Symbiosis International (Deemed University) : (Established Under Section 3 of The UGC Act 1956)
Symbiosis International (Deemed University) : (Established Under Section 3 of The UGC Act 1956)
Symbiosis International (Deemed University) : (Established Under Section 3 of The UGC Act 1956)
INSTRUCTIONS
1. Mention your details only in the space provided above. If any other details
name, contact detail etc. are written anywhere else in the answer script it will
be treated as adoption of unfair means.
2. Use diagrams and sketches wherever required.
3. Examiner will conduct viva voce based on entire question paper set on the
subject.
4. Submission must be done by the student through google form link provided
by the examination department and all submissions must be in the word
format only(.doc/.docx). Submission of any other format will not accepted.
5. Submission will not be accepted beyond the deadline given by the
examination department in each subject. Student will be marked absent in
case of late submission.
6. Formatting guidelines: Font size & name: 12 & Times New Roman; Line
spacing 1.5; Justified; Page size: A4; No borders
7. Write your answer in your own language and do not copy paste from any
source. Read the question carefully and write your answer fulfilling the
requirements of the question.
8. If the students copy from each other’s assignment, it will be considered as
unfair means case and performance will be treated as null and void for the
entire examination.
9. Please read all the instructions given by the faculty in every subject in the
question paper.
QUES 1. EXPLAIN THE DIFFERENCE BETWEEN CAPITAL
MARKET AND MONEY MARKET.
A financial market is a location where financial instruments and shares are bought and sold. It
allocates scarce resources in the country's economy. It functions as an intermediary between
buyers and collectors by mobilizing money between them. The stock exchange in a capital
market helps investors to buy and sell publicly traded company shares. The main stock
exchange is where new stocks are first sold, and the secondary stock market is where stock
shares are traded.
Debt Market – It is a market where fixed bonds and debentures or bonds are
exchanged between investors.
Money Market – It deals with monetary assets and short-term funds such as a
certificate of deposits, treasury bills, and commercial paper, etc. which mature within
twelve months.
Futures Market: Here, the delivery or compensation of products are taken in the future
specified date.
I. Capital Market
Capital Market is a type of stock market in which business or government shares are issued
with the intent of creating a long-term finance to coincide the capital required. In a nutshell,
the Capital Market is a market that deals in medium and long-term funds. The Capital Market
is a network of instruments and structures that aggregate intermediate and long-term assets
and make them available to businesses, governments, and individuals. A capital market is an
institutional structure that allows for the financing of short and long-term funds as well as the
marketing and selling of securities.
The market where securities are traded known as Securities market. It consists of two
different segments namely primary and secondary market. The primary market deals with
new or fresh issue of securities and is, therefore, also known as new issue market; whereas
the secondary market provides a place for purchase and sale of existing securities and is often
termed as stock market or stock exchange.
II. Primary Market
The Primary Market consists of arrangements that promote companies' acquisition of long-
term funds by issuing new securities and debentures. As far as we are aware, the companies
issue new shares and/or debentures during their formation stage in order to expand their
business. That is usually achieved through private placement of associates, families, and
financial institutions, or through a public sale. In any case, the firms must adhere to a well-
established regulatory procedure and include a variety of intermediaries such as underwriters,
traders, and others that are an essential part of the primary sector.
The secondary market, also known as the capital market or stock exchange, is equally critical
in mobilizing long-term funds by adding liquidity to securities and debentures. It offers a
position where these securities can be cashed without trouble or hesitation. It is a well-
organized market in which shares and debentures are exchanged on a daily basis with a high
level of confidentiality and stability. In reality, an active secondary market promotes the
growth of the primary market by assuring primary market holders of a continuous market for
liquidity of their holdings. The major players in the primary market are merchant bankers,
mutual funds, financial institutions, and the individual investors; and in the secondary market
you have all these and the stockbrokers who are members of the stock exchange who
facilitate the trading.
The money market is a market for short-term funds that invests with financial assets with
maturities of up to a year. It is important to understand that the money market does not trade
with currency or money in general, but rather in credit instruments such as bills of exchange,
promissory notes, commercial paper, treasury bills, and so on. These financial instruments are
a near-perfect replacement for money. These instruments assist corporate units, other
organizations, and the government in borrowing funds to fulfil short-term needs.
Types of Money Market
1. Time Span Deals in long term securities Short term securities varying from a
for more than one year. day, month but not more than a
year.
2. Instrument Commercial Papers, Bills, Bonds, Shares, Asset Secularisation,
Treasury Certificate of Retained Earnings, Debentures etc
Deposit, Trade Credit, etc
3. Liquidity Liquid in nature as they can Highly liquid in nature compared to
be traded through stock Capital Market due to its nature.
exchange.
4. Return Comparatively High Return Low Return compared to capital
market.
5. Risk Riskier than Money Market. Lower Risk involved.
6. Definition Capital Market is a type of The money market is a market for
stock market in which short-term funds that invests with
business or government financial assets with maturities of up
shares are issued with the to one year.
intent of creating a long-
term finance to coincide the
capital required.
7. Nature Formal in nature compared Informal in nature compared to
to Money Market Capital Market
8. Purpose Long-term trading of debt Short-term borrowing, lending,
and equity-backed securities buying and selling
9. Investor Stockbrokers, Commercial Central bank, chit funds commercial
banks, insurance companies banks, non-financial institutions etc.
etc.
QUES. 2 WHAT IS A COMPANY? HOW IS A COMPANY FORM OF
AN ENTITY DIFFERENT FROM THAT OF A PARTNERSHIP FIRM?
A company is a company incorporated under the Companies Act or any other previous law,
being an artificial legal person and having characteristics of an independent legal, entity with
a perpetual succession, a common seal for its signatures, a common capital comprised of
transferable shares and carrying limited liability.
Characteristics of a Company
1. Capacity to Sue and be Sued: A company being a legal person has the capacity to
sue in its own name and similarly be sued in its own name. Any banality faced by the
company for any contravention of provisions or law we’ll have to be borne by the
independent legal company. However, a company can only be fined for contravention
of law and not Imprisoned for criminal offence.
2. Limited Liability: Limited liability is a distinguishing feature of a company
incorporated under law as compare to a partnership firm. Under the Limited liability
all the members of the company have their liability towards the company limited to
the amount of unpaid share capital or amount guaranteed by the members. A
shareholder cannot be, in any circumstances, be called upon to pay anything towards
the company other than the unpaid value of shares or amount guaranteed by the
shareholder.
3. Perpetual Succession: A company incorporated under the law is Juristic person. A
company enjoys perpetual succession and never dies irrelevant of death or change in
its members. This feature connotes that even if all the shareholders die, it shall not
affect the privileges and positions of the incorporated entity.
4. Legal Personality: The independent corporate existence is the outstanding feature of
a company. Legal person or artificial person is a creation devised by human laws.
Company incorporated under the law is an artificial person created by a legal process
and not through natural birth. A company, an artificial person, though invisible and
abstract, can do all activities like a natural person except a few acts. A company is a
distinct legal person, from its shareholders and members.
5. Right to Property: A company incorporated under law being a legal person distinct
from its member, has the right to dispose, acquire and possessed property in its own
name. The property so acquired will be under the ownership of the company and not
the shareholders. Even if the shareholders continue to invest capital in the company,
the property will only be under the ownership of the company and not under joint
ownership.
6. Common Seal: Just like a natural person can authorize documents with its signatures,
an artificial person, and Inc entity, has common seal as its official signatures. All the
documents are authenticated by the common seal. The company secretary of the
Incorporated company has the possession of the common seal. Any document bearing
the common seal of the company signifies that the document has been approved and
authorized by the company itself.
7. Transferability of Shares: Transfer ability of shares is a primary feature of and Inc
company. Share of a company is a small part of the entire capital of the company. A
share is considered as a movable property and hence like all other movable assets, the
members and the shareholders have the right to transfer the title over to some other
person. Some provisions regulate the transfer of shares in a private company as
compared to that of a public company.
1. Availability of Name: The first step while incorporating a company is to check the
availability of the name. The name of the company will be mentioned in the
memorandum of association of the company and must bear the words Ltd if it’s a
public company and Private Limited if it’s a private company. The availability of
name can be checked by an application along with a fee of Rs.500.
The memorandum of association regulates the actions of the company with the third
parties whereas articles of association is a document that states the rules and
regulations for internal management of the company. The article creates a prima facie
contract between the members and the company, being binding on both parties.
Partnership firm:
Some points of basic difference between a company and partnership firm are:
The accounts of company should be maintained as per the provisions of law and
audited by a certified chartered accountant. Whereas accounts of a partnership firm
have to be maintained as per the provisions of partnership deed.
In a public limited company, the word Ltd should be used after the name of the
company whereas in a private limited company in the world Private Limited should
be used after the name of the company.
In case of partnership firm, the partners are responsible for the management of the
firm whereas in a company the directors are responsible for the management of the
company.
The statutory requirement in case a partnership firm is the partnership deed where as
in case of the company is the memorandum of association and articles of association.
The creation of company is done as per the provisions of law where as a partnership
firm is created as per the contract between two or more persons.
The members of the partnership firm are referred as partners whereas members of the
company are referred as shareholders.
As per the provisions of law, a company has to be registered Mandatorily whereas the
Station of partnership firm is not necessary.
Decree against a firm can be executed against partners whereas decree can't be
executed against shareholders.
QUES. 3 EXPLAIN THE IMPORTANCE OF BOARD OF DIRECTORS
TO A COMPANY BY EMPHASIZING UPON THE POWERS AND
DUTIES OF THE BOARD OF DIRECTORS.
Section 2(34) of the Companies Act, 2013 defines a director as – “director” means a director
appointed to the Board of a company. The Companies Act vide Section 164 provides for the
disqualifications for appointment of director in a company. The analysis of the above section
provides us with the below points:
He has not paid any calls in respect of any shares of the company held by him & 6
months have elapsed from the last day fixed for the payment of the call
He has been convicted of the offence dealing with related party transactions under
section 188 at any time during the last preceding five years
He has not obtained DIN
A person who is director of a company which has not filed financial statements or
annual returns for 5 continuous years, till expiry of 5 years from date of default
A person who is director of company which has failed to repay deposits, debentures
or distribute dividend for a period of one year, till expiry of 5 years from date of
default
Private Companies can provide for additional disqualifications in their Articles
He is of unsound mind and stands so declared by a competent court
He is an undischarged insolvent
He has applied to be adjudicated as an insolvent and his application is pending
He has been convicted and sentenced to imprisonment for atleast 6 months and 5
years from expiry of sentence have not got over
He has been convicted and sentenced for a period of 7 years or more
An order disqualifying him for appointment as a director has been passed by a court
or Tribunal and the order is in force
Effects of Disqualification
Once a person attains any disqualification under section 164 of the said act, he becomes in
eligible to be appointed as director of any company. This restriction is imposed for a period
of five years or as the case maybe under the provisions of the said section.
The order of disqualification of a director does not take a fact within the next 30 days of
being passed, a director can appeal to the national company law Apple it tribunal within the
said period. As soon as the appeal is accepted by the NCLAT, the disqualification will be
deemed to be not present and the director will continue to hold the post.
In Jadhav v. Rampada Gupta AIR 1955 CAL 715 the court held that directors of a
company registered under the companies act or persons duly appointed by the company to
direct and manage the business of the company. Therefore, a director is sometimes described
as agents, trustees, managing partners etc.
Directors as employees: In Re. Lee Behrens & Co. 1932 2 Co. Cases 588, the court
held that directors are elected representatives of the shareholders. The shareholders
appoint the directors which are engaged in directing the face of the company on their
behalf. As such they are agents of the company and not its employees. However, law
does not prevent company to appoint director as an employee. When a director is
appointed on the board as a whole-time director of the company then the particular
director shall be considered as an employee of the company.
Director as trustees: As trustee is a person who is vested with the legal ownership of
certain property which he has to administer for the benefit of others. Director is vested
with the company’s money property and powers, acting as a trustee and they have to
use this power is for the benefit of the company only. The provisions of section 197 of
the said act provides for remuneration of directors. In the event that a director has
received any remuneration in excess of the prescribed limit, the director holds the
excessive amount interest for the company.
In Percival v. Wright 1902 2 Ch. D 421 the court held that directors or trustees of
the company and not the shareholders. Because the directors have no duty towards the
individual shareholders but to words the company. The same view was also upheld in
Peskin v. Anderson 2000 BCLC 1.
The Companies Act, 2013 for the first time has laid down the duties of directors in
unequivocal terms in Section 166. In summary, the general duties of directors are as follows:
to act in accordance with the articles of the company, in other words, to act within
powers;
to act in good faith in order to promote the objects of the company for the benefit of
its members as a whole;
to act in the best interest of the company, its employees, shareholders, community and
for the protection of environment;
to exercise due and reasonable care, skill and diligence and independent judgment;
to avoid direct or indirect conflicts of interest;
to avoid undue gain or advantage either to himself or relatives, partners or associates;
and
not to assign his office to any other person.
If a director of the company contravenes the provisions of this section such director
shall be punishable with fine which shall not be less than one Lakh Rupees but which
may extend to five Lac Rupees.
