Institute of management and computer studies

Corporate law

Group members
Nilesh Mundle - 21

Nikita Tiwari

- 31 Deepika Chavan- 36 Archana Gupta - 39 Amol Jadhav - 41

Topic Discuss with reference to the company of your own matters relating to oppressions and mismanagement in your co. Draft out the matters relating to the same and the powers with your co. to prevent the same.

Ideal textile Pvt. ltd

The company was incorporated on 1stApril,2011

Directors of co.

Nilesh Mundle Deepika Chavan Archana Gupta Nikita Tiwari Amol jadhav

Chairman

 Share capital : Rs. 2,00,000

equity shares of Rs. 100 each 1,00,000 -500 preference shares of Rs.100 each 50000 -5% debentures 50000
-1000

Registered office : Office no 001, Ground Floor, Behind Sai Guest House, Vashi, Navi Mumbai - 400703

 The liability of company was liability

limited by shares.
The main objective of the Company

is
-

to manufacture/trade-yarn/textile.

OPPRESSION
When the ownership of rights of a

member is violated or he is not given fair play towards his rights, called oppression.

Condition of Oppression
flouts the decisions of the Board of Directors and makes it

impossible for the company to function properly. try to force new and more risky objects upon an unwilling minority. deprived of their right to vote, to elect directors and to receive dividends. unreasonable and consistent refusal to accept a transfer or transmission of shares the directors doing nothing to defend directors issue and allot shares in a manner by which an existing majority of shareholders are reduced to a minority.

Mismanagement
If the affair of the company are being

conducted in a manner prejudicial to the interest of the company or public interest , or that by reason of any change in the management of control of the company, it is likely that the affairs of the company will be conducted in that manner it is called mismanagement.

Reasons for mismanagement

Absence of basic records of the company Drawing considerable expenses for personal purposes by

directors/management of the company. Not filing documents with The Registrar of Companies relating to compliances under The Companies Act,1956 Misuse of companies finances/funds Sale of assets at very low prices Violation of provisions of law and memorandum or article of association of the company. Making Secret Profits Diverting company funds for personal use of directors Continuation in office by director beyond the specified term and not holding any qualification shares.

Case 1 :
Our co. has 4 directors of which 3 belonged to

majority group and 1 director belonged to minority group. Nilesh belonging to minority group was the managing director of the co. But Nilesh was charged with misappropriation of the co. assets but it could not be proved. However majority group taking a cue from this incident tried to replace him from the post of managing director and appointed Deepika as a managing director who belong to majority group and was a C.A. by Profession. Also new members had also been inducted in the co. which reduced the no. of minority shareholders to a marginal limit in which they were unable to have even one director on board. So Nilesh had filed a case against majority shareholders.

Powers with co.

First of all company should revert back the to the

same position of management With the help of mutual consent directors can be appointed. If the new MD Is the CA then he /she cannot be the MD without prior permission of ICAI.

Procedures for Prevention of Oppression and mismanagement :

1. Application to National Company Law Tribunal:

Sec 397 provides that a requisite number of shareholders of a

company who are affected by the companys prejudicial manner may apply to NCLT for appropriate relief. According to Sec 399, the requisite number of members who may apply to the NCLT is as follows: In the case of a company having a share capital -Not less than 100 members or not less than 1/10th of total member, whichever is less, or -A member or members holding not less than 1/10th of the issued share capital of the company on which all calls and other sums have been paid. In the case of company not having a share capital; not less than 1/5th of the total number of member.

2. To Give Reasonable Order:

When the NCLT is satisfied that the charges mentioned in the

application are true and winding up the company would unfairly prejudice such member or members it may pass such order to prevent. The NCLT may give relief if it is of the opinion: That the companys affairs are being conducted in manner prejudicial to public interest, or in a manner oppressive to any member or members. That the facts justify the compulsory winding up order on the ground that it is just and equitable that the company should be wound up That to wind up the company would unfairly prejudice the applicants

Case 2:
There are 4 director in the Company. The Company

is filing NIL return in from past 2 years as there was no business being carried out. The Company has balance sheet total of 2,00,000/-. One of the Director (Archana)of the Company who has been authorised to use bank A/c has used the Company Bank A/c for personal use. That Director has done transaction of more than 70 Lacs for personal use and has made the payment and received the Amount for personal use. Other Director were Known for such Fraud. The other Director want to make liable such Director for such fraud. They have total of 60% Shares of the Company and that Guilty Director has 40% Shares of the Company.

Powers with company

The directors can be removed for doing

fraudulent and unfair trade practices. Also the co. can file a case against director The new director will be appointed to hold banking transaction of the company.

Prevention of mismanagement
Sec. 398 provides for relief in case

of mismanagement by majority
A requisite no of members of the

Co. may apply to NCLT for appropriate relief on the ground of mismanagement of the Co.

CONCLUSION

THANK YOU