I, an existing rotational director of MRN Company Limited

whose term expired at the Company’s Annual General Meeting held on 30^th September,

1997, was reappointed at the same meeting. I accepted the reappointment and resumed the office without filing his consent with the concerned Registrar

of Companies on his reappointment. A group of members of the company objected to]’s continuation as director, since I did not file his consent with the

egistrar within the stipulated period as required under the Companies Act, 1956. Examining the

provisions of the Act, decide: .

(i) Whether the members’ contention shall be tenable and whether I has

violated the provisions of the Companies Act, 1956 in this regard?

(ij) What would be your answer in case I is a person named as director of the

company in the Company’s Articles of Association registered with the

Registrar of Companies? [May, 19981

12. With reference to the provisions of the Companies Act, 1956, examine the validity of the following:

(i) Appointment of Mr. Balak, a minor, as a Director of MRN (Private) Limited.

(ii) Mr. Smart was appointed as the Managing Director of a public limited company for a period of 5 years effective from 1.4.1993. It is noticed that he

performed certain acts on behalf of the company in which he was appointed, after the expiry of his term. Some of the aggrieved parties have

questioned the validity of the Managing Director’s acts. [May, 19981

13. The paid-up share capital and free reserves of XYZ Co. Limited, a public company, is Rs. 100 crores as on 1^st April, 1998. The shareholders of the

company at their general meeting held on 4^th April, 1998, by a resolution authorised the Board of Directors of the company to borrow money “exceeding

the paid-up share capital and free reserves of the company, to the extent required by the

Board of Directors”. The Board of Directors as a result borrowed money to an extent of Rs. 130 crores, including Rs. 20 crores as short-term and Rs. 25

crores as temporary loan for financing the construction of a building of the company.

Referring to the provisions of the Companies Act, 1956 examine the validity of the following:

(i) The Board’s exercising the powers for borrowing money to an extent of Rs. 130 crores?

(ii) What would be your answer in case the company’s paid-up share. capital and free reserves increased to Rs. 160 crores and the Board of Directors

borrow money to an extent of Rs. 140 crores which neither include any short-term loan nor temporary loan for financing the construction of a

building of the company? [May, 19981

14. Is it possible for a retiring director to continue in his office beyond the date of the Annual General Meeting which had to be adjourned due to

disturbances at the

meeting? Explain. [May, 19981