Examine whether the following transactions can be considered as a loan to a Director requiring approval of the Central Government under Section 295

(i) An advance payment of salary of Rs. 10,000 to an employee who is the wife of the Managing Director.

(ii) A Public Company secures residential accommodation for the use of its Managing Director by entering into a lease arrangement under whic the

company has to deposit a certain amount with the landlord to secure compliance with the terms of the Lease Agreement.

(iii) A Public Company purchases a flat which is subsequently sold to a Director at the prevailing market price, out of which the Director pays 50 per cent

immediately and contracts to pay the balance in 10 equal annual instalments. [November,.19991

2. Papa Group of Companies known for their business repute have been advocating for payment of donations to political parties as one of the methods of

funding elections. The group has recently floated a company by name M/ s. Papa Computers Ltd. and in the very first year of its working made a net

profit of Rs. 6 crores. Examine with reference to the provisions of the Companies Act, whether the said company can make political donations and what is

the maximum limit

up to which a company can make political donations. [November, 19991

3. M/ s. Excellent Industries Ltd. is a Multi-product Company with a paid up capital of Rs. 4 crores. A contract for the purchase of Textile Machineries and

Balancing Equipments valued at Rs. One crore was placed before the Board for approval. The Managing Director of the company is interested in this

contract because his son-in-law is a partner of the firm selling the machineries and the equipment to the company. Explain briefly the procedure to be

followed by the company to

enter into the said contract. [November, 19991

4. Mr. V, a chartered accountant is a Director in PQR Limited. The Company proposes to appoint/ engage the firm V & Co. in which Mr. V is a partner in

one or more of the following capacities;

(i) Consultants on regular retainer basis.

(ii) Authorised representatives to appear before tribunals.

Discuss whether the provisions of Section 314 of the Compahies Act are attracted

in the above situations. [May, 2000]

5. Can a company pay compesation to its directors for loss of office? Explain briefly the relevant provisions of the Companies Act; 1956 in this regard.

[May, 2000]