Indian Company Law
Volume 1

Contents
at-a-glance

Foreword
Preface to the Eleventh Edition
Preface to the Tenth Edition
Preface to the Ninth Edition
A word from the publishers
Detailed Contents
Abbreviation
Comparative Table
Table of Cases
Subject Index

Introduction

Evolution of Company Law

The Companies Act, 1956
(Act 1 of 1956)
Preamble

Part I
Preliminary

1. Short title, commencement and extent

2. Definitions

2-A. Interpretation of certain words and expressions

3. Definitions of "company", "existing company", "private company" and "public company"

4. Meaning of "holding company" and "subsidiary"

4-A. Public Financial Institutions

5. Meaning of "officer who is in default"

6. Meaning of "relative"

7. Interpretation of "person in accordance with whose directions or instructions directors are accustomed to act"

8. Power of Central Government to declare an establishment not to be a branch office

9. Act to override memorandum, articles, etc.

10. Jurisdiction of Courts

10-A. [* * *]

10-B. [* * *]

10-C. [* * *]

10-D. [* * *]

Part I-A

board of company law administration

10-E. Constitution of Board of Company Law Administration

10-F. Appeals against the orders of the Company Law Board

10-FA. Dissolution of Company Law Board

Part I-B

National Company Law Tribunal

10-FB. Constitution of National Company Law Tribunal

10-FC. Composition of Tribunal

10-FD. Qualifications for appointment of President and members

10-FE. Term of office of President and members

10-FF. Financial and administrative powers of Member Administration

10-FG. Salary, allowances and other terms and conditions of service of President and other members

10-FH. Vacancy in tribunal

10-FI. Resignation of President and member

10-FJ. Removal and suspension of President or member

10-FK. Officers and employees of tribunal

10-FL. Benches of Tribunal

10-FM. Order of Tribunal

10-FN. Power to review

10-FO. Delegation of powers

10-FP. Power to seek assistance of Chief Metropolitan Magistrate and District Magistrate

Part I-C

appellate Tribunal

10-FQ. Appeal from order of tribunal

10-FR. Constitution of Appellate Tribunal

10-FS. Vacancy in Appellate Tribunal, etc

10-FT. Term of office of Chairperson and members

10-FU. Resignation of Chairperson and members

10-FV. Removal and suspension of Chairperson and members of Appellate Tribunal

10-FW. Salary, allowances and other terms and conditions of service of Chairperson and members

10-FX. Selection Committee

10-FY. Chairperson, etc., to be public servants

10-FZ. Protection of action taken in good faith

10FZA. Procedure and powers of tribunal and Appellate Tribunal

10-G. Power to punish for contempt

10-GA. Staff of Appellate Tribunal

10-GB. Civil Court not to have jurisdiction

10-GC. Vacancy in tribunal or Appellate Tribunal not to invalidate acts or proceedings

10-GD. Right to legal representation

10-GE. Limitation

10-GF. Appeal to Supreme Court

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

Memorandum of association

12. Mode of forming incorporated company

13. Requirements with respect to memorandum.

14. Form of Memorandum

15. Printing and signature of Memorandum

15-A. Special provision as to alteration of memorandum consequent on alteration of name of State of Madras

15-B. Special provision as to alteration of memorandum consequent on alteration of name of State of Mysore

16. Alteration of memorandum

17. Special resolution and confirmation by Central Government required for alteration of memorandum

17-A. Change of registered office within a State

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

21. Change of name by company

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

27. Regulations required in case of unlimited company, company limited by guarantee or private company limited by shares

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

34. Effect of registration

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

41. Definition of "member"

42. Membership of holding company

Private companies

43. Consequences of default in complying with conditions constituting a company a private company

43-A. Private company to become public company in certain cases

44. Prospectus or statement in lieu of prospectus to be filed by private company on ceasing to be private company

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

Contracts and deeds, investments, seal, etc.

46. Form of contracts

47. Bills of exchange and promissory notes

48. Execution of deeds

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

Part III

prospectus and allotment and other matters
relating to issue of shares or debentures

Prospectus

55. Dating of prospectus

55-A. Powers of Securities and Exchange Board of India

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

58-A. Deposits not to be invited without issuing an advertisement

58-AA. Small depositors

58AAA. Default in acceptance or refund of deposits to be cognizable

58-B. Provisions relating to prospectus to apply to advertisement

59. Penalty and interpretation

60. Registration of prospectus

60-A. Shelf prospectus

60-B. Information memorandum

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 mis-statements in prospectus

64. Document containing offer of shares or debentures for sale to be deemed prospectus

65. Interpretation of provisions 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

68-A. Personation for acquisition, etc., of shares

68-B. Initial offer of securities to be in dematerialised form in certain cases

Allotment

69. Prohibition of allotment unless minimum subscription received

70. Prohibition of allotment in certain cases unless statement in lieu of prospectus delivered to Registrar

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

75. Return as to allotments

Commissions and discounts

76. Power to pay certain commissions and prohibition of payment of all other commissions, discounts, etc

77. Restrictions on purchase by company, or loans by company for purchase, of its own or its holding company’s shares

77-A. Power of company to purchase its own securities

77-AA. Transfer of certain sums to capital redemption reserve account

77-B. Prohibition for buy-back in certain circumstances

Issue of shares at premium and discount

78. Application of premiums received on issue of securities

79. Power to issue shares at a discount

79-A. Issue of sweat equity shares

Issue and redemption of preference shares

80. Power to issue redeemable preference shares

80-A. Redemption of irredeemable preference shares, etc

Further issue of capital

81. Further issue of capital

Part IV

share capital and debentures

Nature, numbering and certificate of shares

82. Nature of shares or debentures

83. Numbering of shares

84. Certificate of shares

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. [* * *]

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

Subject Index

 

 

Detailed Contents

Introduction

The Company as a medium of business

 

Business enterprise

Company

Corporations

Partnership

Company and partnership distinguished

Advantages of a registered company

Advantages of a partnership

Company a "creature of statutes"

Company is a legal persona distinct from its members

One-man companies under 1913 Act : Salomon's case

Fraudulent trading under guise of one-man companies—Personal liability of Directors from the company's debts—English Act, 1929

Salomon's case

Member's non-liability for contracts or tortious acts of company

Execution against members for decrees obtained against the company, not permissible under 1913 Act

A member or Director, though holding the bulk of the shares, not personally liable for the debts or torts of the company

Public company

Grant of probate or letters of administration to company

Private companies—Duties and obligation of

Share holder's liability restricted to amount unpaid on his share

Majority rights of members

Merits of Company Law in general

Minimum subscription clause

Company and corporation—Separate legal entities

Company—Not a property

Holding company

Dissolution of companies

Liquidation

Winding-up

Protection of members of companies—Shareholder's right

Rights of, and protection afforded to members

Prospectus must give full information

Liability for issue of a misleading prospectus

Intending purchasers of shares entitled to true disclosures in the prospectus

Law relating to non-disclosures

Moneys received from applicants for shares to be kept deposited in a scheduled bank

Statement in lieu of prospectus

Waiver of compliance is null and void

Protection of the interests of creditors

 

Protection of employees

Directors and provisions in the interests of commercial morality

Doctrine of dolus malus

Checks on Directors

Restrictions on Managers

Prevention of oppression and mismanagement

Investigation by Inspectors

Constitution of the Board of Company Law Administration

Issue of shares at discount

Issue of shares at premium

Reduction of share capital

Variation of shareholders' rights

Provisions regarding issue of Redeemable Preference Shares

Construction of Memorandum of Association

Annual General Meeting

Statutory Meeting and Statutory Report

Provisions for enforcing the submission of returns and documents to the Registrar of Companies

Relief from civil and criminal liability

Inadvertent defaults

Duties cast upon Auditors

Auditors can attend meetings

Articles cannot relieve Auditors of any of the duties cast upon them by law

Rights and duties of Auditors

Illegal associations—Consequences of formation of such associations

Doctrine of the lifting of the veil of corporate personality

Grounds of lifting of the corporate veil

Where companies are in the relationship of holding and subsidiary companies and the subsidiary company acts as an agent of the holding company

Position of European Court

Where fraud or improper conduct is intended to be prevented

Where the law itself contemplates lifting the veil

Where protection of public interest is of paramount importance

Where obligations laid down by tax law or a beneficent law are sought to be evaded

Other exceptional cases

Classification of companies under the Act

Evolution of Company Law

Meaning of Company Law

Major economic themes in the development of Modern Company Law

Origin and growth of company legislation

Origin of the Companies Act, 1956 (Act 1 of 1956)

Amending Acts and Adaptation Orders

The Jammu and Kashmir (Extension of Laws) Act, 1956 (Act 62 of 1956)

The Adaptation of Laws (No. 3) Order, 1956

The Repealing and Amending Act, 1957 (Act 36 of 1957)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1962 (Act 43 of 1962)

The Companies (Amendment) Act, 1963 (Act 53 of 1963)

The Goa, Daman and Diu Laws (No. 2) Regulation, 1963

The Companies (Amendment) Act, 1964 (Act 32 of 1964)

The Repealing and Amending Act, 1964 (Act 52 of 1964)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 1966 (Act 34 of 1966)

The Companies Tribunal (Abolition) Act, 1967 (Act 17 of 1967)

The Central Laws (Extension to Jammu and Kashmir) Act, 1968 (Act 25 of 1968)

The Companies (Amendment) Act, 1969 (Act 17 of 1969)

The Madras State (Alteration of Name) (Adaptation of Laws on Union Subjects) Order, 1970

The Companies (Amendment) Act, 1971 (Act 80 of 1971)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Mysore State (Alteration of Name) (Adaptation of Laws on Union Subjects) Order, 1974

The Companies (Amendment) Act, 1977 (Act 46 of 1977)

The Monopolies and Restrictive Trade Practices (Amendment) Act, 1984 (Act 30 of 1984)

The Companies (Amendment) Act, 1985 (Act 35 of 1985)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Monopolies and Restrictive Trade Practices (Amendment) Act, 1991 (Act 58 of 1991)

The Depositories Act, 1996 (Act 22 of 1996)

The Companies (Amendment) Act, 1996 (Act 5 of 1997)

The Depositories Related Laws (Amendment) Act, 1997 (Act 8 of 1997)

The Companies (Amendment) Act, 1999 (Act 21 of 1999)

The Trade Marks Act, 1999 (Act 47 of 1999)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Amendment) Act, 2001 (Act 57 of 2001)

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Act 54 of 2002)

The Companies (Amendment), Act, 2002 (Act 1 of 2003)

The Companies (Second Amendment), Act, 2002 (Act 11 of 2003)

The Election and other Related Laws (Amendment) Act, 2003 (Act 46 of 2003)

The Enforcement of Security Interest and Recovery of Debt Laws (Amendment) Act, 2004 (Act 30 of 2004)

Scope of Company Law

Object and scheme of the Act

Purpose of the Act

the companies act, 1956

(Act 1 of 1956)

Preamble

Act is not retrospective

Application of the preamble

Act not exhaustive

Applicability of English Decisions

Extent to which old decisions are applicable

 

Application of the Act

Companies to which the Act applies

Companies to which the Act does not apply

Modification of the Act in its application to Nidhis and Mutual Benefit Societies

Interpretation of statutes

Concept of

Object of

Purpose of

Title of the Act

Preamble as an aid to interpretation

General principles of interpretation of statutes

Fundamental rules of interpretation

Cardinal rule of interpretation

Golden rule

Clear and unambiguous language

Equity of the statute

Harmonious interpretation

Purposive interpretation

Commencement of an Act

Notification

Intention of Legislature

Reasons of enactment

Policy and object of the statute

Historical facts

Recommendations of the Law Commission

Statement of Objects and Reasons

Determination of object of statute

Rule of construction

Object of, and words and phrases

Common commercial meaning of the words

Same word to have same meaning

Effect to words used

Each word is important

Two different words expressions

Definition clause

Context

Grammatical construction

Punctuation

Court cannot legislate

Court cannot rewrite a section

Heading of the section

Inclusive definition

Adjectives

Ejusdem generis rule

Assistance of statutes in pari materia

Incorporation of the provisions of another statute

Conflict between two similar statutes

Incorporation of provisions of an earlier statute

Generalia specialibus non derogant

 

Constitutional validity of a statute

Contemporanea expositio

Doctrine of severability

Enabling provision

Dictionary meanings

Encyclopaedias and technological books

Marginal notes

Explanation

Schedule

Illustration

Non obstante clause

Internal aids

External aids

Provision creating legal fiction

Deeming provision

Directory or mandatory provision

Prescribed manner

Exception

Savings clause

Proviso

General and particular powers

Executive instructions

Amending Act

Repeal of a statute

Amendment and repeal

Prospectivity and retrospectivity

Effect of amendment on pending proceedings

Implied repeal

Doctrine of eclipse

Doctrine of prospective overruling

Construction of judgment

Construction by implication of a notification

Defect in a notification

Beneficent legislation

Disqualifications imposed by provisions

Taxing and fiscal statutes

Principle of rateable distribution

Penal statutes

Remedial statute

Procedural law

Interpretation of compromise decree

Interpretation of the Constitution

Interpretation of documents

Ex praecedentibus et consequentibus optoma fit interpretatio

Interpretation of declaratory statute

 

Ubi jus ibi remedium

Principles of natural justice and audi alteram partem rule

Order passed contrary to mandatory provision of statute

Rule of res judicata

Part I

preliminary

1. Short title, commencement and extent

Scope of the section

Commencement of the Act

Territorial jurisdiction of the Act

India

Special provisions as to applicability in Sikkim

Special provisions as to applicability in Goa

Special provisions as to applicability in Jammu and Kashmir

2. Definitions

Definition clause

"Abridged prospectus" [Section 2 (1)]

"Alter" and "alteration" [Section 2 (1-A)]

"Appellate Tribunal" [Section 2 (1-B)]

"Articles" [Section 2 (2)]

"Banking company" [Section 2 (5)]

"Board of Directors" or "Board" [Section 2 (6)]

"Body corporate" or "corporation" [Section 2 (7)]

Institution or body which can be regarded body corporate

Status of Registered Societies

Societies registered under the Societies Registration Act—Whether "body corporate" ?

Department's Circular I

Department's Circular II

ONGC notified as a body corporate—Notification

"Book and paper" and "book or paper" [Section 2 (8)]

Books and documents statutorily required to be maintained by a company

"Branch office" [Section 2 (9)]

Department's Circular

Branch outside India is not a foreign concern

"Company" [Section 2 (10)]

Classification of companies under the Act

"Company Law Board" [Section 2 (10-A)]

"The Court" [Section 2 (11)]

"Debenture" [Section 2 (12)]

Meaning of debentures

Debentures and debenture stock

Debentures and debenture stock—Debenture includes debenture stock

Debenture documents and stamp duty

Debentures, shares and stock—Distinguished

Debentures—Where payable ?

Kinds of debentures

Debentures with a floating charge distinguished from debentures with a fixed charge

Main characteristic of a floating charge

Restriction on banking companies

Debentures payable to registered holders distinguished from debentures payable to bearer

Debenture holder—Whether a consumer ?

Fixed deposit—Whether constitutes a debenture ?

"Depository" [Section 2 (12-A)]

"Derivative" [Section 2 (12-B)]

"Director" [Section 2 (13)]

Position of Directors where management of the company vests in the Central Government—Department's Clarification

"District Court" [Section 2 (14)]

"Dividend" [Section 2 (14-A)]

"Document" [Section 2 (15)]

"Employees stock option" [Section 2 (15-A)]

"Existing company" [Section 2 (16)]

"Financial year" [Section 2 (17)]

"Government company" [Section 2 (18)]

"Holding and subsidiary companies" [Section 2 (19)]

"Hybrid" [Section 2 (19-A)]

"Industrial company" [Section 2 (19-AA)]

"Industrial undertaking" [Section 2 (19-AB)]

"Information Memorandum" [Section 2 (19-B)]

"Insurance company" [Section 2 (21)]

"Issued generally" [Section 2 (22)]

"Limited company" [Section 2 (23)]

"Listed public companies" [Section 2 (23-A)]

"Manager" [Section 2 (24)]

Factory Manager—Whether covered under Section 2 (24) ?

Department's Clarification

"Managing Director" [Section 2 (26)]

When Director is to be regarded as Managing Director ?

Managing Director—Whether company may have more than one—Department's Clarification

Managing Director—Whether an 'agent' or 'servant' of the company

Managing Director—Dual capacity of agent and servant

Decree against the company and its Managing Director for recovery of dues—Managing Director not the judgment-debtor in individual capacity

"Member" [Section 2 (27)]

"Memorandum" [Section 2 (28)]

Purpose of the Memorandum

"Modify" and "modification" [Section 2 (29)]

"Net worth" [Section 2 (29-A)]

"Officer" [Section 2 (30)]

Person holding position of responsibility—Whether an officer of the company ?—Clarification

When employee can be treated as an officer ?

Debenture-trustee—Whether an officer ?

"Officer who is in default" [Section 2 (31)]

"Option in securities" [Section 2 (31-A)

"Operating agency" [Section 2 (31-AA)]

"Paid-up capital" or "capital paid-up" [Section 2 (32)]

"Prescribed" [Section 2 (33)]

"Previous companies law" [Section 2 (34)]

"Private company" [Section 2 (35)]

"Prospectus" [Section 2 (36)]

Liability in connection with issue of prospectus

Invitation to the public

Facts of, and holding in Nash v. Lynde

"Public company" [Section 2 (37)]

"Public holiday" [Section 2 (38)]

"Recognised Stock Exchange" [Section 2 (39)]

Stock Exchanges notified as recognised Stock Exchanges

Change of name of Bombay Stock Exchange to BSE

SEBI's caution against unrecognised Stock Exchanges

Persons convicted of offence—Not eligible for membership

Exclusive trading right to function as Stock Exchange

Remedy of writ of mandamus against Stock Exchange

National Stock Exchange—Suspension of trading in a particular scrip and postponement of settlement

Suspension/cancellation of membership

"Registrar" [Section 2 (40)]

"Relative" [Section 2 (41)]

"Schedule" [Section 2 (42)]

"Scheduled bank" [Section 2 (43)]

"Secretary" [Section 2 (45)]

Companies with Rs. 50 lakhs capital to have qualified Secretary

Authentication of accounts by the Secretary—Department's view

Authorisation for making corrections in defective documents filed by Companies with the Registrar of Companies—Department's circular

Certification of documents relating to charges

Delay in Registration of Charges

Secretary whether competent to sign and verify pleadings

Institute of Companies Secretaries of India—An "authority"

Removal of Company Secretary

"Secretary in whole-time practice" [Section 2 (45-A)]

"Securities" [Section 2 (45-AA)]

"Scrip certificates"

"Securities and Exchange Board of India" [Section 2 (45-B)]

"Share" [Section 2 (46)]

'Share' and 'share certificate'

Some points of distinction between shares and stock

Securities

Investment companies

Units issued by Unit Trust of India, not shares

Shares and debentures—Distinguished

Public issue of shares to raise capital—Whether a trading activity?

"Share with differential rights" [Section 2 (46-A)]

"Sick Industrial Company" [Section 2 (46-AA)]

"State Level Institution" [Section 2 (46-AB)]

"Subsidiary company" or "subsidiary" [Section 2 (47)]

"Total voting power" [Section 2 (48)]

Total voting power on issue of shares with differential rights

"Trading corporation" [Section 2 (49)]

"Tribunal" [Section 2 (49-A)]

"Variation" and "vary" [Section 2 (50)]

2-A. Interpretation of certain words and expressions

Legislative history—The Depositories Act, 1996 (Act 22 of 1996)

Scope of the section

Definitions under Depositories Act, 1996

3. Definitions of "company", "existing company", "private company" and "public company"

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Jammu and Kashmir (Extension of Laws) Act, 1956 (Act 62 of 1956)

The Central Laws (Extension to Jammu and Kashmir) Act, 1968 (Act 25 of 1968)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

"Company"

Companies incorporated by Royal Charter

Companies incorporated by special Acts of the Legislature

'Registered companies' and 'firms'

Company distinguished from Hindu joint family business

Company distinguished from 'Club'

Societies registered under the Societies Registration Act

"Existing company"

"Private company"

Meaning and characteristics of 'private company'

One-man or family companies

Special privileges of all private companies

Special disability of a private company

Special privileges of a private company which is not subsidiary of a public company

Prohibition on private companies from accepting deposits from persons other than its members, Directors or their relatives

Deposits received from joint shareholders by a private limited NBFC

Transfer of shares in a private company—Private agreement between members

Transfer of shares in a private limited company—Previous sanction of the Board of Directors

Transmission under a Will

Value of shares of a private company

"Public company"

Private company which is a subsidiary of a public company

Refusal by company to register transfer of shares—Validity of reasons

Transfer of shares—Consequences of failure to send notice of refusal

4. Meaning of "holding company" and "subsidiary"

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Object of the section

Concept of 'group of companies', 'holding company' and 'subsidiary company'

Points for determining whether the business of the subsidiary company is the business of the parent company

Company—When a holding company of a subsidiary company ?

Subsidiary company—Delinking from holding company

When subsidiary and holding company to be treated as one ?

Whether business of subsidiary company is to be considered as business of the holding company ?

The United Kingdom position

Limited recognition of the group in the English Companies Acts

Definition of holding and subsidiary corporation—American context

Purposes of holding company device

Contract

Tort

Control

Holding company—Manner of reckoning "half in nominal value of its equity capital" mentioned in Clause (b) (ii)—Department's view

4-A. Public Financial Institutions

Legislative history—The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1999 (Act 21 of 1999)

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Act 54 of 2002)

The Enforcement of Security Interest and Recovery of Debt Laws (Amendment) Act, 2004 (Act 30 of 2004)

Scope of the section

Power of the Central Government to specify public financial institutions

Institutions specified by the Central Government as public financial institutions

Right of Unit Trust of India to file recovery proceedings

5. Meaning of "officer who is in default"

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1988 (Act 31 of 1988)

Scope of the section

Term "officer"—Interpretation of

"Officer in default"

'Officer'—Connotation of—Department's circular

When Directors to be treated as 'officer who is in default' under Section 5

Immunity from prosecution of officers other than the Managing Director, whole-time Directors or Manager of the company

Wilful default

Position in other Acts

The Maritime Zones of India (Regulation of Fishing by Foreign Vessels) Act, 1981

The Imports and Exports (Control) Act, 1947

The Payment of Bonus Act, 1965

The Employee's Provident Funds and Miscellaneous Provisions Act, 1952

The Factories Act, 1948

The Employees' State Insurance Corporation Act, 1948

The Equal Remuneration Act, 1976

The Minimum Wages Act, 1948

The Water (Prevention and Control of Pollution) Act, 1974

The Insecticides Act, 1968

The Prevention of Food Adulteration Act, 1954

The Essential Commodities Act, 1955

The Drugs and Cosmetics Act, 1940

The Consumer Protection Act, 1986

The Central Excises and Salt Act, 1944

The Income-tax Act, 1961

The Negotiable Instruments Act, 1881

Notice to company sufficient to charge others

No notice to the company

Averment of being in-charge

Complaint filed prematurely

Defence and burden of proof

Resignation and quashing of complaint

Absence of signature and company seal

Issue of process

Jurisdiction for filing complaint

Representation of corporation in Court proceedings

Relief under Section 633

Compounding of offences

6. Meaning of "relative"

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Purpose and object of the section

Members of Hindu undivided family—Department's clarification

Reciprocal relationships

Effect of adoption

Deceased spouse

Relationship by half blood

Relative

Who can be regarded as relative within the meaning of Section 6 ?

Sale of goods to dealers on principal to principal basis—Whether dealers to be regard as related persons ?

Illegitimate child

7. Interpretation of "person in accordance with whose directions or instructions directors are accustomed to act"

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

'Accustomed to act'

Shadow Directors

De facto Directors

Directors of holding company

8. Power of Central Government to declare an establishment not to be a branch office

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope and object of the section

"Branch office"

Delegation of powers to the Company Law Board

9. Act to override memorandum, articles, etc.

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Articles of Association—Whether overriden by Act ?

Agreement

Provisions of Memorandum and Articles conflicting with other laws equally void

10. Jurisdiction of Courts

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Retrospectivity of the section

"Central Government" Definition

"Court"

"High Court"

Conferment of jurisdiction on Courts

Jurisdiction of the Courts

Jurisdiction to Courts at place of branch office of the company

Jurisdiction of the High Courts

Jurisdiction of District Courts

Notification delegating jurisdiction to District Courts

Inherent powers of Company Court

Challenging automatic vacation of office under Section 283

Civil Courts

Jurisdiction of Consumer Forum and MRTP Commission

Alteration of jurisdiction

Judicial non-interference in company matters

Judicial interference in company matters

Facts of Foss v. Harbottle

Exceptions to the rule in Foss v. Harbottle

Ultra vires and illegal acts

Fraud on the minority

Application of principles of natural justice

Appropriation of corporate property

Negligence

Resolutions obtained by trick

Motives of personal benefit

Wrongdoer control

Form of action

Derivative action

Representative action

Cause of action

Territorial jurisdiction

Registered office

Foreign companies

No jurisdiction without notification

Registered office and domicile

Residence and jurisdiction

Proceedings in a wrong Court

Appeal

Transfer of cases

10-A. Constitution of Tribunal

[Omitted by Act 17 of 1967, Section 4, read with Schedule, w.e.f. 1-7-1967]

10-B. Procedure of Tribunal

[Omitted by Act 17 of 1967, Section 4, read with Schedule, w.e.f. 1-7-1967]

10-C. Powers of Tribunal

[Omitted by Act 17 of 1967, Section 4, read with Schedule, w.e.f. 1-7-1967]

10-D. Appeals against decisions, etc., of the Tribunal

[Omitted by Act 17 of 1967, Section 4, read with Schedule, w.e.f. 1-7-1967]

Part I-A

board of company law administration

10-E. Constitution of Board of Company Law Administration

Legislative history—The Companies (Amendment) Act, 1963 (Act 53 of 1963)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1977 (Act 46 of 1977)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

Sachar Committee recommendations

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Constitution of Company Law Board

Powers and functions of the Company Law Board

Powers under the M.R.T.P. Act, 1969

Powers under Securities Contracts (Regulation) Act, 1956

Powers under Reserve Bank of India Act, 1934

Company Law Board and the Consumer Protection Act, 1986

Delegation of powers

Powers of the Central Government that cannot be delegated

Delegation of powers to the Regional Directors

Delegation of powers to the Registrars of Companies

Delegation of powers to the Company Law Board

Withdrawal of notifications

Constitution of Company Law Board

Constitutional validity

Validity of acts of Company Law Board

Protection of acts done in good faith

Qualifications, age and experience of Company Law Board members

Chairman of Company Law Board

Vice-Chairman of Company Law Board

Eligibility of Company Secretaries for appointment as member of Company Law Board—Department's clarification

Constitution of benches

Additional Principal Bench of Company Law Board at Chennai

Jurisdiction of the benches

Jurisdiction of Company Law Board extended

Powers of Company Law Board under Code of Civil Procedure

Powers under Code of Criminal Procedure and Indian Penal Code

Compounding of offences

Applicability of Indian Evidence Act and Code of Civil Procedure to proceedings before the Company Law Board

Bench has power to impose conditions in its order or withdraw the same

Enforcement of order of Company Law Board

Power to grant interim relief

Principles of natural justice—Quasi-judicial adjudication

Exercise of discretion and principles of natural justice

Reasoned decisions—Necessity of recording reasons

Whether bench of Company Law Board is a Court under the Act

Company Law Board is a Court for the purposes of Contempt of Court Act

Company Law Board whether a substitute of the High Court

Procedure to be followed by the Company Law Board

Company Law Board Regulations, 1991

Matters to be dealt with by benches of Company Law Board

Transfer of matters to Principal Bench

Jurisdiction of bench

Language of the bench

Sitting hours

Seal of the bench

Petition in writing and divided in paras

General heading

Procedure for filing petition

Presentation and scrutiny of petition

Contents of petition

Interlocutory application

Documents to accompany the petition

Rights of appearance before the bench

Plural remedies

Service of notice and process issued by the bench

Filing of reply and documents by the respondents

Filing of counter-reply

Power of the bench to call for further information/evidence

Hearing of petition

Procedure upon non-appearance of the party

Substitution of legal representative

Order of the bench

Inspection of records and certified copies

Payment of fees

Reference to Company Law Board

Petition under Section 17

Application by depositors and debenture holders

Petition under Section 397/398

Petition under Section 407

Reference under Section 621-A

Petition under Section 2-A of M.R.T.P. Act

Enlargement of time

Inherent powers of the bench

Amendment of order

Bench to be deemed to be a Court for certain purposes

Company Law Board bound to follow procedural laws of the land

Power of Company Law Board to enlarge period of two months for filing reference

Matter heard by three members of the Company Law Board, can be decided by two members

Validity of order based on unsigned compromise

Exclusion of time taken in certified copies of Company Law Board's order

Review of order by Company Law Board

Appeal from orders of the Company Law Board

Nature of power and functions conferred on Company Law Board at-a-glance

Under Companies Act, 1956

Under M.R.T.P. Act, 1969

Under R.B.I. Act, 1934

Destruction of records in offices of benches

Transitional provisions

10-F. Appeals against the orders of the Company Law Board

Legislative history—The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Scope of challenge

Limitation period for filing of appeal

"Any person aggrieved"

Constitutional right of appellant

"Arising out of such order"—Meaning of

Issue not raised and argued before Company Law Board cannot be said to have arisen out of the order of the Board

No appeal on finding of fact

Order for refund of deposits—Not a question of law and is not appealable

Question of law and fact

Appeal against consent orders

Finding of fact—Powers of the High Court

Question of law—Appealable

Order passed by the Company Law Board in a manner unknown to law—Constitutes a question of law

Jurisdiction of High Court limited to question of law

Appeal to Division Bench from order of single Judge

Power of review

Necessity and availability of judicial review

Nature of jurisdiction of the High Court

Appeal against orders of the Company Law Board rendered in exercise of powers conferred on it under other laws

Forum of appeal

Territorial jurisdiction of High Court for appeal against decisions of the Company Law Board

Applicability of Court Rules to appeals

10-FA. Dissolution of Company Law Board

Legislative history—The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Part I-B

National Company Law Tribunal

Legislative history—The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Creation of National Company Law Tribunals and Appellate Tribunals—Constitutional validity of

10-FB. Constitution of National Company Law Tribunal

Legislative history

Scope of the section

10-FC. Composition of Tribunal

Legislative history

Scope of the section

10-FD. Qualifications for appointment of President and members

Legislative history

Scope of the section

10-FE. Term of office of President and members

Legislative history

Scope of the section

10-FF. Financial and administrative powers of Member Administration

Legislative history

Scope of the section

10-FG. Salary, allowances and other terms and conditions of service of President and other members

Legislative history

Scope of the section

10-FH. Vacancy in tribunal

Legislative history

Scope of the section

10-FI. Resignation of President and member

Legislative history

Scope of the section

10-FJ. Removal and suspension of President or member

Legislative history

Scope of the section

10-FK. Officers and employees of tribunal

Legislative history

Scope of the section

10-FL. Benches of Tribunal

Legislative history

Scope of the section

10-FM. Order of Tribunal

Legislative history

Scope of the section

10-FN. Power to review

Legislative history

Scope of the section

10-FO. Delegation of powers

Legislative history

Scope of the section

10-FP. Power to seek assistance of Chief Metropolitan Magistrate and District Magistrate

Legislative history

Scope of the section

Part I-C

appellate Tribunal

Legislative history—The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

10-FQ. Appeal from order of tribunal

Legislative history

Scope of the section

10-FR. Constitution of Appellate Tribunal

Legislative history

Scope of the section

10-FS. Vacancy in Appellate Tribunal, etc

Legislative history

Scope of the section

10-FT. Term of office of Chairperson and members

Legislative history

Scope of the section

10-FU. Resignation of Chairperson and members

Legislative history

Scope of the section

10-FV. Removal and suspension of Chairperson and members of Appellate Tribunal

Legislative history

Scope of the section

10-FW. Salary, allowances and other terms and conditions of service of Chairperson and members

Legislative history

Scope of the section

10-FX. Selection Committee

Legislative history

Scope of the section

10-FY. Chairperson, etc., to be public servants

Legislative history

Scope of the section

10-FZ. Protection of action taken in good faith

Legislative history

Scope of the section

10FZA. Procedure and powers of tribunal and Appellate Tribunal

Legislative history

Scope of the section

10-G. Power to punish for contempt

Legislative history

Scope of the section

10-GA. Staff of Appellate Tribunal

Legislative history

Scope of the section

10-GB. Civil Court not to have jurisdiction

Legislative history

Scope of the section

10-GC. Vacancy in tribunal or Appellate Tribunal not to invalidate acts or proceedings

Legislative history

Scope of the section

10-GD. Right to legal representation

Legislative history

Scope of the section

10-GE. Limitation

Legislative history

Scope of the section

10-GF. Appeal to Supreme Court

Legislative history

Scope of the section

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

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Object of the section

Grounds for the existence of Section 11 of the Act

Section 11 of the Act and Hindu joint family doing business

Meaning of the term 'person'

Male and female members to be included—Department's views

'Association'

Association to which the section applies

Effect of non-incorporation

Non-compliance with Section 11 of the Act—Illegal associations

Partnership

A partnership firm cannot be a member of a company—Department's view

Whether incorporated companies can enter into partnership

"Carrying on business"—Meaning of

"Acquisition of gain"

Position of joint families

Purpose for which a company is formed must be a lawful one

Sub-section (5)

Memorandum of association

12. Mode of forming incorporated company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Company—Legal status

Persons

Subscriber—Subscriber to Memorandum

"Member", "shareholder" and "holder of a share"

Memorandum of Association—Whether general authorised agent can sign Memorandum or any amendment thereto on behalf of subscriber

Kinds of companies which may be formed under the Act

Absence of authorised capital

Mode of forming a company under the Act

Incorporated company as subscriber

Partnership cannot be member—Department's clarification

Subscription by persons residing abroad

General permission to NRIs to subscribe to the Memorandum and Articles of Association under FERA, 1973

Permission further liberalised with effect from 31-10-1995

Direct investment in firms/companies in India by NRIs

Practice Notes

"Seven or more persons" : "Two or more persons"

Partnership converted into company

"One-man company"

Lawful purpose

Signatories to Memorandum

Members

Third persons

Legal entity

Nationality

Domicile

Residence

Enemy character

Situs of shares

Company as a partner

Practice Notes—Incorporation

Commencement of business by a public company

Precaution to be taken in registering Prize Chit Business Companies—Department's Instructions

13. Requirements with respect to memorandum.

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Memorandum of Association

Contents and form of the Memorandum of Association

Name

Registered office

Objects of the company

Arrangement of objects clause—Department's view

Inclusion of items and activities in the object clause of Memorandum and Articles of Association of a company

Companies with the main objects of conducting Prize Chit Business

Purpose of the objects clause

Main objects and incidental objects

Any purpose which may benefit the company

Independent objects

Indefinite objects

Main objects of the company should correlate with the nature of the business—Department's instruction

Objects must not be illegal

Canons for construction of objects clause

'Memorandum' and 'Articles of Association'—Distinguished

Memorandum or Articles cannot supersede statutory rights

Invalid Articles

Articles may explain but cannot modify Memorandum

Objects alone required to be stated in the Memorandum—Powers should be relegated to the Articles

Inherent powers

Implied powers

Powers which are not implied

Ratification of acts

Estoppel

Injunction

Meaning of ultra vires

Doctrine of ultra vires

Manner of exercising powers and the ultra vires rule

Loans, borrowings, guarantees, etc. and the ultra vires rule

Who could plead the rule of ultra vires ?

Officers' acts binding on company

Third party and ultra vires

Limited liability clause

Share capital

Association clause and subscription

Nominal, issued, subscribed and paid-up capital

Shares of a fixed amount

Different classes of shares

Flexibility of fixing any denomination of issue of equity shares

Freedom to determine the denomination of shares for public/rights issues and to change the standard denomination

Abolition of standard denomination for equity shares

Government company

Scrutiny by Registrar of Draft Memorandum and Articles—Department's Instructions

14. Form of Memorandum

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Constitution of the company

Distinction between Memorandum and Articles

Directory or mandatory nature of the forms

15. Printing and signature of Memorandum

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Printing and signing of the Memorandum

"Print" or "Printed"—Meaning of

Whether computer printing is included in printing

Zerox copies of Memorandum and Articles of Association not acceptable—Department's views

Acceptance of Memorandum and Articles of Association by off-set printing method for the purpose of registration

Acceptance of computer printed documents for registration of companies

Signatures of subscribers

Persons who can sign the Memorandum—Department's view

Requirement as to signature by a subscriber who is illiterate

Attestation by witnesses

Power-of-attorney need not be insisted from each of the subscriber of Memorandum

Stamp duty

15-A. Special provision as to alteration of memorandum consequent on alteration of name of State of Madras

15-B. Special provision as to alteration of memorandum consequent on alteration of name of State of Mysore

16. Alteration of memorandum

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

"Condition" contained in Memorandum are unalterable

When transfer does not amount to alteration

Alteration of Memorandum

Spelling and grammatical mistakes

17. Special resolution and confirmation by Central Government required for alteration of memorandum

Corresponding provision

Legislative History—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1996 (Act 5 of 1997)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Objects clause—Alteration

Business conveniently or advantageously combined with existing business

Diversification of objects—Department's view

Change of name during pendency of petition under Section 17—Department's view

Alteration of objects clause to convert into a Nidhi company

Negative objects

Interest of the creditors

Creditor's objection

Registered office—Alteration of

Objection by persons interested

Objection by creditor of group company

Objection by employees

Non-cooperation by host State in setting-up an industry

Change in registered office—When takes effect ?

Considerations for exercise of discretionary jurisdiction

Initiation of proceedings for unauthorised shifting

Discretion of Company Law Board

Cases where no sanction of the Company Law Board is required

Form of petition

Procedure

Factors for consideration

Appeal

Stay

17-A. Change of registered office within a State

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Change of Registered Office within a State—Enforcement of Section 17-A

Scope of the section

Filing of confirmation with Registrar of Companies

Registration—A conclusive evidence

18. Alteration to be registered within three months

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1996 (Act 5 of 1997)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

The Company Law Board Regulations, 1991—Department's clarification

Registration of the alteration

Registration of alteration of objects clause—Whether time in drawing-up order of Court and obtaining a copy should be excluded in computing prescribed period of three months

Computation of time for filing order

Limitation for filing documents

Extension of time

Limitation for registration of alteration

Power of Court to extend time

Alteration to be registered within three months—Department's view

Change of the State in which the registered office of the company is situated

Registration of alteration for inter-State change of registered office—Department's clarification

No time limit prescribed under sub-section (3)—Department's clarification

Failure to file confirmation of alteration by Company Law Board within three months—Effect

No remedy available when proceedings become void

19. Effect of failure to register

Corresponding provision

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Applicability of the section

Period within which to file

Sufficient cause

Consequences of non-registration of the alteration within time

Extension of time

Revival of Company Law Board's order—Department's clarification

Provisions with respect to names of companies

20. Companies not to be registered with undesirable names

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Trade Marks Act, 1999 (Act 47 of 1999)

Name of the company not to be identical with trade mark registered or applied for

Assignment of trade mark to a company

Infringement of registered trade marks

Name of the company and its objects—Correlation between

Name which a company may adopt

Admissibility of name at common law

Similar names—Injunction against use of

Use of name and monopoly

Passing-off

Use of corporate name for joint-venture company

Use of family or surname

Undesirable names

When name of a company is considered undesirable for registration—Instances of

Availability of names

Department's guidelines for deciding cases for availability of names

Guiding instructions for availability of names

Guiding instructions for deciding cases of making a name available for registration

Department's Circular, dated 31-3-1993

Press Note, dated 5-5-1993

Department's Circular, dated 16-2-1995

Clarification

Judicial review of the Department's circular

Further Guidelines for availability of names

Department's clarification

Use of Name of "Chamber of Commerce" in UK

Guidelines as to use of key words

Availability of name—Instructions regarding

No objection from applicants who do not sign Memorandum and Articles

Department's Circular I

Department's Circular II

Department's Circular III

Incorporation of Stock Exchanges—Advance approval of name by SEBI

Copy of SEBI's letter, dated 18-3-1996

Incorporation of Venture Capital Companies—Department's Circular

Guidelines for registration of Asset Management Companies

Department's Circular I

Department's Circular II

Use of the words 'Nidhis' or 'Mutual Funds'

Delegation of powers to Registrar

Corporate Identity Number

E-Corporate Business Working Group to synergise the provisions of the Companies Act, 1956, with the Information Technology Act, 2000

Allocation of specific economic activity based upon the main object clause of a company while allocating Corporate Identity Number (CIN) instead of entering the Code "00000"

Prescribed Rules and Form

Department's Circular to Registrar of Companies

Change of name by a company during the pendency/hearing of petition for alteration of object clause/s under Section 17

Fees for making application for availability of name of new company to Registrar of Companies is raised from Rs. 100 to Rs. 500

21. Change of name by company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1956 (Act 31 of 1965)

Scope of the section

Rights not affected by change

Compliance with this Act and other statutes required

Change of name of banking company

Prior RBI approval for change in names of NBFC

Guidelines regarding change of names—Department's view

Guidelines for availability of names

Form and Procedure

Application form for change of name

Application to Central Government for approval of change of name

Application form for availability of names

Application for the approval of the Central Government for conversion of a public company into a private company

Clarification

Approval policy about change of name on adoption of new business—Department's instructions

Abbreviated names of companies and approval by Registrar of Companies—Department's circular

Department's Circular and Press Note

Change of name during pendency of petition under Section 17—Department's circular

Listing companies to notify Stock Exchange

Delegation of powers to the Registrars of Companies

Government company

22. Rectification of name of company

Corresponding provision

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Trade Marks Act, 1999 (Act 47 of 1999)

Scope of the section

The Emblems and Names (Prevention of Improper Use) Act, 1950—Effect of

Company's name

Right to use name

Injunction

Registrar's power

Distinction

Delegation of powers to the Regional Directors

Compulsion to change name on directions of Central Government

Penalty

Compoundable offence

23. Registration of change of name and effect thereof

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Fresh certificate of incorporation

Certificate under Section 23

Consequences of change of name

Change of name when a private company converts itself in a public limited company

Mutation of name in other company's register of members

English law

Modification with reference to Government companies

24. Change of name of existing private limited companies

Scope of the section

Change of name of existing Private Limited Company

25. Power to dispense with "Limited" in name of charitable or other company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Exemption from use of word "Limited" or "Private Limited"

Licence

Companies (under Section 25) as juristic persons

Income-tax

Procedure concerning application for the grant of licence

Procedure for dealing with application for grant of licence under the provisions of Section 25—Department's view

Meaning of "Charity" and "Science"

Charitable company and other allied institutions

Partnership firm as a member

A firm may be a member of company licensed under Section 25—Department's view

Whether firm recognised only for limited purpose of membership of companies licensed under the section ?

