CS EXECUTIVE CASE STUDY QUESTIONS UNDER NEW SYLLABUS BY ICSI
Writing excellent answers for CS Executive Company Law Case Studies questions is one of the most important skill for a CS aspirant. After reading this article you will write better answers in professional exams for case study type questions.
Before we begin, I assume that you have already read law subjects and remember all the provisions. Now the challenge you might be facing is to convert your knowledge of provisions into an excellent answer for a case based questions. Remember that a case based question in your professional exams tests 2 primary skills:
- Your capability to identify the governing law
- Apply the relevant legal principles to a given situation.
So the key to securing good marks in such type of questions is:
First: Remember The Law
You should have thorough knowledge of the relevant law. Identify the underlying legal issues hidden beneath the layers of facts in a problem;
Second: Understanding of The Law
Understanding of the law by applying the relevant law to the facts in question.
To conquer such questions in your exams, planning your answer plays a crucial role. In this process of planning there is no ‘right answer’ but there is what you call a ‘right approach’. So what is the right approach? We call it PAC Method in Pareeksha Commerce Academy. This method was invented by CS Midhasaya Purohit for CS Executive students.
THE PAC METHOD FOR CS EXECUTIVE COMPANY LAW CASE STUDIES QUESTIONS
- Step 1: Identifying the Provision
- Step 2: Apply the same to the facts
- Step 3: Conclusion with cause & effect
Let us understand the 3 steps in some detail.
STEP 1: IDENTIFYING THE PROVISION
This is a very important step where you need to identify what the question is about from a legal point of view. While going through the question you should pay close attention to hot spots and make note of the issues for which advice is sought. Now when you write your answer make sure you deal with each identified issue separately. This will give your answer a clear structure & provide a reference points helpful for examiner. Once you have identified the issues you need to match the same with the relevant provision of law by filtering through irrelevant provisions.
STEP 2: APPLYING THE PROVISION TO THE FACTS
In this step the identified provision must be applied to the facts of the case as stated in the question. This part of the answer should focus on constructing a logical argument. So make a sensible attempt to apply the law to the factual issues.
STEP 3: CONCLUSION WITH CAUSE & EFFECT
This step is very simple, if you have followed the first two with utmost care. Conclusion of your answer need not be lengthy. It should precisely contain your advice as demanded by the question. You need to make your conclusion based on the reasons that why an issue was raised basing on the rule of law and using the judgment of relevant case laws.
LETS UNDERSTAND WITH AN EXAMPLE
Warner Ltd is an Indian Company with a net profit of ₹ 4, 7, 6 and 7 crores respectively in the last four years. Net profit of each of last four years included a dividend of ₹ 1 crore received from WB Ltd which is an Indian company. Discuss whether Warner Ltd is required to spend on CSR Activities. If yes, how much should it spend? If no, state the reasons for it.
Step 1 – Identify the provision
As per Section 135 of The Companies Act, 2013, the CSR provision is applicable to companies which fulfills any of the following criteria during the immediately preceding financial year
- Companies having net worth of ₹500 crore or more;
- Companies having turnover of ₹1000 crore or more;
- Companies having a net profit of ₹5 crores or more
As per explanation to Section 135, the net profit for the purposes of this section is calculated as per the provisions of Section 198 of the Companies Act, 2013.
As per Section 198 read with CSR rules,
- “Net profit” shall not include dividend income received from another Indian Company (which are covered under and complying with the provisions of Companies Act, 2013)
- The 2% CSR is computed as 2% of the average net profits made by the company during the preceding three financial years.
Step 2 – Apply the Provision
- Here, the net profit of Warner Ltd shall be calculated by deducting ₹ 1 crore which is the dividend income received from WB Ltd. Hence, the net profit for the immediately preceding financial year is ₹ 6 crore (₹7 crore- ₹1 crore) and it thus fulfils the third criteria of Section 135 for applicability of CSR.
- Based on the above explanation, the net profit of the last 4 years is ₹3, 6, 5 and 6 crores.
Step 3 – Draw Conclusion with cause and effect
- Warner Ltd is thus liable to spend on CSR activities as the average net profit for the immediately preceding three financial year exceeds ₹5 crores.
- The amount required to be spent can be calculated as 2% of the average of net profits of the three immediately preceding financial years. The CSR amount to spent is 2% of (6+5+6/3) crores = 11.33 lakhs.
So now that you know how to approach CS Executive Company Law Case Studies question, why not give some questions a try. Let me know in comments section if you face any difficulty or have any queries. Happy Learning.
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ABOUT AUTHOR: CS MIDHAS PUROHIT
His students call him the champion of Company Law and he indeed is the best across India. He is also a Practicing Company Secretary and author of 2 bestseller books for CS and CA students. With 10 years of teaching experience under his belt, CS Midhas Purohit teaches
- Business Laws (CA Foundation)
- Corporate and Other Laws (CA Inter)
- Corporate and Economic Laws (CA Final)
- Company Law (CS Executive)
- Setting up of Business Entities and Closure (CS Executive)
- Governance, Risk Management, Compliances and Ethics (CS Professional)
- Secretarial Audit, Compliance Management and Due Diligence (CS Professional)
- Law & Ethics (CMA Intermediate)
- Corporate Laws and Compliance (CMA Final)