(b) The situation as stated in the question is covered by the provisions of Section 224(6) of the Companies Act, 1956. Clause (a) of the said section states that the Board of Directors may fill any casual vacancy in the office of an auditor. Accordingly, in the case of death of the auditor, the Board of Directors of the company can appoint the auditor. This is called the filling up of the casual vacancy. However, as per clause (b) of the said section any auditor appointed in a casual vacancy shall hold office until the conclusion of the next annual general meeting. (ii) As per section 294AA of the Companies Act, 1956 where the Central Government is of opinion that the demand for goods of any category, to be specified by that Government, is substantially in excess of the production or supply of such goods and that the services of sole selling agents will not be necessary to create a market for such goods, the Central Government may, by notification in the Official Gazette,
FINAL EXAMINATION : NOVEMBER, 2005 72 declare that sole selling agents shall not be appointed by a company for the sale of such goods for such period as may be specified in the declaration. In view of the provisions of the said section, the Central Government has to take following two considerations into account while prohibiting the appointment of sole selling agents: (1) Whether the demand for goods of any category is in excess of the production or supply; and (2) that the services of sole selling agents will not be necessary to create a market for such goods. Question 6 (a) (i) The existing Inter-state Cooperative Society seeks your advice regarding the papers to be submitted to the Registrar of Companies for its registration as a Producer Company under the provisions of the Companies Act, 1956. You are required to prepare a list of such papers. (ii) A group of individuals eligible to form a Producer Company within the meaning of the Companies Act, 1956 has entrusted you with the job of preparing the Memorandum of Association of the proposed Producer Company. You are required to state the matters, which are required to be included in such Memorandum of Association. (8 Marks) (b) Some small shareholders of TRG Ltd., a company listed with Mumbai Stock Exchange, want to appoint Mr. Raj, who is holding 1,000 equity shares of Rs.10 each of the Company as a Director as their representative on the Board of Directors of the said company. You are required to state the relevant provisions of the Companies Act, 1956 in respect of such proposal to appoint Mr. Raj as a Small Shareholders’ Director. Also state whether Mr. Raj can be appointed as a Small Shareholders’ Director if he is already a Small Shareholders’ Director in two other companies. (7 Marks) Answer (a) (i) As per Section 581J of the Companies Act, 1956, any Inter-State Co-operative Society with objects not confined to one State may make an application to the Registrar of Companies for registration as Producer Company.
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