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B.A. LL.B. (Five Years) Sem 6 Company Law 2024 Aug Question Paper with Solutions - KSLU

KSLU Solved Question Papers

Company Law

Previous Year Question Paper with Solution

B.A. LL.B. (Five Years) · Sem 6

2024 Aug Examination

munotes.in

Mumbai

First published on munotes.in on 21 October 2026.

Published by munotes.in, Mumbai.

Model answers written and edited by the munotes.in editorial desk.

Passages from this volume may be quoted, in print, online or by an AI system, with credit: name munotes.in and link to this volume's page. The volume may not be reproduced as a whole. Full terms at munotes.in/content-license.

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The question paper reproduced here is the paper as set by Karnataka State Law University at the 2024 Aug examination.

The Paper as Set

The questions in this volume are the questions asked at the 2024 Aug examination, reproduced as Karnataka State Law University set them, in the order it set them. Long reading passages are shortened to their first and last lines and our summary; the original paper prints them in full. Only the answers are ours. See the original question paper.

Duration 3 hours · Total marks 80 · 20 questions answered

Instructions printed on the paper

N.B. (1) Answer all five Units. (2) One essay type question and short note/problems is compulsory from each Unit. (3) Figures to the right indicate marks. (4) Answer should be written either in English or Kannada completely.

How to use this volume

Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.

Read the original question paper

Q1

Unit I

(a)Define 'Company'. Explain its kinds.[10]

Answer

For full marks, cover: the definition of "company" (section 2(20)) and its features; the kinds, classified by mode of incorporation (chartered, statutory, registered), by liability (shares, guarantee, unlimited), by number of members (one person, private, public), by control (holding, subsidiary, associate), by ownership (government company), by purpose (section 8), by size (small company) and by nationality (foreign company), plus listed and producer companies; a table; Salomon, State Trading Corporation and Vodafone explained.

What a company is

Section 2(20) of the Companies Act 2013 defines a company as a company incorporated under the Act or under any previous company law. In substance, a company is an association of persons registered under the Act. It becomes a body corporate with perpetual succession, separate from its members (section 9). Its capital is usually divided into transferable shares, and its members' liability is usually limited.

1. By mode of incorporation

Chartered company: created by a royal charter, such as the East India Company. None are formed in India now.
Statutory company: created by a special Act of Parliament or a State legislature, such as the Life Insurance Corporation or the Reserve Bank of India.
Registered company: formed by registration under the Companies Act. Almost all companies are of this kind.

2. By liability of members (section 3(2))

Company limited by shares (section 2(22)): a member's liability is limited to the amount unpaid on his shares.
Company limited by guarantee (section 2(21)): liability is limited to the amount each member undertakes to contribute on winding up. Clubs and charities often take this form.
Unlimited company (section 2(92)): there is no limit on the members' liability.

3. By number of members

One Person Company (section 2(62)): a company with only one member. Its memorandum names a nominee who will become the member on his death or incapacity (section 4(1)(f)).

Private company (section 2(68)): by its articles it restricts the transfer of its shares and limits its members to two hundred, except an OPC. It cannot invite the public to subscribe for its securities. It needs at least two members and two directors. Its name ends with "Private Limited".
Public company (section 2(71)): a company that is not a private company. It needs at least seven members and three directors, and its shares are freely transferable (section 58(2)). A private company that is a subsidiary of a public company is treated as a public company.

4. By control

Holding and subsidiary company (sections 2(46) and 2(87)): a company is a subsidiary of another if that other controls the composition of its Board. It is also a subsidiary if the other controls more than half of its total voting power.
Associate company (section 2(6)): a company in which another has significant influence, without its being a subsidiary. Significant influence means at least twenty per cent of the voting power, or participation in business decisions under an agreement.

5. By ownership: government company (section 2(45))

A company in which at least fifty-one per cent of the paid-up share capital is held by the Central Government, a State Government, or both. Its subsidiaries are government companies too.

6. By purpose: section 8 company

A company formed to promote commerce, art, science, sports, education, research, social welfare, religion, charity or the environment. It must apply its profits to those objects and pay no dividend to members. It is registered under a licence and is exempt from using the word "Limited".

7. Other kinds

Small company (section 2(85)): a private company within limits of paid-up capital and turnover set by the Act and rules. It enjoys lighter compliance.
Foreign company (section 2(42)): a company incorporated outside India that has a place of business, or does business, in India.
Listed company (section 2(52)): a company with securities listed on a recognised stock exchange.

Producer company: formed by primary producers, such as farmers, under Chapter XXIA.
Nidhi: a company that borrows from and lends to its own members only.

Three decided cases

Salomon v. A. Salomon and Co. Ltd., [1897] AC 22, shows that even a company controlled by one man is a separate person. Salomon held almost all the shares, and his family the rest. The House of Lords held the company validly formed and distinct from him. The One Person Company of the 2013 Act carries that idea into a statute.

State Trading Corporation of India Ltd. v. Commercial Tax Officer, AIR 1963 SC 1811, concerned a government company wholly owned by the Union. It claimed fundamental rights under Article 19 against sales tax. The Supreme Court held that a corporation, even a government company, is not a citizen. It could not claim those rights.

Vodafone International Holdings B.V. v. Union of India, (2012) 6 SCC 613, concerned a group of holding and subsidiary companies. Vodafone bought a single share of a Cayman Islands company, and with it control of Indian operations. The Supreme Court held that a genuine holding structure is respected. Each company in a group is a separate person unless the arrangement is a sham.

The kinds at a glance

Basis	Kinds	Key provision
Incorporation	Chartered, statutory, registered	Section 2(20)
Liability	By shares, by guarantee, unlimited	Section 3(2)
Members	One person, private, public	Sections 2(62), 2(68), 2(71)
Control	Holding, subsidiary, associate	Sections 2(46), 2(87), 2(6)
Ownership	Government company	Section 2(45)
Purpose	Section 8 company	Section 8
Origin	Foreign company	Section 2(42)

Conclusion. A company is a body corporate registered under the Act, separate from its members. It may be classified by how it was formed, by its members' liability and by the number of its members. It may also be classified by who controls or owns it, and by its purpose, size or place of incorporation. Each kind has its own rules, but all share the separate personality that Salomon established. As State Trading Corporation and Vodafone show, that separateness is respected even for government and group companies.

B.A. LL.B. (Five Years) Sem 6 Company Law 2024 Aug Question Paper with Solutions

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