MAHARASHTRA-CLASS-XII SERIES Secretarial-practice
Corporate Law
4 previous year questions.
Volume: 4 Ques
Yield: Medium
High-Yield Trend
4
2025 Chapter Questions 4 MCQs
01
PYQ 2025
medium
secretarial-practice ID: maharash
Answer the following question: Explain the procedure for allotment of shares.
Official Solution
Correct Option: (1)
Allotment of shares is the process by which a company distributes its new shares to applicants. It is a formal acceptance of the offer made by applicants to buy shares. The procedure for allotment is governed by the Companies Act, 2013, and SEBI regulations, and involves the following steps:
Appointment of Allotment Committee: The Board of Directors constitutes a Share Allotment Committee, which consists of some directors and company officials. This committee is delegated the power to supervise the entire allotment process and ensure it is fair and transparent.
Decide the Basis of Allotment: The committee, in consultation with merchant bankers and stock exchange representatives, decides the formula or basis for allotting shares, especially in the case of oversubscription. The goal is to ensure a fair and equitable distribution among different categories of investors (Retail, HNI, Institutional).
Board Meeting to Finalize Allotment: A Board Meeting is convened to approve the allotment formula recommended by the committee. A resolution is passed to allot shares to the successful applicants as per the finalized list.
Filing Return of Allotment: Within 30 days of allotment, the company must file a 'Return of Allotment' in Form PAS-3 with the Registrar of Companies (ROC). This return contains details of the allottees, the number of shares allotted to each, and the amount paid.
Dispatch of Letters: After the allotment is finalized, the company sends out communication to all applicants.
Letter of Allotment: Sent to successful applicants, informing them about the number of shares allotted and the amount of allotment money to be paid.
Letter of Regret: Sent to unsuccessful applicants, along with a refund of their application money.
Credit of Shares to Demat Account: In modern practice, for public issues, the allotted shares are directly credited to the Demat accounts of the successful allottees instead of issuing physical share certificates.
Collection of Allotment Money: The company then makes a call for the allotment money due from the allottees. A separate bank account is used for this purpose.
Appointment of Allotment Committee: The Board of Directors constitutes a Share Allotment Committee, which consists of some directors and company officials. This committee is delegated the power to supervise the entire allotment process and ensure it is fair and transparent.
Decide the Basis of Allotment: The committee, in consultation with merchant bankers and stock exchange representatives, decides the formula or basis for allotting shares, especially in the case of oversubscription. The goal is to ensure a fair and equitable distribution among different categories of investors (Retail, HNI, Institutional).
Board Meeting to Finalize Allotment: A Board Meeting is convened to approve the allotment formula recommended by the committee. A resolution is passed to allot shares to the successful applicants as per the finalized list.
Filing Return of Allotment: Within 30 days of allotment, the company must file a 'Return of Allotment' in Form PAS-3 with the Registrar of Companies (ROC). This return contains details of the allottees, the number of shares allotted to each, and the amount paid.
Dispatch of Letters: After the allotment is finalized, the company sends out communication to all applicants.
Letter of Allotment: Sent to successful applicants, informing them about the number of shares allotted and the amount of allotment money to be paid.
Letter of Regret: Sent to unsuccessful applicants, along with a refund of their application money.
Credit of Shares to Demat Account: In modern practice, for public issues, the allotted shares are directly credited to the Demat accounts of the successful allottees instead of issuing physical share certificates.
Collection of Allotment Money: The company then makes a call for the allotment money due from the allottees. A separate bank account is used for this purpose.
02
PYQ 2025
medium
secretarial-practice ID: maharash
Justify the following statement: Company has to fulfill certain provisions relating to issue of circular or advertisement.
Official Solution
Correct Option: (1)
This statement is correct. When a company intends to invite public deposits from its members or the public, it is legally required under the Companies Act, 2013, to issue a circular or an advertisement. This document provides essential information to potential investors. The company must strictly adhere to the following provisions:
Contents of Advertisement: The circular must be detailed and transparent. It must contain the financial position of the company, the portion of deposits guaranteed, the credit rating obtained from a recognized agency, the names of Deposit Trustees, and details of the deposit scheme.