Conclusion
A Director is a member of the Board of Directors, which oversees, manages, and guides the
organization. The duties of the director are largely derived from the rule of agency and trusts
under common law rules and equitable principles (i.e., set of contractual, quasi-contractual
and non-contractual fiduciary relationships with the Company). Organizational regulation
requires directors to behave with experience, care, and diligence. Directors, on the other
hand, are obligated to act in good faith under trust law. As a result, directors serve as
guardians for the company's properties and property, as well as brokers of dealings on the
company's behalf. Directors are liable as trustees for violation of confidence if they
misapplied funds or violated the company's bylaws. A director is required to perform his
duties as a fairly conscientious person with expertise, abilities, and experience with both the
person performing the director's role and that person himself. As a result, a director may
serve as an administrator, an employee (when added to the company's rolls), an executive,
and/or a trustee of the company.
QUES. 4 CALCULATE THE EFFECTIVE MINIMUM ALTERNATE
TAX LIABILITY OF THE FOLLOWING
Working:
1. In case of Earth limited, a foreign company, since the taxable income is greater than 1
CR, a surcharge of 2% is applicable.
2. In case of Fire limited, a domestic company, since the taxable income is less than 1
CR, a surcharge is not applicable.
3. In case of Wind limited, a domestic company, since the taxable income is greater than
10 CR, a surcharge of 12% is applicable.
4. In case of Water PTE limited, a foreign company, since the taxable income is greater
than 10 CR, a surcharge of 5% is applicable.
The Annual General Meeting (AGM) is a meeting held once a year by every Private Limited
Company or Limited Company to enable shareholders to meet and discuss Company-related
matters. The AGM ensures that the rights of the shareholders are protected. Furthermore,
SEBI recently released a notice specifying that the top 100 listed companies by market
capitalization on March 31st of each fiscal year would hold their annual general meetings
within five months of the fiscal year's end. Annual General Meetings are a statutory
requirement for Private Limited Corporations and Limited Companies in India.
Every year, every company, whether public or private, limited by shares or guarantee, with or
without share capital, or unregulated, must hold an annual general meeting (AGM). The
Annual General Meeting is a gathering of the Company's shareholders and directors held
each year. The Company's audited accounts are approved at the Annual General Meeting, and
the appointment of auditors and Directors is concluded. Other problems that can be settled at
an AGM include officer pay, acceptance of proposed dividends, and all other shareholder
concerns. Provisions of Section 96 of the Companies Act, 2013 apply on AGMs.
The first annual general meeting of the company must be held within 18 months from the
date of incorporation of Company. Even a Company that has no activity is required to
conduct a annual general meeting.
Subsequent AGM
Section 99 of the said Act provides that if any default is made in complying or holding a
meeting of the company.
The company and each officer of the company who is in default shall be punished
with a fine of up to one lakh rupees, and in the case of continuing default, with a
further fine of up to five thousand rupees for each day that such default continues.
If a company fails to hold its annual general meeting, any member of the company
can make an application to the Tribunal to call or order the calling of an annual
general meeting of the company, as well as to offer such ancillary or consequential
orders as the Tribunal deems appropriate. Such directives can contain the requirement
that one director of the organization attend in person or by proxy constitute a
conference.
Under Regulation 30 of the SEBI (LODR) Regulation, 2015, any listed entity is
required to report the proceedings of its annual and extraordinary general meetings to
the Stock Exchange where its shares are listed within 24 hours of the case.
d. Types of Resolutions
Since an organization is a self-contained entity, all decisions it takes must be recorded in the
form of a Resolution. As a consequence, a resolution may be described as an agreement or
decision made by the directors or representatives of a corporation (or a class of members). A
petition is used to propose a new amendment. An agreement binds an organization before it is
passed. Since the Board is ultimately responsible for running the Company, decisions at
Board meetings could be about almost any subject. The Act normally specifies the topics on
which resolutions must be approved by general meeting delegates.
Ordinary Resolution, Special Resolution, and Unanimous Resolution are the three kinds of
resolutions. In the case of Board Meetings, there is no definition of Unanimous Resolutions,
except in a few cases, unanimous resolutions are required. In the case of general assemblies,
though, all three are covered.
PASSING OF RESOLUTION
The Chairman has complete power to consider or deny an amendment for a variety of reasons
such as inconsistency, duplication, irrelevance, and so on. When an amendment is moved,
admitted, and seconded, debate on the main motion ends and debate on the amendment
begins. Anyone may comment on the amendment, even though they have already spoken on
the key motion, but no one may speak on the same amendment twice. The proposal is put to a
referendum after it has been fully debated. If the amendment is approved, it is inserted into
the main motion's body. The changed motion, known as a "substantive motion," is then
introduced to the conference. If the amendment fails, debate on the main motion resumes;
however, if the substantive motion is put to a vote and fails, the initial motion cannot be
resurrected.