Companies Bill 2009

Published on February 2017 | Categories: Documents | Downloads: 30 | Comments: 0 | Views: 190
of 303
Download PDF   Embed   Report

Comments

Content

AS INTRODUCED IN LOK SABHA ON 3rd AUGUST 2009 Bill No. 59 of 2009 THE COMPANIES BILL 2009 !!!!!!!!!!!!!!!! ARRANGEMENT O" CLAUSES !!!!!!!!!!!!!!! CHAPTER I PRELIMINAR# CLAUSES 1. 2. Short title, extent, commencement and application. Definitions. CHAPTER II INCORPORATION O" COMPANIES 3. 4. 5. ". $. &. ). 1*. 11. 12. 13. 14. 15. 1". 1$. 1&. 1). 2*. 21. Formation of company. Formation of companies with charitable objects, etc. emorand!m. #rticles. %ncorporation of companies. 'ffect of re(istration. 'ffect of memorand!m and articles. +ommencement of b!siness, etc. ,e(istered office of company. #lteration of memorand!m. #lteration of articles. #lteration of memorand!m and articles to be noted in e-ery copy. ,ectification of name of company. +opies of memorand!m, articles, etc., to be (i-en to members. ,e.re(istration of companies already re(istered. S!bsidiary company not to hold shares in its holdin( company. Ser-ice of doc!ments. #!thentication of doc!ments, proceedin(s and contracts. 'xec!tion of bills of exchan(e, etc. CHAPTER III PROSPECTUS AND ALLOTMENT O" SECURITIES 22. 23. 24. 25. 2". 2$. 2&. 2). 3*. 31. 32. /ower of Sec!rities and 'xchan(e 0oard to re(!late iss!e and transfer of sec!rities, etc. atters to be stated in prospect!s. 1ffer or in-itation for s!bscription of sec!rities. #d-ertisement of prospect!s. Shelf prospect!s. ,ed herrin( prospect!s. %ss!e of application forms for sec!rities. +riminal liability for misstatements in prospect!s. +i-il liability for misstatements in prospect!s. /!nishment for fra!d!lently ind!cin( persons to in-est money. #ction to be ta2en by affected persons.

1

33. 34. 35. 3".

/!nishment for personation for ac3!isition, etc., of sec!rities. #llotment of sec!rities by company. Sec!rities to be dealt with in Stoc2 'xchan(es. 4lobal Depository ,eceipt. CHAPTER I$ SHARE CAPITAL AND DEBENTURES

3$. 3&. 3). 4*. 41. 42. 43. 44. 45. 4". 4$. 4&. 4). 5*. 51. 52. 53. 54. 55. 5". 5$. 5&. 5). "*. "1. "2. "3. "4. "5.

5inds of share capital. 6at!re of shares or debent!res. 6!mberin( of shares. +ertificate of shares. 7otin( ri(hts. 7ariation of shareholders8 ri(hts. +alls on shares of same class to be made on !niform basis. +ompany to accept !npaid share capital, altho!(h not called !p. /ayment of di-idend in proportion to amo!nt paid.!p. #pplication of premi!ms recei-ed on iss!e of shares. /rohibition on iss!e of shares at disco!nt. %ss!e of sweat e3!ity shares. %ss!e and redemption of preference share. 9ransfer and transmission of sec!rities. /!nishment for personation of shareholder. ,ef!sal of re(istration and appeal a(ainst ref!sal. ,ectification of re(ister of members. /!blication of a!thorised, s!bscribed and paid.!p capital. /ower of limited company to alter its share capital. F!rther iss!e of share capital. 6otice to be (i-en to ,e(istrar for alteration of share capital. :nlimited company to pro-ide for reser-e share capital on re.re(istration. ,ed!ction of share capital. ,estrictions on p!rchase by company or (i-in( of loans by it for p!rchase of its shares. /ower of company to p!rchase its own sec!rities. 9ransfer of certain s!ms to +apital ,edemption ,eser-e #cco!nt. /rohibition for b!y.bac2 in certain circ!mstances. Debent!res. 6omination of shares or debent!res. CHAPTER $ ACCEPTANCE O" DEPOSITS B# COMPANIES

"". "$. "&.

/rohibition on acceptance of deposits from p!blic. ,epayment of deposits, etc., accepted before commencement of #ct. Dama(es for fra!d. CHAPTER $I REGISTRATION O" CHARGES D!ty to re(ister char(es, etc. #pplication for re(istration of char(e. Section ") to apply in certain matters. Date of notice of char(e. ,e(ister of char(es to be 2ept by ,e(istrar. +ompany to report satisfaction of char(e. %ntimation of appointment of recei-er or mana(er.

"). $*. $1. $2. $3. $4. $5.

2

$". $$.

+ompany8s re(ister of char(es. /!nishment for contra-ention. CHAPTER $II MANAGEMENT AND ADMINISTRATION

$&. $). &*. &1. &2. &3. &4. &5. &". &$. &&. &). )*. )1. )2. )3. )4. )5. )". )$. )&. )). 1**. 1*1. 1*2. 1*3. 1*4. 1*5. 1*". 1*$.