Filing with Registrar of Companies (ROC): A copy of the circular or advertisement, signed by a majority of the company's directors, must be filed with the ROC before it is circulated to the public.
Issuing the Advertisement: The advertisement must be published in one leading English newspaper and one vernacular newspaper having wide circulation in the state where the company's registered office is located.
Validity: A circular or advertisement remains valid for six months from the end of the financial year in which it was issued or until the date on which the Annual General Meeting was held, whichever is earlier. A fresh advertisement is required for any new deposit scheme.
Fulfilling these provisions ensures that potential depositors are well-informed and their interests are protected, making the process transparent and compliant with the law.
Contents of Advertisement: The circular must be detailed and transparent. It must contain the financial position of the company, the portion of deposits guaranteed, the credit rating obtained from a recognized agency, the names of Deposit Trustees, and details of the deposit scheme.
Filing with Registrar of Companies (ROC): A copy of the circular or advertisement, signed by a majority of the company's directors, must be filed with the ROC before it is circulated to the public.
Issuing the Advertisement: The advertisement must be published in one leading English newspaper and one vernacular newspaper having wide circulation in the state where the company's registered office is located.
Validity: A circular or advertisement remains valid for six months from the end of the financial year in which it was issued or until the date on which the Annual General Meeting was held, whichever is earlier. A fresh advertisement is required for any new deposit scheme.
Fulfilling these provisions ensures that potential depositors are well-informed and their interests are protected, making the process transparent and compliant with the law.
03
PYQ 2025
medium
secretarial-practice ID: maharash
Answer in brief: State the provisions relating to Bonus Shares.
Official Solution
Correct Option: (1)
Answer in brief: State the provisions relating to Bonus Shares.
Bonus Shares are additional shares issued by a company to its existing shareholders, typically in proportion to the shares they already hold. The provisions relating to Bonus Shares are as follows:
- Source of Issue: Bonus shares are issued from the company's accumulated profits, reserves, or surplus.
- Authorization: The issuance of bonus shares must be authorized by the company's Board of Directors and approved by shareholders in the Annual General Meeting (AGM).
- Ratio: Bonus shares are usually issued in a fixed ratio, such as 1:1, 2:1, etc., meaning that for every share held, the shareholder receives a certain number of bonus shares.
- Capitalization: The issue of bonus shares capitalizes the company's reserves by converting them into share capital, without any cash outflow.
- Eligibility: Only the existing shareholders of the company are eligible to receive bonus shares. The eligibility is determined by the record date set by the company.
- Effect on Shareholder: The shareholderβs total holding increases, but the overall value of their investment remains the same since the price per share is adjusted downward after the bonus issue.
04
PYQ 2025
medium
secretarial-practice ID: maharash
Distinguish between: Final Dividend and Interim Dividend
Official Solution
Correct Option: (1)
The main difference relates to the timing and the declaring authority. A final dividend is declared at the end of a financial year by the shareholders in an AGM, whereas an interim dividend is declared in the middle of a financial year by the Board of Directors.
| Basis of Distinction | Final Dividend | Interim Dividend |
|---|---|---|
| Meaning | A dividend declared and paid after the close of the financial year and finalization of accounts. | A dividend declared and paid between two Annual General Meetings (i.e., during the financial year). |
| Declaring Authority | It is recommended by the Board of Directors and declared by the shareholders at the AGM. | It is both declared and paid by the Board of Directors in a Board Meeting. |
| Timing | Declared at the Annual General Meeting. | Declared anytime during the financial year. |
| Source of Profits | Paid out of the profits of the financial year after preparing the final accounts. | Paid out of the profits of the current year before the final accounts are prepared. |
| Rate | The rate of final dividend is usually higher than the interim dividend. | The rate is generally lower as it is based on estimated profits. |