10C. [OMITTED
BY THE COMPANIES TRIBUNAL (ABOLITION) ACT, 1967, W.E.F. 1-7-1967]
10D. [OMITTED
BY THE COMPANIES TRIBIJNAL (ABOLITION) ACT, 1967, W.E.F. 1-7-1967]
BOARD OF COMPANY
LAW ADMINISTRATION
10E. Constitution of Board of Company Law
Administration
10F. Appeals against the orders of the Company Law
Board
INCORPORATION OF
COMPANY AND MATTERS
INCIDENTAL
THERETO
Certain companies, associations and partnerships to be registered as
companies under Act
11. Prohibition of associations and partnerships exceeding certain
number Memorandum of association
12. Mode of
forming incorporated company
13. Requirements
with respect to memorandum
15. Printing
and signature of memorandum
15A. Special provision as to alteration of memorandum consequent on
alteration of name of State of Madras
15B. Special provision as to alteration of memorandum consequent on
alteration of name of State of Mysore
17. Special resolution and confirmation by Company Law Board required
for alteration of memorandum
18. Alteration
to be registered within three months
19. Effect of
failure to register
Provisions with respect to names of companies
20. Companies
not to be registered with undesirable names
22. Rectification
of name of company
23. Registration
of change of name and effect thereof
24. Change of
name of existing private limited companies
25. Power to dispense with "Limited' in name of charitable or
other company
Articles of association
26. Articles prescribing regulations
28. Adoption
and application of Table A in the case of companies limited by shares
29. Form of
articles in the case of other companies
30. Form and
signature of articles
31. Alteration
of articles by special resolution
Change of registration of companies
32. Registration of unlimited company as limited,
etc.
General provisions with respect to memorandum and articles
33. Registration of memorandum and articles
35. Conclusiveness of certificate of incorporation
36. Effect of memorandum and articles
37. Provision as to companies limited by guarantee
38. Effect of alteration in memorandum or articles
39. Copies of
memorandum and articles, etc., to be given to members
40. Alteration
of memorandum or articles, etc., to be noted in every copy
Membership of company
42. Membership
of holding company
Private companies
43. Consequences
of default in complying with conditions constituting a company a private
company
43A. Private
Company to become public company in certain cases.
Reduction of number of members below legal minimum
Contracts and deeds, investments, seal, etc.
47. Bills of
exchange and promissory notes
49. Investments
of company to be held in its own name
50. Power for
company to have official seal for use outside India
Service of documents
51. Service
of documents on company
52. Service
of documents on Registrar
53. Service
of documents on members by company
Authentication of documents and proceedings
54. Authentication
of documents and proceedings
PROSPECTUS AND
ALLOTMENT, AND OTHER MATTERS
RELATING TO ISS
UE OF SHARES OR DEBENTURES
Prospectus
56. Matters to be stated and reports to be set out in
prospectus
57. Expert to
be unconnected with formation or management of company
58. Expert's
consent to issue of prospectus containing statement by him
58A. Deposits
not to be invited without issuing an advertisement
58B. Provisions
relating to prospectus to apply to advertisement
59. Penalty
and interpretation
60. Registration
of prospectus
61. Terms of contract mentioned in prospectus or statement in lieu of
prospectus, not to be varied
62. Civil
liability for mis-statements in prospectus
63. Criminal
liability for misstatements in prospectus
64. Document containing offer of shares or debentures for sale to be
deemed prospectus
65. Interpretation
of provision is relating to prospectuses
66. Newspaper
advertisements of prospectus
67. Construction of references to offering shares or debentures to the
public, etc.
68. Penalty
for fraudulently inducing persons to invest money
68A. Personation
for acquisition, etc., of shares
Allotment
69. Prohibition
of allotment unless minimum subscription received
71. Effect of
irregular allotment
72. Applications
for, and allotment of, shares and debentures
73. Allotment
of shares and debentures to be dealt in on stock exchange
74. Manner of
reckoning fifth, eighth and tenth days in sections 72 and 73
Commissions and discounts
77A. Power of
company to purchase its own securities
77AA. Transfer
of certain sums to capital redemption reserve account
77B. Prohibition
for buy-back in certain circumstances
Issue of shares at premium and discount
78. Application
of premiums received on issue of shares
79. Power to
issue shares at a discount
79A. Issue of
sweat equity shares
Issue and redemption of preference shares
80. Power to
issue redeemable preference shares
80A. Redemption
of irredeemable preference shares, etc.
Further issue of capital
SHARE CAPITAL
AND DEBENTURES
Nature, numbering and certificate of shares
82. Nature of
shares or debentures
Kinds of share capital
85. Two kinds
of share capital
86. New
issues of share capital to be only of two kinds
87. Voting
rights
88. Prohibition of issue of shares with
disproportionate rights
89. Termination of disproportionately excessive voting rights in
existing companies
90. Savings
Miscellaneous provisions as to share capital
91. Calls on
shares of same class to be made on uniform basis
92. Power of company to accept unpaid share capital, although not
called up
93. Payment
of dividend in proportion to amount paid-up
94. Power of
limited company to alter its share capital
94A. Share
capital to stand increased where an order is made under section 81(4)
95. Notice to
Registrar of consolidation of share capital, conversion of shares into stock,
etc.
96. Effect of
conversion of shares into stock
97. Notice of
increase of share capital or of members
98. Power of
unlimited company to provide for reserve share capital on re-registration
99. Reserve
liability of limited company
Reduction of share capital
100. Special
resolution for reduction of share capital
102. Order confirming reduction and powers of Court on making such
order
103. Registration
of order and minute of reduction
104. Liability
of members in respect of reduced shares
105. Penalty
for concealing name of creditor, etc.
Variation of share holder, rights
106. Alteration
of rights of holders of special classes of shares
107. Rights of
dissentient shareholders
Transfer of shares and debentures
108. Transfer
not to be registered except on production of instrument of transfer
108A. Restriction
on acquisition of certain shares
108B. Restriction
on transfer of shares
108C. Restriction
on the transfer of shares of foreign companies
108D. Power of
Central Government to direct companies not to give effect to the transfer
108E. Time
within which refusal to be communicated
108F. Nothing
in sections 108A to 108D to apply to Government companies, etc.
108G. Applicability
of the provisions of sections 108A to 108F
108H. Construction
of certain expressions used in sections 108A to 108D
108-I. Penalty
for acquisition or transfer of share in contravention of sections 108A to 108D
109. Transfer
by legal representative
109A. Nomination
of shares
109B. Transmission
of shares
111. Power to
refuse registration and appeal against refusal
111A. Rectification
of register on transfer
112. Certification
of transfers
Issue of certificate of shares, etc.
113. Limitation
of time for issue of certificates
Share -warrants
114. Issue and
effect of share warrants to bearer
115. Share
warrants and entries in register of members
Penalty for personation of shareholder
116. Penalty
for personation of shareholder
Special
provisions as to debentures
117. Debentures
with voting fights not to be issued hereafter
118. Right to
obtain copies of and inspect trust deed
119. Liability
of trustees for debenture holders
120. Perpetual
debentures
121. Power to
reissue redeemed debentures in certain cases
122. Specific
performance of contract to subscribe for debentures
REGISTRATION OF
CHARGES
124. 'Charge'
to include mortgage in this part
125. Certain
charges to be void against liquidator or creditors unless registered
127. Registration
of charges on properties acquired subject to charge
128. Particulars
in case of series of debentures entitling holders pari passu
129. Particulars
in case of commission, etc., on debentures
130. Register
of charges to be kept by Registrar
131. Index to
register of charges
132. Certificate
of registration
133. Endorsement of certificate of registration on debenture or
certificate of debenture stock
134. Duty of company as regards registration and right of interested
party
135. Provisions of Part to apply to
modification of charges
136. Copy of instrument creating charge to be kept by company at
registered office
137. Entry in
register of charges of appointment of receiver or manager
138. Company
to report satisfaction and procedure thereafter
139. Power of Registrar to make entries of satisfaction and release in
absence of intimation from company
140. Copy of
memorandum of satisfaction to be furnished to company
141. Rectification
by Company Law Board of register of charges
142. Penalties
143. Company's
register of charges
144. Right to inspect copies of instruments creating charges and
company's register of charges
145. Application
of Part to charges requiring registration under it but not under previous law
MANAGEMENT AND
ADMINISTRATION
CHAPTER I
GENERAL
PROVISIONS
Registered
office and name
146. Registered
office of company
147. Publication
of name by company
148. Publication
of authorised as well as subscribed and paid up capital
Restrictions on commencement of business
149. Restrictions
on commencement of business
Registers of
members and debenture holders
150. Register,
of members
151. Index of
members
152. Register
and index of debenture holders
152A. Register
and index of beneficial owners
153. Trusts
not to be entered on register
153A. Appointment
of public trustee
153B. Declaration
as to shares and debentures held in trust
154. Power to
close register of member or debenture holders
155. [OMITTED BY THE COMPANIES (AMENDMENI') ACT, 1988, W.E.F.
31-5-1991]
156. [OMITTED BY THE COMPANIES (AMENDMENT) ACT, 1988, W.E.F. 31-5-1991]
Foreign registers of members or debenture holders
157. Power for
company to keep foreign register of members or debenture holders
158. Provisions
as to foreign registers
Annual returns
159. Annual
return to be made by company having a share capital
160. Annual
return to be made by company not having a share capital
161. Further provisions regarding annual return and certificate to be
annexed thereto
162. Penalty and interpretation
General provisions regarding registers and returns
163. Place of
keeping, and inspection of, registers and returns
164. Registers,
etc., to be evidence
Meetings and proceedings
165. Statutory meeting and statutory report of company
167. Power of
Company Law Board to call annual general meeting
168. Penalty
for default in complying with section 166 or 167
169. Calling
of extraordinary general meeting on requisition
170. Sections
171 to 186 to apply to meetings
171. Length of
notice for calling meeting
172. Contents
and manner of service of notice and persons on whom it is to be served
173. Explanatory
statement to be annexed to notice
174. Quorum
for meeting
175. Chairman
of meeting
176. Proxies
177. Voting to
be by show of hands in first instance
178. Chairman's
declaration of result of voting by show of hands to be conclusive
179. Demand
for poll
180. Time of
taking poll
181. Restriction
on exercise of voting right of members who have not paid calls, etc.
182. Restrictions
on exercise of voting right in other cases to be void
183. Right of
member to use his votes differently
184. Scrutineers
at poll
185. Manner of
taking poll and result thereof
186. Power of
Company Law Board to order meeting to be called
187. Representation
of corporations at meetings of companies and of creditors
187A. Representation of the President and Governors in meetings of
companies of which they are members
187B. Exercise
of voting rights in respect of shares held in trust
187C. Declaration
by persons not holding beneficial interest in any share
187D. Investigation
of beneficial ownership of shares in certain cases
188. Circulation
of members resolutions
189. Ordinary
and special resolutions
190. Resolutions
requiring special notice
191. Resolutions
passed at adjourned meetings
192. Registration
of certain resolutions and agreements
193. Minutes of proceedings of general meetings and of Board and other
meetings
195. Presumptions
to be drawn where minutes duly drawn and signed
196. Inspection
of minute books of general meetings
197. Publication
of reports of proceedings of general meetings
Prohibition of simultaneous appointment of different
categories of managerial personnel
Managerial remuneration, etc.
199. Calculation
of commission, etc., in certain cases
200. Prohibition
of tax-free payments
201. Avoidance
of provisions relieving liability of officers and auditors of company
Prevention of
management by undesirable persons
202. Undischarged insolvent not to manage companies
203. Power to
restrain fraudulent persons from managing companies
Restriction on
appointment of firms and bodies corporate to offices
204. Restriction
on appointment of firm or body corporate to office or place of profit under a
company
Dividends and
manner and time of payment thereof
205. Dividend
to be paid only out of profits
205A. Unpaid
dividend to be transferred to special dividend account
205B. Payment
of unpaid or unclaimed dividend
205C. Establishment
of Investor Education and Protection Fluid
206. Dividend
not to be paid except to registered share holders or to their order or to their
bankers
207. Penalty
for failure to distribute dividends within forty-two days
Payment of interest out of capital
208. Power of
company to pay interest out of capital in certain cases
Accounts
209. Books of
account to be kept by company
209A. Inspector
of books of account, etc., of companies
210. Annual
accounts and balance sheet
210A. Constitution
of National Advisory Committee on Accounting Standards
211. Form and
contents of' balance-sheet and profit and loss account
212. Balance-sheet of holding company to include certain particulars as
to its subsidiaries
213. Financial
year of holding company and subsidiary
214. Rights of
holding company's representatives and members
215. Authentication
of balance sheet and profit and loss account
216. Profit
and loss account to be annexed and auditors' report to be attached to balance
sheet
217. Board's
report
218. Penalty
for improper issue, circulation or publication of balance sheet or profit and
loss account
219. Right of
member to copies of balance-sheet and auditors' report
220. Three
copies of balance-sheet, etc., to be filed with Registrar
221. Duty of
officer to make disclosure of payments, etc.
222. Construction
of references to documents annexed to accounts
223. Certain
companies to publish statement in the Form in Table F in Schedule I
Audit
224. Appointment
and remuneration of auditors
225. Provisions
as to resolutions for appointing or removing auditors
226. Qualifications
and disqualifications of auditors
227. Powers
and duties of auditors
228. Audit of
accounts of branch office of company
229. Signature
of audit report, etc.
230. Reading
and inspection of auditor's report
231. Right of
auditor to attend general meeting
232. Penalty
for noncompliance with sections 225 to 231
233. Penalty
for non-compliance by auditor with sections 227 and 229
233A. Power of Central
Government to direct special audit in certain cases
233B. Audit of
cost accounts in certain cases
Power of Registrar to call for information, etc.
234. Power of
Registrar to call for information or explanation
234A. Seizure
of documents by Registrar
Investigation
235. Investigation
of the affairs of a company
236. Application
by members to be supported by evidence and power to call for security
237. Investigation of company's affairs in other cases
238. Firm,
body corporate or association not to be appointed as inspector
240. Production
of documents and evidence
240A. Seizure
of documents by inspector
241. Inspector's
report
242. Prosecution
243. Application
for winding up of company or an order under section 397 or 398
244. Proceedings
for recovery of damages or property
245. Expenses
of investigation
246. Inspectors
report to be evidence
247. Investigation
of ownership of company
249. Investigation of associate ship with managing agents, etc.
250A. Voluntary winding up of company, etc., not to stop investigation
proceedings
251. Saving
for legal advisers and bankers
CHAPTERII
DIRECTORS
Constitution of
Board of Directors
252. Minimum
number of directors
253. Only
individuals to be directors
254. Subscribers
of memorandum deemed to be directors
255. Appointment of directors and proportion of those who are to retire
by rotation
256. Ascertainment of directors retiring by rotation and filling of
vacancies
257. Right of persons other than retiring directors to stand for
directorship
258. Right of company to increase or reduce the number of directors
259. Increase in number of directors to require Government sanction
260. Additional directors
261. Certain persons not be appointed directors, except by special
resolution
262. Filling
of casual vacancies among directors
263. Appointment
of directors to be voted on individually
265. Option to company to adopt proportional representation for the
appointment of directors
266. Restrictions
on appointment or advertisement of director
Managing directors, etc.
267. Certain
persons not to be appointed managing directors
Share
qualification
270. Time
within which share qualification is to be obtained and maximum amount thereof
271. [OMITTED
BY THE COMPANIES (AMENDMENT) ACT, 1965]
272. Penalty
273. Saving
Disqualifications
of directors
274. Disqualifications
of directors
Restrictions on
number of directorships
275. No person
to be a director of more than twenty companies
276. Choice to
be made by director of more than twenty companies at commencement of Act
277. Choice by
person becoming director of more than twenty companies after commencement of
Act
278. Exclusion
of certain directorships for the purposes of sections 275, 276 and 277
279. Penalty
280. [OMITTED BY THE COMPANIES (AMENDMENT) ACT, 1965, W.E.F. 15-10-1965]
281. [OMITTED BY THE COMPANIES (AMENDMENT) ACT, 1965, W.E.F.
15-10-1965]
282. [OMITTED BY THE COMPANIES (AMENDMENT) ACT, 1965, W.E.F.
15-10-1965]
Vacation of office by directors
283. Vacation
of office by directors
284. Removal
of directors
Meetings of Board
285. Board to
meet at least once in every three calendar months
286. Notice of
meetings
287. Quorum
for meetings
288. Procedure
where meeting adjourned for want of quorum
289. Passing
of resolutions by circulation
290. Validity
of acts of directors
Boards powers
and restrictions thereon
292. Certain
powers to be exercised by Board only at meeting
293. Restrictions on powers of
Board
Political
contributions
293A. Prohibitions
and restrictions regarding political contributions
293B. Power of Board and other persons to make contributions to the
National Defence Fund, etc.
Appointment of sole selling agents
294. Appointment of sole selling agents to require approval of company
in general meeting
294A. Prohibition of payment of compensation to sole selling agents
for loss of office in certain cases
294AA. Power of Central
Government to prohibit the appointment of sole selling agents in certain cases
296. Application
of section 295 to book debts in certain cases
297. Board's sanction to be required for certain contracts in which
particular directors are interested
Procedure, etc., where director interested
299. Disclosure of interests by director
300. Interested
director not to participate or vote in Board's proceedings
301. Register
of contracts, companies and firms in which directors are interested
Register of directors, etc.
303. Register
of directors, managing agents, secretaries and treasurers, etc.
304. Inspection
of the register
305. Duty of
directors, etc., to make disclosure
306. Register
to be kept by Registrar and inspection thereof
Register of directors share holdings
307. Register
of directors' shareholdings, etc.
308. Duty of directors and persons deemed to be directors to make
disclosure of shareholdings
Remuneration of directors
309. Remuneration of directors
310. Provision
for increase in remuneration to require Government sanction
Miscellaneous
provisions
312. Prohibition
of assignment of office by director
313. Appointment
and term of office of alternate directors
314. Director,
etc., not to hold office or place of profit
Restrictions on appointment of managing directors
315. [OMITTED
BY THE COMPANIES (AMENDMENT) ACT, 1960]
316. Number of
companies of which one person may be appointed managing director
317. Managing director not to be appointed for more than five years at
a time
Compensation for loss of office
320. Payment
to director for loss of office, etc., in connection with transfer of shares
321. Provisions supplementary to sections 318, 319 and
320
Directors with unlimited liability
322. Directors,
etc., with unlimited liability in limited company
323. Special resolution of limited company making liability of
directors, etc., unlimited
CHAPTER III
MANAGING AGENTS
Prohibition of appointment of
managing agent
in certain cases
324A. Abolition
of managing agencies and secretaries and treasurers
325. Managing
Agency Company not to have managing agent
325A. Subsidiary
of a body Corporate not to be appointed as managing agent
Appointment and term of office
327. Application
of sections 328 to 331
328. Term of
office of managing agent
Variation of managing agency agreement
329. Variation
of managing agency agreement
Special provisions regarding existing
Managing agents
330. Term of
office of existing managing agents to termination 15th August 1960
331. Application of Act to existing managing agents
Restrictions on number of managing agencies
332. No person
to be managing agent of more than ten companies after 15th August, 1960
Right to charge on assets
333. Right of
managing agent to charge on company's assets
Vacation of office, removal and resignation
334. Vacation
of office on insolvency, dissolution or winding up, etc.
335. Suspension
from office where receiver appointed
336. Vacation
of office on conviction in certain cases
337. Removal
for fraud or breach of trust
338. Removal
for gross negligence or mismanagement
339. Power to
call meetings for the purposes of sections 337 and 338 and procedure
340. Time when
certain disqualifications will take effect
341. Conviction
not to operate as disqualification if convicted partner, director, etc., is
expelled
342. Resignation
of office by managing agent
Transfers of, and succession to, office
343. Transfer
of office by managing agent
344. Managing
agency not to be heritable after commencement of Act
Changes in constitution of firms and corporations
346. Changes
in constitution of managing agency, firm or corporation to be approved by
Central Government
347. Application
of Schedule VIII to certain managing agents
Remuneration of managing agents
348. Remuneration
of managing agent ordinarily not to exceed 10 per cent of net profits
349. Determination
of net profits
350. Ascertainment
of depreciation
351. Special
provision where there is a profit-sharing arrangement between two or more
companies
352. Payment
of additional remuneration
353. Time of
payment of remuneration
354. Managing
agent not entitled to office allowance but entitled to be reimbursed in respect
of expenses
355. Saving
Appointments as selling and buying agents
356. Appointment
of managing agent or associate as selling agent of goods produced by the
company
358. Appointment
of managing agent or associate as buying agent for company
359. Commission,
etc., of managing agent as buying or selling agent of other concerns
362. Registers
to be open to inspection
363. Remuneration received in contravention of foregoing sections to be
held in trust for company
Assignment of, or charge on, remuneration
364. Company
not to be bound by assignment of, or charge on, managing agent's remuneration
Compensation for termination of office
365. Prohibition
of payment of compensation for loss of office in certain cases
366. Limit of
compensation for loss of office
Other rights and liabilities not affected on
Termination of office
367. Managing
agent's rights and liabilities after termination of office
Restrictions on powers
368. Managing
agent to be subject to control of Board and to restrictions in Schedule VII
370. Loans,
etc., to companies under the same management
370A. Provisions as to certain loans, which could not have been made
if sections 369 and 370 were in force
371. Penalty
for contravention of section 369, 370 or 370A
372. Purchase
by company of shares, etc., of other companies
372A. Inter-corporate
loans and investments
373. Investments
made before commencement of Act
374. Penalty
for contravention of section 372 or 373
375. Managing
agent not to engaged in business competing with business of managed company
377. Restrictions
on right of managing agent to appoint directors
CHAPTER IV
A. SECRETARIES AND TREASURERS
378. Appointment
of secretaries and treasurers
380. Sections
324, 330 and 332 not to apply
381. Section
348 to apply subject to a modification
382. Secretaries
and treasurers not to appoint directors
383A. Certain
companies to have secretaries
B.MANAGERS
384. Firm or
body corporate not to be appointed manager
385. Certain
persons not to be appointed managers
386. Number of
companies of which a person may be appointed manager
388. Application
of sections 269, 310, 311, 312 and 317 to managers
388A. Sections
386 to 388 not to apply to certain private companies
CHAPTER IV-A
POWERS OF
CENTRAL GOVERNMENT TO REMOVE
MANAGERIAL
PERSONNEL FROM OFFICE ON
THE
RECOMMENDATION OF THE
COMPANY LAW
BOARD
388B. Reference
to Company Law Board of cases against managerial personnel
388C. Interim
order by Company Law Board
388D. Decision of the Company Law Board
CHAPTER V
ARBITRATION,
COMPROMISES, ARRANGEMENTS
AND
RECONSTRUCTIONS
389. [OMITTED
BY THE COMPANIES (AMENDMENT) ACT, 1960]
390. Interpretation
of sections 391 and 393
391. Power to compromise or make arrangements with creditors and
members
392. Power of
High Court to enforce compromises and arrangements
393. Information
as to compromises or arrangements with creditors and members
394. Provisions for facilitating reconstruction and amalgamation of
companies
394A. Notice to be given to Central Government for applications under
sections 391 and 394
396. Power of Central Government to provide for amalgamation of
companies in national interest
396A. Preservation
of books and papers of amalgamated company
CHAPTER VI
PREVENTION OF
OPPRESSION AND MISMANAGEMENT
A. Powers of Company Law Board
397. Application
to Company Law Board for relief in cases of oppression
398. Application to Company Law Board for relief in cases of
mismanagement
399. Right
to apply under sections 397 and 398
400. Notice to be given to Central Government of applications under
sections 397 and 398
401. Right of
Central Government to apply under sections 397 and 398
402. Powers of Company Law Board on application under section 397 or
398
403. Interim
order by Company Law Board
404. Effect of alteration of memorandum or articles of company by order
under section 397 or 398
405. Addition
of respondents to application under section 397 or 398
406. Application of sections 539 to 544 to proceedings under sections
397 and 398
407. Consequences
of termination or modification of certain agreements
B. Powers of Central
Government
408. Powers of
Government to prevent oppression or mismanagement
CHAPTER VII
CONSTITUTION AND
POWERS OF ADVISORY
COMMITTEE
410. Appointment
of Advisory Committee
411. [OMITTED BY THE COMPANIES (AMENDMENT) ACT, 1965, W.E.F. 15-10-1965]
412. [OMITTED BY THE COMPANIES (AMENDMENT) ACT, 1965, W.E.F.
15-10-1965]
413. [OMITTED BY THE COMPANIES (AMENDMENT) ACT, 1965, W.E.F.
15-10-1965]
414. [OMITTED BY THE COMPANIES (AMENDMENT) ACT, 1965, W.E.F.
15-10-1965]
415. [OMITTED BY THE COMPANIES (AMENDMENT) ACT, 1965, W.E.F.
15-10-1965]
CHAPTER VIII
MISCELLANEOUS PROVISIONS
Contracts where company is undisclosed principal
416. Contracts by agents of company in which company is undisclosed
principal
Employees securities and provident funds
417. Employees securities to be deposited in post office savings bank
or Scheduled Bank
418. Provisions
applicable to provident funds of employees
419. Right of employee to see bank's receipt for moneys or securities
referred to in section 417 or 418
420. Penalty for contravention of sections 417, 418 and
419
Receivers and managers
421. Filing of
accounts of receivers
422. Invoices,
etc., to refer to receiver where there is one
423. Penalty
for non-compliance with sections 421 and 422
WINDING UP
CHAPTERI
PRELIMINARY
Modes of winding
tip
425. Modes of winding up
Contributories
426. Liability
as contributories of present and past members
427. Obligations of directors, managing agents and managers whose
liability is unlimited
428. Definition
of 'contributory"
429. Nature of
liability of contributory
430. Contributories
in case of death of member
431. Contributories
in case of insolvency of member
432. Contributories in case of winding up of a body corporate, which is
a member
CHAPTER II
WINDING UP BY THE COURT
Cases in which company may be wound up by the Court
433. Circumstances
in which Court may wind up company.
434. Company
when deemed unable to pay its debts
Transfer of proceedings
435. Transfer
of winding up proceedings to District Court
436. Withdrawal and transfer of winding up from one District Court to
another
437. Power of High Court to retain winding up proceedings in District
Court
Petition for winding up
439. Provisions
as to applications for winding up
Commencement of winding up
441. Commencement
of winding up by Court
Powers of Court
442. Power of Court to stay or restrain proceedings against company
443. Powers of Court on hearing
petition
Consequences of winding up order
444. Order for
winding up to be communicated to Official Liquidator and Registrar
445. Copy of
winding up order to be filed with Registrar
446. Suits
stayed on winding up order
447. Effect of
winding up order
Official Liquidators
448. Appointment
of Official Liquidator
449. Official
Liquidator to be liquidator
450. Appointment
and powers of provisional liquidator
451. General
provisions as to liquidators
452. Style,
etc., of liquidator
453. Receiver
not to be appointed of assets with liquidator
454. Statement
of affairs to be made to Official Liquidator
455. Report by Official Liquidator
456. Custody of company's property
457. Powers of
liquidator
458A. Exclusion
of certain time in computing periods of limitation
459. Provision
for legal assistance to liquidator
460. Exercise
and control of liquidator's powers
461. Books to be kept by liquidator
462. Audit of
liquidator's accounts
463. Control
of Central Government over liquidators
Committee of inspection
464. Appointment and composition of committee of
inspection
465. Constitution and proceedings of committee of
inspection
General powers of Court in case of winding up by Court
466. Power of Court to stay winding up
467. Settlement of list of contributories and
application of assets
468. Delivery of property to liquidator
469. Payment of debts due by contributory and extent of
set-off
470. Power of Court to make calls
471. Payment into bank of moneys due to company
472. Moneys
and securities paid into bank to be subject to order of Court
473. Order on
contributory to be conclusive evidence
474. Power to
exclude creditors not proving in time
475. Adjustment
of rights of contributories
476. Power to
order costs
477. Power to summon persons suspected of having property of company,
etc.
478. Power to
order public examination of promoters, directors, etc.
479. Power to
arrest absconding contributory
480. Saving of
existing powers of Court
Enforcement of and appeal from orders
482. Order
made in any Court to be enforced by other Courts
483. Appeals
from orders
CHAPTER III
VOLUNTARY
WINDING UP
Resolutions for, and commencement of, voluntary winding up
484. Circumstances
in which company may be wound up voluntarily
485. Publication
of resolution to wind up voluntarily
486. Commencement
of voluntary winding up
Consequences of voluntary winding up
487. Effect of voluntary winding up on status of
company
Declaration of solvency
488. Declaration of solvency in case of proposal to
wind up voluntarily
Provisions applicable to a members voluntary
Winding up
489. Provisions applicable to a members voluntary
winding up
490. Power of
company to appoint and fix remuneration of liquidators
491. Board's
powers to cease on appointment of liquidator
492. Power to
fill vacancy in office of liquidator
493. Notice of
appointment of liquidator to be given to registrar
494. Power of
liquidator to accept shares, etc., as consideration for sale of property of
company
495. Duty of liquidator
to call creditors' meeting in case of insolvency
496. Duty of
liquidator to call general meeting at end of each year
497. Final
meeting and dissolution
498. Alternative provisions as to annual and final meetings in case of
insolvency
Provisions applicable to a creditors voluntary
winding up
499. Provisions
applicable to a creditors voluntary winding up
500. Meeting
of creditors
501. Notice of
resolutions passed by creditors' meeting to be given to Registrar
502. Appointment
of liquidator
503. Appointment
of committee of inspection
504. Fixing of
liquidators remuneration
505. Board's
powers to cease on appointment of liquidator
506. Power to
fill vacancy in office of liquidator
507. Application
of section 494 to a creditors voluntary winding up
508. Duty of
liquidator to call meetings of company and of creditors at end of each year
509. Final
meeting and dissolution
Provisions applicable to every voluntary winding up
510. Provisions
applicable to every voluntary winding up
511. Distribution
of property of company
511A. Application
of section 454 to voluntary winding up
512. Powers
and duties of liquidator in voluntary winding up
513. Body
corporate not to be appointed as liquidator
514. Corrupt
inducement affecting appointment as liquidator
515. Power of
Court to appoint and remove liquidator in voluntary winding up
516. Notice by
liquidator of his appointment
517. Arrangement
when binding on company and creditors
518. Power to apply to Court to have questions determined or powers
exercised
519. Application
of liquidator to Court for public examination of promoters, directors, etc.
520. Costs of
voluntary winding up
521. [OMITTED
BY THE COMPANIES (AMENDMENT) ACT, 1960]
CHAPTER IV
WINDING UP
SUBJECT TO SUPERVISION OF COURT
522. Power to
order winding up subject to supervision
523. Effect of
petition for winding up subject to supervision
524. Power of
Court to appoint or remove liquidators
525. Powers
and obligations of liquidator appointed by Court
526. Effect of
supervision order
527. Appointment
in certain cases of voluntary liquidators to office of liquidators
CHAPTER V
PROVISIONS
APPLICABLE TO EVERY MODE OF
WINDING UP
Proof and ranking of claims
528. Debts of all descriptions to be admitted to proof
529. Application
of insolvency rules in winding up of insolvent companies
529A. Overriding
preferential payments
Effect of winding up on antecedent and
Other transactions
531A. Avoidance
of voluntary transfer
532. Transfers
for benefit of all creditors to be void
533. Liabilities
and rights of certain fraudulently preferred persons
534. Effect of floating charge
535. Disclaimer
of onerous properly in case of a company, which is being wound up
536. Avoidance
of transfers, etc., after commencement of winding up
Offences antecedent to or in course of winding up
538. Offences
by officers of companies in liquidation
539. Penalty
for falsification of books
540. Penalty
for frauds by officers
541. Liability
where proper accounts not kept
542. Liability
for fraudulent conduct of business
543. Power of
Court to assess damages against delinquent directors, etc.
544. Liability
under sections 542 and 543 to extend to partners or directors in firm or
company
545. Prosecution
of delinquent officers and members of company
Miscellaneous
provisions
546. Liquidator
to exercise certain powers subject to sanction
547. Notification
that a company is in liquidation
548. Books and
papers of company to be evidence
549. Inspection
of books and papers by creditors and contributories
550. Disposal
of books and papers of company
551. Information
as to pending liquidations
552. Official
Liquidator to make payments into the public account of India
553. Voluntary
liquidator to make payments into Scheduled Bank
554. Liquidator not to pay moneys into private banking
account
555. Unpaid dividends and undistributed assets to be paid into the
Companies Liquidation Account
556. Enforcement
of duty of liquidator to make returns, etc.
Supplementary powers of Court
557. Meetings
to ascertain wishes of creditors or contributories
558. Court or
person before whom affidavit may be sworn
Provisions as to dissolution
559. Power of
Court to declare dissolution of company void
560. Power of
Registrar to strike defunct company off register
APPLICA TION OF
ACT TO COMPANIES FORMED
OR REGISTERED
UNDER PREVIOUS
COMPANIES LAWS
561. Application
of Act to companies formed and registered under previous companies laws
562. Application of Act to companies registered but not formed under
previous companies laws
563. Application
of Act to unlimited companies registered under previous companies laws
564. Mode of transferring shares in the case of companies registered
under Acts 19 of 1857 and 7 of 1860
COMPANIES A
UTHORISED TO REGISTER
UNDER THIS ACT
565. Companies
capable of being registered
566. Definition
of 'joint-stock company'
567. Requirements
for registration of joint-stock companies
568. Requirements for registration of companies not being joint stock
companies
569. Authentication of statements
of existing companies
570. Power of
registrar to require evidence as to nature of company
571. Notice to customers on registration of banking company with
limited liability
572. Change of
name for purposes of registration
573. Addition
of "Limited" or 'Private Limited" to name
574. Certificate
of registration of existing companies
575. Vesting of property on registration
576. Saving for existing liabilities
577. Continuation of pending legal proceedings
578. Effect of registration under Part
579. Power to
substitute memorandum and articles for deed of settlement
580. Power of
Court to stay or restrain proceedings
581. Suits
stayed on winding up order
WINDING UP OF
UNREGISTERED
COMPANIES
582. Meaning
of "unregistered company
583. Winding
up of unregistered companies
584. Power to
wind up foreign companies, although dissolved
585. Contributories
in winding up of unregistered company
586. Power to
stay or restrain proceedings
587. Suits,
etc., stayed on winding up order
588. Directions
as to property in certain cases
589. Provisions
of Part cumulative
COMPANIES
INCORPORATED OUTSIDE INDIA
Provisions as to
establishment of places of
Business in
India
591. Application of sections 592 to 602 to foreign
companies
592. Documents,
etc., to be delivered to Registrar by foreign companies carrying on business in
India
593. Return to
be delivered to Registrar by foreign company where documents, etc., altered
594. Accounts of foreign company
595. Obligation
to state name of foreign company, whether limited, and country where
incorporated
596. Service
on foreign company
597. Office
where documents to be delivered
598. Penalties
599. Company's
failure to comply with Part not to affect its liability under contracts, etc.
600. Registration of charges, appointment of receiver and books of
account
601. Fees for
registration of documents under Part
602. Interpretation
of foregoing sections of Part
Prospectuses
603. Dating of prospectus and particulars to be contained therein
604. Provisions
as to expert's consent and allotment
605. Registration
of prospectus
606. Penalty
for contravention of sections 603, 604 and 605
607. Civil
liability for misstatements in prospectus
608. Interpretation
of provisions as to prospectuses
REGISTRATION
OFFICES AND OFFICERS AND FEES
609. Registration offices
610. Inspection,
production and evidence of documents kept by Registrar
611. Fees in
Schedule X to be paid
612. Fees,
etc., paid to Registrar and other officers to be accounted for to Central
Government
613. Power of
Central Government to reduce fees, charges, etc.
614. Enforcement
of duty of company to make returns, etc., to Registrar
614A. Power of
Court trying offences under the Act to direct the filing of documents with
Registrar
GENERAL
Collection of information and statistics
From companies
615. Power of
Central Government to direct companies to furnish information or statistics
Application of Act to companies governed
By special Acts
Application of Act to Government companies
617. Definition
of "Government company
618. Government
companies not to have managing agents
619. Application
of sections 224 to 233 to Government companies
619A. Annual
reports on Government companies
619B. Provisions
of section 619 to apply to certain companies
620. Power to
modify Act in relation to Government companies
Modification of Act in its application to Nidhis and
Mutual Benefit Societies
620A. Power to
modify Act in its application to Nidhis, etc.
620B. Special
provisions as to companies in Goa, Daman and Diu
Special
provisions as to companies in Jammu & Kashmir
620C. Special
provisions as to companies in Jammu & Kashmir
Offences
621. Offences
against Act to be cognizable only on complaint by Registrar, shareholder or
Government
621A. Composition
of certain offences
622. Jurisdiction
to try offences
623. Certain
offences triable summarily in Presidency towns
624. Offences
to be non-cognizable
624A. Power of
Central Government to appoint company prosecutors
624B. Appeal
against acquittal
625. Payment
of compensation in cases of frivolous or vexatious prosecution
626. Application
of fines
627. Production
and inspection of books where offence suspected
628. Penalty
for false statements
629. Penalty
for false evidence
629A. Penalty
where no specific penalty is provided elsewhere in the Act
630. Penalty
for wrongful withholding of property
631. Penalty
for improper use of words "Limited' and "Private Limited'
Legal proceedings
632. Power to require limited company to give security
for costs
633. Power of
Court to grant relief in certain cases
634. Enforcement
of orders of Courts
634A. Enforcement
of orders of Company Law Board
635. Enforcement
of orders of one Court by other Courts
635A. Protection
of acts done in good faith
635AA. Non-disclosure of information in certain
cases
Temporary protection of employees
Reduction of fees, payable to company
636. Reduction
of fees, charges, etc., payable to company
Delegation of powers and functions of Central
Government
637. Delegation
by Central Government of its powers and functions under Act
Grant of approval, etc., subject to conditions and levy
Of fees on applications
637AA.Power of Central Government to fix a limit
with regard to remuneration
637B. Condonation
of delays in certain cases
Annual report on working of Act
638. Annual
report by Central Government
639. [OMITTED
BY THE COMPANIES (AMENDMENT) ACT, 1960]
Validation of registration of firms in certain cases
640. Validation
of registration of firms as members of charitable and other
Computation of time for filing orders of Court
or the Company Law Board
640A. Exclusion
of time required in obtaining copies of orders of Court or the Company Law
Board
Schedules, forms and rules
640B. Forms
of, and procedure in relation to, certain applications
642. Power of
Central Government to make rules
643. Power of
Supreme Court to make rules
Repeals and savings
644. Repeal of
Acts specified in Schedule XII
645. Saving of
orders, rules, etc., in force at commencement of Act
646. Saving of
operation of section 138 of Act 7 of 1913
647. Saving of
pending proceedings for winding up
648. Saving of
prosecutions instituted by liquidator or Court under section 237 of Act 7 of
1913
649. Construction
of references to former enactments in documents
650. [OMITTED BY THE COMPANIES (AMENDMENT) ACT, 1960]
651. Construction
of references to extraordinary resolution in articles, etc.
652. Appointment
under previous companies laws to have effect as if made under Act
653. Former registration offices continued
654. Registers
under previous companies laws to be deemed to be part of registers under Act
656. Saving of
incorporation under repealed Acts
657. Saving of
certain Tables under previous companies laws
SCHEDULE I
Table A Regulations for management of a company
limited by shares
Table B Memorandum of association of a company
limited by shares
Table E Memorandum and articles of association of an
unlimited company
SCHEDULE I-A
LIST OF
RELATIVES
SCHEDULE II
MATTERS TO BE
SPECIFIED IN PROSPECTUS AND
REPORTS TO BE
SET OUT THEREIN
Part I
Matters to be specified
Part III Provisions applying to Parts I and II of
the Schedule
SCHEDULE III
FORM OF
STATEMENT IN LIEU OF PROSPECTUS TO BE
DELIVERED TO
REGISTRAR BY A COMPANY WHICH
DOES NOT ISSUE A
PROSPECTUS OR WHICH DOES
NOT GO TO
ALLOTMENT ON A PROSPECTUS
ISSUED, AND
REPORTS TO BE
SET OUT THEREIN
Part I Form
of statement and particulars to be contained therein
Part III Provisions applying to Parts I and II of
this Schedule
SCHEDULE IV
FORM OF
STATEMENT IN LIEU OF PROSPECTUS TO BE
DELIVERED TO
REGISTRAR BY A PRIVATE COMPANY
ON BECOMING A
PUBLIC COMPANY AND
REPORTS TO BE
SET OUT THEREIN
Part I Form of
statement and particulars to be contained therein
Part III Provisions applying to Parts I and II of
this Schedule
SCHEDULE V
CONTENTS AND
FORM OF ANNUAL RETURN OF
A COMPANY HAVING
A SHARE CAPITAL
SCHEDULE VI
Part II Requirements as to profit and loss account
Part IV Balance-sheet abstract and company's general
business profile
SCHEDULE VII
RESTRICTIONS ON
POWERS OF MANAGING AGENTS
SECRETARIES AND
TREASURERS
SCHEDULE VIII
DECLARATIONS TO
BE MADE PY FIRMS, PRIVATE
COMPANIES AND
OTHER BODIES CORPORATE
ACTING AS
MANAGING AGENTS/SECRETARIES
AND TREASURERS
SCHEDULE IX
FORM OF PROXY
SCHEDULE X
TABLE OF FEES TO
BE PAID TO THE REGISTRAR
SCHEDUI-E XI
FORM IN WHICH
SECTIONS 539 TO 544 OF ACT ARE
TO APPLY TO
CASES WHERE AN APPLICATION IS
MADE UNDER
SECTION 397 OR 398
SCHEDULE XII
ENACTMENTS
REPEALED
SCHEDULE XIII
CONDITIONS TO BE
FULFILLED FOR THE APPOINTMENT
OF A MANAGING OR
WHOLE TIME DIRECTOR OR A
MANAGER WITHOUT
THE APPROVAL OF
THE CENTRAL
GOVERNMENT
Part III Provisions applicable to Parts I and II
of this Schedule
SCHEDULE XI-V
RATES OF
DEPRECIATION
SCHEDULE XV
COMPANIES
ACT, 1956
[1
OF 1956] 1
An Act to consolidate and
amend the law relating to companies and certain other associations
BE it enacted by
Parliament in the Sixth Year of the Republic of India as follows
PARTI
PRELIMINARY
1. Short title,
commencement and extent. -
(1)
This Act may be called the
Companies Act, 1956.
(2) It shall come into force on such date 2 as the Central Government may, by
notification in the Official Gazette, appoint.
3[(3) It
extends to the whole of India:]
4[* * *]
5[Provided 6[* * *] that it shall apply to the State of Nagaland subject to such modifications, if any, as the Central Government may, by notification in the Official Gazette, specify.]
1. Received the
assent of the President of India on 18-1-1956.
Keep
following in view:
* In terms of section 6 of the Companies (Amendment) Act,
1969, on and from 3-4-1970, so much of the provisions of the Act as relate to
managing agents and secretaries and treasurers shall cease to have effect
except as respects things done or omitted to be done under those provisions
before such cesser. Such provisions are
marked off by square brackets with asterisk. [*]
* Section 68(l) of the Companies (Amendment) Act, 1988,
provides that any matter or proceeding which, immediately before the
commencement of the Companies (Amendment) Act, 1988, was pending before any
Court shall, notwithstanding that such matter or proceeding would be heard by
the Company Law Board after such commencement, be continued and disposed of by
that court after such commencement in accordance with the provisions of the
principal Act as they stood immediately before such commencement.
* Sub-section (2) of section 68 further provides that any
matter or proceeding which, immediately before the commencement of the
Companies (Amendment) Act, 1988, was pending bef ore the Company Law Board by
virtue of any notification issued by the Central Government shall, unless such
matter or proceeding would be heard by the Company Law Board after such
commencement, be heard and disposed of by the Central Government.
2. 1-4-1956 vide
Notification No. S.R.O. 612, dated 8-3-1956.
3. Substituted by the
J & K (Extension of Laws) Act, 1956.
4. The first proviso,
earlier inserted by the J & K (Extension of Laws) Act, 1956 was omitted by
the Central Laws (Extension to J & K) Act, 1968, w.e.f. 15-8-1968.
5. Inserted by the
Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
6. 'Further omitted
by the Central Laws (Extension to J & K) Act, 1968, w.e,f. 15-8-1968.
2. Definitions. -In
this Act, unless the context otherwise requires, -
(1) "Alter" and
"alteration" shall include the making of additions and omissions;
(2) "Articles"
means the articles of association of a company as originally framed or as
altered from time to time in pursuance of any previous companies law or of this
Act, including, so far as they apply to the company, the regulations contained,
as the case may be, in Table B in the Schedule annexed to Act No. 19 of 1857 or
in Table A in the First Schedule annexed to the Indian Companies Act, 1882 (6
of 1882), or in Table A in the First Schedule annexed to the Indian Companies
Act, 1913 (7 of 1913), or in Table A in Schedule I annexed to this Act;
*[(3) "Associate", in relation to a
managing agent, means any of the following, and no others: -
|
(a) Where the managing agent is an individual |
any partner or relative of such individual; any
firm in which such individual, partner or relative is a partner; any private
com pany of which such individual or any such partner, relative or firm is
the managing agent or secretaries and treasurers or a director or the manager
; and any body corporative general meating of which not less than one-third
of the total voting power in regard to any matter may be exercised or
controlled by any one or more of the following, namely, such individual, partner or partners, relative or
relatives, firm or firms; and private company or companies; |
|
(b) where the managing agent is a firm |
Any member of such firm;
any partner or relative
of any such member ; and any other firm in which any such member, partner or
relative is a partner ; any private company of which the firm first-mentioned
, or any such member, partner, relative or other firm is the managing agent,
or secretaries and treasurers, or a director, or the manager ; and any body
corporate at any general meeting of which not less than one-third of the
total voting power in regard to any matter may be exercised or controlled by
any one or more of the following, namely, the firm first-mentioned, any such
member or members, partner or partners, relative or relatives, other firm or firms and private company or companies; |
|
(C) Where the managing agent is a body corporate |
(i)Any subsidiary or holding company of such body corporate; the managing agent or secretaries and treasurers, or a director, the manager or an officer of the body corporate or of any subsidiary or holding company thereof; any partner or relative of any such director or manager; any firm in which such director, manager, partner or relative, is a partner 7[
* * * ] (ii) Any other body corporate at any general meeting of which not less than one-third of the total voting power in regard to any matter may be exercised or controlled by any one or more of the following, namely, the body corporate and the companies and other persons specifying paragraph (i) above; and 8[(iii)
Any subsidiary of the other body corporate referred to in paragraph (ii)
above: Provided that
where the body corporate is the managing agent of the other body corporate
referred to in paragraph (ii) above, a subsidiary of such other body
corporate shall not be an associate in relation to the managing agent
aforesaid ; and] |
|
(d)Where the managing
agent is a private company or a body corporate having not more than fifty
members : |
In addition to the
persons mentioned in sub-clause (c), any member of the private company or
body corporate. |
*In terms of section 6
of he Companies (Amendment) Act. 1969, on and from 3-4-1970, so much of
the provisions of the Act as relate to managing agents and secretaries and
treasurers shall cease to have effect except as respects thinj4s done or
omitted to be done under those provisions before such cesser. Such provisions are marked off by square
brackets with asterisk.
Explanation: If one person is an associate in relation to another within the meaning of
this clause, the latter shall also be deemed to be an associate in relation to
the former within its meaning;]
*[(4)
"Associate", in relation to any secretaries and treasurers, means any
of the following, and no others :
7. "And"
omitted by the Compinies (Amendment) Act, 1960,
8. Inserted,
ibid,
*In terms of section 6 of the Companies (Amendment) Act,
1969, on and from 3-4-1970. So much of the provisions of the Act as relate to
managing agents and secretaries and treasurers shall cease to have effect
except as respects things done or omitted to be done under those provisions
before such cesser. Such provisions are
marked off by square breeders with asterisk.
|
(a) Where the secretaries and
treasurers are a firm |
Any member of such firm;
any partner or relative of any such
member; and any other firm in which
any such member, partner or relative is a partner ; any private company of
which the firm first mentioned, or any such member, partner, relative or
other firm is the managing agent, or secretaries and treasurers, or a
director, or the manager; and any body corporate at any general meeting of
which not less than one-third of the total voting power in regard to any
matter may be exercised or controlled by any one or more of the following,
namely, the firm first-mentioned, any such member or members, partner or
partners, relative or relatives, other firm or firms, and private company or
companies; |
|
(b)Where the secretaries
and treasurers area body corporate |
(i)Any subsidiary or holding company of such body corporate; the managing agent or secretaries and treasurers, or a director, the manager or an officer of the body corporate or of any subsidiary or holding company thereof; any partner or relative of any such director or manager; Any firm in which such director or manager,
partner or relative, is a partner; 9[*
* *] (ii)Any other body corporate at any general
meeting of which not less than one-third of the total voting power in regard to any matter may be
exercised or controlled by any one or more of the following, namely,
the body corporate and the companies
and other persons specified in paragraph (i) above; and 10[(iii) Any subsidiary of the other body corporate
referred to in paragraph(ii) above: Provided
that where the body corporate is the secretaries and treasurers of the other
body corporate referred to in paragraph (ii) above, a subsidiary of such
other body corporate shall not be an associate in relation to the secretaries
and treasurers aforesaid; and ] |
|
(C) Where the
secretaries and treasurers are a private company or a body corporate having
not more than fifty members : |
In addition to the persons mentioned in sub-clause (b), any member of the private company or body corporate. |
9. And"
omitted by the Companies (Amendment) Act, 1960.
10. Inserted,
ibid.
Explanation: If one person is an associate in relation to
another within the meaning of this clause, the latter shall also be deemed to
be an associate in relation to the former within its meaning;]
(5) Banking company" has the same
meaning as in the Banking Companies Act, 1949 (10 of 1949) 11;
(6) "Board of directors'
or "Board', in relation to a company, means the Board of directors of the
company;
(7) "Body corporate' or
'corporation' includes a company incorporated outside India but 12[does
not include-
(a) A corporation sole;
(b) A co-operative society
registered under any law relating to cooperative societies; and
(c) Any other body corporate
(not being a company as defined in this Act), which the Central Government may,
by 13 notification in the
Official Gazette, specify in this behalf;]
(8) "Book and paper' and
"book or paper" include accounts, deeds, 14[Vouchers,]
writings, and documents;
15[(9) Branch office' in relation to a company
means-
(a) Any establishment
described as a branch by the company; or
(b) Any establishment
carrying on either the same or substantially the same activity as that carried
on by the head office of the company; or
(c) Any establishment engaged
in any production, processing or manufacture,
But
does not include any establishment specified in any order made by the Central
Government under section 8 ;]
(10) "Company" means
a company as defined in section 3;
11. For
definitions of 'banking'/'banking company', see Appendix
II.
12. Substituted
for' does not include a corporation sole by the Companies (Amendment) Act,
1960.
13. For
notification issued under sub-clause (c), refer Taxmann's Master Guide to
Companies Act.
14. Inserted
by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
15. Substituted
by the Companies (Amendment) Act, 1960.
For text of substituted provision, see Appendix
I.
16[(10A) "Company
Law Board" means the Board of Company Law Administration constituted under
section 10E
17[(11)
"The Court" means,-
(a) With respect to any
matter relating to a company (other than any offence against this Act), the
Court having jurisdiction under this Act with respect to that matter relating
to that company, as provided in section 10;
(b) With respect to any
offence against this Act, the Court of a Magistrate of the First Class or, as
the case may be, a Presidency Magistrate, having jurisdiction to try such
offence;]
(12) "Debenture"
includes debenture stock, bonds and any other securities of a company, whether
constituting a charge on the assets of the company or not;
(13) "Director"
includes any person occupying the position of director, by whatever name
called;
(14) "District Court
means the principal Civil Court of original jurisdiction in a district, but
does not include a High Court in the exercise of its ordinary original civil
jurisdiction;
(15) "Document' includes
summons, notice, requisition, order, other legal process, and registers,
whether issued, sent or kept in pursuance of this or any other Act or
otherwise;
(16) "Existing
company" means an existing company as defined in section 3 ;
(17) "Financial year"
means, in relation to any body corporate, the period in respect of which any
profit and loss account of the body corporate laid before it in annual general
meeting is made up, whether that period is a year or not:
Provided that, in relation to an insurance company,
"Financial Year" shall mean the calendar year referred to in
sub-section (1) of section 11 18
of the Insurance Act, 1938 (4 of 1938);
(18) "Government Company" means a
Government company within the meaning of section 617
(18A) "[Omitted by the MRTP (Amendment)
Act, 1984, w.e.f. 1-8-1984. The
original clause as earlier inserted by the Companies (Amendment) Act, 1974,
w.e.f. 1-2-1975];
(19) "Holding company' means a holding
company within the meaning of section 4 ;
(20) [Omitted by the J & K (Extension of
Laws) Act, 1956;]
16. Inserted by the Companies (Amendment) Act,
1963, w.e.f. 1- 1 - 1964.
17. Substituted by
the Companies (Amendment) Act, 1960.
For text of substituted provision, see Appendix
1.
18. For section 11
(1) in which "calendar year' has been referred to, refer Appendix II.
19. For text of
omitted provision, see Appendix I.
(21) "Insurance company" means a
company, which carries on the business of insurance either solely or in
conjunction with any other business or businesses;
(22) 'Issued generally' means, in relation to a
prospectus, issued to person is irrespective of their being existing members or
debenture holders of the body corporate to which the prospectus relates;
(23) "Limited company' means a company
limited by shares or by guarantee;
(24) "Manager" means an individual
(not being the managing agent) who, subject to the superintendence, control and
direction of the Board of directors, has the management of the whole, or
substantially the whole, of the affairs of a company, and includes a director
or anv other person occupying the position of a manager, by whatever name
called, and whether under a contract of service or not;
(25) "Managing agent" means any
individual, firm or body corporate entitled, subject to the provisions of this
Act, to the management of the whole, or substantially the whole, of the affairs
of a company by virtue of an agreement with the company, or by virtue of its
memorandum or articles of association, and includes any individual, form or
body corporate occupying the position of a managing agent, by whatever name
called.
20[Explanation I: For the purposes of this
Act, references to "managing agent" shall be construed as references
to any individual, firm, or body corporate who, or which, was, at any time
before the 3rd day of April, 1970, the managing agent of any company.
Explanation II: For the removal of doubts,
it is hereby declared that notwithstanding anything contained in section 6 of
the Companies (Amendment) Act, 1969 (17 of 1969), this clause shall remain, and
shall be deemed always to have remained, in force;]
(26) "Managing director" means a
director who, by virtue of an agreement with the company or of a resolution
passed by the company in general meeting or by its Board of directors or, by
virtue of its memorandum or articles of association, is entrusted with 21[substantial powers of management] which would
not otherwise be exercisable by him, and includes a director occupying the
position of a managing director, by whatever name called:
22[Provided that the power to do
administrative acts of a routine nature when so authorised by the Board such as
the power to affix the common seal of the company to any document or to draw
and endorse any cheque on the account of the company in any bank or to draw and
endorse any negotiable instrument or to sign any certificate of share or to
direct registration of transfer of any share, shall not be deemed to be
included within substantial powers of management:
20. Inserted by the Companies (Amendment)
Act, 1974, w.e.f. 1-2-1975.
21. Substituted for "any powers of
management' by the Companies (Amendment) Act, 1960.
22. Inserted, ibid.
Provided further that a managing director of a company shall
exercise his powers subject to the superintendence, control and direction of
its Board of directors;]
(27) "Member", in
relation to a company, does not include a bearer of a share-warrant of the
company issued in pursuance of section 114;
(28) "Memorandum"
means the memorandum of association of a company as originally framed or as
altered from time to time in pursuance of any previous companies law or of this
Act;
(29) "Modify" and
modification shall include the making of additions and omissions;
23[(30) "Officer "24 includes any director, *[managing agent,
secretaries and treasurers,] manager or secretary, 25[or
any person in accordance with whose directions or instructions the Board of
directors or any one or more of the director is or are accustomed to act,]
*[and also includes-
(a) Where the managing agent, 26 [or the secretaries and treasurers] is or
are a firm, any partner in the firm;
(b) Where the managing agent or the
secretaries and treasurers is or are a body corporate, any director or manager
of the body corporate;]
(c) [Omitted by the Companies (Amendment)
Act, 1974, w.e.f. 1-81975. For the
original clause, refer Appendix I;]
But,
save in sections 477,478, 539,543, 545, 621, 625 and 633, does not include an
auditor;]
(31) "Officer who is in
default', in relation to any provision referred to in section 5, has the
meaning specified in that section;
(32) "Paid-up capital
or" capital paid-up" includes capital credited as paid-up;
(33) "Prescribed' means,
as respects the provisions of this Act relating to the winding up of companies
except sub-section (5) of section 503, 27 [sub-section
(3) of section 550, section 552 and sub-section (3) of section 555], prescribed
by rules made by the Supreme Court in consultation with High Courts, and as
respects the other provisions of this Act including sub-section (5) of section
503, 27[sub-section (3) of
section 550, section 552 and subsection (3) of section 555], prescribed by
rules made by the Central Government;
23. Substituted
by the Companies (Amendment) Act, 1960.
For text of substituted provision, see Appendix
1.
24. For
clarification on this expression, refer Taximnn's Master Guide to Companies
Act.
25. Inserted
by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
26. Substituted
for "the secretaries and treasurers or the secretary' by the Companies
(Amendment) Act, 1974, w.e.f. 1-8-1975.
27. Substituted
for "sub-section (1) of section 549 and sub-section (3) of section
550" by the Companies (Amendment) Act, 1960.
(34) Previous companies law
means any of the laws specified in clause (ii) of sub-section (1) of section 3
;
(35) Private company"
means a private company as defined in section 3
(36) "Prospectus"
means 28[any
document described or issued as a prospectus and includes any] notice,
circular, advertisement or other document 29[inviting
deposits from the public or] inviting offers from the public for the
subscription or purchase of any shares in, or debentures of, a body corporate;
(37) Public company"
means a public company as defined in section 3
(38) "Public holiday"30 means a public holiday within the meaning of
the Negotiable Instruments Act, 1881 (26 of 1881):
Provided that no day declared by the Central
Government to be a public holiday shall be deemed to be such a holiday, in
relation to any meeting, unless the declaration was notified before the issue
of the notice convening such meeting;
31(39) Recognised stock exchange' means, in
relation to any provision of this Act in which it occurs, a stock exchange,
whether in or outside India, which is notified by the Central Government in the
Official Gazette as a recognised stock exchange for the purposes of that
provision;
(40) "Registrar"
means a Registrar, or an Additional, a Joint, a Deputy or an Assistant
Registrar, having the duty of registering companies under this Act;
(41) Relative' means, with
reference to any person, any one who is related to such person in any of the
ways specified in section 6, and no others
(42) "Schedule' means a
Schedule annexed to this Act;
(43) Scheduled
Bank"" has the same meaning as in the Reserve Bank of India Act, 1934
(2 of 1934);
(44) "Secretaries and
treasurers' means any firm or body corporate (not being the managing agent)
which, subject to the superintendence, control and direction of the Board of
directors, has the management of the whole, or substantially the whole, of the
affairs of a company; and includes any firm or body corporate occupying the
position of secretaries and treasurers, by whatever name called, and whether
under a contract of service or not.
33[Explanation
I: For the purposes of this Act, reference to
'secretaries and treasurers" shall be construed as references to any firm
or body corporate which was, at any time before the 3rd day of April, 1970,
secretaries and treasurers of any company.
28. Substituted
for 'any prospectus' by the Companies (Amendment) Act, 1960.
29. Inserted
by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
30. For
the expression as defined in section 25 of the Negotiable Instruments Act,
refer Appendix II.
31. For
list of recognised stock exchanges, refer Taxmann's Master Guide to Companies
Act.
32. For
definition of "Scheduled Bank', see Appendix
II.
33. Inserted
by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
Explanation II: For the removal of doubts,
it is hereby declared that notwithstanding anything contained in section 6 of
the Companies (Amendment) Act, 1969 (17 of 1969), this clause shall remain, and
shall be deemed always to have remained, in force;]
34[(45) "Secretary" means a company
secretary within the meaning of clause (c) of subsection (1) of section 2 of
the Company Secretaries Act, 1980 (56 of 1980), and includes any other
individual possessing the prescribed qualifications35
and appointed to perform the duties which may be performed by a secretary under
this Act arid any other ministerial or administrative duties
36[(45A) "Secretary in whole-time practice"
means a secretary who shall be deemed to be in practice within the meaning of
sub-section (2) of section 2 of the Company Secretaries Act, 1980 (56 of 1980),
and who is not in full-time employment;]
37[(45B) Securities and Exchange Board of India means
the Securities and Exchange Board of India established under section 3 of the
Securities and Exchange Board of India Act, 1992 (15 of 1992);]
(46) "Share" means share in the share
capital of a company, and includes stock except where a distinction between
stock and shares is expressed or implied;
(47) "Subsidiary company or
"subsidiary" means a subsidiary company within the meaning of section
4
(48) "Total voting power", in regard
to any matter relating to a body corporate, means the total number of votes
which may be cast in regard to that matter on a poll at a meeting of such body,
if all the members thereof and all other persons, if any, having a right to
vote on that matter are present at the meeting, and cast their votes;
(49) "Trading corporation"38 means a trading corporation within the meaning
of entries 43 and 44 in List I in the Seventh Schedule to the Constitution;
(49A) [Omitted by the Companies Tribunal
(Abolition) Act, 1967, w.e.f. 1-7-1967.
The clause was earlier inserted by the Companies (Amendment) Act, 1963;]
(50) "Variation" shall include
abrogation; and "vary" shall include abrogate.
2A. 39[lnterpretation of certain words and expressions. -Words and expressions used and not defined in this Act but defined in
the Depositories Act, 1996 (22 of 1996), shall have the same meanings
respectively assigned to them in that Act.]
34. Substituted by the Companies (Amendment)
Act, 1988, w.e.f. 1-12-1988. For text
of substituted provision, see Appendix 1.
35. See Companies (Appointment &
Qualifications of Secretary) Rules, 1988.
36. tnsei-ted by the Companies (Amendment)
Act, 1988, w.e.f. 15-6-1988.
37. Inserted by the Dcpositories Act, 1996,
w.r.e.f. 20-9-1995.
38. For the definition of the expression,
refer Appendix II.
39. Inserted by the Depositories Act, 1996,
w.r.e.f. 20-9-1995.
3. Definitions of "company", "existing company", "private company" and "public company". -
(1) In this Act, unless the
context otherwise requires, the expressions "company, "existing
company', "private company" and "public company', shall, subject
to the provisions of sub-section (2), have the meanings specified below: -
(i) "Company means a
company formed and registered under this Act or an existing company as defined
in clause (ii);
(ii) "Existing company' means a company
formed and registered under any of the previous companies laws specified
below:-
(a) Any Act or Acts relating
to companies in force before the Indian Companies Act, 1866 (10 of 1866), and
repealed by that Act;
(b) The Indian Companies Act,
1866 (1 0 of 1866);
(c) The Indian Companies Act,
1882 (6 of 1882);
(d) The Indian Companies Act,
1913 (7 of 1913);
(e) The Registration of Transferred
Companies Ordinance, 1942 (54 of 1942); and
40[(f) Any law corresponding to any of the Acts or
the Ordinance aforesaid and in force-
(1) In the merged territories or in a Part B State (other than the
State of Jammu and Kashmir), or any part thereof, before the extension thereto
of the Indian Companies Act, 1913 (7 of 1913); or
(2) In the State of Jammu and
Kashmir, or any part thereof, before the commencement of the Jammu and Kashmir
(Extension of Laws) Act, 1956 41[,
in so far as banking, insurance and financial corporations are concerned, and
before the commencement of the Central Laws (Extension to Jammu & Kashmir)
Act, 1968, in so far as other corporations are concerned];] and
42[(g) The Portuguese Commercial Code 43[* * *] in so far as it relates to
sociedades anonimas";]
(iii) "Private company" means a
company which, by its articles, -
(a) Restricts the right to transfer its
shares, if any;
(b) Limits the number of its members to
fifty not including-
(i) Persons who are in the
employment of the company; and
(ii) Persons who, having been
formerly in the employment of the company, were members of the company while in
that employment and have continued to be members after the employment ceased;
and
40. Substituted by
the J & K (Extension of Laws) Act, 1956.
41. Inserted by
the Central Laws (Extension to J & K) Act, 1968, w.e.f. 15-8-1968.
42. Inserted by
the Goa, Daman & Diu (Laws) No. 2 Regulation, 1963.
43. (Carta Lie of the 11th April, 1901)" omitted by the Repealing and
Amending Act, 1964.
(c) Prohibits any invitation
to the public to subscribe for any shares in, or debentures of, the company:
Provided
that where two or more persons hold one or more shares in a company jointly,
they shall, for the purposes of this definition, be treated as a single member;
(iv) "Public company means a company
which is not a private company.
(2) Unless the context
otherwise requires, the following companies shall not be included within the
scope of any of the expressions defined in clauses (1) to (iv) of sub-section
(1), and such companies shall be deemed, for the purposes of this Act, to have
been formed and registered outside India: -
(a) A company the registered
office whereof is in Burma, Aden or Pakistan and which immediately before the
separation of that country from India was a company as defined in clause (t) of
subsection (1);
(b)
[Omitted by the J & K (Extension of Laws) Act,
1956]
4. Meaning of "holding company"
and "subsidiary". -
(1)
For the purposes of this Act, a
company shall, subject to the provisions of sub-section (3), be deemed to be a
subsidiary of another if, but only if, -
(a) That other controls the
composition of its Board of directors; or
(b) 44 [that other-
(i) Where the
first-mentioned company is an existing company in respect of which the holders
of preference shares issued before the commencement of this Act have the same
voting rights in all respects as the holders of equity shares, exercises or
controls more than half of the total voting power of such company;
(ii) Where the
first-mentioned company is any other company, holds more than half in nominal
value of its equity share capital; or]
(c) The first-mentioned
company is a subsidiary of any company which is that other's subsidiary.
Illustration
Company B is a subsidiary of Company A, and Company C is a subsidiary of Company B. Company C is a subsidiary of Company A, by virtue of clause (c) above. If Company D is a subsidiary of Company C, Company D will be a subsidiary of Company B and consequently also of Company A, by virtue of clause (c) above, and so on.
(2) For the purposes of sub-section (1), the
composition of a company's Board of directors shall be deemed to be controlled
by another company if, but only if, that other company by the exercise of some
power exercisable by it at its discretion without the consent or concurrence of
any other person, can appoint or remove the holders of all or a majority of the
directorships; but for the purposes of this provision that other company shall
be deemed to have power to appoint to a
directorship with respect to which any of the following conditions is
satisfied, that is to say-
44. Substituted
for "that other holds more than half in nominal value of its equity share
capital; or" by the Companies (Amendment) Act, 1960.
(a) That
a person cannot be appointed thereto without the exercise in his favour by that
other company of such a power as aforesaid;
(b) That a person's appointment thereto
follows necessarily from his appointment as director *[, managing agent,
secretaries and treasurers], or manager of, or to any other office or
employment in, that other company; or
(C) 45[that the directorship is held by an
individual nominated by that other company or a subsidiary thereof.]
(3) In determining whether one company is a
subsidiary of another-
(a) Any shares held or power
exercisable by that other company in a fiduciary capacity shall be treated as
not held or exercisable by it;
(b) Subject to the provisions
of clauses (c) and (d), any shares held or power exercisable-
(i) By any person as a
nominee for that other company (except where that other is concerned only in a
fiduciary capacity); or
(ii) By, or by a nominee for,
a subsidiary of that other company, not being a subsidiary which is concerned
only in a fiduciary capacity; shall be treated as held or exercisable by that
other company;
(c) Any shares held or power
exercisable by any person by virtue of the provisions of any debentures of the
first-mentioned company or of a trust deed for securing any issue of such
debentures shall be disregarded;
(d) Any shares held or power
exercisable by, or by a nominee for, that other or its subsidiary [not being
held or exercisable as mentioned in clause (c)] shall be treated as not held or
exercisable by that other, if the ordinary business of that other or its
subsidiary, as the case may be, includes the lending of money and the shares
are held or the power is exercisable as aforesaid by way of security only for
the purposes of a transaction entered into in the ordinary course of that
business.
(4) For the purposes of this Act, a company shall be deemed to be the
holding company of another if, but only if, that other is its subsidiary.
(5) In this section, the expression "company" includes
any body corporate, and the expression "equity share capital' has the same
meaning as in sub-section (2) of section 85.
(6) In the case of a body
corporate which is incorporated in a country outside India, a subsidiary or
holding company of the body corporate under the law of such country shall be
deemed to be a subsidiary or holding company of the body corporate within the
meaning and for the purposes of this Act also, whether the requirements of this
section are fulfilled or not.
45. Substituted
for 'that the director ship is held by
that other company itself for by a subsidiary of it' by the Companies
(Amendment) Act, 1960.
46[(7) A private company,
being a subsidiary of a body corporate incorporated outside India, which, if
incorporated in India, would be a public company within the meaning of this
Act, shall be deemed for the purposes of this Act to be a subsidiary of a
public company if the entire share capital in that private company is not held
by that body corporate whether alone or together with one or more other bodies
corporate incorporated outside India.]
4A. 47 [Public financial institutions. -
(1)
Each of the financial institutions
specified in this sub-section shall be regarded, for the put-poses of this Act,
as a public financial institution, namely: -
(i) The Industrial Credit
and Investment Corporation of India Limited, a company formed and registered
under the Indian Companies Act, 1913 (7 of 1913);
(ii) The Industrial Finance
Corporation of India, established under section 3 of the Industrial Finance
Corporation Act, 1948 (15 of 1948);
(iii) The Industrial
Development Bank of India, established under section 3 of the Industrial
Development Bank of India Act, 1964 (18 of 1964);
(iv) The Life Insurance
Corporation of India, established under section 3 of the Life Insurance
Corporation Act, 1956 (31 of 1956);
(v) The Unit Trust of India,
established under section 3 of the Unit Trust of India Act, 1963 (52 of 1963);
48[(vi) The
Infrastructure Development Finance Company Limited, a company formed and
registered under this Act]
(2) Subject to the provisions of sub-section
(1), the Central Government may, by notification in the Official Gazette,
specify such other institution 4 as it may think fit to be a public financial
institution:
Provided that no institution shall be so specified
unless-
(i) It has been established or constituted
by or under any Central Act, or
(ii) Not less than fifty-one per cent of the
paid-up share capital of such institution is held or controlled by the Central
Government.]
5. 56[Meaning of "officer
who is in default". -For the purpose of any provision in this Act which enacts that an
officer of the company who is in default shall be liable to any punishment or
penalty, whether by wav of imprisonment, fine or otherwise, the expression
"officer who is in default' means all the following officers of the
company, namely: -
(a) The managing director or managing
directors;
(b) The whole-time director or whole-time
directors;
46. Inserted by
the Companies (Amendment) Act, 1960.
47. Inserted by
the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
48. Inserted by
the Companies (Amendment) Act, 1999, w.r.e.f. 31-10-1998.
49. For other
notified public financial institutions, refer Taxmann's Master Guide to
Companies Act.
50. Substituted by
the Companies (Amendment) Act, 1988, w.e.f. 15-7-1988. For text of substituted provision, see Appendix I. Rule 4BB of
General Rules & Forms, 1956, as Inserted by Fourth Amendment Rules, 1988,
w.e.f. 15-7-1988, prescribes Form Nos.
1AA, 1AB and 1AC under this section.
(c) The manager;
(d) The secretary;
(e) Any person in accordance with whose
directions or instructions the Board of directors of the company is accustomed
to act;
51(f) Any
person charged by the Board with the responsibility of complying with that
provision:
Provided
that the person so charged has given his consent in this behalf to the Board;
52(g) Where
any company does not have any of the officers specified in clauses (a) to (c),
any director or directors who may be specified by the Board in this behalf or
where no director is so specified, all the directors:
Provided
that where the Board exercises any, power under clause or clause (g), it shall,
within thirty days of the exercise of such powers, file with the Registrar a
return in the prescribed form 52.]
6. 53[Meaning of "relative". -A person shall be deemed to be a relative of
another, if, and only if, -
(a) They are members of a Hindu undivided
family; or
(b) They are husband and wife; or
(c) The one is related to the other in the
manner indicated in Schedule IA.]
7. Interpretation
of "person in accordance with whose directions or instructions directors
are accustomed to act". - Except where this Act expressly provides otherwise, a person shall
not be deemed to be, within the meaning of any provision in this Act, a person
in accordance with whose directions or instructions the Board of directors of a
company is accustomed to act, by reason only that the Board acts on advice
given by him in a professional capacity.
8. Power
of Central Government to declare an establishment not to be a branch office. -The Central Government may, by order, declare that in the case of any
company, 54[* * *] any establishment
carrying on either the same or substantially the same activity as that carried
on by the head office of the company, or 55[any
establishment engaged in any production, processing or manufacture], shall not
be treated as a branch office of the company for all or any of the purposes of
this Act.
9. Act
to override memorandum, articles, etc. -Save as otherwise expressly provided in the Act-
(a) The provisions of this
Act shall have effect notwithstanding anything to the contrary contained in the
memorandum or articles of a company, or in any agreement executed by it, or in
any resolution passed by the company in general meeting or by its Board of
directors, whether the same be registered, executed or passed, as the case may
be, before or after the commencement of this Act; and
51. See
rule 4BB and Form Nos. I AB and I AC of
General Rules & Forms.
52. See
rule 4BB & Form No. I AA of General Rules & Forms.
53. Substituted
by the Companies (Amendment) Act, 1960.
For the original section, refer Appendix
1.
54. "Not
being a banking or an insurance company,' omitted by the Companies (Amendment)
Act, 1960.
55. Substituted
for 'any production or manufacture", ibid.
(b) Any provision contained
in the memorandum, articles, agreement or resolution aforesaid shall, to the
extent to which it is repugnant to the provisions of this Act, become or be
void, as the case may be.
10. Jurisdiction of Courts. -
(1) The
Court having jurisdiction under this Act shall be-
(a) The High Court having
jurisdiction in relation to the place at which the registered office of the company
concerned is situate, except to the extent to which jurisdiction has been
conferred on any District Court or District Courts subordinate to that High
Court in pursuance of sub-section (2); and
(b) Where jurisdiction has
been so conferred, the District Court in regard to matters falling within the
scope of the jurisdiction conferred, in respect of companies having their
registered offices in the district.
(2) The Central Government
may, by notification in the Official Gazette and subject to such restrictions,
limitations and conditions as it thinks fit, empower any District Court to
exercise all or any of the jurisdiction conferred by this Act upon the Court,
not being the jurisdiction conferred-
(a) In respect of companies generally, by
sections 237, 391, 394, 395 and 397 to 407, both inclusive;
(b) In respect of companies with a paid-up
share capital of not less than one lakh of rupees, by Part VII (sections 425 to
560) and the other provisions of this Act relating to the winding up of
companies.
(3) For the purposes of
jurisdiction to wind up companies, the expression "registered office"
means the place which has longest been the registered office of the company
during the six months immediately preceding the presentation of the petition for
winding up.
10A. Constitution
of Tribunal. -[Omitted by the Companies Tribunal (Abolition) Act,
1967,we.f.1-7-1967 Earlier this section was inserted by the Companies
(Amendment) Act, 1963, w.e.f. 1-1-1964.]
10B. Procedure
of Tribunal. - [Omitted
by the Companies Tribunal (Abolition) Act, 1967,we.1.1-7-1967. Earlier this
section was inserted by the Companies (Amendment) Act, 1963, w.e.f. 1-1-1964.]
10C. Powers of
Tribunal. -[Omitted by the Companies Tribunal (Abolition) Act,
1967, w.e.f. 1.1-7-1967. Earlier this section was inserted by the Companies
(Amendment) Act, 1963, w.e.f. 1-1-1964.]
10D. Appeals
against decisions, etc., of the Tribunal. -[Omitted by the Companies
Tribunal (Abolition) Act, 1967,we.f.1-7-1967 Earlier this section was inserted
by the Companies (Amendment) Act, 1963, w.e.f. 1-1-1964.]
56[PART IA
BOARD OF COMPANY
LAW ADMINISTRATION
10E. Constitution of Board of Company Law Administration. -
57[(1)
As soon as may be after the
commencement of the Companies (Amendment) Act, 1988, the Central Government
shall, by notification in the Official Gazette, constitute a Board to be called
the Board of Company Law Administration.
(1A) The Company Law Board shall
exercise and discharge such powers and functions as may be conferred on it, by
or under this Act or any other law, and shall also exercise and discharge such
other powers and functions of the Central Government under this Act or any
other law as may be conferred on it by the Central Government, by notification
in the Official Gazette under the provisions of this Act or that other law.]
(2) The Company Law Board
shall consist of such number of members, not exceeding 58[nine], as the Central Government deems fit,
to be appointed by that Government by notification in the Official Gazette:
59[Provided
that the Central Government may, by notification in the Official Gazette,
continue the appointment of the chairman or any other member of the Company Law
Board functioning as such immediately before the commencement of the Companies
(Amendment) Act, 1988, as the chairman or any other member of the Company Law
Board, after such commencement for such period not exceeding three years as may
be specified in the notification.]
60 [(2A) The members of the Company Law Board shall
possess such qualifications and experience as may be prescribed .61]
(3) One
of the members shall be appointed by the Central Government to be the chairman
of the Company Law Board.
(4) No act done by the
Company Law Board shall be called in question on the ground only of any defect
in the constitution of, or the existence of any vacancy in, the Company Law
Board.
(4A) [Omitted by the Companies
(Amendment) Act, 1988, w.e.f. 31-5-1991.
For text of omitted sub-section (4A), refer Appendix I.]
56. Inserted by
the Companies (Amendment) Act, 1963, w.e.f. 1- 1 - 1964.
57. Substituted
for sub-section (1) by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
For text of substituted provision, see Appendix I.
58. Substituted
for "five' by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
59. Inserted by
the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
60. Inserted,
ibid, w.e.f. 4-8-1989.
61. The Company
Law Board (Qualifications, Experience and other Conditions of Service of
Members) Rules, 1993 has been notified under this sub-section.
62 [(4B) 63[The
Board] may, by order in writing, form one or more Benches from among its
members and authorise each such Bench to exercise and discharge Such of the
Board's powers and functions as may be specified in the order; and every order
made or act done by a Bench in exercise of such powers or discharge of such
functions shall be deemed to be the order or act, as the case may be, of the
Board.
(4C) Every Bench referred to in sub-section (4B) shall have powers which are vested in a Court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely --
(a) Discovery and inspection
of documents or other material objects producible as evidence;
(b) Enforcing the attendance
of witnesses and requiring the deposit of their expenses;
(c) Compelling the production
of documents or other material objects producible as evidence and impounding
the same;
(d) Examining witnesses on
oath;
(e) Granting adjournments;
(f) Reception of evidence on
affidavits.
(4D) Every Bench shall be deemed
to be a civil court for the purposes of section 19564
and 65[Chapter, XXVI of the Code
of Criminal Procedure, 1973 (2 of 1974)], and every proceeding before the Bench
shall be deemed to be a judicial proceeding within the meaning of sections 193 64 and 22864
of the Indian Penal Code (45 of 1860), and for the purpose of section 196 64 of
that Code.]
66[(5)
Without prejudice to the provisions of
sub-sections (4C) and (4D), the Company Law Board shall in the exercise of its
powers and the discharge of its functions under this Act or any other law be
guided by the principles of natural justice and shall act in its discretion.]
(6) Subject to the foregoing provisions of this section, the Company Law Board shall have power to regulate its own procedure .67]
10F. 68[Appeals against the orders of the Company Law
Board. -Any
person aggrieved by any decision or order of the Company Law Board may file an
appeal to the High Court within sixty days from the date of communication of
the decision or order of the Company Law Board to him on any question of law
arising out of such order:
62. Inserted by
the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
63. Substituted
for "Without prejudice to the provisions of sub-section (4A), the Board,
with the previous approval of the Central Government" by the Companies
(Amendment) Act, 1988, w.e.f. 31-5-1991.
64. For relevant
sections of both the Codes referred to in the sub-section, refer Appendix II.
65. Substituted
for "Chapter XXXV of the Code of Criminal Procedure, 1898 (5 of
1898)" by the Companies (Amendment) Act, 1977.
66. Substituted
by, the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991. For text of substituted sub-sections (5) and
(6), refer Appendix 1.
67. See the
companies Law Board Regulation, 1991 and the Company Law Board (Fees on
Applications and Petitions) Rules, 1991.
68. Inserted by
the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
Provided that
the High Court may, if it is satisfied that the appellant was prevented by
sufficient cause from filing the appeal within the said period, allow it to be
filed within a further period not exceeding sixty days.]
PART
II
INCORPORATION
OF COMPANY AND MATTERS
INCIDENTAL
THERETO
Certain
companies, associations and partnerships to
be
registered as companies under Act
11. Prohibition of associations and partnerships exceeding certain number. -
(1) No company, association or partnership consisting of more than
ten persons shall be formed for the purpose of carrying on the business of
banking, unless it is registered as a company under this Act, or is formed in
pursuance of some other Indian law.
(2) No company, association
or partnership consisting of more than twenty persons shall be formed for the
purpose of carrying on any other business that has for its object the
acquisition of gain by the company, association or partnership, or by the
individual members thereof, unless it is registered as a company under this
Act, or is formed in pursuance of some other Indian law.
(3) This section shall not
apply to a joint family as such carrying on a business; and where a business is
carried on by two or more joint families, in computing the number of persons
for the purposes of subsections (1) and (2), minor members of such families
shall be excluded.
(4) Every member of a company, association or partnership carrying
on business in contravention of this section shall be personally liable for all
liabilities incurred in such business.
(5) Every person who is a
member of a company, association or partnership formed in contravention of this
section shall be punishable with fine, which may extend to one thousand rupees.
Memorandum of
association
12. Mode of forming
incorporated company. -
(1) Any seven or more
persons, or where the company to be formed will be a private company, any two
or more persons, associated for an lawful purpose may, by subscribing their
names to a memorandum of association and otherwise complying with the
requirements of this Act in respect of registration, form an incorporated
company, with or without limited liability.
(2) Such a company may be either-
(a) A company having the
liability of its members limited by the memorandum to the amount, if any,
unpaid on the shares respectively held by them (in this Act termed "a
company limited by shares");
(b) A company having the
liability of its members limited by the memorandum to such amount as the
members may respectively undertake by the memorandum to contribute to the
assets of the company in the event of its being wound up (in this Act termed
"a company limited by guarantee"); or
(c) A company not having any
limit on the liability of its members (in this Act termed "an unlimited
company').
13. Requirements with respect to memorandum. -
(1)
The memorandum of every company
shall state-
(a) The name of the company
with "Limited' as the last word of the name in the case of a public
limited company, and with "Private Limited" as the last words of the
name in the case of a private limited company;
(b) The State in which the
registered office of the company is to be situate; 69[***]
70[(c) In the case of a company in existence
immediately before the commencement of the Companies (Amendment) Act, 1965, the
objects of the company;
(d) In the case of a company formed after
such commencement, -
(i) The main objects of the
company to be pursued by the company on its incorporation and objects
incidental or ancillary to the attainment of the main objects;
(ii)
Other objects of the company not
included in sub-clause (i); and
(e) In the case of companies (other than
trading corporations), with objects not confined to one State, the States to
whose territories the objects extend.]
(2) The memorandum of a
company limited by shares or by guarantee shall also state that the liability
of its members is limited.
(3) The memorandum of a
company limited by guarantee shall also state that each member undertakes to
contribute to the assets of the company in the event of its being wound up while
he is a member or within one year after he ceases to be a member, for payment
of the debts and liabilities of the company, or of such debts and liabilities
of the company as may have been contracted before he ceases to be a member, as
the case may be, and of the costs, charges and expenses of winding up, and for
adjustment of the rights of the contributories among themselves, such amount as
may be required, not exceeding a specified amount.
(4) In the case of a company
having a share capital-
(a) Unless the company is an
unlimited company, the memorandum shall also state the amount of share capital
with which the company is to be registered and the division thereof into shares
of a fixed amount;
(b) No subscriber of the
memorandum shall take less than one share; and
(c) Each subscriber of the
memorandum shall write opposite to his name the number of shares he takes.
14. Form
of memorandum. -The
memorandum of association of a company shall be in such one of the Forms in
Tables B, C, D and E in Schedule I as may be applicable to the case of the
company, or in a Form as near thereto as circumstances admit.
69. "And
omitted by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
70. Substituted
for clause (c), ibid. For the original
clause, refer Appendix I.
7115. Printing
and signature of memorandum. -The
memorandum shall-
(a) Be printed,
(b) Be divided into paragraphs numbered
consecutively, and
(c) Be signed by each
subscriber (who shall add his address, description and occupation, if any), in
the presence of at least one witness who shall attest the signature and shall
likewise add his address, description and occupation, if any.
15A. 72[Special provision as to alteration of memorandum
consequent on alteration of name of State of Madras. -Where, in the memorandum of association of a company
in existence immediately before the commencement of the Madras State
(Alteration of Name) Act, 1968 (53 of 1968), it is stated that Madras is the
State in which the registered office of that company is situate, then,
notwithstanding anything contained in this Act, the said memorandum shall, as
from such commencement, be deemed to have been altered by substitution of a
reference to the State of Tamil Nadu for the reference to the State of Madras,
and the registrar of the State of Tamil Nadu shall make necessary alterations
in the memorandum of association and the certificate of incorporation of the
said company.]
15B. 73[Special provision as to alteration of memorandum
consequent on alteration of name of State of Mysore. -Where, in the memorandum of association of a
company in existence immediately before the commencement of the Mysore State
(Alteration of Name) Act, 1973 (31 of 1973), it is stated that Mysore is the
State in which the registered office of that company is situate, then,
notwithstanding anything contained in this Act, the said memorandum shall, as
from such commencement, be deemed to have been altered by substitution of a
reference to the State of Karnataka for the reference to the State of Mysore,
and the Registrar of the State of Karnataka shall make necessary alterations in
the memorandum of association and the certificate of incorporation of the said
company.]
16. Alteration
of memorandum. -
(1) A company shall not alter
the conditions contained in its memorandum except in the cases, in the mode,
and to the extent, for which express provision is made in this Act.
(2) Only those provisions
which are required by section 13 or by any other specific provision contained
in this Act, to be stated in the memorandum of the company concerned shall be
deemed to be conditions contained in its memorandum. (3) Other provisions
contained in the memorandum, including those relating to the appointment of a
managing director *[, managing agent, secretaries and treasurers] or manager,
may be altered in the same manner as the articles of the company, but if there
is any express provision in this Act permitting of the alteration of such
provisions in any other manner, they may also be altered in such other manner.
71. For
clarifications on this section, refer Taxmann's Master Guide to Companies Act.
72. Inserted by
the Madras State (Alteration of Name) (Adaptation of Law son Union Subjects)
Order, 1970, w.r.e.f. 14-1-1969.
73. Inserted by
the Mysore State (Alteration of Name) (Adaptation of Lawson Union Subjects)
Order, 1974, w.r.e.f. 1- 11- 1973.
(4) All references to the articles of a
company in this Act shall be construed as including references to the other
provisions aforesaid contained in its memorandum.
(1) A company may, by special
resolution, alter the provisions of its memorandum so as to change the place of
its registered of office from one State to another, or with respect to the
objects of the company so far as may be required to enable it-
(a) To carry on its business
more economically or more efficiently;
(b) To attain its main
purpose by new or improved means;
(c) To enlarge or change the
local area of its operations;
(d) To carry on some business
which under existing circumstances may conveniently or advantageously be
combined with the business of the company;
(e) To restrict or abandon
any of the objects specified in the memorandum;
(f) To sell or dispose of
the whole, or any part, of the undertaking, or of and of the undertakings, of.'
the company; or
(g) To amalgamate with any other company or
body of persons.
75[(2) 76The
alteration of the provisions of memorandum relating to the change of the place
of its registered office from one State to another shall not take effect unless
it is confirmed by the Company Law Board on petition.]
(3) Before confirming the
alteration, the 74[Company
Law Board] must be satisfied-
(a) That sufficient notice
has been given to every holder of the debentures of the company, and to every
other person or class of persons whose interests will, in the opinion of the 74 [Company Law Board], be affected by the
alteration; and
(b) That, with respect to
every creditor who, in the opinion of the 74[Company
Law Board], is entitled to object to the alteration, and who signifies his
objection in the manner directed by the 74[Company
Law, Board], either his consent to the alteration has been obtained or his debt
or- claim has been discharged or has determined, or has been secured to the
satisfaction of the 74[Company
Law Board]:
74. Substituted
for Court by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
75. Substituted by the Companies (Amendment) Act,
1996, w.e.f. 1-3-1997. Prior to its
Substitution, sub-section (2), as amended by the Companies (Amendment) Act,
1974, w.e.f. 1-2-1975, read as under:
"(2) The alteration shall not take effect until, and
except, in so I ar as, it is confirmed by the Company Law Board of petition.'
76. Prescribed
fees is Rs. 500.
Provided that the 77Company
Law Board] may, in the case of any person or class of persons, for special
reasons, dispense with the notice required by clause (a).
78[(4) The 77[Company Law Board] shall cause notice of the
petition for confirmation of the alteration to be served on the Registrar who
shall also be given a reasonable opportunity to appear before the 77[Company Law Board] and state his objections
and suggestions, if any, with respect to the confirmation of the alteration.]
(5) The 77[Company Law Board] may make an order confirming the alteration 79[***] on such terms and conditions, if any, as it thinks fit, and may make such order as to costs as it thinks proper.
(6) The 77[Company Law Board] shall, in exercising its
powers under this section, have regard to the rights and interests of the
members of the company and of every class of them, as well as to the rights and
interests of the creditors of the company and of every class of thein.
(7) The 77[Company Law Board] may, if it thinks fit,
adjourn the proceedings in order that an arrangement may be made to the
satisfaction of the 77[Company
Law Board] for the purchase of the interests of dissentient members; and may
give such directions and make such orders as it thinks fit for facilitating, or
carrying into effect, any such arrangement:
Provided that no part of the capital of the company
may, be expended in and such purchase.
18. Alteration to be registered within three months. -
80[(1) A company shall file with the Registrar-
(a) A special resolution
passed by a company in relation to clauses (a) to (g) of subsection (1) of
section 17, within one month from the date of such resolution; or
(b) A certified copy of the
order of the Company Law Board made under sub-section (5) of that section
confirming the alteration, within three months from the date of order,
As
the case may be, together with a printed copy of the memorandum as altered and
the Registrar shall register the same and certify the registration under- his
hand within one month from the date of filing of such documents.]
(2) The certificate shall be
conclusive evidence that all the requirements of this Act with respect to the
alteration and the confirmation thereof' have been complied with, and
thenceforth the memorandum as so altered shall be the memorandum of the
company.
77. Substituted
for' Court" by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975,
78. Substituted by
the Companies (Amendment) Act, 1960.
For the original sub-section, refer Appendix
I.
79. Words 'either
wholly or in part, and' omitted by the Companies (Amendment) Act, 1996, w.e.f.
1-3-1997.
80. Substituted,
ibid. Prior to its substitution,
sub-section (1), as substituted by the Companies (Amendment) Act, 1960 and
later amended by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975, read as
under:
(1) A certified
copy of the order of the Company Law Board made, under sub-section (5) of
section 17 confirming the alteration, together with a printed copy of the
memorandum as altered, shall, within three months from the date of the order,
be filed by the company with the Registrar- who shall register the same and
certify the registration under his hand within one month from the date of the
filing of such documents.'
FOF the original sub-section, refer Appendix I.
(3)
Where the alteration involves a transfer of the
registered office from one State to another, a certified copy of the order
confirming the alteration shall be filed by the company with the Registrar of
each of the States, and the Registrar of each such State shall register the
same, and shall certify under his hand the registration thereof; and the
Registrar of the State from which such office is transferred shall send to the Registrar
of the other State all documents relating to the company registered, recorded
or filed in his office.
(4) The 81[Company
Law Board] may, at any time, by order, extend the time for the filing of
documents 82[or
for the registration of the alteration] under this section by such period as it
thinks proper.83
19. Effect of failure to register. -
(1) No such alteration as is referred to in section 17 shall have
any effect until it has been duly registered in accordance with the provisions
of section 18.
84[(2) If the documents required Lo be filed with
the Registrar under section 18 are not filed within the time allowed under that
section, such alteration and the order of the 85[Company
Law Board] made under sub-section (5) of section 17 and all proceedings
connected therewith, shall, at the expiry of such period, become void and
inoperative:
Provided that the 85[Company
Law Board] may, on sufficient cause shown, revive the order on application made
within a further period of one month.]
Provisions with respect to names of companies
8620. Companies not to be registered with undesirable names. -
(1) No Company shall be registered by a name, which, in the opinion
of the Central Government, is undesirable.
86a[(2) Without
prejudice to the generality of the foregoing power, a name which is identical
with, or too nearly resembles, -
(i) The name by which a
company in existence has been previously registered, or
(ii) A registered trade mark
or a trade mark which is subject of an application for registration, of any
other person under the Trade Marks Act, 1999,
May
be deemed to be undesirable by the Central Government within the meaning of
sub-section (1).
(3) The Central Government
may, before denying a name as undesirable under clause (ii) of sub-section (2),
consult the Registrar of Trade Marks.]
81. Substituted
for 'Court' by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
82. Inserted by
the Companies (Amendment) Act, 1960.
83. Prescribed
fees is Rs. 100.
84. Substituted by
the Companies (Amendment) Act, 1960.
For the original sub-section refer Appendix
I.
85. Substituted
for 'Court" by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
86. For
clarification on this section refer Taxmann Master Guide to Companies Act.
86a. Sub-sections (2) and (3) substituted for
sub-section (2) by the Trade Marks Act, 1999.
Prior to its substitution, sub-section (2) read as under:
(2) Without
prejudice to the generality of the foregoing power, a name which is identical
with, or too nearly resembles, the name by which a company in existence has
been previously registered, mav be deemed to be undesirable by the Central
Government within the meaning of sub-section (1)."
21. Change of name by company87. -A company may, by special
resolution and with the approval of the Central Government" signified in
writing, change its name:
89[Provided that no such approval shall be
required where the only change in the name of a company is the addition thereto
or, as the case may be, the deletion therefrom, of the word "Private',
consequent on the conversion in accordance with the provisions of this Act of a
public company into a private company or of a private company into a public
company].
22. Rectification
of name of company. -
(1) 90[If,
through inadvertence or otherwise, a company on its first registration or on
its registration by a new name, is registered by a name which, -
(i) In the opinion of the
Central Government, is identical with, or too nearly resembles, the name by
which a company in existence has been previously registered, whether under this
Act or any previous companies law, the first-mentioned company, or
(ii) On an application by a
registered proprietor of a trade mark, is in the opinion of the Central
Government identical with, or too nearly resembles, a registered trade mark of
such proprietor under the Trade Marks Act, 1999, such company, -]
(a) May, by ordinary
resolution and with the previous approval of the Central Government signified
in writing, change its name or new name; and
(b) Shall, if the Central
Government so directs within twelve months of its first registration or
registration by its new name, as the case may be, or within twelve months of
the commencement of this Act, whichever is later, by ordinary resolution and
with the previous approval of the Central Government signified in writing,
change its name or new name within a period of three months from the date of
the direction or such longer period as the Central Government may think fit to
allow:
90a[Provided that no application under clause
(ii) made by a registered proprietor of a trade mark after live years of coming
to notice of registration of the company shall be considered by the Central
Government.]
(2) If a company makes
default in complying with any direction given under clause (b) of sub-section
(1), the company, and every officer who is in default, shall be punishable with
fine which may extend to one hundred rupees for every day during which the
default continues.
87. Vide rule 4A
of the Companies (Central Government's) General Rules & Forms, 1956, Form
No. IA & Fees of Rs. 500 has been prescribed.
88. Powers are
delegated to Registrar of Companies.
89. Inserted by
the Companies (Amendment) Act, 1965, w.e.f 15-10-1965.
90. Substituted
for the portion beginning with 'If, through' and ending with 'the first
mentioned company by the Trade Marks Act, 1999. Prior to its substitution the quoted portion read as under:
If, through inadvertence or otherwise, a company on its first
registration or on its registration by a new name, is registered by a name
which, in the opinion of the Central Government, is identical with, or too
nearly resembles, the name by which a company in existence has been previously
registered, whether under this Act or any previous companies law, the
first-mentioned company-"
90a. Inserted by the
Trade Marks Act, 1999.
23. Registration of chance of name and effect thereof. -
(1) Where a company, changes its name in Pursuance of section 21 or
22, the Registrar shall enter the new name on the register in the place of the
former name, and shall issue a fresh certificate of incorporation with the
necessary alterations embodied therein; and the change of name shall be
complete and effective only on the issue of such a certificate.
(2) The Register shall also
make the necessary alteration in the memorandum of association of the company.
(3) The change of name shall
not affect any rights or obligations of the company, or render defective any
legal proceedings by or against it; and any legal proceedings which might have
been continued or commenced by or against the company by its former name may be
continued by or against the company by its new name.
24. Change of name of existing private limited companies. -
(1) In
the case of a company which was a private limited company immediately before
the commencement of this Act, the Registrar shall enter the word 'Private'
before the word "Limited' in the name of the company upon the register and
shall also make the necessary alterations in the certificate of incorporation
issued to the company and in its memorandum of association. (2) Sub-section (3)
of section 23 shall apply to a change of name under sub-section (1), as it
applies to a change of name under section 21.
25. Power to dispense with
"Limited" in name of charitable or other company*. -
(1) Where it is proved to the satisfaction of the Central
Government 91
that an association-
(a) Is about to be formed as
a limited company for promoting commerce, art, science, religion, charity or
any other useful object, and
(b) Intends to apply its
profits, if any, or other income in promoting its objects, and to prohibit the
payment of any dividend to its members,
The
Central Government may, by licence, direct that the association may be
registered as a company with limited liability, without the addition to its
name of the word limited or the words "Private Limited'.
(2) The association may
thereupon be registered accordingly; and on registration shall enjoy all the
privileges, and (subject to the provisions of this section) be subject to all
the obligations, of limited companies.
(3) Where it is proved to the
satisfaction of the Central Government-
(a) That the objects of a
company registered under this Act as a limited company are restricted to those
specified in clause (a) of sub-section (1), and
(b) That by its constitution
the company is required to apply its profits, if any, or other income in
promoting its objects and is prohibited from paying any dividend to its members,
The
Central Government mav, by licence, authorise the company by a special
resolution to change its name, including or consisting of the emission of the
word "Limited" or the words "Private Limited'; and section 23
shall apply to a change of name under this sub-section as it applies to a
change of name under section 21.
(4) A firm may be a member of
any association or company licensed under this section, but on the dissolution
of the firm, its membership of the association or company shall cease.
91. Powers are now
delegated to Regional Directors.
* See also Companies (Fees on Applications)
Rules, 1999.
(5) A licence may be granted by the Central Government under this
section on such conditions and subject to such regulations 92 as it thinks fit, and those conditions and
regulations shall be binding on the body to which the licence is granted, and
where the grant is under sub-section (1), shall, if the Central Government so
directs be inserted in the memorandum, or in the articles, or partly in the one
and partly in the other.
93[(6) It shall not be necessary for a body to
which a licence is so granted to use the word "Limited" or the words
"Private Limited" as any part of its name and, unless its articles
otherwise provide, such body shall, if the Central Government by general or
special order so directs and to the extent specified in the directions, be
exempt from such of the provisions of this Act as may be specified therein.]
(7) The licence may at any
time be revoked by the Central Government, and upon revocation, the Registrar
shall enter the word 'Limited" or the words "Private Limited' at the
end of the name upon the register of the body to which it was granted; and the
body shall cease to enjoy the exemption granted by this section:
Provided that, before a licence is so revoked, the
Central Government shall give notice in writing of its intention to the body,
and shall afford it an opportunity of being heard in opposition to the
revocation.
94[(8) (a) A
body in respect of which a licence under this section is in force shall not
alter the provisions of its memorandum with respect to its objects except with
the previous approval of the Central Government signified in writing.
(b) The Central Government
mav revoke the licence of such a body if it contravenes the provisions of
clause (a).
(c)
In according the approval referred to in clause (a),
the Central Government may vary the licence by making it subject to such
conditions and regulations 95
as that Government thinks fit, in lieu of, or in addition to, the conditions
and regulations, if any, to which the licence was formerly subjects
(d)
Where the alteration proposed in the provisions of
the memorandum of a body under this sub-section is with respect to the objects
of the body so far as may be required to enable it to do any of the things
specified in clauses (a) to (g) of sub-section (1) of section 17, the
provisions of this sub-section shall be in addition to, and not in derogation
of, the provisions of that section.]
(9) Upon the revocation of a
licence granted under this section to a body the name of which contains the
words 'Chamber of Commerce', that body shall, within a period of three months
from the date of revocation or such longer period as the Central Government may
think fit to allow, change its name to a name which does not contain those
words; and-
(a) The notice to be given
under the proviso to sub-section (7) to that body shall include a statement of
the effect of the foregoing provisions of this sub-section; and
(b) Section 23 shall apply to
a change of name under this sub-section as it applies to a change of name under
section 21.
(10) If the body makes default
in complying with the requirements of sub-section (9), it shall be punishable
with fine which may extend to five hundred rupees for every day during which
the default continues.
92. Refer
Companies Regulations, 1956.
93. Substituted by
the Companies (Amendment) Act, 1960.
For the original sub-section, refer Appendix 1.
94. Substituted,
ibid.
95 Refer
Companies Regulations 1956.
Articles of
association
26. Articles prescribing regulations. -There may in the case of a public company limited by shares, and there shall in
the case of an unlimited company or a company limited by guarantee or a private
company limited by shares, be registered with the memorandum, articles of
association signed by the subscribers of the memorandum, prescribing
regulations for the company.
(1) In the case of an unlimited company, the articles shall state
the number of embers with which the company is to be registered and, if the
company has a share capital, the amount of share capital with which the company
is to be registered.
(2) In the case of a company limited by guarantee, the articles shall state the number of members with which the company is to be registered.
(3) In the case of a private company having a share capital, the articles shall contain provisions relating to the matters specified in sub-clauses (a), (b) and (c) of clause (iii) of sub-section (1) of section 3; and in the case of any other private company, the articles shall contain provisions relating to the matters specified in the said sub-clauses (b) and (c).
28. Adoption
and application of Table A in the case of companies limited by shares. -
(1) The articles of
association of a company limited by shares may adopt all or any of the
regulations contained in Table A in Schedule I.
(2) In the case of any such
company which is registered after the commencement of this Act if articles are
not registered, or if articles are registered, in so far as the articles do not
exclude or modify the regulations contained in Table A aforesaid, those
regulations shall, so far as applicable, be the regulations of the company in
the same manner and to the same extent as if they were contained in duly
registered articles.
29. Form
of articles in the case of other companies. -The
articles of association of any company, not being a company limited by shares,
shall be in such one of the Forms in Tables C, D and E in Schedule I as may be
applicable, or in a Form as near thereto as circumstances admit:
96[Provided that nothing in this section shall
be deemed to prevent a company from including any additional matters in its
articles in so far as they are not inconsistent with the provisions contained
in the Form in any of the Tables C, D and E, adopted by the company.]
30. Form
and signature of articles. -Articles shall-
(a) Be printed;
(b) Be divided into
paragraphs numbered consecutively; and
(c) Be signed by each
subscriber of the memorandum of association (who shall add his address,
description and occupation, if any,) in the presence of at least one witness
who shall attest the signature and shall likewise add his address, description
and occupation, if any.
9731. Alteration of articles by special resolution. -
(1) Subject to the provisions of this Act and to the conditions
contained in its memorandum, a company may, by special resolution, alter its
articles:
96. Inserted by the Companies (Amendment)
Act, 1960.
97. For
clarification on this section, refer Appendix
I.
98[Provided that no alteration made in the
articles under this sub-section which has the effect of converting a public
company into a private company, shall have effect unless such alteration has
been approved by the Central Government.99]
(2) Any alteration so made shall, subject to the provisions of this
Act, be as valid as if originally contained in the articles and be subject in
like manner to alteration by special resolution.
98[(2A) Where any alteration such as is referred to
in the proviso to sub-section (1) has been approved by the Central Government,
a printed copy of the articles as altered shall be filed by the company with
the Registrar within one month of the date of receipt of the order of
approval.]
(3) The power of altering articles under this section shall, in the
case of any company formed and registered under Act No. 19 of 1857 and Act No.
7 of 1860 or either of them, extend to altering any provisions in Table B
annexed to Act 19 of t857, and shall also, in the case of an unlimited company
formed and registered under the said Acts or either of them, extend to altering
any regulations relating to the amount of capital or its distribution into
shares, notwithstanding that those regulations are contained in the memorandum.
Change of
registration of companies
32. Registration of unlimited company as limited,
etc. -
(1) Subject to the provisions
of this section, -
(a) A company registered as
unlimited may register under this Act as a limited company; and
(b) A company already
registered as a limited company may re-register under this Act.
(2) On registration in
pursuance of this section, the Registrar shall close the former registration of
the company, and may dispense with the delivery to him of copies of any
documents with copies of which lie was furnished on the occasion of the
original registration of the company; but, save as aforesaid, the registration
shall take place in the same manner and shall have effect, as if it were the
first registration of the company under this Act.
(3) The registration of an
unlimited company as a limited company under this section shall not affect any
debts, liabilities, obligations or contracts incurred or entered into, by, to,
with or on behalf of, the company before the registration, and those debts,
liabilities, obligations and contracts may be enforced in the manner provided
by Part IX of this Act in the case of a company registered in pursuance of that
Part.
General
provisions with respect to memorandum
And articles
33. Registration of memorandum and articles. -
(1) There shall be presented for registration, to the Registrar of
the State in which the registered office of the company is stated by the
memorandum to be situate-
98. Inserted by
the Companies (Amendment) Act, 1960.
99. Powers are now
delegated to Registrar of Companies.
(a) The memorandum of the
company;
(b) Its articles, if any;
and
1[(c) The agreement, if any, which the company
proposes to enter into with any individual for appointment as its managing or
whole time director or manager.]
(2) A declaration 2 by an advocate of the Supreme Court or of a
High Court, an attorney or a pleader entitled to appear before a High Court, or
3[a secretary, or a
chartered accountant, in whole-time practice in India], who is engaged in the
formation of a company, or by a person named in the articles as a director 4[* * *], manager or secretary of the company,
that all the requirements of this Act and the rules thereunder have been
complied with in respect of registration and matters precedent and incidental
thereto, shall be filed with the Registrar; and the Registrar may accept such a
declaration as sufficient evidence of such compliance.
5[Explanation:
For the purposes of this sub-section, "chartered accountant in whole-time
practice in India" means a chartered accountant within the meaning of clause
(b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38
of 1949) 6, who is practising
in India and who is not in full-time employment.]
(3) If the Registrar is satisfied that all the requirements
aforesaid have been complied with by the company and that it is authorised to
be registered under this Act, he shall retain and register the memorandum, the
articles, if any, and the agreement referred to in clause (c) of sub-section
(1), if any.
34. Effect of registration. -
(1) On the registration of the memorandum of a company, the
Registrar shall certify under his hand that the company is incorporated and, in
the case of a limited company, that the company is limited.
(2) From the date of
incorporation mentioned in the certificate of incorporation, such of the
subscribers of the memorandum and other persons, as may from time to time be
members of the company, shall be a body corporate by the name contained in the
memorandum, capable forthwith of exercising all the functions of an
incorporated company, and having perpetual succession and a common seal, but
with such liability on the part of the members to contribute to the assets of
the company in the event of its being wound up as is mentioned in this Act.
1. Substituted
by the Companies (Amendment) Act, 1988, w.e.f. 15-6-1988. For clause (c) as it stood prior, to its
substitution, refer Appendix I.
2. See Form No.
I of General Rules & Forms.
3. Substituted
for "a chartered accountant practising in India' by the Companies (Amendment)
Act, 1988, w.e.f. 15-6-1988.
4. "Managing
agent, secretaries and treasurers" omitted, ibid.
5. Inserted,
ibid.
6. See Appendix II.
35. Conclusiveness
of certificate of incorporation. -A certificate of incorporation given by the
Registrar in respect of any association shall be conclusive evidence that all
the requirements of this Act have been complied with in respect of registration
and matters precedent and incidental thereto, and that the association is a
company authorised to be registered and duly registered under this Act.
36. Effect of memorandum and articles. -
(1)
Subject to the provisions of this
Act, the memorandum and articles shall, when registered, bind the company and
the members thereof to the same extent as if they respectively had been signed
by the company and by each member, and contained covenants on its and his part
to observe all the provisions of the memorandum and of the articles. (2) All
money payable by any member to the company under the memorandum or articles shall
be a debt due from him to the company.
37. Provision as to companies limited by guarantee. -
(1)
In the case of a company limited by
guarantee and not having a share capital, and registered on or after the first
day of April, 1914, every provision in the memorandum or articles or in any
resolution of the company purporting to give any person a right to participate
in the divisible profits of the company otherwise than as a member shall be
void. (2) For the purpose of the provisions of this Act relating to the
memorandum of a company limited by guarantee and of this section, every
provision in the memorandum or articles, or in any resolution, of any company
limited by guarantee and registered on or after the first day of April, 1914,
purporting to divide the undertaking of the company into shares or interests,
shall be treated as a provision for a share capital, notwithstanding that the
nominal amount or number of the shares or interests is not specified thereby.
38. Effect of alteration in memorandum or articles. -Notwithstanding anything in the memorandum or
articles of a company, no member of the company shall be bound by an alteration
made in the memorandum or articles after the date on which he became a member,
if and so far as the alteration requires him to take or subscribe for more
shares than the number held by him at the date on which the alteration is made,
or in any way increases his liability as at that date, to contribute to the
share capital of, or otherwise to pay money to, the company:
7[Provided that
this section shall not apply-
(a) In any case where the
member agrees in writing either before or after a particular alteration is
made, to be bound by the alteration; or
(b) In any case where the
company is a club or the company is any other association and the alteration
requires the member to pay recurring or periodical subscriptions or charges at
a higher rate although he does not agree in writing to be bound by the
alteration.]
7. Substituted
by the Companies (Amendment) Act, 1960.
For the original proviso, refer Appendix
I.
39. Copies of
memorandum and articles, etc., to be given to members. -
(1)
A company shall, on being so
required by a member, send to him within seven days of the requirement and
subject to the payment of a fee of one rupee, a copy each of the following
documents as in force for the time being-
(a) The memorandum;
(b) The articles, if any;
(c) * [The agreement, if any,
entered into or proposed to be entered into by the company with any person
appointed or to be appointed as its managing agent or as its secretaries and
treasurers; and]
(d) Every other agreement and
every resolution referred to in section 192, if and in so far as they have not
been embodied in the memorandum or articles.
(2) If a company makes
default in complying with the requirements of this section, the company, and
every officer of the company who is in default, shall be punishable, for each
offence, with fine which may extend to fifty rupees.
40.
Alteration of memorandum or articles, etc., to be noted in every copy. -
(1) Where an alteration is made in the memorandum or articles of a
company, *[in the agreement referred to in clause (c) of sub-section (1) of
section 39] or in any other agreement, or any resolution, referred to in
section 192, every copy of the memorandum, articles, agreement or resolution
issued after the date of the alteration shall be in accordance with the
alteration.
(2) If, at any time, the
company issues any copies of the memorandum, articles, resolution or agreement,
which are not in accordance with the alteration or alterations made therein
before that time, the company, and every officer of the company who is in
default, shall be punishable with fine which may extend to ten rupees for each
copy so issued.
Membership of
company
841. Definition of "member". -
(1) The subscribers of the
memorandum of a company shall be deemed to have agreed to become members of the
company, and on its registration, shall be entered as members in its register
of members.
(2) Every other person who 9[agrees in writing] to become a member of a
company and whose name is entered in its register of members, shall be a member
of the company.
10[(3) Every person holding equity share capital
of company and whose name is entered as beneficial owner in the records of the
depository shall be deemed to be a member of the concerned company.]
42. Membership of holding
company. -
(1) Except in the cases mentioned in this section, a body corporate
cannot be a member of a company which is its holding company and any allotment
or transfer of shares in a company to its subsidiary shall be void.
8. For
clarification oil this section, refer Taxmann's Master Guide lo Companies Act.
9. Substituted
for "agrees" by the Companies (Amendment) Act, 1960.
10. Inserted by
the Depositories Act, 1996, w.r.e.f. 20-9-1995.
(2) Nothing in this section shall apply-
(a) Where the subsidiary is
concerned as the legal representative of a deceased member of the holding
company; or
(b) Where the subsidiary is
concerned as trustee, unless the holding company or a subsidiary thereof is
beneficially interested under the trust and is not so interested only by way of
security for the purposes of a transaction entered into by it in the ordinary
course of a business which includes the lending of money.
(3)
This section shall not prevent a subsidiary from
continuing to be a member of its holding company if it was a member thereof
either at the commencement of this Act or before becoming a subsidiary of the
holding company, but except in the cases referred to in sub-section (2), the
subsidiary shall have no right to vote at meetings of the holding company or of
any class of members thereof.
(4) Subject to sub-section
(2), sub-sections (1) and (3) shall apply in relation to a nominee for a body
corporate which is a subsidiary, as if references in the said sub-sections (1)
and (3) to such a body corporate included references to a nominee for it.
(5) In relation to a holding
company which is either a company limited by guarantee or an unlimited company,
the reference in this section to shares shall, whether or not the company has a
share capital, be construed as including a reference to the interest of its
members as such, whatever the form of that interest.
Private
companies
43. Consequences of default in complying with conditions
constituting a company a private company. -Where the articles of a company include the
provisions which, under clause (iii) of sub-section (1) of section 3, are
required to be included in the articles of a company in order to constitute it
a private company, but default is made in complying with any of those
provisions, the company shall cease to be entitled to the privileges and
exemptions conferred on private companies by or under this Act, and this Act
shall apply to the company as if it were not a private company:
Provided that the 11[Company
Law Board], on being satisfied that the failure to comply with the conditions
was accidental or due to inadvertence or to some other sufficient cause, or
that on other grounds it is just and equitable to grant relief, may, on the
application12
of the company or any other person interested and on such terms and conditions
as seem to the 11[Company
Law Board] just and expedient, order that the company be relieved from such
consequences as aforesaid.
11. Substituted for
"Court' by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
12. Prescribed
fees is Rs. 200.
1443A. 13[Private company to become public company in certain
cases. -
(1) Save as otherwise provided in this
section, where not less than twenty-five per cent of the paid-up share capital
of a private company having a share capital is held by one or more bodies
corporate, the private company shall, -
(a) On and from the date on
which the aforesaid percentage is first held by such body or bodies corporate,
or
(b) Where the aforesaid
percentage has been first so held before the commencement of the Companies
(Amendment) Act, 1960, on and from the expiry of the period of three months
from the date of such commencement unless within that period the aforesaid
percentage is reduced below twenty-five per cent of the paid-up share capital
of the private company,
Become
by virtue of this section a public company:
Provided that even after the private company has so
become a public company, its articles of association may include provisions
relating to the matters specified in clause (iii) of sub-section (1) of section
3 and the number of its members may be, or may at any time be reduced, below
seven:
Provided further that in computing the aforesaid percentage,
account shall not be taken of any share in the private company held by a
banking company if, but only if, the following conditions are satisfied in
respect of such share, namely: -
(a) That the share-
(i) Forms part of the
subject-matter of a trust,
(ii) Has not been set apart
for the benefit of any body corporate, and
(iii) Is held by the banking
company either as a trustee of that trust or in its own name on behalf of a trustee
of that trust; or
(b) That
the share-
(i) Forms part of the estate
of a deceased person,
(ii) Has not been bequeathed
by the deceased person by his will to any body corporate, and
(iii) Is held by the banking
company either as an executor or administrator of the deceased person or in its
own name on behalf of an executor or administrator of the deceased person;
And the Registrar may, for the purpose of satisfying himself that any share is held in the private company by a banking company as aforesaid, call for at any time from the banking company such books and papers as he considers necessary.]
15[Explanation:
For the purposes of this sub-section, 'bodies corporate' means public
companies, or private companies which had become public companies by virtue of
this section.]
13. Inserted by
the Companies (Amendment) Act, 1960.
14. For
clarifications on this section, refer Taxmann's Master Guide to Companies Act.
15. Inserted by
the Companies (Amendment) Act, 1988, w.e.f. 15-6-1988.
16[(A) Without prejudice to
the provisions of sub-section (1), where the average annual turnover of a
private company, whether in existence at the commencement of the Companies
(Amendment) Act, 1974, or incorporated thereafter, is not, during the relevant
period, less than 17[such
amount as may be prescribed], the private company shall, irrespective of its
paid-up share capital, become, on and from the expiry of a period of three
months from the last day of the relevant period during which the private
company had the said average annual turnover, a public company by virtue of
this sub-section :
Provided that even after the private company has so
become a public company, its articles of association may include provisions
relating to the matters specified in clause (iii) of sub-section (1) of section
3 and the number of its members may be, or may at any time be reduced, below
seven. (I B) Where not less than twenty-five per cent of the paid-up share
capital of a public company, having share capital, is held by a private company,
the private company shall, -
(a) On and from the date on
which the aforesaid percentage is first held by it after the commencement of
the Companies (Amendment) Act, 1974, or
(b) Where the aforesaid
percentage has been first so held before the commencement of the Companies
(Amendment) Act, 1974, on and from the expiry of the period of three months
from the date of such commencement, unless within that period the aforesaid
percentage is reduced below twenty-five per cent of the paid-up share capital of
the public company,
Become,
by virtue of this sub-section, a public company, and thereupon all other
provisions of this section shall apply thereto:
Provided that even after the private company has so
become a public company, its articles of association may include provisions
relating to the matters specified in clause (iii) of sub-section (1) of section
3 and the number of its members may be, or may at any time be reduced, below
seven.]
18[(1C) Where, after the
commencement of the Companies (Amendment) Act, 1988, a private company accepts,
after an invitation is made by an advertisement, or renews, deposits from the
public, other than its members, directors or their relatives, such private
company shall, on and from the date on which such acceptance or renewal, as the
case may be, is first made after such commencement, become a public company and
thereupon all the provisions of this section shall apply thereto:
Provided that even after the private company has so
become a public company, its articles of association may include provisions
relating to the matters specified in clause (iii) of sub-section (1) of section
3 and the number of its members may be, or may at any time be, reduced below
seven.]
16. Inserted by
the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
17. Substituted
for "rupees one crore" by the Companies (Amendment) Act, 1988, w.e.f.
15-61988. Vide rule 4C of the Companies
(Central Government's) General Rules & Forms, 1956, as amended by the Third
Amendment Rules, 1999, w.e.f. 23-2-1999, limit of Rs. 25 crore has been
prescribed.
18. Inserted by
the Companies (Amendment) Act, 1988, w.e.f. 15-6-1988. For clarification on this sub-section, refer
Taxmann Master Guide to Companies Act.
(2) Within three months from the date on which a private company
becomes a public company by virtue of this section, the company shall inform
the Registrar that it has become a public company as aforesaid, and thereupon
the Registrar shall delete the word 'Private' before the word 'Limited" in
the name of the company upon the register and shall also make the necessary
alterations in the certificate of incorporation issued to the company and in
its memorandum of association.
(3) Sub-section (3) of
section 23 shall apply to a change of name under sub-section (2) As it applies
to a change of name under section 21.
(4) A private company which
has become a public company by virtue of this section shall continue to be a
public company until it has, with the approval of the Central Government 19 and in accordance
with the provisions of this Act, again become a private company.
(5) If a company makes
default in complying with sub-section (2), the company and every officer of the
company who is in default, shall be punishable with fine which may extend to
five hundred rupees for every day during which the default continues.
(6)& (7) [Omitted by the Companies (Amendment) Act, 1988, w.e.f.
15-6-1988. For sub-sections (6) and
(7), as they stood prior to omission, refer Appendix I.]
(8) Every private company having
a share capital shall, in addition to the certificate referred to in
sub-section (2) of section 161, file with the Registrar along with the annual
return a second certificate signed by both the signatories of the return,
stating either-
(a) That since the date of
the annual general meeting with reference to which the last return was
submitted, or in the case of a first return, since the date of the
incorporation of the private company, no body or bodies corporate has or have
held twenty-five per cent or more of its paid-up share capital, 20[***]
(b) [Omitted by the Companies
(Amendment) Act, 1988, w.e.f. 15-6-1988. For clause (b) as it stood prior to
its omission, refer Appendix I.]
21[(c) That the private
company, irrespective of its paid-up share capital, did not have, during the
relevant period, an average annual turnover of 22[such
amount as is referred to in sub-section (IA) or more,]]
23[(d) That the private
company did not accept or renew deposits from the public.]
21[(9) Every private company,
having share capital, shall file with the Registrar along with the annual
return a certificate signed by both the signatories of the return, stating that
since the date of the annual general meeting with reference to which the last return was submitted, or
in the case of a first return, since the date of the incorporation of the
private company, it did not hold twenty-five per cent or more of the paid-up
share capital of one or more public companies.
19. Powers are
delegated to Registrar of Companies.
20. "Or"
omitted by the Companies (Amendment) Act, 1988, w.e.f. 15-6-1988.
21. Inserted by
the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
22. Substituted
for "rupees one crore or more' by the Companies (Amendment) Act, 1988,
w.e.f. 15-6-1988.
23. Inserted,
ibid.
24[(10) Subject to the other
provisions of this Act, any reference in this section to accepting, after an
invitation is made by an advertisement, or renewing deposits from the public
shall be construed as including a reference to accepting, after an invitation
is made by an advertisement, or renewing deposits from any section of the
public and the provisions of section 67 shall, so far as may be, apply, as if
the reference to invitation to the public to subscribe for shares or debentures
occurring in that section, includes a reference to invitation from the public
for acceptance of deposits.]
Explanation: For the purposes of this section, -
25(a) "Relevant period' means the period of
three consecutive financial years, -
(i) Immediately preceding
the commencement of the Companies (Amendment) Act, 1974, or
(ii) A part of which
immediately preceded such commencement and the other part of which immediately,
followed such commencement, or
(iii) Immediately following
such commencement or at any time thereafter;
(b) Turnover" of a
company, means the aggregate value of the realisation made from the sale,
supply or distribution of goods or on account of services rendered, or both, by
the company during a financial year;]
26[(c) "Deposit' has the same meaning as in
section 58A.]
44. Prospectus or statement in
lieu of prospectus to be filed by private company on ceasing to be private
company. -
(1) If a company, being a private company, alters its articles in
such a manner that they no longer include the provisions which, under clause
(iii) of sub-section (1) of section 3, are required to be included in the
articles of a company in order to constitute it a private company, the company,
-
(a) Shall, as on the date of
the alteration, cease to be a private company; and
(b) Shall, within a period of
27[thirty] days after the
said date, file with the Registrar either a prospectus or a statement in lieu
of prospectus, as specified in sub-section (2).
(2) (a) Every prospectus filed under sub-section
(1) shall state the matters specified in Part I of Schedule R and set out the
reports specified in Part II of that Schedule, and the said Parts I and II
shall have effect subject to the provisions contained in Part III of that
Schedule.
24. Inserted by
the Companies (Amendment) Act, 1988, w.e.f. 15-6-1988.
25. For
clarification on this clause, refer Taxmann's Master Guide to Companies Act.
26. Inserted by
the Companies (Amendment) Act, 1988, w.e.f. 15-6-1988.
27. Substituted
for 'fourteen' by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
(b) Every statement in lieu
of prospectus filed under sub-section (1) shall be in the form and contain the
particulars set out in Part I of Schedule IV, and in the cases mentioned in
Part II of that Schedule, shall set out the reports specified therein, and the
said Parts I and II shall have effect subject to the provisions contained in
Part III of that Schedule.
(c) Where the persons making
any such report as is referred to in clause (a) or (b) have made therein, or
have, without giving the reasons indicated therein, any such adjustments as are
mentioned in clause 32 of Schedule II or clause 5 of Schedule IV, as the case
may be, the prospectus or statement in lieu of prospectus filed as aforesaid,
shall have endorsed thereon or attached thereto, a written statement signed by
those persons, setting out the adjustments and giving the reasons therefor.
(3) If default is made in
complying with sub-section (1) or (2), the company, and every officer of the company
who is in default, shall be punishable with fine which may extend to five
hundred rupees for every day during which the default continues.
(4) Where any prospectus or
statement in lieu of prospectus filed under this section includes any untrue
statement, any person who authorised the filing of such prospectus or statement
shall be punishable with imprisonment for a term which may extend to two years,
or with fine which may extend to five thousand rupees, or with both, unless he
proves either that the statement was immaterial or that he had reasonable
ground to believe, and did up to the time of the filing of the prospectus or
statement believe, that the statement was true.
(5) For the purposes of this
section-
(a) A statement included in a
prospectus or a statement in lieu of prospectus shall be deemed to be untrue if
it is misleading in the form and context in which it is included; and
(b) Where the omission from a
prospectus or a statement in lieu of prospectus of any matter is calculated to
mislead, the prospectus or statement in lieu of prospectus shall be deemed, in
respect of such omission, to be a prospectus or a statement in lieu of
prospectus in which an untrue statement is included.
(6) For the purposes of
sub-section (4) and clause (a) of sub-section (5), the expression
"included" when used with reference to a prospectus or statement in
lieu of prospectus, means included in the prospectus or statement in lieu of
prospectus itself or contained in any report or memorandum appearing on the face
thereof, or by reference incorporated therein.
Reduction of
number of members below legal minimum
45. Members
severally liable for debts where business carried on with fewer than seven, or
in the case of a private company, two members. -If at any time the number of members of a
company is reduced, in the case of a public company, below seven, or in the
case of a private company, below two, and the company carries on business for
more than six months while the number is so reduced, every person who is a
member of the company during the time that it so carries on business after
those six months and is cognizant of the fact that it is carrying on business
with fewer than seven members or two members, as the case may be, shall be
severally liable for the payment of the whole debts of the company contracted
during that time, and may be severally sued therefor.
Contracts and
deeds, investments, seal, etc.
(1) Contracts on behalf of a
company may be made as follows: -
(a) A contract which, if made
between private persons, would by law be required to be in writing signed by
the parties to be charged therewith, may be made on behalf of the company in
writing signed by any person acting under its authority, express or implied, and
may in the same manner be varied or discharged;
(b) A contract which, if made
between private persons, would by law be valid although made by parol only and
not reduced into writing, may be made by parol on behalf of the company by any
person acting under its authority, express or implied, and may in the same
manner be varied or discharged.
(2) A contract made according
to this section shall bind the company.
47. Bills of exchange and promissory notes. -A bill of exchange, hundi or promissory note shall
be deemed to have been made, accepted, drawn or endorsed on behalf of a company
if drawn, accepted, made, or endorsed in the name of, or on behalf or on
account of, the company by any person acting under its authority, express or
implied.
(1)
A company may, by writing under its
common seal, empower any person, either generally or in respect of any
specified matters, as its attorney, to execute deeds on its behalf in any place
either in or outside India. (2) A deed signed by such an attorney on behalf of
the company and under his seal where sealing is required, shall bind the
company and have the same effect as if it were under its common seal.
49. Investments of company to be
held in its own name. -
(1) Save as otherwise provided in sub-sections (2) to (5) 28[or any other law for the time being in
force] and subject to the provisions of sub-sections (6) to (8), -
(a) All investments made by a
company on its own behalf shall be made and held by it in its own name; and
(b) Where any such
investments are not so held at the commencement of this Act the company shall,
within a period of one year from such commencement, either cause them to be
transferred to, and hold them in, its own name, or dispose of them.
28. Inserted by
the Companies (Amendment) Act, 1960.
(2)
Where the company has a right to appoint any person
or persons, or where any nominee or nominees of the company has or have been
appointed, as a director or directors of any other body corporate, shares in
such other body corporate to an amount not exceeding the nominal value of the
qualification shares which are required to be held by a director thereof, may
be registered or held by such company jointly in the names of itself and of
each such person or nominee or in the name of each such person or nominee 29[* * *].
(3)
A company may hold any shares in its subsidiary in
the name or names of any nominee or nominees of the company, if and in so far
as it is necessary so to do, to ensure that the number of members of the
subsidiary is not reduced, where it is a public company, below seven, and where
it is a private company, below two.
(4) Sub-section (1) shall not
apply to investments made by a company whose principal business consists of the
buying and selling of shares or securities.
(5) Nothing in this section
shall be deemed to prevent a company-
(a) From depositing with a
bank, being the bankers of the company, any shares or securities for the
collection of any dividend or interest payable thereon; or
30[(aa) From depositing with, or transferring to,
or holding in the name of, the State Bank of India or a Scheduled Bank, being
the bankers of the company, shares or securities, in order to facilitate the
transfer thereof:
Provided that if within a period of six months from
the date on which the shares or securities are transferred by the company to,
or are first held by the company in the name of, the State Bank of India or a
Scheduled Bank as aforesaid, no transfer of such shares or securities takes
place, the company shall, as soon as practicable after the expiry of that
period, have the shares or securities retransferred to it from the State Bank
of India or the Scheduled Bank or, as the case may be, again hold the shares or
securities in its own name; or]
(b) From depositing with, or
transferring to, any person any shares or securities, by way of security for
the repayment of any loan advanced to the company or the performance of any
obligation undertaken by it;
31[(c) From holding investments in the name of a
depository when such investment are in the form of securities held by the
company as a beneficial owner.]
(6) The certificate or letter of allotment relating to the shares or securities in which investments have been made by a company shall, except in the cases referred to in sub-sections (4) and (5), be in the custody of such company or 32[with the State Bank of India or a Scheduled Bank], being the bankers of the company.
29. Expressly
described as a nominee of the company' omitted by the Companies (Amendment)
Act, 1960
30. Inserted,
ibid.
31. Inserted by
the Depositories Act, 1996, w.r.e.f. 20-9-1995.
32. Substituted for
'with a Scheduled Bank" by the Companies (Amendment) Act, 1960.
(7) Where, in pursuance of
sub-section (2), (3), (4) or (5), any shares or securities in which investments
have been made by a company are not held by it in its own name, the company
shall forthwith enter in a register maintained by it for the purpose-
(a) The nature, value, and such other particulars as may be necessary
fully to identify the shares or securities in question; and
(b) The bank or person in
whose name or custody the shares or securities are held.
(8) The register kept under
sub-section (7) shall be open to the inspection of any member or debenture holder
of the company without charge, during business hours, subject to such
reasonable restrictions as the company may, by its articles or in general
meeting, impose, so that not less than two hours in each day are allowed for
inspection.
(9) If default is made in
complying with any of the requirements of sub-sections (1) to (8), the company,
and every officer of the company who is in default, shall be punishable with
fine which may extend to five thousand rupees.
(10) If any inspection required
under sub-section (8) is refused, the 33[Company
Law Board] may, by order, direct an immediate inspection of the register.34 Nothing in this sub-section shall be
construed as prejudicing in any way the operation of sub-section (9).
(11) In this section, "securities' includes stock and debentures.
33. Substituted
for "Court' by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
34. Prescribed
fees is Rs. 50.
50. Power for company to have official seal
for use outside India. -
(1) A company whose objects
require or comprise the transaction of business outside India may, if
authorised by its articles, have for use in any territory, district or place
not situate in India an official seal which shall be a facsimile of the common
seal of the company, with the addition on its face of the name of the
territory, district or place where it is to be used.
(2) A company having an
official seal for use in any such territory, district or place may, by writing
under its common seal, authorise any person appointed for the purpose in that
territory, district or place to affix the official seal to any deed or other
document to which the company is a party in that territory, district or place.
(3) The authority of any
agent authorised under sub-section (2) shall, as between the company and any
person dealing with the agent, continue during the period, if any, mentioned in
the instrument conferring the authority, or if no period is there mentioned,
until notice of the revocation or determination of the agent's authority has
been given to the person dealing with him.
(4) The person affixing any
such official seal shall, by writing under his hand, certify on the deed or
other document to which the seal is affixed, the date on which and the place at
which, it is affixed. (5) A deed or other document to which an official seal is
duly affixed shall bind the company as if it had been sealed with the common
seal of the company.
Service of
documents
51. Service
of documents on company. -A
document may be served on a company or an officer there of by sending it to the
company or officer at the registered office of the company by post under a
certificate of posting or by registered post, or by leaving it at its
registered office:
35[Provided that where the securities are held
in a depository, the records of the beneficial ownership may be served by such
depository on the company by means of electronic mode or by delivery of
floppies or discs.]
52. Service
of documents on Registrar. -A
document may be served on a Registrar by sending it to him at his office by
post under a certificate of posting or by registered post, or by delivering it
to, or leaving it for, him at his office.
53. Service of documents on members by company. -
(1) A document may be served by a company on any member thereof
either personally, or by sending it by post to him to his registered address,
or if he has no registered address in India, to the address, if any, within
India supplied by him to the company for the giving of notices to him.
(2) Where a document is sent
by post, -
(a) Service
thereof shall be deemed to be effected by properly addressing, prepaying and
posting a letter containing the document, provided that where a member has
intimated to the company in advance that documents should be sent to him under
a certificate of posting or by registered post with or without acknowledgement
due and has deposited with the company a sum sufficient to defray the expenses
of doing so, service of the document shall not be deemed to be effected unless
it is sent in the manner intimated by the member; and
(b) 36[* * *] such service shall be deemed to have
been effected-
(i) In the case of a notice
of a meeting, at the expiration of forty-eight hours after the letter
containing the same is posted, and
(ii) In any other case, at
the time at which the letter would be delivered in the ordinary course of post.
(3) A document advertised in
a newspaper circulating in the neighbourhood of the registered office of the
company shall be deemed to be duly served on the day on which the advertisement
appears, on every member of the company who has no registered address in India
and has not supplied to the company an address within India for the giving of
notices to him.
(4) A document may be served
by the company on the joint-holders of a share by serving it on the
joint-holder named first in the register in respect of the share.
(5) A document may be served
by the company on the persons entitled to a share in consequence of the death
or insolvency of a member by sending it through the post in a prepaid letter
addressed to them by name, or by the title of representatives of the deceased,
or assignees of the insolvent, or by any like description, at the address, if
any, in India supplied for the purpose by the persons claiming to be so
entitled, or until such an address has been so supplied, by serving the
document in any manner in which it might have been served if the death or
insolvency had not occurred.
35. Inserted by
the Depositories Act, 1996, w.r.e.f. 20-9-1995.
36. Unless the
contrary is proved' omitted by the Companies (Amendment) Act, 1960.
Authentication
of documents and proceedings
54. Authentication of
documents and proceedings. -Save as otherwise expressly
provided in this Act, a document or proceeding requiring authentication by a
company may be signed by a director *[, the managing agent, the secretaries and
treasurers], the manager, the secretary or other authorised officer of the
company, and need not be under its common seal.
PART III
PROSPECTUS AND ALLOTMENT, AND OTHER MATTERS
RELATING TO ISSUE OF SHARES OR DEBENTURES
Prospectus
55. Dating of
prospectus. -A prospectus issued by or on behalf of a
company or in relation to an intended company shall be dated, and that date
shall, unless the contrary is proved, be taken as the date of publication of
the prospectus.
3756. Matters to be
stated and reports to be set out in prospectus. -
(1) Every prospectus issued-
(a) By or on behalf of a
company, or
(b) By or on behalf of any
person who is or has been engaged or interested in the formation of a company,
Shall
state the matters specified in Part I of Schedule II and set out the reports
specified in Part II of that Schedule; and the said Parts I and II shall have
effect subject to the provisions contained in Part III of that Schedule.
(2) A condition requiring or
binding an applicant for shares in or debentures of a company to waive
compliance with any of the requirements of this section, or purporting to
affect him with notice of any contract, document or matter not specifically
referred to in the prospectus, shall be void.
(3) No one shall issue any form of application for shares in or
debentures of a company, unless the form is accompanied 38 [by a memorandum containing such salient features
of a prospectus as may be prescribed 39]
which complies with the requirements of this section:
40[Provided that a copy of the prospectus
shall, on a request being made by any person before the closing of the
subscription list, be furnished to him:]
37. For
clarification on this section, refer Taxmann's Master Guide to Companies Act.
38. Substituted
for 'by a prospectus' by the Companies (Amendment) Act, 1988, w.e.f. 31-51991.
39. See rule 4CC
& Form No. 2A of General Rules & Forms.
40. Inserted by
the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
Provided 41
[further] that this sub-section shall not apply if it is
shown that the form of application was issued either-
(a) In connection with a bona
fide invitation to a person to enter into an underwriting agreement with
respect to the shares or debentures; or
(b) In relation to shares or
debentures which were not offered to the public.
If
any person 42 acts
in contravention of the provisions of this sub-section, he shall be punishable
with fine which may extend to five thousand rupees. (4) A director or other
person responsible for the prospectus shall not incur any liability by reason
of any non-compliance with, or contravention of, any of the requirements of
this section, if-
(a) As regards any matter not
disclosed, he proves that he had no knowledge thereof; or
(b) He proves that the
non-compliance or contravention arose from an honest mistake of fact on his
part; or
(c) The non-compliance or
contravention was in respect of matters which, in the opinion of the Court
dealing with the case, 43[were]
immaterial, or was otherwise such as ought, in the opinion of that Court,
having regard to all the circumstances of the case, reasonably to be excused:
Provided that no director or other person shall incur
any liability in respect of the failure to include in a prospectus a statement
with respect to the matters specified in clause 18 of Schedule II, unless it is
proved that he had knowledge of the matters not disclosed.
(5) This section shall not
apply-
(a) To the issue to existing
members or debenture holders of a company of a prospectus or form of
application relating to shares in or debentures of the company, whether an
applicant for shares or debentures will or will not have the right to renounce
in favour of other persons; or
(b) To the issue of a
prospectus or form of application relating to shares or debentures which are,
or are to be, in all respects uniform with shares or debentures previously
issued and for the time being dealt in or quoted on a recognised stock
exchange;
But,
subject as aforesaid, this section shall apply to a prospectus or a form of
application, whether issued on or with reference to the formation of a company
or subsequently.
(6) Nothing in this section
shall limit or diminish any liability which any person may incur under the
general law or under this Act apart from this section.
57. Expert to be
unconnected with formation or management of company. -A prospectus inviting persons to subscribe for shares in or debentures of
a company shall not include a statement purporting to be made by an expert,
unless the expert is a person who is not, and has not been, engaged or
interested in the formation or promotion, or in the management, of the company.
41. Inserted by the
Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
42. Prosecution
powers are delegated to SEBI officials.
43. Substituted
for 'was" by the Repealing and Amending Act, 1964.
58. Expert's
consent to issue of prospectus containing statement by him. -A
prospectus inviting persons to subscribe for shares in or debentures of a
company and including a statement purporting to be made by an expert shall not
be issued, unless-
(a) He has given his written
consent to the issue thereof with the statement included in the form and
context in which it is included, and has not withdrawn such consent before the
delivery of a copy of the prospectus for registration; and
(b) A statement that he has
given and has not withdrawn his consent as aforesaid appears in the prospectus.
4658A. 44 [Deposits not to be invited
without issuing an advertisements 45. -
(1) The Central Government may, in consultation with the Reserve
Bank of India, prescribe the limits up to which, the manner in which and the
conditions subject to which deposits may be invited or accepted by a company
either from the public or from its members. (2) No company shall invite, or
allow any other person to invite or cause to be invited on its behalf, any
deposit unless-
(a) Such deposit is invited
or is caused to be invited in accordance with the rules made under sub-section
(1), 47[* * *]
(b) An advertisement,
including therein a statement showing the financial position of the company,
has been issued by the company in such form and in such manner as may be
prescribed 48 49
[, and]
49[(c) The company is not in default in the
repayment of any deposit or part thereof and any interest thereupon in
accordance with the terms and conditions of such deposit.]
(3) (a) Every deposit accepted by a company at
any time before the commencement of the Companies (Amendment) Act, 1974, in
accordance with the directions made by the Reserve Bank of India under Chapter
IIIB of the Reserve Bank of India Act, 1934 (2 of 1934), shall, unless renewed
in accordance with clause (b), be repaid in accordance with the terms 50[and conditions] of such deposit.
(b) No deposit referred to in
clause (a) shall be renewed by the company after the expiry of the term thereof
unless the deposit is such that it could have been accepted if the rules made
under sub-section (1) were in force at the time when the deposit was initially
accepted by the company.
44. Inserted by
the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
45. See Companies
(Acceptance of Deposits) Rules, 1975.
46. For
clarification on this section, refer Taxmann's Master Guide to Companies Act.
47. Word 'and'
omitted by the Companies (Amendment) Act, 1996, w.e.f. 1-3-1997.
48. Refer
Non-Banking Financial Companies & Miscellaneous Non-Banking Companies
(Advertisement) Rules, 1977.
49. Inserted by
the Companies (Amendment) Act, 1996, w.e.f. 1-3-1997.
50. Inserted by
the Companies (Amendment) Act, 1988, w.e.f. 1-9-1989.
(c) Where, before the commencement of the Companies (Amendment)
Act, 1974, an deposit was received by a company in contravention of any
direction made under Chapter IIIB of the Reserve Bank of India Act, 1934 (2 of
1934), repayment of such deposit shall be made in full on or before the 1st day
of April, 197 5, and such repayment shall be without prejudice to any action
that may be taken under the Reserve Bank of India Act, 1934 for the acceptance
of such deposit in contravention of such direction.
51[(3A) Every deposit
accepted by a company after the commencement of the Companies (Amendment) Act,
1988, shall, unless renewed in accordance with the rules made under sub-section
(1), be repaid in accordance with the terms and conditions of such deposit.]
(4)
Where any deposit is accepted by a company after the
commencement of the Companies (Amendment) Act, 1974, in contravention of the
rules made under sub-section (1), repayment of such deposit shall be made by
the company within thirty days from the date of acceptance of such deposit or
within such further time, not exceeding thirty days, as the Central Government
may, on sufficient cause being shown by the company, allow.
(5) Where a company omits or
fails to make repayment of a deposit in accordance with the provisions of
clause (c) of sub-section (3), or in the case of a deposit referred to in
sub-section (4), within the time specified in that sub-section, -
(a) The company shall be
punishable with fine which shall not be less than twice the amount in relation
to which the repayment of the deposit has not been made, and out of the fine,
if realised, an amount equal to the amount in relation to which the repayment
of deposit has not been made, shall be paid by the Court, trying the offence,
to the person to whom repayment of the deposit was to be made, and on such
payment, the liability of the company to make repayment of the deposit shall,
to the extent of the amount paid by the Court, stand discharged ;
(b) Every officer of the
company who is in default shall be punishable with imprisonment for a term
which may extend to five years and shall also be liable to fine.
(6) Where a company accepts
or invites, or allows or causes any other person to accept or invite on its
behalf, any deposit in excess of the limits prescribed under sub-section (1) or
in contravention of the manner or condition prescribed under that sub-section
or in contravention of the provisions of sub-section (2), as the case may be, -
(a) The company shall be
punishable, -
(i) Where such contravention
relates to the acceptance of any deposit, with fine which shall not be less
than an amount equal to the amount of the deposit so accepted;
(ii) Where such contravention
relates to the invitation of any deposit, with fine which may extend to one
lakh rupees but shall not be less than five thousand rupees;
51. Inserted by the Companies (Amendment)
Act, 1988, w.e.f. 1-9-1989.
(b) Every officer of the
company who is in default shall be punishable with imprisonment for a term
which may extend to five years and shall also be liable to fine.
(7) (a) Nothing contained in this section shall
apply to, -
(i) A banking company, or
52(ii) Such other company as the Central
Government may, after consultation with the Reserve Bank of India, specify in
this behalf.
52(b) Except the provisions relating to
advertisement contained in clause (b) of sub-section (2), nothing in this
section shall apply to such classes of financial companies as the Central
Government may, after consultation with the Reserve Bank of India, specify in
this behalf.53
54[55(8) The
Central Government may, if it considers it necessary for avoiding any hardship
or for any other just and sufficient reason, by order, issued either
prospectively or retrospectively from a date not earlier than the commencement
of the Companies (Amendment) Act, 1974 (41 of 1974), grant extension of time to
a company or class of companies to comply with, or exempt any company or class
of companies from, all or any of the provisions of this section either
generally or for any specified period subject to such conditions as may be
specified in the order:
Provided that no order under this sub-section shall
be issued in relation to a class of companies except after consultation with
the Reserve Bank of India.]
56[(9) Where a company has failed to repay any
deposit or part thereof in accordance with the terms and conditions of such
deposit, the Company Law Board may, if it is satisfied, either on its own
motion or on the application of the depositor, that it is necessary so to do to
safeguard the interests of the company, the depositors or in the public
interest, direct, by order, the company to make repayment of such deposit or
part thereof forthwith or within such time and subject to such conditions as
may be specified in the order:57
Provided that the Company Law Board may, before
making any order under this sub-section, give a reasonable opportunity of being
heard to the company and the other persons interested in the matter.