Privileges available to association/body upon incorporation

Applicability of Section 293—Department's Clarifications I

Applicability of Section 370 [see now Section 372-A]—Department's Clarification II

Nomination by member—Company which has not paid subscription—Subsequent election as committee member—Validity of

Conditions for existing company to obtain licence

Central Government may impose conditions

Exemption from some provisions

Exemption to Secretaries of companies, licenced under Section 25, from the requirement of the prescribed qualifications

Amalgamation of business undertakings with a charitable institution

Directions issued by the Central Government in exercise of powers conferred on it by the Articles of Association of a company licensed under Section 25

Requisites for alteration of objects clause

Alteration of Memorandum

Revocation of licence

Discontinuation of name after revocation of licence

Applicability of the section to trust-companies

Jurisdiction where trust registered under the Act

Club

Association

Applicability of the provisions of Section 370 of the Companies Act, 1956, to Section 25 Companies limited by guarantee and having no share capital—Department's view

Bombay Chambers of Commerce and Industry exempted from Sections 370 and 372

Associated Chambers of Commerce and Industry exempted from Section 370

Western U.P. Chamber of Commerce and Industry exempted from provisions of Section 372

Election of Directors in case of Section 25 companies

Payment of registration fees consequent upon increase in the authorised capital by a Section 25 company

The Manufacturing and other Companies (Auditor's Report) Order, 1988

Delegation of powers to the Regional Directors

Form and Procedure

Penalty

Articles of Association

26. Articles prescribing regulations

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Nature, scope and functions of the Articles of Association

Binding force of Articles

How far binding on the company

In relation to members as members

In relation to outsiders

Articles are subordinate to the Memorandum of Association

Invalidity of Articles by reason of conflict with the Act, Memorandum of Association and other laws

Restriction on transfer of shares of a private company

Construction and interpretation of Articles

Terms in Articles by implication

President's power to nominate Directors and give directions

Constructive notice of the Act and Articles

27. Regulations required in case of unlimited company, company limited by guarantee or private company limited by shares

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Unlimited company

Company limited by guarantee

Transfer of interest in a guarantee company

Private company

28. Adoption and application of Table A in the case of companies limited by shares

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

"Articles" & "Table A" in the First Schedule—Regulation deemed to be included in Articles—Application of Table A

Company limited by shares

Company registered prior to April, 1956

Company registered after 1st April, 1956

Articles of a private company

Options to a public company regarding Articles of Association

Interpretation

Method by which Memorandum and Articles may be proved

Removal of lacunae in the Articles of Association

Courts' power to rectify the Articles

Remuneration of Directors

Shareholders' rights

Company's lien on shares

Articles of Association restricting transfer of shares to outsiders—Effect

Articles and third parties

29. Form of articles in the case of other companies

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope, purport and effect of the section

Company other than limited by shares

30. Form and signature of articles

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Printing includes computer printing

Form and signature of Articles

Meaning of term 'description'

Subscribers and witnesses

Stamp duty on Articles of Association

Improperly stamped Articles of Association

31. Alteration of articles by special resolution

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Alteration of Articles

Scope and limits of power of alteration

Alterations to be made in good faith, bona fide and for the benefit of the company as a whole

Limitations of alterations

Adoption of new set of regulations—Department's circular

When altered Articles can be acted upon ?

Alteration effective as original

Amendment of Articles by special resolution

Notice of meeting for alteration of the Articles

Retrospective alteration of Articles

Alteration of Articles by consent or by unanimous agreement

Informal resolutions

Adoption of Articles by long acquiescence

Omnibus resolution to amend several Articles

Irregular alterations

Ratification of Directors' irregular acts

Alterations against Memorandum of Association

Alteration of Articles of Association so as to empower to Board of Directors to expel members in certain circumstances—Department's Circular

Increase in number of Directors

Alteration in Articles enabling permanent Director to be removed : "Benefit to the company"

Alteration in Articles of Association increasing members liability

Alteration of Articles in breach of contract and liability in damages

Court's jurisdiction

Alteration of Articles providing for compulsory transfer of shares

Injunction to restrain alterations of Articles

Power of Company Law Board to order alterations

Conversion of public company into private company

Approval of Central Government—Departmental instructions

Guiding principles—Government for converting public into private company

Department's clarification I

Department's clarification II

Rectification of mistake in the Articles of Association

Minor defect shall not render the amendment of Articles null and void

Delegation of power to Registrar

Articles duly altered, to be filed

Contravention

When Registrar may refuse to register ?

"New" Articles of Association—Stamp Duty

Change of registration of companies

32. Registration of unlimited company as limited, etc

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Registration of unlimited company as limited

Re-registration

Conversion of limited company into a unlimited company

General provisions with respect to memorandum and articles

33. Registration of memorandum and articles

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

Sachar Committee Recommendations

Scope of the section

Agreement

Declaration

Form

Memorandum and Articles are "public documents"—Notice and inspection of

Place of filing

Conclusiveness of Certificate of Incorporation

Registrar's discretion

Judicial review and writ remedies

Date of registration

Filing documents with Registrar of Companies, whether tantamount to "Registration" under the Registration Act

Requirement of Stamp Act

Registration fee—Table of fees

Amendment to Schedule X to the Companies Act and of Companies (Central Government's) General Rules and Forms, 1956

Guidelines for additional fees for belated filing of documents

Fees paid for registration whether refundable

Cancellation of registration

Memorandum of Association—Signing of

Power-of-attorney

Procedure

34. Effect of registration

Corresponding provisions

Scope of the section

Certificate of Incorporation

Registration of company—Effect of such registration

Common seal—Clarification of Section 34 read with Sections 50 and 147—Department's view

Legal entity of a company

Holding company and subsidiary company—Liability of subsidiary company

Company not a citizen

Perpetual succession

"Legal personality"—Company a 'person' under Money Lenders Act

"Capable forthwith of exercising all the functions of an incorporated company"

Statutory existence of a company

Exercise of powers by a company

Residence, domicile and nationality of a company

Government company as a separate legal entity

Government company not an agent of Central Government

Co-operative society

Company and its undertaking

Company is distinct from its shareholders

Guarantors not discharged by change of management

Company not an agent of its shareholders

Company's assets cannot be treated by the shareholders as their own

Property of the shareholders is not the property of the company

Company's liability is not shareholder's liability

Decree against company is not decree against another company in same group

Common management

Liability of Directors/shareholders is not liability of the company

No personal liability of Managing Director/shareholders for the dues of the company

Director is not employer of the company's employees

When Director's/employee's knowledge is company's knowledge

Service of summons of Court

Company cannot be a witness

Company's privilege against self-incrimination

Substitution of representative in complaint by the company

Dismissal of company's complaint on default in appearance

Signing and verification of pleadings

Forma pauperis suit by company

Legal aid when corporate body involved in action in representative capacity

Suits by or against the company

Corporate identity not affected by change of ownership

Right of company to sue for defamation and other wrongs

Complaint by company against dishonour of cheque

Criminal complaint by company

Company's right to privacy

Offences

Offences punishable only with imprisonment

Offences by officer of company

Liability of member's

Liability of a company

Company's liability in torts

Company's responsibility for slander or libel

Company's liability for fraud

Company's liability in crime

Liability for perjury

Liability for contempt

Prosecution of company for contravention of laws

Company's prosecution for tax evasion

Mens rea of company

Lease to company and tenancy rights

Doctrine of lifting the corporate veil

Lifting the corporate veil—Principle or policy

Doctrine of economic entity

35. Conclusiveness of certificate of incorporation

Corresponding provisions

Scope and application of the section

Registrar incompetent to probe into the motives to form a company

Evidentiary value of certificate of incorporation—Absolutely conclusive for all purposes

Power of review when company formed for unlawful objects

Incorporated company—A legal person but not a citizen

Cancellation of Registration

Revision of registration numbers allotted to companies incorporated under the Act

36. Effect of memorandum and articles

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Meaning of Articles of Association

Effect of Articles—Regulation of Articles

Notice

Outsiders

Construction of the Memorandum of Association

Social contract

Binding contract

Binding upon the company

Binding upon the members

Company as also the members of the company bound by its Memorandum and Articles

Members inter se bound by the Memorandum and Articles, suits and legal proceedings by and against members, company, Directors and officers of the company

Binding on Directors

Memorandum and Articles—Outsiders

Third parties

"Debt due"

Company's contractual and borrowing powers—Contracts

Effect of Memorandum—Doctrine of ultra vires

Suggestions for reform of the doctrine of ultra vires

Memorandum—Rule in Royal British Bank v. Turquand—Doctrine of indoor management

Conclusion in regard to the doctrine of indoor management

37. Provision as to companies limited by guarantee

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Object and scope of the section

Guarantee company

Provision as to companies limited by guarantee

Shares of no nominal amount or no par-value

Debentures

Admission to membership and transfer of members' interest

Distribution of profits

38. Effect of alteration in memorandum or articles

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Effect of alteration in Memorandum or Articles made after the date of membership

Alteration increasing members' liability to contribute capital

Increasing liability by implication

Copies of Articles to be given by company if required and paid for

Alteration of Articles restricting foreign interests

39. Copies of memorandum and articles, etc., to be given to members

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1969 (Act 17 of 1969)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope and object of the section

Copies of Memorandum and Articles to be given if required and paid for

Obligations of the company

Resolution under Section 192

Balance-sheet

Minute book

Account books

Reconstruction of company—Court's duty

Jurisdiction at registered office

Penalty

Compoundable offence

40. Alteration of memorandum or articles, etc., to be noted in every copy

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1969 (Act 17 of 1969)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Alteration of Memorandum or of Articles to be noted in every copy

Wilful default

Penalty

Compoundable offence

Membership of company

41. Definition of "member"

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Depositories Act, 1996 (Act 22 of 1996)

Scope of the section

Ways of becoming a member

'Member' and 'shareholder'

"Contributory" and "Member"

Agreement to become member—"Agrees in writing"

Membership by transmission

Membership by transfer

Joint members

HUF as member

Trade Union as a member

Firm as member—Department's views

Test of membership

Subscriber as member

A member is he whose name is on the register

Rights of a member

Shareholder's interest in the property of the company

Liabilities and duties of members

Minor as member

Clarification I

Clarification II

Clarification III

Society as member—Department's clarification

Shares belonging to society held in names of trustees simpliciter—Department's clarification

Shares to be held in the name of trustees—Department's clarification

Shares in the name of 'public office'—Department's clarification

Government companies—President or Governor as member—Department's circular

Termination or cessation of membership

Expulsion of member

Sachar Committee views

Department's views

42. Membership of holding company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Object of the section

Membership of holding company

Subsidiary cannot be a member

Legal representatives

Nominee

'Shares' mean 'interest' where there is no share capital

Private companies

43. Consequences of default in complying with conditions constituting a company a private company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Exemptions in favour of private companies

Disabilities of private companies

Consequences of non-compliance with the provisions of Section 3 (1) (iii), regarding the restrictions imposed on private companies

Petition before the Company Law Board

43-A. Private company to become public company in certain cases

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Private company deemed to be public company under Section 43-A

Deemed Public Company—Applicability of other provisions of the Companies Act on deemed conversion by virtue of the section—Clarification 1

Deposits accepted by private limited company from its shareholders—Whether would attract Acceptance of Deposits Rules on becoming public company

Major shareholding with parent company outside India—Whether the section operates to make Indian private company a public company

Quorum for General Meeting of deemed public company

Effect of deemed conversion on Managing Director's appointment, remuneration, etc

Managerial remuneration of deemed public companies—Policy regarding

Application of second proviso to Clause (b) of sub-section (1)

Private limited company becoming public limited company by virtue of sub-section (1-A)—Applicability of Sections 198, 269, 317 and 370

Turnover criteria brought in by sub-section (1-A)—What it contemplates

Concept of "public interest" on the basis of which turnover is made a factor for converting private company into public company in terms of sub-section (1-A)

Interpretation of "relevant period" defined in Explanation (a)—Date of applicability of the sub-section to private companies

Gross amount received on sale of cinema tickets including entertainment tax—Whether would come within the purview of definition of "turnover" given in Explanation (b)

Applicability of sub-section (1-A) to Government companies incorporated as private limited companies—Proposal for granting exemption

Private companies becoming public companies by virtue of sub-section (1-A)—Criteria

Increase in the ceiling of average annual turnover criterion from Rs. 10 crores to Rs. 25 crores

New criteria for conversion based on invitation and acceptance of deposits from public introduced by the Companies (Amendment) Act, 1989—Effective date

Formalities to be complied with on deemed conversion under sub-section (2)

Intimation given to Registrar under sub-section (2)—Whether the same, may be treated as document on which filing fee is to be paid

Reconversion of deemed public company into private company on raising limit of Rs. 5 crores to Rs. 10 crores

Reconversion into private company in the event of shareholding getting reduced to less than 25 per cent. of paid-up share capital and average annual turnover falling below Rs. 1 crore

Whether two separate application fees—One under sub-section (4) of the section and the other under Section 31 (1)—Required for reversion to status of private company

Applicability of sub-section (6) on companies falling under sub-sections (1-A) and (1-B)

Intimation regarding change in membership of shareholding company under sub-section (7)

Clarifications regarding Section 43-A (2-A)

Departmental Circular Regarding new provisions of Section 43-A (2-A) of the Companies Act, 1956

Court proceedings to continue under the altered name of the company

Filing of statement in lieu of prospectus

Section 43-A and right of renunciation under Section 81

Appointment of Managing Director in a Section 43-A company

Directors' personal liability for private company's overdue taxes

Section 43-A company—Additional issue of shares

Re-conversion of Section 43-A company into public company

Annual submission of certificates by private companies

Penalty for default

44. Prospectus or statement in lieu of prospectus to be filed by private company on ceasing to be private company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965, (Act 31 of 1965)

The Companies (Amendment) Act, 2000, (Act 53 of 2000)

Scope of the section

Conversion of private company into public company

Conversion of public company into private company

Penalty for default

Compoundable offence

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

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Effect of number of members falling below the minimum

Consequence of reduction of number of members below the required legal minimum

Carrying on business with less than the legal minimum of members

Penalty of unlimited liability

Number of members

Remedy

Personal liability where the membership falls below the minimum

Decree against the company

Position of deemed public companies—Department's clarification

Contracts and deeds, investments, seal, etc.

46. Form of contracts

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Manner in which company may contract

Preliminary and provisional contracts

Acquisition of shares before incorporation

Income-tax on income accruing prior to incorporation

Authority

Liability of the company in case of forgery

Limited company can stand guarantee

Termination of contract

47. Bills of exchange and promissory notes

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Bills of Exchange and Promissory Notes

Mode of authenticating negotiable instruments on behalf of the company

Duty of third party

Criminal liability

48. Execution of deeds

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Execution of deeds

Proceedings by the company

Use of common seal dispensed with in England

Position in India

Presumption of validity

49. Investments of company to be held in its own name

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Depositories Act, 1996 (Act 22 of 1996)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Investments of company to be held in its own name

Exceptions

Registers

Power of Company Law Board to order inspection

Petition before the Company Law Board

Penalty

Compoundable offence

50. Power for company to have official seal for use outside India

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Official seal

Power of company to have official seal for use abroad

Seal necessary for appointing authority

Service of documents

51. Service of documents on company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Depositories Act, 1996 (Act 22 of 1996)

Scope of the section

Service of documents on the company

Oral notice

Postal service

Registered office

Service of notice to the company through its Directors and officers

Service under C.P.C

Will fax be deemed to be proper service

Notice to agent

Foreign company

52. Service of documents on Registrar

Corresponding provision

Legislative history

Scope of the section

Service of documents on Registrar

Authorisation for making corrections in defective documents filed with the Registrar of Companies—Department's circular

Filing of documents with the Registrar of Companies

Government's decision

53. Service of documents on members by company

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Service of documents on members of company

Service to joint-holders

Death and insolvency

Notice of General Meetings

Newspaper advertisements

Service by post when deemed to be effective

Obligations not discharged by failure of communication

Jurisdiction for complaint against default

Provisions of General Clauses Act, 1897

Provisions of Negotiable Instruments Act, 1881

Issue of refund orders, allotment letters/certificates and letters of offer by registered post

Department's circular I

Department's circular II

Authentication of documents and proceedings

54. Authentication of documents and proceedings

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1969 (Act 17 of 1969)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Implied authority

Authentication of documents

Agent's signature

Part III

prospectus and allotment and other matters
relating to issue of shares or debentures

Prospectus

55. Dating of prospectus

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope and object of the section

Prospectus

Conditions precedent to the issue of a prospectus

Dating of the prospectus

Meaning of "issuing to the public"

Prospectus when false ?

Remedies of allottees

Director's liability

Administration by SEBI

Powers of SEBI to inspect books of account, etc. and to file complaints

Penalty

Compoundable offence

55-A. Powers of Securities and Exchange Board of India

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Suggestions

Recommendations of Parliamentary Standing Committee

Select Committee's recommendation

Powers to decide applications submitted to the Central Government

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Applicability of the section

Powers of SEBI

Administration by SEBI

Administration under other sections

Whole administration not delegated

Companies under SEBI ambit

Regulation of public listed companies

Powers of SEBI to inspect books of account, etc. and to file complaints

Powers not transferred

Filing of criminal complaint

Cognizance by Court

56. Matters to be stated and reports to be set out in prospectus

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Capital Issues (Control) Act, 1947

Scope of the section

Applicability of the section

Prospectus—Meaning of

Prospectus—Binding nature of

Injunction to safeguard prospectus against adverse criticism

"Issue" of prospectus to the public

Prospectus—"Offer to the public"

Share-hawking and written offers of shares—English Act, 1929

"Offer for sale", when deemed to be a prospectus

Abridged prospectus

Subscription

Cost and expenditure of issue of prospectus

Expression "five years" refers to "five financial years" ending 3 months before issue of prospectus—Department's clarification

Prospectus not to be misleading

Prospectus must be prepared with utmost candour and honesty—Misstatement or concealment of material facts—"Golden rule as to framing of prospectus"

Misrepresentation in prospectus

What may amount to misrepresentation ?

Prospectus not complying with the requirements—Omission of material particulars

Remedy of aggrieved shareholder

Remedy of aggrieved person

Limitation

Claim for damages

False statement in prospectus—Remedy of purchaser of shares in open market

Issue of prospectus when not necessary ?

Department's view

Prospectus published as a newspaper advertisement

Advertisement of prospectus—Department's view

Announcement regarding the proposed issue of capital

Newspaper advertisement

Statements in a circular contrary to the terms of sanction by Controller of Capital Issues

Unsound practices disclosed in prospectuses

Shares reserved for subscription on firm allotment basis to be excluded in arriving at the number of shares offered to the public for subscription

Clause 24 (1) in Part II of Schedule II to Companies Act, 1956—Interpretation of

Non-inclusion of accountants' report in prospectus by company which acquired estate as going concern—Whether gives rise to default under the section ?

Application forms not to be issued without abridged prospectus

Forwarding forms of application for shares without enclosing copies of prospectuses—Whether contravenes sub-section (3) ?

Application form—Department's Press Note, dated 9-1-1992

Printing of two application forms forming part of abridged prospectus—Department's Press Note, dated 10-4-1992

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Compliance of SEBI guidelines

Requirements as to application forms under SEBI Guidelines, 2000—Obligations of Lead Merchant Banker

Application by NRIs—Declaration of nationality and residentship of applicants

Instructions to investors

Distribution of application forms

Fixation of date stamp alongwith a continuous serial number on the application form by the bankers to an issue

Requirements of Section 56 not applicable to circulars or notices inviting existing members or debenture-holders to subscribe for shares or debentures

Invalidity of certain conditions as to waiver or notice

Issue of forms of application for shares or debentures of a company

Exemption from liability in certain cases

Directors' defences against contravention of the section

Section does not affect other remedies

Penalty for default

Compoundable offence

57. Expert to be unconnected with formation or management of company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Expert to be unconnected with formation or management of company

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Compoundable offence

58. Expert’s consent to issue of prospectus containing statement by him

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Expert's consent to issue of prospectus containing statement by him

Report of expert

Expert's consent and authorisation

Statement

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Compoundable offence

58-A. Deposits not to be invited without issuing an advertisement

Legislative history—The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1977 (Act 46 of 1977)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

Sachar Committee Recommendations

The Companies (Amendment) Act, 1996 (Act 5 of 1997)

The Companies (Amendment) Act, 1999 (Act 21 of 1999)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the section

Section 58-A and Rules

Constitutional validity of Section 58-A and the Deposit Rules

Rule 3-A of Companies (Acceptance of Deposits) Rules, 1975—Not ultra vires Section 58-A

Provision is prospective—Condition to deposit 10% not arbitrary

Central Government may make Rules

Meaning of the word 'public' occurring in Section 58-A—Department's view

Advertisement

Department's clarification I

Department's clarification II

Department's clarification on advertisement referred to in Section 58-B

Need for advertisement in case of renewal of existing deposits—Department's view

Advertisement rules

Announcement altering the terms and conditions of deposits—Department's view

Deposit

Scope and provision of Companies (Acceptance of Deposits) Rules, 1975 explained

Whether deposits received in joint names of Director and non-Director/shareholder and non-shareholder fall within the purview of the rule ?

Whether private company, which accepts deposits only from its Directors and shareholders, is required to comply with Rules 3 ?

Whether amounts raised by issue of unsecured bonds or Debentures which have an option to convert them into shares are exempt from the purview of deposits as defined in the rule ?

Whether amount of surplus in the profit and loss account forms part of "free reserve" as defined in the rules ?

Whether capital redemption reserve is to be treated as "free reserve" ?

Whether subsidy received under Central Government Out-right Grant or Subsidy Schemes, 1971 ?—A "Free Reserve" under Rule 2 (d) of acceptance of deposits rules ?

Whether retention of balance payment of deposit amounts to renewal ?

Ceiling on rate of interest on deposit—Payment of interest on compound interest—Whether contravenes the rules ?

Whether the management charges could be paid in addition to the brokerage and would not be subject to the limits ?

Whether amount of unprovided depreciation from aggregate of paid-up share capital and free reserves are to be deducted for determining limits up to which deposits can be accepted ?

Whether shares premium account to be treated as part of company's paid-up share capital or free reserves ?

Determination of paid-up share capital for the purposes of reckoning limits under sub-rule (2) ?

Requirement of depositing or investing 10 per cent. of deposits maturing during the year ending on 31st March next following

Announcement about alterations in terms and conditions of deposits—Whether amounts to invitation of deposits—Whether in conformity with Section 58-A (2) read with Rule 4 (2) ?

Requirement of delivering Registrar a copy of advertisement for registration

Provision for reduction in rate of interest payable on deposits—Not to be applicable in the event of conversion of deposit into secured debentures

Submission of return of deposits with the Registrar

Treatment of repayment of loans secured by mortgage of assets—Earlier excluded from definition of deposits but are included now.

When deposits are in excess of prescribed limit ?

Applicability of exemption to deposits from HUF, trusts and firms in which Directors are interested

Exemption of promoters' deposits—Department's view

Deduction of unprovided depreciation from paid-up capital and free reserves

Amount standing to the credit of premium account and capital redemption reserve

Surplus in the profit and loss account to be treated as forming part of "free reserve"

Amount raised by issue of bonds or debentures under Rule 2 (b) (x)—Whether deposit ?

Unsecured debentures with option for conversion—Whether deposit ?

Unsecured bonds or debentures, later secured by mortgage

Claim for interest on amount forwarded towards fixed deposit—Initially accepted but later returned

Reduced rate of interest on premature repayment of deposit

Payment of compound interest

Ceiling on rate of interest on deposits

Increase in rate of interest on deposit is prospective

Interest on public deposit reduced by one per cent

Renew

'Renewal' of deposits—Effect

Transitional provisions

Return of deposits wrongfully accepted

Penalty

Penalty for violation of the rules

Invitation of deposit without advertisement—Authority competent to take action

Exempted companies

Exceptions under Section 58-A and under the Rules

Public deposits—Exemption

All classes of financial companies specified to which provisions of the section are not applicable

Whether promoter's contribution can be excluded from definition of 'deposits'

Exemption to small scale industrial units

Small Scale Units exempted—Revised limits for exemption to small-scale industrial units

Department's circular

Applicability and exemption—Non-banking financial companies

Renewal or acceptance of deposits or loans

Renewal of deposits

Period for acceptance and renewal of deposits

Receipt for deposits and loans

Register of deposits and loans

General provisions regarding payment of deposits/loans

Public deposits—Repayment—Applicability of Section 58-A (9), in the case of a relief undertaking declared by a local Act or Central Act

Central Government's power to decide questions

Return of deposits to be filed with the Registrar

Extention of time or exemption

Exemption of non-banking companies for acceptance of deposits through commercial paper

Extension of time to repay deposits

Clarification regarding application to Company Law Board under Section 58-A (9)—Default in repayment of deposits

Rules for repayment of company deposits made stringent—The Companies (Amendment) Act, 1988

Applicability of Section 58-A (9) of Companies Act, 1956, in the case of a relief undertaking declared by a local Act or Central Act

Power of Company Law Board to order re-payment of deposits by NBFCs' covered under Reserve Bank of India Act

Non-payment of matured deposits—Remedies available to investors

Investors grievances relating to Deposits, Mutual Funds, Collective Investment Scheme, companies in liquidation and other investor complaints

Implementation of decisions of Company Law Board

Remedies available to investors in case of non-payment of matured deposits

Dealing with complaints relating to Deposits, Mutual Funds, Collective Investment Scheme, etc

Penalty under Section 58-A of the Companies Act, 1956

Penalty under the Rules

Compoundable offence

Cognizable offence

Complaint by Registrar

Continuing offence

Nomination facility

Complaints, prosecution and penalties for default

Prosecution of officers singly

Violation of Reserve Bank of India Act

Violation of Section 58-A (6) and Rules 3-A and 4-A of Deposit Rules

Delayed application by depositor

Approval of repayment plan

Powers of the Company Law Board for rescheduling, or directing repayment of deposits

Rescheduling repayment of deposits under Section 45-QA of the Reserve Bank of India Act

Hardship cases

No jurisdiction to decide directorship

No order for repayment in absence of proof

Enforcement of orders

Approval of repayment scheme

Liability of officer signing the deposit receipts

Time-barred complaints

Authorities competent to take action

Complicated questions as to repayment

Dismissal and restoration of application

Remedy under writ jurisdiction for refund of deposits

Moratorium to relief undertakings—Department's circular

Moratorium under Sick Industrial Companies (Special Provisions) Act (SICA)

Jurisdiction

Remedy before Consumer Forum set-up under Consumer Protection Act, 1986

58-AA. Small depositors

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Suggestions

Government's views

Select Committee's recommendations

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Company's obligations

Jurisdiction and powers of the Company Law Board

Prohibition against acceptance of fresh deposits as a consequence of default

Small depositors

Applicability of Section 58-A

Advertisements for inviting deposits and application form

Applicability to private companies

Appropriation of bank loans

Period for filing complaint

Cognizable offence

Penalty for default

Non-compoundable offence

58AAA. Default in acceptance or refund of deposits to be cognizable

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Government's views

Select Committee's recommendations

Scope of the section

Cognizance under Section 621

Cognizance on complaint

Criminal liability

Companies in Jammu and Kashmir

Offence not compoundable

58-B. Provisions relating to prospectus to apply to advertisement

Legislative history—The Companies (Amendment) Act, 1974 (Act 41 of 1974)

Scope of the section

Clarifications regarding the scope of Section 58-B—Department's view

Provisions concerning issue of prospectus apply to advertisements for inviting deposits or loans

Advertisements for deposits

Advertisement rules

Private companies

Acceptance of deposits by incorporated bodies

59. Penalty and interpretation

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Expert

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Penalty for default

Compoundable offences

60. Registration of prospectus

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Object of the section

Scope of the section

Signing of prospectus

Names of original/alternate Directors disclosed in prospectus—Whether all such Directors should sign prospectus

Registration of prospectus

Registration of the prospectus is a condition precedent to its issue

Filing of prospectus

Revision of prospectus

Scrutiny of prospectus

Prospectus to be made public

Time limit of 90 days

Formalities to be observed for registration of prospectus

Material contracts

Inspection of copies of contracts

Public issue or private placement

Refusal of the Registrar to register

Prospectus to state on the face of it that a copy of it has been filed for registration with the Registrar

Advance approval of the prospectus in draft stage before it is actually delivered to the Registrar for registration

Alterations, deletions or additions made in prospectus at the instance of the Registrar of Companies when filing

New Capital Issues—Supply of copies of prospectus issued by companies to Reserve Bank of India

It is sufficient compliance if either the original Directors or the alternate Directors sign the prospectus

In view of prospectus being vetted by SEBI/concerned Stock Exchange, it is not necessary for Registrar of Companies to make elaborate scrutiny of prospectus

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Sub-section (5)

Penalty

Compoundable offence

60-A. Shelf prospectus

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Report of Working Group on Companies Act

The Companies Bill, 1997

Scope of the section

Applicability of the section

Meaning of shelf prospectus

Who can issue ?

Financing

Further filing of prospectus not required

Information memorandum

Validity period of shelf prospectus

Filing with the Registrar of Companies

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

SEBI Guidelines, 2000

60-B. Information memorandum

"Book Building" and "Information Memorandum"

Scope of the section

Information Memorandum

Red-herring prospectus

Mis-statements

Circulation and filing of red-herring prospectus

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

SEBI Guidelines for Book Building

61. Terms of contract mentioned in prospectus or statement in lieu of prospectus, not to be varied

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Shifting of the registered office to a place other than stated in the prospectus

Penalty

Jurisdiction

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

SEBI Guidelines, 2000—Monitoring of issue proceeds

Requirement of Monitoring Agency

62. Civil liability for mis-statements in prospectus

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Untrue statement and civil liability

Promoters

Promoters—Their fiduciary relation

Promoter's duty to disclosure

Principles governing position of Directors and promoters

Remedies for breach of duty

Personal liability of promoters

When promotion begins and ends ?

Promoters' agreement for joint-venture

Liability of promoters for mis-statements or omissions in prospectus issued by them

Remuneration of promoter

Preliminary and provisional contracts by promoters

Liability for mis-statements in prospectus

Intending purchasers of shares are entitled to true disclosures in the prospectus

Liability for omissions and concealments

Liability for false statement

Limitation on issue of capital

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

63. Criminal liability for mis-statements in prospectus

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Materiality of untrue statements

Jurisdiction

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints—Department's Circular

Disclaimer clause under Section 63—SEBI Guidelines, 2000

Penalty

Compoundable offence

64. Document containing offer of shares or debentures for sale to be deemed prospectus

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Object of the section

Deemed prospectus

Prospectus by implication

Offer for sale

Allotment of shares or debentures in a company with a view that those shares or debentures may be offered for sale to the public

Terms of prospectus may be part of contract between company and subscribers for shares or debentures

Situs of shares

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

65. Interpretation of provisions relating to prospectuses

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Untrue and misleading statements

Interpretation of "included"

Statements included in the prospectus

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

66. Newspaper advertisements of prospectus

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Newspaper advertisement—Contents

Proforma prescribed by department

Advertisement of prospectus and format of advertisement

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

SEBI Guidelines, 2000

67. Construction of references to offering shares or debentures to the public, etc

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Offer to the public

Rights issue

Public issue

Placings

Private placement of equity shares through brokers etc.

'Issue as a domestic concern'

Letter of offer with right of renunciation

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Guidelines specified by SEBI under sub-section (3-A)

68. Penalty for fraudulently inducing persons to invest money

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Reckless

Criminal breach of trust—Ingredients of

Intention of accused

Nature of statement, promise or forecast

Onus of proof

Opportunity of hearing

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Department's circulars and clarifications

Penalty for fraudulent inducement

Compoundable offence

68-A. Personation for acquisition, etc., of shares

Legislative history—The Companies (Amendment) Act, 1965 (Act 31 of 1965)

Scope of the section

Personation for acquisition, etc. of shares

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Offences to be investigated by Delhi Police Establishment

Notification SO 3803, dated 8-11-1979

Notification No. SO 503, dated 13-2-1996

Penalty for default

Compoundable offence

68-B. Initial offer of securities to be in dematerialised form in certain cases

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Objective

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

SEBI Guidelines, 2000

Agreements with depositories

Option to subscribe—Disclosure in offer document

Allotment

69. Prohibition of allotment unless minimum subscription received

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Object of the section

Allotment

Allotment how effected ?

Conditions precedent to allotment of shares

Allotment of Shares—Department's view

Share capital—Propriety of issue of shares as donation

Minimum subscription

Amount payable on each share at the time the applicant makes his offer to go in for the company's shares

Moneys received from applicants for shares to be deposited and kept deposited in a scheduled bank

Any condition to waive compliance with the requirements of Section 101 void

Excepting sub-section (3), Section 69 does not apply to any allotment of shares subsequent to the first allotment of shares offered to the public for subscription

Public issues—Call-up of issue price—Ceiling on amount to be called-up with application—Department's view

Effect of not receiving minimum subscription

Minimum subscription in public/rights issues—Department's view

Stamp duty and allotment

Payment by shareholder for the shares he purchases

Over-subscription and principles of allotment

Minimum allotment of capital in case of over-subscription—Department's view

Standard denominations for corporate securities

Method of allotment of shares in case of over-subscription of public offers of capital

Clarification regarding 20 shareholders for every Rs. 1 lakh of the amount of 'offer for sale' not underwritten by public financial institutions and/or State developmental or investment agencies

Public announcement about the scheme of allotment—Information regarding the number of shareholders for every Rs. 1 lakh of share capital issued/offered for sale

Requirement of application money to be kept in separate bank account

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Penalty for default

Compoundable offence

Prosecution under the Indian Penal Code for non-refund of subscription money

70. Prohibition of allotment in certain cases unless statement in lieu of prospectus delivered to Registrar

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Statement in lieu of prospectus

Filing of statement in lieu of prospectus

Liability for mis-statements in a statement in lieu of prospectus

Untrue statement

Allotment before filing of "statement", whether illegal and void or merely voidable : English and Indian law contrasted

Compliance with Section 70 whether exonerates company from compliance with Section 149 (1)

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Company cannot issue fully paid shares as donation—Departmental clarifications

Share Capital—Propriety of issue of shares as donation—Departmental clarifications

Minimum/Maximum period during which subscription list in respect of an issue of capital to public should be kept open—Departmental clarifications

Penalty for default

Compoundable offence

71. Effect of irregular allotment

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope and applicability of the section

Irregular allotments

Consequence of irregular allotment

Ratification by the company of irregular allotment

Lapse of application on undue delay in allotment

Minimum subscription when not necessary ?

How can irregular allotment be avoided ?

Cases where the applicant cannot avoid allotment

Withdrawal of application money

Allotment in contravention of law

Cancellation of allotment

Compensation by Directors

Measure of damages

Estoppel of Director

Improper motive

No allotment without application

Irregular allotment in contravention of Section 69 or 70

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

72. Applications for, and allotment of, shares and debentures

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of section

Minimum application size for subscription

Subscription list

Minimum/maximum period during which subscription list in respect of an issue of capital to public should be kept open—Department's view

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Issue opening date—Minimum and maximum duration of subscription lists

Period of subscription

Public issues

Rights issues

Allotment and agreement to allot

Validity of allotment

Communication of allotment

Allotment in favour of minor

Penalty

73. Allotment of shares and debentures to be dealt in on stock exchange

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Object of the section

Applicability of the section

Allotment of shares and debentures to be dealt in on Stock Exchange

"Permission has not been granted"—Meaning of

Conditional permission

Refusal of listing by single Stock Exchange

Subscription money to be released to company only on compliance

Utilisation of application moneys and interest thereon

Refund of money

Refund of excess money

Refund of application money

Complaint under the Companies Act for default in refund

Prosecution under the Indian Penal Code on failure to refund subscription money

Public issue of share capital—Refund of application monies against issue—To be promptly attended to—Department's view

Despatch of allotment letters/certificates and refund orders to the applicants in public issue of share capital

Guidelines for expeditious processing of applications from the public for public issue of capital and despatch of refund orders

Delay in allotment orders/share certificates and refund orders of public issues of capital

Allotment of shares of public issue to be listed—Issue of refund orders under Section 73 (2)/(2-A)

Compulsory registration of share certificates, debenture certificates, dividend warrants and refund order under Post Office Rules

Stockinvest Scheme—Introduction of a new instrument called stockinvest

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Penalty

Continuing offence

Compoundable offence

74. Manner of reckoning fifth, eighth and tenth days in Sections 72 and 73

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

Scope of the section

Public holiday

Manner in which the fifth, eighth, and tenth days in Sections 72 and 73, are to be reckoned

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

75. Return as to allotments

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Object of the section

Scope of the section

Applicability of the section

Allotment

Payment in cash or in kind

Department's clarification I

Department's clarification II

Allotment for consideration other than cash

Relief to allottee from liability—Department's instructions

Return as to allotments

Whether Registrar has power to refuse to take return of allotment on record ?

Whether fully paid-up shares can be issued by way of donation ?

Whether holders of coupons for fractional shares can be regarded as allottes?

Whether fractional shares can be allotted ?

Whether the word "Court" occurring in Section 75 (1) (c) (ii) should be read harmoniously with Section 79 in which "Court" has been replaced with "Company Law Board" ?

Extension of time for filing return

Non-filing of return of allotment—Department's clarification

Return of allotment and stamp duty

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Penalty

Compoundable offence

Commissions and discounts

76. Power to pay certain commissions and prohibition of payment of all other commissions, discounts, etc

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Premium, commissions and discounts

Power to pay certain kinds of commission and discount

Statement in annual list and summary, as to commission and discounts

"Underwriting" and "Placing of shares"

Underwriting

Sub-underwriting

Placing of shares

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Penalty

Compoundable offence

77. Restrictions on purchase by company, or loans by company for purchase, of its own or its holding company’s shares

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Object of the section

Scope of the section

Reduction of share capital—Restrictions on purchase by company, or loans by company for purchase, of its own shares

Buy-back of shares

Buy-back of debentures

Bequest of shares to a company

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Penalty

Compoundable offence

77-A. Power of company to purchase its own securities

Legislative history

The Companies (Amendment) Act, 1999 (Act 21 of 1999)

Report of the Working Group on the Companies Act, 1956

Scope of the section

Section 77-A vis-a-vis Sections 100 to 104 and Section 391

Objects of Section 77-A vis-a-vis powers of Company Law Board under Section 42

What is buy-back ?

Authority by written or informal resolution

Funding of buy-back

Capital redemption reserve

Effect of buy-back on ceiling of investments by FIIs

Tax implications—Stamp duty

Sanction of scheme

Register of securities bought-back

Return relating to buy-back

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Penalty for default

Compoundable offence

77-AA. Transfer of certain sums to capital redemption reserve account

Legislative history—The Companies (Amendment) Act, 1999 (Act 21 of 1999)

Scope of the section

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

77-B. Prohibition for buy-back in certain circumstances

Legislative history—The Companies (Amendment) Act, 1999 (Act 21 of 1999)

Scope of the section

SEBI Regulations

Non-compliance with provisions of Sections 159, 207 and 211

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Issue of shares at premium and discount

78. Application of premiums received on issue of securities

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1999 (Act 21 of 1999)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Applicability of the section

Premium

Issue of shares at premium

Nature of Securities Premium Account

Department's circular

Application of Securities Premium Account

Reduction of capital requires Court approval

Issue of shares at premium under earlier Acts

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Writ petition for directions to SEBI

Penalty for default

Compoundable offence

79. Power to issue shares at a discount

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Applicability of the section

Power of company to issue shares at discount

Rate of discount

Discount issued in violation of the section

Forfeiture of fully paid-up shares

Sale of forfeited shares resulting in loss to company—Effect of transaction

Issue of sweat equity shares

Convertible debentures

Capital control regulations

Issue of shares at discount to banking companies

Petition before Company Law Board

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Penalty the default

Compoundable offence

79-A. Issue of sweat equity shares

Legislative history—The Companies (Amendment) Act, 1999 (Act 21 of 1999)

Scope of the section

Sweat equity shares

Essential features of sweat equity shares

Conditions for issue of sweat equity

Issue of sweat equity at discount

Issue of sweat equity for consideration other than cash

Intellectual property rights

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Guidelines and Regulation of SEBI

Treatment under Income Tax Act

Stock option

Sweat equity shares

Amendments made by Finance Act, 2000

Issue and redemption of preference shares

80. Power to issue redeemable preference shares

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 1996 (Act 5 of 1997)

The Companies (Amendment) Act, 1999 (Act 21 of 1999)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Equity Shares

Deferred or founder's shares

Preference shares

Issue of redeemable preference shares

Status of preference shareholder

Conversion of preference shares into loan

Bonus shares—Capitalization of profits

Investment by non-resident Indians

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Penalty

Compoundable offence

80-A. Redemption of irredeemable preference shares, etc

Legislative history—The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Redemption of preference shares

Redemption of irredeemable preference shares

Conditions for redemption of preference shares

No reduction

Conditional approval of redemption

Remedy to shareholders

Notice of redemption

Extension of time for redemption

Prohibition on dividend in case of default

Petition before the Company Law Board

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Penalty

Compoundable offence

Further issue of capital

81. Further issue of capital

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1963 (Act 53 of 1963)

The Companies (Amendment) Act, 1999 (Act 21 of 1999)

Scope of the section

Object of the section

Applicability of section

Further allotment out of unsubscribed portion of capital—Department's view

Counting of period of one year under Section 81 (1)

Further issue of shares

Whether offer, containing an offer of shares to a select group, can be deemed to be a prospectus

Increase of subscribed share capital—Pre-emptive rights of equity shareholders

Redeemable preference shares

Responsibility of Directors

Equity share-holders have pre-emptive right to issue of new shares

Passing of resolution under—Sub-section (1-A)

Scope of companies' power

Intereference by Court

"Declines to accept the shares"—Meaning of

Declaratory suits

Injunction by Court

Restoring original percentage of minority shareholding

Vesting of bonus shares

Liability under Consumer Protection Act

Private Company

Propriety of inclusion of a provision similar to Section 81 in the Articles of a private company—Department's view

Section 81 (4) applies to private companies—Legal opinion

Conversion of loan into shares is prospective in effect

Institutions specified by Central Government for the purposes of Clause (b) of the proviso to Section 81 (3) (b)

Conversion of loan into shares under sub-section (4)—Whether prospective in effect ?

Whether sub-section (4) applies to private companies

New guidelines for stipulation of convertibility clause and appointment of nominee Directors—Effective from March 1984

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Appeal against Government's order

Penalty for default

Compoundable offence

Part IV

share capital and debentures

Nature, numbering and certificate of shares

82. Nature of shares or debentures

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1999 (Act 21 of 1999)

Scope of the section

Meaning of Capital

Kinds of Capital

Authorised or nominal capital

Issued capital

Subscribed capital

Paid-up capital

Called-up capital

Uncalled capital

Share

Debenture

Pre-conditions

Allotment of shares

"Transfer" and "transmission" of share

Nature of shares and their transfer

Transfer of shares—Auction sale of shares by Court

Effect of death of member on rights shares

Other interests

Situs of shares

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

83. Numbering of shares

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Depositories Act, 1996 (Act 22 of 1996) and Depositories Related Laws (Amendment) Act, 1997 (Act 8 of 1997)

Scope of the section

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Penalty

84. Certificate of shares

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Depositories Act, 1996 (Act 22 of 1996)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Certificate of shares or stock

Certificate facilitates dealings in shares

Certificate, not a negotiable instrument

Estoppel as to payment on shares

"Certification"

Meaning of

Effect of

"Certification" and "Share Certificate" : Distinguished

Common seal

Certificate sealed and signed fraudulently by Secretary and one Director without authority of the Board—Forgery—Company not estopped—Enquiry into "Indoor" Management

Signature on share certificates

Affixing of signature by means of machine on share certificates—Departments' clarification

Liability of Directors

Duplicate certificate

Transfer of wrongfully issued duplicates

Central Government Rules

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Penalty

Kinds of share capital

85. Two kinds of share capital

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Preference and equity shares capital

Equity share capital

Preference share capital

Participating preference shares

Preference shares preferential as regards the distribution of dividends only (under the old Act)

Preference shares preferential both as regards profits and capital

Cumulative preference shares

Preferential dividend and income-tax

Regulation of dividends on non-participating preference shares

Share register

86. New issues of share capital to be only of two kinds

Legislative history—The Companies Bill, 1997

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Applicability of the section

Meaning of 'shares with differential rights'

Companies (Issue of Share Capital with Differential Voting Rights) Rules, 2001

Companies not eligible to issue shares with differential rights

Financial norms to be fulfilled

Procedural requirements

87. Voting rights

Legislative history

Scope of the section

Voting rights

Voting rights in proportion to payment

Dividends on preference shares

Private company

Voting rights in case of banking companies

Injunction on voting rights

88. Prohibition of issue of shares with disproportionate rights

[Omitted by the Companies (Amendment) Act, 2000, w.e.f. 13.12.2000]

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Prohibition

Abeyance of dividend rights till shares become fully paid-up

Department's clarification I

Department's clarification II

Clarification regarding import of Sections 88 and 93—Department's view

Private company exempted

Penalty

Compoundable offence

89. Termination of disproportionately excessive voting rights in existing companies

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Termination of disproportionately excessive voting rights in existing companies

Power of exemption

Scheme of the section

Exemption of private company

Penalty

Compoundable offence

90. Savings

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

Scope of the section

Prohibition of issue of shares with disproportionate rights

Private company

Miscellaneous provisions as to share capital

91. Calls on shares of same class to be made on uniform basis

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Calls on shares of same class to be on uniform basis

Duty of Directors in regard to calls

Requisites of a valid call

Notice of call

Time and place of payment of calls

Remedies of shareholder for invalid calls

Burden of proof as to payment of call

Interest on call money

Effect of transfer and forfeiture

Effect of death on calls

Advance payment of calls

Compoundable offence

92. Power of company to accept unpaid share capital, although not called-up

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Power of company to arrange for different amounts being paid on shares

Power under Articles

Voting rights

Interest

Subject index

 


Indian Company Law Volume 2

Indian Company Law
Volume 2

Contents
at-a-glance

Foreword
Preface to the Eleventh Edition
Preface to the Tenth Edition
Preface to the Ninth Edition
A word from the publishers
Detailed Contents
Abbreviation
Comparative Table
Table of Cases
Subject Index

93. Payment of dividend in proportion to amount paid up

94. Power of limited company to alter its share capital

94-A. 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

101. Application to Tribunal for confirming order, objections by creditors, and settlement of list of objecting creditors

102. Order confirming reduction and powers of Tribunal 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 shareholders’ 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

108-A. Restriction on acquisition of certain shares

108-B. Restriction on transfer of shares

108-C. Restriction on the transfer of shares of foreign companies

108-D. Power of Central Government to direct companies not to give effect to the transfer

108-E. Time within which refusal to be communicated

108-F. Nothing in Sections 108-A to 108-D to apply to Government companies, etc.

108-G. Applicability of the provisions of Sections 108-A to 108-F

108-H. Construction of certain expressions used in Sections 108-A to 108-G

108-I. Penalty for acquisition or transfer of share in contravention of Sections 108-A to 108-D

109. Transfer by legal representative

109-A. Nomination of shares

109-B. Transmission of shares

110. Application for transfer

111. Power to refuse registration and appeal against refusal

111-A. 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 rights not to be issued hereafter

117-A. Debenture trust deed

117-B. Appointment of debenture-trustees and duties of debenture-trustees

117-C. Liability of company to create security and debenture redemption reserve

118. Right to obtain copies of and inspect trust deed

119. Liability of trustees for debenture-holders

120. Perpetual debentures

121. Power to re-issue redeemed debentures in certain cases

122. Specific performance of contract to subscribe for debentures

123. Payments of certain debts out of assets subject to floating charge in priority to claims under the charge

Part V

Registration of charges

124. "Charge" to include mortgage in this Part

125. Certain charges to be void against liquidator or creditors unless registered

126. Date of notice of charge

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 Central Government 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

part vi

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

152-A. Register and index of beneficial owners to be of debenture holder

153. Trusts not to be entered on register

153-A. Appointment of public trustee

153-B. Declaration as to shares and debentures held in trust

154. Power to close register of members or debenture-holders

155. [* * *]

156. [* * *]

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

166. Annual general meeting

167. Power of Central Government 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 Tribunal to order meeting to be called

187. Representation of corporations at meetings of companies and of creditors

187-A. Representation of the President and Governors in meetings of companies of which they are members

187-B. Exercise of voting rights in respect of shares held in trust

187-C. Declaration by persons not holding beneficial interest in any share

187-D. 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

192-A. Passing of resolutions by postal ballot

193. Minutes of proceedings of general meetings and of Board and other meetings

194. Minutes to be evidence

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

197-A. Company not to appoint or employ certain different categories of managerial personnel at the same time

Managerial remuneration, etc.

198. Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits

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

204-A. [* * *]

Dividends and manner and time of payment thereof

205. Dividend to be paid only out of profits

205-A. Unpaid dividend to be transferred to special dividend account

205-B. Payment of unpaid or unclaimed dividend

205-C. Establishment of Investor Education and Protection Fund

206. Dividend not to be paid except to registered shareholders or to their order or to their bankers

206-A. Right to dividend, rights shares, and bonus shares to be held in abeyance pending registration of transfer of shares

207. Penalty for failure to distribute dividends within thirty days

Payments 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

209-A. Inspection of books of account, etc., of companies

210. Annual accounts and balance sheet

210-A. 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 representative 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

224-A. Auditor not to be appointed except with the approval of the company by special resolution in certain cases

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 non-compliance with Sections 225 to 231

233. Penalty for non-compliance by auditor with Sections 227 and 229

233-A. Power of Central Government to direct special audit in certain cases

233-B. 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

234-A. 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

239. Power of inspectors to carry investigation into affairs of related companies

240. Production of documents and evidence

240-A. Seizure of documents by inspector

241. Inspectors’ 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

248 . [* * *]

249. [* * *]

250. Imposition of restrictions upon shares and debentures and prohibition of transfer of shares or debentures in certain cases

250-A. Voluntary winding-up of company, etc., not to stop investigation proceedings

251. Saving for legal advisers and bankers

chapter Ii

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. [* * *]

262. Filling of casual vacancies among directors

263. Appointment of directors to be voted on individually

263-A. Sections 177, 255, 256 and 263 not to apply in relation to companies not carrying business for profit, etc.

264. Consent of candidate for directorship to be filed with the company and consent to act as director to be filed with the Registrar

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

268. Amendment of provision relating to managing, whole-time or non-rotational directors to require Government approval

269. Appointment of managing or whole-time director or manager to require Government approval only in certain cases

Share qualification

270. Time within which share qualification is to be obtained and maximum amount thereof

271. [* * *]

272. Penalty

273. Saving

Subject Index

 

 

Detailed Contents

 

93. Payment of dividend in proportion to amount paid-up

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Clarification regarding Sections 88 and 93—Department's view

94. Power of limited company to alter its share capital

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Alteration of share capital

Power of a company limited by shares to alter its share capital—Increase, consolidation and division

Increase of capital in case of a company limited by guarantee and having a share capital

Effect of provisions in Articles on power to increase capital vis-a-vis statutory provisions

Power of a company to alter its share capital—Department's view

Consolidation of share capital

Consolidation of shares

Conversion of shares into stock and vice versa

Sub-division of shares

Cancellation of unissued shares

Registration fees on cancellation followed by increase—Departmental clarification

Text of circular

Registration fee is capital expenditure

Intimation to Registrar

94-A. Share capital to stand increased where an order is made under Section 81 (4)

Legislative history—The Companies (Amendment) Act, 1974 (Act 41 of 1974)

Scope of the section

Share capital stands increased, on an order under Section 81 (4)

Delegation of powers to the Company Law Board

Filing of return

Government Policy Guidelines

95. Notice to Registrar of consolidation of share capital, conversion of shares into stock, etc.

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Notice to Registrar of Companies

Recording by Registrar

Penalty

Compoundable offence

96. Effect of conversion of shares into stock

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Conversion

Stock

Meaning of

Transferability

Register of members, entry in

Annual return

No numbering

Shares and Stocks—Differentiation

Effect of forgery

97. Notice of increase of share capital or of members

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

"Increase in share capital"—Meaning of

Increase of authorised share capital due to amalgamation—Applicability of Section 97

Board may ratify shareholders' action

Filing of notice with the Registrar

Penalty for default

Compoundable offence

Continuing offence

Prescribed form

Prescribed fees

Fixed rates of additional fees for delay in filing documents

98. Power of unlimited company to provide for reserve share capital on re-registration

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Power of unlimited company to provide for reserve share capital on reorganisation

Procedure

99. Reserve liability of limited company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Reserve liability of limited company—Reserve share capital

Reduction of share capital

100. Special resolution for reduction of share capital

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Maintenance of share capital

Reduction of share capital

Pari passu or all-round reduction

Power of reduction of capital

Principles applicable to reduction of capital

Redemption of preference shares

Reduction in capital without the consent of the Court

Authorisation of reduction of capital in the Articles necessary

Procedure for reduction of capital

Buy back of shares—Jurisdiction of Court under Section 77-A

Forfeiture and surrender of shares

Power of Court

When does the reduction become effective ?

Government company

101. Application to Tribunal for confirming order, objections by creditors, and settlement of list of objecting creditors

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Requirements for reduction

"Diminution of liability," etc.—Creditors affected

Application to the Court to be by petition

Application to Court when not required ?

Necessary contents of the petition to the Court

Objections by creditors, and settlement of list of objecting creditors

Advertisement of the petition and the list of creditors, and notices to creditors

Claim for mesne profits—Whether a debt ?

Power to dispense with the consent of creditor on security being given for his debt

Court's power

Court's power to order rectification

Reduction of capital in arrangements and amalgamations

Petition

Notice to the Registrar of Companies

Publication of notice

Government company

102. Order confirming reduction and powers of Tribunal on making such order

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Order confirming reduction

Publication of reasons for reduction

Addition to name of company of the words "and reduced"—Order of the Court confirming reduction; and powers of the Court on the making of such order

Consequences of failure to make the addition

Government company

Penalty

Compoundable offence

103. Registration of order and minute of reduction

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Registration of order and minute of reduction

Minute to form part of the Memorandum

Registrar's certificate conclusive

Effect of registered minute

Government company

Penalty

Compoundable offence

104. Liability of members in respect of reduced shares

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Liability of member in respect of reduced shares

Government company

105. Penalty for concealing name of creditor, etc.

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Nature of offence

Penalty for concealment of name of creditor

Compoundable offence

Variation of shareholders’ rights

106. Alteration of rights of holders of special classes of shares

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Class rights

Variation of shareholders' rights

Under the English law

Under the Indian law

Procedure for variation of class rights

Variation of dividend rights under statutory authorisation—Department's views

Consequential effect of variation of class rights on other classes of shares

Overriding effect of Section 80-A as inserted by Amendment Act, 1988

Penalty

Compoundable offence

107. Rights of dissentient shareholders

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Remedy of the dissentient shareholders

Power of the Court

Limitation

Filing

Penalty

Compoundable offence

Transfer of shares and debentures

108. Transfer not to be registered except on production of instrument of transfer

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 1966 (Act 39 of 1966)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Depositories Act, 1996 (Act 22 of 1996)

Scope of the section

Applicability of the section

Distinction between issue of new shares and transfer of shares already issued

A member's right to transfer his shares

Mode of transfer of shares

Instrument of transfer

Signature on transfer form

Effect of mere agreement to transfer

Agreement amongst joint-venturers as to transfer of shares

Financial institutions approved by Central Government for the purposes of the section

Guidelines for good or bad delivery of documents

Recommendations of working group on transfer of shares—Acceptance by Government—Follow-up for their implementation

Clarification regarding requirement of producing of instrument of transfer—Department's view

Production of estate duty clearance certificate—Whether to be insisted upon where heirs apply for transfer of shares held by deceased

Prescribed authority for endorsing forms of transfer of shares in pursuance of Section 108 (1-A)

Transfer not to be registered, unless instrument of transfer is produced

Lodging of the certificate of shares

Share Transfer Form (Form 7-B) for endorsement—Department's circular

Delay in registration of transfer

Closure of register of members

Fixing a 'record date' without closing register of members—Department's clarification

Transfer below market lot

Creation of trust for disposal of odd lot shares—Department's circular

Bulk lodgement of instrument(s) of transfer of shares/debentures—Department's circular

Effect of transfer until registration

Transfer when complete ?

Transmission of shares

Comparison between transfer and transmission

Transfer relates back to the date of execution

Mortgage of shares by blank transfer

Restrictions on blank transfers of shares—Procedure clarified by Department—Department's clarification

System of blank transfers of shares—Intention behind its prohibition

Transfer without the authority of the owner

Transferor's responsibility with regard to transfer of shares by him "Lodging the Certificate"—"Certification"—"Balance Ticket"

Transfer of shares-cum-dividend and transfer ex-dividend

Transfer of shares at price by valuation

Specific performance of contract for sale of shares

Signature of transferor and witnesses

Indication of occupation of transferee-company not necessary

Transfer of shares held in trust

Transmission to real successors

Stamp duty on transfer of shares

"Duly stamped"

Stamp duty by whom payable

Denomination of share transfer stamps

Securities under depository mode not liable to stamp duty—Under SEBI Press Release

Liability of valuer for negligence

Whether transferee/transferor to be given opportunity of hearing

Director's powers to refuse transfers

Refusal to transfer shares on frivolous grounds such as non-tallying of attested signature

Department's circular I

Department's circular II

Whether share transfer deeds on which words 'one thousand nine hundred and seventy' are printed can be deemed to be good delivery if word 'seventy' is cut and in its place 'eighty' is written

Transfer deeds in name of minor must be signed by natural guardian

Transfer deed signed by guardian on behalf of minor for listed schemes

Whether execution of transfer deeds is necessary for effecting change in order of names of joint-shareholders

Whether it is obligatory to disclose address of transferor-shareholder while returning documents under objection for non-tally of transferor's signature

Inordinate delay in registering transfers, endorsing calls, sub-dividing and consolidating share certificates and returning defective documents

Review and simplification of existing procedure in matter of registration and transfer of share—Suggestion regarding non-charging of transfer fee, etc

Transfer fees

Prohibition on transfer of shares of companies having dual registers, one in India and one in UK under the Foreign Exchange Regulation Act

Abolition of standard denomination for equity shares

Nomination facility for shareholders

Registration not to be effected if instrument is received after period stipulated in sub-section (1-B)

Applications for extension of time for registering transfer of shares under sub-section (1-D)—Whether should be supported by specific reasons indicating hardship

Notification delegating powers to Regional Directors by Central Government—Rescission of

Defective transfer deed

Forged transfer

Consequence of certification

Transfer in violation of the Articles of Association

Payment of transfer fee prescribed by the Articles

Effect of a forged transfer of shares

Joint shareholding—Department’s views

Disinvestment by Government

Company's lien over shares

Forfeiture of shares by company

Power of forfeiture strictly construed

Compliance with statutory provisions necessary

Setting aside of forfeiture for want of notice

Jurisdiction for challenging forfeiture

Surrender of shares

Pledge of shares

Distinction between lien, surrender and forfeiture

Power of Central Government to extend time

Extension of time for registering transfer to be supported by reasons—Department's clarification

Simplifications of procedure—Department's instruction

Application in Form 7-C

Application fee payable by individuals for transfer of shares

Delegation of powers to the Company Law Board

Delegation of powers to the Registrars of Companies

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Government company

Penalty

Compoundable offence

108-A. Restriction on acquisition of certain shares

Legislative history—The Companies (Amendment) Act, 1974 (Act 41 of 1974)

Sachar Committee Recommendations

The MRTP (Amendment) Act, 1984 (Act 30 of 1984)

The MRTP (Amendment) Act, 1991 (Act 58 of 1991)

Scope of the section

Applicability of the section

Approval necessary

'Group'

'Bodies corporate under the same management'

Government's approval

Acquisition without prior permission

Department's clarifications

Time-limit for conveying approval

Penalty for default

Compoundable offence

108-B. Restriction on transfer of shares

Legislative history—The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The MRTP (Amendment) Act, 1984 (Act 30 of 1984)

The MRTP (Amendment) Act, 1991 (Act 58 of 1991)

Scope of the section

Applicability of the section

Dominant undertaking

Powers of the Central Government

Considerations for transfer

Companies under the same management

Time-limit for sanction by the Government

Who can file complaint ?

Relevant rules and prescribed form

Penalty

Compoundable offence

108-C. Restriction on the transfer of shares of foreign companies

Legislative history—The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The MRTP (Amendment) Act, 1984 (Act 30 of 1984)

The MRTP (Amendment) Act, 1991 (Act 58 of 1991)

Scope of the section

Foreign company

Refusal of approval

Time-limit for decision by the Government

Relevant rules and prescribed form

Penalty

Compoundable offence

108-D. Power of Central Government to direct companies not to give effect to the transfer

Legislative history—The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The MRTP (Amendment) Act, 1984 (Act 30 of 1984)

The MRTP (Amendment) Act, 1991 (Act 58 of 1991)

Scope of the section

Controlling interest

Powers of the Central Government

Directions to be complied

Voting rights prohibited

Re-transfer and refund

Order should be passed after affording opportunity of hearing and on sufficient material

Penalty

Compoundable offence

108-E. Time within which refusal to be communicated

Legislative history—The MRTP (Amendment) Act, 1984 (Act 30 of 1984)

MRTP (Amendment) Act, 1991 (Act 58 of 1991)

Scope of the section

108-F. Nothing in Sections 108-A to 108-D to apply to Government companies, etc.

Legislative history—The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The MRTP (Amendment) Act, 1984 (Act 30 of 1984)

The MRTP (Amendment) Act, 1991 (Act 58 of 1991)

Scope of the section

108-G. Applicability of the provisions of Sections 108-A to 108-F

Legislative history—The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1977 (Act 46 of 1977)

The MRTP (Amendment) Act, 1984 (Act 30 of 1984)

The MRTP (Amendment) Act, 1991 (Act 58 of 1991)

Scope of the section

Opportunity of hearing to the applicant

108-H. Construction of certain expressions used in Sections 108-A to 108-G

Legislative history—The Companies (Amendment) Act, 1977 (Act 46 of 1997)

The MRTP (Amendment) Act, 1984 (Act 30 of 1984)

The MRTP (Amendment) Act, 1991 (Act 58 of 1991)

Scope of the section

Meaning of Expressions

108-I. Penalty for acquisition or transfer of share in contravention of Sections 108-A to 108-D

Legislative history—The Companies (Amendment) Act, 1977 (Act 46 of 1977)

The MRTP (Amendment) Act, 1984 (Act 30 of 1984)

The MRTP (Amendment) Act, 1991 (Act 58 of 1991)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Penalties

Compoundable offences

109. Transfer by legal representative

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Rights of the estate of a deceased-member to new shares

Rights of executors and legal representatives

Transfer of shares by legal representative

Transmission of shares

Death of personal representative

Transfer and transmission—Distinction

Shares of lunatic and bankrupt persons

Discretion of the Board of Directors

Administration by the Securities and Exchange Board of India (SEBI)

Power of SEBI to inspect books of account, etc. and to file complaints

109-A. Nomination of shares

Legislative history—The Companies (Amendment) Act, 1999 (Act 21 of 1999)

Scope of the section

Nomination facility

Right of nomination

More than one nominee

Rights of nominee

Status of the nominee

Minor nominee

Nomination for partly paid shares

Articles of Association need not provide for nomination facility

Cancellation and variation of nomination

Signatures on nomination form

Recording nominee's name

Nomination facility for shareholders

109-B. Transmission of shares

Legislative history—The Companies (Amendment) Act, 1999 (Act 21 of 1999)

Scope of the section

Object of the section

Option of nominee

Transmission in paperless mode/dematerialised form

110. Application for transfer

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Application for registration of transfer

Splitting of joint-holding of shares

Transfer deed

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Penalty

111. Power to refuse registration and appeal against refusal

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1988 (Act 31 of 1988)

Sachar Committee Recommendations

The Depositories Act, 1996 (Act 22 of 1996)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Grounds on which listed companies could refuse to register a transfer of shares under the Securities Contract Regulation Act, 1956 (now deleted)

Contract to transfer

Transfer in respect of pledged shares

Shareholdings and transfer of shares of banking companies

Reserve Bank of India circulars

Circular, dated 13-1-1970

Circular, dated 23-5-1991

Circular, dated 16-4-1994

Registration of transfers—Power of company to refuse registration

Transferee's right on transfer

Refusal to register transfer on the ground of restrictions contained in the Articles of Association

Signature not tallying with the specimen signature

Department's circular

Irregularities of form

Refusal on frivolous and untenable grounds

Department's circular I

Department's circular II

Consequences of invalid refusal to register a transfer

Transmission of shares and debentures

Transfer and transmission distinguished

Succession certificate necessary in case of transmission

Genuineness of consideration

Irregularities of minor nature

Transfer to non-resident Indians

Shares in minor's name

Irrelevant or inadequate reasons for refusal

Rejection of transfer is not restrictive or an unfair trade practice

Effect of failure to communicate refusal within two months

Unnecessary delay

Interim relief

Appeals

Limitation and condonation of delay

Rectification of register of members

Transfer of shares in case of joint-holding

Transfer of shares in case of trust

Dispute between public sector corporations

Interest on delayed refund of bonds

Court sale cannot abrogate provisions in Articles

Aggrieved person

'Any person having become a member'—Interpretation of

Allotment beyond authorised capital

Allotment without written application

Cancellation of allotment

Restrictions on transfer

Sufficient cause

Appeal against orders of the Central Government (now Company Law Board)

Special Court not subordinate to High Court

Transmission under unprobated Will

Share transfer—Refusal by company

Disposal of appeals received under the section—Criteria for deciding cases

Appeal against refusal or failure to register

Penalty

Compoundable offence

111-A. Rectification of register on transfer

Legislative history

The Depositories Act, 1996 (Act 22 of 1996)

The Depositories Related Laws (Amendment) Act, 1997 (Act 8 of 1997)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Applicability of Section 111-A

Applicability of the provisions of Section 111 to Section 111-A

Time-limit for appeal

Power of the Company Law Board

Civil Court remedy

Intervention of Civil Court order

Rectification of register of members

Inter-depository transfer of beneficial ownership of securities

Sufficient cause

SEBI Takeover Regulations

"May" is to be taken as "shall"

Failure to exercise option

Refusal to accept splitting-up of joint-holding

Transfers in violation of law

Contravention of any other law

Who can apply ?

Rectification of register of members—Matter in dispute before Criminal Court

Petition before Company Law Board

Condonation of delay

Fraudulent transactions and appropriate remedy

Transfer of shares where consideration not paid

Company compellable to register transfer where Section 111-A (3) not applicable

Petition signed by second joint-holder only

Transfer of shares of banking company

Writ remedy

Right of appeal

112. Certification of transfers

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Principle of certification

Scope of the section

Certification of transfer

Consequences of a forged transfer

Effect of certification

Liability of a company

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Issue of certificate of shares, etc.

113. Limitation of time for issue of certificates

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 ( Act 31 of 1988)

The Depositories Act, 1996 (Act 22 of 1996)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2000 (Act 11 of 2003)

Scope of the section

Applicability of the section to letters of allotment

Share certificate

Share certificates—Clarification regarding signature by means of machine thereon.—Department's view

Right of member to certificate

Limitation of time for issue of certificate

Issue of refund orders, allotment letters/certificates, and letters of offer by registered post.—Department's circular

Extension of time

Person aggrieved

Remedy against default

Company Law Board has no power to punish for default

Company Law Board has no power to compensate investor for delay in issuing certificates under Sections 113

Jurisdiction for complaint

Quashing of complaint

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Petition before the Company Law Board

Relevant rules and forms

Penalty

Compoundable offence

Share warrants

114. Issue and effect of share warrants to bearer

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Warant—Meaning of

Share-warrants to bearer

Effect of a share warrant

Rights of bearer share warrant holder

Reconversion of warrants into shares

Who can issue?

Free transfer

Stamp duty on share warrants

Issue of share warrants outside India

SEBI Guidelines

Delegation of powers to the Company Law Board

115. Share warrants and entries in register of members

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Member

Deemed member

Position of the bearer of share warrant

Entries to be made in the register of the company upon the issue of share warrants

Registration of name of bearer of share warrant

Share warrant and share certificate—Distinguished

Failure to exercise right of option of converting warrants into shares

Annual returns

Compoundable offence

Penalty for personation of shareholder

116. Penalty for personation of shareholder

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Personation

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Penalty for personation of shareholder

Compoundable offence

Special provisions as to debentures

117. Debentures with voting rights not to be issued hereafter

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Debentures not to be issued with voting rights

Contents of debenture

Kinds of debenture

Secured

Unsecured

Bearer

Registered

Redeemable

Perpetual

Redeemable and irredeemable debentures

Nature of debenture and the question of priority

Convertible debentures.

Blank debentures

Debenture stock

Debenture and debenture stock

Remedies of debenture-holders

Interest on call money

Debenture holder is not a consumer

Interest on debentures

Stamp duty

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

SEBI Guidelines

Prescribed rules

Compoundable offence

117-A. Debenture trust deed

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Purpose and nature of trust deed

Advantages of trust deed

Contents of trust deed

Time period for execution of trust deed

Inspection and copies of trust deeds

SEBI Guidelines

Substantive law

Penalty for default

Compoundable offence

117-B. Appointment of debenture-trustees and duties of debenture-trustees

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Issue of prospectus and appointment of debenture-trustees

Who is debenture trustee ?

Who can be appointed as trustee ?

Consent to act as debenture trustee

Functions of debenture-trustees

Duties of debenture-trustees under the SEBI (Debenture Trustees) Regulations, 1993

Duty of debenture-trustee to furnish information to SEBI

Petition before Company Law Board

117-C. Liability of company to create security and debenture redemption reserve

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Notes on Clause 161 of the Companies Bill, 1993

Notes on Clause 105 of the Companies Bill, 1997

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Creation and utilisation of debenture redemption reserve

Claim for redemption of debentures from Investor Education and Protection Fund

Failure to redeem

Clarifications regarding Debenture Redemption Reserve (DRR)

Penalty for default

Compoundable offence

118. Right to obtain copies of and inspect trust deed

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Inspection

Foreign companies

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Remedy for refusal

Petition before the Company Law Board

Penalty

Compoundable offence

119. Liability of trustees for debenture-holders

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Liabilities of trustees for debenture-holders

Debenture trustees—Right to carry on business of the company

Trust in favour of debenture-holders

Book debts of a company may be charged

Court may grant relief from liability

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

120. Perpetual debentures

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Conditions regulating the issue of debentures

Irregular issue of debentures

Debentures may be issued at a discount

Issue of debentures by public companies where the consideration for the securities exceeds rupees twenty-five lakhs

Irredeemable debentures

Clog on equity of redemption

Redemption of debentures

Effect of death of debenture-holder

Conditions regulating the transfer of debentures

Remedies available to debenture holders

Winding-up

Power to modify terms

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

121. Power to re-issue redeemed debentures in certain cases

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Power to re-issue redeemed debentures in certain cases

Re-issue of debentures

Rights of re-issued debenture-holder

Nominees

Redeemed

Stamp duty

Balance-sheet

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

122. Specific performance of contract to subscribe for debentures

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Specific performance of contract to subscribe for debentures

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

123. Payments of certain debts out of assets subject to floating charge in priority to claims under the charge

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Object of the section

Scope of the section

Payment of certain debts out of assets subject to floating charge in priority to claims under the charge

Preferential payments

Indemnity

Priority only against floating charge

Appointment of receiver

Appointment of receiver by Court

Status of a receiver appointed by the Court

Receiver not occupier

Receiver is an officer of the Court

Legal effects of appointment of a receiver

Appointment of receiver supersedes company's powers

Appointment of receiver by the debenture-holder out of Court

Legal status of receiver appointed out of Court

Effect of appointment of receiver upon Directors

Receiver's report on conduct of the Directors

Receiver's costs and remuneration

Recoupment

Part V

Registration of charges

124. "Charge" to include mortgage in this Part

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Meaning of "charge"

Fixed and floating charge

Power to create charges and mortgages

Crystallisation of floating charge

Effect of crystallisation of floating charge

Dealings with properties under floating charge

Further charges

Floating charge on issue of debentures

Secured creditor and burden of proof

Holding/subsidiary relationship

Non-banking Financial companies—Requirement of consent of first charge-holder—RBI Press release

Form

Filing of charge

125. Certain charges to be void against liquidator or creditors unless registered

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

Scope of the section

Applicability of Section 125

Registration of certain mortgages and charges

Effect of non-registration

Solution to certain problems arising out of registration/modification of charges provided—Department's view

Whether Registrar can register a charge which is pledged on movable property ?

Effect of non-registration, charge created by a Liquidator not registrable

Effect of delayed registration

Late payment of fee for registration of charges

Delay in registration of charges

Department's circular I

Department's circular II

Department's circular III

Extension of time to file particulars of charge

Central Government cannot condone delay under Section 637-B

Necessity of formal instrument of charge

Doctrine of revivor

"Debentures", definition of—"Issue" essential

Registration of debentures under Section 17 of the Indian Registration Act, 1908

Registration of pledge of movable property not compulsory but permissible—Department's circular

Charge over book debts

Charge on calls

Charges on ship

Charges on goodwill, patents, etc

Charge on properties situated abroad

Negotiable instrument

SEBI Guidelines

Stamp duty on instrument of charge

Penalty

Compoundable offence

126. Date of notice of charge

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Foreign companies

Notice of mortgages and charges

No constructive notice of contents of charge

127. Registration of charges on properties acquired subject to charge

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Registration of charges on properties acquired subject to charge

Effect of non-registration

Property acquired on dissolution of partnership firms

Penalty

Compoundable offence

128. Particulars in case of series of debentures entitling holders pari passu

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Particulars in case of series of debentures entitling holders pari passu

Series of debentures

Protection to debenture-holders

Debentures ranking pari passu

Incorporated company cannot be mortgaged or charged

Charge by foreign company on immovable property in India

Guarantor

Proviso

129. Particulars in case of commission, etc., on debentures

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Particulars in case of commission, allowance or discount, having been paid or made by the company

Effect of non-filing

Prescribed form

130. Register of charges to be kept by Registrar

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

Scope of the section

Register of charges

Registered charge to be entered in the register

Particulars

Validity of entry in the register

Delay in filing

Delay in fling Form No. 13—Department's view

131. Index to register of charges

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Prescribed Form

132. Certificate of registration

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Certificate of registration

Evidentiary value of certificate

Validity of the registration

Mis-statement by charge-holder

Instant registration

Relevant rule

133. Endorsement of certificate of registration on debenture or certificate of debenture stock

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Endorsement of certificate of registration on debentures or certificate of debenture stock

Penalty

Compoundable offence

134. Duty of company as regards registration and right of interested party

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Duty of company and right of interested persons, as regards registration

Who should effect registration ?—Department's circular

Penalty

135. Provisions of Part to apply to modification of charges

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Modification of charge

Whether transfer or assignment of rights by charge-holder amounts to modification?—Department's views

Registration of modification of charges as a result of change in law—Department's view

Variation in rate of interest arising out of increase in bank rate—Department's view

Other cases of change of rate of interest—Department's view

Procedure for registration

Prescribed fee and additional fee

Fixed rate of additional fee for belated filing of documents

Condonation of delay under Section 141

Prescribed rules and forms

136. Copy of instrument creating charge to be kept by company at registered office

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Copy of instrument creating mortgage or charge must be kept by the company at its registered office

137. Entry in register of charges of appointment of receiver or manager

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Receiver and Manager

Receiver

Receivership

Effect of appointment of Receiver

Borrowing powers of a Receiver

Receiver's appointment subject to security given by him

Registration of appointment of Receiver

Applicability of Sections 137 and 421 of the Act

Companies in liquidation—Appointment of Receivers—Applicability of Sections 137 and 421 of the Companies Act, 1956—Indefinite continuance of Liquidator and Receiver simultaneously—Department's view

Form and procedure

Penalty

Compoundable offence

138. Company to report satisfaction and procedure thereafter

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

Scope of the section

Charge-holder's right to be heard before entry of satisfaction

Supporting letter of satisfaction from the charge-holder

Notice of satisfaction

Reckoning of period of 30 days within which satisfaction is to be reported to Registrar—Department's view

Satisfaction of charge to be filed with the Registrar of Companies within 30 days from the date of satisfaction/payment of charge revising earlier clarification to the effect that period of 30 days to be counted from "date of issue of bank's letter"—Department's view

Notice by Registrar

Notice to the charge-holder.—Department's view

Entry by Registrar

Form and procedure

Procedure of filing of Form No. 17 with the Registrar of Companies.—Original loan merged in secured loan of higher amount—Which form is required to be filed ?

Department's circular I

Department's circular II

Penalty for default

Compoundable offence

Condonation of delay

139. Power of Registrar to make entries of satisfaction and release in absence of intimation from company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

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

Corresponding provisions

Scope of the section

Copy of Memorandum of satisfaction to be furnished to the company

Rectification

141. Rectification by Central Government of register of charges.

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Rectification of register of charges

Exercise of power of rectification of register of charges

Registration of satisfaction of mortgages and charges

Rectification in liquidation

Jurisdiction exercisable in case of omission, mistake and mis-statement but not validity of the charge

Existing rights not to be prejudiced

Locus standi of unsecured creditor

Direction in case of default or delay in filing particulars of charge

Acceptance of documents on record not to be accepted by Registrar after expiry of stipulated period unless Court's sanction is obtained

Application to the Company Law Board for condonation of delay where charge-holder waives claim—Department's clarification

Additional penal fee not to be levied unless the Company Law Board so orders in the order of extension—Department's view

Registrar not to accept documents filed out of time without the Company Law Board's order—Department's view

Delay in filing Form No. 13—Department's clarification

Condonation of delay by the Central Government

Prescribed forms

Petition before the Company Law Board

142. Penalties

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Persons liable

Penalties for non-compliance with the provisions regarding registration

Compoundable offence

143. Company’s register of charges

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Company's registrar of charges

Contents of the register of charges

Time

Penalty

Compoundable offence

144. Right to inspect copies of instruments creating charges and company’s register of charges

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies Amendment Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Right to inspect copies of instruments creating mortgages and charges and right to inspect company's register of mortgages

What can be inspected ?

Time for inspection

Fee

Penalty for refusal to grant inspection

Compoundable offence

Petition before the Company Law Board

145. Application of Part to charges requiring registration under it but not under previous law

Scope of the section

Application of Part V to charges requiring registration under it but not under previous company law

part vi

management and administration

chapter i

general provisions

Registered office and name

146. Registered office of company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Registered office of company

Importance of registered office

Service of documents must be affected at the registered office

Intimation to Registrar

Shifting of registered office

Change of registered office—From when effective ?

Registered office at Managing Director's residence—Departmental clarification

"Local limits" to mean both the local body limits and the postal limits—Department's view

Default

Penalty

Compounding of fine

147. Publication of name by company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Object of the section

Publication of name by limited company

Expression "person"—Construction of—Person liable to be sued—C.P.C., Order XXX, Rule 10

Place of business

Bills of Exchange, Cheques and other Negotiable Instruments

Exemption to Section 25 companies

Provision in Articles on mode and manner of keeping seal and seal to be metallic—Department's clarification

Publication of name by company in the local language—Department's view

Manner in which a company's seal should be kept

Publication of company's name in notices

Whether share certificate is an official publication within the meaning of sub-section (1) (c) ?

Penalty for non-publication of name

Compounding of fine

148. Publication of authorised as well as subscribed and paid-up capital

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Publication of subscribed and paid-up capital necessary when the authorised capital is published

Clarification regarding requirement of specifying authorised capital of the company on its share certificate—Department's view

Penalty for default

Compounding of fine

Restrictions on commencement of business

149. Restrictions on commencement of business

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Object and scope of the section

Applicability of the section

Restrictions on the commencement of business

Company's right to commence business—Certificate of commencement

Public companies

Special resolution required

Criterion to decide whether new activity is germane to the original business—Department's view

Ordinary resolution and permission of Central Government

Certificate of commencement

Certificate of commencement conclusive evidence that the company can commence business

Private company

Certificate of commencement of business—Applicability to private companies converted into public company—Department's view

Government company

Compliance of the provisions of Section 149 and Section 165 by public companies registered under Part IX of the Act—Department's view

Contracts made by the company before the day on which it can commence business deemed to be provisional

Contracts made before and after incorporation

Prohibition against allotment

Penalty for default

Compoundable offence

Form and Procedure

Registers of members and debenture holders

150. Register of members

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Depositories Act, 1996 (Act 22 of 1996) and the Depositories Related Laws (Amendment) Act, 1997 (Act 8 of 1997)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Register of members

Duty to keep register up-to-date

Register of beneficial owners

Entry in the register of members in the case of a firm

Entry in case of joint-holders

Whether particulars, including occupation, of each joint-shareholder are to be recorded in register ?—Department's view

Entry in case of minors

Authentication of particulars

Prima facie evidence

Rectification of register

Position in England

Inspection of register

Penalty

Compounding of fine

151. Index of members

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Index of members of company

Penalty

Compoundable offence

152. Register and index of debenture-holders

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Depositories Act, 1996 (Act 22 of 1996) and the Depositories Related Laws (Amendment) Act, 1997 (Act 8 of 1997)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Register of debenture-holders

Index

Penalty for default

Compoundable offence

152-A. Register and index of beneficial owners to be of debenture holder

Legislative history—The Depositories Act, 1996 (Act 22 of 1996)

Scope of the section

153. Trusts not to be entered on register

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1963 (Act 53 of 1963)

The Depositories Act, 1996 (Act 22 of 1997)

Scope of the section

Object of the section

Trusts and equitable interests

Trust not to be entered on the register

Notice of trust

Admission of trusts as members—Department's view

Situations in which notice must or may be taken

Liabilities of nominees and beneficial owner

Shares held on behalf of Hindu undivided family

Company's lien or charge on its share

Section 187-C (4) strikes at Section 153 qua trusts of shares

Penalty

153-A. Appointment of public trustee

Legislative history—The Companies (Amendment) Act, 1963 (Act 53 of 1963)

Appointment of public trustee

Relevant rules

153-B. Declaration as to shares and debentures held in trust

Legislative history—The Companies (Amendment) Act, 1963 (Act 53 of 1963)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 1996 (Act 5 of 1997)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Object of the section

Applicability of the section

Declaration as to shares and debentures held in trust

Declaration should be by all the trustees—Department's view

Whether the declaration should be in respect of preference shares as well

Exemption

Where shares are held in more than one company, the limits should be applied separately in relation to each such company—Department's view

Whether expression "trust money invested in shares or debentures of company", occurring in sub-section (4), as it stood before the Amendment Act, 1965, also covers shares obtained as gift or on allotment of bonus shares

Exercise of voting rights in respect of shares held in trust

Penalty

Compounding of offence

Form and Procedure

154. Power to close register of members or debenture-holders

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Power to close register

Notice of closure of transfer books or share transfer books of a company—Need for strict compliance with the provisions of Section 154—Department's view

Uniform dates of closure

Advertisement in newspaper

Amendment to Clause 16 of the listing agreement

Penalty for default

Compoundable offence

155. Power of Court to rectify register of members

[Omitted by the Companies (Amendment) Act, 1988, Section 21, w.e.f. 31-5-1991.]

Repeal of Section 155

Corresponding provisions

Scope of the section

Maintainability of composite petition

Application for rectification

Necessary parties

Civil suit for rectification of register

Entry or omission of name without sufficient case

Power of Court to rectify the register after the Companies (Amendment) Act, 1988

156. Notice to Registrar of rectification of register

[Omitted by the Companies (Amendment) Act, 1988, Section 21, w.e.f. 31-5-1991]

Repeal of Section 156

Corresponding provisions

Jurisdiction of the Court

Foreign registers of members or debenture holders

157. Power for company to keep foreign register of members or debenture holders

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Penalty for default

Compoundable offence

158. Provisions as to foreign registers

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Foreign register

Penalty for default

Compoundable offence

Delegation of powers to the Company Law Board

Annual returns

159. Annual return to be made by company having a share capital

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 1960)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Annual returns

Filing of annual return by company having share capital

Form

Repetitive return not essential

Purpose of filing annual returns—Department's view

Delay in filing annual return—Penal fees—Department's clarification

Annual return as prima facie evidence

Foreign companies—Department's clarification

Proof of contents

Not a continuing default

Defence

Default under Section 159 is a separate offence—Department's view

Penalty

Compoundable offence

160. Annual return to be made by company not having a share capital

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Sections 159 and 160

Form

Exemption

Penalties

Compounding of offence

161. Further provisions regarding annual return and certificate to be annexed thereto

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act 1988 (Act 31 of 1988)

Scope of the section

Signature and certification of annual return

Certificate regarding annual return—Department's view

Amendment in annual return

Ceiling on signing of annual returns by a Secretary in whole-time practice

Exemption

Penalty

Compoundable offence

162. Penalty and interpretation

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Default

Mens rea

Default in calling meeting

Company not functioning

Documents lodged in Court

Jurisdiction

Prosecution for default

Reasons to be given

Plea of time bar to be raised at the stage of trial

Joint trial

Defaults under the Act not economic offences

Not a continuing offence

Penalty for default

Compoundable offence

General provisions regarding registers and returns

163. Place of keeping, and inspection of registers and returns

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Place of keeping of registers, etc

Inspection of register of members

Inspection and copies

Object of inspection is immaterial

Right to seek information

Right to inspect

Removal of register of members from registered office

Fees for inspection of documents, etc

Penalty for default

Compoundable offence

Petition before the Company Law Board

164. Registers, etc., to be evidence

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Register of members, debenture-holders etc. : Evidentiary value

Annual returns and register of members are prima facie evidence

Company estopped by contents of register

Meetings and Proceedings

165. Statutory meeting and statutory report of company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Meaning and purpose behind the holding of meetings

Various types of meetings

Minutes of proceedings at Board meetings

Statutory meeting and statutory report

Notice of statutory meeting

English Law

Statutory report

Statutory meeting not required by private company converted into a public company—Department's clarification

Private company

Companies registered under Part IX

Government company

Penalty for default

Compounding of fine

166. Annual general meeting

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Annual General Meeting

Obligation to hold meeting

Extension of time

Time limits for holding Annual General Meeting under Section 166 read with Section 210—Department's view

Extension of time to hold Annual General Meeting under Section 166 (1) read with Section 210 (3) (b)

Extension of time for holding Annual General Meeting upto three months only for special reasons

Delay in the completion of audit of annual accounts not ordinarily a 'special reasons' justifying the grant of extension

Procedure for holding adjourned Annual General Meeting

Placing of accounts of foreign business in Annual General Meetings

Application for extension of time should be made before expiry of the period laid down in sub-section (1)

Registrar may grant extension of time for special reasons upto 3 months even if such extension allows the company to hold AGM beyond the calendar year

Uniform accounting year under the Income-tax Act, 1961—Grant of extension of time for holding Annual General Meeting under Section 166 (1)

Notice of meeting

Time, day and place of meeting

Holding of Annual General Meeting during "business hours"—Department's view

Implication of 'time' in sub-section (2)

Provisions of Section 166 (2) are mandatory—Annual General Meeting cannot be called on a public holiday

Bank closing holidays

Holding of Annual General Meeting whether permissible on 30th June and 31st December declared as public holidays under Negotiable Instruments Act

Place of holding Annual General Meeting

Exemption from holding Annual General Meeting to companies whose registered offices are situated in Punjab and which have foreign nationals as Directors/share-holders

Companies desiring to hold Annual General Meeting but are unable to do so on account of apprehending violence—Whether constitute "class of companies" within the meaning of first proviso to Section 166 (2)

Date of Annual General Meeting can be fixed by Articles of Association

Private company

Postponement of the meeting

Adjournment of the meeting

Adjournment for laying of balance-sheet and profit and loss account before the Annual General Meeting of the company—Adjourned AGM must be held within the statutory period including the period of extension granted—Department's view

Holding of adjourned Annual General Meetings

Suit

Defaults under Sections 166 and 210 of the Companies Act, 1956—Prosecution for—Department's view

Delay in holding first Annual General Meeting

Default in holding Annual General Meeting and filing of accounts

Default under Sections 166 and 210—Registrar's, duty to launch prosecution—Department's instructions

Companies not able to hold Annual General Meeting for fear of violence, not a class—Department's view

Voting rights as on last day for holding Annual General Meeting

Adjourned Annual General Meeting and tenure of Additional Directors

Adjourned Annual General Meeting, whether can be held on public holiday and notice necessary—Department's clarifications

Government company

Exemption to Section 25 companies

Power of Central Government to grant exemption

Penalty for default

Petition for relief in representative capacity

Compoundable offence

167. Power of Central Government to call annual general meeting

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Constitution of meeting of members

Power of Company Law Board to call meeting

Power cannot be used to help defaulting persons

No power to give directions where meeting not called by the Company Law Board

Application only by member of the company

When power conferred on the Central Government is to be exercised—Department's view

Penalty for default

Compoundable offence

168. Penalty for default in complying with Section 166 or 167

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Penalty for default in complying with the provisions of Sections 166 and 167

Subsequent Board not liable for default committed by preceding Board

Provisional Liquidator

Private company

Registrar's duty to launch prosecution for defaults under Sections 166 and 210—Department's circular

Prosecution for default, how Registrars of Companies will meet defence that meeting was in fact held—Department's instruction to Registrars

Penalty for default

Compoundable offence

169. Calling of extraordinary general meeting on requisition

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Extraordinary General Meeting on requisition

Agenda for requisitioned meeting and validity thereof

Directors' duty to call meeting on requisition

Meeting by the requisionists on Directors' failure

Venue of meeting

Evidence of holding of requisitioned meeting

Reimbursement of expenses

Default

170. Sections 171 to 186 to apply to meetings

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Recommendations of the Company Law Committee

Scope of the section

Public company and a private subsidiary of a public company

Private company not being a subsidiary of a public company

Meetings of debenture-holders and class of members or debenture-holders

171. Length of notice for calling meeting

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Recommendation of Company Law Committee

Scope of the section

Notices relating to calling of meetings

Length of notice for calling meetings

Requirement as to period of notice—Whether directory or mandatory ?

