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1 / 5

Category: 1

(1)CASE STUDY

Pharma Limited is a company listed with Bombay Stock Exchange. The company is having 500 small 50 shareholders with shareholding of 1200 equity shares of Rs. 10 each, have proposed to appoint Amar as a Director as their representative on the Board of Directors of the company. One of the director of the Board contended that appointment of Amar is not valid due to lack of holding of any shares in the company.

Based on the above details and referring to the provisions of the Companies Act, 2013, you are requested to answer the following MCQs:

1. Whether the proposal to appoint Amar as a Small Shareholders’ Director can be adopted?

The said proposal cannot be adopted as notice for his appointment shall be given by 1000 small shareholders.

The said proposal cannot be adopted as notice for his appointment shall be given by more than 1/10 of total small shareholders and no shareholding of Amar is not in compliance

The said proposal can be adopted as 1/10th of 500 small shareholders comes to 50 and his holding in Pharma Limited is not necessitated mandatorily.

The said proposal cannot be adopted as no nominal value of Rs. 20,000 shares held by Amar in Pharma Limited.

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Category: 1

(1)CASE STUDY

Based on the above details and referring to the provisions of the Companies Act, 2013, you are requested to answer the following MCQs:

2. If there is no such proposal moved by the small shareholders, can Pharma Limited appoint Small Shareholders' Director on its own?

No, Pharma Limited cannot appoint a small shareholder director on its own.

Yes, Pharma Limited can suo moto appoint small shareholders' director, even if there is no such proposal moved by the small shareholders.

No, for appointment of small shareholders director, notice must come from atleast 1000 small shareholders.

No, for the appointment of small shareholders director, notice must come from 1/10 of total small shareholders.

3 / 5

Category: 2

CASE STUDY

PCR Limited has appointed Mr. Vivek, a person resident in India, as a Managing Director who has taken a charge of the post on 1stJune, The remuneration package sanctioned to him is as below:

Sr. No.	Particulars	Amount
1	Salary	60,00,000
2	Rent free accommodation	6,00,000
3	Children education allowance	3,00,000

4	Leave Travel Concession Package	3,00,000
5	Premium in respect of insurance taken for indemnification	5,00,000

It has, further, been informed that-

Vivek has availed the Leave Travel Concession Package which will not be pro-rated for 2021-22.
Vivek is not proved guilty during the financial year 2021 -22 with respect to the above insurance policy.

Based on the above details and referring to the provisions of the Companies Act, 2013, you are requested to answer the following MCQs:

3. What would be the amount of yearly remuneration for FY 2021-22 paid by PCR to Mr. Vivek, the managing director who is appointed on 1st June, 2021?

Rs. 65,50,000

Rs. 60,50,000

Rs. 60,00,000

Rs. 77,00,000

4 / 5

Category: 2

CASE STUDY

PCR Limited has appointed Mr. Vivek, a person resident in India, as a Managing Director who has taken a charge of the post on 1stJune, The remuneration package sanctioned to him is as below:

Sr. No.	Particulars	Amount
1	Salary	60,00,000
2	Rent free accommodation	6,00,000
3	Children education allowance	3,00,000

4	Leave Travel Concession Package	3,00,000
5	Premium in respect of insurance taken for indemnification	5,00,000

It has, further, been informed that-

Vivek has availed the Leave Travel Concession Package which will not be pro-rated for 2021-22.
Vivek is not proved guilty during the financial year 2021 -22 with respect to the above insurance policy.

Based on the above details and referring to the provisions of the Companies Act, 2013, you are requested to answer the following MCQs:

4. If PCR Limited has incurred losses during the financial years 2020-21 and 2021-22 and the effective capital of the company as on 31st March 2021 is in negative, is there any excess remuneration paid to Mr. Vivek and if yes, what would be that excess remuneration?

Yes, excess remuneration is there of Rs.10,00,000

Yes, excess remuneration is there of Rs. 10,50,000

Yes, excess remuneration is there of Rs. 15,50,000

Yes, excess remuneration is there of Rs. 27,00,000

5 / 5

Category: 2

CASE STUDY

PCR Limited has appointed Mr. Vivek, a person resident in India, as a Managing Director who has taken a charge of the post on 1stJune, The remuneration package sanctioned to him is as below:

Sr. No.	Particulars	Amount
1	Salary	60,00,000
2	Rent free accommodation	6,00,000
3	Children education allowance	3,00,000

4	Leave Travel Concession Package	3,00,000
5	Premium in respect of insurance taken for indemnification	5,00,000

It has, further, been informed that-

Vivek has availed the Leave Travel Concession Package which will not be pro-rated for 2021-22.
Vivek is not proved guilty during the financial year 2021 -22 with respect to the above insurance policy.

Based on the above details and referring to the provisions of the Companies Act, 2013, you are requested to answer the following MCQs:

5. Under what circumstances, PCR Limited can waive the excess remuneration paid to Vivek (if any)?

A waiver is approved by an ordinary resolution passed by the company within 1 year from the date the sum becomes refundable.

A waiver is approved by a special resolution passed by the company within 1 year from the date the sum becomes refundable.

A Waiver is approved by an ordinary resolution passed by the company within 2 years from the date the sum becomes refundable.

A Waiver is approved by a special resolution passed by the company within 2 years from the date the sum becomes refundable.

Your score is

The average score is 34%

person for services rendered by him and includes perquisites as defined under the Income Tax Act, 1961. Further, as per Section 197(13) of the Act, where any indemnification insurance is taken by a Company on behalf of Managing Director or other managerial personnel, the premium therefor paid by the Company shall not form part of the remuneration payable to any such personnel, if that person is proved not to be guilty during the year of insurance coverage. In the light of the provided information in the problem and as per Section 197 read with Schedule V to the Companies Act, 2013, the computation of the amount that would constitute the yearly remuneration of Mr. Vivek in PCR Limited for the FY 2021-2022 will be as under:
	Sl.No.	Particulars	In ` (proportionate to 10 months as the MD has taken charge of the post w.e.f. 01.06.2021)
	1.	Salary	50,00,000
	2.	Rent Free Accommodation	5,00,000
	3.	Children Education Allowance	2,50,000
	4	Leave Travel Concession Package (not pro- rated for 2021-22 as per the question)	3,00,000
		Total yearly remuneration of Mr. Vivek	60,50,000