IGNOU| COMPANY LAW (BCOE - 108/ ECO - 08)| SOLVED PAPER – (JUNE - 2023)| (BDP)| ENGLISH MEDIUM
BACHELOR'S DEGREE PROGRAMME
(BDP)
Term-End Examination
June - 2023
(Elective Course: Commerce)
BCOE-108/ECO-08
COMPANY LAW
Time: 2 Hours
Maximum Marks: 50
Note: Answer any five questions.
हिंदी माध्यम: यहां क्लिक करें
1. What is a prospectus? What are the consequences for a mis-statement in prospectus? 4, 6
Ans:- 'Prospectus' is any document described or
issued as a prospectus containing any notice, circular, advertisement or other
document inviting deposits from the public or subscription for any shares or
debentures of a body corporate. Takes or invites offers from the public for
purchase. In other words, it is an invitation to the public to apply for shares
or debentures of the company or to make deposits in the company.
It is issued by
a public company which wishes to raise required funds from the public by
issuing shares and debentures. It is not necessary for every company to file a
prospectus. A statement in lieu of prospectus is filed with the Registrar of
Companies Act instead of the articles of association. Private companies are not
required to file a prospectus.
Consequences
of misrepresentation in prospectus:-
A prospectus
is a document containing information that can be used by the public to
subscribe or buy securities of a company. If there is any inaccuracy in this,
it will have big consequences. Any statement in the prospectus which is false
or misleading is called misrepresentation in the prospectus. Misrepresentation
is defined as including or omitting any material fact which is likely to
mislead the public. If any relevant matter has been omitted from the prospectus
and such omission is likely to mislead the public, the prospectus shall be
deemed to be a misrepresented prospectus.
There are
instances when the representation of future events has been questioned. A mere
comment that something will be done or will happen in the future is not a
statement of fact that can give rise to liability for misrepresentation. What
is necessary to activate an existing fact is its misinterpretation. If a
representation was true only at the time of issue of prospectus and not at the
time of allotment, it would trigger liability. A statement in the prospectus as
to the persons to be directors is a material statement, and if it is false, a
person subscribing on the basis of it is prima facie entitled to cancel his
subscription.
Analysis of
Section 34 Criminal Liability for Misstatement in Prospectus as per Companies
Act 2013:-
Section 34 of
the Companies Act 2013 makes liable for punishment the persons who are
responsible for any false statement or false statement in the prospectus issued
by a company. Are. The section provides that any person who is responsible for
issuing such prospectus which contains false statements or negligently makes
false statements, shall be liable for punishment which may extend to
imprisonment for a term which may extend to five years and fines can be imposed
for securities. Issued by the company. A fine of three times the value may be
imposed. Or fraud has been committed, whichever is greater. Under section 34, a
person found guilty of making a false statement in the prospectus shall be
liable to the prescribed punishment. The general principles of liability for
misstatement in the prospectus as per the Companies Act 2013 are given below:-
(i)
Criminal liability: A person who authorizes the issue of any prospectus
which contains any false statement or any false statement made negligently or
fraudulently shall be liable to criminal prosecution and punishment which may
extend to imprisonment. Which can be extended up to five years. And the penalty
can be imprisonment up to one year and fine. Can be applied three times. The
value of securities issued by the company or the amount of fraud committed,
whichever is higher. A person found liable for making a false statement may
also be fined up to half the amount of the fraud.
(ii) Strict
Liability: Under Section 34, there is a general principle of strict
liability. That is, any person found responsible for a misstatement or
misrepresentation in the prospectus will be liable, whether or not the
prospectus is published. This principle is considered applicable to promoters,
directors, promoters of a company, consultants who help in preparing the
prospectus and persons authorizing the issue of prospectus.
(iii)
Direct liability: Under section 34, direct liability for misrepresentation
or misrepresentation rests on any person found responsible for issuing the
prospectus. The concept of direct liability implies that whoever is found
responsible for misrepresentation, misrepresentation or fraud in the prospectus
is liable and will be prosecuted, even if that person is a promoter, director
or other company personnel. Don't be. Do not become. ,
(iv) Civil
Liability: Under Section 35, persons who have made any misrepresentation or
fraud in the prospectus will also be liable to civil action. Such actions
against individuals may form the basis of claims for damages, rescission
(cancellation of the contract) or compensation. Conclusion: Section 34 of the
Companies Act 2013 imposes criminal liability for false statement or
misrepresentation in a prospectus. Any person found responsible for any
misstatement or misrepresentation in the prospectus will be liable to penalty.
Section 34 places the burden on any person authorized to issue a prospectus to
ensure that all relevant information about the company is included in the
prospectus, and that no misrepresentation or fraud has been made. It is
important for companies to fully disclose all relevant information to avoid any
prosecution under Section 34.
2. What are the differences between a company and a
partnership? 10
Ans:- Difference between Company and Partnership Firm:-
|
Aspect |
Company |
Partnership |
|
Legal
Framework |
Incorporated
under the Companies Act |
Governed by
Indian Partnership Act |
|
Number of members |
shareholder
or member |
partner |
|
liability |
Limited
liability of shareholders/members |
Unlimited liability
of partners |
|
Construction |
More complex
and formal process |
simple
manufacturing process |
|
Ownership
Transfer |
Shares can be
easily transferred |
Restrictions
may be imposed on transfer of partnership interest |
|
Management |
Managed by
directors and officers |
Managed by
partners or designated managing partners |
|
regulatory
compliance |
More
comprehensive regulatory requirements |
Less
extensive regulatory requirements |
|
Name |
The name
contains "Limited" or "Private Limited" |
The names of
the partners are usually included in the name of the firm. |
|
perpetual
succession |
Continuity
after death of shareholders |
Dissolution
or reconstitution on death of partner |
|
Public
List |
Can be listed
on stock exchanges |
Cannot be
listed on stock exchanges |
A company and a
partnership firm are both types of business structures, but they have several
important differences.
Key differences
between a company and a partnership firm are:-
(i) Legal
entity: A company is a separate legal entity, which means it can make
contracts, own property and assets, and be liable for its actions. On the other
hand, a partnership firm has no separate legal identity, and the partners are
personally liable for the debts and obligations of the partnership.
(ii)
Liability: Shareholders in a company have limited liability, which means
that their financial liability is limited to the amount of capital invested by
them. In a partnership firm, the partners have unlimited personal liability,
which means they can be held responsible for the entire amount of the
partnership's debts and liabilities.
(iii)
Management: A company is usually managed by a board of directors, while a
partnership firm is managed by the partners.
(iv)
Ownership: A company is owned by the shareholders, whereas a partnership
firm is owned by the partners.
(v)
Continuity of existence: A company has perpetual existence, which means it
continues to exist until it is dissolved, whereas the continuity of a
partnership firm depends on the terms of the partnership agreement.
(vi)
Raising capital: A company can raise capital through the sale of shares,
whereas the ability of a partnership firm to raise capital is generally limited
to the capital of the partners.
(vii)
Taxation: Companies are taxed on their income and shareholders are also
taxed on dividends and capital gains. In partnership firms, partners are taxed
on their share of the partnership income.
3. What are the duties of a director? 10
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