Green Wave Beverages Private Limited, incorporated by two close friends, Arjun (MBA–Finance) and Kabir (MBA–Marketing) with Authorised Capital of 30…

Green Wave Beverages Private Limited, incorporated by two close friends, Arjun (MBA–Finance) and Kabir (MBA–Marketing) with Authorised Capital of 30 crore consisting of 3,00,00,000 equity shares of 10 each, had its Registered office at Indore, Madhya Pradesh. The company, having paid-up share capital of 20,00,00,000, subscribed by 102 shareholders, has been making its niche in the beverage industry for the last six years. With quality and taste as its pillars, Green Wave made its presence felt not only in the city of Indore but also in Gwalior (Uttar Pradesh) and neighbouring areas through its variety of products which included fruit juices of various kinds, jeera drinks and lemonade. In the current financial year, the liability on account of a term loan, which was availed from Unity Bank Limited and whose repayment, both principal and interest till date, is quite regular, stood at 10 crore. Anticipating robust future trends, Arjun and Kabir, holding the office of Managing Director and Whole-time Director respectively, and two other directors, named Nisha (wife of Arjun) and Rhea (wife of Kabir), were thinking of launching a new line of health-oriented drink after receiving positive market feedback. The same was discussed with the product development team as well as the marketing team of the company. It is heartening to note that the product development team was successful in creating a new line of health drink including formulation and taste testing. Use of taste testing methods ensured that the new health drink met the highest standards of quality and taste. The marketing team was also hopeful and confident enough to capture the substantial market throughout the country so far as the new line of health drink was concerned. As the company needed a fresh dose of additional capital for production and marketing of the newly developed health drinks, the directors decided to offer 50,00,000 equity shares of 10 each through private placement to a selected group of identified persons. The equity shares were duly allotted to these shareholders after following the requisite provisions. With the infusion of further capital, production of health drinks came swiftly into action. As expected, the marketing team developed and executed a successful campaign that significantly boosted the product's market presence and turnover rose much beyond expectations and so did the goodwill of the company. The directors of Green Wave Beverages Private Limited decided to reward and motivate the top ten employees of the product development team and marketing team, who contributed significantly to the success of the company and made available rights in the nature of Intellectual Property Rights (IPR). Consequently, the company issued 5,00,000 Sweat Equity Shares of face value 10 each to them, each getting 50,000 shares for consideration other than cash, after passing the specified resolution. This issue recognised the hard work and achievements of the employees beyond their regular salaries and bonuses. Through this goodwill gesture, the employees developed a sense of ownership in the company. There were great chances that by issuing Sweat Equity Shares, the company would be able to reduce the likelihood of employees leaving for other gainful opportunities in times to come. This way, the company not only enhanced employee satisfaction but also strengthened its overall organisational performance. The graph of success went on rising day by day. With soaring demand, the company established five branch offices in Hyderabad, Jaipur, Lucknow, Nagpur and Kochi. The branch managers of these branches were ably handling almost all the areas of north, south and west of India. The company received a welcoming response from all corners and had a pan-India image. Motivated by this, the company crossed the boundaries of the country and began exporting to European countries as well. To handle and coordinate the business in a smooth manner, the company established its maiden overseas branch office in Lisbon, Portugal, which was the sixth one in the row after opening five Indian branches. It is worth mentioning that Green Wave maintains its books of account and other books and papers in electronic mode. Accordingly, the backup of these books of account and other books and papers is duly kept on a server physically located in India. The auditors, R. K. Deshpande & Associates, duly prepared the audit report stating the authenticity of the accounts, compliance of financial statements with the accounting standards, provision of adequate internal financial control with reference to the financial statements and the operating effectiveness of such controls. The company duly prepared its Annual Return and filed the same with the jurisdictional Registrar of Companies in addition to filing other financial statements. On the basis of above facts and by applying applicable provisions of the Companies Act, 2013 and the applicable Rules therein, choose the correct answer (one out of four) of the following Multiple Choice Questions (of 2 marks each) given herein under: