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CSEET · Business Laws and Management · Elements of Company Law

Sundaram Textiles Ltd, an unlimited company with share capital, passes a resolution for registration as a limited company. It wishes to provide that a specified part of its uncalled share capital can be called up only if the company is wound up. Which statement is correct?

Yes. An unlimited company with share capital registering as limited may, by resolution, provide that a specified portion of its uncalled share capital can be called up only in the event and for the purposes of winding up. No stock conversion or reduction is needed.

  1. AIt may do so, as it can provide that a specified portion of its uncalled capital is not capable of being called up except in winding upCorrect
  2. BIt may not do so, because uncalled capital can be called at any time
  3. CIt may do so only by converting all its shares into stock
  4. DIt may do so only by reducing its share capital with Tribunal approval

Explanation

Section 65(b) lets such a company provide in the resolution that a specified portion of uncalled capital cannot be called up except in the event and for the purposes of winding up. Stock conversion and capital reduction are not required.

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