into the affairs of another related company in the same
management or group.
For investigation of ownership of a company: The separate legal entity may be disregarded
under s.247. This Section authorises the Central Government to appoint one or more
Inspectors to investigate and report on the membership of any company for the purpose
of determining the true persons who are financially interested in the company and who
control or materially influence its policy.

Business intended to defraud creditors: Where in the course of winding up of a company,
it appears that any business of the company has been carried on, with intent to defraud
creditors of the company, or any other persons, or for any fraudulent purpose, the court on
the application of the Liquidator, or any creditor or contributory of the company, may, if
it thinks proper, declare that any persons who are knowingly parties to the carrying on of
the business in the manner aforesaid shall be personally responsible, without any
limitation of liability, for all or any of the debts or other liabilities of the company as the
court may direct (s.542).

Self Assessment

7. The term ‘company’ is defined under which section of the Act?

(a) Sec 3 (1) (b) Sec 4 (2)
(c) Sec 2 (4) (d) Sec 1 (3)
8. Which company shares can be freely transferable
(a) Private Company (b) Public Company
(c) Both a and b (d) None of the above

9. The liability of members if company is limited by guarantee.
(a) Unpaid value of shares (b) Guarantee amount
(c) Unlimited liability (d) None of the above

10. The liability of members if company is limited by shares
(a) Unpaid value of shares (b) Guarantee amount
(c) Unlimited liability (d) None of the above

Task Savoy Ltd. had eight members at the time of incorporation. Within two months,
two of the members transferred their shares to one of the existing members. By the end of
the year, the company went into liquidation. All the shares are fully paid-up. The creditors
of the company sought to recover their dues from the company. The liquidator demanded
money from the shareholders, who refused to accept any liability; their shares being fully
paid-up. Explain the legal position.

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