Page 285 - DMGT407Corporate and Business Laws

Corporate and Business Laws

Notes 5. “Are the public company able to increase the subscribed capital by allotment of further
shares.” Justify.
6. A buys from B 400 shares in a company on the faith of a share certificate issued by the
company. A tenders to the company a transfer deed duly executed together with B’s share
certificate. The company discovers that the certificate in the name of B has been fraudulently
obtained and refuses to register the transfer. Advice A.
7. Examine the restrictions and limitations on inviting and accepting deposits by companies.
8. You wanted to raise the capital from the public, so you go through the process of prospectus
drafting. Analyse the liability in case of the misrepresentations and misstatements in the
prospectus along with the extent of penalties for the same.

9. “A share certificate is prima facie evidence of the title of the person whose name is entered
on it.” Comment.
10. A company issues different shares with different rights & liabilities attached to them so as
to satisfy the needs of different investors. Do you agree? Justify.
11. A shareholder approached a director and sold him shares in the company. The director
had known at the time of the contract that negotiations were on foot for the purchase by an
outsider of all the shares of the company at a higher figure. The shareholder sued to
rescind the contract. Advise him.
12. You are the investor in the Company XYZ Ltd. You have applied for the shares of the
company on the faith of the false prospectus. Now you are worried for your investment.
Analyse the protection granted to you by the company in such a case.

Answers: Self Assessment

1. prospectus 2. Registrar
3. directors 4. two

5. true 6. omit
7. stock 8. SEBI
9. premium 10. preference, equity
11. reduction 12. articles
13. private 14. By an offer for sale

15. private placement

11.9 Further Reading

Book S.S. Gulshan, Business Law, Excel Books, New Delhi, 2006.

Online links www.legalserviceindia.com/company%20law/com_2.htm

www.vakilno1.com/bareacts/companiesact/companiesacts.htm

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