Meetings held on shorter notice

Public trustee cannot give consent under Section 171 (2)—Department's circular

Notice regarding meetings of any particular class of shareholders or of debenture-holders

Contents of the notice

Notice issued without authority is invalid

Members entitled to receive notice

Notice after adjournments

Jurisdiction for challenging the validity of the notice

Exemption to Section 25 companies

Private companies

Penalty

172. Contents and manner of service of notice and persons on whom it is to be served

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Place of the meeting

Day of the meeting

Time of the meeting

Object of the notice

Contents and manner of service of notice of meeting and the persons on whom it is to be served

Requirements as to contents of notice

Sufficiency of notice

Persons entitled to notice

Notice of the meeting during postal strike

Manner of service of notice

Waiver of notice

Notice of meetings of Board of Directors

Requirements of agenda of Board meetings

Quorum for Board meetings

Private company can make its own regulations

Substantial compliance necessary

Advertisement of notices in the newspapers whether obligatory—Department's clarification

Whether preference shareholders can attend a General Meeting in which no business affecting them is to be conducted and what are their rights in such a meeting

Penalty for default

Compoundable offence

173. Explanatory statement to be annexed to notice

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Recommendation of Company Law Committee

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1969 (Act 17 of 1969)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Object of the section

Applicability of Section 173 (1) (a) (iii) in case of re-appointment of Additional Directors (appointed under Section 260)—Department's view

Special business

Notice of the meeting

Explanatory statement to be annexed to notice

Mere irregularity does not vitiate meeting

Explanatory statement to be annexed to notice—Department's view

Explanatory statement to set out all material facts concerning each item of special business

Requirements of the section

Explanatory statement regarding special resolution

Minor inaccuracies

Explanatory statement and requisitioned meeting

Improper rejection of candidature for directorship and stay of meeting

Class of meetings

Effect of non-compliance

Penalty

174. Quorum for meeting

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

Scope of the section

Quorum and representation of company at meetings

Waiting time for quorum

Presence of quorum at the time of decision

Joint-holders and quorum

Effect of absence of quorum

Adjournment for lack of quorum

Quorum at adjourned meeting—A single member cannot constitute a quorum—Department's clarifications

Presence of preference shareholders—Whether counted for quorum

One person can constitute a meeting

Articles may override this section

Effect of non-compliance

175. Chairman of meeting

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

The Chairman

Appointment of Chairman

Removal of the Chairman

Casting vote of Chairman

Postponement of a meeting

Adjournment, meaning of

Sine die adjournment, meaning of

Chairman can adjourn for disorder at the meeting

Appointment of Chairman where business not completed

Chairman's power to withdraw resolution

Closure of meeting

Private company

Class meetings

Publication of Chairman's speech etc. in newspapers/magazines—Department's circular

176. Proxies

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

'Proxy'—Creature of law of agency

Notice must state that every member has a right to appoint proxy

Form of instrument appointing proxy—Date of meetings should be filled in to obviate possible misuse of proxy forms—Department's view

Deposit of proxy

Inspection of proxies

Certified copy of proxy

Issue of proxy at company's expense

Disabilities of proxy

Proxies not allowed at meetings of creditors

Proxy—An agent of the shareholder

Revocation of proxy

Stamp of which State to be affixed

Co-operative society exempted

Private company

Unstamped proxies

Suit for wrongful exclusion of proxies

Penalty

177. Voting to be by show of hands in first instance

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Voting by show of hands

Vote is right to property

Casting vote

Right of splitting

Voting

Manner of voting

En bloc voting

Director's right to vote

Private companies

Class meetings

178. Chairman’s declaration of result of voting by show of hands to be conclusive

Corresponding provisions

Legislative history

Scope of the section

Conclusiveness of Chairman's declaration of result

Private companies

Class meetings

179. Demand for poll

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

Scope of the section

Meaning of a poll

Object of a poll

Poll

Voting and the right to demand a poll

Demand for poll by proxy

Procedure at a poll

Withdrawal

Private companies

Class meetings

180. Time of taking poll

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Time of taking a poll

Chairman's duty

Mode of voting by poll

Private companies

Class meetings

181. Restriction on exercise of voting right of members who have not paid calls, etc.

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

"Call"—Connotation of

Disqualification and disabilities

Lien

Rights after forfeiture

Private companies

Class meetings

182. Restrictions on exercise of voting right in other cases to be void

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Exercise of voting rights by shareholders

Void restrictions

Private companies

Class meetings

Penalty

183. Right of member to use his votes differently

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Object of the section

Private companies

Class meetings

184. Scrutineers at poll

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Duty of scrutineers

Removal of scrutineers

Private companies

Class meetings

185. Manner of taking poll and result thereof

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Chairman's powers

Polls are non-confidential

Result of the poll

Private companies

Class meetings

186. Power of Tribunal to order meeting to be called

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Second Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Meeting convened under order of the Company Law Board

Impracticability—Connotation of

Postponement of meeting

Calling of meeting by requisionists vis-a-vis the Company Law Board

Powers of Company Law Board to give ancillary directions

Section 186 and Rule 9—No observer at certain meetings

Form and Procedure

Private company

187. Representation of corporations at meetings of companies and of creditors

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Representation of a company at meetings of other companies of which it is a member or creditor

Can a donee of a general power-of-attorney act as representative at General Meetings—Department's view

Voting by corporations

Foreign companies

Liquidator's right to appoint representative

Section applies to General Meetings only

187-A. Representation of the President and Governors in meetings of companies of which they are members

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

187-B. Exercise of voting rights in respect of shares held in trust

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1963 (Act 53 of 1963)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Applicability of the section

Scope of the section

Exercise of voting rights in respect of shares held in trust

Holding of shares in a company in trust by a society—Applicability of Section 187-B—Department's view

Public trustee cannot give consent under Section 171 (2)

187-C. Declaration by persons not holding beneficial interest in any share

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Declaration by persons not holding beneficial interest in shares and Companies (Declaration of Beneficial Interest in Shares) Rules, 1975

Declaration by beneficiary

Company to note beneficial interest and file return

Enforcement of charge

Obligation to pay dividend not affected

Declaration under Section 187-C (4), concerning beneficial interest in shareholding

Scope of the section and the rules made under Section 187-C—Department's view

Applicability to private trusts

Section 187-C and the Rules not applicable to banks keeping the shares as security deposit by the Stock Exchange—Department's clarifications

Uncertain position

Joint owner

Government company

Penalty for default

Compoundable offence

187-D. Investigation of beneficial ownership of shares in certain cases

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Investigation of beneficial ownership of shares

Good reasons

Government company

188. Circulation of members’ resolutions

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the section

Circulation of members' resolutions

Requisition received from less than specified number of members

Conditions for circulation

Application before the Company Law Board

Penalty for default

Compoundable offence

189. Ordinary and special resolutions

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Resolutions

Ordinary resolution

Special resolution

Distinction between ordinary resolution and special resolution

Matters requiring sanction of shareholders by ordinary resolution

Matters requiring sanction of shareholders by special resolution

Explanatory statement regarding special resolution—Department's view

Procedure

Alteration of Articles of Association—Notice must specify intention to propose the alteration

Restraining of General Meeting

Amendment to resolution

Registration of resolutions

190. Resolutions requiring special notice

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Meaning of "clear days' notice"

No publicity of defamatory representation

Construction of notice

Penalty for default

Compoundable offence

191. Resolutions passed at adjourned meetings

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Meetings of Committees of Board of Directors

Directors' resolution

Date of resolution

192. Registration of certain resolutions and agreements

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 1969 (Act 17 of 1969)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Object of the section

Registration of certain resolutions and agreements

Amendment in the Articles of Association

Clarification regarding sub-section (2) of Section 192—Department's view

Filing of resolutions and agreements and harmonisations in the practices by Registrar of Companies—Department's instructions

Explanatory statement to notice of meeting

Registration of resolution/agreement

Penalty for default

Compoundable offence

192-A. Passing of resolutions by postal ballot

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Objects of the section

Passing of resolution by postal ballot—Enforcement of Section 80 Companies (Amendment) Act, 2000—PIB Press release

Resolutions passed by means of postal ballot

Notice to members

Resolution passed by postal ballot

Penalty for default

Clarification regarding Companies (Passing of the Resolution by Postal Ballot) Rules, 2001

193. Minutes of proceedings of general meetings and of Board and other meetings

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Meaning and purpose behind the holding of meetings

Minutes of proceedings of General Meetings and of meetings of the Board of Directors and of meetings of Committees of the Board of Directors

Minutes of Board meetings

Minutes of proceedings at Board meetings

Book

Confirmation of minutes

Signatures of the Chairman

Corrections in minutes

Location

Inspection

Exemption to Section 25 companies

Writing of minutes within thirty days—Department's view

Signing of the Minutes pursuant to Section 193 vis-a-vis the provisions of Section 285 of the Companies Act, 1956—Clarification regarding, etc

Maintenance of minutes of proceedings of Board of Directors and alterations in the minutes

Clarification regarding maintaining minutes in the loose-leaf form—Department's view

Whether minutes book has to be kept at company's registered office ?

Clarification regarding the provisions of Section 193 (1-B)

Penalty for default

Compoundable offence

194. Minutes to be evidence

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Production of minutes book for pirma facie evidence

Keeping of minute book—Liability of

Evidence of proceedings

195. Presumptions to be drawn where minutes duly drawn and signed

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Presumption as to minutes

Omnia rite acta praesumuntur

Rebuttable presumption

Acquiescence or laches

Without a General Meeting resolutions may be valid

196. Inspection of minute books of general meetings

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Inspection of minute books of General Meetings

Location

Place of keeping the minute books—Department's view

Inspection of minutes book

Motive for inspection

Furnishing of copy—Department's view

Collective responsibility of Directors

Prescribed fee

Penalty

Compoundable offence

Petition before the Company Law Board

197. Publication of reports of proceedings of general meetings

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Publication of reports of proceedings of General Meetings—Department's circular

Penalty

Compoundable offence

Prohibition of simultaneous appointment of different categories
of managerial personnel

197-A. Company not to appoint or employ certain different categories of managerial personnel at the same time

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Restriction on appointment of both Managing Director and Manager

Managerial personnel of companies—Adoption of new nomenclature—Need for close watch by Registrars of Companies—Department's view

Employment and Appointment—Section 197-A, 267 and 316 (1)

Adoption of American nomenclature of President and Vice-President—Whether permissible ?

Whether appointment of persons styled as Special Directors, Director Administration, etc. is desirable and permissible

Clarification 1

Clarification 2

Managing Director is principal officer for tax purposes

Penalty

Managerial remuneration, etc.

198. Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Overall limit of managerial remuneration

Net profits

Remuneration

Clarifications regarding amendments made under the Companies (Amendment) Act, 1988—Department's view

Appointment and remuneration of managerial personnel

Whole-time Sales Manager or Works Manager appointed on the Board of Directors will be a whole-time Director

Deputy Managing Director

Remuneration paid to Technical Directors or Directors designated as Technical Advisors whether outside the purview of Section 198 (1)

Remuneration to Director working as Technical Adviser—Whether to be included in 11 per cent. managerial remuneration

Managerial remuneration—Clarification regarding perquisites

Increase in the remuneration of Directors whether in accordance with the provisions of Section 198

Managerial remunerations—Payment of—Supreme Court decision in Union of India v. Mahindra & Mahindra Ltd.

Whether banking companies are to obtain approval of the Central Government where remuneration exceeded prescribed limits

Remuneration to Deputy Managing Director/Whole-time Director Sales Manager/Works Manager—Whether outside provisions of the section

Whether sitting fees paid for attending Committee Meetings are excluded from 11 per cent. managerial remuneration

Criteria/Policy for approving proposals involving payment of remuneration in excess of prescribed limits in the event of absence or inadequacy of profits

When approval of the Central Government is not required as per in terms of the sub-section as recast by the Companies (Amendment) Act, 1988 ?

Scope of the sub-section—Whether requires modification ?

Whether minimum remuneration can afford protection to element of commission on net profits payable to such managerial personnel ?

Increase in remuneration of Directors on the ground that commission payable earlier being discontinued—Whether in accordance with proviso to sub-section (4) ?

Approval of Central Government—Department's circular

Central Governments' power of approval is quasi-judicial

Private company

Government company

Banking company

Penalty for default

Compoundable offence

199. Calculation of commission, etc., in certain cases

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Commission or remuneration to employees based on profits

Section 199—Whether applies to private companies ?—Department's view

200. Prohibition of tax-free payments

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Tax-free remuneration prohibited

Exceptions to the section

Penalty

201. Avoidance of provisions relieving liability of officers and auditors of company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

No indemnity to officers

Reimbursement of the expenses to the Managing Directors etc. in connection with criminal cases instituted against them—Department's view

Prevention of management by undesirable persons

202. Undischarged insolvent not to manage companies

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Object of the section

Undischarged insolvent not to manage companies

Penalty

Compoundable offence

203. Power to restrain fraudulent persons from managing companies

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the section

Court may disqualify a person from managing companies

Ground on which disqualification order may be made

Jurisdiction of the Court

Persons entitled to apply for order of disqualification

Opportunity of hearing to concerned person

Official Liquidator or Liquidator may adduce evidence

Period of disqualification

Order does not affect criminal liability

Penalty

Compoundable offence

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

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Appointment not to exceed 5 years

Office or place of profit

Exceptions

Renewal of appointment

Restrictions on appointment of firms and body corporate to office or place of profit under a company—Contravention of Section 204 (1)—Department's view

Private company

Penalty for contravention

Compoundable offence

204-A. Restriction on the appointment of former managing agents or secretaries and treasures to any office

[Omitted by the Companies (Amendment) Act, 2000, Section 91, w.e.f. 13-12-2000.]

Dividends and manner and time of payment thereof

205. Dividend to be paid only out of profits

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Applicability of the section

'Profits', 'Profits available for distribution' and 'Profits available for dividend'

Dividend defined

Sources of dividend

Dividends to be paid only out of profits

Right to dividend

Declaration of dividend

Requirement regarding declaration of dividend out of profits arrived at only after providing depreciation—Certain queries answered

Declaration of dividend should be unconditional by companies—Department's circular

Declaration of dividends a second time out of a past year's profits will be illegal and ultra vires—Department's view

Declaration of dividend at extraordinary General Meeting

Declaration of dividends at extraordinary General Meeting of company—Whether permissible ?—Department's view

Interim dividend

Confirmation of interim dividend—Department's view

Provisions for depreciation

Clarification regarding Clause (b) of the first proviso to Section 205 (1)—Department's view

Accounting Standard (AS) 6 on Depreciation Accounting based on general principles of accounting issued by the Council of the Institute of Chartered Accountants of India

Introduction

Methods of charging depreciation

Adoption of different methods for different types of assets

Change in the method of providing depreciation

Relevant rates of depreciation for the purpose of preparation of accounts of a company

Applicability of the rates prescribed in Schedule XIV to assets existing on which Schedule XIV came into force

Pro rata depreciation

Depreciation on low value items

Computation of managerial remuneration,—Whether SLM rates given in Schedule can be used

Charging of depreciation in case of revaluation of assets

Certain issues arising from the provisions of Section 205 as amended by the Companies (Amendment) Act, 1988 clarified

Date on which the new provisions relating to depreciation become effective

Recomputation of specified period

Can higher rates of depreciation be charged

Can SLM rates be different than those specified under Schedule XIV

Determination of depreciation under Section 205 (2) (b)—Recomputation of specified period consequent upon changes in the rates of depreciation—Department's view

Modification of the above views

Computation of depreciation under Straight Line Method as contemplated in Clause (b) of sub-section (2)—Certain queries answered

Clarification 1

Clarification 2

Whether deduction of normal depreciation from WDV is for limited purpose of determining WDV

Clarifications on the provisions relating to depreciation under the Companies Act, 1956, as amended by the Companies (Amendment) Act, 1988

Date on which the new provisions relating to depreciation become effective

Recomputation of specified period

Can higher rates of depreciation be charged ?

Can SLM rates be different than those specified under Schedule XIV ?

Determination of specified period

Calculation of depreciation under the Straight-line Method

Depreciable assets for which no rate of depreciation is laid down

Declaration of dividend without providing for depreciation on immovable properties

Writing back of the depreciation on the fixed assets provided in excess in previous years

Depreciation in respect of multiple-shift working

Depreciation on Idle Assets

Where depreciation on certain assets is not admissible under the Income-tax Act/Rules

Provision for transfer of portion of profits to reserves before recommendation on dividends

Specified period regarding depreciable asset

Fixed capital and circulating capital

The Companies (Transfer of Profits to Reserves) Rules, 1975 and the Companies (Declaration of Dividend out of Reserves) Rules, 1975—Clarification regarding—Department's view

Transfer to General Reserves

Meaning of 'current profits'

Clarification of the term 'Reserves' mentioned in Companies (Transfer of Profits to Reserves) Rule, 1975

The Companies (Transfer of Profits to Reserves) Rules, 1975—Clarification regarding—Applicability to newly incorporated companies

Dividend Warrant containing information on TDS

Threshold limits for deduction of tax at source from income by way of dividends and income from units

Whether "specified period" is to be determined with reference to original cost and yearly quantum of depreciation.

Use of information technology in cash transaction of listed companies for payment of dividends

Director's powers to have reserves, power of the company to keep its profits to reserve fund and the power to capitalize the same

Payment of dividend in cash and/or capitalization of profits

Mode of forwarding dividend

Regulation of dividends on non-participating preference shares

Cause of action

Limitation

Revocation of dividend

Forfeiture of unclaimed dividends

Director's liability for improper payment of dividend

Liability of Auditors for payment of improper dividend

Shareholders' liability in respect of improper dividend

Injunction to restrain improper payment of dividend

Payment of dividends to joint-holders

Winding-up and distribution of dividend

Provision for proposed dividend—Treatment in profit and loss account and balance sheet—Department's view

Transfer of shares after declaration of dividend

Remittance of dividends by computerised means—Departmental circular

Private companies

Penalty for default

205-A. Unpaid dividend to be transferred to special dividend account

Legislative history—The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 1999 (Act 21 of 1999)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Object of the section

Declaration of dividends out of reserves

Rate of dividend

Amount to be drawn from reserves

Residual reserves

Provisions relating to unpaid dividends

Clarification regarding Section 205-A (1)—Department's view

Dividend payable to non-resident shareholders—Limitation of time under Section 205-A

Payment of unpaid/unclaimed dividend to shareholders under Section 205-A/205-B—Department's view

Payment of Filing Fees

Banks to open fixed deposit accounts for purpose of maintaining special deposit account in respect of unpaid/unclaimed dividend

Penalty

Compoundable offence

Government Company

205-B. Payment of unpaid or unclaimed dividend

Legislative history—The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1999 (Act 21 of 1999)

Scope of the section

Government company—Department's clarifications

Information to shareholders for unclaimed dividend every year with notice of Annual General Meeting—Department's view

Claiming payment of unpaid/unclaimed dividend, etc.—Department's clarification

Compulsory posting of dividend warrants by registered post only—Press release

Further Press Release

Unpaid or unclaimed dividend—Department's circular

Unclaimed dividend in winding-up

Payment of dividend and interest to be rounded-off to nearest rupee

205-C. Establishment of Investor Education and Protection Fund

Legislative history—The Companies (Amendment) Act, 1999 (Act 21 of 1999)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Purpose of the fund

Claims against funds of Investor Education and Protection Fund

Control and management of the fund

Establishment of Investor Education and Protection Fund

Investors Educations and Protections Fund Rule, 2001

Investors Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001

Notified fund under Section 206-C (1)

Interpretation of provisions of Section 205-C—Press Release

Quick redressal of complaints against companies—Press Release

206. Dividend not to be paid except to registered shareholders or to their order or to their bankers

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Dividend must be paid only to registered shareholders or to their bankers

Dividend warrants encashable only at particular branches of companies' bankers—Department's clarifications

Measures to prevent theft of refund orders—SEBI Press Release

Compulsory posting of dividend warrants by registered post—Press Release

Further Press Release

Dividend warrants/refund orders—Whether required to be sent only by registered post

Shareholders right to authorise payment to any person or to his bankers—Department's clarification

Remittance of dividends by computerised means—Departmental Circular

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Penalty for default

206-A. Right to dividend, rights shares, and bonus shares to be held in abeyance pending registration of transfer of shares

Legislative history—The Companies (Amendment) Act, 1988 (Act 31 of 1988)

Scope of the section

Applicability of the section

Issue of rights/bonus shares etc. to be held in abeyance

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

207. Penalty for failure to distribute dividends within thirty days

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Time within which dividend to be distributed

Penalty for failure to distribute dividends within 42 days from the date of its declaration

Exceptions

Jurisdiction of Courts

Clarification regarding penal provision—Department's view

Distribution of dividend to non-resident shareholder

Only Directors are punishable

Disqualification of Director on default in payment of dividend

Dividends—Penalty for failure to distribute—Conditional approval/ decla-ration of dividend by companies and non-payment of it within 42 days (now 30 days)

Distribution of dividend to non-residents Indians under FERA, 1973—Department's views

Administration by the Securities and Exchange Board of India (SEBI)

Powers of SEBI to inspect books of account, etc. and to file complaints

Limitation for filing complaint

Registrar is aggrieved person

Penalty for default

Compounding of offence

Payments of interest out of capital

208. Power of company to pay interest out of capital in certain cases

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Principle of the section

Payment of interest out of capital—Power of company to pay interest out of capital in certain cases

Fixation of rate of interest at 12% per annum—Press Note

Accounts

209. Books of account to be kept by company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Books of accounts to be kept by every company

Cost Accounting Records

Books of accounts to be maintained in indelible ink. Accounting records maintained in pencil not "proper books of accounts"—Department's view

Keeping accounts on cash or receipts basis—Whether amounts to keeping prior books of account ?

Foreign companies

Branch office accounts—Department's clarification

Location

Maintenance of books of account at a place outside the State in which companies are registered—Department's view

Submission of summarised returns to the registered office

Books of account kept by a company at a place other than registered office—Requirement of filing of notice within Registrar of Companies

Maintaining books of account at a place outside the State in which companies are registered—When desirable ?

Proper books of account

Provision for gratuity liability in the books of account

Provisions of Section 209 (3) (b) not applicable to Rural Electrification Corporation Ltd., Delhi

Inspection by Directors

Members' right of inspection of accounting records

Members' right of inspection in Section 25 company

Auditor's right of inspection of accounts

Other books and papers

Books to be preserved for eight years—Department's circular

Government company

Penalty for default and persons responsible

Foreign companies

Books, documents and registers which a company must have at its registered office—Books or documents cannot be pledged

Form and Procedure

Compoundable offence

Defence

209-A. Inspection of books of account, etc., of companies

Legislative history—The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Applicability of the section

Inspection of books and papers

What can be inspected ?

Right to inspect accounts of firms in which the company is a partner—Department's view

Right to inspect accounts of joint-venture in which the company has an interest

The inspecting officer can seek information about company's joint-ventures with other bodies that are not companies

Inspection of documents relating to appointment of former Managing Agents

Allegations of violation of Foreign Exchange Regulations and improper accounting—Order for inspection

Who can inspect ?

Inspection of books and papers of non-banking companies by the Reserve Bank of India

Powers of inspecting officer

Time and place of inspection

Investigation by Registrar under Section 209-A

Duties of Directors, officers and employees

Order for inspection of accounts

Penalty

210. Annual accounts and balance sheet

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Annual accounts and balance sheet

Provision of Section 166 applies independent of Section 210

Persons responsible for preparation

Function of balance sheet

Acknowledgment of liability

Financial year

Holding of adjourned Annual General Meeting—Department's view

Laying of balance-sheet and profit and loss account before the Annual General Meeting of the company—Circular

Annual accounts—Applicability of sub-section (4)

Different financial years for the purposes of Companies Act and Income-tax Act

Financial year as the uniform accounting year under the Income-tax Act, 1961—Grant of extension of time for holding Annual General Meetings under Section 166 (1) and permission to extend financial year under Section 210 (4), Proviso, Companies Act, 1956

Re-opening/revision of annual accounts

Before adoption by the shareholders in the Annual General Meeting

After adoption by the shareholders in the Annual General Meeting

Whether accounts once adopted and passed in Annual General Meeting can be revised in a subsequent meeting—Department's view

Punishment for default

Defence

Prosecution of Directors of a Government company without sanction

Profit and loss account for the period of construction—Department's view

Clarification regarding drawing-up of final accounts as required under Section 210 in respect of such companies which are under the process of amalgamation

Laying of unaudited balance sheet before Annual General Meeting

Limitation

Practice and Procedure

210-A. Constitution of National Advisory Committee on Accounting Standards

Legislative history—The Companies (Amendment) Act, 1999 (Act 21 of 1999)

Scope of the section

Standards of accounting specified by ICAI to continue till the new accounting standards are prescribed

Members of Advisory Committee

211. Form and contents of balance sheet and profit and loss account

Corresponding provisions

Legislative history.—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1999 (Act 21 of 1999)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Balance-sheet

Statements in balance sheets must give a 'true and fair view'

Form and contents of balance sheet

Adoption of vertical form of balance sheet—Department's view

Model form of balance sheet other than set out in Part I of Schedule VI

Requirements as per Notification GSR No. 494 (E), dated 30-10-1973 amending Schedule VI—Whether to be enforced strictly only in respect of financial years ending on or after 31-12-1973 ?

Corresponding figures for immediately preceding financial year given for each group head as a whole instead of for each item—Whether sufficient compliance of the sub-section ?

Providing for proposed dividend in profit and loss account and showing the same under the head "Current liabilities and provisions" in balance sheet—Whether statutory obligation breach of which invites prosecution ?

Clarification 1

Clarification 2

Whether general reserve can be used for redeeming preference shares ?

Whether disclosure of expenses of Auditor in connection with his services is to be made in profit and loss account ?

Treatment of debit balance and calls in advance—Whether uncommitted reserves are to be adjusted against debit balance and whether calls in advance are to be shown under the head "Current liabilities and provisions" ?

Company accounts—Some important problems.—Department's view

Charging of bonus payable to the profit and loss account

Failure to provide for taxation and proposed dividend

Auditors report to include a statement whether profit and loss account and balance-sheet comply with the accounting standards referred to in Section 211 (3-C) of the Companies Act, 1956

ICAI Standards to continue till new standards are formulated

Statutory applications under Section 211

Power of exemption and modification

Exemption to companies engaged in cultivation or processing of tea, or both, from disclosing in profit and loss account certain information—Notifications

Outstanding dues to Small Scale Industrial Undertakings—Notification GSR 376 (E), dt. 22-5-2002

Application by hotel companies for exemptions—Notification GSR 365 (E), dt. 14-5-2002

Balance-sheets of companies engaged in the generation and supply of electricity—Department's view

Applications seeking exemption under Section 211 (4) of the Companies Act, 1956—Clarification

Exemptions to companies covered under special Acts

Balance sheet figures—For what purpose can be relied on ?

Accounts maintained on cash basis not proper

Persons responsible for preparing balance-sheet etc

Offence—Whether a continuing offence ?

Limitation

Penalty for default

Compoundable offence

212. Balance sheet of holding company to include certain particulars as to its subsidiaries

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Applicability of the section

Balance sheet of holding company must include particulars as to its subsidiaries

Exemption

Guidelines for filing statutory applications under Section 212

Approval for publication of financial highlights of subsidiary—Department's clarification

Persons responsible

Defence

Penalty for default

Compoundable offence

213. Financial year of holding company and subsidiary

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Extension of financial year of holding company and subsidiary company

Transitory provision

214. Rights of holding company’s representative and members

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Rights of holding company's representatives and members

Investigation under Section 235

Penalty for default

Compoundable offence

215. Authentication of balance sheet and profit and loss account

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Applicability of the section

Authentication of balance sheet and profit and loss account

Annual accounts—Authentication of—Whether Board of Directors must consider annual accounts and approve them before the same are handed over to statutory Auditors—Department's view

Authentication of the annual accounts by the Secretary of a company

Authentication of the balance sheet and profit and loss account and signing of the same by the Auditors

Completion of audit before approval of accounts

Banking companies

Effect of admission

Acknowledgment

Co-Director's liability

Penalty for default

216. Profit and loss account to be annexed and auditors’ report to be attached to balance sheet

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

217. Board’s report

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies Amendment Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 1999 (Act 21 of 1999)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Report of the Board of Directors

Clarification regarding the term "material changes and commitments"—Department's view

Board's report—Whether Directors should hold another meeting to consider reservation, qualification, etc., made in Auditors' report

Particulars regarding energy conservation, technology absorption and foreign exchange earnings and outgo

Government company—Exemption in respect of disclosure of particulars regarding conservation of energy, etc. in Directors' report to HAL

Particulars of employee—Department's clarifications

Remuneration as defined in Section 198—Salary and perquisites to be indicated in terms of actual expenditure

Valuation of perquisites

Last employment

Particulars of employees in a loose statement

Managing Director is not an employee of the company

Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988—Applicable to companies whose annual accounts have closed on or after April 1, 1989

Companies (Particulars of Employees) Rules, 1975—Certain queries regarding terms "remuneration" and "last employment held" and other matters connected therewith clarified

Board's report to include Director's Responsibility Statement

Board's report to specify reasons for failure to complete buy-back within time

Audit committee

Certificate of compliance from whole-time Secretary in practice

Comments on the qualification in Auditors' report

Board's remarks on the Auditors' Report—Department clarification

Date and signing of Board's Report

Information required to be disclosed in the Board report under other Acts

Under Reserve Bank of India's Directions

For non-banking miscellaneous companies

For residuary non-banking companies

For non-banking non-financial companies

Under SEBI Listing Agreements

Form and Procedure

Jurisdiction for complaints

Penalty for default

Compoundable offence

218. Penalty for improper issue, circulation or publication of balance sheet or profit and loss account

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Compoundable offence

219. Right of member to copies of balance sheet and auditors’ report

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Shareholder's statutory right—Private company

Copy of balance sheet on demand

Persons not entitled to balance sheet

Time

Supply of balance sheet, etc. by listed companies

Section 25 companies

Format of abridged statements—Department's clarification

Penalty for default in not sending copy on demand

Penalty for default in not sending copies of balance-sheet, etc. to members

Compoundable offence

Petition before the Company Law Board

Private company

220. Three copies of balance sheet, etc., to be filed with Registrar

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1977 (Act 46 of 1977)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Object of the section

Three copies of balance sheet and profit and loss account must be filed with the Registrar and a copy with the Reserve Bank

Laying of balance-sheet and profit and loss account before the Annual General Meeting—Department's view

Filing of Board's report alongwith the accounts with the Registrar

Accounts may be filed with the Registrar without Directors' report or notice of the Annual General Meeting

Signing of balance sheet

Private company

Filing of the profit and loss accounts of private limited companies—Department's view

Inspection of annual accounts of private companies in the office of the Registrar of Companies

Whether separate filing fee is required for profit and loss account and whether only members are to be permitted to inspect profit and loss account—Departments' circular

Three obligations

Date of filing of balance sheet and profit and loss accounts of companies with the Registrar of Companies in view of change in Section 3 of the Income-tax Act—Department's view

Disqualification of Director on failure to file annual accounts

Whether the offence is of a continuing nature

Non-filing of balance sheet is a continuing offence—Department's view

Filing of prosecution by department—Department's circular

Certain companies to send balance sheet to Reserve Bank—Reserve Bank Directions

Companies to send annual report to MRTP authority

Penalty and consequences of default

Compoundable offence

221. Duty of officer to make disclosure of payments, etc.

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Duty of officer to make disclosure of payments

Penalty for default

Compoundable offence

222. Construction of references to documents annexed to accounts

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Documents annexed

223. Certain companies to publish statement in the Form in Table F in Schedule I

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Copy of the statement to members or creditors

Penalty for default

Compoundable offence

Audit

224. Appointment and remuneration of auditors

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Applicability to private companies

Government company—Department's circular

Need for appointment of independent Auditors—Suggestion regarding

Whether statutory Auditor of company can also be its internal Auditor?

Whether statutory Auditor can undertake work of writing books of account?

Applicability to foreign companies

Audit and Auditors—Appointment

Appointment of first Auditors

Ceiling on number of company audits

Guarantee companies are to be excluded from reckoning the specified number of audit companies—Department's clarification

Whether the branch audit of the Indian companies and the audit of the Indian Business Accounts of the foreign companies are to be included while calculating the specified number—Explanation I of sub-section (1-C) of Section 224—Department's view

Certificate by Auditor given under the proviso to the sub-section—Applicability of sub-section (1-B) and (1-C)

Tenure of office of the Auditors—Department's view

Notice of appointment

Signing of Form 23-B by Auditors in firm’s name without disclosing identity of signatory—Whether permissible?

Inspection

Requirement of sending certificate by Auditors to Registrar—Whether intimation to Registrar required to be given by Auditor under sub-section (1-C) should be in any particular form and whether it is to be registered by Registrar and any fee is to be charged?

No filing fee for Form No. 23-B

Casual vacancy

Resignation of Auditor

Removal of Auditor

Re-appointment of retiring Auditors

Appointment/re-appointment of Auditors—Department's circular

Special notice for appointment of new Auditor necessary—Department's circular

Appointment of Auditor by the Central Government

Power of the Central Government to appoint an Auditor under Section 224 (3)—Department's clarification

Application to the Regional Director under sub-section (3)

Application to the Central Government under Section 224 (3)—Payment of fees—Clarification regarding—Department's clarification

Remuneration of Auditors—Department's view

Penalty for default

Compoundable offence

224-A. Auditor not to be appointed except with the approval of the company by special resolution in certain cases

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

Scope of the section

Subscribed share capital

Material date for holding 25% of the subscribed share capital—Department's view

Nationalised bank

Appointment of Auditors of Government and certain other companies

Failure to appoint Auditor

Clauses (a) to (c) are not mutually exclusive—Clarification on provisions of Section 224-A of the Companies Act, 1956—Departmental Clarification

225. Provisions as to resolutions for appointing or removing auditors

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Special notice

Appointment of Auditor other than a retiring Auditor—Notice to retiring Auditor—Department's view

Wording of special notice under Section 225

Mode of sending notice to retiring Auditor

Whether service of copy of special notice to retiring Auditors is to be effected by registered post

Removal of first and any other Auditor

Auditor's right

Professional misconduct

Intervention of Company Law Board

Instance of unjustifiable removal of retiring Auditors

Petition before the Company Law Board

Penalty for default

Compoundable offence

226. Qualifications and disqualifications of auditors

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Qualifications and disqualifications of Auditors

Appointment of the proprietorship firm must be by proprietor's name—Department's view

Disqualifications

Appointment of relative of a Directors as Auditor—Department's circular

Statutory Auditor of a company cannot also be its internal Auditor—Department's view

Chartered Accountant rendering professional service is not an officer or employee of the company

Certain situations where Auditor's independence might be impaired

Disqualification due to holding of security

Automatic vacation of office

Change in the constitution of firm

Penalty for default

Compoundable offence

227. Powers and duties of auditors

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 1999 (Act 21 of 1999)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Auditor—An agent of the shareholders

Auditor not a detective or a critic of management decisions

Though an Auditor is supposed to be a good watch-dog, he is not a bloodhound

Auditor not an adviser

Auditor not an insurer

Auditors are not valuers or advisers

Rights of Auditors

Right to have books, accounts and vouchers, and necessary information

Right to receive Notice of, and to attend, General Meetings

Right to take legal, expert or technical advice

Right to have the remuneration payable to him

Right to indemnity

Right to plead limitation

Right to working papers

Duties of Auditors

Auditor's duty to be honest and to exercise reasonable care

Duty to report to the Members of the company and to attend meetings

Duty to examine the books of the company and to find out whether the books themselves show the company's position

Duty to check the cash

Duty to make certain inquiries under the Act

Auditors must make themselves thoroughly aware of the Articles of Association of their company

Duty to inform the members if there be any non-disclosure in the balance-sheet

Duty to make personal inspection of securities that are in the custody of a person or company with whom it is not proper that they should be left

Duty to deliver books and documents to liquidator

Duty with regard to checking of window-dressing

Duty with regard to disclosure of bad and doubtful debts

Duty with regard to secret reserves

Auditor's duty to make certain inquiries

Auditors' report under the Banking Regulation Act and special duties of Auditors

Report of Auditor

True and fair view

Statement on 'true and fair view'—Department's view

Whether Manufacturing and other Companies (Auditor's Report) Order, 1975 is applicable to companies licensed under Section 25

Manufacturing and Other Companies (Auditor's Report) Order (MAOCARO), 1988

Companies (Auditor's Report) Order (CARO), 2003

Effective date of CARO, 2003

Companies to which CARO, 2003 is applicable

Activity of the company irrelevant for the applicability of CARO, 2003

Applicability to branches of a company

Exemption of companies from CARO, 2003

Exemption of private companies from CARO, 2003

Distinctive features of CARO, 2003

Reporting requirements which are omitted in CARO, 2003

New reporting matters and issue in CARO, 2003

Qualified answers/Inability to answer a question

Sequence of items appearing in the Auditor's Report

Material violation of law and accounting practices to be reported—Department's view

Press Note

Completion of audit before approval of the balance sheet by the Board of Directors—No contravention of Section 215—Department's view

Reference to the branch audit in Auditors' Report

Valuation of shares by Auditors

Responsibility for auditing balance sheet or accounts submitted by individuals

Liabilities of Auditors

Compensation

Liabilities under the Companies Act

Who can prosecute ?

Criminal liabilities

Professional misconduct

Reliefs

Defence

Indemnity

Penalty for default

Compoundable offence

228. Audit of accounts of branch office of company

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Branch

Place of manufacture to be regarded as a branch office—Department's view

Whether, for appointment of Branch Auditors, procedure laid down in Section 225 is to be followed ?

Audit of accounts of branch office of the company

Rights of company's Auditor

Appointment of Branch Auditor

Powers and duties of Branch Auditor

Branch Auditor to forward his report direct to the statutory Auditor—Department's view

Audit of the branch accounts may be carried out at the head office

Definition of "accounts" used in Section 228 (3) (c)

Branch Audit Report

Remuneration of Branch Auditor

Exemption from branch audit

Revocation of Exemption

Exemption of banking companies from the requirement of branch audit

Clarification I

Clarification II

Period and validity of exemption

Guidelines for making applications for exemption

Penalty for default

Compoundable offence

229. Signature of audit report, etc.

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Signature on Auditor's report, etc

Manner of signature or authentication

Signing of Auditors' report—Department's view

Penalty for default

Compoundable offence

230. Reading and inspection of auditor’s report

Corresponding provisions

Scope of the section

Reading and Inspection of Auditor's Report

Amendment of the Auditor's report

Penalty for default

Compoundable offence

231. Right of auditor to attend general meeting

Corresponding provisions

Scope of the section

Penalty for default

Compoundable offence

232. Penalty for non-compliance with Sections 225 to 231

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Penalties

Compoundable offence

233. Penalty for non-compliance by auditor with Sections 227 and 229

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Penalty for wilful default

Liabilities of Auditors

Compoundable offence

233-A. Power of Central Government to direct special audit in certain cases

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Who can be a special Auditor

Approval of appointment of Cost Accountant

Special Audit—Powers conferred by Section 233-A will be exercised in special circumstances—Government to exercise its discretion as to who should be appointed as special Auditor—Department's view

Powers and duties

Directions to furnish information

Report of special Auditor and action thereon

Expenses

Applicability to foreign companies

Delay in submission of Cost Audit report

233-B. Audit of cost accounts in certain cases

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Audit of cost accounts in certain cases

Qualifications

Appointment in firm's name—Department's view

Cost Auditor should not also be the internal Auditor of the company

Appointment

Ceiling on number of cost audits

Cost Auditor's powers and duties

Cost Audit Report

Disclosure of full details in the cost audit report—Department's view

Previous years' figures

Appointment of Cost Auditors in firm's name—Whether Cost audit report could be signed by merely fixing firm's name

Central Government's power

Prescribed form

Penalty

Compoundable offence

Power of Registrar to call for information, etc.

234. Power of Registrar to call for information or explanation

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Registrar's powers—On perusal of documents

On Complaints

Probe into balance sheets of past years by Registrar's office—Whether could be roving

Clarification regarding power of Registrar to call for information and explanation—Department's view

Subsequent withdrawal of complaint—Registrar's power to call for information

Difficulties experienced by companies in complying with the requirements of item 7 (d) of Schedule V to the Companies Act

Harmonisation of practices over power to call for information

Resignation by a Director

Duty of the company

Consequences of non-compliance

Search and seizure

Information or explanation supplied to form part of the record

Power of Registrar to prefer police complaint

Report to the Central Government

Foreign company

Transfer of interest, foreign company holding shares in Indian company to another foreign company

Compoundable offence

234-A. Seizure of documents by Registrar

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Application by Registrar

Reasonable ground of belief

Magistrate's power

Return of books and papers seized

Foreign companies

Investigation

235. Investigation of the affairs of a company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Report by Registrar

Application by members

Power of Central Government

Investigation of affairs of Government company

Guidelines for ordering investigation under Sections 235, 237 and 247—Department's view

Investigation of affairs of a subsidiary company

Alternative remedy

Nature of investigation

Enforcement of the orders of the Company Law Board

Order based on compromise

Enforcement of unsigned compromise order

Investigation by Inspectors in other cases

Time-limit for report

Investigation report

Petition before the Company Law Board

Unregistered companies

Foreign companies

236. Application by members to be supported by evidence and power to call for security

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Prelude to application under Sections 397 and 398

Sections 236 (a), 477 and 543—Effect

237. Investigation of company’s affairs in other cases

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of investigation

Central Government's duty

Powers of the Court

Discretionary powers of Central Government

Prerequisites to the making of an order of investigation—Departments view

Enquiries made by shareholders regarding accounts

To what extent the power is justiciable ?

Strict view of the provisions

Writ petition for order of investigation

Order of investigation not a judgment

Locus standi to move the Court for investigation

Application to the Company Law Board

Appointment of Receiver, Manager or Administrator no bar to investigation

Whether order of investigation appealable ?

Jurisdiction of Company Law Board exclusive

No other authority has power to order investigation

Extension of time for investigation

Applicability of the section to foreign companies

238. Firm, body corporate or association not to be appointed as inspector

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

239. Power of inspectors to carry investigation into affairs of related companies

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Power of Inspectors to investigate into affairs of related companies

Approval of Central Government

Fact-finding nature

Procedure of investigation

Report

Report of Inspector—Whether a privilege

240. Production of documents and evidence

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Production of documents and evidence

Administrative

Incriminating questions

Admissibility of evidence

Examination on oath

Penalty for non-compliance with the order of the Inspector

Retention of books and papers

Examination notes

Penalty

Applicability to foreign companies

Penalty for default

Compoundable offence

240-A. Seizure of documents by inspector

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Magistrate's power

Retention of documents by Inspector

Code of Criminal Procedure

241. Inspectors’ report

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Reports

Report to be sent to the company or to other body corporate

Report to be supplied to other persons

Publication of report

Publication of Inspector's report—Criterion for selection—Department's view

Consequences of Inspector's Report

Fees for copy of the Inspector's report

Foreign companies

242. Prosecution

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Prosecution by Central Government

Assistance in prosecution

Inspector's Report is opinion not admissible as evidence

243. Application for winding up of company or an order under Section 397 or 398

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Application for winding-up of companies

Application under Sections 397 and 398

Function of the officers authorised by the Government for filing winding-up petition

Other remedies not barred

Winding-up orders made

Writ—When cannot be issued ?

Other person

244. Proceedings for recovery of damages or property

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Proceedings for recovery of damages or property

Costs

245. Expenses of investigation

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Expenses of Investigation

Penalty

Recovery of expenses

Liability to be reimbursed

Contribution

Inability to recover expenses

Foreign companies

246. Inspectors’ report to be evidence

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Inspector's report

Authentication of copies

247. Investigation of ownership of company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Powers of Inspector

Procedure of investigation

Time limit for report

No right to copy of the report

Expenses

Purpose of protection under Section 635-B—Department's view

248 . Information regarding persons having an interest in company, or in body corporate or firm acting as managing agent thereof

[Omitted by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000.]

249. Investigation of associateship with managing agent, etc.

[Omitted by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000.]

250. Imposition of restrictions upon shares and debentures and prohibition of transfer of shares or debentures in certain cases

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the section

Imposition of restriction on shares or debentures

Change in composition of the Board of Directors

Variation of order

Debentures

Penalty for contravention

Compoundable offence

Complaint before the Company Law Board

250-A. Voluntary winding-up of company, etc., not to stop investigation proceedings

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Certain proceedings will not affect investigation

251. Saving for legal advisers and bankers

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Privileged communications

chapter Ii

directors

Constitution of Board of Directors

252. Minimum number of directors

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Parliamentary Standing Committee on Second Amendment Bill, 1997

Government's views

Committee's recommendation

Scope of the section

Company's affairs carried on by Directors

Directors obligatory

Proportional representation on the Board of Directors

True position of Directors

Directors and Members in General Meeting

Board of Directors and the Managing Director

Director's fiduciary position

Extent of joint and several responsibility

Rights of Directors

Directors' powers

Limitation of powers

Ultra vires acts of Directors

Indemnification

Directors' remuneration

Liabilities of Directors

Duties of Directors

Misrepresentation by Directors

Delegation by Directors

Removal of Director

Suit for removal of Director

Resignation

General observations

Knowledge of a Director

Penalty

253. Only individuals to be directors

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Appointment of Directors

Employee of shareholder-company cannot be a Director

254. Subscribers of memorandum deemed to be directors

Corresponding provisions

Scope of the section

Object of the section

Appointment of first Directors

Appointment of Additional Directors

If Articles of Association make provision for appointment of first Directors—Section 254 is not attracted—Department's view

Return of particulars of subscribers of Memorandum as Directors not necessary

255. Appointment of directors and proportion of those who are to retire by rotation

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Appointment of Directors

Implied agreement

Managing Director

Private company

Nomination agreement between sellers and buyers of shares

Directors appointed by Financial Institutions

Retirement of Directors by rotation

Appointment of persons styled as special Directors, Executive Directors, etc

Subscribers to continue till Directors are appointed at the first Annual General Meeting—Department's Clarification

Public company's Articles may provide for greater number of rotational Directors

Public company's Articles may provide that all Directors would annually retire

Rotational Directors in case of private companies—Department's view

Directors appointed by the banks and public financial institutions on the Boards of the Company—Arrangement with the State Bank/subsidiary banks/nationalised banks on appointment of Directors to prevail

Government company

Re-election of retiring Director

256. Ascertainment of directors retiring by rotation and filling of vacancies

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

Scope of the section

Ascertainment of Directors retiring by rotation and filling of vacancies

Construction of the word 'so'

Annual General Meeting not held

Meaning of retiring Directors—Department's view

Director due to retire shall cease to hold office from the date on which the Annual General Meeting is due to be held

Re-election and filing of return

All the first Directors should retire at the first Annual General Meeting, except those specified in the Articles who need not retire—Department's view

How many Directors to retire from Board of Directors having 5 Directors of which one is ex-officio Director

Company may provide in its Articles that all the Directors are liable to retirement by rotation

Public company's Articles may provide for greater number of rotational Directors than specified in the Act

Applicability of the section to company becoming public company under Section 43-A—Position regarding

Reserve Bank and companies carrying on banking business

Applicability of the section to private companies

Order for deletion of Article providing for retirement of Directors from a a private company's Articles

Government company

257. Right of persons other than retiring directors to stand for directorship

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

Scope of the section

Right of persons other than retiring Directors to stand for directorship—Department's view

Additional Directors and persons appointed to fill casual vacancies

Section 257 will be attracted in case of Directors appointed by the Articles of a newly registered company

Deposit of Rs. 500 shall stand forfeited if the person is not elected as a Director

Directors—Appointment—Liberalisation of certain provisions

Fourteen-days' notice of nomination, hour for filing

Candidates to be voted on individually

Civil Court's jurisdiction

Appointment of Directors on the Board by another public company—Amendment of Articles of Association of the company in contravention of Sections 255, 256 and 257—Department's view

Holding company and its subsidiary

Private company

Sub-section (1) as well as sub-section (1-A) shall not apply to a private company—Department's view

Government company

Section 25 companies exempted

Penalty for default

Compoundable offence

258. Right of company to increase or reduce the number of directors

Corresponding provisions

Scope of the section

Right of company to increase or reduce the number of its Directors

Suit for injunction—Whether maintainable ?

259. Increase in number of directors to require Government sanction

Corresponding provisions

Legislative history.—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

Scope of the section

Government sanction necessary for increasing number of Directors

Increase in the number of Directors—Government policy—Department's view

Private company

Government company

Section 25 companies exempted

Prescribed Form and Procedure

Penalty

260. Additional directors

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Appointment of Additional Directors

Sections 255, 258 and 259

Additional Director when ceases to hold office—Department's views

Additional Director does not retire by rotation—Section 257 should be complied with on his election as a Director at the next Annual General Meeting—Department's views

Where an Additional Director is appointed as a Director in Annual General Meeting, the change should be notified to the Registrar under Section 303 (2)—Department's views

Additional Director as Managing Director—Department's view

Adjourned Annual General Meeting and Additional Directors

Power to appoint when single Director left in office

Meeting necessary for appointmentment of Director

Judicial non-interference in appointment of Directors

Filing of consent not necessary

261. Certain persons not to be appointed directors, except by special resolution

[Omitted by the Companies (Amendment) Act, 2000, Section 129, w.e.f. 13-12-2000.]

262. Filling of casual vacancies among directors

Corresponding provisions

Scope of the section

Object of the section

Casual vacancy

Filling of casual vacancy and power to co-opt Directors

Provisions of the Articles of Association

Valid Board of Directors

Duration—Department's view

Where a Director appointed in a casual vacancy is appointed as a Director in Annual General Meeting, the change should be notified to the Registrar under Section 303 (2)

Private company

263. Appointment of directors to be voted on individually

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Object of the section

Appointment of Directors must be voted on individually

Automatic re-appointment

Private company

Government company

263-A. Sections 177, 255, 256 and 263 not to apply in relation to companies not carrying business for profit, etc.

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Sections 177, 255, 256 and 263 not applicable to Associations that are not for profit-making or profit-sharing

264. Consent of candidate for directorship to be filed with the company and consent to act as director to be filed with the Registrar

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

Scope of the section

Restrictions on appointment and/or advertisement of Directors

Filing of written consent with the Registrar when not required

Nominee Director need not file consent with the company under Section 264 (1)—Department's view

Nominee Directors required to file consent with the Registrar

Where all Directors retire simultaneously at an Annual General Meeting and are re-elected, the consent should be filed with the Registrar as there is no retirement by rotation

Need for consent of Directors of private company—Department's Circular

Filing of consent by proposed nominee Director

Directors—Filing of consent to act as Director with Registrar—Whether Additional Director, elected as Director at Annual General Meeting in which he vacated his office of Additional Director, is required to file fresh consent.

Failure to file consent with the company

Consequences of not filing the consent with the Registrar within the specified period—Department's view

Private company

Government company

Section 25 companies exempted

Penalty

Compoundable offence

Form

265. Option to company to adopt proportional representation for the appointment of directors

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Object of the section

Proportional representation for appointment of Directors

Appointment of Director by proportional representation once in three years

Duration of the appointment

Removal of Directors appointed by proportional representation

Private company

Government company

266. Restrictions on appointment or advertisement of director

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

Scope of the section

Applicability of the section

Director appointed by Articles or proposed in a prospectus

Private companies

Government company

Form and Procedure

Managing directors, etc.

267. Certain persons not to be appointed managing directors

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Certain persons not to be appointed

Moral turpitude

Conviction

Disqualification of a Director and a Manager

Meaning of the terms 'appointment' and 'employment'—Department's view

Penalty for violation

Compoundable offence

268. Amendment of provision relating to managing, whole-time or non-rotational directors to require Government approval

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Applicability of the provisions

Alteration of terms and conditions requires approval

Approval required only when an existing provision in the Articles, etc. is amended—Approval is not required for making a new provisions—Department's view

Appointment of non-rotational Directors by a group of equity shareholders not permissible

Foreign collaborators or the Financial Corporations permitted to appoint non-rotational Directors in certain cases

Approval under Section 268 not required, if appointment or re-appointment is made in terms of Section 269

Appointment of Managing Director as an employee after he ceases as Managing Director—Department's clarification

Appointment of non-rotational Directors by foreign collaborators and by public financial institutions

Filing resolution with the Registrar of Companies under Section 192

Consequence of non-approval

Form and Procedure

Private and banking companies exempted

Government companies exempted

269. Appointment of managing or whole-time director or manager to require Government approval only in certain cases

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Rs. five crores company must have a Managing Director

Managing Director to be under control of Board

Appointment or re-appointment of managing or whole-time Director

Power of Central Government to accord approval subject to conditions

Fit and proper person

No remuneration where removal fully justified

Clarifications regarding amendments made under the Companies (Amendment) Act, 1988—Department's view

Sitting fee to managing and whole-time Director

Liberalisation measures for corporate management—Increase in monetary limits and age limits for managerial appointments

Appointment of Managing Director—Methods specified in the Act—Clarifications and Circulars under Section 269, issued prior to its substitution by the Companies (Amendment) Act, 1988

Managing Director and whole-time Director—Clarification

Technical Director

Whether a whole-time employee is a whole-time Director

Branch Manager if appointed as a Director would be a whole-time Director

Appointment of professional persons like Chartered Accountants, Solicitors etc. as Directors, Managing Director of companies

Appointment of Secretary as Director of the company—No approval required under Section 269

Appointment of Managing Director in cases where he is interested in the sole-selling agents

Re-election of a Managing Director as a Director—Whether approval is necessary ?

Conversion of a private company into a public company by virtue of Section 43-A—No fresh appointment is involved

Managing Director must be a Director

Adoption of American nomenclature of President and Vice-President—Registrars should ensure that all the statutory provisions relating to Managing Directors are complied with

Timely application for payment/waiver of managerial remuneration—Department's Clarification

Medical expenses in excess of limits

Department's clarification I

Department's clarification II

Expenses incurred on travelling and transportation of personal effects of managing or whole-time Director or Manager—Department's circular

Approval for appointment of relative of Managing Director as whole-time Director—Department's Clarification

Whole-time Director—Period of appointment

Relaxation of age of appointee by Notification, dated 12-9-1996

Department's clarification

Department's Press Note

Removal of Managing Director

Form and Procedure

Private company

Government company

Filing of return

Approval of appointment/re-appointment and remuneration payable to managing/whole-time Directors or Managers—Revision of appli-cation forms to provide additional information

Clarification 1

Clarification 2

Application for approval of Government for appointment/re-appointment—Need for applying simultaneously for minimum remuneration

Fee for condonation in respect of filing of Form No. 25-C belatedly with the Registrar of Companies—Charging of additional fee

Penalties for default

Failure to vacate office

Contravention of Schedule XIII

Contravention of Company Law Board's order

Non-compoundable offence

Share qualification

270. Time within which share qualification is to be obtained and maximum amount thereof

Corresponding provisions

Scope of the section

Qualification and disqualifications of Directors

Director must acquire qualification shares within two months after appointment

Director of a new company after incorporation, shares may be allotted only after complying with Section 70—Department's view

Quantum of shares

Increase in qualification shares

Vacation of office and penalty

Qualification shares in a private company

Penalty

Compoundable offence

271. Filing of declaration of share qualification by director

[Omitted by Act 31 of 1965, Section 34, w.e.f. 15-10-1965.]

272. Penalty

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of section

Applicability of the section

Contravention of Section 270

Court's jurisdiction

Compoundable offence

273. Saving

Corresponding provisions

Scope of section

Qualification shares in private companies

Subject Index


Indian Company Law Volume 3

Indian Company Law

Volume 3

Contents
At-A-Glance

 

Foreword

Preface to the Eleventh Edition

Preface to the Tenth Edition

Preface to the Ninth Edition

A word from the publishers

Detailed Contents

Abbreviation

Comparative Table

Table of Cases

Subject Index

Section

Disqualifications of directors

274. Disqualifications of directors

Restrictions on number of directorships

275. No person to be a director of more than fifteen companies

276. Choice to be made by director of more than fifteen companies at commencement of Act

277. Choice by person becoming director of more than fifteen companies after commencement of Act

278. Exclusion of certain directorships for the purposes of Sections 275, 276 and 277

279. Penalty

Retiring age of directors

280. [* * *]

281. [* * *]

282. [* * *]

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

Board’s powers and restrictions thereon

291. General powers of Board

292. Certain powers to be exercised by Board only at meeting

292-A. Audit Committee

293. Restrictions on powers of Board

Political contributions

293-A. Prohibitions and restrictions regarding political contributions

293-B. 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

294-A. Prohibition of payment of compensation to sole selling agents for loss of office in certain cases

294-AA. Power of Central Government to prohibit the appointment of sole selling agents in certain cases

295. Loans to directors, etc.

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

298. [* * *]

Procedure, etc., where director interested

299. Disclosure of interest 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

302. Disclosure to members of director’s interest in contract appointing manager, managing director

Register of directors, etc.

303. Register of directors 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’ shareholdings

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. Provisions for increase in remuneration to require Government sanction

311. Increase in remuneration of managing director on re-appointment or appointment after Act 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. [* * *]

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

318. Compensation for loss of office not permissible except to managing or whole-time directors or to directors who are managers

319. Payment to director, etc., for loss of office, etc., in connection with transfer of undertaking or property

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

324. [* * *]

324-A. [* * *]

325. [* * *]

325-A. [* * *]

Appointment and term of office

326. [* * *]

327. [* * *]

328. [* * *]

Variation of managing agency agreement

329. [* * *]

Special provisions regarding existing managing agents

330. [* * *]

331. [* * *]

Restrictions on number of managing agencies

332. [* * *]

Right to charge on assets

333. [* * *]

Vacation of office, removal and resignation

334. [* * *]

335. [* * *]

336. [* * *]

337. [* * *]

338. [* * *]

339. [* * *]

340. [* * *]

341. [* * *]

342. [* * *]

Transfers of, and succession to, office

343. [* * *]

344. [* * *]

345. [* * *]

Changes in constitution of firms and corporations

346. [* * *]

347. [* * *]

Remuneration of managing agents

348. [* * *]

349. Determination of net profits

350. Ascertainment of depreciation

351. [* * *]

352. [* * *]

353. [* * *]

354. [* * *]

355. Saving

Appointments as selling and buying agents

356. [* * *]

357. [* * *]

358. [* * *]

359. [* * *]

360. [* * *]

361. [* * *]

362. [* * *]

363. [* * *]

Assignment of, or charge on, remuneration

364. [* * *]

Compensation for termination of office

365. [* * *]

366. [* * *]

Other rights and liabilities not affected on termination of office

367. [* * *]

Restrictions on Powers

368. [* * *]

369. [* * *]

370. Loans, etc., to companies under the same management

370-A. 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 370 or 370-A

372. Purchase by company of shares, etc., of other companies

372-A. Inter-corporate loans and investments

373. Investments made before commencement of Act

374. Penalty for contravention of Section 372 or 373

375. [* * *]

376. Conditions prohibiting reconstruction or amalgamation of company

377. [* * *]

chapter iv

a. secretaries

378. [* * *]

379. [* * *]

380. [* * *]

381. [* * *]

382. [* * *]

383. [* * *]

383-A. 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

387. Remuneration of manager

388. Application of Sections 269, 310], 311, 312 and 317 to managers

388-A. 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 Tribunal

388-B. Reference to Tribunal of cases against managerial personnel

388-C. Interim order by Tribunal

388-D. Decision of the Tribunal

388-E. Power of Central Government to remove managerial personnel on the basis of Tribunals decision

chapter v

arbitration, compromises, arrangements and reconstructions

389. Power for companies to refer matters to arbitration.

390. Interpretation of Sections 391 and 393

391. Power to compromise or make arrangements with creditors and members

392. Power of Tribunal 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

394-A. Notice to be given to Central Government for applications under Sections 391 and 394

395. Power and duty to acquire shares of shareholders dissenting from scheme or contract approved by majority

396. Power of Central Government to provide for amalgamation of companies in public interest

396-A. Preservation of books and papers of amalgamated company

chapter vi

prevention of oppression and mismanagement

A. Powers of Tribunal

397. Application to Tribunal for relief in cases of oppression

398. Application to Tribunal 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 Tribunal on application under Section 397 or 398

403. Interim order by Tribunal

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

409. Power of Tribunal to prevent change in Board of directors likely to affect company prejudicially

chapter vii

constitution and powers of advisory committee

410. [* * *]

411. [* * *]

412. [* * *]

413. [* * *]

414. [* * *]

415. [* * *]

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

424. Application of Sections 421 to 423 to receivers and managers appointed by Tribunal and managers appointed in pursuance of an instrument

part vi-a

Revival and rehabilitaion of sick
industrial companies

424-A. Reference to Tribunal

424-B. Inquiry into working of sick industrial companies

424-C. Powers of Tribunal to make suitable order on completion of inquiry

424-D. Preparation and sanction of schemes

424-E. Rehabilitation by giving financial assistance

424-F. Arrangement for continuing operations, etc., during inquiry

424-G. Winding up of sick industrial company

424-H. Operating agency to prepare complete inventory, etc.

424-I. Direction not to dispose of assets

424-J. Power of Tribunal to call for periodic information

424-K. Misfeasance proceedings

424-L. Penalty for certain offences

part vii

winding up

chapter I

preliminary

Modes of winding up

425. Modes of winding up

Contributories

426. Liability as contributories of present and past members

427. Obligations of directors 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 Tribunal

Cases in which company may be wound up by the Tribunal

433. Circumstances in which company may be wound-up by Tribunal

434. Company when deemed unable to pay its debts

435. [* * *]

436. [* * *]

437. [* * *]

438. [* * *]

Petition for winding up

439. Provisions as to applications for winding up

439-A. Statement of affairs to be filed on winding up of a company

440. Right to present winding up petition where company is being wound up voluntarily

Commencement of winding up

441. Commencement of winding up by Tribunal

Levy by way of cess and formation of
Rehabilitation and Revival Fund

441-A. Levy and collection of cess on turnover or gross receipts of companies

441-B. Crediting proceeds of cess to Consolidated Fund of India

441-C. Rehabilitation Fund

441-D. Application of Fund

441-E. Power to call for information

441-F. Penalty for non-payment of cess

441-G. Refund of fund in certain cases

Powers of Tribunal

442. [* * *]

443. Powers of Tribunal on hearing petition

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

446-A. Responsibility of directors and officers to submit to Tribunal audited books of accounts

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

458. Discretion of liquidator

458-A. 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

Subject Index

 

 

 

Detailed Contents

 

Disqualifications of directors

274. Disqualifications of directors

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Word "disqualified"—Meaning

Disqualifications for appointment as Director

Sub-section (1) (g)—Effect of

Conviction for offence involving 'moral turpitude'

Liability on conviction—Prevention of fraudulent persons from management of affairs of companies

Misfeasance proceedings

Additional grounds for disqualification

Clarifications regarding disqualification of Directors under Section 274 (1) (g) in certain circumstances

Removal of disqualification by Central Government

Minor as Director

Advocate as Director

Stock Exchange company

Private company

Injunction

Disqualification of a Special Director appointed under SICA,1985, in view of new Section 274 (1) (g)

Restrictions on number of directorships

275. No person to be a director of more than fifteen companies

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Restrictions on number of directorships

Exemption

Penalty

Compoundable offence

276. Choice to be made by director of more than fifteen companies at commencement of Act

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Person is already Director of 20 companies—Whether he is required to give-up directorship of one of companies when private company in which he is Director becomes public company by virtue of Section 43-A

277. Choice by person becoming director of more than fifteen companies after commencement of Act

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section—Department's view

Private company

278. Exclusion of certain directorships for the purposes of Sections 275, 276 and 277

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Mode of calculation of directorships—Department's views

279. Penalty

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Legislative slip

Scope of the section

Penalty on default

Compoundable offence

Retiring age of directors

280. Age limit

[Omitted by Act 31 of 1965, w.e.f. 15-10-1965.]

281. Age limit not to apply if company so resolves

[Omitted by Act 31 of 1965, w.e.f. 15-10-1965.]

282. Duty of director to disclose age

[Omitted by Act 31 of 1965, w.e.f. 15-10-1965.]

Vacation of office by directors

283. Vacation of office by directors

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Applicability of the section

Vacation of office by Directors

Disqualifications which become effective immediately

Vacation of office of Director under Section 314

Disqualifying a Director

Disqualification to be effective after some time in some cases

Non-payment of calls

Acceptance of loan or any guarantee or security for loan in contravention of Section 295

Failure to disclose Director's interest in contract

Director absent himself from meeting

Resignation

Public companies cannot prescribe additional grounds for disqualification

Intimation to the Registrar of Companies

Approach by Registrar of Companies in matters of resignation by a Director—Department's Instructions

Resignation by a Director

Private company

Additional grounds for vacation of office in private companies—Department's view

Director ex-officio

Directors appointed by financial institutions

Directors appointed by the Government

Removal of Director

Jurisdiction of Courts

Penalty for default

Compoundable offence

284. Removal of directors

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Removal of Directors

Person sought to be removed should be in the position of a Director

Exclusion of Director from Board meetings

Reasons for removal—Whether essential ?

Requirements for removal of a Director

Special notice

Director's right to make representation

Removal of Directors in private companies

Filling the vacancy

Right to compensation

Pensions to Directors

Resignation of Directors

Government corporations

Powers of the Company Law Board

Meetings of Board

285. Board to meet at least once in every three calendar months

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965) (Act 31 of 1965)

Scope of the section

Object of the section

Meetings of Board of Directors

Interval between Board Meetings—Clarification regarding—Department's view

Meaning of 'month'—Department's clarification

Place of holding Board Meeting

Board Meeting to be held normally on a working day—Department's view

Board Meeting—Whether a member of a company can obtain a copy of or inspect the minutes of such meetings

Irregularities of procedure at General Meetings

Validity of acts and irregular meeting

Powers of the Central Government

Section 25 companies exempted

Penalty for default

Compoundable offence

286. Notice of meetings

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Form, contents and mode of service of the notice

Increase of capital to be specified in agenda

Notice of adjourned meeting

Ratification of improper notice

Length of notice

Contents of notice, agenda and procedure at meeting

No waiver of right to receive notice

Penalty

Compoundable offence

287. Quorum for meetings

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Total strength of the Board

Constitutions of quorum

Number of Directors actually appointed count for quorum

Quorum to be present throughout the meeting

Number of Directors below quorum

Interested Directors and quorum

Quorum in cases where Directors are interested—Department's view

Section 25 companies exempted

288. Procedure where meeting adjourned for want of quorum

Legislative history

Scope of the section

No contravention of Section 285

Public holiday

Holding of original Board Meeting on public holidays—Clarification regarding—Department's view

Resolution at adjourned meeting

289. Passing of resolutions by circulation

Corresponding provisions

Legislative history

Scope of the section

Pre-requisites to be fulfilled

Resolution passed by circulation

Business which cannot be transacted by resolution by circulation

290. Validity of acts of directors

Corresponding provisions

Scope of the section

Object of the section

Abuse of fiduciary power—What constitutes ?

Acts of a Director will be valid

Acts of a Director will not be valid

Act of de facto Directors

Validity of de facto Directors

Directors not aware of their disqualification and ratification by company

Knowledge of irregularity

Proviso

Act of a person other than the Director not covered

Court order for maintaining status quo in Board of Directors

Board’s powers and restrictions thereon

291. General powers of Board

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Powers of a company

Powers of Directors—General

Powers of the Board of Directors and restrictions on such powers

Power to institute suits and legal proceedings

Proceedings to be launched by authorised person

Proceeding under power-of-attorney

Complaint by Managing Director through power-of-attorney holder

Power to compromise disputes

Legal position of Directors.

Directors as Trustees

Directors as Agents

Difference between Director and trustee

Directors as employees of the company

Powers of individual Directors

Power to recommend dividends

No power to make ex gratia payments

Directors can lend money to their company

Powers of directors in a winding-up

Duties of Directors

Delegation of duties by Directors

Liability of Directors

Wilful misconduct

Liability for non-compliance with the provisions of the Act

Liability on conviction—Prevention of fraudulent persons from management of affairs of companies

Misfeasance proceedings

No liability for loans taken by company

Joint and several liability

Survival of cause of action even after death

Director's liability for act or default of Managing Director

Director's liability for Act or default of fellow-Director

Ratification by the shareholders of ultra vires acts of the Directors

Acquiescence

Ratification of irregular acts of Directors by the Board

Indemnity to Directors from the company

Doctrine of good faith and interference by Courts

Company having no Directors

292. Certain powers to be exercised by Board only at meeting

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Delegation of Board's powers

Borrowing power

Company's burden to prove : Loan without proper authorisation

Banks exempted

Board's powers to make loans—Department's view

Borrowing power of company, if limited—Effect

Delegation

Duty of outsider

Rights of the creditor—When not affected ?

Ultra vires borrowing

Powers to give security

Investment of funds

Board's power to make loans—Department's clarification

Transfer of shares

Section 25 companies exempted

Penalty

292-A. Audit Committee

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Government's views

Committee's recommendation

Scope of the section

Constitution of Audit Committee

Functions of the Audit Committee

Listed companies

Penalty for default

Compoundable offence

293. Restrictions on powers of Board

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1977 (Act 46 of 1977)

Scope of the section

Powers of the company which the Board can exercise only if authorised by the General Meeting

Directors cannot alienate undertaking or remit debt

Undertaking

Creation of mortgages—Department's view

Board's powers—Restrictions on—What amounts to disposal of property to attract restriction contemplated in Clause (a)

Sale of controlling interest

Sale of assets with knowledge, assent and approval of shareholders

Remission of debt

Investment of funds

Sale of trade mark

Borrowing money

Directors cannot, except with consent of the company, borrow moneys in excess

Resolution to mention specific amounts

Directors must borrow within the limit specified—Department's view

Section 293 (1) (d) not applicable to temporary loans—If borrowing is for financing expenditure of a capital nature, the ceiling specified in Section 293 (1) (d) will apply

Term 'borrowing' does not include purchase of machinery on deferred payment

Board's powers—Restrictions on—Whether periodicity of resolution to be passed in terms of Clauses (b) and (e) of sub-section (1) depends on circumstances of each case.

Contributions to charity in the form of fully paid-up shares instead of in cash—Value of shares donated should not exceed the ceiling

Section 293 is applicable to the companies granted licence under Section 25

Contingent liabilities—Department's view

Directors cannot except with consent of the company, contribute to funds

Contribution in terms of shares—Department's circular

Contribution to National Defence Fund need not to be taken into account

Contributions to political parties

Directors cannot, except with consent of the company, invest in non-trust securities

Explanations to Section 293

Effect of contravention of Section 293

Companies licensed under Section 25

Private companies exempted

Banks exempted

Penalty

Political contributions

293-A. Prohibitions and restrictions regarding political contributions

Legislative history—The Companies (Amendment) Act, 1959 (Act 65 of 1960)

The Companies (Amendment) Act, 1969 (Act 17 of 1969)

The Companies (Amendment) Act, 1985 (Act 35 of 1985)

Scope of the section

Contribution

Political purpose

Prohibitions and restrictions regarding political contributions

Some aspects for consideration regarding Section 293-A

Directly or indirectly

Expenditure incurred on advertisements in souvenirs issued by political parties—Department's clarification I

Department's clarification II

Board's powers—Prohibition regarding political contributions—Whether the section is applicable to expenditure incurred on advertisements in souvenirs, etc., issued by political parties

Providing of services to political parties in the ordinary course of business of the company—Department's view

Donation to political parties through dealers and distributors

Board resolution is necessary

Disclosure in Profit and Loss Account

Auditor's duty

Penalty

Compounding of fine

293-B. Power of Board and other persons to make contributions to the National Defence Fund, etc.

Legislative history—The Companies (Amendment) Act, 1962 (Act 43 of 1962)

The Companies (Amendment) Act, 1971 (Act 80 of 1971)

Scope of the section

Clarification of Section 293-B as inserted by Companies (Amendment) Act, 1971 with effect from 3-12-1971—Department's view

Disclosure in profit and loss account of the company

Notified funds approved for the purpose of Section 293-B

Appointment of sole selling agents

294. Appointment of sole selling agents to require approval of company in general meeting

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Object of the section

Appointment of sole selling agents to require approval of company

Opportunity should be given to the shareholders to consider the nature of the contract

Sole selling agreement must incorporate the condition that the appointment shall cease to be valid if not approved in the General Meeting—If there is no such condition the agreement will be void ab initio—Department's view

Acts done by sole selling agent before approval

Appointment of distributors

Approval linked with reality of position than description—Department's clarification

Prevention of undesirable practices in appointments of sole selling agents—Department's view

Involvement of managerial personnel in selling agency arrangements—Department's guidelines

Appointment of persons, firms, companies related, associated with Managing Director—Department's view

Central Government may call for information

Central Government may declare a selling agent as sole selling agent

Private companies

Government company

Limitation

Penalty for default

Compoundable offence

294-A. Prohibition of payment of compensation to sole selling agents for loss of office in certain cases

Legislative history—The Companies (Amendment) Act, 1965 (Act 31 of 1965)

Scope of the section

Limited compensation payable

294-AA. Power of Central Government to prohibit the appointment of sole selling agents in certain cases

Legislative history—The Companies Amendment Act, 1974 (Act 41 of 1974)

Scope of the section

Power of Central Government to prohibit appointment of sole selling agents in certain cases

Previous approval of the Central Government necessary

Appointment of Sole Selling Agents—Subsequent increase in the interest held by sole selling agents in the principal company, effect of the appointment—Department's view

Subsequent increase in paid-up capital of the company—Effect of the appointment

Sole-selling agents already approved by members, sufficient for application—Department's clarification

Notifications issued under sub-section (1)

Controlling multiplicity of applications—Department's clarification

Form and Procedure

Government company

295. Loans to directors, etc.

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Loans to Directors

Directly or indirectly

Quasi-loans

Supply of goods or property on credit

Book debts

Form of application for seeking approval of the Government—Information and documents to be furnished—Department's view

Guidelines for the grant of loan by public limited companies to their Directors for house building

House building limit raised to Rs. 10 lakhs and Government approval not required

Instructions prohibiting the Public Limited Companies from exposing themselves to the risk of standing surety on behalf of accused persons

Clarification regarding Managing Director, etc. accustomed to act

Clarification regarding applicability of the provisions of Section 295/370 in respect of intercorporate deposits

Loans to Directors—Criteria followed by Government in considering applications for approval

Unusual instances relating to loans made by the company to concerns in which Directors are interested

Clarification 1

Clarification 2

Clarification 3

Clarification 4

Department of Company Affairs Check List under Section 295/372-A

Advance not amounting to loan

Loans by or to a holding company

Exemptions

Loans, guarantees or securities provided by exempted companies—Compliance of Section 295 not required if the loans etc. are continued after the exemption under sub-section (2) of Section 295 has ceased to exist—Department's view

Penalty for default

Compoundable offence

Director's liability

Non-applicability of the section to Managers, Secretaries, employees, etc.

Government company

296. Application of Section 295 to book debts in certain cases

Legislative history.—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Book debt

Advance

Loans and advances represented by book-debts

297. Board’s sanction to be required for certain contracts in which particular directors are interested

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

Scope of the section

Object of the section

Board's sanction required for certain contracts with interested Directors

Directors cannot enter into certain contracts without the approval of the Board of Directors

Whether proviso to the sub-section, requiring approval of Central Government in the case of companies having paid-up capital of Rs. 1 crore or more, applies to contract of employment of Director as Managing Director

Powers of Central Government under Section 297 (1), proviso, delegated to Regional Directors—Clarification 1

Subsisting contracts—Department's view

Sale, purchase or supply of any goods, material or services

Sale, purchase or lease of immovable property

In case of companies having a paid-up share capital of Rs. 1 crore no contract shall be entered into except with the previous approval of the Central Government—Companies relaxed by sub-section (3) are also covered by the proviso—Only exception to this requirement is sub-section (2)—Department's view

Proviso to sub-section (1) does not apply to : (1) the supply of professional services rendered by the firms of Solicitors and Advocates, etc.; (2) the employment of a Director as managing or whole-time Director

If the approval of the Central Government is required also under Section 269 or 294-AA or Section 314 (1-B), no separate approval under Section 297 is necessary

Clarification regarding interest of Directors in hiring of office premises

Exceptions

Meaning of the words "for cash"—Department's view

Opinion of ICAI on the term "for cash"

Whether provisions of the section applicable to contracts entered into by companies with dealer on principal to principal basis—Limit specified in sub-section (2) when applicable

Limit of Rs. 5,000 is applicable to contracts for purchase and supply of goods or services in which Director, relative etc. regularly trade

Interested Directors—Contracts in which Director's are interested—Director not knowing that particular person is his relation—Whether provision of the section to be applied with discretion

Effect of non-compliance

Penalty

Compoundable offence

Government company

Banking company

Form and Procedure

298. Power of directors to carry on business when managing agent or secretaries and treasurers are deemed to have vacated office etc.

Procedure, etc., where director interested

299. Disclosure of interest by director

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Principle and object of the section

"Concern or Interest"—Connotation of

Directors to disclose their interest at the time of considering specific contract by Board to ensure that collective interest is less than 2 per cent—Suggestion regarding

Department's clarifications

In any way, whether directly or indirectly, concerned or interested

Transfer of shares by Director, but not registered—Whether still constitutes interest—Department's clarifications

Quorum at Board Meeting—Disclosure of interest by Director

Provisions apply to Government Directors also

Disclosure of interest

Interested Directors to disclose any interests they may have in any contract or Arrangement entered into by or on behalf of the company

Section 299 vis-a-vis Section 297

Scope of Section 299 as compared with Section 297—Department's view

Disclosure of interest by Directors and their collective responsibility—Department's clarification I

Clarification II

Mode of disclosure of interest

General notice of interest

Member of a 'firm'

Limit of 2% of shareholding

Requirement can be complied with by general notice of shareholding under Section 299 (3)—Department's clarification

Compliance of sub-sections (1) and (6)—Department's clarification

Nature of interest of Directors in other companies—A Director's partnership or membership or directorship in a body corporate will be deemed to constitute his interest—His being a General Manager or other employee not to constitute interest

Word 'interest' means Director's personal interest. Even if his relative has an interest the Director will be deemed to be "indirectly interested"

If the Director has transferred the shares, but the transfer is still not registered, it may be deemed to constitute an interest. (2) If the Director is registered as a trustee of shares, it will constitute an interest

General notice under sub-section (3) must cover the relevant contract in question

Compliance of sub-section (6)—Shareholding of Directors exceeding 2% of the paid-up share capital of the other company

Director can easily comply with the requirements of sub-section (6) by giving a general notice to the Board under Section 299 (3)

It is the collective responsibility of the Directors to see that the requirements of Section 299 (6) are duly complied with

Limit of 2% shareholding under Section 299 (6) is to be verified on the date on which the contract is entered

Provisions of Section 299 apply to Government Directors

Effect of non-disclosure

Non-disclosure of interest where facts already known to all Members and Directors

Failure to disclose interest—Contract voidable at the instance of the company

Consequences of non-disclosure

Compoundable offence

Form and Procedure

Section 25 companies exempted

300. Interested director not to participate or vote in Board’s proceedings

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Object of the section

Applicability of the section

Interested Director—Who is ?

Director should not participate or vote if his near relative is proposed to be appointed as a Director—Department's view

Resolution of the Board of Directors in regard to the fixation of or increase in the Director's fees—Section 300 (1) is not attracted

Prohibition of voting on any contract or arrangement in which a Director is interested

Quorum

Quorum of interested Directors—Department's view

Exceptions

Powers of the Central Government to grant exemption

Penalty for default

Compoundable offence

301. Register of contracts, companies and firms in which directors are interested

Corresponding provision

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Register of contracts, companies and firms in which Directors are interested

Period within which entries are to be made

Exceptions

Register is to be maintained in respect of all contracts or arrangements to which Section 297 or 299 applies—Department's view

Whether register of contracts has to be maintained even though Section 299 is not applicable—Register of contracts—Maintenance of

Directors to sign the register

Register to be kept at the Registered Office of the company

If the Board of Directors meeting cannot be held at the registered office, adequate notice should be given to the shareholders for inspection—Department's view

Section 25 companies exempted

Fee for inspection and obtaining extracts and copies

Exercise of power by the Court—Preliminary requisites

Penalty for default

Compoundable offence

302. Disclosure to members of director’s interest in contract appointing manager, managing director

Corresponding provision

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Disclosure to members in case of contract appointing a Manager or Managing Director

What is a contract within this section ?

Interest

Inspection of contracts at the registered office of the company

Penalty

Compoundable offence

Register of directors, etc.

303. Register of directors etc.

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Register of Directors, Managers, Secretary, Managing Director

Particulars to be sent in duplicate to the Registrar of Companies

Return to be filed within thirty days

Whether membership of Board of Trustees of Unit Trust of India and State Bank of India should be treated as directorship of a body corporate

Company can maintain the Register of Directors in loose-leaf form provided it takes all possible safeguards—Department clarifications/circular

Subscribers to Memorandum as deemed Directors, filing of particulars not necessary—Department's view

Trusteeship of the Unit Trust of India and membership of Board of State Bank of India—Department's view

Change in Directors

Re-election is not a change—Department's view

Appointment of Additional Director as Director is a change—Department's clarification

Date of resignation of Director

Duty of Director after resignation

Communication of resignation of a Director—Department's view

Text of instructions

Section 25 companies exempted

Private company

Form and Procedure

Penalty for default

Compoundable offence

304. Inspection of the register

Legislative history—The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Inspection of the Register of Directors, Managing Director, Manager

Outsiders not bound to search registers

Remedy of aggrieved person

Petition before the Company Law Board

Penalty for default

Compoundable offence

305. Duty of directors, etc., to make disclosure

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Duty of Directors, etc., to make disclosure

Changes in particulars—Filing under Sections 303 (2) and 305—Company appointing or relinquishing the Director, should inform and advise the Director to comply with Section 305—Department's view

Section 305 (1) does not apply to the subscribers to the Memorandum who are deemed to be Directors under Section 254

Penalty for default

Compoundable offence

306. Register to be kept by Registrar and inspection thereof

Corresponding provision

Register to be kept by the Registrar, and inspection thereof

Public may inspect registers in the Registrar's office

Registrar of Companies is merely an administrative authority as regards conflicting returns filed

Return filed by two rival parties—Department's view

Form of Register

Prescribed fee for inspection

Register of directors’ shareholdings

307. Register of directors’ shareholdings, etc.

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Register of Directors' shareholdings

Trust holding ought to be noted if the Director so requires

Register not to be notice to the company—Department's view

No time-limit for entry in register

Inspection of register

Register of Directors' shareholding—Whether specific mention is to be made in minutes that it was kept open and accessible at commencement of meeting

For purposes of this section certain persons are deemed to be Directors

Remedy for refusal of inspection

Petition before the Company Law Board

Government company

Penalty for default

Compoundable offence

308. Duty of directors and persons deemed to be directors to make disclosure of shareholdings

Corresponding provisions

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Notice of shareholdings of Directors and Managers to be given and brought to the Board's attention

Government company

Penalty for default

Compoundable offence

Remuneration of directors

309. Remuneration of directors

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Purpose of the section

Rights of Directors

Remuneration of Directors

Remuneration of Chairman of a State Corporation

Expenditure incurred by company on maintenance of vehicles available for the personal use of Directors

Remuneration

Monthly payments

If company has no managing or whole-time Director

If company has managing or whole-time Director or Manager

Managerial remuneration—Basis for determination of Director's remuneration—Whether remuneration paid to Director as partner of sole selling agency firm covered by the section

Payment of guarantee commission to Directors, whether 'remuneration'

Interest on advances/guarantee commission paid to Directors—Whether the same are to be included in remuneration of Directors for purposes of the section

Commission to the Directors to the extent of 1% permitted by the Act is allowed only where the Directors render some specific services—Department's view

Increased remuneration with approval of General Meeting and Central Government

If Articles or General Meeting authorises

Increased remuneration with approval of Central Government

Limit on the remuneration of an individual Director under Section 309 (3)

Approval of appointment of managerial personnels and sanction of remuneration—Department's view

Remuneration by way of commission

Director's remuneration by way of commission—Pre-requisite for Central Government's approval under sub-section (4)—Clarification 1

Clarification 2

Payment of guarantee commission to Directors—Department's view

Interests paid on advances or guarantee commission paid to Directors

Comments on the Circulars—Guarantee commission is not remuneration

Remuneration paid to a partnership firm of Sole selling agency in which Director is a partner—Covered by Section 309

Remuneration for services of professional nature

Department's view

Professional qualifications of Directors eligible for remuneration—Clarification

Auditing practice

Remuneration by way of fee

Sitting fees, travelling allowances etc. are payable to a Director in respect of a Board Meeting which was adjourned for want of quorum—Department's view

Payment of travelling allowance and sitting fee to the Directors where the Board Meeting of two or three companies is held on the same day and in the same building—Department's view

Clarification regarding proposal to pay enhanced sitting fees

Travelling allowance and daily allowance payable to the working Directors of public limited companies

Quantum meruit

Effect of contravention by Director

Raising of commission of Director—Department's clarification

Waiver of excess remuneration

Waiver of payment made under defective appointment

Permission for waiving of excess payment of remuneration under Section 309 (5-B)—Department's view

Private company

Government company

Form and Procedure

Application for Central Government approval under sub-section (3) proviso—Department's instructions

310. Provisions for increase in remuneration to require Government sanction

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

Scope of the section

Payment of sitting fee

Payment of remuneration for first time and increase in sitting fee—Department's views

Payment of sitting fee, commission, remuneration, etc., to non-resident Director under FERA, 1973

Increase in remuneration

Clarification regarding amendments made under the Companies (Amendment) Act, 1988—Department's view

Sitting fee to managing and whole-time Director

Reimbursement of medical expenses incurred in excess of limits laid down under Schedule XIII of the Companies Act, 1956—Clarifications on

Department's clarification

Reimbursement of medical expenses incurred beyond the ceiling mentioned in the total managerial package—Approval of—Department's circular

Expenses incurred on travelling and transportation of personal effects—Department's circular

Section 310 operates only when there is an increase in the remuneration. If a Director is to be remunerated for the first time, the approval of the Central Government under Section 310 is not required

Increase in the remuneration of managing or whole-time Director. Guiding factors where increase is sought with a view to absorbing into the fixed salaries the element of commission on net profits

Certain payments to retired Directors and Managers not allowed unless prior approval of Central Government is obtained under Section 310

Payment of D.A. at a fixed rate would attract Section 310

Devaluation and managerial remuneration

Increase of remuneration of foreign technicians acting as managing/whole-time Directors

Payment of remuneration to Directors without Government approval—Companies asked to comply with the provisions of the Act

Increase in Director's remuneration requires Government sanction—Approval to proposal for increase in managerial remuneration with a view to absorb into salary an element of commission on net profits—Policy regarding

Monetary benefits granted to retired Directors purporting to be for past services—Whether amounts to an increase under the section ?

Private company

Government company

Banking companies

Form and Procedure

Penalty for default

311. Increase in remuneration of managing director on re-appointment or appointment after Act to require Government sanction

Legislative history—The Companies (Amendment) Act, 1988 (Act 31 of 1988)

Scope of the section

Appointment or re-appointment of managing or whole-time Director and Manager at increased remuneration requires Central Government's approval

Department's circular

New guidelines for approval of Managerial remuneration—Effective from April 1, 1983 in supersession of guidelines of 1978 as modified in 1979

Clarification 1

Clarification 2

Clarification 3

Private company

Government company

Banking company

Form and Procedure

Revised Forms for submitting applications for approval—Department's circular

Miscellaneous provisions

312. Prohibition of assignment of office by director

Corresponding provision

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Distinction between 'assignment' and 'appointment'

Assignment of office distinguished from appointment of an alternate or substitute Director

Private company

313. Appointment and term of office of alternate directors

Corresponding provision

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Appointment of alternate Director—Department's view

Alternate Director vacates office when the original Director returns to the State irrespective of the fact whether he attends the Board Meeting or not—Department's view

Department's clarification

Foreign Director

Position of alternate Director

Effect of original Director's interest upon alternate Director

Share qualification—Department's clarification

Register of Directors, particulars and consent to be filed

314. Director, etc., not to hold office or place of profit

Corresponding provision

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Object of the section

Applicability of the section

Except with the company's approval, Director cannot hold any office of profit under his company

Office of profit

Whether appointment of whole-time Director attracts sub-section (1)

Posts not "office or place of profit"

Professional services of Advocates

Technical adviser

Exception

Relative, partner, firm or private company or its Director or Manager not to hold office or place of profit

Prescribed total monthly remuneration under Section 314 (1) (b) and (1-B)

Subsequent appointment

Renewal of appointment

Date of cessation of office

Exemptions

Holding of office or place of profit by Directors or by their relatives—Special resolution contemplated in the section should be passed in respect of each individual case—Department's view

Every increase in the remuneration shall require the passing of a fresh resolution, except where the increase is as per the approved time scale

Clarification of the words "monthly remuneration"

Partnership firm—Holding office of profit

Only the employee-relatives, already in office, before the relative becomes a Director are covered by sub-section (1-A)

Sale or purchase of materials by a Director or his relative, associate, etc. to or from a company in which he is Director—Section 314 (1) does not apply

If a Director functions as Manager and Secretary, he is a Managing Director—Section 314 does not apply if a Director holds an office as Managing Director

Appointment of whole-time Director does not attract Section 314 (1)

Appointment of Director as "Technical Adviser" requires special resolution

Service of professional nature

Whether payment of guarantee commission or interest on loans to Directors attracts sub-section (1)

Appointment as Sole Selling Agent—Department's clarification

Clarifications regarding the scope of Section 314 (1-B)

Appointment of relative of a Director as managing or whole-time Director—Section 314 (1-B) does not apply, however approval of the Central Government under Section 269 will be necessary unless conditions specified in Schedule XIII are satisfied

Approval under Section 314 (1-B)—Special resolution should clearly spell out the nature and quantum of perquisites proposed to be allowed—Copy of rules or Auditor's certificate should be furnished along with the application to show that the proposed benefits are of the same kind and at the same rate as allowed to other employees of equivalent grade

Appointment of relatives of Directors as statutory Auditors

Whether remuneration of each month will be of material consideration for ensuring that sub-section (1) is complied with

Increase in remuneration of relative of Director subsequent to appointment of Director—Whether Explanation to sub-section (1) is applicable

Prescribed limit under Rule 10-C of General Rules and Forms—Clarification 1

Revision of Form Nos. 24-B, 25-A ad 26 prescribed under the Companies (Central Government's) General Rules and Forms, 1956, for making applications to the Central Government under Sections 314 (1-B), 269/198 (4)/309 (3)/311/387/388 and 310/311/388 of the Companies Act, 1956

Applicability of Section 314 (1-B), 637-A and 637-AA

Declaration by a person connected with a Director

Injunction

Form and Procedure

Effect of contravention

Penalty

Restrictions on appointment of managing directors

315. Application of Sections 316 and 317

[Omitted by Act 65 of 1960, Section 117]

316. Number of companies of which one person may be appointed managing director

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Objects of the section

Appointment of a person as Managing Director in more than one company

Specific notice

Exemptions by the Central Government

Ceiling on remuneration from two companies

Policy of Central Government in according approval under Sections 269 and 310

Private company

Government company

Penalty for default

Compoundable offence

317. Managing director not to be appointed for more than five years at a time

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Managing Director should be an individual and Director

Sections 255, 256, 260, 262 and 388

Private companies exempted

Government company

Penalty

Compoundable offence

Compensation for loss of office

318. Compensation for loss of office not permissible except to managing or whole-time directors or to directors who are managers

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Quantum of compensation

Compensation not payable in certain cases

Effect of winding-up of the company on the compensation payable

Exceptions

Private company

Jurisdiction of Company Court

Penalty for default

319. Payment to director, etc., for loss of office, etc., in connection with transfer of undertaking or property

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Payment to Director for loss of office in connection with transfer of undertaking or of property

Compensation paid to Directors for loss of office, etc

Effect of contravention

Provisions of Section 318 not affected

Exception—Section 321 (3)

Private company

320. Payment to director for loss of office, etc., in connection with transfer of shares

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Applicability of Sections 319-320

Compensation may be received from transferees or any other person

Nature of transfer

Effect of contravention

Complete disclosure about compensation

Penalty for default

Compoundable offence

321. Provisions supplementary to Sections 318, 319 and 320

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Trust money

Certain transaction will amount to payment

Exceptions

Disclosure

Directors with unlimited liability

322. Directors, etc., with unlimited liability in limited company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Unlimited liability of Directors

No liability for money spent on behalf of company

Knowledge of Managing Director/Director binding on company

Specific notice to be given to the proposed Director or Manager

Income-tax liability

Penalty for failure to give notice to Directors of unlimited liability

Compoundable offence

323. Special resolution of limited company making liability of directors, etc., unlimited

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

By special resolution a company may make the liability of its Directors, etc. unlimited

Filing

chapter iii

managing agents

Prohibition of appointment of managing agent in certain cases

324. Power of Central Government to notify that companies engaged in specified classes of industry or business shall not have managing agents

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

324-A. Abolition of managing agencies and secretaries and treasurers

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

325. Managing agency company not to have managing agent

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

325-A. Subsidiary of a body corporate not to be appointed as managing agent

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

Appointment and term of office

326. Central Government to approve of appointment, etc., of managing agent; and circumstances in which approval may be accorded

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

327. Application of Sections 328 to 331

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

328. Term of office of managing agent

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

Variation of managing agency agreement

329. Variation of managing agency agreement

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

Special provisions regarding existing managing agents

330. Term of office of existing managing agents to terminate on 15th August, 1960

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

331. Application of Act to existing managing agents

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

Restrictions on number of managing agencies

332. No person to be managing agent of more than ten companies after 15th August, 1960

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

Right to charge on assets

333. Right of managing agent to charge on company's assets

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

Vacation of office, removal and resignation

334. Vacation of office on insolvency, dissolution or winding-up, etc.

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

335. Suspension from office where receiver appointed

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

336. Vacation of office on conviction in certain cases

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

337. Removal for fraud or breach of trust

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

338. Removal for gross negligence or mismanagement

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

339. Power to call meetings for the purposes of Sections 337 and 338 and procedure

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

340. Time when certain disqualifications will take effect

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

341. Conviction not to operate as disqualification if convicted partner, director, etc., is expelled

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

342. Resignation of office by managing agent

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

Transfers of, and succession to, office

343. Transfer of office by managing agent

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

344. Managing agency not to be heritable after commencement of Act

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

345. Succession to managing agency by inheritance or device under agreement before commencement of Act, to be subject to Central Government's approval

Changes in constitution of firms and corporations

346. Changes in constitution of managing agency, firm or corporation to be approved by Central Government

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

347. Application of Schedule VIII to certain managing agents

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

Remuneration of managing agents

348. Remuneration of managing agent ordinarily not to exceed 10 per cent. of net profits

[Omitted by the Companies (Amendment) Act, 2000, Section 159, w.e.f. 13-12-2000.]

349. Determination of net profits

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Determination of net profits

Deduction

Depreciation

Method of computing depreciation—Department's circular

Excess of expenditure over income

Net profit—Determination of—Deduction of surtax for purposes of computation—Tax notified by Central Government as being in nature of tax on excess or abnormal profits for purposes of Clause (d) of sub-section (4)

Deduction of outgoings for purposes of computation—Whether amortized amount for leasehold land constitutes "outstanding" within the meaning of Clause (d) of sub-section (4)

Payments under Voluntary Retirement Scheme

Managerial Remuneration—Mode of calculation in respect of officers or employees of a company as well as private companies—Department's view

Computation of net profits—Deduction of super profits tax

Treatment of surtax—Notification

Clarification regarding treatment of surtax

Wealth-tax not an item of deductible expenditure

Net Profit—Question whether political contributions constitute 'outgoings' within the meaning of Clause (j) of sub-section (4)

Computation of net profits—Treatment of the amount written-off from the leasehold land

Computation of Managing Directors' remuneration without taking into account the unabsorbed depreciation of the previous year

Private companies

350. Ascertainment of depreciation

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Ascertainment of depreciation

Rates of depreciation different from those provided in Income-tax Act

To claim depreciation is not mandatory under Income-tax Act

Calculation of depreciation—Department's view

Depreciation to be provided for in the profit and loss account before declaring dividend and for the purpose of determining the net profits for payment of managerial remuneration

Clarification regarding Memorandum

Clarifications regarding Explanatory Note

Method of depreciation for purposes of Section 350

Department's Clarification dated 7-3-1989 issued after the Companies (Amendment) Act, 1988

Can depreciation be charged on SLM for computing managerial remuneration—ICAI views

Revision of rate of depreciation in Schedule XIV (w.e.f. 16-12-1993)—Department's circular

Private company

351. Special provision where there is a profit-sharing arrangement between two or more companies

[Omitted by the Companies (Amendment) Act, 2000, Section 162, w.e.f. 13-12-2000]

352. Payment of additional remuneration

[Omitted by the Companies (Amendment) Act, 2000, Section 162, w.e.f. 13-12-2000]

353. Time of payment of remuneration

[Omitted by the Companies (Amendment) Act, 2000, Section 162, w.e.f. 13-12-2000]

354. Managing agent not entitled to office allowance but entitled to be reimbursed in respect of expenses

[Omitted by the Companies (Amendment) Act, 2000, Section 162, w.e.f. 13-12-2000]

355. Saving

Legislative history—The Companies Act, (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Appointments as selling and buying agents

356. Appointment of managing agent or associate as selling agent of goods produced by the company

[Omitted by the Companies (Amendment) Act, 2000, Section 164, w.e.f. 13-12-2000.]

357. Application of section 356 to case where business of company consists of the supply or rendering of any services

[Omitted by the Companies (Amendment) Act, 2000, Section 164, w.e.f. 13-12-2000.]

358. Appointment of managing agent or associate as buying agent for company

[Omitted by the Companies (Amendment) Act, 2000, Section 164, w.e.f. 13-12-2000.]

359. Commission, etc., of managing agent as buying or selling agent of other concerns

360. Contracts between managing agent or associate and company for the sale or purchase of goods or the supply of services, etc.

361. Existing contracts relating to matters dealt with in sections 356 to 360 to terminate on 1st March, 1958

[Omitted by the Companies (Amendment) Act, 2000, Section 164, w.e.f. 13-12-2000.]

362. Registers to be open to inspection

[Omitted by the Companies (Amendment) Act, 2000, Section 164, w.e.f. 13-12-2000.]

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

[Omitted by the Companies (Amendment) Act, 2000, Section 164, w.e.f. 13-12-2000.]

Compensation for termination of office

365. Prohibition of payment of compensation for loss of office in certain cases

[Omitted by the Companies (Amendment) Act, 2000, Section 164, w.e.f. 13-12-2000.]

366. Limit of compensation for loss of office

[Omitted by the Companies (Amendment) Act, 2000, Section 164, w.e.f. 13-12-2000.]

Other rights and liabilities not affected on termination of office

367. Managing agent's rights and liabilities after termination of office

[Omitted by the Companies (Amendment) Act, 2000, Section 164, w.e.f. 13-12-2000.]

Restrictions on Powers

368. Managing agent to be subject to control of Board and to restrictions in Schedule VII

[Omitted by the Companies (Amendment) Act, 2000, Section 164, w.e.f. 13-12-2000.]

369. Loans to managing agent

[Omitted by the Companies (Amendment) Act, 2000, Section 164, w.e.f. 13-12-2000.]

370. Loans, etc., to companies under the same management

Corresponding provision

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 1966 (Act 34 of 1966)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 1996 (Act 34 of 1966)

The Companies (Amendment) Act, 1999 (Act 21 of 1999)

Scope of the section

Inter-corporate loans—Under same management

Whether Section 370/295 applies to inter-corporate desposits treating them as 'loans'

Whether Section 370 applies to Section 25 companies limited by guarantee and having no share capital

Whether expression "the same individual or body corporate" in Clause (iii) implies singular number

Whether Clause (iii) of sub-section (1-B) applies to Government companies

Money-lending and financing transactions by erstwhile banks taken-up and carried on after nationalisation

Whether covered by exemption under Clause (iii) of sub-section (2)

Improper/undesirable instances of inter-corporate loans

Clarification 1

Clarification 2

Clarification 3

Deposit vis-a-vis loan

Leasing/hire purchase transactions

Debentures and shares

Default in repayment of deposit

Same management

Common Manager or Managing Director

Certain persons to be deemed Directors

Control

Registers of bodies corporate under the same management

Period within which entries in register to be made

Location of Register

Special resolution required for making certain loans

Exceptions

Approval of the Central Government

Exemption

Prescribed percentage

Director standing surety to outsider

Whether ultra vires the company—Instructions to Directors not to expose themselves to risk of standing sureties for accused persons

Resolution under Section 370 of the Companies Act, 1956—Instructions regarding—Department's view

Guiding principles for considering applications under Sections 370 and 372

Loans by subsidiaries to the holding companies

Section applies in respect of a guarantee given by a company in respect of a loan given by a bank to an individual

Loans given by exempted companies—When can be taken into account for the purpose of ceiling

Loans given by exempted companies to be computed when exemption ceases—Department's circulars

Applicability of Section 370 to Section 25 companies limited by guarantee and having no share capital

Debit balances are not loans/advances

Deemed public company

Loans by subsidiary to holding company

Private companies

Banking and Insurance companies

Companies established for financing industrial enterprises

Government company

Form and Procedure

Procedure for making applications—Press release

Penalty for default

Compoundable offence

370-A. Provisions as to certain loans which could not have been made if Sections 369 and 370 were in force

Legislative history—The Companies (Amendment) Act, 1960 (Act 15 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Default

Compoundable offence

371. Penalty for contravention of Section 370 or 370-A

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Penalties

Prosecution for excess loans in contravention of Section 370

Limitation for filing complaint

Penalty for contravention

Compoundable offence

372. Purchase by company of shares, etc., of other companies

Corresponding provision

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 1996 (Act 34 of 1966)

The Depositories Act, 1996 (Act 22 of 1966)

The Companies (Amendment) Act, 1999 (Act 21 of 1999)

Scope of the section

Acquiring shares by virtue of scheme of reorganisation and arrangement—Department's circular

Investing company's power to invest is linked with its paid-up capital and free reserves

Investment in same group of companies

Exemption

Investment in excess of limits

Aggregate of investments in shares in excess of ceilings require Central Government approval

Prescribed ceilings on investments in other bodies corporate—Notification No. GSR 621 (E), dated 24-9-1993

Earlier prescribed ceilings on investments from 17-4-1989 to 24-9-1993

Investment in rights shares

Inter-corporate investments—In excess of limits—Company investing in shares of private company—Whether can be allowed to have benefit of exemption in first proviso to the sub-section—Department's view

Investment in subsidiary company

Investment company

Investment in share and debentures

Unanimous resolution by Board required for making investment

"Consent of all the Directors present"

Where resolutions must necessarily be passed under Sections 292 and 372

Section not attracted at the stage of agreement to invest

Prior approval of the Central Government

Exceptions

Clarification of Section 372—Guiding principles for considering applications thereunder—Department's view

Inter-corporate investments—Consideration for grant of approval

Inter-company investment—Relaxation of statutory limits in cases involving foreign collaboration

Some instances of inter-corporate investments

Clarification 2

Improper/ undesirable instances where company was found guilty of circumventing the section

Clarification 2

Acquisition of shares by virtue of schemes of reorganisation and arrangement—No need of approval under sub-section (4)

Inter-corporate investments beyond statutory limits made without prior approval—Validity

Investments in excess of statutory limits—Effect

Subscribing to new company's Memorandum through nominees

Department's clarification I

Department's clarification II

Applicability of Section 372

Investment proposed to be made in the shares of a new company—Section 372 shall apply

Purchase of units of the Unit Trust of India by a company does not attract Section 372

Investments made prior to the amendment of the section

Calculation for the purpose of ceiling limits of permissible investments

Inter-corporate investments by a share-trading company

"Investment company"—Clarification regarding definition

Investment by a holding company in its subsidiary company

Whether exemption in sub-section (14) applies to calculation of percentage limits specified in the sub-section

Investments by former Managing Agents—Whether exempt even after their termination

Whether the section applies where a company acquires shares of another company as a gift

Investments enumerated under sub-section (14) are to be excluded from calculation for the ceiling in sub-section (2)

Inter-corporate investments made by the companies exempted under sub-section (14)—Continuation of investments after the cessation of exemption would not require compliance of Section 372

Whether approval under sub-section (4) should be a prior approval

Display of investments as stock-in-trade in accounts

Relaxation in cases involving foreign collaboration—Department's clarification

Inter-corporate investments and sole selling agents—Department's clarification

Register of Investments

Jurisdiction of Court

Limitation for filing complaint

Res judicata

Balance sheet to have enclosure containing particulars of investments

Applicability to Section 25 and guarantee companies

Government company

Western U.P. Chamber of Commerce and Industry exempted

Private companies and deemed public companies

Form and Procedure

Filing of applications for simultaneous approval of inter-corporate investments and Foreign Exchange Regulation Act

Procedure for making applications—Press Note

Provision rendered in operative

Penalty for default

Compoundable offence

372-A. Inter-corporate loans and investments

Legislative history—The Companies (Amendment) Act, 1999 (Act 21 of 1999)

Scope of the section

Providing guarantee without previous consent of members

Departmental circular

Corporate guarantee or security

Acquisition of securities in other body corporate

"Free reserves"

Unanimous consent by the Board of Directors

Public financial institution

Interest at bank rate

Effect of default under Section 58-A

Maintenance of register

Government guidelines

Companies not covered

Applicability to companies having no share capital

Private company

Deemed public companies

Subsidiary companies

Default

Compoundable offence

Period of limitation

Investment made by exempted companies

373. Investments made before commencement of Act

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

374. Penalty for contravention of Section 372 or 373

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Amendment not to be effected retrospectively

Transactions violating the sections, void—Department's clarifications

Compoundable offence

375. Managing agent not to engage in business competing with business of managed company

[Omitted by Companies (Amendment) Act, 2000, Section 168, w.e.f. 13-12-2000.]

376. Conditions prohibiting reconstruction or amalgamation of company

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Certain conditions regarding appointment of Managing Director or Manager shall be void

377. Restrictions on right of managing agent to appoint directors

[Omitted by Companies (Amendment) Act, 2000, Section 170, w.e.f. 13-12-2000.]

chapter iv

a. secretaries

378. Appointment of secretaries and treasurers

[Omitted by Companies (Amendment) Act, 2000, Section 170, w.e.f. 13-12-2000.]

379. Provisions applicable to managing agents to apply to secretaries and treasurers with the exceptions and modifications specified in sections 380 to 383

[Omitted by Companies (Amendment) Act, 2000, Section 170, w.e.f. 13-12-2000.]

380. Sections 324, 330 and 332 not to apply

[Omitted by Companies (Amendment) Act, 2000, Section 170, w.e.f. 13-12-2000.]

381. Section 348 to apply subject to a modification

[Omitted by Companies (Amendment) Act, 2000, Section 170, w.e.f. 13-12-2000.]

382. Secretaries and treasurers not to appoint directors

[Omitted by Companies (Amendment) Act, 2000, Section 170, w.e.f. 13-12-2000.]

383. Secretaries and treasurers not to sell goods or articles produced by company, etc., unless authorised by board

[Omitted by Companies (Amendment) Act, 2000, Section 170, w.e.f. 13-12-2000.]

383-A. Certain companies to have secretaries

Legislative history—The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Recommendation of Working Group on the Companies Act, 1956

Parliamentary Standing Committee

Government's views

Committee's recommendations

Scope of the section

Company below Rs. 50 lakhs paid-up capital

Companies with Rs. 50 lakhs capital to have Secretary w.e.f. 13-4-1993

Term "Secretary" explained

Secretary—A servant of the company

Qualifications of Secretary

Appointment by Articles

Rights of the Secretary

Liabilities of Secretary

Some of the duties of the Secretary

Minutes of Meetings

Secretary's powers

Compliance report by Secretary

Company Secretary to be compliance officer—Amendment of Listing Agreement

Part-time Secretary

Whole-time Secretary—Dual position

Secretary in whole-time practice

Remuneration

Status of Secretary

Right to institute legal proceeding

Indemnity

Relief from liability—Civil and criminal

Ostensible authority

Officer

Institute of Company Secretaries of India is an authority

Removal of Company Secretary

Dismissal by Members

Termination of service

Documents certified as correct by a Company Secretary—Department's view

Compliance certificate—Department's view

Plea of reasonable efforts in making appointment of Company Secretary

Penalty

Compoundable offence

b. managers

384. Firm or body corporate not to be appointed manager

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Firm or corporation cannot be appointed Manager

Private company

Approval of the Central Government

Appointment of General Manager

Contravention

385. Certain persons not to be appointed managers

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Removal of disqualifications

Private company

Contravention

Compoundable offence

386. Number of companies of which a person may be appointed manager

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Number of companies of which a person may be appointed Manager

Condition for appointment in two companies

Central Government

Application

Private company

Government company

387. Remuneration of manager

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Remuneration of Manager

Approval of appointment/payment of remuneration

Private company

Banking company

Government company

Contravention

Relevant rule and prescribed form

388. Application of Sections 269, 310, 311, 312 and 317 to managers

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Manager of public or private subsidiary company not to be appointed for more than five years at a time

Prohibition of assignment of office

Private company

Banking company

Government company

Form and Procedure

388-A. Sections 386 to 388 not to apply to certain private companies

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Private banking company

Deemed public company

CHAPTER IV-A

powers of central government to remove managerial personnel from office on the recommendation
of the Tribunal

388-B. Reference to Tribunal of cases against managerial personnel

Legislative history—The Companies (Amendment) Act, 1963 (Act 53 of 1963)

The Companies Tribunal (Abolition) Act, 1967 (Act 17 of 1967)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Constitutional validity of the section

Pre-requisites to making application to Company Law Board

Subjective satisfaction

Wide powers of Company Law Board

Prudent commercial practices

Sound business principles

Procedure

Delay and acquiescence may vitiate reference

Reference to the Company Law Board

388-C. Interim order by Tribunal

Legislative history

Interim order

388-D. Decision of the Tribunal

Legislative history

Decision of the Company Law Board

Intervention in proceedings

No automatic disqualification

388-E. Power of Central Government to remove managerial personnel on the basis of Tribunals decision

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Power of the Central Government to remove the managerial personnel

Removal of Director or other person by the Central Government

No compensation payable

Before making order of removal no hearing is necessary

Removal of disqualification

Approval of the Central Government required to fill the vacancy

chapter v

arbitration, compromises, arrangements and reconstructions

389. Power for companies to refer matters to arbitration.

[Omitted by Act 65 of 1960, Section 150.]

390. Interpretation of Sections 391 and 393

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Company liable to be wound-up

Scheme under Section 391, an alternative to liquidation, but not an alternative mode of liquidation

Compromise and arrangement

Creditors and depositors

Decree holders and other creditors

391. Power to compromise or make arrangements with creditors and members

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Principle of the section

Construction

Applicability of the section

Effect of the scheme

Compromise or arrangement

Distinction between arrangement and amalgamation

Foreign creditor not affected by scheme under Section 391

Proceedings under Section 391, winding-up and liquidation—Distinguished

Reorganisation of share capital

Persons entitled to make an application to Court

Jurisdiction of Courts

Application to Court

Notice to Central Government and shareholders

Direction for holding meeting

Recall of orders for convening meeting

Class

Incomplete explanatory statement

Notice of meeting

Support of majority in number and three-fourths in value of those present and voting required to approve the scheme

Manner of counting of votes at meeting

Variation of class rights

Voting by postal ballot

Chairman's report and application for confirmation

Court may sanction a scheme

Court may impose conditions

Reduction of share capital

Sanctioning of scheme—Whether a mechanical act ?

Illustrations regarding sanctioning of scheme :

Requisite resolution of creditors necessary

Rights of the creditors

Interest of and effect upon workmen

Merger of companies under same management or with same set of shareholders

Division of assets

Amalgamation of MRTP companies

Beneficial scheme to be approved even if opposed by Regional Director or few workmen/share-holders

Rejection of Scheme

Company Law Board not precluded to adjudicate on an application under Section 45-QA of the Reserve Bank of India Act till the disposal of proceeding under Section 391

Take-over reverse bid

Change of sponsors in scheme

Time when the scheme takes effect

Effect of scheme coming into operation

Consent of Stock Exchange

Variation/modification of scheme

Order of the Court not to have any effect unless and until certified copy of the order is filed with Registrar

Copy to be annexed to Memorandum

Vesting

Power of the Court to stay suits and proceedings against the company pending the disposal of the application

Joint petition

Section 18-FA of IDR Act overrides Section 391

Partial invalidity of scheme

Where scheme fails ?

Where substratum comes to an end, scheme of arrangement cannot be sanctioned

Scheme in winding-up

Revival scheme of some of the units of the company in liquidation

Appeal

Reconsideration of sanctioned scheme by another Court

Reconsideration of sanctioned scheme because of fraud

Setting aside sanctioned scheme because of suppression of facts

Scheme by relief undertaking

Provisions of Sections 391 to 394 not controlled by provisions of Sections 42 and 77 of the Act

Government company

Amalgamation of banking companies

Procedure

392. Power of Tribunal to enforce compromises and arrangements

Legislative history—The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Purpose of the section

Power of High Court to enforce compromises and arrangements

Attempt to misuse Section 392

Third party disputes outside Court's powers

Eviction of persons having no right/title

Modification of scheme without calling fresh meeting

Limitation

Power to order winding-up

Government company

Banking companies

393. Information as to compromises or arrangements with creditors and members

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Compromise and arrangement

Compromise

Arrangement

Information as to compromises or arrangements with creditors and members

Copy of statement to be furnished free of cost

Scope of sub-section 1 (a)

Disclosure of mathematical calculation of share exchange ratio not necessary

Effect of Section 393 (4)

Notice to company by Directors and Trustees

Effects of the scheme

Penalty for default

Compoundable offence

Form and Procedure

394. Provisions for facilitating reconstruction and amalgamation of companies

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Reconstruction

Amalgamation

'Reconstruction' and 'amalgamation'

Merger

Hiving-off

Provisions for facilitating reconstruction and amalgamation

Separate applications by transferor and transferee-companies

Powers and duties of Court on an application under Section 391

Valuation of shares

Amendment to share exchange ratio

Sanctioning Court is not Court of Appeal

Absence of power of amalgamation in Memorandum of Association

Alteration of objects

Procedure to be followed in case of increase of authorised share capital as a result of amalgamation

Registrar's report under Section 394 (1)

Court may refuse to sanction

Instances where the scheme can be sanctioned

Instances where the scheme cannot be sanctioned

Effect of scheme

Amalgamation in case of a company in course of winding-up

Vesting of property

Order of sanction of a scheme of amalgamation and stamp duty

Filing of order

Annulment of approved scheme

Amalgamation with Section 25 charitable company

Amalgamation of companies with similar objects

Amalgamation of companies with dissimilar objects

Amalgamation between an Indian company and a foreign company

Merger of subsidiary company in holding company

Application to respective High Courts

Meeting

Monopolies and Restrictive Trade Practices Act, 1969

Amalgamation of Companies under Section 391/394—Expeditious disposal of cases—Copy of the application seeking its registration under Section 26 of the M.R.T.P. Act should be forwarded to the concerned Regional Director—Department's view

Amalgamation and Securities Contracts (Regulation) Rules, 1957

Liability for evasion of excise

Income-tax Act, 1961

Sections 392 and 394 read with Section 231 of the Income-tax Act, 1961

Capital Gains Tax

Amalgamation and liabilities under the Rent Acts

Government company

Period of limitation

Transferor and the transferee-companies should move the High Court for direction—Department's view

High Court shall give notice of every application made to it under Section 391 or 394 to the Central Government and consider its representations before passing any order

Compliance of the provisions of 2nd proviso to Section 394 (1) of the Act—High Court should obtain a report from the Official Liquidator about the affairs of the transferor-company before passing an order of dissolution—Clarification

Sections 391 to 394 and the Companies (Court) Rules, 1959 lay down the following procedure

Amalgamation—Instances of an attempt to circumvent Court order

Penalty for default

Compoundable offence

Form and Procedure

394-A. Notice to be given to Central Government for applications under Sections 391 and 394

Legislative history—The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Notice to Central Government

Objections by the Central Government

Appeal by Central Government

Power of Central Government delegated to Regional Directors

395. Power and duty to acquire shares of shareholders dissenting from scheme or contract approved by majority

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the section

Applicability of the section

Underlying principle

Constitutional validity of Section 395

Take-over bids

Time-limit of four months

Dissenting shareholder

Acquisition of shares from dissenting shareholders

Stage I : Offer

Duty of Directors to give certain information to shareholders

Registration with the Registrar of Companies

Stage II : Acceptance

Conditional offer

When provisions not invoked ?

Stage III : Notice to non-acceptors of transferee-company's desire to acquire their shares

Transferee-company holds more than 10% of the shares

Stage IV : Dissenting shareholders' application to Court

Terms of fairness

When dissentient's application is rejected

Nominee of transferee-company to execute transfer documents

Stamp duties

Trust money

Stage V : Notice to dissenting shareholders where transferee-company holds 90% of the shares

Stage VI : Dissenting shareholders' rights against transferee-company

Substantial acquisition

Shares held under pledge

Demerger and shares exchange ratio

Insurance companies

Penalty

Form and Procedure

396. Power of Central Government to provide for amalgamation of companies in public interest

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1985 (Act 35 of 1985)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Power of Central Government to provide for amalgamation of companies in the public interest

Pre-conditions of making the order

Parliamentary control

Order to be notified in the Official Gazette

Interest of members and creditors

Prescribed authority

Appeal against award of compensation

396-A. Preservation of books and papers of amalgamated company

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1965 (Act 31 of 1965)

Preservation of books and papers of amalgamated company

Object of the prohibition

chapter vi

prevention of oppression and mismanagement

A. Powers of Tribunal

397. Application to Tribunal for relief in cases of oppression

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1963 (Act 53 of 1963)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object and purpose of the section

Personal prejudice not necessary

Banking company

Oppression and unfairly prejudicial conduct qua member

Public interest

Doctrine of legitimate expectation

Sections 397 and 398—Points of difference

Application to Court for relief in cases of oppression

Alternative remedy

Application under—Maintainability

Validity of petition under Section 397 or 398

Parties to a proceeding

Requisites for referring to arbitration must exist

Petition must contain proper materials

Burden of proof

No particulars of siphoning-off funds

Unsubstantiated allegations

Relief where allegations not proved

Claims constituting abuse of process

Petition under Section 397 or 398 to contain statement of specific relief sought and its nature and to be in prescribed form

Amendment of petition

Composite petition for winding-up and relief against oppression

Composite petition under Sections 397, 398 and 237

Subsequent events

Order of admission of petition not a final order

Oppression

Acts held not oppressive

Acts held oppressive

Jurisdiction of the Court

Reducing equal shareholders to minority

Appointment of Directors to gain majority control

Interest of the company

Oppression by minority

Majority members may invoke Section 397

Powers of Court

Power of investigation

Affairs of another company cannot be examined in a Section 397/398 petition

Appointment of Administrator

Valuation

Company in reality a partnership—Tests

Situation of deadlock not necessary

Allotment of shares against loans excluding petitioner

Three family partnership

Participant in decisions may not complain

Transmission of shares

Entitlement to shares under family settlement

Legal representatives

Company Law Board to act according to its own Regulations

Appeal

Recent changes in England

Compromising of proceedings under Section 397 or 398 of the Act

Order for amicable settlement

Limitation

Ousting of jurisdiction of Civil Court

Pendency of civil suit

Company Court has no power to order criminal trial

Pendency of proceeding in High Court

Res judicata

Stay of proceedings before the Company Law Board

Winding-up proceedings

Jurisdiction of Court to entertain winding-up petition

Power of review

Correction of mistakes

Writ remedy

Petition before the Company Law Board

398. Application to Tribunal for relief in cases of mismanagement

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1963 (Act 33 of 1963)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope and object of the section

Who can make the petition

Motive of petition to be seen

Necessary parties

'Material change'—Connotation of

Mismanagement

Mismanagement in group companies

Acts not amounting to mismanagement

Order for restructuring of Board of Directors

Composite application

Verification

Public interest—Sections 397 and 398—Application

Bank as secured creditor

Pleadings

Relief in case of unproved allegations

Position of legal representative

Presentation of petition by Secretary

Alternative remedy

Res judicata

Compromise

Arbitration

Ex parte order

Amendment

No abatement of proceedings on death

Stay of proceedings

Private company

Appeal

Limitation

Facts and principles to be considered

Oppression must be of a member, not Director or creditor

Representative petition

Issue of shares to reduce majority—Act of oppression

Receiver to be appointed only in exceptional cases

Civil proceedings—Arbitration

Winding-up to be avoided

Ultra vires acts by Directors

Resolution may be struck-down, if oppressive

Register of members not conclusive

Company has right to know who are real owners of its shares

Appealable order

Company in liquidation

Valuation of shares

Tenancy right

Unconditional withdrawal of petition

Pendency of civil proceedings

Proceedings under Section 397/398 and misfeasance proceedings under Section 543

Form of petition and pleadings

Orders of the Company Law Board to be filed with the Registrar of Companies in the prescribed form

Petition before the Company Law Board

399. Right to apply under Sections 397 and 398

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Principle of the section

Object of the section

Who can make an application under Section 397 or Section 398 ?

In the case of a company having a share capital

In the case of a company not having a share capital

Decisions prior to the Companies (Amendment) Act, 1988

Member

Member by allotment allotment of shares

Member by operation of law

Heirs may apply

Petition by legal heirs before transmission of shares

Rectification of register of members where necessary

Joint-holders

Consent

Maintainability of the petition

Member not qualified may file civil suit

Sections 155, 397, 398, 408 and 543—Maintainability of suit

Company Court—Not a super-structure for supervision

Representative action

Derivative action

Appointment of Administrators

Amendment of petition

Withdrawal of petition

Powers of the Central Government

Alteration of Articles of Association

Minority may be restrained

Action by minority

In minority shareholder's action, the conduct of the petitioner is material

Appeal

Form and Procedure

400. Notice to be given to Central Government of applications under Sections 397 and 398

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Notice to be given to the Central Government

Position of the Central Government in petitions under Section 397/398

Delegation of powers to the Regional Directors

Notice to Government in respect of applications under Sections 397 and 398—Department's view

401. Right of Central Government to apply under Sections 397 and 398

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Power of Central Government to apply under Section 397 or 398

402. Powers of Tribunal on application under Section 397 or 398

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Powers of Court on application under Section 397 or 398

Purchase of members' shares

Applicability of principles of partnership to companies

Valuation of shares held by minority group

Circumstances in which purchase of shares cannot be ordered

Reduction of capital

Alternative remedy

Computation of period of three months

Subsidiary

Interim order

Modification of the order

Validity of the petition

Compromise

Appeal to High Court

403. Interim order by Tribunal

Corresponding provisions

Legislative history.—The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Interim order by the Court

Interim orders and other orders not appealable

Review of order

404. Effect of alteration of memorandum or articles of company by order under Section 397 or 398

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Filing and penalty

Compoundable offence

405. Addition of respondents to application under Section 397 or 398

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Addition of Managing Director, Director, Manager, or other person as respondent to an application under Section 497 or 398

Joinder of parties

406. Application of Sections 539 to 544 to proceedings under Sections 397 and 398

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Sections 539 to 544

Where original documents not available

407. Consequences of termination or modification of certain agreements

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2000 (Act 11 of 2003)

Consequences of termination or modification of certain agreements

Leave of the Company Law Board

Petition before the Company Law Board

Penalty for default

Compoundable offence

B. Powers of Central Government

408. Powers of Government to prevent oppression or mismanagement

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Purpose of the section

Powers of the Central Government to prevent oppression or mis-management

Authority vested in the Company Law Board

Whether the appointment of a Government Director becomes invalid after three years

Proportional representation

Interim order in case of proportional representation

Natural justice

Power of Central Government to make reference

Where the company appointed expert professional Directors and Reserve Bank of India is monitoring the affairs on continuous basis

Reckoning of two-thirds

Share qualification of the Central Government nominee Directors

Retirement by rotation

No change without Company Law Board permission

Appointment of Directors by Central Government and consequential directions

Jurisdiction of Civil Courts not ousted

Appeal against appointment

Government policy in respect of application made under Section 408—Department's view

Private companies

Form and Procedure

Petition under Section 408 bars relief under Sections 397 and 398

Petition before the Company Law Board

409. Power of Tribunal to prevent change in Board of directors likely to affect company prejudicially

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Object and scope of the section

Complaint by Managing Director, Director or Manager

Requirements of the section

Effect of the order

Changes in Board of Directors on the orders of the Court

Government's policy in respect of application under Section 409—Department's view

Private company

Form and Procedure

Petition before the Company Law Board

chapter vii

constitution and powers of advisory committee

410. Appointment of Advisory Committee

Legislative history—The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Constitution of Advisory Committee—Notification

411. Duties of Advisory Commission

[Omitted by Act 31 of 1965, Section 53, w.e.f. 15-10-1965.]

412. Forms and procedure in cases referred to Advisory Commission

[Omitted by Act 31 of 1965, Section 53, w.e.f. 15-10-1965.]

413. Powers of Advisory Commission

[Omitted by Act 31 of 1965, Section 53, w.e.f. 15-10-1965.]

414. Penalties

[Omitted by Act 31 of 1965, Section 53, w.e.f. 15-10-1965.]

415. Immunity for action taken in good faith

[Omitted by Act 31 of 1965, Section 53, 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

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment), 2000 (Act 53 of 2000)

Object of the section

Default under sub-section (3)

Private company

Penalty for default

Compoundable offence

Employees’ securities and provident funds

417. Employees’ securities to be deposited in post office savings bank or scheduled bank

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Object of the section

Investment of employee's securities in National Defence Certificates—Whether permissible—Department's view

Provident fund, and security deposits by employees

Prosecution on failure to deposit

Penalty for contravention

418. Provisions applicable to provident funds of employees

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Object of Sections 418, 419 and 420

Obligations for collection of moneys

Interest to employees

Advances to employees

Provident fund—If trust money

Where there is a breach of trust

Where it is not a breach of trust

Employee's contribution should be deposited within 15 days from the date on which it is collected from the employee concerned—Department's view

Investment of fund moneys in fixed deposit—Whether permissible ?

Company set-up staff mutual benefit fund instead of regular provident fund—Whether a device for by passing regulations as laid down in the section ?

Whether provisions of the section applies where Employees' Provident Fund Act is applicable to fund ?

Amendment of Post Office Savings Bank Rules in compliance of the section

Whether sub-section (2) prohibits payment of interest at higher rate ?

Penalty on contravention

Condonation of delay

419. Right of employee to see bank’s receipt for moneys or securities referred to in Section 417 or 418

Corresponding provisions

Right of employee to see the bank's receipt for moneys or securities

Contravention

420. Penalty for contravention of Sections 417, 418 and 419

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Proceedings

Penalty for contravention of Sections 417, 418 and 419

Receivers and Managers

421. Filing of accounts of receivers

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Filing of abstract of account with the Registrar of Companies—Department's view

Period of limitation

Notice to Income-tax Officer

Form and Procedure

422. Invoices, etc., to refer to receiver where there is one

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Object of the section

Penalty for default

Compoundable offence

423. Penalty for non-compliance with Sections 421 and 422

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Contravention

Compoundable offence

424. Application of Sections 421 to 423 to receivers and managers appointed by Tribunal and managers appointed in pursuance of an instrument

Legislative history—The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Effect of Section 424

Notice to Income-tax Officer

Form and Procedure

Position of Receiver in companies in liquidation—Department's clarifications

part vi-a

Revival and rehabilitaion of sick
industrial companies

424-A. Reference to Tribunal

Legislative history—The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

424-B. Inquiry into working of sick industrial companies

Legislative history

424-C. Powers of Tribunal to make suitable order on completion of inquiry

Legislative history

424-D. Preparation and sanction of schemes

Legislative history

424-E. Rehabilitation by giving financial assistance

Legislative history

424-F. Arrangement for continuing operations, etc., during inquiry

Legislative history

424-G. Winding up of sick industrial company

Legislative history

424-H. Operating agency to prepare complete inventory, etc.

