DEF Ltd. was established 10 years ago and is in the business of manufacturing Electronic Chips which are used in electronic toys for the children. The Company listed in NSE and BSE, was the main buyer consisting of about

CS Professional · Capital Commodity and Money Market · PYQS · December 2021
DEF Ltd. was established 10 years ago and is in the business of manufacturing Electronic Chips which are used in electronic toys for the children. The Company listed in NSE and BSE, was the main buyer consisting of about 90% of DEF Ltd.'s total sale. LMN Ltd. uses one customized Chip manufactured by DEF Ltd. mainly for the production of one model of toy called 'Teletotto'. It came to the notice of Ministry of Information and Technology, Government of India that the toy 'Teletotto' poses a threat to national security and accordingly ordered the stoppage the production and sale of the same toy and also instructed the company to deactivate the Chip in the toys already sold. As a Company Secretary of DEF Ltd., comment on: (ii) What kind of disclosure are required after the notice of Ministry of Information and Technology?

Answer & Explanation:

Since in the given case 90% of sales is from the LMN Ltd. and that too from one product. Accordingly, with the ban on the toy the same product of DEF Ltd. is used posing threat a threat to the existence of the company and hence same be clearly disclosed in the Board's Report. The company has to send information to stock exchange also because it is a price sensitive information.

Topics: Corporate Governance

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