PART I BUSINESS LAWS & COMPANY LAW

Contents About the author I-5 Preface to fourth edition I-7 Syllabus I-19 CA - Intermediate (IPC) Nov. 2015 Examinations I-23 CA - Intermediate (IPC) May 2015 Examinations I-27 CA - Intermediate (IPC) Nov. 2014 Examinations I-29 CA - Intermediate (IPC) May 2014 Examinations I-33 PART I BUSINESS LAWS & COMPANY LAW 1 INDIAN CONTRACT ACT, 1872 Meaning of Contract, Agreement and Promise 3 Essentials of a Valid Contract - Sec. 10 3 Types of Contracts 4 Proposal/Offer 4 Acceptance 5 Communication of Offer and Acceptance 6 Revocation of Offer and Acceptance 6 Consideration 8 Capacity to Contract 11 Free Consent 12 Coercion 12 Undue Influence 13 Coercion vs. Undue Influence 13 Fraud - Sec. 17 13 Misrepresentation 14 Fraud vs. Misrepresentation 14 Consequences of Coercion, Fraud, Misrepresentation & undue influence - Sec. 19 14 Mistake 15 I-9

I-10 CONTENTS Unlawful Object and Consideration 15 Agreements expressly declared void 16 Performance of Contract 20 Discharge of a Contract 23 Breach of Contract 26 Remedies for breach of contract - Sec. 73 27 Contingent Contract 31 Quasi Contract 31 Contract of Indemnity - Secs. 124 & 125 33 Contract of Guarantee - Secs. 126-147 34 Rights of Surety 35 Invalid Guarantee 35 Indemnity vs. Guarantee 36 Contract of Bailment 38 Contract of Pledge 41 Bailment vs. Pledge 42 Contracts of Agency 46 2 NEGOTIABLE INSTRUMENTS ACT, 1881 Negotiable Instruments - Sec. 13 53 Presumptions as to Negotiable Instruments 53 Promissory Note - Sec. 4 54 Bills of Exchange - Sec. 5 55 Acceptance of Bills of Exchange 55 Maturity of a Promissory Note or Bill of Exchange (Secs. 22-25) 56 Promissory Note vs. Bills of Exchange 58 Cheque - Sec. 6 59 Crossing of Cheques 59 Holder and Holder in due course 62 Privileges of a Holder in due Course 63 Payment in Due Course 66 Classification of Instruments 66 Negotiation 67 Endorsement - Sec. 15 67 Capacity to incur liability under instrument 68 Liabilities of Parties 69 Liability on an instrument made, drawn etc. without considerations - Sec. 43 70 Rights and Obligations of parties to an instrument obtained illegally 72

CONTENTS I-11 Discharge of Negotiable Instruments & Discharge of Parties to Negotiable Instruments 73 Dishonour 74 Dishonour of Cheque for Insufficiency, etc. of Funds in the Account 76 Material Alteration and its Effect 77 Noting and Protest 78 Acceptance for Honour and Payment for Honour 79 Presentment of Instrument 80 Hundis 80 Miscellaneous Illustrations - Negotiable Instruments Act 82 3 PAYMENT OF BONUS ACT, 1965 Applicability and Non-Applicability of the Act 86 Important Definitions 87 Eligibility for Bonus 93 Disqualification for Bonus 94 Payment and Calculation of Bonus - Secs. 10-14 94 Set on and Set off Allocable Surplus - Sec. 15 96 Deductions from Bonus - Secs. 17 & 18 97 Time Limit for Payment of Bonus - Sec. 19 98 Special Provisions applicable to New Establishments - Sec. 16 98 Recovery of Bonus due from an employer - Sec. 21 99 Inspectors - Sec. 27 99 Payment of Bonus Linked with Production or productivity - Sec. 31A 100 Exemption from Provisions of the Act - Sec. 36 101 Summarised Procedure for Computation of Bonus 102 4 EPF AND MISCELLANEOUS PROVISIONS ACT, 1952 Applicability of PF Act - Sec. 1 104 Non-Applicability of PF Act - Sec. 16 104 Definitions 105 Employees Provident Fund Scheme 107 The Central Board - Sec. 5A 107 Executive Committee - Sec. 5AA 108 Employees Provident Fund Scheme - Sec. 6 108 Employees Pension Scheme - Sec. 6A 109 Employee s Deposit Linked Insurance Scheme 110 Determination of Money due from the Employer - Sec. 7A 111

I-12 CONTENTS Review of Order - Sec. 7B 111 Appeal against Order of Officer - Secs. 7I, 7L 112 Payment of Interest 112 Protection against Attachment - Sec. 10 112 Priority of Payment of Contribution over other debts 113 Inspectors - Sec. 13 113 Authorising certain employers to maintain Provident Fund Accounts - Sec. 16A 114 Transfer of Accounts - Sec. 17A 115 Liability of Employer in case of Transfer of Establishment - Sec. 17B 115 5 PAYMENT OF GRATUITY ACT, 1972 Applicability of the Act - Sec. 1 117 Definitions 117 Eligibility for Gratuity - Sec. 4(1) 120 Calculation of amount of Gratuity - Sec. 4(2) 120 Maximum Amount of Gratuity - Sec. 4(3) 121 Gratuity in case of a Disabled Employee - Sec. 4(4) 121 Forfeiture of Gratuity 122 Compulsory Insurance 123 Exemption from Provisions of the Act - Sec. 5 124 Nomination - Sec. 6 124 Determination and Payment of Gratuity - Sec. 7 125 Inspectors - Secs. 7A & 7B 126 Recovery of Gratuity 126 Protection of Gratuity 127 6 COMPANY LAW - BASICS, INCORPORATION, MOA AND AOA Sections covered in this Chapter 128 Introduction 128 Meaning and characteristics of company 129 Lifting of corporate veil 131 Types of companies under the Act 133 Conversion of public company into a private company or vice versa 142 Mode of registration/incorporation of company 143 Provisions w.r.t. Registered Office of a Company - Sec. 12 147 Contractual relationships established on incorporation of company 148 Overriding Effect of Act over the MOA and AOA - Sec. 6 149

CONTENTS I-13 Memorandum of association 149 Provisions w.r.t. Name of Company - Sec. 4 150 Alteration of the memorandum 151 Rectification of name of company - Sec. 16 154 Doctrine of ultra vires 154 Articles of association 156 Doctrine of constructive notice 157 Doctrine of indoor management 158 Preliminary contract 159 Conversion of Companies Already Registered - Sec. 18 161 Promoters 161 Service of documents - Sec. 20 162 Miscellaneous provisions 163 7 COMPANY LAW - PROSPECTUS AND ALLOTMENT OF SECURITIES Sections covered in this chapter 165 Prospectus 166 Issue of securities by the company - Sec. 23 166 Power of SEBI to regulate issue and transfer of securities - Sec. 24 166 Deemed prospectus - Sec. 25 167 Matters to be stated in the prospectus - Sec. 26 167 Variation in terms of contract or objects in prospectus - Sec. 27 170 Offer of sale of shares by certain members of company - Sec. 28 171 Public offer of securities to be in dematerialized form - Sec. 29 171 Advertisement of prospectus - Sec. 30 171 Shelf Prospectus - Sec. 31 171 Red herring Prospectus - Sec. 32 172 Abridged prospectus - Sec. 33 172 Criminal liability for mis-statements in prospectus - Sec. 34 173 Civil liability for mis-statements in prospectus - Sec. 35 173 Punishment for fraudulently inducing persons to invest money - Sec. 36 175 Action by affected persons - Sec. 37 176 Punishment for personation for acquisition, etc., of securities - Sec. 38 176 Allotment of securities by company - Sec. 39 176 Securities to be dealt with in stock exchanges - Sec. 40 177 Payment of commission for subscription 177 Global depository reciepts - Sec. 41 179

I-14 CONTENTS Offer of invitation for subscription of securities on private placement - Sec. 42 180 Acceptance of deposits by companies 182 Membership of company 185 8 COMPANY LAW - SHARE CAPITAL, DEBENTURES & CHARGE Sections covered in this chapter 190 Concept of capital 191 Kinds, nature and numbering of share capital - Secs. 43, 44 & 45 191 Share certificate - Sec. 46 193 Voting rights of a member - Sec. 47 193 Variation of shareholder s rights - Sec. 48 194 Calls on shares - Secs. 49 & 50 195 Issue of securities at a premium - Sec. 52 195 Issue of shares at a discount - Sec. 53 196 Issue of sweat equity shares - Sec. 54 196 Transfer and transmission of securities - Sec. 56 197 Transfer vs. Transmission of shares 198 Punishment for personation of shareholder - Sec. 57 199 Refusal to Register Transfer and Appeal against Refusal - Sec. 58 199 Rectification of Register of members - Sec. 59 199 Blank transfers 200 Forged transfers 200 Forfeiture of shares 202 Further issue of share capital - Sec. 62 (Right shares) 203 Alteration of share capital - Secs. 61 & 64 204 Reduction of the share capital - Sec. 66 205 Issue of bonus shares - Sec. 63 206 Restrictions on purchase by company or giving of loans by it for purchase of its shares - Sec. 67 207 Power of company to purchase its own securities - Secs. 68, 69 & 70 208 Nomination facility in respect of securities - Sec. 72 211 Debentures - Sec. 71 211 Registration of a charge 213 Fixed charge v. Floating charge 216 9 COMPANY LAW - MEETINGS AND PROCEEDINGS Sections covered in this chapter 218