Legislative history

424-I. Direction not to dispose of assets

Legislative history

424-J. Power of Tribunal to call for periodic information

Legislative history

424-K. Misfeasance proceedings

Legislative history

424-L. Penalty for certain offences

Legislative history

part vii

winding up

chapter I

preliminary

Modes of winding up

425. Modes of winding up

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Winding-up of registered companies—Meaning and object of winding-up

Different kinds of winding-up under the Act

Bankruptcy and winding-up—Distinguished

Corporate existence and power of company continue

Voluntary winding-up

Companies that can be wound-up under the act

Where a company cannot be wound-up by Court

Jurisdiction for winding-up

Foreign company

Effect of foreign company having ceased to exist

Banking companies—Winding-up of

Defunct companies

Contributories

426. Liability as contributories of present and past members

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Principle of the section

Liability to contribute

Liability as contributories of present and past members

Member-Director

Deceased members and joint-members

Trustees and persons to whom shares have been issued at a discount

Subscribers to Memorandum of Association

Forfeited/transferred shares

When shares forfeited more than a year before winding-up

Where forfeiture made less than a year before winding-up

Meaning of 'commencement of the winding-up'

Extended liability may be enforced

Company limited by guarantee

Assets

Exceptions

Dividend

Member—Creditor

Limitation

Fresh period of limitation for enforcing liability

427. Obligations of directors and managers whose liability is unlimited

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Liability of Directors and Managers whose liability is unlimited

Position of Directors in a winding-up—Liability to render accounts and answer the Auditors

Exceptions

Further contribution

428. Definition of "contributory"

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Who are contributories ?

Alleged contributory

Joint-holding

Lists of contributories

Contributories and register of members

Effect of being placed on the list of contributories

429. Nature of liability of contributory

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Nature of contributory's liability

When liability begins ?

Future calls

Call when payable

Enforcement of call

In voluntary liquidation

Jurisdiction of Civil Courts

430. Contributories in case of death of member

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Legal representative to be brought on record

Contributories in case of death of member

Liability of estate

Letters of administration of the estate of a deceased contributory

Joint-holders

431. Contributories in case of insolvency of member

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Contributories in case of insolvency of Member

432. Contributories in case of winding up of a body corporate which is a member

Scope of the section

Contributories in case of winding-up of a corporation which is a member of the company in liquidation

chapter ii

winding up by the Tribunal

Cases in which company may be wound up by the Tribunal

433. Circumstances in which company may be wound-up by Tribunal

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Whether Section 186 is a bar to a petition for winding-up

Section 433 vis-a-vis Chapter III-B of the Reserve Bank of India Act, 1934

Object of winding-up

Principles as to winding-up

Who can make a winding-up petition

Application for impleading as petitioner

Territorial jurisdiction

Discretion of Court to pass winding-up order after admission of petition

Jurisdiction of Courts

Extension of time for payment

Winding-up proceedings and suit for recovery of money—Distinguished

Relegating parties to civil suit

Circumstances under which a company may be wound-up by the Court—Enumeration of grounds for winding-up

Resolution by the members of the company that the company may be wound-up

Winding-up on the ground that default is made in filing the statutory report or in holding the statutory meeting

Winding-up on the ground that the company has not commenced its business within a year after its incorporation or has suspended its business for a whole year

Winding-up on the ground that the number of company's members has gone below the legal minimum

Winding-up on the ground that the company is unable to pay its debts

Distinction between winding-up brought about by the company itself to avoid consequences under Industrial Law and winding-up brought about by creditor's petition

Creditor's petition

Debt and damages—Distinguished

Right of equitable set-off

Acknowledgment in statement of accounts

Admitted debt

Quantification of debt

Deposit of admitted debt and its withdrawal

Hopelessly insolvent with no chance of revival

Bona fide dispute

Petition for recovery of interest not maintainable

Commercial insolvency

Just and equitable ground—Winding-up may be ordered by the Court whenever it is of opinion that it is just and equitable that the company should be wound-up

When winding-up can be ordered

Disappearance of the substratum of the company

Company having a fraudulent inception

A bubble-company may be wound-up

Winding-up due to a crisis

Oppressive majority or fraudulent Directors might lead the company to its being wound-up

Winding-up by the Court on the ground that an event prescribed by the Articles of the company had happened

Motive behind the petition

Winding-up proceedings on failure to implement scheme of payment approved by the Company Law Board

Bank guarantee and BIFR

Particulars to be given in the winding-up petition

Filing of documents

Privileged documents

Participation/Intervention of interested persons in winding-up proceedings

Application mentioning wrong clause of the section

Amendment of winding-up petition

Verification of petition

Withdrawal of petitioner after admission of winding-up petition

Advertisement of winding-up petition

Conditional order of advertisement

Consequence of failure to advertise the petition

Default in payment by company after rescheduling, no contempt

Court fees

Presentation of several petitions

Costs of petition

When petition may be stayed ?

Matters of stay where criminal complaints also pending

Alternative remedy

Suit before Debt Recovery Tribunal

Writ petition

Jurisdictional issue of company being an industrial company

Winding-up of sick industrial company—Company's right of reference

Appeal

Application for winding-up—Department's clarification

Revival scheme for sick industrial undertaking

Refusal by writ Court to interfere in winding-up order

Sale of assets by secured creditor

Sick industrial company—Winding-up of

Sick industrial company—Revival/rehabilitation of

Sick industrial company—Suspension of legal proceedings

Suit to challenge method of depreciation

Decree obtained by suppressing knowledge of reference

Proceedings for refund of deposits

Recovery proceedings against guarantor

Contributions to Employees Provident Fund

Interests of employees

Dues of employees

Employees retirement scheme

Employees' claim for interim relief

Recovery of lease property and lease rental

Stay of winding-up petition in the matter of sick industrial company

Debt incurred after scheme of revival

Loan taken from creditor by fraud

Arbitration proceedings

When Directors bound to refer ?

Petition without consent of BIFR

Control of BIFR upto order under Section 20 (2)

Recommendation of BIFR not final

High Court’s jurisdiction after recommendation of winding-up by BIFR

Setting up of new undertaking

Rehabilitation-cum-repayment plan

Limitation

Suspension of proceedings and limitation

434. Company when deemed unable to pay its debts

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Applicability of the section

Presumption of inability to pay

Satisfaction of the Court

Notice of demand

Effective date of change of registered office

Service at changed registered office address

Service of statutory notice on Managing Director

Consequences of non-compliance of Section 434 (1) (a)

Notice must be actually served

No response to statutory notice

Company's obligation to disclose all its defence in reply to the statutory notice

Failure by Government company to pay after statutory notice

Period of notice

Requirements of notice

Service of notice without affidavit

Acknowledgment to be by authorised person

Minimum requirement of petition not satisfied

Bona fide disputed debt

Company's inability to pay—Inference of

Notice of demand good for purposes of Section 138, Negotiable Instruments Act

Creditor's right

Remedies for the company

Section applies to decretal amount also

Time-barred decreed debt

Estoppel against creditor receiving dividend

Period of limitation regarding winding-up petition

Companies in genuine difficulties to be saved

435. Transfer of winding up proceedings to District Court

[Omitted by the Companies (Second Amendment) Act, 2002.]

436. Withdrawal and transfer of winding up from one District Court to another

[Omitted by the Companies (Second Amendment) Act, 2002.]

437. Power of High Court to retain winding up proceedings in District Court

[Omitted by the Companies (Second Amendment) Act, 2002.]

438. Jurisdiction of High Court under Sections 435, 436 and 437 to be exercised at any time and at any stage

[Omitted by the Companies (Second Amendment) Act, 2002.]

Petition for winding up

439. Provisions as to applications for winding up

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Opportunity to pay

Persons entitled to present a winding-up petition

Company’s petition

Contributory's petition

Compromise of contributory's petition and valuation of shares

Shareholder's petition

Creditors' petition

Substitution of the petitioning creditor

Prospective and contingent creditor

Single petition

Partnership firm as creditor

Creditors suit against the guarantor of the company—Not a bar

Secured creditor

Time at which secured creditor has to exercise option

Secured creditor appointing receiver and opposing winding-up

Workers' petition

Registrar of Companies

Petition to contain full facts

Affidavit verifying petition

Maintainability of company petition due to defective affidavit

Combined petition to be properly verified

Requisites of a petition

Company's name to be correctly stated

Admission stage

Revocation of order of admission

Malicious petition

Array of parties

Jurisdiction to entertain winding-up petition

Agreement as to jurisdiction

Maintainability of petition

Order for admission and advertisement of winding-up petition

Publication of notice in Official Gazette may be dispensed with

Copies of advertisement to be filed in Court soon after advertisement

Form and Procedure

Requirements of Rule 21 mandatory

Defunct company may be wound-up

Delegation of powers to the Regional Directors

Approval for presentation of petitions under Section 439(5)/433 (e)—Department's view

439-A. Statement of affairs to be filed on winding up of a company

Legislative history—The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

440. Right to present winding up petition where company is being wound up voluntarily

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Voluntary winding-up

Wishes of the creditors

Powers of Official Liquidator in relation to Liquidator in voluntary winding-up

Proposals for resorting to the provisions of Section 440 instead of Section 515, in regard to companies in voluntary liquidation—Department's view

Commencement of winding up

441. Commencement of winding up by Tribunal

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the section

Effect of the section

Principle of relation back

Commencement of winding-up by order of the Court

Commencement of winding-up date—Department’s view

Disposition of property

Avoidance of disposition of property after commencement of winding-up

Sale of assets by secured creditor

Period of stay of winding-up order

Recovery of debts

Limitation

Appeal from orders

Levy by way of cess and formation of
Rehabilitation and Revival Fund

441-A. Levy and collection of cess on turnover or gross receipts of companies

Legislative history—The Companies (Second) Amendment Act, 2002 (Act 11 of 2003)

441-B. Crediting proceeds of cess to Consolidated Fund of India

Legislative history—The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

441-C. Rehabilitation Fund

Legislative history—The Companies (Second Amendment), 2002 (Act 11 of 2003)

441-D. Application of Fund

Legislative history—The Companies (Second Amendment), 2002 (Act 11 of 2003)

441-E. Power to call for information

Legislative history—The Companies (Second Amendment), 2002 (Act 11 of 2003)

441-F. Penalty for non-payment of cess

Legislative history—The Companies (Second Amendment), 2002 (Act 11 of 2003)

441-G. Refund of fund in certain cases

Legislative history—The Companies (Second Amendment), 2002 (Act 11 of 2003)

Powers of Tribunal

442. Power of Court to stay or restrain proceedings against company

[Omitted by the Companies (Second Amendment) Act, 2002.]

443. Powers of Tribunal on hearing petition

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Applicability of Section 443 (2)

Powers of Court on hearing petition

Alternative remedy

Who may be heard ?

Representative character of winding-up petition

Workers' Union—Party to proceedings

Consumers

Third parties

Hearing at the admission stage

Procedure and advertisement

Awarding of costs is at the discretion of the Court

Adjournment of hearing

Interim order

Interim order for sale of assets

Appointment of Auditor to verify extent of liability

Order of investigation

Consent order for payment of debt

Stay of winding-up proceedings

Stay pending arbitration

Stay during pendency of proceedings under Sections 397 and 398

Withdrawal of petition

Striking out the petition

Restoration of the petition

Ex-parte order of winding-up and appeal

Effect of winding-up order

Residuary powers of Directors on passing of winding-up order

"Or make any other order"

Appeal against order

Refusal of Court to pass winding-up order

Recall of winding-up order

Belated application for review

Order for costs

Rules and procedure applicable

444. Order for winding up to be communicated to Official Liquidator and Registrar

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the section

Form and Procedure

445. Copy of winding up order to be filed with Registrar

Corresponding provision

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Copy of the winding-up order must be filed with The Registrar

Filing when the Registrar himself is a petitioner—Department's view

Duties of the Registrar of Companies

Board of Directors to cease to function and to hold office

Discharge of employees/officers and payment of compensation

Dismissal wrongful in case of contract of service

Contributions under E.S.I. and E.P.F

Penalty for default

Compoundable offence

446. Suits stayed on winding up order

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Policy and object of the section

Applicability of the section

"Legal proceeding"—Meaning of

Claims by company

Default in payment of hire-purchase instalments

Leave of Court—General

Criminal proceeding against Director or Managing Director

Criminal proceeding against company for default under Section 113

Prosecution for failure to refund deposit by NBFC

Stay of suits etc.

Leave whether condition precedent

Leave—Where necessary ?

Proceedings before Debt Recovery Tribunal—When leave necessary ?

Permission to initiate proceedings under the Securitisation Act, 2002

Proceedings under the Consumer Protection Act

Directions of High-Power Committee

Leave—Where not necessary ?

Leave of Court in income-tax cases

Discretionary powers of Court

Leave—When cannot be granted ?

Proceeding without leave of Court

Execution of decree without leave of Court

Scope of Court's power

Transfer of suits

Transfer of criminal proceedings

Vesting of property with Official Liquidator after order of winding-up

Limitation

Writ jurisdiction

Secured creditors

Section 446 and Arbitration Act

Application under Section 446

Appeal

Sick industrial company

446-A. Responsibility of directors and officers to submit to Tribunal audited books of accounts

Legislative history—The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

447. Effect of winding up order

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of Section

Effect of winding-up order

On agents

On debenture-holders

Ownership of property

Status of officers/Directors

Status of officers/Directors

Care of property by the Official Liquidator

Universal effect of winding-up order, withdrawal of petition not permissible

Binding nature of winding-up order

Retrospective operation of the winding-up order

Rescission of winding-up order

Official liquidators

448. Appointment of Official Liquidator

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Appointment of Official Liquidator

Extension of term of Official Liquidator

Nominee—Government's view

Jurisdiction of Benches of High Court

Liquidators for States of Chhattisgarh, Uttaranchal and Jharkhand

449. Official Liquidator to be liquidator

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Official Liquidator is the "Principal Officer" under the Income-tax Act

Notice to the Income-tax Department

Banking companies

450. Appointment and powers of provisional liquidator

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of appointing a provisional Liquidator

Interim or provisional Liquidator

Notice to the company

Appointment of provisional Liquidator in financial company

Appointment of provisional Liquidator without notice to company

Position

Powers of provisional Liquidator

Appointment of provisional Liquidator—Board of Directors does not become defunct

451. General provisions as to liquidators

Corresponding provisions

Legislative history.—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Duties of Liquidator

Remuneration of the Official Liquidator

Payment of fees to the Central Government

Payment of fee under Section 451 (2) read with Rule 291 of the Companies (Court) Rules, 1959—Department's view

Defective appointment of Official Liquidator; Result of an invalid appointment

452. Style, etc., of liquidator

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

453. Receiver not to be appointed of assets with liquidator

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the section

If Official Liquidator appointed, no leave to appoint a Receiver

454. Statement of affairs to be made to Official Liquidator

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the statement to Liquidator

Statement of affairs to be made to the Liquidator

Officers who are required to submit the statement

Reasonable excuse

Books not in possession of Directors

"Subject to directions of Court"—Connotation

Burden of proof on the Liquidator

Time-limit for submission of statement

Meaning of the expression "the relevant date"

Cost of preparation of statement

Creditors and contributories entitled to inspect statement

Continuing offence

Cognizance of offence

Appealability

Procedure

Supply of certified copies of statement of affairs and other documents—Department's view

Penalty for default

455. Report by Official Liquidator

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the preliminary report

Statement in the form of a preliminary report to be made by Official Liquidator

Further report or reports by Official Liquidator

Fraud

Public examination under Section 478

Reports privileged

Inspection of the Liquidator's report

Disclosure of Liquidator's report

Procedure

Penalty

456. Custody of company’s property

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Custody of the Court

Custody of property

Duty of Official Liquidator to take property into custody

Procedure of taking property into custody

No restriction on sale of assets of a company in custody of a winding-up Court

Official Liquidator to comply with directions of Debt Recovery Tribunal

Secured creditors

Bank guarantee

Right to transfer/alienate leased property

Recovery of rent/property under lease agreement

Pending suits

Penalty

457. Powers of liquidator

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Official Liquidators are Court Officers and are regarded as public servants

Official Liquidators as trustees

Rights of Official Liquidator

Powers of Official Liquidator

Duties of Official Liquidators

Liabilities of Official Liquidator

Expenses incurred by Official Liquidator in winding-up proceedings

No rule that sale to be by open auction

Guidelines for conduct of Company Court sales

Sale on "as is where is basis"

No confirmation of sale unless Court satisfied about adequacy of price

Setting aside of auction sale

Ordering resale

Cancellation of sale—Refund of purchase money

Forfeiture of earnest money

Refusal to set aside sale

Position of sub-lessee

Sub-tenancy created with consent of landlord

Handing over of the tenanted premises to the landlord

Electricity connection

Relevant Rules

458. Discretion of liquidator

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act 2002 (Act 11 of 2003)

Scope of the section

Liquidator empowered to act without sanction of Court

458-A. Exclusion of certain time in computing periods of limitation

Corresponding provision

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Applicability of the section

Computation of period of limitation

Period of limitation qua a claim by company in winding-up

459. Provision for legal assistance to liquidator

Corresponding provision

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Employment of Solicitor

Liquidator appointing pleader without Court's sanction

Speedier disposal of winding-up cases

460. Exercise and control of liquidator’s powers

Corresponding provision

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Exercise and control of Official Liquidator's powers

Power of an aggrieved person to apply to the Court

Right of appeal against the Liquidator's decision by aggrieved persons

Object of Committee of Inspection

461. Books to be kept by liquidator

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Books to be maintained by the Liquidator

Inspection of books and records of the Liquidator

Penalty for default

Compoundable offence

462. Audit of liquidator’s accounts

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Accounts to be submitted to the Court

Audit of accounts through the Court

Audited copy of accounts

Inspection of the audited accounts

Copy of audited accounts to be sent to creditors and contributories

Government company in liquidation

Procedure

Penalty for default

463. Control of Central Government over liquidators

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Complaint to Central Government

Examination of Liquidator

Investigation of books and vouchers

Removal of Official Liquidator

Delegation of powers to the Company Law Board

Committee of inspection

464. Appointment and composition of committee of inspection

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Liquidator's application to Court

Committee of Inspection in compulsory winding-up

Composition of the Committee of Inspection

Inspection of accounts by the Committee

Meeting

Quorum

Cessation of membership

Filling of vacancy

Functions and duties of Committee of Inspection

Principles of liability

Remuneration for the members of Committee of Inspection

Procedure

Penalty

Subject Index


Indian Company Law Volume 4

Indian Company Law
Volume 4

Contents
at-a-glance

Foreword
Preface to the Eleventh Edition
Preface to the Tenth Edition
Preface to the Ninth Edition
A word from the publishers
Detailed Contents
Abbreviation
Comparative Table
Table of Cases
Subject Index

 

465. Constitution and proceedings of committee of inspection
      General powers of Tribunal in case of winding up by Tribunal

466. Power of Tribunal 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 Tribunal 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 Tribunal

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 Tribunal

481. Dissolution of company

Enforcement of and appeal from orders

482. Order made in any Court to be enforced by other Courts

483. Appeal 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 a 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 the 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 creditor’s 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

510. Provisions applicable to every voluntary winding up

511. Distribution of property of company

511-A. 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 Tribunal 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 Tribunal to have questions determined or powers exercised

519. Application of liquidator to Tribunal for public examination of promoters, directors, etc.

520. Costs of voluntary winding up

521. [* * *]

Chapter IV

winding up subject to supervision of court

522. [* * *]

523. [* * *]

524. [* * *]

525. [* * *]

526. [* * *]

527. [* * *]

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

529-A. Overriding preferential payments

530. Preferential payments

Effect of winding up on antecedent and other transactions

531. Fraudulent preference

531-A. 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 property in case of a company which is being wound up

536. Avoidance of transfers, etc., after commencement of winding-up

537. Avoidance of certain attachments, executions, etc., in winding up by Tribunal

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 Tribunal 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 the 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 Tribunal

557. Meetings to ascertain wishes of creditors or contributories

558. Tribunal or person before whom affidavit may be sworn

Provisions as to dissolution

559. Power of Tribunal to declare dissolution of company void

560. Power of Registrar to strike defunct company off register

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

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

Part IX

Companies authorised 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

Part IX-A
Chapter I

producer companies

581-A. Definitions

Chapter II

Incorporation of producer companies
and other matters

581-B. Objects of Producer Company

581-C. Formation of Producer Company and its registration

581-D. Membership and voting rights to Members of Producer Company

581-E. Benefits to Members

581-F. Memorandum of Producer Company

581-G. Articles of association

581-H. Amendment of memorandum

581-I. Amendment of articles

581-J. Option to inter-State co-operative societies to become Producer Companies

581-K. Effect of incorporation of Producer Company

581-L. Vesting of undertaking in Producer Company

581-M. Concession, etc., to be deemed to have been granted to Producer Company

581-N. Provisions in respect of officers and other employees of inter-State co-operative society

Chapter III
Management of producer company

581-O. Number of directors

581-P. Appointment of directors

581-Q. Vacation of office by directors

581-R. Powers and functions of Board

581-S. Matter to be transacted at general meeting

581-T. Liability of directors

581-U. Committee of directors

581-V. Meetings of Board and quorum

581-W. Chief Executive and his functions

581-X. Secretary of Producer Company

581-Y. Quorum

581-Z. Voting rights

Chapter IV
General meetings

581-ZA. Annual general meetings

Chapter V
Share capital and members rights

581-ZB. Share capital

581-ZC. Special user rights

581-ZD. Transferability of shares and attendant rights

Chapter VI
Finance, accounts and audit

581-ZE. Books of account

581-ZF. Internal audit

581-ZG. Duties of auditor under this Part

581-ZH. Donations or subscription by Producer Company

581-ZI. General and other reserves

581-ZJ. Issue of bonus shares

Chapter VII
Loans to members and investments

581-ZK. Loan, etc., to Members

581-ZL. Investment in other companies, formation of subsidiaries, etc.

Chapter VIII
Penalties

581-ZM. Penalty for contravention

Chapter IX
Amalgamation, merger or division

581-ZN. Amalgamation, merger or division, etc., to form new Producer Companies

Chapter X
Resolution of disputes

581-ZO. Disputes

Chapter XI
Miscellaneous provisions

581-ZP. Strike off name of Producer Company

581-ZQ. Provisions of this Part to override other laws

581-ZR. Application of provisions relating to private companies

Chapter XII
reconversion of producer company to inter-state co-operative society

581-ZS. Reconversion of Producer Company to inter-State co-operative society

581-ZT. Power to modify Act in its application to Producer Companies

Part X

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

590. Saving and construction of enactments conferring power to wind up partnership, association or company in certain cases

Part XI
Companies incorporated outside india

Provisions as to establishment of place 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

605-A. Offer of Indian Depository Receipts

606. Penalty for contravention of Sections 603, 604 and 605

607. Civil liability for mis-statements in prospectus

608. Interpretation of provisions as to prospectuses

Part XII
Registration offices and officers and fees

609. Registration offices

610. Inspection, production and evidence of documents kept by Registrar

610-A. Admissibility of micro films, facsimile copies of documents, computer printouts and documents on computer media as documents and as evidence

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

614-A. Power of Court trying offences under the Act to direct the filing of documents with Registrar

Part XIII
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

616. Application of Act to insurance, banking, electricity supply and other companies governed by special Acts

Application of Act to Government companies

617. Definition of "Government Company"

618. [* * *]

619. Application of Sections 224 to 233 to Government companies

619-A. Annual reports on Government companies

619-B. 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

620-A. Power to modify Act in its application to Nidhis, etc.

620-B. Special provisions as to companies in Goa, Daman and Diu

Special provisions as to companies in Jammu and Kashmir

620-C. Special provisions as to companies in Jammu and Kashmir

Offences

621. Offences against Act to be cognizable only on complaint by Registrar, shareholder or Government

621-A. Composition of certain offences

622. Jurisdiction to try offences

623. Certain offences triable summarily in Presidency towns

624. Offences to be non-cognizable

624-A. Power of Central Government to appoint company prosecutors

624-B. 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

629-A. 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

634-A. Enforcement of orders of Company Law Board

635. Enforcement of orders of one Court by other Courts

635-A. Protection of acts done in good faith

635-AA. Non-disclosure of information in certain cases

Temporary protection of employees

635-B. Protection of employees during investigation by inspector or pendency or proceeding before Appellate Tribunal in certain cases

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

637-A. Powers of Central Government or Tribunal to accord approval, etc., subject to conditions and to prescribe fees on applications

637-AA. Power of Central Government to fix a limit with regard to remune-ration

637-B. Condonation of delays in certain cases

Annual Report on working of Act

638. Annual report by Central Government

639. [* * *]

Validation of registration of firms in certain cases

640. Validation of registration of firms as members of charitable and other companies

Computation of time for filing orders of Court or the Tribunal

640-A. Exclusion of time required in obtaining copies of orders of Court or tribunal

Schedules, forms and rules

640-B. Forms of, and procedure in relation to, certain applications

641. Power to alter Schedules

642. Power of Central Government to make rules

643. Power of Central Government to make rules relating to winding up

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

647-A. Transfer of winding up proceedings to Tribunal

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. [* * *]

651. Construction of references to extraordinary resolution in articles etc.

651-A. Reference of winding up of companies in other laws

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

655. Funds and accounts under Act to be in continuation of funds and accounts under previous companies laws

656. Saving of incorporation under repealed Acts

657. Saving of certain Tables under previous companies laws

658. Section 6 of the General Clauses Act, 1897 (10 of 1897), to apply in addition to Sections 645 to 657 of Act

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 C—Memorandum and articles of association of a company limited by guarantee and not having a share capital

TABLE D—Memorandum and articles of association of a company limited by guarantee and having a share capital

TABLE E—Memorandum and articles of association of an unlimited company

TABLE F—Form of statement to be published by limited banking companies, insurance companies and deposit, provident of benefit societies

Schedule I-A List of relatives

SCHEDULE II Matters to be specified in prospectus and reports to be set out therein

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

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

Schedule v Annual return contents and form of annual return of a company having a share capital

Schedule vi

schedules vii Redundant after abolition of the system of managing

and viii agents, secretaries and treasurers by Act 17 of 1969, w.e.f. 3-4-1970

Schedule ix Form of proxy

Schedule x Table of fees to be paid to the registrar

Schedule 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

Schedule xiv Rates of depreciation

Schedule xv

Subject Index

 

Detailed Contents

465. Constitution and proceedings of committee of inspection

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the Section

Fiduciary position of Committee of Inspection

Procedure

General powers of Tribunal in case of winding up by Tribunal

466. Power of Tribunal to stay winding up

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the section

When an application is to be made

Who can make the application ?

Powers of the Court in a compulsory winding-up

Powers of Court to stay winding-up

Voluntary winding-up

Winding-up order not to be questioned under this section

Appeal from order

Procedure

Penalty

467. Settlement of list of contributories and application of assets

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Settlement of list of contributories and application of assets

Exceptions

Duty of Court

Procedure

468. Delivery of property to liquidator

Corresponding provisions

Legislative History—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the section

Applicability of the section

Power to require delivery of money, property or documents

Employees

"At any time"—Applicability of the period of limitation

Recovery of possession

Where the section is not applicable

Sections 468 and 518—Court's assistance available

Foreign judgment in rem

Appeal

Procedure

469. Payment of debts due by contributory and extent of set-off

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the section

Applicability of the section

Power to order payment of debts and to allow set-off

Calls made before liquidation

Set-off and mutual credit

Limitation

Enforcement of payment order

Procedure

470. Power of Tribunal to make calls

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Power of Court to make calls

Balance order

Interest

Limitation

Procedure

Appeal

471. Payment into bank of moneys due to company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Power of Court to order payment into bank

Enforcement of order—Jurisdiction

Procedure

Relevant Rules

472. Moneys and securities paid into bank to be subject to order of Tribunal

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Reserve Bank of India to hold moneys subject to the orders of the Court

Garnishee order—Liquidator's account in bank

473. Order on contributory to be conclusive evidence

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Conclusive evidence

474. Power to exclude creditors not proving in time

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Object of the section

Fixing of a time-limit

Power to exclude creditors not proving in time

Voluntary winding-up

Procedure

475. Adjustment of rights of contributories

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Rights of contributories

Advance payment

Position of creditors

Procedure

476. Power to order costs

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Costs, charges and expenses

Power of the Court to order costs

Priority of payments

Relevant Rules

477. Power to summon persons suspected of having property of company, etc.

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the section

Who can apply ?

Who can be summoned ?

When can be summoned

Power to summon and conduct examination of persons suspected to be in possession of any property of the company, or supposed to be indebted to the company, or capable of giving information regarding the trade, dealings, affairs or property of the company

Discharge from liability

Non-compliance

Examination held under this section a private one

Deposition

Voluntary winding-up

Procedure

478. Power to order public examination of promoters, directors, etc.

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the section

Power to order public examination of any person or of any Promoters, Directors, Company Secretaries, Managers or officers of the company on a Report made by the Liquidator

Who can be examined ?

Who are to take part in the examination ?

Conduct of the examination

Principles of natural justice

Privileged statement

Power to pass ex parte order

Voluntary winding-up

Appeal

Not violative of Article 20 (3) of the Constitution

Costs

Procedure

479. Power to arrest absconding contributory

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Powers of the Court to have an absconding contributory arrested

Immovable property

Voluntary winding-up

480. Saving of existing powers of Tribunal

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Act confers additional powers on the Court

Recall of order

481. Dissolution of company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Circumstances when order for dissolution will be made

Date of dissolution

Dissolution of company

Dissolution—Meaning of

Bona vacantia

Secured creditor not affected

Filing of order of dissolution

Penalty

Compoundable offence

Registrar's duty

Procedure

Enforcement of and appeal from orders

482. Order made in any Court to be enforced by other Courts

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Order made in any Court may be enforced in any place in India other than in which the Court making the order is situate

Appeal

483. Appeal from orders

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Principle of appealability

Appeals from winding-up orders

Appeal against winding-up order

Power of Review

Period of Limitation

Condonation of delay

Impleadment of guarantor—A necessary party in appeal

chapter iii

voluntary winding up

Resolutions for, and commencement of, voluntary winding up

484. Circumstances in which company may be wound-up voluntarily

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Circumstances under which a company may be wound-up voluntarily

Contrary provisions in the Articles void

Resolution for voluntary winding-up

No interference by the Court

Validity of a resolution for voluntary winding-up

Indian Companies (Foreign Interests) Act, 1918

Commencement of winding-up

Compulsory and voluntary winding-up

Where circumstances of suspicion revealed on investigation

Passing of winding-up resolution during pendency of compulsory winding-up proceedings in Court

Position of Liquidator in voluntary winding-up

Effect of voluntary winding-up

485. Publication of resolution to wind-up voluntarily

Corresponding provisions

Legislative history—The Companies Act., 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Notice of resolution for voluntary winding-up to be given by the company in the Official Gazette

Penalty for default

Compoundable offence

486. Commencement of voluntary winding up

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Commencement of voluntary winding-up

Commencement of winding-up under supervision of the Court

Commencement of winding-up where voluntary liquidation superseded by compulsory liquidation

Consequences of voluntary winding up

487. Effect of voluntary winding up on status of company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Object of the section

Consequences of voluntary winding-up

Lease

Discharge of employees

Vesting of property

Income-tax liability

Pending litigation

Declaration of solvency

488. Declaration of solvency in case of proposal to wind-up voluntarily

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Members' voluntary winding-up and creditors voluntary winding-up

Condition precedent

Declaration of solvency

Procedure

Effect of non-filing of declaration of solvency—Department's view

Cases where the declaration of solvency has been filed but Section 488 (2) have not been complied with

Checking-up of declaration of solvency—Registrars should check up the resolutions and give necessary advice to the company

Penalty for default

Compoundable offence

Provisions applicable to a members’ voluntary winding up

489. Provisions applicable to a members’ voluntary winding up

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Members' voluntary winding-up

490. Power of company to appoint and fix remuneration of liquidators

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Appointment and remuneration of Liquidators in a members' voluntary winding-up

Liquidator's remuneration—Source of payment

Joint Liquidators

Corporation not to be appointed as voluntary Liquidator

Corrupt inducement affecting appointment as Liquidator

Legal position of voluntary Liquidators

Voluntary Liquidator stands in a fiduciary relationship towards his company and the creditors of the company

Voluntary Liquidator is an agent of the company whose Liquidator he is appointed

Appointment of firm of Chartered Accountants as Liquidator in winding-up—Department's view

491. Board’s powers to cease on appointment of a liquidator

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Effect of appointment of a Liquidator or Liquidators

492. Power to fill vacancy in office of liquidator

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Filling of a vacancy in the office of Liquidator and removal of Liquidator

Resignation of Liquidator

Relevant Rules

493. Notice of appointment of liquidator to be given to Registrar

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Notice to Registrar

Liquidator's duty to give notice

Penalty for default

Compoundable offence

Notice of appointment of Liquidator to the income-tax authorities—Department's view

494. Power of liquidator to accept shares, etc., as consideration for sale of property of company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope and applicability of the section

Object of the section

Memorandum and Articles cannot override the provisions of this section.

Statutory right

Purchasing company must be in existence

Agreement

Meeting and resolution

Time of passing resolution

Creditors

Right of dissentient shareholders

Court's jurisdiction

Arbitration

Scheme may be challenged

Passive member

Appeal

495. Duty of liquidator to call creditors’ meeting in case of insolvency

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

In case of insolvency Liquidator to call creditors' meeting

Penalty

Compoundable offence

Procedure

496. Duty of liquidator to call general meeting at the end of each year

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

General Meeting

Accounts

Procedure

Delegation of powers to the Regional Directors

Fees on application to the Central Government under Section 496 (1) (a) and Section 551 of the Companies Act, 1956 under Companies (Fees on Application) Rules, 1961—Department's view

Penalty for default

Compoundable offence

497. Final meeting and dissolution

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2000 (Act 11 of 2003)

Scope of the section

Dissolution of the company after voluntary winding-up

Position of Liquidator after dissolution

Official Liquidator's duty

Petition for compulsory winding-up after dissolution

Proviso to sub-section (5)

Court's power

Inspection

Procedure

Scrutiny of accounts under Section 497/509—Department's view

Problems and difficulties arising out of administration of Section 497/509—Instructions regarding

Penalty

Compoundable offence

498. Alternative provisions as to annual and final meetings in case of insolvency

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Alternative provisions

Provisions applicable to a creditors’ voluntary winding up

499. Provisions applicable to a creditor’s voluntary winding up

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Procedure where Sections 209-A to 209-H of the previous Act not followed

500. Meeting of creditors

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Meeting of the creditors

Failure to hold creditors' meeting not fatal

Notice

Penalty for default

Compoundable offence

Procedure

501. Notice of resolutions passed by creditors’ meeting to be given to Registrar

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Notice of resolutions to be given to Registrar

Notice to the income-tax authorities

Penalty for default

Compoundable offence

Prescribed form

502. Appointment of liquidator

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Appointment of liquidator in a creditors' voluntary winding-up

Removal of Liquidator

503. Appointment of committee of inspection

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Appointment of Committee of Inspection

Procedure

504. Fixing of liquidators’ remuneration

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Fixing of Liquidator's remuneration

Limitation of remuneration

Relevant Rules

505. Board’s powers to cease on appointment of liquidator

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Effect of appointment of Liquidator

Sections 491 and 505

Procedure

506. Power to fill vacancy in office of liquidator

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Filling of any vacancy in the Liquidator's office

Resignation

Decision on resignation of the Liquidator

507. Application of Section 494 to a creditors’ voluntary winding up

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

508. Duty of liquidator to call meetings of company and of creditors at end of each year

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Object of the section

General meetings

Creditors' meetings

Facts to be placed before the meetings

Procedure

Delegation of powers to the Regional Directors

Penalty

Compoundable offence

509. Final meeting and dissolution

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Final accounts of winding-up

Final meeting of members and creditors

Convening of meetings

Quorum

Filing of return

Registrar's duty

Official Liquidator

Instructions regarding problems and difficulties—Department's view

Second report

Dissolution

Effect of dissolution

Procedure

Bona vacantia

Penalty for default

Compoundable offence

Provisions applicable to every voluntary winding up

510. Provisions applicable to every voluntary winding up

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Provisions applicable to every voluntary winding-up

511. Distribution of property of company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Distribution

Distribution before payment of debts not proper

Preferential payments

Liquidator to provide for all debts and liabilities

Rights of preference shareholders

Preference shareholders entitled to arrears of dividend

Advance of calls

Contributory

Trust money

Debts incurred in the course of winding-up

Delayed claim

Penalty

511-A. Application of Section 454 to voluntary winding up

Corresponding provisions

Legislative history—The Companies Act, 1965 (Act 31 of 1965)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Statement of affairs by officers

512. Powers and duties of liquidator in voluntary winding up

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Rights of the Liquidator

Powers of the Liquidator

Duties of voluntary Liquidators

Liabilities of voluntary Liquidators

Joint Liquidators

Supervision by Court

Procedure

Penalty

513. Body corporate not to be appointed as liquidator

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Firm of accountants not a body corporate

Penalty for default

Compoundable offence

514. Corrupt inducement affecting appointment as liquidator

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Penalty for inducement for appointment as Liquidator

515. Power of Tribunal to appoint and remove liquidator in voluntary winding up

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope and applicability of the section

Power of the Court to appoint and remove a Liquidator in voluntary winding-up

Who can apply ?

Removal of Liquidator—Condition precedent

Registrar's application

Remuneration of Official Liquidator

Procedure

Proposals for resorting to the provisions of Section 440 instead of Section 515, in regard to companies in voluntary liquidation—Department's view

Appeal

516. Notice by liquidator of his appointment

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Notice by Liquidator of his appointment

Section 178 of the Income-tax Act

Penalty for default

Compoundable offence

517. Arrangement when binding on company and creditors

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Arrangement between company and its creditors

Arrangement or compromise

Approval by meeting

Dissenting creditor or contributory

Section 391

518. Power to apply to Tribunal to have questions determined or powers exercised

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the section

Power to apply to the Court to have question determined or powers exercised

Who may apply to the Court ?

Purposes of application

Withdrawal of petition

Transfer of suit

Forum

Court's powers

Procedure

Rule

Filing

Penalty

519. Application of liquidator to Tribunal for public examination of promoters, directors, etc.

Corresponding provisions

Legislative history—The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Report of the Liquidator

Duty of Liquidator

Powers of the Court

Examination of outsiders and privileged documents

Considerations for guidance of Court in ordering public examination

Ex parte order of public examination

Provisions of Section 478 made applicable for examination

Admissibility of evidence

Civil and criminal proceedings—Concurrent

Invocation of provisions of Section 478

Relevant Rules

520. Costs of voluntary winding up

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Manner in which the voluntary Liquidator must discharge the obligations of the company

Claims of secured creditors

521. Saving of rights of creditors and contributories to apply for winding-up

[Omitted by Act 65 of 1960]

chapter Iv

winding up subject to supervision of court

522. Power to order winding up subject to supervision

[Omitted by Companies (Second Amendment) Act, 2002]

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Winding-up subject to supervision of Court

Object of supervision order

Court may have regard to the wishes of creditors and contributories

Appeal

Procedure

523. Effect of petition for winding up subject to supervision

[Omitted by Companies (Second Amendment) Act, 2002]

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Effect of petition for winding-up subject to supervision

Commencement of winding-up under supervision

524. Power of Court to appoint or remove liquidators

[Omitted by Companies (Second Amendment) Act, 2002]

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Power of the Court to appoint Liquidators

Remuneration of Liquidator

Power of the Court to remove any Liquidator and fill vacancy

Procedure

525. Powers and obligations of liquidator appointed by Court

[Omitted by Companies (Second Amendment) Act, 2002]

Corresponding provisions

Legislative history—The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Powers and duties of the Liquidator and the additional Liquidator

526. Effect of supervision order

[Omitted by Companies (Second Amendment) Act, 2002]

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Effect of supervision order

Advantages of voluntary winding-up under supervision of the Court

527. Appointment in certain cases of voluntary liquidators to office of liquidators

[Omitted by Companies (Second Amendment) Act, 2002]

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Winding-up under supervision may be superseded by a winding-up by the Court

Additional Liquidators in compulsory winding-up

Procedure

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

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Object of the section

Applicability of the section

Debts provable

Contributory's claim

Creditor's debt as on date of presentation of winding-up petition

Interest

Interest ceases on commencement of winding-up

Foreign creditors' claim

Right of set-off

Insurance policies

Actionable claims

Proof of debts

Debts which can be proved

Limitation

Appeal

Procedure

529. Application of insolvency rules in winding up of insolvent companies

Corresponding provisions

Legislative history—The Companies Act 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1985 (Act 35 of 1985)

Scope of the section

Winding-up of company and insolvency of individual

Meaning of insolvency of a company

Effect of bankruptcy rules

Interest

Secured creditor

Position of secured creditor

Remedies of secured creditor

Advertisement expenses when to be reimbursed by secured creditor

Landlord

Guarantor's position

Solicitor's position

Draft by bank

Priority for workers dues in company liquidation under 1985 amendment

Priority of "workmen's dues"

Mutual dealings and set-off

Claims of persons who had left property with the company to be kept by the company as trustee or as bailee or for safe custody

Procedure

529-A. Overriding preferential payments

Legislative history—The Companies (Amendment) Act, 1985 (Act 35 of 1985)

Scope of the section

Priority of payments

Priority of claims of workmen's dues and secured creditors

Provident fund contributions

Payment in full

Part payment of dues to workmen

Proof and ranking of workmen's claims

Rohtas Industries case

Workmen of a subsidiary company

State Financial Corporations

Sale of properties—Necessity of valuation

Interest to secured creditors

Sick industrial company—Scheme of rehabilitation

Retrospective effect of the Amendment Act, 1985

530. Preferential payments

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1985 (Act 35 of 1986)

The Companies (Amendment) Act, 1996 (Act 22 of 1996)

Scope of the section

Overriding effect of Section 529-A

Preferential payments

Overriding preferential payments

Relevant date for computing workmen's dues

Priority of debts due to the Government

Meaning of Revenue

Income-tax and other taxes

Capital gains tax whether expense of winding-up ?

Wages or salary of any clerk or servant

Provident fund and securities deposited by employees

Floating charge in favour of debenture-holders

Priority of costs, charges and expenses

When a security deposit is trust money

Deposits in banks

Advocate's fees

Procedure

Winding-up preferential payment—Amount notified for priority of payments for purpose of Section 530 (1) (b)

Effect of winding up on antecedent and other transactions

531. Fraudulent preference

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Insolvency rule as to fraudulent preference and its application to winding-up of an insolvent company

What constitutes fraudulent preference

Payments under directions of the Court

Intention to favour creditors over others

Onus of proof

Fraudulent preference not to be pleaded in defence

Proceedings against ex-Directors

Pledge of goods—Not an act of preferential treatment

Payment under consent order—Not fraudulent preference

Transfer—Annulment of

Availability of writ jurisdiction for deciding fraudulent preference

531-A. Avoidance of voluntary transfer

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Avoidance of voluntary transfer

Transaction void against the Liquidator

Exception

Fraudulent transfer

Burden of proof

532. Transfers for benefit of all creditors to be void

Corresponding provisions

Scope of the section

533. Liabilities and rights of certain fraudulently preferred persons

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the Section

Object of the section

Liabilities and rights of certain fraudulently preferred persons

Surety

534. Effect of floating charge

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Object of the section

Effect of floating charge

Effect of the section

At the time of

Cash paid to the company

"In consideration for the charge"

Applicability of Clayton's case rule

535. Disclaimer of onerous property in case of a company which is being wound up

Corresponding provisions

Legislative History—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the section

Disclaimer of onerous property

Effect of disclaimer

Who can apply ?

Leave to disclaim

Request to Liquidator to disclaim

Application to Court for disclaimer

Vesting order

Transfer of tenancy rights

Procedure

Penalty for default

536. Avoidance of transfers, etc., after commencement of winding-up

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Applicability of Section 536

Transfer of share and alteration in the status of members after the commencement of the winding-up.

Discretion of the Court under Section 536 (2)

Liability for dishonoured cheques

Specific performance—Shares

Who can make the application?

Bank

"In the winding up"

537. Avoidance of certain attachments, executions, etc., in winding up by Tribunal

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1965)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section.

Object of the section

Applicability of Section 537

Section not binding on State Financial Corporations

Avoidance of attachment, distress or execution put into force without leave of the Court

Leave of the Court.