(10) Whoever fails to comply
with any order made by the Company Law Board under sub-section (9) shall be
punishable with imprisonment which may extend to three years and shall also be
liable to a fine of not less than rupees fifty for every day during which such
non-compliance continues.]
52. For
companies specified under clause (a)(it) and (b), respectively, refer Taxmann's
Master Guide to Companies Act'
53. Refer
Non-Banking Financial Companies & Miscellaneous Non-Banking Companies
(Advertisement) Rules, 1977. See also
GSR 73(E), dated 2-2-1996.
54. Inserted
by the Companies (Amendment) Act, 1977.
55. Refer
Companies (Application for Extension of Time or Exemption under sub-section (8)
of section 58A) Rules, 1979.
56. Inserted
by the Companies (Amendment) Act, 1988, w.e.f. 1-9-1989.
57. Prescribed
fees is Rs. 50.
58[(11) A depositor may, at
any time, make a nomination and the provisions of sections 109A and 109B shall,
as far as may be, apply to the nomination a made under this sub-section.]
Explanation: For the purposes of this section, 'deposit'
means any deposit of money with, and includes any amount borrowed by, a company
but shall not include such categories
of amount as may be prescribed in consultation with the Reserve Bank of India.]
6058B. 59[Provisions relating to
prospectus to apply to advertisement. -The provisions of this Act relating to a
prospectus shall, so far as may be, apply to an advertisement referred to in
section 58A.]
59. Penalty and interpretations 61.
-
(1) If any prospectus is issued in contravention of section 57 or
58, the company, and every person, who is knowingly a party to the issue thereof,
shall be punishable with fine which may extend to five thousand rupees.
(2) In sections 57 and 58,
the expression 'expert' includes an engineer, a valuer, an accountant and any
other person whose profession gives authority to a statement made by him.
60. Registration of prospectus. -
(1) No prospectus shall be issued by or on behalf of a company or
inrelation to an intended company unless, on or before the date of its
publication, there has been delivered to the Registrar for registration a copy
thereof signed by every person who is named therein as a director or proposed
director of the company or by his agent authorised in writing, and having
endorsed thereon or attached thereto-
(a) Any consent to the issue
of the prospectus required by section 58 from any person as an expert; and
(b) In the case of a
prospectus issued generally, also-
(i) A
copy of every contract required by clause 16 of Schedule R to be specified in
the prospectus, or, in the case of a contract not reduced into writing, a
memorandum giving full particulars thereof; and
(ii) Where
the persons making any report required by Part II of that Schedule have made
therein, or have, without giving the reasons, indicated therein, any such
adjustments as are mentioned in clause 32 of that Schedule, a written statement
signed by those persons setting out the adjustments and giving the reasons
therefor.
(2) Every prospectus to which
sub-section (1) applies shall, on the face of it, -
(a) State that a copy has
been delivered for registration as required by this section; and
58. Inserted by
the Companies (Amendment) Act, 1999, w.r.e.f. 31-10-1998. 58a. See rule 4CC and Form No. 2B.
59. Inserted by
the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
60. For
clarification on this section, refer Taxmnn's Master Guide to Companies Act.
61. Prosecution
powers are delegated to SEBl officials.
(b) Specify any documents required by this section to be endorsed
on or attached to the copy so delivered, or refer to statements included in the
prospectus which specify those documents.
62[(3) The Registrar shall
not register a prospectus unless the requirements of sections 55, 56, 57 and 58
and sub-sections (1) and (2) of this section have been complied with and the
prospectus is accompanied by the consent in writing of the person, if any,
named therein as the auditor, legal adviser, attorney, solicitor, banker or
broker of the company or intended company, to act in that capacity.]
(4) No prospectus shall be
issued more than ninety days after the date on which a copy thereof is
delivered for registration; and if a prospectus is so issued, it shall be
deemed to be a prospectus a copy of which has not been delivered under this
section to the Registrar.
(5) If a prospectus is issued
without a copy thereof being delivered under this section to the Registrar or
without the copy so delivered having endorsed thereon or attached thereto the
required consent or documents, the company, and every person who is knowingly a
party to the issue of the prospectus, shall be punishable with fine which may
extend to five thousand rupees.
61. Terms of contract
mentioned in prospectus or statement in lieu of prospectus, not to be varied. -A company shall not, at any
time, vary the terms of a contract referred to in the prospectus or statement
in lieu of prospectus, except subject to the approval of, or except on
authority given by, the company in general meeting.
62. Civil
liability for misstatements in prospectus. -
(1) Subject to the provisions of this section, where a prospectus
invites persons to subscribe for shares in or debentures of a company, the
following persons shall be liable to pay compensation to every person who
subscribes for any shares or debentures on the faith of the prospectus for any
loss or damage he may have sustained by reason of any untrue statement included
therein, that is to say, -
(a) Every person who is a
director of the company at the time of the issue of the prospectus;
(b) Every person who has
authorised himself to be named and is named in the prospectus either as a
director, or as having agreed to become a director, either immediately or after
an interval of time;
(c) Every person who is a
promoter of the company; and
(d) Every person who has
authorised the issue of the prospectus:
Provided that where, under section 58, the consent of
a person is required to the issue of a prospectus and he has given that
consent, or where, under 63[*
* *] subsection (3) of section 60 ' the consent of a person named in a
prospectus is required and he has given that consent, he shall not, by reason
of having given such consent, be liable under this sub-section as a person who
has authorised the issue of the prospectus except in respect of an untrue
statement, if any, purporting to be made by him as an expert.
62. Substituted by
the Companies (Amendment) Act, 1960.
For the original sub-section, refer Appendix I.
63. 'Clause (b)
of' omitted by the Companies (Amendment) Act, 1960.
(2) No person shall be liable under sub-section (1), if he proves-
(a) That, having consented to
become a director of the company, he withdrew his consent before the issue of
the prospectus, and that it was issued without his authority or consent;
(b) That the prospectus was
issued without his knowledge or consent, and that on becoming aware of its
issue, he forthwith gave reasonable public notice that it was issued without
his knowledge or consent;
(c) That, after the issue of
the prospectus and before allotment thereunder, he, on becoming aware of any
untrue statement therein, withdrew his consent to the prospectus and gave
reasonable public notice of the withdrawal and of the reason therefor; or
(d) That-
(i) As regards every untrue
statement not purporting to be made on the authority of an expert or of a public
official document or statement, he had reasonable ground to believe, and did up
to the time of the allotment of the shares or debentures, as the case may be,
believe, that the statement was true; and
(ii) As regards every untrue
statement purporting to be a statement by an expert or contained in what
purports to be a copy of or an extract from a report or valuation of an expert,
it was a correct and fair representation of the statement, or a correct copy
of, or a correct and fair extract from, the report or valuation; and he had
reasonable ground to believe, and did up to the time of the issue of the
prospectus believe, that the person making the statement was competent to make
it and that that person had given the consent required by section 58 to the
issue of the prospectus and had not withdrawn that consent before delivery of a
copy of the prospectus for registration or, to the defendant's knowledge,
before allotment thereunder; and
(iii) As regards every untrue
statement purporting to be a statement made by an official person or contained
in what purports to be a copy of or extract from a public official document, it
was a correct and fair representation of the statement, or a correct copy of or
a correct and fair extract from, the document:
Provided that this sub-section shall not apply in the
case of a person liable, by reason of his having given a consent required of
him by section 58, as a person who has authorised the issue of the prospectus
in respect of an untrue statement, purporting to be made by him as an expert.
(3) A person who, apart from this sub-section, would, under sub-section (1), be
liable by reason of his having given a consent required of him by section 58 as
a person who has authorised the issue of a prospectus in respect of an untrue
statement purporting to be made by him as an expert, shall not be so liable, if
he proves-
(a) That, having given his
consent under section 58 to the issue of the prospectus, he withdrew it in
writing before delivery of a copy of the prospectus for registration;
(b) That, after delivery of a
copy of the prospectus for registration and before allotment thereunder, he, on
becoming aware of the untrue statement, withdrew his consent in writing and
gave reasonable public notice of the withdrawal and of the reason therefor; or
(c) That he was competent to
make the statement and that he had reasonable ground to believe, and did up to
the time of the allotment of the shares or debentures, believe, that the
statement was true.
(4) Where-
(a) The prospectus specifies
the name of a person as a director of the company, or as having agreed to
become a director thereof, and he has not consented to become a director, or
has withdrawn his consent before the issue of the prospectus, and has not
authorised or consented to the issue thereof; or
(b) The consent of a person
is required under section 58 to the issue of the prospectus and he either has
not given that consent or has with drawn it before the issue of the prospectus;
The
directors of the company excluding those without whose knowledge or consent the
prospectus was issued, and every other person who authorised the issue thereof,
shall be liable to indemnify the person referred to in clause (a) or clause
(b), as the case may be, against all damages, costs and expenses to which he
may be made liable by reason of his name having been inserted in the prospectus
or of the inclusion therein of a statement purporting to be made by him as an
expert, as the case may be, or in defending himself against any suit or legal
proceeding brought against him in respect thereof:
Provided that a person shall not be deemed for the
purposes of this sub-section to have authorised the issue of a prospectus by
reason only of his having given the consent required by section 58 to the
inclusion therein of a statement purporting to be made by him as an expert. (5)
Every person who, becomes liable to make any payment by virtue of this section,
may recover contribution, as in cases of contract, from any other person who,
if sued separately, would have been liable to make the same payment, unless the
former person was, and the latter person was not, guilty of fraudulent
misrepresentation.
(6) For the purposes of this
section-
(a) The expression
"promoter" means a promoter who was a party to the preparation of the
prospectus or of the portion thereof containing the untrue statement, but does
not include any person by reason of his acting in a professional capacity for
persons engaged in procuring the formation of the company; and
(b) The expression
'expert" has the same meaning as in section 58.
63. Criminal liability 64
for misstatements in prospectus. -
(1) Where
a prospectus issued after the commencement of this Act includes any untrue
statement, every person who authorised the issue of the prospectus shall be
punishable with imprisonment for a term which may extend to two years, or with
fine which may extend to five thousand rupees, or with both, unless he proves
either that the statement was immaterial or that he had reasonable ground to
believe, and did up to the time of the issue of the prospectus believe, that
the statement was true.
(2) A person shall not be
deemed for the purposes of this section to have authorised the issue of a
prospectus by reason only of his having given-
(a) The consent required by
section 58 to the inclusion therein of a statement purporting to be made by him
as an expert, or
(b) The consent required by 65[**'] sub-section (3) of section 60.
64. Document containing offer of
shares or debentures for sale to be deemed prospectus. -
(1) Where a company allots or agrees to allot any shares in or
debentures of the company with a view to all or any of those shares or
debentures being offered for sale to the public, any document by which the offer
for sale to the public is made shall, for all purposes, be deemed to be a
prospectus issued by the company; and all enactments and rules of law as to the
contents of prospectuses and as to liability in respect of statements in and
omissions from prospectuses, or otherwise relating to prospectuses, shall apply
with the modifications specified in sub-sections (3), (4) and (5), and have
effect accordingly, as if the shares or debentures had been offered to the
public for subscription and as if persons accepting the offer in respect of any
shares or debentures were subscribers for those shares or debentures, but
without prejudice to the liability, if any, of the persons by whom the offer is
made in respect of misstatements contained in the document or otherwise in
respect thereof.
(2) For the purposes of this
Act, it shall, unless the contrary is proved, be evidence that an allotment of,
or an agreement to allot, shares or debentures was made with a view to the
shares or debentures being offered for sale to the public if it is shown-
(a) That an offer of the
shares or debentures or of any of them for sale to the public was made within
six months after the allotment or agreement to allot; or
(b) That at the date when the
offer was made, the whole consideration to be received by the company in
respect of the shares or debentures had not been received by it.
(3) Section 56 as applied by
this section shall have effect as if it required a prospectus to state in
addition to the matters required by that section to be stated in a prospectus-
(a) The net amount of the
consideration received or to be received by the company in respect of the
shares or debentures to which the offer relates; and
64. Prosecution
powers are delegated to SEBI officials.
65. "Clause
(b) of" omitted by the Companies (Amendment) Act, 1960.
(b) The place and time at which the contract under which the said shares or debentures have been or are to be allotted may be inspected.
(4) Section 60 as applied by
this section shall have effect as if the persons making the offer were persons
named in a prospectus as directors of a company.
(5) Where a person making an
offer to which this section relates is a company or a firm, it shall be
sufficient if the document referred to in sub-section (1) is signed on behalf
of the company or firm by two directors of the company or by not less than
one-half of the partners in the firm, as the case may be; and any such director
or partner may sign by his agent authorised in writing.
65. Interpretation of provisions relating to
prospectuses. -
(1) For the purposes of the foregoing provisions of this Part-
(a) A statement included in a
prospectus shall be deemed to be untrue, if the statement is misleading in the
form and context in which it is included; and
(b) Where the omission from a
prospectus of any matter is calculated to mislead, the prospectus shall be
deemed, in respect of such omission, to be a prospectus in which an untrue
statement is included.
(2) For the purposes of
sections 61, 62 and 63 and clause (a) of sub-section (1) of this section, the
expression "included" when used with reference to a prospectus, means
included in the prospectus itself or contained in any report or memorandum
appearing on the face thereof or by reference incorporated therein or issued
therewith.
66. Newspaper advertisements of prospectus. -Where any prospectus is published as a
newspaper advertisement, it shall not be necessary in the advertisement to
specify the contents of the memorandum or the signatories thereto, or the
number of shares subscribed for by them.
67. Construction of references
to offering shares or debentures to the public, etc. -
(1) Any reference in this Act or in the articles of a company to
offering shares or debentures to the public shall, subject to any provision to
the contrary contained in this Act and subject also to the provisions of
sub-sections (3) and (4), be construed as including a reference to offering
them to any section of the public, whether selected as members or debenture holders
of the company concerned or as clients of the person issuing the prospectus or
in any other manner.
(2) Any reference in this Act
or in the articles of a company to invitations to the public to subscribe for
shares or debentures shall, subject as aforesaid, be construed as including a
reference to invitations to subscribe for them extended to any section of the
public, whether selected as members or debenture holders of the company
concerned or as clients of the person issuing the prospectus or in any other
manner.
(3) No offer or invitation
shall be treated as made to the public by virtue of subsection (1) or
sub-section (2), as the case may be, if the offer or invitation can properly be
regarded, in all the circumstances-
(a) As not being calculated
to result, directly or indirectly, in the shares or debentures becoming
available for subscription or purchase by persons other than those receiving
the offer or invitation; or
(b) Otherwise as being a
domestic concern of the persons making and receiving the offer or invitation.
(4) Without prejudice to the
generality of sub-section (3), a provision in a company's articles prohibiting
invitations to the public to subscribe for shares or debentures shall not be
taken as prohibiting the making to members or debenture holders of an
invitation which can properly be regarded in the manner set forth in that
sub-section.
(5)
The provisions of this Act relating to private
companies shall be construed in accordance with the provisions contained in
sub-sections (1) to (4).
68. Penalty for fraudulently inducing persons to invest
money66. -Any person who, either by knowingly or
recklessly making any statement, promise or forecast which is false, deceptive
or misleading, or by any dishonest concealment of material facts, induces or
attempts to induce another person to enter into, or to offer to enter into-
(a) Any agreement for, or
with a view to, acquiring, disposing of, subscribing for, or underwriting
shares or debentures; or
(b) Any agreement the purpose
or pretended purpose of which is to secure a profit to any of the parties from
the yield of shares or debentures, or by reference to fluctuations in the value
of shares or debentures;
Shall
be punishable with imprisonment for a term, which may extend to five years, or
with fine, which may extend to ten thousand rupees, or with both.
68A. 67 [Personation for acquisition, etc., of shares. -
(1) Any person who-
(a) Makes in a fictitious
name an application to a company for acquiring, or subscribing for, any shares
therein, or
(b) Otherwise induces a
company to allot, or register any transfer of, shares therein to him, or any
other person in a fictitious name,
Shall
be punishable with imprisonment for a term which may extend to five years.
(2) The provisions of
sub-section (1) shall be prominently reproduced in every prospectus issued by
the company and in every form of application for shares which is issued by the
company to any person.]
Allotment
69. Prohibition of allotment unless minimum
subscription received. -
(1)
No allotment shall be made of any
share capital of a company offered to the public for subscription, unless the
amount stated in the prospectus as the minimum amount which, in the opinion of
the Board of directors, must be raised by the issue of share capital in order
to provide for the matters specified in clause 5 of Schedule II has been
subscribed, and the sum payable on application for the amount so stated has
been paid to and received by the company, whether in cash or by a cheque or
other instrument which has been paid.
66. Prosecution
powers are delegated to SEBI officials.
67. Inserted by
the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
(2) The amount so stated in
the prospectus shall be reckoned exclusively of any amount payable otherwise
than in money, and is in this Act referred to as "the minimum
subscription".
(3) The amount payable on
application on each share shall not be less than five per cent of the nominal
amount of the share.
68[(4) All moneys received from applicants for
shares shall be deposited and kept deposited in a Scheduled Bank-
(a) Until the certificate to
commence business is obtained under section 149, or
(b) Where such certificate
has already been obtained, until the entire amount payable on applications for
shares in respect of the minimum subscription has been received by the company,
And
where such amount has not been received by the company within the time on the
expiry of which the moneys received from the applicants for shares are required
to be repaid without interest under sub-section (5), all moneys received from
applicants for shares shall be returned in accordance with the provisions of
that sub-section.
In
the event of any contravention of the provisions of this sub-section, every promoter,
director or other person who is knowingly responsible for such contravention
shall be punishable with fine, which may extend to five thousand rupees.]
(5) If the conditions
aforesaid have not been complied with on the expiry of one hundred and twenty
days after the first issue of the prospectus, all moneys received from
applicants for shares shall be forthwith repaid to them without interest; and
if any such money is not so repaid within one hundred and thirty days after the
issue of the prospectus, the directors of the company shall be jointly and
severally liable to repay that money with interest at the rate of six per cent
per annum from the expiry of the one hundred and thirtieth day:
Provided that a director shall not be so liable if he
proves that the default in the repayment of the money was not due to any
misconduct or negligence on his part.
(6) Any condition purporting
to require or bind any applicant for shares to waive compliance with any
requirement of this section shall be void.
(7) This section, except
sub-section (3) thereof, shall not apply in relation to any allotment of shares
subsequent to the first allotment of shares offered to the public for
subscription.
68. Substituted by
the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965. For the original sub-section, refer Appendix 1.
70. Prohibition of allotment in
certain cases unless statement in lieu of prospectus delivered to Registrar.
(1) A company having a share capital, which does not issue a
prospectus on or with reference to its formation, or which has issued such a
prospectus but has not proceeded to allot any of the shares offered to the
public for subscription, shall not allot any of its shares or debentures unless
at least three days before the first allotment of either shares or debentures,
there has been delivered to the Registrar for registration a statement in lieu
of prospectus signed by every person who is named therein as a director or
proposed director of the company or by his agent authorised in writing, in the
form and containing the particulars set out in Part I of Schedule III and, in
the cases mentioned in Part II of that Schedule, setting out the reports
specified therein, and the said Parts I and II shall have effect subject to the
provisions contained in Part III of that Schedule.
(2) Every statement in lieu
of prospectus delivered under sub-section (1), shall, where the persons making
any such report as aforesaid have made therein, or have without giving the
reasons indicated therein, any such adjustments as are mentioned in clause 5 of
Schedule III, have endorsed thereon or attached thereto a written statement
signed by those persons, setting out the adjustments and giving the reasons
thereof.
(3) This section shall not
apply to a private company.
(4)
If a company acts in contravention of sub-section
(1) or (2), the company, and every director of the company who wilfully
authorises or permits the contravention, shall be punishable with fine which
may extend to one thousand rupees.
(5) Where a statement in lieu
of prospectus delivered to the Registrar under subsection (1) includes any
untrue statement, any person who authorised the delivery of the statement in
lieu of prospectus for registration shall be punishable with imprisonment for a
term which may extend to two years or with fine which may extend to five
thousand rupees or with both, unless he proves either that the statement was
immaterial or that he had reasonable ground to believe, and did up to the time
of the delivery for registration of the statement in lieu of prospectus
believe, that the statement was true.
(6) For the purposes of this
section-
(a) A statement included in a
statement in lieu of prospectus shall be deemed to be untrue if it is
misleading in the form and context in which it is included; and
(b) Where the omission from a
statement in lieu of prospectus of any matter is calculated to mislead, the
statement in lieu of prospectus shall be deemed, in respect of such omission,
to be a statement in lieu of prospectus in which an untrue statement is
included.
(7) For the purposes of
sub-section (5) and clause (a) of sub-section (6), the expression
"included', when used with reference to a statement in lieu of prospectus,
means included in the statement in lieu of prospectus itself or contained in
any report or memorandum appearing on the face thereof, or by reference
incorporated therein, or issued therewith.
71. Effect of irregular
allotment. -
(1) An allotment made by a
company to an applicant in contravention of the provisions of section 69 or 70
shall be voidable at the instance of the applicant-
(a) Within two months after
the holding of the statutory meeting of the company, and not later, or
(b) In any case where the
company is not required to hold a statutory meeting or where the allotment is
made after the holding of the statutory meeting, within two months after the
date of the allotment, and not later.
(2) The
allotment shall be voidable as aforesaid, notwithstanding that the company is
in course of being wound up.
(3) If any director of a company knowingly contravenes, or wilfully
authorises or permits the contravention of, any of the provisions of section 69
or 70 with respect to allotment, he shall be liable to compensate the company
and the allottee respectively for any loss, damages or costs which the company
or the allottee may have sustained or incurred thereby:
Provided that proceedings to recover any such loss,
damages or costs shall not be commenced after the expiration of two years from
the date of the allotment.
72.
Applications for, and allotment of, shares and debentures. -
(1) (a) No allotment
shall be made of any shares in or debentures of a company in pursuance of a
prospectus issued generally, and no proceedings shall be taken on applications
made in pursuance of a prospectus so issued, until the beginning of the fifth
day after that on which the prospectus is first so issued or such later time,
if any, as may be specified in the prospectus:
Provided that where, after a prospectus is first
issued generally, a public notice is given by some person responsible under
section 62 for the prospectus which has the effect of excluding, limiting or
diminishing his responsibility, no allotment shall be made until the beginning
of the fifth day after that on which such public notice is first given.
(b) Nothing in the foregoing
proviso shall be deemed to exclude, limit or diminish any liability that might
be incurred in the case referred to therein under the general law or this Act.
(c)
The beginning of the fifth day or such later time as
is mentioned in the first paragraph of clause (a), or the beginning of the
fifth day mentioned in the second paragraph of that clause, as the case may be,
is hereinafter in this Act referred to as "the time of the opening of the
subscription lists'.
(2) In sub-section (1), the
reference to the day on which the prospectus is first issued generally shall be
construed as referring to the day on which it is first so issued as a newspaper
advertisement:
Provided that, if it is not so issued as a newspaper
advertisement before the fifth day after that on which it is first so issued in
any other manner, the said reference shall be construed as referring to the day
on which it is first so issued in any manner.
(3) The validity of an
allotment shall not be affected by any contravention of the foregoing
provisions of this section; but, in the event of any such contravention, the
company, and every officer of the company who is in default, shall be
punishable with fine which may extend to five thousand rupees. (4) In the
application of this section to a prospectus offering shares or debentures for
sale, sub-sections (1) to (3) shall have effect with the substitution of
references to sale for references to allotment, and with the substitution for
the reference to the company and every officer of the company who is in default
of a reference to any person by or through whom the offer is made and who is
knowingly guilty of, or wilfully authorises or permits, the contravention.
(5) An application for shares
in, or debentures of, a company, which is made in pursuance of a prospectus
issued generally shall not be revocable until after the expiration of the fifth
day after the time of the opening of the subscription lists, or the giving, before
the expiry of the said fifth day by some person responsible under section 62
for the prospectus, of a public notice having the effect under that section of
excluding, limiting or diminishing the responsibility of the person giving it.
73. Allotment
of shares and debentures to be dealt in on stock exchange. -
69[(1) Every company intending to offer shares
or debentures to the public for subscription by the issue of a prospectus
shall, before such issue, make an application to one or more recognised stock
exchanges for permission for the shares or debentures intending to be so
offered to be dealt with in the stock exchange or each such stock exchange.]
70[71 [(1A) Where a prospectus, whether issued generally
or not, states that an 72[application
under sub-section (1) has been] made for permission for the shares or
debentures offered thereby to be dealt in one or more recognised stock
exchanges, such prospectus shall state the name of the stock exchange or, as
the case may be, each such stock exchange, and any allotment made on an
application in pursuance of such prospectus shall, whenever made, be void 73[* * *], if the permission has not been
granted by the stock exchange or each such stock exchange, as the case may be,
before the expiry of ten weeks from the date of the closing of the subscription
lists:
Provided that where an appeal against the decision of
any recognised stock exchange refusing permission for the shares or debentures
to be dealt in on that stock exchange has been preferred under section 22 of
the Securities Contracts (Regulation) Act, 1956 74
(42 of 1956), such allotment shall not be void until the dismissal of the
appeal.]
69. Inserted by
the Companies (Amendment) Act, 1988, w.e.f. 15-6-1988.
70. Substituted by
the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975. For sub-section as it stood prior to its substitution, refer Appendix I.
71. Renumbered by
the Companies (Amendment) Act, 1988, w.e.f. 15-6-1988.
72. Substituted
for application has been, or will be," ibid.
73. 'If the
permission has not been applied for before the tenth day after the first issue
of the prospectus, or, where such permission has been applied for before that
day, "omitted, ibid,
74. See Division
Two.
75(2) Where the permission has not been applied 76[under sub-section (1)], 77[or, such permission having been applied for,
has not been, granted as aforesaid], the company shall forthwith repay without
interest all moneys received from applicants in pursuance of the prospectus,
and, if any such money is not repaid within eight days after the company
becomes liable to repay it, 78[the
company and every director of the company who is an officer in default shall,,
on and from the expiry of the eighth day, be jointly and severally, liable to
repay that money with interest at such rate, not less than four per cent and
not more than fifteen per cent, as may be prescribed 79, having regard to the length of the period
of delay in making the repayment of such money.]
80[* * *]
81[(2A) Where permission has
been granted by the recognised stock exchange or stock exchanges for dealing in
any shares, or debentures in such stock exchange or each such stock exchange
and the moneys received from applicants for shares or debentures are in excess
of the aggregate of the application moneys relating to the shares or debentures
in respect of which allotments have been made, the company shall repay the
moneys, to the extent of such excess forthwith without interest, and if such
money is not repaid within eight days, from the day the company becomes liable
to pay it, 12[the company and, every director of the company who is an officer
in default shall, on and from the expiry of the eighth day, be jointly and
severally liable to're'pay that money with interest at such rate, not less than
four per cent and not more than fifteen per cent, as may be prescribed 79,
having regard to the length of the period of delay in making the repayment of
such money.]
80[* * *]
75(2B) If default is made in
complying with the provisions of sub-section (2A), the company and e' very
officer of the company who is in default shall be punishable with fine which
may extend to five thousand rupees, and where repayment is not made within six
months from the expiry of the eighth day, also with imprisonment for a term
which may extend to Lone year.] (3) All moneys received as aforesaid shall be
kept in a separate bank account maintained with a Scheduled Bank 83[until the permission has been granted, or
where an appeal has been preferred against the refusal to grant such
permission, until the disposal of the appeal, and the money standing in such
separate account shall, where the permission has not been applied for as
aforesaid or has not been granted, be repaid within the time and in the manner
specified in sub-section (2)]; and if default is made in complying with this
sub-section, the company, and every officer of the company who is in default,
shall be punishable with fine which may extend to five thousand rupees.
75. Prosecution
powers are delegated to SEBI Officials.
76. Substituted
for for as aforesaid" by Companies (Amendment) Act, 1988, w.e.f.
15-6-1988.
77. Substituted
for "Or has not been granted as a foresaid by the Companies (Amendment)
Act, 1974, w.e.f. 1-2-1975.
78. Substituted
for the directors of the company shall be jointly and severally liable to
repay that money with interest at the rate of twelve per cent per annum from
the expiry of the eighth day: by the Companies (Amendment) Act, 1988, w.e.f.
15-6-1988.
79. Vide rule 4D
of the Companies (Central Government's) General Rules & Forms, 1956, 15 per
cent interest has been prescribed.
80. Proviso
omitted by the Companies (Amendment) Act, 1988, w.e.f. 15-6-1988. For text of omitted proviso, see Appendix 1.
81. Inserted by
the Companies (Amendment) Act, 1974, w.e.f.1-2-1975.
82. Substituted
for the directors of the company shall be jointly and severally liable to
repay the money with interest at the rate of twelve per cent per annum from the
expiry of the said eighth day: bv the Companies (Amendment) Act, 1988, w.e.f.
15-6-1988.
83. Substituted
for "so long as the company may become liable to repay it under
sub-section (2) by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
84[(3A)
Moneys standing to the credit of the
separate bank account referred to in sub-section (3) shall not be utilised for
any purpose other than the following purposes, namely: -
(a) Adjustment against
allotment of shares, where the shares have been permitted to be dealt in on the
stock exchange or each stock exchange specified in the prospectus; or
(b) Repayment of moneys
received from applicants in pursuance of the prospectus, where shares have not
been permitted to be dealt in on the stock exchange or each stock exchange
specified in the prospectus, as the case may be, or, where the company is for
any other reason unable to make the allotment of share.]
(4) Any condition purporting
to require or bind anv applicant for shares or debentures to waive compliance
with any of the requirements of this section shall be void.
85[(5)
For the purposes of this section, it
shall be deemed that permission has not been granted if the application for
permission, where made, has not been disposed of within the time specified in
sub-section (1).]
(6) This section shall have
effect-
(a) In relation to any shares
or debentures agreed to be taken by a person underwriting an offer thereof by a
prospectus, as if he had applied therefor in pursuance of the prospectus; and
(b) In relation to a
prospectus offering shares for sale, with the following modifications, namely,-
(i) References to sale shall
be substituted for references to allotment;
(ii) The persons by whom the
offer is made, and not the company, shall be liable under sub-section (2) to
repay money received from applicants, and references to the company's liability
under that sub-section shall be construed accordingly; and
(iii) For the reference in
sub-section (3) to the company and every officer of the company who is in
default, there shall be substituted a reference to any person by or through
whom the offer is made and who is knowingly guilty of, or wilfully authorises
or permits, the default.
(7) No prospectus shall state
that application has been made for permission for the shares or debentures
offered thereby to be dealt in on any stock exchange, unless it is a recognised
stock exchange.
84. Inserted by the Companies
(Amendment) Act, 1974, w.e.f. 1-2-1975.
85. Substituted, ibid. For sub-section (5) as it stood prior to its
substitution, refer Appendix I.
74. Manner
of reckoning fifth, eighth and tenth days in sections 72 and 73. -In reckoning for the purposes of sections 72
and 73, the fifth day, 86[or
the eighth day] after another day, any intervening day which is a public
holiday87
under the Negotiable Instruments Act, 1881 (26 of 1881), shall be disregarded,
and if, the fifth, 88[or
eighth day] (as so reckoned) is itself such a public holiday, there shall for
the said purposes be substituted the first day thereafter which is not such a
holiday.
8975. Return as to allotments.
-
(1) Whenever a company having a share capital makes any allotment
of its shares, the company shall, within 91[thirty days] thereafter, -
(a) File with the Registrar a
return of the allotments91,
stating the number and nominal amount of the shares comprised in the allotment,
the names, addresses and occupations of the allottees, and the amount, if any,
paid or due and payable on each share:
92[Provided that the
company shall not show in such return any shares as having been allotted for
cash if cash has not actually been received in respect of such allotment;]
(b) In the case of shares
(not being bonus shares) allotted as fully or partly paid-up otherwise than in
cash, produce for the inspection and examination of the Registrar a contract in
writing constituting the title of the allottee to the allotment together with
any contract of sale, or a contract for services or other consideration in
respect of which that allotment was made, such contracts being duly stamped,
and file with the Registrar copies verified in the prescribed9l manner of all
such contracts and a return stating the number and nominal amount of shares so
allotted, the extent to which they are to be treated as paid-up, and the
consideration for which they have been allotted; and
(c) 94[File with the
Registrar-
(i) In the case of bonus
shares, a return stating the number and nominal amount of such shares comprised
in the allotment and the names, addresses and occupations of the allottees and
a copy of the resolution authorising the issue of such shares;
(ii) In the case of issue of
shares at a discount, a copy of the resolution passed by the company
authorising such issue together with a copy of the order of the Court
sanctioning the issue and where the maximum rate of discount exceeds ten per
cent, a copy of the order of the Central Government permitting the issue at the
higher percentage.]
86. Substituted
for 'the eighth day, or the tenth day' by the Companies (Amendment) Act, 1988,
w.e.f. 15-6-1988.
87. For definition
of "public holiday', see Appendix II.
88. Substituted
for 'eighth, or tenth day' by the Companies (Amendment) Act, 1988, w.e.f.
15-6-1988.
89. For
clarifications on this section, refer Taxmann's Master Guide to Companies Act.
90. Substituted
for 'one month" by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
91. See Form No. 2
of General Rules & Forms.
92. Inserted by
the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
93. See rule 5 of
General Rules & Forms.
94. Substituted
for 'in the case of bonus shares, file with the Registrar return stating the
number and nominal amount of the bonus shares so allotted' by the Companies
(Amendment) Act, 1960.
(2) Where a contract such as
is mentioned in clause (b) of sub-section (1) is not reduced to writing, the
company shall, within 95[thirty
days] after the allotment, file with the Registrar the prescribed particulars96 of the contract
stamped with the same stamp duty as would have been payable if the contract had
been reduced to writing; and those particulars shall be deemed to be an
instruments' within the meaning of the Indian Stamp Act, 1899 (2 of 1899), and
the Registrar may, as a condition of filing the particulars, require that the
duty payable thereon be adjudicated under section 3197 of that Act.
(3) If the Registrar is
satisfied that in the circumstances of any particular case the period of 95[thirty days]
specified in subsections (1) and (2) for compliance with the requirements of
this section 98[is
or was inadequate, he may, on application made in that behalf by the company,
whether before or after the expiry of the said period, extend that period as he
thinks fit]; and if he does so, the provisions of sub-sections (1) and (2)
shall have effect in that particular case as if for the said period of
"[thirty days] the extended period allowed by the Registrar were
substituted.
(4) If default is made in
complying with this section, every officer of the company who is in default
shall be punishable with fine, which may extend to five hundred rupees for
every day during which the default continues:
99[Provided that in
case of contravention of the proviso to clause (a) of subsection (1), every
such officer, and every promoter of the company who is guilty of the
contravention shall be punishable with fine which may extend to five thousand
rupees.]
(5) Nothing in this section
shall apply to the issue and allotment by a company of shares which under the
provisions of its articles were forfeited for non-payment of calls.
Commissions and
discounts
(1) A company may pay a commission to any person in consideration
of-
(a) His subscribing or
agreeing to subscribe, whether absolutely or conditionally, for any shares in,
or debentures of, the company, or
(b) His procuring or agreeing
to procure subscriptions, whether absolute or conditional, for any shares in,
or debentures of, the company, if the following conditions are fulfilled,
namely: -
(i) The payment of the
commission is authorised by the articles;
(ii) The commission paid or
agreed to be paid does not exceed in the case of shares, five per cent of the
price at which the shares are issued or the amount or rate authorised by the
articles, whichever is less, and in the case of debentures, two and a half per
cent of the price at which the debentures are issued or the amount or rate
authorised by the articles, whichever is less;
95. Substituted for "one
month by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
96. See Form No. 3 of General
Rules & Forms.
97. For the expression
"instrument as defined in section 2(14) and also for provisions of
section 31 of the Indian Stamp Act, 1899, refer Appendix
II.
98. Substituted for is
inadequate, he may extend that period as he thinks fit" by the companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
99. Substituted by the
Companies (Amendment) Act, 1965, w.e.f. 15-10-1965. For the original proviso, refer Appendix
I.
(iii) The amount or rate per
cent of the commission paid or agreed to be paid is in the case of shares or
debentures offered to the public for subscription, disclosed in the prospectus;
and
In
the case of shares or debentures not offered to the public for subscription,
disclosed in the statement in lieu of prospectus, or in a statement in the
prescribed form1
signed in like manner as a statement in lieu of prospectus and filed before the
payment of the commission with the Registrar and, where a circular or notice,
not being a prospectus inviting subscription for the shares or debentures, is
issued, also disclosed in that circular or notice; 2[* * *]
(iv) The number of shares or
debentures which persons have agreed for a commission to subscribe absolutely
or conditionally is disclosed in the manner aforesaid; 3[and]
3[(v) A copy of the contract for the payment of
the commission is delivered to the Registrar at the time of delivery of the
prospectus or the statement in lieu of prospectus for registration.]
(2) Save as aforesaid and save
as provided in section 79, no company shall allot any of its shares or
debentures or apply 4[any
of its moneys], either directly or indirectly, in payment of any commission,
discount or allowance, to any person in consideration of-
(a) His subscribing or
agreeing to subscribe, whether absolutely or conditionally, for any shares in,
or debentures of, the company, or
(b) His procuring or agreeing
to procure subscriptions, whether absolute or conditional, for any shares in,
or debentures of, the company,
Whether
the shares, debentures or money be so allotted or applied by being added to the
purchase money of any property acquired by the company or to the contract price
of any work to be executed for the company, or the money to be paid out of the
nominal purchase money or contract price, or otherwise. (3) Nothing in this
section shall affect the power of any company to pay such brokerage as it has
heretofore been lawful for a company to pay.
(4) A vendor to, promoter of,
or other person who receives payment in shares, debentures or money from, a
company shall have and shall be deemed always to have had power to apply any
part of the shares, debentures or money so received in payment of any
commission the payment of which, if made directly by the company, would have
been legal under this section.
5[(4A)
For the removal of doubts it is hereby
declared that no commission shall be paid under clause (a) of sub-section (1)
to any person on shares or debentures which are not offered to the public for
subscription:
Provided
that where a person has subscribed or agreed to subscribe under clause (a) of
sub-section (1) for any shares in, or debentures of, the company and before the
issue of the prospectus or statement in lieu thereof any other person or
persons has or have subscribed for any or all of those shares or debentures and
that fact together with the aggregate amount of commission payable under this
section in respect of such subscription is disclosed in such prospectus or
statement, then, the company may pay commission to the first-mentioned person
in respect of such subscription.]
(5) If default is made in
complying with the provisions of this section, the company, and every officer
of the company who is in default, shall be punishable with fine, which may
extend to five hundred rupees.
1. See Form No. 4 of General
Rules & Forms.
2. "And" omitted
by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
3. Inserted, ibid.
4. Substituted for 'any of
its capital monevs" by the Companies (Amendment) Act, 1960.
5. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
(1) No company limited by shares, and no company limited by
guarantee and having a share capital, shall have power to buy its own shares,
unless the consequent reduction of capital is effected and sanctioned in
pursuance of sections I 00 to 104 or of section 402.
(2) No public company, and no
private company which is a subsidiary of a public company, shall give, whether
directly or indirectly, and whether by means of a loan, guarantee, the
provision of security or otherwise, any financial assistance for the purpose of
or in connection with a purchase or subscription made or to be made by any
person of or for any shares in the company or in its holding company:
Provided
that nothing in this sub-section shall be taken to prohibit-
(a) The lending of money by a
banking company in the ordinary course of its business; or
(b) The provision by a
company, in accordance with any scheme for the time being in force, of money
for the purchase of, or subscription for, fully paid shares in the company or
its holding company, being a purchase or subscription by trustees of or for
shares to be held by or for the benefit of employees of the company, including
any director holding a salaried office or employment in the company; or
(c) The making by a companv
of loans, within the limit laid down in subsection (3), to persons (other than
directors *[, managing agents, secretaries and treasurers] or managers) bona
fide in the employment of the company with a view to enabling those persons to
purchase or subscribe for fully paid shares in the company or its holding
company to be held by themselves by way of beneficial ownership.
(3) No loan made to any
person in pursuance of clause (c) of the foregoing proviso shall exceed in
amount his salary or wages at that time for a period of six months. (4) If a
company acts in contravention of sub-sections (1) to (3), the company, and
every officer of the company who is in default, shall be punishable with fine,
which may extend to one thousand rupees.
(5) Nothing in this section
shall affect the right of a company to redeem any shares issued under section
80 or under any corresponding provision in any previous companies law.
77A. 6[Power
of company to purchase its own securities6a.
-
(1) Notwithstanding anything contained in this Act, but subject to
the provisions of sub-section (2) of this section and section 77B, a company
may purchase its own shares or other specified securities (hereinafter referred
t&as "buy-back') out of-
(i) Its free reserves; or
(ii) The securities premium
account; or
(iii) The proceeds of any
shares or other specified securities:
6. Sections 77A, 77AA and
77B inserted by the Companies (Amendment) Act, 1999, w.r.e.f. 31-10-1998.
6a. See also Private Limited
Company and Unlisted Public Limited Company (Buy Back of Securities) Rules,
1999.
Provided
that no buy-back of any kind of shares or other specified securities shall be
made out of the proceeds of an earlier issue of the same kind of shares or same
kind of other specified securities.
(2) No company shall purchase
its own shares or other specified securities under sub-section (1), unless-
(a) The buy-back is
authorised by its articles.
(b) A special resolution has
been passed in general meeting of the company authorising the buy-back.
(c) The buy-back is or less
than twenty-five per cent of the total paid-up capital and free reserves of the
company:
Provided
that the buy-back of equity shares in any financial year shall not exceed
twenty-five percent of its total paid-up equity capital in that financial year;
(d) The ratio of the debt
owed by the company is not more than twice the capital and its free reserves
after such buy-back:
Provided
that the Central Government may prescribe a higher ratio of the debt than that
specified under this clause for a class or classes of companies.
Explanation.
-For the purposes of this clause, the expre-5sion "debt' includes all
amounts of unsecured and secured debts, -
(e) All the shares or other
specified securities for buy-back are fully paid up"
(f) The buy-back of the
shares or other specified securities listed on any recognised stock exchange is
in accordance with the regulations* made by the
Securities and Exchange Board of India in this behalf;
(g) The buy-back in respect
of shares or other specified securities other than those specified in clause
(f) is in accordance with the guidelines as may be prescribed
(3) The notice of the meeting
at which special resolution is proposed to be passed shall be accompanied by an
explanatory statement stating-
(a) A full and complete
disclosure of all material facts;
(b) The necessity for the
buy-back;
(c) The class of security
intended to be purchased under the buy-back;
(d) The amount to be invested
under the buy-back; and
(e) The time limit for
completion of buy-back;
(4) Every buy-back shall be
completed within twelve months from the date of passing the special resolution
under clause (b) of sub-section (2).
(5) The buy-back under
sub-section (1) may be-
(a) From the existing
security holders on a proportionate basis, or
* See SEBI (Buy-back of Securities) Regulations,
1998.
(b) From the open market; or
(c) From odd lots, that is to
say, where the lot of securities of a public company whose, shares are listed
on a recognised stock exchange, is smaller than such marketable lot, as may be
specified by, the stock exchange or
(d) By purchasing the
securities issued to employees of the company pursuant to a scheme of stock
option or sweat equity.
(6) Where a company has passed a special resolution
under clause (b) of sub-section (2) to buy-back its on shares or other
securities under this section, it shall, before making such buy-back, file with
the Registrar and the Securities and Exchange Board of India a declaration of
solvency in the form6a
as may be prescribed* and verified by an affidavit to the effect that the Board
has made a full inquiry into the affair of the company as a result of which
they have formed an opinion that it is capable of meeting its liabilities and
will not be rendered insolvent within a period of one year of the date of
declaration adopted by the Board, and signed by at least two directors of the
company, one of whom shall be the Managing director, if any:
Provided
that no declaration of solvency shall be filed with the Securities and Exchange
Board of India by a company whose shares are not listed or any recognised stock
exchange.
(7) Where a company buys-back
its own securities, it shall extinguish and physically, destroy the securities
so bought-back within seven days of the last date of completion of buy-back.
(8) Where a company completes
a bay-back of its shares or other specified securities under this section, it
shall not make further issue of the same kind of shares (including allotment of
further shares under clause (a) of subsection (1) of section 81) or other
specified securities within a period of twenty-four months by except by way of
bonus issue or in the discharge of subsisting obligations such as conversion of
warrants, stock option schemes, sweat equity or conversion of preference shares
or debentures into equity shares.
(9) Where a company buys-back
its securities under this section, it shall maintain a register of the
securities so bought, the consideration paid for the securities bought-back,
the date of cancellation of securities, the date of extinguishing and
physically destroying of securities and such other particulars as may be
prescribed.
(10) A company shall, after the
completion of the buy-back under this section, file with the Registrar and the
Securities and Exchange Board of India, a return containing such particulars
relating to the buy-back within thirty days of such completion, as may be
prescribed:
Provided
that no return shall be filed with the Securities and Exchange Board of India
by a conipat7y whose shares are not listed on any recognised stock exchange.
(11) If a company " takes
default in company with the provisions of this section or any rules made
thereunder, or any regulations made under clause (f) of subsection (2), the
company or any officer of the company who is in default shall be punishable
with imprisonment for a term which may extend to two years, or with fine which
may extend to fifty thousand rupees, or with both.
Explanation.
--For the purposes of this section, -
(a) "Specified
securities" includes employees stock option or other securities as may be
notified by the Central Government front time to time;
6a. See rule 5C and Form Nos. 4A, 4B & 4C.
(b) "Free reserves
shall have the meaning assigned to it in clause (b) of Explanation to section 3
72A.
77AA. Transfer of certain sums to capital
redemption reserve account. -Where
a company purchases its own shares out of free reserves then a sum equal to the
nominal value of the share so purchased shall be transferred to the capital
redemption reserve account referred to in clause (d) of the proviso to
sub-section (1) of section 80 and details of such transfer shall be disclosed
in the balance-sheet.
77B. Prohibition
for buy-back in certain circumstances. -
(1) No company shall directly or in directly purchase its own shares
or other specified securities-
(a) Through any subsidiary
company including its own subsidiary companies, or
(b) Through any investment
company or group of investment companies, or
(c) If a default, by the
company, in repayment of deposit or interest payable thereon, redemption of
debentures or preference shares or payment of dividend to any shareholder or
repayment of any term loan or interest payable thereon to any financial
institution or bank is subsisting.
(2) No company shall directly
or indirectly purchase its own shares or other specified securities in case
such company has not complied with the provisions of sections 159, 207 and
211.]
Issue
of shares at premium and discount
78. Application
of premiums received on issue of shares. -
(1) Where a company issues shares at a premium, whether for cash or
otherwise, a sum equal to the aggregate amount or value of the premiums on
those shares shall be transferred to an account, to be called the 6b[securities]
premium account; and the provisions of this Act relating to the reduction of
the share capital of a company shall, except as provided in this section, apply
as if the 6b[securities]
premium account were paid-up share capital of the company.
(2) The 6b[securities]
premium account may, notwithstanding anything in subsection (1), be applied by
the company-
(a) In paying up unissued
shares of the company to be issued to members of the company as fully paid
bonus shares;
(b) In writing off the
preliminary expenses of the company;
(c) In writing off the
expenses of, or the commission paid or discount allowed on, any issue of shares
or debentures of the company; or
(d) In providing for the
premium payable on the redemption of any redeemable preference shares or of any
debentures of the company.
(3) Where a company has,
before the commencement of this Act, issued any shares at a premium, this
section shall apply as if the shares had been issued after the commencement of
this Act:
.
6b. Substituted for 'share' by
the Companies (Amendment) Act, 1999, w.r.e.f. 31-10-1998.
Provided
that any part of the premiums which has been so applied that it does not at the
commencement of this Act form an identifiable part of the company's reserves
within the meaning of Schedule VI, shall be disregarded in determining the sum
to be included in the 6c[securities]
premium account
79. Power
to issue shares at a discount. -
(1) A company shall not issue
shares at a discount except as provided in this section.
(2) A company may issue at a
discount shares in the company of a class already issued, if the following
conditions are fulfilled, namely,-
(i) The issue of the shares
at a discount is authorised by a resolution passed by the company in general
meeting and sanctioned by the 7[Company
Law Board]; 8
(ii) The resolution specifies
the maximum rate of discount at which the shares are to be issued:
10[Provided that no
such resolution shall be sanctioned by the Company Law Board if the maximum
rate of discount specified in the resolution exceeds ten per cent, unless that
Board is of opinion that a higher percentage of discount may be allowed in the
special circumstances of the case;]
(iii) Not less than one year
has at the date of the issue elapsed since the date on which the company was
entitled to commence business; and
(iv) The shares to be issued
at a discount are issued within two months after the date on which the issue is
sanctioned by the 7[Company
Law Board] or within such extended time as the 7[Company Law Board] may allow.
(3) Where a company has
passed a resolution authorising the issue of shares at a discount, it may apply
to the '[Company Law Board] for an order sanctioning the issue; and on any such
application, the 7[Company Law Board], if having regard to all the
circumstances of the case, it thinks proper so to do, may make an order
sanctioning the issue on such terms and conditions as it thinks fit.
(4) Every prospectus relating
to the issue of the shares shall contain particulars of the discount allowed on
the issue of the shares or of so much of that discount as has not been written
off at the date of the issue of the prospectus.
If
default is made in complying with this sub-section, the company and every
officer of the company who is in default shall be punishable with fine which may
extend to fifty rupees.
79A. 11[Issue
of sweat equity shares. -
(1) Notwithstanding anything contained in section 79, a company may
issue sweat equity shares of a class of shares already issued if the following
conditions are fulfilled, namely. -
(a) The issue of sweat equity
shares is authorised by a special resolution passed by the company in the
general meeting;
6c. Substituted for
'share" by the Companies (Amendment) Act, 1999, w.r.e.f. 31-10-1998.
7. Substituted for 'Court'
by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
8. Prescribed fees is Rs.
500.
9. (Not exceeding ten per
cent or such higher percentage as the Central Government may permit in any
special case) omitted by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
10. Inserted, ibid.
11. Inserted by the Companies
(Amendment) Act, 1999, w.r.e.f. 31-10-1998.
(b) The resolution specifies
the number of shares, current market price, consideration, if any, and the
class or classes of directors or employees to whom such equity shares are to be
issued,-
(c) Not less than one year
has, at the date of the issue, elapsed since the date on which the company was
entitled to commence business,-
(d) The sweat equity shares
of a company whose equity shares are listed on a recognised stock exchange, are
issued, in accordance with the regulations made by the Securities and Exchange
Board of India in this behalf:
Provided
that in the case of a company whose equity shares are not listed on any
recognised stock exchange, the sweat equity shares are issued in accordance
with the guidelines as may be prescribed.
Explanation I. -For the purposes of this subsection, the
expression "a company' means the company incorporated, formed and
registered under this Act and includes its subsidiary company incorporated in a
country outside India
Explanation II. -For the purposes of this Act, the
expression "sweat equity shares means equity shares issued by the company
employees or directors at a discount or
for consideration other than cash for providing know-how or making a vailable
rights in the nature of intellectual property rights or value additions, by
whatever name called.
(2) All the limitations,
restrictions and provisions relating to equity shares shall be applicable to
such sweat equity shares issued under subjection (1).]
12[Issue and
redemption of preference shares]
80. Power
to issue redeemable preference shares. -
(1) Subject to the provisions
of this section, a company limited by shares may, if so authorised by its
articles, issue preference shares which are, or
at the option of the company are to be liable, to be redeemed:
Provided
that-
(a) No such shares shall be
redeemed except out of profits of the company which would otherwise be
available for dividend or out of the proceeds of a fresh issue of shares made
for the purposes of the redemption;
(b) No such shares shall be
redeemed unless they are fully paid;
(c) The premium, if any,
payable on redemption shall have been provided for out of the profits of the
company or out of the company's 12a[security]
premium account, before the shares are redeemed;
(d) Where any such shares are
redeemed otherwise than out of the proceeds of a fresh issue, there shall, out
of profits which would otherwise have been available for dividend, be
transferred to a reserve fund, to be called the capital redemption reserve 13[account], a sum
equal to the nominal amount of the shares redeemed; and the provisions of this
Act relating to the reduction of the share capital of a company shall, except as
provided in this section, apply as if the capital redemption reserve 13[account] were
paid-up share capital of the company.
12. Substituted for
"Redeemable preference shares" by the Companies (Amendment) Act,
1988, w.e.f. 15-6-1988.
12a. Substituted for 'share' by the Companies (Amendment) Act, 1999,
w.r.e.f. 31-10-1998.
13. Substituted for
"fund" by the Companies (Amendment) Act, 1960.
(2) Subject to the provisions
of this section, the redemption of preference shares thereunder may be effected
on such terms and in such manner as may be provided by the articles of the
company.
(3) The redemption of
preference shares under this section by a company shall not be taken as
reducing the amount of its authorised share capital.
(4) Where in pursuance of this
section, a company has redeemed or is about to redeem any preference shares, it
shall have power to issue shares up to the nominal amount of the shares
redeemed or to be redeemed as if those shares had never been issued; and
accordingly the share capital of the company shall not, for the purpose of
calculating the fees payable under 14[section
611], be deemed to be increased by the issue of shares in pursuance of this
sub-section:
Provided
that, were new shares are issued before the redemption of the old shares, the
new shares shall not, so far as relates to stamp duty, be deemed to have been
issued in pursuance of this sub-section unless the old shares are redeemed
within one month after the issue of the new shares.
(5) The capital redemption
reserve 15[account]
may, notwithstanding anything in this section, be applied by the company, in
paying up unissued shares of the company to be issued to members of the company
as fully paid bonus shares.
16[(5A)
Notwithstanding anything contained
in this Act, no company limited by shares shall, after the commencement of the
Companies (Amendment) Act, 1996, issue any preference share which is
irredeemable or is redeemable after the expiry of a period of twenty years from
the date of its issue.]
(6) If a company fails to
comply with the provisions of this section, the company, and every officer of
the company who is in default, shall be punishable with fine which may extend
to one thousand rupees.
80A. 17[Redemption of irredeemable preference shares,
etc. -
(1) Notwithstanding anything contained in the terms of issue of any
preference shares, every preference share issued before the commencement of the
Companies (Amendment) Act, 1988, -
(a) Which is irredeemable,
shall be redeemed by the company within a period not exceeding five years from
such commencement, or
(b) Which is not redeemable
before the expiry of ten years from the date of issue thereon in accordance
with the terms of its issue and which had not been redeemed before such
commencement, shall be redeemed by the company on the date on which such share
is due for redemption or within a period not exceeding ten years from such
commencement, whichever is earlier:
Provided
that where a company is not in a position to redeem any such share within the period
aforesaid and to pay the dividend, if any, due thereon (such shares being
hereinafter referred to as unredeemed preference shares), it may, with the
consent of the Company Law Board", on a petition made by it in this behalf
and notwithstanding anything contained in this Act, issue further redeemable
preference shares equal to the amounts due (including the dividend thereon), in
respect of the unredeemed preference shares, and on the issue of such further
redeemable preference shares, the unredeemed shares shall be deemed to have
been redeemed.
14. Substituted for
"section 601 " by the Companies (Amendment) Act, 1960.
15. Substituted for
"fund", ibid.
16. Substituted by the
Companies (Amendment) Act, 1996, w.e.f. 1-3-1997. Prior to its substitution, sub-section (5A), as inserted by the
Companies (Amendment) Act, 1988, w.e.f. 15-6-1988.
17. Inserted by the Companies
(Amendment) Act, 1988, w.e.f. 15-6-1988.
18. Prescribed fees are Rs.
500.
(2) Nothing contained in
section 106 or any scheme referred to in sections 391 to 395, or in any scheme
made under section 396, shall be deemed to confer power on any class of
shareholders by resolution or on any court or the Central Government to vary or
modify the provisions of this section.
(3) If any default is made in
complying with the provisions of this section, -
(a) The company making such
default shall be punishable with fine which may extend to one thousand rupees
for every day during which such default continues; and
(b) Every officer of the
company who is in default shall be punishable with imprisonment for a term
which may extend to three years and shall also be liable to fine.]
Further issue of
capital
1981. Further issue of
capital. -
(1) 20[Where
at any time after the expiry of two years from the formation of a company or at
any time after the expiry of one year from the allotment of shares in that
company made for the first time after its formation, whichever is earlier, it
is proposed to increase the subscribed capital of the company by allotment of
further shares, then. -]
(a) Such 21[further] shares
shall be offered to the persons who, at the date of the offer, are holders of
the equity shares of the company, in proportion, as nearly as circumstances
admit, to the capital paid-up on those shares at that date;
(b) The offer aforesaid shall
be made by notice specifying the number of shares offered and limiting a time
not being less than fifteen days from the date of the offer within which the
offer, if not accepted, will be deemed to have been declined;
(c) Unless the articles of
the company otherwise provide, the offer aforesaid shall be deemed to include a
right exercisable by the person concerned to renounce the shares offered to him
or any of them in favour of any other person; and the notice referred to in
clause (b) shall contain a statement of this right;
(d) After the expiry of the
time specified in the notice aforesaid, or on receipt of earlier intimation
from the person to whom such notice is given that he declines to accept the shares
offered, the Board of directors may dispose of them in such manner as they
think most beneficial to the company.
19. For clarifications on this
section, refer Taxmanns Master Guide, to Companies Act.
20. Substituted for 'Where at
any time subsequent to the first allotment of shares in a company, it is
proposed to increase the subscribed capital of the company by the issue of new
shares, then, subject to any directions to the contrary which may be given by
the company in general meeting, and subject only to those directions' by the
Companies (Amendment) Act, 1960.
21. Substituted for "new'
by the Companies (Amendment) Act, 1960.
Explanation: In this sub-section, 'equity share
capital" and "equity shares" have the same meaning as in section
85.
22[(1A)
Notwithstanding anything contained in sub-section (1), the further shares
aforesaid may be offered to any persons [whether or not those persons include
the persons referred to in clause (a) of sub-section (1)] in any manner
whatsoever-
(a) If a special resolution
to that effect is passed by the company in general meeting, or
(b) Where no such special
resolution is passed, if the votes cast (whether on a show of hands, or on a
poll, as the case may be) in favour of the proposal contained in the resolution
moved in that general meeting (including the casting vote, if any, of the
chairman) by members who, being entitled so to do, vote in person, or where
proxies are allowed, by proxy, exceed the votes, if any, cast against the
proposal by members so entitled and voting and the Central Government is
satisfied, on an application made by the Board of directors in this behalf,
that the proposal is most beneficial to the company.]
(2) Nothing in clause (c) of
sub-section (1) shall be deemed-
(a) To extend the time within
which the offer should be accepted, or
(b) To authorise any person
to exercise the right of renunciation for a second time, on the ground that the
person in whose favour the renunciation was first made has declined to take the
shares comprised in the renunciation.
21[(3)
Nothing in this section shall apply-
(a) To a private company; or
(b) To the increase of the
subscribed capital of a public company caused by the exercise of an option
attached to debentures issued or loans raised by the company-
(i) To convert such
debentures or loans into shares in the company, or
(ii) To subscribe for shares
in the company:
24[Provided that the
terms of issue of such debentures or the terms of such loans include a term
providing for such option and such term-
(a) Either has been approved
by the Central Government before the issue of debentures or the raising of the
loans, or is in conformity with the rules25, if any, made by that Government in this
behalf; and
(b) In the case of debentures
or loans other than debentures issued to, or loans obtained from, the
Government or any institution 26 specified by the Central Government in this
behalf, has also been approved by a special resolution passed by the company in
general meeting before the issue of the debentures or the raising of the
loans.]]
22. Inserted by the Companies
(Amendment) Act, 1960.
23. Substituted by the
Companies (Amendment) Act, 1960. For
the original sub-section, refer Appendix I.
24. Substituted by the
Companies (Amendment) Act, 1963, w.e.f. 1-1-1964. For the proviso, as inserted by the Companies (Amendment) Act,
1960, refer Appendix I.
25. Refer Public Companies
(Terms of Issue of Debentures and Raising of Loans with option to convert such
Debentures or Loans into Shares) Rules, 1977.
26. For institutions specified
for the purposes of clause (b) of the proviso, refer Taxmann's Master Guide to
Companies Act.
27[(4) Notwithstanding anything contained in the
foregoing provisions of this section, where any debentures have been issued to,
or loans have been obtained from, the Government by a company, whether such
debentures have been issued or loans have been obtained before or after the
commencement of the Companies (Amendment) Act, 1963, the Central Government
may, if in its opinion it is necessary in the public interest so to do, bv
order, direct that such debentures or loans or any part thereof shall be
converted into shares in the company on such terms and conditions as appear to
that Government to be reasonable in the circumstances of the case, even if the
terms of issue of such debentures or the terms of such loans do not include a
term providing for an option for such conversion."
(5) In determining the terms
and conditions of such conversion, the Central Government shall have due regard
to the following circumstances, that is to say, the financial position of the
company, the terms of issue of the debentures or the terms of the loans, as the
case may be, the rate of interest payable on the debentures or the loans, the capital
of the company, its loan liabilities, its reserves, its profits during the
preceding five years and the current market price of the shares in the company.
(6) A copy of every order
proposed to be issued by the Central Government under sub-section (4) shall be
laid in draft before each House of Parliament while it is in session for a
total period of thirty days which may be comprised in one session or in two or
more successive sessions.
(7) If the terms and
conditions of such conversion are not acceptable to the company, the company
may, within thirty days from the date of communication to it of such order or
within such further time as may be granted by the Court, prefer an appeal to
the Court in regard to such terms and conditions and the decision of the Court
on such appeal and, subject only to such decision, the order of the Central
Government under sub-section (4) shall be final and conclusive.]
PARTIV
SHARE
CAPITAL AND DEBENTURES
Nature,
numbering and certificate of shares
82. Nature
of shares 29[or debentures]. -The shares 29[or debentures] or other interest of any
member in a company shall be movable property, transferable in the manner
provided by the articles of the company.
27. Inserted by the Companies
(Amendment) Act, 1963, w.e.f. 1-1-1964.
28. See Form No. 5 of General
Rules & Forms.
29. Inserted by the Companies
(Amendment) Act, 1999, w.e.f. 31-10-1998.
83. 30[Numbering of shares. -Each share in a company having a share
capital shall be distinguished by its appropriate number:
Provided that nothing in this section shall apply to the shares held with
a depository.]
31[(1)] A certificate, under the common seal of the
company, specifying any shares held by any rp ember, shall be prima facie
evidence of the title of the member to such shares.
32[(2) A certificate may be renewed or a duplicate
of a certificate may be issued if such certificate-
(a) Is proved to have been
lost or destroyed, or
(b) Having been defaced or
mutilated or torn is surrendered to the company.
(3) If a company with intent
to defraud renews a certificate or issues a duplicate thereof, the company
shall be punishable with fine which may extend to ten thousand rupees and every
officer of the company who is in default shall be punishable with imprisonment
for a term which may extend to six months, or with fine which may extend to ten
thousand rupees, or with both.
(4) Notwithstanding anything
contained in the articles of association of a company, the manner of issue or
renewal of a certificate or issue of a duplicate thereof, the form of a
certificate (original or renewed) or of a duplicate thereof, the particulars to
be entered in the register of members or in the register of renewed or
duplicate certificates, the form of such registers, the fee on payment of
which, the terms and conditions, if any (including terms and conditions as to
evidence and indemnity and the payment of out-of-pocket expenses incurred by a
company in investigating evidence) on which a certificate may be renewed or a
duplicate thereof may be issued, shall be such as may be prescribed".]
Kinds of share
capital
85. Two
kinds of share capital.
(1) "Preference share capital" means, with reference to
any company limited by shares, whether formed before or after the commencement
of this Act, that part of the share capital of the company which fulfils both
the following requirements, namely:-
(a) That as respects
dividends, it carries or will carry a preferential right to be paid a fixed
amount or an amount calculated at a fixed rate, which may be either free of or-
subject to income-tax; and
30. Inserted by the
Depositories Related Laws (Amendment) Act, 1997, w.e.f.15-1-1997.Earlier
existing section 83 was omitted by the Depositories Act, 1996, w.e.f. 20-9-1995.
31. Renumbered as sub-section
(1) by the Companies (Amendment) Act, 1960.
32. Inserted ibid.
33. Refer Companies (Issue of
Share Certificates) Rules, 1960.
(b) That as respect capital, it carries or will carry, on a winding up or repayment of capital, a preferential right to be repaid the amount of the capital paid-up whether or not there is a preferential right to the payment of either or both of the following amounts, namely: -
(i) Any money remaining
unpaid, in respect of the amounts specified in clause (a), up to the date of
the winding up or repayment of capital; and
(ii) Any fixed premium or
premium on any fixed scale, specified in the memorandum or articles of the
company.
Explanation: Capital
shall be deemed to be preference capital, notwithstanding that it is entitled
to either or both of the following rights, namely: -
(i) That, as respects
dividends, in addition to the preferential right to the amount specified in
clause (a), it has a right to participate, whether fully or to a limited
extent, with capital not entitled to the preferential right aforesaid;
(ii) That, as respects
capital, in addition to the preferential right to the repayment, on a winding
up, of the amounts specified in clause (b), it has a right to participate, whether
fully or to a limited extent, with capital not entitled to that preferential
right in any surplus which may remain after the entire capital has been repaid.
(2) "Equity share
capital" means, with reference to any such company, all share capital,
which is not preference share capital.
(3) The expressions
"preference share' and "equity share" shall be construed
accordingly.
86. New
issues of share capital to be only of two kinds. -The share capital of a company limited by
shares formed after the commencement of this Act, or issued after such
commencement, shall be of two kinds only, namely: -
(a) Equity share capital; and
(b) Preference share capital.
(1) Subject to the provisions
of section 89 and subsection (2) of section 92, -
(a) Every member of a company
limited by shares and holding anv equity share capital therein shall have a
right to vote, in respect of such capital, on every resolution placed before
the company; and
(b) His voting right on a
poll shall be in proportion to his share of the paid up equity capital of the
company.
(2) (a) Subject as aforesaid and save as provided
in clause (b) of this sub-section, every member of a company limited by shares
and holding any preference share capital therein shall, in respect of such
capital, have a right to vote only on resolutions placed before the company
which directly affect the rights attached to his preference shares.
Explanation: Any resolution for winding up the company
or for the repayment or reduction of its share capital shall be deemed directly
to affect the rights attached to preference shares within the meaning of this
clause.
(b) Subject as aforesaid,
every member of a company limited by shares and holding any preference share
capital therein shall, in respect of such capital, be entitled to vote on every
resolution placed before the company at any meeting, if the dividend due on
such capital or any part of such dividend has remained unpaid-
(i) In the case of
cumulative preference shares, in respect of an aggregate period of not less
than two years preceding the date of commencement of the meeting; and
(ii) In the case of
non-cumulative preference shares, either in respect of a period of not less
than two years ending with the expiry of the financial year immediately
preceding the commencement of the meeting or in respect of an aggregate period
of not less than three years comprised in the six years ending with the expiry
of the financial year aforesaid.
Explanation: For the purposes of this clause, dividend
shall be deemed to be due on preference shares in respect of any period,
whether a dividend has been declared by the company on such shares for such
period or not,-
(a) On the last day specified
for the payment of such dividend for such period, in the articles or other
instrument executed by the company in that behalf; or
(b) In case no day is so
specified, on the day immediately following such period.
(c) Where the holder of any
preference share has a right to vote on any resolution in accordance with the
provisions of this sub-section, his voting right on a poll, as the holder of
such share, shall, subject to the provisions of section 89 and subsection (2)
of section 92, be in the same proportion as the capital paid-up in respect of
the preference share bears to the total paid-up equity capital of the company.
88. Prohibition
of issue of shares with disproportionate rights. -No company formed after the commencement of
this Act, or issuing any share capital after such commencement, shall issue any
shares (not being preference shares) which carry voting rights or rights in the
company as to dividend, capital or otherwise which are disproportionate to the
rights attaching to the holders of other shares (not being preference shares).
89. Termination
of disproportionately excessive voting rights in existing companies. -
(1) If at the commencement of this Act any shares, by whatever name
called, of any existing company limited by shares carry voting rights in excess
of the voting rights attaching under sub-section (1) of section 87 to equity
shares in respect of which the same amount of capital has been paid-up, the
company shall, within a period of one vear from the commencement of this Act,
reduce the voting rights in respect of the shares first-mentioned so as to
bring them into conformity with the voting rights attached to such equity
shares under sub-section (1) of section 87.
(2) Before the voting rights
are brought into such conformity, the holders of the shares in question shall
not exercise in respect thereof voting rights in excess of what would have been
exercisable by them if the capital paid-up on their shares had been equity
share capital, in respect of the following resolutions placed before the
company, namely: -
(a) Any resolution relating
to the appointment or re-appointment of a director *[or of a managing agent or
secretaries and treasurers], or to any variation in the terms of an agreement
between the company and a managing or wholetime director thereof *[or its
managing agent or secretaries and treasurers];
(b) Any resolution relating
to the appointment of buying or selling agents; any resolution relating to the
grant of a loan or to the giving of a guarantee or any other financial
assistance, to any other body corporate having any person as managing agent or
secretaries and treasurers who is also either the managing agent or the
secretaries and treasurers of the company or an associate of such managing
agent or secretaries and treasurers.]
(3) If, by reason of the
failure of the requisite proportion of any class of members to agree, it is not
found possible to comply with the provisions of sub-section (1), the company
shall, within one month of the expiry of the period of one year mentioned in
that subsection, apply to the Court for an order specifying the manner in which
the provisions of that sub-section shall be complied with; and any order made
by the Court in this behalf shall bind the company and all its shareholders.
If
default is made in complying with this sub-section, the company, and every
officer of the company who is in default, shall be punishable with fine, which
may extend to one thousand rupees.
(4) The Central Government
may, in respect of any shares issued by a company before the Ist day of
December, 1949, exempt the company from the requirements of sub-sections (1),
(2) and (3), wholly or in part, if in the opinion of the Central Government the
exemption is required either in the public interest or in the interests of the
company or of any class of shareholders therein or of the creditors or any
class of creditors thereof.
Every
order of exemption made by the Central Government under this subsection shall
be laid before both Houses of Parliament as soon as may be after it is made.
(1) Nothing in sections 85,
86, 88 and 89 shall, in the case of any shares issued by a public, company
before the commencement of this Act, affect any voting rights attached to the
shares save as otherwise provided in section 89, or any rights attached to the
shares as to dividend, capital or otherwise.
(2) Nothing in sections 85 to
89 shall apply to a private company, unless it is a subsidiary of a public
company.
(3) For the removal of
doubts, it is hereby declared that on and from the commencement of the
Companies (Amendment) Act, 1974, the provisions of section 87 shall apply in
relation to the voting rights attached to preference shares issued by a public
company before the 1st day of april, 1956,astheyapply to the
preference shares issued by a public company after that date.
Explanation: For
the purposes of this section, references to a public company shall be construed
as including references to a private company which is a subsidiary of a public
company.]
34. Substituted by the
Companies (Amendment) Act, 1974, w.e.f. 1-2-1975. For the original section, refer Appendix
I.
Miscellaneous
provisions as to share capital
91. Calls on shares of same class to be made on uniform basis. -Where after the commencement of this Act, any
calls for further share capital are made on shares, such calls shall be made on
a uniform basis on all shares falling under the same class.
Explanation: For
the purposes of this section, shares of the same nominal value on which
different amounts have been paid-up shall not be deemed to fall under the same
class.
92. Power
of company to accept unpaid share capital, although not called up.
(1) A company may, if so authorised by its articles accept from
any member the whole or a part of the amount remaining unpaid on any shares
held by him, although no part of that amount has been called up. (2) The member
shall not however be entitled, where the company is one limited by shares, to
any voting rights in respect of the moneys so paid by him until the same would,
but for such payment, become presently payable.
93. Payment
of dividend in proportion to amount paid-up. A company may, if so authorised by its
articles, pay dividends in proportion to the amount paid-up on each share where
a larger amount is paid-up on some shares than on others.
3594. Power of limited company to alter its share capital. -
(1) A limited company having a share capital, may, if so authorised
by its articles, alter the conditions of its memorandum as follows, that is to
say, it may-
(a) Increase its share
capital by such amount as it thinks expedient by issuing new shares;
(b) Consolidate and divide
all or any of its share capital into shares of larger amount than its existing
shares;
(c) Convert all or any of its
f ullv paid-up shares into stock, and reconvert that stock into fully paid-up
shares of any denomination;
(d) Sub-divide its shares, or
any of them, into shares of smaller amount than is fixed by the memorandum, so
however, that in the sub-division the proportion between the amount p,-id and
the amount, if any, unpaid on each reduced share shall be the same as it was in
the case of the share from which the reduced share is derived;
35. For clarification on this
section, refer Taxmanns Master Guide to Companies Act.
(e) Cancel shares which, at
the date of the passing of the resolution in that behalf have not been taken or
agreed to be taken by any person, and diminish the amount of its share capital
by the amount of the shares so cancelled.
(2) The powers conferred by
this section shall be exercised bv the company in general meeting and shall not
require to be confirmed by the Court. (3) A cancellation of shares in pursuance
of this section shall not be deemed to be a reduction of share capital within
the meaning of this Act.
94A. 36[Share
capital to stand increased where an order is made under section 81(4).
(1) Notwithstanding anything
contained in this Act, where the Central Government has, by an order made under
sub-section (4) of section 81, directed that any debenture or loan or any part
thereof shall be converted into shares in a company, the conditions contained
in the memorandum of such company shall, where such order has the effect of
increasing the nominal share capital of the company, stand altered and the
nominal share capital of such company shall stand increased by an amount equal
to the amount of the value of the shares into which such debentures or loans or
part thereof has been converted.
(2) Where, in pursuance of an
option attached to debentures issued or loans raised by the company, any public
financial institution proposes to convert such debentures or loans into shares
in the company, the Central Government may, on the application of such public
financial institution, direct that the conditions contained in the memorandum
of such company shall stand altered and the nominal share capital of such
company shall stand increased by an amount equal to the amount of the value of
the shares into which such debentures or loans or part thereof has been
converted.
(3) Where the memorandum of a
company becomes altered, whether by reason of an order made by the Central
Government under sub-section (4) of section 81 or sub-section (2) of this
section, the Central Government shall send a copy of such order to the
Registrar and also to the company and on receipt of such order, the company
shall file in the prescribed form", within thirty days from the date of
such receipt, a return to the Registrar with regard to the increase of share
capital and the Registrar shall, on receipt of such order and, return, carry
out the necessary alterations in the memorandum of the company.]
95. Notice
to Registrar of consolidation of share capital, conversion of shares into
stock, etc. -
(1) If a company having a share capital has-
(a) Consolidated and divided
its share capital into shares of larger amount than its existing shares;
(b) Converted any shares into
stock;
(c) Re-converted any stock
into shares;
(d) Sub-divided its shares or
any of them;
(e) Redeemed any redeemable
preference shares; or
36. Inserted by the Companies
(Amendment) Act, 1974, w.e.f. 1-2-1975.
37. See Form No. 5 of General
Rules & Forms.
(f) Cancelled any shares,
otherwise than in connection with a reduction of share capital under sections
100 to 104 ;
The
company shall within 38[thirty
days] after doing so, give notice39
thereof to the Registrar specifying, as the case may be, the shares
consolidated, divided, converted, sub-divided, redeemed or cancelled, or the
stock reconverted.
(2) The Registrar shall thereupon
record the notice, and make any alterations which may be necessary in the
company's memorandum or articles or both.
(3) If default is made in
complying with sub-section (1), the company, and every officer of the company
who is in default, shall be punishable with fine, which may extend to fifty
rupees for every day during which the default continues.
96. Effect
of conversion of shares into stock. -Where
a company having a share capital has converted any of its shares into stock,
and given notice of the conversion to the Registrar, all the provisions of this
Act which are applicable to shares only, shall cease to apply as to so much of
the share capital as is converted into stock.
97. Notice
of increase of share capital or of members. -
(1) Where a company having a
share capital, whether its shares have or have not been converted into stock,
has increased its share capital beyond the authorised capital, and where a
company, not being a company limited by shares, has increased the number of its
members beyond the registered number, it shall file with the Registrar,
noticc'9 of the increase of capital or of members within 40[thirty]
days after the passing of the resolution authorising the increase; and the
Registrar shall record the increase and also make any alterations which may be
necessary in the company's memorandum or articles or both.
(2) The notice to be given as
aforesaid shall include particulars of the classes of shares affected and the
conditions, if any, subject to which the new shares have been or are to be
issued.
(3) If default is made in
complying with this section, the company, and every officer of the company who
is in def ault, shall be punishable with fine, which may extend to fifty rupees
for every day during which the default continues.
98. Power
of unlimited company to provide for reserve share capital on re-registration. -An unlimited company having a share capital may, by
its resolution for registration as a limited company in pursuance of this Act,
do either or both of the following things, namely:-
(a) Increase the nominal
amount of its share capital by increasing the nominal amount of each of its
shares, but subject to the condition that no part of the increased capital
shall be capable of being called up except in the event and for the purposes of
the company being wound up;
(b) Provide that a specified
portion of its uncalled share capital shall not be capable of being called up
except in the event and for the purposes of the company being wound up.
38. Substituted for "one month' by the
Companies (Amendment) Act, 1965, w.e.f.15-10-1965.
39. See Form No. 5 of General
Rules & Forms.
40. Substituted for
"fifteen" by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
99. Reserve
liability of limited company. -A limited
company may, by special resolution, determine that any portion of its share
capital which has not been already called up shall not be capable of being
called up, except in the event and for the purposes of the company being wound
up, and thereupon that portion of its share capital shall not be capable of
being called up except in that event and for those purposes.
Reduction of
share capital
100. Special
resolution for reduction of share capital. -
(1) Subject to confirmation by the Court, a company limited by
shares or a company limited by guarantee and having a share capital, may, if so
authorised by its articles, by special resolution, reduce its share capital in
any way; and in particular and without prejudice to the generality of the
foregoing power, may-
(a) Extinguish or reduce the
liability on any of its shares in respect of share capital not paid-up;
(b) Either with or without
extinguishing or reducing liability on any of its shares, cancel any paid-up
share capital which is lost, or is unrepresented by available assets; or
(c) Either with or without
extinguishing or reducing liability on any of its shares pays of any paid-up
share capital, which is in excess of the wants of the company;
And
may, if and so far as is necessary, alter its memorandum by reducing the amount
of its share capital and of its shares accordingly.
(2) A special resolution
under this section is in this Act referred to as "a resolution for
reducing share capital'.
(1) Where a company has passed are solution for reducing share
capital, it may apply, by petition, to the Court for an order confirming the
reduction.
(2) Where the proposed reduction
of share capital involves either the diminution of liability in respect of
unpaid share capital or the payment to any shareholder of any paid-up share
capital, and in any other case if the Court so directs, the following
provisions shall have effect, subject to the provisions of sub-section (3): -
(a) Every creditor of the
company who at the date fixed by the Court is entitled to any debt or claim
which, if that date were the commencement of the winding up of the company,
would be admissible in proof against the company, shall be entitled to object
to the reduction;
(b) The Court shall settle a
list of creditors so entitled to connect, and for that purpose shall ascertain,
as far as possible without requiring an application from any creditor, the names
of those creditors and the nature, and amount of their debts or claims, and may
publish notices fixing a day or days within which creditors not entered on the
list are to claim to be so entered or are to be excluded from the right of
objecting to the reduction;
(c) Where a creditor entered
on the list whose debt or claim is not discharged or has not determined does
not consent to the reduction, the Court may, if it thinks fit, dispense with
the consent of that creditor, on the company securing payment of his debt or
claim by appropriating, as the Court may direct, the following amount: -
(i) If the company admits
the full amount of the debt or claim, or, though not admitting it, is willing
to provide for it, then, the full amount of the debt or claim;
(ii) If the company does not
admit and is not willing to provide for the full amount of the debt or claim,
or if the amount is contingent or not ascertained, then, an amount fixed by the
Court after the like inquiry and adjudication as if the company were being
wound up by the Court.
(3) Where a proposed
reduction of share capital involves either the diminution of any liability in
respect of unpaid share capital or the payment to any shareholder of any
paid-up share capital, the Court may, if, having regard to any special
circumstances of the case, it thinks proper so to do, direct that the
provisions of sub-section (2) shall not apply as regards any class or any
classes of creditors.
102. Order
confirming reduction and powers of Court on making such order. -
(1) The Court, if satisfied
with respect to every creditor of the company who under section IO 1 is
entitled to object to the reduction, that either his consent to the reduction
has been obtained or his debt or claim has been discharged, or has determined,
or has been secured, may make an order confirming the reduction on such terms
and conditions as it thinks fit.
(2) Where the Court makes any
such order, it may-
(a) If for any special reason
it thinks proper so to do, make an order directing that the company shall,
during such period commencing on, or at any time after, the date of the order,
as is specified in the order, add to its name as the last words thereof the
words "and reduced"; and
(b) Make an order requiring
the company to publish as the Court directs the reasons for reduction or such
other information in regard thereto as the Court may think expedient with a
view to giving proper information to the public, and, if the Court thinks fit,
the causes which led to the reduction.
(3) Where a company is
ordered to add to its name the words "and reduced", those words
shall, until the expiration of the period specified in the order, be deemed to
be part of the name of the company.
103. Registration
of order and minute of reduction. -
(1) The Registrar-
(a) On production to him of
an order of the Court confirming the reduction of the share capital of a
company; and
(b) On the delivery to him of
a certified copy of the order and of a minute approved by the Court showing,
with respect to the share capital of the company as altered by the order, (i)
the amount of the share capital, (ii) the number of shares into which it is to
be divided, (iii) the amount of each share, and (iv) the amount, if any, at the
date of the registration deemed to be paid-up on each share;
Shall
register the order and minute.
(2) On the registration of
the order and minute, and not before, the resolution for reducing share capital
as confirmed by the order shall take effect.
(3) Notice of the
registration shall be published in such manner as the Court may direct.
(4) The Registrar shall
certify under his hand the registration of the order and minute, and his
certificate shall be conclusive evidence that all the requirements of this Act
with respect to reduction of share capital have been complied wih, and that the
share capital of the company is such as is stated in the minute,
(5) The minute when
registered shall be deemed to be substituted for the corresponding part of the
memorandum of the company, and shall be valid and alterable as if it had been
originally contained therein.
(6) The substitution of any
such minute as aforesaid forpart of the memorandum of the company shall be
deemed to be an alteration of the memorandum within the meaning and for the
purposes of section 40.
104. Liability
of members in respect of reduced shares. -
(1) Amember of the company, past or present, shall not beliable, in
respect of any share, to any call or contribution exceeding in amount the
difference, if any, between the amount paid on the share, or the reduced
amount, if any, which is to be deemed to have been paid thereon, as the case
may be, and the amount of the share as fixed by the minute of reduction:
Provided
that, if any creditor entitled in respect of any debt or claim to object to the
reduction of share capital is, by reason of his ignorance of the proceedings
for reduction or of their nature and effect with respect to his debt or claim,
not entered on the list of creditors, and after the reduction the companv is
unable, within the meaning of section 434, to pay the amount of his debt or
claim, then-
(a) Every person who was a
member of the company at the date of the registration of the order for
reduction and minute, shall be liable to contribute for the payment of that
debt or claim an amount not exceeding the amount which he would have been
liable to contribute if the company had commenced to be wound up on the day
immcdiately before the said date; and
(b) If the company is wound
up, the Court, on the application of any such creditor and proof of his
ignorance as aforesaid, may, if it thinks fit, settle accordingly a list of
persons so liable to contribute, and make and enforce calls and orders on the
contributories settled on the list, as if they were ordinary contributoi-ies in
a winding up.
(2) Nothing in this section
shall affect the rights of the contributories among themselves.
105. Penalty
for concealing name of creditor, etc. -If any officer of the company-
(a) Knowingly conceals the
name of any creditor entitled to object to the reduction;
(b) Knowingly misrepresents
the nature or amount of the debt or claim of any creditor; or
(c) Abets or is privy to any
such concealment or misrepresentation as aforesaid;
He
shall be punishable with imprisonment for a term, which may extend to one year,
or with fine, or with both.
Variation of
shareholders'rights
106. 41[Alteration of
rights of holders of special classes of shares. -Where the share capital of a company is divided into
different classes of shares, the rights attached to the shares of any class may
be varied with the consent in writing of the holders of not less than
three-fourths of the issued shares of that class or with the sanction of a
special resolution passed at a separate meeting of the holders of the issued
shares of that class-
(a) If provision with respect
to such variation is contained in the memorandum or articles of the company, or
(b) In the absence of any
such provision in the memorandum or articles, if such variation is not prohibited
by the terms of issue of the shares of that class.]
107. Rights
of dissentient shareholders. -
(1) If, in pursuance of any provision such as is referred to in
section 106, the rights attached to any such class of shares are at any time
varied, the holders of not less in the aggregate than ten per cent of the
issued shares of that class being persons who did not consent to or vote in
favour of the resolution for the variation, may apply to the Court to have the
variation cancelled, and where any such application is made, the variation
shall not have effect unless and until it is confirmed by the Court.
(2) An application under this
section shall be made within twenty-one days after the date on which the
consent was given or the resolution was passed, as the case may be, and may be
made on behalf of the shareholders entitled to make the application by such one
or more of their number as they may appoint in writing for the purpose.
(3) On any such application,
the Court, after hearing the applicant and-any other persons who apply to the
Court to be heard and appear to the Court to be interested in the application,
may, if it is satisfied, having regard to all the circumstances of the case,
that the variation would unfairly prejudice the shareholders of the class
represented by the applicant, disallow the variation: and shall, if not so
satisfied, confirm the variation.
41. Substituted by the
Companies (Amendment) Act, 1960. For the original section, refer Appendix I.
(4) The decision of the Court
on any such application shall be final.
(5) The company shall, within
41[thirty] days after
the service on the company of any order made on any such application, forward a
copy of the order to the Registrar; and if default is made in complying with
this provision, the company, and every officer of the company who is in
default, shall be punishable with fine which may extend to fifty rupees.
Transfer of
shares and debentures
108. Transfer
not to be registered except on production of instrument of transfer. -
(1) A company shall not
register a transfer of shares in, or debentures of, the company, unless a
proper instrument of transfer duly stamped and executed by'or on behalf of the
transferor and by or on behalf of the transferee and specifying the name,
address and occupation, if any, of the transferee, has been delivered to the
company along with the certificate relating to the shares or debentures, or if
no such certificate is in existence, along with the letter of allotment of the
shares or debentures:
Provided
that where, on an application in writing made to the company by the transferee
and bearing the stamp required for an instrument of transfer, it is proved to
the satisfaction of the Board of directors that the instrument of transfer
signed by or on behalf of the transferor and by or on behalf of the transferee
has been lost, the company may register the transfer on such terms as to
indemnity as the Board may think fit:
Provided
further that nothing in this section shall prejudice any power of the company
to register as shareholder or debenture-holder any person to whom the right to
any shares in, or debentures of, the company has been transmitted by operation
of law.
44[(1A)
Every instrument of transfer of shares
shall be in such form as may be prescribed45, and-
(a) Every such form shall,
before it is signed by or on behalf of the transferor and before any entry is
made therein, be presented to the prescribed authority46, being a person
already in the service of the Government, who shall stamp or otherwise endorse
thereon the date on which it is so presented, and
(b) Every instrument of
transfer in the prescribed form47
with the date of such presentation stamped or otherwise endorsed thereon shall,
after it is executed by or on behalf of the transferor and the transferee and
completed in all other respects, be delivered to the company, -
(i) In the case of shares
dealt in or quoted on a recognised stock exchange, at any time before the date
on which the register of members is closed, in accordance with law, for the
first time after the date of the presentation of the prescribed form to the
prescribed authority under clause (a) or within 48[twelve] months from the date of such
presentation, whichever is later;
(ii) In any other case,
within two months from the date of such presentation.
42. Substituted for 'fifteen'
by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
43. For clarification on this
section, refer Appendix i.
44. Substituted for
sub-sections (1A), (1 B) and (1C) by the Companies (Second Amendment) Act,
1966, w.e.f. 1-4-1966. Earlier they
were inserted by the Companies (Amendment) Act, 1965, w.e.f. 1-4-1966. For the sub-sections, as they stood prior to
their substitution, refers Appendix I.
45. See Rule 5A & Form No.
7B of General Rules & Forms.
46. Prescribed authority is
Registrar/notified authority.
47. Form 7B of General Rules
& Forms. In case of companies
listed with OTCEI, Form No. 7BB has been prescribed.
48. Substituted for
"two" bY the Companies Amendment Act 1988 w.e.f. 15-6-1988.
(lB) Notwithstanding anything
contained in sub-section (IA), an instrument of transfer of shares, executed
before the commencement of section 13 of the Companies (Amendment) Act, 1965
(31 of 1965), or executed after such commencement in a form other than the
prescribed form, shall be accepted by a company, -
(a) In the case of shares
dealt in or quoted on a recognised stock exchange, at any time not later than
the expiry of six months from such commencement or the date on which the
register of members is closed, in accordance with law, for the first time after
such commencement, whichever is later;
(b) In any other case, at any
time not later than the expiry of six months from such commencement.
(1C) Nothing contained in
sub-sections (IA) and (IB) shall apply to-
(A) Any share-
(i) Which is held by a
company in any other body corporate in the name of a director or nominee in
pursuance of sub-section (2), or as the case may be, sub-section (3), of
section 49, or
(ii) Which is held by a
corporation, owned or controlled by the Central Government or a State
Government, in any other body corporate in the name of a director or nominee,
or
(iii) In respect of which a
declaration has been made to the Public Trustee under section 153B,
If-
(1) The company or
corporation, as the case may be, stamps or otherwise endorses, on the form of
transfer in respect of such share, the date on which it decides that such share
shall not be held in the name of the said director or nominee or, as the case
may be, in the case of any share in respect of which any such declaration has
been made to the Public Trustee, the Public Trustee stamps or otherwise
endorses, on the form of transfer in respect of such share under his seal, the
date on which the form is presented to him, and
(2) The instrument of
transfer in such form, duly completed in all respects, is delivered to the-
(a) Body corporate in whose
share such company or corporation has made investment in the name of its
director or nominee, or
(b) Company in which such
share is held in trust,
Within
two months of the date so stamped or otherwise endorsed; or
(B) Any share deposited by any
person with-
(i) The State Bank of India,
or
(ii) Any scheduled bank, or
49(iii) Any banking company (other than a
scheduled bank) or financial institution approved by the Central Government by
notification in the Official Gazette (and any such approval may be accorded so
as to be retrospective to any date not earlier than the 1st day of April,
1966), or
(iv) The Central Government or
a State Government or any corporation owned or controlled by the Central
Government or a State Government,
By
way of security for the repayment of any loan or advance to, or for the
performance of any obligation undertaken by, such person, if the bank,
institution, Government or corporation, as the case may be, stamps or otherwise
endorses on the form of transfer of such share-
(a) The date on which such
share is returned by it to the depositor, or
(b) In the case of failure on
the part of the depositor to repay the loan or advance or to perform the
obligation, the date on which such share is released for sale by such bank,
institution, Government or corporation, as the case may be, or
(c) Where the bank,
institution, Government or corporation, as the case may be, intends to get such
share registered in its own name, the date on which the instrument of transfer
relating to such share is executed by it; and
(2) The instrument of
transfer in such form, duly completed in all respects, is delivered to the
company within two months from the date so stamped or endorsed.
Explanation: Where
any investment by a company or a corporation in the name of its director or
nominee referred to in clause (A)(1) or clause (A)(it), or any declaration
referred to in clause (A) (iii), or any deposit referred to in clause (B), of
this sub-section is made after the expiry of the period or date mentioned in
clause (a) of sub-section (1 B) or after the expiry of the period mentioned in
clause (b) of that subsection, as the case may be, the form of transf er, in
respect of the share which is the subject of such investment, declaration or
deposit, means the prescribed form;
Or
(C) Any share which is held in
any company by the Central Government or a State Government in the name of its
nominee, except that every instrument of transfer which is executed on or after
the Ist day of October, 1966, in respect of any such share shall be in the
prescribed form.]
49. For approved financial
institutions, refer Taxmann's Master Guide to Companies Act.
50[(lD) Notwithstanding anythingin sub-section (1A)
orsub-section (1B) 51[orsubsection
(1C)], where in the opinion of the Central Government52 it is necessary so
to do to avoid hardship in any case, that Government may on an
application" made to it in that behalf, extend the periods mentioned in
those sub-sections by such further time as it may deem fit "[whether such
application is made before or after the expiry of the periods aforesaid]; and
th number of extensions granted hereunder and the period of each such extension
shall be shown in the annual report laid before the Houses of Parliament under
section 638".]
(2) In the case of a company
having no share capital, sub-section (1) shall apply as if the references
therein to shares were references instead to the interest of the member in the
company.
55[(3) Nothing contained in this section shall apply
to transfer of security effected by the transferor and the transferee both of
whom are entered as beneficial owners in the records of a depository.]
108A. 56[Restriction
on acquisition of certain shares. -
(1) Except with the previous approval of the Central Government, no
individual, firm, group, constituent of a group, body corporate or bodies
corporate under the same management, shall jointly or severally acquire or
agree to acquire, whether in his or its own name or in the name of any other
person, any equity shares in a public company, or a private company which is a
subsidiary of a public company, if the total nominal value of the equity shares
intended to be so acquired exceeds, or would, together with the total nominal
value of any equity shares already held in the company by such individual,
firm, group, constituent of a group, body corporate or bodies corporate under
the same management, exceed twenty-five per cent of the paid-up equity share
capital of such company.
50. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 1-4-1966.
51. Inserted by the Companies
(Second Amendment) Act, 1966, w.e.f. 1-4-1966.
52. Powers are delegated to
Registrar of Companies.
53. Sub-rule (4) of rule 5A of
General Rules and Forms, as substituted by Amendment Rules, 1988, has
prescribed Form 7C in which application is to be made for extension of delivery
period of transfer deed under this sub-section. The power of the Central Government to grant extension of time
has been delegated to the Registrar of Companies. Application for extension can be made either to the Registrar of
the State/Union Territory in which the office of the company is situate orthe
Registrar of the State/Union Territory in which the transferee ordinarily
resides.
54. Rule 2(2) of Companies
(Fees on Application) Rules, 1999 provides that every application made to
Central Government under sub-section (ID) of section 108 shall be accompanied
by appropriate fee as specified below:
Where the face value of the shares involved in a transfer:
(a) Does
not exceed Rs. 5,000 Rs. 50 (b) exceeds Rs. 5,000 Rs. 100.
55. Inserted by the
Depositories Act, 1996, w.r.e.f. 20-9-1995.
56. Inserted by the MRTP
(Amdt.) Act, 1991, w.e.f. 27-9-1991.
Sections 108A to 108H were earlier inserted by the Companies (Amendment)
Act, 1974, and later omitted by the MRTP (Amendment) Act, 1984, w.e.f.
1-8-1984, see Appendix I.
(2) Where any individual,
firm group, constituent of a group, body corporate or bodies corporate under
the same management (hereafter in this Act referred to as the acquirer), is
prohibited, by sub-section (1), from acquiring or agreeing to acquire except
with the previous approval of the Central Government, any share of a public
company or a private company which is a subsidiary of a public company, no-
(a) Company in which not less
than fifty-one per cent of the share capital is held by the Central Government;
or
(b) Corporation (not being a
company) established by or under any Central Act; or
(c) Financial institution,
Shall
transfer or agree to transfer any share to such acquirer unless such acquirer
has obtained the previous approval 17 of the Central Government for the
acquisition, or agreement for the acquisition, of such share.
108B. Restriction
on transfer of shares. -
(1) Every body corporate or bodies corporate under the same
management, holding, whether singly or in the aggregate, ten per cent or more
of the nominal value of the subscribed equity share capital of any other
company shall, before transferring one or more of such shares, give to the
Central Government an intimation of its or their proposal to transfer such
share, and every such intimation shall include a statement as to the
particulars of the share proposed to be transferred, the name and address of
the person to whom the share is proposed to be transferred, the shareholding,
if any, of the proposed transferee in the concerned company and such other
particulars as may be prescribed."
(2) Where, on receipt of an
intimation given under sub-section (1) or otherwise, the Central Government is
satisfied that as a result of such transfer, a change in the composition of the
Board of directors of the company is likely to take place andthat such change
would be prejudicial to the interests of the company or to the public interest,
it may, by order, direct that-
(a) No such share shall be
transferred to the proposed transferee:
Provided
that no such order shall preclude the body corporate or bodies corporate from
intimating, in accordance with the provisions of sub-section (1), to the
Central Government its or their proposal to transfer the share to any other
person, or
57. See rule 5B & Form
7D. Prescribed fee is Rs. 500.
58. See rule 5B +&
Form7E.Prescribed fee isRs.500.
(b) Where such share is held
in a company engaged in any industry specified in Schedule XV, such share shall
be transferred to the Central Government or to such corporation owned or
controlled by that Government as may be specified in the direction.
(3) Where a direction is made
by the Central Government under clause (b) of subsection (2), the share
referred to in such direction shall stand transferred to the Central Government
or to the corporation specified therein, and the Central Government or the
specified corporation, as the case may be, shall pay, in cash, to the body
corporate or bodies corporate from which such share stands transferred, an
amount equal to the market value of such share, within the time specified in
sub-section (4).
Explanation: In this sub-section, "market value
means, in the case of a share which is quoted on any recognised stock exchange,
the value quoted at such stock exchange on the date immediately preceding the
date on which the direction is made, and, in any other case, such value as may
be mutually agreed upon between the holder of the share and the Central
Government or the specified corporation, as the case may be, or in the absence
of such agreement, as may be determined by the court.
(4) The market value referred
to in sub-section (3) shall be given forthwith, where there is no dispute as to
such value or where such value has been mutually agreed upon, but where there
is a dispute as to the market value, such value as is estimated by the Central
Government or the corporation, as the case may be, shall be given forthwith and
the balance, if any, shall be given within thirty days from the date when the
market value is determined by the court.
(5) If the Central Government
does not make any direction under sub-section (2) within sixty days from the
date of receipt by it of the intimation given under subsection (1), the
provisions contained in sub-section (2) with regard to the transfer of such
share shall not appiv.
108C.
Restriction on the transfer of shares of foreign companies. -No body corporate or bodies corporate under
the same management, which holds, or hold in the aggregate, ten per cent or
more of the nominal value of the equity share capital of a foreign company,
having an established place of business in India, shall transfer any share in
such foreign company to any citizen of India or any body corporate incorporated
in India except with the previous approval" of the Central Government and
such previous approval shall not be refused unless the Central Government is of
opinion that such transfer would be prejudicial to the public interest.
108D. Power of Central Government to direct
companies not to give effect to the transfer. -
(1) Where the Central Government is satisfied that as a result of
the transfer of any share or block of shares of a company, a change in the
controlling interest of the company is likely to take place and that such
change would be prejudicial to the interests of the company or to the public
interest, that Government may direct the company not to give effect to the
transfer of any such share or block of shares and-
59. See rule 5B & Form
7E. Prescribed fee is Rs. 500.
(a) Where the transfer of
such share or block of shares has alreadv been registered, not to permit the
transferee or any nominee or proxy Of the transferee, to exercise any voting or
other rights attaching to such share or block of shares; and
(b) Where the transfer of such
share or block of shares has not been registered, not to permit any nominee or
proxy of the transferor to exercise any voting or other rights attaching to
such share or block of shares.
(2) Where any direction is
given by the Central Government under sub-section (1), the share or the block
of shares referred to therein shall stand retransferred to the person from whom
it was acquired, and thereupon the amount paid by the transferee for the
acquisition of such share or block of shares shall be refunded to him by the
person to whom such share or block of shares stands or stand retransferred.
(3) If the refund referred to
in sub-section (2) is not made within the period of thirty days from the date
of the direction referred to in sub-section (1), the Central Government shall,
on the application of the person entitled to get the refund, direct, by order,
the refund of such amount and such order may be enforced as if it were a decree
made by a civil court.
(4) The person to whom any
share or block of shares stands or stand retransferred under sub-section (2)
shall, on making refund under sub-section (2) or subsection (3), be eligible to
exercise voting or other rights attaching to such share or block of shares.
108E.
Time within which refusal to be communicated. Every request made to the Central Government
for accordingits approval to the proposal for the acquisition of any share
referred to in section 108A or the transfer of any share referred to in section
108C shall be presumed to have been granted unless, within a period of sixty
days from the date of receipt of such request, the Central Government
communicates to the person by whom the request was made, that the approval
prayed for cannot be granted.
108F.
Nothing in sections 108A to 108D to apply to Government companies, etc.
-Nothing
contained in section 108A [except sub-section (2) thereof] shall apply to the
transfer of any share to, and nothing in section 108B or section 108C or
section 108D shall apply to the transfer of any share by-
(a) Any company in which not
less than fifty-one per cent of the share capital is held by the Central
Government;
(b) Any corporation (not
being a company) established by or under any Central Act;
(c) Any financial
institution.
108G.
Applicability of the provisions of sections 108A to 108F. The provisions of sections 108A to 108F (both
inclusive) shall apply to the acquisition or transfer of shares or share
capital by, or to, an individual, firm, group, constituent of a group, body
corporate or bodies corporate under the same management, who or which-
(a) Is, in case of
acquisition of shares or share capital, the owner in relation to a dominant
undertaking and there would be, as a result of such acquisition, any increase-
(i) In the production,
supply, distribution or control of any goods that are produced, supplied,
distributed or controlled in India or any substantial part thereof by that
dominant undertaking, or
(ii) In the provision or
control of any services that are rendered in India or any substantial part
thereof by that dominant undertaking; or
(b) Would be, as a result of
such acquisition or transferofsharesorshare capital, the owner of a dominant
undertaking; or
(c) Is, in case of transfer
of shares or share capital, the owner in relation to a dominant undertaking.
108H.
Construction of certain expressions used in sections 108A to 108G. -The expressions "group', 'same
management", "financial institution", 'dominant undertaking' and
'owner' used in sections 108A to 108G (both inclusive), shall have the meanings
respectively assigned to them in the Monopolies and Restrictive Trade Practices
Act, 1969 (54 of 1969).
108-I. Penalty
for acquisition or transfer of share in contravention of sections 108A to 108D.
-
(1) Any person who acquires any share in contravention of the
provisions of section 108A shall be punishable with imprisonment for a term,
which may extend to three years, or with fine, which may extend to five
thousand rupees, or with both.
(2) (a) Every body corporate which makes any
transfer of shares without giving any intimation as required by section 108B,
shall be punishable with fine, which may extend to five thousand rupees.
(b) Where any contravention
of the provisions of section 108B has been made by a company, every officer of
the company who is in default shall be punishable with imprisonment for a term
which may extend to three years, or with fine which may extend to five thousand
rupees, or with both.
(3) (a) Every body corporate which makes any
transfer of shares in contravention of the provisions of section 108C, shall be
punishable with fine which may extend to five thousand rupees.
(b) Where any contravention
of the provisions of section 108C has been made by a company, every officer of
the company who is in default shall be punishable with imprisonment for a term
which may extend to three years, or with fine which may extend to five thousand
rupees, or with both.
(4) (a)
Every person who transfers any
share in contravention of any order made by the Central Government under
section 108B, or gives effect to any transfer of shares made in contravention
of any direction made by the Central Government under section 108D, or who
exercises any voting right in respect of any share in contravention of any direction
made by the Central Government under section 108D, shall be punishable with
imprisonment for a term which may extend to five years, and shall also be
liable to fine.
(b) If
any company gives effect to any voting or other right exercised in relation to
any share acquired in contravention of the provisions of section 108B, or which
gives effect to any voting right in contravention of any direction made by the
Central Government under section 108D, the company shall be punishable with
fine which may extend to five thousand rupees, and every officer of the company
who is in default shall be punishable with imprisonment for a term which may
extend to three years, or with fine which may extend to five thousand rupees,
or with both.]
109. Transfer
by legal representative. -A
transfer of the share or other interest in a company of a deceased member
thereof made by his legal representative shall, although the legal
representative is not himself a member, be as valid as if he had been a member
at the time of the execution of the instrument of transfer.
109A. 60[Nomination
of shares. -
(1) Every holder of shares
in, or holderof debentures of a company may, at any time, nominate, in the
prescribed manner60 a,
a person to whom his shares in, or debentures of, the company shall vest in the
event of his death.
(2) Where the shares in, or
debentures of, a company are held by more than one person jointly, the joint
holders may together nominate, in the prescribed manner, a person to whom all
the rights in the slzares or debentures of the company shall vest in the event
of death of all the joint holders.
(3) Notwithstanding anything
contained in any other law for the time being in force or in any disposition,
whether testamentary or otherwise, in respect olsuch shares in, or debentures
of, the company, where a nomination made in the prescribed mannerpurports to
confer on any person the right to vest the shares in, or debentures of, the
company, the nominee shall, on the death of the shareholderor holderof debentures
of, the company or, as the case may be, on the death of the joint holders
become entitled to all the rights in the shares or debentures of the company
or, as the case may be, all thejoint holders, in relation to such shares in, or
debentures of the company to the exclusion of all other persons, unless the
nomination is varied or cancelled in the prescribed manner.
(4) Where the nominee is a
minor, it shall be lawful for the holder of the shares, or holder of
debentures, to make the nomination to appoint, in the prescribed manner, any
person to become entitled to shares in, or debentures of, the company, in the
event of his death, during the minority.
109B. Transmission
of shares. -
(1) Any person who becomes a
nominee by virtue of the provisions of section 109A upon the production of such
evidence as may be required by the Board and subject as hereinafter provided,
elect, either-
60. Sections 109A and 109B
inserted by the Companies (Amendment) Act, 1999, w.e.f. 31-10-1998.
60a. See rule 5D and Form No. 2B.
(a) To be registercd hiselfas
holder of the share or debenture as the case may be; or
(b) To make such transfer of
the share or debenture as the case may be as the deceased shareholder or
debenture holder, as the case may be, could have acle.
(2) If the person being a
nominee, so becoming entitled, elects to be registered as holder of the share
or debenture, himself, as the case may be, he shall deliver or send to the
company a notice in writingsigned by him stating that he so elects and such
notice shall be accompanied with the death certificate of the deceased
shareholder or debenture holder, as the case may be.
(3) All the limitations,
restrictions and provisions of this Act relating to the right to transfer and
the registration of transfers of shares or debentures shall be applicable
toanysuch notice ortransferasaloresaidasilthedeath ofthe member had not
occurred and the notice or transfer were a transfer signed by that shareholder
or debenture holder, as the case may be.
(4) A person, beinga nominee,
becomingentitledtoashareordebenture by reason of the death of the holder shall
be entitled to the same dividends and other advantages to which he would be
titled if he were the registered holder of the share or debenture except that
he shall not, before being registered a member in respect of his share or
debenture, be entitled in respect of it to exercise any right conferred by
membership in relation to meetings of the company:
Provided
that the Board may, at any the, give notice requiring any such person to elect
either to be registered himself or to transfer the share or debenture, and if
the notice is not complied with within ninety days, the Board may thereafter
withholdpayment of all dividends, bonuses or other moneys payable in respect
oftheshare ordebenture, untilthe requirements ofthe notice have been complied
with.]
110. Application
for transfer. -
(1) An application for the registration of a transfer of the
shares or other interest of a member in a company may be made either by the
transferor or by the transferee.
(2) Where the application is
made by the transferor and relates to partly paid shares, the transfer shall
not be registered, unless the company gives notice of the application to the
transferee and the transferee makes no objection to the transfer within two
weeks from the receipt of the notice.
(3) For the purposes of
sub-section (2), notice to the transferee shall be deemed to have been duly
given if it is despatched by prepaid registered post to the transferee at the
address given in the instrument of transfer, and shall be deemed to have been
duly delivered at the time at which it would have been delivered in the
ordinary course of post.
111. 61[Power
to refuse registration and appeal against refusal. -
(1) If a companu refuses,
whether in pursuance of any power of the company under its articles or
otherwise, to register the transfer of, or the member in, or debentures of the
company, it shall, within two months from the date on which the instrument of transfer,
or the intimation of such transmission, as the case may be, was delivered to
the company, send notice of the refusal to transmission, as the case may be,
giving reasons for sucj refusal.
(2) The transferor or
transferee, or the person who gave intimation of the transmission by operation
of law, as the case may be, may appeal to the Company Law Board against any
refusal of the company to register the transfer or transmission, or against any
failure on its part within the period referred to in sub-section (1), either to
register the transfer or transmission or to send notice of its refusal to
register the same. 62
(3) An appeal under
sub-section (2) shall be made within two months of the receipt of the notice of
such refusal, or where no notice has been sent by the company, within four
months from the date on which the instrument of transfer, or the intimation of
transmission, as the case may be, was delivered to the company.
(4) If. -
(a) The name of any person. -
(i) Is, without sufficient
cause, entered in the register of members of a company, or
(ii) After having been
entered in the register, is, without sufficient cause, omitted therefrom; or
(b) Default is made, or
unnecessary delay takes place, in entering in the register the fact of any
person having become, or ceased to be, a member [including a refusal under
sub-section (1)],
The
person aggrieved, or any member of the company, or the company, may apply to
the company Law Board for rectification of the register.
(5) The company law board,
while dealing with an appeal preferred under sub section (2) or an application
made under sub-section (4) may, after hearing the parties, either dismiss the
appeal or reject the application, or by order. -
(a) Direct that the transfer
or transmission shall be registered by the company and the company shall comply
with such order within ten daus of the receipt of the order; or
(b) Direct rectification of
the register and also direct the company to pay damages, if any sustained by
any party aggrieved.
(6) The company Law Board,
while acting under sub-section (5), may, at its discretion, make. -
61. Substituted by the
Companies (Amendment) Act, 1998, w.e.f. 31-5-1991. For text of original
section, see Appendix I.
62. Prescribed fee is Rs. 500.
(a) Such interim orders,
including any orders as to injunction or stay, as it may deem fit and just;
(b) Such orders as to costs
as it thinks fit; and
(c) Incidental or
consequential orders regarding payment of dividend or the allotment of bonus or
rights shares.
(7) On any application under
this section, the Company Law Board-
(a) May decide any question
relating to the title of any person who is a party to the application to have
his name entered in, or omitted from, the register;
(b) Generally, may decide any
question, which it is necessary or expedient to decide in connection with the
application for rectification.
(8) The provisions of
sub-sections (4) to (7) shall apply in relation to the rectification of the
register of debenture holders as they apply in relation to the rectification of
the register of members. (9) If default is made in giving effect to the orders
of the Company Law Board under this section, the company and every officer of
the company who is in default shall be punishable with fine which may extend to
one thousand rupees, and with a further fine which may extend to one hundred
rupees for every day after the first day after which the default continues.
(10) Every appeal or
application to the Company Law Board under sub-section (2) or sub-section (4)
shall be made by a petition in writing and shall be accompanied by such fee as
may be prescribed.
(11) In the case of a private
company which is not a subsidiary of a public company, where the right to any
shares or interest of a member in, or debentures of, the company is transmitted
by a sale thereof held by a Court or other public authority, the provisions of
sub-sections (4) to (7) shall apply as if the company were a public company:
Provided
that the Company Law Board may, in lieu of an order under sub-section (3), pass
an order dirccting the company to register the transmission of the right unless
any member or members of the company specified in the order acquire the right
aforesaid, within such time as may be allowed for the purpose by the order, on
payment to the purchaser of the price paid by him therefor or such other' sum
as the Company Law Board may determine to be a reasonable compensation for the
right in all the circumstances of the case. (12) If default is made in complying
with any of the provisions of this section, the company and every officer of
the company who is in default, shall be punishable with fine which may extend
to fifty rupees for every day during which the default continues.
(13) Nothing in this section and
section 108, 109 or 110 shall prejudice any power of a private companv under
its articles to enforce the restrictions contained therein against the right to
transfer the shares of such company.]
63[(14) In
this section "company" means a private company and includes a private
company which had become a public company by virtue of section 43A of this
Act.]
63. Inserted by the
Depositories Act, 1996, w.r.e.f. 20-9-1995.
111A. 64[Rectification
of register on transfer. -
(1) In this section, unless the context otherwise requires,
"company' means a company other than a company referred to in sub-section
(14) of section 111 of this Act.
(2) Subject to the provisions
of this section, the shares or debentures and any interest therein of a company
shall be freely transferable:
65[Provided that if a company without sufficient cause
refuses to register transfer of shares within two months from the date on which
the instrument of transfer or the intimation of transfer, as the case may be,
is delivered to the company, the transferee may appeal to the Company Law Board
and it shall direct such company to register the transfer of shares.]
66[(3) The
Company Law Board may, on an application made by a depository, company,
participant or investor or the Securities and Exchange Board of India, if the
transfer of shares or debentures is in contravention of any of the provisions
of the Securities and Exchange Board of India Act, 1992 (15 of 1992), or
regulations made thereunder or the Sick Industrial Companies (Special
Provisions) Act, 1985 (1 of 1986), or any other law for the time being in
force, within two months from the date of transfer of any shares or debentures
held by a depository or from the date on which the instrument of transfer or
the intimation of the transmission was delivered to the company, as the case
may be, after such inquiry as it thinks fit, direct any depository or company
to rectify its register or records.]
(4) The Company Law Board
while acting under sub-section (3), may at its discretion make such interim
order as to suspend the voting rights before making or completing such enquiry.
(5) The provisions of this
section shall not restrict the right of a holder of shares or debentures, to
transfer such shares or debentures and any person acquiring such shares or
debentures shall be entitled to voting rights unless the voting rights have
been suspended by an order of the Company Law Board.
(6) Notwithstanding anything
contained in this section, any further transfer, during the pendency of the application
with the Company Law Board, of shares or debentures shall entitle the
transferee to voting rights unless the voting rights in respect of such
transferee have also been suspended.
(7) The provisions of
sub-sections (5), (7), (9), (I 0) and (I 2) of section I I I shall, so far as
may be, apply to the proceedings before the Company Law Board under this
section as they apply to the proceedings under that section.]
112. Certification
of transfers. -
(1) The certification by a company of any instrument of transfer
of shares in, or debentures of, the company, shall be taken as a representation
by the company to any person acting on the faith of the certification that
there have been produced to the company such documents as on the face of them
show a prima facie title to the shares or debentures in the transferor named in
the instrument of transfer, but not as a representation that the transferor has
any title to the shares or debentures.
(2) Where any person acts on
the faith of an erroneous certification made by a company negligently, the
company shall be under the same liability to him as if the certification had
been made fraudulently.
64. Inserted by the
Depositories Act, 1996, w.e.f. 20-9-1995.
65. Inserted by the
Depositoiies Related Laws (Amendment) Act, 1997, w.e.f. 15-1-1997.
66. Substituted, ibid. Prior to its substitution, sub-section (3)
was inserted by the Depositories Act, 1996, w.r.e.f. 20-9-1995.
(3) For the purposes of this
section-
(a) An instrument of transfer
shall be deemed to be certificated if it bears the words "certificate
lodged" or words to the like effect;
(b) The certification of an
instrument of transfer shall be deemed to be made by a company, if-
(i) The person issuing the
certificated instrument is a person authorised to issue such instruments of
transfer on the company's behalf; and
(ii) The certification is
signed by any officer or servant of the company or any other person, authorised
to certificate transfers on the company's behalf, or if a body corporate has
been so authorised, by any officer or servant of that body corporate;
(c) A certification shall be
deemed to be signed by any person, if it purports to be authenticated by his
signature unless it is shown that the signature was placed there neither by
himself nor by any person authorised to use the signature for the purpose of
certificating transfers on the company's behalf.
Issue of certificate of shares, etc.
113. Limitation
of time for issue of certificates. -
(1) 67[Every
company, unless prohibited by any provision of law or of any order of any
court, tribunal or other authority, shall, within three months after the
allotment of any of its shares, debentures or debenture stock, and within two
months after the application 61 for the registration of the transf er of any
such shares, debentures or debenture stock, deliver, in accordance with the
procedure laid down in section 53, the certificates of all shares, debentures
and certificates of debenture stocks allotted or transferred :
Provided
that the Company Law Board may, on an application being made to it in this
behalf by the company, extend any of the periods within which the certificates
of all debentures and debenture stocks allotted or transferred shall be
delivered under this sub-section, to a further period not exceeding nine
months, if it is satisfied that it is not possible for the company to deliver
such certificates within the said periods.]
The
expression "transfer, for the purposes of this sub-section, means a
transfer duly stamped and otherwise valid, and does not include any transfer
which the company is for any reason entitled to refuse to register and does not
register.
69(2) If
default is made in complying with sub-section (1), the company, and every
officer of the company who is in default, shall be punishable with fine which
may extend to five hundred rupees for every day during which the default
continues.
67. Substituted by the
Companies (Amendment) Act, 1988, w.e.f. 15-6-1988.
68. Prescribed fees is Rs.
500.
69. Prosecution powers are
delegated to SEBI officials.
(3) If any company on which a
notice has been served requiring it to make good any default in complying with
the provisions of sub-section (1), fails to make good the default within ten
days after the service of the notice, the 70[Company
Law Board] may, on the application" of the person entitled to have the
certificates or the debentures delivered to him, make an order directing the
company and any officer of the company to make good the default within such
time as may be specified in the order; and any such order may provide that all
costs of and incidental to the application shall be borne by the company or by
any officer of the company responsible for the default.
71[(4) Notwithstanding
anything contained in sub-section (1), where the securities are dealt with in a
depository, the company shall intimate the details of allotment of securities
to depository immediately on allotment of such securities.]
Share warrants
114. Issue
and effect of share warrants to bearer. -
(1) A public company limited by shares, if so authorised by its
articles, may, with the previous approval of the Central Government, with
respect to any fully paid-up shares, issue under its common seal a warrant
stating that the bearer of the warrant is entitled to the shares therein
specified, and may provide, by coupons or otherwise, for the payment of the
future dividends on the shares specified in the warrant.
(2) The warrant aforesaid is
in this Act referred to as a hare warrant".
(3) A share warrant shall
entitle the bearer thereof to the shares therein specified, and the shares may
be transferred by delivery of the warrant.
115. Share
warrants and entries in register of members. -
(1) On the issue of a share warrant, the company shall strike out
of its register of members the name of the member then entered therein as
holding the shares specified in the warrant as if he had ceased to be a member,
and shall enter in that register the following particulars, namely
(a) The fact of the issue of
the warrant;
(b) A statement of the shares
specified in the warrant, distinguishing each share by its number; and
(c) The date of the issue of
the warrant.
(2) The bearer of a share
warrant shall, subject to the articles of the company, be entitled, on
surrendering the warrant for cancellation and paying such fee to the company as
the Board of directors may from time to time determine, to have his name
entered as a member in the register of members.
(3) The company shall be
responsible for any loss incurred by any person by reason of the company
entering in its register of members the name of a bearer of a share warrant in
respect of the shares therein specified, without the warrant being surrendered
and cancelled.
70. Substituted for'Court"
by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
71. Prescribed fees is Rs. 50.
72. Inserted by the
Depositories Act, 1996, w.r.e.f. 20-9-1995.
(4) Until the warrant is
surrendered, the particulars specified in sub-section (1) shall be deemed to be
the particulars required by this Act to be entered in the register of members;
and, on the surrender, the date of the surrender shall be entered in that
register.
(5) Subject to the provisions
of this Act, the bearer of a share warrant may, if the articles of the company
so provide, be deemed to be a member of the company within the meaning of this
Act, for any purposes defined in the articles. (6) If default is made in
complying with any of the requirements of this section, the company and every
officer of the company who is in default, shall be punishable with fine which
may extend to fifty rupees for every day during which the default continues.
Penalty for personation of shareholder
116. Penalty
for personation of shareholder. -If
any person deceitfulty personatesanownerofanyshareorinterestin a company, or of
any share warrant or coupon issued in pursuance of this Act, and thereby
obtains or attempts to obtain any such share or interest or any such share
warrant or coupon, or receives or attempts to receive any money due to any such
owner, he shall be punishable with imprisonment for a term which may extend to
three years and shall also be liable to fine.
Specialprovisions as to debentures
117. Debentures
with voting rights not to be issued hereafter. -No company shall, after the commencement of
this Act, issue any debentures carrying voting rights at any meeting of the
company, whether generally or in respect of particular classes of business.
118. Right
to obtain copies of and inspect trust deed. -
(1) A copy of any trust deed for securing any issue of debentures
shall be forwarded to the holder of any such debentures or any member of the
company, at his request and within seven days of the making thereof, on
payment-
(a) In the case of a printed
trust deed, of "[such sum as may be prescribed]; and
(b) In the case of a trust
deed which has not been printed, of 74[Such sum as may be prescribed] for every
one hundred words or fractional part thereof required to be copied.
(2) If a copy is refused, or
is not forwarded within the time specified in sub-section (1), the company, and
every officer of the company who is in default, shall be punishable, for each
offence, with fine which may extend to fifty rupees and with a further fine
which may extend to twenty rupees for every day during which the offence
continues.
73. Substituted for "the
sum of one rupee" by the Companies (Amendment) Act, 1988, w.e.f.
15-7-1988, Rs. 10 has been prescribed under rule 21A(2) of General Rules &
Forms as inserted by the Fourth Amendment Rules, 1988.
74. Substituted for "six
annas, ibid. Re. 1 has been prescribed under rule 21 A (2) of
General Rules & Forms as inserted by the Fourth Amendment Rules, 1988.
(3) The "[Company Law
Board] may also, by order, direct that the copy required shall forthwith be
sent to the person requiring it.16
(4) The trust deed referred
to in sub-section (1) shall also be open to inspection by any member or
debenture holder of the company in the same manner, to the same extent, and on
payment of the same fees, as if it were the register of members of the company.
119. Liability
of trustees for debenture holders. -
(1) Subject to the provisions of this section, any provision
contained in a trust deed for securing an issue of debentures, or in any
contract with the holders of debentures secured by a trust deed, shall be void
in so far as it would have the effect of exempting a trustee thereof from, or
indemnifying him against, liability for breach of trust, where he fails to show
the degree of care and diligence required of him as trustee, having regard to
the provisions of the trust deed conferring on him any powers, authorities or
discretions.
(2) Sub-section (1) shall not
invalidate-
(a) Any release otherwise
validly given in respect of anything done or omitted to be done by a trustee
before the giving of the release; or
(b) Any provision enabling
such a release to be given-
(i) On the agreement thereto
of a majority of not less than threefourths in value of the debenture holders
present and voting in person or, where proxies are permitted, by proxy, at a
meeting summoned for the purpose; and
(ii) Either with respect to
specific acts or omissions or on the trustee dying or ceasing to act.
(3) Sub-section (1) shall not
operate-
(a) To invalidate any
provision in force at the commencement of this Act so long as any person then
entitled to the benefit of that provision or afterwards given the benefit
thereof under sub-section (4) remains a trustee of the deed in question; or
(b) To deprive any person of
any exemption or right to be indemnified in respect of anything done or omitted
to be done by him while any such provision was in force.
(4) While any trustee of a
trust deed remains entitled to the benefit of a provision saved by sub-section
(3), the benefit of that provision may be given either-
(a) To all trustees of the
deed, present and future; or
(b) To any named trustees or
proposed trustees thereof;
By
a resolution passed by a majority of not less than three-fourths in value of
the debenture holders present in person or, where proxies are permitted, by
proxy, at a meeting called for the purpose in accordance with the provisions of
the deed or, if the deed makes no provision for calling meetings, at a meeting
called for the purpose in any manner approved by the Court.
75. Substituted for
"Court' by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
76. Prescribed fees is Rs. 50.
120. Perpetual
debentures. -A
condition contained in any debentures or in any deed for securing any
debentures, whether issued or executed before or after the commencement of this
Act, shall not be invalid by reason only that thereby, the debentures are made
irredeemable or redeemable only on the happening of a contingency, however
remote, or on the expiration of a period, however long.
121. Power
to re-issue redeemed debentures in certain cases. -
(1) Where either before or after the commencement of this Act, a
company has redeemed any debentures previously issued, then,-
(a) Unless any provision to
the contrary, whether express or implied, is contained in the articles, or in
the conditions of issue, or in any contract entered into by the company; or
(b) Unless the company has,
by passing a resolution to that effect or by some other act, manifested its
intention that the debentures shall be cancelled;
The
company shall have, and shall be deemed always to have had, the right to keep
the debentures alive for the purposes of rc-issue; and in exercising such a
right, the company shall have, and shall be deemed always to have had, power to
reissue the debentures either by re-issuing the same debentures or by issuing
other debentures in their place.
(2) Upon such rc-issue, the
person entitled to the debentures shall have, and shall be deemed always to
have had, the same rights and priorities as if the debentures had never been
redeemed.
(3) Where with the object of
keeping debentures alive for the purpose of re-issue, they have, either before
or after the commencement of this Act, been transf erred to a nominee of the
company, a transfer from that nominee shall be deemed to be a reissue for the
purposes of this section.
(4) Where a company has,
either before or after the commencement of this Act, deposited any of its
debentures to secure advances from time to time on current account or
otherwise, the debentures shall not be deemed to have been redeemed by reason
only of the account of the company having ceased to be in debit whilst the
debentures remained so deposited.
(5) The re-issue of a
debenture or the issue of another debenture in its place under the power by
this section given to, or deemed to have been possessed by, a company, whether
the re-issue or issue was made before or after the commencement of this Act,
shall be treated as the issue of a new debenture for the purposes of stamp
duty, but it shall not be so treated for the purposes of any provision limiting
the amount or number of debentures to be issued:
Provided
that at any person lending money on the security of a debenture re-issued under
this section which appears to be duly stamped may give the debenture in
evidence in any proceedings for enforcing his security without payment of the
stamp duty or any penalty in respect thereof, unless he had notice or, but for
his negligence, might have discovered, that the debenture was not duly stamped;
but in any such case the company shall be liable to pay the proper stamp duty
and penalty.
(6) Nothing in this Section
shall prejudice-
(a) The operation of any
decree or order of a Court of competent jurisdiction pronounced or made before
the twenty-fifth day of February, 19 1 0, as between the parties to the
proceedings in which the decree or order was made;
(b) Where an appeal has been
preferred against any such decree or order, the operation of any decree or
order passed on such appeal, as between the parties to such appeal; or
(c) Any power to issue
debentures in the place of any debentures paid off or otherwise satisfied or
extinguished, reserved to a company by its debentures or the securities for the
same.
122. Specific
performance of contract to subscribe for debentures. -A contract with a company to take up and pay
for any debentures of the company may be enforced by a decree for specific
performance.
(1) Where either-
(a) A receiver is appointed
on behalf of the holders of any debentures of a company secured by a floating
charge; or
(b) Possession is taken by or
on behalf of those debenture holders of any property comprised in or subject to
the charge;
Then,
if the company is not at the time in course of being wound up, the debts which
in every winding up are, under the provisions of Part VII relating to
preferential payments, to be paid in priority to all other debts, shall be paid
forthwith out of any assets coming to the hands of the receiver or other person
taking possession as aforesaid in priority to any claim for principal or
interest in respect of the debentures.
(2) In the application of the
provisions aforesaid, section 530 shall be construed as if the provision for
payment of accrued holiday remuneration becoming payable on the termination of
employment before or by the effect of the winding up order or resolution were a
provision for payment of such remuneration becoming payable on the termination
of employment before or by the effect of the appointment of the receiver or
possession being taken as aforesaicl. (3) The periods of time mentioned in the
said provisions of Part VII shall be reckoned from the date of appointment of
the receiver or of possession being taken as aforesaid, as the case may be.
(4) Where the date referred
to in sub-section (3) occurred before the commencement of this Act,
sub-sections (1) and (3) shall have effect with the substitution, for
references to the said provisions of Part VII, of references to the provisions
which, by virtue of sub-section (9) of section 530, are deemed to remain in
force in the case therein mentioned, and sub-section (2) shall not apply.
(5) Any payments made under
this section shall be recouped, as far as may be, out of the assets of the
company available for payment of general creditors.
PART V
REGISTRATION OF
CHARGES
124. "Charge"
to include mortgage in this Part. -In this Part, the expression "charge"
includes a mortgage.
125. Certain
charges to be void against liquidator or creditors unless registered. -
(1) Subject to the provisions
of this Part, every charge created on or after the 1st day of April, 1914, by a
company and being a charge to which this section applies shall, so far as any
security on the company's property or undertaking is conferred thereby, be void
against the liquidator and any creditor of the company, unless the prescribed
particulars77 of the charge,
together with the instrument, if any, by which the charge is created or
evidenced, or a copy thereof verified in the prescribed manner, are filed with
the Registrar for registration in the manner required by this Act within 78[thirty] days after the date of its
creation :
79[Provided
that the Registrar may allow the particulars and instrument or copy as
aforesaid to be filed within thirty days next following the expiry of the said
period of thirty days on payment of such additional fee not exceeding ten times
the amount of fee specified in Schedule X as the Registrar may determine, if
the company satisfies the Registrar that it had sufficient cause for not filing
the particulars and instrument or copy within that period.] (2) Nothing in
sub-section (1) shall prejudice any contract or obligation for the repayment of
the money secured by the charge.
(3) When a charge becomes
void under this section, the money secured thereby shall immediately become
payable.
(4) This section applies to
the following charges:
(a) A charge for the purpose
of securing any issue of debentures;
(b) A charge on uncalled
share capital of the company;
(c) A charge on any immovable
property, wherever situate, or any interest therein;
(d) A charge on any book
debts of the company;
(e) A charge, not being a
pledge, on any movable property of the company; a floating charge on the
undertaking or any property of the company including stock-in-trade;
(g) A charge on calls made
but not paid;
(h) A charge on a ship or any
share in a ship;
(i) A charge on goodwill, on
a patent or a licence under a patent, on a trademark, or on a copyright or a
licence under a copyright.
77. See rule 6 and Form No. 8
of General Rules and Forms.
78. Substitutedfor"twentv-one'
by the Companies (Amendment) Act, 1965, w.e.f.15-10-1965.
79. Substituted by the
Companies (Amendment) Act, 1988, w.e.f. 15-6-1988. For the provison as it stood
prior to its substitution, refer Appendix I.
(5) In the case of a charge
created out of India and comprising solely property situate outside India, 80[thirty] days after the date on which the
instrument creating or evidencing the charge or a copy thereof could, in due
course of post and if despatched with due diligence, have been received in
India, shall be substituted for "Olthirty] days after the date of the
creation of the charge, as the time within which the particulars and instrument
or copy are to be filed with the Registrar.
(6) Where a charge is created
in India but comprises property outside India, the instrument creq-ting or
purporting to create the charge under this section or a copy thereof verified
in the prescribed manner, may be filed for registration, notwithstanding that
further proceedings may be necessary to make the charge valid or effectual
according to the law of the country in which the property is situate.
(7) Where a negotiable
instrument has been given to secure the payment of any book debts of a company,
the deposit of the instrument for the purpose of securing an advance to the
company shall not, for the purposes of this section, be treated as a charge on
those book debts.
(8) The holding of debentures
entitling the holder to a charge on immovable property shall not, for the
purposes of this section, be deemed to be an interest in immovable property.
126. Date
of notice of charge. -Where
any charge on any property of a company required tobe registered under section
125 has been so registered, any person acquiring such property or any part
thereof, or any share or interest therein, shall be deemed to have notice of
the charge as from the date of such registration.
127. Registration
of charges on properties acquired subject to charge81. -
(1) Where a company acquires
any property which is subject to a charge of any such kind as would, if it had
been created by the company after the acquisition of the property, have been
required to be registered under this Part, the company shall cause the
prescribed particulars of the charge, together with a copy (certified in the
prescribed manner to be a correct copy) of the instrument, if any, by which the
charge was created or is evidenced, to be delivered to the Registrar for
registration in the manner required by this Act within 80[thirty] days after the date on which the
acquisition is completed:
Provided
that, if the property is situate, and the charge was created, outside India, 80[thirty] days after the date on which a
copy of the instrument could, in due course of post and if despatched with due
diligence, have been received in India shall be substituted for 80 [thirty] days after 'the completion of
the acquisition as the time within which the particulars and the copy of the
instrument are to be delivered to the Registrar.
(2) If default is made in
complying with sub-section (1), the company, and every officer of the company
who is in default, shall be punishable with fine, which may extend to five
hundred rupees.
80. Substituted for
'twenty-one' by the Companies (Amendment) Act, 1965, w.e.f.15-10-1965.
81. See rule 6 and Form Nos.8
& 56 of Geneial Rules and Forms.
128. Particulars
in case of series of debentures entitling holders pari passu. 82 Where a series of debentures containing, or
giving by reference to any other instrument, any charge to the benefit of which
the debenture holders of that series are entitled pari passu is created by a
company, it shall, for the purposes of section 125, be sufficient, if there are
filed with the Registrar, within 83[thirty]
days after the execution of the deed containing the charge or, if there is no
such deed, after the execution of any debentures of the series, the following
particulars: -
(a) The total amount secured
by the whole series;
(b) The dates of the
resolutions authorising the issue of the series and the date of the covering
deed, if any, by which the security is created or defined;
(c) A general description of
the property charged; and
(d) The names of the
trustees, if any, for the debenture holders;
Together
with the deed containing the charge, or a copy of the deed verified in the
prescribed manner, or if there is no such deed, one of the debentures of the
series: Provided that, where more than one issue is made of debentures in the
series, there shall be filed with the Registrar, for entry in the register,
particulars of the date and amount of each issue; but an omission to do this
shall not affect the validity of the debentures issued.
129. Particulars
in case of commission, etc., on debentures. - 82Where
any commission, allowance or discount has been paid or made either directly or
indirectly by a company to any person in consideration of his subscribing or
agreeing to subscribe, whether absolutely or conditionally, for any debentures
of the company, or procuring or agreeing to procure subscriptions, whether
absolute or conditional, for any such debentures, the particulars required to
be filed for registration under sections 125 and 128 shall include particulars
as to the amount or rate per cent of the commission, discount or allowance so
paid or made; but an omission to do this shall not affect the validity of the
debentures issued:
Provided
that the deposit of any debentures as security for any debt of the company
shall not, for the purposes of this section, be treated as the issue of the debentures
at a discount.
130. Register
of charges to be kept by Registrar. -
83a[(1) The
Registrar shall, in respect of each company, cause to be kept a register
containing the particulars of all the charges requiring registration under this
Part.
(1A) Every company shall forward
to the Registrar for being entered in the register kept under sub-section (1)
the particulars of all the charges requiring registration under this Part in
such form and manner, and after payment of, such fees as may be prescribed.
82. See rule 6 and Form No. 10
of General Rules and Forms.
83. Substituted for
"twenty-one" by the Companies (Amendment) Act, 1965, w.e.f.
15-10-1965.
83a. Substituted for sub-sections (1) and (2) by the Companies
(Amendment) Act, 1988, w.e.f. 17-4-1989.
For these sub-sections as they stood prior to their substitution, refers
Appendix I.
(1B) The particulars of the
charges referred to in sub-section (1) shall relate to, -
(a) In the case of a charge
to the benefit of which the holders of a series of debentures are entitled,
such particulars as are specified in sections 128 and 129;
(b) In the case of any other
charge, -
(i) If the charge is a
charge created by the company, the date of its creation, and if the charge was
a charge existing on property acquired by the company, the date of the
acquisition of the property;
(ii) The amount secured by
the charge;
(iii) Short particulars of the
property charged; and
(iv) The persons entitled to
the charge.
(1C) The pages of the register
shall be consecutively numbered and the Registrar shall-
(a) Cause to be kept in such
register in the prescribed form, the documents of charges filed in such form
and manner as may be prescribed"; and
(b) Sign or initial every
page of such register.
(2) After entering the
particulars of all the charges required under sub-section (1), the Registrar
shall return the instrument, if any, or the verified copy thereof, as the case may be, filed in accordance with the
provisions of this Part to the person filing it.]
(3) The register kept in
pursuance of this section shall be open to inspection by any person on payment
of "[such fee as may be prescribed] for each inspection.
131. Index
to register of charges. -The
Registrar shall keep a chronological index, in the prescribed form and with the
prescribed particulars,16, of the charges registered with him in pursuance of
this Part.
132. Certificate
of registration. -The
Registrar shall give a certificate under his hand of the registration of any
charge registered in pursuance of this Part, stating the amounts thereby
secured; and the certificate shall be conclusive evidence that the requirements
of this Part as to registration have been complied with.
133. Endorsement
of certificate of registration on debenture or certificate of debenture stock.
-
(1) The company shall cause a copy of every certificate of
registration given under section 132, to be endorsed on every debenture or
certificate of debenture stock which is issued by the company and the payment
of which is secured by the charge so registered:
84. See Form No. 13 of General
Rules and Forms.
85. Substituted for "a
fee of one rupee by the Companies (Amendment) Act, 1988, w.e.f.
17-4-1989. Vide rule 6 have the
Companies (Central Government) General Rules and Forms, 1956, fee of Rs. 10 has
been prescribed.
86. See Form No. 12 of General
Rules and Forms.
Provided
that nothing in this sub-section shall be construed as requiring a company to
cause a certificate of registration of any charge so given to be endorsed on
any debenture or certificate of debenture stock issued by the company before
the charge was created.
(2) If any person knowingly
delivers, or wilfully authorises or permits the delivery of, any debenture or
certificate of debenture stock which, under the provisions of sub-section (1),
is required to have endorsed on it a copy of a certificate of registration
without the copy being so endorsed upon it, he shall, without prejudice to any
other liability, be punishable with fine which may extend to one thousand
rupees.
134. Duty
of company as regards registration and right of interested party. -
(1) It shall be the duty of a
company to file with the Registrar for registration the particulars of every
charge created by the company, and of every issue of debentures of a series,
requiring registration under this Part; but registration of any such charge may
also be effected on the application of any person interested therein.
(2) Where registration is
effected on the application of some person other than the company, that person
shall be entitled to recover from the company the amount of any fees properly
paid by him to the Registrar on the registration.
87135. Provisions of Part to apply to modification
of charges. -Whenever
the terms or conditions, or the extent or operation, of any charge registered
under this Part are or is modified, it shall be the duty of the company to send
to the Registrar the particulars" of such modification, and the provisions
of this Part as to registration of a charge shall apply to such modification of
the charge.
136. Copy
of instrument creating charge to be kept by company at registered office. -Every company shall cause a copy of every
instrument creating any charge requiring registration under this Part to be
kept at the registered office of the company:
Provided
that, in the case of a series of uniform debentures, a copy of one debenture of
the series shall be sufficient.
137. Entry
in register of charges of appointment of receiver or manager. -
(1) If any person obtains an
order for the appointment of a receiver of, or of a person to manage, the
property of a company, or if any person appoints such receiver or person under
any powers contained in any instrument, he shall, within '9[thirty] days from
the date of the passing of the order or of the making of the appointment under
the said powers, give notice"' of the fact to the Registrar; and the
Registrar shall, on payment of the prescribed fee, enter the fact in the
register of charges.
87. For clarification on this
section, refer Taxmann's Master Guide to Companies Act.
88. See Form Nos. 8 and 13 of
General Rules and Forms.
89. Substituted foi-
"fifteen" by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
90. See Form No. 15 of General
Rules and Forms.
(2) Where any person so
appointed under the powers contained in any instrument cease to act as such, he
shall, on so ceasing, give to the Registrar notice91 to that effect; and the Registrar shall
enter the notice in the register of charges.
(3) If any person makes
default in complying with the requirements of subsection (1) or (2), he shall
be punishable with fine which may extend to fifty rupees for every day during
which the default continues.
92138. Company to report
satisfaction and procedure thereafter. -
(1) The company shall give intimation to the Registrar of the
payment or satisfaction, 93[in
full], of any charge relating to the company and requiring registration under
this Part, within 94[thirty]
days from the date of such payment or satisfaction.
(2) The Registrar shall, on
receipt of such intimation, cause a notice to be sent to the holder of the
charge calling upon him to show cause within a time (not exceeding fourteen
days) specified in such notice, why payment or satisfaction should not be
recorded as intimated to the Registrar.
(3) If no cause is shown, the
Registrar shall order that a memorandum of satisfaction 95[***] shall be entered in the register of
charges .96
(4) If cause is shown, the
Registrar shall record a note to that effect in the register, and shall inform
the company that he has done so.
(5) Nothing in this section
shall be deemed to affect the power of the Registrar to make an entry in the
register of charges under section 139 otherwise than on receipt of an intimation
from the company.
139. Power
of Registrar to make entries of satisfaction and release in absence of
intimation from company. -The
Registrar may, on evidence being given to his satisfaction with respect to any
registered charge, -
(a) That the debt for which
the charge was given has been paid or satisfied in whole or in part; or
(b) That part of the property
or undertaking charged has been released from the charge or has ceased to form
part of the company's property or undertaking;
Enter
in the register of charges a memorandum of satisfaction in whole or in part, or
of the fact that part of the property or undertaking has been released from the
charge or has ceased to form part of the company's property or undertaking, as
the case may be, notwithstanding the fact that no intimation has been received
by him from the company.
91. See Form No. 16 of General
Rules and Forms.
92. For clarification on this
section, refer Taxmann's Master Guide lo Companies AcL
93. Substituted for in whole
or in part" by the Companies (Amendment) Act, 1960.
94. Substituted for
"twenty-one" by the Companies (Amendment) Act, 1965, w.e.f.
15-10-1965.
95. In whole or in part, as
the case may be," omitted by the Companies (Amendment) Act, 1960.
96. See Form Nos. 13 and 17 of
General Rules and Forms.
140. Copy
of memorandum of satisfaction to be furnished to company. -Where the Registrar enters a memorandum of
satisfaction in whole or in part, in pursuance of section 138 or 139, he shall
furnish the company with copy of the memorandum.
141. Rectification
by 97[Company Law Board] of register of
charges.
98[(1) The
97[Company Law Board], on
being satisfied99-
(a) That the omission to file
with the Registrar the particulars of any charge created by a company or of any
charge subject to which any property has been acquired by the company or of any
modification of any such charge or of any issue of debentures of a series, or
that the omission to register any charge within the time required by this Part,
or that the omission to give intimation to the Registrar of the payment or
satisfaction of a charge, within the time required by this Part, or that the
omission or misstatement of any particular with respect to any such charge,
modification or issue of debentures of a series or with respect to any
memorandum of satisfaction or other entry made in pursuance of section 138 or
139, was accidental or due to inadvertcnce or to some other sufficient cause or
is not of a nature to prejudice the position of creditors or shareholders of the
company; or
(b) That on other grounds it
is just and equitable to grant relief;
May,
on the application of the company or any person interested and on such terms
and conditions as seem to the "[Company Law Board] just and expedient,
direct that the time for the filing of the particulars or for the registration
of the charge or for the giving of intimation of payment or satisfaction shall
be extended or, as the case may require, that the omission or misstatement
shall be rectified.]
(2) The 97[Company Law Board] may make such order as
to the costs of an application under sub-section (1) as it thinks fit.
(3) Where the 97[Company Law Board] extends the time for
the registration of a charge, the order shall not prejudice any rights acquired
in respect of the property concerned before the charge is actually registered. 1
(1) If default is made in filing with the Registrar for
registration the particulars-
(a) Of any charge created by
the company;
(b) Of the payment or
satisfaction 2[***] of a debt
in respect of which a charge has been registered under this Part; or
(c) Of the issues of
debentures of a series;
Requiring
registration with the Registrar under the provisions of this Part, then, unless
the registration has been effected on the application of some other person, the
company, and every officer of the company or other person who is in default,
shall be punishable with fine which may extend to five hundred rupees for every
day during which the default continues.
97. Substituted for
"Court" bv the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
98. Substituted by the
Companics (Amendment) Act, 1960. For
the original sub-section refer Appendix I.
99. Prescribed fees are Rs.
200.
1 Prescribed fees are Rs.
200.
2. "In whole or in
part," omitted by the Companies (Amendmeiit) Act, 1960.
(2) Subject as aforesaid, if
any company makes default in complying with any of the other requirements of
this Act as to the registration with the Registrar of any charge created by the
company or of any fact connected therewith, the company, and every officer of
the company who is in default, shall, without prejudice to any other liability,
be punishable with fine which may extend to one thousand rupees.
143. Company's
register of charges. -
(1) Every Company shall keep at its registered office a register of
charges and enter therein all charges specifically affecting property of the
company, and all floating charges on the undertaking or on any property of the
company, giving in each case-
(i) A short description of
the property charged;
(ii) The amount of the
charge; and
(iii) Except in the case of
securities of bearer, the names of the persons entitled to the charge.
(2) If any officer of the
company knowingly omits, or wilfully authorises or permits the omission of, any
entry required to be made in pursuance of subsection (1), he shall be
punishable with fine, which may extend to five hundred rupees.
144. Right
to inspect copies of instruments creating charges and company's register of
charges. -
(1) The copies of instruments creating charges kept in pursuance of
section 136, and the register of charges kept in pursuance of section 143,
Shall
be open during business hours (but subject to such reasonable restrictions as
the company in general meeting may impose, so that not less than two hours in
each day are allowed for inspection) to the inspection of any creditor or
member of the company without fee, at the registered office of the company.