CONTENTS I-15 Register of members - Sec. 88 219 Rules relating to manner for maintenance of the register u/s 88 219 Rules related to index of names to be included in register 220 Declaration in respect of beneficial interest in any share - Sec. 89 220 Investigation of beneficial ownership of shares in certain cases 221 Power to close register of members or debenture holders or other security holders - Sec. 91 221 Annual return - Sec. 92 221 Return to be filed with registrar in case of promoters stake changes 222 Place of keeping and inspection of registers, returns, etc. - Sec. 94 222 Registers, etc., to be evidence 223 Preservation of register of members etc. and annual return 223 Annual general meeting - Secs. 96, 97, 99 224 Examples 224 Extraordinary general meeting - Secs. 98, 99, 100 225 Class meetings 228 Essentials of a valid meeting 228 Notice - Secs. 101, 102 228 Quorum - Sec. 103 231 Voting and the right to demand a poll - Secs. 106, 107, 108, 109 234 Proxies and representation of corporates and governors - Secs. 105, 112 and 113 237 Resolution - Secs. 114, 115, 116, 117 240 Circulation of member s resolution - Sec. 111 242 Postal ballot - Sec. 110 243 Minutes - Secs. 118 & 119 245 Miscellaneous 248 Company law in a computerized environment 250 PART II ETHICS 10 INTRODUCTION TO BUSINESS ETHICS Ethics and Morals 255 Business Ethics 256 Benefits of Ethical Business 256 Social Sins listed by Mahatma Gandhi 257 Sources of Ethical Standards 257 Stakeholders 258

I-16 CONTENTS 11 CORPORATE GOVERNANCE AND CSR Corporate Governance 260 Social issue connected with Business Enterprises 262 Corporate Social Responsibility 262 External Standards and Developments 264 12 WORKPLACE ETHICS Workplace Ethics 267 13 ENVIRONMENT AND ETHICS Sustainable Development 273 Pollution and Resource Depletion 273 Ecological Ethics 275 Eco Friendly Business practices 276 14 ETHICS IN MARKETING Relationship between Ethics and Marketing 279 Pragmatic Reasons for Ethical Behaviour in Marketing 280 Competition 280 Competition Policy and Law 281 15 ETHICS IN ACCOUNT AND FINANCE Importance of Ethics for a Finance and Accounting Professional 286 Fundamental Principles of Ethics in the Context of Finance and Accounts 286 Factors creating an Ethical Accounting Environment 287 Reasons for Unethical Behaviour in context of Accounts and Finance 287 Ethical Conflict Resolution in the Context of Finance and Accounting 287 Threats faced by a Finance and Accounting Professional 288 Safeguards to be adopted by a Finance and Accounting Professional to counter/ overcome Various Threats 289

CONTENTS I-17 PART III COMMUNICATION 16 ESSENTIALS OF COMMUNICATION Inter Departmental Communication 299 Verbal Communication 299 Forms of Non-verbal Communication 303 Barriers to Effective Communication 304 Business Letter 306 17 INTER PERSONAL COMMUNICATIONS Critical Thinking 311 Active Listening 312 Emotional Intelligence 313 18 GROUP DYNAMICS Features of Groups 317 Types of Formal Group 317 Team Roles 318 Group Think 319 Group Conflicts 319 Consensus Building 320 Negotiation and Bargaining 320 19 ETHICS IN COMMUNICATION Concept of Ethical Communication 323 Ethical Dilemmas in Communication 324 20 CORPORATE CULTURE, CHANGE AND INNOVATION Corporate Culture 327 Organisation Wide Change 328 Innovation 330

I-18 CONTENTS 21 COMMUNICATIONS IN BUSINESS ENVIRONMENT Press Releases 337 Affidavit 337 Power of Attorney 338 Indemnity Bond 338 Lease Deed 339 Gift Deed 340 Partnership Deed 341