Position of secured creditor

Partnership converted into company

After commencement of winding-up

Sections 442, 446 and 537

Limitation period for setting aside a sale

Legal proceedings—Connotation of

Offences antecedent to or in course of winding up

538. Offences by officers of companies in liquidation

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Applicability of the section

Officer—Connotation of

Obligation of past and present officer of a company to help the Liquidator

Burden of proof and punishment

Pledgee knowingly receiving property

Punishment for default of sub-section (1)

Compoundable offence

Defence

Proceedings for recovery of fine

Action under other law

539. Penalty for falsification of books

Corresponding provisions

Legislative History—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Penalty for falsification of books and penalty for giving false evidence

Wilful misconduct

Intention

Frauds by officers of companies which have gone into liquidation—English Act, 1929

Penalty for default

Compounding

540. Penalty for frauds by officers

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Penalty for frauds by officers

Transfer

Liability for non-compliance with the provisions of the Act

Misfeasance proceedings

Penalty for default

Compounding

541. Liability where proper accounts not kept

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Proper books

Incomplete records

Liability for not keeping accounts

Defence

Auditor

542. Liability for fraudulent conduct of business

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2000 (Act 11 of 2003)

Scope of the section

Object of the section

Liability for fraudulent conduct of business

Right to apply—When accrues

Party to carrying on a business

Who can make the application

Proceedings against legal representatives

Court's power

Fraudulent conduct of business—Requirements of penalty for

Failure to take steps for recovery of debts

Section 542 and Limitation Act

Extended period of limitation under Section 458-A not available

Procedure

Compoundable offence

Penalty

543. Power of Tribunal to assess damages against delinquent directors, etc.

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Object and scope of section—Summary powers

Power of Court to asses damages against delinquent Directors, Promoters, Manager, Liquidator or any officer of the company

Who are liable under Section 543 ?

Meaning of Officers

Application to the Court for an order under Section 543

Pecuniary loss to company—Locus standi of applicant

Limitation

Powers of the Court

Court's power to quash proceedings

Sanction of the Court

Meaning of misfeasance

Permitting debt to become time-barred

Acts not amounting to misfeasance

Fraud need not be proved

Onus probandi

No proof of possession

Measure of damages

Set-off not allowed

Deceased Director/officer and liability of their heirs

Jurisdiction

Combined application under Sections 397/398 and 543

Appeal

Proceedings under Section 543 bar the right to institute subsequent suit

Procedure

544. Liability under Sections 542 and 543 to extend to partners or directors in firm or company

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

545. Prosecution of delinquent officers and members of the company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Prosecution of delinquent Directors, Managers, officers or members of company

Who can make application ?

Voluntary winding-up

Duty of Liquidator, officers and agents of company

Sections 543 and 545

Prosecution of delinquent Directors at public expense—English Act, 1929

Sub-section (6)

Appeal

Penalty

Miscellaneous provisions

546. Liquidator to exercise certain powers subject to sanction

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the section

Powers of Liquidators

Sanction of the Court

Supreme Court Rules

Control of the Court over the Liquidator

Procedure for sanction of Court

547. Notification that a company is in liquidation

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Penalty for default

Compoundable offence

548. Books and papers of company to be evidence

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Onus

549. Inspection of books and papers by creditors and contributories

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Inspection of documents

Procedure

550. Disposal of books and papers of company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Disposal of documents of the company

Court's order

Special resolution of General Meeting

Committee of Inspection or Directors

Limitation—Five years

Overriding powers of the Central Government

Procedure

Penalty for default

Compoundable offence

551. Information as to pending liquidations

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Government company in liquidation

Form

Inspection

Compoundable offence

Trial and appeal

Delegation of powers of the Central Government

Delayed filing of statements by Liquidators pursuant to Section 551—Department's view

Fees on application to the Central Government under Section 496 (1) (a) and Section 551 under Companies (Fees on Applications) Rules, 1961—Department's view

Penalty

552. Official Liquidator to make payments into the public account of India

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Contravention

Relevant rules

Rules made by the Central Government under Section 552

553. Voluntary liquidator to make payments into Scheduled Bank

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Voluntary Liquidators must make payments into scheduled bank

No retention of money by the Liquidator

Bank's position

Deposit of funds available with Official Liquidators—Department's view

554. Liquidator not to pay moneys into private banking account

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Contravention

555. Unpaid dividends and undistributed assets to be paid into the Companies Liquidation Account

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Unclaimed dividends and undistributed assets to be paid into the Company's Liquidation Account.

Winding-up—Provisions applicable to every mode of winding-up—Deposit of surplus funds available with Official Liquidator in nationalised bank—Whether Court's approval is to be obtained

Manner of payment

Payment of dividend/return of share capital to parties—Cheques issued but not enchased within the period prescribed under Section 555—Procedure to be followed—Department's view

Deductions from unpaid dividends and undistributed assets paid into the Companies Liquidation Account—Instructions regarding

Comments on the circular

Payment out of the Companies Liquidation Account

Payments from Companies Liquidation Account—Department's view

Endorsement should be made on the original documents at the time of making payment

Procedure for application (by claimant) to Central Government

Delegation of powers to the Regional Directors

Department instructions as regards applications to Central Government under sub-section (7) (b) of Section 555—Department's view

Transfer to General Revenue Account after 15 years

Penalty for not paying moneys into the account

Default committed by a Liquidator under Section 555—Department's view

Contravention

Unclaimed dividend or undistributed assets

Company not entitled

Procedure

Relevant Rules

556. Enforcement of duty of liquidator to make returns, etc.

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Costs

Supplementary provision

Procedure

Supplementary powers of Tribunal

557. Meetings to ascertain wishes of creditors or contributories

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Powers of the Court are discretionary

Meetings to ascertain the wishes of creditors or contributories

Court's duty

Procedure

558. Tribunal or person before whom affidavit may be sworn

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Affirmation of affidavit—India

Foreign countries

Judicial notice to be taken

Procedure

Provisions as to dissolution

559. Power of Tribunal to declare dissolution of company void

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Power of the Court to declare dissolution void

Effects of Court's order declaring dissolution void

Property or assets found to exist after dissolution

Voluntary winding-up not to bar the right of any contributory or creditor to have it wound-up by the Court

Filing

Procedure

Penalty for default

Compundable offence

560. Power of Registrar to strike defunct company off register

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Removal of defunct companies from register

Formalities to be observed

Company in winding-up

Formalities when a company is being wound-up

Failure to raise capital within permitted time period

Registrar's power to remove the name of a company from the register

Prosecution not warranted if Registrar refused to strike-off the company

Dissolution

Effect

Winding-up of defunct company

Restoration of the name of the company to the register

Restoration to register and registration of charge with retrospective effect

Who can make application ?

Grounds for restoration

Order of restoration when effective

Effect of restoration of a company to the register

Costs

Appeals

Procedure

Relevant rules

Notice to be sent to the income-tax authorities also—Department's view

Policy followed with regard to weeding out defunct companies—Department's view

Liberalised procedure for striking-off the names of companies under Section 560—Department's view

Simplification of the existing procedure for removal of the names of defunct Indian companies from the registers of companies under Section 560

Striking-off names of defunct companies—Simplified Exist Scheme, 2005

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

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Existing company

562. Application of Act to companies registered but not formed under previous companies laws

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

563. Application of Act to unlimited companies registered under previous companies laws

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

564. Mode of transferring shares in the case of companies registered under Acts 19 of 1857 and 7 of 1860

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Applicability of Sections 561 to 564

Part IX

companies authorised to register under this act

565. Companies capable of being registered

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Jammu and Kashmir (Extension of Laws) Act, 1956 (Act 62 of 1956)

Scope of the section

Companies which can be registered

Special majority

Companies incorporated in a foreign country

Partnership firm

Registration of partnership firm as joint-stock company—Department's circular

Registration of partnership firm as a company

Form and Procedure

566. Definition of "joint-stock company"

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Joint-stock companies and their registration

567. Requirements for registration of joint-stock companies

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Conditions/Requirements for registration

Form and procedure

Registration of partnership firm as a company

568. Requirements for registration of companies not being joint-stock companies

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of section

Registration of companies other than joint-stock companies

Registration of partnership firm as a company

Form and procedure

569. Authentication of statements of existing companies

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Authentication of statements

Penalty

Prescribed forms

570. Power of Registrar to require evidence as to nature of company

Corresponding provisions

Legislative history—The Companies Act, 1956 (1 of 1956)

Scope of the section

Registrar's power to require evidence as to the nature of the company intended to be registered

571. Notice to customers on registration of banking company with limited liability

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope

Omission to give notice

572. Change of name for purposes of registration

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Name to be desirable

Approval of the members

Delegation of powers of the Central Government

573. Addition of "Limited" or "Private Limited" to name

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Addition of the word's "limited" or "private limited"

574. Certificate of registration of existing companies

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Certificate of registration

575. Vesting of property on registration

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Vesting of property

576. Saving for existing liabilities

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Saving from liabilities

577. Continuation of pending legal proceedings

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Decree

578. Effect of registration under Part

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Effect of registration of incorporated company

Companies Act, 1956 to apply

Exceptions

Provisions of the Act will prevail over other Acts or instruments

Alterations

Whole of the Act is applicable except as stated in the section—Department's circular

Delegation of powers to the Company Law Board

579. Power to substitute memorandum and articles for deed of settlement

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Meaning of "Deed of Settlement"

Power of the company to substitute Memorandum and Articles for deed of settlement

Prescribed rules and forms

580. Power of Court to stay or restrain proceedings

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Staying of suits and proceedings

Who can apply ?

Sections 442, 580 and 586—Comparison between

581. Suits stayed on winding up order

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Part IX-A

chapter i

producer companies

581-A. Definitions

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

chapter ii

incorporation of producer companies and other matters

581-B. Objects of Producer Company

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-C. Formation of Producer Company and its registration

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-D. Membership and voting rights to Members of Producer Company

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-E. Benefits to Members

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-F. Memorandum of Producer Company

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-G. Articles of association

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-H. Amendment of memorandum

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-I. Amendment of articles

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-J. Option to inter-State co-operative societies to become Producer Companies

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-K. Effect of incorporation of Producer Company

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-L. Vesting of undertaking in Producer Company

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-M. Concession, etc., to be deemed to have been granted to Producer Company

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-N. Provisions in respect of officers and other employees of inter-State co-operative society

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

chapter iii

management of producer company

581-O. Number of directors

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-P. Appointment of directors

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-Q. Vacation of office by directors

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-R. Powers and functions of Board

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-S. Matter to be transacted at general meeting

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-T. Liability of directors

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-U. Committee of directors

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-V. Meetings of Board and quorum

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-W. Chief Executive and his functions

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-X. Secretary of Producer Company

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-Y. Quorum

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581-Z. Voting rights

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

chapter iv

general meetings

581ZA. Annual general meetings

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

chapter v

share capital and members rights

581ZB. Share capital

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581ZC. Special user rights

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581ZD. Transferability of shares and attendant rights

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

chapter vi

finance, accounts and audit

581ZE. Books of account

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581ZF. Internal audit

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581ZG. Duties of auditor under this Part

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581ZH. Donations or subscription by Producer Company

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581ZI. General and other reserves

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581ZJ. Issue of bonus shares

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

chapter vii

loans to members and investments

581ZK. Loan, etc., to Members

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581ZL. Investment in other companies, formation of subsidiaries, etc.

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

chapter viii

penalties

581ZM. Penalty for contravention

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

chapter ix

amalgamation, merger or division

581ZN. Amalgamation, merger or division, etc., to form new Producer Companies

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

chapter x

resolution of disputes

581ZO. Disputes

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

chapter xi

miscellaneous provisions

581ZP. Strike off name of Producer Company

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581ZQ. Provisions of this Part to override other laws

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581ZR. Application of provisions relating to private companies

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

chapter xii

reconversion of producer company to inter-state co-operative society

581ZS. Reconversion of Producer Company to inter-State co-operative society

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

581ZT. Power to modify Act in its application to Producer Companies

Legislative history—The Companies (Amendment) Act, 2002 (Act 1 of 2003)

Scope of the section

Part X

winding up of unregistered companies

582. Meaning of "unregistered company"

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Jammu and Kashmir (Extension of Laws) Act, 1956 (Act 62 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Applicability of the section

"More than seven members"—Meaning of

Meaning of "unregistered company"

Partnership

Investigation of affairs not permissible

583. Winding up of unregistered companies

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Applicability of the section

Winding-up of unregistered companies

Registered society

Jurisdiction

Foreign company

Effect of winding-up of a foreign company

Arbitration not a bar

584. Power to wind up foreign companies, although dissolved

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Effect of the section

Foreign company, though dissolved, may be wound-up

Benefit would accrue to creditors

Remittance of proceeds of winding-up

585. Contributories in winding up of unregistered company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Contributories in case of unregistered companies

Liability of contributories

586. Power to stay or restrain proceedings

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Staying of suits

587. Suits, etc., stayed on winding up order

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the section

Applicability of the section

Stay of suits, etc.

Sections 446, 581 and 587—Comparison between

588. Directions as to property in certain cases

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Provision as to vesting of property in Official Liquidator

Personal right or liability

Legal proceedings

589. Provisions of Part cumulative

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Applicability of provisions to winding-up of unregistered companies

Except in the event of its being wound-up

590. Saving and construction of enactments conferring power to wind up partnership, association or company in certain cases

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Part XI

companies incorporated outside india

Provisions as to establishment of place of business in India

591. Application of Sections 592 to 602 to foreign companies

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

Scope of the section

Applicability of Sections 592 to 602

Place of business

Indian citizen or body corporate holding 50% share capital in foreign company

592. Documents, etc., to be delivered to Registrar by foreign companies carrying on business in India

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

Scope of the section

Applicability of the section

Requirements as to companies established outside India

Establishment of place of business in India

Procedure for a foreign company establishing a place of business in India

Certification of copy

Service

Expression 'person' in Section 592 (1) (d) includes a 'company', as well—Department's view

Jurisdiction

Condonation of delay in filing document for registration

Form and Procedure

593. Return to be delivered to Registrar by foreign company where documents, etc., altered

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

Scope of the section

Return to be delivered to Registrar by foreign company and also where documents, etc. altered

Form and Procedure

594. Accounts of foreign company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Delegation of powers to the Company Law Board

Accounts of foreign company

Exemptions and modifications granted to the foreign companies under the proviso to Section 594 (1)—Department's view

Submission of Indian business accounts of foreign company—Modification of SRO 3216, dated 4-10-1957

Application for modification of the provisions of Section 594

Foreign insurance companies required to file with the Registrar, the same returns, which they file under the Insurance Act, 1938

Supplementary statement to explain the variation necessary, if the period of closing the Indian accounts as incorporated in the world accounts varies from the closing of the Indian accounts as filed with the Registrar

Form and Procedure

595. Obligation to state name of foreign company, whether limited, and country where incorporated

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Obligation to state name of foreign company, whether limited, and country of incorporation

596. Service on foreign company

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Service of process or notice on a company registered outside India

597. Office where documents to be delivered

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Office where documents should be delivered

Payment of filing fee

Notice of cessation of place of business

Filing and registration fees payable by foreign companies—Department's view

Registration of charges by foreign companies

Form and Procedure

598. Penalties

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Officers who are liable

Validity of contracts

Penalties

Compoundable offence

599. Company’s failure to comply with Part not to affect its liability under contracts, etc.

Scope of the section

Disability of foreign company to file suits and maintain actions in India

Suits in India against foreign corporations

Effect of non-compliance with Sections 592-597

Disability for legal proceedings of foreign companies

600. Registration of charges, appointment of receiver and books of account

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

Scope of the section

Registration of charges

Permission of the Reserve Bank of India

Right of debenture-holders and shareholders to copies of trust deed

Certain books to be kept at principal place of business

Annual return

Applicability of other provisions

Registrar

Filing

Form and Procedure

Foreign Companies Rules

601. Fees for registration of documents under Part

Corresponding provisions

Scope of the section

Fees for registration of documents

Mode of payment

Filing and registration fees payable by foreign companies—Department's circular

Revision of fees payable by foreign companies under Section 601 and additional fees payable by companies in respect of their applications relating to condonation of delay under Section 637-B

602. Interpretation of foregoing sections of Part

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Certified

Director

Place of business

Prospectus

Secretary

Prospectuses

603. Dating of prospectus and particulars to be contained therein

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Extent of applicability

Requirements as to prospectus

Dating

Prospectus to be void

Forms to accompany prospectus

Exception

Penalty for default

Compoundable offence

604. Provisions as to expert’s consent and allotment

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Consent of the expert

"Expert" defined

Manner of statement

Penalty

Compoundable offence

605. Registration of prospectus

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Certification

Document to be attached

Material contracts

Prescribed Rules

Penalty

Compoundable offence

605-A. Offer of Indian Depository Receipts

Legislative history—The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies Bill, 1997

Recommendations of working group

Scope of the section

Foreign companies

Rules

Dealings in IDR's

Compliance with FEMA

IDRs in DEMAT mode

Power to make rules

Penalty

606. Penalty for contravention of Sections 603, 604 and 605

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Persons liable

Knowingly responsible for the issue

Penalty for default

Compoundable offence

607. Civil liability for mis-statements in prospectus

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Civil liability

Criminal liability

608. Interpretation of provisions as to prospectuses

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Interpretation

Offer when not a public offer ?

Meaning of expressions

Part XII

registration offices and officers and fees

609. Registration offices

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Registration offices and fees

Offices

Regulations

Appointment of Registrars

Seal

Rights and duties of the Registrar—Rights

Duties

Registrars for States of Chhattisgarh Uttaranchal and Jharkhand

New ROC Office for Private Limited Companies in NCT of Delhi—Notification

Companies with Registered Offices in Nasik to come under ROC, Mumbai—Notification

Registration of companies and appointment of Registrars of Companies in States of Chhattisgarh, Uttaranchal and Jharkhand

Complaints against companies—DCA discretion for quick disposal

Citizen's Charter of Department of Company Affairs

610. Inspection, production and evidence of documents kept by Registrar

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the section

Inspection of documents kept by the Registrar

Prospectus

Prescribed fees

Delegation of powers to the Regional Directors

Subpoena, summons or process for production of documents

Certified copy admissible in evidence

Deregistration of documents

Function of the Registrar

Application to the Company Law Board

Documents kept by Registrar—Need not produce the originals in Court—Certified copies to be produced, unless the original is expressly called for by the Court

Photostat copies of documents—Suggestion for adoption—Registrars may in addition to their certifying typed/printed copies, certify the photostat copies

Correspondence between the Registrar and the company not a document kept by the Registrar

Inspection and copies of the documents kept by the Registrar to the Government Departments

Other documents—Department's instructions

Ledgerisation/Placement of documents—Department's instructions

Defective documents—Department's Press Note

Preservation of records and weeding out—Department's instructions

Disposal and preservation of records in offices of the Registrars of Companies

Information and facilitation counter of DCA

Government delegated its powers to four Regional Directors of Company Law in matters relating to the administration of the Companies Act, 1956—Department of Company Affairs fixes deadlines for time-bound disposal of cases to build investor confidence and make Companies Act, 1956 more responsive

Complaints against Companies—DCA directions for quick disposal

Trading and settlement in Dematerialised Securities

Revision of rate of fees payable by companies to Registrar of Companies

Revision of fees for copy of other documents in the offing

Companies (Central Government's) General Rules and Forms (Second Amendment) Rules, 2000

Prescribed Rules

Prescribed Regulations

610-A. Admissibility of micro films, facsimile copies of documents, com-puter printouts and documents on computer media as documents and as evidence

Legislative history

Scope

Deemed documents

Conditions for computer printouts

611. Fees in Schedule X to be paid

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Fees payable to Registrar in respect of matters mentioned in Scheduled X

Late filing fees

Condonation of delay

Properly filed

Refund

Mode of Payment

Re-submitting document after making necessary correction—Payment of fresh filing fees therewith is necessary—Department's view

Filing of defective documents—Courses open to Registrar

Pending/Defective documents in the offices of the Registrars of Companies

Removal of defects in the documents filed

Imposition of additional fee

Pre-acceptance procedural scrutiny

Registration of documents certified as correct by Company Secretary/ Chartered Accountant/Cost Accountant in practice

Authorisation for making corrections in defective documents filed by companies with the Registrars of Companies

Late filing—Payment of additional fee brings to an end the continuing liability but does not exonerate the company and officers from the liability they have already incurred until such filing of the documents

Whether fee is not payable by Liquidator/Receivers in respect of various statements, returns, etc., filed with Registrar under Section 552, 553 or 554 ?

Whether additional fee can be imposed even in a case where Court's order does not specifically mentioned filing of documents ?

Whether additional fee can be charged for delay in encashing cheque and whether bona fide postal delay can be overlooked by Registrar ?

Whether payment of additional fee exonerates company from liability already incurred until filing of document ?

Payment of fees by cheques and bank drafts

Fee for registration of an association not for profit

Fixed rates of additional fee for belated filing of documents

Applicability of revised fee for registration of company

Revision of rates of fees for applications made to Central Government by companies for approvals under the Companies Act, 1956—Effective date shifted to 10-8-1999

Company Law Settlement Scheme

612. Fees, etc., paid to Registrar and other officers to be accounted for to Central Government

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Payment to credit of Central Government

Prescribed Rules

613. Power of Central Government to reduce fees, charges, etc.

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Central Governments' powers

Variation/Cancellation of order

Power to alter Schedules

Fees—Power of Central Government to reduce—Notification regarding fees payable for registration of an association not for profit and licensed under Section 25

614. Enforcement of duty of company to make returns, etc., to Registrar

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Object of the section

Enforcement of duty of company to make returns, etc., to the Registrar

Officer

Effect of non-compliance

Application before Company Law Board

Section 614 supplementary

Procedure

Text of Circular

614-A. Power of Court trying offences under the Act to direct the filing of documents with Registrar

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Power of Court to direct the filing of documents with Registrar

Powers of the Court

Penalty

Compoundable offence

Part XIII

general

Collection of information and statistics from companies

615. Power of Central Government to direct companies to furnish information or statistics

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the Part XIII of the Act

Scope of the section

Collection of information and statistics from companies

Publication of the order

Service of the order

Supporting evidence

Enquiry

An order for inquiry must be made in writing naming the person(s) who will conduct such inquiry

Foreign company

Delegation of powers to the Company Law Board

Notification under Section 615

Notification No. SO 368 (E), dated 6-4-1988

Notification No. SO 464 (E), dated 2-5-1988

Penalty for non-compliance

Compoundable offence

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

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

Scope of the section

Effect of the section

Insurance companies

Banking companies

Electricity companies

Other bodies corporate

Application of Act to Government companies

617. Definition of "Government Company"

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Meaning of "Government company"

Stake of the Government

Status of Government company

Status of employees

Government company is a separate legal person

Privileges of a Government company

Subsidiary company

Application of Insolvency Acts

Factors in considering whether Government company "other authority"

Race Club formed to promote race meetings

Writ petition

Public Interest Litigation

Application of M.R.T.P. Act to Government companies

Government NBFCs

Disinvestment

Listing and disinvestment of shares held by Public Sector Enterprises—Department's circular

Foreign company

Winding-up of a Government company

Arrangement or scheme of compromise

Lifting the corporate veil

Period of limitation

618. Government companies not to have managing agents

[Omitted by the Companies (Amendment) Act, 2000, Section 219, w.e.f. 13-12-2000.]

619. Application of Sections 224 to 233 to Government companies

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Powers of the Comptroller and Auditor General of India

Accounts and audit in case of Government companies

Duties of Auditor

Limit on number of companies

Scrutiny by independent Auditor

Government companies—Appointment of first Auditor or Auditors—Department's view

A panel of three or four names of Chartered Accountants to be forwarded to the Department—Government companies—Appointment of Auditor

Remuneration of Auditor

Fixation of audit fees for statutory Auditors appointed under Section 619 (2)—Department's view

Guidelines for Government companies regarding fixation of Auditors' remuneration

Additional factors while suggesting the quantum of audit fee—Department's circulars

Guidelines for fixation of audit fees/remuneration for statutory Auditors for Government company

Directions of C & AG as to submission of report

Audits of Government companies

Branch Auditors

Statutory Auditors

Board of Directors not bound to give information or explanation under Section 217 (3)—Comptroller and Auditor General to comment upon or supplement the audit report—Department's view

Powers of Comptroller and Auditor General

Government companies—Power to conduct test audit—Department's view

Penalty

619-A. Annual reports on Government companies

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

Scope of the section

Annual Reports on Government companies

Time frame

Documents to be attached

Text of circular

Laying of Annual Reports on Table of House

619-B. Provisions of Section 619 to apply to certain companies

Legislative history—The Companies (Amendment) Act, 1974 (Act 41 of 1974)

Scope of the section

Provisions of Section 619 apply to certain companies

Government controlled institutions

Appointment of statutory Auditors to Government companies—Department's view

Clarification regarding corporations controlled by Central/State Governments—Department's view

620. Power to modify Act in relation to Government companies

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1977 (Act 46 of 1977)

Scope of the section

Application of the Act to Government companies

Government company not a public body or authority

Procedure for issue of Notification

Chit Fund Companies

Exemption Notifications

Central Government Notifications under Section 620 and Section 620-A regarding modifications, additions, alterations concerning the application of certain provisions of the Companies Act, 1956, to Government Companies and Nidhis

Provisions not to apply—Notifications

Modification of Act in its application to Nidhis and Mutual Benefit Societies

620-A. Power to modify Act in its application to Nidhis, etc.

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Nidhi company or Mutual Benefit Society

Brokerage

Regulation

Advertisement

Rationalisation of norms by DCA

Injunction against Nidhi company for recovery of dues

Registration of companies with the word 'Nidhis' or 'Mutual Funds'

Nidhis/Mutual Benefit Societies—Power to modify Act

Notification No. GSR 978, dated 28-5-1963

Directions relating to functions and norms of Nidhi/Mutual Benefit Societies

Notification No. GSR 737 (E), dated 1-11-1999

Notification No. GSR 780(E), dated 19-11-1999

Notification No. GSR 347(E), dated 25-4-2000

Nidhi and Mutual Benefit Society under Section 620-A

Notification GSR 555 (E), dated 26-7-2001

Press Note No. 5 (2001 Series), dated, 13-9-2001

Nidhi and Mutual Benefit Society under Section 620-A—Prudential norms for revenue recognitions and classifications of assets in respect of mortgage loans/jewel loans etc.

Notification No. GSR 309 (E), dated 30-4-2002

Notification No. GSR 556 (E), dated, 26-7-2001

Guidelines for chit funds and NBFCs to protect interests of depositors

Constitution of committee for examining various aspects of functioning of Nidhi companies, etc

Regulations for Mutual Benefit Companies (MBCs, i.e., unnotified Nidhi companies) not yet notified by DCA as Nidhi companies—Press Release : 1998-99/1292, dated 13-4-1999, issued by the Press Relations Division, RBI

Background

Department's clarifications on the Notification

Declaration of Nidhi companies by Central Government subject to certain conditions

Notification I : No. GSR 241 (E), dated 28-4-1995

Clarification on Notification No. GSR 241, dated 28-4-1995

Notification II : GSR 773 (E), dated 4-12-1995

Further restrictions on Nidhi companies (w.e.f. 20-10-1997)

Press Note, dated 20-10-1997

Notification III : GSR 603 (E), dated 20-10-1997

Clarification Notifications No. GSR 84 (E) and 85 (E), dated 23-2-1998

Mutual Benefit Societies to have fixed net owned fund

Brokerage, commission, incentive or other benefits

No advertisement for inviting deposits

Applications pending with the Department of Company Affairs under Section 620-A of the Companies Act, 1956

Text of Press Note No. 10 (1999 series)

Exemption from ceiling on interest rate

620-B. Special provisions as to companies in Goa, Daman and Diu

Legislative history—The Goa, Daman and Diu (Laws) No. 2 Regulation, 1963 (Reg. No. 11 of 1963)

Scope of the section

Applicability of the Act

Object of the section

Por Quota Societies to be registered as companies under the Companies Act—Text of Notifications and circulars

Povisions of the Act applicable with modifications to companies in Goa, Daman and Diu

Provisions of the Act shall not apply or shall apply only with the exceptions/modifications/adaptations in relation to companies in Goa, Daman and Diu

Text of Notification No. GSR 615, dated 24-4-1965

Text of Notification No. GSR 1621, dated 28-10-1965

Edited extract from the Ninth Annual Report for the year ended 31st March, 1965 por quota societies formed under the Portuguese law be deemed to be a company, if registered as company under the Companies Act on or before 18th March, 1965

Text of Notification No. GSR 641, dated 24-4-1967

Special provisions as to companies in Jammu and Kashmir

620-C. Special provisions as to companies in Jammu and Kashmir

Legislative history—The Central Laws (Extension to Jammu & Kashmir) Act, 1968 (Act 25 of 1968)

Scope of the section

Applicability of the section

Notification No. GSR 71, dated 29-12-1969

Offences

621. Offences against Act to be cognizable only on complaint by Registrar, shareholder or Government

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Who can complain ?

Complaint by Director not yet registered as shareholder

"Person aggrieved"

Institution of prosecutions by Registrar or by Liquidator, or by shareholder

Prosecution against company

Power of SEBI

Complaint by any other aggrieved person

Jurisdiction for filing complaint

Who can take cognizance of offence ?

Non-cognizable

Complainant may be exempted from personal attendance

Government company

Limitation for taking cognizance of offence

Government's policy regarding prosecution for offences

Persons authorised by the Central Government

Authorisation to officers of SEBI for prosecution under various sections of the Act

Notification GSR No. 69 (E), dated 15-2-1995

Notification GSR No. 94 (E), dated 26-2-1997

Notification GSR No. 727 (E), dated 28-9-2000

SEBI to exercise concurrent authority with DCA for punishing companies in certain cases

621-A. Composition of certain offences

Legislative history—The Companies (Amendment), Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Offences punishable with fine only is compoundable

Procedure for compounding

Default must be made good

Imprisonment for non-compliance

Compoundable and non-compoundable offences

Powers of Criminal Court vis-a-vis Company Law Board

Complete Code for compounding

Compounding of offences—Department's guidelines

Compounding of offence under Section 621-A of the Companies Act, 1956—Companies under liquidation—Clarification

Who can apply for compounding an offence ?

Application for compounding

Company's duty to intimate about compounding

Offence can be compounded before prosecution

Company Law Board/Regional Director can direct companies to file documents, returns, etc.

Procedure for composition of offences by the Court

Difference in the procedure for compounding an offence under Company Law and Criminal Procedure Code

Under the Companies Act (Section 621-A) :

Under Criminal Procedure Code (Section 320)

Effect of compounding of an offence

Power of SEBI

List of offences compoundable

Offences compoundable by Company Law Board/Regional Directors (offences punishable with fine only)

Compoundable offences punishable with fine only under Section 629-A

Offences compoundable by Company Law Board/Regional Director with Court permission (offences punishable with imprisonment or with fine or with both)

Offences not compoundable (offences punishable with imprisonment only or with imprisonment and also with fine)

Penalties

622. Jurisdiction to try offences

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Trial Court

Jurisdiction of Courts

Lok Adalat—Alternative Dispute Resolution—Department's Circular No. 10/99, dated 7-12-1999

623. Certain offences triable summarily in Presidency towns

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Summary trials

624. Offences to be non-cognizable

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Non-cognizable and cognizable offences

Offence under other Acts

624-A. Power of Central Government to appoint company prosecutors

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

624-B. Appeal against acquittal

Legislative history

Right of appeal—Scope

Appeals against acquittal

Exception

Criminal Procedure Code

625. Payment of compensation in cases of frivolous or vexatious prosecution

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Frivolous or vexatious prosecutions

Compensation in cases of frivolous or vexatious prosecutions

Discharge or acquittal of accused

Cause shown

Penalty

Additional liability

Appeal

626. Application of fines

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

627. Production and inspection of books where offence suspected

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Court's power to authorise inspection and order for production of documents

When can the Court make an order ?

Who can make the application ?

Powers of the Central Government

Order not appealable

628. Penalty for false statements

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

False statement

Penalty for false statement

Mens rea

Document

Right to prefer complaint

Who is liable ?

Complaint by private persons

Jurisdiction of Courts

Penalty for default

Non-compoundable offence

Filing of defective documents—Courses open to Registrar—Department’s view

629. Penalty for false evidence

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Intention of giving false evidence

Nature of false evidence

Trial of offences

Penalty for contravention

Non-compoundable offence

629-A. Penalty where no specific penalty is provided elsewhere in the Act

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Applicability of the section

Penalty when no specific penalty is provided elsewhere in the Companies Act

Section when applicable

Section when not applicable

Unauthorised business

Contravention

Alternative remedy

Penalty

Compoundable offence

Limitation

630. Penalty for wrongful withholding of property

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Object of the section

Penalty for wrongful withholding of property

Constitutional validity of the section

Conflict between the provisions of Section 33, Industrial Disputes Act and Section 630, Companies Act

Offence relating to property

Wrongfully obtaining possession or wrongfully withholding property

Effect of winding-up order

"Officer or employee"

Relatives and legal heirs of employee

Possession in capacity other than officer or employee

Return of property

Civil disputes

Stay of criminal proceedings

Prosecution maintainable in spite of other pending proceedings

Who can complain ?

Who can try ?

Penal Code

Simultaneous prosecution

Adverse possession

Burden of proof

Jurisdiction of Courts

Procedure for trial of offences

Offence of continuing nature

Writ jurisdiction

Review

Penalty for default

Compoundable offence

Period of limitation for filing complaint

631. Penalty for improper use of words "Limited" and "Private Limited"

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Who is punishable

Penalty for improper use of the word "limited"

Compoundable offence

Legal proceedings

632. Power to require limited company to give security for costs

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Extent of applicability

Power to require limited company to give security for costs

Power discretionary

Reason to believe

Where security may be ordered

Where security may not be ordered

Appeal

633. Power of Court to grant relief in certain cases

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1956)

Scope of the section

Applicability of the section

"Relieve from liability"—Meaning of

Conditions of relief

Power of Court to grant relief—Discretionary

Power of Court to grant relief in certain cases

In pending proceeding

Before any proceeding has commenced

"Any proceeding"—Connotation of

Notice to Registrar

Who can get relief ?

"Court hearing the case"—Meaning of

Jurisdiction for the purpose of relief

Appears to the Court hearing the case

Power and duties of Court

Procedure before Magistrate

Instances of cases where relief can be granted

Instances of cases where relief cannot be granted

Statutory violations and reasonableness of conduct

Shortage admitted—No relief

Sub-section (2)

Extension of time

Procedure

Applications to Court for grant of relief—Opposition by Registrar—Department's view

Starting of prosecution

634. Enforcement of orders of Courts

Corresponding provisions

Scope of the section

"Same manner"

Execution as a decree

Consent order under Section 634 is a decree

Jurisdiction of Courts

Contempt proceedings for disobedience

634-A. Enforcement of orders of Company Law Board

Legislative history—The Companies (Amendment) Act, 1977 (Act 46 of 1977)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Enforcement of orders of Company Law Board

Enforcement of repayment and realisation orders

Conflicting orders of regional and Principal Bench of the Company Law Board

Enforcement of orders of Company Law Board

Enforcement of compromise order

Enforcement of unsigned compromise order

635. Enforcement of orders of one Court by other Courts

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1977 (Act 46 of 1977)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Enforcement of Court orders

Decree

Execution

635-A. Protection of acts done in good faith

Legislative history

Scope of the section

Good faith

635AA. Non-disclosure of information in certain cases

Legislative history—The Companies (Amendment) Act, 1963 (Act 53 of 1963)

The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Disclosure of source of information

Investigation and special audit

Temporary protection of employees

635-B. Protection of employees during investigation by inspector or pendency or proceeding before Appellate Tribunal in certain cases

Legislative history—The Companies (Amendment) Act, 1964 (Act 32 of 1964)

The Companies (Amendment) Act, 1967 (Act 17 of 1967)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Protection of employees

Employees—Can an employee of a company work for another company in his spare time ?

Dismissal of employees

Temporary absence from service

Temporary protection of employees

Rights of employees

Restriction as to child labour

Payment of salary does not make the company employer

Reduction of fees payable to company

636. Reduction of fees, charges, etc., payable to company

Scope of the section

Reduction of fees

Prescribed fee

Prescribed rule

Revision of fees for copy of other documents in the offing

Companies (Central Government's) General Rules and Forms (Third Amendment) Rules, 2000

Delegation of powers and functions of Central Government

637. Delegation by Central Government of its powers and functions under Act

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1963 (Act 53 of 1963)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Company Law Board

Powers of the Central Government that cannot be delegated

Delegation of powers to the Company Law Board

Withdrawing the powers of Central Government which were delegated to the Company Law Board

Delegation of powers to Regional Directors and Registrars of Companies

Delegation of powers and functions of the Central Government to the Regional Directors of the Company Law Board

Powers of Central Government under Section 297 (1), proviso, delegated to Regional Directors

Delegation of powers/functions of the Central Government to the Registrar of Companies

Delegation of powers to SEBI—Authorisation to officer of SEBI in respect of offences punishable under Sections 56 (3), 59 (1), 73 (2) and (2-B), 113 (2) and 207

Subsequent delegation of power under Section 237 to Company Law Board under Section 637—Powers can be exercised by Chairman on behalf of Board

Grant of approval, etc., subject to conditions and levy of fees on applications

637-A. Powers of Central Government or Tribunal to accord approval, etc., subject to conditions and to prescribe fees on applications

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Power of Central Government to give approval and to prescribe fees

Withdrawal of consent

Prescribed fees

Fees on applications

Applications made by companies to the Central Government

Application fee payable by Section 25 companies

Application fee for foreign companies

Application fee payable by individuals for claims from companies under liquidation

Application fee payable by individuals for transfer of shares

Rationalisation of accounting classification of Government Transactions—Change in the Receipt Head allotted to the Department of Company Law Administration

Revised application fees under Companies Act from August 10, 1999

637AA. Power of Central Government to fix a limit with regard to remune-ration

Legislative history—The Companies (Amendment) Act, 1974 (Act 41 of 1974)

Scope of the section

Power of Central Government to limit remuneration

Ceiling on managerial remuneration

Remuneration fixed/approved by the Company Law Board—Income-tax authorities are bound

637-B. Condonation of delays in certain cases

Legislative history—The Companies (Amendment) Act, 1965 (Act 31 of 1965)

Scope of the section

Power of Central Government to condone delays

Options to defaulting-company

Condonation of delay in applying

Condonation of delay in filing

Reason to be recorded in writing

Prescribed fees

Company Law Settlement Scheme (CLSS) 2000

Grant of immunity from prosecution and compounding the period of delay—Notification

Annual Report on working of Act

638. Annual report by Central Government

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Annual Report

639. Annual reports on Government Companies to be placed before Parliament, etc.

[Omitted by Act 65 of 1960, Section 208]

Validation of registration of firms in certain cases

640. Validation of registration of firms as members of charitable and other companies

Computation of time for filing orders of Court or the Tribunal

640-A. Exclusion of time required in obtaining copies of orders of Court or tribunal

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Computation of time for filing orders of Court

Time taken by the Bench Office of the Company Law Board—Department's circular

The Company Law Board Regulations, 1991

The Limitation Act, 1963

Period of limitation—When starts ?

Schedules, forms and rules

640-B. Forms of, and procedure in relation to, certain applications

Legislative history—The Companies (Amendment) Act, 1965 (Act 31 of 1965)

The Companies (Amendment) Act, 1969 (Act 17 of 1969)

The Companies (Amendment) Act, 1988 (Act 31 of 1988)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Form of, and procedure regarding applications

Private company

Prescribed rules

641. Power to alter Schedules

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1974 (Act 41 of 1974)

Scope of the section

Power of the Central Government to alter tables and forms in the schedules and to alter or add to the forms

Rules and alterations to be laid before Parliament

Parliamentary control

Rules and Forms

Table A of Schedule I

Schedule VI

Alterations in Schedule VI

Substitution of Schedule X of Companies Act, 1956

Amendment in Schedule X to the Companies Act, 1956

Power to alter Schedules—Substitution of Para 1 of Section 11 of Part II of Schedule XIII

642. Power of Central Government to make rules

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Amendment) Act, 1999 (Act 21 of 1999)

The Companies (Amendment) Act, 2000 (Act 53 of 2000)

Scope of the section

Power of the Central Government to make rules

Rules and Regulations

Rescission of the Companies (Appeal to CG) Rules, 1957, CLB (Procedure) Rules, 1964 and CLB (Bench) Rules, 1957

Penalty for default

643. Power of Central Government to make rules relating to winding up

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

The Companies (Amendment) Act, 1960 (Act 65 of 1960)

The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

Scope of the section

Power of Supreme Court to make rules

Applicability of Code of Civil Procedure

Section 463 (1) (b) (iii) and (2)

Sections 645 and 646—Distinction

Sub-section (1) (b) (v)

Holding and conduct of meetings

Companies (Court) Rules, 1959—Rules 6 and 9

Supreme Court cannot make rules on certain matters

Audit of Liquidator's account

Rules for interim period

Repeals and savings

644. Repeal of Acts specified in Schedule XII

Corresponding provisions

Scope of the section

Enactments repealed

Effect of repeal

645. Saving of orders, rules, etc., in force at commencement of Act

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Applicability of the section

Notification

Effect of Sections 645 to 648

646. Saving of operation of Section 138 of Act 7 of 1913

Corresponding provisions

Scope of the section

647. Saving of pending proceedings for winding up

Corresponding provisions

Legislative history—The Companies (Amendment) Act, 1960 (Act 65 of 1960)

Scope of the section

Pending proceeding for winding-up—Department's circulars

Payment of filing fees by Liquidators and Receivers in respect of various statements, returns etc. filed with Registrar of Companies under Schedule X—Department's view

647-A. Transfer of winding up proceedings to Tribunal

Legislative history—The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

648. Saving of prosecutions instituted by liquidator or Court under Section 237 of Act 7 of 1913

Corresponding provisions

Scope of the section

649. Construction of references to former enactments in documents

Corresponding provisions

Scope of the section

650. Construction of "register of joint stock companies" in Act 21 of 1860

[Omitted by Act 65 of 1960, Section 214.]

651. Construction of references to extraordinary resolution in articles etc.

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

651-A. Reference of winding up of companies in other laws

Legislative history—The Companies (Second Amendment) Act, 2002 (Act 11 of 2003)

652. Appointment under previous companies laws to have effect as if made under Act

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

653. Former registration offices continued

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

654. Registers under previous companies laws to be deemed to be part of registers under Act

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

655. Funds and accounts under Act to be in continuation of funds and accounts under previous companies laws

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

656. Saving of incorporation under repealed Acts

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

657. Saving of certain Tables under previous companies laws

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

658. Section 6 of the General Clauses Act, 1897 (10 of 1897), to apply in addition to Sections 645 to 657 of Act

Corresponding provisions

Legislative history—The Companies Act, 1956 (Act 1 of 1956)

Scope of the section

Effect of repeal

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 C—Memorandum and articles of association of a company limited by guarantee and not having a share capital

TABLE D—Memorandum and articles of association of a company limited by guarantee and having a share capital

TABLE E—Memorandum and articles of association of an unlimited company

TABLE F—Form of statement to be published by limited banking companies, insurance companies and deposit, provident of benefit societies

Schedule I-A List of relatives

SCHEDULE II Matters to be specified in prospectus and reports to be set out therein

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

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

Schedule v Annual return contents and form of annual return of a company having a share capital

Schedule vi

schedules vii Redundant after abolition of the system of managing

and viii agents, secretaries and treasurers by Act 17 of 1969, w.e.f. 3-4-1970

Schedule ix Form of proxy

Schedule x Table of fees to be paid to the registrar

Schedule 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

Schedule xiv Rates of depreciation

Schedule xv

Subject Index