(2) The register of charges kept in pursuance of section 143 shall
also be open, during business hours but subject to the reasonable restrictions
aforesaid, to the inspection of any other person on payment of a fee of 3[such sum as may be prescribed] for each
inspection, at the registered office of the company.
(3) If inspection of the said
copies or register is refused, the company, and every officer of the company
who is in default, shall be punishable with fine which may extend to fifty
rupees and with a further fine which may extend to twenty rupees for every day
during which the refusal continues.
(4) The 4[Company Law Board] may also by order
compel an immediate inspection of the said copies or register. 5
3. Substituted for 'one
rupee' by the Companies (Amendment) Act, 1988, w.e.f. 15-7-1988. Rs. 10 has been prescribed under rule 21A(3)
of General Rules & Forms as inserted by Fourth Amendment Rules, 1988.
4. Substituted for
"Court" by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
5. Prescribed fees are Rs.
50.
145. Application
of Part to charges requiring registration under it but not under previous law.
-In respect of 6[any charge created before, and remaining
unsatisfied at, the commencement of this Act,] which, if this Act had been
enforce at the relevant time, would have had to be registered by the company in
pursuance of this Part but which did not require registration under the Indian
Companies Act, 1913 (7 of 1913), and in respect of all matters relating to such
charge, the provisions of this Part shall apply and have effect in all
respects, as if the date of commencement of this Act had been substituted
therein for the date of creation of the charge, or the date of completion of
the acquisition of the property subject to the charge, as the case may be.
Nothing
contained in this section shall be deemed to affect the relative priorities, as
they existed immediately before the commencement of this Act, as between
charges on the same property.
PART VI
MANAGEMENT AND ADMINISTRATION
CHAPTER I
GENERAL PROVISIONS
Registered office and name
7146. Registered office of company. -
(1) A company shall, as from the day on which it begins to carry on
business, or as from the '[thirtieth] day after the date of its incorporation,
Whichever
is earlier, have a registered office to which all communications and notices
may be addressed.
(2) Notice9 of the situation of the registered office,
and of every change therein, shall be given within 10[thirty] days after the date of the
incorporation of the company or after the date of the change, as the case may
be, to the Registrar who shall record the same:
Provided
that except on the authority of a special resolution passed by the company, the
registered office of the company shall not be removed-
(a) In the case of an
existing company, outside the local limits of any city, town or village where
such office is situated at the commencement of this Act, or where it may be
situated later by virtue of a special resolution passed by the company; and
(b) In the case of any other
company, outside the local limits of any city, town or village where such
office is first situated, or where it may be situated later by virtue of a
special resolution passed by the company.
6. Substituted for 'any
charge created before the commencement of this Act' by the Companies
(Amendment) Act, 1960.
7. For clarification on this
section, refer Taxmann's Master Guide to Companies Act.
8. Substituted for
twenty-eighth" by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
9. See Form No. 18 of
General Rules and Forms.
10. Substituted for
'twenty-eight' by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
(3) The inclusion in the
annual return of a company of a statement as to the address of its registered
office shall not be taken to satisfy the obligation imposed by sub-section (2).
(4) If default is made in
complying with the requirements of this section, the company, and every officer
of the company who is in default, shall be punishable with fine, which may
extend to fifty rupees for every day during which the default continues.
147. Publication
of name by company. -
(1) Every company-
(a) Shall paint or affix its
name [and the address of its registered office], and keep the same painted or
affixed, on the outside of every office or place in which its business is
carried on, in a conspicuous position, in letters easily legible; and if the
characters employed therefor are not those of the language, or of one of the
languages in general use in that locality, also in the characters of that language
or of one of those languages;
(b) Shall have its name
engraven in legible characters on its seal; and
(c) Shall have its name 11[and the address of its registered office]
mentioned in legible characters in all its business letters, in all its bill
heads and letter paper, and in all its notices 12[*
* *] and other official publications; 13[and
also have its name so mentioned in all bills of exchange], hundies, promissory
notes, endorsements, cheques and orders for money or goods purporting to be
signed by or on behalf of the company, and in all bills of parcels, invoices,
receipts and letters of credit of the company.]
(2) If a company does not
paint or affix its name 14[and
the address of its registered office], or keep the same painted or affixed in the
manner directed by clause (a) of sub-section (1), the company, and every
officer of the company who is in default, shall be punishable with fine which
may extend to fifty rupees for not so painting or affixing its name 14 [and the address of its registered
office], and for every day during which its name 14[and the address of its registered office]
15[is] not so kept painted or
affixed.
(3) If a company fails to
comply with clause (b) or clause (c) of sub-section (1), the company shall be
punishable with fine, which may extend to five hundred rupees.
(4) If an officer of a
company or any person on its behalf-
(a) Uses, or authorises the
use of, any seal purporting to be a seal of the company whereon its name is not
engraven in the manner aforesaid;
(b) Issues, or authorises the
issue of, any business letter, bill head, letter paper, notice 12[***] or other official publication of the
company wherein 16[its name
and the address of its registered office are] not mentioned in the manner
aforesaid;
(c) Signs, or authorises to
be signed, on behalf of the company, any bill of exchange, hundi, promissory
note, endorsement, cheque or order for money or goods wherein its name is not
mentioned in the manner aforesaid; or
(d) Issues, or authorises the
issue of, any bill of parcels, invoice, receipt or letter of credit of the
company, wherein its name is not mentioned in the manner aforesaid;
Such
officer or person shall be punishable with fine which may extend to five
hundred rupees, and shall further be personally liable to the holder of the
bill of exchange, hundi, promissory note, cheque or order for money or goods,
for the amount thereof, unless it is duly paid by the company.
11. Inserted by the Companies
(Amendment) Act, 1960.
12. Advertisements"
omitted, ibid.
13. Substituted for 'and in
all bills of exchange", ibid.
14. Inserted, ibid.
15. Is" should be read
as 'are'.
16. Substituted for 'its name
is" by the Companies (Amendment) Act, 1960.
148. Publication
of authorised as well as subscribed and paid-up capital. -
(1) Where any notice,
advertisement or other official publication, or any business letter, bill head
or letter paper, of a company contains a statement of the amount of the
authorised capital of the company, such notice, advertisement or other official
publication, or such letter, bill head or letter paper, shall also contain a
statement, in an equally prominent position and in equally conspicuous
characters, of the amount of the capital which has been subscribed and the
amount paid-up.
(2) If default is made in
complying with the requirements of sub-section (1), the company, and every
officer of the company who is in default, shall be punishable with fine, which
may extend to one thousand rupees.
Restrictions on commencement of business
149. Restrictions
on commencement of business. -
(1) Where a company having a
share capital has issued a prospectus inviting the public to subscribe for its
shares, the company shall not commence any business or exercise any borrowing
powers, unless-
(a) Shares held subject to
the payment of the whole amount thereof in cash have been allotted to an amount
not less in the whole than the minimum subscription;
(b) Every director of the
company has paid to the company, on each of the shares taken or contracted to
be taken by him and for which he is liable to pay in cash, a proportion equal
to the proportion payable on application and allotment on the shares offered
for public subscription;
(c) No money is, or may
become, liable to be repaid to applicants for any shares or debentures which
have been offered for public subscription by reason of any failure to apply
for, or to obtain, permission for the shares or debentures to be dealt in on
any recognised stock exchange; and
(d) There has been filed with
the Registrar a duly verified declaration by one of the directors or the
secretary17 [or, where the
company has not appointed a secretary, a secretary in whole-time practice], in
the prescribed form18, that
clauses (a), (b) and (c) of this sub-section, have been complied with.
(2) Where a company having a
share capital has not issued a prospectus inviting the public to subscribe for
its shares, the company shall not commence any business or exercise any
borrowing powers, unless-
(a) There has been filed with
the Registrar a statement in lieu of prospectus;
(b) Every director of the
company has paid to the company, on each of the shares taken or contracted to
be taken by him and for which he is liable to pay in cash, a proportion equal
to the proportion payable on application and allotment on the shares payable in
cash; and
(c) There has been filed with
the Registrar a duly verified declarations19
by one of the directors or the secretary 17[or,
where the company has not appointed a secretary, a secretary in whole-time
practice], in the prescribed form, that clause (b) of this sub-section has been
complied with.
20[(2A) Without prejudice to the provisions of
sub-section (1) and sub-section (2) a company having a share capital, whether
or not it has issued a prospectus inviting the public to subscribe for its
shares, shall not at any time commence any business-
(a) If such company is a
company in existence immediately before the commencement of the Companies
(Amendment) Act, 1965, in relation to any of the objects stated in its
memorandum in pursuance of clause (c) of
sub-section (1) of section 13;
(b) If such company is a
company formed after such commencement, in relation to any of the objects
stated in its memorandum in pursuance of sub-clause (ii) of clause (a) of
sub-section (1) of the said section, unless-
(i) The company has approved
of the commencement of any such business by a special resolution passed in that
behalf by it in general meeting; and
(ii) There has been filed
with the Registrar a duly verified declaration21
by one of the directors or the secretary 17[or,
where the company has not appointed a secretary, a secretary in whole-time
practice], in the prescribed form, that clause (i) or, as the case mav be,
sub-section (2B) has been complied with;
17. Inserted by the Companies
(Amendment) Act, 1988, w.e.f. 15-6-1988.
18. See Form No. 19 of General
Rules and Forms.
19. See Form No. 20 of General
Rules and Forms.
20. Inserted by the Companies
(Amendmcnt) Act, 1965, w.e.f. 15-10-1965.
21. See Form No. 20A of
General Rules and Forms.
And
if the company commences any such business in contravention of this subsection,
every person who is responsible for the contravention shall, without prejudice
to any other liability, be punishable with fine, which may extend to five
hundred rupees for every day during which the contravention continues.
Explanation: A
company shall be deemed to commence any business within the meaning of clause
(a) if and only if it commences any new business, which is not germane to the
business, which it is carrying on at the commencement of the Companies
(Amendment) Act, 1965 in relation to any of the objects referred to in the said
clause.
(2B) Notwithstanding anything
contained in sub-section (2A) where no such special resolution as is referred
to in that sub-section is passed but the votes cast (whether on a show of hands
or, as the case may be, on a poll) in favour of the proposal to commence any
business contained in the resolution moved in that general meeting (including
the casting vote, if any, of the chairman) by members who, being entitled so to
do, vote in person, or where proxies are allowed, by proxy, exceed the votes,
if any, cast against the proposal by members so entitled and voting, the
Central Government may on an application made to it by the Board of directors
in this behalf allow the company to commence such business as if the proposal
had been passed by a special resolution by the company in general meeting.]
(3) The Registrar shall, on
the filing of a duly verified declaration in accordance with the provisions of
sub-section (1) or sub-section (2), as the case may be, and, in the case of a
company which is required by sub-section (2) to file a statement in lieu of
prospectus, also of such a statement, certify that the company is entitled to
commence business, and that certificate shall be conclusive evidence that the
company is so entitled.
(4) Any contract made by a
company before the date at which it is entitled to commence business shall be
provisional only, and shall not be binding on the company until that date, and
on that date it shall become binding. (5) Nothing in this section shall prevent
the simultaneous offer for subscription or allotment of any shares and
debentures or the receipt of any money payable on applications for debentures.
(6) If any company commences
business or exercises borrowing powers in contravention of this section, every
person who is responsible for the contravention shall, without prejudice to anv
other liability, be punishable with fine which may extend to five hundred
rupees for every day during which the contravention continues.
(7) Nothing in this section
shall apply to-
(a) A private company; or
(b) A company registered
before the first day of April 1914, which has not issued a prospectus inviting
the public to subscribe for its shares.
(8) [Omitted by the Companies
(Amendment) Act, 1960. For the original
subsection, refer Appendix I.]
Registers of members and debenture holders
(1) Every company shall keep in one or more books a register of its
members, and enter therein the following particulars: -
(a) The name and address, and
the occupation, if any, of each member;
(b) In the case of a company
having a share capital, the shares held by each member, 22[***] 23[distinguishing
each share by its number except where such shares are held with a depository],
and the amount paid or agreed to be considered as paid on those shares;
(c) The date at which each
person was entered in the register as a member; and
(d) The date at which any
person ceased to be a member:
Provided
that where the company has converted any of its shares into stock and given
notice of the conversion to the Registrar, the register shall show the amount
of stock held by each of the members concerned instead of the shares so
converted which were previously held by him.
(2) If default is made in
complying with sub-section (1), the company, and every officer of the company
who is in default, shall be punishable with fine, which may extend to fifty
rupees for every day during which the default continues.
(1) Every company having more than fifty members shall, unless the
register of members is in such a form as in itself to constitute an index, keep
an index (which may be in the form of a card index) of the names of the members
of the company and shall, within fourteen days after the date on which any
alteration is made in the register of members, make the necessary alteration in
the index.
(2) The index shall, in
respect of each member, contain a sufficient indication to enable the entries
relating to that member in the register to be readily found.
(3) The index shall, at all
times, be kept at the same place as the register of members.
(4) If default is made in
complying with sub-section (1), (2) or (3), the company, and every officer of
the company who is in default, shall be punishable with fine, which may extend
to fifty rupees.
152. Register
and index of debenture holders. -
(1) Every company shall keep
in one or more books a register of the holders of its debentures and enter
therein the following particulars, namely: -
(a) The name and address, and
the occupation, if any, of each debenture holder;
(b) The debentures held by each
holder, 24[***] 23[distinguishing each debenture by its
number except where such debentures are held with a depository], and the amount
paid or agreed to be considered as paid on those debentures;
(c) The
date at which each person was entered in the re-ister as a debenture holder;
and
(d) The
date at which any person ceased to be a debenture holder.
22. Words 'distinguishing each
share by its number' omitted by the Depositories Act, 1996, w.r.e.f. 20-9-1995.
23. Inserted by the
Depositories Related Laws (Amendment) Act, 1997, w.e.f. 15-1-1997.
24. Words 'distinguishing each
debenture by its number' omitted by the Depositories Act, 1996, w.r.e.f.
20-9-1995.
(2) (a) Every company having more than fifty
debenture holders shall, unless the register of debenture holders is in such a
form as in itself to constitute an index, keep an index (which may be in the
form of a card index) of the names of the debenture holders of the company and
shall, within fourteen days after the date on which any alteration is made in
the register of debenture holders, make the necessary alteration in the index.
(b) The index shall, in
respect of each debenture holder, contain a sufficient indication to enable the
entries relating to that holder in the register to be readily found.
(3) If default is made in
complying with sub-section (1) or (2), the company, and every officer of the
company who is in default, shall be punishable with fine, which may extend to
fifty rupees.
(4) Sub-sections (1) to (3)
shall not apply with respect to debentures which, ex facie, are payable to the
bearer thereof.
152A. 25[Register and index of beneficial owners. -The register and index of beneficial owners
maintained by a depository under section 11 of the Depositories Act, 1996 (22
of 1996), shall be deemed to be an index of members and register and index of
debenture holders, as the case may be, for the purposes of this Act.]
153. Trusts
not to be entered on register. -No
notice of any trust, express, implied or constructive, shall be entered on the
register of members or of debenture holders 26[*
* *].
28153A. 27[Appointment
of public trustee. -The Central Government
may, by notification in the Official Gazette, appoint a person as public
trustee to discharge the functions and to exercise the rights and powers
conferred on him by or under this Act.]
153B. "[Declaration as to shares and debentures
held in trust. -
(1) Notwithstanding anything
contained in section 153, where any shares in, or debentures of, a company are
held in trust by any person (hereinafter referred to as the trustee), the
trustee shall, within such time and in such form as may be prescribed 21, make
a declaration to the public trustee.
(2) A copy of the declaration
made under sub-section (1) shall be sent by the trustee to the company
concerned, within twenty-one days, after the declaration has been sent to the
public trustee.
25. Inserted by the
Depositories Act, 1996, w.r.e.f. 20-9-1995.
26. 'Or be receivable by the
Registrar' omitted by the Companies (Amendment) Act, 1963, w.e.f. 1-1-1964.
27. Inserted, ibid.
28. Refer Companies (Public
Trustee) Rules, 1973.
29. Refer Trustees
(Declaration of Holding of Shares and Debentures) Rules, 1964.
(3) (a) If a trustee fails to make a declaration
as required by this section, he shall be punishable with fine which may extend
to five thousand rupees and in the case of a continuing failure, with a further
fine which may extend to one hundred rupees for every day during which the
failure continues.
(b) If a trustee makes in a
declaration aforesaid any statement which is false and which he knows or
believes to be false or does not believe to be true, he shall be punishable
with imprisonment for a term which may extend to two years and also with fine.
(4) The provisions of this
section and section 187B shall not apply in relation to a trust-
(a) Where the trust is not
created by instrument in writing; or
(b) Even if the trust is
created by instrument in writing, 30[where
the value of the shares in, or debentures of, a company, held in trust]-
(i) Does not exceed one lakh
of rupees, or
(ii) Exceeds one lakh of
rupees but does not exceed either five lakhs of rupees or twenty-five per cent
of the paid-up share capital of the company, whichever is less 31[or]]
31[(c) Where
the trust is created, to set up a Mutual Fund or Venture Capital Fund or such
other fund as may be approved by the Securities and Exchange Board of India
established under sub-section (1) of section 3 of the Securities and Exchange
Board of India Act, 1992(15 of 1992).]
32[Explanation:
The expression "the value of the shares in, or debentures of, a company
in clause (b) means, -
(i) In the case of shares or
debentures acquired by way of allotment or transfer for consideration, the cost
of acquisition thereof, and
(ii) In any other case, the
paid-up value of the shares or debentures.]
154. Power
to close register of members or debenture holders. -
(1) A company may, after giving not less than seven days'previous
notice by advertisement in some newspaper circulating in the district in which
the registered office of the company is situate, close the register of members
or the register of debenture holders for any period or periods not exceeding in
the aggregate forty-five days in each year, but riot exceeding thirty days at
any one time.
(2) If the register of
members or of debenture holders is closed without giving the notice provided in
sub-section (1), or after giving shorter notice than that so provided, or for a
continuous or an aggregate period in excess of the limits specified in that
sub-section, the company, and every officer of the company who is in default,
shall be punishable with fine which may extend to five hundred rupees for every
day during which the register is so closed.
30. Substituted for 'where the
trust money invested in shares in, or debentures of a company' by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
31. Inserted by the Companies
(Amendment) Act, 1996, w.e.f. 1-3-1997.
32. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
155. Power
of Court to rectify register of members. -[Omitted by the Companies (Amendment) Act,
1988, we.f. 31-5-1991. For, text of
omitted section refer Appendix I.]
156. Notice
to Registrar of rectification of register. -[Omitted by the Companies (Amendment) Act,
1988, we.l. 31-5-1991. For text of
omitted section refer Appendix I.]
Foreign, registers of members or debenture holders
157. Power
for company to keep foreign register of members or debenture holders. -
(1) A company which has a share capital or which has issued
debentures may, if so authorised by its articles, keep in any State or countrv
outside India a branch register of members or debenture holders resident in
that State or country (in this Act called a "foreign register.
(2) The company shall, within
33[thirty days] from the date
of the opening of any foreign register, file with the Registrar notice of the
situation of the office where such register is kept; and in the event of any
change in the situation of such office or of its discontinuance, shall, within 33[thirty days] from the date of such change
or discontinuance, as the case may be, file notice with the Registrar of such
change or discontinuance.
(3) If default is made in
complying with the requirements of sub-section (2), the company, and every
officer of the company who is in default, shall be punishable with fine, which
may extend to fifty rupees for every day during which the default continues.
158. Provisions
as to foreign registers. -
(1) A foreign register shall be deemed to be part of the company's
register (in this section called the "principal register) of members or
of debenture holders, as the case may be.
(2) A foreign register shall
be kept, shall be open to inspection and may be closed, and extracts may be
taken therefrom and copies thereof may be required, in the same manner, mutatis
mutandis, as is applicable to the principal register under this Act, except
that the advertisement before closing the register shall be inserted in some
newspaper circulating in the district wherein the foreign register is kept.
(3) (a) The Central Government may, by
notification in the Official Gazette, direct that the provisions of clause (b)
shall apply, or cease to apply, to foreign registers kept in any State or
country outside India.
(b) If a foreign register is
kept by a company in any State or country to which a direction under clause (a)
applies for the time being, the decision of any competent Court in that State or
country in regard to the rectification of the register shall have the same
force and effect as if it were the decision of a competent Court in India.
33. Substituted for 'one
month' by the Companies (Amendment) Act,1965,w.e.f.15-10-1965.
(4) The company shall-
(a) Transmit to its
registered office in India a copy of every entry in any foreign register as
soon as may be after the entry is made; and
(b) Keep at such office a
duplicate of every foreign register duly entered up from time to time.
(5) Every such duplicate
shall, for all the purposes of this Act, be deemed to be part of the principal
register.
(6) Subject to the provisions
of this section with respect to duplicate registers, the shares or debentures
registered in any foreign register shall be distinguished from the shares or
debentures registered in the principal register and in every other foreign
register; and no transaction with respect to any shares or debentures
registered in a foreign register shall, during the continuance of that
registration, be registered in any other register.
(7) The company may
discontinue the keeping of any foreign register; and thereupon all entries in
that register shall be transferred to some other foreign register kept by the
company in the same part of the world or to the principal register.
(8) Subject to the provisions
of this Act, a company may, by its articles, make such regulations as it thinks
fit in regard to its foreign registers.
(9) If default is made in
complying with sub-section (4), the company, and every officer of the company
who is in default, shall be punishable with fine, which may extend to fifty
rupees.
Annual returns
159. Annual
return to be made by company having a share capital34.
(1) Every Company having a
share capital shall, within 35[sixty]
days from the day on which each of the annual general meetings referred to in
section166 is held, prepare and file with the Registrar a return containing the
particulars specified in Part I of Schedule V, as they stood on that day,
regarding-
(a) Its registered office,
(b) The register of its
members,
(c) The register of its
debenture holders,
(d) Its shares and
debentures,
(e) Its indebtedness,
(h) Its members and debenture
holders, past and present, and
(g) Its directors, managing
directors *[managing agents, secretaries and treasurers], 36[managers and secretaries], past and
present:
37[Provided
that if any of the 38[five]
immediately preceding returns has given as at the date of the annual general
meeting with reference to which it was submitted, the full particulars required
as to past and present members and the shares held and transferred by them, the
return in question may contain only such of the particulars as relate to
persons ceasing to be or becoming members since that date and to shares
transferred since that date or to changes as compared with that date in the
number of shares held by a member.
34. Refer Application of
section 159 to Foreign Companies Rules, 1975.
35. Substituted for
'forty-two" by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
36. Substituted for 'and
managers' by the Companies (Amendment) Act, 1960.
37. Inserted by the Companies
(Amendment) Act, 1960.
38. Substituted for 'two' by
the Companies (Amendment) Act, 1988, w.e.f. 15-6-1988.
Explanation: Any
reference in this section or in section 160 or 161 or in any other section or
in Schedule V to the day on which an annual general meeting is held or to the
date of the annual general meeting shall, where the annual general meeting for
any year has not been held, be construed as a reference to the latest day on or
before which that meeting should have been held in accordance with the
provisions of this Act.]
(2) The said return shall be
in the Form set out in Part 11 of Schedule V or as near thereto as
circumstances admit 19[and where the return is filed even though the annual
general meeting has not been held on or before the latest day by which it
should have been held in accordance with the provisions of this Act, the
company shall file with the return a statement specifying the reasons for not
holding the annual general meeting]:
Provided that where the company has converted any of
its shares into stock and given notice of the conversion to the Registrar, the
list referred to in paragraph 5 of Part I of Schedule V shall state the amount
of stock held by each of the members concerned instead of the shares so
converted previously held by him.
160. Annual
return to be made by company not having a share capital. -40
(1) Every company not having a share capital shall, within 41[sixty] days from the day on which each of
the annual general meeting referred to in section 166 is held, prepare and file
with the Registrar a return stating the following particulars as they stood on
that day
(a) The address of the
registered office of the company;
39[(aa) The
names of members and the respective dates on which they became members and the
names of persons who ceased to be members since the date of the annual general
meeting of the immediately preceding year, and the dates on which they so
ceased;]
(b) All such particulars with
respect to the persons who, at the date of the return, were the directors of
the company *[, its managing agent, its secretaries and treasurers], 42[its manager and its secretary] as are set
out in section 303.
(2) There shall be annexed to
the return a statement containing particulars of the total amount of the
indebtedness of the company as on the day aforesaid in respect of all charges
which are or were required to be registered with the Registrar under this Act
or under any previous companies law, or which would have been required to be
registered under this Act if they had been created after the commencement of
this Act.
39. Inserted by the Companies
(Amendment) Act, 1960.
40. SeealsoFormNo.2lAofGeneralRulesandForms.
41. Substituted for
'forty-two' by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
42. Substituted for 'and its
manager' by the Companies (Amendment) Act, 1960.
161. Further
provisions regarding annual return and certificate to be annexed thereto. -
(1) The copy of the annual
return filed with the Registrar under section 159 or 160, as the case may be,
shall be signed both by a director and by the 43[*
* *] manager or secretary of the company, or where there is no 43[* * *] manager or secretary, by two
directors of the company, one of whom shall be the managing director where
there is one:
44[Provided
that where the annual return is filed by a company whose shares are listed on a
recognised stock exchange, the copy of such annual return shall also be signed
by a secretary in whole-time practice.]
(2) There shall also be filed
with the Registrar along with the return a certificate signed by 45[* * *]
the signatories of the return, stating-
(a) That the return states
the facts as they stood on the day of the annual general meeting aforesaid,
correctly and completely; 46[*
* *]
47[(aa) That
since the date of the last annual return the transfer of all shares and
debentures and the issue of all further certificates of shares and debentures
have been appropriately recorded in the books maintained for the purpose; and]
(b) In the case of a private
company also, (t) that the company has not, since the date of the annual
general meeting with reference to which the last return was submitted, or in
the case of a first return, since the date of the incorporation of the company,
issued any invitation to the public to subscribe for any shares or debentures
of the company, and (ii) that, where the annual return discloses the fact that
the number of members of the company exceeds fifty, the excess consists wholly
of persons who under sub-clause (b) of clause (iii) of sub-section (1) of
section 3 are not to be included in reckoning the number of fifty.
162. Penalty
and interpretation. -
(1) If a company fails to comply with any of the provisions
contained in section 159,160 or 161, the company, and every officer of the
company who is in default, shall be punishable with fine, which may extend to
fifty rupees for every day during which the default continues.
(2) For the purposes of this
section and sections 159,160 and 161, the expressions officer' and
'director" shall include any person in accordance with whose directions or
instructions the Board of directors of the company is accustomed to act.
43. 'Managing agent,
secretaries and treasurers,' omitted by the Companies (Amendment) Act, 1988,
w.e.f. 15-6-1988.
44. Inserted, ibid.
45. 'Both omitted, ibid
46. 'And omitted by the
Companies (Amendment) Act, 1960.
47. Inserted, ibid.
General provisions regarding registers and returns
163. Place
of keeping, and inspection of, register and returns. -
(1) The register of members
commencing from the date of the registration of the company, the index of members,
the register and index of debenture holders, and copies of all annual returns
prepared under sections 159 and 160, together with the copies of certificates
and documents required to be annexed thereto under sections 160 and 161, shall
be kept at the registered office of the company:
48[Provided
that such registers, indexes, returns and copies of certificates and documents
or any or more of them may, instead of being kept at the registered office of
the company, be kept at any other place within the city, town or village in -
vhich the registered office is situate, if-
(i) Such other place has
been approved for this purpose by a special resolution passed by the company in
general meeting, 49[and]
(ii) [Omitted by the
Companies (Amendment) Act, 1965, we.f. 15-10-1965. For the original clause,
refer Appendix I].
(iii) The Registrar has been
given in advance a copy of the proposed special resolution.]
48[(1A) Notwithstanding
anything contained in sub-section (1), the Central Government may mak 50rules for the preservation and for the
disposal whether by destruction or otherwise, of the registers, indexes,
returns and copies of certificates and other documents referred to in
sub-section (1).]
(2) The registers,
indexes, returns, and copies of certificates and other documents referred to in
sub-section (1) shall, except when the register of members or debenture holders
is closed under the provisions of this Act, be open during business hours
(subject to such reasonable restrictions, as the company may impose, so that
not less than two hours in each day are allowed for inspection) to the
inspection-
(a) Of any member or
debenture holder, without fee; and
(b) Of any other person, on
payment of 51[suchsumasmaybeprescribed]
for each inspection.
(3) Any such member,
debenture holder or other person may-
(a) Make extracts from any
register, index, or copy referred to in subsection (1) without fee or
additional fee, as the case may be; or
(b) Require a copy of any
such register, index, or copy or of any part thereof, on payment of 52[such sum as may be prescribed] for every
one hundred words or fractional part thereof required to be copied.
(4) The company shall cause
any copy required by any person under clause (b) of sub-section (3) to be sent
to that person within a period of ten days, exclusive of non-working days,
commencing on the day next after the day on which the requirement is received
by the company.
48. Inserted by the Companies
(Amendment) Act, 1960.
49. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
50. Refer Companies
(Preservation & Disposal of Records) Rules, 1966.
51. Substituted for "a
fee of one rupee by the Companies (Amendment) Act, 1988, w.e.f.
15-7-1988. Fee of Rs. 10 has been
prescribed vide rule 21 A of General Rules & Forms.
52. Substituted for "six
annas, ibid. Fees of Re. 1 has been
prescribed vide rule 21 A.
(5) If anv inspection, or the
making of any extract required under this section, is refused, or if any copy
required under this section is not sent within the period specified in
sub-section (4), the company, and every officer of the company who is in
default, shall be punishable, in respect of each offence, with line which may
extend to fifty rupees for every day during which the refusal or default
continues.
(6) The 53[Company Law Board] may also, by order,
compel an immediate inspection of the document, or direct that the extract
required shall forthwith be allowed to be taken by the person requiring it, or
that the copy required shall forthwith be sent to the person requiring it, as
the case may be. 54
164. Registers,
etc., to be evidence. -The
register of members, the register of debenture holders, and the annual returns,
certificates and statements referred to in sections 159,160 and 161 shall be
prima facie evidence of any matters directed or authorised to be idscrted
therein by this Act.
Meetings and proceedings
165. Statutory
meeting and statutory report" of company. -
(1) Every company limited by shares, and every company limited by
guarantee and having a share capital, shall, within a period of not less than
one month nor more than six months from the date at which the company is
entitled to commence business, hold a general meeting of the members of the
company, which shall be called "the statutory meeting.
(2) The Board of directors
shall, at least twenty-one days before the day on which the meeting is held,
forward a report (in this Act referred to as "the statutory report")
to every member of the company:
Provided
that if the statutory report is forwarded later than is required above, it
shall, notwithstanding that fact, be deemed to have been duly forwarded if it
is so agreed to by all the members entitled to attend and vote at the meeting.
(3) The statutory report
shall set out-
(a) The total number of
shares allotted, distinguishing shares allotted as fully or partly paid up
otherwise than in cash, and stating in the case of shares partly paid up, the
extent to which they are so paid-up, and in either case, the consideration for
which they have been allotted;
(b) The total amount of cash
received by the company in respect of all the shares allotted, distinguished as
aforesaid;
(c) An abstract of the
receipts of the company and of the payments made thereout, up to a date within
seven days of the date of the report, exhibiting under distinctive headings the
receipts of the company from shares and debentures and other sources, the
payments made thereout, and particulars concerning the balance remaining in
hand, and an account or estimate of the preliminary expenses of the company,
showing separately any commission or discount paid or to be paid on the issue
or sale of shares or debentures;
53. Substituted for 'Court' by
the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
54. Prescribed fees is Rs. 50.
55. See Form No. 22 of General
Rules and Forms.
(a) The names, addresses and
occupations of the directors of the company and of its auditors; and also, if
there be any, of its *[managing agent, secretaries and treasurers,] manager and
secretary; and the changes, if any, which have occurred in such names,
addresses and occupations since the date of the incorporation of the company;
(e) The particulars of any
contract which, or the modification or the proposed modification of which, is
to be submitted to the meeting for its approval, together in the latter case
with the particulars of the modification or proposed modification;
The
extent, if any, to which each underwriting contract, if any, has not been
carried out, and the reasons therefor;
(g) The arrears, if any, due
on calls from every director; *[from the managing agent, every partner of the
managing agent, every firm in which the managing agent is a partner, and where
the managing agent is a private company, every director thereof; from the
secretaries and treasurers; where they are a firm, from every partner therein;
and where they are a private company, from every director thereof;] and from
the manager; and
(h) The particulars of any
commission or brokerage paid or to be paid in connection with the issue or sale
of shares or debentures to any director; *[to the managing agent, any partner
of the managing agent, any firm in which the managing agent is a partner; and
where the managing agent is a private company, to any director thereof; to the
secretaries and treasurers; where they are a firm, to any partner therein; and
where they are a private company, to any director thereof;] or to the manager.
(4) The statutory report
shall be certified as correct by not less than two directors of the company one
of who shall be a managing director, where there is one. After the statutory report has been
certified as aforesaid, the auditors of the company shall, in so far as the
report relates to the shares allotted by the company, the cash received in
respect of such shares and the receipts and payments of the company 56[* * *], certify it as correct.
(5) The Board shall cause a
copy of the statutory report certified as is required by this section to be
delivered to the Registrar for registration forthwith, after copies thereof
have been sent to the members of the company.
(6) The Board shall cause a
list showing the names, addresses and occupations of the members of the
company, and the number of shares held by them respectively, to be produced at
the commencement of the statutory meeting, and to remain open and accessible to
any member of the company during the continuance of the meeting.
(7) The members of the
company present at the meeting shall be at liberty to discuss any matter
relating to the formation of the company or arising out of the statutory
report, whether previous notice has been given or not; but no resolution may be
passed of which notice has not been given in accordance with the provisions of
this Act
56. 'On capital account'
omitted by the Companies (Amendment) Act, 1960.
(8) The meeting may adjourn
from time to time, and at any adjourned meeting, any resolution of which notice
has been given in accordance with the provisions of this Act, whether before or
after the former meeting, may be passed; and the adjourned meeting shall have
the same powers as an original meeting.
(9) If default is made in
complying with the provisions of this section, every director or other officer
of the company who is in default shall be punishable with fine, which may
extend to five hundred rupees.
(10) This section shall not
apply to a private company.
57166. Annual general meeting.
-
58(l) Every
Company shall in each year hold in addition to any other meetings a general
meeting as its annual general meeting and shall specify the meeting as such in
the notices calling it; and not more than fifteen months shall elapse between
the date of one annual general meeting of a company and that of the next
Provided
that a company may hold its first annual general meeting within a period of not
more than eighteen months from the date of its incorporation; and il' such
general meeting is held within that period, it shall not be necessary for the
company to hold any annual general meeting in the year of its incorporation or
in the following year:
Provided
further that the Registrar may, for any special reason, extend the time within
which any annual general meeting (not being the first annual general meeting)
shall be held, by a period not exceeding three months.]
(2) Every annual general
meeting shall be called for a time during business hours, on a day that is not
a public holiday, and shall be held either at the registered office of the
company or at some other place within the city, town or village in which the
registered office of the company is situate 59[*
* *]:
[Provided
that the Central Government may except any class of companies from the
provisions of this sub-section subject to such conditions as it may impose:
Provided
further that-
(a) A public company or a
private company which is a subsidiary of a public company, may by its articles
fix the time for its annual general meetings and may also by a resolution
passed in one annual general meeting fix the time for its subsequent annual
general meetings; and
57. For clarifications on this section, refer Taxmann's Master Guide to
Companies Act.
58. Substituted by the
Companies (Amendment) Act, 1960. For
the original sub-section, refer Appendix I.
59. And the notices calling
the meeting shall specify it as the annual general meeting' omitted by the
Companies (Amendment) Act, 1960.
60. Inserted, ibid.
61. For notification granting
exemption under the proviso, refer Taxmann's Master Guide to Companies Act.
(b) A private company, which
is not a subsidiary of a public company, may in like manner and also by a
resolution agreed to by all the members thereof, fix the time as well as the
place for its annual general meeting.]
167. Power
of 62[Company Law Board] to call annual
general meeting. -
(1) If default is made in holding an annual general meeting in
accordance with section 166, the 62[Company
Law Board] may, notwithstanding anything in this Act or in the articles of the
company, on the application 61 of any member of the company, call, or direct
the calling of, a general meeting of the company and give such ancillary or
consequential directions as the 62[Company
Law Board] thinks expedient in relation to the calling, holding and conducting
of the meeting.
Explanation: The directions that may be given under this
sub-section may include a direction that one member of the company present in
person or by proxy shall be deemed to constitute a meeting.
(2) A general meeting held in
pursuance of sub-section (1) shall, subject to any directions of the 62[Company Law Board], be deemed to be an
annual general meeting of the company.
168. Penalty
for default in complying with section 166 or 167. -If default is made in holding a meeting of
the company in accordance with section 166, or in complying with any directions
of the Central Government under subsection (1) of section 167, the company, and
every officer of the company who is in default, shall be punishable with fine
which may extend to five thousand rupees 61[and
in the case of a continuing default, with a further fine which may extend to
two hundred and fifty rupees for every day after the first during which such
default continues].
169. Calling
of extraordinary general meeting on requisition. -
(1) The Board of directors of a company shall, on the requisition
of such number of members of the company as is specified in sub-section (4),
forthwith proceed duty to call an extraordinary general meeting of the company.
(2) The requisition shall set
out the matters for the consideration of which the meeting is to be called,
shall be signed by the requisitionists, and shall be deposited at the
registered office of the company.
(3) The requisition may
consist of several documents in like form, each signed by one or more requisitionists.
(4) The number of members
entitled to requisition a meeting in regard to any matter shall be-
(a) In the case of a company
having a share capital, such number of them as hold at the date of the deposit
of the requisition, not less than one- tenth of such of the paid-up capital of
the company as at that date carries the right of voting in regard to that
matter;
62. Substituted for Central
Government by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
63. Prescribed fees is Rs. 50.
64. Inserted by the Companies
(Amendment) Act, 1960.
(b) In the case of a company
not having a share capital, such numbers of them as have at the date of deposit
of the requisition not less than onetenth of the total voting power of all the
members having at the said date a right to vote in regard to that matter.
(5) Where two or more
distinct matters are specified in the requisition, the provisions of
sub-section (4) shall apply separately in regard to each such matter; and the
requisition shall accordingly be valid only in respect of those matters in
regard to which the condition specified in that sub-section is fulfilled.
(6) If the Board does not,
within twenty-one days from the date of the deposit of a valid requisition in
regard to any matters, proceed duly to call a meeting for the consideration of
those matters on a day not later than forty-five days from the date of the
deposit of the requisition, the meeting may be called-
(a) By the requisitionists
themselves;
(b) In the case of a company
having a share capital, by such of the requisitionists as represent either a
majority in value of the paid-up share capital held by all of them or not less
than one-tenth of such of the paid-up share capital of the company as is
referred to in clause (a) of sub-section (4), whichever is less; or
(c) In the case of a company
not having a share capital, by such of the requisitionists as represent not
less than one-tenth of the total Voting power of all the members of the company
referred to in clause (b) of sub-section (4).
Explanation: For
the purposes of this sub-section, the Board shall, in the case of a meeting at
which a resolution is to be proposed as a special resolution, be deemed not to
have duly conveded the meeting if they do not give such notice thereof as is
required by sub-section (2) of section 189.
(7) A meeting called under
sub-section (6) by the requisitionists or any of them-
(a) Shall be called in the
same manner, as nearly as possible, as that in which meetings are to be called
by the Board; but
(b) Shall not be held after
the expiration of three months from the date of the deposit of the requisition.
Explanation: Nothing
in clause (b) shall be deemed to prevent a meeting duly commenced before the
expiry of the period of three months aforesaid, from adjourning to some day
after the expiry of that period.
(8) Where two or more persons
hold any shares or interest in a company jointly, a requisition, or a notice
calling a meeting, signed by one or some only of them shall, for the purposes
of this section, have the same force and effect as if it had been signed by all
of them.
(9) Any reasonable expenses
incurred by the requisitionists by reason of the failure of the Board duly to
call a meeting shall be repaid to the requisitionists by the company; and any
sum so repaid shall be retained by the company out of any sums due or to become
due from the company by way of fees or other remuneration for their services to
such of the directors as were in default.
170. Sections
171 to 186 to apply to meetings. -
(1) The provisions of
sections 171 to 186-
(i) Shall, notwithstanding
anything to the contrary in the articles of the company, apply with respect to
general meetings of a public company, and of a private company which is a
subsidiary of a public company; and
(ii) Shall, unless otherwise
specified therein or unless the articles of the company otherwise provide,
apply with respect to general meetings of a private company which is not a
subsidiary of a public company.
(2) (a) Section 176, with such adaptations and
modifications, if any, as may be prescribed, shall apply with respect to
meetings of any class of members, or of debenture holders or any class of
debenture holders, of a company, in like manner as it applies with respect to
general meetings of the company.
(b) Unless the articles of
the company or a contract binding on the persons concerned otherwise provide,
sections 171 to 175 and sections 177 to 186 with such adaptations and
modifications, if any, as may be prescribed6l, shall apply with respect to
meetings of any class of members, or of debenture holders or any class of
debenture holders, of a company, in like manner as they apply with respect to
general meetings of the company.
171. Length
of notice for calling meeting. -
(1) A general meeting of a company may be called by giving not less
than twenty-one days' notice in writing.
(2) A general meeting may be
called after giving shorter notice than that specified in sub-section (1), if
consent is accorded thereto66_
(i) In the case of an annual
general meeting, by all the members entitled to vote thereat; and
(ii) In the case of any other
meeting, by members of the company (a) holding, if the company has a share
capital, not less than 95 per cent of such part of the paid-up share capital of
the company as gives a right to vote at the meeting, or (b) having, if the
company has no share capital, not less than 95 per cent of the total voting
power exercisable at that meeting:
Provided
that where any members of a company are entitled to vote only on some
resolution or resolutions to be moved at a meeting and not on the others, those
members shall be taken into account for the purposes of this sub-section in
respect of the former resolution or resolutions and not in respect of the
latter.
172. Contents
and manner of service of notice and persons on whom it is to be served. -
(1) Every notice of a meeting of a company shall specify the place
and the day and hour of the meeting, and shall contain a statement of the business
to be transacted thereat.
(2) Notice of every meeting
of the company shall be given-
(i) To every member of the
company, in any manner authorised by subsections (1) to (4) of section 53;
65. See rule 7 of General
Rules and Forms.
66. See Form No. 22A of
General Rules and Forms.
(ii) To the persons entitled
to a share in consequence of the death or insolvency of a member, by sending it
through the post in a prepaid letter addressed to them by name, or by the title
of representatives of the deceased, or assignees of the insolvent, or by any
like description, at the address, if any, in India supplied for the purpose by
the persons claiming to be so entitled, or until such an address has been so
supplied, by giving the notice in any manner in which it might have been given
if the death or insolvency had not occurred; and
(iii) To the auditor or
auditors for the time being of the company, in any manner authorised by section
53 in the case of any member or members of the company:
67[Provided
that where the notice of a meeting is given by advertising the same in a
newspaper circulating in the neighbourhood of the registered office of the
company under sub-section (3) of section 53, the statement of material facts
referred to in section 173 need not be annexed to the notice as required by
that section but it shall be mentioned in the advertisement that the statement
has been forwarded to the members of the company.]
(3) The accidental omission
to give notice to, or the non-receipt of notice by, any member or other person
to whom it should be given shall not invalidate the proceedings at the meeting.
173. Explanatory
statement to be annexed to notice. -
(1) For the purposes of this
section-
(a) In the case of an annual
general meeting, all business to be transacted at the meeting shall be deemed
special, with the exception of business relating to (i) the consideration of
the accounts, balance sheet and the reports of the Board of directors and
auditors, (ii) the declaration of a dividend, (iii) the appointment of
directors in the place of those retiring, and (iv) the appointment of, and the
fixing of the remuneration of, the auditors; and
(b) In the case of any other
meeting, all business shall be deemed special.
(2) Where any items of
business to be transacted at the meeting are deemed to be special as aforesaid,
there shall be annexed to the notice of the meeting a statement setting out all
material facts concerning each such item of business, including in particular 68[the
nature of the concern or interest], if any, therein, of every director *[, the
managing agent, if any, the secretaries and treasurers, if any,] and the
manager, if any:
69[Provided that where any item of special
business as aforesaid to be transacted at a meeting of the company relates to,
or affects, any other company, the extent of shareholding interest in that
other company of every director, *[the managing agent, if any, the secretaries
and treasurers, if any,] and the manager, if any, of the first-mentioned
company shall also be set out in the statement if the extent of such
shareholding interest is not less than twenty per cent of the paid-up share
capital of that other company.]
67. Inserted by the Companies
(Amendment) Act, 1960.
68. Substituted for 'the
nature and extent of the interest 'by the Companies (Amendment) Act, 1960.
69. Inserted, ibid.
(3) Where any item of
business consists of the according of approval to any document by the meeting,
the time and place where the document can be inspected shall be specified in
the statement aforesaid.
(1) Unless the articles of
the company provide for a larger number, five members personally present in the
case of 70[public company
(other than a public companv which has become such by virtue of section 43A),
and two members personally present in the case of any other company,] shall be
the quorum for a meeting of the company.
(2) Unless the articles of
the company otherwise provide, the provisions of subsections (3), (4) and (5)
shall apply with respect to the meetings of a public or private company.
(3) If within half an hour
from the time appointed for holding a meeting of a company, a quorum is not
present, the meeting, if called upon the requisition of members, shall stand
dissolved.
(4) In any other case, the
meeting shall stand adjourned to the same day in the next week, at the same
time and place, or to such other day and at such other time and place as the
Board may determine.
(5) If at the adjourned
meeting also, a quorum is not present within half an hour from the time
appointed for holding the meeting, the members present shall be a quorum.
(1) Unless the articles of
the company otherwise provide, the members personally present at the meeting
shall elect one of themselves to be the chairman thereof on a show of hands.
(2) If a poll is demanded on
the election of the chairman, it shall be taken forthwith in accordance with
the provisions of this Act, the chairman elected on a show of hands exercising
all the powers of the chairman under the said provisions.
(3) If some other person is
elected chairman as a result of the poll, he shall be chairman for the rest of
the meeting.
(1) Any member of a company
entitled to attend and vote at a meeting of the company shall be entitled to
appoint another person (whether a member or not) as his proxy to attend and
vote instead of himself; but a proxy so appointed shall not have any right to
speak at the meeting: Provided that, unless the articles otherwise provide-
(a) This sub-section shall
not apply in the case of a company not having a share capital;
(b) A member of a private
company shall not be entitled to appoint more than one proxy to attend on the
same occasion; and
70. Substituted for "public
company, and two members personally present in the case of a private company,'
by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
(c) A proxy shall not be
entitled to vote except on a poll.
(2) In every notice calling a
meeting of a company which has a share capital, or the articles of which
provide for voting by proxy at the meeting, there shall appear with reasonable
prominence a statement that a member entitled to attend and vote is entitled to
appoint a proxy, or, where that is allowed, one or more proxies, to attend and
vote instead of himself, and that a proxy need not be a member.
If
default is made in complying with this sub-section as respects any meeting,
every officer of the company who is in default shall be punishable with fine,
which may extend to five hundred rupees.
71[(3) Any
provision contained in the articles of a public company or of a private company
which is a subsidiary of a public company, which specifies or requires a longer
period than forty-cight hours before a meeting of the company, for depositing
with the company or any other person any instrument appointing a proxy or any
other document necessary to show the validity or otherwise relating to the
appointment of a proxv in order that the appointment may be effective at such
meeting, shall have effect as if a period of forty-eight hours had been
specified in or required by such provision for such deposit.]
(4) If for the purpose of any
meeting of a company, invitations to appoint as proxy a person or one of a number
of persons specified in the invitations are issued at the company's expense to
any member entitled to have a notice of the meeting sent to him and to vote
thereat by proxy, every officer of the company who knowingly issues the
invitations as aforesaid or wilfully authorises or permits their issue shall be
punishable with fine which may extend to one thousand rupees:
Provided that an officer shall not be punishable
under this sub-section by reason only of the issue to a member at his request
in writing of a form of appointment naming the proxy, or of a list of persons
willing to act as proxies, if the form or list is available on request in
writing to every member entitled to vote at the meeting by proxy.
(5) The instrument appointing
a proxy shall-
(a) Be in writing; and
(b) Be signed by the
appointee or his attorney duly authorised in writing or, if the appointee is a
body corporate, be under its sea] or be signed by an officer or an attorney
duly authorised by it.
(6) An instrument appointing
a proxy, if in any of the forms set out in Schedule IX, shall not be questioned
on the ground that it fails to comply with any special requirements specified
for such instrument by the articles.
(7) Every member entitled to
vote at a meeting of the company, or on any resolution to be moved thereat,
shall be entitled during the period beginning twenty-four hours before the time
fixed for the commencement of the meeting and ending with the conclusion of the
meeting, to inspect the proxies lodged, at any time during the business hours
of the company, provided not less than three days'notice in writing of the
intention so to inspect is given to the company.
71. Substituted by the
Companies (Amendment) Act, 1960. For
the original sub-section, refer Appendix I.
177. Voting
to be by show of hands in first instance. -At any general meeting, a resolution put to
the vote of the meeting shall, unless a poll is demanded under section 179, be
decided on a show of hands.
178. Chairman's
declaration of result of voting by show of hands to be conclusive. -A declaration by the chairman in pursuance of
section 177 that on a show of hands, a resolution has or has not been carried,
or has or has not been carried either unanimously or by a particular majority,
and an entry to that effect in the books containing the minutes of the
proceedings of the company, shall be conclusive evidence of the fact, without
proof of the number or proportion of the votes cast in favour of or against
such resolution.
(1) Before or on the declaration of the result of the voting on any
resolution on a show of hands, a poll may be ordered to be taken by the
chairman of the meeting of his own motion, and shall be ordered to be taken by
him on a demand made in that behalf by the persons or person specified below,
that is to say, -
72[(a) In
the case of a public company having a share capital, by any member or members
present in person or by proxy and holding shares in the company-
(i) Which confer a power to
vote on the resolution not being less than one-tenth of the total voting power
in respect of the resolution, or
(ii) On which an aggregate
sum of not less than fifty thousand rupees has been paid up,
(b) In the case of a private
company having a share capital, by one member having the right to vote on the
resolution and present in person or by proxy if not more than seven such
members are personally present, and by two such members present in person or by
proxy, if more than seven such members are personally present,
(c) In the case of any other
company, by any member or members present in person or by proxy and having not
less than one-tenth of the total voting power in respect of the resolution.]
(2) The demand for a poll may
be withdrawn at any time by the person or persons who made the demand.
(1) A poll demanded on a
question of adjournment shall be taken forthwith.
(2) A poll demanded on any
other question (not being a question relating to the election of a chairman,
which is provided for in section 175) shall be taken at such time not being
later than forty-cight hours from the time when the demand was made, as the
chairman may direct.
181. Restriction
on exercise of voting right of members who have not paid calls, etc. -Notwithstanding anything contained in this
Act, the articles of a company may provide that no member shall exercise any
voting right in respect of any shares registered in his name on which any calls
or other sums presently payable by him have not been paid, or in regard to
which the company has and has exercised any right of lien.
72. Substituted for clauses
(a) to (d) by the Companies (Amendmenti Act, 1988, w.e.f.15-6-1988. For clauses
(a) to (d) as they stood prior to their substitution, refer Appendix I.
182. Restrictions
on exercise of voting right in other cases to be void. -A public company, or a private company which
is a subsidiary of a public company, shall not prohibit any member from
exercising his voting right on the ground that he has not held his share or
other interest in the company for any specified period preceding the date on
which the vote is taken, or on any other ground not being a ground set out in
section 181.
183. Right
of member to use his votes differently. -On a poll taken at a meeting of a company, a member
entitled to more than one vote, or his proxy, or other person entitled to vote
for him, as the case may be, need not, if he votes, use all his votes or cast
in the same way all the votes he uses.
(1) Where a poll is to be taken, the chairman of the meeting shall
appoint two scrutineers to scrutinize the votes given on the poll and to report
thereon to him.
(2) The chairman shall have
power, at any time before the result of the poll is declared, to remove a
scrutineer from office and to fill vacancies in the office of scrutineer
arising from such removal or from any other cause.
(3) Of the two scrutineers
appointed under this section, one shall always be a member (not being an
officer or employee of the company) present at the meeting, provided such a
member is available and willing to be appointed.
185. Manner
of taking poll and result thereof. -
(1) Subject to the provisions
of this Act, the chairman of the meeting shall have power to regulate the manner
in which a poll shall be taken.
(2) The result of the poll
shall be deemed to be the decision of the meeting on the resolution on which
the poll was taken.
186. Power
of 73[Company Law Board] to order
meeting to be called. 74
(1) If for any reason it is impracticable to call a meeting of a
company, other than an annual general meeting, in any manner in which meetings
of the company may be called, or to hold or conduct the meeting of the company
in the manner prescribed by this Act or the articles, the 73[Company Law Board] may, either of its own
motion or on the application of any director of the company, or of any member
of the company who would be entitled to vote at the meeting, -
(a) Order a meeting of the
company to be called, held and conducted in such manner as the 73[Company Law Board] thinks fit; and
(b) Give such ancillary or
consequential directions as the 73[Company
Law Board] thinks expedient, including directions modifying or supplementing in
relation to the calling, holding and conducting of the meeting, the operation
of the provisions of this Act and of the company's articles.
73. Substituted for
"Court" by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
74. Prescribed fees is Rs.
200.
Explanation: The directions that may be given under this
sub-section may include a direction that one member of the company present in
person or by proxv shall be deemed to constitute a meeting. (2) Any meeting
called, held and conducted in accordance with any such order shall, for all purposes,
be deemed to be a meeting cl'the company duly called, held and conducted.
187. Representation
of corporations at meetings of companies and of creditors. -
(1) A body corporate (whether a company within the meaning of this
Act or not) may-
(a) If it is a member of a
company within the meaning of this Act, by resolution of its Board of directors
or other governing body, authorise such person as it thinks fit to act as its
representative at any meeting of the company, or at any meeting of any class of
members of the company;
(b) If it is a creditor
(including a holder of debentures) of a company within the meaning of this Act,
by resolution of its directors or other governing body, authorise such person
as it thinks fit to act as its representative at any meeting of any creditors
of the company held in pursuance of this Act or of any rules made thereunder,
or in pursuance of the provisions contained in any debenture or trust deed, as
the case may be.
(2) A person authorised by
resolution as aforesaid shall be entitled to exercise the same rights and
powers (including the right to vote by proxy) on behalf of the body corporate
which he represents as that body could exercise if it were 75[an individual member,] creditor or holder
of debentures of the company.
(1) The President of India or the Governor of a State, if he is a
member of a company, may appoint such person as he thinks fit to act as his
representative at any meeting of the company or at any meeting of any class of
members of the company.
(2) A person appointed to act
as aforesaid shall, for the purposes of this Act, be deemed to be a member of
such a company and shall be entitled to exercise the same rights and powers
(including the right to vote by proxy) as the President or, as the case may be,
the Governor could exercise as a member of the company.]
187B. 77[Exercise
of voting rights in respect of shares held in trust. -
(1) Save as otherwise
provided in section 153B but notwithstanding anything contained in any other
provisions of this Act or any other law or any contract, memorandum or
articles, where any shares in a company are held in trust by a person
(hereinafter referred to as trustee), the rights and powers (including the
right to vote by proxy) exercisable at any meeting of the company or at any
meeting of any class of members of the company by the trustee as a member of
the company shall-
(a) Cease to be exercisable
by the trustee as such member, and
(b) Become exercisable by the
public trustee.
75. Substituted for "a
member, by the Companies (Amendment) Act, 1960.
76. Insertcd, ibid.
77. Inserted by the Companies
(Amendment) Act, 1963, w.e.f. 1-12-1964.
(2) The public trustee may,
instead of himself attending the meeting, and exercising the rights and powers,
as aforesaid, appoint as his proxy an officer of Government or the trustee
himself to attend such meeting and to exercise such rights and powers in
accordance with the directions of the public trustee:
Provided
that where the trustee is appointed by the public trustee as his proxy, the
trustee shall be entitled, notwithstanding anything contained in any other
provisions of this Act, to exercise such rights and powers in the same manner,
as he would have been but for the provisions of this section.
(3) The public trustee may
abstain from exercising the rights and powers conferred on him by this section
if in his opinion the objects of the trust or the interests of the
beneficiaries of the trust are not likely to be adversely affected by such
abstention.
(4) If for any reason the
trustee considers that the public trustee should not abstain from exercising
the rights and powers conferred on him by this section and the exercise of such
rights and powers is necessary in order to safeguard the objects of the trust
or the interests of the beneficiaries of the trust, he may by writing
communicate his views in this behalf to the public trustee but the public
trustee may in his discretion either accept such views or reject the same.
(5) No suit, prosecution or
other legal proceeding shall lie against the public trustee at the instance of
the trustee or any person on his behalf or any other person on the ground that the
public trustee has abstained from exercising the rights and powers conferred on
him by this section.
(6) In order to enable the
public trustee to exercise the rights and powers aforesaid, the public trustee
shall also be entitled to receive and in respect all books and papers under
this Act, which a member is entitled to receive and inspect.]
187C. 78[Declaration
by persons not holding beneficial interest in any share.
(1) Notwithstanding anything contained in section 150, section 153B
or section 187B, a person, whose name is entered, at the commencement of the
Companies (Amendment) Act, 1974, or at any time thereafter, in the register of
members of a company as the holder of a share in that company but who does not
hold the beneficial interest in such share, shall, within such time and in such
form as may be prescribed 79, make a declaration to the company specifying the
name and other particulars of the person who holds the beneficial interest in
such share.
(2) Notwithstanding anything
contained elsewhere in this Act, a person who holds a beneficial interest in a
share or a class of shares of a companv shall, within thirty days from the
commencement of the Companies (Amendment) Act, 1974, or within thirty days
after his becoming such beneficial owner, whichever is later, make a
declaration to the company specifying the nature of his interest, particulars
of the person in whose name the shares stand registered in the books of the
company and such other particulars as may be prescribed.
78. Inserted by the Companies
(Amendment) Act, 1974, w.e.f. 1-2-1975.
79. Refer Companies
(Declaration of Beneficial Interest in Shat-es) Rules, 1975.
(3) Whenever there is a
change in the beneficial interest in such shares the beneficial owner shall,
within thirty days from the date of such change, make a declaration to the
company in such form and containing such particulars as may be prescribed.
(4) Notwithstanding anything
contained in section 153 where any declaration referred to in sub-section (1),
sub-section (2) or sub-section (3) is made to a company, the company shall make
a note of such declaration, in its register of members and shall file, within
thirty days from the date of receipt of the declaration by it, a return in the
prescribed form with the Registrar with regard to such declaration.
(5) (a) If any person, being required by the
provisions of sub-section (1), subsection (2) or sub-section (3), to make a
declaration, fails, without any reasonable excuse, to do so, he shall be
punishable with fine which may extend to one thousand rupees for every day
during which the failure continues.
(b) If a company fails to
comply with the provisions of this section, the company, and every officer of
the company who is in default, shall be punishable with fine, which may extend
to one hundred rupees for every day during which the default continues.
(6) Any charge, promissory
note or any other collateral agreement, created, executed or entered into in
relation to any share, by the ostensible owner thereof, or any hypothecation by
the ostensible owner of any share, in respect of which a declaration is
required to be made under the foregoing provisions of this section, but not so
declared, shall not be enforceable by the beneficial owner or any person claiming
through him.
(7) Nothing in this section
shall be deemed to prejudice the obligation of a company to pay dividend in
accordance with the provisions of section 206, and the obligation shall, on
such payment, stand discharged.]
187D.
80[Investigation of beneficial
ownership of shares in certain cases. -Where it appears to the Central Government that
there are good reasons so to do, it may appoint one or more inspectors to
investigate and report as to whether the provisions of section 187C have been complied
with regard to any share, and thereupon the provisions of section 247 shall, as
far as may be, apply to such investigation as if it were an investigation
ordered under that section.]
188. Circulation
of members' resolutions. -
(1) Subject to the provisions of this section, a company shall, on
the requisition in writing of such number of members as is hereinafter
specified and (unless the company otherwise resolves) at the expense of the
requisitionists,-
(a) Give to members of the
company entitled to receive notice of the next annual general meeting, notice
of any resolution, which may properly be moved and is intended to be moved at
that meeting;
80. Inserted by the Companies
(Amendment) Act, 1974, w.e.f. 1-2-1975.
(b) Circulate to members
entitled to have notice of any general meeting sent to them, any statement of
not more than one thousand words with respect to the matter referred to in any
proposed resolution, or any business to be dealt with at that meeting.
(2) The number of members
necessary for a requisition under sub-section (1) shall be-
(a) Such number of members as
represent not less than one-twentieth of the total voting power of all the
members having at the date of the requisition a right to vote on the resolution
or business to which the requisition relates; or
(b) Not less than one hundred
members having the right aforesaid and holding shares in the company on which
there has been paid up an aggregate sum of not less than one lakh of rupees in
all.
(3) Notice of any such resolution
shall be given, and any such statement shall be circulated, to members of the
company entitled to have notice of the meeting sent to them, by serving a copy
of the resolution or statement on each member in any manner permitted for
service of notice of the meeting; and notice of any such resolution shall be
given to any other member of the company by giving notice of the general effect
of the resolution in any manner permitted for giving him notice of meetings of
the company:
Provided
that the copy shall be served, or notice of the effect of the resolution shall
be given, as the case may be, in the same manner and ' so far as practicable,
at the same time as notice of the meeting, and where it is not practicable for
it to be served or given at that time, it shall be served or given as soon as
practicable thereafter.
(4) A company shall not be
bound under this section to give notice of any resolution or to circulate any
statement unless-
(a) A copy of the requisition
signed by the requisitionists (or two or more copies, which between them
contain the signatures of all the requisitionists) is deposited at the
registered office of the compady-
(i) In the case of a
requisition requiring notice of a resolution, not less than six weeks before
the meeting;
(ii) In the case of any other
requisition, not less than two weeks before the meeting; and
(b) There is deposited or
tendered with the requisition a sum reasonably sufficient to meet the company's
expenses in giving effect thereto:
Provided
that if, after a copy of a requisition requiring notice of a resolution has
been deposited at the registered office of the company, an annual general
meeting is called for a date six weeks or less after the copy has been
deposited, the copy, although not deposited within the time required by this
sub-section, shall be deemed to have been properly deposited for the purposes
thereof.
(5) The company shall also
not be bound under this section to circulate anv statement if, on the
application81 either of the
company or of any other person who claims to be aggrieved, the 82[Company Law Board] is satisfied that the
rights conferred by this section are being abused to secure needless publicity
for defamatory matter; and the 82[Company
Law Board] may order the company's costs on an application under this section
to be paid in whole or in part by the requisitionists, notwithstanding that
they are not parties to the application. 83
(6) A banking companv shall
not be bound to cii-culatc any statement under this section, if, in the opinion
of its Board of directors, the circulation will injure the interests of the
company.
(7) Notwithstanding anything
in the company's articles, the business which may be dealt with at an annual
general meeting shall include any resolution of which notice is given in
accordance with this section, and for the purposes of this subsection, notice
shall be deemed to have been so given, notwithstanding the accidental omission,
in giving it, of one or more members.
(8) If default is made in
complying with the provisions of this section, every officer of the companv who
is in default shall be punishable with fine, which may extend to five thousand
rupees.
189. Ordinary
and special resolutions. -
(1) A resolution shall be an
ordinary resolution when at a general meeting of which the notice required
under this Act has been duly given, the votes cast (whether on a show of hands,
or on a poll, as the case mav be,) in favour of the resolution (including the
casting vote, if any, of the chairman) by members who, being entitled so to do,
vote in person, or where proxies are allowed, by proxy, exceed the votes, if
any, cast against the resolution by members so entitled and voting.
(2) A resolution shall be a
special resolution when-
(a) The intention to propose
the resolution as a special resolution has been duly specified in the notice
calling the general meeting or other intimation given to the members of the
resolution;
(b) The notice required under
this Act has been duly given of the general meeting; and
(c) The votes cast in f avour
of the resolution (whether on a show of hands, or on a poll, as the case may
be), by members who, being entitled so to do, vote in person, or where proxies
are allowed, by proxy, are not less than three times the number of the votes,
if any, cast against the resolution by members so entitled and voting.
190. Resolutions
requiring special notice.
(1) Where, by any provision
contained in this Act or in the articles, special notice is required of any
resolution, notice of the intention to move the resolution shall be given to
the company not less than 84[fourteen
days] before the meeting at which it is to be moved, exclusive of the day on
which the notice is served or deemed to be served and the day of the meeting.
81. Prescribed fees is Rs. 50.
82. Substituted for
"Court" by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
83. Prescribed fees is Rs. 50.
84. Substituted for
"twenty-eight days" by the Companies (Amendment) Act, 1960.
85(2) The
company shall, immediately after the notice of the intention to move any such
resolution has been received by it, give its members notice of the resolution
in the same manner as it gives notice of the meeting, or if that is not
practicable, shall give them notice thereof, either by advertisement in a
newspaper having an appropriate circulation or in any other mode allowed by the
articles, not less than seven days before the meeting.]
191. Resolutions
passed at adjourned meetings. -Where
a resolution is passed at an adjourned meeting of-
(a) A company;
(b) The holders of any class
of shares in a company; or
(c) The Board of directors of
a companv;
The
resolution shall, for all purposes, be treated as having been passed on the
date on which it was in fact passed, and shall not be deemed to have been
passed on any earlier date.
192. Registration
of certain resolutions and agreements. 86
(1) A copy of every resolution 87[(together
with a copy, of the statement of material facts annexed under section 173 to
the notice of the meeting in which such resolution has been passed)] or
agreement to which this section applies shall, within 88[thirty] days after the passing or making
thereof, be printed or typewritten and duly certified under the signature of an
officer of the company and filed with the Registrar who shall record the same.
(2) Where articles have been
registered, 89[a copy of every
resolution ref errcd to in sub-section (1) which has the effect of altering the
articles and a copy of every agreement referred to in that sub-section] for the
time being in force shall be embodied in or annexed to every copy of the
articles issued after the passing of the resolution or the making of the
agreement.
(3) Where articles have not
been registered, a printed copy of everv 90[resolution
or agreement referred to in sub-section (1)] shall be forwarded to any member
at his request, on payment of one rupee.
(4) This section shall apply
to-
(a) Special resolutions;
(b) Resolutions, which have
been agreed to by all the members of a company, but which, if not so agreed to,
would not have been effective for their purpose unless they had been passed as
special resolutions;
(c) Any resolution of the
Board of directors of a company or agreement executed by a company, relating to
the appointment, re-appointment or renewal of the appointment, or variation of
the terms of appointment, of a managing director;
85. Substituted for
sub-sections (2) and (3) by the Companies (Amendment) Act, 1960.Forthe original
sub-sections, refer Appendix I.
86. See Form No. 23 of General
Rules and Forms.
87. Inserted by the Companies
(Amendment) Act, 1960.
88. Substituted for
"fifteen" by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
89. Substituted for "a
copy of every such resolution or agreement by the Companies (Amendment) Act,
1960.
90. Substituted for "such
resolution or agreement', ibid
*[(d) Any agreement relating to
the appointment, re-appointment or renewal of the appointment of a managing
agent or secretaries and treasurers for a company, or varying the terms of any
such agreement, executed by the company;]
(e) Resolutions or agreements
which have been agreed to by all the members of any class of shareholders but
which, if not so agreed to, would not have been effective for their purpose unless
they had been passed by some particular majority or otherwise in some
particular manner; and all resolutions or agreements which effectively bind all
the members of any class of shareholders though not agreed to by all those
members; 91[***]
92[(ee) Resolutions passed by a company-
(i) According consent to the
exercise by its Board of directors of any of the powers under clause (a),
clause (d) and clause (e) of subsection (1) of section 293;
(ii) Approving the
appointment of sole selling agents under 93 [section 294 or section 294AA];
(f) Resolutions requiring a
company to be wound up voluntarily passed in pursuance of sub-section (1) of
section 484; 94[and]
94[(g) Copies
of the terms and conditions of appointment of a sole selling agent appointed
under section 294 or of a sole selling agent or other person appointed under
section 294AA.]
(5) If default is made in
complying with sub-section (1), the company, and every officer of the company
who is in default, shall be punishable with fine which may extend to twenty
rupees for every day during which the default continues.
(6) If default is made in
complying with sub-section (2) or (3), the company, and every officer of the
company who is in default, shall be punishable with fine which may extend to
ten rupees for each copy in respect of which default is made.
(7) For the purposes of
sub-sections (5) and (6), the liquidator of a company shall be deemed to be an
officer of the company.
95193. Minutes of proceedings of general meetings and of Board and other
meetings.
96[(1) Every
company shall cause minutes of all proceedings of every general meeting and of
all proceedings of every meeting of its Board of directors or of every
committee of the Board, to be kept by making within 97[thirty] days of the conclusion of every
such meeting concerned, entries thereof in books kept for that purpose with
their pages consecutively numbered.
91. "And omitted by the Companies (Amendment) Act, 1960.
92. Inserted, ibid.
93. Substituted for
"section 294" by the Companies (Amendment) Act, 1974, w.e.f.
1-2-1975.
94. Inserted, ibid.
95. For clarifications on this
section, refer Taxmann's Master Guide, to Companies Act.
96. Substituted for
sub-section (1) by the Companies (Amendment) Act, 1960. For the original subsection, refer Appendix I.
97. Substituted for
"fourteen" by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
(IA) Each page of every such
book shall be initialled or signed and the last page of the record of
proceedings of each meeting in such books shall be dated and signed-
(a) In the case of minutes of
proceedings of a meeting of the Board or of a committee thereof, by the
chairman of the said meeting or the chairman of the next succeeding meeting;
(b) In the case of minutes of
proceedings of a general meeting, by the chairman of the same meeting within
the aforesaid period of "[thirty] days or in the event of the death or
inability of that chairman within that period, by a director duly authorised by
the Board for the purpose.
(IB) In no case the minutes of
proceedings of a meeting shall be attached to any such book as aforesaid by
pasting or otherwise.]
(2) The minutes of each
meeting shall contain a fair and correct summary of the proceedings thereat.
(3) All appointments of
officers made at any of the meetings aforesaid shall be included in the minutes
of the meeting.
(4) In the case of a meeting
of the Board of directors or of a committee of the Board, the minutes shall
also contain-
(a) The names of the
directors present at the meeting; and
(b) In the case of each
resolution passed at the meeting, the names of the directors if any, dissenting
from, or not concurring in, the resolution.
(5) Nothing contained in
sub-sections (1) to (4) shall be deemed to require the inclusion in any such
minutes of any matter which, in the opinion of the chairman of the meeting, -
(a) Is, or could reasonably
be regarded as, defamatory of any person;
(b) Is irrelevant or
immaterial to the proceedings; or
(c) Is detrimental to the
interests of the company.
Explanation: The
chairman shall exercise an absolute discretion in regard to the inclusion or
non-inclusion of any matter in the minutes on the grounds specified in this
sub-section.
(6) If default is made in
complying with the foregoing provisions of this section in respect of any
meeting, the company, and every officer of the company who is in default, shall
be punishable with fine, which may extend to fifty rupees.
194. 99[Minutes to be evidence. -Minutes of meetings kept in accordance with
the provisions of section 193 shall be evidence of the proceedings recorded
therein.]
98. Substituted for
"fourteen" by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
99. Substituted by the
Companies (Amendment) Act, 1960. For
the original section, refer Appendix I.
195. Presumptions
to be drawn where minutes duly drawn and signed. -Where minutes of the proceedings of any
general meeting of the company or of any meeting of its Board of directors or
of a committee of the Board 1[have
been kept in accordance with the provisions of section 193], then, until the
contrary is proved, the meeting shall be deemed to have been duly called and
held, and all proceedings thereat to have duly taken place, and in particular,
all appointments of directors or liquidators made at the meeting shall be
deemed to be valid.
196. Inspection
of minute books of general meetings. -
(1) The books containing the minutes of the proceedings of any
general meeting of a company held on or after the 15th day of January, 1937,
shall-
(a) Be kept at the registered
office of the company, and
(b) Be open, during business
hours, to the inspection of any member without charge, subject to such
reasonable restrictions as the company may, by its articles or in general
meeting impose, so however that not less than two hours in each day are allowed
for inspection.
(2) Any member shall be
entitled to be furnished, within seven days after he has made a request in that
behalf to the company, with a copy of any minutes referred to in sub-section
(1), on payment of 2[such sum
as may be prescribed] for every one hundred words or fractional part thereof
required to be copied.
(3) If any inspection
required under sub-section (1) is refused, or if any copy required under
sub-section (2) is not furnished within the time specified therein, the
company, and every officer of the company who is in default, shall be
punishable with fine which may extend to five hundred rupees in respect of each
offence.
(4) In the case of any such
refusal or default, the 3[Company
Law Board] may, by order, compel an immediate inspection of the minute books or
direct that the copy required shall forthwith be sent to the person requiring
it. 4
197. Publication
of reports of proceedings of general meetings. -
(1) No document purporting to be a report of the proceedings of
any general meeting of a company shall be circulated or advertised at the
expense of the company, unlcssit includes the matters required by section 193
to be contained in the minutes of the proceedings of such meeting.
(2) If any report is
circulated or advertised in contravention of sub-section (1), the company, and
every officer of the company who is in default, shall be punishable, in respect
of each offcnce, with fine, which may extend to five hundred rupees.
1. Substituted for
"have bccn made and signed in accordance with the provisions of sections
193 and 194" by the Companies (Amendment) Act, 1960.
2. Substituted for "six
annas" bv the Companies (Amendment) Act, 1988, w.e.f. 15-7-1988. Re. 1 has been prescribed under rule 21A(6)
of General Rules & Forms as inserted by Fourth Ameiidment Rules, 1988.
3. Substituted for
"Court" by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
4. Prescribed fees is Rs.
50.
5[Prohibition of simultaneous appointment of different categories of
managerial personnel
197A.
Company not to appoint or employ certain different categories of
managerial personnel at the same time. -Notwithstanding anything contained in this Act or
any other law or any agreement or instrument, no company shall, after the
commencement of the Companies (Amendment) Act, 1960, appoint or employ at the
same time, or after the expiry of six months from such commencement, continue
the appointment or employment at the same time, of more than one of the
following categories of managerial personnel, namely:-
(a) Managing director,
*[(b) Managing agent,
(c) Secretaries and
treasurers,] and
(d) Manager.]
Managerial remuneration, etc.
(1) The total managerial remuneration payable by a public company
or a private company, which is a subsidiary of a public company, to its
directors and its *[managing agent, secretaries and treasurers or] manager in
respect of any financial year shall not exceed eleven per cent of the net
profits of that company for that financial year computed in the manner laid
down in sections 349, 350 and 351, except that the remuneration of the
directors shall not be deducted from the gross profits:
*[Provided that nothing in this section shall affect
the operation of sections 352 to 354 and 356 to 360.]
(2) The percentage aforesaid
shall be exclusive of any fees payable to directors under sub-section (2) of
section 309.
(3) Within the limits of the
maximum remuneration specified in sub-section (1), a company may pay a monthly
remuneration to its managing or whole-time director in accordance with the
provisions of section 309 or to its manager in accordance with the provisions
of section 387.
7[(4)
Notwithstanding anything contained in sub-sections (1) to (3), but subject to
the provisions of section 269, read with Schedule XIH, if, in any financial
vear, a company has no profits or its profits are inadequate, the company shall
not pay to its directors, including anv managing or whole-time director or
manager, by way of remuneration any sum [exclusive of any fees payable to
directors under sub-section (2) of section 309], except with the previous
approval of the Central Government. 8]
5. Inserted by the Companies
(Amendment) Act, 1960.
6. Substituted ibid. For the original section, refer Appendix I.
7. Substituted bv the
Companies (Amendment) Act, 1988, w.e.f. 15-6-1988. For the original sub-section, refer Appendix
I.
8. See Form No. 25A of
General Rules and Forms.
Explanation - For the purposes of this section and
sections 309, 310, 311, *[348, 352,] 381 and 387, "remuneration"
shall include, -
(a) Any expenditure incurred
by the company in providing any rent-free accommodation, or any other benefit
or amenity in respect of accommodation free of charge, to any of the persons
specified in sub-section (1);
(b) Any expenditure incurred
by the company in providing any other benefit or amenity free of charge or at a
concessional rate to any of the persons aforesaid;
(c) Any expenditure incurred
by the company in respect of any obligation or service, which, but for such
expenditure by the company, would have been incurred by any of the persons
aforesaid; and
(d) Any expenditure incurred
by the company to effect any insurance on the life of, or to provide any
pension, annuity or gratuity for, any of the persons aforesaid or his spouse or
child.]
199. Calculation
of commission, etc., in certain cases. -
(1) Where any commission or other remuneration payable to any
officer or employee of a company (not being a director *[, the managing agent,
secretaries and treasurers] or a manager) is fixed at a percentage of, or is
otherwise based on, the net profits of the company, such profits shall be
calculated in the manner set out in sections 349, 350 and 351.
(2) Any provision in force at
the commencement of this Act for the payment of any commission or other
remuneration in any manner based on the net profits of a company, shall
continue to be in force for a period of one year from such commencement; and
thereafter shall become subject to the provisions of subsection (1).
200. Prohibition
of tax-free payments. -
(1) No company shall pay to any
officer or employee thereof, whether in his capacity as such or otherwise,
remuneration free of any tax, or otherwise calculated by reference to, or
varying with, any tax payable by him, or the rate or standard rate of any such
tax, or the amount thereof.
Explanation: In this sub-section, the expression
"tax" comprises any kind of income tax including super tax.
(2) Where by virtue of any
provision in force immediately before the commencement of this Act, whether
contained in the company's articles, or in any contract made with the company,
or in any resolution passed by the company in general meeting or by the
company's Board of directors, any officer or employee of the company holding
any office at the commencement of this Act is entitled to remuneration in any
of the modes prohibited by sub-section (1), such provision shall have effect
during the residue of the term for which he is entitled to hold such office at
such commencement, as if it provided instead for the payment of a gross sum
subject to the tax in question, which, after deducting such tax, would yield
the net sum actually specified in such provision.
(3) This section shall not
apply to any remuneration-
(a) Which fell due before the
commencement of this Act, or
(b) Which may fall due after
the commencement of this Act, in respect of any period before such
commencement.
201. Avoidance
of provisions relieving liability of officers and auditors of company.
(1) Save as provided in this section, any provision, whether
contained in the articles of a company or in an agreement with a company or in
any other instrument, for exempting any officer of the company or any person
employed by the company as auditor from, or indemnifying him against, any
liability which, by virtue of any rule of law, would otherwise attach to him in
respect of any negligence, default, misfeasance, breach of duty or breach of
trust of which he may be guilty in relation to the company, shall be void:
Provided
that a company may, in pursuance of any such provision as aforesaid, indemnify
any such officer or auditor against any liability incurred by him in def ending
any proceedings, whether civil or criminal, in which judgment is given in his
favour or in which he is acquitted or discharged or in connection with any application
under section 633 in which relief is granted to him by the Court.
*[(2) Nothing contained in the
proviso to sub-section (1) shall apply to the constituted attorney of the
managing agent of a company unless such attorney is, or is deemed to be, an
officer of the company.]
Prevention of management by undesirable persons
202. Undischarged
insolvent not to manage companies. -
(1) If any person, being an
undischarged insolvent, -
(a) Discharges any of the
functions of a director, or acts as or discharges any of the functions of the
*[managing agent, secretaries and treasurers, or] manager, of any company; or
(b) Directly or indirectly
takes part or is concerned in the promotion, formation or management of any
company;
He
shall be punishable with imprisonment for a term which may extend to two years,
or with fine which may extend to five thousand rupees, or with both.
(2) In this section,
"company' includes-
(a) An unregistered company;
and
(b) A body corporate
incorporated outside India, which has an established place of business within
India.
203. Power
to restrain fraudulent persons from managing companies.
(1) Where-
(a) A person is convicted of
any offence in connection with the promotion, formation or management of a
company; or
(b) In the course of winding
up a company it appears that a person-
(i) Has been guilty of any
offence for which he is punishable (whcther he has been convicted or not) under
section 542; or
(ii) Has otherwise been
guilty, while an officer of the companv, of anv fraud or misfeasance in
relation to the company or of any breach of his duty to the company;
The
Court may make an order that that person shall not, without the leave of the
Court, be a director of, or in any way, whether directly or indirectly, be
concerned or take part in the promotion, formation or management of a company,
for such period not exceeding five years as may be specified in the order.
(2) In sub-section (1), the
expression "the Court",-
(a) In relation to the making
of an order against any person by virtue of clause (a) thereof, includes the
Court by which he is convicted, as well as any Court having jurisdiction to
wind up the company as respects whic the offence was committed; and
(b) In relation to the
granting of leave, means any Court having jurisdiction to wind up the company
as respects which leave is sought.
(3) A person intending to
apply for the making of an order under this section by the Court having
jurisdiction to wind up a company shall give not less than ten days' notice of
his intention to the person against whom the order is sought, and at the
hearing of the application, the last-mentioned person may appear and himself
give evidence or call witnesses.
(4) An application for the
making of an order under this section by the Court having jurisdiction to wind
up a company may be made by the Official Liquidator, or by the liquidator of
the company, or by any person who is or has been a member or creditor of the
company.
(5) On the hearing of any
application for an order under this section by the Official Liquidator or the
liquidator, or of any application for leave under this section by a person
against whom an order has been made on the application of the Official
Liquidator or liquidator, the Official Liquidator or liquidator shall appear
and call the attention of the Court to any matters which seem to him to be
relevant, and may himself give evidence or call witnesses.
(6) An order may be made bv
virtue of sub-clause (it) of clause (b) of sub-section (1), notwithstanding
that the person concerned may be criminally liable in respect of the matters on
the ground of which the order is to be made
(7) If any person acts in
contravention of an order made under this section, he shall, in respect of each
offence, be punishable with imprisonment for a term, which may extend to two
years, or with fine, which may extend to five thousand rupees, or with both.
(8) The provisions of this
section shall be in addition to, and without prejudice to the operation of, any
other provision contained in this Act.
Restriction on appointment of firms and bodies corporate to offices
10204. Restriction on appointment of firm or body
corporate to office or place of profit under a company. -
11[(1) Save as provided in sub-section (2), no
company shall, after the commencement of this Act, appoint or employ any firm
or body corporate to or in any ifficc or place of profit under the company,
other than the office of *[managing agent, secretaries and treasurers or]
trustee for the holders of debentures of the company, for a term exceeding five
years at a time:
Provided
that the initial appointment or employment of a firm or body corporate to or in
any office or place of profit as aforesaid may, with the approval of the
Central Government, be made for a term not exceeding ten years.]
9. And for the purposes of
the said sub-clause (ii), the expression 'officer' shall include any person in
accordance with whose directions or instructions the Board of directors of the
company has been accustomed to act omitted by the Companies (Amendment) Act,
1965, w.e.f. 15-10-1965.
10. For clarification on this
section, refer Taxmann's Masier Guide to Companies Act
11. Substituteo by the
Companies (Amendment) Act, 1960. For
the original sub-section, refer Appendix I.
*[(2) Sub-section (1) shall not
apply to the appointment or employment of a firm or body corporate as a
technician or a consultant,-
(i) Unless the firm or body
corporate aforesaid is already the managing agent or secretaries and treasurers
of the company; or
(ii) Unless a partner in the
firm aforesaid, or a director or member of the body corporate aforesaid being a
private company, or a director of the body corporate aforesaid not being a
private company, is-
Already
the managing agent of the company; or a member of the firm, a director or
member of the private company, or a director of the body corporate not being a
private company, which firm, private company or body corporate is already the
managing agent or the secretaries and treasurers of the company.]
(3) Any firm or body
corporate holding at the commencement of this Act any office or place of profit
under the company shall, unless its term of office expires earlier, be deemed
to have vacated its office immediately on the expiry of five years from the
commencement of this Act.
(4) Nothing contained in
sub-section (1) shall be deemed to prohibit the reappointment, re-employment,
or extension of the term of office, of any firm or body corporate by further
periods not exceeding five years on each occasion: Provided that any such
re-appointment, re-employment or extension shall not be sanctioned earlier than
two years from the date on which it is to come into force.
(5) Any office or place in a
company shall be deemed to be an office or place of profit under the company,
within the meaning of this section, if the person holding it 12[obtains from the company anything] by way
of remuneration, whether as salary, fees, commission, perquisites, the right to
occupy free of rent any premises as a place of residencc, or otherwise.
(6) This section shall not
apply to a private company, unless it is a subsidiary of a public company.
(1) Except with the previous
approval of the-
(a) Company in general
meeting, and
(b) Central Government, 14
No
company shall, during a period of five years from the commencement of the
Companies (Amendment) Act, 1974, appoint as secretary, consultant or adviser or
to any other office, by whatever name called,-
12. Substituted for
"obtains anything by the Companies (Amendment) Act, 1960.
13. Inserted by the Companies
(Amendment) Act, 1974, w.e.f. 1-2-1975.
14. See Form No. 23A o Genera
Rules and Forms.
(i) Any individual, firm or
body corporate who, or which, had at any time after the 15th day of August,
1960, been holding office as the managing agents or secretaries and treasurers
of the company, or
(ii) Any associate of the
managing agents or secretaries and treasurers as aforesaid:
Provided
that where any such appointment has been made before the commencement of the
Companies (Amendment) Act, 1974, no such appointment shall be continued by the
company after a period of six months from such commencement unless such
appointment has been approved by the company in general meeting and the Central
Government before the expiry of the said period.
(2) (a) Where-
(i) Any individual, firm or
body corporate, who, or which, had at any time after the 15th day of August,
1960, been holding office as the managing agents or secretaries and treasurers
of the company, or
(ii) Any associate of the
managing agents or secretaries and treasurers as aforesaid;
Has
been appointed by such company at any time during a period of five years
preceding the 3rd day of April, 1970, or at any time after that date, as its
secretary, consultant or adviser, or to any other office under it, by whatever
name called, the Central Government may, if it appears to it that there is good
reason for so doing, require the company to furnish to it such information as
it may consider necessary, with regard to the terms and conditions of the
appointment of such individual, firm or body corporate as secretary, consultant
or adviser or as the holder of such other office, for the purpose of
determining whether or not such terms and conditions are prejudicial to the
interests of the company.
(b) If the company refuses or
neglects to furnish any such information, the Central Government may appoint a
competent person to investigate and report on the terms and conditions of
appointment to any of the offices referred to in clause (a) and the provisions
of section 240A shall, so far as may be, apply, to such investigation, as they
apply to any other investigation made under any other provision of this Act.
(c) If, after perusal of the
information furnished by the company, or, as the case may be, the report
submitted by the person appointed under clause (b), the Central Government is
of opinion that the terms and conditions of appointment to any of the offices
referred to in clause (a) are prejudicial to the interests of the company, it
may, by order, make such variations in those terms and conditions as would, in
its opinion, no longer render such terms and conditions of appointment
prejudicial to the interests of the company.
(d) As from such date as may
be specified by the Central Government in the order aforesaid, the appointment
referred to in clause (a) shall be regulated by the terms and conditions as
varied by that Government.
(3) For the purposes of this
section, the expression "appointment' includes reappointment, employment
and re-employment.]
Dividends and manner and time of payment thereof
16205. 15[Dividend to be paid only out of profits. -
(1) No dividend shall be
declared or paid by a company for any financial year except out of the profits
of the company for that year arrived at after providing for depreciation in
accordance with the provisions of sub-section (2) or out of the profits of the
company for any previous financial year or years arrived at after providing for
depreciation in accordance with those provisions and remaining undistributed or
out of both or out of moneys provided by the Central Government or a State
Government for the payment of dividend in pursuance of a guarantee given by
that Government:
Provided
that-
(a) If the company has not
provided for depreciation for any previous financial year or years which falls
or fall after the commencement of the Companies (Amendment) Act, 1960, it
shall, before declaring or paying dividend for any financial year provide for
such depreciation out of the profits of that financial year or out of the
profits of any other previous financial year or years;
(b) If the company has
incurred any loss in any previous financial year or years, which falls or fall
after the commencement of the Companies (Amendment) Act, 1960, then, the amount
of the loss or an amount which is equal to the amount provided for depreciation
for that year or those years whichever is less, shall be set off against the
profits of the company for the year for which dividend is proposed to be
declared or paid or against the profits of the company for any previous
financial year or years, arrived at in both cases after providing for
depreciation in accordance with the provisions of subsection (2) or against
both;
(c) The Central Government
may, if it thinks necessary so to do in the public interest, allow any company
to declare or pay dividend for any financial year out of the profits of the
company for that year or any previous financial year or years without providing
for depreciation:
Provided further that it shall not be necessary for a company
to provide for depreciation as aforesaid where dividend for any financial year
is declared or paid out of the profits of any previous financial year or years
which falls or fall before the commencement of the Companies (Amendment) Act,
1960.
(2) For the purpose of
subsection. (1), depreciation shall be provided either-
(a) To the extent specified
in section 350; or
(b) In respect of each item
of depreciable asset, for such an amount as is arrived at by dividing
ninety-five per cent of the original cost thereof to the company by the
specified period in respect of such asset; or
(c) On any other basis
approved by the Central Government which has the effect of writing off by way
of depreciation ninety-five per cent of the original cost to the company of
each such depreciable asset on the expiry of the specified period; or
15. Substituted by the
Companies (Amendment) Act, 1960. For
the original section, refer Appendix I.
16. For clarifications on
thissection, refer Taxmann's Master Guide to Companies Act. See also rule 23 of
the Companies (Central Govt.'s) General Rules & Forms for rounding off of
dividend.
(d) As regards any other
depreciable asset for which no rate of depreciation has been laid down by 17[this Act or any] rules made thereunder,
on such basis as may be approved by the Central Government by any general order
published in the Official Gazette or by any special order in any particular
case:
Provided
that where depreciation is provided for in the manner laid down in clause (b)
or clause (c), then, in the event of the depreciable asset being sold,
discarded, demolished or destroyed the written down value thereof at the end of
the financial year in which the asset is sold, discarded, demolished or
destroyed, shall be written off in accordance with the proviso to section 350.
18[(2A) Notwithstanding
anything contained in sub-section (1), on and from the commencement of the
Companies (Amendment) Act, 1974, no dividend shall be declared or paid by a
company for any financial year out of the profits of the company for that year
arrived at after providing for depreciation in accordance with the provisions
of sub-section (2), except after the transfer to the reserves of the company of
such percentage of its profits for that year, not exceeding ten per cent, as
may be prescribed:
Provided
that nothing in this sub-section shall be deemed to prohibit the voluntary
transfer by a company of a higher percentage of its profits to the reserves in
accordance with such rules'9 as may be made by the Central Government in this
behalf.]
20[(2B) A
company which fails to comply with the provisions of section 80A shall not, so
long as such failure continues, declare any dividend on its equity shares.]
(3) No dividend shall be
payable except in cash:
Provided
that nothing in this sub-section shall be deemed to prohibit the capitalization
of profits or reserves of a company for the purpose of issuing fully paid-up
bonus shares or paying up any amount for the time being unpaid on any shares
held by the members of the company.
(4) Nothing in this section
shall be deemed to affect in any manner the operation of section 208.
(5) For the purposes of this
section-
(a) "Specified
period" in respect of any depreciable asset shall mean the number of years
at the end of which at least ninety-five per cent of the original cost of that
asset to the company will have been provided for by way of depreciation if
depreciation were to be calculated in accordance with the provisions of section
350;
(b) Any dividend payable in
cash may be paid by cheque or warrant sent through the post directed to the
registered address of the shareholder entitled to the payment of the dividend
or in the case of joint shareholders, to the registered address of that one of
the joint shareholders which is first named on the register of members, or to
such person and to such address as the shareholder or the joint shareholders
may in writing direct.]
17. Substituted for "the
Indian Income-tax Act, 1922 (11 of 1922) or the by the Companies (Amendment)
Act, 1988, w.e.f. 15-6-1988.
18. Inserted by the Companies
(Amendment) Act, 1974, w.e.f. 1-2-1975.
19. Refer Companies (Transfer
of Profits to Reserve) Rules, 1975.
20. Inserted by the Companies
(Amendment) Act, 1988, w.e.f. 15-6-1988.
22205A. 21[Unpaid
dividend to be transferred to special dividend account. -
(1) Where, after the commencement of the Companies (Amendment) Act,
1974, a dividend has been declared by a company but has not been paid, 23[or claimed], within forty-two days from
the date of the declaration, to any shareholder entitled to the payment of the
dividend, the company shall, within seven days from the date of expiry of the
said period of forty-two days, transfer the total amount of dividend which
remains unpaid 24[or
unclaimed] within the said period of forty-two days, to a special account to be
opened by the company in that behalf in any scheduled bank, to be called
Unpaid Dividend Account of Company Limited/Company (Private) Limited".
25[Explanation:
In this sub-section, the expression "dividend which remains unpaid"
means any dividend the warrant in respect thereof has not been encashed or
which has otherwise not been paid or claimed.]
(2) Where the whole or any
part of any dividend, declared by a companv before the commencement of the
Companies (Amendment) Act, 1974, remains unpaid at such commencement, the
company shall, within a period of six months from such commencement, transfer
such unpaid amount to the account referred to in sub-section (1).
(3) Where, owing to
inadequacy or absence of profits in any year, any company proposes to declare
dividend out of the accumulated profits earned by the company in previous years
and transferred by it to the reserves, such declaration of dividend shall not
be made except in accordance with such rules26
as may be made by the Central Government in this behalf, and, where any such
declaration is not in accordance with such rules26, such declaration shall not be made except with the
previous approval of the Central Government.
(4) If the default is made in
transferring the total amount referred to in subsection (1) or anv part thereof
to the unpaid dividend account of the concerned company, the company shall pay,
from the date of such default, interest on so much of the amount as has not
been transferred to the said account, at the rate of twelve per cent per annum
and the interest accruing on such amount shall enure to the benefit of the
members of the company in proportion to the amount remaining unpaid to them.
27[ (5) Any
money transferred to the unpaid dividend account of a company in pursuance of
this section which remains unpaid or unclaimed for a period of seven years from
the date of such transfer shall be transferred by the company to the Fund
established under sub-section (1) of section 205C.]
21. Inserted by the Companies
(Amendment) Act, 1974, w.e.f. 1-2-1975.
22. For clarifications on this
section, refer Tax zann's Master Guide to Conipanies Act.
23. Substituted for 'or the
warrant in respect thereof has not been posted" by the Companies
(Amendment) Act, 1988, w.e.f. 15-6-1988.
24. Substituted for "or
in relation to which no dividend warrant has been posted', ibid.
25. Inserted, ibid.
26. Refer Companies
(Declaration of Dividend out of Reserves) Rules, 1975.
27. Substituted by the
Companies (Amendment) Act, 1999, w.r.e.f. 31-10-1998. Prior to its substitution, sub-section (5) was inserted by the
Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
(6) The company shall, when
making any transfer under sub-section (5) to the 28[Fund established under section 205C] any
unpaid or unclaimed dividend, furnish 29[to such authority or committee as the
Central Government may appoint] in this behalf a statement in the prescribed
form setting forth in respect of all sums included in such transfer, the nature
of the sums, the names and last known addresses of the persons entitled to
receive the sum, the amount to which each person is entitled and the nature of
his claim thereto and such other particulars as may be prescribed. 30
31[(7) The
company shall be entitled to a receipt from the authority or committee under
sub-section (4) of section 205C for any money transferred by it to the Fund and
such a receipt shall be an effectual discharge of the company in respect
thereof.]
(8) If a company fails to
comply with any of the requirements of this section, the company, and every
officer of the company who is in default, shall be punishable with fine which
may extend to five hundred rupees for every day during which the failure
continues.]
205B.
"[Payment of unpaid or unclaimed dividend. -Any person claiming to be entitled to any
money transferred under subsection (5) of section 205A to the general revenue
account of the Central Government, may apply to the Central Government for an
order for payment of the money claimed; and the Central Government may, if
satisfied, whether on a certificate by the company or otherwise, that such
person is entitled to the whole or any part of the money claimed, make an order
for the payment to that person of the sum due to him after taking such security
from him as it may think fit:
33[Provided
that nothing contained in this section shall apply to any person claiming to be
entitled to any money transferred to the Fund referred to in section 205C on
and after the commencement of the Companies (Amendment) Act, 999.]
205C. 34[Establishment
of Investor Education and Protection Fund. -
(1) The Central Government shall establish alund to be called the
Investor Education andprotection Fund (hereafter in this section referred to as
the "Fund").
(2) There shall be credited to the Fund the following amounts,
namely. -
(a) Amounts in the unpaid dividend accounts
of companies;
(b) The application moneys
received by companies for allotment of any securities and due for refund;
28. Substituted for 'general
revenue account of the Central Government' by the Companies (Amendment) Act,
1999, w.r.e.f. 31-10-1998.
29. Substituted for 'to such
officer as the Central Government may appoint', ibid.
30. Refer Companies Unpaid
Dividend (Transfer to General Revenue Account by the Central Government) Rules,
1978.
31. Substituted by the
Companies (Amendment) Act, 1999, w.e.f. 31-10-1998. Prior to its substitution, sub-section (7) was inserted by the
Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
32. Inserted by the Companies
(Amendment) Act, 1974, w.e.f. 1-2-1975.
33. Inserted by the Companies
(Amendment) Act, 1999, w.e.f. 31-10-1998.
34. Inserted, ibid.
(c) Matured deposits with
companies;
(d) Matured debentures with
companies;
(e) The interest accrued on
the amounts referred to in clauses (a) to (d);
(f) Grants and donations
given to the Fund by the Central Government, State Governments, companies or
any other institutions for the purposes of the Fund, and
(g) The interest or other
income received out of the investments made from the Fun&
Provided
that no such amounts referred to in clauses (a) to (d) shall form part Of the
Fund unless such amounts have remained unclaimedand unpaidforaperiod of seven
years from the date they became due for payment.
Explanation. -For the removal of doubts, it is hereby
declared that no claims shall lie against the Fund or the company in respect of
individual amounts which were unclaimed and unpaid for a period of seven years
from the dates that they first became due for payment and no payment shall be
made in respect of any such claims.
(3) The Fund shall be
utilised for promotion of investors' awareness and protection of the interests
of investors in accordance with such rules as may beprescribed
(4) The Central Government
shall, by notification in the Official Gazette, specify an authority or
committee, with such members as the Central Government may appoint, to
administer the Fund, and maintain separate accounts and other relevant records
in relation to the Fund in such form as may be prescribed in consultation with
the Comptroller and Auditor-General of India.
(5) It shall be competent for
the authority or committee appointed under subsection (4) to spend moneys out
of the Fundfor carrying out the objects for which the Fund has been
established.]
35206. Dividend not to be paid
except to registered shareholders or to their order or to their bankers.
(1) No dividend shall be paid by a company in respect of any share
therein, except-
(a) To the registered holder
of such share or to his order or to his bankers; or
(b) In case a share warrant
has been issued in respect of the share in pursuance of section 114, to the
bearer of such warrant or to his bankers.
(2) Nothing contained in
sub-section (1) shall be deemed to require the bankers of a registered
shareholder to make a separate application to the company for the payment of
the dividend.
206A. 36[Right
to dividend, rights shares and bonus shares to be held In abeyance pending
registration of transfer of shares. -Where any instrument of transfer of shares has been
delivered to any company for registration and the transfer of such shares has
not been registered by the company, it shall, notwithstanding anything
contained in any other provision of this Act,-
35. For clarification on this
section, refer Taxmann's Master Guide to Companies Act.
36. Inserted by the Companies
(Amendment) Act, 1988, w.e.f. 15-6-1988.
(a) Transfer the dividend in
relation to such shares to the special account referred to in section 205A
unless the company is authorised by the registered holder of such share in
writing to pay such dividend to the transferee specified in such instrument of
transfer; and
(b) Keep in abeyance in
relation to such shares any offer of rights shares under clause (a) of sub-section
(1) of section 81 and any issue of fully paid-up bonus shares in pursuance of
sub-section (3) of section 205.]
207. 37Penalty for failure to distribute dividends
within 38[forty-two
days]. -Where
a dividend has been declared by a coi-npany but has not been paid, or the
warrant in respect thereof has not been posted, within 38[forty-two days] from the date of the
declaration, to any shareholder entitled to the payment of the dividend, every
director of the companv *[,its managing agent or secretaries and treasurers;
and where the managing agent is a firm or body corporate, every partner in the
firm and every director of the body corporate; and where the secretaries and
treasurers are a firm, every partner in the firm and where they are a body
corporate, every director thereof,] shall, if he is knowingly a party to the
default, be punishable with simple imprisonment for a term which may extend to
seven days and shall also be liable to fine:
Provided
that no offence shall be deemed to have been committed within the meaning of
the foregoing provision in the following cases, namely:-
(a) Where the dividend could
not be paid bv reason of the operation of any law;
(b) Where a shareholder has
given directions to the company regarding the payment of the dividend and those
directions cannot be complied with;
(c) Where there is a dispute
regarding the right to receive the dividend;
(d) Where the dividend has
been lawfull adjusted by the company against any sum due to it from the shareholder;
or
(e) Where, for any other
reason, the failure to pay the dividend or to post the warrant within the
period aforesaid was not due to any default on the part of the company.
Payments of interest out of capital
208. Power
of company to pay interest out of capital in certain cases. -
(1) Where any shares in a company are issued for the purpose of
raising money to defray the expenses of the construction of any work or
building, or the provision of any plant, which cannot be made profitable for a
lengthy period, the companv may-
(a) Pay interest on so much
of that share capital as is for the time being paid up, for the period and
subject to the conditions and restrictions mentioned in sub-sections (2) to
(7); and
(b) Charge the sum so paid by
way of interest, to capital as art of the cost of construction of the work or
building, or the provision of the plant.
37. Prosecution powers are
delegated to SEBI officials.
38. Substituted for 'three
months' by the Companies (Amendment) Act, 1960.
(2) No such payment shall be
made unless it is authorised by the articles or by a special resolution.
(3) No such payment, whether
authoriscd by the articles or by special resolution, shall be made without the
previous sanction of the Central Government.
The grant of such sanction shall be conclusive evidence, for the
purposes of this section, that the shares of the company, in respect of which
such sanction is given, have been issued for a purpose specified in this
section.
(4) Before sanctioning any
such payment, the Central Government may, at the expense of the company,
appoint a person to inquire into, and report to the Central Government on, the
circumstances of the case; and may, before making the appointment, require the
company to give security for the payment of the costs of the inquiry.
(5) The payment of interest
shall be made only for such period as may be determined by the Central
Government; and that period shall in no case extend beyond the close of the
half-year next after the half-year during which the work or building has been
actually completed or the plant provided.
(6) The rate of interest
shall, in no case, exceed four per cent per annum or such other rate as the
Central Government may, by notification in the Official Gazette'9, direct.
(7) The payment of the
interest shall not operate as a reduction of the amount paid up on the shares
in respect of which it is paid.
(8) Nothing in this section
shall affect any company to which the Indian Railway Companies Act, 1895 (10 of
1895), or the Indian Tramways Act, 1902 (4 of 1902) applies.
Accounts
40209. Books of account to be kept by company. -
41[(1) Every
company shall keep at its registered office proper books of account with
respect to-
(a) All sums of money
received and expended by the company and the matters in respect of which the
receipt and expenditure take place;
(b) All sales and purchases
of goods by the company; 42[***]
(c) The assets and
liabilities of the company; 43[and]
41[(d) In
the case of a company pertaining to any class of companies engaged in
production, processing, manufacturing or mining activities, such particulars
relating to utilisation of material or labour or to other items of cost as may
be prescribed, if such class of companies is required by the Central Government
to include such particulars in the books of account:]
39. Notified rate of interest:
Not to exceed 12 per cent per annum (vide GSR 426, dated 8-91995).
40. For clarification on this
section, refer Taxmann's Master Guide to Companies Act.
41. Substituted for
sub-section (1) by the Companies (Amendment) Act, 1960. For the original sub-section, refer Appendix
1.
42. 'And omitted by the
Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
43. Inserted, ibid.
Provided
that all or any of the books of account aforesaid may be kept at such other
place in India as the Board of directors may decide and when the Board of
directors so decides, the company shall, within seven days of the decision,
file with the Registrar a notice" in writing giving the full address of
that other place.]
(2) Where a company has a
branch office, whether in or outside India, the company shall be deemed to have
complied with the provisions of sub-section (1), if proper books of account
relating to the transactions effected at the branch office are kept at that
office and proper summarised returns, made up to dates at intervals of not more
than three months, are sent by the branch office to the company at its
registered office or the other place referred to in sub-section (1).
45[(3) For
the purposes of sub-sections (1) and (2), proper books of account shall not be
deemed to be kept with respect to the matters specified therein, -
(a) If there are not kept
such books as are necessary to give a true and fair view of the state of
affairs of the company or branch office, as the case may be, and to explain its
transactions; and
(b) If such books are not
kept on accrual basis and according to the double entry system of accounting.]
46[(4) 47[* *] The books of account and other books
and papers shall be open to inspection by any director during business
hours (b) to (a) 48[*
* * * *]]
49[(4A) The
books of account of every company relating to a period of not less than eight
years immediately preceding the current year 50[together
with the vouchers relevant to any entry in such books of account] shall be
preserved in good order:
Provided that in the case of a company incorporated less than eight years
before the current year, the books of account for the entire period preceding
the current year 50 [together with the vouchers relevant to any entry in such
books of account] shall be so preserved.]
(5) If any of the persons
referred to in sub-section (6) fails to take all reasonable steps to secure
compliance by the company with the requirements of this section, or has by his
own wilful act been the cause of any default by the company thereunder, he
shall, in respect of each offence, be punishable with 51[imprisonment for a term which may extend
to six months, or with fine which may extend to one thousand rupees, or with
both]:
44. See Form No. 23AA of
General Rules & Forms.
45. Substituted by the
Companies (Amendment) Act, 1988, w.e.f. 15-6-1988. For original subsection (3), refer Appendix
I.
46. Substituted by the
Companies (Amendment) Act, 1965, w.e.f. 15-10-1965. For the original sub-section as it stood prior to its
substitution refers Appendix I.
47. '(a)' omitted by the
Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
48. Omitted, ibid. For clauses (b), (c) & (d) as they stood
prior to their omission, refer Appendix I.
49. Inserted by the Companies
(Amendment) Act, 1960.
50. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
51. Substituted for fine
which may extend to onejthousand rupees" by the Companies (Amendment) Act,
1960.
Provided
that in any proceedings against a person in respect of an offence under this
section consisting of a failure to take reasonable steps to secure compliance
by the company with the requirements of this section, it shall be a defence to
prove 52[***] that a competent
and reliable person was charged with the duty of seeing that those requirements
were complied with and was in a position to discharge that duty:
53[Provided
further that no person shall be sentenced to imprisonment for any such offence
unless it was committed wilfully.]
(6) The persons referred to
in sub-section (5) are the following, namely:-
(a) Where the company has a
*[managing agent 54[,
secretaries and treasurers or] managing director or manager], such *[managing
agent 54[, secretaries and
treasurers or] managing director or manager] 55[*[and
all officers and other employees and agents [as defined in sub-section (6) of
section 240 but excluding bankers, auditors and legal advisers] of such
managing agent or secretaries and treasurers]];
*[(b) Where such managing agent
or secretaries and treasurers are a firm, every partner in the firm;]
*[(c) Where such managing agent
or secretaries and treasurers are a body corporate, every director of such body
corporate;] 56[* * *]
(d) Where the company has
neither a *[managing agent nor 57[secretaries
and treasurers nor] managing director nor manager, every director of the
company]; 55[and]
55[(e) *[whether
or not a company has a managing agent or secretaries and treasurers,] every
officer and other employee and agent (defined as aforesaid) of the company.]
(7) If any person, not being
a person referred to in sub-section (6), having been charged by the *[managing
agent, secretaries and treasurers,] 58[managing
director, manager] or Board of directors, as the case may be, with the duty of
seeing that the requirements of this section are complied with, makes a default
in doing so, he shall, in respect of each offence, be punishable with 59[imprisonment for a term which may extend
to six months, or with fine which may extend to one thousand rupees, or with
both].
52. That he had reasonable
ground to believe, and did believe omitted by the Companies (Amendment) Act,
1960.
53. Inserted, ibid.
54. Substituted for 'or
secretaries and treasurers', ibid.
55. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
56. And" omitted, ibid.
57. Substituted for
"secretaries and treasurers, everv director of the company by the
Companies (Amendment) Act, 1960.
58. Inserted, ibid
59. Substituted for
"fine, which may extend to one thousand rupees, ibid.
61209A. 60[Inspection of books of account, etc., of
companies. -
(1) The books of account and
other books and papers of every company shall be open to inspection during
business hours (i) by the Registrar, or (ii) by such officer of Government as
may be authorised by the Central Government in this behalf:
Provided
that such inspection may be made without giving any previous notice to the
company or any officer thereof.
(2) It shall be the duty of
every director, other officer or emplovee of the company to produce to the
person making inspection under sub-section (1), all such books of account and
other books and papers of the company in his custody or control and to furnish
him with any statement, information or explanation relating to the affairs of
the company as the said person may require of him within such time and at such
place as he may specify.
(3) It shall also be the duty
of every director, other officer or employee of the company to give to the
person making inspection under this section all assistance in connection with
the inspection, which the company may be reasonably expected to give.
(4) The person making the
inspection under this section may, during the course of inspection,-
(i) Make or causeto bemade
copiesof booksof accountand otherbooks and papers, or
(ii) Place or cause to be
placed any marks of identification thereon in token of the inspection having
been made.
(5) Notwithstanding anything
contained in any other law for the time being in force or any contract to the
contrary, any person making an inspection under this section shall have the
same powers as are vested in a civil court under the Code of Civil Procedure,
1908 (5 of 1908), while trying a suit, in respect of the following matters,
namely: -
(i) The discovery and
production of books of account and other documents, at such place and such time
as may be specified by such person;
(ii) Summoning and enforcing
the attendance of persons and examining them on oath;
(iii) Inspection of any books,
registers and other documents of the company at any place.
(6) Where an inspection of
the books of account and other books and papers of the company has been made
under this section, the person making the inspection shall make a report to the
Central Government.
(7) Any officer authorised to
make an inspection under this section shall have all the powers that a
Registrar has under this Act in relation to the making of inquiries.
60. Inserted by the Companies
(Amendment) Act, 1974, w.e.f. 1-2-1975.
61. For clarifications on this
section, refer Appendix III.
(8) If default is made in
complying with the provisions of this section, every officer of the company who
is in default shall be punishable with fine which shall not be less than five
thousand rupees, and also with imprisonment for a term not exceeding one year.
(9) Where a director or any
other officer of a company has been convicted of an offence under this section
he shall, on and from the date on which he is so convicted, be deemed to have
vacated his office as such and on such vacation of office, shall be
disqualified for holding such office in any company, for a period of five years
from such date.]
210. Annual
accounts and balance sheet. -
(1) At every annual general meeting of a company held in pursuance
of section 166, the Board of directors of the company shall lay before the
company-
(a) A balance sheet as at the
end of the period specified in sub-section (3); and
(b) A profit and loss account
for that period.
(2) In the case of a company
not carrying on business for profit, an income and expenditure account shall be
laid before the company at its annual general meeting instead of a profit and
loss account, and all references to "profit and loss account', 'profit'
and "loss in this section and elsewhere in this Act, shall be construed,
in relation to such a company, as references respectively to the 'income and
expenditure account", 'the excess of income over expenditure", and
"the excess of expenditure over income".
(3) The profit and loss
account shall relate-
(a) In the case of the first
annual general meeting of the company, to the period beginning with the
incorporation of the company and ending with a day which shall not precede the
day of the meeting by more than nine months; and
63[(b) In
the case of any subsequent annual general meeting of the company, to the period
beginning with the day immediately after the period for which the account was
last submitted and ending with a day which shall not precede the day of the
meeting by more than six months, or in cases where an extension of time has
been granted for holding the meeting under the second proviso to sub-section
(1) of section 166, by more than six months and the extension so granted.]
(4) The period to which the
account aforesaid relates is referred to in this Act as a 'financial year'; and
it may be less or more than a calendar year, but it shall not exceed fifteen
months:
Provided
that it may extend to eighteen months where special permission has been granted
in that behalf by the Registrar.
62. For clarifications on this
section, refer Taxmanns Master Guide to Companies Act.
63. Substituted by the
Companies (Amendment) Act, 1960. For
clause (b) as originally stood, refer Appendix
I.
(5) If any person, being a
director of a company, fails to take all reasonable steps to comply with the
provisions of this section, he shall, in respect of each offence, be punishable
with imprisonment for a term which may extend to six months, or with fine which
may extend to one thousand rupees, or with both:
Provided
that in any proceedings against a person in respect of an offence under this
section, it shall be a defence to prove 64[***]
that a competent and reliable person was charged with the duty of seeing that
the provisions of this section were complied with and was in a position to
discharge that duty:
Provided
further that no person shall be sentenced to imprisonment for any such offence
unless it was committed wilfully.
(6) If any person, not being
a director of the company, having been charged by the Board of directors with
the duty of seeing that the provisions of this section are complied with, makes
default in doing so, he shall, in respect of each offence, be punishable with
imprisonment for a term which may extend to six months, or with fine which may
extend to one thousand rupees, or with both:
Provided
that no person shall be sentenced to imprisonment for any such offence unless
it was committed wilfully.
210A. 65[Constitution
of National Advisory Committee on Accounting Standards. -
(1) The Central Government ay, by notification in the Official
Gazette, constitute an Advisory Committee to be called the National Advisory
Committee on Accounting Standards (here after in this section referred to as
the Advisory Committee) to advise the Central Government on the formulation
and laying do" n of accounting policies and accounting standards for
adoption by companies or class of companies under this Act.
(2) The Advisory Committee
shall consist of the following embers, namely. -
(a) A Chairperson who shall
be a person of eminence and well versed in accountancy, finance, business
administration, business law, economics or similar discipline;
(b) One member each nominated
by the Institute of Chartered Accountants of India constituted under the
Chartered Accountants Act, 1949 (38 of 1949), the Institute of Cost and Works
Accountants of India constituted under the Cost and Works Accountants Act, 1959
(23 of 1959) and the Institute of Company Secretaries of India constituted
under the Company Secretaries Act, 1980 (56 of 1980), -
(c) One representative of the
Central Government to be nominated by it,
(d) One representative of the
Reserve Bank of India to be nominated by it,
(e) One representative of the
Comptroller andAuditor-General of India to be nominated by him,
(f) A person who holds or
has held the office of professor in accountancy, finance or business management
in any university or deemed university,
64. That he had reasonable
ground to believe, and did believe, omitted by the Companies (Amendment) Act,
1960.
65. Inserted by the Companies
(Amendment) Act, 1999, w.e.f. 31-10-1998.
(g) The Chairman of the
Central Board of Direct Taxes constituted under the Central Boards of Revenue
Act, 1963 (54 of 1963) or his nominee;
(h) Two members to represent
the chambers of commerce and industry to be nominated by the Central
Government; and
(i) One representative of
the Securities andExchangeBoardof India to be nominated by it.
(3) The Advisory Committee
shall give its recommendations to the Central Government on such matters of
accounting policies and standards and auditing as may be referred to it for
advice from time to time. (4) The members of the Advisory Committee shall hold
office for such term as may be determined by the Central Government at the time
of their appointment andany vacancy in the membership in the Committee shall be
filled by the Central Government in the same manner as the member whose vacancy
occurred was filled.
(5) The non-official member
of the Advisory Committee shall be entitled to such fees, travelling,
conveyance andotherallowances as are admissible to the officers of the Central
Government of the highest rank.]
66211. Form and contents of
balance sheet and profit and loss account. -
67[(1) Every
balance sheet of a company shall give a true and fair view of the state of
affairs of the company as at the end of the financial year and shall, subject
to the provisions of this section, be in the form set out in Part I of Schedule
VI, or as near thereto as circumstances admit or in such other form as may be
approved by the Central Government either generally or in any particular case;
and in preparing the balance sheet due regard shall be had, as far as may be,
to the general instructions for preparation of balance sheet under the heading
'Notes' at the end of that Part:
Provided
that nothing contained in this sub-section shall apply to any insurance or
banking company or any company engaged in the generation or supply of
electricity or to any other class of company for which a form of balance sheet
has been specified in or under the Act governing such class of company.] (2)
Every profit and loss account of a company shall give a true and fair view of
the profit or loss of the company for the financial year and shall, subject as
aforesaid, comply with the requirements of Part II of Schedule VI, so far as
they are applicable thereto:
Provided
that nothing contained in this sub-section shall apply to any insurance or
banking company 68[or any
company engaged in the generation or supply of electricity], or to any other
class of company for which a form of profit and loss account has been specified
in or under the Act governing such class of company.
69(3) The
Central Government may, by notification in the Official Gazette, exempt any
class of companies from compliance with any of the requirements in Schedule VI
if, in its opinion, it is necessary to grant the exemption in the 70[public interest].
66. For clarifications on this
section, refer Taxinanns Master Guide to Companies Act.
67. Substituted by the
Companies (Amendment) Act, 1960. For
the original sub-section, refer Appendix I.
68. Inserted, ibid.
69. For notification issued
under this sub-section, refer Taxmann's Master Guide to Companies Act.
Any
such exemption may be granted either unconditionally or subject to such
Conditions as may be specified in the notification.
71(3A) Every
prolit and loss account and balance sheet of the company shall comply with the
accounting standards.
(3B) Where the profit and loss
account and the balance sheet of the compan ' y do not comply with the
accounting standards, such companies shall disclose in its profit and loss
account and balance sheet, the following, namely. -
(a) The deviation from the
accounting standards;
(b) The reasons for such
deviation; and
(c) The Financial effect, if
any, arising due to such deviation.
(3C) For the purposes of this
section, the expression "accounting standards means the standards ol
accounting recommended by the Institute of Chartered Accountants ol India
constituted under the CharteredAccountants Act, 1949 (38 ol 1949), as "Jay
be prescribed by the Central Government in consultation with the National
Advisory Committee on Accounting Standards established under subsection (1) of
section 210A:
Provided
that the standards of accounting specified by the Institute of Chartered
Accountants ol India shall be deemed to be the Accounting Standards until the
accounting standards are prescribed by the Central Government under this
subsection.]
(4) The Central Government
may, on the application, or with the consent of the Board of directors of the
company, by order, modify in relation to that company any of the requirements
of this Act as to the matters to be stated in the company's balance sheet or
profit and loss account for the purpose of adapting them to the circumstances
of the company.
(5) The balance sheet and the
profit and loss account of a company shall not be t treated as not disclosing a
true and fair view of the state of affairs of the company, merely by reason of
the fact that they do not disclose-
(i) In the case of an
insurance company, any matters which are not required to be disclosed by the
Insurance Act, 1938 (4 of 1938);
(ii) In the case of a banking
company, any matters which are not required to be disclosed by the Banking
Companies Act, 1949 (10 of 1949);
(iii) In the case of a company
engaged in the generation or supply of electricity, any matters which are not
required to be disclosed by 72[both
the Indian Electricity Act, 1910 (9 of 19 1 0), and the Electricity (Supply)
Act, 1948 (54 of 1948)];
70. Substituted for
"national interest by the Companies (Amendment) Act, 1960.
71. Sub-sections (3A), (3B)
and (3C) inserted by the Companies (Amendment) Act, 1999, w.e.f. 31-10-1998.
72. Substituted for 'the
Electricity (Supply) Act, 1948 (54 of 1948)' by the Companies (Amendment) Act,
1960.
(iv) In the case of a company
governed by any other special Act for the time being in force, any matters
which are not required to be disclosed by that special Act; or
(v) In the case of any
company, any matters which are not required to be disclosed by virtue of the provisions
contained in Schedule VI or by virtue of a notification issued under
sub-section (3) or an order issued under sub-section (4).
(6) For the purposes of this
section, except where the context otherwise requires, any reference to a
balance sheet or profit and loss account shall include any notes thereon or
documents annexed thereto, giving information required by this Act, and allowed
by this Act to be given in the form of such notes or documents.
(7) If any such person as is
referred to in sub-section (6) of section 209 fails to take all reasonable
steps to secure compliance by the company, as respects any accounts laid before
the company in general meeting, with the provisions of this section and with
the other requirements of this Act as to the matters to be stated in the
accounts, he shall, in respect of each offence, be punishable with imprisonment
for a term which may extend to six months, or with fine which may extend to one
thousand rupees, or with both:
Provided
that in any proceedings against a person in respect of an offence under this
section, it shall be a defence to prove 73[*
* *] that a competent and reliable person was charged with the duty of seeing
that the provisions of this section and the other requirements aforesaid were
complied with and was in a position to discharge that duty:
Provided
further that no person shall be sentenced to imprisonment for anv such offence
unless it was committed wilfully.
(8) If any person, not being
a person referred to in sub-section (6) of section 209, having been charged by
the *[managing agent, secretaries and treasurers,] 74[managing director or manager,] or Board
of directors, as the case may be, with the duty of seeing that the provisions
of this section and the other requirements aforesaid are complied with, makes
default in doing so, he shall, in respect of each offence, be punishable with
imprisonment for a term which may extend to six months or with fine which may
extend to one thousand rupees, or with both:
Provided
that no person shall be sentenced to imprisonment for any such offence unless
it was committed wilfully.
212. Balance
sheet of holding company to include certain particulars as to its subsidiaries.
-
(1) There shall be attached to the balance sheet of a holding
company having a subsidiary or subsidiaries at the end of the financial year as
at which the holding company's balance sheet is made out, the following
documents in respect of such subsidiary or of each such subsidiary, as the case
may be:-
73. 'That he had reasonable
ground to believe and did believe' omitted by the Companies (Amendment) Act,
1960.
74. Inserted, ibid.
(a) A copy of the balance
sheet of the subsidiary;
(b) A copy of its profit and
loss account;
(c) A copy of the report of
its Board of directors;
(a) A copy of the report of
its auditors;
(e) A statement of the
holding company's interest in the subsidiary as specified in sub-section (3);
(f) The statement referred
to in sub-section (5), if any; and
(g) The report referred to in
sub-section (6); if any.
(2) 75[(a) The
balance sheet referred to in clause (a) of sub-section (1) shall be made out in
accordance with the requirements of this Act, -
(i) As at the end of the
financial year of the subsidiary, where such financial year coincides with the
financial ear of the holding company;
(ii) As at the end of the
financial year of the subsidiary last before that of the holding cornpanv where
the financial year of the subsidiary does not coincide with that of the holding
company.]
(b) The profit and loss
account and the reports of the Board of directors and of the auditors, referred
to in clauses (b), (c) and (a) of sub-section (1), shall be made out, in
accordance with the requirements of this Act, for the financial year of the
subsidiary referred to in clause (a).
(c) 76[Where the financial year of the
subsidiary does not coincide with that of the holding company, the financial
year aforesaid] of the subsidiary shall not end on a day which precedes the day
on which the Loading company's financial year ends by more than six months.
(d) Where the financial year
of a subsidiary is shorter in duration than that of its holding company,
references to the financial year of the subsidiary in clauses (a), (b) and (c)
shall be construed as references to two or more financial years of the
subsidiary the duration of which, in the aggregate, is not less than the
duration of the holding company's financial year,
(3) The statement referred to
in clause (e) of sub-section (1) shall specify-
(a) The extent of the holding
company's interest in the subsidiary at the end of the financial year or of the
last of the financial years of the subsidiary referred to in sub-section (2);
(b) So far as it concerns
members of the dealt with in the company's accounts, of deducting its losses or
vice versa-
(i) For the financial years
of the subsidiary aforesaid; and
(ii) Years of the subsidiary
since it became the holding company's subsidiary;
75. Substituted by the
Companies (Amendment) Act, 1960. For clause as originally stood, refer
76. Substituted for The financial year aforesaid by the
Cornpanies (Amendrnent) Act, 1960.
(c) The net aggregate amount
of the profits of the subsidiary after deducting its losses or vice versa-
(i) For the financial year
or years of the subsidiary aforesaid; and
(ii) For the previous
financial years of the subsidiary since it became the holding company's
subsidiary;
So
far as those profits are dealt with, or provision is made for those losses, in
the company's accounts.
(4) Clauses (b) and (c) of
sub-section (3) shall apply only to profits and losses of the subsidiary which
may properly be treated in the holding company's accounts as revenue profits or
losses, and the profits or losses attributable to any shares in a subsidiary for
the time being held by the holding company or any other of its subsidiaries
shall not (for that or any other purpose) be treated as aforesaid so far as
they are profits or losses for the period before the date on or as from which
the shares were acquired by the company or any of its subsidiaries, except that
they may in a proper case be so treated where-
(a) The company is itself the
subsidiary of another bodv corporate; and
(b) The shares were acquired
from that body corporate or a subsidiary of it;
And
for the purpose of determining whether any profits or losses are to be treated
as profits or losses for the said period, the profit or loss for any financial
year of the subsidiary may, if it is not practicable to apportion it with
reasonable accuracy by reference to the facts, be treated as accruing from day
to day during that year and be apportioned accordingly.
(5) Where the financial year
or years of a subsidiary referred to in sub-section (2) do not coincide with
the financial year of the holding company, a statement containing information
on the following matters shall also be attached to the balance sheet of the
holding company: -
(a) Whether there has been
any, and, if so, what change in the holding company's interest in the
subsidiary between the end of the financial year or of the last of the
financial years of the subsidiary and the end of the holding company's
financial year;
(b) Details of any material
changes, which have occurred between the end of the financial year or of the
last of the financial vears of the subsidiary and the end of the holding
companv's financial year in respect of-
(i) The subsidiary's fixed
assets;
(ii) Its investments;
(iii) The moneys lent by it;
(iv) The moneys borrowed by it
for any purpose other than that of meeting current liabilities.
(6) If, for any reason, the
Board of directors of the holding company is unable to obtain information on
any of the matters required to be specified by sub-section (4), a report in
writing to that effect shall be attached to the balance sheet of the holding
company.
(7) The documents referred to
in clauses (e), (f) and (g) of sub-section (1) shall be signed bv the persons
by whom the balance sheet of the holding company is required to be signed.
(8) The Central Government
may, on the application or with the consent of the Board of directors of the
company, direct that in relation to any subsidiary, the provisions of this
section shall not apply, or shall apply only to such extent as may be specified
in the direction.
(9) If any such person as is
referred to in sub-section (6) of section 209 fails to take all reasonable
steps to comply with the provisions of this section, he shall, in respect of
each offence, be punishable with imprisonment for a term which may extend to six
months, or with fine which may extend to one thousand rupees, or with both:
Provided
that in any proceedings against a person in respect of an offence under this
section, it shall be a defence to prove 77[*
**] that a competent and reliable person was charged with the duty of seeing
that the provisions of this section were complied with and was in a position to
discharge that duty:
Provided
further that no person shall be sentenced to imprisonment for any such off cnce
unless it was committed wilfully.
(10) If any person, not being a
person referred to in sub-section (6) of section 209, having been charged by
the *[managing agent, secretaries and treasurers,] 78[managing director, manager,] or Board of
directors, as the case may be, with the duty of seeing that the provisions of
this section are complied with, makes default in doing so, he shall, in respect
of each offence, be punishable with imprisonment for a term which may extend to
six months, or with fine which may extend to one thousand rupees, or with both:
Provided
that no person shall be sentenced to imprisonment for any such off ence unless
it was committed wilfully.
213. Financial
year of holding company and subsidiary.
(1) Where it appears to the Central Government desirable for a
holding company or a holding company's subsidiary, to extend its financial year
so that the subsidiary's financial year may end with that of the holding
company, and for that purpose to postpone the submission of the relevant
accounts to a general meeting, the Central Government may, on the application
or with the consent of the Board of directors of the company whose financial
year is to be extended, direct that in the case of that company, the submission
of accounts to a general meeting, the holding of an annual general meeting or
the making of an annual return, shall not be required to be submitted, held or
made, earlier than the dates specified in the direction, notwithstanding
anything to the contrary in this Act or in anv other Act for the time being in
force.
77. That lie had reasonable
ground to believe, and did believe," omitted by the Companies (Amendment)
Act, 1960.
78. Inserted, ibid.
(2) The Central Government
shall, on the application of the Board of directors of a holding company or a
holding company's subsidiary, exercise the powers conferred on that Government
by sub-section (1) if it is necessary so to do, in order to secure that the end
of the financial year of the subsidiary does not precede the end of the holding
company's financial year by more than six months, where that is not the case at
the commencement of this Act, or at the date on which the relationship of
holding company and subsidiary comes into existence, where that date is later
than the commencement of this Act.
214. Rights
of holding company's representatives and members. -
(1) A holding company may, by
resolution, authorise representatives named in the resolution to inspect the
books of account kept by any of its subsidiaries; and the books of account of
any such subsidiary shall be open to inspection by those representatives at any
time during business hours.
(2) The rights conferred by
section 235 upon members of a company may be exercised, in respect of any
subsidiary, by members of the holding company as if they alone were members of
the subsidiary.
79215. Authentication of balance sheet and profit and loss account. -
(1) Save as provided by sub-section (2), every balance sheet and
every profit and loss account of a company shall be signed on behalf of the
Board of directors-
(i) In the case of a banking
company, by the persons specified in clause (a) Or clause (b), as the case may
be, of sub-section (2) of section 2980
of the Banking Companies Act, 1949 (10 of 1949); (it) in the case of any other
company, by its *[managing agent, secretaries and treasurers,] manager or
secretary, if any, and by not less than two directors of the company one of
whom shall be a managing director where there is one.
(2) In the case of a company
not being a banking company, when only one of its directors is for the time
being in India, the balance sheet and the profit and loss account shall be
signed by such director; but in such a case there shall be attached to the
balance sheet and the profit and loss account a statement signed by him
explaining the reason for non-compliance with the provisions of subsection (1).
(3) The balance sheet and the
profit and loss account shall be approved by the Board of directors before they
are signed on behalf of the Board in accordance with the provisions of this
section and before thev are submitted to the auditors for their report thereon.
216. Profit
and loss account to be annexed and auditors' report to be attached to balance
sheet. -The
profit and loss account shall be annexed to the balance sheet and the auditors'
report 81[(including the
auditors' separate, special or supplementary report, if any)] shall be attached
thereto.
79. For clarifications on this
section, refer Taxiiiann; Master Guide to Coiiipai ies Act.
80. See Appendix II.
81. Inserted by the Companies
(Amendment) Act, 1960.
(1) There shall be attached
to every balance sheet laid before a company in general meeting, a report by
its Board of directors, with respect to-
(a) The state of the
company's affairs;
(b) The amounts, if any,
which it proposes to carry to any reserves 82[*
*] in such balance sheet; 82[*
* *]
(c) The amount, if any, which
it recommends should be paid by way of dividend;
83[(d) Material
changes and commitments, if any, affecting the financial position of the
company which have occurred between the end of the financial year of the
company to which the balance sheet relates and the date of the report;]
84[(e) The
conservation of energy, technology absorption, foreigi exchange earnings and
outgo, in such manner as may be prescribed. 85]
(2) The Board's report shall,
so far as is material for the appreciation of the state of the company's
affairs by its members and will not in the Board's opinion be harmful to the
business of the company or of any of its subsidiaries, deal with any changes,
which have occurred during the financial year-
(a) In the nature of the
company's business;
(b) In the company's
subsidiaries or in the nature of the business carried on by them; and
(c) Generally in the classes
of business in which the company as an interest.
[(2A) (a) The Board's report shall also include a
statement showing the name of every employee of the company who-
(i) If employed throughout
the financial year, was in receipt of remuneration for that year, which, in the
aggregate, was not less than 87[Such
sum as may be prescribed]; or
(ii) If employed for a part
of the financial year, was in receipt of remuneration for any part of that
year, at a rate which, in the aggregate, was not less than "[such sum per
month as may be prescribed89;
or]
90[(iii) If
employed throughout the financial year or part thereof, was in receipt of
remuneration in that year which, in the aggregate, or as the case may be, at a
rate which, in the aggregate, is in excess of that drawn by the managing
director or whole-time director or manager and holds by himself or along with
his spouse and dependent children, not less than two per cent, of the equity
shares of the company.]
82. Either and or in a subsequent
balance sheet; and omitted, respectively, by the companies (Amendment) Act,
1960.
83. Inserted, ibid.
84. Inserted by the Companies
(Amendment) Act, 1988, w.e.f. 1-4-1989.
85. Refer Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.
86. Inserted b- the Companies
(An-icndment) Act, 1974, w.e.f. 1-2-1975.
87. Substituted for
"thirt y-six thousand rupees" by the ConDanies (Amendment) Act, 1988,
w.e.f. 15-6-1988. Prcsciibed sum is Rs. 6,00,000 per annual, w.e.f. 12-3-1999.
88. Substjtuted for
"three thousand rupees per month, ibid
89. Rs. 50,600 per month has
been prescribed, w.c.f. 12-3-1999.
90. Inserted by the Companies
(Amendment) Act, 1988, w.e.f. 15-6-1988.
(b) The statement referred to
in clause (a) shall also indicate, -
(i) Whether any such
employee is a relative of any director or manager of the company and if so, the
name of such director, and
(ii) Such other particulars
as may be prescribcd.91
Explanation: "Remuneration
has the meaning assigned to it in the Expla ratio to section 198.]
91a[(2B) The
Board report shall also specify the reasons for the failure, if any, to
complete the buy-back within, the time specified in sub-section (4) of
section77A.]
(3) The Board shall also be
bound to give the fullest information and explanations in its report aforesaid,
or, in cases failing under the proviso to section 222, in an addendum to that
report, on every reservation, qualification or adverse remark contained in the
auditors' report.
(4) The Board's report and
any addendum thereto shall be signed by its chairman if he is authorised in
that behalf by the Board; and where he is not so authorised, shall be signed by
such number of directors as are required to sign the balance sheet and the
profit and loss account of the company bv virtue of sub-sections (1) and (2) of
section 215.
(5) If any person, being a
director of a company, fails to take all reasonable steps to comply with the
provisions of sub-sections (1) to (3), or being the chairman, signs the Board's
report otherwise than in conformity with the provisions of subsection (4), he
shall, in respect of each offence, be punishable with imprisonment for a term
which may extend to six months, or with fine which may extend to two thousand
rupees, or with both:
Provided
that no person shall be sentenced to imprisonment for any such offence unless
it was committed wilfully:
Provided
further that in any proceedings against a person in respect of an offence under
sub-section (1), it shall be a defence to prove 92[***] that a competent and reliable person was charged
with the duty of seeing that the provisions of that sub-section were complied
with and was in a position to discharge that duty.
(6) If any person, not being
a director, having been charged by the Board of directors with the duty of
seeing that the provisions of sub-sections (1) to (3) are complied with, makes
default in doing so, he shall, in respect of each offence, be punishable with
imprisonment for a term which may extend to six months, or with fine which may
extend to two thousand rupees, or with both:
Provided
that no person shall be sentenced to imprisonment for any such offence unless
it was committed wilfully.
91. Refer Companies
(Particulars of Employees) Rules, 1975.
91 a. Inserted by the Companies
(Amendment) Act, 1999, w.e.f. 31-10-1998.
92. That he had reasonable
ground to believe, and did believe, omitted by the Companies (Amendment) Act,
1960.
(a) If any copy of a balance sheet or profit and loss account which
has not been signed as required by section 215 is issued, circulated or
published; or
(b) If any copy of a balance
sheet is issued, circulated or published without there being annexed or
attached thereto, as the case may be, a copy each of (i) the profit and loss
account, (ii) any accounts, reports or statements which, by virtue of section
212, are required to be attached to the balance-sheet, (iii) the auditors'
report, and (iv) the Board's report referred to in section 217; the company,
and every officer of the company who is in default, shall be punishable with
fine which may extend to five hundred rupees.
219. Right
of member to copies of balance sheet and auditors' report. -
(1) A copy of every balance sheet (including the profit and loss
account, tl.e auditors'report and every other document required by law to be
annexed or attached, as the case may be, to the balance sheet) which is to be
laid before a company in general meeting shall, not less than twenty-one days
before the date of the meeting, be sent to every member of the company, 91[to
every trustee for the holders of any debentures issued by the company, whether
such member or trustee is or is not entitled to have notices of general
meetings of the company sent to him, and to all persons other than such members
or trustees, being persons so entitled]:
Provided that-
(a) In the case of a company
not having a share capital, this sub-section shall not require the sending of a
copy of the documents aforesaid to a member, or holder of debentures, of the
company who is not entitled to have notices of general meetings of the company
sent to him;
(b) This sub-section shall
not require a copy of the documents aforesaid to be sent-
(i) To a member, or holder
of debentures, of the company, who is not entitled to have notices of general
meetings of the company sent to him and of whose address the company is
unaware;
(ii) To more than one of the
joint holders of any shares or debentures none of whom is entitled to have such
notices sent to him; 94[* * *]
(iii) In the case of joint
holders of any shares or debentures some of whom are and some of whom are not
entitled to have such notices sent to them, to those who are not so entitled; 95[* * *]
96[(iv) In
the case of a company whose shares are listed on a recognised stock exchange,
if the copies of the documents aforesaid are made available for inspection at
its registered office during working hours for a period of twenty-one days
before the date of the meeting and a statement containing the salient features
of such documents in the prescribed 97form
or copies of the documents aforesaid, as the company may deem fit, is sent to
every member of the company and to every trustee for the holders of any
debentures issued by the company not less than twenty-one days before the date
of the meeting;]
93. Substituted for "to
every holder of debentures issued by the company (not being debentures which ex
facie are payable to the bearer thereof), to every trustee for the holders of
any debentures issued by the company, whether sucb member, holder or trustee is
or is not entitled to have notices of general meetings of the company sent to
him, and to all persons other than such members, holders or trustees, being
persons so entitled' by the Companies (Amendment) Act, 1988, w.e.f. 17-4-1989.
94. "Or" omitted,
ibid
95. "Andomitted, ibid.
96. Inserted, ibid
97. Form No. 23AB has been
prescribed under rule 7A. This form
contains a statement of salient features of documents required to be sent by a
company to its member, etc.
(c) If the copies of the
documents aforesaid are sent less than twenty-one days before the date of the
meeting, they shall, notwithstanding that fact, be deemed to have been duly
sent if it is so agreed by all the members entitled to vote at the meeting.
98[(2) Any
member or holder of debentures of a company and anv person from whom the
company has accepted a sum of money by way of deposit shall, on demand, be
entitled to be furnished free of cost, with a copy of the last balance sheet of
the company and of every document required by law to be annexed or attached
thereto, including the profit and loss account and the auditors' report.]
(3) If default is made in
complying with sub-section (1), the company, and every officer of the company
who is in default, shall be punishable with fine, which may extend to five
hundred rupees.
(4) If, when any person makes
a demand for a copy of any document with which he is entitled to be furnished
by virtue of sub-section (2), default is made in complying with the demand
within seven days after the making thereof, the company, and every officer of
the company who is in default, shall be punishable with fine which may extend
to five hundred rupees, unless it is proved that that person had already made a
demand for and been furnished with a copy of the document. 99
The
1[Company law Board] may also,
by order, direct that the copy demanded shall forthwith be furnished to the
person concerned.
(5) Sub-sections (1) to (4)
shall not apply in relation to a balance sheet of a private company laid before
it before the commencement of this Act; and in such a case the right of any
person to have sent to him or to be furnished with a copy of the balance sheet,
and the liability of the company in respect of a failure to satisfy that right,
shall be the same as they would have been if this Act had not been passed.
2220. Three copies of balance
sheet, etc., to be filed with Registrar.
(1) After the balance sheet and the profit and loss account have
been laid before a company at an annual general meeting as aforesaid, there
shall be filed with the Registrar 3[within
thirty days from the date on which the balance sheet and the profit and loss
account were so laid, 4[or
where the annual general meeting of a company for any year has not been held,
there shall be filed with the Registrar within thirty days from the latest day
on or before which that meeting should have been held in accordance with the
provisions of this Act,] -
(a) 5[***] three copies of the balance sheet and
the profit and loss account, signed by the managing director, *[managing agent,
secretaries and treasurers,] manager or secretary of the company, or if there
be none of these, by a director of the company, together with three copies of
all documents which are required by this Act to be annexed or attached to such
balance sheet or profit and loss account:
98. Substituted by the
Companies (Amendment) Act, 1988, w.e.f. 17-4-1989. For sub-section (2) as it stood prior to its substitution, refer Appendix I.
99. Prescribed fees is Rs. 50.
1. Substituted for
"Court" by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
2. For clarification on this
section, refer Taxinanki's Master Guide to Companies Act.
3. Substituted for at the
same time as the copy of the annual return referred to in section 161 by the
Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
4. Inserted by the Companies
(Amendment) Act, 1977.
5. "In the case of a
public company omitted by the Companies (Amendment) Act, 1960.
6[Provided
that in the case of a private company, copies of the balance sheet and copies
of the profit and loss account shall be filed with the Registrar separately:] 7[***]
6[Provided
further that, -
(i) In the case of a private
company which is not a subsidiary of a public company, or
(ii) In the case of a private
company of which the entire paid-up share capital is held by one or more bodies
corporate incorporated outside India, or
(iii) In the case of a company
which becomes a public company by virtue of section 43A, if the Central
Government directs that it is not in the public interest that any person other
than a member of the company shall be entitled to inspect, or obtain copies of,
the profit and loss account of the company,
No
person other than a member of the company concerned shall be entitled to
inspect, or obtain copies of, the profit and loss account of that company under
section 610.]
(2) If the annual general
meeting of a 8[***] company
beforewhich abalance sheet is laid as aforesaid does not adopt the balance
sheet, 9[or is adjourned
without adopting the balance sheet] 10[,
or, if the annual general meeting of a company for any year has not been held,]
a statement of that fact and of the reasons therefor shall be annexed to the
balance sheet and to the copies thereof required to be filed with the
Registrar.
(3) If default is made in
complying with the requirements of sub-sections (1) and (2), the company, and
every officer of the company who is in default, shall be liable to the like
punishment as is provided by section 162 for a default in complying with the
provisions of section 159, 160 or 161.
221. Duty
of officer to make disclosure of payments, etc. -
(1) Where any particulars or information is required to be given
ill the balance sheet or profit and loss account of a company or in any
document required to be annexed or attached thereto, it shall be the duty of
the concerned officer of the company to furnish without delay to the company,
and also to the company's auditor whenever he so requires, those particulars or
that information in as full a manner as possible.
6. Inserted, ibid.
7. Clause (b) omitted, ibid.
For the original clause, refer Appendix I.
S. "Public or
private" omitted, ibid.
9. Inserted by the Companies
(Amendment) Act, 1988, w.e.f. 15-6-1988.
10. Inserted by the Companies
(Amendment) Act, 1977.
*[(2) Where the officer concerned
is a firm or body corporate acting as managing agent or as secretaries and
treasurers, the duty aforesaid shall extend to every partner in the firm, or to
every director of the body corporate, as the case may be.]
(3) The particulars or
information referred to in sub-section (1) may relate to payments made to any
director *[, managing agent, secretaries and treasurers,] or other person by
any other company, body corporate, firm or person.
(4) If any person knowingly
makes default in performing the duty cast on him by the foregoing provisions of
this section, he shall be punishable with imprisonment which may extend to six
months, or with fine which may extend to five thousand rupees, or with both.
222. Construction
of references to documents annexed to accounts. -References in this Act to documents annexed or
required to be annexed to a company's accounts or any of them shall not include
the Board's report, the auditors'report or any document attached or required to
be attached to those accounts:
Provided
that anv information which is required by this Act to be given in the accounts,
and is allowed by it to be given in a statement annexed to the accounts, may be
given in the Board's report instead of in the accounts; and if any such
information is so given, the report shall be annexed to the accounts and this
Act shall apply in relation thereto accordingly, except that the auditors shall
report thereon only in so far as it gives the said information.
223. Certain
companies to publish statement in the Form in Table F in Schedule 1.
(1) Every company which is a
limited banking company, an insurance company, or a deposit, provident, or
benefit society, shall, before it commences business and also on the first
Monday in February and the first Monday in August in every year during which it
carries on business, make a statement in the Form in Table F in Schedule I, or
in Form as near thereto as circumstances admit.
(2) A copy of the statement,
together with a copy of the last audited balance sheet laid before the members
of the company, shall be displayed and until the display of the next following
statement, shall be kept displayed, in a conspicuous place in the registered
office of the company, and in every branch office or place where the business
of the company is carried on.
(3) Every member, and every
creditors of the company shall be entitled, on payment of a sum of eight annas,
to be furnished with a copy of the statement, within seven days of such
payment.
(4) If default is made in
complying with any of the requirements of this section, the company, and every
officer of the company who is in default, shall be punishable with fine which
may extend to fifty rupees for everv day during which the default continues.
