creased from 25% to 40% of the total subscribed and paid-up equity

creased from 25% to 40% of the total subscribed and paid-up equity
share capital. .
(ii) Invested Rs. 5 lakhs on 1st February 1995 in debentures of Mis ST
Limited, a company in the same group.
(iii) Invested Rs. 10 Lakhs on 1st March. 1995 in debentures of Mis UV
Limited, a company not in the same group.
Examine whether the Board of Directors are competent to make the
above investments. [November, 19951
3. A Public Limited Company with a subscribed capital ofRs. 3 crores and free reserves
of Rs. 2 crores has not so far given any guarantees. Advise the company about the
legal requirements under the Companies Act in respect of the following transactions:
(i) To give guarantee to a housing finance company in respect of Rs. 40 lakhs
borrowed by the company's employees.
(ii) To give security to a finance company for a loan of Rs. 2 crores obtained by
a company under the same management.
(iii) To deposit a sum of Rs. 2 crores with another company for a period of 6
months. [May, 19951
4. The Board of Directors of 'X Ltd.' having a paid-up share capital of Rs. 40 lakhs appointed 'Y Ltd.' as sole selling agent for a period of 5 years with effect from 1st April, 1993 and the said appointment was approved by the company in the next Annual General Meeting held on 30th September, 1993. The Directors of 'Y Ltd.' were holding fully paid-up shares of face value of Rs. 3 lakhs in 'X Ltd.' Answer the following explaining the relevant provisions of the Companies Act:
(i) Is the appointment of the sole selling agent in order?
(ii) Will your answer be different if both are Private Companies or if the
Directors of'Y Ltd.' acquired the aforesaid shares in 'X Ltd.' on 1st Septem
ber,1993? [November, 19941
5. When shall a borrower company be called a company "under the same
management" for the purpose of grant of loan by the lender company?
[May, 19941
6. The Board of Directors of XYZ Limited, having a subscribed capital of Rs. 15 crores, decide by a resolution to invest an amount of Rs. 5 crores in shares of DJA Company Limited, not being a company under the same management. The
subscribed capital of the DJA Company Limited is Rs. 15 crores (Rs. 10 crores .
equity share capital and Rs. 5 crores preference share capital). Consequent upon the passing of resolution of the Board of Directors, the Directors proceeded with the proposal and made the above investment. Certain shareholders of XYZ Limited challenged the validity of the investment made by the company on the ground that it is violative of the Companies Act provisions. Decide giving reasons:
(i) whether the investment made by XYZ Limited is in order?
(ii) would your answer be the same in case both XYZ Limited and DJA
Company Limited are Private Companies? [May, 19941
7. State the limits upto which the Board of Directors of a Public Company may
invest in the shares of other body corporates. Whether the following investments
are to be reckoned for the purpose of computing the said limits: