CS Professional CRVI common mistakes
CS Professional CRVI · Understand the traps and how to avoid them.
Treating a scheme of arrangement under sections 230–232 as available to any company without first checking whether the company is in corporate insolvency resolution process, since a scheme cannot be sanctioned for a company undergoing CIRP except in limited situations.
Candidates memorise the section numbers and procedural steps (application, NCLT-convened meeting, 75% majority in value of creditors, 3/4 majority of members present and voting) but skip the eligibility gate and the interplay with the IBC moratorium.
What to do instead
Before answering any scheme question, run a two-line eligibility check: (a) is the company in CIRP or liquidation? (b) does the scheme involve merger/demerger/amalgamation triggering the section 232 and 233 route? Write the gate down first, then the procedure. Practise five fact patterns where one company is in CIRP and identify the correct route.
Confusing the open offer trigger thresholds and the creeping acquisition limits under the SEBI Takeover Code, quoting 25% for both the initial trigger and the annual creeping acquisition.
The 2011 amendment moved the initial trigger to 25% and the creeping limit to 5% per financial year, but older study material and memory of pre-2011 numbers persist.
What to do instead
Build a one-page trigger table: initial trigger 25% voting rights (or acquisition of control), open offer for at least 26% of voting rights, creeping acquisition 5% per financial year up to the 25% cap, and the 5% disclosure band under Regulation 29. Test yourself by writing the numbers from memory weekly until they are automatic.
Applying a single valuation method (usually DCF or a comparable multiples range) and presenting one number as the answer, instead of reconciling multiple methods and explaining the weight given to each.
Candidates learn formulas in isolation and treat valuation as arithmetic; examiners award marks for method selection rationale and reconciliation, not just the computed figure.
What to do instead
Adopt a fixed template: (1) purpose and standard of value, (2) three methods with inputs, (3) reconciliation and weighting rationale, (4) sensitivity on the key driver. In practice answers, always show at least two methods and a one-paragraph reconciliation even when the question asks for a single value.
Stating that the Committee of Creditors approves a resolution plan by a simple majority, or by two-thirds of members present, instead of 66% of the voting share of the CoC.
The 2018 amendment raised the threshold from 75% to 66%; candidates mix up 'two-thirds of members' with 'two-thirds of voting share' and confuse the CoC threshold with the members' threshold in schemes.
What to do instead
Anchor three distinct thresholds in memory: CoC approval of resolution plan = 66% of voting share; CoC decision to liquidate or replace RP = 66%; scheme of arrangement members' meeting = 3/4 of members present and voting. Write them side by side on one card and drill with numerical fact patterns.
Describing the CIRP timeline as a single 180-day period and omitting the extension, the 330-day outer limit, and the consequences of exceeding it.
Candidates learn the 180-day figure from the statute's first proviso and never internalise the 90-day extension by NCLT on CoC approval, the exclusion of certain periods, and the 330-day outer limit including extensions.
What to do instead
Draw the timeline as a horizontal bar: day 0 admission, 180 days, plus 90 days extension, 330-day outer limit, and mark where the RP must submit the plan, where the CoC must decide, and what happens on default (liquidation). Redraw from memory before every mock.
Treating the waterfall under section 53 as a simple list and placing unsecured financial creditors above workmen's dues, or omitting the two-year and one-year look-back for preferential and undervalued transactions.
The waterfall has sub-priorities (CIRP costs, secured creditors and workmen's dues for 24 months, wages for 12 months, financial debts of unsecured creditors, government dues and remaining debts, then equity) and candidates flatten it.
What to do instead
Memorise the section 53 waterfall as a numbered ladder with the time windows attached to each rung, and separately memorise sections 43, 45, 49 and 66 with their look-back periods. Answer waterfall questions by drawing the ladder before writing prose.
Answering a cross-border insolvency question by citing the UNCITRAL Model Law as if it were binding in India, without noting that India has not enacted it and that the mechanism currently runs through section 234 and the bilateral reciprocity agreements.
Model Law language ('foreign main proceeding', 'centre of main interests') is widely taught and read as Indian law, and the draft Part Z of the IBC has not been enacted.
What to do instead
State the position in one sentence: India has not adopted the Model Law; section 234 permits the Central Government to enter into reciprocal arrangements with other countries; the Model Law concepts remain proposals. Then answer the substantive question on that footing, and flag any assumption about future enactment.
Missing the competition-law dimension of a merger answer: quoting the deal value threshold and the 210-day review period without identifying when CCI approval is mandatory and when the target-based de minimis exemption applies.
Candidates study the IBC and SEBI routes thoroughly and treat competition approval as a footnote, so they omit the standstill obligation and the failure-to-notify consequences.
What to do instead
For every M&A question, add a mandatory 'approvals' paragraph with four headings: CCI (deal value threshold, de minimis, standstill), sectoral regulator (RBI, IRDAI, SEBI, TRAI as relevant), NCLT, and foreign investment. Keep a checklist and tick it in every practice answer.
Writing governance answers as a list of clause references (sections 177, 178, 149) with no application to the facts, so the answer never states who breached which duty or what the company secretary should have done.
The syllabus is statute-heavy and candidates revise by memorising section numbers; the examiner's marks are for applying the standard of care, independence and the CS's reporting obligation to the given scenario.
What to do instead
Use a three-step answer structure for every governance scenario: identify the duty or provision, apply it to the named persons and facts, then state the CS's recommended action and escalation path (board, audit committee, regulator). Limit provision citations to those actually used.
Ignoring the professional-conduct angle in ethics questions: answering only on the company's legal position without addressing the CS's own obligations under the Company Secretaries Act, the code of conduct, and the duty to resign or report.
Candidates treat ethics as a soft topic and answer it as a corporate-law question, missing that the examiner wants the member's personal exposure, confidentiality limits and the correct sequence of escalation.
What to do instead
Prepare a fixed ethics framework: identify the conflict, cite the relevant clause of the code of conduct and the Act, state the disclosure or recusal step, then the escalation sequence (client/board, then Institute), and finally the resignation threshold. Apply it to three past-style scenarios before the exam.