(5) This section shall not
apply to a life assurance company or provident insurance society to which the
provisions of the Insurance Act, 1938 (4 of 1938), as to the annual statements
to be made by such company or society, apply, with or without modifications, if
the company or society complies with those provisions.
Audit
11224. 12Appointment and
remuneration of auditors. -
12[(1) Every
company shall at each annual general meeting, appoint an auditor or auditors to
hold office from the conclusion of that meeting until the conclusion of the
next annual general meeting and shall, within seven days of the appointment,
give intimation thereof to every auditor so appointed 13[***]:
14[Provided
that before any appointment or re-appointment of auditor or auditors is made by
any company at any annual general meeting, a written certificate shall be
obtained by the companv from the auditor or auditors proposed to be so
appointed to the effect that the appointment or reappointment, if made, will be
in accordance with the limits specified in sub-section (IB).]
(1A) Every auditor appointed
under sub-section (1) 13[***]
shall within thirty days of the receipt from the company of the intimation of
his appointment, inform the Registrar in writing15 that he has accepted, or refused to accept, the
appointment.]
14[(1B) On and from the financial year next
following the commencement of the Companies (Amendment) Act, 1974, no company
or its Board of directors shall appoint or re-appoint any person 16[who is in full-time employment elsewhere]
or firm as its auditor if such person or firm is, at the date of such
appointment or re-appointment, holding appointment as auditor of the specified
number of companies or more than the specified number of companies,
17[Provided
that in the case of a firm of auditors, "specified number of companies
shall be construed as the number of companies specified for every partner of
the firm who is not in full-time employment elsewhere]:
Provided
further that where any partner of the firm is also a partner of any other firm
or firms of auditors, the number of companies which may be taken into account,
by all the firms together, in relation to such partner shall not exceed the
specified number in the aggregate:]
Provided
also that where any partner of a firm of auditors is also holding office, in
his individual capacity, as the auditor of one or more companies, the number of
companies which may be taken into account in his case shall not exceed the
specified number, in the aggregate.]
14[(C) For
the purposes of enabling a company to comply with the provisions Of sub-section
(IB), a person or firm holding, immediately before the commencement of the
Companies (Amendment) Act, 1974, appointment as the auditor of a number of
companies exceeding the specified number, shall, within sixty days from such
commencement, intimate his or its unwillingness to be re-appointed as the
auditor from the financial year next following such commencement, to the
company or companies of which he or it is not willing to be re-appointed as the
auditor; and shall simultaneously intimate to the Registrar the names of the
companies of which he or it is willing to be re-appointed as the auditor and
forward a copy of the intimation to each of the companies referred to therein.
11. For clarifications on this
section, refer Taxmanns Master Guide to Conipanies Act.
12. Substituted for
sub-section (1) by the Companies (Amendment) Act, 1960. For the original sub-section, refer Appendix I.
13. Unless he is a retiring
auditor, omitted by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
14. Inserted, ibid.
15. See Form No. 23B of
General Rules and Forms.
16. Inserted by the Companies
(Amendment) Act, 1988, w.e.f. 15-6-1988.
17. Substituted, ibid. For the original proviso, refer Appendix I.
Explanation I: Forthe purposes of sub-sections (IB) and (lC),"specified
number means, -
(a) In the case of a person
or firm holding appointment as auditor of a number of companies each of which
has a paid-up share capital of less than rupees twenty-five lakhs, twenty such
companies;
(b) In any other case, twenty
companies, out of which not more than ten shall be companies each of which has
a paid-up share capital of rupees twenty-five lakhs or more.
Explanation II: In computing the specified number, the
number of companies in respect of which or any part of which any person or firm
has been appointed as an auditor, whether singly or in combination with any
other person or firm, shall be taken into account.]
(2) "[Subject to the
provisions of sub-section (IB) and section 224A, at any annual general
meeting], a retiring auditor, by whatsoever authority appointed, shall be
re-appointed, unless-
(a) He is not qualified for
re-appointment;
(b) He has given the company
notice in writing of his unwillingness to be re-appointed;
(c) A resolution has been
passed at that meeting appointing somebody instead of him or providing
expressly that he shall not be re-appointed; or
(d) Where notice has been
given of an intended resolution to appoint some person or persons in the place
of a retiring auditor, and by reason of the death, incapacity or
disqualification of that person or of all those persons, as the case may be,
the resolution cannot be proceeded with.
(3) Where at an annual
general meeting no auditors are appointed or reappointed, the Central
Government19 may appoint a
person to fill the vacancy.
(4) The company shall, within
seven days of the Central Government's19
power under sub-section (3), becoming exercisable, give notice of that fact to
that Government; and, if a company fails to give such notice, the company, and
evcrv officer of the company who is in default, shall be punishable, with fine
which may extend to five hundred rupees.
18. Substituted for At any
annual general meeting" by the Companies (Amendment) Act, 1974, w.e.f.
1-2-1975.
19. Powers are now delegated
to Regional Directors.
(5) The first auditor or
auditors of a company shall be appointed by the Board of directors within one
month of the date of registration of the company; and the auditor or auditors
so appointed shall hold office until the conclusion of the first annual general
meeting:
Provided that-
(a) The company may, at a
general meeting, remove any such auditor or all or any of such auditors and
appoint in his or their places any other person or persons who have been
nominated for appointment by any member of the company and of whose nomination
notice has been given to the members of the company not less than fourteen days
before the date of the meeting; and
(b) If the Board fails to
exercise its powers under this sub-section, the company in general meeting may
appoint the first auditor or auditors.
(6) (a) The Board mav fill any casual vacancy in
the office of an auditor; but while any such vacancy continues, the remaining
auditor or auditors, if any, may act:
Provided
that where such vacancv is caused by the resignation of an auditor, the vacancy
shall only be filled by the company in general meeting.
(b) Any auditor appointed in
a casual vacancy shall hold office until the conclusion of the next annual
general meeting.
(7) Except as provided in the
proviso to sub-section (5), any auditor appointed under this section may be
removed from office before the expiry of his term only by the company in
general meeting after obtaining the previous approval of the Central Government"
in that behalf.
(8) The remuneration of the
auditors of a company-
(a) In the case of an auditor
appointed by the Board or the Central Government,20 may be fixed by the Board or the Central
Government, as the case may be; and
(b) Subject to clause (a),
shall be fixed by the company in general meeting or in such manncr as the
company in general meeting may determine.
For
the purposes of this sub-section, any sums paid by the company in respect of
the auditors' expenses shall be deemed to be included in the expression
remuneration'.
(1) In the case of a company in which not less than twenty-five per
cent of the subscribed share capital is held, whether singly or in any
combination, by-
(a) A public financial
institution or a Government company or Central Government or any State
Government, or
(b) Any financial or other
institution established by any Provincial or State Act in which a State
Government holds not Jess than fifty-one per cent of the subscribed share
capital, or
20. Powers are now delegated
to Regional Directors.
21. Inserted b.v the Companies
(Amendment) Act, 1974, w.e.f. 1-2-1975.
(c) A nationalised bank or an
insurance company carrying on general insurance business,
The
appointment or re-appointment at each annual general meeting of an auditor or
auditors shall be made by a special resolution.
(2) Where any company
referred to in sub-section (1) omits or fails to pass at its annual general
meeting any special resolution appointing an auditor or auditors, it shall be
deemed that no auditor or auditors had been appointed by the company at its
annual general meeting, and thereupon the provisions of subsection (3) of
section 224 shall become applicable in relation to such company.
Explanation: For
the purposes of this section, -
(a) "General insurance
business, 22 has the meaning
assigned to it in the General Insurance (Emergency Provisions) Act, 1971 (17 of
197 1);
(b) "Nationalised bank 23 means a corresponding new bank as
defined in the Banking Companies (Acquisition and Transfer of Undertakings)
Act, 1970 (5 of 1970) 24[or in
the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40
of 1980)].]
25225. Provisions as to resolutions for appointing or removing auditors. -
(1) Special notice shall be required for a resolution at an annual
general meeting appointing as auditor a person other than a retiring auditor,
or providing expressly that a retiring auditor shall not be re-appointed.
(2) On receipt of notice of
such a resolution, the company shall forthwith send a copy thereof to the
retiring auditor.
(3) Where notice is given of
such a resolution and the retiring auditor makes with respect thereto
representations in writing to the company (not exceeding a reasonable length)
and requests their notification to members of the company, the company shall,
unless the representations are received by it too late for it to do so, -
(a) In any notice of the
resolution given to members of the company, state the fact of the
representations having been made; and
(b) Send a copy of the
representations to every member of the company to whom notice of the meeting is
sent, whether before or after the receipt of the representations by the
company;
And
if a copy of the representations is not sent as aforesaid because they were
received too late or because of the company's default the auditor mav (without
prejudice to his right to be heard orally) require that the representations
shall be read out at the meeting:
Provided
that copies of the representations need not be sent out and the representations
need not be read out at the meeting if, on the application either of the
company or of any other person who claims to be aggrieved, the
22. For definition of 'general
insurance business', see Appendix II.
23. For definition of
"nationalised bank, refer Appendix II.
24. Inserted by the Companies
(Amendment) Act, 1988, w.e.f. 15-6-1988.
25. For clarifications on this
section, ref er Taxmann Master Guide to Companies Act.
26[Company
Law Board] is satisfied that the rights conferred by this sub-section are being
abused to secure neec less publicity for defamatory matter,, and the 26[Company Law Board] may orc er the
company's costs on such an application to be paid in whole or in part by the
auditor, notwithstanding that he is not a party to the application . 27
(4) Sub-sections (2) and (3)
shall apply to a resolution to remove the first auditors or any of them under
sub-section (5) of section 224 or to the removal of any auditor or auditors
under sub-section (7) of that section, as they apply in relation to a
resolution that a retiring auditor shall not be re-appointed.
226. Qualifications
and disqualifications of auditors. -
(1) A person shall not be qualified for appointment as auditor of a
company unless he is a chartered accountants within the meaning of the
Chartered Accountants Act, 1949 (38 of 1949):
Provided
that a firm whereof all the partners practising in India are qualified for
appointment as aforesaid may be appointed by its firm name to be auditor of a
company, in which case any partner so practising may act in the name of the
firm.
(2) (a) Notwithstanding anything contained in
sub-section (1), but subject to the provisions of any rules made under clause
(b), the holder of a certificate granted under a law in force in the whole or
any portion of a Part B State immediately before the commencement of the Part B
States (Laws) Act, 1951 (3 of 1951) 19[or of the Jammu and Kashmir (Extension
of Laws) Act, 1956 (62 of 1956), as the case may be,] entitling him to act as
an auditor of companies 30[in
the territories which, immediately before the 1st November, 1956, were
comprised] in that State or any portion thereof, shall be entitled to be
appointed to act as an auditor of companies registered anywhere in 31[India].
(b) The Central Government
may, by notification in the Official Gazette, make rules providing for the
grant, renewal, suspension or cancellation of auditors' certificates to persons
in 30[the territories which,
immediately before the lst November, 1956, were comprised in] Part B States for
the purposes of clause (a), and prescribing conditions and restrictions for
such grant, renewal, suspension or cancellation.
(3) None of the following
persons shall be qualified for appointment as auditor of a company-
(a) A body corporate;
(b) An officer or employee of
the company;
(c) A person who is a
partner, or who is in the employment, of an officer or employee of the company;
(d) A person who is indebted
to the company for an amount exceeding one thousand rupees, or who has given
any guarantee or provided any security in connection with the indebtedness of
any third person to the company for an amount exceeding one thousand rupees;
26. Substituted for Court by
the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
27. Prescribed fees is Rs. 50.
28. For definition of
'chartered accountant' as given in section 2(b) of the Act, refer Appendix II.
29. Inserted by the J & K
(Extension of Laws) Act, 1956.
30. Inserted by the Adaptation
of Laws (No. 3) Order, 1956.
31. Substituted for 'those
territories' by the Companies (Amendment) Act, 1960.
*[(e) A person who is a director
or member of a private company, or a partner of a firm, which is the managing
agent or the secretaries and treasurers of the company;]
*[(f) A person who is a
director, or the holder of shares exceeding five per cent in nominal value of
the subscribed capital, of any body corporate which is the managing agent or
the secretaries and treasurers, of the company:]
Provided
that any shares held by such person as nominee or trustee for any third person
and in which the holder has no beneficial interest shall be excluded in
computing the percentage of shares held by him for the purpose of this clause.
Explanation: References in this sub-section to an officer
or employee shall be construed as not including references to an auditor.
(4) A person shall also not be qualified for appointment as auditor
of a company if he is, by virtue of sub-section (3), disqualified for
appointment as auditor of any other body corporate which is that company's
subsidiary or holding company or a subsidiary of that company's holding company,
or would be so disqualified if the body corporate were a company.
(5) If an auditor becomes
subject, after his appointment, to any of the disqualifications specified in
sub-sections (3) and (4), he shall be deemed to have vacated his office as such.
32227. Powers and duties of
auditors.
(1) Every auditor of a company shall have a right of access at all
times to the books and accounts and vouchers of the company, whether kept at
the head office of the company or elsewhere, and shall be entitled to require
from the officers of the company such information and explanations as the
auditor may think necessary for the performance of his duties as auditor.
33[(lA) Without
prejudice to the provisions of sub-section (1), the auditor shall inquire-
(a) Whether loans and
advances made by the company on the basis of security have been properly
secured and whether the terms on which they have been made are not prejudicial
to the interests of the company or its members;
(b) Whether transactions of
the company which are represented merely by book entries are not prejudicial to
the interests of the company;
(c) Where the company is not
an investment company within the meaning of section 372 or a banking company,
whether so much of the assets of the company as consist of shares, debentures
and other securities have been sold at a price less than that at which they
were purchased by the company;
(d) Whether loans and
advances made by the company have been shown as deposits;
32. For clarification on this
section, refer Taxmann's Handbook to Companies Act. w.e.f 15-10-1965.
33. Inserted by the companies (Amendment) Act, 1965, w.e.f. 15- 10-
1995.
(e) Whether personal expenses
have been charged to revenue account; where it is stated in the books and
papers of the company that any shares have been allotted for cash, whether cash
has actually been received in respect of such allotment, and if no cash has
actually been so received, whether the position as stated in the account books
and the balance sheet is correct, regular and not misleading.]
(2) The auditor shall make a
report to the members of the company on the accounts examined by him, and on
every balance sheet and profit and loss account and on every other document
declared by this Act to be part of or annexed to the balance sheet or profit
and loss account, which are laid before the company in general meeting during
his tenure of office, and the report shall state whether, in his opinion and to
the best of his information and according to the explanations given to him, the
said accounts give the information required by this Act in the manner so
required and give a true and fair view-
(i) In the case of the
balance sheet, of the state of the company's affairs as at the end of its
financial year; and
(ii) In the case of the
profit and loss account, of the profit or loss for its financial year.
(3) The auditors'report shall
also state-
(a) Whether he has obtained
all the information and explanations, which to the best of his knowledge and
belief were necessary for the purposes of his audit;
(b) Whether, in his opinion,
proper books of account as required by law have been kept by the company so far
as appears from his examination of those books, and proper returns adequate for
the purposes of his audit have been received from branches n visited by him;
34[(bb) Whether
the report on the accounts of any branch office audited under section 228 by a
person other than the company's auditor has been forwarded to him as required
by clause (c) of sub-section (3) of that section and how he has dealt with the
same in preparing the auditor's report;]
(c) Whether the company's
balance sheet and profit and loss account dealt with by the report are in
agreement with the books of account and returns;
35[(d) Whether,
in his opinion, theprolitand loss accountand balance sheet comply with the
accounting standards referred to in sub-section (3C) of section 211.]
(4) Where any of the matters
referred to in clauses (i) and (ii) of sub-section (2) or in clauses (a), (b) 34[, (bb)] 36[,
(c) and (d)] of sub-section (3) is answered in thnegative or with a
qualification, the auditor's report shall state the reason for the answer.
34. Inserted by the Companies
(Amendment) Act, 1960.
35. Inserted by the Companies
(Amendment) Act, 1999, w.r.e.f. 31-10-1998.
36. Substituted for 'and (c)',
ibid.
37[(4A) The Central Government may, by general
or special order, 38 direct
that, in the case of such class or description of companies as may be specified
in the order, the auditor's report shall also include a statement on such
matters as may be specified therein:
Provided
that before making any such order the Central Government may consult the
Institute of Chartered Accountants of India constituted under the Chartered
Accountants Act, 1949 (38 of 1949), in regard to the class or description of
companies and other ancillary matters proposed to be specified therein unless
the Government decides that such consultation is not necessary or expedient in
the circumstances of the case.]
39[(5) The
accounts of a company shall not be deemed as not having been, and the auditor's
report shall not state that those accounts have not been, properly drawn up on
the ground merely that the company has not disclosed certain matters if-
(a) Those matters are such as
the company is not required to disclose by virtue of any provisions contained
in this or any other Act, and
(b) Those provisions are
specified in the balance sheet and profit and loss account of the company.]
228. Audit
of accounts of branch office of company. -
(1) Where a company has a branch office, the accounts of that
office shall 40[be audited by
the company's auditor appointed under section 224 or] by a person qualified for
appointment as auditor of the company under section 226, or where the branch
office is situate in a country outside India, either 41[by the company's auditor or a person
qualified as aforesaid] or by an accountant duly qualified to act as an auditor
of the accounts of the branch office in accordance with the laws of that
country.
(2) Where the accounts of any
branch office are 42[audited
by a person other than the company's auditor], the company's auditor-
(a) Shall be entitled to
visit the branch office, if he deems it necessary to do so for the performance
of his duties as auditor, and
(b) Shall have a right of
access at all times to the books and accounts and vouchers of the company
maintained at the branch office:
Provided
that in the case of a banking company having a branch office outside India, it
shall be sufficient if the auditor is allowed access to such copies of, and
extracts from, the books and accounts of the branch as have been transmitted to
the principal office of the company in India.
43[(3)
(a) Where a company in
general meeting decides to have the accounts of a branch office audited
otherwise than by the company's auditor, the company in that meeting shall for
the audit of those accounts appoint a person qualified for appointment as auditor of the company under section
226, or where the branch office is situate in a country outside India, a person
who is either qualified as aforesaid or an accountant duly qualified to act as
an auditor of the accounts of the branch office in accordance with the laws of
that country, or authorise the Board of directors to appoint such a person in
consultation with the company's auditor;
(b) The person so appointed
(hereafter in this section referred to as the branch auditor) shall have the
same powers and duties in respect of audit of the accounts of the branch office
as the company's auditor has in respect of the same;
(c) The branch auditor shall
prepare a report on the accounts of the branch office examined by him and
forward the same to the company's auditor, who shall in preparing the auditor's
report, deal with the same in such manner, as he considers necessary;
(d) The branch auditor shall
receive such remuneration and shall hold his appointment subject to such terms
and conditions as may be fixed either by the company in general meeting or by
the Board of directors if so authorised by the company in general meeting.
37. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
38. Refer Manufacturing &
Other Companies (Auditor's Report) Order, 1988.
39. Substituted by the
Companies (Amendment) Act, 1960. For
the original sub-section refer Appendix I.
40. Substituted for', unless
the company in general meeting decides otherwise be audited" by the
Companies (Amendment) Act, 1960.
41. Substituted for 'by a
person qualified as aforesaid', ibid.
42. Substituted for not so
audited", ibid
43. Inserted, ibid
(4) Notwithstanding anything
contained in the foregoing provisions of this section, the Central Government 44[may make rule providing, for the
exemption of] any branch office from the provisions of this section to the
extent specified in the rules and in making such rules the Central Government
shall have regard to all or any of the following matters, namely
(a) The arrangement made by
the company for the audit of accounts of the branch office by a person
otherwise qualified for appointment as branch auditor even though such person
may be an officer or employee of the company;
(b) The nature and quantum of
activity carried on at the branch office during a period of three years
immediately preceding the date on which the branch office is exempted from the
provisions of this section;
(c) The availability at a
reasonable cost of a branch auditor for the audit of accounts of the branch
office;
(d) Any other matter which in
the opinion of the Central Government justifies the grant of exemption to the
branch office from the provisions of this section.]
229. Signature
of audit report, etc. -Only
the person appointed as auditor of the company, or where a firm is so appointed
in pursuance of the proviso to sub-section (1) of section 226, only a partner
in the firm practising in India, may sign the auditor's report, or sign or
authenticate any other document of the company required by law to be signed or
authenticated by the auditor.
44. Substituted for may, by
rules made in this behalf, exempt by the Companies (Amend- 4 15-10-1965.
45. Refer companies (Branch
Audit Exemption) Rules, 1961.
230. Reading
and inspection of auditor's report. -The auditor's report shall be read before the
company in general meeting and shall be open to inspection by any member of the
company.
231. Right
of auditor to attend general meeting. -All notices of, and other communications relating
to, any general meeting of a company which any member of the company is
entitled to have sent to him shall also be forwarded to the auditor of the
company; and the auditor shall be entitled to attend any general meeting and to
be heard at any general meeting which he attends on any part of the business
which concerns him as auditor.
232. Penalty
for non-compliance with sections 225 to 231. -If default is made by a company in complying
with any of the provisions contained in sections 225 to 231, the company, and
every officer of the company who is in default, shall be punishable with fine
which may extend to five hundred rupees.
233. Penalty
for non-compliance by auditor with sections 227 and 229. -If any auditor's report is made, or any
document of the company is signed or authenticated, otherwise than in
conformity with the requirements of sections 227 and 229, the auditor
concerned, and the person, if any, other than the auditor who signs the report
or signs or authenticates the document, shall, if the default is wilful, be
punishable with fine which may extend to one thousand rupees.
233A. "[Power of Central Government to
direct special audit in certain cases. -
(1) Where the Central
Government is of the opinion-
(a) That the affairs of any
company are not being managed in accordance with sound business principles or
prudent commercial practices; or
(b) That any company is being
managed in a manner likely to cause serious injury or damage to the interests
of the trade, industry or business to which it pertains; or
(c) That the financial
position of any company is such as to endanger its solvency;
The
Central Government may at any time by order direct that a special audit of the
company's accounts for such period or periods as may be specified in the order,
shall be conducted and may by the same or a different order appoint either a
chartered accountant as defined in clause (b) of sub-section (1) of section 247 of the Chartered Accountants Act, 1949
(38 of 1949) (whether or not such chartered accountant is a chartered
accountant in practice within the meaning of that Act) or the company's auditor
himself to conduct such special audit.
(2) The chartered accountant
or the company's auditor appointed under subsection (1) to conduct a special
audit as aforesaid is hereafter in this section referred to as the special
auditor.
46. Inserted by the Companies
(Amendment) Act, 1960.
47. For definition of
'chartered accountant' as given in section 2(b) of the Chartered Accountants
Act, 1949, refer Appendix II.
(3) The special auditor shall
have the same powers and duties in relation to the special audit as an auditor
of a company has under section 227:
Provided
that the special auditor shall, instead of making his report to the members of
the company, make the same to the Central Government.
(4) The report of the special
auditor shall, as far as may be, include all the matters required to be
included in an auditor's report under section 227 and, if the Central
Government so directs, shall also include a statement on any other matter which
may be referred to him by that Government.
(5) The Central Government
may by order direct any person specified in the order to furnish to the special
auditor within such time as may be specified therein such information or
additional information as may be required by the special auditor in connection
with the special audit; and on failure to comply with such order such person
shall be punishable with fine which may extend to five hundred rupees.
(6) On receipt of the report
of the special auditor, the Central Government may take such action on the
report, as it considers necessary in accordance with the provisions of this Act
or any other law for the time being in force:
Provided
that if the Central Government does not take any action on the report within
four months from the date of its receipt, that Government shall sent to the
company either a copy of, or relevant extract from, the report with its
comments thereon and require the company either to circulate that copy or those
extracts to the members or to have such copy or extracts read before the company
at its next general meeting.
(7) The expenses of, and
incidental to, any special audit under this section (including the remuneration
of the special auditor) shall be determined by the Central Government (which
determination shall be final) and paid by the company and in default of such
payment shall be recoverable from the company as an arrear of land revenue.]
233B. 48[Audit of cost
accounts in certain cases. -
(1) Where in the opinion of the Central Government it is necessary
so to do in relation to any company required under clause (a) of sub-section
(1) of section 209 to include in its books of account the particulars referred
to therein, the Central Government may, by order, direct that an audit of cost
accounts of the company shall be conducted in such manner as may be specified
in the order by an auditor 49[who
shall be cost accountant50
within the meaning of the Cost and Works Accountants Act, 1959 (23 of 1959):
Provided
that if the Central Government is of opinion that sufficient number of cost
accountants within the meaning of the Cost and Works Accountants Act, 1959 (23
of 1959), are not available for conducting the audit of the cost accounts of
companies generally, that Government may, by notification in the Official
Gazette, direct that, for such period as may be specified in the said
notification, such chartered accountant51
within the meaning of the Chartered Accountants Act, 1949 (38 of 1949), as
possesses the prescribed qualifications, may also conduct the audit of the cost
accounts of companies, and thereupon a chartered accountant possessing the
prescribed qualifications may be appointed to audit the cost accounts of the
company.]
48. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
49. Substituted for'who shall
be either a cost accountant within the meanina of the Cost and Works
Accountants Act, 1959 (23 of 1959), or any such chartered accountant within the
meaning of the Chartered Accountants Act, 1949 (38 of 1949), or otherperson, as
possesses the prescribed qualifications' by the Companies (Amendment) Act,
1974, w.e.f. 1-2-1975
50. For definitions of 'cost
accountant'and 'chartered accountant'as given in section 2(b) of the respective
Acts, mentioned in the section, refer Appendix
II.
51. For definitions of "cost
accountant' and 'Chartered accountant' as given in section 2(b) of the
respective Acts, mentioned in the section, refer Appendix
II.
52[(2) The
auditor under this section shall be appointed by the Board of directors of the
company 53[in accordance with
the provisions of sub-section (IB) of section 224 and] within the previous
approval of the Central Government:]
53[Provided
that before the appointment of any auditor is made by the Board, a written
certificate shall be obtained by the Board from the auditor proposed to be so
appointed to the effect that the appointment, if made, will be in accordance
with the provisions of sub-section (IB) of section 224.]
(3) An audit conducted by an
auditor under this section shall be in addition to an audit conducted by an
auditor appointed under section 224.
55(4) An
auditor shall have the same powers and duties in relation to an audit conducted
by him under this section as an auditor of a company has under subsection (1)
of section 227 and such auditor shall make his report to the 56[Central Government] in such form and
within such time as may be prescribed and shall also at the same time forward a
copy of the report to the company.]
57[(5)
(a) A person referred to
in sub-section (3) or sub-section (4) of section 226 shall not be appointed or
re-appointed for conducting the audit of the cost accounts of a company.
(b) A person appointed, under
section 224, as an auditor of a company, shall not be appointed or re-appointed
for conducting the audit of the cost accounts of that company.
(c) If a person, appointed
for conducting the audit of cost accounts of a company, becomes subject, after
his appointment, to any of the disqualifications specified in clause (a) or
clause (b) of this sub-section, he shall, on and from the date on which he
becomes so subject, cease to conduct the audit of the cost accounts of the
company.
(6) Upon receipt of an order
under sub-section (1), it shall be the duty of the company to give all
facilities and assistance to the person appointed for conducting the audit of
the cost accounts of the company.
(7) The company shall, within
thirty days from the date of receipt of a copy of the report referred to in
sub-section (4), furnish the Central Government with full information and explanations
on every reservation or qualification contained in such report.
52. Substituted by the
Companies (Amendment) Act, 1974, w.e.f. 1-2-1975. Forthe original subsection, refer Appendix 11.
53. Inserted by the Companies
(Amendment) Act, 1988. w.e.f. 15-6-1988.
54. See Form No. 23C of
General Rules and Forms.
55. Refer Cost Audit (Report)
Rules, 1968.
56. Substituted for
"Company Law Board" by the Companies (Amendment) Act, 1974, w.e.f.
1-2-1975.
57. Inserted, ibid.
(8) If, after considering the
report referred to in sub-section (4) and the information and explanations
furnished by the company under sub-section (7), the Central Government is of
opinion that any further information or explanation is necessary that
Government may call for such further information and explanation and thereupon
the company shall furnish the same within such time as may be specified bv that
Government.
(9) On receipt of the report
referred to in sub-section (4) and the informations and explanations furnished
by the company under sub-section (7) and sub-section (8), the Central
Government mav take such action on the report, in accordance with the
Provisions of this Act or' any other law for the time being in force, as it may
consider necessary.
(10) The Central Government may
direct the company whose cost accounts have been audited under t iis section to
circulate to its members, along with the notice of the annual general meeting
to be held for the first time after the submission of such report, the whole or
such portion of the said report as it may specify in this behalf.
(11) If default is made in
complying with the provisions of this section, the company shall be liable to
be punished with fine which may extend to five thousand rupees, and every
officer of the company who is in default, shall be liable to be Punished with
imprisonment for a term which may extend to three years, or with fine which may
extend to five thousand rupees, or with both.] Power of Registrar to call for
information, etc.
234. Power
of Registrar to call for information or explanation. -
(1) Where, on perusing any document which'a company is required to
submit to him under this Act, the Registrar is ot opinion that any information
or explanation is necessary 58[With
respect to any matter to which such document] purports to relate, he may, by a
written order, call on the company submitting the document to furnish in
writing such information or explanation, within such time as he may specify in
the order.
(2) On receipt by the company
of an order under sub-section (1), it shall be the duty of the company, and of all persons who are officers of the
company, to furnish such information or explanation to the best of their power.
(3) On receipt of a copy of
an order under sub-section (1), it shall also be the duty of every person who
has been an officer of the company to furnish such information or explanation
to the best of his power.
59[(3A) If
no information or explanation is furnished within the time specified or if the
information or explanation furnished is, in the opinion of the Registrar,
inadequate, the Registrar may by another written order call on the company
produce before him for his inspection such books and papers as he considers
necessary within such time as he may specify in the order; and it shall be the
duty of the company, and of all persons who are officers of the company, to
produce such books and papers.]
58. Subsituted for in order
that such document may afford full Particulars of the matter which it by the
Companies (Amendment) Act, 1960.
59. Inserted, ibid.
(4) If the company, or any
such person as is referred to in sub-section (2) or (3), refuses or neglects to
furnish any such information or explanation 60 [or if the company or any such
person as is referred to in sub-section (3A) refuses or neglects to produce any
such books and papers], -
61[(a) The
company and each such person shall be punishable with fine which may extend to
five hundred rupees and in the case of a continuing offence, with an additional
fine which may extend to fifty rupees for every day after the first during
which the offence continues; and
(b) The Court trying the
offence may, on the application of the Registrar and after notice to the
company, make an order on the company for production before the Registrar of
such books and papers as in the opinion of the Court, may reasonably be
required by the Registrar for the purpose referred to in sub-section (1).]
62[(5) On
receipt of any writing containing the information or explanation referred to in
sub-section (1), or of any book or paper produced whether in pursuance of an
order of the Registrar under sub-section (3A) or of an order of the Court under
sub-section (4), the Registrar may annex that writing book or paper, or where
that book or paper is required by the company, any copy or extract thereof, to
the document referred to in sub-section (1); and any writing or any book or
paper or copy or extract thereof so annexed shall be subject to the like
provisions as to inspection, the taking of extracts and the furnishing of
copies, as that document is subject.
(6) If such information or
explanation is not furnished within the specified time or if after perusal of
such information or explanation or of the books and papers produced whether in
pursuance of an order of the Registrar under sub-section (3A) or of an order of
the Court under sub-section (4), the Registrar is of opinion that the document
referred to in sub-section (1), together with such information or explanation
or such books and papers discloses an unsatisfactory state of affairs or does
not disclose a full and fair statement of any matter to which the document
purports to relate, the Registrar shall report in writing the circumstances of
the case to the Central Government.]
(7) If it is represented to
the Registrar on materials placed before him by any contributory or creditor or
any other person interested that the business of a company is being carried on
in fraud of its creditors or of persons dealing with the company or otherwise
for a fraudulent or unlawful purpose, he may, after giving the company an
opportunity of being heard, by a written order, call on the company to furnish
in writing any information or explanation on matters specified in the order,
within such time as he may specify therein; and the provisions of sub-sections
(2),(3), 61 [(3A)], (4) and (6) of this section shall apply to such order.
60. Inserted by the Companies
(Amendment) Act, 1960.
61. Substituted, ibid. For clauses (a) and (b) as they originally stood,
refer Appendix 1.
62. Substituted by the
Companies (Amendment) Act, 1960. For
original sub-sections (5) and (6), refer Appendix
I.
If
upon inquiry the Registrar is satisfied that any representation on which he
took action under this sub-section was frivolous or vexatious, he shall
disclose the identity of his informant to the company. (8) The provisions of
the section shall apply mutatis mutandis to documents, which a liquidator, or a
foreign company within the meaning of section 591, is required to file under
this Act.
234A. 63[Seizure
of documents by Registrar. -
(1) Where, upon information
in his possession or otherwise, the Registrar has reasonable ground to believe
that books and papers of, or relating to, any company or other body corporate
*[, or any managing agent or secretaries and treasurers or] managing director
or manager of such company or other body corporate, *[or any associate of such
managing agent or secretaries and treasurers,] may be destroyed, mutilated,
altered, falsified or secreted, the Registrar may make an application 64[***] to the Magistrate of the First Class
or, as t he case may be, the Presidency Magistrate havingjurisdiction for an
order for the seizure of such books and papers.
(2) After considering the
application and hearing the Registrar, if necessary, the 65[Magistrate] may, by order, authofise the
Registrar-
(a) To enter, with such
assistance as may be required, the place or places where such books and papers
are kept;
(b) To search that place or
those places in the manner specified in the order; and
(c) To seize such books and
papers as he considers necessary.
(3) The Registrar shall
return the books and papers seized under this section as soon as may be, and in
any case not later than the thirtieth day, after such seizure, to the company
or the other body corporate or, as the case may be, to *[the managing agent or
the secretaries and treasurers or the associate of such managing agent or
secretaries and treasurers or] the managing director or the manager or any
other person, from whose custody or power they were seized and inform the 65[Magistrate] of such return:
Provided
that the Registrar may, before returning such books and papers as aforesaid,
take copies of, or extracts from them 66[or
place identification marks on them or any part thereof] or deal with the same
in such other manner as he considers necessary.
63. Inserted by the Companies
(Amendment) Act, 1960.
64. "To the Tribunal
or" omitted by the Companies Tribunal (Abolition) Act, 1967, w.e.f. 1-7-1967. Earlier these words were inserted by the
Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
65. Substituted for 'Tribunal
or Magistrate, as the case may be," by the Companies Tribunal (Abolition)
Act, 1967, w.e.f. 1-7-1967. Earlier
these words were substituted for 'Magistrate' by the Cbmpanies (Amendment) Act,
1965, w.e.f. 15-10-1965.
66. Inserted by the Companies
(Amendment) Act, 1965 w.e.f. 15-10-1965.
(4) Save as otherwise
provided in this section, every search 67[or
seizure] made under this section shall be carried out in accordance with the
provisions of the Code of Criminal Procedure, 1898 (5 of 1898), relating to
searches 6'Lor seizures] made under that Code.]
Investigation
235. 68[Investigation of
the affairs of a company. -
(1) The Central Government may, where a report has been made by the
Registrar under sub-section (6) of section 234, or under sub-section (7) of
that section, read with sub-section (6) thereof, appoint one or more competent
persons as inspectors to investigate the affairs of a company and to report
thereon in such manner as the Central Government may direct.
(2) Where-
(a) In the case of a company
having a share capital, an application has been received from not less than two
hundred members or from members holding not less than one-tenth of the total
voting power therein, and
(b) In the case of a company
having no share capital, an application has been received from not less than
one-fifth of the persons on the company's register of members,
The
Company Law Board may, after giving the parties an opportunity of being heard,
by order, declare that the affairs of the company ought to be investigated by
an inspector or inspectors, and on such a declaration being made, the Central
Government shall appoint one or more competent persons as inspectors to
investigate the affairs of the company and to report thereon in such manner as
the Central Government mav direct69.]
236. Application
by members to be supported by evidence and power to call for security. -An application by members of a company under 70[sub-section (2)] of section 235 shall be
supported by such evidence as the 71[Company
Law Board] may require for the purpose of showing that the applicants have good
reason for requiring the investigation; and the Central Government may, before
appointing an inspector, require the applicants to give security, for such
amount not exceeding one thousand rupees as it may think fit, for payment of
the costs of the investigation.
237. Investigation
of company's affairs in other cases. -Without prejudice to its powers under section 235,
the Central Government-
(a) Shall appoint one or more
competent persons as inspectors to investigate the affairs of a company and to
report thereon in such manner as the Central Government may direct, if-
(i) The company, by special
resolution; or
(ii) The Court, by order,
Declares
that the affairs of the company ought to be investigated by an inspector
appointed by the Central Government; and
67. Inserted by the Companies
(Amendment) 1965, w.e.f. 15-10-1965.
68. Substituted by the
Companies (Amendment) Act, 1988, w.e.f. 31-5-1991. For original section, refer Appendix 1.
69. Prescribed fee is Rs. 500.
70. Substituted for clause (a) or (b) by the Companies
(Amendment) Act, 1988, w.e.f. 31-5-1991.
71. Substituted for Central
Government", ibid.
(b) May do so if, in the
opinion of the 72[Company Law
Board] 73, there are
circumstances suggesting-
(i) That the business of the
company is being conducted with intend to defraud its creditors, members or any
other persons, or otherwise for a fraudulent or unlawful purpose, or in a
manner oppressive of any of its members, or that the company was formed for any
fraudulent or unlawful purpose;
(ii) That persons concerned
in the formation of the company or the management of its affairs have in
connection therewith been guilty of fraud, misfeasance or other misconduct
towards the company or towards any of its members; or
(iii) That the members of the
company have not been given all the information with respect to its affairs
which they might reasonably expect, including information relating to the
calculation of the commission payable to a managing or other director, 74[* * *] or the manager, of the company.
238. Firm,
body corporate or association not to be appointed as inspector. -No firm, body corporate or other association
shall be appointed as an inspector under section' 235 or 237.
(1) If an inspector appointed under section 235 or 237 to
investigate the affairs of the company thinks it necessary for the purposes of
his investigation to investigate also the, affairs of-
(a) Any other body corporate,
which is, or has at any relevant time been the company's subsidiary or holding
company, or a subsidiary of its holding company, or a holding company of its
subsidiary;
*[(b) Any other body corporate
which is, or has at any relevant time been, managed-
(i) By any person as
managing agent or as secretaries and treasurers or as managing director or as
manager, who is, or was at the relevant time, either the managing agent or the
secretaries and treasurers or the managing director or the manager of the
company; or
(ii) By any person who is, or
was at the relevant time, an associate of the managing agent or secretaries and
treasurers of the company; or
(iii) By any person of whom
the managing agent or secretaries and treasurers of the company is, or was at
the relevant time, an associate;]
72. Substituted for 'Central
Government' by the Companies (Amendment) Act, 1988, w.e.f. 31-5-199l.
73. Prescribed fees is Rs.
500.
74. "The ma6aging agent,
the secretaries and treasurers' omitted by the Companies (Amendment) Act, 1988,
w.e.f. 31-5-1991.
75. Substituted by the
Companies (Amendment) Act, 1960. For
text of substituted provisions, see Appendix I.
(c) Any other body corporate
which is, or has at any relevant time been, managed by the company or whose
Board of directors comprises of nominees of the company or is accustomed to act
in accordance with the directions or instructions of-
(i) The company, or
(ii) Any of the directors of
the company, or
(iii) Any company, any of
whose directorships is held by the employees or nominees of those having the
control and management of the first-mentioned company; or
(d) Any person who is or has
at any relevant time been the company's *[managing agent or secretaries and
treasurers or] managing director or manger *[or an associate of such managing
agent or secretaries and treasurers],
The
inspector shall, subject to the provisions of sub-section (2), have power so to
do and shall report on the affairs of the other body corporate or of the
*[managing agent, secretaries and treasurers,] managing director, manager *[or
associate of the managing agent or secretaries and treasurers], so far as he
thinks that the results of his investigation thereof are relevant to the
investigation of the affairs of the first-mentioned company.
(2) In the case of any body
corporate or person referred to in clause (b) (ii), (b)(iii), (c) or (a) of
sub-section (1), the inspector shall not exercise his power of investigating
into, and reporting on, its or his affairs without first having obtained the
prior approval of the Central Government thereto:
Provided
that before according approval under this sub-section, the Central Government
shall give the body corporate or person a reasonable opportunity to show cause
why such approval should not be accorded.]
240. Production
of documents and evidence. -
(1) It shall be the duty of all officers 76[and other employees] and agents of the
company *[, and where the company is or was managed by a managing agent or
secretaries and treasurers, of all officers 76[and
other employees] and agents of the managing agent or secretaries and
treasurers], and where the affairs of any other body corporate *[, or of a
managing agent or secretaries and treasurers, or of an associate of a managing
agent or secretaries and treasurers,] are investigated by virtue of section
239, of all officers 76[and
other employees] and agents of such body corporate *[, managing agent,
secretaries and treasurers, or associate, and where such managing agent,
secretaries and treasurers or associate is or was a firm, of all partners in
the firm]-
76. Inserted by the Companies
(Amendment) Act, 1960.
(a) 77[To preserve and tol produce to an
inspector or any person authorised by him in this behalf with the previous
approval of the Central Government,] all books and papers of, or relating to,
the company or, as the case may be, of or relating to the other body corporate,
*[managing agent, secretaries and treasurers or associate,] which are in their
custody or power; and
(b) Otherwise to give to the
inspector all assistance in connection with the investigation which they are
reasonably able to give.
78[(1A) The inspector may, with the previous
approval of the Central Government, require any body corporate [other than a
body corporate referred to in subsection (1)] to furnish such information to,
or produce such books and papers before, him or and person authorised by him in
this behalf 79[with the
previous approval of that Government] as he may consider necessary if the
furnishing of such information or the production of such books and papers is
relevant or necessary for the purposes of his investigation.
(1B) The inspector may keep in
his custody any books and papers produced under sub-section (1) or sub-section
(1A) for six months and thereafter shall return the same to the company, body
corporate, and firm or individual by whom or on whose behalf the books and
papers are produced:
Provided
that the inspector may call for the books and papers if they are needed again:
Provided
further that if certified copies of the books and papers produced under
sub-section (1A) are furnished to the inspector, he shall return those books
and papers to the body corporate concerned.]
80[(2) An
inspector may examine on oath-
(a) Any of the persons
referred to in sub-section (1); and
(b) With the previous
approval of the Central Government, any other person,
In
relation to the affairs of the company, other body corporate *[, managing
agent, secretaries and treasurers or associate,], as the case may be; and may
administer an oath accordingly and for that purpose may require any of those
persons to appear before him personally.
(3) If any person fails
without reasonable cause or refuses-
(a) To produce to an
inspector or any person authorised by him in this behalf with the previous
approval of the Central Government any book or paper which it is his duty under
sub-section (1) or sub-section (1A) to
produce; or
77. Substituted for "to
produce to an inspector by the Companies (Amendment) Act, 1965, w.e.f.
15-10-1965.
78. Inserted, ibid.
79. Inserted by the Companies
(Amendment) Act, 1966, w.e.f. 1-4-1967.
80. Substitutedfor subsections
(2), (3), (3A) and (4) by the Companies (Amendment) Act, 1965, w.e.f.
15-10-1965. Earlier, sub-section (2)
was amended, and sub-section (3) was substituted by new sub-sections (3) and
(3A) by the Companies (Amendment) Act, 1960.
For the sub sections as they stood prior to there substituted, refer Appendix I.
(b) To furnish any
information which it is his duty under sub-section (IA) to furnish; or
(c) To appear before the
inspector personally when required to do so under sub-section (2) or to answer
any question which is put to him by the inspector in pursuance of that
sub-section; or
(d) To sign the notes of any
examination referred to in sub-section (5),
He
shall be punishable with imprisonment for a term, which may extend to six
months, or with fine, which may extend to two thousand rupees, or with both,
and also with a further fine, which may extend to two hundred rupees for every
day after the first during which the failure or refusal continues.]
(4) [Omitted [ds a result of
substitution of sub-sections (2), (3), (3A), and (4)] by the Companies
(Amendment) Act, 1965, we.f. 15-10-1965.
For the originalsub-section refer Appendix 1.1
(5) Notes of any examination
under sub-section (2) 81[* *
*] shall be taken down in writing and shall be read over to or by, and signed
by, the person examined, and may thereafter be used in evidence against him.
(6) In this section-
(a) The expression
'officers', in relation to any company or body corporate, includes any trustee
for the debenture holders of such company or body corporate;
(b) The expression
'agent", in relation to any company, body corporate or person, means, any
one acting or purporting to act for or on behalf of such company, body
corporate or person, and includes the bankers and legal advisers of, and
persons employed as auditors by such company, body corporate or person; and
(c) Any reference to officers
82[and other employees],
agents or partners shall be construed as a reference to past as well as present
officers 82[and other
employees], agents or partners, as the case may be.
240A. 82[Seizure
of documents by inspector. -
(1) Where in the course of
investigation under section 235 or section 237 or section 239 or section 247,
the inspector has reasonable ground to believe that the books and papers of, or
relating to, any companv or other body corporate '[or any managing agent or
secretaries and treasurers] or managing director or manager of such company or
other body corporate *[, or any associate of such managing agent or secretaries
and treasurers] may be destroyed, mutilated, altered, falsified or secreted,
the inspector may make an application 83[***]
to the Magistrate of the First Class or, as the case may be, the Presidency
Magistrate, having jurisdiction for an order for the seizure of such books and
papers.
81. Or (4)" omitted by
the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
82. Inserted by the Companies
(Amendment) Act, 1960.
83. 'To the Tribunal or'
omitted by the Companies Tribunal (Abolition) Act, 1967, w.e.f. 1-7-1967. These words were earlier inserted by the
Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
(2) After considering the
application and hearing the inspector, if necessary, the 84[Magistrate] may by order authorise the
inspector-
(a) To enter, with such
assistance, as may be required, the place or places where such books and papers
are kept;
(b) To search that place or
those places in the manner specified in the order; and
(c) To scize books and papers
he considers necessary for the purposes of his investigation.
(3) The inspector shall keep
in his custody the books and papers seized under this section for such period
not later than the conclusion of the investigation as he considers necessary
and thereafter shall return the same to the company or the other body
corporate, or, as the case may be, to *[the managing agent, or the secretaries
and treasurers or the associate of such managing agent or secretaries and
treasurers or] the managing director or the manager or any other person from
whose custody or power they were seized and inform the 84[Magistrate] of such return:
85[Provided
that the inspector may, before returning such books and papers as aforesaid,
place identification marks on them or any part thereof.]
(4) Save as otherwise
provided in this section, every search 85[or
seizure] made under this section shall be carried out in accordance with the
provisions of the Code of Criminal Procedure, 1898 (5 of 1898), relating to
searches 85[or seizures] made
under that Code.]
(1) The inspectors may, and if so directed by the Central
Government shall, make interim reports to that Government, and on the conclusion
of the investigation, shall make a final report to the Central Government.
Any
such report shall be written or printed, as the Central Government may direct.
(2) The Central Government-
(a) Shall forward a copy of
any report 85[(other than an interim
report)] made by the inspectors to the company at its registered office, and
also to any body corporate *[, managing agent, secretaries and treasurers or
associate] dealt with in the report by virtue of section 239;
(b) May, if it thinks fit,
furnish a copy thereof, on request and on payment of the prescribed fee '86 to
any person-
(i) Who is a member of the
company or other body corporate *[(including a managing agent, secretaries and
treasurers, or an associate of a managing agent or secretaries and treasuerers,
where such managing agent, secretaries and treasurers or associate is a body
corporate)] dealt with in the report by virtue of section 239;
84. Substituted for
"Tribunal or Magistrate, as the case may be' by the Companies Tribunal
(Abolition) Act, 1967 w.e.f 1-7-1967.
These words earlier were substituted for 'Magistrate' by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
85. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
86. Prescribed fees are
Rs. 1 vide Rule 9 of General Rules
& Forms.
*[(ii) Who is a partner in
the firm, where such managing agent, secretaries and treasurers or associate is
firm; or]
(iii) Whose interests as a
creditor of the company, other body corporate *[, managing agent, secretaries and
treasurers or associate] aforesaid appear to the Central Government to be
affected;
(c) Shall, where the
inspectors are appointed 87[in
pursuance of the provisions of sub-section (2)] of section 235, furnish, at the
request of the applicants for the investigation, a copy of the report to them;
(d) Shall, where the
inspectors are appointed under section 237 in pursuance of an order of the
Court, furnish a copy of the report to the Court; 88[***]
89[(dd) Shall,
where the inspectors are appointed in pursuance of the provisions of
sub-section (2) of section 235, furnish a copy of the report to the Company Law
Board; and]
(e) May also cause the report
to be published.
(1) If, from any report made
under section 241, it appears to the Central Government that any person has, in
relation to the company or in relation to any other body corporate *[, managing
agent, secretaries and treasurers, or associate of a managing agent or
secretaries and treasurers,] whose affairs have been investigated by virtue of
section 239, been guilty of any offence for which he is criminally liable, the
Central Government may, after taking such legal advice as it thinks fit,
prosecute such person for the offence; and it shall be the duty of all officers
"[and other employees] and agents of the company, body corporate *[,
managing agent, secretaries and treasurers, or associate], as the case may be
(other than the accused in the proceedings), to give the Central Government all
assistance in connection with the prosecution which they are reasonably able to
give.
(2) Sub-section (6) of
section 240 shall apply for the purposes of this section, as it applies for the
purposes of that section.
243. Application
for winding up of company or an order under section 397 or 398. -If any such company or other body corporate
*[, or any such managing agent, secretaries and treasurers, or associate, being
a body corporate,] is liable to be wound up under this Act and it appears to
the Central Government from any such report as aforesaid that it is expedient
so to do by reason of any such circumstances as are referred to in sub-clause
(1) or (it) of clause (b) of section 237, the Central Government may, unless
the company, body corporate '[, managing agent, secretaries and treasurers or
associate] is already being wound up by the Court, cause to be presented to the
Court by any person authorised by the Central Government in this behalf-
87. Substituted for 'under
clause (a) or (b)' by the Companies (Amendment) Act, 1988, w.c.f. 31-5-1991.
88. And" omitted, ibid.
89. Inserted, ibid.
90. Inserted by the companies
(Amendment) Act, 1960.
(a) A petition for the
winding up of the company, body corporate *[, managing agent, secretaries and
treasurers, or associate,] on the ground that it is just and equitable that it
should be wound up;
(b) An application for an
order under section 397 or 398; or
(c) Both a petition and an
application as aforesaid.
244. Proceedings
for recovery of damages or property. -
(1) If from any such report as aforesaid, it appears to the Central
Government that proceedings ought, in the public interest, to be brought by the
company or any body corporate whose affairs have been investigated in pursuance
of clause (a), (b) or (c) of section 239, -
(a) For the recovery of
damages in respect of any fraud, misfeasance or other misconduct in connection
with the promotion or formation, or the management of the affairs, of such
company or body corporate; or
(b) For the recovery of any
property of such company, or body corporate, which has been misapplied or
wrongfully retained;
The
Central Government may itself bring proceedings for that purpose in the name of
such company or body corporate.
(2) The Central Government
shall indemnify such company or body corporate against any costs or expenses
incurred by it in, or in connection with, any proceedings brought by virtue of
sub-section (1).
245. Expenses
of investigation. -
(1) The expenses of and
incidental to an investigation by an inspector appointed by the Central
Government under section 235 or 237 shall be defrayed in the first instance by
the Central Government; but the following persons shall, to the extent
mentioned below, be liable to reimburse the Central Government in respect of
such expenses: -
(a) Any person who is
convicted on a prosecution instituted in pursuance of section 242, or who is
ordered to pay damages or restore any property in proceedings brought by virtue
of section 244, may, in the same proceedings, be ordered to pay the said expenses
to such extent as may be specified by the Court convicting such person, or
ordering him to pay such damages or restore such property, as the case may be;
(b) Any company or body
corporate in whose name proceedings are brought as aforesaid shall be liable,
to the extent of the amount or value of any sums or property recovered by it as
a result of the proceedings; and
(c) Unless, as a result of
the investigation, a prosecution is instituted in pursuance of section 242, -
91[(i) Any
company, body corporate *[, managing agent, secretaries and treasurers,
associate], managing director or manager dealt with by the report of the
inspector shall be liable to reimburse the Central Government in respect of the
whole of the expenses, unless and except in so far as, the Central Government
otherwise directs; and]
(ii) The applicants for the
investigation, where the inspector was appointed 92[in pursuance of the provisions of
sub-section (2)] of section 235, shall be liable to such extent, if any, as the
Central Government may direct.
(2) Any amount for which a
company or body corporate is liable by virtue of clause (b) of sub-section (1)
shall be a first charge on the sums or property mentioned in that clause.
91[(3) The
amount of expenses in respect of which any company, body corporate *[, managing
agent, secretaries and treasurers, associate], managing director or manager is
liable under sub-clause (i) of clause (c) of sub-section (1) to reimburse the
Central Government shall be recoverable from that company, body corporate *[,
managing agent, secretaries and treasurers, associate], managing director or
manager, as an arrear of land revenue.]
(4) For the purposes of this
section, any costs or expenses incurred by the Central Government in or in
connection with proceedings brought by virtue of section 244 (including
expenses incurred by virtue of sub-section (2) thereof) shall be treated as
expenses of the investigation giving rise to the proceedings.
(5) (a) Any liability to reimburse the Central
Government imposed by clauses (a) and (b) of sub-section (1) shall, subject to
satisfaction of the right of the Central Government to reimbursement, be a
liability also to indemnify all persons against liability under clause (c) of
that sub-section.
(b) Any such liability
imposed by the said clause (a) shall, subject as aforesaid, be a liability also
to indemnify all persons against liability under the said clause (b).
(c) Any person liable under
the said clause (a) or (b) or sub-clause (i) or (ii) of the said clause (c)
shall be entitled to contribution from any other persons liable under the same
clause or sub-clause, as the case may be, according to the amount of their
respective liabilities thereunder.
(6) In so far as the expenses
to be defrayed by the Central Government under this section are not recovered
thereunder, they shall be paid out of moneys provided by Parliament.
91. Substituted by the
Companies (Amendment) Act, 1960. For
the original SLtb-clause, refer Appendix I.
92. Substituted for 'under
clause (a) or (b)' by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
246. Inspectors'
report to be evidence. -A
copy of any report of any inspector or inspectors appointed under section 235
or 237 authenticated in such manner, if any, as may be prescribed93, shall be admissible in any legal
proceeding as evidence of the opinion of the inspector or inspec ors in
relation to any matter contained in the report.
247. Investigation
of ownership of company. -
(1) Where it a pears to the Central Government that there is good
reason So to do, it may appoint one or more inspectors to investigate and
report on the rnembership company and other matters relating to the company,
for the purpose of determining the true persons-
(a) Who are or have been
financially interested in the success or failure, whether real or apparent, of
the company; or
(b) Who are or have been able
to control or materially to influence the Policy of the company.
94[(1A) Without prejudice to its powers under
this section, the Central Government shall appoint one or more inspectors under
sub-section (l), if the Company Law Board, in the course of any prpoceeding
before it, declares by an order that the affairs of the company ought to be
investigated as regards the membership of the company and other matters
relating to the company, for the purpose of determining the true persons-
(a) Who are or have been
financially interested in the success or failure, whether real or apparent, of
the company; or
(b) Who are or have been able
to control or materially to influence the Policy of the company.]
(2) When appointing an
inspector under sub-section (1), the Central Government may define the scope of
his investigation, whether as respects the matters or the period to which it is
to extend or otherwise, and in particular, may limit the investigation to
matters connected with particular shares or debentures.
(3) Subject to the terms of
an inspector's appointment, his powers shall extend to the investigation of any
circumstances su gesting the existence of any arrangement or understanding
which, though not legally binding, is or was observed or is likely to be
observed in practice and which is relevant to the purposes of his
investigation.
(4) Subject as aforesaid, the
powers of the inspector shall also extend, where the company *[has or] at any
time had a managing agent or secretaries and treasurers, -
(a) In case such managing
agent or secretaries and treasurers *[are or] were a body corporate, to the
investigation of the ownership of the shares of such body corporate, and of who
the persons are or were who control or manage or controlled or managed its
affairs;
(b) In case such managing
agent or secretaries and treasurers *[are or] were a firm, to the investigation
of who the persons are or were who control or manage or controlled or managed
its affairs as partners in the firm or otherwise and of the respective
interests therein of the partners; and
93. See rule 10 of General
Rules & Forms.
94. Inserted b.v the Companies
(Amendment) Act, 1988, w.e.f. 31-5-1991.
(c) In all cases, to the
investigation of who the persons *[are or] were who *[are or] were entitled to
any share of, or any amount forming part of, the remuneration of such managing
agent or secretaries and treasurers.
(5) For the purposes of any
investigation under this section, sections 239, 240 and 241 shall apply with
the necessary modifications of references to the affairs of the company or to
those of any other body corporate or of any managing agent, secretaries and treasurers,
or associate:
Provided that the said sections shall apply in
relation to all persons (including persons concerned only on behalf of others)
who *[are or] have been, or whom the inspector has reasonable cause to believe
to be or to have been, -
(i) Financially interested
in the success or failure, or the apparent success or failure, of the company,
or of any other body corporate *[, managing agent, secretaries and treasurers
or associate] whose membership or constitution is investigated with that of the
company; or
(ii) Able to control or
materially to influence the policy of such company, body corporate *[, managing
agent, secretaries and treasurers or associate;]
As
they apply in relation to officers 95[and
other employees] and agents of the company, of the other body corporate *[, or
of the managing agent, secretaries and treasurers or associate], as the case
mav be:
Provided further that the Central Government shall not be
bound to furnish the company or any other person with a copy of any report by
an inspector appointed under this section or with a complete copy thereof, if
it is of opinion that there is good reason for not divulging the contents of,
the report or of parts thereo but in such a case, the Central Government shall
cause to be kept by the Registrar a copy of any such report or, as the case may
be, of the parts thereof, as respects which it is not of that opinion.
(6) The expenses of any
investigation under this section shall be defrayed by the Central Government
out of moneys provided by Parliament, unless the Central Government directs
that the expenses or any part thereof should be paid by the persons on whose
application the investigation was ordered.
95. Inserted by the Companies
(Amendment) Act, 1960.
248. Information regarding persons having an interest in company *[,
or in body corporate or firm acting as managing agent thereof]. -
(1) Where it appears to the
Central Government 96[or to
the Company Law Board in any proceedings before it,] that there is good reason
to investigate the ownership of any shares in or debentures of a company, or of
a body corporate which *[, acts or] has acted as the managing agent or
secretaries and treasurers of a company, and that it is unnecessary to appoint
an inspector for the purpose, the Central Government 97[or the Company Law Board, as the case may
be,] may require any person whom it has reasonable cause to believe-
(a) To be, or to have been,
interested in those shares or debentures; or
(b) To act, or to have acted,
in relation to those shares or debentures, as the legal adviser or agent of
someone interested therein;
96. Inserted by the Companies
(Amendment.) Act, 1988, w.e.f. 31-5-1991.
97. Inserted by the Companies
(Amendment) Act, 1988, w.e.f. 31-5-1991.
To
give the Central Government 9'ror the Company Law Board, as the case may be,]
any information which he has, or can reasonably be expected to obtain, as to
the present and past interests in those shares or debentures, and the names and
addresses of the persons interested and of any persons who act or have acted on
their behalf in relation to the shares oi- debentures.
(2) For the purposes of
sub-section (1), a person shall be deemed to have an interest in a share or
debenture-
(a) If he has any right to
acquire or dispose of the share or debenture or any interest therein or to vote
in respect thereof,
(b) If his consent is
necessary for the exercise of any of the rights of other persons interested
therein; or
(c) If other persons
interested therein can be required, or are accustomed, to exercise their rights
in accordance with his directions or instructions.
(3) Where it appears to the
Central Government that there is good reason to investigate the ownership of
any interest in a firm which *[acts or] has acted as managing agent or as
secretaries and treasurers of any company, and that it is unnecessary to
appoint an inspector for the purpose, the Central Government may require any
person whom it has reasonable cause to believe-
(a) To have, or to have had,
any interest in the firm; or
(b) To act, or to have acted,
in relation to any such interest, as the legal adviser or agent of someone
interested therein;
To
give the Central Government any information which be has, or can reasonably be
expected to obtain, as to the present and past interests held in the firm, and
the names and addresses of the persons interested and of any persons who act or
have acted on their behalf in relation to any such interest.
(4) Any person-
(a) Who fails to give any
information required of him under this section; or
(b) Who, in giving any such
information, makes any statement, which he knows to be false in a material
particular, or recklessly makes any statement, which is false in a material
particular;
Shall
be punishable with imprisonment for a term, which may extend to six months, or
with fine, which may extend to five thousand rupees, or with both.
249. Investigation
of associateship with managing agent, etc. -
(1) Where any question arises as to whether any body corporate,
firm, or individual *[is or is not, or] was or was not, an associate of the
managing agent or secretaries and treasurers of a company and it appears to the
Central Government that there is good reason to investigate such question, it
may either-
(a) Appoint an inspector for
the purpose of making the investigation; or
(b) If it considers it
unnecessary to appoint an inspector as aforesaid, require any person whom it
has reasonable cause to believe to be in a position to give relevant
information in regard to the question, to furnish the Central Government with
information on such matters as may be specified by it.
(2) The provisions of section
247 shall apply mutatis mutandis to cases falling under clause (a) of
sub-section (1) and those of section 248 to cases falling under clause (b) of
that sub-section.
(1) Where it appears to the 99[Company
Law Board, whether on a reference made to it by the Central Government in
connection with any investigation under section 247, 248 or 249 or on a
complaint made by any person in this behalf], that there is good reason to find
out the relevant facts about any shares (whether issued or to be issued) and
the 1[Company Law Board] is of
the opinion that such facts cannot be found out unless the restrictions
specified in subsection (2) are imposed, the 1[Company
Law Board] may, by order, direct that the shares shall be subject to the
restrictions imposed by sub-section (2) for such period not exceeding three
years as may be specified in the order. 2
(2) So long as any shares are
directed to be subject to the restrictions imposed by this sub-section-
(a) Any transfer of those
shares shall be void;
(b) Where those shares are to
be issued, they shall not be issued; and any issue thereof or any transfer of
the right to be issued therewith, shall be Void;
(c) No voting right shall be
exercisable in respect of those shares;
(d) No further shares shall
be issued in right of those shares or in pursuance of any offer made to the
holder thereof; and any issue of such shares or any transfer of the right to be
issued therewith, shall be void; and
(e) Except in a liquidation,
no payment shall be made of any sums due from the company on those shares,
whether in respect of dividend, capital or otherwise.
3[(3) Where
a transfer of shares in a company has taken place and as a result thereof a
change in the composition of the Board of directors of the company is likely to
take place and the Company Law Board is of the opinion that any such change
would be prejudicial to the public interest, it may, by order, direct that-
(a) The voting rights in
respect of those shares shall not be exercisable for such period not exceeding
three years as may be specified in the order;
(b) No resolution passed or
action taken to effect a change in the composition of the Board of directors
before the date of the order shall have effect unless confirmed by the Company
Law Board.]
98. Substituted by the
Companies (Amendment) Act, 1960. For
the origidal section, refer Appendix I.
99. Substituted for 'Central
Government, whether in connection with any investigation under section 247, 248
or 249 or otherwise' by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
1. Substituted for 'Central
Government', ibid.
2. Prescribed fees is Rs.
500.
3. Substituted by the
Companies (Amendment) Act, 1988, w.e.f. 31-5-1991. For text of original
sub-sections (3) & (4) of secion 250, refers Appendix
I.
4[(4) Where
the Company Law Board has reasonable ground to believe that a transfer of
shares in a company is likely to take place whereby a change in the composition
of the Board of directors of the company is likely to take place and the Company
Law Board is of the opinion that any such change would be prejudicial to the
public interest, the Company Law Board may, by order, direct that any transfer
of shares in the company during such period not exceeding three ears as may be
specified in the order, shall be void.]
(5) The 5[Company Law Board] may, by order at any
time, vary or rescind any order made by it under sub-section (1) or sub-section
(3) or sub-section (4).
(6) & (7) [Omittedby the
Companies (Amendment) Act, 1988, we.f. 31-5-1991. For omitted sub-sections (6) and (7), refer Appendix I.]
(8) Any order made by the 5[Company Law Board] under sub-section (5)
shall be served on the company, within fourteen days of the making of the
order.
(9) Any person who-
(a) Exercises or purports to
exercise any right to dispose of any shares or of any right to be issued with
any such shares when to his knowledge he is not entitled to do so by reason of
any of the said restrictions applicable to the case under sub-section (2); or
(b) Votes in respect of any
shares whether as holder or proxy, or appoints a proxy to vote in respect
thereof, when to his knowledge he is not entitled to do so by reason of any of
the said restrictions applicable to the case under sub-section (2) or by reason
of any order made under sub-section (3); or
(c) Transfers any shares in
contravention of any order made under subsection (4); or
(d) Being the holder of any
shares in respect of which an order under subsection (2) or sub-section (3) has
been made, fails to give notice of the fact of their being subject to any such
order to any person whom he does not know to be aware of that fact but whom he
knows to be otherwise entitled to vote in respect of those shares, whether as
holder or as a proxy,
Shall
be punishable with imprisonment for a term, which may extend to six months, or
with fine, which may extend to five thousand rupees, or with both.
4. Substituted by the
Companies (Amendment) Act, 1988, w.e.f. 31-5-1991. For sub-section (4) as they it stood prior to its substitution,
refer Appendix I.
5. Substituted for Central
Government" by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1989.
(10) Where shares in any
company are issued in contravention of such of the restrictions as may be
applicable to the case under sub-section (2), the company, and every officer of
the company who is in default, shall be punishable with fine which may extend
to five thousand rupees.
(11) A prosecution shall not be
instituted under this section except by, or with the consent of, the Central
Government.
(12) This section shall apply
in relation to debentures as it applies in relation to shares.]
250A.
6[Voluntary winding up of
company, etc., not to stop investigation proceedings. -An investigation may be initiated under section 235,
237, 239, 247, 248 or 249 notwithstanding that-
(a) An application has been
made for an order under section 397 or section 398; or
(b) The company has passed a
special resolution for voluntary winding up,
And
no investigation so initiated shall be stopped or suspended by reason only of
the fact that an application referred to in clause (a) has been made or a
special resolution referred to in clause (b) has been passed.]
251. Saving
for legal advisers and bankers. Nothing
in sections 234 to 250 shall require the disclosure to the 7[Company Law Board or to the Central
Government or to the Registrar or to an inspector appointed by Central
Government]-
(a) By a legal adviser, of
any privileged communication made to him in that capacity, except as respects
the name and address of his client; or
(b) By the bankers of any
company, body corporate *[, managing agent, secretaries and treasurers] or
other person, referred to in the sections aforesaid, as such bankers, of any
information as to the affairs of any of their customers other than such
company, body corporate managing agent, secretaries and treasurers] or person.
CHAPTER II
DIRECTORS
Constitution of Board of Directors
252. Minimum
number of directors. -
(1) Every 8[public
company (other than a public company which has become such by virtue of section
43A)] 9[***] shall have at
least three directors.
6. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
7. Substituted for
"Registrar or to the Central Government or to an inspector appointed by
that Government by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
8. Substituted for 'public
company' by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
9. , And every private
company which is a subsidiary of a public company, omitted by the Companies
(Amendment) Act, 1960.
(2) Every 10[other] company 11[* * *] shall have at least two directors.
(3) The directors of a
company collectively are referred to in this Act as the 'Board of directors' or
'Board'.
253. Only
individuals to be directors. -No
body corporate, association or firm shall be appointed director of a 12[* * *] company, and only an individual
shall be so appointed.
254. Subscribers
of memorandum deemed to be directors. -In default of and subject to any regulations in the
articles of a company, subscribers of the memorandum who are individuals, shall
be deemed to be the directors of the company, until the directors are duly
appointed in accordance with section 255.
255. Appointment
of directors and proportion of those who are to retire by rotation. -
(1) 13[Unless the
articles provide for the retirement of all directors at every annual general
meeting, not less than two-thirds] of the total number of directors of a public
company, or of a private company which is a subsidiary of a public company,
shall-
(a) Be persons whose period
of office is liable to determination by retirement of directors by rotation;
and
(b) Save as otherwise
expressly provided in this Act, be appointed by the company in general meeting.
(2) The remaining directors
in the case of any such company, and the directors generally in the case of a
private company which is not a subsidiary of a public company, shall, in
default of and subject to any regulations in the articles of the company, also
be appointed by the company in general meeting.
256. Ascertainment
of directors retiring by rotation and filling of vacancies. -
(1) At the first annual general meeting of a public company, or a
private company which is a subsidiary of a public company, held next after the
date of the general meeting at which the first directors are appointed in
accordance with section 255 and at every subsequent annual general meeting,
one-third of such of the directors for the time being as are liable to retire
by rotation, or if their number is not three or a multiple of three, then, the
number nearest to one-third, shall retire from office.
(2) The directors to retire
by rotation at every annual general meeting shall be those who have been
longest in office since their last appointment, but as between persons who
became directors on the same day, those who are to retire shall, in default of
and subject to any agreement among themselves, be determined by lot.
(3) At the annual general
meeting at which a director retires as aforesaid, the company may fill up the
vacancy by appointing the retiring director or some other person thereto.
10. Substituted for 'Private'
by the Companies (Amendment) Act, 1965, w.e.f 15-10-1965.
11. Which is not a subsidiary
of a public company omitted by the Companies (Amendment) Act, 1960.
12. "Public or private
omitted, bid
13. Substituted for 'Not less
than two-thirds', ibid.
(4) (a) If the place of the retiring director
is not so filled up and the meeting has not expressly resolved not to fill the
vacancy, the meeting shall stand adjourned till the same day in the next week,
at the same time and place, or if that day is a public holiday, till the next
succeeding day which is not a public holiday, at the same time and place.
(b) If at the adjourned
meeting also, the place of the retiring director is not filled up and that
meeting also has not expressly resolved not to fill the vacancy, the retiring
director shall be deemed to have been re-appointed at the adjourned meeting,
unless-
(i) At that meeting or at
the previous meeting a resolution for the reappointment of such director has
been put to the meeting and lost;
(ii) The retiring director
has, by a notice in writing addressed to the company or its Board of directors,
expressed his unwillingness to be so re-appointed;
(iii) He is not qualified or
is disqualified for appointment;
(iv) A resolution, whether
special or ordinary, is required for his appointment or re-appointment in
virtue of any provisions of this Act; or
(v) The proviso to
sub-section (2) of section 263 14[*
* *] is applicable to the case.
(5) [Omitted by the Companies
(Amendment) Act, 1965, we.f. 15-10-1965.
For the original sub-section, refer Appendix I.]
15[Explanation : In this section and in section 257, the
expression "retiring director" means a director retiring by
rotation].
16257. Right of persons other than retiring directors to stand for
directorship. -
(1) A person who is not a retiring director shall, subject to the
provisions of this Act, be eligible for appointment to the office of director
at any general meeting, if he or some member intending to propose him has, not
less than fourteen days before the meeting, left at the office of the company a
notice in writing under his hand signifying his candidature for the office of
director or the intention of such member to propose him as a candidate for that
office, as the case may be "[along with a deposit of five hundred rupees
which shall be refunded to such person or, as the case may be, to such member,
if the person succeeds in getting elected as a director].
15[(1A) The
company shall inform its members of the candidature of a person for the office
of director or the intention of a member to propose such person as a candidate
for that office, by serving individual notices on the members not less than
seven days before the meeting:
Provided
that it shall not be necessary for the company to serve individual notices upon
the members as aforesaid if the company advertises such candidature or
intention not less than seven days before the meeting in at least two
newspapers circulating in the place where the registered office of the company
is located, of which one is published in the English language and the other in
the regional language of that place.]
14. 'Or subsection (3) of
section 280 'omitted by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
15. Inserted by the Companies
(Amendment) Act, 1960.
16. For clarification on this
section, refer Taxn-tann's Master Guide to Companies Act.
17. Inserted by the Companies
(Amendment) Act, 1988, w.e.f. 15-6-1988.
(2) Sub-section (1) shall not
apply to a private company, unless it is a subsidiary of a public company.
258. Right
of company to increase or reduce the number of directors. -18[***]
Subject to the provisions of sections 252, 255 and 259, a company in general
meeting may, by ordinary resolution, increase or reduce the number of its
directors within the limits fixed in that behalf by its articles.
259. Increase
in number of directors to require Government sanction. -In the case of a public company or a private
company, which is a subsidiary of a public company, any increase in the number
of its directors, except-
(a) In the case of a company
which was in existence on the 21 st day of July, 195 1, an increase which was
within the permissible maximum under its articles as in force on that date, and
(b) In the case of a company
which came or may come into existence after that date, an increase which is
within the permissible maximum under its articles as first registered,
Shall
not have any effect unless approved' 9 by the Central Government; and shall
become void if, and in so far as, it is disapproved by that Government:
20[Provided
that where such permissible maximum is twelve or less than twelve, no approval
of the Central Government shall be required if the increase in the number of
its directors does not make the total number of its directors more than
twelve.]
260. Additional
directors. -Nothing
in section 255, 258 or 259 shall affect any power conferred on the Board of
directors by the articles to appoint additional directors:
Provided
that such additional directors shall hold office only up to the date of the
next annual general meeting of the company:
Provided
further that the number of the directors and additional directors together
shall not exceed the maximum strength fixed for the Board by the articles.
261. *[Certain persons not be appointed directors,
except by special resolution. -
(1) If a public company, or a private company, which is a
subsidiary of a public company, has a managing agent and such managing agent is
authorised by the articles or by an agreement to appoint any director to the
Board, 21[none of the
following persons shall be appointed-
18. " I omitted by the
Repealing and Amending Act, 1957.
19. See Form No. 24 of General
Rules and Forms.
20. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
21. Substituted for "none
of the following persons shall be appointed as a director of the companv whose
period of office is liable to determination bv retirement of directors by
rotation, except by a special resolution passed by the company-" bv the
Companies (Amendment) Act, 1960.
*In terms of section 6 of the Companies (Amendment) Act, 1969, on and
from 3-4-1970, so much of the provisions of the Act as relate to managing
agents and secretaries and treasurers shall cease to have effect except as
respects things done oromitted to be done underthose provisions before such
cesser. Such provisions are marked off
by square brackets with asterisk.
(i) As a director of the
company whose period of office is liable to determination by retirement of
directors by rotation, or
(ii) To fill a casual vacancy
in the office of a director under section 262, or
(iii) As an additional
director under section 260, or
(iv) As an alternate director
under section 313,
Except
by a special resolution passed by the company-
(a) Any person who is an
officer or employee of, or who holds any office or place of profit under, the
company or any subsidiary thereof:
Provided that nothing in this clause shall
apply to the director of such company or subsidiary, or to the holder of any
office or place of profit under such company or subsidiary which may be held by
a director of the company by virtue of section 314;
(b) Where any office or place
of profit which would disqualify a person under clause (a), read with the
proviso thereto, is held by any firm, any partner in, or employee of, the firm;
(c) Where any such office or
place of profit is held by a private company, any member, officer or employee
of such company;
(d) Where any such office or
place of profit is held by a body corporate, any officer or employee of such
body corporate;
(e) Any person who is
entitled, by virtue of any agreement, to any share of, or any amount out of,
the remuneration received by the managing agent;
(d) Any associate, or officer
or employee, of the managing agent; or
(g) Any person who is an
officer or employee of, or who holds any office or place of profit under, any
body, corporate under the management of the managing agent or any subsidiary of
such body corporate:
Provided that nothing in clause (g) shall apply to the
director of such body corporate or subsidiary or to the holder of any office or
place of profit under such body corporate or subsidiary which may be held by a
director of such body corporate by virtue of section 314.
(2) Special notice shall be
required of any resolution appointing, or approving the appointment of, any
person referred to in clauses (a) to (g) of sub-section (1), 22[as a director of an additional or
alternative director of the company or to fill a casual vacancy in the office
of a director under section 262.]
(3) The notice given to the
company of any such resolution, and the notice thereof given by the company to
its members, shall set out the reasons which make the resolution necessary.
(4) Nothing in this section
shall be deemed to prevent any director holding any office immediately before
the commencement of this Act from continuing to hold that office up to the next
annual general meeting of the company.]
22. Substituted for as a
director of the company" by the Companies (Amendment) Act, 1960.
262. Filling
of casual vacancies among directors. -
(1) In the case of a public company or a private company which is a
subsidiary of a public company, if the office of any director appointed by the
company in general meeting is vacated before his term of office will expire in
the normal course, the resulting casual vacancy may, in default of and subject
to any regulations in the articles of the company, be filled by the Board of
directors at a meeting of the Board.
(2) Any person so appointed
shall hold office only up to the date up to which the director in whose place
he is appointed would have held office if it had not been vacated as aforesaid.
263. Appointment
of directors to be voted on individually. -
(1) At a general meeting of a public company or of a private
company which is a subsidiary of a public company, a motion shall not be made
for the appointment of two or more persons as directors of the company by a
single resolution, unless a resolution that it shall be so made has first been
agreed to by the meeting without any vote being given against it.
(2) A resolution moved in contravention of sub-section (1) shall be
void, whether or not objection was taken at the time to its being so moved:
Provided that where a resolution so moved is passed,
no provision for the automatic re-appointment of 23[the director retiring by rotation] in
default of another appointment shall apply.
(3) For the purposes of this
section, a motion for approving a person's appointment, or for nominating a
person for appointment, shall be treated as a motion for his appointment.
263A.
24[Sections 177, 255, 256 and
263 not to apply in relation to companies not carrying business for profit,
etc. -Nothing
contained in sections 177, 255, 256 and 263 shall affect any provision in the
articles of a company for the election by ballot of all its directors at each
annual general meeting if such company does not carry on business for profit or
prohibits the payment of a dividend to its members.]
(1) Every person (26[other than a director retiring by
rotation or otherwise or a person] who has left at the office of the company a
notice under section 257 signifying his candidature for the office of a
director) proposed as a candidate for the office of a director shall sign, and
file with the company, his consent in writing to act as a director, if
appointed.
27[(2) A
person other than-
(a) A director re-appointed
after retirement by rotation or immediately on the expiry of his term of
office, or
23. Substituted for 'retiring
directors' by the Companies (Amendment) Act, 1960.
24. Inserted, ibid.
25. Substituted, ibid. For the original section, refer Appendix I.
26. Substituted for 'other
than a person' by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
27. Substituted, ibid. For the original sub-section, refer Appendix I.
(b) An additional or
alternate director, or a person filling a casual vacancy in the office of a
director under section 262, appointed as a director or re-appointed as an
additional or alternate director, immediately on the expiry of his term of
office, or
(c) A person named as a
director of the company under its articles asfirst registered, shall not act as
a director of the company unless he has within thirty days of his appointment
signed and filed with the Registrar his consent28
in writing to act as such director.]
(3) This section shall not
apply to a private company unless it is a subsidiary of a public company.]
265. Option
to company to adopt proportional representation for the appointment of
directors. -Notwithstanding
anything contained in this Act, the articles of a company may provide for the
appointment of not less than two-thirds of the total number of the directors of
a public company or of a private company which is a subsidiary of a public
company, according to the principle of proportional representation, whether by
the single transferable vete or by a system of cumulative voting or otherwise,
the appointments being made once in every three years and interim casual
vacancies being filled in accordance with the provisions, mutatis mutandis, of
section 262.
266. Restrictions
on appointment or advertisement of director. -
(1) A person shall not be capable of being appointed director of a
company by the articles, and shall not be named as a director or proposed
director of a company in a prospectus issued by or on behalf of the company, or
as proposed director of an intended company in a prospectus issued in relation
to that intended company, or in a statement in lieu of prospectus filed with
the Registrar by or on behalf of a company, unless, before the registration of
the articles, the publication of the prospectus, or the filing of the statement
in lieu of prospectus, as the case may be, he has, by himself or by his agent
authorised in writing,-
(a) Signed and filed with the
Registrar a consent" in writing to act as such director; and
(b) Either-
(i) Signed the memorandum
for shares not being less in number or value than that of his qualification
shares, if any; or
(ii) Taken his qualification
shares, if any, from the company and paid or agreed to pay for them; or
(iii) Signed and filed with
the Registrar an undertaking28
in writing to take from the company his qualification shares, if any, and pay
for them; or
(iv) Made and filed with the
Registrar an affidavit to the effect that shares, not being less in number or
value than that of his qualification shares, if any, are registered in his
name.
28. See Form No. 29 of General
Rules and Forms.
(2) Where a person has signed
and filed as aforesaid an undertakings29
to take and pay for his qualification shares, he shall, as regards those
shares, be in the same position as if he had signed the memorandum for shares
of that number or value.
(3) References in this
section to the share qualification of a director or proposed director shall be
construed as including only a share qualification required within a period
determined by reference to the time of appointment, and references therein to
qualification shares shall be construed accordingly.
(4) [Omitted by the Companies
(Amendment) Act, 1965, wef. 15-10-1965.
For the originalsub-section' refer Appendix I.]
(5) This section shall not
apply to-
(a) A company not having a
share capital;
(b) A private company;
(c) A company which was a
private company before becoming a public company; or
(d) A prospectus issued by or
on behalf of a company after the expiry of one year from the date on which the
company was entitled to commence business.
Managing directors, etc.
267. Certain
persons not to be appointed managing directors. -No company shall, after the commencement of
this Act, appoint or employ, or continue the appointment or employment of, any
person as its managing or whole-time director who-
(a) Is an undischarged
insolvent, or has at any time been adjudged an insolvent;
(b) Suspends, or has at any
time suspended, payment to his creditors, or makes, or has at any time made, a
composition with them; or
(c) Is, or has at any time
been, convicted by a Court 30[*
* *] of an offence involving moral turpitude.
268. Amendment
of provision relating to managing, whole-time or non-rotational directors to
require Government approval. -In
the case of a public company or a private company which is a subsidiary of a
public company, an amendment of any provision relating to the appointment or
re-appointment of a managing or whole-time director or of a director not liable
to retire by rotation, whether that provision be contained in the company's
memorandum or articles, or in an agreement entered into by it, or in any
resolution passed by the company in general meeting or by its Board of
directors, shall not have any effect unless approved31 by the Central Government; and the
amendment shall become void if, and in so far as, it is disapproved by that
Government.
29. See Form No. 29 of General
Rules and Forms.
30. "In India omitted by
the Companies (Amendment) Act, 1960.
31. See Form No. 25B of
General Rtiles and Forms.
(1) On and from the commencement of the Companies (Amendment) Act,
1988, every public company, or a private company which is a subsidiary of a
public company, having a paid-up share capital of such sum as may be
prescribed", shall have a managing or whole-time director or a manager.
(2) On and from the
commencement of the Companies (Amendment) Act, 1988, no appointment of a person
as a managing or whole-time director or a manager in a public company or a
private company which is a subsidiary of a public company shall be made except
with the approva134 of the
Central Government unless such appointment is made in accordance with the
conditions specified in Parts I and II of Schedule XIII (the said Parts being
subject to the provisions of Part III of that Schedule) and a return in the
prescribed" form is filed within ninety days from the date of such
appointment.
(3) Every application seeking
approval to the appointment of a managing or whole-time director or a manager
shall be made to the Central Government within a period of ninety days from the
date of such appointment.
(4) The Central Government
shall not accord its approval to an application made under sub-section (3), if
it is satisfied that-
(a) The managing or
whole-time director or the manager appointed is, in its opinion, not a fit and
proper person to be appointed as such or such appointment is not in the public
interest; or
(b) The terms and conditions
of the appointment of managing or wholetime director or the manager are not
fair and reasonable.
(5) It shall be competent for
the Central Government while according approval to an appointment under
sub-section (3) to accord approval for a period lesser than the period for
which the appointment is proposed to be made.
(6) If the appointment of a
person as a managing or whole-time director or a manager is not approved by the
Central Government under sub-section (4), the person so appointed shall vacate
his office as such managing or whole-time director or manager on the date on
which the decision of the Central Government is communicated to the company,
and if he omits or fails to do so, he shall be punishable with fine which may
extend to five hundred rupees for every day during which he omits or fails to
vacate such office.
(7) Where the Central
Government suo motu or on any information received by it is, Prima facie, of
the opinion that any appointment made under sub-section (2) without the
approval of the Central Government has been made in contravention of the
requirements of Schedule XIII, it shall be competent for the Central Government
to refer the matter to the Company Law Board for decision.
32. Substituted by the
Companies (Amendment) Act, 1988, w.e.f. 15-6-1988. For text of substituted provision, refer Appendix I.
33. Rule 10A of General Rules
& Forms, as inserted by Second Amendment Rules, 1990, w.e.f. 17-4-1990 lays
down Rs. 5, crore of paid-up share capital as the criterion for compulsory
appointment of managerial personnel.
Second Amendment Rules, 1988, prescribes Form No. 25C in which return is
to be filed with the Registrar in terms of sub-section (2).
34. See Form No. 25A of
General Rules and Forms.
35. See Form No. 25C of
General Rules and Forms.
(8) The Company Law Board
shall, on i-eceipt of a reference under sub-section (7), issue a notice to the
company, the managing or whole-time director or the manager, as the case, may
be, and the director or other officer responsible for complying with the
requirements of Schedule XIII, to show cause as to why such appointment shall
not be terminated and the penalties provided under subsection (10) shall not be
imposed.
(9) The Company Law Board
shall, if, after giving a reasonable opportunity to the company, the managing
or whole-time director or the manager, or the officer who is in default, as the
case may be, comes to the conclusion that the appointment has been made in
contravention of the requirements of Schedule XIII, make an order declaring
that a contravention of the requirements of Schedule XHI has taken place.
(10) On the making of an order
by the Company Law Board under sub-section (9). -
(a) The company shall be
liable to a fine, which may extend to five thousand rupees;
(b) Every officer of the
company who is in default shall be liable to a fine of ten thousand rupees; and
(c) The appointment of the
managing or whole-time director or manager, as the case may be, shall be deemed
to have come to an end and the person so appointed shall, in addition to being
liable to pay a fine of ten thousand rupees, refund to the company the entire
amount of salaries, commissions and perquisites received or enjoyed by him between
the date of his appointment and the passing of such order.
(11) If a company contravenes
the provisions of sub-section (10) or any direction given by the Company Law
Board under that sub-section, every officer of the company who is in default
and the managing or whole-time director or the manager, as the case may be,
shall be punishable with imprisonment for a term which may extend to three
years and shall also be liable to a fine which may extend to fifty rupees for
every day of default.
(12) All acts done by a
managing or whole-time director or a manager, as the case may be, purporting to
act in such capacity and whose appointment has been found to be in
contravention of Schedule XIII, shall, if the acts so done are valid otherwise,
be valid notwithstanding any order made by the Company Law Board under
sub-section (9).
Explanation: In
this section "appointment' includes reappointment and 'wholetime
director" includes a director in the whole-time employment of the
company.]
Share qualification
270. Time
within which share qualification is to be obtained and maximum amount thereof.
-
(1) Without prejudice to the restrictions imposed by section 266,
it shall be the duty of every director who is required by the articles of the
company to hold a specified share qualification and who is not already
qualified in that respect, to obtain his qualification within two months after
his appointment as director.
(2) Any provision in the
articles of the company (whether made before or after the commencement of this
Act) shall be void in so far as it requires a person to hold the qualification
shares before his appointment as a director or to obtain them within a shorter
time than two months after his appointment as such.
(3) The nominal value of the
qualification shares shall not exceed five thousand rupees, or the nominal
value of one share where it exceeds five thousand rupees.
(4) For the purpose of any
provision in the articles requiring a director to hold a specified share
qualification, the bearer of a share warrant shall not be deemed to be the
holder of the shares specified in the warrant.
271. Filing
of declaration of share qualification by director. -[Omitted by the Companies (Amendment) Act,
1965. For the section as it stood prior
to its substitution, refer Appendix I.]
272. Penalty.
-If, after the
expiry of the said period of two months, any person acts as a director of the
company when he does not hold the qualification shares referred to in section
270, he shall be punishable with fine which may extend to fifty rupees for
every day between such expiry and the last day on which he acted as a director.
273. Saving. -Sections 270 16 [and 272] shall not apply to
a private company, unless it is a subsidiary of a public company.
Disqualifications of directors
274. Disqualifications
of directors. -
(1) A person shall not be
capable of being appointed direct or of a company, if-
(a) He has been found to be
of unsound mind by a Court of competent jurisdiction and the finding is in
force;
(b) He is an undischarged
insolvent;
(c) He has applied to be
adjudicated as an insolvent and his application is pending;
(d) He has been convicted by
a Court of any offence involving moral turpitude and sentenced in respect
thereof to imprisonment for not less than six months, and a period of five
years has not elapsed from the date of expiry of the sentence;
(e) He has not paid any call
in respect of shares of the company held by him, whether alone oriointly with
others, and six months have elapsed from the last day fixed for the payment of
the call; or
(f) An order disqualifying
him for appointment as director has been passed by a Court in pursuance of
section 203 and is in force, unless the leave of the Court has been obtained
for his appointment in pursuance of that section.
36. Substituted for "to
272 by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
37. In India omitted by the
Companies (Amendment) Act, 1960.
(2) The Central Government
may, by notification in the Official Gazette, remove-
(a) The disqualification
incurred by any person in virtue of clause (a) of sub-section (1), either
generally or in relation to any company or companies specified in the
notification; or
(b) The disqualification
incurred by any person in virtue of clause (e) of sub-section (1).
(3) A private company, which
is not a subsidiary of a public company, may, by its articles, provide that a
person shall be disqualified for appointment as a director on any grounds in
addition to those specified in sub-section (1).
Restrictions on number of directorships
275. No
person to be a director of more than twenty companies. -After the commencement
of this Act, no person shall, save as otherwise provided in section 276, hold
office at the same time as director in more than twenty companies.
276. Choice
to be made by director of more than twenty companies at commencement of Act. -
(1) Any person holding office as director in more than twenty
companies immediately before the commencement of this Act shall, within two
months from such commencement, -
(a) Choose not more than
twenty of those companies as companies in which he wishes to continue to hold
the office of director;
(b) Resign his office as
director in the other companies; and
(c) Intimate the choice made
by him under clause (a) to each of the companies in which he was holding the
office of director before such commencement, to the Registrar having
jurisdiction in respect of each such company, and also to the Central
Government.
(2) Any resignation made in
ursuance of clause (b) of subsection (1) shall become effective immediately opn
the despatch thereof to the company concerned.
(3) No such person shall act
as director-
(a) In more than twenty
companies, after the expiry of two months from the commencement of this Act; or
(b) Of any company after
despatching the resignation of his office as director thereof, in pursuance of
clause (b) of sub-section (1).
277. Choice
by person becoming director of more than twenty companies after commencement of
Act. -
(1) Where a person already holding the office of director in twenty
companies is appointed, after the commencement of this Act, as a director of
any other company, the appointment-
(a) Shall not take effect
unless such person has, within fifteen days thereof, effectively vacated his
office as director in any of the companies in which he was already a director,
and
(b) Shall become void
immediately on the expiry of the fifteen days if he has not, before such
expiry, effectively vacated his office as director in any of the otner
companies aforesaid.
(2) Where a person already
holdin the office of director in nineteen companies or less is appointed, after
the comgmencement of this Act, as a director of other companies, making the
total number of his directorships more than twenty, he shall choose the
directorships which he wishes to continue to hold or to accept, so however that
the total number of the directorships, old and new, held by him shall not
exceed twenty.
None
of the new appointments of director shall take effect until such choice is
made; and all the new appointment shall become void if the choice is not made
within fifteen days of the day on which the last of them was made.
278. Exclusion
of certain directorships for the purposes of sections 275, 276 and 277. -
(1) In calculating, for the
purposes of sections 275, 276 and 277, the number of companies of which a
person may be a director, the following companies shall be excluded, namely: -
(a) A private company, which
is neither a subsidiary nor a holding company of a public company;
(b) An unlimited company;
(c) An association not
carrying on business for profit or which prohibits the payment of a dividend;
(d) A company in which such
person is only an alternate director, that is to say, a director who is only
qualified to act as such during the absence or incapacity of some other
director.
(2) In making the calculation
aforesaid, any companv referred to in clauses (a), (b) and (c) of sub-section
(1) shall be excluded for a period of three months from the date on which the
company ceases to fall within the purview of those clauses.
279. Penalty.
-Any person who holds
office, or acts, as a director of more than twenty companies in contravention
of the foregoing provisions shall be punishable with fine which may extend to
five thousand rupees in respect of each of those companies after the first
twenty.
38[* * *]
280. Age
limit. -
[Omitted by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965. For the original section, refer Appendix I.]
281. Age
limit not to apply if company so resolves. - [Omitted by the Companies (Amendment) Act,
1965, we.f. 15-10-1965. For the
original section, reler Appendix I.]
282. Duty
of director to disclose age. -
[Omitted by the Companies (Amendment) Act, 1965, we.f 15-10-1965. For the original section, refer- Appendix I.]
38. Heading 'Retiring age of
directors' omitted by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
Vacation of office by directors
283. Vacation
of office by directors. -
(1) 39[The office of a director shall become
vacant if-]
(a) He fails to obtain within
the time specified in sub-section (1) of section 270, or at any time thereafter
ceases to hold, the share- qualification, if any, required of him by the articles
of the company;
(b) He is found to be of
unsound mind by a Court of competent jurisdiction;
(c) He applies to be
adjudicated an insolvent;
(d) He is adjudged an
insolvent;
40[(e) He
is convicted by a Court of any offence involving moral turpitude and sentenced
in respect thereof to imprisonment for not less than six months;]
(f) He fails to pav any call
in respect of shares of the company held by him, whether alone or jointly with
others, within six months from the last date fixed for the payment of the call 41[unless the Central Government has, by
notification in the Official Gazette, removed the disqualification incurred by
such failure];
(g) He absents himself from
three consecutive meetings of the Board of directors, or from all meetings of
the Board for a continuous period of three months, whichever is longer, without
obtaining leave of absence from the Board;
(h) 42[He (whether by himself or by any person
for his benefit or on his account), or any firm in which] he is a partner or
any private company of which he is a director, accepts a loan, or any guarantee
or security for a loan, from the company in contravention of section 295;
(i) He acts in contravention
of section 299;
(j) He becomes disqualified
by an order of Court under section 203; 43[*
* *]
(k) He is removed in
pursuance of section 284; 41[or]
41[(l) Having
been appointed a director by virtue of his holding any office or other
employment in the company *[, or as a nominee of the managing agent of the
company], he ceases to hold such office or other employment in the company
*[or, as the case may be, the managing agency comes to an end].]
(2) Notwithstanding an'ything
in clauses (a), (e) and (i) of sub-section (1), the disqualification referred
to in those clauses shall not take effect-
(a) For thirty days from the
date of the adjudication, sentence or order
(b) Where any appeal or
petition is preferred within the thirty days aforesaid against the
adjudication, sentence or conviction resultingin the sentence, or order until
the expiry of seven days from the date on which such appeal or petition is
disposed of, or
39. Substituted for 'The
office of a director shall be vacated if-' by the Companies (Amendment) Act,
1960.
40. Substituted by the
companies (Amendment) Act, 1960. For
the original clause, refer Appendix I.
41. Inseried, ibid.
42. Substituted for 'he, or
any firm in which', ibid.
43. Or omitted, ibid.
(c) Where within the seven
days aforesaid, any further appeal or petition is preferred in respect of the
adjudication, sentence, conviction, or order, and the appeal or petition, if
allowed, would result in the removal of the disqualification, until such
further appeal or petition is disposed of.
44[(2A) Subject
to the provisions of sub-sections (1) and (2), if a person functions as a
director when he knows that the office of director held by him has become
vacant on account of any of the disqualifications, specified in the several
clauses of sub-section (1), he shall be punishable with fine which may extend
to five hundred rupees for each day on which he so functions as a director.]
(3) A private company which is not a subsidiary of a public company may, by its
articles, provide that the office of director shall be vacated on any grounds
in addition to those specified in sub-section (1).
(1) A company may, by
ordinary resolution, remove a director (not being a director appointed by the
Central Government in pursuance of section 408) before the expiry of his period
of office:
Provided
that this sub-section shall not, in the case of a private company, authorise
the removal of a director holding office for life on the 1st day of April,
1952, whether or not he is subject to retirement under an age limit by virtue
of the articles or otherwise:
Provided
further that nothing contained in this sub-section shall apply where the
company has availed itself of the option given to it under section 265 to
appoint not less than two-thirds of the total number of directors according to
the principle of proportional representation.
(2) Special notice shall be
required of any resolution to remove a director under this section, or to
appoint somebody instead of a director so removed at the meeting at which he is
removed.
(3) On receipt of notice of a
resolution to remove a director under this section, the company shall forthwith
send a copy thereof to the director concerned, and the director (whether or not he is a member of the company)
shall be entitled to be heard on the resolution at the meeting.
(4) Where notice is given of
a resolution to remove a director under this section and the director concerned
makes with respect thereto representations in writing to the company (not
exceeding a reasonable length) and requests their notification to members of
the company, the company shall, unless the representations are received by it
too late for it to do so;
(a) In any notice of there
solution given to members of the company, state the fact of the representations
having been made; and
(b) Send a copy of the
representations to every member of the company to whom notice of the meeting is
sent (whether before or after receipt of the representations by the company);
44. Inserted by the Companies
(Amendment) Act, 1960.
And
if a copy of the representations is not sent as aforesaid because they were
received too late or because of the companv's default, the director may
(without prejudice to his right to be heard orally) require that the
representations shall be read out at the meeting:
Provided
that copies of the representations need not be sent out and the representations
need not be read out at the meeting if, on the applications either of the
company or of any other person who claims to be aggrieved, the 46[Company Law Board] is satisfied that the
rights conferred by this sub-section are being abused to secure needless
publicit for defamatory matter; and the 46[Company
Law Board] may order the company's costs on the application to be paid in whole
or in part by the director notwithstanding that he is not a party to
(5) A vacancy created by the
removal of a director under this section may, if he had been appointed by the
company in general meeting or by the Board in pursuance of section 262, be
filled by the appointment of another director in his stead by the meeting at
which he is remo-ved, provided special notice of the intended appointment has
been given under sub-section (2).
A
director so appointed shall hold office until the date up to which his
predecessor would have held office if he had not been removed as aforesaid.
(6) If the vacancy is not
filled under sub-section (5), it may be filled as a casual vacancy in
accordance with the provisions, so far as they may be applicable, of section
262, and all the provisions of that section shall apply accordingly:
Provided that the director who was removed from
office shall not be reappointed as a director by the Board of directors.
(7) Nothing in this section
shall be taken-
(a) As depriving a person
removed thereunder of any compensation or damages payable to him in respect of
the termination of his appointment as director or of any appointment
terminating with that as director; or
(b) As derogating from any
power to remove a director which may exist apart from this section.
Meetings of Board
285. 47[Board to meet at least once in every three
calendar months. -In
the case of every company, a meeting of its Board of directors shall be held at
least once in every 48[three months and at least four such meetings shall be
held in every year]:
45. Prescribed fee is Rs. 50.
46. Substituted for Court by
the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
47. Substituted by the
companies (Amendment) Act, 1960. For
the original section, refer Appendix I.
48. Substituted for
"three calendar months, and not more than two months shall intervene
between the last day of the calendar month in which such meeting is held on the
date of the next meeting' by the Companies (Amendment) Act, 1965, w.e.f.
15-10-1965.
Provided
that the Central Government may, by notification in the Official Gazette,
direct that the provisions of this section shall not apply in relation to any
class of companies or shall apply in relation thereto subject to such
exceptions, modifications or conditions as may be specified in the notification.]
(1) Notice of every meeting of the Board of directors of a company
shall be given in writing to every director for the time being in India, and at
his usual address in India to every other director.
(2) Every officer of the
company whose duty it is to give notice as aforesaid and who fails to do so
shall be punishable with fine, which may extend to one hundred rupees.
(1) In the section-
(a) "Total strength
means the total strength of the Board of directors of a company as determined
in pursuance of this Act, after deducting therefrom the number of the
directors, if any, whose places may be vacant at the time; and
(b) "Interested
director" means any director whose presence cannot, by reason of section
300, count for the purpose of forming a quorum at a meeting of the Board, at
the time of the discussion or vote on any matter.
(2) The quorum for a meeting
of the Board of directors of a company shall be onethird of its total strength
(any fraction contained in that one-third being rounded off as one), or two
directors, whichever is higher:
Provided
that where at any time the number of interested directors exceeds or is equal
to two-thirds of the total strength, the number of the remaining directors,
that is to say, the number of the directors who are not interested 49[present at the
meeting being not less than two], shall be the quorum during such time.
288. Procedure
where meeting adjourned for want of quorum. -
(1) If a meeting of the Board could not be held for want of quorum,
then, unless the articles otherwise provide, the meeting shall automatically
stand adjourned till the same day in the next week, at the same time and place,
or if that day is a public holiday, till the next succeeding day which is not a
public holiday, at the same time and place.
(2) The provisions of section
285 shall not be deemed to have been contravened merely by reason of the fact
that a meeting of the Board which had been called in compliance with the terms
of that section could not be held for want of a quorum.
289. Passing
of resolutions by circulation. -No
resolution shall be deemed to have been duly passed by the
Board or by a committee thereof by circulation, unless the resolution has been
circulated in draft, together with the necessary papers, if any, to all the
directors, or to all the members of the committee, then in India (not being
less in number than the quorum fixed for a meeting of the Board or committee,
as the case may be,) and to all other directors or members at their usual
address in India, and has been approved by such of the directors as are
then in India, or by a majority of such
of them, as are entitled to vote on the resolution.
49. Inserted bv the Companies
(Amendment) Act, 1960.
290. Validity
of acts of directors. -Acts
done by a person as a director shall be valid, notwithstanding that it any
defect or disqualification or had terminated by virtue of any provision
contained in this Act or in the articles:
Provided
that nothing in this section shall be deemed to give validity to acts done by a
director after his appointment has been shown to the company to be invalid or
to have terminated.
Board's Powers and restrictions thereon
291. General
Powers of Board. -
(1) Subject to the provisions Of this Act, the Board of directors
of a company shall be entitled to exercise all such Powers, and to do ali such
acts and things, as the company is authorised to exercise and do:
Provided that the Board shall not exercise any power
or do any act or thinly is directed or required, whether by this or any other
Act or by the memorandum or article of the company or otherwise, to be
exercised or done by the company in general meeting.
Provided further that in exercising any such power or doing
any sych act or thing, the Board shall be subject to the procisions contained
in that behalf in this or any other Act, or in the memorandum or articles of
the company, or in any regulations not inconsistent therewith and duly made
thereunder, including regulations made by the company in general meeting.
(2) No regulation made by the
company in general meeting shall invalidate any prior act of the Board, which
would have been valid if that regulation had not been made.
292.
Certain Powers to be exercised by Board only at meeting. -
(1) The Board of directors of a company shall exercise the
following Powers on behalf of the company, and it shall do so only by means of
resolutions passed at meetings of the Board: -
(a) The Power to make calls
on shareholders in respect of money unpaid on their shares;
(b) The Power to issue
debentures
(c) The Power to borrow
moneys otherwise than on debentures;
(d) The Power to invest the
funds of the company; and
(e) The Power to make loans:
50[Provided that the
Board may, by a resolution passed at a meeting, delegate to any committee of
directors, the managing director, *[the managing agent, secretaries and
treasurers,] the manager or any other Principal officer of the company or in
the case of a branch office of the company, a principal officer of the branch
office, the powers specified in clauses (c), (d) and (e) to the extent
specified in sub-sections (2), (3) and (4) respectively, on such conditions as
the Board may prescribe:
50. Substituted by the
Companies (Amendment) Act, 1960. For
the original Proviso, refer Appendix I.
Provided
further that the acceptance by a banking company in the ordinary course of its
business of deposits of money from the public repayable on demand or otherwise
and withdrawable by cheque, draft, order or otherwise, or the placing of moneys
on deposit by a banking company with another banking company on such conditions
as the Board may prescribe, shall not be deemed to be a borrowing of moneys or,
as the case may be, a making of loans by a banking company within the meaning
of this section.
Explanation I: Nothing in clause (c) of sub-section (1)
shall apply to borrowings by a banking company from other banking companies or
from the Reserve Bank of India, the State Bank of India or any other banks
established by or under any Act.
Explanation II: In respect of dealings between a company and
its bankers, the exercise by the company of the power specified in clause (c)
of sub-section (1) shall mean the arrangement made by the company with its
bankers for the borrowing of money by way of overdraft or cash credit or
otherwise and not the actual day to day operation on overdraft, cash credit or
other accounts by means of which the arrangement so made is actually availed
of.]
(2) Every resolution
delegating the power referred to in clause (c) of sub-section (1) Shall specify
the total amount 51[outstanding
at any one time] up to which moneys may be borrowed by the delegate.
(3) Every resolution
delegating the power referred to in clause (a) of sub-section (1) shall specify
the total amount up to which the funds may be invested, and the nature of the
investments which may be made, by the delegate.
(4) Every resolution
delegating the power referred to in clause (e) of sub-section (1) shall specify
the total amount up to which loans may be made by the delegate, the purposes
for which the loans may be made, and the maximum amount of loans which may be
made for each such purpose in individual cases.
(5) Nothing in this section
shall be deemed to affect the right of the company in general meeting to impose
restrictions and conditions on the exercise by the Board of any of the powers
specified in sub-section (1).
293. Restrictions
on powers of Board. -
(1) The Board of directors of a public company, or of a private
company which is a subsidiary of a public company, shall not, except with the
consent of such public company or subsidiary in general meeting,-
(a) Sell, lease or otherwise
dispose of the whole, or substantially the whole, of the undertaking of the
company, or where the company owns more than one undertaking, of the whole, or
substantially the whole, of any such undertaking;
51. Inserted by the Companies
(Amendment) Act, 1960.
(b) Remit, or give time for
the repayment of, any debt due by a director 52[except in the case of renewal or continuance
of an advance made by a banking company to its director in the ordinary course
of business];
(c) Invest, otherwise than in
trust securities, 13 [the amount of comperisation received by the company in
respect of the compulsory acquisition, after the commencement of this Act], of
any such undertaking as is referred to in clause (a), or of any premises or
properties used for any such undertaking and without which it cannot be carried
on or can be carried on only with difficulty or only after a considerable time;
(d) Borrow moneys after the
commencement of this Act, where the moneys to be borrowed, together with the
moneys already borrowed by the company (apart from temporary loans obtained
from the company's bankers in the ordinary course of business), will exceed the
aggregate of the paid-up capital of the company and its free reserves, that is
to say, reserves not set apart for any specific purpose; or
(e) Contribute, after the
commencement of this Act, to charitable and other funds not directly relating
to the business of the company or the welfare of its employees, any amounts the
aggregate of which will, in any financial year, exceed "[fifty thousand
rupees] or five per cent of its average net profits as determined in accordance
with the provisions of sections 349 and 350 during the three financial years
immediatcly preceding, whichever is greater.
52[Explanation
I.- Every resolution passed by the company in general
meeting in relation to the exercise of the power referred to in clause (a) or
in clause (e) shall specify the total amount up to which moneys may be borrowed
by the Board of directors under clause (d) or as the case may be, the total
amount which may be contributed to charitable and other funds in any financial
year under clause (e).
Explanation II. - The expression "temporary loans in
clause (d) means loans repayable on demand or within six months from the date of
the loan such as short-term, cash credit arrangements, the discounting of bills
and the issue of other short-term loans of a seasonal character, but does not
include loans raised for the purpose of financing expenditure of a capital
nature.]
55[Explanation
III: Where aportion of a financial year of the company
falls before the commencement of this Act, and a portion falls after such
commencement, the later portion shall be deemed to be a financial year within
the meaning, and for the purposes, of clause (e).
52. Inserted by the Companies
(Amendment) Act, 1960.
53. Substituted for 'the sale
proceeds resulting from the acquisition, after the commencement of this Act,
witfiout the consent of the company', ibid.
54. Substituted for,
"twenty-five thousand rupees by the Companies (Amendment) Act, 1977.
55. Numbered as Explanation
III ibid.
(2) Nothing contained in
clause (a) of sub-section (1) shall affect-
(a) The title of a buyer or
other person who buys or takes a lease of any such undertaking as is referred
to in that clause, in good faith and after exercising due care and caution; or
(b) The selling or leasing of
any property of the company, where the ordinary business of the company
consists of, or comprises, such selling or leasing.
(3) Any resolution passed by
the company permitting any transaction such as is referred to in clause (a) of
sub-section (1) may attach such conditions to the permission as may be
specified in the resolution, including conditions regarding the use, disposal
or investment of the sale proceeds which may result from the transaction:
Provided
that this sub-section shall not be deemed to authorise the company to effect
any reduction in its capital except in accordance with the provisions contained
in that behalf in this Act.
(4) The acceptance by a
banking company, in the ordinary course of its business, of deposits of money
from the public, repayable on demand or otherwise, and withdrawable by cheque,
draft, order or otherwise, shall not be deemed to be a borrowing of moneys by
the banking company within the meaning of clause (d) of sub-section (1).
(5) No debt incurred by the
company in excess of the limit imposed by clause (d) of sub-section (1) shall
be valid or effectual, unless the lender proves that he advanced the loan in
good faith and without knowledge that the limit imposed by that clause had been
exceeded.
56[Political contributions
293A. Prohibitions
and restrictions regarding political contributions. -
(1) Notwithstanding anything contained in any other provision of
this Act, -
(a) No Government company;
and
(b) No other company, which
has been in existence for less than three financial years,
Shall
contribute any amount or amounts, directly or indirectly,(i) to any political
party; or (ii) for any political purpose to any person.
(2) A company, not being a
company referred to in clause (a) or clause (b) of subsection (1), may
contribute any amount or amounts, directly or indirectly,-
(a) To any political party;
or
(b) For any political purpose
to any person:
56. Substituted for section
293A by the Companies (Amendment) Act, 1985.
The original Section was inserted by the Companies (Amendment) Act, 1960
and was later substituted by the Companies (Amendineiit) Act, 1969, w.e.f.
3-4-1970. For the section as it stood
immediately prior to its substitution, refers Appendix I.
Provided that the amount or, as the case may be, the
aggregate of the amounts which may be so contributed by a company in any
financial year shall not exceed five per cent of its average net profits
determined in accordance with the provisions of sections 349 and 350 during the
three immediately preceding financial years.
Explanation: Where
a portion of a financial year of the company falls before the commencement of
the Companies (Amendment) Act, 1985, and a portion falls after such
commencement, the latter portion shall be deemed to be a financial year within
the meaning and for the purposes, of this sub-section:
Provided further that no such contribution shall be made by a
company unless a resolution authorising the making of such contribution is
passed at a meeting of the Board of directors and suchresolution shall, subject
to the otherprovisions ot this section, be deemed to be justification in law
for the making and the acceptance of the contribution authorised by it.
(3) Without prejudice to the
generality of the provisions of sub-sections (1) and (2), -
(a) A donation or
subscription or payment caused to be given by a company on its behalf or on its
account to a person who, to its knowledge, is carrying on any activity which,
at the time at which such donation or subscription or payment was given or
made, can reasonably be regarded as likely to effect public support for a
political party shall also be deemed to be contribution of the amount of such
donation, subscription or payment to such person for a political purpose;
(b) The amount of expenditure
incurred, directly or indirectly, by a company on advertisement in any
publication (being a publication in the nature of a souvenir, brochure, tract,
pamphlet or the like) by or on behalf of a political party or for its advantage
shall also be deemed, -
(i) Where such publication
is by or on behalf of a political party, to be a contribution of such amount to
such political party, and
(ii) Where such publication
is not by or on behalf of but for the advantage of a political party, to be a
contribution for a political purpose to person publishing it.
(4) Every company shall
disclose in its profit and loss account any amount or amounts contributed by it
to any political party or for any political purpose to any person during the
financial year to which that account relates, giving particulars of the total
amount contributed and the name of the party or person to which or to whom such
amount has been contributed.
(5) If a company makes anv
contribution in contravention of the provisions of this section, -
(a) The company shall be
punishable Alith fine which may extend to three times the amount so
contributed; and
(b) Every officer of the
company who is in default shall be punishable with imprisonment for a term,
which may extend to three years and shall also be liable to fine.]
293B. 57[Power
of Board and other persons to make contributions to the National Defence Fund,
etc. -
(1) The Board of directors of any company or any person or
authority exercising the powers of the Board of directors of a company, or of
the company in general meeting, may, notwithstanding anything contained in
sections 293 and 293A or any other provision of this Act or in the memorandum,
articles or any other instrument relating to the company, contribute such
amount as it thinks fit to the National Defence Fund or any other fund58, approved by the
Central Government for the purpose of national defence.
(2) Every company shall
disclose in its profits and loss account the total amount or amounts
contributed by it to the Fund referred to in sub-section (1) during the
financial year to which the amount relates.]
59[Appointment of sole selling agents]
294. Appointment
of sole selling agents to require approval of company in general meeting. -
60[(1) No company shall, after the commencement of
the Companies (Amendment) Act, 1960, appoint a sole selling agent for any area
for a term exceeding five years at a time:
Provided
that nothing in this sub-section shall be deemed to prohibit the reappointment,
or the extension of the term of office, of any sole selling agent by further
periods not exceeding five years on each occasion. (2) After the commencement
of the Companies (Amendment) Act, 1960, the Board of directors of a company
shall not appoint a sole selling agent for any area except subject to the
condition that the appointment shall cease to be valid if it is not approved by
the company in the first general meeting held after the date on which the
appointment is mhde.
(2A) If the company in general
meeting as aforesaid disapproves the appointment, it shall cease to be valid
with effect from the date of that general meeting.]
(3) Where before the
commencement of this Act, a company has appointed a sole selling agent for any
area for a period of not less than five years, the appointment shall be placed
before the company in general meeting within a period of six months from such
commencement; and the company in general meeting may, by resolution,-
(a) If the appointment was
made on or after the 15th day of February, 1955, terminate the appointment
forthwith or with effect from such later date as may be specified in the
resolution; and
(b) If the appointment was
made before the date specified in clause (a), terminate the appointment with
effect from such date as may be specified in the resolution, not being earlier
than five years from the date on which the appointment was made, or the expiry
of one year from the commencement of this Act, whichever is later.
57. Inserted by the Companies
(Amendment) Act, 1971, w.e.f. 3-12-1971.
58. For funds approved under
sub-section (1), refer Taxmanns Master Guide to Companies Act.
59. Inserted by the Companies
(Amendment) Act, 1960.
60. Substitutedfor subections
(l) and (2), ibid. For text of original provision, refer Appendix I.
61[(4)
Notwithstanding anything contained
in the foregoing provisions of this section-
(a) Where at any time during
the period beginning on the 1st day of April, 1956 and ending on the
commencement of the Companies (Amendment) Act, 1960, a managing agent has
ceased to hold office as such and has been appointed as the sole selling agent
of the company whose managing agent he was, the sole selling agency agreement
whether taken in his own name or in association with, or in the name of, any
other person for his benefit or on his own account, shall, unless approved by
the Central Government within a period of six months from such commencement,
become void and inoperative and the appointment as sole selling agent shall,
unless it has terminated by efflux of time, come to an end on the expiry of
that period;
(b) No managing agent-
(i) Who has ceased to hold
office as such before the commencement of the Companies (Amendment) Act, 1960,
but has not been appointed before such commencement as the sole selling agent
of the company whose managing agent he was, or
(ii) Who has ceased to hold
office as such after the commencement of the Companies (Amendment) Act, 1960.
Shall
be appointed after such commencement during a period of three years from the
date of such cesser as the sole selling agent of the company whose managing
agent he was except with the approval of the Central Government obtained in
this behalf.]
61[(5) (a) Where
a company has a sole selling agent (by whatever name called) for an area and it
appears to the Central Government that there is good reason so to do, the
Central Government may require the company to furnish to it such information
regarding the terms and conditions of the appointment of the sole selling agent
as it considers necessary for the purpose of determining whether or not such
terms and conditions are prejudicial to the interests of the company;
(b) If the company refuses or
neglects to furnish any such information, the Central Government may appoint a
suitable person to investigate and report on the terms and conditions of
appointment of the sole selling agent;
(c) If after perusal of the
information furnished by the company or, as the case may be, the report
submitted by the person appointed under clause (b), the Central Government is
of the opinion that the terms and conditions of appointment of the sole selling
agent are prejudicial to the interests of the company, the Central Government
may, by order, make such variations in those terms and conditions as would in
its opinion make them no longei- prejudicial to the interests of the company;
(d) As from such date as may
be specified by the Central Government in the order aforesaid, the appointment
of the sole selling agent shall be regulated by the terms and conditions as
varied by the Central Government.]
61. Inserted by the Companies
(Amendment) Act, 1960.
61a[(6) (a) Where
a company has more selling agents than one (by whatever name called) in any
area or areas and it appears to the Central Government that there is good
reason so to do, the Central Government may require the company to furnish to
it such information regarding the terms and conditions of appointment of all
the selling agents as it considers necessary for the purpose of determining
whether any of those selling agents should be declared to be the sole selling
agent for such area or any of such areas;
(b) If the company refuses or
neglects to furnish anv such information, the Central Government may appoint a
suitable person to investigate and report on the terms and conditions of
appointment of all the selling agents;
(c) If after perusal of the
information furnished by the company or, as the case may be, the report
submitted by the person appointed under clause (b), the Central Government is
of the opinion that having regard to the terms and conditions of appointment of
any of the selling agents and to any other relevant factors, that selling agent
is to all intents and purposes the sole selling agent for such area, although
there may be one or more other selling agents of the company operating in that
area, the Central Government may by order declare that selling agent to be the
sole selling agent of the company for that area with effect from such date as
may be specified in the order and may make suitable variations in such of the
terms and conditions of appointment of that selling agent as are in the opinion
of the Central Government prejudicial to the interests of the company;
(d) As from the date
specified in clause (c) the appointment of the selling agent declared to be the
sole selling agent shall be regulated bv the terms and conditions as varied by
the Central Government.]
61a[(7)
It shall be the duty of the company-
(a) To produce to the person
appointed under clause (b) of sub-section (5) or clause (b) of sub-section (6),
all books and papers of, or relating to, the company which are in its custody
or power; and
(b) Otherwise to give to that
person all assistance in connection with the investigation, which the company
is reasonably able to give.]
61a[(8)
If a company refuses or neglects-
(a) To furnish the
information required by the Central Government under clause (a) of sub-section
(5) or clause (a) of sub-section (6), or
(b) To produce to the person
appointed under clause (b) of sub-section (5) or clause (b) of sub-section (6)
any books and papers which are in its custody or power or otherwise to give to
that person any assistance which it is reasonably able to give,
The
company and every officer of the company who is in default shall be punishable
with fine which may extend to five thousand rupees and with a further fine Of
Dot less than fifty rupees for every day after the first during which such
refusal or neglect continues.]
61a. Inserted by the Companies
(Amendment) Act, 1960.
(1) A company shall not pay or be liable to pay to its sole selling
agent any compensation for the loss of his office in the following cases:-
(a) Where the appointment of
the sole selling agent ceases to be valid by virtue of sub-section (2A) of
section 294;
(b) Where the sole selling
agent resigns his office in view of the reconstruction of the company or of its
amalgamation with any other body corporate or bodies corporate and is appointed
as the sole selling agent of the reconstructed company or of the body corporate
resulting from the amalgamation;
(c) Where the sole selling
agent resigns his office, otherwise than on the reconstruction of the company
or its amalgamation as aforesaid;
(d) Where the sole selling
agent has been guilty of fraud or breach of trust in relation to, or of gross
negligence in, the conduct of his duty as the sole selling agent;
(e) Where the sole selling
agent has instigated, or has taken part directly or indirectly in bringing
about, the termination of the sole selling agency.
(2) The compensation which
may be paid by a company to its sole selling agent for loss of office shall not
exceed the remuneration which he would have earned if he had been in office for
the unexpired residue of his term, or for three years, whichever is shorter, calculated
on the basis of the average remuneration actually earned by him during a period
of three years immediately preceding the date on which his office ceased or was
terminated, or where he held his office for a lesser period than three years,
during such period.]
(1) Where the Central Government is of opinion that the demand for
goods of any category, to be specified by that Government, is substantially in
excess of the production or supply of such goods and that the services of sole
selling agents will not be necessary to create a market for such goods, the
Central Government may, by notification65 in the Official Gazette, declare that sole selling
agents shall not be appointed by a company for the sale of such goods for such
period as may be specified in the declaration.
(2) No company shall appoint
any individual, firm or body corporate, who or which has a substantial interest
in the company, as sole selling agent of that company unless such appointment
has been previously approved by the Central Government.
(3) No company having a
paid-up share capital of rupees fifty lakhs or more shall appoint a sole
selling agent except with the consent of the company accorded by a special
resolution and the approval of the Central Government.
62. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
63. Inserted by the Companies
(Amendment) Act, 1974, w.e.f. 1-2-1975.
64. Refei- Companies
(Appointment of Sole Agents) Rules, 1975.
65. For notification issued
urider this sub-section (1), refer Taxmanns Master Guide to Companies Act.
(4) The provisions of
sub-sections (5),(6) and (7) of section 294 shall, so far as may be, apply to
the sole selling, or the sole purchasing or buying, agents of a company.
(5) A company seeking
approval under this section shall furnish such particulars, as may be
prescribed66
(6) Where any appointment has
been made of a sole selling agent by a company before the commencement of the
Companies (Amendment) Act, 1974, and the appointment is such that it could not
have been made except on the authority of a special resolution passed by the
company and the approval of the Central Government, if sub-section (2), sub-section
(3) and sub-section (8), were in force at the time of such appointment, the
companv shall obtain such authority and approval within six months from such
commencement; and if such authority and approval are not so obtained, the
appointment of the sole selling agent shall stand terminated on the expiry of
six months from such commencement.
(7) If the company in general
meeting disapproves the appointment referred to in sub-section (3), such
appointment shall, notwithstanding anything contained in sub-section (6), cease
to have effect from the date of the general meeting. (8) The provisions of this
section except those of sub-section (1), shall apply so far as may be to the
appointment by a company of a sole agent for the buying or purchasing of goods
on behalf of the company.
Explanation: In
this section, -
(a) "Appointment
includes "re-appointment",
(b) "Substantial
interest, -
(i) In relation to an
individual, means the beneficial interest held by such individual or any of his
relatives, whether singly or taken together, in the shares of the company, the
aggregate amount paid-up on which exceeds five lakhs of rupees or five per cent
of the paid-up share capital of the company, whichever is the lesser;
(ii) In relation to a firm,
means the beneficial interest held by one or more partners of the firm or any
relative of such partner, whether singly or taken together, in the shares of
the company, the aggregate amount paid up on which exceeds five lakhs of rupees
or five per cent of the paid up share capital of the company, whichever is the
lesser;
(iii) In relation to a body
corporate, means the beneficial interest held by such body corporate or one or
more of its directors or any relative of such director, whether singly or taken
together, in the shares of the company, the aggregate amount paid-up on which
exceeds five lakhs of rupees or five per cent of the paid-up share capital of
the company, whichever is the lesser.]
66. Refer Companies
(Appointment of Sole Agents), Rules, 1975.
67295. Loans to directors, etc. -
(1) Save as otherwise provided in sub-section
(2), no company (hereinafter in this section referred to as the lending
company") 68[Without
obtaing the previous approval of the Central Government in that behalf s thout
obtaining indirectly,] make any loan to, or give any guarantee or provide hall,
directly or connection with a loan made by any other person to, or to any oth
any security in connection with a loan made by any other person to, or to any
other person by, -
(a)
Any director of the lending company
or of a company, which is its holding company or any partner or relative of any
suchdirector;
(b) Any firm in which any
such director or relative is a partner;
(c) Any private company of
which any such director s a director or member;
(d) Any body corporate at a
general meeting of which not less than twenty-fivc per cent of the total voting
power may be exercised or controlled by any such director, or by two or more such
directors together; or
(e) Any body corporate, the
Board of directors, managing director *[, managing agent, secretaries and
treasurers], or manager whereof is accustomed to act in accordance with the
directions or instructions of the Board, or of any director or directors, of
the lending company.
69[(2) Sub-sectioti (1) shall not apply to-
(a) Any loan made, guarantee
given or security provided-
(i) By a private company
unless it is a subsidiary of a public company, or
(ii) By a banking company;
(b) Any loan made-
(i) By a holding company to
its subsidiary, or
*[(ii) By a company which is
the managing agent or secretaries and treasurers of another company to that
other company;]
(c) Any guarantee given or
security provided-
(i) By a holding company in
respect of any loan made to its subsidiary, or
*[(ii) By, company which is the
managing agent or secretaries and treasurers of another company in respect of
any loan made to that others company].]
(3) Where any loan made,
guarantee given or security provided by a lending company and outstanding at
the commencement of this Act could not have been made, given oi- provided,
without the previous approval of the Central Governnient, if this section had
then been in force, the lending company shall, within six months from the
commeticeinei-it of this Act or such further time not exceeding six months as
the Central Government may grant for that prurpose, either obtain the approval
of the Central Government to the transaction or emfprce the repayment of the
loan made, or in connection with which the guarantee was given or the security
was provided, notwithstanding any agreement to the contrary.
67. For carification, refer
Taxnzanns Masier Guide to Companies Act.
68. Substituted for shall,
without obtaining the previous approval of the Central Government es
(Amendment) Act, 1960.
69. Substituted by the
companies (Amendment) Act, 1960. For
the original sub-section, refer Appendix I.
(4) Every person who is
knowingly a party to any contravention of sub-section (1) or (3), including in
particular any person to whom the loan is made or who has taken the loan in
respect of which the guarantee is given or the security is provided, shall be
punishable either with fine which may extend to five thousand rupees or with
simple imprisonment for a term which may extend to six months:
Provided that where any such loan, or any loan in
connection with which any such guarantee or security has been given or provided
by the lending company, has b-ecn repaid in full, no punishment by way of
imprisonment shall be imposed under this sub-section; and where the loan has
been repaid in part, the maximum punishment which may be imposed under this
sub-section by way of imprisonment shall be proportionately reduced.
(5) All persons who are
knowingly parties to any contravention of sub-section (1) or (3) shall be
liable, jointly and severally, to the lending company for the repayment of the
loan or for ma ing good the sum which the lending company may have been called
upon to pay in virtue of the guarantee given or the security provided by such
company.
(6) No officer of the lending
company or of the borrowing body corporate shall be punishable under
sub-section (4) or shall incur the liability referred to in subsection (5) in
respect of any loan made, guarantee given or security provided 70[after the Ist day of April, 1956] in
contravention of clause (a) or (e) of subsection (1), unless at the time when
the loan was made, the guarantee was given or the security was provided by the
lending company, he knew or had express notice that that clause was being
contravened thereby.
296. 71[Application of section 295 to book debts in
certain cases. -Section
295 shall apply to any transaction represented by a book debt which was from its
inception in the nature of a loan or an advance.]
72297. Board's sanction to be
required f or certain contracts in which particular directors are interested. -
(1) Except with the consent of the Board of directors of a company,
a director of the company or his relative, a firm in which such a director or
such a firm, or a private companv of relative is a partner, anv other partner
in which the director is a member or director, shall not enter into any
contract with the company-
(a) For the sale, purchase or
supply of any goods, materials or services; or
(b) After the commencement of
this Act, for underwriting the subscription of any shares in, or debentures of,
the company:
70. Inserted by I he Companies
(Amendment) Act, 1960.
71. Substituted, ibid. For the original section, refer Appendix I.
72. For clarifications on this
section, refer Tax nn's Master Guide to Coinpa ies Act.
73[Provided
that in the case of a company havin g a paid-up share capital of not less than
rupees one crore, no such contract shall be entered into except with the
previous approval74 of the Central Government.75]
76[(2) Nothing
contained in clause (a) of sub-section (1) shall affect-
(a) The purchase of goods and
materials from the corn any, or the sale of goods and materials to the company,
by any direcptor, relative, firm, partner or private company as aforesaid for
cash at prevailing market prices; or
(b) Any contract or contracts
between the company on one side and any such director, relative, firm, partner
or private company on the other for sale, purchase or supply of any goods,
materials and services in which either the company or the director, relative,
firm, partner or private company, as the case may be, regularly trades or does
business:
Provided that such contract or contracts do not rclate
to goods and materials the value of which, or services the cost of which,
exceeds five thousand rupees in the aggregate in any year comprised in the
period of the contract or contracts; or
(c) In the case of a banking
or insurance company any transaction in the ordinary course of business of such
company with any director, relative, firm, partner or private company as
aforesaid.
(3) Notwithstanding anything
contained in sub-sections (1) and (2), a director, relative, firm, partner or
private company as aforesaid may, in circumstances of urgent necessity, enter,
without obtaining the consent of the Board, into any contract with the company
for the sale, purchase or supply of any goods, materials or services even if the
value of such goods or cost of such services exceeds five thousand rupees in
the aggregate in any year comprised in the period of the contract; but in such
a case, the consent of the Board shall be obtained at a meeting within three
months of the date on which the contract was entered into.
(4) Every consent of the
Board required under this section shall be accorded by a resolution passed at a
meeting of the Board and not otherwise; and the consent of the Board required
under sub-section (1) shall not be deemed to have been given within the meanin
of that sub-section unless the consent is accorded before the contract is
entered into or within three months of the date on which it was entered into.
(5) If consent is not
accorded to any contract under this section, anything done in pursuance of the
contract shall be voidable at the option of the Board.
(6) Nothing in this section
shall apply to any case where the consent has been accorded to the contract
before the commencement of the Companies (Amendment) Act, 1960.]
73. Inserted by the Companies
(Amendment) Act, 1974, w.e.f. 1-2-1975.
74. See Form No. 24A of
General Rules and Forms.
75. Power has been delegated
to Regional Director.
76. Substituted for
sub-section (2), (3), (4) and (5) by the Companies (Amendment) Act, 1960.For
the original sub-sections, refer Appendix I.
298. *[Power
of directors to carry on business when managing agent or secretaries and
treasurers are deemed to have vacated office, etc. -Where in pursuance of any provisions
contained in this Act, the managing agent or secretaries and treasurers of a
company are deemed to have vacated or to have been suspended from office, or
are removed or suspended from office, or cease to act or to be entitled to act
as managing agent or secretaries and treasurers, or where a permanent or
temporary vacancy has otherwise occurred in the office of managing agent or
secretaries and treasurers, then 77[*
* *] the Board of directors shall have power to carry on, or arrange for the
carrying on of, the affairs of the company until the managing agent or
secretaries and treasurers again become entitled to act as such, or until the
company in general meeting resolves otherwise.]
Procedure, etc., where director interested
299. Disclosure
of interests by director. -
(1) Every director of a company who is in any way, whether directly
or indirectly, concerned or interested in a contract or arrangement, or
proposed contract or arrangement, entered into or to be entered into, by or on
behalf of the company, shall disclose" the nature of his concern or
interest at a meeting of the Board of directors.
(2) (a) In the case of a proposed contract or
arrangement, the disclosure required to be made by a director under sub-section
(1) shall be made at the meeting of the Board at which the question of entering
into the contract or arrangement is first taken into consideration, or if the
director was not, at the date of that meeting, concerned or interested in the
proposed contract or arrangement, at the first meeting of the Board held after
he becomes so concerned or interested.
(b) In the case of any other
contract or arrangement, the required disclosure shall be made at the first
meeting of the Board held after the director becomes concerned or interested in
the contract or arrangement.
(3) (a) For the purposes of sub-sections (1) and
(2), a general notice given to the Board by a director, to the effect that he
is a director or a member of a specified body corporate or is a member of a
specified firm and is to be regarded as concerned or interested in any contract
or arrangement which may, after the date of the notice, be entered into with
that body corporate or firm, shall be deemed to be a sufficient disclosure of
concern or interest in relation to any contract or arrangement so made.
(b) Any such general notice
shall expire at the end of the financial year in which it is given, but may be
renewed for further periods of one financial year at a time, by a fresh notice
given in the last month of the financial year in which it would otherwise
expire.
(c) No such general notice,
and no renewal thereof, shall be of eff ect unless either it is given at a
meeting of the Board, or the director concerned takes reasonable steps to
secure that it is brought up and read at the first meeting of the Board after
it is given.
77. 'Notwithstanding anything
contained in this Act' omitted by the Companies (Amendment) Act, 1960.
78. See Form No. 24AA of
General Rules and Forms.
- In terms of section 6 of the Companies
(Amendment) Act, 1969, on and from 3-4-1970, so much of this provisions of
the Act as relate to managing agents and secretaries and treasurers shall
cease to have eff ect except as respects things done or omitted to be done
under those provisions before such cesser. Such provisions are marked off by square brackets with
asterisk.
(4) Every director who fails
to comply with subsection (1) and (2) shall be punishable with fine, which may
extend to five thousand rupees.
(5) Nothing in this section
shall be taken to prejudice the operation of any rule of law restricting a
director of a company from having any concern or, interest in any contracts or
arrangements with the company.
79[(6) Nothing
in this section shall apply to any contract or arrangement entered into or to
be entered into between two companies where any of the directors of the one
company or two or more them together holds or hold not more than two Pei cent
of the paid-up shareof capital in the other company.]
300. Interested
director not to participate or vote in Board's proceedings. -
(1) No director of a company shall, as a director, take any part in
the discussion of, or vote on, any contract or arrangement entered into, or to
be entered into, by or on behalf of the company, if he is in any way, whether
directly or indirectly, concerned or interested in the contract or arrangement;
nor shall his presence count for the Purpose of forming a quorum at the time of
any such discussion or vote; and if he does vote, his vote shall be void.
(2) Sub-section (1) shall not
apply to-
(a) A private company, which
is neither a subsidiary nor a holding, company of a public company;
(b) A private company, which
is a subsidiary of a public company, in respect of any contract or arrangement
entered nto, or to be entered into, by the private company with the holding
company thereof-
(c) Any contract of indemnity
against anv loss which the directors, or any one or more of them, may suffer
b-y reason of becoming or being sureties or a surety for the company;
(d) Any contract or
arrangement entered into or to be entered into with a public company, or a
private company which is a subsidiary of a public company, in which the
interest of the director aforesaid 80[consists
solely-
(i) In his being a director
of such company and the holder of not more than shares of such number or value
therein as is requisite to qualify him for appointment as a direc or thereof,
he having been nominated as such director by the company referred to in
sub-section (1), or
(ii) In his being a member
holding not more than two per cent of its paid-up share capital;]
(e) A public company, or a
private company which is a subsidiary of a public corn pany, in respect of
which a notification is issued under subsection (3), to the extent specified in
the notification.
(3) In the case of a public
company or a private company which is a subsidiary of a public company, if the
Central Government is of opinion that having regard to the desirability of
establishing or promoting any industry, business or trade, it would not be in
the public interest to apply all or any of the prohibitions contained in
sub-section (1) to the company, the Central Government may, by notification in
the Official Gazette, direct that that sub-section shall not apply to such company,
or shall apply thereto subject to such exceptions, modifications and conditions
as may be specified in the notification.
79. Inserted the companies
(Amendment) Act, 1960
80. Substituted for consistes
solely in his being director of such company and the holder of not or value
therein as is requisite to qualify him for he having been nominated as such
director by the company referred to in sub-section (1), ibid.
(4) Every director who
knowingly contravenes the provisions of this section shall be punishable with
fine, which may extend to five thousand rupees.
301. Register
of contracts, companies and firms in which directors are interested. -
81[(1) Every
company shall keep one or more registers in which shall be entered separately
particulars of all contracts or arrangements to which section 297 or section
299 applies, including the following particulars to the extent they are
applicable in each case namely:-
(a) The date of the contract
or arrangement;
(b) The names of the parties
thereto;
(c) The principal terms and
conditions thereof;
(d) In the case of a contract
to which section 297 applies or in the case of a contract or arrangement to
which sub-section (2) of section 299 applies, the date on which it was placed
before the Board;
(e) The names of the
directors voting for and against the contract or arrangement and the names of
those remaining neutral.
(2) Particulars of every such
contract or arrangement to which section 297 or, as the case may be,
sub-section (2) of section 299 applies, shall be entered in the relevant
register aforesaid-
(a) In the case of a contract
or arrangement requiring the Board's approval, within seven days (exclusive of
public holidays) of the meeting of the Board at which the contract or
arrangement is approved,
(b) In the case of any other
contract or arrangement, within seven days of the receipt at the registered
office of the company of the particulars of such other contract or arrangement
or within thirty days of the date of such other contract or arrangement
whichever is later.
And
the register shall be placed before the next meeting of the Board and shall
then be signed by all the directors present at the meeting.
(3) The register aforesaid
shall also specify, in relation to each director of the company, the names of
the firms and bodies corporate of which notice has been given by him under
sub-section (3) of section 299. (3A) Nothing in sub-sections (1), (2) and (3)
shall apply-
(a) To any contract or
arrangement for the sale, purchase or supply of any goods, materials or
services if the value of such goods and materials or the cost of such services
does not exceed one thousand rupees in the aggregate in any year; or
81. Substituted by the
Companies (Amendment) Act, 1960. For
the original sub-sections (1), (2) and (3), refer Appendix
I.
(b) To any contract or
arrangement (to which section 297 or, as the case may be, section 299 applies)
by a banking company for the collection of bills in the ordinary course of its
business or to any transaction referred to in clause (c) of sub-section (2) of
section 297.]
(4) If default is made in
complying with the provisions of sub-section (1), (2) or (3), the company, and
every officer of the company who is in default, shall, in respect of each
default, be punishable with fine, which may extend to five hundred rupees.
(5) The register aforesaid
shall be kept at the registered office of the company; and it shall be open to
inspection at such office, and extracts may be taken therefrom and copies
thereof may be required, by any member of the company to the same extent, in
the same manner, and on payment of the same fee, as in the case of the register
of members of the company; and the provisions of section 163 shall apply
accordingly.
(1) Where a company-
(a) Enters into a contract
for the appointment of a manager of the company, in which contract any director
of the company is in any way, whether directly or indirectly, concerned or
interested; or
(b) Varies any such contract
already in existence and in which a director is concerned or interested as
aforesaid;
The
company shall, within twenty-one days from the date of entering into the
contract or of the varying of the contract, as the case may be, send to every
member of the company an abstract of the terms of the contract or variation,
together with a memorandum clearly specifying the nature of the concern or
interest of the director in such contract or variation.
(2) Where a company enters
into a contract for the appointment of a managing director of the company, or
varies any such contract which is already in existence, the company shall send
an abstract of the terms of the contract or variation to every member of the
company within the time specified in subsection (1); and if any other director
of the company is concerned or interested in the contract or variation, a
memorandum clearly specifying the nature of the concern or interest of such
other director in the contract or variation shall also be sent to every member
of the company with the abstract aforesaid.
*[(3) Where a company proposes to
enter into a contract for the appointment of a managing agent or of secretaries
and treasurers in which contract any director of the company is concerned or
interested as aforesaid, or proposes to vary any such contract already in
existence in which a director is concerned or interested as aforesaid, the company
shall send the abstract and memorandum referred to in sub-section (2) to every
member of the company, in sufficient time before the general meeting of the
company at which the proposal is to be considered.]
(4) Where a director becomes
concerned or interested as aforesaid in any such contract as is referred to in
sub-section (1), (2) or (3) after it is made, the abstract and the memorandum,
if any, referred to in the said sub-section shall be sent to every member of
the company within twenty-one days from the date on which the director becomes
so concerned or interested.
(5) If default is made in
complying with the foregoing provisions of this section, the company, and every
officer of the company who is in default, shall be punishable with fine, which
may extend to one thousand rupees.
(6) All contracts entered
into by a company for the appointment of a manager, managing director *[,
managing agent or secretaries and treasurers] shall be kept at the registered
office of the company; and shall be open to the inspection of any member of the
company at such office; and extracts may be taken therefrom and copies thereof
may be required by any such member, to the same extent, in the same manner and
on payment of the same fee, as in the case of the register of members of the
company; and the provisions of section 163 shall apply accordingly.
(7) The provisions of this
section shall apply in relation to any resolution 82[***] of the Board of directors of a
company appointing a manager or a managing or whole-time director, or varying
any previous contract or resolution of the company relating to the appointment
of a manager or a managing or whole-time director, as they apply in relation to
any contract 83[***] for the
like purpose.
Register of directors, etc.
84303. Register of directors
*[, managing agents, secretaries and treasurers], etc. -
(1) Every company shall keep at its registered office a register of
its directors, managing director *[, managing agent, secretaries and
treasurers], manager and secretary, containing with respect to each of them the
following particulars, that is to say: -
(a) In the case of an
individual, his present name, and surname in full; any former name or surname
in full; 85[his father's name
and surname in full or where the individual is a married woman, the husband's
name and surname in full]; his usual residential address; his nationality; and,
if that nationality is not the nationality of origin, his nationality of
origin, his business occupation, if any; if he holds the office of director,
managing director, *[managing agent,] manager or secretary in any other body
corporate, the particulars of each such office held by him; and except in the
case of a private company which is not a subsidiary of a public company, the date
of his birth;
(b) In the case of a body
corporate, its corporate name and registered or principal office; and the full
name, address, nationality, and nationality of origin, if different from that
nationality, 85[the father's
name or where a director is a married woman, the husband's name] of each of its
directors; and if it holds the office of *[managing agent, secretaries and
treasurers] manager or secretary in any other body corporate, the particulars
of each such office;
82. "Or proposed
resolution omitted by the Companies (Amendment) Act, 1960.
83. 'Or proposed contract'
omitted, ibid.
84. For clarification on this
section, refer Taxnzann@ Master Guide to Companies Act.
85. Inserted by the Companies
(Amendment) Act, 1960.
(c) In the case of a firm,
the name of the firm, the full name, address, nationality, and nationality of
origin, if different from that nationality, 86[the
father's name or where a partner is a married woman, the husband's name] of
each partner, and the date on which each became a partner; and if the firm
holds the office of *[managing agent, secretaries and treasurers], manager or
secretary in any other body corporate, the particulars of each such office;
(d) If any director or
directors have been nominated by a body corporate, its corporate name; all the
particulars referred to in clause (a) in respect of each director so nominated,
and also all the particulars referred to in clause (b) in respect of the body
corporate;
(e) If any director or
directors have been nominated by a firm, the name of the firm, all the
particulars referred to in clause (a) in respect of each director so nominated,
and also all the particulars ref erred to in clause (c) in respect of the firm.
Explanation: For the purposes of this sub-section-
(1) Any person in accordance
with 87[whose directions or
instructions], the Board of directors of a company is accustomed to act shall
be deemed to be a director of the company;
(2) In the case of a person
usually known by a title different from his surname, the expression
'surname" means that title; and
(3) References to a former
name or surname do not include-
(i) In the case of a person
usually known by an Indian title different from his surname, the name by which
he was known previous to the adoption of, or succession to, the title;
(ii) In the case of any
person, a former name or surname, where that name or surname was changed or
disused before the person bearing the name attained the age of eighteen years,
or has been changed or disused for a period of not less than twenty years; and
(iii) In the case of a married
woman, the name or surname by which she was known previous to the marriage.
(2) The company shall, within
the periods respectively mentioned in this subsection, send to the Registrar 88[a return in duplicate in the prescribed
form89] containing the
particulars specified in the said register and 90[a
notification in duplicate in the prescribed form] of any change among its
directors, managing directors *[, managing agents, secretaries and treasurers],
managers or secretaries 91[***],
specifying the date of the change.
86. Inserted by the Companies
(Amendment) Act, 1960.
87. Substituted for 'whose
instructions", ibid.
88. Substituted for "a
retui-n in the prescribed form" by the Companies (Amendment) Act, 1960.
89. See Form No. 32 of General
Rules and Forms.
90. Substituted for "a
notification in the prescribed form', by the Companies (Amendment) Act, 1960.
91. Or in any of the
particulars contained in the register" omitted by the Companies (Amendment)
Act, 1965, w.e.f. 15-10-1965.
The
period within which the said return is to be sent shall be a period of 92[thirty] days from the appointment of the
first directors of the company and the period within which the said
notification of a change is to be sent shall be 92[thirty] days from the happening thereof.
93[***]
(3) If default is made in
complying with sub-section (1) or (2), the company, and every officer of the
company who is in default, shall be punishable with fine, which may extend to fifty
rupees for every day during which the default continues.
304. Inspection
of the register. -
(1) The register kept under section 303 shall be open to the
inspection of any member of the company without charge and of any other person
on payment of one rupee for each inspection during business hours subject to
such reasonable restrictions as the company may by its articles or in general
meeting impose, so that not less than two hours in each day are allowed for
inspection.
(2) If any inspection required
under sub-section (1) is refused, -
(a) The company, and every
officer of the company who is in default, shall be punishable with fine which
may extend to fifty rupees; and
(b) The 94[Company Law Board] may, by order, compel
an immediate inspection of the register. 95
305. 96[Duty of directors, etc., to make disclosure.
-
(1) Every director, managing director, *[managing agent,
secretaries and treasurers,] manager or secretary of any company, who is
appointed to, or relinquishes, the office of director, managing director,
*[managing agent, secretaries and treasurers,] manager or secretary of any
other body corporate, shall, within twenty days of his appointment to, or as
the case may be, relinquishment of, such office, disclose to the company aforesaid
the particulars relating to the office in the other body corporate which are
required to be specified under subsection (1) of section 303; and if he fails
to do so, he shall be punishable with fine which may extend to five hundred
rupees.
(2) The provisions of
sub-section (1) shall also apply to a person deemed to be a director of the
company by virtue of the Explanation to subsection (1) of section 303 when such
person is appointed to, or relinquishes, any of the offices in the other body
corporate referred to in sub-section (1).]
92. Substituted for
"twenty-eight' bv the Companies (Ametidment) Act, 1965, w.e.f. 15-101965.
93. Proviso omitted,
ibid. For the original proviso as
inserted by the Companies (Amendment) Act, 1960, refer Appendix 1.
94. Substituted for 'Court' by
the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
95. Prescribed fees is Rs. 50.
96. Substituted by the
Companies (Amendment) Act, 1960. For
the original section, refer Appendix I.
306. Register
to be kept by Registrar and inspection thereof. -
(1) The Registrar shall keep a separate register97 or registers in which there shall be
entered the particulars received by him under sub-section (2) of section 303 in
respect of companies, so however, that all entries in respect of each such
company shall be together.
97. See Form No. 34 of General
Rules and Forms.
(2) The register or registers
aforesaid shall be open to inspection by anv member of the public at any time
during office hours, on payment of the prescribed fee.
98307. Register of
directors'shareholdings Register of directors' shareholdings, etc.
(1) Every company shall keep a register showing, as respects each
director of the company, the number, description and amount of any shares in,
or debentures of, the company or any other body corporate, being the company's
subsidiary or holding co iipany, or a subsidiary of the company's holding
company, which are held bv him or in trust for him, or of which he has any
right to become the holder whether on payment or not.
(2) Where any shares or
debentures have to be recorded in the said register or to be omitted therefrom,
in relation to any director, by reason of a transaction entered into after the
commencement of this Act and while he is a director, the register shall also
show the dateceof, and the price or other consideration for, the transaction.
Provided that where there is an interval between the
agreement for any such transaction and the completion thereof, the date so
shown shall be that of the agreement.
(3) The nature and extent of
any interest or right in or over any shares or debentures recorded in relation
to a director in the said register shall, if he so requires, be indicated in
the register.
(4) The company shall not, by
virtue of anything done for the Purposes of this section, be affected with
notice of, or be put upon inquiry as to, the rights of anv person in relation
to any shares or debentures.
(5) The said register shall, subject to the provisions of this
section, registered office of the company, and shall be open to inspection
during business hours (subject to such reasonable restrictions as the company
may, by its articles or in general meeting, impose, so that not less titan two
hours in each day are allowed for inspection) as follows:
(a) During the period
beginning fourteen days before the date of the conipany's annual general
meeting and ending three days after the date of its conclusion, it shall be
open to the inspection of any member or holder of debentures of the c-ompany;
and
(b) During that or any other
period, it shall be open to the inspection of any person acting on behalf of
the Central Government or of the Registrar.
In
computing the fourteen days and the three days mentioned in this sub-section,
any day, which is a Saturday, a Sunday or a public holiday shall be
disregarded. (6) Without prejudice to the rights conferred by sub-section (5),
the Central Government or the Registrar may, at any time, require a copy of the
said register, or any part thereof.
98. For clarification on this
section. Refer Taxmanns Master Guuide to Companies Act.
(7) The said register shall
also be produced at the commencement of every annual general meeting of the
company and shall remain open and accessible during the continuance of the
ineet;-ng to any person having the right to attend the meeting.
If
default is made in complying with this sub-section the company, an every
officer of the company who is in default, shall be punishable with fine, which
may extend to five hundred rupees.
(8) If default is made in
complying with sub-section (1) or (2), or if any inspection required under this
section is refused, or if any copy required thereunder is not sent within a
reasonable time, the company, and every officer of the company who is in
default, shall be punishable with fine which may extend to five thousand rupees
and also with a further fine which may extend to twenty rupees for every day
during which the default continues.
(9) In the case of any such
refusal, the 99[Company Law
Board] may also, by order, compel an immediate inspection of the register. 1
(10) For the purposes of this
section-
(a) Any person in accordance
with whose directions or instructions the Board of directors of a company is
accustomed to act, shall be deemed to be a director of the company; and
(b) A director of a company
shall be deemed to hold, or to have an interest or a right in or over, any
shares or debentures, if a body corporate other than the company holds them or
has that interest or right in or over them, and either-
(i) That body corporate or
its Board of directors is accustomed to act in accordance with his directions
or instructions; or
(ii) He is entitled to
exercise or control the exercise of one-third or more of the total voting power
exercisable at any general meeting of that body corporate.
2[(11) The
provisions of this section and section 308 shall apply to *[managing agents,
secretaries and treasurers and] managers as they apply to directors].
308. Duty
of directors and persons deemed to be directors to make disclosure of
shareholdings. -
(1) Every director of a company, and every person deemed to be a
director of the company by virtue of sub-section (10) of section 307, shall
give notice to the company of such matters relating to himself as may be
necessary for the purpose of enabling the company to comply with the provisions
of that section.
(2) Any such notice shall be
given in writing, and if it is not given at a meeting of the Board, the person
giving the notice shall take all reasonable steps to secure that it is brought
up and read at the meeting of the Board next after it is given. (3) Any person
who fails to comply with sub-section (1) or (2) shall be punishable with
imprisonment for a term which may extend to two years, or with fine which may
extend to five thousand rupees, or with both.
99. Substituted for
"Court' by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
1. Prescribed fees is Rs.
50.
2. Inserted by the Companics
(Amendment) Act, 1960.
Remuneration of directors
3309. Remuneration of
directors. -
(1) The remuneration pavable to the directors of a company,
including anv managing or whole-time director, shall be determined, in
accordance with and subject to the provisions of section 198 and this section,
either by the articles of the company, or by a resolution or, if the articles
so required, by a special resolution, passed by the company in general meeting 4[and the remuneration pavable to any such
director determined as aforesaid shall be inclusive of the remuneration payable
to such director for services rendered bv him in any other capacity:
Provided
that anv remuneration for, services rendered by any such director in any other
capacity shall not be so included if-
(a) The services rendered are
of a professional nature, and
(b) In the opinion of the
Central Government, the director possesses the requisite qualifications for the
practice of the profession].
5[(2) A
director may receive remuneration by way of a fee for each meeting of the
Board, or a committee thereof, attended by him:
Provided
that where immediately before the commencement of the Companies (Amendment)
Act, 1960, fees for meetings of the Board and any committee thereof, attended
by a directoi- are paid on a monthly basis, such fees may continue to be paid
on that basis for a period of two years after such commencement or for the
remainder of the term of office of such director, whichever is less, but no
longer.
(3) A director who is either
in the whole-time employment of the company or a managing director may be paid
remuneration either by way of a monthly payment or at a specified percentage of
the net profits of the company or partly by one way and partly by the other:
Provided
that except with the approval6
of the Central Government such remuneration shall not exceed five per cent of
the net profits for one such director, and if there is more than one such
director, ten per cent for all of them together.]
7[(4) A
director who is neither in the whole-time employment of the company nor a
managing director may be paid remuneration-
Either
(a) By way of a monthly,
quarterly or annual payment with the approval of the Central Government;
Or
(b) By way of commission if
the company by special resolution authorises such payment:
3. For clarifications on
this section, refer Taxmanns Master Guide to Companies Act.
4. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
5. Substituted by the
Companies (Amendment) Act, 1960. For
the original sub-sections (2) and (3), refer Appendix
I.
6. See Form No. 25A of
General Rules and Forms,
7. Substituted by the
Companies (Amendment) Act, 1965, w.e.f. 15-10-1965. For the subsection as stood pt-iot- to its substitution, refers Appendix I.
Provided
that the remuneration paid to such director, or where there is more than one
such director, to all of them together, shall not exceed-
(i) One per cent of the net
profits of the company, if the company has a managing or whole-time director
*[, a managing agent or secretaries and treasurers] or a manager;
(ii) Three per cent of the
net profits of the company, in any other case: Provided further that the
company in general meeting may, with the approval of the Central Government,
authorise the payment of such remuneration at a rate exceeding one per cent or,
as the case may be, three per cent of its net profits.]
(5) The net profits referred
to in sub-sections (3) and (4) shall be computed in the manner referred to in
section 198, sub-section (1).
8[(5A) If any director draws or receives, directly
or indirectly, by way of remuneration any such sums in excess of the limit
prescribed by this section or without the prior sanction of the Central
Government, where it is required, he shall refund such sums to the company and
until such sum is refunded, hold it in trust for the company.
(5B) The company shall not waive
the recovery of any sum refundable to it under sub-section (5A) unless
permitted by the Central Government.] (6) No director of a company who is in
receipt of any commission from the companv and who is either in the whole-timt
employment of the company or a managing director shall be entitled to receive
any commission or other remuneration from any subsidiary of such company.
(7) The special resolution
referred to in sub-section (4) shall not remain in force for a period of more
than five years; but may be renewed, from time to time, by special resolution
for further periods of not more than five years at a time: Provided that no
renewal shall be effected earlier than one year from the date on which it is to
come into force.
(8) The provisions of this
section shall come into force immediately on the commencement of this Act or,
where such commencement does not coincidc with the end of a financial year of
the company, with effect from the expiry of the financial year immediately
succeeding such commencement.
(9) The provisions of this
section shall not apply to a private company unless it is a subsidiary of a
public company.
8. Inserted by the Companies
(Amendment) Act, 1960.
310. Provision for increase in remuneration to require Government
sanction. -9[In the case of a public company, or a
private company which is a subsidiary of a public company, any provision
relating to the remuneration of any director including a managing or whole-time
director, or any amendment thereof, which purports to increase] or has the
effect of increasing, whether directly or indirectly, the amount thereof,
whether that provision be contained in the company's memorandum or articles, or
in an agreement entered into by it, or in any resolution passed by the company
in general meeting or by its Board of directors, 10[shall not have any effect-
(a) In cases where Schedule
XIII is applicable, unless such increase is in accordance with the conditions
specified in that Schedule; and
(b) In any other case, unless
it is approved by the Central Government];
And
the amendment shall become void if, and in so far as, it is disapproved by that
Government:
11[Provided
that the approval12 of the
Central Government shall not be required where any such provision or any
amendment thereof purports to increase, or has the effect of increasing, the
amount of such remuneration only by way of a fee for each meeting of the Board
or a Committee thereof attended by any such director and the amount of such fee
after such increase does not exceed 13[such
sum as may be prescribed]:
14[Provided
further that where in the case of any private company which converts itself
into a public company or becomes a public company under the provisions of
section 43A, any provision relating to the remuneration of any director
including a managing or whole-time director as contained in its memorandum or
articles or in any agreement entered into by it or in any resolution passed by
it in general meeting or by its Board of directors includes a provision for the
payment of fee for each meeting of the Board or a Committee thereof attended by
any such director which is in excess of the sum specified under the first
proviso, such provision shall be deemed to be an increase in the remuneration
of such director and shall not, after it ceases to be a private company, or, as
the case may be, becomes a public company, have any effect unless approved by
the Central Government.]
311. Increase
in remuneration of managing director on re-appointment or appointment after Act
to require Government sanction. - In
the case of a public company, or a private company which is a subsidiary of a
public company, if the terms of any re-appointment or appointment of a managing
or whole-time director, made after the commencement of this Act, purport to
increase or have the effect of increasing, whether directly or indirectly, the
remuneration which the managing or whole-time director or the previous managing
or whole-time director, as the case may be, was receiving immediately before
such re-appointment or appointment, the re-appointment or appointment 15[shall not have any effect-
9. Substituted for In the
case of a public companv, or a private company which is a subsidiary of a
public company, aii amendment of any provision relating to the renumeration of
any director including a managing or whole-time director, which purports to
increase by the Companies (Amendment) Act, 1960.
10. Substituted for 'shall not
have any effect unless approved by the Central Government' by the Companies
(Amendment) Act, 1988, w.e.f. 15-6-1988.
11. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
12. See Form No. 26 of General
Rules and Forms.
13. Substituted for'two
hundrcd and fifty rupees'by the Companies (Amendment) Act, 1988, w.e.f.
15-6-1988. Prescribed sum is Rs. 2,000
vide rule 10B of General Rules & Forms.
14. Inserted, ibid.
15. Substituted for 'shall not
have any effect unless approved by the Central Government', ibid.
(a) In cases where Schedule
XIH is applicable, unless such increase is in accordance with the conditions
specified in that Schedule; and
(b) In any other case, unless
it is approvedl16 by the
Central Government];
And
shall become void if, and in so far as, it is disapproved by that Government.
Miscellaneous provisions
312. Prohibition
of assignment of office by director. -Any assignment of his office made after the
commencement of this Act by any director of a company shall be void.
313. Appointment
and term of office of alternate directors. -
(1) The Board of directors of a company may, if so authorised by
its articles or by a resolution passed by the company in general meeting,
appoint an alternate director to act for a director (hereinafter in this
section called "the original director') during his absence for a period of
not less than three months from the State in which meetings of the Board are
ordinarily held.
17[(2) An
alternate director appointed under sub-section (1) shall not hold office as
such for a period longer than that permissible to the original director in
whose place he has been appointed and shall vacate office if and when the
original director returns to the State in which meetings of the Board are
ordinarily held.] (3) If the term of office of the original director is
determined before he so returns to the State aforesaid, any provision for the
automatic re-appointment of retiring directors in default of another
appointment shall apply to the original, and not to the alternate director.
18314. Director, etc., not to hold office or place
of profit. -
19[(1) Except
with the 20[consent] of the
company accorded by a special resolution:-
(a) No director of a company
shall hold any office or place of profit, and
(b) 21[No partner or relative of such director,
no firm in which such director, or a relative of such director, is a partner,
no private company of which such director is a director or member, and no
director or manager of such a private company, shall hold any office Or place
Of Profit carrying a total monthly remuneration of 22[such sum as may be prescribed],
16. See Form Nos. 25A and 26
of General Rules and Forms.
17. Substituted by the
Companies (Amendment) Act, 1960. For
the original sub-section, refer Appendix 1.
18. For clarifications on this
section, refer Taxmann's Master Guide to Companies Act.
19. Substituted for
sub-section (1) by the Companies (Amendment) Act, 1960. For the original sub-section refer Appendix I.
20. Substituted for 'previous
consent'by the Companies (Amendment) Act, 1965, w.e.f. 15- 10-1965.
21. Substituted for the
following by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975, no partner
or relative of such a director, no firm in which such a director or relative is
a Partner, no private company of which such a director is a director or member,
and no director, managing agent, secretaries, and treasurers, or manager of
such a private company shall hold any office or place of profit carrying a
total monthlv remuneration of five hundred rupees or more,
Except that of managing director, managing agent, secretaries and
treasurers, manager, legal or technical
adviser,
22. Substituted for five
hundred rupees or more by the Companies (Amendment) Act, 1988, w.e.f.
15-6-1988. Sub-rule (1) of rule 10C of
General Rules & Forms prescribes a sum being not less thin Rs. 10,000 for the purposes of this clause.
Except
that of managing director or manager,] banker or trustee for the holders of
debentures of the company-
(i) Under the company; or
(ii) Under, anv subsidiary of
the company, unless the remuneration received from such subsidiary in respect
of such office or place of profit is paid over to the company or its holding
company:
23[Provided
that it shall be sufficient if the special resolution according the consent of
the companv is passed at the general meeting of the company held for the first
time after the holding of such office or place of profit:
Provided
further that where a relative of a director or a firm in which such relative is
a partner, is appointed to an office or place of profit under the company or a
subsidiary thereof without the knowledge of the director, the consent of the
company mav be obtained eitherin the general meeting aforesaid or within three
months from the date of the appointment, whichever is later.]
Explanaiton:
For the purpose of this sub-section, a special resolution according consent
shall be necessary for every appointment in the first instance to an office or
place of profit and to every subsequent appointment to such office or place of
profit on a higher remuneration not covered by the special resolution, except
where an appointment on a time scale has already been approved by the special
resolution.
(1A) Nothing in sub-section (l)
shall apply where a relative of a director or a firm in which such relative is
a partner holds any office or place of profit under the companv or a subsidiary
thereof having been appointed to such office or place before such director
becomes a director of the company.]
24[(1B) Notwithstanding anything contained in
sub-section (1), -
(a) No partner or relative of
a director or manager,
(b) No firm in which such
director or manager, or relative of either, is a partner,
(c) No private company of
which such a director or manager, or relative of either, is a director or
member,
Shall
hold any office or place of profit in the company, which carries a total
monthly remuneration of not less than 25[such
sum as may be prescribed], except with the prior consent of the company by a
special resolution and tric approvals of the Central Government.
23. Substituted for the
proviso, by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965, For the
proviso originally, inserted bv the Companies (Amendment) Act, 1960, refer Appendix I.
24. Insterted by the companies
(Amendment) Act, 1974, w.e.f. 1 2-1975.
25. Substituted for three
thousand rupees by the Companies (Amendment) Act, 1988, w.e.f. 15-6-1988. Sub
rule (2) of rule 10C, of General Rules & Forms prescribes a sum being not
less than Rs. 20,000 for purposes of this clause.
26. See Form No. 24B.of
General Rules & Forms.
[Proviso
to sub-section (IB) omitted by the Companies (Amendment) Act, 1988, w.e.f
15-6-1988. For omitted proviso, refer Appendix I.]
27[(2) 28[(a)]
If any office or place of profit is
held in contravention of the provisions of sub-section (1), the director,
partner, relative, firm, private company *[, managing agent, secretaries and
treasurers] or the manager, concerned, shall be deemed to have vacated his or
its office as such on and from the date next following the date of the general
meeting of the company referred to in the first proviso or, as the case may be,
the date of the expiry of the period of three months referred to in the second
proviso to that sub-section, and shall also be liable to refund to the company
any remuneration received or the monetary equivalent of any perquisite or
advantage enjoyed by him or it for the period immediately preceding the date
aforesaid in respect of such office or place of profit.]
29[(b) The
company shall not waive the recovery of any sum refundable to it under clause
(a) unless permitted to do so by the Central Government.]
30[(2A) Every
individual, firm, private company or other body corporate proposed to be appointed
to any office or place of profit to which this section applies shall, before or
at the time of such appointment, declare in writing whether he or it is or is
not connected with a director of the company in any of the ways referred to in
sub-section (1).]
29[(2B) If,
after the commencement of the Companies (Amendment) Act, 1974, any office or
place of profit is held, without the prior consent of the company by a special
resolution and the approval of the Central Government, the partner, relative,
firm or private company appointed to such office or place of profit shall be
liable to refund to the company any remuneration received or the monetary
equivalent of any perquisite or advantage enjoyed by him, on and from the date
on which the office was so held by him.
(2C) If any office or place
of profit is held in contravention of the provisions of the proviso to
sub-section (IB), the director, partner, relative, firm, private company or
manager concerned shall be deemed to have vacated his or its of fice as such on
and from the expiry of six months from the commencement of the Companies
(Amendment) Act, 1974, or the date next following the date of the general
meeting of the company referred to in the said proviso, whichever is earlier,
and shall be liable to refund to the company any remuneration received or the
monetary equivalent of any perquisite o.- advantage enjoyed by him or it for
the period immediately preceding the date aforesaid in respect of such office
or place of profit.
(2D) The company shall not waive
the recovery of any sum refundable to it under sub-section (2B) 31[***] unless permitted to do so by the
Central Government.]
27. Substituted by the
Companies (Amendment) Act, 1965, w.e.f. 15-10-1965. For the original sub-section, refer Appendix
I.
28. Lettered as clause (a) by
the Companies (Amendmcnt) Act, 1974, w.e.f. 1-2-1975.
29. Inserted, ibid.
30. Inserted by the Companies
(Amendment) Act, 1960.
31. 'Or (2C), as the case may
be,' omitted by Companies (Amendii-iciit) Act, 1988, w.e.f. 15-61988.
(3) Any office or place 32[***] shall be deemed to be an office or
place of profit under the company 33[within
the meaning of this section],-
(a) In case the office or
place is held by a director, if the director holding it 34[obtains from the company anything] by way
of remuneration over and above the remuneration to which he is entitled as such
director, whether as salary, fees, commission, perquisites, the right to occupy
free of rent any premises as a place of residence, or otherwise;
(b) In case the office or
place is held by an individual other than a director or by any firm, private
company or other body corporate, if the individual, firm, private company or
body corporate holding it 35[obtains
from the company anything] by way of remuneration whether as salary, fees,
commission, perquisites, the right to occupy free of rent any premises as a
place of residence, or otherwise.
36[(4) Nothing
in this section shall apply to a person, who being the holder of any office of
profit in the company, is appointed by the Central Government, under section
408, as a director of the company.]
Restrictions on appointment of managing directors
315. Application
of sections 316 and 317. - [Omitted
by the Companies (Amendment) Act, 1960.
For the original section, refer Appendix I.]
316. Number
of companies of which one person may be appointed managing director. -
(1) [No public company and no private company which is a subsidiary
of a public company] shall, after the commencement of this Act, appoint or
employ any person as managing director, if he is either the managing director
or the manager of 38[any other
company (including a private company which is not a subsidiary of a public
company)], except as provided in sub-section (2).
(2) 39[A public company or a private company
which is a subsidiary of a public company] may appoint or employ a person as
its managing director, if he is the managing director or manager of one, and of
not more than one, 40[other
company (including a private company which is not a subsidiary of a public
company)]:
Provided
that such appointment or employment is made or approved by a resolution passed
at a meeting of the Board with the consent of all the directors present at the
meeting and of which meeting, and of the resolution to be moved thereat,
specific notice has been given to all the directors then in India.
32. "In a company"
omitted by the Companies (Amendment) Act, 1960.
33. Substituted for
"within the meaning of sub-section (1) by the Companies (Amendment) Act, 1974,
w.e.f. 1-2-1975.
34. Substituted for 'obtains
anything" by the Companies (Amendment) Act, 1960.
35. Substituted for 'obtains
anything', ibid.
36. Inserted by the Companies
(Amendment) Act, 1974, w.e.f. 1-2-1975.
37. Substituted for "No
company by the Companies (Amendment) Act, 1960.
38. Substituted for 'any other
company', ibid.
39. Substituted for "A
company", ibid.
40. Substituted for
"other company" by the Companies (Amendment) Act, 1960.
(3) Where, at the commencement of this Act, any person is holding
the office either of managing director or of manager in more than 41[two companies of which each one or at
least one is a public company or a private company which is a subsidiary of a
public company], he shall, within one year from the commencement of 42[the Companies (Amendment) Act, 1960],
choose not more than two of those companies as companies in which he wishes to
continue to hold the office of managing director or manager, as the case may
be; and the provisions of clauses (b) and (c) of sub-section (1) and of
sub-sections (2) and (3) of section 276 shall apply mutatis mutandis in
relation to this case, as those provisions apply in relation to the case of a
director. (4) Notwithstanding anything contained in sub-sections (1) to (3),
the Central Government may, by order, permit any person to be appointed as a
managing director of more than two companies if the Central Government is
satisfied that it is necessary that the companies should, for their proper
working, function as a single unit and have a common managing director.
317. Managing
director not to be appointed for more than five years at a time. -
(1) No company shall, after the commencement of this Act, appoint
or employ any individual as its managing director for a term exceeding five
years at a time.
(2) Any individual holding at
the commencement of this Act the office of managing director in a company
shall, unless his term expires earlier, be deemed to have vacated his office
immediately on the expiry of five years from the commencement of this Act.
(3) Nothing contained in
sub-section (1) shall be deemed to prohibit the reappointment, re-employment,
or the extension of the term of office, of any person by further periods not
exceeding five years on each occasion:
Provided
that any such re-appointment, re-employment or extension shall not be
sanctioned earlier than two years from the date on which it is to come into
force.
43[(4) This
section shall n(,, apply to a private company unless it is a subsidiary of a
public company.]
Compensation for loss of office
(1) Payment may be made by a company, except in the cases specified
in sub-section (3) and subject to the limit specified in sub-section (4), to a
managing director, or a director holding the office of manager or in the
wholetime employment of the company, by way of compensation for loss of office,
or as consideration for retirement from office, or in connection with such loss
or retirement.
41. Substituted for "two
companies" by the Companies (Amendment) Act, 1960.
42. Substituted for 'this
Act', ibid.
43. Inserted, ibid.
(2) No such payment shall be made by the
company to any other director.
(3) No payment shall be made
to a managing or other director in pursuance of sub-section (1), in the
following cases, namely: -
(a) Where the director
resigns his office in view of the reconstruction of the company, or of its
amalgamation with any other body corporate or bodies corporate, and is
appointed as the managing director managing agent] 44[***], manager or other officer of the
reconstructed companv or of the body corporate resulting from the amalgamation;
(b) Where the director resigns
his office otherwise than on tne reconstruction of the company or its
amalgamation as aforesaid;
(c) Where the office of the
director is vacated by virtue of section 203, 45[***]
or any of the clauses (a) to 46[(b],
of sub-section (1) of section 283;
(d) Where the company is
being wound up, whether by or subject to the supervision of the Court or
voluntarily, provided the winding up was due to the negligence or default of
the director;
(e) Where the director has
been guilty of fraud or breach of trust in relation to, or of gross negligence
in or gross mismanagement of, the conduct of the affairs of the company or any
subsidiary or holding company thereof;
(f) Where the director has
instigated, or has taken part directly or indirectly in bringing about, the
termination of his office.
(4) Any payment made to a
managing or other director in pursuance of subsection (1) shall not exceed the
remuneration which he would have earned if he had been in office for the
unexpired residue of his term or for three years, whichever is shorter,
calculated on the basis of the average remuneration actually earned by him
during a period of three years immediately preceding the date on which he
ceased to hold the office, or where he held the office for a lesser period than
three years, during such period:
Provided
that no such payment shall be made to the director in the event of the
commencement of the winding up of the company, whether before, or at any time
within twelve months after, the date on which he ceased to hold office, if the
assets of the company on the winding up, after deducting the expenses thereof,
are not sufficient to repay to the shareholders the share capital (including
the przmiums, if any,) contributed by them.
(5) Nothing in this section
shall be dccmed to prohibit the payment to a managing director, or a director
holding the office of manager, of any remuneration for services rendered by him
to the company in any other capacity.
44. ", Secretaries and
treasurers omitted by the Companies (Amendment) Act, 1960.
45. "Section 280,"
omitted by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
46. Substituted for k bythe
Com anies (Amendment) Act, 1960.
(1) No director of a company shall, in connection with the transfer
of the whole or any part of any undertaking or property of the company, receive
any payment, by way of compensation for loss of office, or as consideration for
retirement from office, or in connection with such loss or retirement-
(a) From such company; or
(b) From the transferee of
such undertaking or property or from any other person (not being such company),
unless particulars with respect to the payment proposed to be made by such
transferee or person (including the amount thereof) have been disclosed to the
members of the company and the proposal has been approved by the company in
general meeting.
(2) Where a director of a
company receives payment of any amount in contravention of sub-section (1), the
amount shall be deemed to have been received by him in trust for the company.
(3) Sub-sections (1) and (2)
shall not affect in any manner the operation of section 318.
320. Payment
to director for loss of office, etc., in connection with transfer of shares. -
(1) No director of a company shall, in connection with the transfer
to any persons of all or any of the shares in a company, being a transfer
resulting from-
(i) An offer made to the
general body of shareholders;
(ii) An offer made by or on
behalf of some other body corporate with a view to the company becoming a
subsidiary of such body corporate or a subsidiary of its holding company;
(iii) An offer made by or on
behalf of an individual with a view to his obtaining the right to exercise, or
control the exercise of, not less than one-third of the total voting power at
any general meeting of the company; or
(iv) Any other offer which is
conditional on acceptance to a given extent;
Receive
any payment by way of compensation for loss of office, or as consideration for
retirement from office, or in connection with such loss or retirement, -
(a) From such company; or
(b) Except as otherwise
provided in this section, from the transferees of the shares or from any other
person (not being such company).
(2) In the case referred to
in clause (b) of sub-section (1), it shall be the duty of the director
concerned to take all reasonable steps to secure that particulars with respect
to the payment proposed to be made by the transferees or other person
(including the amount thereof) are included in, or sent with, any notice of the
offer made for their shares which is given to any shareholders.
(3) If-
(a) Any such director fails
to take reasonable steps as aforesaid; or
(b) Any person who has been
properly required by any such director to include the said particulars in, or
send them with, any such notice as aforesaid fails so to do;
He
shall be punishable with fine, which may extend to two hundred and fifty
rupees.
(4) If-
(a) The requirements of
sub-section (2) are not complied with in relation to any such payment as is
governed by clause (b) of sub-section (1); or
(b) The making of the
proposed payment is not, before the transfer of any shares in pursuance of the
offer, approved by a meeting, called for the purpose, of the holders of the
shares to which the offer relates and other holders of shares of the same class
(other than shares already held at the date of the offei- by, or by a nominee
for, the offercr, or where the offerer is a company, by, or by a nominee for,
any subsidiary thereof) as any of the said shares;
Any
sum received by the director on account of the payment shall be deemed to have
been received by him in trust for any persons who have sold their shares as a
result of the offer made, and the expenses incurred by him in distributing that
sum amongst those persons shall be borne by him and not retained out of that
sum.
(5) If at a meeting called
for the purpose of approving any payment as required by clause (b) of subs
section (4), a quorum is not present and, after the in eeting has been
adjourned to a later date, a quorum is again not present, the payment shall,
for the purposes of that sub-section, be deemed to have been approved.
321. Provisions
supplementary to sections 318, 319 and 320. -
(1) Where in proceedings for the recovery of any pa ments as
having, by virtue of sub-section (2) of section 319 or subsection (4) of
section 320, been received by any person in trust, it is shown that-
(a) The payment was made in
pursuance of any arrangement entered into as part of the agreement for the
transfer in question, or within one year before, or within two years after,
that agreement or the offer leading thereto; and
(b) The company or any person
to whom the transfer was made was privy to that arrangemert;
The
payment shall be deemed, except in so far as the contrary is shown, to be one
to which that sub-section applies.
(2) If in connection with any
such transfer as is mentioned in section 319 or in section 320, -
(a) The price to be paid, to
a director of the company whose office is to be abolished or who is to retire
from office, for any shares in the company held by him is in excess of the
price which could at the time have been obtained by other holders of the like
shares; or
(b) Any valuable
consideration is given to any such director;
The
excess or the money value of the consideration, as the case may be, shall for
the purposes of that section, be deemed to have been a payment made to him by
way of compensation for loss of office, or as consideration for retirement from
office, or in connection with such loss or retirement.
(3) References in sections
318, 319 and 320 to payments made to any director of a company by way of
compensation for loss of office, or as consideration for retirement from
office, or in connection with such loss or retirement, do not include any bojia
fide payment by way of damages for breach of contract or by way of pension in
respect of past services; and for the purposes of this sub-section the
expression pension" includes any superannuation allowance, superannuation
gratuity or similar payment.
(4) Nothing in sections 319
and 320 shall be taken to prejudice the operation of any rule of law requiring
disclosure to be made with respect to any such payments as are therein
mentioned or with respect to any other like payments made or to be made to the
directors of a company.
(1) In a limited company, the liability of the directors or of any
director *[or of the managing agent, secretaries and treasurers] or manager
may, if so provided by the memorandum, be unlimited. (2) In a limited company
in which the liability of a director *[, managing agent, secretaries and
treasurers] or manager is unlimited, the directors *[, the managing agent,
secretaries and treasurers] and the manager of the company, and the member who
proposes a person for appointment to the office of director *[, managing agent,
secretaries and treasurers] or manager, shall add to that proposal a statement
that the liability of the person holding that office will be unlimited; and
before the person accepts the office or acts therein, notice in writing that
his liability will be unlimited, shall be given to him by the following or one
of the following persons, namely, the promoters of the company, its directors,
*[its managing agent, secretaries and treasurers] or manager, if any, and its
officers.
(3) If any director *[,
managing agent, secretaries and treasurers], manager or proposer makes default
in adding such a statement, or if any promoter, director *[, managing agent,
secretaries and treasurers], manager or officer of the company makes default in
giving such a notice, he shall be punishable with fine which may extend to one
thousand rupees and shall also be liable for any damage which the person so
appointed may sustain from the default; but the liability of the person appointed
shall not be affected by the default.
323. Special
resolution of limited company making liability of directors, etc., unlimited. -
(1) A limited company may, if
so authorised by its articles, by special resolution, alter its memorandum so
as to tender unlimited the liability of its directors or of any director *[or
of its managing agent, secretaries and treasurers] or manager.
(2) Upon the passing of any
such special resolution, the provisions thereof shall be as valid as if they
had been originally contained in the memorandum:
Provided
that no alteration of the memorandum making the liability of any of the
officers referred to in sub-section (1) unlimited shall apply to such officer,
if he was holding the office from before the date of the alteration, until the
expiry of his then term, unless he has accorded his consent to his liability
becoming unlimited.
*[CHAPTER
III
MANAGING
AGENTS
Prohibition
of appointment of managing
Agent
in certain cases
(1) Subject to such rules as may be prescribed in this behalf, the
Central Government may, by notification in the Official Gazette, declare that,
as from such date as may be specified in the notification, the provisions of
subsection (2) shall apply to all companies, whether incorporated before or
after the commencement of this Act, which are engaged on that date or may
thereafter be engaged, wholly or in part, in such class or description of
industry or business as may be specified in the notification.
(2) Thereupon, -
(a) Where any such company
has a managing agent on the specified date, the term of office of that managing
agent shall, if it does not expire earlier, expire, at the end of three years
from the specified date, or on the 15th day of August, 1960, whichever is the
later; and the company shall not re-appoint or appoint the same or any other
managing agent; and
(b) Where any such company
has no managing agent on the specified date, or where it is incorporated on or
after that date, it shall not appoint a managing agent.
(3) Copies of all rules
prescribed under sub-section (1) shall, as soon as may be after they have been
prescribed, be laid before both Houses of Parliament. (4) A copy of every
notification proposed to be issued under sub-section (1) shall be laid in draft
before both Houses of Parliament for a period of not less than thirty davs
while they are in session; and if, within that period, either House disapproves
of the issue of the notification or approves of such issue only with
modifications, the notification shall not be issued or, as the case may
require, shall be issued only with such modifications as may be agreed on by
both the Houses.
* In terms of section 6 of
the Companies (Amendment) Act, 1969, on and from 3-4-1970, so much of the
provisions of the Act as relate to managing agents and secretaries and
treasurers shall cease to have ef fect except as respects things done or omitted
to be done under those provisions before such cesser. Such provisions are marked off bv square brackets with asterisk.
324A. [Abolition of managing agencies and
secretaries and treasurers. -
(1) Notwithstanding anything contained in any other provision of
this Act or in the memorandum or articles of association or in any contract to
the contrary, where any company has, on the 3rd day of April, 1970, a managing
agent or secretaries and treasurers, the term of office of such managing agent
or, as the case may be, the secretaries and treasurers shall expire, if it does
not expire earlier, on that date.
(2) No company shall appoint
or re-appoint any managing agent or secretaries and treasurers on or after the
3rd day of April, 1970.]
325. Managing
Agency Company not to have managing agent. -
(1) No company acting as the managing agent of any other company
shall, after the commencement of this Act, appoint a managing agent for itself,
whether it transacts any other kind of business in addition or not.
(2) No company having a
managing agent shall, after the commencement of this Act be appointed as the
managing agent of any other company.
(3) Any appointment of
managing agent made in contravention of sub-section (1) or (2) shall be void.
(4) Where at the commencement
of this Act a company having a managing agent is itself acting as a managing
agent of any other company, the term of office of the company first-mentioned
as managing agent of the other company shall, if it does not expire earlier in
accordance with the provisions applicable thereto immediately before such
commencement [including any provisions contained in the Indian Companies Act,
1913 (7 of 1913)], expire on the 15th day of August, 1956.
325A.
48[Subsidiary of a body
corporate not to be appointed as managing agent. -After the commencement of
the Companies (Amendment) Act, 1960, no company shall appoint as its managing
agent any body corporate which is a subsidiary either of itself or of any other
body corporate unless immediately before such commencement the company has any
such subsidiary as its managing agent.]
Appointment and term of office
(1) In respect of any company to which neither the prohibition
specified in section 324 nor that specified in section 325 applies, a managing
agent shall not be appointment or re-appointed, -
(a) Except by the company in
general meeting; and
(b) Unless the approval of
the Central Government has been obtained for such appointment or
re-appointment.
(2) The Central Government
shall not accord its approval under sub-section (1) in any case, unless it is
satisfied-
47. Inserted by the Companies
(Amendmcnt) Act, 1969, w.e.f. 3-4-1970.
48. Inserted by the Companies
(Amcndment) Act, 1960.
(a) That it is not against
the public interest to allow the company to have a managing agent;
(b) That the managing agent
proposed is, in its opinion, a fit and proper person to be appointed or
re-appointed as such, and that the conditions of the managing agency agreement
proposed are fair and reasonable; and
(c) That the managing agent
proposed has fulfilled any conditions, which the Central Government requires
him to fulfil.
327. Application
of sections 328 to 331. -The
provisions of sections 328 to 331 shall apply to-
(a) A public company;
(b) A private company which
is a subsidiary of a public company; and
(c) A private company which
is not a subsidiary of a public company, unless the Central Government, by
general or special order, specifically exempts the private company.
328. Term
of office of managing agent. -
(1) After the commencement of this Act, no company shall-
(a) In case it appoints a
managing agent for the first time (that is to say, in case the company has had
no managing agent at any time since its formation), make the appointment for a
term exceeding fifteen years;
(b) In any other case,
re-appoint or appoint a managing agent for a term exceeding ten years at a
time;
(c) Re-appoint a managing
agent for a fresh term, when the existing term of the managing agent has two
years or more to run:
Provided
that the Central Government may, if satisfied that it is in the interest of the
company so to do, permit the reappointment of a managing agent at an earlier
time than that specified in clause (c).
(2) For the purpose of
sub-section (1), re-appointment does not include the reappointment of any
person on fresh, additional or changed conditions for any period not extending
beyond his existing term, but otherwise includes-
(a) The renewal, or the
extension of the term, of a previous appointment; and
(b) The appointment of any
person or persons having an interest in the previous managing agency.
(3) Any appointment or
reappointment of a managing agent made in contravention of the provisions of
sub-sections (1) and (2) shall be void in respect of the entire term for which
the appointment or re-appointment is made.
Variation of managing agency agreement
329. Variation
of managing agency agreement. -A
resolution of the company in general rr)ceting shall be required for varying
the terms of a managing agency agreement; and before such a resolution is
passed, the previous sanction of the Central Government shall be obtained
therefor.
Special provisions regarding existing managing agents
330. Term
of office of existing managing agents to terminate on 15th August, 1960. Where a company has a managing agent at the
commencement of this Act, the term of office of such managing agent shall, if
it does not expire earlier in accordance with the provisions applicable thereto
immediately before such commencement [including any provisions contained in the
Indian Companies Act, 1913 (7 of 1913)], expire on the 15th day of August,
1960, unless before that date he is re-appointed for a fresh term in accordance
with any provision contained in this Act.
331. Application
of Act to existing managing agents. -All provisions of this Act, other than those
relating to the term for which the office can be held, shall apply to every
managing agent holding office at the commencement of this Act, with effect from
such commencement.
Restrictions on number of managing agencies
332. Noperson
to be managing agent of more thanten companies after 15thAugust, 1960. -
(1) After the 15th day of
August, 1960, no person shall, at the same time, hold office as managing agent
in more than ten companies.
(2) Where a person holding
office as managing agent in more than ten companies before that date fails to
comply with sub-section (1), the Central Government may permit him to hold
office as managing agent with effect from that date in respect of such of those
companies, not exceeding ten in number, as it may determine.
(3) In calculating the number
of companies of which a person may be a managing agent in pursuance of this
section, the following companies shall be excluded, namely: -
(a) A private company which
is neither a subsidiary nor a holding company of a public company;
(b) An unlimited company;
(c) An association which does
not carry on business for profit, or which prohibits the payment of a dividend.
(4) For the purposes of this
section, each of the following persons shall also be deemed to hold office as
managing agent of the company
(a) Where the managing agent
of the company is a firm, every partner in the firm;
49[(b) Where
the managing agent of the company is itself a company, every person who is a
director, the secretaries and treasurers or a manager of the latter company, and
where the latter company is a public company, every member who is entitled to
exercise not less than ten per cent of the total voting power therein and,
where the latter company is a private company, every member thereof who is
entitled to exercise not less than five per cent of.the total voting power
therein.]
49. Substituted by the
Companies (Amendment) Act, 1960.
50[(4A) A
director or member referred to in clause (b) of sub-section (4) shall include
any person in accordance with whose directions or instructions any director or,
as the case may be, any member is in the opinion of the Central Government
accustomed to act.]
(5) Any person who acts as a
managing agent of more than ten companies in contravention of this section
shall be punishable with fine which may extend to one thousand rupees in
respect of each of those companies in excess of ten, for each day on which he
so acts.]
Right to charge on assets
333. Right
of managing agent to charge on company's assets. -A managing agent whose office stands
terminated under section 324 or 332 shall be entitled to a charge on the assets
of the company in respect of all moneys which are due to him from the company
at the date of such termination, or which he may have to pay after that date in
respect of any liability or obligation properly incurred by him on behalf of
the company before such date, subject to all existing charges and encumbrances,
if any, on such assets.
Vacation of office, removal and resignation
334. Vacation
of office on insolvency, dissolution or winding up, etc. -Subject to the provisions of section 340 the
managing agent of a company shall be deemed to have vacateD his office as such-
(a) In case the managing
agent is an individual, if he is adjudged an insolvent;
(b) In the same case, if the
managing agent applies to be adjudicated an insolvent;
(c) In case the managing
agent is a firm, on its dissolution from any cause whatsoever, including the
insolvency of a partner in the firm;
(d) In case the managing
agent is a body corporate, on the commencement of its winding up whether by or
subject to the supervision of the Court, or voluntarily;
(e) In all cases, on the
commencement of the winding up of the company managed by the managing agent,
whether by or subject to the supervision of the Court or voluntarily.]
335. Suspension
from office where receiver appointed. -
(1) The managing agent of a company shall be deemed to have been
suspended from his office as such, if a receiver is appointed for his property-
(a) By a Court, or
(b) By or on behalf of the
creditors of the managing agent, including the holders of debentures issued by
the managing agent, in pursuance of any power conferred by an instrument
executed by the managing agent;
50. Inserted by the Companies
(Amendment) Act, 1960.
Provided that the Court
which appointed the receiver, or which will have jurisdiction to wind up the
managed company, as the case may, by order, direct that the managing agent
shall continue to act as such for such period and subject to such restrictions
and conditions, if any, as may be specified in order.
(2) The Court may, at any
time, cancel or vary any order passed by it under the proviso to sub-section
(1).
336. Vacation of
office on conviction in certain cases. Subject to the provisions of sections 340 and 341,
the managing agent of a company shall also be deemed to have vacated his office
as such, if-
(a) The managing agent;
(b) In case the managing
agent is a firm, any partner in the firm; or
(c) In case the managing
agent is a body corporate, any director of, or any officer holding a general
power of attorney from, such body corporate;
Is
convicted by a Court in India, after the commencement of this Act, of anv
offence, and sentenced therefor to imprisonment for a period of not less than
six months.
337. Removal
for fraud or breach of trust. -A
company in general meeting may, by ordinary resolution, remove its managing
agent from office-
(i) For fraud or breach of
trust in relation to the affairs of the company or of any subsidiary or holding
company thereof, whether committed before or after the commencement of this
Act;
(ii) For fraud or breach of
trust, whether committed before or after such commencement, in relation to the
affairs of any other body corporate, if a court of law, whether in or outside
India, finds such fraud or breach of trust to have been duly established; or
(iii) Subject to the
provisions of sections 340 and 341, where the managing agent is a firm or body
corporate, if any partner in the firm, or any director of, or any officer
holding a general power of attorney from, the body corporate is guilty of any
such fraud or breach of trust as is referred to in clause (i).
338. Removal
for gross negligence or mismanagement. -A company in general meeting may, by a special
resolution, remove its managing agent from office for gross negligence in, or
for gross mismanagement of, the affairs of the company or of any subsidiary
thereof.
339. Power
to call meetings for the purposes of sections 3 37 and 3 38 and procedure. -
(1) Without prejudice to any other provision contained in this Act
or in the articles of the company for the calling of meetings, anv two
directors of the company may call a general meeting of the company for the
purpose of considering any resolution of the nature referred to in section 337
or 338.
(2) On receipt of notice of
any such resolution, a copy of the resolution shall be sent forthwith to the
managing agent by the company.
(3) The managing agent shall
have, in relation to any such resoluti a director of the company has under
section 284 in relat r removing him from office, including, in particular, tf
ntations to the companv in writing, to have such repres ers of the company and
to have them read out at the meeting and also the right to be heard on the
resolution at the meeting.
340. Time
when certain disqualifications will take effect. -
(1) The disqualifications imposed by clause (a) of section 334, by
subsection (1) of section 335, by section 336, and bv any resolution passed in
pursuance of clause (it) of section 337, shall not take effect-
(a) For thirty days from the
date of the order of adjudication, appointment of the receiver, sentence, or
finding of the Court, as the case may be, or
(b) Where any appeal or
petition is preferred within the thirty days aforesaid against the order,
appointment, sentence or conviction resulting in the sentence, or finding,
until the expirv of seven days from the date on which such appeal or petition
is disposed of, or
(c) Where within the seven
days aforesaid, any further appeal or petition is preferred in respect of the
order, appointment, sentence, conviction or finding, as the case may be, and
the appeal or petition, if allowed, would result in the removal of the
disqualification or in making the resolution inapplicable, as the case may be,
unti; such further appeal or petition is disposed of.
(2) In the cases referred to
in sub-section (1), the Board may suspend the managing agent from office
immediately on, or at any time after, the adjudication, appointment, sentence
or finding referred to in clause (a) of that sub-section and until the disposal
of the appeals and petitions, if any, referred to in clauses (b) and (c)
thereof, or until the convicted partner, director or officer is expelled or
dismissed in pursuance of section 341, as the case may be.
(1) In the cases referred to in clauses (b) and (c) of section
336, it shall be open to the managing agent, notwithstanding anything to the
contrarv in any other law or agreement, for the time being in force, to expel
or dismiss the convicted partner, director or officer, within thirty days from
the date of his sentence; and in that event, the disqualifications imposed by
the clauses aforesaid shall cease to appiv.
(2) Sub-section (1) shall not
affect the operation of section 346 in any case to which that section would
otherwise apply.
342. Resignation
of office by managing agent. -
(1) Unless the managing
agency agreement otherwise provides, a managing to the Board, "[resign his
office as from such in the notice but such resignation shall not be d by the
company under sub-section (7)].
51. Substituted for resign
his office with effect from such date as may be specified in the notice by the
companies (Amendment) Act, 1960.
(2) The managing agent shall
cease to act as such with effect from the date so specified or from such later
date, if any, as may be mutually agreed on between him and the Board; 52[but the managing agent shall not be
absolved from liability to the company for his acts whether of commission or
omission, during, the period of his managing agency].
53[(3) When
notice of resignation is given as aforesaid, the Board shall require the
managing agent within such time as may be fixed by it or such further time as
ni ay be allowed by it, to prepare, and the managing agent shall prepare, a
report on the state of affairs of the company as on the date specified in the
notice of resignation or such subsequent date as the Board may think suitable,
not being later than that on which the managing agent ceases to act as such
under sub-section (2), together with a balance sheet made out as on that date
and a profit and loss account for the period commencing from the date up to
which the last such account was prepared and ending with the date on which the managing agent ceases to act as such.
(4) In case of default by the
managing agent in complying with the requisition of the Board under subsection
(3), the Board shall itself cause a report on the state of affairs of the
company as on the date specified in the notice of resignation or such
subsequent date as the Board may think suitable, not being later than that on
which the managing agent ceases to act as such under sub-section (2), together
with a balance sheet made out as on that date and a profit and loss account for
the period specified in sub-section (3), to be prepared.
(5) The Board shall also
obtain a report from the auditors of the company on such balance sheet and
profit and loss account in accordance, with sections 227, 228 and 229 and place
the managing agent's resignation together with the report on the state of the
company's affairs, balance sheet, profit and loss account and auditors'report
mentioned above, before the company in general meeting. (6) In relation to any
report made bv the auditors as aforesaid, sections 230 to 233 shall apply in
like manner as they apply in relation to auditors' report referred to therein.
(7) The company in general
meeting may, by a resolution, accept the resignation or take such other action
with reference thereto as it may deem fit.]
Transfers of, and succession to, office
343. 54[Transfer
of office by managing agent. -
(1) The managing agent of a company shall not transfer his office
to another person or enter into any agreement or arrangement with another
person by or under which the managing agent parts with, or which has the effect
of transferring, his right to manage the whole or substantially the whole of
the affairs of the company in favour of or to that other person unless approval
of the company in general meeting and also of the Central Government has been
accorded to such transfer, agreement or arrangement.
52. Substituted for "but
his resignation shall not be effectivc until it is considered as provided in
subsection (3) by the Companies (Amendment) Act, 1960.
53. Substituted for
sub-sections (3), (4) and (5), ibid.
54. Substituted, ibid.
(2) If the other person and
the managing agent referred to in sub-section (1) contravene the provisions of
that sub-section, that other person and the managing agent, and where the
managing agent is a firm, every partner in the firm and where the managing
agent is a body corporate, every director of the body corporate, shall be
punishable with imprisonment for a term which may extend to six months, or with
fine which may extend to five thousand rupees, or with both.]
344. Managing
agency not to be heritable after commencement of Act. Any agreement made by a company other than a
private company which is not a subsidiary of a public company, with its
managing agent after the commencement of this Act shall be void in so far as it
provides for succession to the office by inheritance or device.
(1) Where the office of the
managing agent of a company is held by an individual at the commencement of
this Act and the managing agency agreement provides for succession to the
office by inheritance or device, no person shall succeed to the office on the
death of the holder thereof; unless the succession of such person thereto is
approved by the Central Government; and that Government shall not accord such
approval unless, in its opinion, such person is a fit and proper person to hold
the office of managing agent of the company.
(2) The provisions of
sub-section (1) shall not apply to a private company, which is not a subsidiary
of a public company.
Changes in constitution of flrms and corporations
(1) Notwithstanding anything to the contrary contained in any
other provision of this Act, where the managing agent of a public company, or
of a private company which is a subsidiary of a public company, is a firm or
bodv corporate and any change takes place in the constitution of the firm or body
corporate, the managing agent shall cease to act as such on the expiry of six
months from the date on which the change takes place or such further time as
the Central Government may (whether before or after the expiry of the six
months) allow in that behalf, unless the approval of the Central Government has
been accorded 55[before the
expiry of six months aforesaid or where further time has been allowed by the
Central Government, before the expiry of that time] to the changed constitution
of the firm or body corporate.
Explanalion: For
the purposes aforesaid, a change in the constitution of a body corporate means-
(a) Its conversion from a
private to a public company, or from a public to a private company;
55. Substituted for
"before such expiry" by the Companics (Amendment) Act, 1960.
(b) Any change among the
directors or managers of the Corporation ether caused by the death or
retirement of a director or manager, appointment of a new director or manager,
or otherwise;
(c) Any change in the ownership
of shares in the body corporate or in the e of a bodv corporate not having a
share capital, any change in its membership;
56[and
where the managing agent, being a body corporate is a subsidiary of another
body corporate, includes a change in the constitution of that other body
corporate within the meaning of clause (a), clause (b) or clause (c).]
57[(2) Where
the managing agent is a body corporate (whether or not it is a subsidiary of
another body corporate) and its shares are for the time being dealt in, or
quoted on, a recognised stock exchange, a change in the ownership of its
shares, or
Where
a managing agent being a body corporate is a subsidiary of another, body
corporate and the shares of the other body corporate are for the time being dealt
in, or quoted on, a recognised stock exchange, a change in the ownership of the
shares of the other body corporate,
Shall
not be deemed to be a change in the constitution of the managing agent within
the meaning and for the purposes of sub-section (1), unless the Central
Government, by notification in the Official Gazette, otherwise directs:
Provided that no such notification shall be issued in
respect of any such, or such other, body corporate as aforesaid, unless the
Central Government is of the opinion that any change in the ownership of its
shares has taken place or is likely to take place, which has affected or is
likely to affect prejudicially the affairs of any company which is being
managed by the managing agent.]
347. Application
of Schedule VIII to certain managing agents. -
(1) The provisions of Schedule VIII shall apply-
(a) To every firm or private
company which acts as the managing agent of any company, whether public or
private; and
(b) Save as provided in
sub-section (2), to every other body corporate (not being a private company)
which acts as the managing agent of any company, whether public or private.
(2) A body corporate (not
being a private company) acting as managing agent shall, if and so long as its
shares are dealt in, or quoted on, any recognised stock exchange, be exempt
from the operation of sub-section (1), unless the Central Government, by
notification in the Official Gazette otherwise directs:
Provided
that the Central Government may, by order, modify or limit the operation of
this sub-section in relation to any body corporate in such manner as that
Government thinks fit.
56. Inserted by the Companies
(Amendment) Act, 1960.
57. Substituted, ibid.
(3) If default is made by a
managing agent to which Schedule VIII applies in complying with the provisions
thereof, -
(a) If the managing agent is
a firm, every partner therein who is in default, and
(b) If the managing agent is
a body corporate, the body corporate, and every director or other officer
thereof who is in default,
Shall
be punishable with fine which may extend to fifty rupees for every day during
which the default continues.]
Remuneration of managing agents
348. Remuneration
of managing agent ordinarily not to exceed 10 per cent of net profits. -
58[(1)] 59[* A company shall not pay to its managing
agent, in respect of any financial year beginniticy at or after the
commencement of this Act, by way of remuneration, whether in respect of his
services as managing agent or in any other capacity, any sum in excess of ten
per cent of the net profits of the company for that financial year. ll[(2) For
the purposes of this section, any payment made by way of remuneration to any of
the following persons shall be deemed to be included in the remuneration of the
managing agent
(a) Where the managing agent
of the company is a firm, every partner in the firm;
(b) Where the managing agent
of the company is a public company, every director of that public company;
(c) Where the managing agent
of the company is a private company, every director and member of that private
company.
(3) Nothing contained in
sub-section (1) or sub-section (2) shall be deemed to affect the operation of
sections 352, 354 and 356 to 360.]]
58. Numbeyed as subsection (1)
by the Companies (Aiiiendinciit) Act, 1960.
59. "Save as otherwise
expressly provided in this Act," omitted, ibid.
60. Inserted, ibid.
349. Determination
of net profits. -
(1) In computing for the purpose of section 348, the net profits
of a company in any financial year-
(a) Credit shall be given for
the sums specified in sub-section (2), and credit shall not be given for those
specified in sub-section (3); and
(b) The sums specified in
sub-section (4) shall be deducted, and those specified in subsection (5) shall
not be deducted.
(2) In making the computation
aforesaid, credit shall be given for the following sums: -
Bounties
and subsidies received from any Government, or any public authority constituted
or authorised in this behalf, by any Government, unless and except in so far as
the Central Government otherwise directs. (3) In making the computation
aforesaid, credit shall not be given for the following sums: -
(a) Profits, by way of
premium, on shares or debentures of the company, which are issued or sold by
the company;
(b) Profits on sales by the
company of forfeited shares;
(c) 61[profits of a capital nature including
profits from the sale] of the undertaking or any of the undertakings of the
company or of any part thereof;
(d) Profits from the sale of
any immovable property or fixed assets of a capital nature comprised in the
undertaking or any of the undertakings of the company, unless the business of
the company consists, whether wholly or partly, of buying and selling any such
property or assets:
62[Provided
that where the amount for which any fixed asset is sold exceeds the written
down value thereof referred to in section 350, credit shall be given for so
much of the excess as is not higher than the difference between the original
cost of that fixed asset and its written down value.]
(4) In making the computation
aforesaid, the following sums shall be deducted: -
(a) All the usual working
charges;
(b) Directors remuneration;
(c) Bonus or commission paid
or payable to any member of the company's staff, or to any engineer, technician
or person employed or engaged by the company, whether on a whole-time or on a
part-time basis;
63(d) Any
tax notified by the Central Government as being in the nature of tax on excess
or abnormal profits;
(e) Any tax on business
profits imposed for special reasons or in special circumstances and notified by
the Central Government in this behalf
(f) Interest on debentures
issued by the company;
(g) Interest on mortgages
executed by the company and on loans and advances secured by a charge on its
fixed or floating assets;
(h) Interest on unsecured
loans and advances;
(i) Expenses on repairs,
whether to immovable or to movable property, provided the repairs are not of a
capital nature;
(j) Outgoings 64[inclusive of contributions made under
clause (e) of subsection (1) of section 293];
(k) Depreciation to the
extent specified in section 350;
65[(l) The
excess of expenditure over income, which had arisen in computing the net
profits in accordance with this section in any year which begins at or after
the commencement of this Act, in so far as such excess has not been deducted in
any subsequent year preceding the year in respect of which the net profits have
to be ascertained;]
61. Substituted for profits
from the sale" by the Companies (Amcndment) Act, 1960.
62. Inserted, ibid.
63. For notification is sued
under clause (d), referTaxinanns MasterGuide to CompaniesAct.
64. Inserted by the Companies
(Amendment) Act, 1960.
65. Substituted, ibid. For the original clause, refer Appendix I.
(m) Any compensation or
damages to be paid in virtue of any legal liability, including a liability
arising from a breach of contract;
(n) Any sum paid by way of
insurance against the risk of meeting any liability such as is referred to in
clause (m);
66[(o) Debts
considered bad and written off or adjusted during the year of account.]
(5) In making the computation
aforesaid, the following sums shall not be deducted: -
*[(a) The remuneration payable to the managing agent;]
(b) Income-tax and super tax
payable by the company under the Indian Income-tax Act, 1922 (11 of 1922) 67, or any other tax on the income of the
company not f ailing under clauses (d) and (e) of sub-section (4);
(c) Any compensation, damages
or payments made voluntarily, that is to say, otherwise than in virtue of a
liability such as is referred to in clause (m) of sub-section (4)
66[(d) loss
of a capital nature including loss on sale of the undertaking or any of the
undertakings of the company or of any part thereof not including any excess
referred to in the proviso to section 350 of the written down value of any
asset which is sold, discarded, demolished or destroyed over its sale proceeds
or its scrap value.]
350. 68[Ascertainment of depreciation. -The amount of depreciation to be deducted in
pursuance of clause (k) of sub-section (4) of section 349 shall be the amount
calculated with reference to the written down value of the assets as shown by
the books of the company at the end of the financial year expiring at the
commencement of this Act or immediately thereafter and at the end of each
subsequent financial year 69[at
the rate specified in Schedule XIVI:
Provided
that if any asset is sold, discarded, demolished or destroyed for any reason
before depreciation of such asset has been provided f or in full, the excess,
if any, of the written down value of such asset over its sale proceeds or, as
the case may be, its scrap value, shall be written off in the financial year in
which the asset is sold, discarded, demolished or destroyed.]
66. Inserted by the Companies
(Amendment) Act, 1960.
67. Now the Income-tax Act,
1961 (43 of 1961).
68. Substituted by the
Companies (Amendment) Act, 1960. For
the original section, refer Appendix I.
69. Substituted for 11 at the
rate specified for the assets by the Indian Income-tax Act, 1922 (11 of 1922),
and the rules made thereunderfor the time being in force, as normal
depreciation including therein extra and multiple shift allowances but not
including therein anv special, initial or other depreciation or any development
rebate, whether allowed by that Act or those rules or otherwise" by the
Companics (Amendment) Act, 1988, w.e.f. 15-6-1988.
351. *[Special
provision where there is a profit-sharing arrangement between two or more
companies. -Where
there is an arrangement between two or more companies to share their profits,
and not less than two of those companies have the same managing agent, any
profits paid in pursuance of the arrangement by any of the companies having that
managing agent to any other or others of them shall-
(a) Be excluded from the net
profits of the company making such payment; and
(b) Be included in the net
profits of the company receiving such payment, or where more than one company
receives such payment, be included in the net profit of each of the receiving
companies, to the extent of the payment received by it.
352. Payment
of additional remuneration. -Additional
remuneration in excess of the limits specified in sections 198 and 348 may be
paid to the managing agent if, and only if, such remuneration is sanctioned by
a special resolution of the company and is approved by the Central Government
as being in the public interest.
353. Time
of payment of remuneration. The
remuneration payabl e to the managing agent for any financial year or part
thereof shall not be paid to him, until the accounts of the company for such
financial year have been audited and laid before the company in general
meeting:
Provided
that the minimum remuneration, if any, payable in pursuance of section 198 may
be paid to the managing agent in such suitable instalments as may be specified
either in the articles of the company or in a resolution passed by the company
at an annual general meeting or in the managing agency agreement executed by
the company.
354. Managing
agent not entitled to office allowance but entitled to be reimbursed in respect
of expenses. -The
managing agent shall not be paid any office allowance, but he may be reimbursed
in respect of any expenses incurred by him on behalf of the company and
sanctioned by the Board or by the company in general meeting; and nothing
contained in sections 348 to 353 shall be deemed to prohiit his being so
reimbursed.]
355. Saving.
-Sections 348 to 354
shall not apply to a private company unless it is a subsidiary of a public
company.
*[Appointments as selling and buying agents
356. Appointment
of managing agent or associate as selling agent of goods produced by the
company. -
(1) No managing agent and no associate of a managing agent, shall
receive any commission or other remuneration from the company, in respect of
sales of goods produced by the managed company, if the sales are made from the
premises at which they are produced or from the bead office of the managing agent
or from any place in India.
* In terms of section 6 of
the Companies (Amendment) Act, 1969, on and from 3-4-1970, so much of the
provisions of the Act as relate to managing agents and secretaries and
treasurers shall cease to have effect except as respects things done or omitted
to be done underthose provisions before such cesser. Such provisions are marked off by square brackets with asterisk.
(2) For sales of any goods
produced by the company, which are effected from any place outside India not
being a place specified in sub-section (1), the managing agent, or an associate
of the managing agent, may be applinted as a selling agent subject to the
following conditions, namely. -
(a) That the managing agent
or associate maintains an Office at such place for his own business, that is to
say, for a business not connected with that of the company 70[or any other company managed by the
managing agent];
(b) That the remuneration
payable in respect of the work done as selling agent by the managing agent or
associate is in accordance with the terms of a special resolution passed by the
company in that behalf; and
(c) That no other sums are
payable by the company to the managing agent or associate whether by way of
expenses or otherwise.
(3) Any appointment made in
pursuance of sub-section (2) shall not be made for, a term exceeding five years
but may be renewed from time to time for a term not exceeding five years on
each occasion:
Provided
that such renewal shall not be effected earlier than one year from the date on
which it is to come into force.
(4) The special resolution
referred to in clause (b) of sub-section (2) shall set out the material terms
subject to which the appointment of selling agent is made.
(5) Every appointment made
under sub-section (2) and all particulars relating thereto shall be entered in
a register maintained by the company for the purpose.
357. Application of section 356 to case where business of company
consists of the supply or rendering of any services. -Where and in so far as the business of a
company consists in the supply or rendering of any services, the provisions of
section 356 shall apply in respect of ariy such business procured for the
company by its managing agent or any associate of its managing agent from any place
outside India, in like manner as those provisions apply in respect of sales of
any goods produced by a company which are effected from that place.
358. Appointment
of managing agent or associate as buying agent for company. -
(1) No managing agent, and no associate of a managing agent, shall
receive anv Payment whatever, from the company except expenses, if any,
sanctioned under section 354 in respect of purchases of goods made on its
behalf either in India, or in cases to which sub-section (2) does not apply,
outside India.
(2) Where purchases of goods
are made on behalf of a company by its managing agent or any associate of its
managing agent, at any place outside India, then, if the managing agent or
associate maintains an'office at such place not only for such purchase but also
for his own business, that is to say, for a business not connected with that of
the company 70 [or any other
company managed by the managing agent], he may receive, at the option of the
company, either:
(a) Such part of the expenses
of such office as may reasonably be attributed to the purchases made on behalf
of the company as aforesaid; or
(b) Remuneration, by way of
commission or otherwise, in respect of the work done by the managing agent or
associate in making such purchases.
70. Inserted by the companies
(Amendment) Act, 1960.
(3) In cases to which clause
(a) of sub-section (2) applies, the maximum amount which may be paid to the
managing agent shall be specified in a special resolution passed by the
company; and in cases to which clause (b) of that sub-section applies, the
remuneration payable to the managing agent or associate shall be in accordance
with the terms of a special resolution, passed by the company in that behalf.
(4) The special resolution
referred to in sub-section (3) shall set out in sufficient detail the nature of
the office maintained by the managing agent or associate outside India, the
purposes for which it is maintained, the scale of its operations, the expenses
incurred in maintaining the office, and the proportion of those expenses which
may be reasonably attributed to the work done on behalf of the company.
(5) The special resolution
shall not remain in force for a term exceeding three years but may be renewed
from time to time for a term not exceeding three years on each occasion:
Provided
that no renewal shall take place earlier than one year from the date on which
it is to come into force.
(6) Every resolution passed
in pursuance of this section shall be entered in a register maintained by the
company for the purpose.
359. Commission,
etc., of managing agent as buying or selling agent of other concerns. -
(1) A company in general meeting may, by resolution, authorise its
managing agent or any associate of its managing agent to retain any commission
or other remuneration earned or to be earned by such agent or associate as 71[***] the agent, secretary or selling or
buying agent of any firm, body corporate or other concern in respect of any
goods, power, freight, repairs or other services, for the sale, purchase,
supply or rendering of which a contract has been, or is to be, entered into by
such firm, body or concern with the company, provided the prices or amounts
charged to or received by the company are at rates which are not less
favourable to the company than the market rates or which are otherwise
reasonable. (2) Every contract so entered into and all particulars relating
thereto shall be entered in a separate register maintained by the company for
the purpose.
72[(1) A
contract between a company and its managing agent or an associate of the
managing agent, -
(a) For the sale, purchase or
supply of any property, movable or immovable, or for the supply or rendering of
any service other than that of managing agent; or
71. 'Managing agent,
secretaries and treasurers, manager,' omitted by the Companies (Amendment) Act,
1960.
72. Substituted, ibid.
(b) For the underwriting of
any shares or debentures to be issued or sold by the company;
Shall
not be valid against the company-
(i) Unless the contract has
been approved by the company by a special resolution passed by it, and
(ii) Where the contract is
for the supply or rendering of any service other than that of managing agent,
unless further the contract has been approved by the Central Government, either
before the date of the contract or at any time within three months next after
that date.]
(2) The special resolution
aforesaid shall-
(a) Set out the material
terms of the contract proposed to be entered into 73[or, entered into]; and
(b) Provide specifically that
for any 74[property] supplied
or sold, or any services supplied or rendered, by the company, the managing
agent or associate shall make payment to the company within one month from the
date of the supply or sale of the 74[property],
or the supply or rendering of the service, as the case may be.
(3) Every such contract and
all particulars relating thereto shall be entered in a separate register
maintained by the company for the purpose.
75[(4) Nothing
in clause (a) of sub-section (1) shall affect any contract or contracts for the
sale, purchase or supply of any property or the supply or rendering of any
services, in which either the company or the managing agent or associate, as
the case may be, regularly trades or does business, provided that the value of
such property or the cost of such services does not exceed five thousand rupees
in the aggregate in any year comprised in the period of the contract or
contracts.]
361. Existing
contracts relating to matters dealt with in sections 356 to 360 to terminate on
lst March 1958. -All
contracts in force at the commencement of this Act, to which a company or the
managing agent or an associate of the managing agent of a company is a party,
shall, in so far as the contracts relate to any of the matters referred to in
sections 356 to 360, be deemed to terminate on the first day of March, 1958, unless
they terminate on an earlier date.
362. Registers
to be open to inspection. -The
registers referred to in sections 356 to 360 shall be open to inspection, and
extracts may be taken therefrom and copies thereof may be required; by any
member of the company, in the same manncr, to the same extent and on payment of
the same fees, as in the case of the resister of members of the company.
73. Inserted by the Companies
(Amendment) Act, 1960.
74. Substituted for
'goods", ibid.
75. Substitutcd, ibid.
76[(1)] Where
the managing agent of a company, or an associate of the managing agent,
receives any sum from the company, whether directly or indirectly, by way of
remuneration, rebate, commission, expenses or otherwise, -
(a) In the case of a public
company, or a private company which is a subsidiary of a public company, in
contravention of sections 348 to 354 and sections 356 to 361; or
(b) In the case of a private
company which is not a subsidiary of a public company, in contravention of
sections 356 to 361;
The
managing agent or associate 77 [shall refund such sum to the company and until
such sum is so refunded, hold it in trust for the company.]
78[(2) The
company shall not waive the recovery of any sum refundable to it under
sub-section (1) unless permitted by the Central Government.]
Assignment of, or charge on, remuneration
364. Company
not to be bound by assignment of, or charge on, managing agent's remuneration.
-Any assignment of,
or charge on, his remuneration, or any part thereof, effected by a managing
agent shall be void as against the company.
This
section shall not affect the rights in terse of the managing agent and any
person other than the company.
Compensation for termination of office
365. Prohibition
of payment of compensation for loss of office in certain cases. -A company shall not pay or be liable to pay
to its managing agent any compensation for the loss of his office in the
following cases: -
(a) Where the managing agent
resigns his office in view of the reconstruction of the company or of its
amalgamation with any other body corporate or bodies corporate and is appointed
as the managing agent, secretaries and treasurers, manager or other officer of
the reconstructed company or of the body corporate resulting from the
amalgamation;
(b) Where the managing agent
resigns his office, otherwise than on the reconstruction of the company or its
amalgamation as aforesaid;
(c) Where the managing agent
vacates his office in pursuance of section 324, 79 [324A,] 330 or 332;
(d) Where the managing agent
is deemed to have vacated his office in pursuance of clause (a), (b), (c) or
(d) of section 334 or of section 336;
76. Numbered as sub-section
(1) bv the Companies (Amendment) Act, 1960.
77. Substituted for 'shall
account to the company for such sum as if he held it in trust for the
company", ibid.
78. Inserted, ibid.
79. Inserted by the Companies
(Amendment) Act, 1969, w.e.f. 3-4-1970.
(e) Where the managing agent
is deemed to have vacated his office in pursuance of clause (e) of section 334,
provided the winding up of the company was due to the negligence or default of
the managing agent;
(f) Where the managing agent
is deemed to have been suspended, or is suspended, from his office in pursuance
of section 335 or subsection (2) of section 340;
(g) Where the managing agent
is removed from office bv a resolution in pursuance of section 337 or 338; and
(h) Where the managing agent
has instigated, or has taken part in bringing about, the termination of his
office.
366. Limit
of compensation for loss of office. -The compensation which may be paid by a companv to
its managing agentfor loss of office shall not exceed the remuneration which he
would have earned if he had been in office for the unexpired residue of his
term, or for three years, whichever is shorter, calculated on the basis of the
average remuneration actually earned by him during a period of three years
immediately preceding the date on which his office ceased or was terminated, or
where he held the office for a lesser period than three years, during such
period :
Provided
that in the event of the winding up of the company commencing, whether before,
or at any time within twelve months after, the date of the cessation or
termination of the office of managing agent, no compensation shall be payable
to him if the assets of the company on the winding up, after deduction of the
expenses thereof, are not sufficient to repay the share capital (including the
premiums, if any), contributed by the members of the company.
Other rights and liabilities not affected on
termination of office
367. Managing
agent's rights and liabilities after termination of office. -Where the office of a managing agent ceases or is
terminated-
(a) The managing agent and
the company shall be entitled to enforce any claim or demand which each may
have against the other, in respect of anything done or omitted to be done by
either of them before the cessation or termination of the managing agency; and
(b) The rights and
liabilities, in relation to the company, of the managing agent in anv other
capacity, shall not be affected.
Restrictions on powers
368. Managing
agent to be subject to control of Board and to restrictions in Schedule VII. -The managing agent of a company, whether appointed
before or after the commencement of this Act, shall exercise his powers,
subject to the superintendence, control and direction of its Board of directors
and sunect also to the provisions of the memorandum and articles of the company
and to the restrictions contained in Schedule VII.
369. Loans
to managing agent. -
(1) No public company, and no
private company which is a subsidiary of a public company, shall 80[, directly or indirectly,] make any loan
to, or give ariv guarantee or provide any security in connection with a loan
made by any other person to, or to any other person by,-
(a) Its managing agent or any
associate of its, managing agent; or
(b) Any body corporate in
respect of which the Central Government, by order, declares that it is
satisfied that the Board of directors, managing director, managing agent,
secretaries and treasurers or manager thereof is accustomed to act in
accordance with the directions or instructions of the managing agent, or
associate of the managing agent, notwithstanding that the body corporate may
not itself be an associate of the managing agent.
81[(2) Nothing
contained in sub-section (1) of section 295 shall apply to-
(a) Any credit given by the
company to its managing agent for the purpose of facilitating the compaiiy's
business and held by such agent in his own name in one or more current
accounts, subject to limits previously approved by the directors of company and
on no account exceeding twenty thousand rupees in the aggregate; or
(b) Any loan made by a
holding company to its subsidiary.
Explanation: Credit
referred to in clause (a) of sub-section (2) is confined to any cash advance
given by way of a permanent advance or imprest for facilitating the carrying on
the company's business, transactions on such advance or imprest account being
settled as far as possible on a monthly basis.]
82370. Loans, etc., to companies under the same management. -
(1) No company (hereinafter in this section referred to as
"the lending company") shall-
(a) Make any loan to, or
(b) Give any guarantee, or
provide any security, in connection with a loan made by any other person to, or
to any other person by,
Any
body corporate 83[***], unless
the making of such loan, the giving of such guarantee or the provision of such
security has been previously authorised bv a special resolution of the lending
company:
84[Provided
that no' special resolution shall be necessary in the case of loans made to
other bodies corporate not tinder the same management as the lending comparl.v
where the aggregate of such loans does not exceed '-[such percentage of the
aggregate of the subscribed capital of the lending company and its free
reserves as may be prescribed]:
80. Inserted by the Companies
(Amendment) Act, 1960.
81. Substituted, ibid.
82. For, clarifications on
this section refer Taxmanns Master Guide to Companies Act.
83. "Which is under the
samc management as the lending company any omitted by the Companies
(Amendment) Act, 1965, w.e.f. 1-4-1967.
84. Inserted, ibid.
85. Substituted for 'ten per
cent of the aggregate of the subscribed capital of the lending company and its
free reserves'by the Companies (Amendment) Act, 1988, w.e.f. 17-4-1989.
Provided
further that the aggregate of the loans made to all bodies corporate shall not
exceed without the prior approval of the Central Government-
(a) 88[Such percentage of the aggregate of the
subscribed capital of the lending company and its free reserves as may be
prescribed] where all such other bodies corporate are not under the same
management as the lending company;
(b) 89[such percentage of the aggregate of the
subscribed capital of the lending company and its free reserves as may be
prescribed] where all such other bodies corporate are under the same management
as the lending company.
Explanation 90[1]:
If a special resolution has been passed by the lending company authorising the
making of loans up to the limit of 91[the
percentage of the aggregate specified in clause (a), or, as the case may be,
the percentage of the aggregate specified in clause (b) of the second proviso]
then, no further special resolution or resolutions shall be deemed to be
necessary for the making of any loan or loans within such limit.]
90[Explanation 2:
If a special resolution has been passed by the lending company authorising the
Board of directors to give any guarantee or provide any security up to a limit
specified in the resolution, then, no further special resolution or resolutions
shall be deemed to be necessary for giving any guarantee or providing any
security within such limit.]
92[(1A) Where the lending company-
(a) Makes any loan to, or
86. Rule 11B of the Companies
(Central Government's) General Rules & Forms, 1956, provides that for the
purposes of the first proviso to sub-section (1) of section 370, no special
resolution shall be necessary in the case of loans made to other bodies
corporate not under the same management as the lending company, where the aggregate
of such loans do not exceed thirty per cent of the aggregate of the subscribed
capital of the lending company and its free reserves.
The aggregate of the loans made by the lending company to all other
bodies corporate shall not, except with the prior approval of the Central
Government, exceed-
(a) Thirty
per cent of the aggregat e of the subscribed capital of the lending company and
its free reserves, where all such other bodies corporate are not under the same
management as the lending company;
(b) Thirty
per cent of the aggregate of the subscribed capital of the lending company and
its free reserves, where all such other bodies corporate are under the same
management as the lending company.
87. See From No. 34AA of
General Rules and Forms.
88, Substituted for
"thirty per cent of the aggregate of the subscribed capital of the lending
company and its free reserves" by the Companies (Amendment) Act, 1988,
w.e.f. 17-4-1989.
89. Substituted for twenty
per cent of the aggregate of the subscribed capital of the lending company and
its free reserves", ibid.
90. Inserted by the Companies
(Amendment) Act, 1966, w.e.f. 1-4-1967.
91. Substituted to thirty per
cent of the aggregate specified in clause (a), or, as the case may be, of
twenty per cent of the aggregate specified in clause (b), of the second
proviso" by the Companies (Amendment) Act, 1988, w.e.f. 17-4-1989.
92. Inserted by the Companies
(Amendment) Act, 1960.
(b) Gives any guarantee, or
provides any security, in connection with a loan made by any other person to,
or to any other person by,
A
firm in which a partner is a body corporate under the same management as the
lending company-
(i) The loan shall be deemed
to have been made to, or
(ii) The guarantee or the
security shall be deemed to have been given or provided in connection with the
loan made by such other person to, or to such other person by,
A
body corporate under the same management.]
93[(1B) 94[For the purposes of sub-sections (1) and
(1A)], two bodies corporate shall be deemed to be under the same management-
(i) If the *[managing agent,
secretaries and treasurers,] managing director or manager of the one body *[,
or where such managing agent or secretaries and treasurers are a firm, any
partner in the firm, or where such managing agent or secretaries and treasurers
are a private company, any director of such company,] is-
(a) *[The managing agent,
secretaries and treasurers,] managing director or manager of the other body; or
*[(b) A partner in the firm
acting as managing agent or secretaries and treasurers of the other body; or]
*[(c) A director of the private
company acting as managing agent or secretaries and treasurers of the other
body; or]
(ii) If a majority of the directors of the one body constitute, or
at any time within the six months immediately preceding constituted, a majority
of the directors of the other body; 95[or]
95[(iii) If
not less than one-third of the total voting power with respect to any matter
relating to each of the two bodies corporate is exercised or controlled by the
same individual or body corporate; or
(iv) If the holding company of
the one body corporate is under the same management as the other body corporate
within the meaning of clause (i), clause (ii) or clause (iii); or
(v) If one or more directors
of the one body corporate while holding, whether by themselves or together with
their relatives, the majority of shares in that body corporate also hold,
whether by themselves or together with their, relatives, the majority of shares
in the other body corporate.]
95[(1C) Every
lending company shall keep a register showing-
(a) The names of all bodies
corporate under the same management as the lending company and the name of
every firm in which a partnei- is a bodv corporate under the same management as
the lending company; and
93. Explanation to sub-section
(1) numbered and relettered as sub-section (IB) by the Companies (Amendment)
Act, 1960.
94. Substituted for 'For the
purposes of this sub-section', ibid.
95. Inserted, ibid.
(b) The following particulars
in respect of every loan made, guarantee given or security provided by the
lending company 96[in relation
to any such body corporate] under this section: -
(i) The name of the body
corporate to which the loan has been made whether such loan has been made
before or after that body corporate came under the same management as the
lending companv,
(ii) The amount of the loan,
(iii) The date on which the
loan has been made,
(iv) The date on which the
guarantee has been given or security has been provided in connection with a
loan made by any other Person to, or to any other person by, any body corporate
or firm ref erred to in sub-section (1) or (I A) together with the name of the
person, body corporate or firm.
(ID) Particulars of 97[every loan, guarantee or security
referred to in sub-section (1C) shall be entered in the register aforesaid
within three days of the making of such loan, or the giving of such guarantee
or the provision of such security oi- in the case of an)" loan made, guarantee
given or security provided before the commencement of the Companies (Amendment)
Act, 1960, within three months, from such commencement or such further time not
exceeding six months as the company mav by special resolution allow.
(1E) If default is made in
complying with the provisions of sub-section (1C) or (ID), the companv and
every officer of the company who is in default, shall be punishable with fine
which may extend to five hundred rupees and also with a further fine which inav
extend to fifty rupees for everv day after the first during which the default
continues.
(IF) The register aforesaid
shall be kept at the registered office of the lending companv and-
(a) Shall be open to
inspection at such office, and
(b) Extracts may be taken
therefrom or copies thereof may be required, by anv member of the company to
the same extent and in the same matiner and on the payment of the same fees as
in the case of the registerof inembersof thecompany; andtheprovisionsof section
163 shall applv accordingly.]
98[(1G) A
company which has defaulted in the repayment of any deposit referred to in
section 58A or part thereof or interest thereupon in accordance with the terms
and conditions of such deposit, shall not make any loan or give guarantee under
this section till the default is made good.]
[(2) Nothing contained in the
foregoing provisions of this section shall apply to-
(a) Any loan made-
96. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 1-4-1967.
97. Substituted for
"evcry such loan, guarantee or security", ibid
98. Inserted by the Companies
(Amendment) Act, 1996, w.e.f. 1-3-1997.
99. Substituted by the
Companies (Amendment) Act, 1960. For
the original subsection, refer Appendix I.
(i) By a holding company to
its subsidiary; or
*[(ii) By the managing agent
or secretaries and treasurers to any company under his or their management; or]
1[(iii) By
a banking company, or an insurance company, in the ordinarn, course of its
business; 2[or]
(iv) By a private company,
unless it is a subsidiary of a public company; '[or]
(v) By a company established
with the object of financing industrial enterprises;]
(b) Any guarantee given or
any security provided-
(i) By a holding company in
respect of any loan made to its subsidiary; or
*[(ii) By the managing agent
or secretaries and treasurers in respect of any loan made to any company under
his or their management, or]
3[(iii) By
a banking company, or an insurance company, in the ordinary course of its
business; or
(iv) By a private company, unless
it is a subsidiary of a public company; or
(v) By a company established
with the object of financing industrial enterprises.]
(3) Nothing in this section
shall apply to a book debt unless the transaction represented by the book debt
was from its inception in the nature of a loan or an advance.
(4) For the purposes of this
section, any person in accordance with whose directions or instructions the
Board of directors of a company is accustomed to act shall be deemed to be a
director of the company.]
4[(5) Where
before the commencement of the Companies (Amendment) Act, 1965, any loan,
guarantee or security has been made, given or provided by a companv which could
not have been made, given or provided under this section as amended by that
Act, and such loan, guarantee or security is outstanding at such commencement,
the company shall, within six months from such conimencement, enforce the
repayment of the loan made or, as the case may be, revoke the guarantee given
or the security provided, notwithstanding anv agreement to the contrary
Provided
that the aforesaid period of six months may be extended by the Central
Government on an application made to it in that behalf by the company.]
1. Substituted for
sub-clause (iii) by the Companics (Amendment Act, 1965, w.e.f. 1-4-1967. For
the sub-clause, as it stood prior to its substitution, Appendix I.
2. Inserted by the Companies
(Amendmeiit) Act, 1966, w.e.f. 1-4-1967.
3. Substituted for
sub-clause (iii), ibid. For the
sub-clause, as it stood prior to its substitution, refer Appendix I.
4. Inserted by the Companies
(Ameridment) Act, 1965, w.e.f. 1-4-1967.
5[(6) Nothing
contained in this section shall apply to a company on and after the
commencement of the Companies (Amendment) Act ' 1999.]
6[Explanation:
For the purposes of this section, "loan" includes any deposit of
money made by one company with another company, not being a banking company.]
370A. 7[Provisions
as to certain loans which could not have been made if sections 369 and 370 were
in force. -Where
any loan made, guarantee given or security provided by a company and
outstanding at the commencement of the Companies (Amendment) Act, 1960 would
not have been made, given or provided if section 369 or section 370 had been in
force at the time when such loan was made, guarantee given or securitv
provided, the company shall, within six months from the commencement of that
Act, enforce the repayment of the loan made or, as the case may be, revoke the
guarantee given or the securitv provided, notwithstanding anv agreement to the
contrary:
Provided
that the period of six months within which the company is required by this
section to enforce the repayment of the loan or to revoke the guarantee or
security, may be extended-
(a) In the case of a loan,
guarantee or security under section 369, by the Central Government on an
application made to it by the company for that purpose;
(b) In the case of a loan,
guarantee or security under section 370, by a special resolution of the
company.]
371. Penalty
for contravention of '[section 369, 370 or 370A]. -
(1) Every person who is a party to any contravention of 8[section 369 or section 370 [excluding
sub-section (IC) or (I D)], or section 370A], including in particular any
person to whom the loan is made, or in whose interest the guarantee is given or
the security is provided, shall be punishable with fine which may extend to
five thousand rupees or with simple imprisonment for a term which may extend to
six months:
Provided
that where any such loan, or any loan in connection with which any such
guarantee or security has been given or provided by the lending company, has
been repaid in full, no punishment by wav of imprisonment shall be imposed
under this sub-section; and where the loan has been repaid in part, the maximum
punishment which may be imposed under this sub-section by way of imprisonment
shall be proportionately reduced.
(2) All persons who are
knowingly parties to any such contravention shall be liable, jointly and
severally, to the lending company for the repayment of the loan, or for making
good the sum which the lending company may have been called upon to pay in
virtue of the guarantee given or the security provided by such company.
5. Inscrted by the Companies
(Amendment) Act, 1999, w.r.e.f. 31-10-1998.
6. Inscrted by the Companies
(Amendment) Act, 1988, w.e.f. 17-4-1989.
7. Inserted by the
Coi-iipanies (Amendment) Act, 1960.
8. Substituted for section
369 or 370" ibid.
372. 9[Purchase by company of shares, etc., of other
companies. -
10[(1) A
company, whether by itself or together with its subsidiaries (hereafter in this
section and section 373 referred to as the investing company), shall not be
entitled to acquire, by way of subscription, purchase or otherwise (whether by
itself, or by any individual or association of individuals in trust for it or
for its benefit or on its account) the shares of any other body corporate
except to the extent, and except in accordance with the restrictions and
conditions, specified in this section.]
10 [(2) The
Board of directors of the investing company shall be entitled to invest in any
shares of any other body corporate up to such percentage of the subscribed
equity share capital, or the aggregate of the paid-up equity and preference
share capital, of such other body corporate, whichever is less, as may be
prescribed11:]
Provided that the aggregate of the investments so made by
the Board in all other bodies corporate shall not exceed "[such percentage
of the aggregate of the subscribed capital and free reserves of the investing
company, as may be prescribed]:
Provided further that the aggregate of the investments made
in all other bodies corporate in the same group shall not exceed 12[such percentage of the aggregate of the
subscribed capital and free reserves of the investing company, as may be
prescribed.]
(3) In computing at any time
the percentages specified in sub-section (2) and the provisos thereto, the
aggregate of the investments made by the investing company in other body or
bodies corporate [whether before or after the commencement of the Companies
(Amendment) Act, 1960] up to that time shall be taken into account.
13[(3A) A
company, which has defaulted in the repayment of any deposit referred to in
section 58A or part thereof or interest due thereupon in accordance with the
terms and conditions of such deposit, shall not make any investment under this
section till the default is made good.]
9. Substituted by the
Companies (Amendment) Act, 1960. For
text of original provision, see Appendix I.
10. Substituted by the
Companies (Amendment) Act, 1988, w.e.f. 17-4-1989. For text of provisions as they stood prior to substitution, refer
Appendix I.
11. Rule 11C ofthe Companies
(Central Government's) General Rules & Forms, 1956 provides that the Board
of Directors of a company shall be entitled to invest in the shares of any
other body corporate, pursuant to sub-section (2) of section 372, up to thirty
per cent of the subscribed equity share capital, or the aggregate of the
paid-up equity and preference share capital, of such other body corporate,
whichever is less.
Where the investments are made by a company together with its one or more
subsidiary companies, the percentage specified in this sub-rule shall be
computed with reference to the aggregate of the investments made by the company
and its subsidiaries.
The aggregate of the investments made by the Board in all other bodies
corporate shall not, except with the previous approval of the Central
Government, exceed-
(i) Thirty
per cent of the aggregate of the subscribed capital and free reserves of the
investing company; and
(ii) Thirty
per cent of the aggregate of the subscribed capital and free reserves of the
investing company, where such other bodies corporate are in the same group.
12. Substituted for thirty
percent of the subscribed capital of the investing company" by the
Companies (Amendment) Act, 1988, w.e.f. 17-4-1989.
13. Inserted by the Companies
(Amendment) Act, 1996, w.e.f. 1-3-1997.
(4) The investing company shall not make any investment in the
shares of any other body corporate in excess of the percentages specified in
sub-section (2) and the provisons thereto, unless the investment is sanctioned
by a resolution of the investing company in general meeting and unless "[previously]
approved by the Central Government:
Provided that the investing company may at any time
invest up to any amount in shares offered to it under clause (a) of sub-section
(1) of section 81 (hereafter in this section referred to as rights shares) irrespective
of the aforesaid percentages:
Provided further that when at any time the investing company
intends to make any investments in shares other than rights shares, then, in
computing at that time any of the aforesaid percentages, all existing investments,
if any, made in rights shares up to that time shall be included in the
aggregate of the investments of the company.
(5) No investment shall be
made by the Board of directors of an investing company in pursuance of
sub-section (2), unless it is sanctioned by a resolution passed at a meeting of
the Board with the consent of all the directors present at the meeting, except
those not entitled to vote thereon, and unless further notice of the resolution
to be moved at the meeting has been given to every director in the manner
specified in section 286.
(6) Every investing company
shall keep a register of all investments made by it in shares of any other body
or bodies corporate (whether in the same group or not and whether in the case
of a body corporate in the same group, such investments were made before or
after that body came within the same group as the investing company), showing
in respect of each investment the following particulars: -
(a) The name of the body
corporate in which the investment has been made;
(b) The date on which the
investment has been made;
(c) Where the body corporate
is in the same group as the investing coitipany, the date on which the body
corporate came in the same group;
(d) The names of all bodies
corporate in the same group as the investing company.
(7) Particulars of every
investment to which sub-section (6) applies shall be entered in the register
aforesaid within seven days of the making thereof or in the case of investments
made before the commencement of the Companies (Amendment) Act, 1960, within six
months from such commencement, or such further time as the Central Government
may grant on an application by the companv in that behalf.
(8) If default is made in
complying with the provisions of sub-section (6) or (7), the company, and every
officer of the company who is in default, shall be punishable with fine which
may extend to five hundred rupees and also with a further fine which may extend
to fifty rupees for every day after the first during which the default continues.
14. Substituted for further
it is" bv the Coiiipanies (Amcndment) Act, 1988, w.e.f. 17-4-1989.
(9) The register aforesaid
shall be kept at the registered office of the investing company and-
(a) Shall be open to
inspection at such office, and
(b) Extracts may be taken
there from and copies there of may be required,
By
any member of the investing company to the same extent, in the same manner, and
on the payment of the same fees as in the case of the register of members of
the investing company; and the provisions of section 163 shall apply
accordingly.
(10) Every investing company
shall annex in each balance sheet prepared by it after the commencement of the
Companies (Amendment) Act, 1960, a statement showing the bodies corporate
(indicating separately the bodies corporate in the same group) in the shares of
which investments have been made by it (including all investments, whether
existing or not, made subsequent to the date as at which the previous balance
sheet was made out) and the nature and extent of the investments so made in
each body corporate:
Provided
that in the case of a company whose principal business is the acquisition of
shares, stock, debentures or other securities (hereafter in this section
referred to as an investment company), it shall be sufficient if the statement
shows only the investments existing on the date as at which the balance sheet
to which the statement is annexed has been made out.
(11) For the purposes of this
section, a body corporate shall be deemed to be in the same group as the
investing company-
*[(a) If the body corporate is
the managing agent of the investing company; or]
(b) If the body corporate and
the investing company should, in virtue of sub-section (IB) of section 370, be
deemed to be under the same management.
(12) References in the
foregoing provisions of this section to shares shall in the case of investments
made by the investing company in other bodies corporate in the same group, be
deemed to include references to debentures also.
(13) The provisions of this
section except the first proviso to sub-section (2) "[and sub-section (5)]
shall also apply to an investment company.
(14) This section shall not
apply-
(a) To any banking or
insurance company;
(b) To a private company,
unless it is a subsidiary of a public company;
(c) To any company
established with the object of financing, whether by way of making loans or
advances to, or subscribing to the capital of, private industrial enterprises
in India, in any case where the Central Government has made or agreed to make
to the company a special advance for the purpose or has guaranteed or agreed to
guarantee the pavment of moneys borrowed by the company from anv iiistitution
outside India;
15. Inserted by the Companies (Anieridment) Act, 1965, w.e.f. 15-10-1965.
16[(d) To
investments by a holding company in its subsidiary, other than a subsidiary
within the meaning of clause (a) of sub-section (1) of section 4;]
*[(e) To investments by a managing
agent or secretaries and treasurers in a company managed by him or them-]]
17[(15) Nothing
contained in this section shall apply to a company on andafter the commencement
of the Companies (Amendment) Act, 1999.]
372A. 17[lnter-corporate loans and investments. -
(1) No company shall, directly or indirectly,-
(a) Make any loan to any
other body corporate,
(b) Give any guarantee, or
provide security, in connection with a loan made by any other person to, or to
any other person by, any body corporate; and
(c) Acquire, by way of
subscription, purchase or otherwise the securities of any other body corporate,
Exceeding
sixty per cent of its paid-up share capital and free reserves, or one hundred
per cent of its free reserves, whichever is more:
Provided
that where the aggregate of the loans and investments so far made, the amounts
for which guarantee or security so far provided to or in all other bodies
corporate, along with the investment, loan, guarantee or security proposed to
be made or given by the Board, exceeds the aforesaid limits, no investment or
loan shall be made or guarantee shall be given or security shall be provided
unless previously authorised by a special resolution passed in a general
meeting.
Provided
further that the Board may give guarantee, without being previously authorsed
by a special resolution, if,-
(a) A resolution is passed in
the meeting of the Board authorising to give guarantee in accordance with the
provisions of this section;
(b) There exist exceptional
circumstances, which prevent the company from obtaining previous authorisation
by a special resolution passed in a general meeting for giving a guarantee; and
(c) The resolution of the
board under clause (a) is confirmedwithin twelve months, in a general meeting of
the company or the annual general meeting held immediately after passing of the
Board's resolution, whichever is earlier.-
Provided
also that the notice of such resolution shall indicate clearly the specific
limits, the particulars of the body corporate in which the investment is
proposed to be made or loan or securitv or guarantee to be given, the purpose
of the investment, loan or security or guarantee, specific sources of f nding
and such other details.
(2) No loan or investment
shall be made or guarantee or security given bv the company unless the
resolution sanctioning it is passed at a meeting of the board with the consent
of all the directors present at the meeting and the prior approval of the
public financial institution referred to in section 4A, where any term loan is
subsisting, is obtained.
16. Substituted for (d) to
investments by a holding company in its subsidiary; or" by the companies
amendment) Act, 1988, w.e.f. 17-4-1998.
17. Inserted by the companies
(Amendment) Act, 1999, w.e.f. 31-10-1998.
Provided
that prior approval of a publicfinancial institution shall not be required
where the aggregate of the loans and investments so far made, the amounts for
which guarantee or security so far provided to or in all other bodies
corporate, alongwith the investments, loans, guarantee or security proposed to
be made or given does notexceed the limit of sixtypercentspecified in
sub-section (1), if there is no default in repayment of loan instalments or
payment of interest thereon as per the terms and conditions of such loan to the
public financial institution.
(3) No loan to any body
corporate shall be made at a rate of interest lower than the prevailing bank
rate, being the standard rate made public under section 49 of the Reserve Bank
of India Act, 1934 (2 of 1934).
(4) No company, which has
defaulted in complying with the provisions of section 58A, shall, directly or
indirectly, -
(a) Make any loan to any body
corporate;
(b) Give any guarantee, or
provide security, in connection with a loan made by any other person to, or to
any other person by, any body corporate,- and
(c) Acquire, by way of
subscription, purchase or otherwise the securities of any other body corporate,
till such default is subsisting.
(5) (a) Every company shall keep a register
showing the following particulars in respect of every investment or loan made,
guarantee given orsecurity provided by it in relation to any body corporate
under sub-section (1), namely. -
(i) The name of the body
corporate;
(ii) The amount, terms and
purpose of the investment or loan or security or guarantee;
(iii) The date on which the
investment or loan has been made; and
(iv) The date on which the
guarantee has been given or security has been provided in connection with a
loan.
(b) Theparticulars of
investment, loan, guarantee orsecurity referred to in clause (a) Shall be
entered chronologically in the register aforesaid within seven days of the
making of such investment or loan, or the giving of such guarantee or the
provision of such security.
(6) The register referred to
in sub-section (5) shall be kept at the registered office of the company
concerned and-
(a) Shall be open to
inspection at such office; and
(b) Extracts may be taken
therefrom and copies thereof may be required,
By
any member of the company to the same extent, in the same manner, and on
payment of the same fees as in the case of the registerof members of the
company, and the provisions of section 163 shall apply accordingly.
(7) The Central Government
may prescribe guidelines for the purposes of this section.
(8) Nothing contained in this
section shall apply, -
(a) To any loan made any
guarantee given or any security provided or any investment made by-
(i) A banking company, or an
insurance company, or a housing finance company in the ordinary course of its
business, or a company established with the object of financing industrial
enterprises, or of providing infrastructural facilities,
(ii) A company whose
principal buisiness is the acquisition of shares, stock, debentures or other
securities; iary of a public company;
(iii) A private company unless
it is a subsidiary of a public company;
(b) To investment made in
shares allotted in pursuance of clause (a) of sub-section (1) of section 81;
(c) To any loan made by a
holding company to its wholly owned subsidiary;
(d) To any guarantee given
security provided by a holding company in respect of loan made to its wholly
way of subscription, purchasesor otherwise, the securities of its wholly owned
subsidiary;or
(e) To acquisition by a
holding company, by way of subscription, purchases or otherwise, the securities
of its wholly owned subsdiary.
(9) If default is made in
complying with the provisionsn of this section, other than sub-section (5), the
company and every officer of the company who is in default shall be punishable
with imprisonment, which may extend to two years or with fine, which may extend
to thousand rupees:
Provided that where any such loan or any loan in
connection with which any such guarantee or security has been given, or
provided by the company, has been repaid in full, no punishment by way of
imprisonment shall be imposed under this sub-section, and where suchloan has
been repaid in part, the maximum punishment which may be imposed under this
sub-section by way of imprisonment shall be approapriately reduced:
Provided further that all persons w are knowingly parties to
any such contravention shall be liable, jointly and severally, to the company
for the repaument of the loan or for making good the same which the company may
have been called upon to pay by virtue of the guarantee given or the securities
provided by such company.
(10) If default is made in
complying with the provisions of sub-section (5), the company who is in default
shall be punishable with fine, which may extend to five thousand rupees and
also with a further fine which may extend to five hundred rupees for every day
after the first day during which the default continues.
Explanation. -For the purposes of this section, -
(a) 'Loan" includes
debentures or any deposit of money made by one cpmpany with another company, of
being a banking company;
(b) "Free reserves"
means those reserves which, as per the latest audited balat cc sheet of the
company, are f ree for distribution as dividend and shall include balance to
the credit of the securities premium account but shall not include share
application money.]
373. Investments made before commencement of Act. Where any investments have been made by a company 18[in any other body corporate in the dame
group] at any time after the first day of April, 1952, which, if "section
372 had been then in force, could not have been made except on the authority of
a resolution passed by the investing company and the approval of the Central
Government, the authority of the company by means of a resolution and the
approval of the Central Government shall be obtained to such investments,
within six months from the commencement of this Act; and if such authority and
approval are not so obtained, the Board of directors of the so far as thev may
be in excess of the limits specified in sub-section (2) of section 372 and the 18[srcond] proviso to that subsection,
within two years from the commencement of this Act.
18. Inserted by the Companies
(Amendment) Act, 1960.
374. Penalty
for contravention of section 372 or 373. -If default is made in complying with the
provisions of 19[section 372
[excluding sub-sections (6) and (7)] or section 3731, every officer of the
company who is in default shall be punishable with fine which may extend to
five thousand rupees.
375. *[Managing
agent not to engage in business competing with business of managed company. -
(1) A managing agent shall not engage on his own account in any
business which is of the same nature as, and directly competes with, the
business carried on by a company of which he is the managing agent or by a
subsidiary of such company, unless such company by special resolution permits
him to do so.
(2) For the purposes of
sub-section (1), a managing agent shall be deemed to be engaged in business on
his own account, if such business is carried on by. -
(a) A firm in \vhich he is a
partner; or
(b) A private company at any
general meeting of which not less than twentv per, cent of the total voting
power niav be exercised or controlled bv any of the following persons, or by
any two or more of them acting together, namely, (1) the managing agent
aforesaid; (ii) where such managing agci-it is a firm, anV partner in the firm;
and (iii) where such managing agent is a body corporate, aiiv officer of the
body corporate;
(c) A body corporate (not
being a private company) at any general meeting of which not less than seventy
per cent of the total voting power mav be exercised or controlled by any of the
following persons, or by anv two or more of them acting together, namely, (1)
the managing agent aforesaid; (ii) where such managing agent, is a firm, any
partner in the firi-n; and (iii) where such managing agent is a body corporate,
anv officer of such body corporate.
(3) If a managing agent
engages in any business in contravention of this section, he shall be deemed to
have received all profits and belief its accruing to him from such business, in
trust for the company under his management or the subsidiary of such company,
as the case mav be; and where such profits and benefits are deemed to have been
so received bv the managing agent in trust for two or more such companies or
subsidiaries, such profits and benefits shall be held by the managing agent in
trust for each of them ill such proportions as may be agreed upon bet"recn
them or, failing such agreement, as may be decided by the Court.]
376. Condition
prohibiting reconstruction or amalgamation of company except on continuance of
managing agent, etc., to be void. -Where any provision in the memorandum or articles of
a company, or in any resolution passed in general meeting, by or by the board
of directors of, the company, or in agreement between the company, and *[its
managing agent or] any other person, whether made before or after the
commencement of this Act,
prohibits the reconstruction of the company or its amalgamation with any other body corporate or bodies
corporate, either absolutely or except on the condition that the managing director
*[, managing agent, secretaries and treasurers,] or manager of the company is
appointed or reappointed as *[secretaries and treasurers,] managing director
*[, managing agent] or manager of the reconstructed company or of the body
resulting from amalgamation, as the case may be, shall become void with effect
from the commencement of this Act, or be void, as the case may be.
19. Substituted for section
372 or 373 by the companies (Amendment) Act, 1960.
* In terms of section 6 of
the Companies (Amendment) Act 1969, on and from 3-4-1970, so much of he
provisions of the Act as relate to managing agents and secretaries and
treasurers shall cease to have effect except as respects things done or omitted
to be done under those provisions before such cesser. Such provisions are
marked off bu square brackets with asterisk.
377. *[Restrictions
on right of managing agent to appoint directors. -
(1) The managing agent of a company may, if so authorised by its
articles, appoint not more than two directors where the total number of the
directors exceeds five, and one director where the total number does not exceed
five.
20[(lA) Nothing
contained in sub-section (1), or in any other provision of this Act, or in the
memorandum or articles of a company, or in any agreement executed by it, or in
any resolution passed by the company in general meeting, or by its Board of
directors shall be deemed to authorise the managing agent to appoint the
chairman of the Board of directors.]
(2) The managing agent may,
at any time, remove any director so appointed, and appoint another director in
his place or in the place of a director so appointed who'resigns or otherwise
vacates his office.
(3) Any provision contained
in the articles of, or in any agreement with, the company authorising the
managing agent to appoint more than the number before the commencement of this
Act, shall, in regard to the excess, be void, with effect from the expiry of
one month from such commencement.
(4) Where at the commencement
of this Act, the number of directors appointed by the managing agent exceeds
the number authorised under sub-section (1), the managing agent shall determine
which of them shall continue to hold office, and intimate the choice made by
him to the company before the expiry of one month from such commencement; and
only the director or directors so chosen shall continue to hold office as
directors after such expiry.
(5) If no choice is made by
the managing agent as aforesaid, all the directors appointed by him shall, with
effect from the expiry of one month from the commencement of this Act, be
deemed to have vacated their offices.
21[(6) Where
from any cause the total number of directors is so reduced as not to exceed
five, but the number of directors appointed by the managing agent exceeds,
after such reductions, the number authorised under sub-section (1), the
managing agent shall determine which of them shall continue to hold office and
intimate the choice made by him to the company before the expiry of one month
from the happening of the cause and only the director so chosen shall continue
to hold office as director with effect from such expiry:
Provided
that if no choice is made by the managing agent as aforesaid, all the directors
appointed by him shall, with effect from such expiry, be deemed to have vacated
their offices].] 1
20. Inserted by the Companies
(Amendment) Act, 1960.
21. Inserted, ibid.
In terms of section 6of the companies (Amendment) Act, 1969, on and from
3-4-1970, so much of the provisions of the Act as relate to managing agents and
secretaries and treasurers shall cease to have effect except as resoects things
done or omitted to be done under those provisions before such cesser. Such provisions
are marked off by square brackets with asterisk.
*[CHAPTER
IV
A.
SECRETARIES AND TREASURERS
378. Appointment
of secretaries and treasurers. -Subject
to the provisions of this Chapter, a company may appoint a firm or body
corporate as its secretaries and treasurers.
22[* * *]
379. Provisions
applicable to managing agents to apply to secretaries and treasurers with the
exceptions and modifications specified in sections 380 to 383. -Subject to the exceptions and modifications
specified in sections 380 to 383, -
(a) All the provisions of
this Act applicable to, or in relation to, a managing agent which is a firm or
body corporate shall apply to secretaries and treasurers; and
(b) All the provisions of
this Act applicable to, or in relation to, any person or persons connected or
associated in any manner with such a managing agent shall apply to, or in
relation to, any person or persons connected or associated with secretaries and
treasurers in the like manner; and
Subject
as aforesaid 23[and unless the
context otherwise requires], all references in this Act to a managing agent or
any person or persons connected or associated in any manner with a managing
agent shall be construed accordingly, as including a reference to secretaries
and treasurers or to the person or persons connected or associated with them in
the like manner.
380. Sections
324, 330 and 332 not to apply. -Sections
324, 330 and 332 shall not apply to secretaries and treasurers.
381. Section
348 to apply subject to a modification. -Section
348 shall apply to secretaries and treasurers subject to the modification that
for the words "ten per cent of the net 24[*
* *] profits occurring in the section, the words "seven and a half per
cent of the net 24[* * *]
profits" shall be substituted.
382. Secretaries
and treasurers not to appoint directors. -Secretaries and treasurers shall have no
right to appoint any director of the company; and sections 377 and 261 shall
not apply to, or in relation to, secretaries and treasurers, or persons
connected or associated with them in the manner in which the persons specified
in section 261 are connected or associated with managing agents.
383. Secretaries
and treasurers not to sell goods or articles produced by company, etc., unless
authorised by board. -Secretaries
and treasurers shall have no right, unless, and except to the extent to which,
they are authorised by the Board of directors, to sell any goods or articles
manufactured or produced by the company, or to purchase, obtain, or acquire
machinery, stores, goods or materials for the purposes of the company, or to
sell the same when no longer required for those purposes.]
22. Proviso omitted by the
Companies (Amendment) Act, 1960.
23. Inserted, ibid.
24. Annual, omitted, ibid.
* In terms of section 6 of
the Companies (Amendment) Act, 1969, on and from 3-4-1970, so much of the
provisions of the Act as relate to In anaging agents and secretaries and
treasurers shall cease to have effect except as respects things done or omitted
to be done under those provisions before such cesser. Such provisions are marked off by square brackets with asterisk.
383A. 25[Certain
companies to have secretaries. -
(1) Every company 26[having
such paid-up share capital as may be prescribed] shall have a whole-time
secretary, and where the Board of directors of any such company comprises only
two directors, neither of them shall be the secretary of the company.
27[(1A) If
a company fails to comply with the provisions of sub-section (1), the company
and every officer of the company who is in default, shall be punishable with
fine which may extend to fifty rupees for every day duringwhichthe default
continues:
Provided
that in any proceedings against a person in respect of an offence under this
subsection, it shall be a defence to prove that all reasonable efforts to
comply with the provisions of subsection (1) were taken or that the financial
position of the company was such that it was beyond its capacity to engage a
whole time secretary.]
(2) Where, at the
commencement of the Companies (Amendment) Act, 1974, -
(a) Any firm or body
corporate is holding office, as the secretary of a company, such firm or, body
corporate shall, within six months from such commencement, vacate office as
secretary of such company;
(b) Any individual is holding
office as the secretary of more than one company having a paid-up share capital
of rupees twentv-five takhs oi- more, he shall, within a period of six months
from such commencement, exercise his option as to the company of which he
intends to continue as the secretary and shall, on and from such date, vacate
office as secretary in relation to all other companies.]
B.MANAGERS
384. Firm
or body corporate not to be appointed manager. -28[No
company] shall, after the commencement of this Act, appoint or employ, or after
the expirv of six months from such commencement, continue the appointment or
cmplonment of, any firm, body corporate or association as its manager.
385. Certain
persons not to be appointed managers. -
(1) No company shall, after the commencement of this Act, appoint
or employ, or continue the appointment or ei-nploymcnt of, any person as its
manager who-
(a) Is an undischarged
insolvent, or has at arty time within the preceding five years been adjudged an
insolvent; or
(b) Suspends, or has at any
time within the preceding five years suspended, payment to his creditors; or
makes, or has at any time within the preceding five years made, a composition
with them; or
(c) Is, or has at any time
within the preceding five years been, convicted by a Court in India of an
offence involving moral turpitude.
25. Inserted by the Companies
(Amendment) Act, 1974, w.e.f. 1-2-1975.
26. Substituted for
"having a paid up share capital of rupees twenty-five lakhs or more"
by the Companies Amendment) Act, 1998, w.e.f. 1-12-1988. Companies (Appointment
and qualifications of secretary) Rules, 1988 lays down that with effect from
13-4-1993 every company having paid-up share capital of Rs.50 Lakhs and above
shall have a whole-time secretary.
27. Inserted ibid.
28. Substituted for "No
public company and no private company which is subsidiary of a public
company," bv the Companies (Amendment) Act, 1960.
(2) The Central Government
may, by notification in the Official Gazette, remove the disqualification
incurred by any person in virtue of clause (a), (b) or (c) of subsection (1),
either generally or in relation to any company or companies specified in the
notification.
386. Number
of companies of which a person may be appointed manager. -
(1) No company shall, after
the commencement of this Act, appoint or employ any person as manager, if he is
either the manager or the managing director of any other company, except as
provided in sub-section (2).
(2) A company ma v appoint or
employ a person as its manager, if he is the manager or managing director of
one, and not more than one, other company:
Provided
that such appointment or employment is made or approved by a resolution passed
at a meeting of the Board with the consent of all the directors present at the
meeting, and of which meeting and of the resolution to be moved thereat,
specific notice has been given to all the directors then in India.
(3) Where, at the
commencement of this Act, any person is holding the office either of manager or
of managing director in more than two companies, he shall, within one year from
the commencement of this Act, choose not more than two of those companies as
companies in which he wishes to continue to hold the office of manager or
managing director, as the case may be; and the provisions of clauses (b) and
(c) of sub-section (1) and of sub-sections (2) and (3) of section 276 shall
apply mutatis mulandis in relation to this case, as those provisions apply in
relation to the case of a director.
(4) Notwithstanding anything
contained in sub-sections (1) to (3), the Central Government may, by order,
permit any person to be appointed as a manager of more than two companies, if
the Central Government is satisfied that it is necessary that the companies
should, for their proper working, function as a single unit and have a common
manager.
(5) [Omitted by the Companies
(Amendment) Act, 1960. For the original
subsection, refer appendix I.]
387. Remuneration
of manager. -The
managers of a company may, subject to the provisions of section 198, receive
remuneration either by way of a monthly payment, or by way of a specified
percentage 29[* * *] of the
"net profits" of the company calculated in the manner laid down in
sections 349, 350 and 35 1, or partly by the one way and partly by the other:
30[Provided
that except with the approval31
of the Central Government such remuneration shall not exceed in the aggregate
five per cent of the net profits.]
388. Application
of sections 32[269, 310], 311, 312 and
317 to managers. 33 -The provisions of sections 32[269, 310], 31 1 and 317 shall applv in
relation to the manager of a company as they apply in relation to a managing
director thereof, anclthosc of section 312 shall apply in relation to the
manager of a company, as they apply to a director thereof.
29. 'Not exceeding five,'
omitted by the Companies (Amendment) Act, 1960.
30. Inserted, ibid,
31. See Form No. 25A of
Genct-al Rules and Forms.
32. Substituted foi- "3
IO' by the Companies (Amendment) Act, 1960.
33. See Form Nos. 25A and 26
of General Rules and Forms.
388A.
33a[Sections 386 to 388 not to
apply to certain private companies. -Sections 386, 387 and 388 shall not apply to a
private company unless it is a subsidiary of a public company.]
34[CHAPTER IVA
POWERS OF
CENTRAL GOVERNMENT TO REMOVE MANAGERIAL PERSONNEL FROM OFFICE ON
THE
RECOMMENDATION OF
THE 35[COMPANY LAW
BOARD]
388B. 34[Reference to 35[Company Law Board]
of cases against managerial personnel: -
(1) Where in the opinion of
the Central Government there is circumstances suggesting-
(a) That any person concerned
in the conduct and management of the affairs of a company is or has been in
connection therewith guilty of fraud, misfeasance, persistent negligence or
default in carrying out his obligations and functions under the law, or breach
of trust; or
(b) That the business of a
company is not or has not been conducted and managed by such person in
accordance with sound business princlples or prudent commercial practices; or
(c) That a company is or has
been conducted and managed by such person in a manner which is likely to cause,
or has caused, serious injury or damage to the interest of the trade, industry
or business to which such company pertains; or
(a) That the business of a
company is or has been conducted and managed by such person with intent to
defraud its creditors, members or any other persons or otherwise for a
fraudulent or unlawful purpose or in a manner prejudicial to public interest,
The
Central Government may state a case against the person aforesaid and refer the
same to the 35[Company Law
Board] with a request that the 35[Company
Law Board] may inquire into the case and 36[record
a decision] as to whether or not such person is a fit and proper person to hold
the office of director or any other office connected with the conduct and
management of any company.
(2) Every case under
sub-section (1) shall be stated in the form of an application which shall be
presented to the 35[Company
Law Board] or such officer thereof as it may appoint in this behalf.
(3) The person against whom a
case is referred to the 35[Company
Law Board] under this section shall be joined as a respondent to the
application.
33a. Inserted by the Companies (Amendment) Act, 1960.
34. Inserted by the Companies
(Amendment) Act, 1963, w.e.f. 1-1-1964.
35. Substituted for "High
Court' by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991. Earlier, 'High
Court' was substittited for 'Tribunal' by the Companies Tribunal (Abolition)
Act, 1967, w.e.f. 1-7-1967.
36. Substituted for 'record a
finding' by the Companies Tribunal (Abolition) Act, 1967, w.e.f. 1-7-1967.
(4) Every such application-
(a) Shall contain a concise
statement of such circumstances and materials as the Central Government may consider
necessary for the purpose of the inquiry, and
(b) Shall be signed and
verified in the manner laid down in the Code of Civil Procedure, 1908 (5 of
1908), for the signature and verification of a plaint in a suit by the Central
Government.
(5) The 37[Company Law Board] may at any stage of
the proceedings allow the Central Government to alter or amend the application
in such manner and on such terms as may bejust, and all such alterations or
amendments shall be made as may be necessary for the purpose of determining the
real questions in the inquiry.]
388C. 38[Interim
order by 37[Company Law Board]. -
(1) Where during the pendency
of a case before the 37[Company
Law Board] it appears necessary to the" [Company Law Board] so to do in
the interest of the members or creditors of the company or in the public
interest, the 37[Company Law
Board] may on the application of the Central Government or on its own motion,
by an order-
(a) Direct that the
respondent shall not discharge any of the duties of his office until further
orders of the 37[Company Law
Board], and
(b) Appoint a suitable person
in place of the respondent to discharge the duties of the office held by the
respondent subject to such terms and conditions as the 37[Company Law Board] may specify in the
order.
(2) Every person appointed
under clause (b) of sub-section (1) shall be deemed to be a public servant
within the meaning of section 21 of the Indian Penal Code (45 of 1860)'.]
388D.
38[39[Decision of the 40[Conipany
Law Board]]. -At
the conclusion of the hearing of the case, the 41[37[Company Law Board] shall record its
decision] stating therein specifically as to whether or not the respondent is a
fit and proper person to hold the office of director or any other office
connected with the conduct and management of any company.]
(1) Notwithstanding any other provision contained in this Act, the
Central Government 43[shall,
by order, remove from office any director, or any other person concerned in the
conduct and management of the affairs, of a company, against whom there is a 44[decision of the 45[Company Law Board] under this Chapter]:
37. Substituted for 'High Court'
by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991. Earlier, 'High Court' was substituted for
'Tribunal' by the CompaniesTribunal (Abolition) Act, 1967, w.e.f. 1-7-1967.
38. Inserted by the Companies
(Amendment) Act, 1963, w.e.f. 1-1-1964.
39. Substituted for 'Findings
of the Tribunal' by the Companies Tribunal (Abolition) Act, 1967, w.e.f.
1-7-1967.
40. Substituted for 'High
Court' by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
41. Substituted for 'Tribunal
shall record its findings' by the Companies Tribunal (Abolition) Act, 1967,
w.e.f. 1-7-1967.
42. Inserted by the Companies
(Amendment) Act, 1963, w.e.f. 1- 1-1964.
43. Substituted for 'may' by
the Companies Tribunal (Abolition) Act, 1967, w.e.f. 1-7-1967.
* See Appendix II.
44. Substituted for "finding of the
Tribunalibunal under this chapter or a decision of a High Court thereon"
by the Companies Tribunal (Abolitiotion) Act. 1967, w.e.f. 1-7-1967.
45. Substituted for "High
Court" by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
*[Provided
that where a firm or a body corporate is concerned in the conduct and
management of the af fairs of a company as its managing agent or secretaries
and treasurers, and the 46[decision
of the 45[Company Law Board]
is against any partner in such firm, or any directors of, or any person holding
a general power of attorney from, such body corporate, the Central Government
may also remove from the office of managing agent or secretaries and
treasurers, such firm or body corporate.]
47[*[(2)
No order removing a firm oi, body corporate from the office of managing agents
or secretaries and treasurers shall be made in pursuance of the proviso to
sub-section (1) unless such firm or body corporate has been given a reasonable
opportunity of showing cause against the same:
Provided
that no matter shall be raised bv such firm or body corporate before the
Central Government if such matter has been decided by the 45[Company Law Board.]]]
(3) The person against whom
an order of removal from office is made under this section shall not hold the
office of a director or any other office connected with the conduct and
management of the affairs of any company during a period of five years from the
date of the order of removal:
Provided
that the Central Government may, with the previous concurrence of the 48[Cornpany Law Board], permit such person
to hold any such office before the expiry of the said period of five years.
(4) Notwithstanding anvthing
contained in any other provision of this Act, or any other law or any contract,
memorandum or articles, on the removal of a person from the office of a
director or, as the case may be, any other office connected with the conduct
and management of to affairs of the company, that person shall not be entitled
to, or be paid, an, compensation for the loss or termination of office.
(5) On the removal of a
person from the office of a director or, as the case may be, any other office
connected with the conduct and management of the affairs of the company, the
company with the previous approval of the Central Government, appoint another
person to that office in accordance with the provisions of this Act.]
45. Substituted for "High
Court" by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
46. Substituted for finding of
a Tribunal or the decision ol a High Court by the Companies Tribunal
(Abolition) Act, 1967, w.e.f. 1-7-1967.
47. Substituted ibid.
48. Substitutred for
"High Court" by the Companies (Amendment) Act, 1988, w.e.f.
31-5-1991.Earlier high Court" was substituted for "Tribunal" by
the Cornpanies (Amendment) Act, 1967, w.e.f. 1-7-1967.
CHAPTER
V
ARBITRATION,
COMPROMISES, ARRANGEMENTS
AND
RECONSTRUCTIONS
389. Power
for companies to refer matters to arbitration. -[Oinilted by the Companies (Amendment) Act,
1960. For ihe origin section, refer Appendix 1.]
390. Interpretation
of sections 391 and 393. -In
sections 391 and 393, -
(a) The expression
"company" means any company liable to be wound up under this Act;
(b) The expression
"arrangement' includes a reorganization of the share capital of the
company by the consolidation of shares of different classes, or by the division
of shares into shares of different classes or, by both those methods; and
(c) Unsecured creditors who
may have filed suits or obtained decrees shall be deemed to be of the same
class as other unsecured creditors.
391. Power
to compromise or make arrangements with creditors and members. -
(1) Where a compromise or arrangement is proposed-
(a) Between a company and its
creditors or any class of them;
(b) Between a company and its
members or anv class of them;
The
Court may, on the application of the company or of any creditor or member of
the company, or, in the case of a company which is being wound up, of the
liquidator, order a meeting of the creditors or class of creditors, or of the
members or class of members, as the case mav be, to be called, held and
conducted in such manner as the Court directs.
(2) If a majority in number
representing three-fourths in value of the creditors, or class of creditors, or
members, or class of members, as the case mav be, present and voting either in
person or, where proxies are allowed 49[under
the rules made under section 643], by proxy, at the meeting, agree to anv
compromise or arrangement, the compromise or arrangement shall, if sanctioned
bv the Court, be binding on all the creditors, all the creditors of the class,
all the members, or all the members of the class, as the case may be, and also
on the company, or in the case of a company which is being wound up, on the
liquidator and contributories of the company:
50[Provided
that no order sanctioning any compromise or arrangement shall be made by the
Court unless the Court is satisfied that the company or any other person by
whom an application has been made under sub-section (1) has disclosed to the
Court, by affidavit or otherwise, all material facts relating to the 6ompany,
such as the latest financial position of the company, the latest auditor's
report on the accounts of the company, the pendency of ariv investigation
proceedings in relation to the company under sections 235 to 251, and the
like.]
49. Inserted by the Companies
(Amendment) Act, 1960.
50. Inserted by the Companies
(Amendment) Act, 196-5, w.e.f. 15-10-1966.
(3) An order made by the
Court under sub-section (2) shall have no effect until a certified copy of the
order has been filed with the Registrar.
(4) A copy of every such
order shall be annexed to every copy of the memorandum of the company issued
after the certified copy of the order has been filed as aforesaid, or in the
case of a company not having a memorandum, to every copy so issued of the
instrument constituting or defining the constitution of the company.
(5) If default is made in
complying with sub-section (4), the company, and every officer of the company
who is in default, shall be punishable with fine, which may extend to ten
rupees for each copy in respect of which default is made.
(6) The Court may, at any
time after an application has been made to it under this section, stay the
commencement or continuation of any suit or proceeding against the company on
such terms as the Court thinks fit, until the application is finally disposed
of.
(7) An appeal shall lie from
any order made by a Court exercising original jurisdiction under this section
to the Court empowered to hear appeals from the decisions of that Court, or if
more than one Court is so empowered, to the Court of inferior jurisdiction.
The
provisions of sub-sections (3) to (6) shall apply in relation to the appellate
order and the appeal as they apply in relation to the original order and the
application.
392. Power
of High Court to enforce compromises and arrangements. -
(1) Where a High Court makes an order under section 391 sanctioning
a compromise or an arrangement in respect of a company, it-
(a) Shall have power to
supervise the carrying out of the compromise or arrangement; and
(b) May, at the time of
making such order or at any time thereafter, give such directions in regard to
any matter or make such modifications in the compromise or arrangement, as it
may consider necessary for the proper working of the compromise or arrangement.
(2) If the Court aforesaid is
satisfied that a compromise or arrangement sanctioned under section 391 cannot
be worked satisfactorily with or without modifications, it may, either on its
own motion or on the application of any person interested in the affairs of the
company, make an order winding up the company, and such an order shall be deemed
to be an order made under section 433 of this Act.
(3) The provisions of this
section shall, so far as may be, also apply to a company in respect of which an
order has been made before the commencement of this Act under section 153 of
the Indian Companies Act, 1913 (7 of 1913), sanctioning a compromise or an
arrangement.
393. Information
as to compromises or arrangements with creditors and members:
(1) Where a meeting of creditors or any class of creditors, or of
members or any class of members, is called under section 391, -
(a) With every notice calling
the meeting which is sent to a creditor or member, there shall be sent also a
statement setting forth the terms of the compromise or arrangement and
explaining its effect, and in particular, stating any material interests of the
directors, managing director *[, managing agent, secretaries and treasurers] or
manager of the company, whether in their capacity as such or as members or
creditors of the company or otherwise, and the effect on those interests, of
the compromise or arrangement, if, and in so far as, it is different from the
effect on the like interests of other persons; and
(b) In every notice calling
the meeting which is given by advertisement, there shall be included either
such a statement as aforesaid or a notification of the place at which and the
manner in which creditors or members entitled to attend the meeting may obtain
copies of such a statement as aforesaid.
(2) Where the compromise or
arrangement affects the rights of debenture holders of the company, the said
statement shall give the like information and explanation as respects the
trustees of any deed for securing the issue of the debentures as it is required
to give as respects the company's directors.
(3) Where a notice given by
advertisement includes a notification that copies of a statement setting forth
the terms of the compromise or arrangement proposed and explaining its effect
can be obtained by creditors or members entitled to attend the meeting, every
creditor or member so entitled shall, on making an application in the manner
indicated by the notice, be furnished by the company, free of charge, with a
copy of the statement.
(4) Where default is made in
complying with any of the requirements of this section, the company, and every
officer of the company who is in default, shall be punishable with fine which
may extend to five thousand rupees; and for the purpose of this sub-section any
liquidator of the company and any trustee of a deed for securing the issue of
debentures of the company shall be deemed to be an officer of the company:
Provided
that a person shall not be punishable under this sub-section if he shows that
the default was due to the refusal of any other person, being a director,
managing director *[, managing agent, secretaries and treasurers], manager or
trustee for debenture holders, to supply the necessary particulars as to his
material interests.
(5) Every director, managing
director *[, managing agent, secretaries and treasurers] or manager of the
company, and every trustee for debenture holders of the company, shall give
notice to the company of such matters relating to himself as may be necessary
for the purposes of this section; and if he fails to do so, he shall be
punishable with fine which may extend to five hundred rupees.
394. Provisions
for facilitating reconstruction and amalgamation of companies. -
(1) Where an application is made to the Court under section 391 for
the sanctioning of a compromise or arrangement proposed between a company and
any such persons as are mentioned in that section, and it is shown to the
Court-
(a) That the compromise or
arrangement has been proposed for the purposes of, or in connection with, a
scheme for the reconstruction of any company or companies, or the amalgamation
of anv two or more companies; and
(b) That under the scheme the
whole or any part of the undertaking, property or liabilities of any company
concerned in the scheme (in this section ref erred to as a "transferor
company) is to be transferred to another company (in this section referred to
as "the transferee company);
The
Court may, either by the order sanctioning the compromise or arrangement or by
a subsequent order, make provision for all or any of the following matters:
(i) The transfer to the
transferee company of the whole or any part of the undertaking, property or
liabilities of any transferor company;
(ii) The allotment or
appropriation by the transferee companv of any shares, debentures, policies, or
other like interests in that company which, under the compromise or
arrangement, are to be allotted or appropriated bv that companv to or for any
person;
(iii) The continuation by or
against the transferee company of any legal proceedings pending by or against
any transferor company;
(iv) The dissolution, without
winding up, of any transferor company;
(v) The provision to be made
for any persons who, within such time and in such manner as the Court directs,
dissent from the compromise or arrangement; and
(vi) Such incidental, consequential
and supplemental matters as are necessary to secure that the reconstruction or
amalgamation shall be full - and effectively carried out:
51[Provided
that no compromise or arrangement proposed for the purposes of, or in
connection xvith, a scheme for the amalgamation of a company, which is being
wound up, with any other company or companies, shall be sanctioned by the Court
unless the Court has received a report from the Company Law Board or the
Registrar that the affairs of the company have not been conducted in a manner
prejudicial to the interests of its members or to public interest:
Provided
further that no order for the dissolution of any transferor company under
clause (iv) shall be made by the Court unless the Official Liquidator has, on
scrutiny of the books and papers of the company, made a report to the Court
that the affairs of the company have not been conducted in a manner prejudicial
to the interests of its members or to public interest.]
(2) Where an order under this
section provides for the transfer of any property or liabilities, then, by
virtue of the order, that property shall be transferred to and vest in, and
those liabilities shall be transferred to and become the liabilities of, the
transferee company; and in the case of any property, if the order so directs,
freed from any charge which is, by virtue of the compromise or arrangement, to
cease to have effect.
51. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
(3) Within 52[thirty] days after the making of an order
under this section, cvcrv company in relation to which the order is made shall
cause a certified copy thereof to be filed with the Registrar for registration.
If
default is made in complying with this subsection, the company, and evcrv officerof
the company who is in default, shall be punishable with fine which mav extend
to fifty rupees.
(4) In this section-
(a) "Property includes
property, rights and powers of every description; and "lia6ititics"
includes du'ties of every description; and
(b) "Transferee
company" does not include anv company other than a companv within the
meaning of this Act; but "transferor company" includes any body
corporate, whether a company within the meaning of this Act or not.
394A.
53[Notice to be given to Central
Governmentl4 for applications under sections 391 and 394. -The Court shall give notice of everv
application made to it under section 391 or 394 to the Central Government, and
shall take into consideration the representations, if any, made to it by that
Government before passing anv order under any of these sections.]
(1) Where a scheme or contract involving the transfer of shares or
any class of shares in a company (in this section referred to as "the
transferor company") to another company (in this section referred to as
the transferee company"), has, within four months after the making of the
offer in that behalf by the transferee company, been approved by the holders of
not less than ninetenths in value of the shares whose transfer is involved
(other than shares already held at the date of the offer by, or by a nominee
for, the transferee company or its subsidiary), the transferee company may, at
anv time within two months after the expiry of the said four months, give
notice in the prescribed mai-iiier to any dissenting shareholder, that it
desires to acquire his shares; and when such a notice is given, the transferee
company, shall, unless, on an application made by the dissenting shareholder
within one month from the date on which the notice56 was given, the Court thinks fit to order
otherwise, be entitled and bound to acquire those shares on the terms on which,
under the scheme or contract, the shares of the approving shareholders are to
be transferred to the transferee company:
52. Substituted
for fourteen by the Companies (Amendment) Act, 1965, w.e.f. 15-40-1965.
53. Inserted,
ibid.
54. Powers
are now delegated to Regional Directors.
55. See
rule 12 of General Rules and Forms.
56. See
Form No. 35 of Gencral Rules and Forms.
Provided
that where shares in the transfcror companv of the same class as the shares
whose transfer is involved are already held as aforcsaid to a value greater
than one-tenth of the aggregate of the values of all the shares in the company
of such class, the foregoing provisions of this sub-section shall not apply,
unless-
(a) The transferee company
offers the same terms to all holders of the shares of that class (other than
those already held as aforesaid) whose transfer is involved; and
(b) The holders who approve
the scheme or contract, besides holding not less than nine-tenths in value of
the shares (other than those already held as aforesaid) whose transfer is
involved, are not less than threefourths in number of the holders of those
shares.
(2) Where, in pursuance of
any such scheme or contract as aforesaid, shares, or shares of any class, in a
company are transferred to another company or its nominee, and those shares
together with any other shares or any other shares of the same class, as the
case may be, in the first-mentioned company held at the date of the transfer
by, or by a nominee for, the transferee company or its subsidiary comprise
nine-tenths in value of the shares, or the shares of that class, as the case
may be, in the first-mentioned company, then,-
(a) The transferee company
shall, within one month from the date of the transfer (unless on a previous
transfer in pursuance of the scheme or contract it has already complied with
this requirement), give notice of that fact in the prescribed manner to the
holders of the remaining shares or of the remaining shares of that class, as
the case may be, who have not assented to the scheme or contract; and
(b) Any such holder may,
within three months from the giving of the notice to him, require the
transferee company to acquire the shares in question;
And
where a shareholder gives notice under clause (b) with respect to any shares, the
transferee company shall be entitled and bound to acquire those shares on the
terms on which, under the scheme or contract, the shares of the approving
shareholders were transferred to it, or on such other terms as may be agreed,
or as the Court on the application of either the transferee company or the
shareholder thinks fit to order.
(3) Where a notice has been
given by the transferee company under sub-section (1) and the Court has not, on
an application made by the dissenting shareholder, made an order to the
contrary, the transferee company shall, on the expiry of one month from the
date on which the notice has been given, or, if an application to the Court by
the dissenting shareholder is then pending, after that application has been
disposed of, transmit a copy of the notice to the transferor company together
with an instrument of transfer executed on behalf of the shareholder by any
person appointed by the transferee company and on its own behalf by the
transferee company, and pay or transfer to the transferor company the amount or
other consideration representing the price payable by the transferee company
for the shares which, by virtue of this section, that company is entitled to
acquire; and 57[the transferor
company shall-
(a) Thereupon register the
transferee company as the holder of those shares, and
57. Substituted for 'the
transfer or company shall there upon register the transferee company as the
holder of those shares' by the Companies (Amendment) Act,
1965,w.e.f.15-10-1965.
(b) Within one month of the
date of such registration, inform the dissenting shareholders of the fact of
such registration and of the receipt of the amount or other consideration
representing the price payable to them by the transferee company:]
Provided
that an instrument of transfer shall not be required for any share for which a
share warrant is for the time being outstanding.
(4) Any sums received by the
transferor company under this section shall be paid into a separate bank
account, and any such sums and any other consideration so received shall be
held by that company in trust for the several persons entitled to the shares in
respect of which the said sums or other consideration were respectively
received.
58[(4A)
(a) The following
provisions shall apply in relation to every offer of a scheme or contract
involving the transfer of shares or any class of shares in the transferor
company to the transferee company, namely: -
(i) Every such offer or
every circular containing such offer or every recommendation to the members of
the transferor company by its directors to accept such offer shall be
accompanied by such information as may be prescribed 59;
(ii) Every such offer shall
contain a statement by or on behalf of the transferee company, disclosing the
steps it has taken to ensure that necessary cash will be available;
(iii) Every circular
containing, or recommending acceptance of, such offer shall be presented to the
Registrar for registration and no such circular shall be issued until it is so
registered;
(iv) The Registrar may refuse
to register any such circular which does not contain the information required
to be given under sub-clause (1) or which sets out such information in a manner
likely to give a false impression; and
(v) An appeal shall lie to
the Court against an order of the Registrar refusing to register any such
circular.
(b) Whoever issues a circular
referred to insub-clause (iii) of clause (a), which has not been registered,
shall be punishable with fine which may extend to five hundred rupees.]
(5) In this section-
(a) 'Dissenting sharcholder'
includes a shareholder who has not assented to the scheme or contract and any
shareholder who has failed or refused to transfer his shares to the transferee
company in accordance with the scheme or contract;
(b) 'Transferor company' and
"transferee company' shall have the same meaning as in section 394.
58. Inserted by the Companies
(Amendment) Act, 1965 w.e.f. 15-10-1965.
59. See Form No. 35A of
General Rules and Forms.
(6) In relation to an offer
made by the transferee company to shareholders of the transferor company before
the commencement of this Act, this section shall have effect-
(a) With the substitution, in
sub-section (1), for the words "the shares whose transfer is involved (other
than shares alreadv held at the date of the offer by, or by a nominee for, the
transferee companny or its subsidiary)," of the words "the shares
affected" and with the omission of the proviso to that sub-section;
(b) With the omission of
sub-section (2);
(c) With the omission in
sub-section (3) of the words "together with an instrument of transfer
executed on behalf of the shareholder by anv person appointed by the transferee
company and on its own behalf bv the transferee company" and of the proviso
to that sub-section; an with the omission of clause (b) of sub-section (5).
396. Power
of Central Government to provide for amalgamation of companies in national
interest. -
(1) Where the Central Government is satisfied that it is essential
in the 60[public interest]
that two or more companies should amalgamate, then, notwithstanding anything
contained in sections 394 and 395 but subject to the provisions of this
section, the Central Government may, by order notified in the Official Gazette,
provide for the amalgamation of those companies into a single company with such
constitution; with such property, powers, rights, interests, authorities and
privileges; and with such liabilities, duties, and obligations; as may be
specified in the order.
(2) The order aforesaid may 61[provide for the continuation by or
against the transferee company of any legal proccedings pendingby or against
any transferor company and may also] contain such consequential, incidental and
supplemental provisions as may, in the opinion of the Central Government, be
necessary to give effect to the amalgamation.
(3) Every member or creditor
(including a debenture holder) of each of the companies before the amalgamation
shall have, as nearly as may be, the same interest in or rights against the
company resulting from the amalgamation as he had in the company of which he
was originally a member or creditor; and to the extent to which the interest or
rights of such member or creditor in or against the company resulting from the
amalgamation are less than his interest in or rights against the original
company, he shall be entitled to compensation which shall be assessed b such
authority as may be prescribed62
63[and every such assessment
shall be published in the Official Gazette.]
The
compensation so assessed shall be paid to the member or creditor concerned by
the company resulting from the amalgamation.
63[(3A) Any
person aggrieved by any assessment of compensation made by the prescribed
authority under sub-section (3) may, within thirtv davs from the date of
publication of such assessment in the Official Gazette, prefer an appeal to the
Company Law Board and thereupon the assessment of the compensation shall be
made by the Company Law Board.]
60. Substituted for
"national interest" by the Companies (Amendment) Act, 1960.
61. Inserted by the Companies
(Amendment) Act, 1985.
62. See rule 12A. Prescribed authority is Joint Director
(Accounts) in Department of Company Affaires.
63. Inserted by the Companies
(Amendment) Act, 1985.
(4) No order shall be made
under this section, unless-
(a) A copy of the proposed
order has been sent in draft to each of the companies concerned; 64[***]
65[(aa) The
time for preferring an appeal under sub-section (3A) has expired, or where any
such appeal has been preferred, the appeal has beef] finally disposed of; and]
(b) The Central Government
has considered, and made such modif'ications, if any, in the draft order as may
seem to it desirable in the light of any suggestions and objections which mav
be received by it from any such companv within such period as the Central
Government may fix in that behalf, not being less than two months from the date
on which the copy aforesaid is received by that company, or from aiin class of
shareholders therein, or from any creditors or any class of' creditors thereof.
(5) Copies of every order
made under this section shall, as soon as may be after it has been made, be
laid before both Houses of Parliament.
396A.
66[Preservation of books and
papers of amalgamated company. -The
books and papers of a company which has been amalgamated \vith, or whose shares
have been acquired by, another company under this Chapter shall not be disposed
of without the prior permission of the Central Government and before granting
such permission, that Government mav appoint a person to examine the books and
papers or any of them for the purpose of ascertaining whether they contain anv
evidence of the commission of an offence in connection with the promotion or
formation, or the management of the affairs, of the first-mentioned company or
its amalgamation or the acquisition of its shares.]
CHAPTER
VI
PREVENTION
OF OPPRESSION AND MISMANAGEMENT
A. POWERS OF 67[COMPANY LAW BOARD]
397. Application
to 67[Company Law Board] for relief
in cases of oppression. -
(1) Any members of a company who complain that the affairs of the
company 68[are being conducted
in a manner prejudicial to public interest or] in a manner oppressive to any
member or members (including any one or more of themselves) may apply69 to the 67[Company
Law Board] for an order under this section, provided such members have a right
so to apply in virtue of section 399.
64. And" omitted by the
Companies (Amendment) Act, 1985.
65. Inserted, ibid.
66. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
67. Substituted for
"Court by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
68. Substituted for "are
being conducted by the Companies (Amendment) Act, 1963, w.e.f. 1-1-1964.
69. Prescribed fees are Rs.
500.
(2) If, on any application
under subsection (1), the 70[Company
Law Board] is of opinion-
(a) That the company's
affairs 71[are being conducted
in a manner prejudicial to public interest or] in a manner oppressive to any
member or members; and
(b) That to wind up the
company would unfairly prejudice such member or members, but that otherwise the
facts would justify the making of a winding up order on the ground that it was
just and equitable that the company should be wound up;
The
70[Company Law Board] may,
with a view to bringing to an end the matters complained of, make such order as
it thinks fit.
398. Application to 70[Company Law Board] for relief in cases of mismanagement:
(1) Any members of a company
who complain
(a) That the affairs of the
company 71[are being conducted
in a manner prejudicial to public interest or] in a manner prejudicial to the
interests of the company; or
(b) That a material change
(not being a change brought about by, or in the interests of, any creditors including
debenture holders, or any class of shareholders, of the company) has taken
place in the management or control of the company, whether by an alteration in
its Board of directors *[, or of its managing agent or secretaries and
treasurers] 73[or manager] *[,
or in the constitution or control of the firm or body corporate acting as its
managing agent or secretaries and treasurers], or in the ownership of the
company's shares, or if it has no share capital, in its membership, or in any
other manner whatsoever, and that by reason of such change, it is likely that
the affairs of the company 74[will
be conducted in a manner prejudicial to public interest or] in a manner
prejudicial to the interests of the company;
May
apply to the 70[Company Law
Board] for an order under this section, provided such members have a right so
to apply in virtue of section 399. (2) If, on any application under sub-section
(1), the 70[Company Law Board]
is of opinion that the affairs of the company are being conducted as aforesaid
or that by reason of any material change as aforesaid in the management or
control of the company, it is likely that the affairs of the company will be
conducted as aforesaid, the 70[Company
Law Board] may, with a view to bringing to an end or preventing the matters
complained of or apprehended, make such order as it thinks fit.
70. Substituted for 'Court' by
the Companies (Amendment) Act, 1988, w.e.f. 31-5-199 1.
71. Substituted for are being
conducted" by the Companies (Amendment) Act, 1963, w.e.f. 1-1-1964.
72. Prescribed fees is Rs.
500.
73. Inserted by the Companies
(Amendment) Act, 1960.
74. Substituted for 'will be
conducted' by the Companies (Amendment) Act, 1963, w.e.f. 1-1-1964.
399. Right
to apply under sections 397 and 398. -
(1) The following members of a company shall have the right to
apply under section 397 or 398: -
(a) In the case of a company
having a share capital, not less than one hundred members of the company or not
less than one-tenth of the total number of its members, whichever is less, or
any member or members holding not less than one-tenth of the, issued share
capital of the company, provided that the applicant or applicants have paid all
calls and other sums due on their shares;
(b) In the case of a company
not having a share capital, not less than onefifth of the total number of its
members.
(2) For the purposes of
subsection (1), where any share or shares are held by two or more persons
jointly, they shall be counted only as one member. (3) Where any members of a
company are entitled to make an application in virtue of sub-section (1), any
one or more of them having obtained the consent in writing of the rest, may
make the application on behalf and for the benefit of all of them.
75(4) The
Central Government may, if in its opinion circumstances exist which make it
just and equitable so to do, authorise any member or members of the company to
apply to the 76[Company Law
Board] under section 397 or 398, notwithstanding that the requirements of
clause (a) or clause (b), as the case may be, of sub-section (1) are not
fulfilled.
(5) The Central Government
may, before authorising any member or members as aforesaid, require such member
or members to give security for such amount as the Central Government may deem
reasonable, for the payment of any costs which the 76[Company Law Board] dealing with the
application may order such member or members to pay to any other person or
persons who are parties to the application.
400. Notice to be given to Central Government77 of applications under sections 397 and 39878. -The 76[Company
Law Board] shall give notice of every application made to it under section 397
or 398 to the Central Government, and shall take into consideration the
representations, if any, made to it by that Government before passing a final
order under that section.
401. Right
of Central Government to apply under sections 397 and 398. 78The Central Government may itself apply to the 76[Company Law Board] for an order under
section 397 or 398, or cause an application to be made to the 16 [Company Law
Board] for such an order by any person authorised by it in this behalf.
402. Powers of 76[Company
Law Board] on application under section 397 or 39878. - Without prejudice to the
generality of the powers of the 76[Company
Law Board] under section 397 or 398, any order under either section may provide
for-
75. See rule 13 of General
Rules and Forms.
76. Substituted for
"Court by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
77. Powers are now delegate to
Regional Directors.
78. Prescribed fees is Rs.
500.
(a) The regulation of the conduct of the company's affairs in
future;
(b) The purchase of the
shares or interests of any Members of the company by other members thereof or
by the company;
(c) In the case of a purchase
of its shares by the company as aforesaid, the consequent reduction of its
share capital;
(d) The termination, setting
aside or modification of any agreement, howsoever arrived at, between the
company on the one hand, and any of the following persons, on the other, namely
(i) The managing director,
(ii) Any other director,
*[(iii) The managing agent,
(iv) The secretaries and
treasurers,] and
(v) The manager,
Upon
such terms and conditions as may, in the opinion of the 79[Company Law Board], be just and equitable
in all the circumstances of the case;
(e) The termination, setting
aside or modification of any agreement between the company and any person not
referred to in clause (d), provided that no such agreement shall be terminated,
set aside or modified except after due notice to the party concerned and
provided further that no such agreement shall be modified except after
obtaining the consent of the party concerned;
(f) The setting aside of any
transfer, delivery of goods, payment, execution or other act relating to
property made or done by or against the company within three months betorc the
date of the application under section 397 or 398, which would, if made or done
by or against an individual, be deemed in his insolvency to be a fraudulent
preference;
(g) Any other matter for
which in the opinion of the 79[Company
Law Board] it is just and equitable that provision should be made.
403. Interim
order by 79[Company
Law Board]. - Pending
the making by it of a final order under section 397 or 398, as the case may be,
the 79[Company Law Board] may,
on the application of any party to the proceedings make any interim order which
it thinks fit f or regulating the conduct of the companv's aff airs, upon such
terms and conditions as appear to it to be just and equitable. 80
404. Effect
of alteration of memorandum or articles of company by order under section 397
or 398. 80
(1) Where an order under section 397 or 398 makes anv alteration in
the memorandum or articles of a company, then, notwithstanding any other
provision of this Act, the company shall not have power, except to the extent,
if any, permitted in the order, to make without the leave of the 79[Company Law Board], any alteration
whatsoever which is inconsistent with the order, either in the memorandum or in
the articles.
79. Substituted in
"Court" by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
80. Prescribed fees is Rs.
500.
(2) Subject to the provisions
of sub-section (1), the alterations made by the order shall, in all respects,
have the same effect as if they had been duly made by the company in accordance
with the provisions of this Act; and the said provisions shall apply
accordingly to the memorandum or articles as so altered.
(3) A certified copy of every
order altering, or giving leave to alter, a company's memorandum or articles,
shall within 81[thirty] days
after the making thereof, be filed by the company with the Registrar who shall
register the same.
(4) If default is made in
complying with the provisions of sub-section (3), the company, and every
officer of the company who is in default, shall be punishable with fine, which
may extend to five thousand rupees.
405. Addition
of respondents to application under section 397 or 398. -If the managing director or any other director *[,
the managing agent, secretaries and treasurers] or the manager, of a company,
or anv other person, who has not been impleaded as a respondent to any
application under section 397 or 398 applies to be added as a respondent
thereto, the 82[Company Law
Board] shall, if it is satisfied that there is sufficient cause for doing so,
direct that he may be added as a respondent accordingly. 83
406. Application
of sections 539 to 544 to proceedings under sections 397 and 398. -In relation to an application under section
397 or 398, sections 539 to 544, both inclusive, shall apply in the form set
forth in Schedule XI.
407. Consequences
of termination or modification of certain agreements. -
(1) Where an order 84[***]
made under section 397 or 398 terminates, sets aside, or modifies an agreement
such as is referred to in clause (d) or (e) of section 402, -
(a) The order shall not give
rise to any claim whatever against the company by any person for damages or for
compensation for loss of office or in any other respect, either in pursuance of
the agreement or otherwise;
(b) No managing or other
director *[, managing agent, secretaries and treasurers] or manager whose
agreement is so terminated or set aside *[and no person who, at the date of the
order terminating or setting aside the agreement was, or subsequently becomes,
an associate of such managing agent or secretaries and treasurers] shall, for a
period of five years from the date of 85[the
order terminating or setting aside the agreement], without the leave of the 82[Company Law Board], be appointed, or act,
as the managing or other director *[,managing agent, secretaries and
treasurers], or manager of the company."
81. Substituted for
"fifteen" by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
82. Substituted for
"Court" by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
83. Prescribed fees are Rs.
500.
84. Of a Court" omitted
by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
85. Substituted for "the
order terminating the agreement" by the Companies (Amendment) Act, 1960.
(2) (a) Any person who knowingly acts as a
managing or other director *[,managing
agent, secretaries and treasurers], or manager of a company in contravention of
clause (b) of sub-section (1);
[(b) Where the person so acting
as managing agent or as secretaries and treasurers is a firm or body corporate,
every partner in the firm, or every director of the body corporate who is
knowingly a party to such contravention; and]
(c) Every other director or
every director, as the case may be, of the company, who is knowingly a party to
such contravention; shall be punishable with imprisonment for a term which may
extend to one year, or with fine which may extend to five thousand rupees, or
with both.
(3) 86[No leave shall be granted] under clause
(b) of sub-section (1) unless notice of the intention to apply for leave has
been served on the Central Government and that Government has been given an
opportunity of being heard in the matter.
B. Powers of
Central Government
408. Powers
of Government to prevent oppression or mismanagement87. -
88[(1) Notwithstanding
anything contained in this Act, the Central Government may appoint such number
of persons as the Company Law Board may, by order in writing, specify as being
necessary to effectively safeguard the interests of the company, or its
shareholders or the public interests to hold office as directors thereof for
such period, not exceeding three years on any one occasion, as it may think
fit, if the Company Law Board, on a reference made to it by the Central
Government or on an application of not less than one hundred members of the
company or of the members of the company holding not less than one-tenth of the
total voting power therein, is satisfied, after such inquiry as it deems fit to
make, that it is necessary to make the appointment or appointments in order to
prevent the affairs of the company being conducted either in a manner which is
oppressive to any members of the company or in a manner which is prejudicial to
the interests of the company or to public interest:
Provided
that in lieu of passing an order as aforesaid, the Company Law Board may, if
the company has not availed itself of the option given to it under section 265,
direct the company to amend its articles in the manner provided in that section
and make fresh appointments of directors in pursuance of the articles as so
amended, within such time as may be specified in that behalf by the Company Law
Board.
(2) In case the Company Law
Board passes an order under the proviso to subsection (1), it may, if it thinks
fit, direct that until new directors are appointed in pursuance of the order
aforesaid, such number of persons as the Company Law Board may, by order,
specify as being necessary to effectively safeguard the interests of the
company, or its shareholders or the public interest, shall hold office as
additional directors of the company and on such directions, the Central
Government shall appoint such additional directors.]
86. Substituted for No Court
shall grant leave by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
87. Prescribed fees is Rs.
500.
88. Substituted by the
Companies (Amendment) Act, 1988, w.e.f. 15-6-1988. For sub-sections (1) and (2) as they stood prior to their
substitution, refer Appendix I.
(3) For the purpose of
reckoning two-thirds or any other proportion of the total number of directors
of the company, any director or directors appointed by the Central Government
under sub-section (1) or (2) shall not be taken into account.
89[(4) A
person appointed under sub-section (1) to hold office as a director or a person
directed under sub-section (2) to hold office as an additional director, shall
not be required to hold any qualification shares nor his period of office shall
be liable to determination by retirement of directors by rotation; but any such
director or additional director may be removed by the Central Government from
his office at any time and another person may be appointed by that Government
in his place to hold office as a director or, as the case may be, an additional
director.
(5) No change in the Board of
directors made after a person is appointed or directed to hold office as a
director or additional director under this section shall, so long as such
director or additional director holds office, have effect unless confirmed by
the 90[Company Law Board].
91[(6) Notwithstanding
anything contained in this Act or in any other law for the time being in force,
where any person is appointed by the Central Government to hold office as
director or additional director of a company in pursuance of subsection (1) or
sub-section (2), the Central Government may issue such directions to the
Company as it may consider necessary or appropriate in regard to its affairs 92[and such directions may include
directions to remove an auditor already appointed and to appoint another
auditor in his place or to alter the articles of the company, and upon such
directions being given, the appointment, removal or alteration, as the case may
be, shall be deemed to have come into effect as if the provisions of this Act
in this behalf have been complied with without requiring any further act or
thing to be done].
(7) The Central Government
may require the persons appointed as directors or additional directors in
pursuance of sub-section (1) or sub-section (2) to report to the Central
Government from time to time with regard to the affairs of the company.]
89. Inserted by the Companies (Amendment)
Act, 1960.
90. Substituted for 'Central
Government" by the Companies (Amendment) Act, 1988, w.e.f. 15-6-1988.
91. Inserted by the Companies
(Amendment) Act, 1974, w.e.f. 1-2-1975.
92. Inserted by the Companies
(Amendment) Act, 1988, w.e.f. 15-6-1988.
(1) Where a complaint is made to the 93[Company Law Board] by the managing
director or any other director *[, the managing agent, 94[the secretaries and treasurers] or the
manager], of a company that as a result of a change which has taken place or is
likely to take place in the ownership of any shares held in the company, a
change in the Board of directors is likely to take placewhich (if allowediwould
affect prejudicially the affairs of thccompany, the 95[Company Law Board] may, if satisfied,
after such inquiry as it thinks f it to make that it is just and proper so to
do, by order, direct that 96[no
resolution passed or that may be passed or no action taken or that may be taken
to effect a change in the Board of directors after the date of the corr
confirmed by the 95[Company
Law Board]; and any such order shall have effect notwithstanding anything to
the contrary containded in any other provision of this Act or in the memorandum
or articles of the company, or in any agreement wi h, or any resolution passed
in general meeting by, or by the Board of directors o the company. 97
(2) The 95[Company Law Board] shall have power when
any such complaint is received by it, to make an int rim order to the effect
set out in sub-section (1), before making or completing the inquiry aforesaid.
(3) Nothing contained in
sub-sections (1) and (2) shall apply to a private company, unless it is a subsidiary
of a public company.
CHAPTER
VII
CONSTITUTION
AND POWERS OF 98[ADVISORY COMMITTEE]
410. 99[Appointment of Advisory Committee. -For the purpose of advising the Central Government
and the Company Law Board on such matters arising out of the administration of
this Act as may be referred to it by that Government or Board, the Central
Government may constitute an Advisory Committee consisting of not more than
five persons with suitable qualifications.]
411. Duties
of Advisory Commission. -
[Omitted by the Companies (Amendment) Act, 1965, we.f 15-10-1965.]
412. Forms
and procedure in cases referred to Advisory Commission. - [Omitted by the Companines (Amenditient) Act, 1965,
w.e.f. 15-10-1965.]
413. Powers
of Advisory Commission. -[Omitted
by the Companies (Amendment) Act, 1965, we.f. 15-10-1965.]
414.
Penalties. -[Omitted
by the Companies (Ar7ie dmeiit) Act, 1965, w.e.f. 15-10-1965.]
415.
Immunity for action taken in good faith. [Omitted by the Compannies
(Amendment) Act, 1965, we.f. 15-10-1965.]
93. Substituted for 'Central
Government' by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
94. Substituted for 'or the
secretaries and treasurers' by the Companies (Amendment) Act 1960.
95. Substitute for
"Central Government" by the Companies (Amendment) Act, 1988,
w.e.f.31-5-1991.
96. Substitutcd for
"noresolution passed or action taken" by the Companies (Amendment)
Act, 1960.
97. Prescribed fees is Rs.
500.
98. Substituted for
"Advisory Commission" by the Companies (Amendmcnt) Act, 1965, w.e.f.
15-10-1965.
99. Substituted, ibid.
CHAPTER VIII
MISCELLANEOUS PROVISIONS
Contracts where company is undisclosed principal
416. Contracts
by agents of company in which company is undisclosed principal. -
(1) Every person, being the *[managing agent, secretaries and
treasurers,] manager or other agent of a public company or of a private company
which is a subsidiary of a public company, who enters into a contract for or on
behalf of the company in which contract the company is an undisclosed principal
shall, at the time of entering into the contract, make a memorandum in writing
of the terms of the contract, and specify therein the person with whom it is
entered into.
(2) Every such person who
enters into a contract as aforesaid shall forthwith deliver the memorandum to
the company and send copies thereof to each of the directors; and such
memorandum shall be filed in the office of the company and laid before the
Board of directors at its next meeting.
(3) If default is made in
complying with the requirements of this section, -
(a) The contract shall, at
the option of the company, be voidable asagainst the company; and
(b) The person who enters
into the contract, or every officer of the company who is in default, as the
case may be, shall be punishable with fine, which may extend to two hundred
rupees.
Employees securities and provident funds
417. Employees'
securities to be deposited in 1[post
office savings bank or Scheduled Bank]. -
2[(1) Any money or security deposited with a
company by any of its employee in pursuance of his contract of service with the
company shall be kept or deposited bv the company within fifteen days from the
date of deposit-
(a) In a post office savings
bank account, or
(b) In a special account to
be opened bv the company for the purpose in the State Bank of India or in a
Scheduled Bank, or
(c) Where the company itself
is a Scheduled Bank, in a special account to be opened bv the companv for the
purpose either in itself or in the State Bank of India or in anv other
Scheduled Bank.]
(2) No portion of such monyes
or securities shall be utiliscd by the conipany except for the purposes agreed
to in the contracts of service.
(3) A receipt for monevs
deposited with a company by its emplovce shall not be deemed to be a security
within the meaning of this section; and the moneys themselves shall accordingly
be deposited 3[as
provided in sub-scction (1).
1. Substituted for
"Scheduled bank" by the Companies (Amendment) Act, 1960.
2. Substituted, ibid. For the original sub-section, after refer Appendix I.
3. "With a Scheduled
Barik" omitted by the Companies (Amendment) Act, 1960.
418. Provisions applicable to provident funds of employees. -
4[(1)
Where a provident fund has been
Constituted by a company for its employees, all moneys contributed to such
employees or any class of its fund (whether by the company or by the employees)
or received or accruing by way of interest or otherwise fund shall within
fifteen days from the date to such of contribution, receipt or accrual, as the
case may be, either-
(a) Be
deposited-
(i) In
a post office savings bank account, or
(ii) In
a special account to be opened by the company for the purpose in the State Bank
of India or in a Scheduled Bank, or
(iii) Where
the company itself is a Scheduled Bank, in a special account to be opened by
the company for the purpose either in itself or in the State Bank of India or
in any other Scheduled Bank; or
(b) Be
invested in the securities mentioned or referred to in clauses (a) to (e) of
section 20' of the Indian Trusts Act, 1882 (2 of 1882).]
(2) Notwithstanding
anything to the contrary in the rules of any provident fund to which
sub-section (1) applies or in any contract between a company and its employees,
no employee shall be entitled to receive, in respect of such portion of the
amount to his credit in such fund as is invested in accordance with the
provisions of sub-section (1), interest at a rate yielded by such investment.
(3) Nothing
in sub-section (1) shall affect any rights of an employee under the rules of a
provident fund to obtain advances from or to withdraw money standing to his
credit in the fund, where the fund is a recognised provident fund within the
meaning of clause (a) of section 58A of the Indian Income-tax Act, 1922 (11 of
1922)6,
or where the rules of the fund contain provisions corresponding to rules 4, 5,
6, 7, 8 and 9 of the Indian Income-tax (Provident Funds Relief) Rules.
(4) Where
a 7[*'*]
trust has been created by a company with respect to any Provident fund referred
to in sub-section (1), the company shall be bound to collect the contributions
of the employees concerned and pay such contribution as well as its own
contributions, if any, to the trustees 8[within fifteen days from the date of
collection]; but in other respects, the obligations laid on the company by this
section shall devolve on the trustees and shall be discharged by them instead
of by the company.
4. Substituted
the companies (Amendment) Act, 1960.
For the original sub-section, refer Appendix I.
5. For
the provisions of section 20(a) to (e) of the Trusts Act, refer Appendix II.
6. Now
clause (38) of section 2 of the income tax Act, 1961 (43 of 1961). For th provisions of the clause', refer
Appendix II.
7. "Separate"
omitted by the Companies (Amendment) Act, 1960.
8. Inserted,
ibid.
419. Right
of employee to see bank's receipt for moneys or securities referred to in
section 417 or 418. -An
employee shall be entitled, on request made in this behalf to the company, or
to the trustees referred to in sub-section (4) of section 418, as the case may
be, to see the bank's receipt for any money or security such as is refer -ed to
in sections 417 and 418.
420. Penalty
for contravention of sections 417, 418 and 419. -Any officer of a company, or any such trustee
of a provident fund as is referred to in sub-section (4) of section 418 who,
knowingly, contravenes, or authorises or permits the contravention of, the
provisions of section 417, 418 or 419, shall be punishable with 9[imprisonment
for a term which may extend to six months, or with fine which may extend to one
thousand rupees.]
Receivers and managers
421. Filing of accounts of receivers. -Every receiver of the property of a companv
who has been appointed under a power conferred by any instrument and who has
taken possession, shall once in every half year while he remains in possession,
and also on ceasing to act as receiver, file with the Registrar an abstract in
the prescribed form10
of his receipts and payments during the period to which the abstract relates.
422. Invoices,
etc., to refer to receiver where there is one. -Where a receiver of the property of a company
has been appointed, every invoice, order for goods, or business letter issued
by or on behalf of the company, or the receiver of the company, being a
document on or in which the name of the company appears, shall contain a
statement that a receiver has been appointed.
423. Penalty
for non-compliance with sections 421 and 422. -If default is made in complying with the
requirements of section 421 or 422, the company, and every officer of the
company who is in default, shall be punishable with fine, which may extend to
two hundred rupees. For the purposes of
this section, the receiver shall be deemed to be an officer of the company.
424. Application
of sections 421 to 423 to receivers and managers appointed by Court and
managers appointed in pursuance of an instrument. -The provisions of sections 421, 422 and 423
shall apply to the receiver of, or any person appointed to manage, the property
of a company, appointed by a Court or to any person appointed to manage the
property of a company under any powers contained in an instrument, in like
manner as they apply to a receiver appointed under any powers contained in an
instrument. 10
9. Substituted for
"fine which may extend to five hundred rupees' by the Companies
(Amendment) Act, 1960.
10, See Form No. 36 of General
Rules and Forms.
PART
VII
WINDING
UP
CHAPTER I
PRELIMINARY
Modes of winding up
(1) The winding up of a
company may be either-
(a) By the Court; or
(b) Voluntary; or
(c) Subject to the
supervision of the Court.
(2) Tlic, provisions of this
Act with respect to winding up apply, unless the contrary appears, to the
winding up of a company in any of those itiodes.
Contributories
426. Liability
as contributories of present and past members. -
(1) In the event of a company being wound up, every present and
past member shall be liable to contribute to the assets of the company to an
amount sufficient for payment of its debts and liabilities and the costs,
charges and expenses of the winding up, and for the adjustment of the rights of
the contributot-ics among themselves, subject to the provisions of section 427
and Subject also to the following qualifications, namely: -
(a) A past member shall not
be liable to contribute if he has ceased to be a member for one year or upwards
before the commencement of the winding up;
(b) A past member shall not
be liable to contribute in respect of any debt orliabilitvof thecompany
contractcdafterheceased to beamember;
(c) No past member shall be
liable to contribute unless it appears to the Court that the present members
are unable to satisfy the contributions required to be made by them in
pursuance of this Act;
(d) in the case of a company
limited by shares, no contribution shall be required from any past or present
member exceeding the amount, if any, unpaid on the shares in respect of which
he is liable as such member-;
(e) In the case of a company
limited by guarantee, no contribution shall, subject to the provisions of
subsection (2), be required from anv past or present nlciyiber exceeding the
amount undertaken to be coiitributcd by him to the assets of the company in the
event of its being wound up;
(f) Nothing this Act shall
invalidate any provision contained in any policy insurance or other contract
whereby the likability of [idividual] members on ific policn, or contract is
restricted, of whereby the funds of the company are alone made liable in
respect of the policy or contract;
(g) A sum due to any past or
present member of the company in his character as such, by way of dividends,
profits or otherwise, shall not, be deemed to be a debt of the company payable
to that member, in a case of competition between himself and 11[any creditor
claiming otherwise than in the character of a past or present member of the
company]; but any such sum shall be taken into account for the purpose of the
final adjustment of the rights of the conti-ibutorics among themselves.
(2) In the winding up of a
company limited by guarantee which has a share capital, every member of the
company shall be liable, in addition to the amount undertaken to be contributed
by him to the assets of the company in the event of its being wound up, to
contribute to the extent of any sums unpaid on any shares held by him as if the
company were a company lirpited b shares.
427. Obligations
of directors *[, managing agents] and managers whose liability is unlimited. -In the winding up of a limited company, any
director, *[managing agent, secretaries and treasurers] or manager, whether
past or present, whose liability is, under the provisions of this Act,
unlimited, shall, in addition to his liability, if any, to contribute as an
ordinary member, be liable to make a further contribution as if he were, at the
commencement of the winding up, a member of an unlimited company:
Provided that-
(a) A past director *[,
managing agent, secretaries and treasurers] or manager shall not be liable to
make such further contribution, if he has ceasedtoholdofficc for a year or
upwards before the commecement of the winding up;
(b) A past director *[,
managing agent, secretaries and treasurers or manager shall not be liable to
make such further contribution in respect of any debt or liability of the
company contracted after he ceased to hold office;
(c) Subject to the articles
of the company, a director *[, riianagijig agent, secretaries and treasurers]
or manager shall not be liable to make such further contribution, unless the
Court dcenis it necessai- 'N, to require the contribution in order to satisfy
the debts and liabilities of the company, and the costs, charges and expenses
of the winding up.
428. Definition
of "contributory". -The
term "contributory" means, every person liable to contribute to the
assets of a company in the event of its being wound up, and includcs the holder
of any shares which are fully paid-up; and for the purposes of' all proceedings
for determining, and all proceedings prior to the final determination of, the
persons who are to be deemed contributorics, includes any person alleged to be
a contributory.
11. Substituted for any other
creditor who is not a pasr or present memver of the company by the companies
(Amendment) Act, 1960.
429. Nature
of liability of contributory. -
(1) The
liability of a contributory shall create a debt accruing due from him at the
time when his liability commenced, but payable at the times specified in calls
made on him for enforcing the liability.
(2) No
claim founded on the liability of a contributory shall be cognizable by any
Court of Small Causes sitting outside the presidency-towns.
430. Contributories in case of death of member. -
(1) If
a contributory dies either before or after he has been placed on the list of
contributories, his legal representatives shall be liable in due course of
administration, to contribute to the assets of the company in discharge of his
liability, and shall be contributories accordingly.
(2) If
the legal representatives make default in paying any money ordered to be paid
by them, proceedings may be taken for administering the estate of the deceased
contributory and compelling payment thereout of the money due.
(3) For
the purposes of this section, where the deceased contributory was a member of a
Hindu joint family governed by the Mitakshara School of Hindu Law, his legal
representatives shall be deemed to include the surviving coparceners.
431. Contributories in case of insolvency of member. -If a contributory is adjudged insolvent, either
before or after he has been placed on the list of contributories, -
(a) His
assignees in insolvency shall represent him for all the purposes of the winding
up, and shall be contributories accordingly, and may be called on to admit to
proof against the estate of the insolvent, or otherwise to allow to be paid out
of his assets in due course of law, any money due from the insolvent in respect
of his liability to contribute to the assets of the company; and
(b) There
may be proved against the estate of the insolvent the estimated value of his
liability to future calls as well as calls already made.
432. Contributories in case of winding up of a body corporate, which
is a member. -If
a body corporate which is a contributory is ordered to be wound up, either
before or after it has been placed on the list of contributories, -
(a) The
liquidator of the body corporate shall represent it for all the purposes of the
winding up of the company and shall be a contributory accordingly, and may be
called on to admit to proof against the assets of the body corporate, or
otherwise to allow to be paid out of its assets in due course of law, any money
due from the body corporate in respect of its liability to contribute to the assets
of the company; and
(b) There
may be proved against the assets of the body corporate the estimated value of
its liability to future calls as well as calls already made.
CHAPTER II
WINDING UP BY THE COURT
Cases in which company may be
wound up by the Court
433. Circumstances
in which company may be wound up by Court. -A company may be wound up by the Court, -
(a) If the company has, by
special resolution, resolved that the company be wound up by the Court;
(b) If
default is made in delivering the statutory report to the Registrar or in
holding the statutory meeting;
(c) If
the company does not commence its business within a year from its
incorporation, or suspends its business for a whole year;
(a) If
the number of members is reduced, in the case of a public company, below seven,
and in the case of a private company, below two;
(e) If
the company is unable to pay its debts;
(h) If
the Court is of opinion that it is just and equitable that the company should
be wound up.
434. Company when deemed unable to pay its debts. -
(1) A
company shall be deemed to be unable to pay its debts-
(a) If
a creditor, by assignment or otherwise, to whom the company is indebted in a
sum exceeding five hundred rupees then due, has served on the company, by
causing it to be delivered at its registered office, by registered post or
otherwise, a demand under his hand requiring the company to pay the sum so due
and the company has for three weeks thereafter neglected to pay the sum, or to
secure or compound for it to the reasonable satisfaction of the creditor;
(b) If
execution or other process issued on a decree or order of any Court in favour
of a creditor of the company is returned unsatisfied in whole or in part; or
(c) If
it is proved to the satisfaction of the Court that the company is unable to pay
its debts, and, in determining whether a company is unable to pay its debts,
the Court shall take into account the contingent and prospective liabilities of
the companv.
(2) The
demand referred to in clause (a) of sub-section (1) shall be deemed to have
been duly given under the hand of the creditor if it is signed bv any agent or
legal adviser dulv authorised on his behalf, or in the case of a firm, if it is
signed by any such agent or legal adviser or by any member of the firm.
Transfer of proceedings
435. Transfer
of winding up proceedings to District Court. -Where a High Court Makes an order for winding up a
company under this Act, the High Court may, if it thinks fit, direct all
subsequent proceedings to be had in a District Court subordinate thereto or,
with the consent of any other High Court, in such High Court or in a District
Court subordinate thereto; and thereupon for the purposes of winding up the
company, the Court in respect of which such direction is given shall be deemed
to be 'the Court" within the meaningof thisAct, and shall have all the
jurisdiction and powers of a High Court under this Act.
436. Withdrawal
and transfer of winding up from one District Court to another. -If during the progress of a winding up in a
District Court, it appears to the High Court that the same could be more
conveniently proceeded with in the High Court or in any other District Court,
the High Court may, as the case may require,-
(a) Withdraw the case and
proceed with the winding up itself; or
(b) Transfer the case to such
other District Court, where upon the winding up shall proceed in that District
Court.
437. Power
of High Court to remain winding up proceedings in District Court. -The High Court may direct that a District Court in
which proceedings for winding up a company have been commenced, shall retain
and continue the proceedings, although it may not be the Court in which they
ought to have been commenced.
438. Jurisdictionof
HighCourt undersections 435, 436 and 437 to be exercised at any time and at any
stage. -The
High Court shall havejurisdiction to pass orders under section 435,436 or 437
at any time and at any stage and either on the application of, or without
application from, any of the parties to the proceedings.
Petition for winding up
439. Provisions
as to applications for winding up. -
(1) An application to the Court for the winding up of a company
shall be by petition presented, subject to the provisions of this section,-
(a) By the company; or
(b) By any creditor or
creditors, including anv contingent or prospective creditor or creditors; or
(c) By any contributory or
contributories; or
(d) By all or any of the
parties specified in clauses (a), (b) and (c), whether together or separately;
or
(e) By the Registrar; or in a
case falling under section 243, by any person authorised by the Central
Government in that behalf.
(2) A secured creditor, the
holder of any debentures (including debenture stock), whether or not any
trustee or trustees have been appointed in respect of such and other like
debentures, and the trustee for the holders of debentures, shall be deemed to
be creditors within the meaning of clause (b) of sub-section (1).
(3) A contributory shall be
entitled to present a petition for winding up a company, notwithstanding that
he mav be the holder of fully paid-up shares, or that the company may have no
assets at all, or may have no surplus assets left for distribution among the
shareholders after the satisfaction of its liabilities.
(4) A contributory shall not
be entitled to present a petition for winding up a company unless-
(a) Either the number of
members is reduced, in the case of a public company, below seven, and, in the
case of a private company, below two; or
(b) The shares in respect of
which he is a contributory, or some of them, either were originally allotted to
him or have been held by him, and registered in his name, for at least six
months during the eighteen months immediately before the commencement of the
winding up, or have devolved on him through the death of a former holder.
(5) Except, in the case where
he is authorised in pursuance of clause (f) of subsection (1), the Registrar
shall be entitled to present a petition for winding up a companv only on the
grounds specified in 12[clauses
(b), (c), (a), (e) and (b] of section 433:
Provided
that the Registrar shall not present a petition on the ground specified in
clause (e) aforesaid, unless it appears to him either from the financial
condition of the company as disclosed in its balance sheet or from the report
of 13[a
special auditor appointed under section 233A or an inspector] appointed under
section 235 or 237, that the company is unable to pay its debts:
Provided
further that the Registrar shall obtain the previous sanction of the Central
Government 14 to the presentation of the petition on any of the grounds
aforesaid.
(6) The Central Government 14
shall not accord its sanction in pursuance of the foregoing proviso, unless the
company has first been afforded an opportunity of making its representations,
if any.
(7) A petition for winding up
a company on the ground specified in clause (b) of section 433 shall not be
presented-
(a) Except by the Registrar
or by a contributory; or
(b) Before the expiration of
fourteen days after the last day on which the statutory meeting referred to in
clause (b) aforesaid ought to have been held.
(8) Before a petition for
winding up a company presented by a contingent or prospective creditor is
admitted, the leave of the Court shall be obtained for the admission of the
petition and such leave shall not be granted-
(a) Unless, in the opinion of
the Court, there is a prima facie case for winding up the company; and
(b) Until such security for
costs has been given as the Court thinks reasonable.
12. Substituted for 'clauses
(b), (c) and (e)' by the Companies (Amendment) Act, 1960.
13. Substituted for "an
inspector", ibid.
14. Powers are now delegated
to Regional Directors.
(1) Where a company is being wound up voluntarily or subject to the
supervision of the Court, a petition for its winding up by the Court may be
presented by-
(a) Any person authorised to
do so under section 439, and subject to the provisions of that section; or
(b) The Official Liquidator.
(2) The Court shall not make
a winding up order on a petition presented to it under sub-section (1), unless
it is satisfied that the voluntary winding up or winding up subject to the
supervision of the Court cannot be continued with due regard to the interests
of the creditors or contributories or both.
Commencement of winding up
441. Commencement
of winding up by Court. -
(1) Where, before the
presentation of a petition for the winding up of a company by the Court, a
resolution has been passed by the company for voluntary winding up, the winding
up of the company shall be deemed to have commenced at the time of the passing
of the resolution, and unless the Court, on proof of fraud or mistake, thinks
fit to direct otherwise, all proceedings taken in the voluntary winding up
shall be deemed to have been validly taken.
(2) In any other case, the
winding up of a company by the Court shall be deemed to commence at the time of
the presentation of the petition for the winding up.
Powers of Court
442. Power
of Court to stay or restrain proceedings against company. -At any time after the presentation of a
winding up petition and before a winding up order has been made, the company,
or anv creditor or contributory, may-
(a) Where any suit or
proceeding against the company is pending in the Supreme Court or in any High
Court, apply to the Court in which the suit or proceeding is pending for a stay
of proceedings therein; and
(b) Where any suit or
proceeding is pending against the companv in any other Court, apply to the
Court having jurisdiction to wind up the company, to restrain further
proceedings in the suit or proceeding and the Court to which application is so
made may stav or restrain the proceedings accordingly, on such terms as it
thinks fit.
443. Powers
of Court on hearing petition. -
(1) On hearing a winding up petition, the Court may -
(a) Dismiss it, with or
without cost; or
(b) Adjourn the hearing
conditionally or unconditionally; or
(c) Make any interim order
that it thinks fit; or
(d) Make an order for winding
up the company with or without costs, or any other ordcer that it thinks fit
Provided
that the Court shall not refuse to make a winding up order on the ground only
that the assets of the company have been mortgaged to an amount equal to or in
excess of those assets, or that the company has no assets.
(2) Where the petition is
presented on the ground that it is just and equitable that the company should
be wound up, the Court may refuse to make an order of winding up, if it is of
opinion that some other remedy is available to the petitioners and that they
are acting unreasonably in seeking to have the company wound up instead of
pursuing that other remedy.
(3) Where the petition is
presented on the ground of default in delivering the statutory report to the
Registrar, or in holding the statutory meeting, the Court may-
(a) Instead of making a
winding up order, direct that the statutory report shall be delivered or that a
meeting shall be held; and
(b) Order the costs to be
paid by any persons who, in the opinion of the Court, are responsible for the
default.
Consequences HAVE winding up order
444. Order
for winding up to be communicated to 15[Official
Liquidator and Registrarl. -Where
the Court makes an order for the winding up of a company, the Court shall
forthwith cause intimation thereof to be sent to the 15[Official
Liquidator and the Registrar].
445. Copy
of winding up order to be filed with Registrar. -
(1) On the making of a
winding up order, it shall be the duty of the petitioner in the winding UP
proceedings and of the company to file with the Registrar a certified copy of
the order, within 16[thirty
days] from the date of the making of the order.
If
def ault is made in complying with the foregoing provision, the petitioner, or
as the case may require, the company, and every officer of the company who is
in default, shall be punishable with fine, which may extend to one hundred
rupees for each day during which the default continues.
17[(1A) In computing
the period of 16[thirty
days] from the date of the making of a winding up order under sub-section (1),
the time requisite for obtaining a certified copy of the order shall be
excluded.]
(2) On the filing of a
certified copy of the winding up order, the Registrar shall make a minute
thereof in his books relating to the company, and shall notify in the Official
Gazette that such an order has been made.
(3) Such order shall be
deemed to be notice of discharge to the officers and employees of the company,
except when the business of the companv is continued.
15. Substituted for
"Official Liquidator" by the Companies (Amendment) Act, 1960.
16. Substituted for one
month" by the Companies (Amendmcnt) Act, 1965, w.e.f. 15-10-1965.
17. Inserted by the Companies
(Amendment) Act, 1960.
446. Suits stayed on winding up order. -
(1) When
a winding up order has been made or the Official Liquidator has been appointed
as provisional liquidator, no suit or other legal proceeding shall be
commenced, or if pending at the date of the winding up order, shall be
proceeded with, against the company, except by leave of the Court and subject
to such terms as the Court may impose.
18[(2)
The Court which is winding up the
company shall, notwithstanding anything contained in any other law for the time
being in force, have jurisdiction to entertain, or dispose of -
(a) Any
suit or proceeding by or against the company;
(b) Any
claim made by or against the company (including claims by or against any of its
branches in India);
(c) Any
application made under section 391 by or in respect of the company;
(d) Any
question of priorities or any other question whatsoever, whether of law or
fact, which may relate to or arise in course of the winding up of the company;
Whether such suit or proceeding has been instituted, or is instituted, or
such claim or question has arisen or ariscs or such application has been made
or is made before or after the order for the winding up of the company, or
before or after the commencement of the Companies (Amendment) Act, 1960.]
(3) Any suit or proceeding by or against the
company which is pending in any Court other than that in which the winding up
of the company is proceeding may, notwithstanding anything contained in any
other law for the time being in force, be transferred to and disposed of by
that Court.
19[(4)
Nothing in sub-section (1) or sub-section (3) shall apply to any proceeding
pending in appeal before the Supreme Court or a High Court.]
447. Effect of winding up order. -An
order for winding up a company shall operate in favour of all the creditors and
of all the contributories of the company as if it had been made on the joint
petition of a creditor and of a contributory.
Official
liquidators
448. Appointment of Official Liquidator. -
(1) For the purposes of this Act, so far as it
relates to the winding up of companies by the Court, -
(a) There
shall be attached to each High Court, an Official Liquidator appointed by the
Central Government, who shall be a whole-time officer, unless the Central
Government considers that there will not be sufficient work for a whole-time
officer in which case a part-time officer may be appointed; and
18. Substituted
by the Companies (Amendment) Act, 1960.
For the original sub-section, refer Appendix
I.
19. Inserted
by the Companies (Amendment) Act, 1960.
(b) The Official Receiver
attached to a District Court for insolvency purposes, or if there is no such
Official Receiver, then, such person as the Central Government may, by
notification in the Official Gazette appoint for the purpose, shall be the
Official Liquidator attached to the District Court.
20[(IA) The Central
Government may appoint one or more Deputy or Assistant Official Liquidators to
assist the Official Liquidator in the discharge of his functions.]
(2) All references to the
'Official Liquidator" in this Act shall be construed as references to the
Official Liquidator referred to in clause (a) or clause (b), as the case may
be, of sub-section (1) 20[and
as including references to Deputy or Assistant Official Liquidators appointed
under sub-section (IA)].
Official Liquidators
449. Appointment of official liquidator. -On a winding up order being made in respect of a company, the Official Liquidator shall, by virtue of his office, become the liquidator of the company.
450. Appointment
and powers of provisional liquidator. -
(1) At any time after the presentation of a winding up petition and
before the making of a winding up order, the Court may appoint the Official
Liquidator to be liquidator provisionally.
(2) Before appointing a
provisional liquidator, the Court shall give notice to the company and give a
reasonable opportunity to it to make its representations, if any, unless, for
special reasons to be recorded in writing, the Court thinks fit to dispense
with such notice.
(3) Where a provisional
liquidator is appointed by the Court, the Court may limit and restrict his
powers by the order appointing him or by a subsequent order; but otherwise he
shall have the same powers as a liquidator.
(4) The Official Liquidator
shall cease to hold office as provisional liquidator, and shall become the
liquidator, of the company, on a winding up order being made.
451. General
provisions as to liquidators. -
(1) The liquidator shall conduct the proceedings in winding up the
company and perform such duties in reference thereto as the Court may impose.
(2) Where the Official Liquidator
becomes or acts as liquidator, there shall be paid to the Central Government
out of the assets of the company such fees as may be prescribed.
(3) The acts of a liquidator
shall be valid, notwithstanding any defect that may afterwards be discovered in
his appointment or qualification:
Provided that nothing in this sub-section
shall be deemed to give validity to acts done by a liquidator after his
appointment has been shown to be invalid.
452. Style,
etc., of liquidator. -A
liquidator shall be described by the style of "The Official
Liquidator" of the particular company in respect of which he acts, and not
by his individual name.
20. Inserted by the Companies (Amendment) Act, 1960.
453. Receiver not to be appointed of assets with liquidator. -A receiver shall not be appointed of assets
in the hands of a liquidator except by, or witl-i the leave of, the Court.
454. Statement
of affairs to be made to Official Liquidator. -
(1) Where
the Court has made a winding up order or appointed the Official Liquidator as
provisional liquidator, unless the Court in its discretion otherwise orders,
there shall be made out and submitted to the Official Liquidator a statement as
to the af fairs of the company in the prescribed form, verified by an affidavit,
and containing the following particulars, namely: -
(a) The
assets of the company, stating separately the cash balance in hand and at the
bank, if any, and the negotiable securities, if any, held by the company;
(b) Its
debts and liabilities;
(c) The
names, residences and occupations of its creditors, stating separately the
amount of secured and unsecured debts; and in the case of secured debts,
particulars of the securities given, whether by the company or an officer
thereof, their value and the dates on which they were given;
(d) The
debts due to the company and the names, residences and occupations of the
persons from whom they are due and the amount likely to be realised on account
thereof;
(e) Such
further or other information as may be prescribed, or as the Official
Liquidator may require.
(2) The
statement shall be submitted and verified by one or more of the persons who are
at the relevant date the directors and by the person who is at that date the
manager, secretary or other chief officer of the company, or by such of the
persons hereinafter in this sub-section mentioned, as the Official Liquidator,
subject to the direction of the Court, may require to submit and verify the
statement, that is to say, persons-
(a) Who
are or have been officers of the company;
(b) Who
have taken part in the formation of the company at any time within one year
before the relevant date.
(c) Who
are in the employment of the company, or have been in the employment of the
company within the said, year, and are, in the opinion of the Official
Liquidator, capable of giving the information required;
(d) Who
are or have been within the said year officers of, or in the employment of, a
company, which is, or within the said year was, an officer of the company to
which the statement relates.
(3) The
statement shall be submitted within twenty-one days from the relevant date, or
within such extended time not exceeding three months from that date as the
Official Liquidator or the Court may, for special reasons, appoint.
(4) Any person making, or
concurring in making, the statement and affidavit required by this section
shall be allowed, and shall be paid by the Official Liquidator or provisional liquidator, as the case may be, out of the
assets of the company, such costs and expenses incurred in and about the
preparation and making of the statement and affidavit as the Official
Liquidator may consider reasonable, subject to an appeal to the Court.
21[(5) If any person, without reasonable excuse,
makes default in complying with any of the requirements of this section, he
shall be punishable with imprisonment for a term which may extend to two years,
or with fine which may extend to one hundred rupees for every day during which
the default continues, or with both.
(5A) The Court by which the
winding up order is made or the provisional liquidator is appointed, may take
cognizance of an offence under sub-section (5) upon receiving a complaint of
facts constituting such an offence and trying the offence itself in accordance
with the procedure laid down in the Code of Criminal Procedure, 189822 (5 of 1898), for
the trial of summons cases by magistrates.]
(6) Any person stating
himself in writing to be a creditor or contributory of the company shall be
entitled, by himself or by his agent, at all reasonable times, on payment of
the prescribed fee, to inspect the statement submitted in pursuance of this
section, and to a copy thereof or extract therefrom.
(7) Any person untruthfully
so stating himself to be a creditor or contributory shall be guilty of an
offence under section 18223
of the Indian Penal Code (45 of 1860); and shall, on the application of the
Official Liquidator, be punishable accordingly.
(8) In this section, the
expression "the relevant date" means, in a case where a provisional
liquidator is appointed, the date of his appointment, and in a case where no
such appointment is made, the date of the winding up order.
455. Report
by Official Liquidator. -
(1) In a case where a winding
up order is made, the Official Liquidator shall, as soon as practicable after
receipt of the statement to be submitted under section 454 and not later than
six months from the date of the order 24[or such extended period as may be allowed by
the Court], or in a case where the Court orders that no statement need be
submitted, as soon as practicable after the date of the order, submit a
preliminary report to the Court-
(a) As to the amount of
capital issued, subscribed, and paid up, and the estimated amount of assets and
liabilities, giving separately, under the heading of assets, particulars of (i)
cash and negotiable securities; (ii) debts due from contributories; (iii) debts
due to the company and securities if any, available in respect thereof; (iv)
movable and immovable properties belonging to the company; and (v) unpaid
calls;
(b) If the company has
failed, as to the causes of the failure; and
(c) Whether, in his opinion,
further inquiry is desirable as to any matter relating to the promotion,
formation, or failure of the company, or the conduct of the business thereof.
21. Substitutedforsubection
(5) by the Companies (Amendment) Act, 1960. For the original sub-section, refer
Appendix I.
22. Now the Code of Criminal
Procedure, 1973 (1 of 1974).
23. For the provisions of
section 182, refer Appendix II.
24. Inserted by the Companies
(Amendment) Act, 1960.
(2) The official Liquidator may also, if he thinks fit, make a
further report, or was promoted or stating the manner in which the Company d by
any person further reports, any fraud has been commute formed and whether in
his opinion officer of the company in relation to the in its promotion or
formation, or by any other matters which, in his company since the formation
thereof, and any other matter which, in his opinion, it is desirable to bring
to the notice of the Court
(3) If the official
Liquidator states in any such f urther report that in his opinion a fraud has
been committed as aforesaid, the Court shall have the further powers provided
in section 478.
456. Custody of company's property. -
(1) Where a winding up or d, the liquidator 25[or the provisional
liquidator has been appointed, the liquidator, as the case may be] shall take
into his custody orinder his control, all the property, effects and actionable
claims to which the company is or appears to be entitled.
25[(lA)
For the purpose of enabling the
liquidator or the provisional liquidator, as the case may be, to take into his
custody or under his control, any property, effects or actionable claims to which
the company is or appears to be entitled, the liquidator or the provisional
liquidator, as the case may be, may by writing request the Chief Presidency
Magistrate or the District Magistrate within whose jurisdiction such property,
effects or actionable claims or any books . of account or other documents of
the company may be found, to take possession thereof, and the Chief Presidency
Magistrate or the District Magistrate may thereupon after such notice as he may
think fit to give to any party, take possession of such property, effects,
actionable claims, books of account or other documents and deliver possession
thereof to the liquidator or the provisional liquidator.
(IB) For
the purpose of securing- compliance with the provisions of sub-section (IA),
the Chief Presidency Magistrate or the District Magistrate may take or cause to
be taken such steps and use or cause to be used such force as may in his
opinion be necessary.]
(2) All
the property and effects of the company shall be deemed to be in the custody of
the Court as from the date of the order for the winding up of the company.
(1) The liquidator in a
winding up by the Court shall have power, with the sanction of the Court,-
(a) To institute or def end
any suit, prosecution, or other legal proceeding, civil or criminal, in the
name and on behalf of the company;
(b) To carry on the business
of the company so far as may be necessary for the beneficial winding up of the
company;
(c) To sell the immovable and
movable property and actionable claims of the company by public auction or
private contract, with power to transf er the whole thereof to any person or
body corporate, or to sell the same in parcels;
25. Inserted by the Companies (Amendment) Act, 1960.
(d) To raise on the security
of the assets of the company any money requisite;
(e) To do all such other
things as may be necessary for winding up the affairs of the company and
distributing its assets.
(2) The liquidator ini a
winding up by the Court shall have power-
(i) To do all acts and to
execute, in the name and on behalf of the company, all deeds, receipts, and
other documents, and for that purpose to use, when necessary, the company's
seal;
26[(ia) to inspect the records and returns of the
company on the files of the Registrar without payment of any fee;]
(ii) To prove, rank and claim
in the insolvency of any contributory, for any balance against his estate, and
to receive dividends in the insolvency, in respect of that balance, as a
separate debt due from the insolvent, and rateably with the other separate
creditors;
(iii) To draw, accept, make
and endorse any bill of exchange, bundi or promissory note in the name and on
behalf of the company, with the same effect with respect to the liability of
the company as if the bill, hundi, or note had been drawn, accepted, made or
endorsed by or on behalf of the company in the course of its business;
(iv) To take out, in his
official name, letters of administration to any deceased contributory, and to
do in his official name any other act necessary for obtaining payment of any
money due from a contributory or his estate which cannot be conveniently done
in the name of the company, and in all such cases, the money due shall, for the
purpose of enabling the liquidator to take out the letters of administration or
recover the money, be deemed to be due to the liquidator himself:
Provided
that nothing herein empowered shall be deemed to affect the rights, duties and
privileges of any Administrator-General;
(v) To appoint an agent to do
any business which the liquidator is unable to do himself.
(3) The exercise by the
liquidator in a winding up by the Court of the powers conferred by this section
shall be subject to the control of the Court; and any creditor or contributory
may apply to the Court with respect to the exercise or proposed exercise of qny
of the powers conferred by this section.
458. Discretion
of liquidator. -The
Court may, by order, provide that the liquidator may exercise any of the powers
referred to in sub-section (1) of section 457 without the sanction or
intervention of the Court:
Provided
always that the exercise by the liquidator of such powers shall be subject to
the control of the Court.
26. Inserted by the Companies (Amendment) Act, 1960.
458A. 27[Exclusion of certain time in computing
periods of limitation. -Notwithstanding
anything in the Indian Limitation Act, 1908 (9 of 1908) or in any other law for
the time being in force, in computing the period of limitation prescribed for
any suit or application in the name and on behalf of a company which is being
wound up by the Court, the period from the date of commencement of the winding
up of the company to the date on which the winding up order is made (both
inclusive) and a period of one year immediately following the date of the
winding up order shall be excluded.]
459. Provision
for legal assistance to liquidator. -The liquidator may, with the sanction of the Court,
appoint an advocate, attorney or pleader entitled to appear before the Court to
assist him in the performance of his duties.
460. Exercise
and control of liquidator's powers. -
(1) Subject to the provisions of this Act, the liquidator shall,
in the administration of the assets of the company and the distribution thereof
among its creditors, have regard to any directions which may be given by
resolution of the creditors or contributories at any general meeting or by the
committee of inspection.
(2) Any directions given by
the creditors or contributories at any general meeting shall, in case of
conflict, be deemed to override any directions given by the committee of
inspection.
(3) The liquidator -
(a) May summon general
meetings of the creditors or contributories, whenever he thinks fit, for the
purpose of ascertaining their wishes;
(b) Shall summon such
meetings at such times, as the creditors or contributories, as the case may be,
may, by resolution, direct, or whenever requested in writing to do so by not
less than one-tenth in value of the creditors or contributories, as the case
may be.
(4) The liquidator may apply
to the Court in the manner prescribed, if any, for directions in relation to
any particular matter arising in the winding up.
(5) Subject to the provisions
of this Act, the liquidator shall use his own discretion in the administration
of the assets of the company and in the distribution thereof among the
creditors.
(6) Any person aggrieved by
any act or decision of the liquidator may apply to the Court; and the Court may
confirm, reverse or modify the act or decision complained of, and make such
further order as it thinks just in the circumstances.
461. Books
to be kept by liquidator. -
(1) The liquidator shall keep, in the manner prescribed, proper
books in which he shall cause entries or minutes to be made of proceedings at
meetings and of such other matters as may be prescribed.
(2) Any creditor or
contributory may, subject to the control of the Court, inspect any such books,
personally or by his agent.
27. Inserted by the Companies
(Amendment) Act, 1960.
462. Audit of liquidators accounts. -
(1) The liquidator shall, at
such times as may be prescribed but not less than twice in each year during his
tenure of office, present to the Court an account of his receipts and payments
as liquidator.
(2) The account shall be in
the prescribed form, shall be made in duplicate, and shall be verified by a
declaration in the prescribed form.
(3) The Court shall cause the
account to be audited in such manner as it thinks fit; and for the purpose of
the audit, the liquidator shall furnish the Court with such vouchers and
information as the Court may require, and the Court may, at any time, require
the production of, and inspect, any books or accounts kept by the liquidator.
(4) When the account has been
audited, one copy thereof shall be filed and kept by the Court, and the other
copy shall be delivered to the Registrar for filing; and each copy shall be
open to the inspection of any creditor, contributory or person interested.
28[(4A)
Where an account referred to in
sub-section (4) relates to a Government companv in liquidation, the liquidator
shall forward a copy thereof, -
(a) To the Central
Government, if that Government is a member of the Government company; or
(b) To any State Government,
if that Government is a member of the Government company; or
(c) To the Central Government
and any State Government, if both the Governments are members of the Government
company.]
(5) The liquidator shall
cause the account when audited or a summary thereof to be printed, and shall
send a printed copy of the account or summary by post to every creditor and to
every contributory:
Provided
that the Court may in any case dispense with compliance with this subsection.
463. Control
of Central Government over liquidators. -
(1) The Central Government
shall take cognizance of the conduct of liquidators of companies which are
being wound up by the Court, and, if a liquidator does not faithfully perform
his duties and duly observe all the requirements imposed on him by this Act,
21[or by the Indian Companies Act, 1913 (7 of 1913)], the rules thereunder, or
otherwise, with respect to the performance of his duties, or if any complaint
is made to the Central Government by any creditor or contributory in regard thereto,
the Central Government shall inquire into the matter, and take such action
thereon as it may think expedient:
29[Provided that
where the winding up of a company has commenced before the commencement of this
Act, the Court may, on the application of the Central Government, appoint in
place of such liquidator the Official Liquidator as the liquidator in such
winding up.]
28. Inserted by the Companies
(Amendment) Act, 1988, w.e.f. 15-6-1988.
29. Inserted by the Companies
(Amendment) Act, 1960.
(2) The Central Government
may at any time require any liquidator of a company which is being wound up by
the Court to answer any inquiry in relation to any winding up in which he is
engaged, and may, if the Central Government thinks fit, apply to the Court to
examine him or any other person on oath concerning the winding up.
(3) The Central Government
may also direct a local investigation to be made of the books and vouchers of
the liquidators.
Committee of inspection
464. Appointment
and composition of committee of inspection. -
30[(1) (a) The
Court may, at the time of making an order for the winding up of a company or at
any time thereafter, direct that there shall be appointed committee of
inspection to act with the liquidator.
(b) Where a direction is
given by the Court as aforesaid, the liquidator shall, within two months from
the date of such direction, convene a meeting of the creditors of the company
(as ascertained from its books and documents) for the purpose of determining
who are to be members of the committee.]
30[(2) The liquidator
shall, within fourteen days from the date of the creditors' meeting or such
further time as the Court in its discretion may grant for the purpose, convene
a meeting of the contributories to consider the decision of the creditors'
meeting with respect to the membership of the committee; and it shall be open
to the meeting of the contributories to accept the decision of the creditors'
meeting with or without modifications or to reject it.]
(3) Except in the case where
the meeting of the contributories accepts the decision of the creditors'
meeting in its entirety, it shall be the duty of the liquidator to apply to the
Court for directions as to 31[***]
what the composition of the committee shall be, and who shall be members
thereof.
465. Constitution
and proceedings of committee of inspections32.
-
(1) A committee of inspection appointed in pursuance of section 464
shall consist of not more than twelve members, being creditors and
contributories of the company or persons holding general or special powers of
attorney from creditors or contributories, in such proportions as may be agreed
on by the meetings of creditors and contributories, or in case of difference of
opinion between the meetings, as may be determined by the Court.
(2) The committee of
inspection shall have the right to inspect the accounts of the liquidator at
all reasonable times.
(3) The committee shall meet
at such times as it may from time to time appoint, 33[***] and the liquidator or any member of the
committee may also call a meeting of the committee as and when he thinks
necessary.
30. Substituted by e Companies
(Amendment) Act, 1960. For the original
sub-sections (1) and (2), refer Appendix I.
31. "Whether there shall
be a committee of inspection; and, if so, "omitted by the Companies
(Amendment) Act, 1960.
32. See rule 14 of General
Rules and Forms.
33. And, failing such
appointment, at least once a month," omitted by the Companies Act 1960.
(4) The quorum for a meeting
of the committee shall be one-third of the total number of the members, or two,
whichever is higher.
(5) The committee may act by
a majority of its members present at a meeting, but shall not act unless a
quorum is present.
(6) A member of the committee
may resign by notice in writing signed by him and delivered to the liquidator.
(7) If a member of the
committee is adjudged an insolvent, or compounds or arranges with his
creditors, or is absent from five consecutive meetings of the committee without
the leave of those members who, together with himself, represent the creditors
or contributories, as the case may be, his office shall become vacant.
(8) A member of the committee
may be removed at a meeting of creditors if he represents creditors, or at a
meeting of contributories if he represents contributories, by an ordinary
resolution of which seven days'notice has been given, stating the object of the
meeting.
(9) On a vacancy occurring in
the committee, the liquidator shall forthwith summon a meeting of creditors or
of contributories, as the case may require, to fill the vacancy; and the
meeting may, by resolution, reappoint the same, or appoint another, creditor or
contributory to fill the vacancy:
Provided
that if the liquidator, having regard to the position in the winding up, is of
the opinion that it is unnecessary for the vacancy to be filled, he may apply
to the Court and the Court may make an order that the vacancy shall not be
filled, or shall not be filled except in such circumstances as may be specified
in the order.
(10) The continuing members of
the committee, if not less than two, may act notwithstanding any vacancy in the
committee.
General powers of court in case of winding up by
court
466. Power
of Court to stay winding up. -
(1) The Court may at any time
after making a winding up order, on the application either of the Official
Liquidator or of any creditor or contributory, and on proof to the satisfaction
of the Court that all proceedings in relation to the winding up ought to be
stayed, make an order staying the proceedings, either altogether or for a
limited time, on such terms and conditions as the Court thinks fit.
(2) On any application under
this section, the Court may, before making an order, require the Official
Liquidator to furnish to the Court a report with respect to any facts or
matters which are in his opinion relevant to the application.
(3) A copy of every order
made under this section shall forthwith be forwarded by the company, or
otherwise as may be prescribed, to the Registrar, who shall make a minute of
the order in his books relating to the company.
467. Settlement
of list of contributories and application of assets. -
(1) As soon as may be after
making a winding up order, the Court shall settle a list of contributories,
with power to rectify the register of members in all cases where rectification
is required in pursuance of this Act, and shall cause the assets of the company
to be collected and applied in discharge of its liabilities:
Provided
that, where it appears to the Court that it will not be necessary to make calls
on, or adjust the rights of, contributories, the Court may dispense with the
settlement of a list of contributories.
(2) In settling the list of
contributories, the Court shall distinguish between those who are
contributories in their own right and those who are contributories as being
representatives of, or liable for the debts of, others.
468. Delivery
of property to liquidator. -The
Court may, at any time after making a winding up order, require any
contributory f or the time being on the list of contributories, and any
trustee, receiver, banker, agent, 34[officer
or other employee] of the company, to pay, deliver, surrender or transf er
forthwith, or within such time as the Court directs, to the liquidator, any
money, property or books and papers 35[in
his custody or under his control] to which the company is prima facie entitled.
469. Payment
of debts due by contributory and extent of set-off. -
(1) The Court may, at any time after making a winding up order,
make an order on anv contributory for the time being on the list of
contributories to pay, in the manner directed by the order, any money due to
the company, from him or f rom the estate of the person whom be represents,
exclusive of any money payable by him or the estate by virtue of any call in
pursuance of this Act.
(2) The Court, in making such
an order, may-
(a) In the case of an
unlimited company, allow to the contributory, by way of set-off, any money due
to him or to the estate which he represents, from the company, on any
independent dealing or contract with the company, but not any money due to him
as a member of the company in respect of any dividend or profit; and
(b) In the case of a limited
company, make to any director *[, managing agent, secretaries and treasurers]
or manager whose liability is unlimited, or to his estate, the like allowance.
(3) In the case of any
company, whether limited or unlimited, when all the creditors have been paid in
full, any money due on any account whatever to a contributory from the company
may be allowed to him by way of set-off against any subsequent call.
470. Power
of Court to make calls. -
(1) The Court may, at any time after making a winding up order, and
either before or after it has ascertained the sufficiency of the assets of the
company, -
(a) Make calls on all or any
of the contributories for the time being on the list of the contributories, to
the extent of their liability, for payment of any money which the Court considers
necessary to satisfy the debts and liabilities of the company, and the costs,
charges and expenses of winding up, and for the adjustment of the rights of the
contributories among themselves; and
(b) Make an order for payment
of any calls so made.
34. Substituted for 'or
officer' by the Companies (Amendment) Act, 1960.
35. Substituted for "in
his hands", ibid.
(2) In making a call, the
Court may take into consideration the probability that some of the
contributories may, partly or wholly, fail to pay the call.
471. Payment
into bank of moneys due to company. -
(1) The Court may order any contributory, purchaser or other person
from whom any money is due to the company to pay the money into the public
account of India in the Reserve Bank of India instead of to the liquidator.
(2) Any such order may be
enforced in the same manner as if the Court had directed payment to the
liquidator.
472. Moneys
and securities paid into bank to be subject to order of Court. -All moneys, bills, hundis, notes and other
securities paid or delivered into the Reserve Bank of India in the course of
the winding up of a company by the Court, shall be subject in all respects to
the orders of the Court.
473. Order
on contributory to be conclusive evidence. -
(1) An order made by the Court on a contributory shall, subject to
any right of appeal, be conclusive evidence that the money, if any, thereby
appearing to be due or ordered to be paid is due.
(2) All other pertinent
matters stated in the order shall be taken to be truly stated as against all
persons and in all proceedings whatsoever.
474. Power
to exclude creditors not proving in time. -The Court may fix a time or times within
which creditors are to prove their debts or claims, or to be excluded from the
benefit of any distribution made before those debts or claims arc proved.
475. Adjustment
of rights of contributories. -The
Court shall adjust the rights of the contributories among themselves, and
distribute any surplus among the persons entitled thereto.
476. Power
to order costs. -The
Court may, in the event of the assets being insufficient to satisfy the
liabilities, make an order for the payment out of the assets, of the costs,
charges and expenses incurred in the winding up, in such order of priority inter
se as the Court thinks just.
477. Power
to summon persons suspected of having property of company, etc. -
(1) The Court may, at any
time after the appointment of a provisional liquidator or the making of a
winding up order, summon before it any officer of the company or person known
or suspected to have in his possession any property or books or papers, of the
company, or known or suspected to be indebted to the company, or any person
whom the Court deems capable of giving information concerning the promotion,
formation, trade, dealings, property, books or papers, or affairs of the
company. (2) The Court may examine any officer or person so summoned on oath
concerning the matters aforesaid, either by word of mouth or on written
interrogatories; and may, in the former case, reduce his answers to writing and
require him to sign them.
(3) The Court may require any
officer or person so summoned to produce any books and papers in his custody or
power relating to the company; but, where he claims any lien on books or papers
produced by him, the production shall be without prejudice to that lien, and
the Court shall havejurisdiction in the winding up to determine all questions
relating to that lien.
(4) If any officer or person
so summoned, after being paid or tendered a reasonable sum for his expenses,
fails to appear before the Court at the time appointed, not having a lawful
impediment (made known to the Court at the time of its sitting and allowed by
it), the Court may cause him to be apprehended and brought before the Court for
examination.
36[(5)
If, on his examination, any officer
or person so summoned admits that he is indebted to the company, the Court may
order him to pay to the provisional liquidator or, as the case may be, the
liquidator at such time and in such manner as to the Court may seem just, the
amount in which he is indebted, or any part thereof, either in full discharge
of the whole amount or not, as the Court thinks fit, with or without costs of
the examination.
(6) If, on his examination,
any such officer or person admits that he has in his possession any property
belonging to the company, the Court may order him to deliver to the provisional
liquidator or, as the case may be, the liquidator, that property or any part
thereof, at such time, in such manner and on such terms as to the Court may
seem just.
(7) Orders made under
sub-sections (5) and (6) shall be executed in the same manner as decrees for
the payment of money or for the delivery of property under the Code of Civil
Procedure, 1908 (5 of 1908), respectively.
(8) Any person making any
payment or delivery in pursuance of an order made under sub-section (5) or
sub-section (6) shall by such payment or delivery be, unless otherwise directed
by such order, discharged from all liability whatsoever in respect of such debt
or property.]
478. Power
to order public examination of promoters, directors, etc. -
(1) When an order has been
made for winding up a company by the Court, and the Official Liquidator has
made a report to the Court under this Act, stating that in his opinion a fraud
has been committed by any person in the promotion or formation of the company,
or by any officer of the company in relation to the company since its
formation, the Court may, after considering the report, direct that that person
or officer shall attend before the Court on a day appointed by it for that
purpose, and be publicly examined as to the promotion or formation or the
conduct of the business of the company, or as to his conduct and dealings as an
officer thereof.
36. Inserted by the Companies
(Amendment) Act, 1960.
(2) The Official Liquidator
shall take part in the examination, and for that purpose may, if specially
authorized by the Court in that behalf employ such legal assistance as may be
sanctioned by the Court.
(3) Any creditor or
contributory may also take part in the examination either personally or by any
advocate, attorney or pleader entitled to appear before the Court.
(4) The Court may put such
questions to the person examined as it thinks fit.
(5) The person examined shall
be examined on oath, and shall answer all such questions as the Court may put,
or allow to be put, to him.
(6) A person ordered to be
examined under this section-
(a) Shall, before his
examination, be furnished at his own cost with a copy of the Official
Liquidator's report; and
(b) May at his own cost
employ an advocate, attorney or pleader entitled to appear before the Court,
who shall be at liberty to put to him such questions as the Court may deemjust
for the purpose of enabling him to explain or qualify any answers given by him.
(7) (a) If any such person applies to the Court to
be exculpated from any charges made or suggested against him, it shall be the
duty of the Official Liquidator to appear on the hearing of the application and
call the attention of the Court to any matters which appear to the Official
Liquidator to be relevant.
(b) If the Court, after
hearing any evidence given or witnesses called by the Official Liquidator,
grants the application, the Court may allow the applicant such costs as it may
think fit.
(8) Notes of the examination
shall be taken down in writing, and shall be read over to or by, and signed by,
the person examined; and may thereafter be used in evidence against him, and
shall be open to the inspection of any creditor or contributory at all
reasonable times.
(9) The Court may, if it
thinks fit, adjourn the examination from time to time.
(10) An examination under this
section may, if the Court so directs and subject to any rules made in this
behalf, be held before any District Judge, or before any officer of the High
Court, being an Official Referee, Master, Registrar or Deputy Registrar.
(11) The powers of the Court
under this section as to the conduct of the examination, but not as to costs,
may be exercised by the Judge or officer before whom the examination is held in
pursuance of sub-section (10).
479. Power
to arrest absconding contributory. -At any time either before or after making a winding
up order, the Court may, on proof of probable cause for believing that a
contributory is about to quit India or otherwise to abscond, or is about to
remove or conceal any of his property, for the purpose of evading payment of
calls or of avoiding examination respecting the affairs of the company, cause-
(a) The contributory to be
arrested and safely kept until such time as the Court may order; and
(b) His books and papers and
movable property to be seized and safely kept until such time as the Court may
order.
480. Saving
of existing powers of Court. -Any
powers conferred on the Court by this Act shall be in addition to, and not in
derogation of, any existing powers of instituting proceedings against any
contributory or debtor of the company, or the estate of any contributory or
debtor, for the recovery of any call or other sums.
481. Dissolution
of company. -
(1) When the affairs of a
company have been completely wound up 37[or when the Court is of the opinion that the
liquidator cannot proceed with the winding up of a companv for want of funds
and assets or for any other reason whatsoever and it is just and reasonable in
the circumstances of the case that an order of dissolution of the company
should be made], the Court shall make an order that the company be dissolved
from the date of the order, and the company shall be dissolved accordingly.
(2) A copy of the order
shall, within 38[thirty]
days from the date thereof, be forwarded by the liquidator to the Registrar who
shall make in his books a minute of the dissolution of the company.
(3) If the liquidator makes
default in forwarding a copy as aforesaid, he shall be punishable with fine
which may extend to fifty rupees for every day during which the default
continues.
Enforcement of and appeal from orders
482. Order
made in any Court to be enforced by other Courts. -Any order made by a Court for, or in the
course of, winding up a company shall be enforceable at any place in India,
other than that over which such Court has jurisdiction, bv the Court which
would have hadjurisdiction in respect of the company if its registered office
had been situate at such other place, and in the same manner in all respects as
if the order had been made by that Court.
483. Appeals
from orders. -Appeals
from any order made, or decision given, in the matter of the winding up of a
company by the Court shall lie to the same Court to which, in the same manner
in which, and subject to the same conditions under which, appeals lie from any
order or decision of the Court in cases within its ordinary jurisdiction.
37. Inserted by the Companies
(Amendment) Act, 1960.
38. Substituted for
"fourteen by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
CHAPTER III
VOLUNTARY WINDING UP
Resolutions for, and commencement of, voluntary
winding up
484. Circumstances
in which company may be wound up voluntarily. -
(1) A company may be wound up
voluntarily-
(a) When the period, if any,
fixed for the duration of the company by the articles has expired, or the
event, if any, has occurred, on the occurrence of which the articles provide
that the company is to be dissolved, and the company in general meeting passes
a resolution requiring the company to be wound up voluntarily;
(b) If the company passes a
special resolution that the company be wound up voluntarily.
(2) In this Act, the
expression "a resolution for voluntary winding up" means a resolution
passed under clause (a) or (b) of sub-section (1).
485. Publication
of resolution to wind up voluntarily. -
(1) When a company has passed
a resolution for voluntary winding up, it shall, within fourteen days of the
passing of the resolution, give notice of the resolution by advertisement in
the Official Gazette, and also in some newspaper circulating in the district
where the registered office of the company is situate.
(2) If default is made in
complying with sub-section (1), the company, and every officer of the company
who is in default, shall be punishable with fine, which may extend to fifty
rupees for every day during which the default continues.
For
the purposes of this sub-section, a liquidator of the company shall be deemed
to be an officer of the company.
486. Commencement
of voluntary winding up. -A
voluntary winding up shall be deemed to commence at the time when the
resolution for voluntary winding up is passed.
Consequences of voluntary winding up
487. Effect
of voluntary winding up on status of company. -In the case of a voluntary winding up, the
company shall, from the commencement of the winding up, cease to carry on its
business, except so far as may be required for the beneficial winding up of
such business:
Provided
that the corporate state and corporate powers of the company shall continue
until it is dissolved.
Declaration of solvency
488. Declaration
of solvency in case of proposal to wind up voluntarily. -
(1) Where it is proposed to
wind up a company voluntarily, its directors, or in case the company has more
than two directors, the majority of the directors, may, at a meeting of the
Board, make a declaration verified by an affidavit, to the effect that they
have made a full inquiry into the affairs of the company, and that, having done
so, they have formed the opinion that the company has no debts, or that it will
be able to pay its debts in full within such period not exceeding three years
from the commencement of the winding up as may be specified in the declaration.
(2) A declaration made as
aforesaid shall have no effect for the purposes of this Act, unless-
(a) It is made within the
five weeks immediately preceding the date of the passing of the resolution for
winding up the company and is delivered to the Registrar for registration
before that date; and
39[(b) It is accompanied by a copy of the report
of the auditors of the company (prepared, as far as circumstances admit, in
accordance with the provisions of this Act) on the profit'and loss account of
the company for the period commencing from the date up to which the last such
account was prepared and ending with the latest practicable date immediately
before the making of the declaration and the balance sheet of the company made
out as on the last-mentioned date and also embodies a statement of the
company's assets and liabilities as at that date.]
(3) Any director of a company
making a declaration under this section without having reasonable grounds for
the opinion that the company will be able to pay its debts in full within the
period specified in the declaration, shall be punishable with imprisonment for
a term which may extend to six months, or with fine which may extend to five
thousand rupees, or with both.
(4) If the company is wound
up in pursuance of a resolution passed within the period of five weeks after
the making of the declaration, but its debts are not paid or provided for in
full within the period specified in the declaration, it shall be presumed,
until the contrary is shown, that the director did not have reasonable grounds
for his opinion.
(5) A winding up in the case
of which a declaration has been made and delivered in accordance with this
section is in this Act referred to as "a members voluntary winding
up"; and a winding up in the case of which a declaration has not been so
made and delivered is in this Act referred to as a creditors' voluntary winding
up".
Provisions applicable to a members' voluntary winding
up
489. Provisions
applicable to a members' voluntary winding up. The provisions contained in sections 490 to
498, both inclusive, shall subject to the provisions of section 498, apply in
relation to a members' voluntary winding up.
39. Substituted by the
Companies (Amendment) Act, 1960. For
the original clause, refer Appendix I.
490. Power
of company to appoint and fix remuneration of liquidators. -
(1) The company in general
meeting shall-
(a) Appoint one or more
liquidators for the purpose of winding up the affairs and distributing the
assets of the company; and
(b) Fix the remuneration, if
any, to be paid to the liquidator or liquidators.
(2) Any remuneration so fixed
shall not be increased in any circumstances whatever, whether with or without
the sanction of the Court.
(3) Before the remuneration
of the liquidator or liquidators is fixed as aforesaid, the liquidator, or any
of the liquidators, as the case may be, shall not take charge of his office.
491. Board's
powers to cease on appointment of liquidator. -On the appointment of a liquidator, all the
powers of the Board of directors and of the managing or whole-time directors
*[, managing agent, secretaries and treasurers,] and manager, if there be any
of these, shall cease, except for the purpose of giving notice of such
appointment to the Registrar in pursuance of section 493 or in so far as the
company in general meeting or the liquidator may sanction the continuance
thereof.
492. Power
to fill vacancy in office of liquidator. -
(1) If a vacancy occurs by death, resignation or otherwise in the
office of any liquidator appointed by the company, the company in general
meeting may, subject to any arrangement with its creditors, fill the vacancy.
(2) For that purpose, a
general meeting may be convened by any contributory, or by the continuing
liquidator or liquidators, if any.
(3) The meeting shall be held
in the manner provided by this Act or by the articles, or in such other manner
as the Court may, on application by any contributory or by the continuing
liquidator or liquidators, determine.
493. Notice
of appointment of liquidator to be given to Registrar. -
(1) The company shall give
notice to the Registrar of the appointment of a liquidator or liquidators made
by it, under section 490, of every vacancy occurring in the office of
liquidator, and of the name of the liquidator or liquidators appointed to fill
every such vacancy under section 492.
(2) The notice aforesaid
shall be given by the company within tcn days of the event to which it relates.
(3) If default is made in
complying with sub-section (1) or (2), the company, and every officer of the
company (including every liquidator or continuing liquidator) who is in
default, shall be punishable with fine which may extend to one hundred rupees
for every day during which the default continues.
494. Power
of liquidator to accept shares, etc., as consideration for sale of property of
company. -
(1) Where-
(a) A company (in this
section called the transferor company") is proposed to be, or is in
course of being, wound up altogether voluntarily; and
(b) The whole or any part of
its business or property is proposed to be transferred or sold to another
company, whether a company within the meaning of this Act or not (in this
section called "the transferee company");
The
liquidator of the transferor company may, with the sanction of a special
resolution of that companv conferring on the liquidator either a general
authority or an authority in respect of any particular arrangement,-
(i) Receive, by way of
compensation or part compensation for the transfer or sale, shares, policies,
or other like interests in the transferee company, for distribution among the
members of the transferor company; or
(ii) Enter into any other
arrangement whereby the members of the transferor company may, in lieu of
receiving cash, shares, policies, or other like interests or in addition
thereto, participate in the profits of, or receive any other benefit from, the
transferee company.
(2) Any sale or arrangement
in pursuance of this section shall be binding on the members of the transferor
company.
(3) If any member of the
transferor company who did not vote in favour of the special resolution expresses
his dissent therefrom in writing addressed to the liquidator, and left at the
registered office of the company within seven days after the passing of the
resolution, he may require the liquidator either-
(a) To abstain from carrying
the resolution into effect; or
(b) To purchase his interest
at a price to be determined by agreement, or by arbitration in the manner
provided by this section.
(4) If the liquidator elects
to purchase the member's interest, the purchase money shall be paid before the
company is dissolved, and be raised by the liquidator in such manner as may be
determined by special resolution.
(5) A special resolution
shall not be invalid for the purposes of this section by reason only that it is
passed before or concurrently with a resolution for voluntary winding up or for
appointing liquidators; but if an order is made within a year for winding up
the company by or subject to the supervision of the Court, the special
resolution shall not be valid unless it is sanctioned by the Court.
(6) The provisions of the
Arbitration Act, 1940 (10 of 1940), other than those restricting the
application of that Act in respect of the subject-matter of the arbitration,
shall apply to all arbitrations in pursuance of this section.
495. Duty
of liquidator to call creditors' meeting in case of insolvency. -
(1) If, in the case of a
winding up commenced after the commencement of this Act, the liquidator is at
any time of opinion that the company will not be able to pay its debts in full
within the period stated in the declaration under section 488, or that period
has expired without the debts having been paid in full, he shall forthwith
summon a meeting of the creditors, and shall lay before the meeting a statement
of the assets and liabilities of the company.
(2) If the liquidator fails
to comply with sub-section (1), he shall be punishable with fine, which may
extend to five hundred rupees.
496. Duty
of liquidator to call general meeting at end of each year. -
(1) Subject to the provisions of section 498, in the event of the
winding up continuing for more than one year, the liquidator shall-
(a) Call a general meeting of
the company at the end of the first year from the commencement of the winding
up, and at the end of each succeeding year, or as soon thereafter as may be
convenient within three months from the end of the year or such longer period
as the Central Government40
may allow; and
(b) Lay before the meeting an
account of his acts and dealings and of the conduct of the winding up during the
preceding year, together with a statement in the prescribed form and containing
the prescribed particulars with respect to the proceedings in, and position of,
the liquidation.
(2) If the liquidator fails
to comply with sub-section (1), he shall be punishable, in respect of each
failure, with fine, which may extend to one hundred rupees.
497. Final
meeting and dissolution. -
(1) Subject to the provisions
of section 498, as soon as the affairs of the company are fully wound up, the
liquidator shall-
(a) Make up an account of the
winding up, showing how the winding lip has been conducted and the property of
the company has been disposed of; and
(b) Call a general meeting of
the company for the purpose of laying the account before it, and giving any explanation
thereof.
(2) The meeting shall be
called by advertisement-
(a) Specifying the time,
place and object of the meeting; and
(b) Published not less than
one month before the meeting in the Official Gazette, and also in some
newspaper circulating in the district where the registered office of the
company is situate.
(3) Within one week after the
meeting, the liquidator shall send to the 41[Registrar and the Official Liquidator a copy
each of the account and shall make a return to each of them] of the holding of
the meeting and of the date thereof.
If
the copy is not so sent or the return is not so made, the liquidator shall be
punishable with fine which may extend to fifty rupees for every day during
which the default continues.
(4) If a quorum is not
present at the meeting aforesaid, the liquidator shall, in licu of the return
referred to in sub-section (3), make a return that the meeting was duly called
and that no quorum was present thereat.
40. Powers are not delegated
to Regional Directors.
41. Substituted for 'Registrar
a copy of the account, and shall make a return to him" bv the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
Upon
such a return being made within one week after the date fixed for the meeting,
the provisions of sub-section (3) as to the making of the return shall be
deemed to have been complied with.
42[(5) The Registrar, on receiving the account and
either the return mentioned in sub-section (3) or the return mentioned in
sub-section (4), shall forthwith register them.
(6) The Official Liquidator,
on receiving the account and either the return mentioned in sub-section (3) or
the return mentioned in sub-section (4), shall, as soon as iiiav be, make, and
the liquidator and all officers, past or present, of the company shall give the
Official Liquidator all reasonable facilities to make, a scrutiny of the books
and papers of the company and if on such scrutiny the Official Liquidator makes
a report to the Court that the affairs of the company have not been conducted
in a manner prejudicial to the interests of its members or to public interest,
then, from the date of the submission of the report to the Court the company
shall be deemed to be dissolved.]
(6A) If on such scrutiny the
Official Liquidator makes a report to the Court that the affairs of the company
have been conducted in a manner prejudicial as aforesaid, the Court shall by
order direct the Official Liquidator to make a further investigation of the
affairs of the company and for that purpose shall invest him with all such
powers as the Court may deem fit.
(6B) On the receipt of the
report of the Official Liquidator on such further investigation the Court may
either make an order that the company shall stand dissolved with effect from
the date to be specified by the Court therein or make such other order as the
circumstances of the case brought out in the report permit.]
(7) If the liquidator fails
to call a general meeting of the company as required by this section, he shall
be punishable with fine, which may extend to five hundred rupees.
498. Alternative
provisions as to annual and final meetings in case of insolvency. -Where section 495 has effect, sections 508
and 509 shall apply to the winding up, to the exclusion of sections 496 and
497, as if the winding up were a creditors'voluntary winding up and not a
members' voluntary winding up:
Provided
that the liquidator shall not be required to call a meeting of creditors under
section 508 at the end of the first year from the commencement of the winding
up, unless the meeting held under section 495 has been held more than three
months before the end of that year.
Provisions applicable to a creditors'voluntary
winding up
499. Provisions
applicable to a creditors' voluntary winding up. -The provisions contained in sections 500 to
509, both inclusive, shall apply in relation to a ci-cditors'voluntary winding
up.
42. Substituted for
sub-sections (5) and (6), by the Companies (Amendment) Act, 1965, w.e.f.
15-10-1965. For the original
sub-seCtiODS, refer Appendix I.
(1) The company shall cause a
meeting of the creditors of the company to be called for the day, or the day
next following the day, on which there is to be held the general meeting of the
company at which the resolution for voluntary winding up is to be proposed, and
shall cause notices of the meeting of creditors to be sent by post to the
creditors simultaneously with the sending of the notices of the meeting of the
company.
(2) The company shall cause
notice of the meeting of the creditors to be advertised once at least in the
Official Gazette and once at least in two newspapers circulating in the
district where the registered office or principal place of business of the
company is situate.
(3) The Board of directors of
the company shall -
(a) Cause a full statement of
the position of the company's affairs together with a list of the creditors of
the company and the estimated amount of their claims to be laid before the
meeting of the creditors to be held as aforesaid; and
(b) Appoint one of their
numbers to preside at the said meeting.
(4) It shall be the duty of
the director appointed to preside at the meeting of creditors to attend the
meeting and preside thereat.
(5) If the meeting of the
company at which the resolution for voluntary winding up is to be proposed is
adjourned and the resolution is passed at an adjourned meeting, any resolution
passed at the meeting of the creditors held in pursuance of sub-section (1)
shall have effect as if it had been passed immediately after the passing of the
resolution for winding up the company.
(6) If default is made-
(a) By the company, in
complying with sub-sections (1) and (2);
(b) By its Board of
directors, in complying with sub-section (3);
(c) By any director of the
company, in complying with sub-section (4);
The
company, each of the directors, or the director, as the case may be, shall be
punishable with fine which may extend to one thousand rupees and, in the case
of default by the company, every officer of the company who is in default,
shall be liable to the like punishment.
501. Notice
of resolutions passed by creditors' meeting to be given to Registrar. -
(1) Notice of any resolution passed at a creditors' meeting in
pursuance of section 500 shall be given by the company to the Registrar within
ten days of the passing thereof.
(2) If default is made in
complying with sub-section (1), the company, and every officer of the company
who is in default, shall be punishable with fine, which may extend to fifty
rupees for every day during which the default continues.
For
the purposes of this section, a liquidator of the company shall be deemed to be
an officer of the company.
502. Appointment
of liquidator. -
(1) The creditors and the
company at their respective meetings mentioned in section 500 may nominate a
person to be liquidator for the purpose of winding up the affairs and
distributing the assets of the company. (2) If the creditors and the company
nominate different persons the person nominated by the creditors shall be
liquidator:
Provided
that any director, member or creditor of the company may, within seven days
after the date on which the nomination was made by the creditors, apply to the
Court for an order either directing that the person nominated as liquidator by
the company shallbe liquidator instead of orjointly with the person nominated
by the creditors, or appointing the Official Liquidator or some other person to
be liquidator instead of the person appointed by the creditors.
(3) If no person is nominated
by the creditors, the person, if any, nominated by the company shall be
liquidator.
(4) If no person is nominated
by the company, the person, if any, nominated by the creditors shall be
liquidator.
503. Appointment
of committee of inspection43. -
(1) The creditors at the
meeting to be held in pursuance of section 500 or at any subsequent meeting
may, if they think fit, appoint a committee of inspection consisting of not
more than five persons.
(2) If such a committee is
appointed, the company may, either at the meeting at which the resolution for
voluntary winding up is passed or at any subsequent general meeting, appoint
such number of persons (not exceeding five) as they think fit to act as members
of the committee:
Provided
that the creditors may, if they think fit, resolve that all or any of the
persons so appointed by the company ought not to be members of the committee of
inspection.
(3) If the creditors so
resolve, the persons mentioned in the resolution shall not, unless the Court
otherwise directs, be qualified to act as members of the committee.
(4) On any application to the
Court for a direction under sub-section (3), the Court may, if it thinks fit,
appoint other persons to act as members of the committee of inspection in the
place of the persons mentioned in the creditors'resolution.
(5) Subject to the provisions
of sub-sections (1) to (4) and to such rules as may be made by the Central
Government, the provisions of section 465 (except subsection (1) thereof) shall
apply with respect to a committee of inspection appointed under this section as
they apply with respect to a committee of inspection appointed in a winding up
by the Court.
504. Fixing
of liquidators' remuneration. -
(1) The committee cf inspection, or if there is no such committee,
the creditors, may fix the remuneration to be paid to the liquidator or
liquidators.
43. See rule 14 of General Rules and Forms.
(2) Where the remuneration is
not so fixed, it shall be determined by the Court.
(3) Any remuneration fixed
under sub-section (1) or (2) shall not be increased in any circumstances
whatever, whether with or without the sanction of the Court.
505. Board's
powers to cease on appointment of liquidator. -On the appointment of a liquidator, all the
powers of the Board of directors shall cease, except in so far as the committee
of inspection, or if there is no such committee, the creditors in general
meeting, may sanction the continuance thereof.
506. Power
to fill vacancy in office of liquidator. -If a vacancy occurs by death, resignation or
otherwise, in the office of a liquidator (other than a liquidator appointed by,
or by the direction of, the Court), the creditors in general meeting may fill
the vacancy.
507. Application
of section 494 to creditors' voluntary winding up. The provisions of section 494 shallapply in the case
of a creditors' voluntary winding up as in the case of a members' voluntary
winding up, with the modification that the powers of the liquidator under that
section shall not be exercised except with the sanction either of the Court or
of the committee of inspection.
508. Duty
of liquidator to call meetings of company and of creditors at end of each year.
-
(1) In the event of the winding up continuing for more than one
year, the liquidator shall-
(a) Call a general meeting of
the company and a meeting of the creditors at the end of the first year from
the commencement of the winding up and at the end of each succeeding year, or
as soon thereafter as may be convenient within three months from the end of the
year or such longer period as the Central Government44 may allow; and
(b) Lay before the meetings
an account of his acts and dealings and of the conduct of the winding up during
the preceding year, together with a statement in the prescribed form and
containing the prescribed particulars with respect to the proceedings in, and
position of, the winding up.
(2) If the liquidator fails
to comply with subsection (1), he shall be punishable, in respect of each
failure, with fine, which may extend to one hundred rupees.
509. Final
meeting and dissolution. -
(1) As soon as the affairs of the companv are fully wound up, the
liquidator shall-
(a) Make up an account of the
winding up, showing how the winding up has been conducted and the property of
the company has been disposed of, and
(b) Call a general meeting of
the company and a meeting of the creditors for the purpose of laying the
account before the meetings and giving any explanation thereof.
44. Powers are now delegated
to Regional Directors.
(2) Each such meeting shall
be called by advertisement-
(a) Specifying the time,
place and object thereof; and
(b) Published not less than
one month before the meeting in the Official Gazette and also in some newspaper
circulating in the district where the registered office of the company is
situate.
(3) Within one week after the
date of the meetings, or if the meetings are not held on the same date, after
the date of the later meeting, the liquidator shall send to the 40[Registrar and the
Official Liquidator a copy each of the account and shall make a return to each
of them] of the holding of the meetings and of the date or dates on which they
were held.
If
the copy is not so sent or the return is not so made, the liquidator shall be
punishable with fine, which may extend to fifty rupees for every day during
which the default continues.
(4) If a quorum (which for
the purposes of this section shall be two persons) is not present at either of
such meetings, the liquidator shall, in lieu of the return ref erred to in
sub-section (3), make a return that the meeting was duly called and that no
quorum was present thereat.
Upon
such a return being made within one week after the date fixed for the meeting,
the provisions of sub-section (3) as to the making of the return shall, in
respect of that meeting, be deemed to have been complied with.
46[(5)
The Registrar, on receiving the
account and also, in respect of each such meeting, either the return mentioned
in sub-section (3) or the return mentioned in subsection (4), shall forthwith
register them.
(6) The Official
Liquidator, on receiving the account and either the return mentioned in
sub-section (3) or the return mentioned in sub-section (4), shall, as soon as
may be, make, and the liquidator and all officers, past or present, of the
company shall give the Official Liquidator all reasonable facilities to make, a
scrutiny of the books and papers of the company and if on such scrutiny the
Official Liquidator makes a report to the Court that the affairs of the company
have not been conducted in a manner prejudicial to the interests of its members
or to public interest, then, from the date of the submission of the report to
the Court the company shall be deemed to be dissolved.
(6A) If on such scrutiny the
Official Liquidator makes a report to the Court that the affairs of the company
have been conducted in a manner prejudicial as aforesaid, the Court shall by
order direct the Official Liquidator to make a further investigation of the
affairs of the company and for that purpose shall invest him with all such
powers as the Court may deem fit.
(6B) On the receipt of the
report of the Official Liquidator on such further investigation the Court may
either make an order that the company shall stand dissolved with effect from
the date to be specified by the Court therein or make such other order as the
circumstances of the case brought out in the report permit.]
45. Substituted for
"Registi-ar a copy of the account, and shall make a return to him" by
the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
46. Substituted for
sub-sections (5) and (6) by the Companies (Amendment) Act, 1965, w.e.f.
15-10-1965. For the original
sub-sections, refer Appendix I.
(7) If the liquidator fails
to call a general meeting of the company or a meeting of the creditors as
required by this section, he shall be punishable, in respect of each such
failure, with fine which may extend to five hundred rupees.
Provisions applicable to every voluntary winding up
510. Provisions
applicable to every voluntary winding up. -The provisions contained in sections 51 1 to
52 1, both inclusive, shall apply to every voluntary winding up, whether a
members' or a creditors' winding up.
511. Distribution
of property of company. -Subject
to the provisions of this Act as to preferential payments, the assets of a
company shall, on its winding up, be applied in satisfaction of its liabilities
pari passu and, subject to such application, shall, unless the articles otherwise
provide, be distributed among the members according to their rights and
interests in the company.
511A. 47[Application of section 454 to voluntary
winding up. -The
provisions of section 454 shall, so far as may be, apply to every voluntary winding
up as they apply to the winding up by the Court except that references to-
(a) The Court shall be
omitted;
(b) The Official Liquidat or
or the provision al liquidator shall be construed as references to the
liquidator; and
(c) The relevant date"
shall be construed as references to the date of commencement of the winding
up.]
512. Powers
and duties of liquidator in voluntary winding up. -
(1) The liquidator may, -
(a) In the case of a members'
voluntary winding up, with the sanction of a special resolution of the company,
and in the case of a creditors' voluntary winding up, with the sanction of the
Court or, the committee of inspection or, if there is no such committee, of a
meeting of the creditors, exercise any of the powers given by 47[clauses (a) to (d)
of sub-section (1)] of section 457 to a liquidator in a winding up by the
Court;
(b) Without the sanction
referred to in clause (a), exercise any of the other powers given by this Act
to the liquidator in a winding up by the Court;
(c) Exercise the power of the
Court under this Act of settling a list of contributories (which shall be prima
focie evidence of the liability of the persons named therein to be
contributories);
(d) Exercise the power of the
Court of making calls;
(e) Call general meetings of
the company for the purpose of obtaining the sanction of the company by
ordinary or special resolution, as the case may require, or for any other
purpose he mav think fit.
47. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
48. Substituted for
"clauses (i) to (iv) of sub-section (2) by the Companies (Amendment) Act,
1960.
(2) The exercise by the
liquidator of the powers given by clause (a) of sub-section (1) shall be
subject to the control of the Court; and any creditor or contributory mav apply
to the Court with respect to any exercise or proposed exercise of any of the
powers conferred by this section.
(3) The liquidator shall pav
the debts of the company and shall adjust the rights of the contributories
among themselves. (4) When several liquidators are appointed, any power given
by this Act may be exercised bv such one or more of them as may be determined
at the time of their appointment, or, in default of such determination, by any
number of them not being less than two.
513. Body
corporate not to be appointed as liquidator. -
(1) A body corporate shall
not be qualified for appointment as liquidator of a company in a voluntary
winding up.
(2) Any appointment made in
contravention of subsection (1) shall be void.
(3) Any body corporate which
acts as liquidator of a company, and every director
*[,
The managing agent or secretaries and treasurers], or a manager thereof, shall
be punishable with fine which may extend to one thousand rupees.
514. Corrupt
inducement-affecting appointment as liquidator. -Any person who gives, or agrees or offers to
give, to any member or creditor of a company any gratification whatever with a
view to-
(a) Securing his own
appointment or nomination as the companv's liquidator; or
(b) Securing or preventing
the appointment or nomination of some person other than himself, as the
companv's liquidator;
Shall
be punishable with fine which may extend to one thousand rupees. .
515. Power
of Court to appoint and remove liquidator in voluntary winding up. -
(1) If from any cause
whatever, there is no liquidator acting, 49[the Court may appoint the Official
Liquidator or any other person as a liquidator].
50[(2)
The Court may, on cause shown, remove
a liquidator and appoint the Official Liquidator or any other person as a
liquidator in place of the removed liquidator.
(3) The Court mav also
appoint or remove a liquidator on the application made by the Registrar in this
behalf.
(4) If the Official
Liquidator is appointed as liquidator under the proviso to subSection (2) of
section 502 or under this section, the remuneration to be paid to him shall be
fixed by the Court and shall be credited to the Central Government.]
516. Notice
by liquidator of his appointment. -
(1) The liquidator shall, within 51[thirty] days after his appointment publish
in the Official Gazette, and deliver to the Registrar for registration, a
notice of his appointment in the form prescribed.
(2) If the liquidator fails
to comply with sub-section (1), he shall be punishable with fine, which may
extend tofiftyrupees forevery day duringwhich the default continues.
49. Substituted for the Court
may appoint a liquidator by the companies (Amendment) Act, 1960.
50. Substituted for
sub-section (2), ibid. For original sub-section, refer Appendix I.
51. Substituted for,
"twenty-on by the companies (Amendment) Act, 1965, w.e.f.l5-10-1965.
517. Arrangement
when binding on company and creditors. -
(1) Any arrangement entered into between a company about to be, or
in the course of being, wound up and its creditors shall, subject to the right
of appeal under this section, be binding on the company and on the creditors if
it is sanctioned by a special resolution of the company and acceded to by
threefourths in number and value of the creditors.
(2) Any creditor or
contributory may, within three weeks from the completion of the arrangement,
appeal to the Court against it and the Court may thereupon, as it thinks just,
amend, vary, confirm or set aside the arrangement.
518. Power
to apply to Court to have questions determined or powers exercised. -
(1) The liquidator or any
contributory or creditor may apply to the Court-
(a) To determine any question
arising in the winding up of a company; or
(b) To exercise, as respects
the enforcing of calls, the staying of proceedings or any other matter all or
any of the powers which the Court might exercise if the company were being
wound up by the Court.
(2) The liquidator or any
creditor or contributory may apply to the Court specified in sub-section (3)
for an order setting aside any attachment, distress or execution put into force
against the estate or effects of the company after the commencement of the
winding up.
(3) An application under
sub-section (2) shall be made-
(a) If the attachment,
distress or execution is levied or put into force by a High Court, to such High
Court; and
(b) If the attachment,
distress or execution is levied or put into force by any other Court, to the
Court having jurisdiction to wind up the company.
(4) The Court, if satisfied
on an application under sub-section (1) or (2) that the determination of the
question or the required exercise of power or the order applied for will be
just and beneficial, may accede wholly or partially to the application on such
terms and conditions as it thinks fit, or may make such other order on the
application as it thinks just.
(5) A copy of an order
staying the proceedings in the winding up, made by virtue of this section,
shall forthwith be forwarded by the company, or otherwise as may be prescribed,
to the Registrar, who shall make a minute of the order in his books relating to
the company.
519. Application
of liquidator to Court for public examination of promoters, directors, etc. -
(1) The liquidator may make a
report to the Court stating that in his opinion a fraud has been committed by
any person in the promotion or formation of the company or by any officer of
the company in relation to the company since its formation; and the Court may,
after considering the report, direct that that person or officer shall attend
before the Court on a day appointed by it for that purpose, and be publicly
examined as to the promotion or formation or the conduct of the business of the
company, or as to his conduct and dealings as officer thereof.
(2) The provisions of
sub-sections (2) to (11) of section 478 shall apply in relation to any
examination directed under sub-section (1) as they apply in relation to an
examination directed under sub-section (1) of section 478 with references to
the liquidator being substituted for references to the Official Liquidator in
those provisions.
520. Costs
of voluntary winding up. -All
costs, charges and expenses properly incurred in the winding up, including the
remuneration of the liquidator, shall, subject to the rights of secured
creditors, if any, be payable out of the assets of the company in priority to
all other claims.
521. Saving
of right of creditors and contributories to apply for winding up. - [Omitted by the Companies (Amendment) Act,
1960. For the originalsection, refer Appendix I].
CHAPTERIV
WINDING
UP SUBJECT TO SUPERVISION OF COURT
522. Power
to order winding up subject to supervision. -At any time after a company has passed a
resolution for voluntary winding up, the Court may make an order that the
voluntary winding up shall continue, but subject to such supervision of the
Court, and with such liberty for creditors, contributories or others to apply
to the Court, and generally on such terms and conditions, as the Court thinks
just.
523. Effect
of petition for winding up subject to supervision. -A petition for the continuance of a voluntary
winding up subject to the supervision of the Court shall, for the purpose of
giving jurisdiction to the Court over suits and legal proceedings, be deemed to
be a petition for winding up by the Court.
524. Power
of Court to appoint or remove liquidators. -
(1) Where an order is made
for a winding up subject to supervision, the Court may, by that or any
subsequent order, appoint an additional liquidator or liquidators.
(2) The Court may remove any
liquidator so appointed or any liquidator continued under the supervision
order, and fill any vacancy occasioned by the removal, or by death or
resignation.
52[(3)
The Court may appoint the Official
Liquidator as a liquidator under sub-section (1) or to fill any vacancy
occasioned under sub-section (2).
(4) The Court may also
appoint or remove a liquidator on an application made by the Registrar in this
behalf.]
52. Inserted by the Companies
(Amendment) Act, 1960.
525. Powers
and obligations of liquidator appointed by Court. -A liquidator appointed by the Court under
section 524 shall have the same powers, be subject to the same obligations, and
in all respects stand in the same position, as if he had been duly appointed in
accordance with the provisions of this Act with respect to the appointment of
liquidators in a voluntary winding up.
526. Effect
of supervision order. -
(1) Where an order is made
for a winding up subject to supervision, the liquidator may, subject to any
restrictions imposed by the Court, exercise all his powers, without the
sanction or intervention of the Court, in the same manner as if the company
were being wound up altogether voluntarily.
(2) Except as provided in
sub-section (1), any order made by the Court for a winding up subject to the
supervision of the Court, shall for all purposes, including the staying of
suits and other proceedings, be deemed to be an order of the Court for winding
up the company by the Court, and shall confer full authority on the Court to
make calls or to enforce calls made by the liquidators, and to exercise all
other powers which it might have exercised if an order had been made for
winding up the company altogether by the Court.
(3) In the construction of
the provisions whereby the Court is empowered to direct any act or thing to be
done to or in favour of the liquidator, the expression 'liquidator' shall be
deemed to mean the liquidator conducting the winding up, subject to the supervision
of the Court.
527. Appointment
in certain cases of voluntary liquidators to office of liquidators. -Where an order has been made for winding up a
company subject to supervision, and an order is afterwards made for winding up
by the Court, the Court may, by the last-mentioned or any subsequent order,
appoint any person or persons who are then liquidators, either provisionally or
permanently, to be liquidator or liquidators in the winding up by the Court in
addition to, and subject to the control of, the Official Liquidator.
CHAPTER V
PROVISIONS APPLICABLE TO EVERY MODE OF WINDING UP
Proof and ranking of claims
528. Debts
of all descriptions to be admitted to proof. -In every winding up (subject, in the case of
insolvent companies, to the application in accordance with the provisions of
this Act of the law of insolvency), all debts payable on a contingency, and all
claims against the company, present or future, certain or contingent,
ascertained or sounding only in damages, shall be admissible to proof against
the company, a just estimate being made, so far as possible, of the value of
such debts or claims as may be subject to any contingency, or may sound only in
damages, or for some other reason may not bear a certain value.
529. Application
of insolvency rules in winding up of insolvent companies. -
(1) In the winding up of an
insolvent company, the same rules shall prevail and be observed with regard to-
(a) Debts provable;
(b) The valuation of
annuities and future and contingent liabilities; and
(c) The respective rights of
secured and unsecured creditors;
As
are in force for the time being under the law of insolvency with respect to the
estates of persons adjudged insolvent:
53[Provided that the
security of every secured creditor shall be deemed to be subject to a pari
passu charge in favour of the workmen to the extent of the workmen's portion
therein, and, where a secured creditor, instead of relinquishing his security
and proving his debt, opts to realise his security,-
(a) The liquidator shall be
entitled to represent the workmen and enforce such charge;
(b) Any amount realised by
the liquidator by way of enforcement of such charge shall be applied rateably
for the discharge of workmen's dues; and
(c) So much of the debt due
to such secured creditor as could not be realised by him by virtue of the
foregoing provisions of this proviso or the amount of the workmen's portion in
his security, whichever is less, shall rank pari passu with the workmen's dues
for the purposes of section 529A.]
(2) All persons who in any
such case would be entitled to prove for and receive dividends out of the
assets of the company, may come in under the winding up, and make such claims
against the company as they respectively are entitled to make by virtue of
thic- section:
54[Provided
that if a secured creditor instead of relinquishing his security and proving
for his debt proceeds to realise his security, he shall be liable to pay 53[his portion of]
the expenses incurred by the liquidator (including a provisional liquidator, if
any) for the preservation of the security before its realization by the secured
creditor.]
53[Explanation:
For the purposes of this proviso, the portion of expenses incurred by the
liquidator for the preservation of a security which the secured creditor shall
be liable to pay shall be the whole of the expenses less an amount which bears
to such expenses the same proportion as the workmen's portion in relation to
the security bears to the value of the security.]
53[(3)
For the purposes of this section,
section 529A and section 530, -
(a) Workmen"55, in relation to a
company, means the employees of the company, being workmen within the meaning
of the Industrial Disputes Act, 1947 (14 of 1947);
53. Inserted by the Companies
(Amendment) Act, 1985.
54. Inserted by the Companies
(Amendment) Act, 1960.
55. For the definition of
workman' as given in section 2(s) of the lndustrial Disputes Act, refer Appendix II.
(b) "Workmens
dues", in relation to a company, means the aggregate of the following sums
due from the companv to its workmen, namely: -
(i) All wages or salary
including wages payable for time or piece work and salary earned wholly or in
part by way of commission of any workman, in respect of services rendered to
the company and any compensation payable to any workman under any of the
provisions of the Industrial Disputes Act, 1947 (14 of 1947);
(ii) All accrued holiday
remuneration becoming payable to any workman, or in the case of his death to
any other person in his right, on the termination of his employment before, or
by the effect of, the winding up order or resolution;
(iii) Unless the company is
being wound up voluntarily merely for the purposes of reconstruction or of
amalgamation with another company, or unless the company has, at the
commencement of the winding up, under such a contract with insurers as is
mentioned in section 14 of the Workmen's Compensation Act, 1923 (8 of 1923),
rights capable of being transferred to and vested in the workman, all amounts
due in respect of any compensation or liability for compensation under the said
Act in respect of the death or disablement of any workman of the company;
(iv) All sums due to any
workman from a provident fund, a pension fund, a gratuity fund or any other
fund for the welfare of the workmen, maintained by the company;
(c) 'Workmens portion', in
relation to the security of any secured creditor of a company, means the amount
which bears to the value of the security the same proportion as the amount of
the workmen's dues bears to the aggregate of-
(i) The amount of workmen's
dues; and
(ii) The amounts of the debts
due to the secured creditors.
Illustration
The
value of the security of a secured creditor of a company is Rs. 1,00,000. The total amount of the workmen's dues is
Rs. 1,00,000. The amount of the debts
due from the company to its secured creditors is Rs. 3,00,000. The aggregate of the amount of workmen's
dues and of the amounts of debts due to secured creditors is Rs. 4,00,000. The workmen's portion of the security is,
therefore, onc-fourth of the value of the security, which is Rs. 25,000.1
529A. 56[Overriding
preferential payments. -
(1) Notwithstanding anything
contained in any other provision of this Act or any other law for the time
being in force, in the winding up of a company-
(a) Workmens dues; and
56. Inserted by the Companies
(Amendment) Act, 1985.
(b) Debts due to secured
creditors to the extent such debts rank under clause (c) of the proviso to
sub-section (1) of section 529 pari passu with such dues,
Shall
be paid in priority to all other debts.
(2) The debts payable under
clause (a) and clause (b) of sub-section (1) shall be paid in full, unless the
assets are insufficient to meet them, in which case they shall abate in equal
proportions.]
(1) In a winding up, 57[Subject to the
provisions of section 529A,] there shall be paid in priority to all other
debts-
(a) All revenues, taxes,
cesses and rates due from the company to the Central or a State Government or
to a local authority at the relevant date as defined in clause (c) of
sub-section (8), and having become due and payable within the twelve months
next before that date;
(b) All wages or salary
(including wages payable for time or piece work and salary earned wholly or in
part by way of commission) of any employee, in respect of services rcndered to
the company and due for a period not exceeding four months within the twelve
months next subject to the limit specified in sub-section (2);
(c) All accrued holiday
remuneration becoming payable to any employee, or in the case of his death to
any other person in his right, on the termination of his employment before, or
by the effect of, the winding up order or resolution;
(d) Unless the company is
being wound up voluntarily merely for the purposes of reconstruction or of
amalgamation with another cornpany, all amounts due, in respect of
contributions payable during the twelve months next before the relevant date,
by the company as the employer of any persons, under the Employees' State
Insurance Act, 1948 (34 of 1948), or any other law for the time being in force;
(e) Unless the company is
being wound up voluntarily merely for the purposes of reconstruction or of
amalgamation with another company, or unless the company has, at the
commencement of the winding up, under such a contract with insurers as is
mentioned in section 1419 of the Workmen's Compensation Act, 1923 (8 of 1923),
rights capable of being transferred to and vested in the workman, all amounts
due in respect of any compensation or liability for compensation under the said
Act in respect of the death or disablement of any employee of the company;
(f) All sums due to any
employee from a provident fund, a pension fund, a gratuity fund or any other
fund for the welfare of the employees, maintained by the company; and
(g) The expenses of any
investigation held in pursuance of section 235 or 237, in so far as they are
payable by the company.
57. Inserted by the Companies
(Amendment) Act, 1985.
58. 'And any compensation
payable to any workmen under any of the provisions of Chapter VA of the
Industrial Disputes Act, 1947 (14 of 1947)', which was earlier inserted by the
Companies (Amendment) Act, 1960, omitted by the Companies (Amendment) Act,
1985.
59. For the provisions of
section 14 relating to contracts with insurers, refer Appendix II.
(2) The sum to which priority
is to be given under clause (b) of sub-section (1), shall not, in the case of
any one claimant, 60[exceed
such sum as may be notified61
by the Central Government in the Official Gazette].
62[* * *]
(3) Where any compensation
under the Workmen's Compensation Act, 1923 (8 of 1923) is a weekly payment, the
amount due in respect thereof shall, for the purposes of clause (e) of sub-section
(1), be taken to be the amount of the lump sum for which the weeklv payment
could, if redeemable, be redeemed if the employer made an application for that
purpose under the said Act.
(4) Where any payment has
been made to any employee of a company, -
(i) On account of wages or
salary; or
(ii) To him, or in the case
of his death, to any other person in his right, on account of accrued holiday
remuneration,
Out
of money advanced by some person for that purpose, the person by whom the money
was advanced shall, in a winding up, have a right of priority in respect of the
money so advanced and paid, up to the amount by which the sum in respect of
which the employee or other person in his right, would have been entitled to
priority in the winding up has been diminished by reason of the payment having
been made.
(5) The foregoing debts
shall-
(a) Rank equally among
themselves and be paid in full, unless the assets are insufficient to meet
them, in which case they shall abate in equal proportions; and
(b) So far as the assets of
the company available for payment of general creditors are insufficient to meet
them, have priority over the claims of holders of debentures under any floating
charge created by the company, and be paid accordingly out of any property
comprised in or subject to that charge.
(6) Subject to the retention
of such sums as may be necessary for the costs and expenses of the winding up,
the foregoing debts shall be discharged forthwith so far as the assets are
sufficient to meet them, and in the case of the debts to which priority is
given by clause (a) of sub-section (1), formal proof thereof shall not be
required except in so far as may be otherwise prescribed. (7) In the event of a
landlord or other person distraining or having disti-ained on any goods or
effects of the company within three months next before the date of a winding
tip order, the debts to which priority is given by this section shall be a
first charge on the goods or effects so distrained on, or the proceeds of the sale
thereof:
60. Substituted for
"exceed one thousand rupees by the Companies (Amendment) Act, 1996,
w.e.f. 1-3-1997.
61. The notified sum shall not
exceed Rs. 20,000 in case of anv one claimant- lide GSR 30(E), dated 17-2-1997.
62. Proviso to sub-section (2)
omitted by the Companies (Amendment) Act, 1985. For original proviso, refer Appendix
I.
Provided
that, in respect of any money paid under any such charge, the landlord or other
person shall have the same rights of priority as the person to whom the payment
is made.
(8) For the purposes of this
section-
(a) Any remuneration in
respect of a period of holiday or of absence from work through sickness or
other good cause shall be deemed to be wages in respect of services rendered to
the company during that period;
(b) The expression
"accrued holiday remuneration" includes, in relation to anv person,
all sums which, by virtue either of his contract of employment or of any
enactment (including any order made or direction given under any enactment),
are payable on account of the remuneration which would, in the ordinary course,
have become payable to him in respect of a period of holiday, had his
employment with the company continued until he became entitled to be allowed
the holiday; 63[*
* *]
64[(bb)
The expression "employee"
does not include a workman; and]
(c) The expression "the
relevant date' means-
(i) In the case of a company
ordered to be wound up compulsorily, the date of the appointment (or first
appointment) of a provisional liquidator, or if no such appointment was made,
the date of the winding up order, unless in either case the company had
cornmenced to be wound up voluntarily before that date; and
(ii) In any case where
sub-clause (i) does not apply, the date of the passing of the resolution for
the voluntary winding up of the company.
(9) This section shall not
apply in the case of a winding up where the date ref erred to in sub-section
(5) of section 230 of the Indian Companies Act, 1913 (7 of 1913), occurred
before the commencement of this Act, and in such a case, the provisions
relating to preferential payments which would have applied if this Act had not
been passed, shall be deemed to remain in full force.
Effect of winding up on antecedent and other
transactions
(1) Any transfer of property,
movable or immovable, delivery of goods, payment, execution or other act
relating to property made, taken or done by or against a companv within six
months before the commencement of its winding up which, had it been made, taken
or done by or against an individual within three months before the presentation
of an insolvency petition on which he is adjudged insolvent, would be deemed in
his insolvency a fraudulent preference, shall in the event of the company being
wound up, be deemed a fraudulent preference of its creditors and be invalid
accordingly :
63. "And" omitted by
the Companies (Amendment) Act, 1985.
64. Inserted, ibid.
Provided
that, in relation to things made, taken or done before the commencement of this
Act, this sub-section shall have effect with the substitution, for the
reference to six months, of a reference to three months.
(2) For the purposes of
sub-section (1), the presentation of a petition for winding up in the case of a
winding up by or subject to the supervision of the Court, and the passing of a
resolution for winding up in the case of a voluntary winding up, shall be
deemed to correspond to the act of insolvency in the case of an individual.
531A. 65[Avoidance of voluntary transfer. -Any transfer of property, movable or
immovable, or any delivery of goods, made by a company, not being a transfer or
delivery made in the ordinary course of its business or in favour of a
purchaser or encumbrancer in good faith and for valuable consideration, if made
within a period of one year before the presentation of a petition for winding
up by or subject to the supervision of the Court or the passing of a resolution
for voluntary winding up of the company, shall be void against the liquidator.]
532. Transfers
for benefit of all creditors to be void. -Any transfer or assignment by a company of
all its property to trustees for the benefit of all its creditors shall be
void.
533. Liabilities
and rights of certain fraudulently preferred persons. -
(1) Where, in the case of a company, which is being wound up,
anything made, taken or done after the commencement of this Act is invalid
under section 531 as a fraudulent preference of a person interested in property
mortgaged or charged to secure the company's debt, then (without prejudice to
any fights or liabilities arising apart from this provision), the person
preferred shall be subject to the same liabilities, and shall have the same
rights, as if he had undertaken to be personally liable as surety for the debt,
to the extent of the mortgage or charge on the property or the value of his
interest, whichever is less.
(2) The value of the said
person's interest shall be determined as at the date of the transaction
constituting the fraudulent preference, and shall be determined as if the
interest were free of all encumbrances other than those to which the mortgage
or charge for the company's debt was then subject.
(3) On any application made
to the Court with respect to any payment on the ground that the payment was a
fraudulent preference of a surety or guarantor, the Court shall have
jurisdiction to determine any questions with respect to the payment arising
between the person to whom the payment was made and the surety or guarantor and
to grant relief in respect thereof, notwithstanding that it is not necessary so
to do for the purposes of the winding up, and for that purpose may give leave
to bring in the surety or guarantor as a third party as in the case of a suit
for the recoverv of the sum paid.
65. Inserted by the Companies
(Amendment) Act, 1960
This
sub-section shall apply, with the necessary modifications, in relation to
transactions other than the payment of money as it applies in relation to
payments of money.
534. Effect
of floating charge. Where
a company is being wound up, a floating charge on the undertaking or property
of the company created within the twelve months immediately preceding the
commencement of the winding up, shall, unless it is proved that the company
immediately after the creation of the charge was solvent, be invalid, except to
the amount of any cash paid to the company at the time of, or subsequently to
the creation of, and in consideration for, the charge, together with interest
on that amount at the rate of five per cent per annum or such other rate as may
for the time being be notified by the Central Government in this behalf in the
Official Gazette:
Provided
that in relation to a charge created more than three months before the
commencement of this Act, this section shall have effect with the substitution,
for references to twelve months of references to three months.
535. Disclaimer
of onerous property in case of a company, which is being wound up. -
(1) Where any part of the
property of a company, which is being wound up, consists of-
(a) Land of any tenure,
burdened with onerous covenants;
(b) Shares or stock in
companies;
(c) Any other property which
is unsaleable or is not readily saleable, by reason of its binding the
possessor thereof either to the performance of any onerous act or to the
payment of any sum of money; or
(d) Unprofitable contracts;
The
liquidator of the company, notwithstanding that he has endeavoured to sell or
has taken possession of the property, or exercised any act of ownership in
relation thereto, or done anything in pursuance of the contract, may, with the
leave of the Court and subject to the provisions of this section, by writing
signed by him, at any time within twelve months after the commencement of the
winding up or such extended period as may be allowed by the Court, disclaim the
property:
Provided
that, where any such property has not come to the knowledge of the liquidator
within one month after the commencement of the winding up, the power of
disclaiming the property may be exercised at any time within twelve months
after he has become aware thereof or such extended period as may be allowed by
the Court.
(2) The disclaimer shall
operate to determine, as from the date of disclaimer, the rights, interest, and
liabilities of the company, and the property of the company, in or in respect
of the property disclaimed, but shall not, except so far as is necessary for
the purpose of releasing the company and the property of the company from
liability, affect the rights or liabilities of any other person.
(3) The Court, before or on
granting leave to disclaim, may require such notices to be given to persons
interested, and impose such terms as a condition of granting leave, and make
such other order in the matter as the Court thinksjust.
(4) The liquidator shall not
be entitled to disclaim any property in any case where an application in
writing has been made to him by any person interested in the property requiring
him to decide whether he will or will not disclaim, and the liquidator has not,
within a period of twenty-eight days after the receipt of the application or
such extended period as may be allowed by the Court, given notice to the
applicant that he intends to apply to the Court for leave to disclaim; and in
case the property is a contract, if the liquidator, after such an application
as aforesaid, does not within the said period or extended period disclaim the
contract, 66[he
shall be deemed to have adopted it].
(5) The Court may, on the
application of any person who is, as against the liquidator, entitled to the
benefit or subject to the burden of a contract made with the company, make an
order rescinding the contract on such terms as to payment by or to either party
of damages for the non-performance of the contract, or otherwise as the Court
thinks just; and any damages payable under the order to any such person may be
proved by him as a debt in the winding up.
(6) The Court may, on an
application by any person who either claims any interest in any disclaimed
property or is under any liability not discharged by this Act in respect of any
disclaimed property, and after hearing any such persons as it thinks fit, make
an order for the vesting of the property in, or the delivery of the property
to, any person entitled thereto or to whom it may seem just that the property
should be delivered by way of compensation for such liability as aforesaid, or
a trustee for him, and on such terms as the Court thinks just; and on any such
vesting order being made, the property comprised therein shall vest accordingly
in the person therein named in that behalf without any conveyance or assignment
for the purpose:
Provided
that, where the property disclaimed is of a leasehold nature, the Court shall
not make a vesting order in favour of any person claiming under the company,
whether as under-lessee or as mortgagee or holder of a charge by way of demise,
except upon the terms of making that person-
(a) Subject to the same
liabilities and obligations as those to which the company was subject under the
lease in respect of the property at the commencement of the winding up; or
(b) If the Court thinks fit,
subject only to the same liabilities and obligations as if the lease had been
assigned to that person at that date;
And
in either event (if the case so requires) as if the lease had comprised only
the property comprised in the vesting order; and any mortgagee or under-lessee
declining to accept a vesting order upon such terms shall be excluded from all
interest in and security upon the property, and, if there is no person claiming
under the company who is willing to accept an order upon such terms, the Court
shall have power to vest the estate and interest of the company in the property
in any person liable, either personally or in a representative character, and
either alone or jointly with the company, to perform the lessee's covenants in
the lease, freed and discharged from all estates, encumbrances and interests
created therein by the company.
66. Substituted for 'the
company shall be deemed to have adopted it' by the Companies (Amendment) Act,
1960.
(7) Any person injured by the
operation of a disclaimer under this section shall be deemed to be a creditor
of the company to the amount of the compensation or damages payable in respect
of the injury, and may accordingly prove the amount as a debt in the winding
up.
536. Avoidance
of transfers, etc., after commencement of winding up. -
(1) In the case of a
voluntary winding up, any transfer of shares in the company, not being a transfer
made to or with the sanction of the liquidator, and any alteration in the
status of the members of the company, made after the commencement of the
winding up, shall be void.
(2) In the case of a winding
up by or subject to the supervision of the Court, any disposition of the
property (including actionable claims) of the company, ind any transfer of
shares in the company or alteration in the status of its members, made after
the commencement of the winding up, shall, unless the Court otherwise orders,
be void.
(1) Where any company is being wound up by or subject to the
supervision of the Court-
(a) Any attachment, distress
or execution put in force, without leave of the Court, against the estate or
effects of the company, after the commencement of the winding up; or
(b) Any sale held, without
leave of the Court, of any of the properties or effects of the company after
such commencement;
Shall
be void.
67[(2) Nothing in this section applies to any
proceedings for the recovery of any tax or impost or anv dues payable to the
Government.]
Offences antecedent to or in course of winding up
538. Offences
by officers of companies in liquidation. -
(1) If any person, being a
past or present officer of a company which, at the time of the commission of
the alleged offence, is being wound up, whether by or subject to the
supervision of the Court or voluntarily, or which is subsequently ordered to be
wound up by the Court or which subsequently passes a resolution for voluntary
winding up, -
(a) Does not, to the best of
his knowledge and belief, fully and truly discover to the liquidator all the
property, movable and immovable, of the companv, and how and to whom and for
what consideration and when the company disposed of any part thereof, except
such part as has been disposed of in the ordinary course of the business of the
company;
(b) Does not deliver up to
the liquidator, or as he directs, all such part of the movable and immovable
property of the company as is in his custody or under his control, and which he
is required by law to deliver up;
(c) Does not deliver up to
the liquidator, or as he directs, all such books and papers of the company as
are in his custody or under his control and which he is required by law to
deliver up;
67. Substituted by the
Companies (Amendment) Act, 1960. For
the original sub-section, refer Appendix I.
(a) Within the twelve months
next before the commencement of the winding up or at any time thereafter'
conceals any part of the property of the company to the value of one hundred
rupees or upwards, or conceals any debt due to or from the company;
(e) Within the twelve months
next before the com@-nencement of the winding up or at any time thereafter,
fraudulently removes any part of the property of the company to the value of
one hundred rupees or upwards;
(f) Makes any material
omission in any statement relating to the affairs of the company;
(g) Knowing or believing that
a false debt has been proved by any person under the winding up, fails for a
period of one month to inform the liquidator thereof;
(h) After the commencement of
the winding up, prevents the production of any book or paper affecting or
relating to the property or affairs of the company;
(i) Within the twelve months
next before the commencement of the winding up or at any time thereafter'
conceals, destroys, mutilates or falsifies, or is privy to the concealment,
destruction, mutilation or falsification of, any book or paper affecting or
relating to, the property or affairs of the company;
(j) Within the twelve months
next before the commencement of the winding up or at any time thereafter makes,
or is privy to the making of, any false entry in any book oi- paper affecting
or relating to, tile property or affairs of the company;
(k) Within the twelve months
next before the commencement of the winding up or at any time thereafter,
fraudulently parts with, alters or makes any omission in, or is privy to the
fraudulent parting with, altering or making of any omission in, any book or
paper affecting or relating to the property or affairs of the company;
(l) After the commencement
of the winding up or at any meeting of the creditors of the company within the
twelve months next before the commencement of the winding up, attempts to
account for anv part of the property of the company by fictitious losses or
expenses;
(m) Within the twelve months
next before the commencement of the winding up or at any time thereafter, b),
any false representation or other fraud, obtains on credit, for or on behalf of
the company, any property which the company does not subsequently pay for;
(n) Within the twelve months
next before the commencement of the winding up or at any time thereafter, under
the false pretence that the company is carrying on its business, obtains on
credit, for or on behalf of the company, any property, which the company does
not subsequently pay for;
(o) Within the twelve months
next before the commencement of the winding up or at any time thereafter,
pawns, pledges or disposes of any property of the company which has been
obtained on credit and has not been paid for, unless such pawning, pledging or
disposing is in the ordinary course of the business of the company, or
(p) Is guilty of any false
representation or other fraud for the purpose of obtaining the consent of the
creditors of the company or any of them, to an agreement with reference to the
aff airs of the company or to the winding up;
He
shall be punishable, in the case of any of the offences mentioned in clauses
(m), (n) and (o), with imprisonment for a term which may extend to five years,
or with fine, or with both, and, in the case of any other offence, with
imprisonment for a term which may extend to two years, or with fine, or with
both:
Provided that it shall be a good def ence-
(i) To a charge under any of
the clauses (b), (c), (d), (f), (n) and (o), if the accused proves that he had
no intent to defraud; and
(ii) To a charge under any of
the clauses (a), (h), (i) and (j), if he proves that he had no intent to
conceal the true state of affairs of the company or to defeat the law.
(2) Where any person pawns,
pledges or disposes of any property in circumstances which amount to an offence under clause (o) of
sub-section (1), every person who takes
in pawn or pledge or otherwise receives the property, knowing it to be pawned,
pledged, or disposed of in such circumstances as aforesaid, shall be punishable
with imprisonment for a term which may extend to three years, or with fine, or
with both.
(3) For the purposes of this
section, the expression officer" shall include any person in accordance
with whose directions or instructions the directors of the company have been accustomed
to act.
539. Penalty
for falsification of books. -If
with intent to defraud or deceive any person, any officer or contributory of a
company, which is being, wound up-
(a) Destroys, mutilates,
alters, falsifies or secrets, or is privy to the destruction, mutilation,
alteration, falsification or secreting of, any books, papers or securities; or
(b) Makes, or is privy to the
making of, any false or fraudulent entry in any register, books of account or
document belonging to the company;
He
shall be punishable with imprisonment for a term, which may extend to seven
years, and shall also be liable to fine.
540.
Penalty for frauds by officers. -If
any person, being at the time of the commission of the alleged offence an
officer of a company which is subsequently ordered to be wound up by the Court
or which subsequently passes a resolution for voluntary winding up, -
(a) Has, by false pretences
or by means of any other fraud, induced any person to give credit to the
company; or
(b) With intent to defraud
creditors of the company, has made or caused to be made any gift or transfer of
or charge on, or has caused or connived at the levying of any execution
against, the property of the company; or
(c) With intent to defraud
creditors of the company, has concealed or removed any part of the property of
the company since the date of any unsatisfied judgment or order for payment of
money obtained against the company, or within two months before that date;
He
shall be punishable with imprisonment for a term, which may extend to two years
and shall also be liable to fine.
541. Liability
where proper accounts not kept. -
(1) Where a company is being wound up, if it is shown that proper
books of account were not kept by the company throughout the period of two
years immediately preceding the commencement of the winding up, or the period
between the incorporation of the company and the commencement of the winding
up, whichever is shorter, every officer of the company who is in default shall,
unless he shows that he acted honestly and that in the circumstances in which
the business of the company was carried on, the default was excusable, be
punishable with imprisonment for a term which may extend to one year.
(2) For the purposes of
sub-section (1), it shall be deemed that proper books of account have not been
kept in the case of any company, if there have not been kept-
(a) Such books or accounts as
are necessary to exhibit and explain the transactions and financial position of
the business of the company, including books containing entries made from day
to day in sufficient detail of all cash received and all cash paid; and
(b) Where the business of the
company has involved dealings in goods, statements of the annual stock takings
and (except in the case of goods sold by way of ordinary retail trade) of all
goods sold and purchased, showing the goods and the buyers and the sellers
thereof in sufficient detail to enable those goods and those buyers and sellers
to be identified.
542. Liability
for fraudulent conduct of business. -
(1) If in the course of the winding up of a company, it appears
that any business of the company has been carried on, with intent to defraud
creditors of the company or any other persons, or for any fraudulent purpose,
the Court, on the application of the Official Liquidator, or the liquidator or
any creditor or contributory of the company, may, if it thinks it proper so to
do, declare that any persons who were knowingly parties to the carrying on of
the business in the manner aforesaid shall be personally responsible, without
any limitation of liability, for all or any of the debts or other liabilities
of the company as the Court mav direct.
On
the hearing of an application under this sub-section, the Official Liquidator
or the liquidator, as the case may be, may himself give evidence or call
witnesses.
(2) (a) Where the Court makes any such
declaration, it may give such further directions as it thinks proper for the
purpose of giving effect to that declaration.
(b) In particular, the Court
may make provision for making the liability of any such person under the
declaration a charge on any debt or obligation due from the company to him, or
on any mortgage or charge or any interest in any mortgage or charge on any assets
of the company held by or vested in him, or any person on his behalf, or any
person claiming as assignee from or through the person liable or any person
acting on his behalf.
(c) The Court may, from time
to time, make such further order as may be necessary for the purpose of
enforcing any charge imposed under this subsection.
(d) For the purpose of this
sub-section, the expression "assignee" includes any person to whom or
in whose favour, by the directions of the person liable, the debt, obligation,
mortgage or charge was created, issued or transferred or the interest was
created, but does not include an assignee for valuable consideration (not
including consideration by way of marriage) given in good faith and without
notice of any of the matters on the ground of which the declaration is made.
(3) Where any business of a
company is carried on with such intent or for such purpose as is mentioned in
sub-section (1), every person who was knowingly a party to the carrying on of
the business in the manner aforesaid, shall be punishable with imprisonment for
a term which may extend to two years, or with fine which may extend to five
thousand rupees, or with both.
(4) This section shall applv,
notwithstanding that the person concerned may be criminally liable in respect
of the matters on the ground of which the declaration is to be made.
543. Power
of Court to assess damages against delinquent directors, etc. -
(1) If in the course of winding up a company, it appears that any
person who has taken part in the promotion or formation of the company, or any
past or present director *[, managing agent, secretaries and treasurers],
manager, liquidator or officer of the company-
(a) Has misapplied, or
retained, or become liable or accountable for, any money or property of the
company; or
(b) Has been guilty of any
misfeasance or breach of trust in relation to the company;
The
Court may, on the application of the Official Liquidator, of the liquidator, or
of any creditor or contributory, made within the time specified in that behalf
in sub-section (2), examine into the conduct of the person, director *[,
managing agent, secretaries and treasurers], manager, liquidator or officer
aforesaid, and compel him to repay or to restore the money or property or anv
part thereof respectively, with interest at such rate as the Court thinks just,
or to contribute such sum to the assets of the company by way of compensation
in respect of the misapplication, retainer, misfeasance or breach of trust, as
the Court thinks just.
(2) An application under
sub-section (1) shall be made within five years from the date of the order for
winding up, or of the first appointment of the liquidator in the winding up, or
of the misapplication, retainer, misfeasance or breach of trust, as the case
may be, whichever is longer.
(3) This section shall apply
notwithstanding that the matter is one for which the person concerned may be
criminally liable.
544. Liability
under sections 542 and 543 to extend to partners or directors in firm or company.
-Where a declaration
under section 542 or an order under section 543 is or may be made in respect of
a firm or body corporate, the Court shall also have power to make a declaration
under section 542, or pass an order under section 543, as the case may be, in
respect of any person who was at the relevant time a partner in that firm or a
director of that bodv corporate.
545. Prosecution
of delinquent officers and members of company. -
(1) If it appears to the
Court in the course of a winding up by, or subject to the supervision of, the
Court, that any past or present officer, or any member, of the company has been
guilty of any offence in relation to the company, the Court may, either on the
application of any person interested in the winding up or of its own motion,
direct the liquidator either himself to prosecute the offender or to refer the
matter to the Registrar.
(2) If it appears to the
liquidator in the course of a voluntary winding up that any past or present
officer, or any member, of the company has been guilty of any offence in
relation to the company, he shall forthwith report the matter to the Registrar
and shall furnish to him such information and give to him such access to and
facilities for inspecting and taking copies of any books and papers, being
information or books and papers in the possession or under the ccntrol of the
liquidator and relating to the matter in question, as the Registrar may
require.
(3) Where any report is made
under sub-section (2) to the Registrar, he may, if he thinks fit, refer the
matter to the Central Government for further inquiry. The Central Government shall thereupon investigate the matter and
may, if it thinks it expedient, apply to the Court for an order conferring on
any person designated by the Central Government for the purpose, with respect
to the company concerned, all such powers of investigating the affairs of the
companv as are provided by this Act in the case of a winding up by the Court.
(4) If on any report to the
Registrar under sub-section (2), it appears to him that the case is not one in
which proceedings ought to be taken by him, he shall inform the liquidator
accordingly, and thereupon, subject to the previous sanction of the Court, the
liquidator may himself take proceedings against the offender.
(5) If it appears to the
Court in the course of a voluntary winding up that any past or present officer,
or any member, of the company has been guiltv as aforesaid, and that no report
with respect to the matter has been made by the liquidator to the Registrar
under sub-section (2), the Court may, on the application of any person
interested in the winding up or of its own motion, direct the liquidator to
make such a report, and on a report being made accordingly, the provisions of
this section shall have effect as though the report had been made in pursuance
of the provisions of sub-section (2).
(6) If, where any matter is
reported or referred to the Registrar under this section, he considers that the
case is one in which a prosecution ought to be instituted, he shall report the
matter to the Central Government; and that Government may, after taking such
legal advice as it thinks fit, direct the Registrar to institute proceedings:
Provided
that no report shall be made by the Registrar under this sub-section without
first giving the accused person an opportunity of making a statement in writing
to the Registrar and of being heard thereon.
(7) When any proceedings are
instituted under this section, it shall be the duty of the liquidator and of
every officer and agent of the company past and present (other than the
defendant in the proceedings) to give all assistance in connection with the
prosecution which he is reasonably able to give.
For
the purposes of this sub-section, the expression 'agent', in relation to a
company, shall be deemed to include any banker or legal adviser of the companv
and any person employed by the company as auditor.
(8) If any person fails or
neglects to give assistance in the manner required by subsection (7), the Court
may, on the application of the Registrar, direct that person to comply with the
requirements of that sub-section.
(9) Where any such
application is made with respect to a liquidator, the Court may, unless it
appears that the failure or neglect was due to the liquidator not having in his
hands sufficient assets of the company to enable him so to do, direct that the
costs of the application shall be borne by the liquidator personally.
Miscellaneous provisions
546. Liquidator
to exercise certain powers subject to sanction. -
(1) The liquidator may-
(a) With the sanction of the
Court, when the company is being wound up by or subject to the supervision of
the Court; and
(b) With the sanction of a
special resolution of the company, in the case of a voluntary winding up, -
(i) Pay any classes of
creditors in full;
(ii) Make any compromise or
arrangement with creditors or per-sons claiming to be creditors, or having or
alleging themselves to have any claim, present or future, certain or contingent,
ascertained or sounding only in damages, against the company, or whereby the
company may be rendered liable; or
(iii) Compromise any call or
liability to call, debt, and liability capable of resulting in a debt, and any
claim, present or future, certain or contingent, ascertained or sounding only
in damages, subsisting or alleged to subsist between the Company and a
contributory or alleged contributory or other person apprehending liability to
the company, and all questions in any way realtint to or affecting thye assets
or liabilities or the winding up of the company, on such terms as may be
agreed, and take any security for the dicharge of any such call, debt liability
or claim, and give a complete discharge in respect thereof.
68[(1A) Notwithstanding anything contained in
sub-section (1), in the case of a winding up by the Court, the Supreme Court
May make rules under section 643 providing that the liquidator may, under such
circumstances, if any, and subject d limitations, if any, as may be specified
in the rules, exercise any of the powers referred to in sub-clause (ii) or
sub-clause (iii) of sub-section (1) without the sanction of the Court]
(2) In the case of a
voluntary winding up, the exercise by the liquidator of the powers conf erred
by sub-section (1) shall be subject to the control of the Court.
(3) Any creditor or
contributory may apply to the Court with respect to any exercise or proposed
exercise of any such power.
547. Notification
that a company is in liquidation. -
(1) Where a company is being
wound up, whether by or under the oluntarily, everv invoice, order for goods or
supervision of the Court or v a liquidator of the business letter issued by or
on behzlf of the company or e company, being a company, or a receiver or manager
of the property of the document on or in which the name of the company appears,
shall contain a statement that the company is being wound up.
(2) If def ault is made in
complying with this section, the company, and every of the following persons
who wilfully authorises or permits the default, namely, any officer of the
company, any liquidator of the company and
any receive manager, shall be punishable with fine which may extend to five hundred rupees.
548. Books
and papers of company to be evidence. Where a company is being woundup, all books and
paper, the company, and of the liquidators shall, as between the contributories
of be prima facie evidence of the truth of all matters purporting to be therein
recorded.
549. Inspection
of books and papers by creditors and contributories69. -
(1) At any time after the making of an order f or the winding up of
a company by or subject to the supervision of the Court, any creditor or
contributory of the company may, if 70[the
Supreme Court], by rules prescribed so permit and in accordance with and
subject to such rules but not further or otherwise, inspect the books and
papers of the company.
(2) Nothing in sub-section
(i) shall be taken as excluding or restricting any rights conferred by any law
for the time being in force-
(a) On the Central or a State
Government; or
(b) On any authority or
officer thereof; or
(c) On any person acting
under the authority of any such Government or of any such authority or officer.
68. Inserted by the Companies
(Amendment) Act, 1960.
69. See rule 14A of General
Rules & Forms.
70. Substituted for "the
Central Government, by the Companies (Amendment) Act, 1960.
550. Disposal
of books and papers of company. -
(1) When the affairs of a company have been completely wound up and
it is about to be dissolved, its books and papers and those of the liquidator
may be disposed of as follows, that is to say: -
(a) In the case of a winding
up by or subject to the supervision of the Court, in such manner as the Court
directs;
(b) In the case of a
members'voluntary winding up, in such manner as the company by special
resolution directs; and
(c) In the case of a
creditors'voluntary winding up, in such manner as the committee of inspection
or, if there is no such committee, as the creditors of the company may direct.
(2) After the expiry of five
years from the dissolution of the company, no responsibility shall rest on the
company, the liquidator, or any person to whom the custody of the books and
papers has been committed, by reason of any book or paper not being forthcoming
to any person claiming to be interested therein.
(3) The Central Government
may, by rules71,
-
(a) Prevent for such period
(not exceeding five years from the dissolution of the company) as the Central
Government thinks proper, the destruction of the books and papers of a company
which has been wound up and of its liquidator; and
(b) Enable any creditor or
contributory of the company to make representations to the Central Government
in respect of the matters specified in clause (a) and to appeal to the Court
from any direction which may be given by the Central Government in the matter.
(4) If any person acts in
contravention of any such rules or of any direction of the Central Government
thereunder, he shall be punishable with imprisonment for a term, which may
extend to six months, or with fine, which may extend to five thousand rupees,
or with both.
551. Information
as to pending liquidations. -
72[(1) If the winding up of a company is not
concluded within one year after its commencement, the liquidator shall, unless
he is exempted from so doing either wholly or in part by the Central Government73 within two months
of the expiry of such year and thereafter until the winding up is concluded, at
intervals of not more than one year or at such shorter intervals, if any, as
may be prescribed, file a statement in the prescribed form and containing the
prescribed particulars duly audited, by a person qualified to act as auditor of
the company, with respect to the proceedings in, and position of, the
liquidation,-
(a) In the case of a winding
up by or subject to the supervision of the Court, in Court; and
(b) In the case of a
voluntary winding up, with the Registrar:
71. See rule 15 of General
Rules & Forms.
72. Substituted by the
Companies (Amendment) Act, 1960. For
the original sub-section, refer Appendix I.
73. Powers are now delegated
to Regional Directors.
Provided
that no such audit as is referred to in this sub-section shall be necessary
where the provisions of section 462 apply.]
(2) When the statement is
filed in Court under clause (a) of sub-section (1), a copy shall simultaneously
be filed with the Registrar and shall be kept by him along with the other
records of the company.
74[(2A)
Where a statement referred to in
sub-section (2) relates to a Government company in liquidation, the liquidator
shall forward a copy thereof, -
(a) To the Central
Government, if that Government is a member of the Government company; or
(b) To any State Government, if
that Government is a member of the Government company; or
(c) To the Central Government
and any State Government, if both the Governments are members of the Government
company.]
(3) Any person stating
himself in writing to be a creditor or contributory of the company shall be
entitled, by himself or by his agent, at all reasonable times, on payment of
the prescribed fee, to inspect the statement, and to receive a copy thereof or
an extract therefrom.
(4) Any person untruthfully
stating himself to be a creditor or contributory for the above purpose shall be
deemed to be guilty of an offence under section 18211 of the Indian Penal Code
(45 of 1860), and shall, on the application of the liquidator, be punishable
accordingly.
(5) If a liquidator fails to
comply with any of requirements of this section, he shall be punishable with
fine, which may extend to five hundred rupees for every day during which the
failure continues:
76[Provided
that if the liquidator makes wilful default in causing the statement referred
to in sub-section (1) to be audited by a person qualified to act as auditor of
the company, the liquidator shall be punishable with imprisonment for a term
which may extend to six months, or with fine which may extend to one thousand
rupees, or with both.]
552. Official
Liquidator to make payments into the public account of India. Every Official Liquidator shall, in such
manner and at such times as may be prescribed77, pay the moneys received by him as
liquidator of any company, into the public account of India in the Reserve Bank
of India.
74. Inserted by the Companies
(Amendment) Act, 1988, w.c.f. 15-6-1988.
75. For offence as envisaged
under section 182 of the Code, refcr Appendix
II.
76. Inserted by the Companies
(Amendment) Act, 1960.
77. Refer Companies (Official
Liquidators Accounts) Rules, 1965.
553. Voluntary
liquidator to make payments into Scheduled Bank. -
(1) Every liquidator of a
company, not being an Official Liquidator, shall, in such manner and at such
times as may be prescribed, pay the moneys received by him in his capacity as
such into a Scheduled Bank to the credit of a special banking account opened by
him in that behalf, and called
Company Limited
"The Liquidation Account of.................................. Company Private Limited':
Company
Provided that if the Court is satisfied that for the
purpose of carrying on the business of the company or of obtaining advances or
for any other reason, it is to the advantage of the creditors or contributories
that the liquidator should have an account with any other bank, the Court may
authorise the liquidator to make his payments into or out of such other bank as
the Court may select; and thereupon those payments shall be made in the prescribed
manner and at the prescribed times into or out of such other bank.
(2) If any such liquidator at
any time retains for more than ten days a sum exceeding five hu idred rupees or
such other amount as the Court may, on the application of the iquidator,
authorise him to retain, then, unless he explains the retention to the
satisfaction of the Court, he shall-
(a) Pay interest on the
amount so retained in excess, at the rate of twelve per cent per annum and also
pay such penalty as may be determined by the Registrar;
(b) Be liable to pay any
expenses occasioned by reason of his default; and
(c) Also be liable to have
all or such part of his remuneration as the Court may think just disallowed,
and to be removed from his office by the Court.
554. Liquidator
not to pay moneys into private banking account. Neither the Official Liquidator nor any other
liquidator of a company shall pay any moneys received by him in his capacity as
such into any private banking account.
555. Unpaid
dividends and undistributed assets to be paid into the Companies Liquidation
Account. -
78[(l) Where any company is being wound up, if the
liquidator has in his hands or under his control any money representing-
(a) Dividends payable to any
creditor which had remained unpaid for six months after the date on which they
were declared, or
(b) Assets refundable to any
contributory which have remained undistributed for six months after the date on
which they become refundable,
The
liquidator shall f orthwith pay the said money into the public account of India
in the Reserve Bank of India in a separate account to be known as the Companies
Liquidation Account.]
78. Substituted by the
Companies (Amendrnent)Act, 1960. For the original sub-section, refer Appendix I.
(2) The liquidator shall, on
the dissolution of the company, similarly pay into the said account any money
representing "[unpaid] dividends or undistributed assets in his hands at
the date of dissolution.
80(3)
The liquidator shall, when making
any payment referred to in sub-sections (1) and (2), furnish to such officer,
as the Central Government may appoint in this behalf, a statement in the
prescribed form, setting forth, in respect of all sums included in such
payment, the nature of the sums, the names and last known addresses of the
persons entitled to participate therein, the amount to which each is entitled
and the nature of his claim thereto, and such other particulars as may be
prescribed.
(4) The liquidator shall be
entitled to a receipt from the Reserve Bank of India for any money paid to it under sub-sections
(1) and (2); and such receipt shall be an effectual discharge of the liquidator
in respect thereof.
(5) Where the company is
being wound up by the Court, the liquidator shall make the payments referred to
in sub-sections (1) and (2) by transfer from the account referred to in section
552.
(6) Where the company is
being wound up voluntarily or subject to the supervision of the Court, the
liquidator shall, when filin a statement in pursuance of sub-section (1) of
section 551, indicate the sum or money which is payable to the Reserve Bank of
India under sub-sections (1) and (2) of this section which he has had in his
hands or under his control during the six months preceding the date to which
the said statement is brought down, and shall within fourteen days of the date
of filing the said statement, pay that sum into the Companies Liquidation
Account.
(7) (a) Any person claiming to be entitled to any
money paid into the Companies Liquidation Account (whether paid in pursuance of
this section or under the provisions of any previous companies law) may apply
to the Court for an order for payment thereof, and the Court, if satisfied that
the person claiming is entitled, may make an order for the payment to that
person of the sum due:
Provided
that before making such an order, the Court shall cause a notice to be served
on such officer as the Central Government may appoint in this behalf, calling
on the officer to show cause within one month from the date of the service of
the notice why the order should not be made.
(b) Any person claiming as
aforesaid may, instead of applying to the Court, apply to the Central
Government" for an order for payment of the money claimed; and the Central
Government may, if satisfied whether on a certificate by the liquidator or the
Official Liquidator or otherwise, that such person is entitled to the whole or
any part of the money claimed and that no application made in pursuance of
clause (a) is pending in the court, make an order for the payment to that
person of the sum due to him,
after taking such security from him as it may think fit.
79. Substituted for
'unclaimed' by the Companies (Amendment) Act, 1960.
80. Refer Companies
Liquidation Account Rules, 1965.
81. Powers are now delegated
to Regional Directors. Prescribed fee
under Compallies (Fees on Applications) Rules, 1999 is as under:
--------------------------------------------------------------------------------------------
Application for payment
from the Amount
of fees to be
Companies'Liquidation
Account paid
(Rs.)
--------------------------------------------------------------------------------------------
(a) When
the amount o claim does not exceed Rs. 5,000 Nil
(b) When
the amount of claim exceeds Rs. 5,000 but does 200
Not
exceed Rs. 10,000
(c) When
the amount of claim exceed Rs. 10,000 300
--------------------------------------------------------------------------------------------------------------
(8) Any money paid into the
Companies Liquidation Account in pursuance of this section, which remains
unclaimed thereafter for a period of fifteen years, shall be transferred to the
general revenue account of the Central Government; but a claim to any money so
transferred may be preferred under sub-section (7) and shall be dealt with as
if such transfer had not been made, the order, if any, for payment on the claim
being treated as an order for refund of revenue.
(9) Any liquidator retaining
any money which should have been paid by him into the Companies Liquidation
Account under this section shall-
(a) Pay interest on the
amount retained at the rate of twelve per cent per annum, and also pay such
penalty as may be determined by the Registrar:
82[Provided that the
Central Government83
may in any proper case remit either in part or in whole the amount of interest
which the liquidator is required to pay under this clause;]
(b) Be liable to pay any
expenses occasioned by reason of his default; and
(c) Where the winding up is
by or under the supervision of the Court, also be liable to have all or such
part of his remuneration as the Court may think just to be disallowed, and to
be removed from his office by the Court.
556. Enforcement
of duty of liquidator to make returns, etc. -
(1) If any liquidator who has
made any default in filing, delivering or making any return, account or other
document, or in giving any notice which he is by law required to file, deliver,
make or give, fails to make good the default within fourteen days after the
service on him of a notice requiring him to do so, the Court may, on an
application made to the Court by any contributory or creditor of the company or
by the Registrar, make an order directing the liquidator to make good the
default within such time as may be specified in the order. (2) Any such order
may provide that all costs of and incidental to the application shall be borne
by the liquidator.
(3) Nothing in this section
shall be taken to prejudice the operation of any enactment imposing penalties
on a liquidator in respect of any such default as aforesaid.
Supplementary powers of Court
557. Meetings
to ascertain wishes of creditors or contributories. -
(1) In all matters relating
to the winding up of a company, the Court mav-
(a) Have regard to the wishes
of creditors or contributories of the company, as proved to it by any
sufficient evidence;
(b) If it thinks fit for the
purpose of ascertaining those wishes, direct meetings of the creditors or
contributories to be called, held and conducted in such manner as the Court
directs; and
(c) Appoint a person to act
as chairman of such meeting and to report the result thereof to the Court.
82. Inserted bv lie Companies
(Amendment) Act, 1960.
83. Powers are now delegated
to Regional Directors.
(2) When ascertaining the
wishes of creditors, regard shall be had to the value of each creditor's debt.
(3) When ascertaining the
wishes of contributories, regard shall be had to the number of votes which may
be cast by each contributory.
558. Court
or person before whom affidavit may be sworn. -
(1) Any affidavit required to
be shown under the provisions, or for the purposes, of this Part may be sworn-
(a) In lndia, before any
Court, Judge or person lawfully authorised to take and receive affidavits; and
(b) In any other country,
either before any Court, Judge or person lawfully authorised to take and
receive affidavits in that country or before an Indian Consul or Vice-Consul.
Explanation: [Omitted
by the J & K (Extension of Laws) Act, 1956]
(2) All Courts, Judges,
Justices, Commissioners and persons acting judicially in India shall take
judicial notice of the seal, stamp or signature, as the case may be, of any
such Court, Judge, person, Consul or Vice-Consul, attached, appended or
subscribed to any such affidavit or to any other document to be used for the
purposes of this Part.
Provisions as to dissolution
559. Power
of Court to declare dissolution of company void. -
(1) Where a company has been
dissolved, whether in pursuance of this Part or of section 394 or otherwise,
the Court mav at any time within two years of the date of the dissolution, on
application by the liquidator of the company or by any other person who appears
to the Court to be interested, make an order, upon such terms as the Court thinks
fit, declaring the dissolution to have been void; and thereupon such
proceedings may be taken as might have been taken if the company had not been
dissolved.
(2) It shall be the duty of
the person on whose application the order was made, within 84[thirty] days after
the making of the order or such further time as the Court may allow, to file a
certified copy of the order with the Registrar who shall register the same; and
if such person fails so to do, he shall be punishable with fine which may
extend to fifty rupees for every day during which the default continues.
560. Power
of Registrar to strike defunct company off register. -
(1) Where the Registrar has reasonable cause to believe that a
company is not carrying on business or in operation, he shall send to the
company by post a letter inquiring whether the company is carrying on business
or in operation.
(2) If the Registrar does not
within one month of sending the letter receive any answer thereto, he shall,
within fourteen days after the expiry of the month, send to the company by post
a registered letter referring to the first letter, and stating that no answer
thereto has been received and that, if an answer is not received to the second
letter within one month from the date thereof, a notice will be published in
the official Gazette with a view to striking the name of the company off the
register.
84. Substituted for
"twenty-one"by the Companies (Amendment) Act, 1965,w.e.f.15-10-1965.
(3) If the Registrar either
receives an answer from the company to the effect that it is not carrying on
business or in operation, or does not within one month after sending the second
letter receive any answer, he may publish in the Official Gazette, and send to
the company by registered post, a notice that, at the expiration of three
months from the date of that notice, the name of the company mentioned therein
will, unless cause is shown to the contrary, be struck off the register and the
company will be dissolved.
(4) If, in any case where a
company is being wound up, the Registrar has reasonable cause to believe either
that no liquidator is acting, or that the affairs of the company have been
completely wound up, and any returns required to be made by the liquidator have
not been made for a period of six consecutive months, the Registrar shall
publish in the Official Gazette and send to the company or the liquidator, if
any, a like notice as is provided in sub-section (3).
(5) At the expiry of the time
mentioned in the notice referred to in sub-section (3) or (4), the Registrar
may, unless cause to the contrary is previously shown by the company, strike
its name off the register, and shall publish notice thereof in the Official
Gazette; and on the publication in the Official Gazette of this notice, the company
shall stand dissolved:
Provided that-
(a) The liability, if any, of
every director '[, the managing agent, secretaries and treasurers,] manager or
other officer who was exercising any power or management, and of every member
of the company, shall continue and may be enforced as if the company had not
been dissolved; and
(b) Nothing in this
sub-section shall affect the power of the Court to wind up a company the name
of which has been struck off the register.
(6) If a company, or any
member or creditor thereof, feels aggrieved by the company having been struck
off the register, the Court, on an application made by the company, member or
creditor before the expiry of twenty years from the publication in the Official
Gazette of the notice aforesaid, may, if satisfied that the company was, at the
time of the striking off, carrying on business or in operation or otherwise
that it is just that the company be restored to the register, order the name of
the company to be restored to the register; and the Court may, by the order,
give such directions and make such provisions as seem just for placing the
company and all other persons in the same position as nearly as may be as if
the name of the company had not been struck off.
(7) Upon a certified copy of
the order under sub-section (6) being delivered to the Registrar for
registration, the company shall be deemed to have continued in existence as if
its name had not been struck off.
(8) A letter or notice to be
sent under this section to a company may be addressed to the company at its
registered office, or if no office has been registered, to the care of some
director *[, the managing agent, secretaries and treasurers], manager or other
officer of the company, or if there is no director *[, managing agent,
secretaries and treasurers], manager or officer of the company whose name and
address are known to the Registrar, may be sent to each of the persons who
subscribed the memorandum, addressed to him at the address mentioned in the
memorandum.
(9) A notice to be sent under
this section to a liquidator may be addressed to the liquidator at his last
known place of business.
PART VIII
APPLICATION OF ACT TO COMPANIES FORMED OR REGISTERED
UNDER PREVIOUS COMPANIES LAWS
561. Application
of Act to companies formed and registered under previous companies laws. -This Act shall apply to existing companies as
follows: -
(a) In the case of a limited
company other than a company limited by guarantee, this Act shall apply in the
same manner as if the company had been formed and registered under this Act as
a company limited by shares;
(b) In the case of a company
limited by guarantee, this Act shall apply in the same manner as if the company
had been formed and registered under this Act as a company limited by guarantee;
and
(c) In the case of a company
other than a limited company, this Act, shall apply in the same manner as if
the company had been formed and registered under this Act as an unlimited
company:
Provided that-
(i) Nothing in Table A in
Schedule I shall apply to a company formed and registered under Act 19 of 1857
and Act 7 of 1860, or either of them, or under the Indian Companies Act, 1866
(10 of 1866), or the Indian Companies Act, 1882 (6 of 1882);
(ii) Reference, express or
implied, to the date of registration shall be construed as a reference to the
date at which the company was registered under the previous companies law
concerned.
562. Application
of Act to companies registered but not formed under previous companies laws. -This Act shall apply to every company
registered but not formed under any previous companies law in the same manner
as it is in Part IX of this Act declared to apply to companies registered but
not formed under this Act:
Provided that reference, express or implied, to the date
of registration shall be construed as a reference to the date at which the
company was registered under the previous companies law concerned.
563. Application
of Act to unlimited companies registered under previous companies laws. -This Act shall apply to every unlimited
company registered as a limited company in pursuance of any previous companies
law, in the same manner as it applies to an unlimited company registered in
pursuance of this Act as a limited company:
Provided
that reference, express or implied, to the date of registration shall be
construed as a reference to the date at which the company was registered as a
limited company under the previous companies law concerned.
564. Mode
of transferring shares in the case of companies registered under Acts 19 of
1857 and 7 of 1860. -A
company registered under Act 19 of 1857 and Act 7 of 1860 or either of them may
cause its shares to be transferred in the manner hitherto in use, or in such
other manner as the company may direct.
PART IX
COMPANIES AUTHORISED TO REGISTER UNDER THIS ACT
565. Companies
capable of being registered85. -
(1) With the exceptions and
subject to the provisions contained in this section,-
(a) Any company consisting of
seven or more meribers, which was in existence on the first day of May, 1882,
including any company registered under Act No. 19 of 1857 and Act No. 7 of 1860
or either of them or under any laws or law in force in a Part B State,
corresponding to those Acts or either of them; and
(b) Any company formed after
the date aforesaid, whether before or after the commencement of this Act, in
pursuance of any Act of Parliament other than this Act or of any other Indian
law (including a law in force in a Part B State), or of any Act of Parliament
of the United Kingdom or Letters Patent in force in India, or being otherwise
duly constituted according to law, and consisting of seven or more members;
May
at any time register under this Act as an unlimited company, or as a company
limited by shares, or as a company limited by guarantee; and the registration
shall not be invalid by reason only that it has taken place with a view to the
company's being wound up:
85. See Form Nos.37, 38 and 41
of General Rules & Forms.
Provided
that-
(i) A company registered
under the Indian Companies Act, 1882 (6 of 1882) or under the Indian Companies
Act, 1913 (7 of 1913), shall not register in pursuance of this section;
(ii) A company having the
liability of its members limited by any Act of Parliament other than this Act
or by any other Indian law (including a law in force in a Part B State), or by
any Act of Parliament of the United Kingdom or Letters Patent in force in
India, and not being a joint-stock company as defined in section 566, shall not
register in pursuance of this section;
(iii) A company having the
liability of its members limited by any Act of Parliament other than this Act
or by any other Indian law (including a law in force in a Part B State), or any
Act of Parliament of the United Kingdom or Letters Patent in force in India,
shall not register in pursuance of this section as an unlimited company or as a
company limited by guarantee;
(iv) A company that is not a
joint-stock company as defined in section 566 shall not register in pursuance
of this section as a company limited by shares;
(v) A company shall not
register in pursuance of this section without the assent of a majority of such
of its members as are present in person, or where proxies are allowed, by
proxy, at a general meeting summoned for the purpose;
(vi) Where a company not
having the liability of its members limited by any Act of Parliament or any
other Indian law (including a law in force in a Part B State) or by any Act of
Parliament of the United Kingdom or Letters Patent in force in India, is about to
register as a limited company, the majority required to assent as aforesaid
shall consist of not less than three-fourths of the members present in person,
or where proxies are allowed, by proxy, at the meeting;
(vii) Where a company is about
to register as a company limited by guarantee, the assent to its being so
registered shall be accompanied by a resolution declaring that each member
undertakes to contribute to the assets of the company, in the event of its
being wound up while he is a member, or within one year after he ceases to be a
member, for payment of the debts and liabilities of the company or of such
debts and liabilities as may have been contracted before he ceases to be a
member, and of the costs, charges and expenses of winding up, and for the
adjustment of the rights of the contributories among themselves, such amount as
may be required, not exceeding a specified amount.
(2) In computing any majority
required for the purposes of sub-section (1) when a poll is demanded, regard
shall be had to the number of votes to which each member is entitled according
to the regulations of the company.
(3) Nothing in this section
shall be deemed to apply to any company the registered office whereof at the
commencement of this Act is in Burma, Aden or Pakistan 86[* * *]
566. Definition
of "joint-stock company"87.
-
(1) For the purposes of this
Part, so far as it relates to the registration of companies as companies
limited by shares, a joint-stock company means company having a permanent paid
up or nominal share capital of fixed amount divided into shares, also of fixed
amount, or held and transferable as stock, or divided and held partly in the
one way and partly in the other, and formed on the principle of having for its
members the holders of those shares or that stock, and no other persons.
86. Or in the State of Jammu
& Kashmir" omitted by the J&K (Extension of Laws) Act, l956.
87. See Form No. 37 of General
Rules & Forms.
(2) Such a company, when
registered with limited liability under this Act, shall be deemed to be a
company limited by shares.
567. Requirements
for registration of joint-stock companies88.
-Before the
registration in pursuance of this Part of a joint-stock company, there shall be
delivered to the Registrar the following documents: -
(a) A list showing the names,
addresses, and occupations of all persons who on a day named in the list, not
being more than six clear days before the day of registration, were members of
the company, with the addition of the shares or stock held by them
respectively, distinguishing, in cases where the shares are numbered, each
share by its number;
(b) A copy of any Act of
Parliament or other Indian law, Act of Parliament of the United Kingdom, Royal
Charter, Letters Patent, deed of settlement, deed of partnership or other
instrument constituting or regulating the company; and
(c) If the company is
intended to be registered as a limited company, a statement specifying the
following particulars:-
(i) The nominal share
capital of the company and the number of shares into which it is divided or the
amount of stock of which it consists;
(ii) The number of shares
taken and the amount paid on each share;
(iii) The name of the company,
with the addition of the word'Limited' or "Private Limited" as the
case may require, as the last word or words thereof; and
(iv) In the case of a company
intended to be registered as a company limited by guarantee, a copy of the
resolution declaring the amount of the guarantee.
568. Requirements
for registration of companies not being joint-stock companies89. -Before the registration in pursuance of this Part of
any company not being a joint-stock company, there shall be delivered to the
Registrar the following documents:-
(a) A list showing the names,
addresses and occupations of the directors, *[, the managing agent, if any, the
secretaries and treasurers, if any,] and the manager, if any, of the company;
(b) A copy of any Act of
Parliament or other Indian law, Act of Parliament of the United Kingdom, Letters
Patent, deed of settlement, deed of partnership or other instrument
constituting or regulating the company; and
88. See Form Nos.37, 39, 40
& 42 of General Rules & Forms.
89. See Form Nos. 38 and 42 of
General Rules & Forms.
(c) In the case of a company
intended to be registered as a company limited by guarantee, a copy of the
resolution declaring the amount of the guarantee.
569. Authentication
of statements of existing companies. -The lists of members and directors and any other
particulars relating to the company required to be delivered to the Registrar
shall be duly verified by the declaration of any two or more directors or other
principal officers of the company.
570. Power
of Registrar to require evidence as to nature of company. -The Registrar may require such evidence as he
thinks necessary for the purpose of satisfying himself whether any company
proposing to be registered is or is not a joint-stock company as defined in
section 566.
571. Notice
to customers on registration of banking company with limited liability:
(1) Where a banking company
which was in existence on the first day of May, 1882, proposes to register as a
limited company under this Part, it shall, at least thirty days before so
registering, give notice of its intention so to register, to every person who
has a banking account with the company, either by delivery of the notice to
him, or by posting it to him at, or delivering it at, his last known address.
(2) If the banking ompany
omits to give the notice required by sub-section (1), then, as between the
company and the person for the time being interested in the account in respect
of which the notice ought to have been given, and so far as respects the
account down to the time at which notice is given, but not further or
otherwise, the certificate of registration with limited liability shall have no
operation.
572. Change
of name for purposes of registration. -Where the name of a company seeking registration
under this Part is one which in the opinion of the Central Government" is
undesirable, the company may, with the approval of the Central Government
signified in writing, change its name with effect from the date of its
registration under this Part: Provided that the like assent of the members of
the company shall be required to the change of name as is required by section
565 to the registration of the company under this Part.
573. Addition
of "Limited" or "Private Limited" to name. -When a company registers in pursuance of this
Part with limited liability, the word 'Limited' or the words 'Private
Limited", as the case may be, shall form, and be registered as, the last
word or words of its name:
Provided that this section shall not be deemed to exclude the operation
of section 25.
90. Powers are delegated to
Registrar of Companies.
574. Certificate
of registration of existing companies. -On compliance with the requirements of this Part
with respect to registration, and on payment of such fees, if any, as are
payable under Schedule X, the Registrar shall certify under his hand that the
company applying for registration is incorporated as a company under this Act,
and in the case of a limited company that it is limited and thereupon the
company shall be so incorporated.
575. Vesting
of property on registration. -All
propertv, movable and immovable (including actionable claims) belonging to or
vested in a company at the date of its registration in pursuance of this Part,
shall, on such registration, pass to and vest in the company as incorporated
under this Act for all the estate and interest of the company therein.
576. Saving
for existing liabilities. -The
registration of a company in pursuance of this Part shall not affect its rights
or liabilities in respect of any debt or obligation incurred, or any contract
entered into, by, to, with, or on behalf of, the company before registration.
577. Continuation
of pending legal proceedings. -All
suits and other legal proceedings taken by or against the company, or any
public officer or member thereof, which are pending at the time of the
registration of a company in pursuance of this Part, may be continued in the
same manner as if the registration had not taken place:
Provided
that execution shall not issue against the property or person of any individual
member of the company on any decree or order obtained in any such suit or
proceeding; but, in the event of the property of the company being insufficient
to satisfy the decree or order, an order may be obtained for winding up the
company.
578. Effect
of registration under Part. -
(1) When a company is registered in pursuance of this Part,
sub-sections (2) to (7) shall apply.
(2) All provisions contained
in anv Act of Parliament or other Indian law, or other instrument constituting
or regulating the company, including, in the case of a company registered as a
company limited by guarantee, the resolution declaring the amount of the
guarantee, shall be deemed to be conditions and regulations of the company, in
the same manner and with the same incidents as if so much thereof as would, if
the company had been formed under this Act, have been required to be inserted
in the memorandum, were contained in a registered memorandum, and the residue
thereof were contained in registered articles.
(3) All the provisions of
this Act shall apply to the company and the members, contributories and
creditors thereof, in the same manner in all respects as if it had been formed
under this Act, subject as follows: -
(a) Table A in Schedulel
shall not apply unless andexceptinsofarasit is adopted by special resolution;
(b) The provisions of this
Act relating to the numbering of shares shall not apply to any joint-stock
company whose shares are not numbered;
(c) Subject to the provisions
of this section, the company shall not have power to alter any provision
contained in any Act of Parliament or other Indian law relating to the company;
(d) Subject to the provisions
of this section, the company shall not have power, without the sanction of the
Central Government, to alter anv provision contained in any Act of Parliament
of the United Kingdom, Royal Charter or Letters Patent, relating to the
company;
(e) The company shall not
have power to alter any provision contained in any Act of Parliament or other
Indian law or in any Act of Parliament of the United Kingdom, Royal Charter or
Letters Patent, with respect to the objects of the company;
(f) In the event of the
company being wound up, every person shall be a contributory, in respect of the
debts and liabilities of the company contracted before registration, who is
liable to pay or contribute to the payment of any debt or liability of the
company contracted before registration, or to pay or contribute to the payment
of any sum for the adjustment of the rights of the members among themselves in
respect of any such debt or liability, or to pay or contribute to the payment
of the costs, charges and expenses of winding up the company, so far as relates
to such debts or liabilities as aforesaid;
(g) In the event of the
company being wound up, every contributory shall be liable to contribute to the
assets of the company, in the course of the winding up, all sums due from him
in respect of any such liability as aforesaid; and in the event of the death or
insolvency of any contributory, the provisions of this Act with respect to the
legal representatives of deceased contributories, or with respect to the
assignees of insolvent contributories, as the case may be, shall apply.
(4) The provisions of this
Act with respect to-
(a) The registration of an unlimited
as a limited company;
(b) The powers of an
unlimited company on registration as a limited company, to increase the nominal
amount of its share capital and to provide that a portion of its share capital
shall not be capable of being called up except in the event of winding up;
(c) The power of a limited
company to determine that a portion of its share capital shall not be capable
of being called up except in the event of winding up;
Shall
apply, notwithstanding any provisions contained in any Act of Parliament or
other Indian Law, or other instrument constituting or regulating the company.
(5) Nothing in this section
shall authorise the company to alter any such provisions contained in any
instrument constituting or regulating the company as would, if the company had
originally been formed under this Act, have been required to be contained in
the memorandum and are not authorised to be altered by this Act.
(6) None of the provisions of
this Act (apart from those of section 404) shall derogate from any power of
altering its constitution or regulations which may be vested in the company, by
virtue of any Act of Parliament or other Indian law, or other instrument
constituting or regulating the company.
(7) In this section, the
expression "instrument' includes deed of settlement, deed of partnership,
Act of Parliament of the United Kingdom, Royal Charter and Letters Patent.
579. Power
to substitute memorandum and articles for deed of settlement. -
(1) Subject to the provisions of this section, a company registered
in pursuance of this Part may, by special resolution, alter the form of its
constitution by substituting a memorandum and articles for a deed of
settlement.
(2) The provisions of
sections 17 to 19 with respect to an alteration of the objects of a company
shall, so far as applicable, apply to any alteration under this section, with
the following modifications. -
(a) There shall be
substituted for the printed copy of the altered memorandum required to be filed
with the Registrar a printed copy of the substituted memorandum and articles;
and
(b) On the registration of
the alteration being certified bv the Registrar, the substituted memorandum and
articles shall apply to the company in the same manner as if it were a company
registered under this Act with that memorandum and those articles, and the
company's deed of settlement shall cease to apply to the company.
(3) An alteration under this
section may be made either with or without any alteration of the objects of the
company under this Act.
(4) In this section, the
expression 'deed of settlement' includes any deed of partnership, Act of
Parliament of the United Kingdom, Royal Charter or Letters Patent, or other
instrument constituting or regulating the company, not being an Act of Parliament
or other Indian law.
580. Power
of Court to stay or restrain proceedings. -The provisions of this Act with respect to
staying and restraining suits and other legal proceedings against a company at
any time after the presentation of a petition for winding up and before the
making of a winding up order, shall, in the case of a company registered in
pursuance of this Part, where the application to stay or restrain is by a
creditor, extend to suits and other legal proceedings against any contributory
of the company.
581. Suits
stayed on winding up order. Where
an order has been made for winding up, or a provisional liquidator has been
appointed for, a company registered in pursuance of this Part, no suit or other
legal proceeding shall be proceeded with or commenced against the company or
any contributory of the company in respect of any debt of the company, except
by leave of the Court and except on such terms as the Court may impose.
PARTX
WINDING UP OF UNREGISTERED COMPANIES
582. Meaning
of "unregistered company". -For the purposes of this Part, the expression
"unregistered compan-
(a) Shall not include-
(i) A railway company
incorporated by any Act of Parliament or other Indian law or any Act of
Parliament of the United Kingdom;
(ii) A company registered
under this Act; or
(iii) A company registered
under any previous companies law and not being a company the registered office
whereof was in Burma, Aden or Pakistan immediately before the separation of
that country from India 91[***];
and
(b) Save as aforesaid, shall
include any partnership, association or company consisting of more than seven
members 92[at
the time when the petition for winding up the partnership, association or
company, as the case may be, is presented before the Court.]
583. Winding
up of unregistered companies. -
(1) Subject to the provisions of this Part, any unregistered
company may be wound up under this Act, and all the provisions of this Act with
respect to winding up shall apply to an unregistered company, with the
exceptions and additions mentioned in sub-sections (2) to (5).
(2) For the purpose of
determining the Court having jurisdiction in the matter of the winding up, an
unregistered company shall be deemed to be registered in the State where its
principal place of business is situate or, if it has a principal place of
business situate in more than one State, then, in each State where it has a
principal place of business; and the principal place of business situate in
that State in which proceedings are being instituted shall, for all the
purposes of the winding up, be deemed to be the registered office of the
company.
(3) No unregistered company
shall be wound up under this Act voluntarily or subject to the supervision of
the Court.
(4) The circumstances in
which an unregistered company may be wound up are as follows: -
(a) If the company is
dissolved, or has ceased to carry on business, or is carrying on business only
for the purpose of winding up its affairs;
(b) If the company is unable
to pay its debts;
(c) If the Court is of
opinion that it is just and equitable that the company should be wound up.
91. "Or in the State of
Jammu and Kashmir immediately before the 26th January, 1950 omitted by the J
& K (Extension of Laws) Act, 1956.
92. Inserted by the Companies
(Amendment) Act, 1960.
(5) An unregistered company
shall, for the purposes of this Act, be deemed to be unable to pay its debts-
(a) If a creditor, by
assignment or otherwise, to whom the company is indebted in a sum exceeding
five hundred rupees then due, has served on the company, by leaving at its
principal place of business, or by delivering to the secretary, or some
director *[, managing agent, secretaries and treasurers], manager or principal
officer of the company, or by otherwise serving in such manner as the Court may
approve or direct, a demand under his hand requiring the company to pay the sum
so due, and the company has, for three weeks after the service of the demand,
neglected to pay the sum or to secure or compound for it to the satisfaction of
the creditor;
(b) If anv suit or other
legal proceeding has been instituted against any member for any debt or demand
due, or claimed to be due, from the company, or from him in his character of
member, and notice in xvritirig of the institution of the suit or other legal
proceeding having been served on the company by leaving the same at its
principal place of business or bv delivering it to the secretary, or some
director *[, managing agent, secretaries and treasurers], manager or principal
officer of the company or by otherwise serving the same in such manner as the
Court may approve or direct, the company has not, within ten days after service
of the notice,-
(i) Paid, secured or
compounded for the debt or demand; or
(ii) Procured the suit or
other legal proceeding to be stayed; or
(iii) Indemnified the
defendant to his satisfaction against the suit or other legal proceeding, and
against all costs, damages and expenses to be incurred by him by reason of the
same;
(c) If execution or other
process issued on a decree or order of any Court in favour of a creditor
against the company, or any member thereof as such, or any person authorised to
be sued as nominal defendant on behalf of the company, is returned unsatisfied
in whole or in part;
(d) If it is otherwise proved
to the satisfaction of the Court that the company is unable to pay its debts.
584. Power
to wind up foreign companies, although dissolved. -Where a body corporate incorporated outside
India which has been carrying on business in India, ceases to carry on business
in India, it may be wound up as an unregistered company under this Part,
notwithstanding that the body corporate has been dissolved or otherwise ceased
to exist as such under or by virtue of the laws of the country under which it
was incorporated.
585. Contributories
in winding up of unregistered company. -
(1) In the event of an unregistered company being wound up, every
person shall be deemed to be a contributory, who is liable to pay, or
contribute to the payment of,-
(a) Any debt or liability of
the company; or
(b) Any sum for the
adjustment of the rights of the members among themselves; or
(c) The costs, charges and
expenses of winding up the company.
(2) Every contributory shall
be liable to contribute to the assets of the company all sums due from him in
respect of any liability to pay or contribute as aforesaid.
(3) In the event of the death
or insolvency of any contributory, the provisions of this Act with respect to
the legal representatives of deceased contributories, or with respect to the
assignees of insolvent contributories, as the case may be, shall apply.
586. Power
to stay or restrain proceedings. -The provisions of this Act with respect to staying
and restraining suits and legal proceedings against a company at any time after
the presentation of a petition for winding up and before the making of a
winding up order, shall, in the case of an unregistered company, where the
application to stay or restrain is by a creditor, extend to suits and legal
proceedings against any contributory of the company.
587. Suits,
etc., stayed on winding up order. -Where an order has been made for winding up an
unregistered company, no suit or other legal proceeding shall be proceeded with
or commenced against any contributory of the company in respect of any debt of
the company, except by leave of the Court and except on such terms as the Court
may impose.
588. Directions
as to property in certain cases. -
(1) If an unregistered
company has no power to sue and be sued in a common name, or if for any reason
it appears expedient, the Court may, by the winding up order or by any
subsequent order, direct that all or any part of the property, movable or
immovable (including actionable claims), belonging to the company or held by
trustees on its behalf, shall vest in the Official Liquidator by his official
name; and thereupon the property or the part thereof specified in the order
shall vest accordingly.
(2) The Official Liquidator
may, after giving such indemnity, if any, as the Court may direct, bring or
defend in his official name any suit or legal proceeding relating to that
property, or which it is necessary to bring or defend for the purpose of
effectually winding up the company and recovering its property.
589. Provisions
of Part cumulative. -
(1) The provisions of this Part with respect to unregistered
companies shall be in addition to and not in derogation of, any provisions
hereinbefore in this Act contained with respect to the winding up of companies
by the Court.
(2) The Court or Official
Liquidator may exercise any powers or do any act in the case of unregistered
companies which might be exercised or done by the Court or Official Liquidator
in winding up companies formed and registered under this Act:
Provided
that an unregistered company shall not, except in the event of its being wound
up, be deemed to be a company under this Act, and then only to the extent
provided by this Part.
590. Saving
and construction of enactments conferring power to wind up partnership,
association or company in certain cases. -Nothing in this Part shall affect the
operation of any enactment, which provides for anv partnership, association or
company being wound up, or being wound up as a Company or as an unregistered
company, under the Indian Companies Act, 1913 (7 of 1913), or any Act repealed
by that Act:
Provided
that references in any such enactment to any provision contained in the Indian
Companies Act, 1913 (7 of 1913), or in any Act repealed by that Act shall be
read as references to the corresponding provision, if any contained in this
Act.
PARTXI
COMPANIES INCORPORATED OUTSIDE INDIA
Provisions as to establishment of places of business
in India
591. Application
of sections 592 to 602 to foreign companies*. -
93[(l)
Sections 592 to 602, both
inclusive, shall apply to all foreign companies, that is to say, companies
falling under the following two classes, namely:-
(a) Companies incorporated
outside India which, after the commencement of this Act, establish a place of
business within India; and
(b) Companies incorporated
outside India, which have, before the commencement of this Act, established a
place of business within India and continue to have an established place of
business within India at the commencement of this Act.
94[(2) Notwithstanding anything contained in
sub-section (1), where not less than fifty per cent, of the paid-up share
capital (whether equity or preference or partly equity and partly preference)
of a company incorporated outside India and having an established place of
business in India, is held by one or more citizens of India or by one or more
bodies corporate incorporated in India, or by one or more citizens of India and
one or more bodies corporate incorporated in India, whether singly or in the
aggregate, such company shall comply with such of the provisions of this Act as
may be prescribed with regard to the business carried on by it in India, as if
it were a company incorporated in India.]
(1) Foreign companies which, after the commencement of this Act,
establish a place of business within India shall, within 96[thirty days] of
the establishment of the place of business, deliver to the Registrar for
registration-
(a) A certified copy of the
charter, statutes, or memorandum and articles, of the company or other
instrument constituting or defining the constitution of the company; and, if
the instrument is not in the English language, a certified translation thereof;
(b) The full address of the
registered or principal office of the company;
93. Renumbered as sub-section
(1) by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
94. Inserted, ibid.
95. See rules 16 & 17 and
Form No. 44 of General Rules & Forms.
96. Substituted for
"onemonth" by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965.
*See also Companies (Fees on Applications) Rules, 1999.
(c) A list of the directors
and secretary of the company, containing the particulars mentioned in
sub-section (2);
(d) The name and address or
the names and addresses of some one or more persons resident in India,
authorised to accept on behalf of the company service of process and any
notices or other documents required to be served on the company; and
(e) The full address of the
office of the company in India, which is to be deemed its principal place of
business in India.
(2) The list referred to in
clause (c) of sub-section (1) shall contain the following particulars, that is
to say: -
(a) With respect to each
director, -
(i) In the case of an
individual, his present name and surname in full, any former name or names and
surname or surnames in full, his usual residential address, his nationality,
and if that nationality is not the nationality of origin, his nationality of
origin, and his business occupation, if any, or if he has no business
occupation but holds any other directorship or directorships, particulars of
that directorship or of some one of those directorships; and
(ii) In the case of a body
corporate, its corporate name and registered or principal office; and the full
name, address, nationality, and nationality of origin, if different from that
nationality of each of its directors;
(b) With respect to the
secretary, or where there are joint secretaries, with respect to each of them-
(i) In
the case of an individual, his present name and surname, any former name or
names and surname or surnames, and his usual residential address; and
(ii) In the case of a body
corporate, its corporate name and registers or principal office :
Provided
that, where all the partners in a firm are joint secretaries of the company,
the name and principal office of the firm may be stated instead of the particulars
mentioned in clause (b) of this sub-section.
(3) Clauses (2) and (3) of
the Explanation to sub-section (1) of section 303 shall apply for the purpose
of the construction of references in sub-section (2) to present and former
names and surnames as they apply for the purposes of the construction of such
references in sub-section (1) of section 303.
(4) Foreign companies, other
than those mentioned in sub-section (1), shall, if they have not delivered to
the Registrar before the commencement of this Act the documents and particulars
specified in sub-section (1) of section 277 of the Indian Companies Act, 1913
(7 of 1913), continue to be subject to the obligation to deliver those
documents and particulars in accordance with that Act.
593. Return
to be delivered to Registrar by foreign company where documents, etc., altered97. -If any alteration is made or occurs in-
(a) The charter, statutes, or
memorandum and articles of a foreign company or other instrument constituting
or defining the constitution of a foreign company; or
(b) The registered or
principal office of a foreign company; or
(c) The directors or
secretary of a foreign company 98[***];
or
(d) The name or address of
any of the persons authorised to accept service on behalf of a foreign company;
or
(e) The principal place of
business of the company in India;
The
company shall, within the prescribed time, deliver to the Registrar for
registration a return containing the prescribed particulars of the alteration.
594. Accounts
of foreign company99. -
(1) Every foreign company
shall, in every calendar year, -
(a) Make out a balance sheet
and profit and loss account in such form, containing such particulars and
including or having annexed or attached thereto such documents (including, in
particular documents relating to every subsidiary of the foreign company) as
under the provisions of this Act it would, if it had been a company within the
meaning of this Act, have been required to make out and lay before the company
in general meeting; and
(b) Deliver three copies of
those documents to the Registrar:
Provided
that the Central Government may, by notification in the Official Gazette,
direct that, in the case of any foreign company or class of foreign company the
requirements of clause (a) shall not apply, or shall apply, subject to such
exceptions and modifications as may be specified in the notification.
(2) If any such document as
is mentioned in sub-section (1) is not in the English language, there shall be
annexed to it a certified translation thereof.
(3) Every foreign company
shall send to the Registrar with the documents required to be delivered to him
under sub-section (1), three copies of a list in the prescribed form of all
places of business established by the company in India as at the date with
reference to which the balance sheet referred to in sub-section (1) is made
out.
595. Obligation
to state name of foreign company, whether limited, and country where
incorporated. -Every
foreign company shall-
(a) In every prospectus inviting
subscriptions in India for its shares or debentures, state the country in which
the company is incorporated;
97. See rules 17 & 18 and
Form Nos. 49 & 52 of General Rules & Forms.
98. "Or the particulars
contained in the list of the directors and secretary omitted by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
99. See rule 18A & Form
No. 52 of General Rules & Forms.
(b) Conspicuously exhibit on
the outside of every office or place where it carries on business in India, the
name of the company and the country in which it is incorporated, in letters
easily legible in English characters, and also in the characters of the
language or one of the languages in general use in the locality in which the
office or place is situate;
(c) Cause the name of the
company and of the country, in which the company is incorporated, to be stated
in legible English characters in all business letters, billheads and letter
paper, and in all notices, 1[*
* *] and other official publications of the company; and
(d) If the liability of the
members of the company is limited, cause notice of that fact-
(i) To be stated in every
such prospectus as aforesaid and in all business letters, bill-heads, letter
paper, notices, advertisements and other official publications of the company,
in legible English characters; and
(ii) To be conspicuously
exhibited on the outside of every office or place where it carries on business
in India, in legible English characters and also in legible characters of the
language or one of the languages in general use in the locality in which the
office or place is situate.
596. Service
on foreign company. -Any
process, notice, or other document required to be served on a foreign company
shall be deemed to be sufficiently served, if addressed to any person whose
name has been delivered to the Registrar under the foregoing provisions of this
Part and left at, or sent by post to, the address which has been so delivered:
Provided that-
(a) Where any such company
makes default in delivering to the Registrar the name and address of a person
resident in India who is authorised to accept on behalf of the company service
of process, notices or other documents; or
(b) If at any time all the
persons whose names and addresses have been so delivered are dead or have
ceased so to reside, or refuse to accept service on behalf of the company, or
for any reason, cannot be served;
A
document may be served on the company by leaving it at, or sending it by post
to, any place of business established by the company in India.
597. Office
where documents to be delivered. 2
(1) Any document which any foreign company is required to deliver
to the Registrar shall be delivered to the Registrar having jurisdiction over
New Delhi, and references to the Registrar in this Part [except in sub-section
(2)] shall be construed accordingly.
1. Advertisements"
omitted by the Companies (Amendment) Act, 1960.
2. See Form No. 52 of
General Rules & Forms.
(2) Any such document as is
referred to in sub-section (1) shall also be delivered to the Registrar of the
State in which the principal place of business of the company is situate.
(3) If any foreign company
ceases to have a place of business in India, it shall forthwith give notice of
the fact to the Registrar, and as from the date on which notice is so given,
the obligation of the company to deliver any document to the Registrar shall
cease, provided it has no other place of business in India.
598. Penalties.
-If any foreign
company fails to comply with any of the foregoing provisions of this Part, the
company, and every officer or agent of the company who is in default, shall be
punishable with fine which may extend to one thousand rupees, and in the case
of a continuing off ence, with an additional fine which may extend to one
hundred rupees for every day during which the default continues.
599. Company's
failure to comply with Part not to affect its liability under contracts, etc. -Any failure by a foreign company to comply
with any of the foregoing provisions of this Part shall not affect the validity
of any contract, dealing or transaction entered into by the company or its
liability to be sued in respect thereof; but the company shall not be entitled
to bring any suit, claim any set off, make any counter-claim or institute any
legal proceeding in respect of any such contract, dealing or transaction, until
it has complied with the provisions of this Part.
600. Registration
of charges, appointment of receiver and books of account3. -
(1) The provisions of Part V (sections 124 to 145) shall apply
mutatis mutandis to-
(a) Charges on properties in
India which are created by a foreign company after the 15th day of January,
1937; and
(b) Charges on property in
India, which is acquired by any foreign company after the day aforesaid:
Provided
that where a charge is created, or the completion of the acquisition of the
property takes place, outside India, sub-section (5) of section 125 and the
proviso to sub-section (1) of section 127 shall have effect as if the property,
wherever situated, were situated outside India.
(2) The provisions of section
118 shall apply mutatis mutandis to a foreign company.
(3) [4(a)] The provisions of section 209 shall apply
to a foreign company to the extent of requiring it to keep at its principal
place of business in India the books of account referred to in that section,
with respect to moneys received and expended, sales and purchases made, and
assets and liabilities, in the course of or in relation to its business in
India.
3. See Form Nos. 55 to 60 of
General Rules & Forms.
4. Lettered as clause (a) by
the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
5[(b) On and from the commencement of the
Companies (Amendment) Act, 1974, -
(i) The provisions of
section 159 shall, subject to such modifications or adaptations as may be made
therein by the rules" made under this Act, apply to a foreign companv
having an established place of business in India, as they apply to a company
incorporated in India;
(ii) The provisions of sections
209, 209A, 233A and 233B and sections 234 to 246 (both inclusive) shall, so far
as may be, apply only to the Indian business of a foreign company having an
established place of business in India, as they apply to a company incorporated
in India.]
(4) In applying the sections
referred to in sub-sections (1), (2) and (3) to a foreign company as aforesaid,
references in those sections to the Registrar shall be deemed to be ref erences
to the Registrar having jurisdiction over New Delhi, and ref erences to the
registered office of the foreign company shall be deemed to be references to
its principal place of business in India.
601. Fees
for registration of documents under Part. There shall be paid to the Registrar for
registering any document required by the foregoing provisions of this Part to
be registered by him, such fees as may be prescribed.'
602. Interpretation
of foregoing sections of Part. -For
the purposes of the foregoing provisions of this Part-
(a) The expression
"certified" means certified in the prescribed manner to be a true
copy oi a coal, cct translation;
(b) The expression
"director", in relation to a company, includes anv person in
accordance with whose directions or instructions the Board of directors of the
company is accustomed to act;
(c) The expression
"place of business" includes a share transfer or share registration
office;
(a) The expression
"prospectus" has the same meaning as when used in relation to a
company incorporated under this Act; and
(e) The expression
"secretary" includes any person occupying the position of secretary,
by whatever name called.
Prospectuses
603. Dating
of prospectus and particulars to be contained therein. -
(1) No person shall issue, circulate or distribute in India any
prospectus offering for subscription shares in or debentures of a company
incorporated or to be incorporated outside India, whether the company has or
has not established, or when formed will or will not establish, a place of
business in India, unless the prospectus is dated, and
5. Inserted by the Companies
(Amendment) Act, 1974, w.e.f. 1-2-1975.
6. Refer Application of
section 159 to Foreign Companies Rules, 1975.
7. Prescribed fees is Rs.
100 vide rule 20.
(a) Contains particulars with
respect to the following matters:-
(i) The instrument
constituting or defining the constitution of the company;
(ii) The enactments or
provisions having the force of enactments, by or under which the incorporation
of the company was ef f ccted;
(iii) An address in India
where the said instrument, enactments, or provision, or copies thereof, and if
the same are not in English, a translation thereof certified in the prescribed
manner, can be inspected;
(iv) The date on which and the
country in which the company was incorporated;
(v) Whether the company has
established a place of business in India, and, if so, the address of its
principal office in India; and
(b) Subject to the provisions
of this section, states the matters specified in Part I of Schedule II and sets
out the reports specified in Part 11 of that Schedue, subject always to the
provisions contained in Part III of that Schedule:
Provided
that sub-clauses (i), (ii) and (iii) of clause (a) shall not apply in the case
of a prospectus issued more than two years after the date at which the company
is entitled to commence business; and in the application of Part I of Schedule
II for the purposes of this sub-section, clause (a) thereof shall have effect
with the substitution, for references to the articles, of references to the constitution
of a company.
(2) Any condition requiring
or binding an applicant for shares or debentures to waive compliance with any
requirement imposed by virtue of clause (a) or (b) of sub-section (1), or
purporting to affect him with notice of any contract, document or matter not
specifically referred to in the prospectus, shall be void.
(3) No person shall issue to
any person in India, a form of application for shares in or debentures of such
a company or intended company as is mentioned in sub-section (1), unless the
form is issued with a prospectus which complies with the provisions of this
part and the issue whereof in India does not contravene the provisions of
section 604:
Provided
that this sub-section shall not apply if it is shown that the form of
application was issued in connection with a bona fide invitation to a person to
enter into an under writing agreement with respect to the shares or debentures.
(4) In the event of
non-compliance with or contravention of any of the requirements imposed by
clauses (a) and (b) of sub-section (1), a director or other person responsible
for the prospectus shall not incur any liability by reason of the noncompliance
or contravention, if-
(a) As regards any matter not
disclosed, he proves that he had no knowledge thereof; or
(b) He proves that the
non-compliance or contravention arose from an honest mistake of fact on his
part; or
(c) The non-compliance or
contravention was in respect of matters which, in the opinion of the Court
dealing with the case, were immaterial, or was otherwise such as ought in the
opinion of that Court, having regard to all the circumstances of the case,
reasonably to be excused:
Provided
that, in the event of failure to include in a prospect is a statement with
respect to the matters contained in clause 18 of Schedule 11, no director or
other person shall incur any liability in respect of the failure, unless it be
proved that he had knowledge of the matters not disclosed.
(5) This section-
(a) Shall not apply to the
issue to existing members or debenture holders of a company of a prospectus or
form of application relating to shares in or debentures of the company, whether
an applicant for shares or debentures will or will not have the right to
renounce in favour of other persons; and
(b) Except in so far as it
requires a prospectus to be dated, shall not apply to the issue of a prospectus
relating to shares or debentures which arc or are to be in all respects uniform
with shares or debentures previously issued and for the time being dealt in or
quoted on a recognised stock exchange;
But,
subject as aforesaid, this section shall apply to a prospectus or form of
application whether issued on or with reference to the formation of a company
or subsequently.
(6) Nothing in this section
shall limit or diminish any liability, which any person may incur under the
general law, or under this Act apart from tli is section.
604. Provisions
as to expert's consent and allotment. -
(1) No person shall issue, circulate or distribute in India any
prospectus offering for subscription shares in or debentures of a companv
incorporated or to be incorporated outside ndia, whether the company has or has
not established, or when formed will or will not establish a place of business
in India-
(a) If, where the prospectus
includes a statement purporting to be made by an expert, he has not given, or
has before delivery of the prospectus for registration withdrawn, his written
consent to the issue of the prospectus with the statement included in the fcrm
and context in which it is included, or there does not appear in the,
prospectus a statement that he has given and has not withdrawn his consent as
aforesaid; or
(b) If the prospectus does
not have the effect, where an application is made in pursuance thereof, of
rendering all persons concerned bound by all the provisions (other than penal
provisions) of sections 72, 73 and 74, so far as applicable.
(2) In this section, the
expression "expert" includes an engineer, a valuer, an accountant and
any other person whose profession gives authc ity to a statement made by him;
and for the purposes of this section a statement shall be deemed to be included
in a prospectus if it is contained in any report or memorandum appearing on the
face thereof or by reference incorporated therein or issued therewith.
605. Registration
of prospectus8.
-
9[(1)] No
person shall issue, circulate or distribute in India any prospectus offering
for subscription shares in or debentures of a company incorporated or to be
incorporated outside India, whether the company has or has not established, or
when formed will or will not establish, a place of business in India, unless
before the issue, circulation or distribution of the prospectus in India, a
copy thereof certified by the chairman and two other directors of the company
as having been approved by resolution of the managing body has been delivered
for registration to the Registrar and the prospectus states on the face of it
that a copy has been so delivered, and there is endorsed on or attached to the
copy-
(a) Any consent to the issue
of the prospectus required by section 604;
(b) A copy of any contract
required by clause 16 of Schedule 11 to be stated in the prospectus or, in the
case of a contract not reduced into writing, a memorandum giving full
particulars thereof; and
(c) Where the persons making
any report required by Part 11 of Schedule 11 have made therein, or have,
without giving the reasons, indicated therein, any such adjustments as are
mentioned in clause 32 of that Schedule, a written statement signed by those
persons setting out the adjustments and giving the reasons therefor.
(2) The references in clause
(b) of sub-section (1) to the copy of a 10[contract]
required thereby to be endorsed on or attached to a copy of the prospectus
shall, in the case of a contract wholly or partly in a language other than
English, be taken as references to a copy of a translation of the contract in
English or a copy embodying a translation in English of the parts which are not
in English, as the case may be, being a translation certified in the prescribed
manner to be a correct translation.
606. Penalty
for contravention of sections 603, 604 and 605. -Any person who is knowingly responsible-
(a) For the issue,
circulation or distribution of a prospectus; or
(b) For the issue of a form
of application for shares or debentures;
In
contravention of any of the provisions of sections 603, 604 and 605, shall be
punishable with imprisonment for a term, which may extend to six months, or with
fine, which may extend to five thousand rupees, or with both.
607. Civil
liability for misstatements -in prospectus. -Section 62 shall extend to every prospectus
offering for subscription shares in or debentures of a company incorporated or
to be incorporated outside India, whether the company has or has not
established, or when formed will or will not establish, a place of business in
India, with the substitution for ref erences in section 62 to section 60 of
this Act, of references to section 604 thereof.
8. See rule 17 of General
Rules & Forms.
9. Inserted by the Repealing
and Amending Act, 1957.
10. Substituted for
"contractor" by the Repealing and Amending Act, 1957.
608. Interpretation
of provisions as to prospectuses. -
(1) Where any document by
which any shares in, or debentures of, a company incorporated outside India are
offered for sale to the public, would, if the company concerned had been a
company within the meaning of this Act, have been deemed by virtue of section
64, to be a prospectus issued by the company, that document shall be deemed,
for the purposes of this Part, to be a prospectus issued by the company
offering such shares or debentures for subscription.
(2) An off er of shares or
debentures for subscription or sale to any person whose ordinary business it is
to buy or sell shares or debentures, whether as principal or as agent, shall
not be deemed to be an offer to the public for the purposes of this Part.
(3) In this Part, the
expressions "prospectus, "shares and "debentures" have
the same meanings as when used in relation to a company incorporated under this
Act.
PART XII
REGISTRATION OFFICES AND OFFICERS AND FEES
(1) For the purposes of the
registration of companies under this Act, there shall be offices at such places
as the Central Government thinks fit.
(2) The Central Government
may appoint such Registrars, and such Additional, Joint, Deputy and Assistant
Registrars as it thinks necessary for the registration of companies under this Act,
and may make regulations with respect to their duties.
(3) The salaries of the
persons appointed under this section shall be fixed by the Central Government.
(4) The Central Government
may direct a seal or seals to be prepared for the authentication of documents
required for, or connected with, the registration of companies.
(5) Whenever any act is by
this Act directed to be done to or by the Registrar, it shall, until the
Central Government otherwise directs, be done to or by the existing Registrar
of companies or joint-stock companies, or in his absence, to or by such person
as the Central Government may for the time being authorise: Provided that in
the event of the Central Government altering the constitution of the existing
registry offices or any of them, any such act shall be done to or by such
officer and at such place, with reference to the local situation of the
registered offices of the companies concerned, as the Central Government may
appoint.
610. (Inspection,
production and evidence of documents kept by Registrar. -
(1) 11[Save as otherwise provided elsewhere in
this Act, any person may]-
II. Substituted for "Any person may" by the Companies
(Amendment) Act, 1960.
(a) Inspect any documents
kept by the Registrar, 12[in
accordance with the rules made under the Destruction of Records Act, 1917 (5 of
1917)] being documents filed or registered by him in pursuance of this Act, or
making a record of any fact required or authorised to be recorded or registered
in pursuance of this Act, on payment for each inspection of 13[such fees as may be prescribed];
(b) Require a certificate of
the incorporation of any company, or a copy or extract of any other document or
any part of any other document to be certified by the Registrar, on payment of 14[such fees as may be prescribed]:
Provided
that the rights conferred by this sub-section shall be exercisable-
(i) In relation to documents
delivered to the Registrar with a prospectus in pursuance of sub-clausc (i) of
clause (b) of sub-section (1) of section 60, only during the fourteen days
beginning with the date of publication of the prospectus; and at other times,
only with the permission of the Central Government;" and
(ii) In relation to documents
so delivered in pursuance of clause (b) of subsection (1) of section 605, only
during the fourteen days beginning with the date of the prospectus; and at
other times, only with the permission of the Central Government.
15(2) No
process for compelling the production of any document kept by the Registrar
shall issue from any Court 16[or
the Company Law Board] except with the leave of that Court 16[or the Companv Law Board]; and anv such
process, if issued, shall bear thereon a statement that it is issued with the
leave of the Court 16[or the
Company Law Board].
(3) A copy of, or extract
from, any document kept and registered at any of the offices for the
registration of companies under this Act, certified to be a true copy under the
hand of the Registrar (whose official position it shall not be necessary to
prove), shall, in all legal proceedings, be admissible in evidence as of equal
validity with the original document.
(4) [Omitted by the Companies
(Amendment) Act, 1960. For the original
subsection, refer Appendix I.]
(1) Notwithstanding anything
contained in any other law for the time being in force, -
12. Inserted by the Companies (Amendment) Act, 1960.
13. Substituted for "a
fee of one rupee" by the Companies (Amendment) Act, 1988, w.e.f.
15-7-1988. Fees of Rs. IO has been prescribed vide under rule 2 1A
of General Rules & Forms.
14. Substituted for "a
fee of five rupees in the case of a certificate of incorporation, and of one
rupee for every one hundered words or fractional part thereof required to be
copied in the case of a certified copy of extract" bv the Companies
(Amendment) Act, 1988 w.c.f. 15-71988.
Earlier clause (b) was amended by the Companies (Amendment) Act;
1960.Fees of Rs. 10/5 has been prescribed by rule 21 A of General Rules and
Forms.
15. Powers are now delegated
to Regional Directors.
16. Inserted by the Companies
(Amcndment) Act, 1988, w.e.f. 31-5-1991.
17. Inserted by the Companies
(Amendment) Act, 1996, w.e.f. 1-3-1997.
(a) A micro film of a
document or the reproduction of the image or images embodied in such micro film
(whether enlarged or not); or
(b) A facsimile copy of a
document; or
(c) A statement contained in
a document and included in a printed material produced by a computer
(hereinafter referred to as a "computer printout"), if the conditions
mentioned in sub-section (2) are satisfied,
Shall
be deemed to be also a document for the purposes of this Act and the rules made
thereunder and shall be admissible in any proceedings thereunder, without
further proof or production of the original, as evidence of any contents of the
original or of any fact stated therein of which direct evidence should be admissible.
(2) The conditions referred
to in sub-section (1) in respect of a computer printout shall be the following,
namely: -
(a) The information contained
in the statement reproduces or is derived from returns and document filed by
the company on paper or on computer network, floppy, diskette, magnetic
cartridge tape, CD-rom or any other computer readable media;
(b) While receiving returns
or documents on computer media, necessary checks by scanning the documents
filed on computer media will be carried out and media will be duly
authenticated by the Registrar; and
(c) The Registrar shall also
take due care to preserve the computer media by duplicating, transferring,
mastering or storage without loss of data.]
611. Fees
in Schedule X to be paid. -
18[(1) In
respect of the several matters mentioned in Schedule X, there shall, subject to
the limitations imposed by that Schedule, be paid to the Registrar the several
fees therein specified :
Provided
that no fees shall be charged in respect of the registration in pursuance of
Part IX of a company, if it is not registered as a limited company, or if,
before its registration as a limited company, the liability of the shareholders
was limited by some other Act of Parliament or any other Indian law or by an
Act of Parliament of the United Kingdom, Royal Charter or Letters Patent in
force in India:
19[Provided
further that in the case of resolutions to which section 192 applies, not more
than one fee shall be required for the filing of more resolutions than one passed
in the same meeting if such resolutions are filed with the Registrar at the
same time.]
19[(2) Any
document required or authorised by this Act to be filed or registered, or any
fact required or authorised by this Act to be registered, with the Registrar on
payment of the fee specified therefor in Schedule X, may, without prejudice to
any other liability, be filed or registered after the time, if any, specified
in this Act for its filing or registration on payment of such additional fee
not exceeding ten times the amount of the fee so specified as the Registrar may
determine.]
18. Numbered as sub-section
(1) by the Companies (Amendment) Act, 1960.
19. Inserted, ibid.
612. Fees,
etc., paid to Registrar and other officers to be accounted for to Central Government.
-All fees, charges,
and other sums paid to any Registrar, any Additional, Joint, Deputy, or
Assistant Registrar, or any other officer of the Central Government in
pursuance of this Act shall be paid into the public account of India in the
Reserve Bank of India.
20613. Power of Central Government to reduce fees, charges, etc. -
(1) The Central Government may, by order notified in the Official
Gazette, reduce the amount of any fee, charge or other sum specified in any
provision contained in this Act, as payable in respect of any matter, either to
the Central Government or to any Registrar, any Additional, Joint, Deputy, or
Assistant Registrar or any other officer of the Central Government; and
thereupon such provision shall, during the period for which the order is in
force, have effect as if the reduced fee had been substituted for the fee
specified in such provision.
(2) Any order notified under
sub-section (1) may, by a like order, be cancelled or varied at any time by the
Central Government.
(3) Nothing in this section
shall be deemed to affect the power of the Central Government under section 641
to alter any of the fees specified in Schedule X.
614. Enforcement
of duty of company to make returns, etc., to Registrar21. -
(1) If a company, having made
default in complying with any provision of this Act which requires it to file
or register with, or deliver or send to, the Registrar any return, account or
other document, or to give notice to him of anv matter, fails to make good the
default within fourteen days after the service of a notice on the company
requiring it to do so, the 22[Company
Law Board] may, on an application made to it by any member or creditor of the
company or by the Registrar, make an order directing the company and any officer
thereof to make good the default within such time as may be specified in the
order.
(2) Any such order may
provide that all costs of an incidental to the application shall be borne by
the company or by anv officers of the company responsible for the default.
(3) Nothing in this section
shall be taken to prejudice the operation of any provisions in this or any
other Act imposing penalties on a company or its officers in respect of any
such default as aforesaid.
20. For notification
specifying fee payable for registration of an association not for profit and
licensed under section 25, refer Taxinaizn's Master Guide to Companies Act.
21. Prescribed fees are Rs.
50.
22. Substituted for 'Court' by
the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
(1) Any Court trying an offence for a default in compliance with
any provision of this Act which requires a company or its officers to file or register
with, or deliver or send to, the Registrar, any return, account or other
document, may at the time of sentencing, acquitting or discharging the accused,
direct by order, if it thinks fit to do so, any officer or other emplovee of
the company to file or register with, deliver or sent to, the Registrar on
payment of the fee including the additional fee required to be paid under
section 611, such return, account or other document within such time as may be
specified in the order.
(2) Any officer or other
employee of the company who fails to comply with an order of the Court under
sub-section (1) shall be punishable with imprisonment for a term which may
extend to six months, or with fine, or with both.]
PARTXIII
GENERAL
Collection of information and statistics from
companies
615. Power
of Central Government to direct companies to furnish information or statistics.
-
(1) The Central Government may, by order, require companies
generally, or any class of companies, or any company, to furnish such information
or statistics with regard to their or its constitution or working, and within
such time, as may be specified in the order.
(2) (a) Every order under sub-section (1)
addressed to companies generally or to any class of companies, shall be published
in the Official Gazette and in such other manner, if any, as the Central
Government may think fit.
(b) The date of publication
of the order in the Official Gazette shall be deemed to be the date on which
the demand for information or statistics is made on such companies or class of
companies, as the case may be.
(3) Every order under
sub-section (1) addressed to an individual company shall be served on it in the
manner laid down in section 51.
(4) For the purpose of
satisfying itself that any information or statistics furnished by a company in
pursuance of any order under sub-section (1) is correct and complete, the
Central Government may require such company-
(a) To produce such records
or documents in its possession or under its control for inspection, before such
officer and at such time as may be specified by the Central Government; or
(b) To furnish such further
information as may be specified by the Central Government and within such time
as may be fixed by it.
23. Inserted by the Companies
(Amendment) Act, 1960.
(5) The Central Government
may also, by order, direct an inquiry to be made by any person or persons named
in the order-
(a) For the purpose of
obtaining any information or statistics which a company has failed to furnish
as required of it by an order under subsection (1); or
(b) For the purpose of
satisfying itself that any information or statistics furnished by a company in
pursuance of an order made under subsection (1) is correct and complete; and in
so far as such information or statistics may be found to be incorrect or
incomplete, for the purpose of obtaining such information or statistics as may
be necessary to make the information or statistics furnished correct and
complete;
And
a person or persons so appointed shall, for the purposes of such inquiry, have
such powers as may be prescribed.
(6) If any company fails to
comply with an order made under sub-section (1) or (4), or knowingly furnishes
any information or statistics which is incorrect or incomplete in any material
respect, the company, and everv officer thereof who is in default, shall be
punishable with imprisonment which may extend to three months or with fine
which may extend to one thousand rupees, or with both.
(7) An order requiring any
information or statistics to be furnished by a company may also be addressed to
any person who is, or has at any time been, an officer or employee of the
company, and all the provisions of this section, so far as may be, shall apply
in relation to such person as they apply in relation to the company: Provided
that no such person shall be punishable under sub-section (6), unless the Court
is satisfied that he was in a position to comply with the order and made wilful
default in doing so.
(8) Where a body corporate incorporated
outside India and having established an office within India, carries on
business in India, all references to a company in this section shall be deemed
to include references to the body corporate in relation, and only in relation,
to such business.
Application of Act to companies governed by special Acts
616. Application
of Act to insurance, banking, electricity supply and other companies governed
by special Acts. -The
provisions of this Act shall apply-
(a) To insurance companies,
except in so far as the said provisions are inconsistent with the provisions of
the Insurance Act, 1938 (4 of, 1938);
(b) To banking companies,
except in so far as the said provisions are inconsistent with the provisions of
the Banking Companies Act, 194924
(10 of 1949);
(c) To companies engaged in
the generation or supply of electricity, except in so far as the said
provisions are inconsistent with the provisions of 25[the Indian Electricity Act, 1910 (9 of
1910), or] the Electricity Supply Act, 1948 (54 of 1948);
24. Now the Banking Regulation
Act, 1949 (10 of 1949).
25. Inscrted by the Companies
(Amendment) Act, 1960.
(d) To any other company
governed by any special Act for the time being in force, except in so far as
the said provisions are inconsistent with the provisions of such special Act;
26[(e) To
such body corporate, incorporated by any Act for the time being in force, as
the Central Government may, by notification in the Official Gazette, specify in
this behalf, subject to such exceptions, modifications or adaptations, as may
be specified in the notifications.]
Application of Act to Government companies
617. Definition
of "Government Company". For the purposes of 27[this
Act], Government company means any company in which not less than fifty-one per
cent of the 28[paid-up share
capital] is held by the Central Government, or by any State Government or
Governments, or partly by the Central Government and partly by one or more
State Governments 29[and
includes a company which is a subsidiary of a Government company as thus
defined.]
618. 30[Government companies not to have managing
agents. -No
Government company, whether formed before or after the lst day of April, 1956,
shall, after the commencement of the Companies (Amendment) Act, 1960, appoint
or employee, or after the expiry of six months from such commencement, continue
the appointment or employment of, any managing agent:
*[Provided
that where a company has become a Government company after the lst day of
April, 1956, nothing in this section shall prevent that company from continuing
after the commencement of the Companies (Amendment) Act, 1960, the appointment
or employment of a managing agent appointed or employed before such
commencement.]]
619. Application
of sections 224 to 233 to Government companies. -
(1) In the case of a Government company, the following provisions
shall apply, notwithstanding anything contained in sections 224 to 233.
(2) The auditor of a
Government company shall be appointed or re-appointed by the Central Government
on the advice of the Comptroller and Auditor-General of India:
31[Provided
that the limits specified in sub-sections (I B) and (IC) of section 224 shall
apply in relation to the appointment or re-appointment of an auditor under this
sub-section.]
(3) The Comptroller and
Auditor-General of India shall have power-
26. Inserted by the Companies
(Amendment) Act, 1974, w.e.f. 1-2-1975.
27. Substituted for
"sections 618, 619 and 620' by the Companies (Amendment) Act, 1960.
28. Substituted for share
capital", ibid.
29. Inserted, ibid.
30. Substituted, ibid. For the original section, refer Appendix I.
31. Inserted by the Companies
(Amendment) Act, 1974, w.e.f. 1-2-1975.
(a) To direct the manner in
which the company's accounts shall be audited by the auditor appointed in
pursuance of sub-section (2) and to give such auditor instructions in regard to
any matter relating to the performance of his functions as such;
(b) To conduct a
supplementary or test audit of the company's accounts by such person or persons
as he may authorise in this behalf; and for the purposes of such audit, to
require information or additional information to be furnished to any person or
persons, so authorised, on such matters, by such person or persons, and in such
form, as the Comptroller and Auditor-General may, by general or special order,
direct.
(4) The auditor aforesaid
shall submit a copy of his audit report to the Comptroller and Auditor-General
of India who shall have the right to comment upon, or supplement, the audit
report in such manner as he may think fit.
(5) Any such comments upon,
or supplement to, the audit report shall be placed before the annual general
meeting of the company at the same time and in the same manner as the audit
report.
619A. 32[Annual
reports on Government companies. -
(1) Where the Central Government is a member of a Government
company, the Central Government shall cause an annual report on the working and
affairs of that company to be-
(a) Prepared within three
months of its annual general meting before which the audit report is placed
under sub-section (5) of section 619; and
(b) As soon as mav be after
such preparation, laid before both Houses of Parliament together with a copy of
the audit report and any comments upon, or supplement to, the audit report,
made by the Comptroller and Auditor-General of India.
(2) Where in addition to the
Central Government, any State Government is also a member of a Government
company, that State Government shall cause a copy of the annual report prepared
under sub-section (1) to be laid before the House or both Houses of the State
Legislature together with a copy of the audit report and the comments or
supplement referred to in sub-section (1).
(3) Where the Central
Government is not a member of a Government company, every State Government
which is a member of that company, or where only one State Government is a
member of the company, that State Government shall cause an annual report on
the working and affairs of the company to be-
(a) Prepared within the time
specified in sub-section (1); and
(b) As soon as may be after
such preparation, laid before the House or both Houses of the State Legislature
with a copy of the audit report and comments or supplement referred to in
sub-section (1).]
33[(4) The
provisions of this section shall, so far as may be, apply to a Government
company in liquidation as they apply to any other Government company.]
32. Inserted by the Companies
(Amendment) Act, 1960.
33. Inserted bv the Companies
(Amendment) Act, 1988, w.e.f. 15-6-1988.
619B.
34[Provisions of section 619
to apply to certain companies. -The
provisions of section 619 shall apply to a company in which not less than
fifty-one per cent of the paid-up share capital is held by one or more of the
following or any combination thereof, as if it were a Government company,
namely: -
(a) The Central Government
and one or more Government companies;
(b) Any State Government or
Governments and one or more Government companies;
(c) The Central Government,
one or more State Governments and one or more Government companies;
(d) The Central Government
and one or more corporations owned or controlled by the Central Government;
(e) The Central Government,
one or more State Governments and one or more corporations owned or controlled
by the Central Government; one or more corporations owned or controlled by the
Central Government or the State Government;
(g) More than one Government
Company.]
35620. Power to modify Act in relation to Government companies. -
(1) The Central Government may, by notification in the Official
Gazette, direct that any of the provisions of this Act (other than sections
618, 619 and 36[619A]
specified in the notification:-
(a) Shall not apply to any
Government company; or
(b) Shall apply to any
Government company, only with such exceptions, modifications and adaptations,
as may be specified in the notification.
37[(2) A
copy of every notification proposed to be issued under sub-section (1), shall
be laid in draft before the each House of Parliament, while it is in session,
for a total period of thirty days which may be comprised in one session or in
two or more successive sessions, and if, before the expiry of the session
immediately following the session or the successive sessions aforesaid, both
Houses agree in disapproving the issue of the notification or both Houses agree
in making any modification in the notification, the notification shall not be
issued or, as the case may be, shall be issued onlv in such modified form as
may be agreed upon by both the Houses.]
34. Inserted by the Companies
(Amendment) Act, 1974, w.e.f. 1-2-1975.
35. For notifications,
specifying provisions of the Act as not applicable or applicable with
modifications in relation to Government Companys underthis section refer
Taxmann's Master Guide to Co ipanies Act.
36. Substituted for
"639" by Repealing & Amending Act, 1964.
37. Substituted by the
Companies (Amendment) Act, 1977, with retrospective effect from 1-2-1975. For the original sub-section, refer Appendix I.
38[Modification of Act in its
application to Nidhis
and Mutual Benefit Societies
620A. Power to modify Act in its application
to Nidhis, etc. -
(1) In this section, "Nidhi" or "Mutual Benefit
Society means a company which the Central Government may, by notification in
the Official Gazette", declares to be a Nidhi or Mutual Benefit Society,
as the case may be.
(2) The Central Government
may, by notification in the Official Gazette, direct that any of the provisions
of this Act specified in the notification-
(a) Shall not apply to any
Nidhi or Mutual Benefit Society, or
(b) Shall apply to any Nidhi
or Mutual Benefit Society with such exceptions, modifications and adaptations
as may be specified in the notification.
(3) A copy of every notification
issued under sub-section (1) shall be laid as soon as may be after it is
issued, before each House of Parliament.]
620B.
40[Special provisions as to
companies in Goa, Daman and Diu. -The Central Government may, by notification in the
Official Gazette, direct that for such period or periods with effect from the
26th January, 1963 or any subsequent date, any of the provisions of this Act
specified in the notification shall not apply or shall apply only with such
exceptions, and modifications or adaptations as may be specified in the
notification, to, -
(a) Anv existing company in
the Union Territories of Goa, Daman and Diu;
(b) Any company registered in
the said Union Territory under this Act on or after the 26th January 1963.
41[Special provisions as to
companies in Jammu and Kashmir
620C.
Special provisions as to companies in Jammu and Kashmir. -The Central Government may, by notification
in the Official Gazette, direct that with effect from the commencement of the
Central Laws (Extension to Jammu and Kashmir) Act, 1968, or any subsequent
date, any of the provisions of this Act specified in the notification shall not
apply, or shall apply only with such exceptions and modifications or
adaptations as may be specified in the notification, to-
(a) Any existing company in
the State of Jammu and Kashmir;
(b) Any company registered in
that State under this Act after the commencement of the Central Laws (Extension
to Jammu and Kashmir) Act, 1968.]
38. Inscrted by the Companies
(Amendment) Act, 1960.
39. For notifications
specifying provisions of the Act, as not applicable or applicable with
modifications in relation to Nidhis, etc., under this section, refer Taxma n's
Master Guide to Companies Act.
40. Inserted by the Goa, Daman
and Diu (Laws) No. 2 Regulation, 1963.
41. Inserted by the Central
Law (Extension to J & K) Act, 1968, w.e.f. 15-8-1968.
Offences
(1) No Court shall take
cognizance of any offence against this Act (other than an offence with respect
to which proceedings are instituted under section 545), which is alleged to
have been committed by any company or any officer thereof, except on the
complaint in kvviting of the Re-istrai-, or of a shareholder of the company, or
of a person authorised by the Central Government in that behalf:
Provided that nothing in
this sub-section shall apply to a prosecution by a company of any of its
officers.
42[(1A) Notwithstanding anything contained in the Code of Criminal Procedure,
1898 41(5 of 1898), where the complainant under sub-section (1) is the
Registrar or a person authorised by the Central Governi-nent, the personal
attendance of the complainant before the Court trying the offence shall not be
necessary unless the court for reasons to be recorded in writing requires his
personal attendance at the trial.]
(2) Sub-section (1) shall
not apply to any action taken bv the liquidator of a company in respect of any
offence alleged to have been committed in respect of anv of the matters
included in Part VII (sections 425 to 560) or in any other provisions of this
Act relating to the winding up of companies.
(3) A liquidator of a
company shall not be deemed to be an officer of the company, within the meaning
of sub-section (1).
621A. 44[Composition of certain offences. -
(1) Notwithstanding anything contained in the Code of Criminal
Procedure, 1973 (2 of 1974), any offence punishable under this Act (whether
committed by a company or any officer thereof), not being an of fence
punishable with imprisonment only, or with imprisonment and also with fine,
may, either before or after the institution of any prosecution, be compounded
by-
(a) The Company Law Board; or
(b) Where the maximum amount
of fine which mav be imposed for such offence does not exceed five thousand
rupees, by the Regional Director, on payment or credit, by the company or the
officer, as the case may be, to the Central Government of such sum as that
Board or the Regional Director, as the case may be, may specify:
Provided
that the sum so specified shall not, in any case, exceed the maximum amount of
the fine which may be imposed for the offence so compounded: Provided further
that in specifying the sum required to be paid or credited for the compounding
of an offence under this sub-section, the sum, if any, paid by way of
additional fee under sub-section (2) of section 61 1 shall be taken into
account. (2) Nothing in sub-section (1) shall apply to an offence committed by
a company or its officer within a period of three years from the date on which
a similar offence committed by it or him was compounded under this section.
42. Inserted by the Companies
(Amendment) Act, 1960.
43. Now the Code of Criminal
Procedure, 1973 (I of 1974).
44. Inserted by the Companies
(Amendment) Act, 1988, w.e.f. 31-5-1991.
Explanation: For
the purposes of this section,-
(a) Any second or subsequent
offence committed after the expiry of a period of three years from the date on
which the offence was previously compounded, shall be deemed to be a first
offence;
(b) "Regional
Director" means a person appointed by the Central Government as a Regional
Director for the purposes of this Act.
(3) Every Regional Director
shall exercise the powers to compound an offence, subject to the direction,
control and supervision of the Company Law Board.
(4) (a) Every application for the compounding of
an offence shall be made to the Registrar who shall forward the same, together
with his comments thereon, to the Company Law Board or the Regional Director,
as the case may be.
(b) Where any off ence is
compounded under this section, whether before or after the institution of any
prosecution, an intimation thereof shall be given by the company to the
Registrar within seven days from the date on which the offence is so
compounded.
(c) Where any offence is
compounded before the institution of any prosecution, no prosecution shall be
instituted in relation to such offence, either by the Registrar or by any
shareholder of the company or by any person authorised by the Central
Government against the offender in relation to whom the offence is so
compounded.
(d) Where the composition of
any offence is made after the institution of any prosecution, such composition
shall be brought bv the Registrar in writing, to the notice of the Court in
which the prosecution is pending and on such notice of the composition of the
offence being given, the company or its officer in relation to whom the offence
is so compounded shall be discharged.
(5) The Company Law Board or
the Regional Director, as the case may be, while dealing with a proposal for
the compounding of an offence for a default in compliance with any provision of
this Act which requires a company or its officer to file or register with, or
deliver or send to, the Registrar anv return, account or other document, may,
direct, by order, if it or he thinks fit to do so, any officer or other
employee of the company to file or register with, or on payment of the fee, and
the additional fee, required to be paid under section 611, such return, account
or other document within such time as may be specified in the order.
(6) Any officer or other
employs& of the company who fails to comply with any order made by the
Company Law Board or the Regional Director under subsection (5) shall be
punishable with imprisonment for a term which may extend to six months, or with
fine not exceeding five thousand rupees, or with both.
(7) Notwithstanding anything
contained in the Code of Criminal Procedure, 1973 (2 of 1974), -
(a) Any offence, which is
punishable under this Act with imprisonment or with fine, or with both, shall
be compoundable with the permission of the court, in accordance with the
procedure laid down in that Act for compounding of offences;
(b) Any offence which is
punishable under this Act with imprisonment only or with imprisonment and also
with fine shall not be compoundable.
(8) No offence specified in
this section shall be compounded except under and in accordance with the
provisions of this section.]
622. Jurisdiction
to try-offences. -No
Court inferior to that of a Presidency Magistrate or a Magistrate of the first
class shall try any offence against this Act.
623. Certain
offences triable summarily in Presidency towns. -If any offence against this Act, which is
punishable with fine, only is oommkted by any person within a Presidency town,
such person may be tried summarily and punished by any Presidency Magistrate of
that Presidency town.
624. Offences
to be non-cognizable. -Notwithstanding
anything in the Code of Criminal Procedure, 1898 (5 of 1898)45, every offence against this Act shall be
deemed to be non-cognizable within the meaning of the said Code.
624A.
46[Power of Central Government
to appoint company prosecutors. -Notwithstanding
anything contained in the Code of Criminal Procedure, 1898 (5 of 1898) 45, the Central Government may appoint
generally, or in any case, or for, any specified class of cases in any local
area, one or more persons, as company prosecutors for the conduct of
prosecutions arising out of this Act; and the persons so appointed as company
prosecutors shall have all the powers and privileges conferred by that Code on
public prosecutors47 ,
appointed by a State Gcvernment under section 492 of that Code.]
624B.
46[Appeal against acquittal. -Notwithstanding anything contained in the
Code of Criminal Procedure, 1898 (5 of 1898) 45,
the Central Government may, in any case arising out of this Act, Direct any
company prosecutor or authorise any other person either by name or by virtue of
his office, to present an appeal from an order of acquittal passed by any Court
other than a High Court and an appeal presented by such prosecutor or other
person shall be deemed to, have been validly presented to the appellate Court.]
625. Payment
of compensation in cases of frivolous or vexatious prosecution. -
(1) In respect of any case instituted upon the complaint of a
shareholder against the company or any officer thereof in pursuance of section
621, the provisions of section 25047
of the Code of Criminal Procedure, 1898 (5 of 1898) 44, shall not apply; and the following
provisions shall apply instead.
45. Now the Code of Criminal
Procedure, 1973 (2 of 1974).
46. Inserted by the Companies
(Amendment) Act, 1960.
47. See Appendix II.
(2) If the Magistrate by whom
any such case is heard discharges or acquits all or any of the accused and is
of opinion that the accusation against them or any of them was false and either
frivolous or vexatious, the Magistrate may, by his order of discharge or
acquittal, if the shareholder upon whose complaint the accusation was made is
present, call upon him forthwith to show cause why he should not pay
compensation to such accused, or to each or any of such accused when there is
more than one, or if such shareholder is not present, direct the issue of a
summons to him to appear and show cause as aforesaid. (3) The Magistrate shall
record and consider any cause which such shareholder may show; and if the
Magistrate is satisfied that the accusation was false and either frivolous or
vexatious, he may, for reasons to be recorded, direct that compensation to such
amount as he may determine be paid by such shareholder to the accused or to
each or any of them, not exceeding one thousand rupees in all.
(4) The Magistrate may, by
the order directing payment of the compensation under subsection (3), further
order that, in default of payment, the shareholder ordered to pay such
compensation shall suffer simple imprisonment for a term not exceeding two
months.
(5) When any person is
imprisoned under sub-section (4), the provisions of sections 68 and 69 of the
Indian Penal Code 41 (45 of 1860), shall, so far as may be, apply.
(6) No person who has been
directed to pay compensation under this section shall, bv reason of such order,
be exempted from any civil or criminal liability in respect of the complaint
made by him:
Provided
that any amount paid to an accused person under this section shall be taken
into account in awarding compensation to such person in any subsequent civil
suit relating to the same matter.
(7) A complainant who has
been ordered to pay compensation under sub-section (3) by a Magistrate may
appeal from the order, in so far as it relates to the payment of compensation,
as if such complainant had been convicted on a trial held by such Magistrate.
(8) Where an order for
payment of compensation to an accused person is made, the compensation shall
not be paid to him before the period allowed for the presentation of the appeal
under sub-section (7) has elapsed; or, if an appeal is presented, before the
appeal has been decided.
626. Application
of fines. -The
Court imposing any fine under this Act may direct that the whole or any part
thereof shall be applied in or towards payment of the costs of the proceedings,
or in or towards the rewarding of the person on whose information or at whose
instance the fine is recovered.
48. For relevant sections of
the IPC, refer Appendix III.
627. Production and inspection of books where
offence suspected 49.
-
(1) If, on an application
made to a Judge of a High Court in chambers by the Public Prosecutor of the
State or by the Central Government, 50[or
by a company prosecutor appointed under section 624A], it is shown that there is
reasonable cause to believe that anv person has, while he was an officer of a
company, committed an offence in connection with the management of the
company's affairs, and that evidence of the commission of the offence is to be
found in any books or papers of or under the control of the company, an order
may be made-
(i) Authorising any person
named therein to inspect the said books or papers or any of them for the
purpose of investigating, and obtaining evidence of the commission of, the
offence; or
(ii) Requiring the *[managing
agent, secretaries and treasurers] or manager of the company or such other
officer thereof as may be named in the order, to produce the said books or
papers or any of them to a person, and at a place and time, named in the order.
(2) Sub-section (1) shall
apply also in relation to any books or papers of a person carrying on the
business of banking so far as they relate to the company's affairs, as it
applies to any books or papers of or under the control of the company, except that
no such order as is referred to in clause (ii) thereof shall be made by virtue
of this sub-section.
(3) No appeal shall lie from
the decision of a Judge of the High Court under this section.
628. Penalty
for false statements. -If
in any return, report, certificate, balance sheet, prospectus, statement or
other document required by or for the purposes of any of the provisions of this
Act, any person makes a statement-
(a) Which is false in any
material particular, knowing it to be false; or
(b) Which omits any material
fact, knowing it to be material;
He
shall, save as otherwise expressly provided in this Act, be punishable with
imprisonment for a term, which may extend to two years, and shall also be
liable to fine.
629. Penalty
for false evidence. -If
any person intentionally gives false evidence-
(a) Upon any examination upon
oath or solemn affirmation, authorised under this Act; or
(b) In any affidavit,
deposition or solemn affirmation, in or about the winding up of any company
under this Act, or otherwise in or about any matter arising under this Act;
He
shall be punishable with imprisonment for a term, which may extend to seven
years, and shall also be liable to fine.
49. Powers are now delegated
to Regional Directors.
50. Inserted by the Companies
(Amendment) Act, 1960.
629A.
51[Penalty where no specific
penalty is provided elsewhere in the Act. -If a company or any other person contravenes
any provision of this Act for which no punishment is provided elsewhere in this
Act or any condition, limitation or restriction subject to which any approval,
sanction, consent, confirmation, recognition, direction or exemption in
relation to any matter has been accorded, given or granted, the company and
every officer of the company who is in default or such other person shall be
punishable with fine which may extend to five hundred rupees, and where the
contravention is a continuing one, with a further fine which may extend to
fifty rupees for every day after the first during which the contravention continues.]
630. Penalty
for wrongful withholding of property. -
(1) If any officer or
employee of a company-
(a) Wrongfully obtains
possession of any property of a company; or
(b) Having any such property
in his possession wrongfully withholds it or knowingly applies it to purposes
other than those expressed or directed in the articles and authorised by this
Act;
He
shall, on the complaint of the company or any creditor or contributory thereof,
be punishable with fine, which may extend to one thousand rupees.
(2) The Court trying the
offence may also order such officer or employee to deliver up or refund, within
a time to be fixed by the Court, any such property wrongfully obtained or
wrongfully withheld or knowingly misapplied, or in default, to suffer
imprisonment for a term which may extend to two years.
631. Penalty
for improper use of words "Limited" and "Private Limited".
-If any person or
persons trade or carry on business under any name or title of which the word
"Limited" or the words "Private Limited", or any
contraction or imitation thereof is or are the last word or words, that person
or each of those persons shall, unless duly incorporated with limited
liability, or unless duly incorporated as a private company with limited liability,
as the case may be, be punishable with fine which may extend to fifty rupees
for every day upon which that name or title has been used.
Legal proceedings
632. Power
to require limited company to give security for costs. -Where a limited company is plaintiff or
petitioner in any suit or other legal proceeding, any Court having jurisdiction
in the matter may, if there is reason to believe that the company will be
unable to pay the costs of defendant if he is successful in his defence,
require sufficient security to be given for those costs, and may stay all
proceedings until the security is given.
633. Power
of Court to grant relief in certain cases. -
(1) If in any proceeding for
negligence, default, breach of duty, niisfeasance or breach of trust against an
officer of a company, it appears to the Court hearing the case that he is or
may be liable in respect of the negligence, default breach of duty, misfeasance
or breach of trust, but that he has acted honestly and reasonably, and that
having regard to all the circumstances of the case, including those connected
with his appointment, he ought fairly to be excused, the Court may relieve him,
either wholly or partly, from his liability on such terms as it may think fit:
51. Inserted by the Companies
(Amendment) Act, 1960.
52[Provided
that in a criminal proceeding under this sub-section, the Court shall have no
power to grant relief from any civil liability which may attach to an officer
in respect of such negligence, default, breach of duty, misfeasance or breach
of trust.]
53[(2) Where
any such officer has reason to apprehend that any proceeding will or might be
brought against him in respect of any negligence, default, breach of duty,
misfeasance or breach of trust, he may apply to the High Court for relief and
the High Court on such application shall have the same power to relieve him as
it would have had if it had been a Court before which a proceeding against that
officer for negligence, default, breach of duty, misfeasance or breach of trust
had been brought under sub-section (1).
(3) No Court shall grant any
relief to any officer under sub-section (1) or subsection (2) unless it has, by
notice served in the manner specified by it, required the Registrar and such
other person, if any, as it thinks necessary, to show cause why such relief
should not be granted.]
634. Enforcement
of orders of Courts. -Any
order made by a Court under this Act may be enforce in the same manner as a
decree made by the Court in a suit pending therein.
634A.
54[Enforcement of orders of
Company Law Board. -Any
order made by the Company Law Board may be enforced by that Board in the same
manner as if it were a decree made by a Court in a suit pending therein, and it
shall be lawful for that Board to send, in the case of its inability to execute
such order, to the Court within the local limits of whose jurisdiction, -
(a) In the case of an order
against a company, the registered office of the company is situated, or
(b) In the case
ofanorderagainstanyotherperson, the person concerned voluntarily resides, or
carries on business or personally works for gain.]
635. Enforcement
of orders of one Court by other Courts.
(1) Where any order made by one Court is required to be enforced by
another Court, a certified copy of the order shall be produced to the proper
officer of the Court required to enforce the order.
(2) The production of such
certified copy shall be sufficient evidence of the order.
52. Inserted by the Companies
(Amendment) Act, 1960.
53. Substituted for sub-section
(2), ibid. For the original
sub-section, refer Appendix I.
54. Inserted by the Companies
(Amendment) Act, 1977.
55. 'Under section 17, section
18, section 19, section 79, section 141 or- section 186' omitted by the
Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
(3) Upon the production of
such certified copy, the Court shall take the requisite steps for enforcing the
order, in the same manner as if it had been made by itself.
56[(4) Where
any order made by the Company Law Board 57[*
* *] is required to be enforced by a Court, a certified copy of the order shall
be produced to the proper officer of the Court required to enforce the order
and the provisions of sub-sections (2) and (3) shall, as far as may be, apply
to every such order in the same manner and to the same extent as they apply to
an order made by a Court.]
635A.
58[Protection of acts done in
good faith. -No
suit, prosecution or other legal proceeding shall lie against the Government or
any officer of Government or any other person in respect of anything which is
in good faith done or intended to be done in pursuance of this Act or any rules
or orders made thereunder, or in respect of the publication by or under the
authority of the Government or such officer of any report, paper or
proceedings.
635AA.Non-disclosure of information in
certain cases. -Notwithstanding
anvthing contained in any other law for the time being in force, the Registrar,
any officer of Government or any other person shall not be compelled to
disclose to any Court, Tribunal or other authority whence he got any
information which-
(a) Has led the Central
Government to direct a special audit under section 233A or to order an
investigation under section 235, 237, 247, 248 or 249; or
(b) Is or has been material
or relevant in connection with such special audit or investigation.]
59[Temporary protection of employees
(1) If-
(a) During the course of any
investigation of the affairs and other matters of or relating to a company,
body or person under section 23 5, section 237 or section 239 or of the
membership and other matters of or relating to a company, or the ownership of
shares in or debentures of a company or body corporate, or the affairs and
other matters of or relating to a company, body or person, under section 247,
section 248 or section 249; or
(b) During the pendency of
any proceeding against any person concerned in the conduct and management of
the affairs of a company under Chapter IVA of Part VI,
56. Inserted by the Companies
(Amendment) Act, 1977.
57. "Under section 17,
section 18, section 19, section 79, section 141 or section 186' omitted by the
Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
58. Substituted for section
635A by the Companies (Amendment) Act, 1965, w.e.f. 15-10-1965. For the original section as inserted by the
Companies (Amendment) Act, 1963, refers Appendix
I.
59. Inserted by the Companies
(Amendment) Act, 1964.
60. Substituted for
"Tribunal' by the Companies Tribunal (Abolition) Act, 1967.
Such company, body or person proposes
(i) To discharge, or
(ii) To punish, whether by
dismissal, removal, reduction in rank or otherwise,
Any
employee, the company, body or person, as the case may be, shall send by post
to the Company Law Board previous intimation in writing of the action proposed
against the employee and if the Company Law Board has any objection to the
action proposed, it shall send by post notice thereof in writing to the
company, body or person concerned.
(2) If the company, body or
person concerned does not receive within thirty days of the sending of the
previous intimation of the action proposed against the employee, any notice of
the objection from the Company Law Board, then and only then, the company, body
or person concerned may proceed to take against the employee the action
proposed.
(3) If the company, body or
person concerned is dissatisfied with the objection raised by the Company Law
Board, it may, within thirty days of the receipt of the notice of the
objection, prefer an appeal to the 61[Court]
in the prescribed manner and on payment of the prescribed fee.
(4) The decision of the
"[Court] on such appeal shall be final and be binding on the Company Law
Board and on the company, body or person concerned.
(5) For the removal of doubt,
it is hereby declared that the provisions of this section shall have effect
without prejudice to the provisions of any other law for the time being in
force.]
Reduction of fees payable to company
636. Reduction
of fees, charges, etc., payable to company. -
(1) A company which is
entitled to any specified fee, charge or other sum by virtue of any provision
contained in this Act or in its articles, may reduce the amount thereof to such
extent as it thinks fit; and thereupon such provision shall, so long as the
reduction is in force, have effect as if the reduced amount had been
substituted for the fee, charge or sum specified in such provision.
(2) Any reduction made under
sub-section (1) may, at any time, be cancelled or varied by the company.
Delegation of powers and functions of Central
Government
637. Delegation
by Central Government of its powers and functions under Act. -
62[63[(1)
The Central Government may, by
notification in the Official Gazette, and subject to such conditions,
restrictions and limitations as may be specified therein, delegate any of its
powers or functions under this Act (other than the Power to appoint a Person as
public trustee under section 153A and the power to make rules), to such
authority or officer as may be specified in the notification.]
61. Substituted for 'Tribunal'
by the Companies Tribunal (Abolition) Act, 1967.
62. Substituted for sub-sections
(1) and (2) by the Companies (Amendment) Act, 1963, w.e.f. 1-1-1964. For the original sub-sections, refer Appendix I.
63. Substituted for
sub-section (1) by the Companies (Amendment) Act, 1988, w.e.f.31-5-1991. For
text of original sub-section (1) of section 637, refer Appendix I.
(2) I'he powers and functions
which cannot be delegated under 64[*
* *] subsection (1) are those conferred by or mentioned in the following
provisions of this Act, namely, sections 10, 81, 89(4), 211(3) and (4), 212,
213, 235, 237, 239, 241, 242, 243, 244, 245, 247, 248, 249, 250, 259, 268, 269,
274 (2), 295, 300, 310, 311, *[324, 326, 328, 329, 332, 343, 345, 346, 347
(2),] 349, *p52, 369,] 372, 396, 399 (4) and (5), 401, 408, 65[* * *] 410, 411 (b), 448, 609, 613, 620,
638, 641 and 642.
(2A) [Omittedby
the CompaniesAct, 1988, we.f. 31-5-1991.
For text or original subsection (2A) of section 63 7, refer Appendix I.]]
(3) A copy of every
notification issued under sub-section (1) shall, as soon as may be after it is
issued, be placed before both Houses of Parliament.
66[Grant of approval, etc., subject
to conditions and levy
of fees on applications]
(1) Where the 67[Central Government or Company Law Board]
is required or authorised by any provision of this Act, -
(a) To accord approval,
sanction, consent, confirmation or recognition to or in relation to, any
matter;
(b) To give any direction in
relation to any matter, or
(c) To grant any exemption in
relation to any matter,
Then,
in the absence of anything to the contrary contained in such or any other
provision of this Act, the 67[Central
Government or Company Law Board] may accord, give or grant such approval,
sanction, consent confirmation, recognition, direction or exemption, subject to
such conditions, limitations or restrictions as it may think fit to impose and
may, in the case of contravention of any such condition, limitation or
restriction, rescind or withdraw such approval, sanction, consent,
confirmation, recognition, direction or exemption.
68(2) Save
as otherwise expressly provided in this Act, every application which may be, or
is required to be, made to the 67[Central
Government or Company Law Board] under any provision of this Act-
(a) In respect of any
approval, sanction, consent, confirmation or recognition to be accorded by that
Government 6'[or Board] to, or in relation to, any matter; or
64. "Clause (b) of
ornitted by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
65. "409, omitted, ibid.
66. Inserted by the Companies
(Amendment) Act, 1960 with retrospective effect from 8-3-1956.
67. Substituted for 'Central
Government' by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
68. Refer Companies (Fees on
Application) Rules, 1968.
69. Inserted by the Companies
(Amendment) Act, 1974, w.e.L 1-2-1975.
(b) In respect of any
direction or exemption to be given or granted by that Government 70[or Board] in relation to any matter; or
(c) In respect of any other
matter,
Shall
be accompanied by such fee 71[* * *] as may be prescribed:
Provided
that different fees may be prescribed for applications in respect of different
matters or in case of applications by companies, for applications by different
classes of companies.]
637AA. 70[Power
of Central Government to fix a limit with regard to remuneration. -Notwithstanding anything
contained in section 198, section 309 or section 637A, the Central Government
may, while according its approval under section 269, to any appointment or to
any remuneration under section 309, section 310, section 311 or section 387,
fix the remuneration of the persons so appointed or the remuneration, as the
case may be, within the limits specified in this Act, at such amount or
percentage of profits of the company, as it may deemed fit and while fixing the
remuneration, the Central Government shall have regard to-
(a) The financial position of
the company;
(b) The remuneration or
commission drawn by the individual concerned in any other capacity, including
his capacity as a sole selling agent;
(c) The remuneration or
commission drawn by him from any other company;
(d) Professional
qualifications and experience of the individual concerned;
(e) Public policy relating to
the removal of disparities in income.]
637B.
72[Condonation of delays in
certain cases. -Notwithstanding
anything contained in this Act, -
(a) Where any application
required to be made to the Central Government under any provision of this Act
in respect of any matter is not made within the time specified therein, that
Government may, for reasons to be recorded in writing, condone the delay;
(b) Where any document
required to be filed with the Registrar under any provision of this Act is not
filed within the time specified therein, the Central Government may, for
reasons to be recorded in writing, condone the delay.]
Annual report on working of Act
638. Annual
report by Central Government. -The
Central Government shall cause a general annual report on the working and
administration of this Act to be prepared and laid before both Houses of
Parliament, within one year of the close of the year to which the report
relates.
70. Inserted by the Companies (Amendment)
Act, 1974, w.e.f. 1-2-1975.
71. 'Not exceeding one hundred
rupees" omitted by the Companies (Amendment) Act, 1988, w.e.f. 15-7-1988.
72. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
639.
Annual reports on Government companies to be placed before Parliament, etc. -[The section and heading above it, viz.,
"Annual reports on Government companies" omitted by the Companies
(Amendment) Act, 1960. For the original
section, refer Appendix I.]
Validation of registration of firms in certain cases
640. Validation
of registration of firms as members of charitable and other companies. -Any firm which stood registered at the
commencement of this Act, as a member of any association or company licensed
under section 26 of the Indian Companies Act, 1913 (7 of 1913), shall be deemed
to have been validly so registered with effect on and from the date of its
registration.
73[Computation of time for filing orders of Court
74[or the Company Law Board]
640A.
Exclusion of time required in obtaining copies of orders of Court 14[or
the Company Law Board]. -Except
as expressly provided in this behalf elsewhere in this Act, where by any
provision of this Act, any order of the Court 74 [or the Company Law Board] is
required to be filed with the Registrar, or a company or any other person
within a period specified therein, then, in computing that period, the time
taken in drawing up the order and in obtaining a copy thereof shall be
excluded.]
Schedules, forms and rules
640B. 75[Forms of, and procedure in relation to,
certain applications. -
(1) Every application made to the Central Government under section
259, 268, 269, 310, 311 *[,326, 328, 329, 332,343, 345], 76[346 or 352] shall be in such form as may
be prescribed.
(2) (a) Before any application is made by a
company to the Central Government under any of the sections aforesaid, there
shall be issued by or on behalf of the company a general notice to the members
thereof, indicating the nature of the application proposed to be made.
(b) Such notice shall be
published at least once in a newspaper in the principal language of the
district in which the registered office of the company is situate and
circulating in that district, and at least once in English in an English
newspaper circulating in that district.
73. Inserted by the Companies
(Amendment) Act, 1960.
74. Inserted by the Companies
(Amendment) Act, 1988, w.e.f. 31-5-1991.
75. Inserted by the Companies
(Amendment) Act, 1965, w.e.f. 15-10-1965.
76. Substituted for '346, 352,
408 or 409' by the Companies (Amendment) Act, 1988, w.e.f. 31-5-1991.
(c) Copies of the notices,
together with a certificate by the company as to the due publication thereof,
shall be attached to the application.
*[(d) Nothing in clause (a),
(b) or (c) shall apply to a private company which is not the managing agent of
a public company.]
641. Power
to alter Schedules. -
(1) Subject to the provisions of this section, the Central
Government may, by notification in the Official Gazette, alter any of the
regulations, rules, tables, forms and other provisions contained in any of the
Schedules to this Act, except Schedules Xl and XII.
(2) Any alteration notified
under sub-section (1) shall have effect as if enacted in this Act and shall
come into force on the date of the notification, unless the notification
otherwise directs:
Provided
that no such alteration in Table A of Schedule I shall apply to any company
registered before the date of such alteration.
77[(3) Every
alteration made by the Central Government under sub-section (1) shall be laid
as soon as may be after it is made before each House of Parliament while it is
in session for a total period of thirty days which may be 78[comprised in one session or in two or
more successive sessions, and if, before the expiry of the session immediately
following the session or the successive sessions aforesaid,] both Houses agree
in making any modification in the alteration, or both Houses agree that the
alteration should not be made, the alteration shall thereaftei- have effect
only in such modified form or be of no effect, as the case may be, so, however,
that any such modification or annulment shall be without prejudice to the
validity of anything previously done in pursuance of that alteration.]
642. Power
of Central Government to make rules. -
(1) In addition to the powers
conferred by section 641, the Central Government may, by notification in the
Official Gazette, make rules 79.
-
(a) For all or any of the
matters which by this Act are to be, or may be, prescribed by the Central
Government; and
(b) Generally to carry out
the purposes of this Act.
80[(2) Any
rule made under sub-section (1) may provide that a contravention thereof shall
be punishable with fine which may extend to five hundred rupees and where the
contravention is a continuing one, with a further fine which may extend to
fifty rupees for every day after the first during which such contravention
continues.
77. Substituted by the
Companies (Amendment) Act, 1960. For
the original sub-section, refer Appendix I.
78. Substituted for
"comprised in one session or in two successive sessions, and if before the
expiry of the session in which it is so laid or the session immediately
following' by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
79. Refer Companies (Central
Government) General Rules & Forms, 1956.
80. Substituted for
sub-sections (2) and (3) by the Companies (Amendment) Act, 1960. For the original sub-sections refer Appendix I.
(3) Every rule made by the
Central Government under sub-section (1) shall be laid as soon as may be after
it is made before each House of Parliament while it is in session for a total
period of thirty days which may be "[comprised in one session or in two or
more successive sessions, and if, before the expiry of the session immediately
following the session or the successive sessions aforesaid,] both Houses agree
in making any modification in the rule or both Houses agree that the rule
should not be made, the rule shall thereafter have effect only in such modified
form or be of no effect, as the case may be, so, however, that any such
modification or annulment shall be without prejudice to the validity of
anything previously done under that rule.]
84a[(4) Every regulation made by the Securities
andExchangeBoardof India under this Act shall be laid, as soon as may be after
it is made, before each House of Parliament, while it is in session, for a
total period of thirty days which may be comprised in one session or in two or
more successive sessions, and if, before the expiry of the session immediately
following the session or the successive sessions aforesaid, both Houses agree
in makingany modification in the regulation or both Housesagree that the
regulation should not be made, the regulation shall thereafter have effect only
in such modified form or be of no effect, as the case may be,- so, however,
thatany such modification orannulmentshallbe withoutprejudice to the validity
of anythingpreviously done under that regulation.]
82643. Power of Supreme Court to make rules. -
(1) The Supreme Court, after
consulting the High Courts, -
(a) Shall make rules
providing for all matters relating to the winding up of companies which, by
this Act, are to be prescribed, and may make rules providing for all such
matters as may be prescribed, except those reserved to the Central Government
by sub-section (5) of section 503, 83[sub-section
(3) of section 550, section 552 and sub-section (3) of section 555]; and
(b) May make rules consistent
with the Code of Civil Procedure, 1908 (5 of 1908), -
(i) As
to the mode of proceedings to be had for winding up a company in High Courts
and in Courts subordinate thereto;
(ii) For
the voluntary winding up of companies, whether by members or by creditors;
(iii) For
the holding of meetings of creditors and members in connection with proceedings
under section 391;
(iv) For giving effect to the
provisions of this Act as to the reduction of the capital 84[* **]; and
(v) Generally for all
applications to be made to the Court under the provisions of this Act.
(2) Without prejudice to the
generality of the foregoing power, the Supreme Court may, by such rules, enable
or require all or any of the powers and duties conferred and imposed on the
Court by this Act, in respect of the following matters, that is to say:-
(a) The holding and
conducting of meetings to ascertain the wishes of creditors and contributories;
(b) The settling of lists of
contributories and the rectifying of the register of members where required,
and collecting and applying the assets;
(c) The payment, delivery,
conveyance, surrender or transfer of money, property, books or papers to the
liquidator;
(d) The making of calls; and
(e) The fixing of a time
within which debts and claims shall be proved;
To
be exercised or performed by the Official Liquidator or any other liquidator as
an officer of the Court, and subject to the control of the Court:
81. Substituted for
"comprised in one session or in two successive sessions, and if before the
expiry of the session in which it is so laid or the session immediately
following' by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
82. Refer Companies (Court)
Rules, 1959.
83. Substituted for
"sub-section (1) of section 549 and sub-section (3) of section 550' by the
Companies (Amendment) Act, 1960.
84. "And the sub-division
of the shares of a company' omitted, ibid.
84a. Inserted by the Companies
(Amendment) Act, 1999, w.r.e.f. 31-10-1998.
Provided
that the liquidator shall not, without the special leave of the Court, rectify
the register of members or make any call.
(3) Until rules are made by
the S upreme Court as aforesaid, all rules made by any High Court on the
matters referred to in this section and in force at the commencement of this
Act, shall continue to be in force in so far as they are not inconsistent with
the provisions of this Act in that High Court and in Courts subordinate
thereto.
85[(4) All
rules made by the Central Government under sub-section (1) of section 549 and
in force immediately before the commencement of the Companies (Amendment) Act,
1960 shall continue in force and be deemed to have been made by the Supreme
Court unless and until they are superseded by rules made by the Supreme Court
after such commencement.]
Repeals and savings
644. Repeal
of Acts specified in Schedule XII. -The enactments mentioned in Schedule XIT are hereby
repealed.
645. Saving
of orders, rules, etc., in force at commencement of Act. -Nothing in this Act shall affect any order,
rule, regulation, appointment, conveyance, mortgage, deed, document or
agreement made, fee directed, resolution passed, direction given, proceeding
taken, instrument executed or issued, or thing done, under or in pursuance of
any previous companies law; but any such order, rule, regulation, appointment,
conveyance, mortgage, deed, document, agreement, fee, resolution, direction,
proceeding, instrument or thing shall, if in force at the commencement of this
Act, continue to be in force, and so far as it could have been made, directed, passed,
given, taken, executed, issued or done under or in pursuance of this Act, shall
have effect as if made, directed, passed, given, taken, executed, issued or
done under or in pursuance of this Act.
646. Saving
of operation of section 138 of Act 7 of 1913. -Nothing in this Act shall affect the
operation of section 138 of the lndian Companies Act, 1913 (7 of 1913), as
respects inspectors, or as respects the continuation of an inspection begun by
inspectors, appointed before the commencement of this Act, and the provisions
of this Act shall apply to or in relation to a report of inspectors appointed
under the said section 138 as they apply to or in relation to a report of
inspectors appointed under section 235 or 237 of this Act.
85. Inserted by the Companies
(Amendment) Act, 1960.
647. Saving
of pending proceedings for winding up. -Where the winding up of a company has commenced
before the commencement of this Act-
(i) Sub-section (7) of
section 555 shall apply inrespect of any moneys paid into the Companies
Liquidation Account whether before or after such commencement; and
(ii) The other provisions
with respect to winding up contained in this Act shall not apply, but the
company shall be wound up in the same manner and with the same incidents as if
this Act had not been passed:
86[Provided
that where the proceedings in any such winding up are pending at the
commencement of the Companies (Amendment) Act, 1960, -
(a) Sections 463, 502, 515
and 524 shall, as far as may be, also apply in relation thereto;
87(b) the
liquidator appointed by the Court and functioning in any such winding up shall
in such manner and at such time as may be prescribed by the Central Government,
pay the moneys received by him as such liquidator, into the public account of
India in the Reserve Bank of India.]
648. Saving
of prosecutions instituted by liquidator or Court under section 237 of Act 7 of
1913. Nothing
in this Act shall affect any prosecution instituted or ordered by the Court to
be instituted under section 237 of the Indian Companies Act, 1913 (7 of 1913);
and the Court shall have the same power of directing how any costs, charges,
and expenses property incurred in any such prosecution are to be defrayed as it
would have had, if this Act had not been passed.
649. Construction
of references to former enactments in documents. -Any document referring to any former enactment
relating to companies shall be construed as referring to the corresponding
enactment in this Act.
650. Construction
of "Registrar of joint stock companies" in Act 21 of 1860. - [Omitted by the Companies (Amendment) Act,
.1960. For the original section, refer Appendix I.]
651. Construction
of references to extraordinary resolution in articles, etc. -Any reference to an extraordinary resolution
in the articles of a company, or in any resolution passed in general meeting by
the company, or in any other instrument, or in any law in force immediately
before the commencement of this Act, shall, with eff ect on and from such
commencement, be construed as a reference to a special resolution.
652. Appointment
under previous companies laws to have effect as if made under Act. -Any person appointed to any office under or
by virtue of any previous companies law shall be deemed to have been appointed
to that office under or by virtue of this Act.
86. Inserted by the Companies
(Amendment) Act, 1960.
87. Refer Companies (Official
Liquidators'Accounts) Rules, 1965.
653. Former
registration offices continued. -The
offices existing at the commencement of this Act for the registration of
companies shall be continued as if they had been established under this Act.
654. Registers
under previous companies laws to be deemed to be part of registers under Act. -Any register kept under the provisions of any
previous companies law shall be deemed to be part of the register to be kept
under the corresponding provisions of this Act.
655. Funds
and accounts under Act to be in continuation of funds and accounts under
previous companies law. All
funds constituted and accounts kept under this Act shall be deemed to be in
continuation of the corresponding funds constituted and accounts kept under
previous companies laws.
656. Saving
of incorporation under repealed Acts. Nothing in this Act shall affect the incorporation
of any company registered under any enactment hereby repealed.
657. Saving
of certain Tables under previous companies laws. -Nothing in this Act shall affect-
(a) Table B in the Schedule
annexed to Act No. 19 of 1857, or any part thereof, so far as the same applies
to any company existing at the commencement of this Act;
(b) Table A in the First
Schedule annexed to the Indian Companies Act, 1882 (6 of 1882), or any part
thereof, so far as the same applies to any company existing at the commencement
of this Act;
(c) Table A in the First
Schedule to the Indian Companies Act, 1913 (7 of 1913), either as originally
contained in that Schedule or as altered in pursuance of section 151 of that
Act, so far as the same applies to anv company existing at the commencement of
this Act.
658. Section
6 of the General Clauses Act, 1897 (10 of 1897) to apply in addition to
sections 645 to 657 of Act. -The
mention of particular matters in sections 645 to 657 or in any other provision
of this Act shall not prejudice the general application of section 611 of the
General Clauses Act, 1897 (10 of 1897), with respect to the effect of repeals.
88. For the
provision of section 6 of that Act, refer Appendix II.
[See sections 2(2), 14, 28(i), 29 and 223]
REGULATIONS FOR MANAGEMENT OF
A COMPANY LIMITED BY SHARES
Interpretation
1. (1)
In this regulations-
(a) "The Act means the
Companies Act, 1956,
(b) "The seal"
means the common seal of the company.
(2) Unless the context
otherwise requires, words or expressions contained in these regulations shall
bear the same meaning as in the Act or any statutory modification thereof in
force at the date at which these regulations become binding on the company.
Share capital and variation of rights
2. Subject
to the provisions of section 80, any preference shares may, with the sanction
of an ordinary resolution, be issued on the terms that they are, or at the
option of the company are liable, to be redeemed on such terms and in such
manner as the company before the issue of the shares may, by special
resolution, determine.
3. (1)
If at any time the share capital
is divided into different classes of shares, the rights attached to any class
(unless otherwise provided by the terms of issue of the shares of that class)
may, subj ect to the provisions of sections 106 and 107, and whether or not the
company is being wound up, be varied with the consent in writing of the holders
of three-fourths of the issued shares of that class, or with the sanction of a
special resolution passed at a separate meeting of the holders of the shares of
that class.
(2) To every such separate 89[***] meeting, the provisions of these
regulations relating to general meetings shall mutatis mutandis apply, but so
that the necessary quorum shall be two persons at least holding or representing
by proxy one-third of the issued shares of the class in question.
89. "General omitted by the Companies (Amendment) Act,
1960.
4. The
rights conferred upon the holders of the shares of any class issued with
preferred or other rights shall not, unless otherwise expressly provided by the
terms of issue of the shares of that class, be deemed to be varied by the
creation or issue of further shares ranking pari passu therewith.
5. (1)
The company may exercise the
powers of paying commissions conferred by section 76, provided that the rate
per cent or the amount of the commission paid or agreed to be paid shall be disclosed in the manner required by
that section.
(2) The rate of the commission
shall not exceed the rate of five per cent of the price at which the shares in
respect whereof the same is paid are issued or an amount equal to five per cent
of such price, as the case may be.
(3) The commission may be
satisfied by the payment of cash or the allotment of fully or partly paid
shares or partly in the one way and partly in the other.
(4) The company may also, on
any issue of shares, pay such brokerage as may be lawful.
6. Except
as required by law, no person shall be recognised by the company as holding any
share upon any trust, and the company shall not be bound by, or be compefledin
any waytorecognise (even when having notice thereof) any equitable, contingent,
future or partial interest in any share, or any interest in any fractional part
of a share, or (except only as by these regulations or by law otherwise
provided) any other rights in respect of any share except an absolute right to
the entirety thereof in the registered holder.
7. (1)
Every person whose name is entered
as a member in the register of members shall be entitled to receive within
three months after allotment or 90[within
two months after the application for the] registration of transfer (or within
such other period as the conditions of issue shall provide)-
(a) One certificate for all
his shares without payment; or
(b) Several certificates,
each for one or more of his shares, upon payment of one rupee for every
certificate after the first.
(2) Every certificate shall
be under the seal and shall specify the shares to which it relates and the
amount paid up thereon.
(3) In respect of any share
or shares heldjointly by several persons, the company shall not be bound to
issue more than one certificate, and delivery of a certificate for a share to
one of several joint holders shall be sufficient delivery to all such holders.
8. If
a share certificate is defaced, lost or destroyed, it may be renewed or]
payment of such fee, if any, not exceeding "[two rupees], and on such
terms, if any, as to evidence and indemnity and the payment of out-of-pocket
expenses incurred by the company in investigating evidence, as the directors
think fit.
Lien
9. (1)
The company shall have a first and
paramount lien-
(a) On every share (not being
a fully-paid share), for all moneys (whether presently payable or not) called,
or payable at a fixed time, in respect of that share; and
(b) On all shares (not being
fully-paid shares) standing registered in the name of a single person, for all
moneys presently payable by him or his estate to the company:
90. Inserted by
Notification No. GSR 631 dated 23-4-1966.
91. Substituted
for eight annas", ibid
Provided
that the Board of directors may at any time declare any share to be wholly or
in part exempt from the provisions of this clause.
(2) The company's lien, if
any, on a share shall extend to all dividends payable thereon.
10. The
company may sell, in such manner as the Board thinks fit, any shares on which
the company has a lien:
Provided that no sale shall be made-
(a) Unless a sum in respect
of which the lien exists is presently payable; or
(b) Until the expiration of
fourteen days after a notice in writing stating and demanding payment of such
part of the amount in respect of which the lien exists as is presently payable,
has been given to the registered holder f or the time being of the share or the
person entitled thereto by reason of his death or insolvency.
11. (1) To give
effect to any such sale, the Board may authorise some person to transfer the
shares sold to the purchaser thereof.
(2) The purchaser shall be
registered as the holder of the shares comprised in any such transfer.
(3) The purchaser shall not
be bound to see to the application of the purchase money, nor shall his title
to the shares be affected by any irregularity or invalidity in the proceedings
in reference to the sale. 12. (1) The proceeds of the sale shall be received by
the company and applied in payment of such part of the amount in respect of
whichthe lien exists as is presently payable.
(2) The residue, if any,
shall, subject to a like lien for sums not presently payable as existed upon
the shares bcf ore the sale, be paid to the person entitled to the shares at
the date of the sale.
Calls on shares
13. (1)
The Board may, from time to time,
make calls upon the members in respect of any moneys unpaid on their shares
(whether on account of the nominal value of the shares or by way of premium)
and not by the conditions of allotment thereof made payable at fixed times:
Provided
that no call shall exceed one-fourth of the nominal value of the share or be
payable at less than one month from the date fixed for the payment of the last
preceding call.
(2) Each member shall,
subject to receiving at least fourteen days' notice specifying the time or
times and place of payment, pay to the company, at the time or times and place
so specified, the amount called on his shares.
(3) A call may be revoked or
postponed at the discretion of the Board.
14. A
call shall be deemed to have been made at the time when the resolution of the
Board authorising the call was passed and may be required to be paid by
instalments.
15. The
joint holders of a share shall be jointly and severally liable to pay all calls
inrespectthereof.
16. (1) If a sum
called in respect of a share is not paid before or on the day appointed for
payment thereof, the person from whom the sum is due shall pay interest thereon
from the day appointed for payment thereof to the time of actual payment at
five per cent per annum or at such lower rate, if any, as the Board may
determine.
(2) The Board shall be at
liberty to waive payment of any such interest wholly or in part.
17. (1)
Any sum which by the terms of
issue of a share becomes payable on allotment or at any fixed date, whether on
account of the nominal value of the share or by way of premium, shall, for the
purposes of these regulations, be deemed to be a call duly made and payable on
the date on which by the terms of issue such sum becomes payable.
(2) In case of non-payment of
such sum, all the relevant provisions of these regulations as to payment of
interest and expenses, forfeiture or otherwise shall apply as if such sum had
become payable by virtue of a call duly made and notified.
18. The
Board-
(a) May, if it thinks fit,
receive from any member willing to advance the same, all or any part of the
moneys uncalled and unpaid upon any shares held by him; and
(b) Upon all or any of the
moneys so advanced, may (until the same would, but for such advance, become
presently payable) pay interest at such rate not exceeding, unless the company
in general meeting shall otherwise direct, six per cent per andum, as may be
agreed upon between the Board and the member paying the sum in advance.
Transfer of shares
19. (1)
The instrument of transfer of any
share in the company shall be executed by or on behalf of both the transferor
and transferee.
(2) The transferor shall be
deemed to remain a holder of the share until the name of the transferee is
entered in the register of members in respect thereof. 12[20. Subject to the provisions of section 108,
the shares in the company shall be transferred in the following form, namely
92. Substituted by
Notification No. GSR 63 1, dated 23-4-1966.
93FORM NO.7B
DATE OF PRESENTATION TO
THE PRESCRIBED AUTHORITY
Share Transfer FoRM
[PURSUANT TO SECTION 108(1A) OF THE COMPANIES ACT, 1956]
|
FOR THE CONSIDERATION stated below
the'Transferor(s)" named do hereby transfer to the 'Transferee(s)' named
the shares specified below subject to the conditions on which the said shares
are now held by the Transferor(s) and Transferee(s) do hereby agree to accept
and hold the said shares subject to the conditions aforesaid. |
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FULL NAME OF COMPANY |
NAME OF THE RECOGNISED
STOCK EXCHANGE WHERE DEALT IN, IF ANY |
DESCRIPTION OF
EQUITY/PREFERENCE SHARES
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No.in figures |
Number in words |
Consideration (in figures) |
Considersation (in words) |
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Distinctive numbers |
From |
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Corresponding
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TRANSFEROR (S) [SELLER (S)] PARTICULARS Regd. Signature(s)
Folio
No.
Name(s) in full 1
.
1
.
2
. 2
..
3
. 3
..
4
4
..
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ATTESTAION I, hereby attest the
signature of the Transferor(s) herein mentioned. Signature Name Address/Seal *Please See overleaf for
instructions |
Signature
of witness Name
and Address of witness
.
.
PIN
.. |
TRANSFEREE (S)[BUYER (S)]
PARTICULARS Signature(s)
Name(s) in full 1 1 ..
2
2
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3
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Occupation |
Address |
Fathers/Husbands
name |
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93. Substituted
by Notification No. GSR 480 (E), dated 22-4-1988. Earlier, Form No.7B was
substituted by GSR 631, dated 23-4-1966.
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Value
of
Rs. |
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Datedthis
..day
of
.One Thousand Nine Hundred
Place
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Folio
Company code
.. Speciman 1
Signature(s) of 2
Transferee(s) 3
Checked
by
.. Signatures tallied by
Entered in Register of Transfer No . Approval
date
.. Approval date |
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Con tin ua tion of f ron t
page (he re in en te r the Dis tinctive n u mbe rs whe n the space on i h e
back page is found to be insufficient)
Distinctive From
numbers
Continuation of front page
(herein enter the Distinctive numbers when hthe jspace on the back page is
found to be insufficient).
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numbers |
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*INSTRUCTIONS
FOR ATTESTATION
Attestation, where
required (thumb impressions, marks, signature difference, etc.) should be done
by a Magistrate, Notarv Public or Special Executive Magistrate or a similar
authority holding a Public Office and authorised to use the Seal of his office
or a member of a recognised Stock Exchange through whom the shares are
introduced or a manager of the transferor's bank.
Note:
Names must be rubber stamped prelerably in a straight line. Chronological order
should be maintained Brokers Clearing Number should be stated when delivery is
given byaClearingMember Bank.
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Name of delivery Broker or Date
Clearing Number |
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Power of Attorney
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Probate |
Death Certificate |
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Letters of Administration |
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Registered with the Company No
.Date
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(Signature [not
initials] of Broker, Bank, Company or Stock Exchange Clearing House) |
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*Lodged
by
. Full Address
Share
certificate to be returned to (Fill in the name and address to which the Certificates
are required to be returned) Name and Address
.
Share transfer stamps.
*To be filled only if the documents are lodged by a person other than the
transferee.
21. The
Board may, subject to the right of appeal conferred by section III, decline to
register-
(a) The transferofashare, not
being a fully-paid share, to a person of whom they do not approve; or
(b) Any transf er of shares
on which the company has a lien.
22. The
Board may also decline to recognise any instrument of transfer unless-
(a) A fee of two rupees is
paid to the company in respect thereof;
(b) The instrument of
transfer is accompanied by the certificate of the shares to which it relates,
and such other evidence as the Board may reasonably require to show the right
of the transferor to make the transfer; and
(c) The instrument of transfer
is in respect of only one class of shares.
94[23.
Subjecttotheprovisionsofsectionl54,theregistrationoftransfersmay be suspended
at such times and for such periods as the Board may from time to time
determine:
Provided
that such registration shall not be suspended for more than thirty days at any
one time or for more than forty-five days in the aggregate in any year.]
24. The
company shall be entitled to charge a fee not exceeding two rupees on the
registration of every probate, letters of administration, certificate of death
or marriage, power of attorney, or other instrument.
Transmission of shares
25. (1) On the death of a member, the survivor
or survivors where the member was a joint holder, and his legal representatives
where he was a solc holder, shall be the only persons recognised by the company
as having any title to his interest in the shares.
(2) Nothing in clause (1)
shall release the estate of a deceased joint holder from any liability in
respect of any share which had beenj ointly held by h im with other persons.
26. (1)
Any person becoming entitled to a
share in consequence of the death or insolvency of a member mav, upon such
evidence being produced as may from timetotime properly be required by the
Board and subject as hereinafterprovided, elect, either-
(a) To be registered himself
as holder of the share; or
(b) To make such transfer of
the share as the deceased or insolvent member could have made.
94. Substituted by
Notification No. GSR 631 dated 23-4-1966.
(2) The Board shall, in
either case, have the same right to decline or suspend registration, as it
would have had, if the deceased or insolvent member had transferred the share
before his death or insolvency.
27. (1) If the
person so becoming entitled shall elect to be registered as holder of the share
himself, he shall deliver or sent to the company a notice in writing signed by
him stating that he so elects.
(2) If the person aforesaid
shall elect to transfer the share, he shall testify his election by executing a
transfer of the share.
(3) All the limitations,
restrictions and provisions of these regulations relating to the right to
transfer and the registration of transfers of shares shall be applicable to any
such notice or transfer as aforesaid as if the death or insolvency of the
member had not occurred and the notice or transfer were a transfer signed by
that member.
28. A
person becoming entitled to a share by reason of the death or Insolvency of the
holder shall be entitled to the same dividends and other advantages to which he
would be entitled if he were the registered holder of the share, except that he
shall not, before being registered as a member in respect of the share, be
entitled in respect of it to exercise any right conferred by membership in
relation to meetings of the company:
Provided
that the Board may, at any time, give notice requiring any such person to elect
either to be registered himself or to transfer the share, and if the notice is
not complied with within ninety days, the Board may thereafter withhold payment
of all dividends, bonuses or other moneys payable in respect of the share,
until the requirements of the notice have been complied with.
Forfeiture of shares
29. If
a member fails to pay any call, or instalment of a call, on the day appointed
for payment thereof, the Board may, at any time thereafter during such time as
any part of the call or instalment remains unpaid, serve a notice on him
requiring payment of so much of the call orinstatrnent as is unpaid, together with
any interest which may have accrued.
30. The
notice aforesaid shall-
(a) Name a further day (not
being earlier than the expiry of fourteen days from the date of service of the
notice) on or before which the payment required by the notice is to be made;
and
(b) State that, in the event
of non-payment on or before the day so named, the shares in respect of which
the call was made will be liable to be forfeited.
31. If
the requirements of any such notice as aforesaid is not complied with, any
share in respect of which the notice has been given may, at any time
thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the Board to that effect.
32. (1)
A forfeited share may be sold or
otherwise disposed of on such terms and in such manner as the Board thinks fit.
(2) At any time before a sale
or disposal as aforesaid, the Board may cancel the forfeiture on such terms as
it thinks fit.
33. (1) A person
whose shares have been forfeited shall cease to be a member in respect of the
forfeited shares, but shall, notwithstanding the forfeiture, remain liable to
pay to the company all moneys which, at the date of forfeiture, were presently
payable by him to the company in respect of the shares.
(2) The liability of such person shall cease if and when the
company shall have received payment in full of all such moneys in respect of
the shares.
34. (1) A duly
verifie declaration in writing that the declarant is a director *[, the
managing agent, the secretaries and treasurers], the manager or the secretary,
of the company, and that a share in the company has been duly forfeited on a
date stated in the declaration, shall be conclusive evidence of the facts
therein stated as against all persons claiming to be entitled to the share.
(2) The company may receive
the consideration, if any, given for the share on any sale or disposal thereof
and may execute a transfer of the share in favour of the person to whom the
share is sold or disposed of.
(3) The transferee shall
thereupon be registered as the holder of the share.
(4) The transferee shall not
be bound to see to the application of the purchase money, if any, nor shall his
title to the share be affected by any irregularity or invalidity in the
proceedings in reference to the forfeiture, sale or disposal of the share.
35. The
provisions of these regulations as to forfeiture shall apply in the case of
non-payment of any sum which, by the terms of issue of a share, becomes payable
at a fixed time, whether on account of the nominal value of the share or by way
of premium, as if the same had been payable by virtue of a call duly made and
notified.
Conversion of shares into stock
36. The
company may, by ordinary resolution, -
(a) Convert any paid-up
shares into stock; and
(b) Reconvert any stock into
paid-up shares of any denomination.
37. The
holders of stock may transfer the same or any part thereof in the same
manneras, andsubject tothe sameregulations underwhich, the shares from which
the stock arose might before the conversion have been transferred, or as near
thereto as circumstances admit:
Provided
that the Board may, from time to time, fix the minimum amount of stock
transferable, so however that such minimum shall not exceed the nominal amount
of the shares from which the stock arose.
38. The
holders of stock shall, according to the amount of stock held by them, have the
same rights, privileges and advantages as regards dividends, voting at meetings
of the company, and other matters, as if they held the shares from which the
stock arose; but no such privilege or advantage (except participation in the
dividends and profits of the company and in the assets on winding up) shap be
conferred by an amount of stock which would not, if existing in shares, have
conferred that privilege or advantage.
39. Such
of the regulations of the company (other than those relating to share
warrants), as are applicable to paid-up shares shall apply to stock and the
words "share" and "shareholder' in those regulations shall
include "stock" and "stockholder" respectively.
Share warrants
40. The
company may issue share warrants subject to, and in accordance with, the
provisions of sections 114 and 115; and accordingly the Board may in its
discretion, with respect to any share which is fully paid up, on application in
writing signed by the person registered as holder of the share, and
authenticated by such evidence (if any) as the Board may, from time to time,
require as to the identity of the person signing the application, and on
receiving the certificate (if any) of the share, and the amount of the stamp
duty on the warrant and such fee as the Board may from time to time require,
issue a share warrant.
41. (1) The bearer
of a share warrant may at any time deposit the warrant at the office of the
company, and so long as the warrant remains so deposited, the depositor
shallhavc the same right of signing a requisition for calling a meeting of the
company, and of attending, and voting and exercising the other privileges of a
member at any meeting held after the expiry of two clear days from the time of
deposit, as if his namewereinsertedin the register of members as the holder of
the shares included in the deposited warrant. (2) Not more than one person
shall be recognised as depositor of the share warrant.
(3) The company shall, on two
days' written notice, return the deposited share warrant to the depositor.
42. (1) Subject a shere in otherwise expressly
provided, no person shall, as bearer of a share warrant, sign a requisition for
calling a meeting of the company, or attend, or vote or exercise any other
privilege of a member at a meeting of the company, or be entitled to receive
any notices from the company.
(2) The bearer of a share
warrant shallbe entitledin all otherrespects to the same privileges and
advantages as if he were named in the register of members as the holder of the
shares included in the warrant, and he shall be a member of the company.
43. The
Board may, from time to time, make rules as to the terms on which (if it shall
think fit) a new share warrant or coupon may be issued by way of renewal in
case of defacement, loss or destruction.
Alteration of capital
44. The
company may, from time to time, by ordinary resolution increase the share capital
by such sum, to be divided into shares of such amount, as may be specified in
the resolution.
45. The
company may, by ordinary resolution, -
(a) Consolidate and divide
all or any of its share capital into shares of larger amount than its existing
shares;
(b) Sub-divide its existing
shares or any of them into shares of smaller amount than is fixed by the
memorandum, subject, nevertheless, to the provisions of clause (d) of
sub-section (1) of section 94;
(c) Cancel any shares, which,
at the date of the passing of the resolution, have not been taken or agreed to
be taken by any person.
46. The
company may, by special resolution, reduce in any manner and with, and
subjectto, any incident authoiised and consent required by law,-
(a) Its share capital;
95[(b)
Any capital redemption reserve
account; or]
(c) Any share premium
account.
General meetings
47. All
general meetings other than annual general meetings shall be called
extraordinary general meetings.
48. (1)
The Board may, whenever it thinks
fit, call an extraordinary general meeting.
(2) If at any time there are
not within India directors capable of acting who are sufficient in number to
form a quorum, any director or any two members of the company may call an
extraordinary general meeting in the same manner, as nearly as possible, as
that in which such a meeting may be called by the Board.
Proceedings atgeneral meetings
49. (1)
No business shall be transacted at
any general meeting unless a quorum of members is present at the time when the
meeting proceeds to business.
(2) Save as herein otherwise
provided, five members present in person (in the case of public company-two
members shall be a quorum.
50. The
chairman, if any, of the Board shall preside as chairman at every general
meeting of the company.
51. If
there is no such chairman, or if he is not present within fifteen minutes after
the time appointed for holding the meeting, or is unwilling to act as chairman
of the meeting, the directors present shall elect one of their number to be
chairman of the meeting.
52. If
at any meeting no director is willing to act as chairman or if no director is
present within fifteen minutes after the time appointed for holding the
meeting, the members present shall choose one of their number to be chairman of
the meeting.
53. (1)
The chairman may, with the consent
of any meeting at which a quorum is present, and shall, if so directedby the
meeting, adjourn the meeting from time to time and from place to place.
(2) No business shall be
transacted at any adjourned meeting other than the business left unfinished at
the meeting from whichthe adjournment took place.
(3) When a meeting is
adjournedfor thirty days or more, notice of the adjourned meeting shall be
given as in the case of an original meeting.
(4) Save as aforesaid, it
shall not be necessary to give any notice of an adjournment or of the business
to be transacted at an adjourned meeting.
54. In
the case of an equality of votes, whether on a show of hands or on a poll, the
chairman of the meeting at which the show of hands takes place, or at which the
poll is demanded, shall be entitled to a second or casting vote.
55. Any
business other than that upon which a poll has been demanded may be proceeded
with, pending the taking of the poll.
Votes of members
56. Subject
to any rights or restrictions for the time being attached to any class or
classes of shares, -
(a) On a show of hands, every
member present in person shall have one vote; and
(b) On a poll, the voting
rights of members shall be as laid down in section 87.
57. In
the case of joint holders, the vote of the senior who tenders a vote, whether
in person or by proxy, shall be accepted to the exclusion of the votes of the
other joint holders.
For
this purpose, seniority shall be determined by the order in which the names
stand in the register of members.
58. A
member of unsound mind, or in respect of whom an order has been made by any
Court havingjurisdiction in lunacy, may vote, whether on a show of hands or on
a poll, by his committee or other legal guardian, and any such committee or
guardian may, on a poll, vote by proxy.
59. No
member shall be entitled to vote at any general meeting unless all calls or
other sums presently payable by him in respect of shares in the company have
beenpaid.
60. (1)
No objection shall be raised to
the qualification of any voter except at the meeting or adjourned meeting at
which the vote objected to is given or tendered, and every vote not disallowed
at such meeting shall be valid for all purposes.
(2) Any such objection made
in due time shall be ref erred to the chairman of the meeting, whose decision
shall be final and conclusive.
61. The
instrument appointing a proxy and the power of attorney or other authority, if
any, under which it is signed or a notarially certified copy of that power or
authority, shall be deposited at the registered office of the company not less
than 48 hours before the time for holdin g the meeting or adj ourned meeting at
which the person named in the instrument proposes to vote, or, in the case of a
poll, not less than 24 hours before the time appointed for the taking of the
poll; and in default the instrument of proxy shall not be treated as valid.
62.
An instrument appointing a proxy shall be in either of the forms in Schedule IX
to the Act or a form as near thereto as circumstances admit.
63. A
vote given in accordance with the terms of an instrument of proxy shall be
valid, notwithstanding the previous death or insanity of the principal or the
revocation of the proxy or of the authority under which the proxy was executed,
or the transfer of the shares in respect of which the proxy is given:
Provided
that no intimation in writing of such death, insanity, revocation or transfer
shall have been received by the company at its office before the commencement
of the meeting or adjourned meeting at which the proxy is used.
Board of directors
64. The
number of the directors and the names of the first directors shall be
determined in writing by the subscribers of the memorandum or a majorit), of
them.
65. (1) The remuneration of the directors
shall, in so far as it consists of a monthly payment, be deemed to accrue from
day to day.
(2) In addition to the
remuneration payable to them in pursuance of the Act, the directors may be paid
all travelling, hotel and other expenses properly incurred by them-
(a) In attending and
returning from meetings of the Board of directors or any committee thereof or
general meetings of the company; or
(b) In connection with the
business of the company.
66. The
qualification of a director shall be the holding of at least one share in the
company.
67. The
Board may pay all expenses incurred in getting up and registering the company.
68. The
company may exercise the powers conferred by section 50 with regard to having
an official seal for use abroad, and such powers shall be vested in the Board.
69. The
company may exercise the powers conferred on it by sections 157 and 158 with
regard to the keeping of a foreign register; andtheboard may (subject to the
provisions of those sections) make and vary such regulations as it may think
fit respecting the keeping of any such register.
70. All
cheques, promissory notes, drafts, hundis, bills of exchange and other
negotiable instruments, and all receipts for moneys paid to the company, shall
be signed, drawn, accepted, endorsed, or otherwise executed, as the case may
be, *[by the managing agent or secretaries and treasurers of the company, or
where there is no managing agent or secretaries and treasurers,] by such person
and in such manner as the Board shall from time to time by resolution
determine.
71. EverydirectorpresentatanymeetingoftheBoardorofacommitteethereof
shall sign his name in a book to be kept for that purpose.
96[72. (1)
The
Board shall have power at any time, and from time to time, to appoint a person
as an additional director, provided the number of the directors and additional
directors together shall not at any time exceed the maximum strength fixed for
the Board by the articles.
(2) Such person shall hold
office only up to the date of the next annual general meeting of the company
but shall be eligible for appointment by the company as a director at that
meeting subject to the provisions of the Act.]
Proceedings of Board
73. (1)
The Board of directors may meet
for the despatch of business, adjourn and otherwise regulate its meetings, as
it thinks fit.
(2) A director may, and the
*[managing agent, secretaries and treasurers,] manager or secretary on the
requisition of a director shall, at any time, summon a meeting of the Board.
74. (1)
Save as otherwise expressly
provided in the Act, questions arising at any meeting of the Board shall be
decided by a majority of votes.
(2) In case of an equality of
votes, the chairman of the Board, if any, shall have a second or casting vote.
75. ThecontinuingdirectorsmayactnotwithstandinganyvacancyintheBoard;
but, if and so long as their number is reduced below the quorum fixed by the
Act for a meeting of the Board, the continuing directors or director may act
for the purpose of increasing the number of directors to that fixed for the
quorum, or of summoning a general meeting of the company, but for no other
purpose.
76. (1)
The Board may elect a chairman of
its meetings and determine the period for which he is to hold office.
(2) If no such chairman is
elected, or if at any meeting the chairman is not present within five minutes
after the time appointed for holding the meeting, the directors present may
choose one of their number to be chairman of the meeting.
77. (1) The Board may,
subject to the provisions of the Act, delegate any of its powers to committees
consisting of such member or members of its body as it thinks f it.
(2) Any committee so formed
shall, in the exercise of the powers so delegated, conform to any regulations
that may be imposed on it by the Board.
78. (1) A committee
may elect a chairman of its meetings.
(2) If no such chairman is
elected, orif at any meetingthe chairman is not present within five minutes
after the time appointed for holding the meeting; the members present may
choose one of their numbers to be chairman of the meeting.
79. (1)
A committee may meet and adjourn
as it thinks proper.
(2) Questions arising at any
meeting of a committee shall be determined by a majority of votes of the
members present, and in case of an equality of votes, the chairman shall have a
second or casting vote.
80. All acts
done by any meeting of the Board or of a committee thereof or by any person
acting as a director, shall, notwithstanding that it may be afterwards
discovered that there was some defect in the appointment of any one or more
such directors or of any person acting as aforesaid, or that they or any of
them were disqualified, be as valid as if every such director or such person
had been duly appointed and was qualified to be a director.
81. Save
as otherwise expressly provided in the Act, are solution in writing, signed by
all the members of the Board or of a committee thereof, for the time being
entitled to receive notice of a meeting of the Board or committee, shall be as
valid and effectual as if it had been passed at a meeting of the Board or
committee, duly convenedandheld.
Manager or secretary
97[82. Subject to the provisions of the Act, -
(1) A manager or secretary
may be appointed by the Board for such term, at such remuneration and upon such
conditions as it may think fit; and any manager or secretary so appointed may
be removed bv the Board;
(2) A director may be
appointed as manager or secretary.]
83. A
provision of the Act or these regulations requiring or authorising a thing to
be done by or to a director and the manager or secretary shall not be satisfied
by its being done by or to the same person acting both as director and as, or
in place of, the manager or secretary.
The seal
84. (1) The Board shall provide Lor the safe
custody of the seal.
(2) The seal of the company
shall not be affixed to any instrument except by the authority of a resolution
of the Board or of a committee of the Board authorised by it in that behalf,
and except in the presence of at least two directors and of the secretary or
such other person as the Board may appoint for the purpose; and those two
directors and the secretary or other person aforesaid shall sign every
instrument to which the seal of the company is so affixed in their presence.
Dividends and reserve
85. The
company in general meeting may declare dividends, but no dividend shall exceed
the amount recommended by the Board.
86. The
Board may from time to time pay to the members such interim dividends as appear
to it to be justified by the profits of the company.
87. (1) The Board
may, before recommending any dividend, set aside out of the profits of the
company such sums as it thinks proper as a reserve or reserves which shall, at
the discretion of the Board, be applicable for any purpose to which the profits
of the company may be properly applied, including provision for meeting
contingencies or for equahsing dividends; and pending such application, may,
atthe like discretion, either be employed in the business of the company or be
invested in such investments (other than shares of the company) as the Board may,
from time to time, think fit.
(2) The Board may also carry
forward any profits, which it may think prudent not to divide, without setting
them aside as a reserve.
97. Substituted by
Notification No. GSR 631, dated 23-4-1966.
88. (1) Subject to the rights of persons, if
any, entitled toshares with special rights as to dividends, all dividends shall
be declared and paid according to the amounts paid or credited as paid on the
shares in respect whereof the dividend is paid, but if and so long as nothing
is paid upon any of the shares in the company, dividends may be declared and
paid according to the amounts of the shares.
(2) No
amount paid or credited as paid on a share in advance of calls shall be treated
for the purposes of this regulation as paid on the share.
(3)
All dividends shall be apportioned
and paid proportionately to the amounts paid or credited as paid on the shares
during anv portion or portions of the period in respect of which the dividend
is paid; but if any share is issued on terms providing that it shall rank for
dividend as from a particular date such share shall rank for dividend
accordingly.
89. The
Board may deduct from any dividend payable to any member all sums of money, if
any, presently payable by him to the company on account of calls or otherwise
in relation to the shares of the company.
90. [Omitted
by Notification No. GSR 631, dated 23-4-1966.]
91. (1) Any dividend, interest or other
moneys payable in cash in respect of shares may be paid by cheque or warrant
sent through the post directed to the registered address of the holder or, in
the case of joint holders, to the registered address of that one of the joint
holders who is first named on the register of members, or to such person and to
such address as the holder or joint holdersmay in writing direct.
(2) Every such cheque or warrant shall be
made payable to the order of the person to whom it is sent.
92. Any one of two or more joint holders of a
share may give effectual receipts for any dividends, bonuses or other moneys
payable in respect of such share.
93. Notice
of any dividend that may have been declared shall be given to the persons
entitled to share therein in the manner mentioned in the Act.
94. No
dividend shall bear interest against the company-
Accounts
95. (1) The Board shall from time to time
determine whether and to what extent and at what times and places and under
what conditions or regulations, the accounts and books of the company, or any
of them, shall be open to the inspection of members not being directors.
(2) No member (not being a director) shall
have any right of inspecting anv account or book or document of the company
except as conferred by law or authorised bv the Board or by the company in
general meeting.
Capitalisation ofprofits
96. (1)
The company in general meeting may,
upon the recommendation of the Board, resolve-
(a) That it is desirable to
capitalize any part of the amount for the time being standing to the credit of
any of the company's reserve accounts, or to the credit of the profit and loss
account, or otherwise available for distribution; and
(b) That such sum be
accordingly set free for distribution in the manner specified in clause (2)
amongst the members who would have been entitled thereto, if distributed by way
of dividend and in the same proportions.
(2) The sum aforesaid shall
not be paid in cash but shall be applied, subject to the provision contained in
clause (3), either in or towards-
(i) Paying up any amounts
for the time being unpaid on any shares held by such members respectively;
(ii) Paying up in full,
unissued shares of the company to be allotted and distributed, credited as
fully paid up, to and amongst such members in the proportions aforesaid; or
(iii) Partly in the way specified
in sub-clause (t) and partly in that specified in sub-clause (ii).
(3) A share premium account
and a capital redemption reserve 98[account]
may, for the purposes of this regulation, only be applied in the paying up of
unissued shares to be issued to members of the company as fully paid bonus
shares.
(4) The Board shall give
effect to the resolution passed by the company in pursuance of this regulation.
97. (1)
Whenever such a resolution as
aforesaid shall have been passed, the Board shall-
(a) Make all appropriations
and applications of the undivided profits resolved to be capitahsed thereby,
and all allotments and issues of fully paid shares 99[* * *], if any; and
(b) Generally do all acts and
things required to give effect thereto.
(2) The Board shall have full
power-
(a) To make such provision,
by the issue of fractional certificates or by payment in cash or otherwise as
it thinks fit, for the case of shares or debentures becoming distributable in
fractions; and also
(b) To authorisc any person
to enter, on behalf of all the members entitled thereto, into an agreement with
the company providing for the allotment to them respectively, credited as fully
paid up, of any further shares 99[*
* *] to which they may be entitled upon such capitalisation, or (as the case
may require) for the payment up by th e company on their behalf, by the
application thereto of their respective proportions of the profits resolved to
be capitalised, of the amounts or any part of the amounts remaining unpaid on their
existing shares.
(3) Any agreement made under
such authority shall be effective and binding on all such members.
98. "Or
debentures" omitted by Notification No.GSR 631, dated 23-4-1966.
99. Substituted
for "fund", ibid.
Winding uP
98. (1) If the
company shall be wound up, the liquidator mav, with the sanction of a special
resolution of the company and any other sanction required by the Act, divide
amongst the members, in specie or kind, the whole or any part of the assets of
the company, whether they shall consist of property of the same kind or
not.
(2) For the purpose
aforesaid, the liquidator rn ay set such value a, he dcems fair id and may
determine how such upon any property to be divided as aforesa members or
different classes of division shall be carried out as between the members.
(3) The liquidator may, with
the like sanction, vest the whole or any part of such assets in trustees upon
such trusts for the benefit of the contributories as the liquidator, with the
like sanction, shall think fit, but so that no member shall be compelled to
accept any shares or other securities whereon there is any liability
Indemnity
99. Every
officer or agent for the time being of the company shall be indemnified out of
the assets of the company against any liability incurred )y him in defending
any proceedings, whether civil or crirninal, in which judgments given in his
favour or in which he is acquitted or in connection with any application under
section 633 in which relief is granted to him by the Court.
MEMORANDUM OF ASSOCIAN OF A COMPANY
LIMITED BY SHARES
1st.- The name of the company is
"The Eastern Steam Packet Company Limited".
2nd. - The registered office of
the company will be situated in the State of Bombay.
1[3rd.
- (a) The
main objects to be pursued by the company on its incorporation are the
conveyance of passengers and goods in ships or boats between such places as the
company may from time to time determine'.
(b) The objects incidental or
ancillary to the attainment of the above main objects are "the
acquisition, construction, building, setting up and provision of establishments
for repairing ships or boats, for the training of personnel required for th
running of ships or boats and the doing of all such other things as are
conducive to the attainment of the foregoing main objects.
(c) The other objects for
which the company is established are "carrying on the business of carriers by land, air and the
running of hotels for tourists".]
4th. - The liability of the
members is limited.
5th. - The share capital of the
company is two hundred thousand rupees, divide into one thousand shares of two
hundred rupees each.
We,
the several persons whose names and addresses are subscribed, are desiro of
being f ormed into a company in pursuance of this memorandum of associatio and
we respectively agree to take the number of shares in the capital of t company
set opposite our respective names.
1. Subtituted by
Noification No. GSR 631 dated 23-4-1966.
|
Names,
addresses, descriptions and occupations of subscribers |
Number
of shares taken by each subscriber. |
|
1. A.B. of
Merchant
200 2. C.D. of
Merchant
25 3. E.F. of
Merchant
30 4. G.H. of
. Merchant
40 5. I.
J. of
Merchant
.. 15 6. K.
L. of
Merchant
5 7. M.N. of
Merchant
10 Total
shares taken 325 |
|
Dated the day of
..19
. Witness to the above signatures
X.Y.of
MEMORANDUMANDARTICLESOFASSOCIAT10NOFACOMPANY
LIMITEDBYGUARANTEEANDNOTHAVINGASHARECAPITAL
Memorandum of association
Ist. - The name of the company
is "The Mutual Calcutta Marine Association Limited".
2nd- The registered office of
the company will be situate in the State of West Bengal
2[3rd.- (a) The
main objects tobe pursuedby the company onits incorporation are "the
mutual insurance of ships belonging to members of the company".
(b) The objects incidental or
ancillary to the attainment of the above main objects are "providing for
the welfare of employees or ex-employees of the company and the making,
drawing, accepting, endorsing, executing and issuing of any negotiable or
transferable documents and the doing of such other things as are conducive to
the attainment of the foregoing main objects".
(c) The other objects for
which the company is established are "building, equipping and maintaining
charitable hospitals, running of schools and undertaking any other social
service".]
4th. - The liability of the
members is limited.
5th. - Every member of the
company undertakes to contribute to the assets of the company in the event of
its being wound up while he is a member, or within one year after he ceases to be
a member, for payment of the debts and liabilities of the company contracted
before he ceases to be a member, and the costs, charges and expenses of winding
up and forthe adjustment of the rights of the contiibutories among themselves,
such amount as may be required, not exceeding one hundred rupees.
We,
the several persons whose names and addresses are subscribed, are desirous of
being formed into a company, in pursuance of this memorandum of association.
2. Substituted
by NotificationNo.GSR 631, dated 23-4-1966.
|
Names,
addresses, descriptions and occupations of subscribers |
|
1. A.B. of
Merchant 2. C.D. of
Merchant 3. E.F. of
Merchant 4. G.H. of
Merchant 5. I. J. of
Merchant 6. K.L. of
.. Merchant 7. M.N. of
. Merchant |
Dated the
..day of
.
19
.. Witness to
the above signatures
X.Y.
of
..
ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY
GUARANTEE AND NOT HAVING A SHARE CAPITAL
Interpretation
1. (1)
In this articles-
(a) "The Act" means
the Companies Act, 1956,
(b) "The seal means the
common seal of the company.
(2) Unless the context otherwise
requires, words or expressions contained in these regulations shall bear the
same meaning as in the Act or any statutory modification thereof in force at
the date at which these regulations become binding on the company.
Members
2. The
number of members with which the company proposes to be registered is 500, but
the Board of directors may, from time to time, whenever the company or the
business of the company requires it, register an increase of members.
3. The
subscribers to the memorandum and such other persons as the Board shall admit
to membership shall be members of the company.
General meetings
4. All
general meetings other than annual general meetings shall be called
extraordinary general meetings.
5. (1)
The Board may, whenever it thinks
fit, call an extraordinary general meeting.
(2) If at any time there are
not within India directors capable of acting, who are sufficient in number to
form a quorum, any director or any two members of the company may call an
extraordinary general meeting in the same manner as nearly as possible, as that
in which such a meeting may be called by the Board.
Proceedings atgeneral meetings
6. (1)
No business shall be transacted
at any general meeting unless a quorum of members is present at the time when
the meeting proceeds to business.
(2) Save as herein otherwise
provided, five members present in person shall be a quorum.
7. (1)
If within half an hour from the
time appointed for holding the meeting, a quorum is not present, the meeting,
if called upon the requisition of members, shall be dissolved.
(2) In any other case, the
meeting shall stand adjourned to the same day in the next week, at the same
time and place, or to such other day and at such other time and place as the Board
may determine.
(3) If at the adjourned
meeting a quorum is not present within half an hour from the time appointed for
the meeting, the members present shall be a quorum.
8. The
chairman, if any, of the Board shall preside as chairman at every general
meeting of the company.
9. If
there is no such chairman, or if he is not present within fifteen minutes after
the time appointed for holding the meeting, or is unwilling to act as chairman
of the meeting, the directors present shall elect one of their number to be
chairman of the meeting.
10. If
at any meeting no director is willing to act as chairman or if no director is
present within fifteen minutes after the time appointed for holding the
meeting, the members present shall choose one of their number to be chairman of
the meeting.
11. (1) The chairman
may, with the consent of any meeting at which a quorum is present, and shall if
so directed by the meeting, adjourn the meeting from time to time and from
place to place.
(2) No business shall be transacted
at any adjourn meeting other than the business left unfinished at the meeting
from which the adjournment took place. (3) When a meeting is adjourned for
thirty days or more, notice of the adjourned meeting shall be given as in the
case of an original meeting. (4) Save as aforesaid, it shall not be necessary
to give any notice of an adjournment or of the business to be transacted at an
adjourned meeting.
12. In
the case of an equality of votes, whether on a show of hands or on a poll, the
chairman of the meeting at which the show of hands takes place, or at which the
poll is demanded, shall be entitled to a second or casting vote.
13. Any
business other than that upon which a poll has been demanded may be proceeded
with, pending the taking of the poll.
Votes of members
14. Every
member shall have one vote.
15. A
member of unsound mind, or in respect of whom an order has been made by any
Court havingjurisdiction in lunacy, may vote, whether on a show of hands or on
a poll, by his committee or other legal guardian, and any such committee or
guardian may, on a poll, vote by proxy.
16. No
member shall be entitled to vote at any general meeting unless all sums
presently payable by him to the company have been paid.
17. (1) No objection shall be raised to the
qualification of any voter except at the meeting or adjourned meeting at which
the vote objected to is given or tendered, and every vote not disallowed at
such meeting shall be valid for all purposes.
(2) Any such objection made
in due time shall be referred to the chairman of the meeting, whose decision
shall be final and conclusive.
18. A vote
given in accordance with the terms of an instrument of proxy shall be valid,
notwithstanding the previous death or insanity of the principal or the
revocation of the proxy or of the authority under which the proxy was executed:
Provided that no intimation in writing of such death, insanity, revocation or
transfer shall have been received by the company at its office before the
commencement of the meeting or adjourned meeting at which the proxy is used.
Board of directors
19. The
number of the directors and the names of the first directors shall be
determined in writing by the subscribers of the memorandum or a majority of
them.
20. (1) The remuneration of the directors
shall, in so f ar as it consists of a monthly payment, be deemed to accrue from
day to day. (2) The directors may also be paid all travelling, hotel and other
expenses properly incurredbythem-
(a) In attending and
returning from meetings of the Board or any committee thereof or general
meetings of the company; or
(b) In connection with the
business of the company.
Proceedings of meetings of Board
21. (1)
The Board of directors may meet for
the despatch of business, adjourn and otherwise regulate its meetings, as it
thinks fit.
(2) A directormay, and the
*[managing agent, secretaries and treasurers,] manager or secretary on the
requisition of a director shall, at any time, summon a meeting of the Board.
22. (1)
Save as otherwise expressly
provided in the Act, questions arising at any meeting of the Board shall be
decided by a majority of votes.
(2) In case of an equality of
votes, the chairman shall have a second or casting vote.
23. The
continuing directors may act not with standing any vacancy in the Board; but,
if and so long as their number is reduced below the quorum fixed by the Act for
a meeting of the Board, the continuing directors or director may act for the
purpose of increasing the number of directors to that fixed for the quorum, or
of summoning a general meeting of the company, but for no other purpose.
24. (1) The Board
may elect a chairman of its meetings and determine the period for which he is
to hold office.
(2) If no such chairman is
elected, or if at any meeting the chairman is not present within five minutes
after the time appointed for holding the meeting, the directors present may
choose one of their number to be chairman of the meeting.
25. (1)
The Board may, subject to the
provisions of the Act, delegate any of its powers to committees consisting of
such member or members of its body as it thinks fit.
(2) Any committee so formed
shall, in the exercise of the powers so delegated, conforin to any regulations
that may be imposed on it by the Board.
26. (1)
A committee may elect a chairman
of its meetings.
(2) If no such chairman is
elected, or if at any meeting the chairman is not present within five
niint.ites after the time appointed for holding the meeting, the members
present may choose one of their number to be chairman of the meeting.
27. (1)
A committee may meet and adjourn
as it thinks proper.
(2) Ouestions arising at any
meeting of a committee shall be determined by a majority of votes of the
members present, and in case of an equality of votes, the chairman shall have a
second or casting vote.
28. All
acts done by any meeting of the Board or of a committee thereof, or by any
person acting as a director, shall notwithstanding that it may be afterwards
discovered that there was some defect in the appointment of any one or more of
such directors or of any person acting as aforesaid, or that they or any of
them were disqualified be as valid as if every such director or such person had
been duly appointed and was qualified to be a director.
29. Save
as otherwise expressly provided in the Act, a resolution in writing, signed by
all the members of the Board or a committee thereof for the time being entitled
to receive notice of a meeting of the Board or committee, shall be as valid and
effectual as if it had been passed at a meeting of the Board or committee, duly
convened and held.
Manager or secretary
30. (1)
A manager- or secretary may be
appointed by the Board for such term, at such remuneration and upon such
conditions as it may think fit; and any manager or secretary so appointed may
be removed by the Board. (2) A director may be appointed as manager or
secretary.
31. A
provision of the Act or these regulations requiring or authorising a thing to
be done by or to a director and the manager or secretary shall not be satisfied
by its being done by or to the same person acting both as director and as, or
in place of, the manager or secretary.
The seal
32. (1)
The Board shall provide for the
safe custodv of the seal.
(2) The seal of the company
shall not be affixed to any instrument except by the authority of a resolution
of the Board of directors, and except in the presence of at least two directors
and of the secretary or such other person as the Board may appoint for the
purpose; and those two directors and the secretary or other person as aforesaid
shall sign every instrument to which the seal of the company is so affixed in
their presence.
|
Names,
addresses, descriptions and occupations of subscribers |
|
1. A.B. of
Merchant 2. C.D. of
Merchant 3. E.F. of
Merchant 4. G.H. of
Merchant 5. I. J. of
Merchant 6. K.L. of
.. Merchant 7. M.N. of
. Merchant |
Dated the
..day of
.
19
.. Witness to
the above signatures
X.Y.
of
..
MEMORANDUMANDARTICLESOFASSOCIATIONOFACOMPANY
LIMITED BY GUARANTEE AND HAVING A SHARE CAPITAL
Memorandum of association
Ist- The name of the company
is "The Snowy Range Hotel Company Limited'.
2nd- The registered office of
the company will be situate in the State of West Bengal.
3[3rd- (a) The
main objects to be pursued by the companv on its incorporation are 'the
facilitating of travelling in the Snowy Range, by providing hotels and
conveyances by sea and by land for the accommodation of travellers'.
(b) The objects incidental or
ancillary to the attainment of the above main objects are "conducting
coaching classes in catering, hotel management, etc., and the doing of such
other things as are conducive to the attainment of the foregoing main objects'.
(c) The other objects for
which the company is estabhshed are "running a publishing house and the
publishing of periodical magazines/newspapers catering tovarious interests
pertaining to the objects aforesaid".]
4th. - The liability of the
members is limited.
5th. - Every member of the
company undertakes to contribute to the assets of the company in the event of
its being wound up while he is a member, or within oneyear afterhe ceases to be
a member forpayment of the debts and liabilities of the company, contracted
before he ceases to be a member, and the costs, charges and expenses of winding
up the same and for the adjustment of the rights of the contiibutories among
themselves, such amount as may be required, not exceeding fiftyrupees.
6th. - The share capital of the
company shall consists of five hundred thousand rupees, divided into five
thousand shares of one hun dred rupees each.
We,
the several persons whose names and addresses are subscribed, are desirous of
being formed into a company, in pursuance of this memorandum of association,
and we respectively agree to take the number of shares in the capital of the
company set opposite our respective names.
3. Substituted
by, Notification No.GSR 631, dated 23-4-1966.
|
Names,
addresses, descriptions and occupations of subscribers |
Number
of shares taken by each subscriber. |
|
1. A.B. of
Merchant
200 2. C.D. of
Merchant
25 3. E.F. of
Merchant
30 4. G.H. of
. Merchant
40 5. I.
J. of
Merchant
.. 15 6. K.
L. of
Merchant
5 7. M.N. of
Merchant
10 Total
shares taken 325 |
|
Dated the day of
..19
. Witness to the above signatures
X.Y.of
ARTICLES
OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE
AND
HAVING A SHARE CAPITAL
1. The
number of members with which the company proposes to be registered is 100, but
the directors may from time to time register an increase of members.
2. All
the articles of Table A in Schedule I annexed to the Companies Act, 1956, shall
be deemed to be incorporated with these articles and to apply to the company.
|
Names,
addresses, descriptions and occupations of subscribers |
|
1. A.B. of
Merchant 2. C.D. of
Merchant 3. E.F. of
Merchant 4. G.H. of
Merchant 5. I. J. of
Merchant 6. K.L. of
.. Merchant 7. M.N. of
. Merchant |
Dated the
..day of
.
19
.. Witness to
the above signatures
X.Y.
of
..
MEMORANDUMANDARTICLESOFASSOCIATION
OFANUNLIMITEDCOMPANY
Memorandum of association
1st. - The name of the company is
"The Patent Stereotype Company".
2nd. - The registered office of
the company will be situating in the State of West Bengal.
4[3rd.- (a) The
main objects to be pursuedbythe companyonitsincorporationare "the working
of a patent method of founding and casting stereotype plates of which method
P.Q. of Bombay, is the sole patentee".
4. Substituted
by Notification No.GSR 631 dated 23-4-1966.
(b) The objects incidental or
ancillary to the attainment of the above main objects are "purchasing,
taking on lease or licence or concession or otherwise, lands, buildings, works
and any rights and privileges or interest therein for establishing the
necessary workshops/factories and the doing of such other things as are
conducive to the attainment of the foregoing main objects'.
(c) The other objects for
which the company is established are "conducting research in any field
pertaining to the science of metallurgy and turning to account the results of
the same.']
We,
the several persons whose names are subscribed, are desirous of being formed
into a company in pursuance of this memorandum of association, and we
respectively agree to take the number of shares in the capital of the company
set opposite our respective names.
|
Names,
addresses, descriptions and occupations of subscribers |
Number
of shares taken by each subscriber. |
|
1. A.B. of
Merchant
3 2. C.D. of
Merchant
2 3. E.F. of
Merchant
1 4. G.H. of
. Merchant
2 5. I.
J. of
Merchant
.. 2 6. K.
L. of
Merchant
1 7. M.N. of
Merchant
1 Total
shares taken 12 |
|
Dated the day of
..19
. Witness to the above signatures
X.Y.of
ARTICLES OF ASSOCIATION OF AN UNLIMITED COMPANY
1. The
number of members with which the company proposes to be registered is 20, but
the Board may from time to time register an increase of members.
2. The
share capital of the company is twenty thousand rupees, divided into twenty
shares of one thousand rupees each.
3. The
company may by special resolution-
(a) Increase the share
capital by such sum to be divided into shares of such amount as the resolution
may prescribe;
(b) Consolidate its shares
into shares of a larger amount than its existing shares;
(c) Sub-divide its shares
into shares of a smaller amount than its existing shares;
(a) Cancel any shares, which
at the date of the passing of the resolution have not been taken or agreed to
be taken by any person;
(e) Reduce its share capital
in any way.
4. All
the articles of Table A in Schedule I to the Companies Act, 1956, except
articles (36,37,38,39,44,45 and46) shallbe deemedtobe incorporatedwith these
articles and to apply to the company.
|
Names,
addresses, descriptions and occupations of subscribers |
|
1. A.B. of
Merchant 2. C.D. of
Merchant 3. E.F. of
Merchant 4. G.H. of
Merchant 5. I. J. of
Merchant 6. K.L. of
.. Merchant 7. M.N. of
. Merchant |
Dated the
..day of
.
19
.. Witness to
the above signatures
X.Y.
of
..
FORM
OF STATEMENT TO BE PUBLISHED BY LIMITED BANKING COMPANIES,
INSURANCE
COMPANIES AND DEPOSIT, PROVIDENT
ORBENEFITSOCIETIES
*The
share capital of the company is Rs
divided into
.. shares of Rs
..each.
The
number of shares issued is
..Calls to the amount of Rs
.per share have
been made, under which the sum of Rs
.has been received.
The
liabilities of the company on the thirty-first day of December (or thirtieth
day of June) were-
Debts
owing to sundry persons by the company:
Under decree, Rs
On mortgages or bonds, Rs
On notes, bills or hundis, Rs
On other contracts, Rs
On estimated liabilities. Rs
The
assets of the company on that day were:
Government
securities [stating them], Rs
.
Bills
of exchange, hundis,
and
promissory notes, Rs
..
Cash
at the Bankers, Rs
..
Other
securities. Rs
..
*If
the company has no capital divided into shares, the portion of the statement
relating to capital and shares must be omitted.
5[SCHEDULE IA
[See
section 6(c)]
LIST
OF RELATIVES
1. Father.
2. Mother (including
stepmother).
5. Inserted by the Companies
(Amendment) Act, 1960.
3. Son (including step-son).
4. Son's wife.
5. Daughter (including
stepdaughter).
6. Father's father.
7. Father's mother.
8. Mother's mother.
9. Mother's father.
10. Son's son.
11. Son's son's wife.
12. Son's daughter.
13. Son's daughter's husband.
14. Daughter's husband.
15. Daughter's son.
16. Daughter's son's wife.
17. Daughter's daughter.
18. Daughter's daughter's
husband.
19. Brother (including
step-brother).
20. Brother's wife.
21. Sister (including
step-sister).
22. Sister's husband.
23.To 49. [Omittedby the
Companies (Amendment) Act, 1965, we.f. 15-10-1965.]
SCHEDULE
II
[See
sections 44(2)(a) and 56]
MATTERS
TO BE SPECIFIED IN PROSPECTUS AND REPORTS
TO
BESET OUT THEREIN
I. Generalinfor zation:
(a) Name and address of
registered office of the company.
(b) (i) Consent of the Central Government for
the present issue and declaration of the Central Government about
non-responsibility for financial soundness or correctness of statements.
(ii) Letter of
intent/industrial licence and declaration of the Central Government about
non-responsibility for financial soundness or correctness of statements.
(c) Names of regional stock
exchange and other stock exchanges where application made for listing of
present issue.
6. Substituted
for Notification No. SO 666 (E), dated 3-10-1991.
(d) Provisions of sub-section
(1) of section 68A of the Companies Act, relating to punishment for fictitious
applications.
(e) Statement/declaration
about refund of the issue if minimum subscription of 90% is not received within
90 days from closure of the issue.
(f) Declaration about the
issue of allotment letters/refunds within a period of IO weeks and interest in
case of any delay in refund at the prescribed rate under section 73(2)/(2A).
(g) Date of opening of the
issue.
Date
of closing of the issue.
Date
of earliest closing of the issue.
(h) Names and addresses of
auditors and lead managers.
(i) Name and address of
trustee under debenture trust deed (in case of debenture issue).
(j) Whether rating from
Crisil or any rating agency has been obtained for the proposed
debenture/preference shares issue.
If
no rating has been obtained, this should be answered as "No'. If "yes" the rating should be
indicated.
(k) Underwriting of the issue
(Names
and addresses of the underwriters and the amount underwritten bv them).
(Declaration
by board of directors that the underwriters have sufficient resources to
discharge their respective obligations.)
7[(l) A statement by the board of directors
stating that-
(i) All monies received out
of issue of shares or debentures to public shall be transferred to a separate bank
account other than the bank account referred to in sub-section (3) of section
73;
(ii) Details of all monies
utilised out of the issue referred to in sub-item (i) shall be disclosed under
an appropriate separate head in the balance-sheet of the companv indicating the
purpose for which such monies had been utilised; and
(iii) Details of all
unutilised monies out of the issue of shares or debentures, if any, referred to
in sub-item (i) shall be disclosed under an appropriate separate head in the
balance-sheet of the company indicating the form in which such unutilised
monies have been invested.].
II. Capitalstructure of the
company:
(a) Authorised, issued,
subscribed and paid-up capital.
(b) Size of present issue
giving separately reservation for preferential allotment to promoters and
others.
(c) Paid-upcapital
(i) After the present issue
(ii) After conversion of
debentures (if applicable).
7. Inserted by Notification
No. GSR 265(E), dated 15-5-1997.
III. Terms of the present
issue:
(a) Terms of payments.
(b) Rights of the instrument
holders.
(c) Howtoapply-availabihtyofforms,prospcctusandmodeofpayment.
(a) Any special tax benefits
for company and its shareholders.
IV. Particulars of the issue
(a) Objects.
(b) Project cost.
(c) Means of financing
(including contribution of promoters).
V Company,
managementandproject:
(a) History and main objects
and present business of the company.
(b) Subsidiary (ies) of the
company, if any
(For
financial data, refer to auditor's report in Part 11).
(c) Promoters and their
background.
(d) Names, addresses and
occupation of manager, managing director and other directors including
nominee-directors, wholetime directors (giving their directorships in other
companies).
(e) Location of project.
(f) Plant and machinery, technology, process, etc.
(g) Collaboration, any
performance guarantee or assistance in marketing by the collaborators.
(h) Infrastructure facilities
for raw materials and utilities like water, electricity, etc.
(i) Schedule of implementation
of the project and progress made so far, giving details of land acquisition,
civil works, installation of plant and machinery, trial production, date of
commercial production, etc.
(j) The products:
(i) Nature of the product/s
- consumer/industrial and end users
(ii) Approach to marketing
and proposed marketing set up
(iii) Export possibilities and
export obligations, if any (in case of a company providing any
"service" particulars, as applicable, be furnished).
(k) Future prospects - expected
capacity utilisation during the first three years from the date of commencement
of production, and the expected year when the company would be able to earn
cash profits and net profits.
Stock
market data for shares /debentures of the company high/low pi-ice in each of
the last three years and monthly high/low during the last six months (where
applicable).
VI. Following particulars in
regard to the company and other listed companies under thesame managementwithin
the meaning of section 370(1B), which made any capital issue during the last
three years:
Name
of the company
Year
of issue
Type
of issue
(Public/rights/cornposite)
Amount
of issue
Date
of closure of issue
Date
of completion of delivery of share/debenture certificates Date of completion of
the project, where object of the issue was financing of a project
Rate
of dividend paid
VII. (a) Outstanding litigation pertaining to-
(i) Matters likely to affect
operation and finances of the company including disputed tax liabilities of any
nature; and
(ii) Criminal prosecution
launched against the company and the director's for alleged offences under the
enactments specified in paragraph 1 of Part I of Schedule XIII to the Companies
Act, 1956.
(b) Particulars of default,
if any, in meeting statutory dues, institutional dues, and towards instrument
holders like debentures, fixed deposits, and arrears on cumulative preference
shares, etc. (also give the same particulars about the companies promoted by
the same private promoters and listed on stock exchanges).
(c) Any material development
after the date of the latest balance-slicet and its impact on performance and
prospects of the company.
VIII. Management perception of
risk factors (i.e., sensitivity to foreign exchange rate fluctuations, difficulty
in availability of raw materials or in marketing of products, costltinie
overrun, etc.).
A. General informatiotin:
1. Consent
of directors, auditors, solicitors/advocates, managers to the issue, Registrar
of Issue, bankers to the company, bankers to the issue and experts.
2. Expert
opinion obtained, if any.
3. Change,
if any, in directors and auditors during the last three years, and reasons
thereof.
4. Authoritv
for the issue and details of resolution passed for the issue.
5. Procedure
and time schedule for allotment and issue of certificates.
6. Names
and addresses of the company secretary, legal adviser, lead managers,
co-managers, auditors, bankers to the company, bankers to the issue, and
brokers to the issue.
B. Financial information
Reports to be set out
1. A
report by the auditors of the company with respect to-
(a) Profits and losses and
assets and liabilities, in accordance with subclause (2) or (3) of this clause,
as the case may require; and
(b) The rates of the dividends,
if any, paid by the company in respect of each class of shares in the company
for each of the five financial years immediately preceding the issue of the
prospectus, giving particulars of each class of shares on which such dividends
have been paid and particulars of the cases in which no dividends have been
paid in respect of any class of shares for any of those years;
And,
if no accounts have been made up in respect of any part of the period of five
years ending on a date of three months before the issue of the prospectus,
containing a statement of that fact (and accompanied by a statement of the
accounts of the company in respect of that part of the said period up to a date
not earlier than six months of the date of issue of the prospectus indicating
the profit or loss for that period and the assets and liabilities position as
at the end of that period together with a certificate from the auditors that
such accounts have been examined and found correct by them. The said statement may indicate the nature
of provision or adjustments made or are yet to be made).
2. If
the company has no subsidiaries, the report shall-
(a) So far as regards profits
and losses, deal with the profits or losses of the company (distinguishing
items of a non-recurring nature) for each of the five financialyears
immediatelyprecedingthe issue of the prospectus; and
(b) So far as regards assets
and liabilities, deal with the assets and liabilities of the company at the
last date to which the accounts of the company were made up.
3. If
the company has subsidiaries, the report shall-
(a) So far as regards profits
and losses, deal separately with the company's profits or losses as provided by
sub-clause (2) and in addition deal either-
(i) As a whole with the
combined profits or losses of its subsidiaries, so far as they concern members
of the company; or
(ii) Individually with the
profits or losses of each subsidiary, so far as they concern members of the
company; or, instead of dealing separately with the company's profits or
losses, deal as a whole with the profits or losses of the coi-ripanv, and, so
far as they concern' members of the company, with the combined profits or
losses of its subsidiaries; and
(b) So far as regards assets
and liabilities, deal separately with the company's assets and liabilities as
provided by sub-clause (2) and in addition, deal either-
(i) As a whole with the
combined assets and liabilities of its subsidiaries, with or without the
coinpanv's assets and liabilities; or
(ii) Individually with the
assets and liabilities of each subsidiary; and shall indicate as respects the
assets and liabilities of the subsidiaries, the allowanceto be made forpersons
otherthan members of the company.
4. If
the proceeds, or any part of the proceeds, of tl-ie issue of the shares or
debentures are or is to be applied directly or indirectly-
(i) In the purchase of any
business; or
(ii) In the purchase of an
interest in any business and by reason of that purchase, or anything to be done
in consequence thereof, or in connection therewith; the company will become
entitled to an interest as respects either the capital or profits and losses or
both, in such business exceeding fifty per cent, thereof;
A
report made by accountants (who shall be named in the prospectus) upon-
(a) The profits or losses of
the business for each of the five financial years immediately preceding the
issue of the prospectus; and
(b) The assets and
liabilities of the business at the last date to which the accounts of the
business were made up, being a date not more than one hundred and twenty days
before the date of the issue of the prospectus.
5. (1) If-
(a) The proceeds, or any part
of the proceeds, of the issue of the shares or debentures are or is to be
applied directly or indirectly in any manner resulting in the acquisition by
the company of shares in any other body corporate; and
(b) By reason of that
acquisition or anything to be done in consequence thereof or in connection
therewith, that body corporate will become a subsidiary of the company;
A
report made by accountants (who shall be named in the prospectus) upon-
(i) The profits or losses of
the other body corporate for each of the five financial years immediately
preceding the issue of the prospectus; and
(ii) The assets and
liabilities of the other body corporate at the last date to which its accounts
were made up.
(2) The said report shall-
(a) Indicate how the profits
or losses of the other body corporate dealt with by the report would, in
respect of the shares to be acquired, have concerned members of the company and
what allowance would have fallen to be made, in relation to assets and
liabilities so dealt with for holders of other shares, if the companyhad at all
material times held the shares to be acquired; and
(b) Where the other body
corporate has subsidiaries deal with the profits or losses and the assets and
liabilities of the body corporate and its subsidiaries in the manner provided
by sub-clause (2) above in relation to the company and its subsidiaries.
6. Principal
terms of loan and assets charged as security
C. Statutory and other
information:
1. Minimum
subscription
2. Expenses
of the issue giving separately fee payable to:
(a) Advisers.
(b) Registrars to the issue.
(c) Managers to the issue.
(d) Trustees for the
debenture-holders.
3. Underwriting
commission and brokerage
4. Previous issue for cash
5. Previous
public or rights issue, if any:
(During
last five years)
(a) Date of allotment:
Date
of refunds:
Date
of listing on the stock exchange:
(b) If the issue(s) at
premium or discount and the amount thereof.
(c) The amount paid or
payable by way of premium, if any, on each share which had been issued within
the two years preceding the date of the prospectus or is to be issued, stating
the dates or proposed dates of issue and, where some shares have been or are to
be issued at a premium and other shares of the same class at a lower premium,
or at par or at a discount, the reasons for the differentiation and how any
premiums received have been or are to be disposed of.
6. Commission
or brokerage on previous issue.
7. Issue
of shares otherwise than for cash.
8. Debentures and redeemable preference shares and other
instruments issued by the company outstanding as on the date of prospectus and
terms of issue.
9. Option to subscribe.
8[9A. The details of option to subscribe for
securities to be dealt with in a depository.]
10. Purchase
of property:
(i) As respects any property
to which this clause applies-
(a) The names, addresses,
descriptions and occupations of the vendors;
(b) The amount paid or
payable in cash, shares or debentures to the vendor and, where there is more
than one separate vendor, or the company is a sub-purchaser, the amount so paid
or payable to each vendor, specifying separately the amount, if any, paid c),-
pavable forgoodwill;
(c) The nature of the title
or interest in such propertv acquired orto be acquired by the company;
(d) Short particulars of
every transaction relating to the property completed within the two preceding
years, in which any vendor of the property to the company or anv person who is,
or was at the time of the transaction, a promoters or a director or proposed
director of the company had any interest, direct or indirect, specifying the
date of the transaction and the name of such promoter, director or proposed
director and stating the amount payable by or to such vendor, promoter director
or proposed director in respect of the transaction.
(ii) The property to which
sub-clause (1) applies, is a property purchased or acquired by the company or
proposed to be purchased or acquired, which is to be paid for wholly or partly
out of the proceeds of the issue offered for subscription by the prospectus or
the purchase or acquisition of which has not been completed at the date of
issue of the prospectus, other than property-
(a) The contract f or the
purchase or acquisition whereof was entered into in the ordinary course of the
company's business ' the contract not being made in contemplation of the issue
nor the issue in consequence of the contract; or
(b) As respects which the
amount of the purchase money is not material.
(iii) For the purpose of this
clause, where a vendor is a firm, the members of the firm shall not be treated
as separate vendors.
(iv) If the company proposes
to acquire a business, which has been carried on for less than three years, the
length of time during which the business has been carried on.
11. (i) Details of
directors, proposed directors, whole time directors, their remuneration,
appointment and remuneration of managing directors, interests of directors,
their borrowing powers and qualification shares.
Any
amount or benefit paid or given within the two preceding years or intended to
be paid or given to any promoter or officer and consideration for payment of
giving of the benefit.
(ii) The dates, parties to,
and general nature of-
(a) Every contract appointing
or fixing the remuneration of a managing director or manager whenever entered
intl, that is to say, whether within or more than, two years before the date of
the prospectus;
(b) Every other material
contract, not being a contract entered into in the ordinary course of the
business carried on or intended to be carried on by the companv or a contract
entered into more than two years before the date of the prospectus.
A
reasonable time and place at which any such contract or a copy thereof may be
inspected.
(iii) Full particulars of the
nature and extent of the interest, if any, of every director or promoter-
(a) In the promotion of the
company; or
(b) In any property acquired
by the company within two years of the date of the prospectus or proposed to be
acquired by it.
Where
the interest of such a director or promoter consists in being a member of a
firm or company, the nature and extent of the interest of the firm or company,
with a statement of all sums paid or agreed to be paid to him or to th e firm
or company in cash or shares or otherwise by anv person either to induce him to
become, or to qualify him as, a director, or otherwise for services rendered bv
him or by the firm or company, in connection with the promotion or formation of
the company.
12. Rights
of members regarding voting, dividend, lien on shares and the process for
modification of such rights and forfeiture of shares.
13. Restrictions,
if any, ontransferandtransmission of shares/debentures and on their
consolidation/splitting.
14. Revaluation
of assets, if any (during last five years).
15. Material
contracts and inspection of documents, e.g.
A. Material contracts.
B. Documents.
C Time and place at which
the contracts together with documents will be available for inspection from the
date of prospectus until the date of closing of the subscription list.
PROVISIONS
APPLYING TOPARTS IAND II OFTHESCHEDULE
16. Every
person shall, for the purpose of this Schedule, be deemed to be a vendoiwho has
entered into any contract, absolute or conditional, for the sale or purchase or
for any option of purchase, of any property to be acquired by the company, in
any case where-
(a) The purchase money is not
fully paid at the date of the issue of the prospectus;
(b) The purchase money is to
be paid or satisfied, wholly or in part, out of the proceeds of the issue
offered for subscription by the prospectus;
(c) The contract depends for
its validity or fulfilment on the result of that issue.
17. Where
any property to be acquired by the company is to be taken on lease, this
schedule shall have effect as if the expression "vendor" included the
lessor, the expression "purchase money included the consideration for the
lease, and the expression "sub-purchaser" included a sub-lessee.
18. If in the case of a company which has been carrying on
business, or of a business which has been carried on for less than five
financial years, the accounts of the company or business have only been made up
in respect of four such years, three such years, two such years or one such
year, Part II of this Schedule shall have effect as if references to four
financial years, three financial years, two financial years or one financial
year, as the case may be, were substituted for references to five financial
years.
19. Where
the five financial years immediately preceding the issue of prospectus which
are referred to in Part 11 of this Schedule or in this Part cover a period of
less than five years, references to the said five financial years in either
Part shall have effect as if references to a number of financial years the
aggregate period covered by which is not less than five years immediately
preceding the issue of the prospectus were substituted for references to the
five financial years aforesaid.
20. Any
report required by Part II of this Schedule shall either-
(a) Indicate by way of note
any adjustments as respects the figures of any profits or losses or assets and
liabilities dealt with by the report which appear to the persons making the
report necessary; or
(b) Make those adjustments and indicate that adjustments have been
made.
21. Any report by accountants required by Part 11 of this Schedule-
(a) Shall be made by
accountants qualified under this Act for appointment as auditors of the
company; and
(b) Shall not be made by any
accountant who is an officer or servant, or a partner or in the employment of
an officer or servant, of the company or of the company's subsidiary or holding
company or of a subsidiary of the company's holding company.
For
the purposes of this clause, the expression "officer" shall include a
proposed director but not an auditor.
22. Inspection
of documents:
Reasonable
time and place at which copies of all balance sheets and profit and loss
accounts, if any, on which the report of the auditors is based, and material
contracts and other documents may be inspected.
Note: Term "year" wherever used hereinearlier,
means financial year.
Declaration: That
all the relevant provisions of the Companies Act, 1956, and the guidelines
issued by the Government have been complied with and no statement made in
prospectus is contrary to the provisions of Companies Act, 1956, and rules
thereunder.
Place
.
Date
Signature
of directors]
[See
section 70]
FORM
OF STATEMENT IN LIEU OF PROSPECTUS TO BE DELIVERED TO
REGISTRAR
BY A COMPANY WHICH DOES NOT ISSUE A PROSPECTUS OR
WHICH
DOES NOT GO TO ALLOTMENTON A PROSPECTUS ISSUED,AND
REPORTS
TO BE SET OUT THEREIN
FORM
OF STATEMENT AND PARTICULARS TO BE CONTAINED THEREIN
THE
COMPANIES ACT, 1956
Statement
in lieu of prospectus delivered for registration by
............................................................................................................................
[Insert
the name of the company]
PURSUANTTOSECTION70OFTHECOMPANIESACT,
1956
Delivered
for registration by
The nominal share capital of the
company Rs
.
Divided into
.shares
of Rs
.each
.
.
Amount (if any) of above capital, which Shares of Rs ..each
Consists of redeemable preference shares
The
earliest date on which the company has power to redeem these shares.
Names, addresses, descriptions and occupations of -
(a) Directors or proposed directors;
(b) Managing director or proposed managing
director;
(c) *[Managing agent or proposed managing
agent;
(d) Secretaries and treasurers or proposed
secretaries and treasurers];
(e) Manager or proposed manager.
Any
provision in the articles of the company, or in any contract irrespective of
the time when it was entered into, as to the appointment of and remuneration
payable to the persons referred to in (a), (b), (c), (a) and (e) above.
If
the share capital of the company is divided into different classes of shares,
the right of voting at meetings of the company conferred by, and the rights in
respect of capital and dividends attached to, the several classes of shares
respcctively.
1
..Shares
of Rs
.. Fully paid. 2
..shares
upon which Rs
.per share credited as paid. 3
debentures
Rs
..
Number and amount of shares and debentures agreed to
be issued as fully or partly paid up otherwise than in cash.
4. Consideration:
The
consideration for the intended issue of those shares and debentures.
1
shares
of Rs
.. And
debentures of Rs
Number, description and amount of any shares or
debentures which any person has or is entitled to be given an option to
subscribe for, or to acquire from, a person to whom they have been allotted or
agreed to be allotted with a view to his offering them for sale.
2. Until
Period
during which the option is exercisable.
3. 4. Consideration
Price to be paid for shares or debentures subscribed
for or acquired unde- the option.
Consideration
for the option or the right to option.
5. Names and addresses
Persons to whom the option or the right to option
was given or, if given to existing shareholders or debenture holders as such,
the relevant shares or debentures.
Names,
occupations and addresses of vendors of property purchased or acquired, or
proposed to be purchased or acquired by the company except where the contract
for its purchase or acquisition was entered into in the ordinary course of the
business intended to be carried on bv the company or the amount of the purchase
money is not material.
Total
purchase price: Rs
.. Cash Rs
.. Shares Rs
.. Debentures Rs
.. Goodwill Rs
..
Amount
(in cash, shares or debentures) payable to each separate vendor.
Amount
(if any) paid or payable (in cash, shares or debentures) for each such
property, specifying amount (if any) paid or payable for goodwill.
Short
particulars of every transaction relating to each such property which was
completed within the two preceding years and in which any vendor to the company
or any person who is, or was at the time thereof, a promoter, director or
proposed director of the company had any interest, direct or indirect.
Amount
paid
.. Amount
payable
.
Amount (if any) paid or payable as commission for
subscribing or agreeing to subscribe or procuring or agreeing to procure
subscriptions for any shares or debentures in the company; or
Rate
of the commission. Rate
percent
The
number of shares, if any, which persons have agreed to subscribe for a
commission.
If
it is proposed to acquire any business, the amount, as certified by the persons
bv whom the accounts of the business have been audited, of the net profits of
the business in respect of each of the five years immediately preceding the
date of this statement, provided that in the case of a busiriesswhichhas been
carried on for less than five years and the accounts of which have only been
made up in respect of four years, three years, two years or one year, the above
requirements shall have effect as if references to four years, three year's,
two years or one year, as the case may be, were substituted for references to
five years, and in any such case the statement shall say how long the business
to be acquired has been carried on.
Where
the financial year with respect to which the accounts of the business have been
made up is greater or less than a year, references to five years, four years,
three years, two years, and one year in this paragraph shall have effect as if
references to such number of financial years as in the aggregate, cover a
period of not less than five years, foui- years, three years, two years or one
year, as the case may be, were substituted for references to three years, two
years and one year respectively.
Estimated amount of preliminary expenses. Rs
.
By
whom those expenses have been paid or are payable.
Name of
promotor
.. Amount
Rs
Consideration
.. Name
of promotor
.. Nature
an value of benefit
Consideration
.
Amount
paid or intended to be paid to any promoter.
Consideration
for the payment
Any
other benefit given or intended to be given to any promoter
Consideration
for the benefit
Dates
of, parties to, and general nature of-
(a) Contract appointing or
fixing the remuneration of directors, managing director *[, managing agent,
secretaries and treasurers,] or manager; and
(b) Every other material
contract (other than (i) contracts entered into in the ordinary course of the
business intended to be carried on by the company or (it) entered into more
than two years before the delivery of this statement)
Time
and place at which (1) the contracts or copies thereof or (2)(i) in the case of
a contract notreduced into writing, a memorandum giving full particulars
thereof, and (ii) in the case of a contract whollv or pa@tlv in a language
other than English, a copy of' a translation thereof in English or embodying a
translation in English of the parts in the other language, as the case in ay
be, being a translation cci iified in the prescribed manner to be a correct
translation, may be inspected.
Names
and addresses of the auditors of the company (if any)
Full
particulars of the nature and extent of the interest of every director,
managing director *[, managing agent, secretaries and treasurers] or manager in
the promotion of or in the property proposed to be acquired by the company, or
where the interest of such a director consists in being a partner in a firm,
the nature and extent of the interest of the firm, with a statement of all sums
paid or agreed to be paid to him or to the firm in cash or shares, or
otherwise, by any person either to induce him to become, or to qualify him as,
a director, or otherwise for services rendered by him or by the firm in
connection with the promotion or formation of the company.
.
(Signatures of the persons abovenamed as directors
or proposed directors, or of their agents authorised in writing)
Date
..
REPORTS TO BE SET OUT
1. Where
it is proposed to acquire a business, a report made by accountants (who shall
be named in the statement) upon-
(a) The profits or losses of
the business in respect of each of the five financial years immediately
preceding the delivery of the statement to the Registrar; and
(b) The assets and
liabilities of the business as at the last date to which the accounts of the
business were made up.
2. (1)
Where it is proposed to acquire
shares in a body corporate which by reason of the acquisition or anything to be
done in consequence thereof or in connection therewith will become as
subsidiary of the company, a report made by accountants (who shall be named in
the statement) with respect to the profits and losses and assets and
liabilities of the other body corporate in accordance with sub-clause (2) or
(3) of this clause, as the case may require, indicating how the profits or
losses of the other body corporate dealt with by the report would, in respect
of the shares to be acquired, have concerned members of the company, and what
allowance would have fallen to be made, in relation to assets and liabilities
so dealt with, for holders of other shares, if the company had at all material
times held the shares to be acquired.
(2) If the other body
corporate has no subsidiaries, the report referred to in subclause (1) shall -
(a) So far as regards profits
and losses, deal with the profits or losses of the body corporate in respect of
each of the five financial years immediately preceding the delivery of the
statement to the Registrar; and
(b) So far as regards assets
and liabilities, deal with the assets and liabilities of the body corporate as
at the last date to which the accounts of the body corporate were made up.
(3) If the other body
corporate has subsidiaries, the report referred to in subclause (1) shall-
(a) So far as regards profits
and losses, deal separately with the other body corporate's profits or losses
as provided by sub-clause (2), and in addition deal either-
(i) As a whole with the
combined profits or losses of its subsidiaries so far as they concern members
of the other body corporate; or
(ii) Individually with the
profits or losses of each subsidiary, so far as they concern members of the
other body corporate; or, instead of dealing separately with the other body
corporate's profits or losses, deal as a whole with the profits or losses of
the other body corporate, and, so far as they concern members of the other body
corporate, with the combined profits or losses of its subsidiaries; and
(b) So far as regards assets
and liabilities, deal separately with the other body corporate's assets and
liabilities as provided by sub-clause (2) and, in addition, deal either-
(i) As a whole with the
combined assets and liabilities of its subsidiaries, with or without the other
body corporate's assets and liabilities; or
(ii) Individually with the
assets and liabilities of each subsidiary; and shall indicate, as respect the
assets and liabilities of the subsidiaries, the allowance to be made for
persons other than members of the company.
PROVISIONS
APPLYING TO PARTS I AND II OF THIS SCHEDULE
3. (1) In this Schedule, the
expression'vendor'includes a vendor as defined in Part III of Schedule II.
(2) Clause 31 of Schedule If
shall apply to the interpretation of Part II of this Schedule as it applies to
the interpretation of Part II of Schedule II.
4. If
in the case of abusiness which has been carried on, orof a bodycorporatewhich
has been carrying on business, for less than five financial years, the accounts
of the business or body corporate have only been made up in respect of fo tir
such years, three such years, two such years or one such year, Part II of this
Schedule shall have effect as if references to four financial years, three
financial years, two financial years or one financial year, as the case may be,
were substituted for references to five financial years.
5. Any
report required by Part II of this Schedule shall either-
(a) Indicate by way of note
any adjustments as respect the figures of any sets and liabilities dealt with
by the report which prof its or losses or as appear to the person making the
report necessary; or
(b) Make those adjustments
and indicate that adjustments have been made.
6. Any
report by accountants required by Part II of this Schedule-
(a) Shall be made by
accountants qualified under this Act for appointment as auditors of a company;
and
(b) Shall not be made by any
accountant who is an officer or servant, or a partner or in the employment of
an officer or servant, of the company or of the company's subsidiary or holding
company or of a subsidiary of the coinpany's holding company.
For
the purposes of this clause, the expression "officer" shall include a
proposed director but not an auditor.
[See section
44(2) (b)]
FORM
OF STATEMENT IN LIEU OF PROSPECTUS TO BE DELIVERED TO
REGISTRAR
BY A PRIVATE COMPANY ONB ECOMING A PUBLIC
COMPANY
AND REPORTS TO BE SET OUT THEREIN
FORM
OF STATEMENT AND PARTICULARS TO BE CONTAINED THEREIN
THE
COMPANIES ACT, 1956
Statement
in lieu of prospectus delivered for registration by
............................................................................................................................
[Insert
the name of the company]
PURSUANT
TO CLAUSE (b) OF SUB-SECTION (2) OF SECTION 44 OF
THECOMPANIESACT,
1956
Delivered
for registration by
The nominal share capital of the
company Rs
.
Divided into
.shares
of Rs
.each
.
.
Amount (if any) of above capital, which Shares of Rs ..each
Consists of redeemable preference shares
The
earliest date on which the company has power to redeem these shares.
Names, addresses, descriptions and occupations of -
(a) Directors or proposed directors;
(b) Managing director or proposed managing
director;
(c) *[Managing agent or proposed managing
agent;
(d) Secretaries and treasurers or proposed
secretaries and treasurers];
(e) Manager or proposed manager.
Any
provision in the articles of the company, or in any contract irrespective of
the time when it was entered into, as to the appointment of and remuneration
payable to the persons referred to in (a), (b), (c), (a) and (e) above.
Amount
of shares issues issued.
..Shares
Amount
of commission paid or payable in connection therewith.
Amount
of discount if any, allowed on the issue of any shares, or so much thereof as
has not been written off the date of the statement. Unless more than two years
have elapsed since the date on which the company ws wntitled to commence
business: -
Amount
of preliminary expenses. Rs
..
Name of
promotor
. Amount
Rs
. Consideration
.. Name
of promotor
Nature
and value of benefit
.
.. Consideration
.
By whom those expenses have been paid or are
payable.
Consideration
for the payment.
Amount
paid or intended to be paid to any promoter.
Consideration
for the benefit.
If
the share capital of the company is divided into different classes of shares,
the right of voting at meetings of the company conferred by, and the rights in
respect of capital and dividends attached to, the several classes of shares
respcctively.
1
..Shares
of Rs
.. Fully paid. 2
..shares
upon which Rs
.per share credited as paid. 3
debentures
Rs
..
Number and amount of shares and debentures agreed to
be issued as fully or partly paid up otherwise than in cash.
4. Consideration:
The
consideration for the intended issue of those shares and debentures.
1
shares
of Rs
.. And
debentures of Rs
Number, description and amount of any shares or
debentures which any person has or is entitled to be given an option to subscribe
for, or to acquire from, a person to whom they have been allotted or agreed to
be allotted with a view to his offering them for sale.
2. Until
Period
during which the option is exercisable.
3. 4. Consideration
Price to be paid for shares or debentures subscribed
for or acquired unde- the option.
Consideration
for the option or the right to option.
5. Names and addresses
Persons to whom the option or the right to option
was given or, if given to existing shareholders or debenture holders as such,
the relevant shares or debentures.
Names,
occupations and addresses of vendors of property purchased or acquired, or
proposed to be purchased or acquired by the company except where the contract
for its purchase or acquisition was entered into in the ordinary course of the
business intended to be carried on bv the company or the amount of the purchase
money is not material.
Total
purchase price: Rs
.. Cash Rs
.. Shares Rs
.. Debentures Rs
.. Goodwill Rs
..
Amount
(in cash, shares or debentures) payable to each separate vendor.
Amount
(if any) paid or payable (in cash, shares or debentures) for each such
property, specifying amount (if any) paid or payable for goodwill.
Short
particulars of every transaction relating to each such property which was
completed within the two preceding years and in which any vendor to the company
or any person who is, or was at the time thereof, a promoter, director or
proposed director of the company had any interest, direct or indirect.
Amount
paid
.. Amount
payable
.
Amount (if any) paid or payable as commission for
subscribing or agreeing to subscribe or procuring or agreeing to procure
subscriptions for any shares or debentures in the company; or
Rate
of the commission. Rate
percent
The
number of shares, if any, which persons have agreed to subscribe for a
commission.
If
it is proposed to acquire any business, the amount, as certified by the persons
bv whom the accounts of the business have been audited, of the net profits of
the business in respect of each of the five years immediately preceding the
date of this statement, provided that in the case of a busiriesswhichhas been
carried on for less than five years and the accounts of which have only been
made up in respect of four years, three years, two years or one year, the above
requirements shall have effect as if references to four years, three year's,
two years or one year, as the case may be, were substituted for references to
five years, and in any such case the statement shall say how long the business
to be acquired has been carried on.
Where
the financial year with respect to which the accounts of the business have been
made up is greater or less than a year, references to five years, four years,
three years, two years, and one year in this paragraph shall have effect as if
references to such number of financial years as in the aggregate, cover a
period of not less than five years, foui- years, three years, two years or one
year, as the case may be, were substituted for references to three years, two
years and one year respectively.
Dates of, parties to, and general nature of-
(a) Contract appointing or
fixing the remuneration of directors, managing director *[, managing agent,
secretaries and treasurers,] or manager; and
(b) Every other material
contract (other than (i) contracts entered into in the ordinary course of the
business intended to be carried on by the company or (it) entered into more
than two years before the delivery of this statement)
Time
and place at which (1) the contracts or copies thereof or (2)(i) in the case of
a contract notreduced into writing, a memorandum giving full particulars
thereof, and (ii) in the case of a contract whollv or pa@tlv in a language
other than English, a copy of' a translation thereof in English or embodying a
translation in English of the parts in the other language, as the case in ay
be, being a translation cci iified in the prescribed manner to be a correct translation,
may be inspected.
Names
and addresses of the auditors of the company (if any)
Full
particulars of the nature and extent of the interest of every director,
managing director *[, managing agent, secretaries and treasurers] or manager in
the promotion of or in the property proposed to be acquired by the company, or
where the interest of such a director consists in being a partner in a firm,
the nature and extent of the interest of the firm, with a statement of all sums
paid or agreed to be paid to him or to the firm in cash or shares, or
otherwise, by any person either to induce him to become, or to qualify him as,
a director, or otherwise for services rendered by him or by the firm in
connection with the promotion or formation of the company.
.
(Signatures of the persons abovenamed as directors
or proposed directors, or of their agents authorised in writing)
Date
..
REPORTS
TO BE SET OUT
1. If
unissued shares or debentures of the company are to be applied in the purchase
of a business, a report madeby accountants (who shall be named in the
statement) upon-
(a) The profits or losses of
the business in respect of each of the five financial years immediately
preceding the delivery of the statement to the Registrar; and
(b) The assets and
liabilities of the business as at the last date to which the accounts of the
business were made up.
2. (1)
If unissued shares or debentures
of the coii-tpany are to be applied directly orindirectly in any
mannerresultingirt the acquisition of shares in a body corporate which by
reason of the acquisition or anything to be done in consequence thereof or in
connection therewith will become a subsidiary of the companv, a report made by
accountants (who shall be named in the statement) with respect to the profits
and losses and assets and liabilities of the other bodv corporate in accordance
with sub-clause (2) or (3) of this clause, as the case may require, indicating
how the profits or losses of the other body corporate dealt with by the report
would, in respect of the shares to be acquired, have concerned members of the
company, and what allowance would have fallen to be made, in relation to assets
and liabilities so dealt with, for holders of other shares, if the company had
at all material times held the shares to be acquired. (2) If the other body
corporate has no subsidiaries, the report referred to in subclause (1) shall-
(a) So far as regards profits and losses, deal with the profits or losses of the bodv corporate in respect of each of the five financial vears immediately preceding the deliverv of the statement to the Registrar; and
(b) So far as regards assets
and liabilities, deal with the assets and liabilities of the body corporate as
at the last date to which the accounts of the body corporate were made up.
(3) If the other body
corporate has subsidiaries, the report referred to in subclause (1) shall-
(a) So far as regards profits
and losses, deal separately with the other body corporate's profits or losses
as provided by sub-clause (2), and in addition deal either-
(i) As a whole with the
combined profits or losses of its subsidiaries, so far as they concern members
of the other body corporate; or
(ii) Individually with the
profits or losses of each subsidiary, so far as they concern members of the
other body corporate;
Or,
instead of dealing separately with the other body corporatces profits or
losses, deal as a whole with the profits or losses of the other body corporate
and, so far as they concern members of the other body corporate, with the
combined profits or losses of its subsidiaries; and
(b) So far as regards assets
and liabilities, deal separately with the other body corporate's assets and
liabilities as provided by sub-clause (2) and in addition, deal either-
(i) As a whole with the
combined assets and liabilities of a subsidiaries, with or without the other
body corporate's assets and liabilities; or
(ii) Individually with the
assets and liabilities of each subsidiary; and shall indicate, as respects the
assets and liabilities of the subsidiaries, the allowance to be made for
persons other than members of the company.
PROVlSIONS
APPLYING TO PARTS I AND II OF THIS SCHEDULE
3. (1) In this
Schedule, the expression "vendor" includes a vendor as defined in
Part III of Schedule II.
(2) Clause 31 of Schedule II
shall apply to the interpretation of Parts I and II of this Schedule as it
applies to the interpretation of Part II of Schedule II.
4. If
in the case of a business which has been carried on, or of a body corporate
which has been carrying on business, for less than five financial years, the
accounts of the business or body corporate have only been made up in respect of
four such years, three such years, two such years or one such year, Parts I and
II of this Schedule shall have effect as if ref erences to four financial
years, three financial years, two financial years or one financial year, as the
case may be, were substituted for references to five financial years.
5. Any
report required by Part II of this Schedule shall either-
(a) Indicate by way of note
any adjustments as respects the figures of any profits or losses or assets and
liabilities dealt with by the report which appear to the persons making the
report necessary; or
(b) Make those adjustments
and indicate that adjustments have been made.
6. Any
report by accountants required by Part II of this Schedule shall-
(a) Be made by accountants
qualified under this Act for appointment as auditors of a company; and
(b) Shall not be made by any
accountant who is an officer or servant or a partner or in the employment of an
officer or servant, of the company, or of the company's subsidiary or holding
company or of a subsidiary of the company's holding company.
For
the purposes of this clause, the expression 'officer" shall include a
proposed director but not an auditor.
[See
section 159]
Annual
return
CONTENTS
AND FORM OF ANNUAL RETURN OF A COMPANY
HAVING
A SHARE CAPITAL
CONTENTS
1. The
address of the registered office of the company.
2. A
summary specifying the f ollowing in respect of each class of shares:
(a) The amount of the
authorised share capital of the companv and the number of shares into which it
is divided;
(b) The number of shares
issued, from the date of commencement of the company to the date of the
company's last annual general meeting;
9. Schedule V was
substituted by Notification No. GSR 389(E) dated 15-5-1995. Prior to their substitution, Parts I and 11
of Schedule V were amended by Notification Nos. GSR 1408, dated 19-12-1950,SRO 1435,dated7-5-1957, SRO 26, dated
23-12-1957, GSR 279, dated 17-4-1958, GSR 1177, dated 8-12-1958, GSR221,
dated2l-2-1961, GSR631, dated23-4-1966, GSR 1519,dated 15-10-1976 and GSR
784(E), dated 13-7-1988,
(c) The number of shares
subscribed upto the date aforesaid;
(d) The paid up share capital
upto that date.
3. The
total number of non-convei-tible, partly convertible and fully convertible
debentures issued and outstanding on the date referred to in sub-clause (b) of
clause 2.
4. Particulars of the total
amount of the indebtedness of the company on the date referred to in sub-clause
(b) of clause 2 in respect of all charges including mortgages, which are
required to be registered with the Registrar under this Act.
5. A
list-
(a) Containing the names and
addresses of all persons who, on the date of the company's last annual general
meeting, are members or debenture holders of the company and of persons who
have ceased to be members or debenture holders on or before that day and since
the date of the annual general meeting with reference to which the last return
was submitted or in the case of the first return, since the incorporation of
the company;
(b) Stating the number of
shares or debentures held by each of the existing members or debenture holders,
as the case may be, at the date referred to in sub-clause (b) of clause 2,
specifying the number of shares or debentures transferred since the date of the
annual general meeting with reference to which the last return was submitted or
in the case of the first return, since the date of the incorporation of the
company by persons who are still members or debenture holders respectively, the
dates of registration of transfers, and the names of transferees and the relevant
folio containing particulars thereo
(c) If the names aforesaid
are not arranged in alphabetical order having annexed thereto an index
sufficient to enable the name of any person therein to be easily found.
6. Particulars
specifying natxie, nationality, date of birth, date of appointment, Election
Commission's Identity Card No. If issued and residential address with respect
to the persons who at the date of the company's last annual general meeting are
the directors of the company and with respect to any person who at the date is
the manager or the secretary of the company together with all such particulars,
with respect to those who had ceased to hold such office that is the office of
the director, manager or secretary on or before the date of the last annual
general meeting and since the date of the annual general meeting with respect
to which the last return was submitted or in the case of the first return,
since the incorporation of the company.
7. Information
whether the shares of the company are listed on a recognised stock exchange.
FORM OF
ANNUAL RETURN OF A COMPANY HAVING GAS SHARE CAPITAL.
ANNUAL
RETURN
THE
COMPANIES ACT, 1956 (1 OF 1956)
SCHEDULE
V
[See
section 1591
I. Registration
Details
Registration
No. State
Code (Refer Code List)
Registration Date Whether
shares listed on
Date
Month Year Recognised stock exchange (s)
Y-Yes
N-No
If
Yes, Stock Exchange Code (Totals)
(Refer Code List 2)
AGM Held Y-Yes
Date of AGM/
N-No
Due date
Date Month
Year
II. Name
and Registered Office Address of Company:
Company
Name:
Address:
Town/City
State Pin
Code
Telephone
With
STD Area Code Number
Fax
Number
Mail
Address
III. Capital
Structure of the Company (Amount in Rs. Thousands)
Authorised
Share Capital Breakup
Type of Shares No. of
Shares Nominal value (in Rs.)
(i) Equity
(ii)
Preference
Total
Authorised Capital
Issued Share Capital Breakup
Type of Shares No. Of
Shares Nominal value (in Rs.)
(i) Equity No.
(ii) Preference
Total
Issued Capital
Subscribed Share Capital Breakup
Type
of Shares No. of Shares Nominal value (in
Rs,)
(i)
Equity
(ii) Preference
Total
Subscribed Capital
Paid-up Share Capital Breakup
Type of Shares No. of Shares Amount paid up (in
Rs.)
(i)
Equity
(ii) Preference
Total
Paid-up Capital
Debentures Breakup
Type of Debenture No. Of
Debentures Nominal value
(in Rs.)
(i) Non-Convertible
(ii) Partly Convertible
(iii) Fully Convertible
Total
Amount
IV. Directors/Manager/Secretary
Information (Past and Present) [Refer clause 6 of Part I of Schedule V]
Name
Surname Middle
Name First Name
Nationality I - Indian Date of Birth
F
- Foreign Date Month
Year
Designation C - Chairman-cum-Managing Director
W
- Whole Time Director, S - Secretary, R - Manager
D
- Director, M - Managing Director
Date of Date of
Appointment Date Month Year Ceasing Date Month Year
Election Commission
Identity Card No.
(If issued)
Name
Surname Middle Name First Name
Nationality I - Indian Date of Birth
F
- Foreign Date Month
Year
Designation C - Chairman-cum-Managing Director
W
- Whole Time Director, S - Secretary, R - Manager
D
- Director, M - Managing Director
Date of Date of
Appointment Date Month Year Ceasing Date Month Year
Election Commission
Identity Card No.
(If issued)
-------------------------------------------------------------------------------------------------------------
Residental
Address
Town/City
District
State
Pin Code
----------------------------------------------------------------------------------------------------------------
Residental
Address
Town/City
District
State
Pin Code
----------------------------------------------------------------------------------------------------------------
Residental
Address
Town/City
District
State
Pin Code
-----------------------------------------------------------------------------------------------------------------
Note:
Additional sheets may be attached if needed.
V. Details
of Shares/Debentures held at date of AGM
Ledger
Folio of Share/Debenture Holder
Share/Debenture
Holder's
Name Surname Middle name First name
Father's/
Husband's
Name
Type
of Share/ 1 - Equity, 2
Preference Shares
Debenture 3 - Debentures, 4 - Stock
Number
of Shares/ Amount
Debentures
held/ per
share
Stock,
if any (in
Rs.)
------------------------------------------------------------------------------------------------------------
Ledger
Folio of Share/Debenture Holder
Share/Debenture
Holder's
Name Surname Middle name First name
Father's/
Husband's
Name
Type
of Share/ 1 - Equity, 2
Preference Shares
Debenture 3 - Debentures, 4 - Stock
Number
of Shares/ Amount
Debentures
held/ per
share
Stock,
if any (in
Rs.)
----------------------------------------------------------------------------------------------------------------
Ledger
Folio of Share/Debenture Holder
Share/Debenture
Holder's
Name Surname Middle name First name
Father's/
Husband's
Name
Type
of Share/ 1 - Equity, 2
Preference Shares
Debenture 3 - Debentures, 4 - Stock
Number
of Shares/ Amount
Debentures
held/ per
share
Stock,
if any (in
Rs.)
----------------------------------------------------------------------------------------------------------------
Note:
Separate sheet may be attached if needed.
If number of such shareholders exceed 10. If so desired a text file may be submitted on a floppy or a
cartridge tape in the format given in Annexure III.
----------------------------------------------------------------------------------------------------------------
Address
Town/City
District
State
Pin Code
----------------------------------------------------------------------------------------------------------------
Address
Town/City
District
State
Pin Code
----------------------------------------------------------------------------------------------------------------
Address
Town/City
District
State
Pin Code
-----------------------------------------------------------------------------------------------------------------
VI. Details
of Shares/Debentures transfers since date of last AGM (or in the case of the
first return at any time since the incorporation of the company)*
Date of Previous AGM
Date Month Year
-----------------------------------------------------------------------------------------------------------------
Date of Registration of
Transfer
of Shares
Date Month Year
Type of Transfer 1 -
Equity, 2 - Preference Shares,
3
- Debentures, 4 - Stock
Number of Shares/ Amount
Debentures Transferred per
Share
(In
Rs.)
Ledger Folio of Transferor
Transferor's
Name
Surname Middle Name First Name
Ledger, Folio of Transferee
Transferee's
Name
Surname Middle Name First Name
---------------------------------------------------------------------------------------------------------------
Date of Registration of
Transfer
of Shares
Date Month Year
Type of Transfer 1 -
Equity, 2 - Preference Shares,
3
- Debentures, 4 - Stock
Number
of Shares/ Amount
Debentures Transferred per
Share
(In
Rs.)
Ledger Folio of Transferor
Transferor's
Name
Surname Middle Name First Name
Ledger, Folio of Transferee
Transferee's
Name
Surname Middle Name First Name
.
Note: Separate
sheet may be attached if needed. If
number of such transactions exceed 10, if so desired a text file may be
submitted on a floppy or cartridge in the format given in Annexure IV.
VII. Indebtedness
of the Company (AmountinRs.Thousands) [Secured Loans including interest
outstanding/accrued but not due for payment].
Amount
VIII. Equity
Share Capital Breakup (Percentage of Total Equity)
(i) Govt. [Central &
State(s)] (ii) Govt. Companies
(iii) Public Financial
Institutions (iv) Nationalised/ Other Banks
(v) MutualFunds (vi) Venture Capital
(vii) Foreign Holdings (viii) Bodies Corporate
(FIIs/FCs/FFIs/NRIs/OCBs) (Not mentioned above)
(ix) Directors/Relatives of (x) Other top 50 shareholders
Directors (other
than those listed above)
----------------------------------------------------------------------------------------------------------------
We certify that:
(a) The return states the
facts as they stood on the date of the annual general meeting aforesaid,
correctly and completely;
(b) Since the date of the
last annual return the transfer of all shares, debentures, the issue of all
further certificates of shares and debentures has been appropriately recorded
in the books maintained f or the purpose;
(c) The whole of the amount
of dividend remaining unpaid or unclaimed for a period of three vears f rom the
date of transf er to the special account has been transf erred to the General
Revenue Account of the Central Government as required under sub-section (5) of
section 205A;
(d) The company has not,
since the date of the annual general meeting with reference to which the last
return was submitted, or in the case of a first return, since the date of the
incorporation of the company, issued any invitation to the public to subscribe
for any shares or debentures of the company;
(e) Where the annual return
discloses the fact that the number of members of the company exceeds fifty, the
excess consists wholly of persons who under sub-clause (1) of section 3 are not
to be included in reckoning the number of fifty;
(f) Since the date of annual
general meeting with reference to which the first return was submitted or in
the case of a first return since the date of the incorporation of the private
company, no public company or deemed public companv has or have held
twenty-five per cent or more of its paid up share capital;
(g) The company did not have
an average turnover of Rs. 10 crores or more during the
(h) Since the date of the
annual general meeting with reference to which the last annual return was
submitted or since the date of incorporation of the company, if it is first
return, the company did not hold twenty-five per cent or more of the paid up
share capital of one or more public companies; and
(i) The private company did
not accept or renew or invite deposits from the public.
Signed
Director
DirectorlManaging DirectorlManagerlSecretary
Secretary in whole time practice
.
CP No
Note: Certificates
to be given by a Director and Manager/Secretary or by two Directors where there
is no manager or secretary. In the case
of a company whose shares are listed on a recognised stock exchange, the
certificates shall also be signed by a secretary in whole time practice.
ANNEXURE
I
CODE
LIST 1: STATE CODES
|
State
Code |
State
Name |
State
Code |
State
Name |
|
01 03 05 07 09 11 13 15 17 20 22 24 53 55 57 59 |
Andhra
Pradesh Bihar Haryana Jammu
& Kashmir Kerala Maharashtra Meghalaya Orissa Rajasthan Uttar
Pradesh Sikkim Goa Chandigarh Delhi Lakshadweep Pondicherry |
02 04 06 08 10 12 14 16 18 21 23 52 54 56 58 |
Assam Gujarat Himachal
Pradesh Karnataka Madhya
Pradesh Manipur Nagaland Punjab Tamil
Nadu West
Bengal Arunachal
Pradesh Andaman
Islands Dadra
Islands Daman
& Diu Mizoram |
ANNEXURE II
CODE LIST2: STOCK EXCHANGE CODES
|
Exchange Code |
Stock Exchange |
Exchange Code |
Stock Exchange |
||
|
Al A2 A4 A8 A16 A32 |
Bombay Delhi Calcutta Madras Bangalore Hyderabad |
BI B2 B4 B8 B16 B32 |
OTCEI Nagpur Coimbator Cochin MP Jaipur |
||
|
Exchange
Code |
Stock Exchange |
Exchange Code |
Stock Exchange |
|
A64 A128 A256 A512 A1024 |
Ahmedabad Pune Kanpur Ludhiana National Stock Exchange |
B64 B128 B256 B512 B1024 B2048 |
Rajkot Gauhati Bhubaneshwar Magadh Vadodara Rajkot |
Note: If listed in
more than one exchange, add the respective codes to arrive at the Totals under
the same category. For example a
company listed in Bombay, Pune, Nagpur and Cochin win fill in the exchange
codes as follows:
ANNEXURE
III
SHARES/DEBENTURES
HELD: (FORMAT FOR FLOPPIES)
I. Registration
Details
Field Type Length Format/
Value
State Code Number 2 -
Registration
No. Number 6 -
Date
of AGM Date 8 (DD/MM/YY)
Date
of last AGM Date 8 (DD/MM/YY)
Note: The
first text file cid.txt will contain the data for above field for Company
Identification.
V. Shares
held by Shareholders:
Field Type Length Format/Value
Ledger foilo of
shareholder Character 8
Name of shareholder Character 20 Surname/Middle
Name/
First
Name
Father's/Husband's name Character 20 Surname/MiddleNaine/
First
Name
Residential address Character 40 -
Town/City Character 20 -
State Character 20 -
Pin Code Number 6 -
Type of Share/Debcnture Number 1 1-Equity, 2- Preference,
3-Debentures,
4 - Stock
Number of Shares/
Debenture Number 6
Amount per Share/
Debenture Number 6
-----------------------------------------------------------------------------------------------------------
Note: The second text file shh.txt will contain
the data for above fields for the sharefiolders/ debentureholders.
The
files may be submitted in 5.25 or 3.5" floppies (preferably 3.5") or
60/l50 MB Normal Cartridge Tapes (mini Cartridges not acceptable). The Floppies/Cartridges may be formatted in
DOS/ Unix.
ANNEXURE IV
SHARES TRANSFERRED: (FORMAT FOR FLOPPIES)
I. Registration Details:
Field Type Length Format/Value
State Code Number 2 -
Registration No. Number 6 -
Date of AGM Date 8 (DD/MM/YY)
Date of last AGM Date 8 (DD/MM/YY)
Note: The
first text file cid.txt will contain the data for above field for Company
Identification.
VI. Transactions
after the last AGM:
Field Type Length Format/Value
Date of transfer of
shares Date 8 (DD/MM/YY)
Type of Share/Debenture Number 1 1-Equity, 2-Preference,
3-Debentures,
4 - Stock
Number of Shares/
Debentures Number 6
Amountper Share/
Debenture Number 6
Ledger folio
ofTransferor Character 8
Name of Transferor Character 20 Surname/MiddleName/
First
Name
Ledger folio of
Transferee Character 8
Name of Transferee Character 20 Surname/MiddleName/
First
Name
Note: The
second text file sht.txt will contain the data for above fields for each such
share transfer. The files may be submitted in 5.25" or 3.5' floppies
(preferably 3.5') or 60/150 MB Normal Cartridge Tapes (mini Cartridges not
acceptable). The Floppies/Cartridges
may be formatted in DOS/Unix.
SCHEDULE
VI
[See section 211]
10[PART
I
FORM
OF BALANCE SHEET
11[The balance sheet of a company shall be either in horizontal form or
vertical from:
A. HORIZONTAL FORM]
BALANCE SHEET OF
[Here enter the name of the
company]
AS AT
[Here enter the date as at which the balace sheet is made out]
|
Instructions in accordance with which
liabilities should be made out |
LIABILITIES |
ASSETS |
Instructions in accordance with which
assets should be made out |
||
|
Figures for the previous year |
Figures for the current previous year Rs. (b) |
Figures for the previous year Rs. (b) |
Figures for the current year Rs. (b) |
||
|
*Terms of redemption or conversion (if any)
of any redeemable preference capital to be stated, together with earliest
date of redemption or conversion. |
*SHARE
CAPITAL: Authorised
shares
of Rs.
each. Issued (distinguishing between the various classes of capital and
stating the particulars specified below, in respect of each class)
. shares
of Rs
each. |
FIXED
ASSESTS Distinguishing as far as possible between expenditure upon (a)
good-will, (b) land, (c) buildings, (d) leaseholds, (e) railway sidings, (f)
plant and machinery, (g) furniture and fittings, (h) development of property,
(i) patents, trademarks and designs, (j) livestock, and (k) vehicles etc. |
*Under each head the original cost, and the
aditions thereto and deductins therefrom during the year, and the total
depreciation written off or provided upto the end of the year to be stated. |
||
10. Substituted by the Companies (Amendment)
Act, 1960.
11. Inserted by notification No. G.S.R 220
(E), dated 12-3-1979.
|
Instructions in accordance with which
liabilities should be made out |
LIABILITIES |
ASSETS |
Instructions in accordance with which
assets should be made out |
||
|
Figures for the previous year |
Figures for the current previous year Rs. (b) |
Figures for the previous year Rs. (b) |
Figures for the current year Rs. (b) |
||
|
Particulars of any option on unissued share
capital to be specidied. Particulars of the different classes of
preference shares to be given. 13[*Specify the source from which bonus share
are issued, e.g. capitalization jof profits or Reserves or from Share Premium
Account.] |
Subscriber (distinguishing between the various clases of capital and
stating the particulars specified below, in respect of each class).
(c)
..shares of Rs
..each . Rs
..called up. Of the above shares
are allotted as fully paid-up pursuant to a
contract without payments being received in cash.] 14[ Of the above shares
are allotted as
fully paid-up by way of bonus shares] Less: Calls unpaid: *[(i) By managing agent or
secretaries and treasurers and where the managing agent or secretaries and
treasures are a firm, by the parteners thereof, and where the, managing agent
or secretaries and treasurers are a private company, by the directors or
memberes of that company.] (ii) By directors. (iii) By otheres. |
|
12[Where the original cost of aforesaid and
additions and deduct- ions thereto, relate to any fixed asset which has been
acquired from a country outside India, and in consequence of a change at any
time after the acquisition of such asset, there has been an increase or
redution in the liability of the company, as expressed in Indian currency,
for making payment towards the whole or a part of the cost of he asset or for
repayment of the whole or a part of moneys borrowed by the company from any
person, directly or indirectly, in any foreign currency specifically for the
purpose of acquiring the assets (being in |
||
12. Inserted by Notification No. G.S.R.129,
dated 3-1-1968.
13. Inserted by Notification No.G.S.R. 414,
dated 21-3- 1961.
14. Substituted ibid.
|
Instructions in accordance with which
liabilities should be made out |
LIABILITIES |
ASSETS |
Instructions in accordance with which
assets should be made out |
||
|
Figures for the previous year |
Figures for the current previous year Rs. (b) |
Figures for the previous year Rs. (b) |
Figures for the current year Rs. (b) |
||
|
15[Any capital profit on reissue of forfeited
shares should be transferred to Capital Reserve] |
16[Add: Forfeited shares (amount originally
paid)]. |
|
Either case the liability existing
immediately before the date on which the change in the rate of exchange takes
effect), the amount by which the liability is so increased or reduced during
the year, shall be added to, or, as the cse may be deducted from the cost,
and the amount arrived at after such adition or deduction shall be taken to
be the cost of the fixed asset. Explanation1: This paragraph applies in
relation to all balance sheets that may be made out as at the 6th
day of June. 1966, or any day thereafter and where, at the date of issue of
the notification of the Government of India, in the Ministry of Industrial
Development and Company Affairs (Department of Company Affairs), G.S.R. No.
129, dated the 3rd day of January, 1968, any balance sheet, in
relation to which this paragraph applies, has already been made out and laid
before the company in annual General Meeting, the adjustment referred to in
this paragraph may be made in the first balance sheet made out after the
issue of the said notification. |
||
15. Inserted by Notification No G.S.R. 414,
dated 21-3-1961.
16. Substituted ibid.
|
Instructions in accordance with which
liabilities should be made out |
LIABILITIES |
ASSETS |
Instructions in accordance with which
assets should be made out |
||
|
Figures for the previous year |
Figures for the current previous year Rs. (b) |
Figures for the previous year Rs. (b) |
Figures for the current year Rs. (b) |
||
|
|
|
|
Explanation 2: In this paragraph, unless the context otherwise
requires, the expressions rate of exchange, foreign currency shall have
the meaningsrespectively assigned to them under sub-section (1) of section
43A of the Income-tax Act, 1961), and Explanation 2 and Explanation 3 of the
said sub-section shall, as far as may
be apply in relation to the said paragraph as they apply to the said
sub-section (1). 17[In every case wherethe original cost
cannot be ascertained, without unreasonable expense or delay, the valuation
shown by the books shall be given. For the purposes of this paragraph, such
valuation shall be the net amount at which an asset stood in the companys
books at the commencement of this Act after deduction of the amounts
previously provided or written off for depreciation or diminution in value,
amount of sale proceeds shall be shown as deduction.] Where sums have been written off on a
reduction of capital or a revaluation of assets, every balance sheet, (after
the first balance sheet) subsequent to the reduction or revaluation shall
show the reduced figures and with the date of the reduction in place of the
original cost. |
||
|
Instructions in accordance with which
liabilities should be made out |
LIABILITIES |
ASSETS |
Instructions in accordance with which
assets should be made out |
||
|
Figures for the previous year |
Figures for the current previous year Rs. (b) |
Figures for the previous year Rs. (b) |
Figures for the current year Rs. (b) |
||
|
*Additions and deduction since last balance
sheet to be shown, under each of the specidied heads. The woed fund in relation to any
Reserve should be used only where such Reserve is specifically represented
by earmarked investments. |
*RESERVE AND SURPLUS: 19[(1)
Capital Reserves. (2) Capital Redemption Reserve. (3) Share Premium Account (cc). (4) Other reerves specifying the nature of each reerve and the amount
in respect thereof. Less: Debit balance in profit and loss account (if any) (h). (5) Surplus, i.e., balance in profit and loss account after providing
for proposed allocations, namely: (6) Proposed additions to reserves. (7) Sinking Funds] |
INVESTMENT: Showing nature of investment and mode of valuation, for example, cost
or market value and distinguishing between *(1) Investments in Government or Trust Securities. *(2) Investments in shares, debentures or bonds (showing separately
shares, fully paid-up and partly paid-up and partly paid-up and
alsodistinguishing the different classes of shares and showing also in
similar details investments in shares, debentures or bonds of subsidiary
companies. (3) Immovable properties. 20[(4) Investments in the capital of partnership firms.] 21[(5) Balance of unutilized monies raised by
issue] |
Each balance sheet for the first five years subsequent to the
date of the reduction, shall show also the amount of the reduction made. Similarly, where sums have been added by
writing up the assets, every balance sheet subsequent to such writing up
shall show the increased figures with the date of the increse in place of the
original cost. Each balance sheet for the first five years subsequent to the
date of writing up shall also show the amount of increase made. 18[Explanation:
Nothing contained in the precedint two paragraphs shall apply to any
adjustment made in accordance with the second paragraph.] *Aggregate amount of companys quoted investment and also the market
value therof shall be shown. Aggregate amount companys unquoted investements shall also be shown. 21[All
unutilized monies out of the issue must be separately disclosed in the
balancesheet of the company indicating the form in which unutilized funds
have invested] |
||
18. Inserted by Notification No. GSR 129,
dated 3-1-1968.
19. Substituted by Notification No. GSR 414,
dated 21-3-1961.
20. Inserted by Notification No. GSR. 494
(E), dated 9-11-1973.
21. Inserted by Notificatin No. 423 (E),
dated 13-9-1996.
|
Instructions in accordance with which
liabilities should be made out |
LIABILITIES |
ASSETS |
Instructions in accordance with which
assets should be made out |
||
|
Figures for the previous year |
Figures for the current previous year Rs. (b) |
Figures for the previous year Rs. (b) |
Figures for the current year Rs. (b) |
||
|
22[Loans from Directors, *[The managing
Agents, secretaries and Treasurers,] Manager should be shown separately. Interest accrued and due on Secured Loans
should be included under the appropriate sub-heads under the heads under the
head SECURED LOANDS.] *The nature of the security to be specified
in each case. Where loans have been guaranteed by
*[managing agents, secretaries and treasurers,] managers and /or directors, a
mention thereof shall also be made and also the aggregate amount of such
loans under each head. Terms of
redemption or conversion (if any) of debentures issued to be stated together
with earliest date of redemption or conversion. |
SECURED LOANS: *(1) Debentures. *(2) Loans and advances from banks. *(3) Loans and advances from subsidiaries. *(4) Other loans and advances. |
CURRENT ASSETS, LOANS AND ADVANCES: (A) CURRENT ASSETS: (1)
Interest accrued on Investments. (2) Store and spare parts. 22[(3) Loose tools.] (4) Stock-in trade. **(5)
Works-in-progress. (6) Sundry debtors: (a) Debts outstanding for a period
exceeding six months. (b) Other debts. 22[Less:Provision] |
Mode of
valuation of stock shall be stated and the amount in respect of raw material
shall also be stated separately wher e practicable. **Mode of valuation of works-in-progress
shall stated. In regard to sundry debtors particulars to
be given separately of (a) debts condidered good for which the company is
fully secured; and (b) debts considered good for which the company holds no
security other than the debtors personal security; and (c) debrts sonsidered
doubtful or bad. Debrts due by directors or other officers of the company or
any of them either severally or jointly with any other person or debts due by
firms or pribate companies respectively in which any deierector is a partner
or a director or a member to be separately stated. |
||
22. Substituted by Notification No. GSR.414,
dated, 21-3-1961.
|
Instructions in accordance with which
liabilities should be made out |
LIABILITIES |
ASSETS |
Instructions in accordance with which
assets should be made out |
||
|
Figures for the previous year |
Figures for the current previous year Rs. (b) |
Figures for the previous year Rs. (b) |
Figures for the current year Rs. (b) |
||
|
|
|
|
23[Debts due from other companies under the
same management within the meaning of sub-section 370, to be disclosed
with the names of the companies.] The maximum amount due by directors or
other officers of the company at any time durint the year to be shown by way
of a note. The 24[provisions]
to be shown under this head should not exceed the amount of debts stated to
be considered doubtful or bad and any surplus of such 24[provisions], if already created, should be
shown at wvery closing under Reserves and Surplus (in the Liabilities side)
under a separate sub-head Reserve for Doubtful or Bad Debts. |
||
23. Substitued by Notification No.GSR.78,
dated 4-1-1963.
24. Substituted by Notification No. GSR. 414,
dated 21-3-1961.
|
Instructions in accordance with which
liabilities should be made out |
LIABILITIES |
ASSETS |
Instructions in accordance with which
assets should be made out |
||
|
Figures for the previous year |
Figures for the current previous year Rs. (b) |
Figures for the previous year Rs. (b) |
Figures for the current year Rs. (b) |
||
|
26[Loans from Directors, *[the Managing
agents, secretaries and treasurers,] manager should be shown separately. Interest accrued and due on Unsecured Loans
should be included under the appropriate subheads under the head UNSECURED LOANS.] |
UNSECURED LOANS: (1) Fixed deposits. (2) Loans and advances from subsidiaries. *(3) Short-term loans and advances: (a)
From Banks. (b)
From others. (4) Other loans and advances: (a)
From banks. (b)
From others. |
25[(7A) Cash
balance on hand. *(7B) Bank balances: (a)
With
scheduled banks; and (b)
With others.] |
25[*In
regard to bank balances, particulars to be given separately of (a) The balances lying with Scheduled Banks on current accounts, call
accounts, and deposit accounts; (b) The name of the bankers other than Scheduled Banks and the balance
lying with each such banker on current accounts, call accounts and deposit
accounts and the maximum amount outstanding at any time during the year from
each such banker; and (c) The nature of the interest, if any of any directo or his relative
*[or the managing agent/ secretaries and treasurers of nay associate of the
latter] in each of the bankers (other than Scheduled Banks) referred to in
(b) above.] 26a[All
unutilized nonies out of the issue must be separately disclosed in the
balance sheet of the company indicating the from in which such unutilized
funds have been invested.] The above instructions regarding Sundry
Debtors apply to Loans and Advances also. |
||
25. Subsititued by Notification No. GSR. 78
dated 4-1-1963.
26. Inserted by Notificaiton No. GSR.414
dated 21-3-1961.
26a. Inserted by Notification No. GSR.423 (E)
dated 13-9-1996.
|
Instructions in accordance with which
liabilities should be made out |
LIABILITIES |
ASSETS |
Instructions in accordance with which
assets should be made out |
||
|
Figures for the previous year Rs. (b) |
Figures for the current previous year Rs. (b) |
Figures for the previous year Rs. (b) |
Figures for the current year Rs. (b) |
||
|
Where loans have
been guaranteed by *[managing agents, secretaries and treasurers,] managers
and/ or directors, a mention thereof shall also be made and also the
aggregate amount of such loans under each head. *See note (d) at foot of Form. 28a[The name(s) of the small scale industrial
undertaking(s) to whom the company owes a sum exceeding Rs. 1 lakh which is outstanding
for more than 30 days, are to be disclosed.] |
CURRENT LIABILITIES AND PROVISIONS: A. CURRENT
LIABILITIES: 28[(1) Acceptances. (2) Sundry creditors. 28a[(i)
Total outstanding dues to small scale industrial undertaking(s); and (ii)
Total outstanding dues of creditors other than small scale industrial
undertaking(s);] (3)
Subsidiary companies. (4) Advance payments and
unexpired discounts for the portion for which value has still to be given e.g.,
in the case of the following classes of companies:- News paper, Fire insurance, theatres,
clubs, banking, steamship companies, etc. |
(B) LOANS ADVANCES: (8) 27[(a)]
Advances and loans to subsidiaries. (b) Advances and loans to partnership firms
in which the company or any of its subsidiaries is a partner.] (9) Bills of
exchange. (10) Advances
recoverable in cash or in kind or for value to be received e.g., rates,
taxes, insurance, etc. (11) Balances on
current account with managing agents or secretaries and treasurers] (12) Balances with
customs, port trust, etc. (where payable on demand). |
|
||
27. Existing item 8 lettered
as sub-item (a) and sub-item (b) inserted by Notification No. GSR 494 (E),
dated 30-10-1973.
28. Substituted by Noticication
No.GSR 78, dated 4-1-1963.
28a. Inserted by Notification
No. GSR 129(E), dated 22-2-1999.
|
Instructions in accordance with which
liabilities should be made out |
LIABILITIES |
ASSETS |
Instructions in accordance with which assets
should be made out |
||
|
Figures for the previous year |
Figures for the current previous year Rs. (b) |
Figures for the previous year Rs. (b) |
Figures for the current year Rs. (b) |
||
|
The period for which
the dividends are in arrear or if there is more than one class of shares, the
dividends on each such class are in arrear, shall be stated. The amount shall be stated before duduction
of income tax, except that in the case of tax-free dividends the amount shall
be shown free of income-tax and the fact that it is so shown shall be stated. The amount of any
guarantees given by the company on behalf of directors or other officers of
the company shall be stated and where practicable, the general nature and
amount of each such contingent liability, if material, shall be specified. |
(5) Unclaimed dividends. (6) Other liabilities (if
any) (7) Interest accrued but
not due on loans.] B. PROVISION 29[(8) Provision for taxation. (9) Proposed dividends (10) Contingencies. (11) For provident fund
scheme. (12) For insurance, pension
and similar staff benefit schemes. (13) Other provisions.] [A foot note to the balance sheet may be added to show separately: - (1) Claims against the company not
acknowledged as debts. (2) Uncalled liability on shares partly
paid.] (3) Arrears of fixed cumulative dividends. (4) Estimated amount of contracts remaining to
be executed on capital account and not provided for. (5) Other money for which
the company is contingently liable.] |
MISCELLANEOUS EXPENDITURE: ( to the extent not written off 30[or
adjusted]): (1)
Preliminary expenses. (2)
Expenses including commission or brokerage on underwriting or subscription
of shares or debentures. (3)
Discount allowed on the issue of shares or debentures. (4)
Interest paid out of capital during constrution (also stating the rate
of interest). (5)
Development expenditure not adjusted. (6)
Other items (specigying nature). 31[PROFIT AND LOSS ACCOUNT] |
[Show here the debit balance of profit and loss account carried forward
after deduction of the uncommitted reserves, if any.] |
||
30. Inserted by Notification No. GSR 414, dated
21-3-1961.
31. Substituted, ibid.
32. Inserted, ibid.
NOTES
General instructions for preparation of balance sheet
(a) The information required
to be given under any of the items or sub-items in this Form, if it cannot be conveniently
included in the balance sheet itself, shall be furnished in a separate Schedule
or Schedules to be annexed to and to form part of the balance sheet. This is recommended when items are numerous.
(b) Nave Paise can also be
given in addition to Rupees, if desired.
(c) In the case of 33[subsidiary
companies] the number of shares held by the holding company as well as by the
ultimate holding company and its subsidiaries must be separately stated.
The
auditor is not required to certify the correctness of such shareholdings as
certified by the management.
33[(cc)
The item Share Premium Account"
shall include details of its utilisation in the manner provided in section 78
in the year of utilisation.]
(d) Short-term loans will
include those which are due for not more than one year as at the date of the
balance sheet.
(e) Depreciation written off
or provided shall be allocated under the different asset heads and deducted in
arriving at the value of fixed assets.
Dividends
declared by subsidiary companies after the date of the balance sheet 33 [should] not are
included unless they are in respect of period, which closed on or before the date
of the balance sheet.
(g) Any reference to benefits
expected from contracts to the extent not executed shall not be made in the
balance sheet but shall be made in the Board's report.
34[(h)
The debit balance in the Profit and
Loss Account shall be shown as a deduction from the uncommitted reserves, if
anv.]
(i) As regards Loans and
Advances, *[amounts due by the Managing Agents or Secretaries and Treasurers,
either severally or jointly with any other persons to be separately stated;] 33[the amounts due
from other companies under the same management within the meaning of sub-
section (lB) of section 370 should also be given with the names of the
companies] the maximum amount due from everv one of these at any time during
the year must be shown.
(j) Particulars of any
redeemed debentures, which the company has power, to issue should be given.
(k) Where any of the
companv's debentures are held by a nominee or a trustee for the company, the
nominal amount of the debentures and the amount at which they are stated in the
books of the company shall be stated.
35[(l) A statement of investments (whether shown
under Investment" or under "Current Assets" as stock-in-trade)
separately classifying trade investments and otherinvestments should be annexed
to the balance sheet, showing the names of the bodies corporate (indicating
separately the names of the bodies corporate under the same management) in
whose shares or debentures, investments have been made (including ail
investments, whether existing or not, made subsequent to the date as at which
the previous balance sheet was made out) and the nature and extent of the
investment so made in each such body corporate; provided that in the case of an
investment company, that is to say, a company whose principal business is the
acquisition of shares, stock, debentures or other securities, it shall be
sufficient if the statement shows only the investments existing on the date as
at which the balance sheet has been made out. In regard to the investments in
the capital of partnership firms, the names of the firms (with the names of all
their partners, total capital and the shares of each partner), shall be given
in the statement.]
33. Substituted by
Notification No. GSR 414, dated 21-3-1961.
34. Inserted, ibid.
35. Substituted by
Notification No. GSR 494(E), dated 30-10-1973.
(m) If, in the opinion of the
Board, any of the current assets, loans and advances have not a value on
realisation in the ordinarv course of business at least equal to the amount at which
they are stated, the fact that the Board is of that opinion shall be stated.
(n) Except in the case of the
first balance sheet laid before the company after the commencement of the Act,
the corresponding amounts for the immediately preceding financial year for all
items shown in the balance sheet shall be also given in the balance sheet. The requirement in this behalf shall, in the
case of companies preparing quarterly or half-yearly accounts, etc., relate to
the balance sheet for the corresponding date in the previous year.
(o) The amounts to be shown
under Sundry Debtors shall include the amounts due in respect of goods sold or
services rendered or in respect of other contractual obligations but shall not include
the amounts which are in the nature of loans or advances.
36[(p) Current accounts with directors *[, managing
agents, secretaries and treasurers] and manager, whether thev are in credit, or
debit, shall be shown separately.]
36a[(q)
A small scale industrial undertaking has the same meaning as assigned to it
under clause (j) of section 3 of the Industries (Development and Regulation)
Act, 1951.]
36. Substituted by Notification No. GSR 414, dated 21-3-1961.
36a. Inserted by Notification
No.GSR 129, dated 22-2-1999.
37[B. VERTIFAL
FORM
Name
of the company
..
Balance
sheet as at
..
|
|
Schedule No. |
Figures as
at the end of current financial year |
Figures at
the end of previous financial year |
|
1 2 |
3 |
4 |
5 |
|
I. Sources
of Funds. (1)
Share holders funds: (a) Capital (b) Reserves
and surplus (2) Loan Funds: (a) Secured
loans (b) Unsecured
loans TOTAL II.
Application of funds (1) Fixed assets: (a) Gross:
Block (b) Less
Depreciation (c) Net
block (d) Capital
work-in-progress (2)
Investments (3)
Current assets, Loans and advances: (a) Inventories (b) Sundry
debtors (c) Cash
and bank balances (d) Other
current assets (e) Loans
and advances Less: Current
liabilities and provisions: (a) Liabilities (b) Provisions Net
current assets (4) (a) Miscellanwous expenditure to the extent
not written off or adjusted. (b) Profit and loss account TOTAL |
|
|
|
37. Inserted by Notification No. GSR 220 (E),
dated 12-3-1979.
Notes:
1. Details under each of the
above items shall be given in separate Schedules. The Schedules shall incorporate all the information required to
be given under A-Horizontal Form read with notes containing general
instructions for preparation of balance sheet.
2. The Schedules, referred
to above, accounting policies and explanatory notes that mav be attached shall
form an integral part of the balance sheet.
3. The figures in the
balance sheet may be rounded off to the nearest '000' or '00' as may be
convenient or may be expressed in terms of decimals of thousands.
4. A footnote to the balance
sheet may be added to show separately contingent liabilities.]
REQUIREMENTS
AS TO PROFIT AND LOSS ACCOUNT
1. The provisions of this Part
shall apply to the income and expenditure account referred to in sub-section
(2) of section 210 of the Act, in like manner as they apply to a profit and
loss account, but subject to the modification of references as specified in
that sub-section.
2. The profit and loss
account-
(a) Shall be so made out as
clearly to disclose the result of the working of the company during the period
covered by the account; and
(b) Shall disclose every
material feature, including credits or receipts and debits or expenses in
respect of non-recurring transactions or transactions of an exceptional nature.
3. The profit and loss
account shall set out the various items relating to the income and expenditure
of the company arranged under the most convenient heads; and in particular,
shall disclose the following information in respect of the period covered by
the account:
38[(i) (a) The
turnover, that is, the aggregate amount for which sales are effected by the
company, giving the amount of sales in respect of each class of goods dealt
with by the company, and indicating the quantities of such sales for each class
separately.]
39[(b) Commission paid to sole selling agents
within the meaning of section 294 of the Act.
(c) Commission paid to other
selling agents.
(d) Brokerage and discount on
sales, other than the usual trade discounts.]
38[(ii) (a) In
the case of manufacturing companies,-
38(1) The value of the raw materials consumed,
giving item-wise break-up and indicating the quantities thereof. In this break-up, as far as possible, all
important basic raw materials shall be shown as separate items. The
intermediates or components procured from other manufacturers may, if their
list is too large to be included in the break-up, be grouped under suitable
headings without mentioning the quantities, provided all those items which in
value individually account for 10% or more of the total value of the raw
material consumed shall be shown as separate and distinct items with quantities
thereof in the break-up.
38. Substituted by
Notification No. GSR494 (E), dated 30-l0-l973.
39. Substituted by
Notification No.GSR 414 dated 2l-3-1961.
40. Companies engaged in the
cultivation or processing of tea or both from disclosingin the profit and loss
account the information mentioned in this sub-clausesubject to certain
conditions vide SO 400 (E), dated 19-4-1988.
(2) The opening and closing stocks of goods produced, giving
break-up in respect of each class of goods and indicating the quantities
thereof.
(b) In the case of trading
companies, the purchases made and the opening and closing stocks, giving
break-up in respect of each class of goods traded in by the company and
indicating the quantities thereof.
(c) In the case of companies
rendering or supplying services, the gross income derived from services
rendered or supplied.
(a) In the case of a company,
which falls under more than one of the categories mentioned in (a), (b) and (c)
above, it shall be sufficient compliance with the requirements herein if the total
amounts are shown in respect of the opening and closing stocks, purchases,
sales and consumption of raw material with value and quantitative break-up and
the gross income from services rendered is shown.
(e) In the case of other
companies, the gross income derived under different heads.
Note 1: The quantities of raw
materials, purchases, stocks and the turnover, shall be expressed in
quantitative denominations in which these are normally purchased or sold in the
market. Note 2: For the purpose of items (ii) (a), (ii) (b) and (ii) (a), the
items for which the company is holding separate industrial licences, shall be
treated as separate classes of goods, but where a company has more than one
industrial licence for production of the same item at different places or for
expansion of the licensed capacity, the item covered by all such licences shall
be treated as one class. In the case of
trading companies, the imported items shall be classified in accordance with the
classification adopted by the Chief Controller of imports and Exports in
granting the import licences.
Note 3: In giving the break-up of
purchases, stocks and turnover, items like spare parts and accessories, the
list of which is too large to be included in the break-up, may be grouped under
suitable headings without quantities, provided all those items, which in value
individually account for 10% or more of the total value of the purchases,
stocks, or turnover, as the case may be, are shown as separate and distinct
items with quantities thereof in the break-up.]
(iii) In the case of all
concerns having works-in-progress, the amounts for which 41[such works have
been completed] at the commencement and at the end of the accounting period.
(iv) The amount provided for depreciation,
renewals or diminution in value of fixed assets.
If
such provision is not made by means of a depreciation charge, the method
adopted for making such provision.
If
no provision is made for depreciation, the f act that no provision has been made
shall be stated 42[and
the quantum of arrears of depreciation computed in accordance with section
205(2) of the Act shall be disclosed by way of a note].
(v) The amount of interest on
the companv's debentures and other fixed loans, that is to say, loans for fixed
periods, stating separately the amount of interest, if any, 41[paid or payable]
to the managing director *[, the managing agent, the secretaries and
treasurers] and the manager, if any.
(vi) The amount of charge for
Indian income-tax and other Indian taxation on profits, including, where
practicable, with Indian income-tax any taxation imposed elsewhere to the
extent of the relief, if any, from Indian income-tax and distinguishing, where
practicable, between income-tax and other taxation.
(vii) The 43[amounts reserved
for-]
(a) Repayment of share
capital; and
(b) Repayment of loans.
(viii) (a) The aggregate, if material, of any
amounts set aside or proposed to be set aside, to reserves, but not including
provisions made to meet any specific liability, contingency or commitment known
to exist at the date as at which the balance sheet is made up.
(b) The aggregate, if
material, of any amounts withdrawn from such reserves.
(ix) (a) The aggregate, if material, of the
amounts set aside to provisions made for meeting specific liabilities,
contingencies or commitments.
(b) The aggregate, if
material, of the amounts withdrawn from such provisions, as no longer required.
(x) Expenditure incurred on each
of the following items, separately for each item
(a) Consumption of stores and
spare parts.
(b) Power and fuel.
41. Substituted by the
Companies (Amendment) Act, 1960.
42. Inserted by Notification
No.GSR 414 dated 2l-3-1961.
43. Substituted, ibid.
(c) Rent.
(a) Repairs to buildings.
(e) Repairs to machinery.
(f) (1) Salaries, wages and bonus.
(2) Contribution to provident
and other funds.
(3) Workmen and staff welfare
expenses 44[to
the extent not adjusted from any previous provision or reserve.
Note 45[l:
Information in respect of this item should also be given in the balance sheet
under the relevant provision or reserve account.
Note 2 : 46[ * * * * * *]
(g) Insurance.
(h) Rates and taxes,
excluding taxes on income.
(i) Miscellaneous expenses:
47[Provided that any
item under which the expenses exceed I per cent of the total revenue of the
company or Rs. 5,000, whichever is higher, shall be shown as a separate and
distinct item against an appropriate account head in the Profit and Loss
Account and shall not be combined with any other item to be shown
under'Miscellaneous expenses'.]
(xi) (a) The amount of income from investments,
distinguishing between trade investments and other investments.
(b) Other income by way of
interest, specifying the nature of the income.
(c) The amount of income tax
deducted if the gross income is stated under sub-paragraphs (a) and (b) above.
(xii) (a) Profits or losses on investments 47[showing distinctly
the extent of the profits or losses earned or incurred on account of membership
of a partnership firm] 48[to
the extent not adjusted from any previous provision or reserve.
Note:
Information in respect of this item
should also be given in the balance sheet under the relevant provision or
reserve account.]
(b) Profits or losses in
respect of transactions of a kind, not usually undertaken by the company or
undertaken in circumstances of an exceptional or non-recurring nature, if
material in amount.
(c) Miscellaneous income.
44. Inserted by the Companies
(Amendment) Act, 1960.
45. Inserted by Notification
No. GSR 1665 dated 9-10-1971.
46. Omitted by Notification
No. SO 723(E), dated 18-9-1990. Earlier
it was inserted by GSR 1665, dated 9-10-1971.
47. Inserted by Notification
No. GSR 494(E), dated 30-10-1973.
48. Inserted by the Companies
(Amendment) Act. 1960.
(xiii) (a) Dividendsfromsubsidiarycompanies.
(b) Provisions for losses of subsidiary
companies.0 ed, and stating
(xiv) The aggregate amount of the dividends paid,
and proposed, and stating whether such amounts are subject to deduction of
income-tax or not.
(xv) Amount, if material, by which any items shown
in the profit and loss account are aff ected by any change in the basis of
accounting.
49[4. 50[The profit and
loss account shall also contain or give by way of a note detailed information,
showing separately the following payments provided or made during the financial
year to the directors (including managing directors) *[the managing agents,
secretaries and treasurers] or manager, if any, by the company, the
subsidiaries of the company and any other person: -]
(i) 50[Managerial
remuneration under section 198 of the Act paid or payable] during the financial
year to the directors (including managing directors), *[themanagingagent,
secretaties and treasurers] or manager, if any;
*[(ii) expenses reimbursed to
the managing agent under section 354;
(iii) Commission or other
remuneration payable separately to a managing agent or his associate under
sections 356,357 and 358;
[50[(iv) commission received or receivable under
section 359 of the Act by the managing agent or his associate as selling or buying
agent of other concerns in respect of contracts entered into by such concerns
with the company;]]
(v) The money value of the
contracts for the sale or purchase of goods and materials or supply of
services, entered into by the company with the managing agent or his associate
under section 360 during the financial year;]
51[(vi) other allowances and commission including
guarantee commission (details to be given);]
(vii) Any other perquisites or
benefits in cash or in kind (stating approximate money value where
practicable);
(viii) Pensions, etc., -
(a) Pensions,
(b) Gratuities,
(c) Payments from provident
funds, in excess of own subscriptions and interest thereon,
(a) Compensation for loss of
office,
(e) Consideration in
connection with retirement from office.]
49. Substituted for pora 4 by parass 4,4A and
4B by the Companies (Amendment) Act, 1960.
50. Substituted by
Notification No.GSR414 dated 2l-3-1961.
51. Substituted by
Notification No.GSR78 dated 4-1-1963.
4A. The profit and loss account
shall contain or give by way of a note a statement showing the computation of
net profits in accordance with section 349 of the Act with relevant details of
the calculation of the commissions payable by way of percentage of such profits
to the directors (including managing directors), *[the managing agents,
secretaries and treasurers] or manager (if any).
4B. The
profit and loss account shall further contain or give by way of a note detailed
information in regard to amounts paid to the auditor, "[whether as fees,
expenses or otherwise for services rendered-]
(a) As auditor; 53 [* * *]
54 [(b) as adviser, or in any other capacity, in
respect of
(i) Taxation matters;
(ii) Company law matters;
(iii) Management services; and
(c)
In any other manner].]
55 [4C. In the case
of manufacturing companies, the profit and loss account shall also contain, by
way of a note in respect of each class of goods manufactured, detailed
quantitative information in regard to the following, namely
(a) The licensed capacity
(where licence is in force);
(b) The installed capacity;
and
(c) The actual production.
Note 1: The licensed capacity and
installed capacity of the company as on the last date of the year to which the profit
and loss account relates, shall be mentioned against items (a) and (b) above,
respectively.
Note 2: Against item (c), the
actual production in respect of the finished products meant for sale shall be
mentioned. In cases where
semi-processed products are also sold by the company, separate details thereof
shall be given.
Note 3: For the purposes of this
paragraph, the items for which the company is holding separate industrial
licences shall be treated as separate classes of goods but where a company has
more than one industrial licence for production of the same item at different
places or for expansion of the licenced capacity, the item covered by all such
licences shall be treated as one class.
4D. The profit and loss
account shall also contain by way of a note the followin, information, namely:
-
(a) Value of imports
calculated on C.I.F. basis by the company during the financial year in respect
of
(i) Raw materials;
(ii) Components and spare
parts;
(iii) Capitalgoods;
52. Substituted by
Notification No. GSR78 dated 4-1-1963.
53. 'And"
omitted by Notification No.GSR455, dated 27-4-1974.
54. Substituted,
ibid.
55. Substituted
for para 4C by parass 4C and 4D by Notification No.GSR 494(E) dated
30-10-1973. Earlier, para 4C inserted by Notification No.GSR1665, dated
9-10-1971.
(b) Expenditure in foreign
currency duringthe financial year on account of royalty, know-how,
professional, consultation fees, interest, and other matters;
(c) Value of all imported raw
materials, spare parts and components consumed during the financial year and
the value of all indigenous raw materials, spare parts and components similarly
consumed and the percentage of each to the total consumption;
(d) The amount remitted
during the year in foreign currencies on account of dividends, with a specific
mention of the number of non-resident shareholders, the number of shares held
by them on which the dividends were due and the year to which the dividends
related;
(e) Earnings in foreign
exchange classified under the following heads, namely: -
(i) Export of goods
calculated on F.O.B. basis;
(ii) Royalty, know-how,
professional and consultation fees;
(iii) Interest and dividend;
(iv) Other income, indicating
the nature thereof.]
5. The
Central Government may direct that a company shall not be obliged to show the
amount set aside to provisions other than those relating to depreciation,
renewal or diminution in value of assets, if the Central Government is
satisfied that the information should not be disclosed in the public interest
and would prej udice the company, but subject to the condition that in any
heading stating an amount arrived at after taking into account the amount set
aside as such, the provision shall be so framed or marked as to indicate that
fact.
6. (1)
Except in the case of the first profit and loss account laid before the company
after the commencement of the Act, the corresponding amounts for the
immediately preceding financial year for all items shown in the profit and loss
account shall also be given in the profit and loss account. (2) The requirement
in sub-clause (1) shall, in the case of companies preparing quarterly or half
-yearly accounts, relate to the profit and loss account for the period, which
entered on the corresponding date of the previous year.
INTERPRETATION
7. (1)
For the purposes of Parts I and II of this Schedule, unless the context
otherwise requires, -
(a) The expression "provision'shall,
subject to sub-clause (2) of this clause, mean any amount written off or
retained by way of providing for depreciation renewals or diminution in value
of assets, or retained by way of providing for any known liability of which the
amount cannot be determined with substantial accuracy;
(b) The expression
"reserve" shall not, subject as aforesaid, include any amount written
off or retained by way of providing for depreciation, renewals or diminution in
value of assets or retained by way of providing for any known liability;
(c) The expression
capitaireserve shall not include any amount regarded as free for distribution
through the profit and loss account; and the expression revenue reserve shall
mean any reserve other than a capital reserve;
And
in this sub-clause the expression "liability" shall include all
liabilities in respect of expenditure contracted for and all disputed or
contingent liabilities.
(2) Where-
(a) Any amount written off or
retained by way of providing for depreciation, renewals or diminution in value
of assets, not being an amount written off in relation to fixed assets before
the commencement of this Act; or
(b) Any amount retained by
way of providing for any known liability; is in excess of the amount which in
the opinion of the directors is reasonably necessary for the purpose, the
excess shall be treated for the purposes of this Schedule as a reserve and not
as a provision. 8. For the purposes aforesaid, the expression "quoted
investment" means an investment as respects which there has been granted a
quotation or permission to deal on a recognised stock exchange, and the
expression "unquoted investment" shall be construed accordingly.
56 [PART IV
BALANCE
SHEET ABSTRACT AND COMPANY'S GENERAL
BUSINESSPROFILE
1. Registration
Details
Registration
No. State
Code (Refer Code List)
Balance
Sheet Date Whether shares listed on
Date Month Year
Y-Yes
N-No
II. Capital
raised during the year (Amount in Rs.
Thousands
Public Issue Rights Issue
Bonus Issue Private
Placement
III. Position
of Mobilisation and Deployment of Funds (Amount in Rs.Thousands)
Total Liabilities Total Assets
Sources of Funds
Paid-upCapital Reserves & Surplus
Secured
Loans Unsecured Loans
56. Inserted by
Notification No.GSR388 (E), dated l5-5-1995.
Application of Funds
Net Fixed Assets Investments
Net Current Assets Misc. Expenditure
Accumulated
Losses
IV. Performance
of Company (AmountinRs.Thousands)
Turnover Total Expenditure
+
- Profit/ Loss before tax + - Profit/ Loss after tax
(Please
tick appropriate box + for Profit, - for Loss)
Company
Name:
State Pin
Code
Telephone
Earning per Share in Rs. Dividend rate %
V. GencricNamesofThreePrincipalProducts/ServicesofCompany(aspermonetaryterms)
Item Code. No. (ITC Code) Product
Description
Item Code. No.
(ITC Code)
Product
Description
Item Code. No.
(TIC Code)
Product
Description
*Note: For ITC Code
of Products please refer to the publication Indian Trade Classification based
on harmonized commodity description and coding system by Ministry of Commerce,
Directorate General of Commercial Intelligence & Statistics, Calcutta-700
001.
ANNEXUREL
I
CODE LIST: STATE CODES
|
State Code |
State Name |
State Code |
State Name |
|
01 03 05 07 09 11 13 15 17 20 22 24 53 55 57 59 |
Andhra Pradesh Bihar Haryana Jammu & Kashmir Kerala Maharashtra Meghalaya Orissa Rajasthan Uttar Pradesh Sikkim Goa Chandigarh Delhi Lakshadweep Pondicherry |
02 04 06 08 10 12 14 16 18 21 23 52 54 56 58 |
Assam Gujarat Himachal Pradesh Karnataka Madhya Pradesh Manipur Nagaland Punjab Tamil Nadu West Bengal Arunachal Pradesh Andaman Islands Dadra Islands
Daman & Diu Mizoram] |
*[SCHEDULE
VII
[See
sections 368 and 379]
RESTRICTIONS
ON POWERS OF MANAGING AGENTS
SECRETARIESANDTREASURERS
The managing agents shall not exercise any of the following powers
secretaries and
treasurers
except after obtaining the previous approval of the Board of directors of the company in regard to each such exercise :-
(1) [Omitted by the Companies
(Amendment) Act, 1960.]
(2) Power to appoint as an
officer or member of the staff of the company, payable from its funds (as
distinguished from the funds of the
managing agent or from out of any remuneration payable
secretaries and
treasurers
to him by
the company), any person
them
(a) on a remuneration or
scale of remuneration exceeding the limits laid down by the Board in this
behalf; or
(b) who is a relative of the managing agent,
or where the
managing agent is a firm, of any partner in the firm, or
secretaries and treasures are
where the managing agent is a private company, of any
secretaries and treasurers are
director or
member or such company;
(3) Power to purchase capital
assets for the company except where the purchase price is within the limits
prescribed by the Board in this behalf;
(4) Power to sell the capital
assets of the company, except where the sale price is within the limits
prescribed by the Board in this behalf;
(5) Power to compound, or sanction the extension of time for the satisfaction or payment of, any claim or demand of the company against (including any debt claimed to be due to it from) the
managing agent or any associate of the managing agent
;
secretaries
and treasurers secretaries and
treasurers
(6) Power to compound any
claim or demand made against the company (including any debt claimed to be due
from it) by the
managing agent or any associate of the managing agent .
secretaries
and treasurers secretaries and
treasurers
*[SCHEDULE
VIII
[See
sections 347 and 379]
DECLARATIONS
TO BE MADE BY FIRMS, PRIVATE COMPANIES AND OTHER BODIES CORPORATE ACTING AS
MANAGING AGENTS/SECRETARIESANDTREASURERS
Definition
1. (1) In this
Schedule, "relevant date" means-
(a) in the case of a firm or body corporate
holding office at the
commencement of this Act as the managing agent of a
secretaries and treasurers
company, the date of such commencement; and
(b) in the case of a firm or body corporate
appointed or re-appointed
after the
commencement of this Act as the managing agent
of a
secretaries and treasurers
company, the date of such appointment, or re-appointment.
(2) For the purposes of
sub-clause (1), the expressions "re-appointment" and
reappointed" shall have the same meaning as they have for the purposes of
subsection (1) of section 328.
Firms
2. Every
firm acting as the managing agent
of any company or
secretaries and treasurers
companies shall file with each company, whether public or private, of
which it acts
as such, a declaration specifying-
(a) the names of the partners
constituting the firm on the relevant date;
(b) the share, or the extent
of the interest, of each partner in the firm, on the relevant date;
(c) the names of persons, if
any, other than partners who are interested, on the relevant date, in any share
of, or amount forming part of, the
remuneration
payable to the managing
agent by the company; and
secretaries and treasurers
the
extent of the interest of each such person in such remuneration.
3. The
declaration shall be signed by a partner of the firm and shall be filed within
one month of the relevant date.
4. If any
change occurs in regard to any of the matters specified in clause 2 after the
relevant date, a declaration specifying the change and signed by a partner of
the firm shall be filed, within three weeks of the occurrence of the change,
with each of the companies referred to in that clause.
Private companies
5. Every private company, which acts as managing agent of any other
secretaries and treasurers
company or companies, whether public or private, shall file with each of those companies, a declaration specifying-
(a) the names of the members
of the private company on the relevant date;
(b) where the private company
has a share capital, the shares held by each member of the company, on that
date;
(c) Where the private company
has no share capital, the extent of the interest of each member of the company
in it on that date;
(d) The manner in which each
such member holds his shares or interest, that is to say, whether he holds the
same beneficially, or on behalf of or in trust for any other person; and in the
latter case, the name or names of the person or persons on whose behalf or in
trust for whom the shares or interest is held and the extent of the interest of
each such person;
(e) The names of the
directors of the private company, and the name of its managing director, if
any;
(f) The names of persons, if
any, who are interested in any share of, or amount forming part of, the
remuneration payable to the private company by the company under its
management, otherwise than as members of the private company; and the extent of
the interest of each such person in such remuneration;
(g) That no arrangement has
been entered into the knowledge of the private company, under which the control
of the private company is vested in any persons other than the members of the
company and the persons referred to in sub-clause (b):
Provided that the obligation to
furnish information on the matters specified in sub-clause (b) and (f) shall
extend only to such particulars relating to those matters as are within the
knowledge of the private company
6. The
declaration shall be signed by a director of the private company and shall be
filed within two months of the relevant date.
7. If, to
the knowledge of the private company, there is a sale or transfer of any shares
in the company or an agreement has been entered into, for the sale or transfer
of any such shares, or any other change occurs in regard to any of the matters
specified in clause5, a declaration specifying the sale, transfer, agreement or
change and signed by a director of the company shall be filed, within six weeks
thereof, with each of the companies referred to in that clause.
8. Where any shares are sold or transferred or agreed to be sold or transferred, the declaration referred to in clause 7 shall specify the name of the person or persons who part with or have agreed to part with the shares and also the name or names of the person or persons who acquire or have agreed to acquire them, with full details of the sale, transfer or agreement. Other bodies corporate
9. The
provisions of clauses 5 to 8 shall apply to every body corporate (other than a
private company) acting as the managing agent of any
secretaries and
treasurers
company, unless it is exempt from the operation of the provisions of this
Schedule by virtue of section 347 .
Section 379 read with section 347
General
10. (1)
All declarations filed with any company in pursuance of this Schedule shall be
open to inspection, and extracts may be taken therefrom and copies thereof may
be required, by any member of the company to the same extent, in the same
manner and on payment of the same fee as in the case of the register of members
of the company.
(2)
All such declarations shall also be open to inspection by any director of the
company, free of charge.]
SCHEDULE
IX
[See article 62
of the Table A and also section 176(6)]
FORM OF PROXY
I
GENERALFORM
................................... Name of Company
I/We
of
.. in the district of
Being a member of the above-named company hereby
appoint
members
of
.in the district of
as my proxy to vote for
Our
me on my behalf at the annual general meeting .
us our general meeting (not being an annual general
meeting
of the company to be held on the
.. day of
and at any
adjournment thereof.
Signed this
.day of
.19
II
FORM
FOR AFFORDING MEMBERS AN OPPORTUNITY
OF
VOTING FOR OR AGAINST A RESOLUTION 57 [* ]
................. Name of
Company
I/We
..of
in the district
of
..,being
a member of the above-named
Company, hereby
appoint,
in
the district of
..,or
failing
him,
.of
in the district of
..
,as
my proxy to vote for me on my behalf at the
our
us our
annual general meeting . of the company, to be held
general meeting (not being an annual general meeting)
on the
..day of
19
and
at any adjournment thereof.
Signed this
..day of
19
.
[This form is to be used *in favour of the resolution.
Unless otherwise instructed
*Against
The proxy will act as he thinks fit.]
*Strike out whichever is not desired.
57. Inserted by Notification No SRO 1977,
dated l-9-1956
58 [SCHEDULE X
[See
sections 574 and 611]
TABLE
OF FEES TO BE PAID TO THE REGISTR AR
|
1. In respect of a company having a share capital: 1. For registration of a company whose nominal share capital Does not exceed Rs.
20,000 2. For registration of a company whose nominal share capital exceeds Rs. 20,000, the above fee of Rs. 400 with the following additional fees regulated according to the amount of nominal capital. - (a) For every Rs. 10,000 of
nominal share capital or part of Rs. 10,000 after the first Rs. 20,000 up to
Rs. 50,000
(b) For every Rs. 10,000 of
nominal share capital or part of Rs. 10,000 after the first Rs. 50,000 up to
Rs. 5,00,000
(c) For every Rs. I 0,000 of nominal share capital or part
of Rs. 10,000 after the first Rs. 5,00,000 up to Rs. 10,00,000 (d) For every Rs. 10,000 of
nominal share capital or part of Rs. 10,000 after the first Rs. 10,00,000 up
to Rs. 25,00,000 (e) For every Rs. I 0,000 of nominal share capital or part Of Rs. 1 0,000 after
the first Rs. 2 5,00,000: Provided that where the additional fees, regulated
according to the amount of the nominal capital of a company, exceeds a sum of
rupees eighty lakhs, the total amount of additional fees payable for the
registration of such company shall not, in any case, exceed rupees eighty
lakhs. 3. For filing a notice of any increase in the nominal share
capital of a company, the difference between the fees payable on the date of
filing the notice for the registration of a company with a nominal share
capital equal to 59[the
increased share capital and the fees paid on such date], for the |
Amount
of fees To be to be paid (Rs.)
400 200 100 60 40 30 |
58. Substituted
by SO 153(E) dated 25-2-1992. Applicable
from 1-4-1992: Circular No.2 of 1992, dated 6-4-1992
59. Substituted
for the increased share capital and the fees payable on such date by
Notification No SO 565(E), dated 21-6-1995.
The Calcutta High Court in J.K. Industries v Registrar of Companies [l997] 14 SCL 122 has held
that Notification No. 565(E), dated 2l-6-1995, amending clause 1.3 of Schedule
X is unreasonable and is therefore set aside.
|
Registration
of a company with a share capital equal to the nominal share capital of the
company filing the notice immediately before the increase. 4. For registration of any existing company, except such
companies as are by this Act exempted from payment of fees in respect of
registration under this Act, the same fee as is charged for registering a new
company. 5. For filing, registering or recording any document by this
Act required or authorised to be filed, registered or recorded- (a) In respect of a company
having a nominal share capital of less than Rs. 1,00,000 (b) In respect of a company
having a nominal share capital of Rs. 1,00,000, or more but less than Rs.
5,00,000 (c) In respect of a company
having a nominal share capital of Rs. 5,00,000, or more but less than Rs.
25,00,000 (d) In respect of a company having a nominal share capital of Rs. 25,00,000 or more. 6. For making a record of or registering any fact by this Act
required or authorised to be recorded or registered by the Registrar- (a) in respect of a company
having a nominal share capital of less than Rs. 1,00,000 (b) In respect of a company
having a nominal share capital of Rs. 1,00,000, or more but less than Rs.
5,00,000 (c) In respect of a company
having a nominal share capital of Rs. 5,00,000, or more but less than Rs.
25,00,000 (d) In respect of a company
having a nominal share capital of Rs. 25,00,000 or more. II. In respect of a company not having a
share capital: 7. For registration of a company whose number of members as
stated in the articles of association, does not exceed 20 8. For registration of a company whose number of members as
stated in the articles of association, exceeds 20 but does not exceed 100. 9. For registration of a company whose number of members as
stated in the articles of association, exceeds 100 but is not stated to be
unlimited, the above fee of Rs. 400 with an additional Rs.10 for every 50
members, or less number than 50 members, after the first 100. 10. For registration of a company in which the number of
members is stated in the articles of association to be unlimited. 11. For registration of any increase in the number of members
made after the registration of the company, the same fee as would have been
payable in respect of such increase, if such increase had been stated in the
articles of association at the time of registration: Provided that
no company shall be liable to pay on the whole a greater fee than Rs. 1,600
in respect of its number of members, taking into account the fee paid on the
first registration of the company. 12. For registration of any existing company except such
companies as are by this Act exempted from payment of fees in respect of
registration under this Act, the same fee as is charged for registering a new
company. 13. For filing or registering any document by this Act required
or authorised to be filed or registered with the Registrar. 14. For making a record of or registering any fact by this Act
required or authorised to be recorded or registered by the Registrar. |
Amount
of fees to be paid Rs. 30 60 100 120 30 60 100 120 160 400 1,600 20 20 |
SCHEDULE
XI
[See
section 406)
FORM
IN WHICH SECTIONS 539 TO 544 OF ACT ARE TO APPLY TO CASES WHERE AN
APPLLCATIONIS MADE
UNDER
SECTION 397 OR 398
539. Penalty for falsification
of books - If with intent to defraud or deceive any person,
any officer or member of a company m respect of which an application has been
made under section 397 or 398-
(a) Destroys, mutilates,
alters, falsifies or secrets any books, papers or securities, or is privy to
the destruction, mutilation, alteration, falsification, or secreting of any
books, papers or securities; or
(b) Makes, or is privy to the
making of any false or fraudulent entry in any register, books of account or
document belonging to the company,
He
shall be punishable with imprisonment for a term, which may extend to seven
years, and shall also be liable to fine.
540. Penalty for frauds by
officers - If any person, being at the time of the commission
of the alleged offence, an officer of a company in respect of which the 60[Company Law Board]
subsequently makes an order under section 397 or 398 -
(a) Has, by false pretences
or by means of any other fraud, induced any person to give credit to the
company;
(b) With intent to defraud
creditors of the company, has made or caused to be made any gift or transfer of
or charge on, or has caused or connived at the levying of any execution against
the property of the company; or
60. Substituted
for Court by the Companies (Amendment) Act 1988 w.e.f. 31-5-199l.
(c) With intent to defraud
creditors of the company, has concealed or removed any part of the property of
the company since the date of any unsatisfied judgment or order for payment of
money obtained against the company, or within two months before that date;
He shall be punishable with imprisonment for a term, which may extend to
two years and shall also be liable to
fine.
541. Liability where proper
accounts not kept -
(1) Where an application has
been made to the 61[Company Law Board]
under section 397 or 398 in respect of a company, if it is shown that proper books
of account were not kept by the company throughout the period of two years
immediately preceding the making of the application, or the period between the
incorporation of the company and the making of the application, whichever is
shorter, every officer of the company who is in default shall, unless he shows
that he acted honestly and that in the circumstances in which the business of
the company was carried on, the default was excusable, be punishable with
imprisonment for a term which may extend to one year
(2) For the purposes of this
section, proper books of account shall be deemed not to have been kept in the
case of any company, if there have not been kept-
(a) Such books of accounts as
are necessary to exhibit and explain the transactions and financial position of
the business of the company, including books containing entries made from day
to day in sufficient detail of all cash received and all cash paid; and
(b) Where the business of the
company has involved dealings in goods, statements of the annual stock takings
and (except in the case of goods sold by way of ordinary retail trade) of all
goods sold and purchased showing the goods and the buyers and sellers thereof
in sufficient detail to enable those goods and those buyers and sellers to be
identified.
542. Liability for fraudulent
conduct of business -
(1) If in the course of the
proceedings on an application made to the 61 [Company Law Board] under section 397 or 398
in respect of a company, it appears that any business of the company has been
carried on with intent to defraud creditors of the company, or any other
persons, or for any fraudulent purpose, the 61[Company Law Board] may, if it thinks it
proper so to do, declare that any persons who were knowingly parties to the
carrying on of the business in the manner aforesaid shall be personally
responsible, without any limitation of liability, for all or any of the debts
or other liabilities of the company as the 61 [Company Law Board] may direct.
(2)
(a) Where the 61 [Company Law
Board] makes any such declaration, it may give such further directions as it
thinks proper for the purpose of giving effect to that declaration.
(b) In particular the 61[Company Law Board]
may make provision for making the liability of any such person under the
declaration a charge on any debt or obligation due from the company to him, or
on any mortgage or charge or any interest in any mortgage or charge on any
assets of the company held by or vested in him, or any person on his behalf, or
any person claiming as assignee from or through the person liable or any person
acting on his behalf.
61. Substituted
for "Court" by the Companies (Amendment) Act,1988, w.e.f.
31-5-1991.
(c) The 62 [Company Law Board]
may, from time to time, make such further orders as may be necessary for the
purpose of enforcing any charge imposed under this sub-section.
(d) For the purpose of this
sub-section, the expression assignee includes any person to whom or in whose favour,
by the directions of the person liable, the debt, obligation, mortgage or
charge was created, issued or transferred or the interest was created, but does
not include an assignee for valuable consideration (not including consideration
by way of marriage) given in good faith and without notice of any of the
matters on the ground of which the declaration is made.
(3) Where any business of a
company is carried on with such intent or for such purpose as is mentioned in
sub-section (1), every person who was knowingly a party to the carrying on of
the business in the manner aforesaid, shall be punishable with imprisonment for
a term which may extend to two years, or with fine which may extend to five
thousand rupees, or with both.
(4) This section shall apply,
notwithstanding that the person concerned may be criminally liable in respect
of the matters on the ground of which the declaration is to be made.
543. Power of 62[Company Law Board] to assess damages against
delinquent directors, etc. -
(1) If, in the course of the
proceedings on an application made to the 62[Company Law Board] under section 397 or 398,
it appears that any person who has taken part in the promotion or formation of
the company, or any past or present director, managing agent, secretaries and
treasurers, manager or officer of the company.-
(a) Has misapplied or
retained or become liable or accountable for any money or property of the
company; or
(b) Has been guilty of any
misfeasance or breach of trust in relation to the company.
The
62[Company Law Board]
may, on the application of any creditor or member, examine into the conduct of
such person, director, managing agent, secretaries and treasurers, manager or
officer aforesaid, and compel him to repay or restore the money or property or
any part thereof respectively, with interest at such rate as the 62[Company Law Board]
thinks just or to contribute such sum to the assets of the company by way of
compensation in respect of the misapplication, retainer, misfeasance or breach
of trust as the 62[Company
Law Board] thinks just.
(2) This section shall apply
notwithstanding that the matter is one for which the person concerned may be
criminally liable.
544. Liability
under sections 542 and 543 to extend to partners or directors in firm or
company- Where a declaration under section 542 or an order
under section 543 is or may be made in respect of a firm or body corporate, the
62[Company Law Board]
shall also have power to make a declaration under section 542 or pass an order
under section 543, as the case may be, in respect of any person who is a
partner in that firm or a director of that body corporate.
62. Substituted for Court by the Companies (Amendment) Act,1988,w.e.f. 31-5-1991.
SCHEDULE
XII
[See
section 644]
ENACTMENTS
REPEALED
|
Year |
No. |
Subject
to short title |
|
1 |
2 |
3 |
|
1913 1942 1951 1952 |
VII LIV LII LI |
The Indian Companies Act, 1913. The Registration of Transferred Companies
Ordinance. The Indian Companies (Amendment) Act,1951. The Indian Companies (Amendment) Act,1952. |
63[SCHEDULE XIII
[See
sections 198,269,310 and 311]
CONDITIONS
TO BE FULFILLED FOR THE APPOINTMENT
OF
A MANAGING OR WHOLE-TIME DIRECTOR OR
A MANAGER
WITHOUT THE APPROVAL OF
THE
CENTRAL GOVERNMENT
64[PART I]
APPOINTMENTS
No
person shall be eligible for appointment as a managing or whole-time director
or a manager (hereinafter referred to as managerial person) of a company unless
he satisfies the following conditions, namely: -
(a) He had not been sentenced
to imprisonment for any period, or to a fine exceeding one thousand rupees, for
the conviction of an offence under any of the following Acts, namely:-
(i) The Indian Stamp Act,
1899 (2 of 1899),
(ii) The Central Excise Act,
1944 (1 of 1944),
(iii) The Industries
(Development and Regulation) Act, 1951 (65 of 1951),
(iv) The Prevention of Food
Adulteration Act, 1954 (37 of 1954),
(v) The Essential Commodities
Act, 1955 (10 of 1955),
(vi) The Companies Act, 1956
(1 of 1956),
63. Substituted by
the Notification No. 510 (E) dated 14-7-1993. See also Handbook to Act.
Earlier it was inserted by the Companies (Amendment) Act, 1988, w.e.f.
15-6-1988. Schedule was omitted by the
MRTP (Amendment) Act, 1984, w.e.f. 1-8-1984, which was inserted by the
Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
64. Substituted by GSR 48 (E) dated 1-2-1994.
(vii) The Securities Contracts
(Regulation) Act, 1956 (42 of 1956),
(viii) The Wealth-tax Act, 1957
(27 of 1957),
(ix) The Income-tax Act, 1961
(43 of 1961),
(x) The Customs Act, 1962 (51
of 1962),
(xi) The Monopolies and
Restrictive Trade Practices Act, 1969 (54 of 1969),
(xii) The Foreign Exchange
Regulation Act, 1973 (46 of 1973),
(xiii) The Sick Industrial
Companies (Special Provisions) Act, 1985 (1 of 1986),
(xiv) The Securities and
Exchange Board of India Act, 1992 (15 of 1992),
(xv) The Foreign Trade
(Development and Regulation) Act, 1992 (22 of 1992);
(b) He had not been detained
for any period under the Conservation of Foreign Exchange and Prevention of
Smuggling Activities Act, 1974 (52 of 1974):
Provided
that where the Central Government has given its approval to the appointment of
a person convicted or detained under sub-paragraph (a) or sub-paragraph (b), as
the case may be, no further approval of the Central Government shall be
necessary for the subsequent appointment of that person if he had not been so
convicted or detained subsequent to such approval;
65[(c) He has completed the age of 25 years and has
not attained the age of 70 years:
Provided that where-
(i) He has not completed the
age of 25 years, but has attained the age of majority; or
(ii)
He has attained the age of 70
years; and
Where
his appointment is approved by a special resolution passed by the company in
general meeting, no further approval of the Central Government shall be
necessary for such appointment;
(d) Where he is a managerial
person in more than one company he draws remuneration from one or more
companies subject to the ceiling provided in Section III of Part II;]
(e) He is resident in India.
Explanation: For
the purpose of this Schedule, resident in India includes a person who has been
staying in India for a continuous period of not less than twelve months
immediately preceding the date of his appointment as a managerial person and
who has come to stay in India, -
65. Substituted
for the following sub-paragraphs (c) and (a) by Notification No GSR4] 8 (E),
dated 12-9-1996:
(c) He
has completed the age of twenty-five years and has not attained the age of
seventy years or the age of retirement, if any, specified by the company,
whichever is earlier;
(d) Where
he is managerial person in more than one company, he opts to draw remuneration
from only one company;
(i)
For taking up employment in India,
or
(ii)
For carrying on a business or
vocation in India
REMUNERATION
Section I. -
Remuneration payable by companies having profits
Subject
to the provisions of sections 198 and 309, a company having profits in a
financial year may pay any remuneration, by way of salary, dearness allowance,
perquisites, commission and other allowances, which shall not exceed five per
cent of its net profits for one such managerial person, and if there is more
than one such managerial person, ten per cent for all of them together
Section II. -Remuneration
payable by companies having no profits or inadequate profits
1.
Notwithstanding anything contained in this Part, where in
any financial year during the currency of tenure of the managerial person, a
company has no profits or its profits are inadequate, it may pay remuneration
to a managerial person, by way of salary, dearness allowance, perquisites and
any other allowances, not exceeding ceiling limit of Rs. 10,50,000 per annum or
Rs. 87,500 per month calculated on
the following scale: -
|
Where the effective capital of a company
is |
Monthly remuneration payable shall not
exceed- |
|
(i) Less than rupees 1 crore (ii) Rupees 1crore or more but less than
rupees 5 crore (iii) Rupees 5 crores or more but less
than rupees 15 crores (iv) Rupees 15 crores or more |
Rupees 40,000 Rupees 57,000 Rupees 72,000 Rupees 87,500 |
2.A managerial person shall also be eligible to the following
perquisites, which shall not be included in the computation of the ceiling on
remuneration specified in paragraph 1 of this section:
(a) Contribution to provident
fund, superannuating fund or annuity fund to the extent these either singly or
put together are not taxable under the Income-tax Act, 1961,
(b) Gratuity payable at a
rate not exceeding half a month's salary for each completed year of service,
and
(c) Encashment of leave at the end of the
tenure
3. In addition to the perquisites specified in paragraph 2 of
this section, an expatriate managerial person (including a non-resident Indian)
shall be eligible to the following perquisites which shall not be included in
the computation of the ceiling on remuneration specified in paragraph 1 of this
section:
(a) Children's
education allowance: In case of children studying in or outside
India, an allowance limited to a maximum of Rs. 5,000 per month per child or
actual expenses incurred, whichever is less.
Such allowance is admissible upto a maximum of two children.
(b) Holiday
passage for children studying outside India/family staying, abroad: Return holiday passage once in a year by
economy class or once in two years by first class to children and to the
members of the family from the place of their study or stay abroad to India if
they are not residing in India with the managerial person.
(c) Leave
travel concession: Return passage for self and family in
accordance with the rule specified by the company where it is proposed that the
leave be spent in home country instead of anywhere in India.
Explanation I: For the purposes of Section II of this Part, "effective capital" means the aggregate of the paid-up share capital (excluding share application money or advances against shares); amount, if any, for the time being standing to the credit of share premium account, reserves and surplus (excluding revaluation reserve), long-term loans and deposits repayable after one year (excluding working capital loans, overdrafts, interest due on loans unless funded, bank guarantee, etc., and other short-term arrangements) as reduced by the aggregate of any investments (except in the case of investment by an investment company whose principal business is acquisition of shares, stock debentures or other securities), accumulated losses and preliminary expenses not written off.
Explanation II: (a) Where the appointment of the managerial
person is made in the year in which company has been incorporated, the
effective capital shall be calculated as on the date, of such appointment;
(b)
In any other case, the effective capital shall be calculated as on the last
date of the financial year preceding the financial year in which the appointment
of the managerial person is made.
Explanation III: For the purposes of Section II of this Part,
family means the spouse, dependent children and dependent parents of the
managerial person.
66[Section III -
Remuneration payable to a managerial person in two companies
Subject
to the provisions of Sections I and II, a managerial person shall draw
remuneration from one or both companies, provided that the total remuneration
drawn from the companies does not exceed the higher maxim um limit admissible
from any one of the companies of which he is a managerial person.]
PROVISIONS
APPLICABLE TO PARTS I AND II OF THIS SCHEDULE
1. The appointment and remuneration referred to in Parts I and
II of this Schedule shall be subject to approval by a resolution of the
shareholders in general meeting.
2. The auditor or the secretary of the company or where the
company has not appointed a secretary, a secretary in whole-time practice shall
certify that the requirements of this Schedule have been complied with and such
certificate shall be incorporated in the return filed with the Registrar under
sub-section (2) of section269.]
66. Inserted by Notification No GSR 418(E)
dated 12-9-1996.
67[SCHEDULEX IV
[See
sections 205 and 3501
RATES OF DEPRECIATION
|
Nature of asset |
Single Shift WDV SLM |
Double Shift WDV SLM |
Triple Shift WDV SLM |
|||
|
1 |
2 3 |
4 5 |
6 7 |
|||
|
1. (a) BUILDINGS (Other
than factory building) [NESD] (b) FACTORY BUILDING (c) PURELY TEMPORARY
ERECTIONS such as wooden structures II. PLANT AND MACHINERY 68[(i)
General rate applicable to, - (a) Plant and machinery (not being a ship)
other than continuous process plant for which no special rate has been
prescribed under (ii) Below: (b) Continuous process plant, 69[***]
for which no-special rate has been prescribed under (ii) below [NESD] |
5% 10% 100% 13.91% 15.33% |
1.63% 3.34% 100% 4.75% 5.28% |
.
.
. 20.87%
. |
.
.
. 7.42%
. |
.
.
. 27.82%
. |
.
.
. 10.34%
.] |
|
(ii) Special rates A.1. Cinematograph films Machinery used in the
production and exhibition of cinematograph films
[NESD] (a) Recording equipment,
reproducing equipment, developing machines, Printing machines, editing
machines, synchronizers and studio lights except bulbs (b) Projecting
equipment of film exhibiting concerns 2. Cycles [NESD] 68[3. Electrical machinery, X-ray and
electrotherapeutic apparatus and accessories thereto, medical, diagnostic
equipments, namely, cat-scan, ultrasound machines, ECG monitors, etc. [NESD] 4. Juice boiling pans (karhasis) [NESD] |
20% 20% 20% |
7.07% 7.07% 7.07% |
.
.
. |
.
.
. |
.
.
. |
.
. |
67. Inserted by the
Companies (Amendment) Act, 1988, w.e.f 2-4-1987
68. Substituted by
GSR 756(E) dated 16-12-1993.
69. Words other
than those omitted by Notification No. GSR 101(E), dated
1-3-1995.
|
Nature of asset |
Single Shift WDV SLM |
Double Shift WDV SLM |
Triple Shift WDV SLM |
|||
|
1 |
2 3 |
4 5 |
6 7 |
|||
|
5. Motor-cars,
motor-cycles, scooters and other mopeds [NESD] 6. Electrically operated vehicles
including battery powered or fuel cell powered vehicles [NESD] 7. Sugarcane crushers
(indigenous kolhus and belans) [NESD] 8. Glass manufacturing concerns except direct
fire glass melting furnaces Recuperative and regenerative glass melting furnaces 9. Machinery used in the manufacture
of electronic goods and components B. 1. 70[Aero planes, aero engines, simulators,
visual system and quick engine change equipment [NESD] 2.
Concrete pipes manufacture-dies [NESD] |
25.89% 20% 20% 20% 15.62% 16.2% |
9.5% 7.07% 20% 7.07% 5.38% 5.6%] |
.
.
. 30% 23.42% |
.
.
. 11.31% 8.46% |
.
.
. 40% 31.23% |
.
.
. 16.21% 11.87% |
|
70. Substituted vide Notification No. GSR
788 (E) dated 4-11-1994. |
||||||
|
3. Drum container
manufacture-dies [NESD] 4. Earth-moving machinery Employed in heavy construction
works, such as dams, tunnels, canals, etc. [NESD] 5. Glass manufacturing concerns except
direct fire glass melting furnaces- Moulds [NESD] 6. Moulds in iron foundries [NESD] 7. Mineral oil concerns- Field operation
(above ground)-Portable boilers, drilling tools, well-head tanks, rigs, etc.
[NESD] 8. Mines and queries-Portable
under-ground machinery and earth-moving machinery used in open cast mining
[NESD] 9. Motor buses and motor lorries other
than those used in a business of running them on hire [NESD] |
30% |
11.31% |
. |
. |
. |
. |
|
9A. Motor tractors, harvesting combines [NESD] 10. Patterns, dies and templates [NESD] 11. Ropeway structures-Ropeways, ropes and
trestle sheaves and connected parts [NESD] 12. Shoe and other leather goods
factories-Wooden lasts used in the manufacture of shoes C. 1. 71[***] 2. Motor buses, motor lorries and motor taxis
used in a business of running them on hire [NESD] 3. Rubber and
plastic goods factories-Moulds [NESD] 4. Data
processing machines including computers [NESD] 5. Gas cylinders including valves and regulators [NESD] D. 1. Artificial silk manufacturing machinery
wooden parts |
30% 40% |
11.31% 16.21% |
45%
. |
18.96%
. |
60%
. |
29.05%
. |
|
2. Cinematograph films- Bulbs of studio lights 3. Flour mills-Rollers 4. Glass manufacturing Concerns- Direct fire Glass melting furnaces 72[4A. Float Glass Melting Furnaces [NESD] 5. Iron and steel industries- Rolling mill rolls 6.
Match factories-Wooden match frames 7. Mineral
oil concerns- (a) Plant used in field
operations (below ground)- Distribution- returnable packages; (b) Pant used in field
operations (below ground) but not including assets used in field operations
(distribution)- Kerbside pumps including under ground tanks and fittings. 8.
Mines and quarries- (a) Tubs, winding ropes,
haulage ropes and sand stowing pipes (b) Safety lamps 9. Salt
works-Salt pans, reservoirs and condensers, etc., made of earthy, sandy or
cay material or any other similar material 10.
Sugar works- Rollers III.
FURNITURE AND FITTINGS 73[1. general
Rates [NESD] 2. Rate for furniture and
fittings used in hotels, restaurants and boarding houses; schools, colleges |
100% |
100% |
.. |
.. |
. |
. |
|
and other educational
institutions, libraries; welfare centers; meeting halls cinema houses;
theatres and circuses; and for furniture and fitting let out on hire for used
on the occasion of marriages and similar functions [NESD] IV.
SHIPS 1. Ocean-going ships- (i) Fishing vessels with
wooden hull [NESD] (ii) Dredgers, tugs
barges survey launches and other similar ships used mainly for dredging
purposes [NESD] (iii) Other ships [NESD] 2.
Vessels ordinarily operation on inland waters- (i) Speed boats [NESD] (ii) Other vessels
[NESD] |
25.88% 27.05% 19.8% 14.6% 20% 10% |
9.5% 10% 7% 5% 7.07% 3.34% |
..
..
.
.
.
.. |
..
..
..
.
.
. |
..
..
..
.
.
|
.]
.
..
.
.
|
·
WDV means written down value.
·
SLM means straight line method.
71. Omitted vide Notification
No.GSR 788 (E),dated 4-11-1994.
72. Inserted vide
Notification No. GSR 500 (E), dated l8-8-1998.
73. Substituted by
GSR 756 (E), dated l6-12-1993.
NOTES
1. "Buildings' include
roads, bridges, culverts, wells and tube-wells.
2. "Factory buildings'
does not include offices, godowns, officers' and employees' quarters, roads,
bridges, culverts, wells and tube-wells.
3. 'Speed boat' means a motor
boat driven by a high speed internal combustion engine capable of propelling
the boat at a speed exceeding 24 kilometres per hour in still water and so
designed that when running at a speed it will plane, ie., its bow will rise
from the water.
4. Where, during any financial year, any addition has been made
to any asset, or where any asset has been sold, discarded, demolished or
destroyed, the depreciation on such assets shall be calculated on a pro rata
basis from the date of such addition or, as the case may be, up to the date on
which such asset has been sold, discarded, demolished or destroyed.
5. The following information
should also be disclosed in the accounts:
(i) Depreciation methods
used; and
(ii) Depreciation rates or
the useful lives of the assets, if they are different from the principal rates
specified in the Schedule.
6. The calculations of the
extra depreciation for double shift working and for triple shift working shall
be made separately in the proportion which the num her of days for which the
concern worked double shift or triple shift, as the case may be, bears to the
normal number of working days during the year.
For this purpose, the normal number of working days during the year
shall be deemed to be-
(a) In the case of a seasonal factory or concern, the number of days on which the factory or concern actually worked during the year or 180 days, whichever is greater;
(b) In any other case, the number of days on which the factory or concern actually worked during the year or 240 days, whichever is greater;
The
extra shift depreciation shall not be charged in respect of any item of
machinery or plant which has been specifically, excepted by inscription of the
letters "NESD' (meaning "no extra shift depreciation') against it in
sub-items above and also in respect of the following items of machinery and
plant to which the general rate of depreciation of 74[ 13.91 ] per cent applies-
(1) Accounting machines.
(2) Air-conditioning
machinery including room air-conditioners.
(3) Building contractor's
machinery.
(4) Calculatingmachines.
(5) Electrical
machinery-switchgear and instruments, transformers and other stationary plant
and wiring and fitting of electric light and fan installations.
(6) Hydraulic works,
pipelines and sluices.
(7) Locomotives, rolling stocks,
tramways and railways used by concerns, excluding railway concerns.
(8) Mineraloilconcems-field
operations:
(a) 75[ . . . ]
(b) Prime movers
(c) 75[* * *]
(d) Storage tanks (above
ground)
(e) Pipelines (above ground)
(f) Jetties and dry docks
(9) Mineral oil
concerns-field operations (distribution)-kerbside pumps, including underground
tanks and fittings.
(10) Mineral oil
concerns-refineries:
(a) 76[* * *]
(b) Prime movers
(c) 76[* * *]
77[(d)
LPG Plant]
(11) Mines and quarries:
(a) Surface and underground
machinery (other than electrical machinery and portable underground machinery)
(b) Head-gears
(c) Rails
(d) 75[* * *]
(e) Shafts and inclines
(f) Tramways on the surface
(12) Neo-post franking
machines.
74. Substituted for"15" by GSR7 56
(E), dated l6-12-1993.
75. Omitted by GSR
756 (E), dated l6-12-1993.
76. Omitted, ibid.
77. Inserted by
GSR 416 (E), dated 14-5-1993.
(13) Office machinery.
(14) Overhead cables and wires.
(15) Railway sidings.
(16) Refrigeration plant
containers, etc. (other than racks).
(17) Ropeway structures:
(a) Trestle and station steel
work.
(b) Driving and tension
gearing.
(18) Salt works-Reservoirs,
condensers, salt pans, delivery channels and piers if constructed of masonry,
concrete, cement, asphalt or similar materials; barges and floating plant;
piers, quays and jetties; and pipelines for conveying brine if constructed of
masonry, concrete, cement, asphalt or similar materials.
(19) Surgical instruments.
(20) Tramways electric and
tramways run by internal combustion engines-permanent way: cars-car trucks, car
bodies, electrical equipment and motors; tram cars including engines and gears.
(21) Typewriters.
(22) Weighing machines.
(23) Wireless apparatus and
gear, wireless appliances and accessories.]
(24) 78[* * *]
79[7. 'Continuous
process plant means a plant which is required and designed to operate 24 hours
a day.
8. Notwithstanding anything mentioned in this Schedule,
depreciation on assets, whose actual cost does not exceed five thousand rupees,
shall be provided depreciation at the rate of hundred per cent:]
79a [Provided that
where the aggregate actual cost of individual items of plant and machinery
costing Rs. 5,000 or less constitutes more than 10 per cent of the total actual
cost of plant and machinery, rates of depreciation applicable to such items
shall be the rates as specified in Item II of the Schedule.]
80[SCHEDULE XV
[See section
108B (2) (b)]
1. Arms and ammunition and
allied items of defence equipment, defence aircrafts and warships.
2. Atomic energy.
3. Coal and lignite.
4. Mineral oils.
5. Mining of iron ore,
manganese ore, chrome ore, gypsum, sulphur, gold and diamond.
6. Mining of copper, lead,
zinc, tin, molybdenum and wolfram.
7. Minerals specified in the
Schedule to the Atomic Energy (Control of Production and Use) Order, 1953.
8. Railway transport.]
78. Omitted by GSR
756 (E), dated l6-12-1993.
79. Inserted,
ibid.
79a. Inserted by Notification No. GSR 101(E) dated
1-3-1995.
80. Inserted by
the MRTP (Amdt.) Act, 1991, w.e.f.27-9-1991.