,e(ister of members, etc. Declaration in respect of beneficial interest in any share. %n-esti(ation of beneficial ownership of shares in certain cases. /ower to close re(ister of members or debent!re holders or other sec!rity holders. #nn!al ret!rn. /lace of 2eepin( and inspection of re(isters, ret!rns, etc. ,e(isters, etc., to be e-idence. #nn!al (eneral meetin(. /ower of 9rib!nal to call ann!al (eneral meetin(. /ower of 9rib!nal to call meetin(s of members, etc. /!nishment for defa!lt in complyin( with pro-isions of sections &5 to &$. +allin( of extraordinary (eneral meetin(. 6otice of meetin(. 'xplanatory statement to be annexed with notice. ;!or!m for meetin(s. +hairman of meetin(s. /roxies. ,estriction on -otin( ri(hts. 7otin( by show of hands. 7otin( thro!(h electronic means. Demand for poll. /ostal ballot. +irc!lation of members8 resol!tion. ,epresentation of the /resident and 4o-ernors in meetin(s. ,epresentation of corporations at meetin( of companies and of creditors. 1rdinary and special resol!tions. ,esol!tions re3!irin( special notice. ,esol!tions passed at adjo!rned meetin(. ,esol!tions and a(reements to be filed. in!tes of proceedin(s of (eneral meetin(, meetin( of 0oard of Directors and other meetin( and resol!tions passed by postal ballot. 1*&. %nspection of min!te.boo2s of (eneral meetin(. 1*). ,eport on (eneral meetin(. CHAPTER $III DECLARATION AND PA#MENT O" DI$IDEND 11*. 111. 112. 113. 114. Declaration of di-idend. :npaid Di-idend #cco!nt. %n-estor 'd!cation and /rotection F!nd. #mo!nt lyin( in pre-io!s F!nd to become part of F!nd !nder this #ct. ,i(ht to di-idend, ri(hts shares and bon!s shares to be held in abeyance pendin( re(istration of transfer of shares. 115. /!nishment for fail!re to distrib!te di-idends within thirty days. CHAPTER I% ACCOUNTS O" COMPANIES 11". 0oo2s of acco!nts, etc., to be 2ept by company.

3

11$. 11&. 11). 12*. 121. 122.

Financial statements. +onstit!tion of 6ational #d-isory +ommittee on #cco!ntin( and #!ditin( Standards. +entral 4o-ernment to notify acco!ntin( standards. Financial Statement, 0oard8s report, etc. ,i(ht of member to copies of a!dited balance sheet. +opy of financial statement to be filed with ,e(istrar. CHAPTER % AUDIT AND AUDITORS

123. 124. 125. 12". 12$. 12&. 12). 13*. 131.

#ppointment of a!ditors. 'li(ibility, 3!alifications and dis3!alifications of a!ditors. ,em!neration of a!ditors. /owers and d!ties of a!ditors and a!ditin( standards. #!ditor not to render certain ser-ices. #!ditor to si(n a!dit reports, etc. #!ditors to attend (eneral meetin(. /!nishment for contra-ention. +entral 4o-ernment to specify a!dit of items of cost in respect of certain companies. CHAPTER %I APPOINTMENT AND &UALI"ICATIONS O" DIRECTORS

132. 133. 134. 135. 13". 13$. 13&. 13). 14*. 141. 142. 143. 144. 145. 14". 14$. 14&. 14). 15*. 151. 152. 153.

+ompany to ha-e 0oard of Directors. #ppointment of Directors. #pplication for allotment of Director %dentification 6!mber. #llotment of Director %dentification 6!mber. /rohibition to obtain more than one Director %dentification 6!mber. Director to intimate Director %dentification 6!mber. +ompany to inform Director %dentification 6!mber to ,e(istrar. 1bli(ation to indicate Director %dentification 6!mber. /!nishment for contra-ention. ,i(ht of persons other than retirin( directors to stand for directorship. #ppointment of additional director, alternate director and nominee director. #ppointment of directors to be -oted indi-id!ally. 1ption to adopt principle of proportional representation for appointment of directors. Dis3!alifications for appointment of director. 6!mber of directorships. D!ties of directors. 7acation of office of director. ,esi(nation of director. ,emo-al of directors. ,e(ister of directors and 2ey mana(erial personnel and their shareholdin(. embers8 ri(ht to inspect. /!nishment. CHAPTER %II MEETINGS O" BOARD AND ITS PO'ERS

154. 155. 15". 15$. 15&. 15). 1"*.

eetin(s of 0oard. ;!or!m for meetin(s of 0oard. /assin( of resol!tion by circ!lation. Defects in appointment of directors not to in-alidate actions ta2en. +ommittees of 0oard. /owers of 0oard. ,estrictions on powers of 0oard.

4

1"1. 1"2. 1"3. 1"4. 1"5. 1"". 1"$. 1"&. 1"). 1$*. 1$1. 1$2. 1$3.

/rohibitions and restrictions re(ardin( political contrib!tions. Disclos!re of interest by director. <oan to directors, etc. <oan and in-estment by company. %n-estments of company to be held in its own name. ,elated party transactions. ,e(ister of contracts or arran(ements in which directors are interested. +ontract of employment with mana(in( or whole.time directors. /ayment to director for loss of office, etc., in connection with transfer of !nderta2in(, property or shares. ,estriction on non.cash transactions in-ol-in( directors. +ontract by 1ne /erson +ompanies. /rohibition on forward dealin(s in sec!rities of company by a 2ey mana(erial personnel. /rohibition on insider tradin( of sec!rities. CHAPTER %III APPOINTMENT AND REMUNERATION O" MANAGERIAL PERSONNEL

1$4. 1$5. 1$". 1$$. 1$&.

#ppointment of mana(in( director, whole.time director or mana(er. ,em!neration of mana(erial personnel. ,em!neration payable to directors. +ompensation for loss of office of mana(in( or whole.time director or mana(er. #ppointment of 2ey mana(erial personnel. CHAPTER %I$ INSPECTION IN&UIR# AND IN$ESTIGATION

1$). 1&*. 1&1. 1&2. 1&3. 1&4. 1&5. 1&". 1&$. 1&&. 1&). 1)*. 1)1. 1)2. 1)3. 1)4. 1)5. 1)". 1)$. 1)&. 1)). 2**.

/ower to call for information, inspect boo2s and cond!ct in3!iries. +ond!ct of inspection and in3!iry. ,eport on inspection made. Search and sei=!re. %n-esti(ation into affairs of company. %n-esti(ation into company8s affairs in other cases. Sec!rity for payment of costs and expenses of in-esti(ation. Firm, body corporate or association not to be appointed as inspector. %n-esti(ation of ownership of company. /roced!re, powers, etc., of inspectors. /ower of inspectors to cond!ct in-esti(ation into affairs of related companies, etc. Sei=!re of doc!ments by inspector. Free=in( of assets on an in3!iry and in-esti(ation of a company. %mposition of restrictions !pon sec!rities. %nspector8s report. 6o s!it or proceedin( till s!bmission of final report. #ctions to be ta2en in p!rs!ance of inspector8s report. 'xpenses of in-esti(ation. 7ol!ntary windin(.!p of company, etc., not to stop in-esti(ation proceedin(s. <e(al ad-isers and ban2ers not to disclose. %n-esti(ation, etc., of forei(n companies. /enalty for f!rnishin( false statement, m!tilation, destr!ction of doc!ments. CHAPTER %$ COMPROMISES ARRANGEMENTS AND AMALGAMATIONS

2*1. /ower to compromise or ma2e arran(ements with creditors and members. 2*2. /ower of 9rib!nal to enforce compromise or arran(ement.

5

2*3. er(er and amal(amation of companies. 2*4. er(er or amal(amation of certain companies. 2*5. #mal(amation by m!t!al a(reement. 2*". /ower to ac3!ire shares of shareholders dissentin( from scheme or contract appro-ed by majority. 2*$. /!rchase of minority shareholdin(. 2*&. /ower of +entral 4o-ernment to pro-ide for amal(amation of companies in p!blic interest. 2*). ,e(istration of offer of Schemes in-ol-in( transfer of shares. 21*. /reser-ation of boo2s and papers of amal(amated company. 211. <iability of the officers in respect of offences committed prior to mer(er, amal(amation etc. CHAPTER %$I PRE$ENTION O" OPPRESSION AND MISMANAGEMENT 212. 213. 214. 215. 21". 21$. #pplication to 9rib!nal for relief in cases of oppression, etc. /owers of 9rib!nal. +onse3!ence of termination or modifications of certain a(reements. ,i(ht to apply !nder section 212. +lass action. #pplication of certain pro-isions to proceedin(s !nder sections 212 or 21". CHAPTER %$II REGISTERED $ALUERS 21&. 21). 22*. 221. 222. 223. 7al!ation by re(istered -al!ers. ,e(istration of -al!ers. #ppointment of committee of experts. /ractice as re(istered -al!ers. F!rnishin( of partic!lars in certain cases. ,emo-al and restoration of names of -al!ers from re(ister. CHAPTER %$III REMO$AL O" NAMES O" COMPANIES "ROM THE REGISTER 224. 225. 22". 22$. 22&. /ower of ,e(istrar to remo-e name of a company from re(ister. 6o application !nder section 224 in certain sit!ations. 'ffect of a company notified as dissol-ed. Fra!d!lent application for remo-al of name. #ppeal to 9rib!nal. CHAPTER %I% RE$I$AL AND REHABILITATION O" SICK COMPANIES 22). 23*. 231. 232. 233. 234. 235. 23". 23$. 23&. 23). 24*. Determination of sic2ness. #pplication for re-i-al and rehabilitation. #ppointment of interim administrator. +ommittee of creditors. 1rder of 9rib!nal. #ppointment of administrator. /owers and d!ties of company administrator. Scheme of re-i-al and rehabilitation. Sanction of scheme. Scheme to be bindin(. %mplementation of the scheme. >indin(.!p of company on report of company administrator.

6

241. 242. 243. 244.

/ower of 9rib!nal to assess dama(es a(ainst delin3!ent directors, etc. /!nishment for certain offences. 0ar of j!risdiction. ,ehabilitation and %nsol-ency F!nd. CHAPTER %% 'INDING UP

245.

odes of windin( !p. P(r) I 'i*di*+ ,- ./ )01 Tri.,*(l

24". 24$. 24&. 24). 25*. 251. 252. 253. 254. 255. 25". 25$. 25&. 25). 2"*. 2"1. 2"2. 2"3. 2"4. 2"5. 2"". 2"$. 2"&. 2"). 2$*. 2$1. 2$2. 2$3. 2$4. 2$5. 2$". 2$$. 2$&.

+irc!mstances in which a company may be wo!nd.!p by 9rib!nal. /etition for windin( !p. /owers of 9rib!nal. Directions for filin( statement of affairs. +ompany <i3!idators and their appointments. ,emo-al and replacement of li3!idator. >indin(.!p order to be comm!nicated to the ,e(istrar. 'ffect of windin( !p order. Stay of s!its, etc., on windin( !p order. ?!risdiction of 9rib!nal. S!bmission of report by +ompany <i3!idator. Directions of 9rib!nal on report of +ompany <i3!idator. +!stody of company8s properties. Directors, officers and employees to co.operate with +ompany <i3!idator. Settlement of list of contrib!tories and application of assets. 1bli(ations of directors and mana(ers. +ommittee of inspection. S!bmission of periodical reports to the 9rib!nal. /ower of 9rib!nal on application for stay of windin( !p. /owers and d!ties of +ompany <i3!idator. /ro-ision for professional assistance to +ompany <i3!idator. 'xercise and control of +ompany <i3!idator8s powers. 0oo2s to be 2ept by +ompany <i3!idator. #!dit of +ompany <i3!idator8s acco!nts . /ayment of debts by contrib!tory and extent of set.off. /ower of 9rib!nal to ma2e calls. #dj!stment of ri(hts of contrib!tories. /ower to order costs. /ower to s!mmon persons s!spected of ha-in( property of company, etc. /ower to order examination of promoters, directors, etc. #rrest of person tryin( to 3!it %ndia or abscond. Dissol!tion of company by 9rib!nal. #ppeals from orders made before commencement of #ct. P(r) II $ol,*)(r/ 'i*di*+ ,-

2$). 2&*. 2&1. 2&2. 2&3.

+irc!mstances in which company may be wo!nd !p -ol!ntarily. Declaration of sol-ency in case of proposal to wind.!p -ol!ntarily. eetin( of creditors. /!blication of resol!tion to wind!p -ol!ntarily. +ommencement of -ol!ntary windin( !p.

7

2&4. 2&5. 2&". 2&$. 2&&. 2&). 2)*. 2)1. 2)2. 2)3. 2)4. 2)5. 2)". 2)$. 2)&.

'ffect of -ol!ntary windin( !p. #ppointment of +ompany <i3!idator. /ower to remo-e and fill -acancy of +ompany <i3!idator. 6otice of appointment of +ompany <i3!idator to be (i-en to ,e(istrar. +esser of 0oard8s powers on appointment of +ompany <i3!idator. /owers and d!ties of +ompany <i3!idator in -ol!ntary windin( !p. #ppointment of committees. +ompany <i3!idator to s!bmit report on pro(ress of windin( !p. ,eport of +ompany <i3!idator to 9rib!nal for examination of persons. Final meetin( of dissol!tion of company. /ower of +ompany <i3!idator to accept shares, etc., as consideration for sale of property of company. Distrib!tion of property of company. #rran(ement when bindin( on company and creditors. /ower to apply to 9rib!nal to ha-e 3!estions determined, etc. +osts of -ol!ntary windin( !p. P(r) III Pro2i3io*3 (--li4(.l1 )o 121r/ 5(d1 of 6i*di*+ ,-

2)). 3**. 3*1. 3*2. 3*3. 3*4. 3*5. 3*". 3*$. 3*&. 3*). 31*. 311. 312. 313. 314. 315. 31". 31$. 31&. 31). 32*. 321. 322. 323. 324. 325. 32". 32$. 32&. 32). 33*. 331. 332. 333.

Debts of all descriptions to be admitted to proof. #pplication of insol-ency r!les in windin(.!p of insol-ent companies. 1-erridin( preferential payments. /referential payments. Fra!d!lent preference. 9ransfers not in (ood faith to be -oid. +ertain transfers to be -oid. <iabilities and ri(hts of certain persons fra!d!lently preferred. 'ffect of floatin( char(e. Disclaimer of onero!s property. 9ransfers, etc., after commencement of windin(.!p to be -oid. +ertain attachments, exec!tions, etc., in windin(.!p by 9rib!nal to be -oid. 1ffences by officers of companies in li3!idation. /enalty for fra!ds by officers. <iability where proper acco!nts not 2ept. <iability for fra!d!lent cond!ct of b!siness. /ower of 9rib!nal to assess dama(es a(ainst delin3!ent directors, etc. <iability !nder sections 314 and 315 to extend to partners or directors in firms or companies. /rosec!tion of delin3!ent officers and members of company . +ompany <i3!idator to exercise certain powers s!bject to sanction. Statement that a company is in li3!idation. 0oo2s and papers of company to be e-idence. %nspection of boo2s and papers by creditors and contrib!tories. Disposal of boo2s and papers of company. %nformation as to pendin( li3!idations. 1fficial <i3!idator to ma2e payments into p!blic acco!nt of %ndia. +ompany <i3!idator to deposit into Sched!led 0an2. <i3!idator not to deposit monies into pri-ate ban2in( acco!nt. +ompany <i3!idation Di-idend and :ndistrib!ted #ssets #cco!nt. <i3!idator to ma2e ret!rns, etc. eetin(s to ascertain wishes of creditors or contrib!tories. +o!rt, trib!nal or person, etc., before whom affida-it may be sworn. /owers of 9rib!nal to declare dissol!tion of company -oid. +ommencement of windin( !p by 9rib!nal. 'xcl!sion of certain time in comp!tin( period of limitation.

8

P(r) I$ Offi4i(l Li7,id()or 334. 335. 33". 33$. 33&. 33). 34*. #ppointment of 1fficial <i3!idator. /owers and f!nctions of 1fficial <i3!idator. S!mmary proced!re for li3!idation. Sale of assets and reco-ery of debts d!e to company. Settlement of claims of creditors by 1fficial <i3!idator. #ppeal by creditor. 1rder of dissol!tion of company. CHAPTER %%I COMPANIES INCORPORATED OUTSIDE INDIA 341. 342. 343. 344. 345. 34". 34$. 34&. 34). 35*. 351. 352. 353. 354. 355. #pplication of #ct to forei(n companies. Doc!ments, etc., to be deli-ered to ,e(istrar by forei(n companies. #cco!nts of forei(n company. Display of name, etc., of forei(n company. Ser-ice on forei(n company. Debent!res, ann!al ret!rn, re(istration of char(es, boo2s of acco!nts and their inspection. Fee for re(istration of doc!ments. %nterpretation. Datin( of prospect!s and partic!lars to be contained therein. /ro-isions as to expert8s consent and allotment. ,e(istration of prospect!s. 1ffer of %ndian Depository ,eceipts. #pplication of sections 2) to 31 and +hapter @@. /!nishment for contra-ention. +ompany8s fail!re to comply with pro-isions of this +hapter not to affect -alidity of contracts, etc. CHAPTER %%II GO$ERNMENT COMPANIES 35". #nn!al reports on 4o-ernment companies. 35$. /ower to modify #ct in its application to 4o-ernment companies. CHAPTER %%III REGISTRATION O""ICES AND "EES 35&. 35). 3"*. 3"1. 3"2. 3"3. 3"4. 3"5. ,e(istration 1ffices. #dmissibility of certain doc!ments as e-idence. /ro-isions relatin( to filin( of applications, doc!ments, inspection, etc., in electronic form. 'lectronic form to be excl!si-e, alternati-e or in addition. /ro-ision of -al!e added ser-ices thro!(h electronic form. #pplication of pro-isions of %nformation 9echnolo(y #ct, 2***. Fee for filin(, etc. Fees, etc., to be credited into p!blic acco!nt.

9

CHAPTER %%I$ COMPANIES TO "URNISH IN"ORMATION OR STATISTICS 3"". /ower of +entral 4o-ernment to direct companies to f!rnish information or statistics. CHAPTER %%$ NIDHIS 3"$. /ower to modify #ct in its application to 6idhis. CHAPTER %%$I NATIONAL COMPAN# LA' TRIBUNAL AND APPELLATE TRIBUNAL 3"&. 3"). 3$*. 3$1. 3$2. 3$3. 3$4. 3$5. 3$". 3$$. 3$&. 3$). 3&*. 3&1. 3&2. 3&3. 3&4. 3&5. 3&". 3&$. 3&&. 3&). 3)*. 3)1. 3)2. 3)3. 3)4. 3)5. Definitions. +onstit!tion of 6ational +ompany <aw 9rib!nal. ;!alifications of /resident and embers of 9rib!nal. +onstit!tion of #ppellate 9rib!nal. ;!alifications of +hairperson and embers of #ppellate 9rib!nal. Selection of embers of 9rib!nal and #ppellate 9rib!nal. 9erm of office of /resident, +hairperson and other embers. Salary, allowances and other terms and conditions of ser-ice of embers. #ctin( /resident and +hairman of 9rib!nal and #ppellate 9rib!nal. ,esi(nation of embers. ,emo-al of embers. Staff of 9rib!nal and #ppellate 9rib!nal. 0enches of 9rib!nal. 1rders of 9rib!nal. #ppeal from orders of 9rib!nal. 'xpeditio!s disposal by 9rib!nal and #ppellate 9rib!nal. #ppeal to S!preme +o!rt. /roced!re before 9rib!nal and #ppellate 9rib!nal. /ower to p!nish for contempt. Dele(ation of powers. embers, officers, etc., to be p!blic ser-ants. /rotection of action ta2en in (ood faith. /ower to see2 assistance of +hief etropolitan a(istrate, etc. +i-il co!rt not to ha-e j!risdiction. 7acancy in 9rib!nal or #ppellate 9rib!nal not to in-alidate acts or proceedin(s. ,i(ht to le(al representation. <imitation. 9ransfer of certain pendin( proceedin(s. CHAPTER %%$II SPECIAL COURTS 3)". 3)$. 3)&. 3)). 4**. 4*1. 4*2. 4*3. 4*4. 4*5. 'stablishment of special co!rts. 1ffences triable by special co!rts. #ppeal and re-ision. #pplication of +ode to proceedin(s before a special co!rt. 1ffences to be non.co(ni=able. 9ransitional pro-isions. +omposition of certain offences. /ower of +entral 4o-ernment to appoint company prosec!tors. #ppeal a(ainst ac3!ittal. +ompensation for acc!sation witho!t reasonable ca!se.

10

4*". #pplication of fines. CHAPTER %%$III MISCELLANEOUS 4*$. 4*&. 4*). 41*. 411. 412. 413. 414. 415. 41". 41$. 41&. 41). 42*. 421. 422. 423. 424. 425. 42". /!nishment for false statements. /!nishment for false e-idence. /!nishment where no specific penalty or p!nishment is pro-ided. /!nishment in case of repeated defa!lt. /!nishment for wron(f!l withholdin( of property. /!nishment for improper !se of A<imitedB, A/ri-ate <imitedB or A1/+ <imitedB. #dj!dication of penalties. Dormant company. /rotection of action ta2en in (ood faith. 6on.disclos!re of information in certain cases. Dele(ation by +entral 4o-ernment of its powers and f!nctions. /owers of +entral 4o-ernment or 9rib!nal to accord appro-al, etc., s!bject to conditions and to prescribe fees on applications. +ondonation of delays in certain cases. #nn!al report by +entral 4o-ernment. /ower to modify certain pro-isions of #ct in their application to pri-ate company, 1ne /erson +ompany and small company. /rohibition of association or partnership of persons exceedin( certain n!mber. ,epeal of certain enactments and sa-in(s. Dissol!tion of +ompany <aw 0oard and conse3!ential pro-ision. /ower to remo-e diffic!lties. /ower of +entral 4o-ernment to ma2e r!les.

11

Bill No. 58 of 2009 THE COMPANIES BILL 2009 A BILL to consolidate and amend the law relatin( to companies. 0' it enacted by /arliament in the Fifty.ninth Cear of the ,ep!blic of %ndia as followsDE CHAPTER I PRELIMINAR# S0or) )i)l1 19)1*) 4o551*4151*) (*d (--li4()io*. 1. F1G 9his #ct may be called the +ompanies #ct, 2**). F2G %t extends to the whole of %ndia. F3G 9his section shall come into force at once and the remainin( pro-isions of this #ct shall come into force on s!ch date as the +entral 4o-ernment may, by notification in the 1fficial 4a=ette, appoint and different dates may be appointed for different pro-isions and for different States, and any reference in any pro-ision of this #ct to the commencement of this #ct shall be constr!ed as a reference to the commencement of that pro-ision. F4G 9he pro-isions of this #ct shall apply toE FaG companies incorporated !nder this #ct or !nder any pre-io!s company lawH and FbG any company or body corporate (o-erned by any special #ct, in the absence of any correspondin( pro-isions therein. D1fi*i)io*3. 2. F1G %n this #ct, !nless the context otherwise re3!ires,E FaG Aabrid(ed prospect!sB means a memorand!m containin( s!ch salient feat!res of a prospect!s as may be prescribedH FbG Aacco!ntin( standardsB means s!ch acco!ntin( standards as the +entral 4o-ernment may notify !nder section 11), in cons!ltation with the 6ational #d-isory +ommittee on #cco!ntin( and #!ditin( Standards constit!ted !nder section 11&H FcG AalterB or AalterationB incl!des the ma2in( of additions, omissions and s!bstit!tionsH FdG A#ppellate 9rib!nalB means the 6ational +ompany <aw #ppellate 9rib!nal constit!ted !nder section 3$1H FeG AarticlesB means the articles of association of a company as ori(inally framed or as altered from time to time or applied in p!rs!ance of any pre-io!s company law or of this #ctH FfG Aassociate companyB, in relation to another company, means a company in which that other company has a si(nificant infl!ence, b!t which is not a s!bsidiary company of the company ha-in( s!ch infl!ence or of any other company.

12

Explanation.EFor the p!rposes of this cla!se, Asi(nificant infl!enceB means control of at the least twenty.six per cent. of total -otin( power, or of b!siness decisions !nder an a(reementH F(G Aa!ditin( standardsB means s!ch a!ditin( standards as the +entral 4o-ernment may notify !nder s!b.section F1*G of section 12", in cons!ltation with the 6ational #d-isory +ommittee on #cco!ntin( and #!ditin( Standards constit!ted !nder section 11&H FhG Aa!thorised capitalB or Anominal capitalB means s!ch capital as is a!thorised by the memorand!m of a company to be the maxim!m amo!nt of share capital of the companyH FiG Aban2in( companyB means a ban2in( company as defined in cla!se FcG of section 5 of the 0an2in( ,e(!lation #ct, 1)4)H FjG A0oard of DirectorsB or A0oardB, in relation to a company, means the collecti-e body of the directors of the companyH F2G Abody corporateB or AcorporationB incl!des a company incorporated o!tside %ndia, b!t does not incl!deE FiG a co.operati-e society re(istered !nder any law relatin( to co.operati-e societiesH and FiiG any other body corporate Fnot bein( a company as defined in this #ctG, which the +entral 4o-ernment may, by notification specify in this behalfH FlG Aboo2 and paperB and Aboo2 or paperB incl!de boo2s of acco!nt, deeds, -o!chers, writin(s, doc!ments, min!tes and re(isters maintained on paper or in electronic formH FmG Aboo2s of acco!ntB incl!des records maintained in respect ofE FiG all s!ms of money recei-ed and expended by a company and matters in relation to which the receipts and expendit!re ta2e placeH FiiG all sales and p!rchases of (oods and ser-ices by the companyH FiiiG the assets and liabilities of the companyH and Fi-G in the case of a company which belon(s to any class of companies specified !nder section 131, s!ch items of cost as may be prescribed !nder that sectionH FnG Abranch officeB, in relation to a company, means any establishment described as s!ch by the companyH FoG Acalled.!p capitalB means s!ch part of the s!bscribed capital, which has been called for paymentH FpG Achar(eB means an interest or lien created on the property or assets of a company or any of its !nderta2in(s or both as sec!rity and incl!des a mort(a(eH F3G Achartered acco!ntantB means a chartered acco!ntant as defined in cla!se of s!b.section F1G of section 2 of the +hartered #cco!ntants #ct, 1)4) and who holds a -alid certificate of practice !nder s!b.section F1G of section " of that #ctH FrG A+hief 'xec!ti-e 1fficerB means an officer of a company, who has been desi(nated as s!ch by itH FsG A+hief Financial 1fficerB means a person appointed as the +hief Financial 1fficer of a companyH

13

FtG AcompanyB means a company incorporated !nder this #ct or !nder any pre-io!s company lawH F!G Acompany limited by (!aranteeB means a company ha-in( the liability of its members limited by the memorand!m to s!ch amo!nt as the members may respecti-ely !nderta2e to contrib!te to the assets of the company in the e-ent of its bein( wo!nd !pH F-G Acompany limited by sharesB means a company ha-in( the liability of its members limited by the memorand!m to the amo!nt, if any, !npaid on the shares respecti-ely held by themH FwG A+ompany <i3!idatorB, in so far as it relates to the windin( !p of a company, means a person appointed by the 9rib!nal, company or creditors, as the case may be, as a +ompany <i3!idator from a panel of professionals maintained by the +entral 4o-ernment !nder s!b.section F2G of section 25*H FxG A+ompany SecretaryB or ASecretaryB means a +ompany Secretary as defined in cla!se FcG of s!b.section F1G of section 2 of the +ompany Secretaries #ct, 1)&* and who is appointed by a company to perform the f!nctions of a +ompany Secretary !nder this #ctH FyG A+ompany Secretary in practiceB means a +ompany Secretary who is deemed to be in practice !nder s!b.section F2G of section 2 of the +ompany Secretaries #ct, 1)&*H F=G Acontrib!toryB means a person liable to contrib!te towards the payment of a company8s debts in the e-ent of its bein( wo!nd !pH F=aG Acontrollin( interestB means the lar(est -otin( power a member may exercise in a (eneral meetin( of a company, whether directly or indirectly, and either alone or in association with his relati-es, bodies corporate or firms controlled by s!ch person or his relati-esH F=bG Acost acco!ntantB means a cost acco!ntant as defined in cla!se FbG of s!bsection F1G of section 2 of the +ost and >or2s #cco!ntants #ct, 1)5) and who holds a -alid certificate of practice !nder s!b.section F1G of section " of that #ctH F=cG A +o!rtB meansE FiG the Ii(h +o!rt ha-in( j!risdiction in relation to the place at which the re(istered office of the company concerned is sit!ate, except to the extent to which j!risdiction has been conferred on any District +o!rt or District +o!rts s!bordinate to that Ii(h +o!rt !nder s!b. cla!se FiiGH FiiG the District +o!rt, in cases where the +entral 4o-ernment has, by notification, empowered any District +o!rt to exercise all or any of the j!risdictions conferred !pon the Ii(h +o!rt, within the scope of its j!risdiction in respect of a company whose re(istered office is sit!ate in the districtH FiiiG the +o!rt of Session ha-in( j!risdiction to try any offence !nder this #ct or !nder any pre-io!s company lawH Fi-G the special co!rt established !nder section 3)"H F-G any etropolitan a(istrate or a ?!dicial a(istrate of the First +lass ha-in( j!risdiction to try any offence !nder this #ct or !nder any pre-io!s company lawH F=dG Adebent!reB incl!des debent!re stoc2, bonds or any other instr!ment of a company e-idencin( a debt, whether constit!tin( a char(e on the assets of the company or notH

14

F=eG Adeemed directorB means a person !nder whose ad-ice, instr!ctions or directions, the 0oard of Directors is acc!stomed to act, b!t does not incl!de a person who has been en(a(ed by the company to ad-ise it in a professional capacityH F=fG AdepositB means a deposit accepted by a company !nder section "" and incl!des a deposit existin( on the commencement of this #ctH F=(G AdepositoryB means a depository as defined in cla!se FeG of s!b.section F1G of section 2 of the Depositories #ct, 1))"H 22 of 1))". F=hG Aderi-ati-eB means the deri-ati-e as defined in cla!se FaaG of section 2 of the Sec!rities +ontracts F,e(!lationG #ct, 1)5"H 42 of 1)5". F=iG AdirectorB means a director appointed to the 0oard of a company, and incl!des a deemed directorH F=jG ADirector.4eneralB means the Director.4eneral of ,e(istration appointed !nder s!b.section F2G of section 35&H F=2G Adi-idendB incl!des any interim di-idendH F=lG Adoc!mentB incl!des s!mmons, notice, re3!isition, order, declaration, form and re(ister, whether iss!ed, sent or 2ept in p!rs!ance of this #ct or !nder any other law for the time bein( in force or otherwise, maintained on paper or in electronic formH F=mG Aemployees8 stoc2 optionB means the option (i-en to the directors, officers or employees of a company or of its holdin( company or s!bsidiary company or companies, if any, which (i-es s!ch directors, officers or employees, the benefit or ri(ht to p!rchase, or s!bscribe for, the shares of the company at a f!t!re date at a pre.determined priceH F=nG AexpertB incl!des an en(ineer, a -al!er, a +hartered #cco!ntant, a +ompany Secretary, a +ost and >or2s #cco!ntant and any other person who has the power or a!thority to iss!e a certificate in p!rs!ance of any law for the time bein( in forceH F=oG Afinancial instit!tionB incl!des a sched!led ban2H F=pG Afinancial statementB in relation to a company, incl!desE FiG a balance sheet as at the end of the financial yearH FiiG a profit and loss acco!nt, or in the case of a company carryin( on any acti-ity not for profit, an income and expendit!re acco!nt for the financial yearH FiiiG cash flow statement for the financial yearH and Fi-G any explanatory note attached to, or formin( part of, any doc!ment referred to in s!b. cla!se FiG or s!b.cla!se FiiGH F=3G Afinancial yearB, in relation to any company or body corporate, means the period endin( on the 31st day of arch e-ery year, and where it has been incorporated on or after the 1st day of ?an!ary of a year, the period endin( on the 31st day of arch of the followin( year, in respect whereof financial statement of the company or body corporate laid before it in its ann!al (eneral meetin( is made !pD

15

/ro-ided that on an application made by a company or body corporate, the 9rib!nal may, if it is satisfied that the circ!mstances so warrant, allow any period as its financial year, whether that period is a year or notH F=rG Aforei(n companyB means any company or body corporate incorporated o!tside %ndia which has a place of b!siness in %ndia whether established before or after the commencement of this #ctH F=sG Afree reser-esB means s!ch reser-es which, as per the latest a!dited balance sheet of a company, are a-ailable for distrib!tion as di-idendH F=tG A4lobal Depository ,eceipt F4D,GB means any instr!ment in the form of a depository receipt, by whate-er name called, created by a forei(n depository o!tside %ndia and a!thorised by a company ma2in( an iss!e of s!ch depository receiptsH F=!G A4o-ernment companyB means any company in which not less than fifty.one per cent. of the paid.!p share capital is held by the +entral 4o-ernment, or by any State 4o-ernment or 4o-ernments, or partly by the +entral 4o-ernment and partly by one or more State 4o-ernments, and incl!des a company which is a s!bsidiary company H F=-G Aholdin( companyB, in relation to one or more other companies, means a company of which s!ch companies are s!bsidiary companiesH F=wG Aindependent directorB means an independent director as defined !nder s!b.section F5G of section 132H F=xG A%ndian Depository ,eceipt F%D,GB means any instr!ment in the form of a depository receipt created by a domestic depository in %ndia and a!thorised by a company incorporated o!tside %ndia ma2in( an iss!e of s!ch depository receiptsH F=yG Ainterested directorB means a director who is in any way, whether by himself or thro!(h any of his relati-es or firm, body corporate or other association of indi-id!als in which he or any of his relati-es is a partner, director or a member, interested in a contract or arran(ement, or proposed contract or arran(ement, entered into or to be entered into by or on behalf of a companyH F==G Aiss!ed capitalB means s!ch capital as the company iss!es from time to time for s!bscription by the p!blicH F==aG A2ey mana(erial personnelB, in relation to a company, means E FiG the ana(in( Director, the +hief 'xec!ti-e 1fficer or the ana(er and where there is no ana(in( Director or ana(er, a whole.time director or directorsH FiiG the +ompany SecretaryH and FiiiG the +hief Financial 1fficerH F==bG Alisted companyB means a company which has any of its sec!rities listed on any reco(nised stoc2 exchan(eH F==cG Amana(erB means an indi-id!al who, s!bject to the s!perintendence, control and direction of the 0oard of Directors, has the mana(ement of the whole, or s!bstantially the whole, of the affairs of a company, and incl!des a director or any other person occ!pyin( the position of a mana(er, by whate-er name called, whether !nder a contract of ser-ice or notH

16

F==dG Amana(in( directorB means a director who, by -irt!e of the articles of a company or an a(reement with the company or a resol!tion passed in its (eneral meetin(, or by its 0oard of Directors, is entr!sted with the mana(ement of the whole, or s!bstantially the whole, of the affairs of the companyH F==eG AmemberB, in relation to a company, meansE FiG any s!bscriber to the memorand!m of the company and whose name is entered in the re(ister of members of the companyH FiiG e-ery other person who a(rees in writin( to become a member of the company by -irt!e of his holdin( e3!ity or preference shares in the company and whose name is entered in the re(ister of members of the companyH FiiiG e-ery person holdin( e3!ity or preference shares of the company and whose name is entered as a beneficial owner in the records of a depositoryH F==fG Amemorand!mB means the memorand!m of association of a company as ori(inally framed or as altered from time to time in p!rs!ance of any pre-io!s company law or of this #ctH F==(G Anet worthB means the a((re(ate -al!e of the paid.!p share capital and all reser-es created o!t of the profits and share premi!m acco!nt, after ded!ctin( the a((re(ate -al!e of the acc!m!lated losses, deferred expendit!re and miscellaneo!s expendit!re not written off, as per the a!dited balance sheet, b!t does not incl!de reser-es created o!t of re-al!ation of assets, write.bac2 of depreciation and amal(amationH F==hG AnotificationB means a notification p!blished in the 1fficial 4a=ette and the expression AnotifyB shall be constr!ed accordin(lyH F==iG Aofficer who is in defa!ltB, for the p!rpose of any pro-ision in this #ct which enacts that an officer of the company who is in defa!lt shall be liable to any penalty or p!nishment by way of imprisonment, fine or otherwise, means all or any of the followin( officers of a company, namelyDE FiG whole.time director or directorsH FiiG other 2ey mana(erial personnelH FiiiG where there is no 2ey mana(erial personnel s!ch director or directors as specified by the 0oard in this behalf and who has or ha-e (i-en his or their consent in writin( to the 0oard to s!ch specification, or all the directors, if no director is so specifiedH Fi-G any person who, !nder the immediate a!thority of the 0oard or any 2ey mana(erial personnel, is char(ed with any responsibility incl!din( maintenance, filin( or distrib!tion of acco!nts or records, a!thorises, acti-ely participates in, 2nowin(ly permits, or 2nowin(ly fails to ta2e acti-e steps to pre-ent, any defa!ltH F-G any person in accordance with whose ad-ice, directions or instr!ctions the 0oard of Directors of the company is acc!stomed to act other than a person who (i-es ad-ice to the 0oard in a professional capacityH F-iG e-ery director, in respect of a contra-ention of any of the pro-isions of this #ct, who is aware of s!ch contra-ention by -irt!e of the receipt by him of any proceedin(s of the 0oard

17

or participation in s!ch proceedin(s witho!t objectin( to the same, or where s!ch contra-ention had ta2en place with his consent or conni-anceH F-iiG in respect of the iss!e or transfer of any shares of a company, the share transfer a(ents, ban2ers, re(istrars and merchant ban2ers to the iss!e or transferH F==jG A1fficial <i3!idatorB means an 1fficial <i3!idator appointed !nder section 334H F==2G A1ne /erson +ompanyB means a company which has only one person as a memberH F==lG Apaid.!p share capitalB or Ashare capital paid.!pB means s!ch a((re(ate amo!nt of money credited as paid.!p as is e3!i-alent to the amo!nt recei-ed as paid.!p in respect of shares iss!ed, b!t does not incl!de any other amo!nt recei-ed in respect of s!ch shares, by whate-er name calledH F==mG Apostal ballotB means -otin( by post or thro!(h any electronic comm!nicationH F==nG AprescribedB means prescribed by r!les made !nder this #ctH F==oG Apre-io!s company lawB means any of the laws specified belowDE FiG any #ct or #cts relatin( to companies in force before the %ndian +ompanies #ct, 1&""H FiiG the %ndian +ompanies #ct, 1&""H FiiiG the %ndian +ompanies #ct, 1&&2H Fi-G the %ndian +ompanies #ct, 1)13H F-G the ,e(istration of 9ransferred +ompanies 1rdinance, 1)42H F-iG the +ompanies #ct, 1)5"H and F-iiG any law correspondin( to any of the #cts or the 1rdinance aforesaid and in forceE F#G in the mer(ed territories or in a /art 0 State Fother than the State of ?amm! and 5ashmirG, or any part thereof, before the extension thereto of the %ndian +ompanies #ct, 1)13H or F0G in the State of ?amm! and 5ashmir, or any part thereof, before the commencement of the ?amm! and 5ashmir F'xtension of <awsG #ct, 1)5", in so far as ban2in(, ins!rance and financial corporations are concerned, and before the commencement of the +entral <aws F'xtension to ?amm! and 5ashmirG #ct, 1)"&, in so far as other corporations are concernedH F-iiiG the /ort!(!ese +ommercial +ode, in so far as it relates to Asociedades anonimasBH and FixG the ,e(istration of +ompanies FSi22imG #ct,1)"1H F==pG Apri-ate companyB means a company which, by its articles,E FiG restricts the ri(ht to transfer its sharesH FiiG limits the n!mber of its members to fifty D /ro-ided that where two or more persons hold one or more shares in a company jointly, they shall, for the p!rposes of this cla!se, be treated as a sin(le memberD

18

/ro-ided f!rther that J F#G persons who are in the employment of the companyH and F0G persons who, ha-in( been formerly in the employment of the company, were members of the company while in that employment and ha-e contin!ed to be members after the employment ceased, shall not be incl!ded in the n!mber of membersH and FiiiG prohibits any in-itation to the p!blic to s!bscribe for any sec!rities of the companyH F==3G ApromoterB means a person who hasE FaG been named as s!ch in a prospect!sH or FbG control o-er the affairs of the company, directly or indirectly whether as a shareholder, director or otherwiseD /ro-ided that nothin( in s!b.cla!se FbG shall apply to a person who is actin( in a professional capacityH F==rG Aprospect!sB means any doc!ment described or iss!ed as a prospect!s and incl!des a red herrin( or shelf prospect!s or any notice, circ!lar, ad-ertisement or other doc!ment in-itin( offers from the p!blic for the s!bscription or p!rchase of any sec!rities, b!t does not incl!de any memorand!m or other doc!ment containin( information abo!t the prospect!s or the matters incl!ded therein iss!ed prior to the iss!e of the prospect!s and any doc!ment which shows on the face of it that it is not a prospect!sH F==sG Ap!blic companyB means a company which is not a pri-ate company or s!ch pri-ate company which is a s!bsidiary of a company which is not a pri-ate companyH F==tG Ap!blic financial instit!tionB means any financial instit!tionE FiG which is established or constit!ted by or !nder any +entral or State #ctH or FiiG in which not less than fifty.one per cent. of the paid.!p share capital is held or controlled by the +entral 4o-ernment or any State 4o-ernment or both by the +entral 4o-ernment and any State 4o-ernment or 4o-ernments or by the State 4o-ernments, and which is notified by the +entral 4o-ernment as s!ch !nder this #ctH F==!G Areco(nised stoc2 exchan(eB means a reco(nised stoc2 exchan(e as defined in cla!se FfG of section 2 of the Sec!rities +ontracts F,e(!lationG #ct, 1)5"H 42 of 1)5". F==-G Ared herrin( prospect!sB means a prospect!s which does not incl!de complete partic!lars of the 3!ant!m or price of the sec!rities or class of sec!rities incl!ded thereinH F==wG Are(ister of companiesB means the re(ister of companies maintained by the ,e(istrar on paper or in any electronic mode !nder this #ctH F==xG A,e(istrarB means any officer ha-in( the d!ty of re(isterin( companies !nder this #ctH F==yG Arelated partyB with reference to a company meansE FiG a relati-e of a director or 2ey mana(erial personnelH

19

FiiG a firm, in which a director, mana(er or his relati-e is a partnerH FiiiG a pri-ate company in which a director or mana(er is a member or directorH Fi-G a p!blic company in which a director or mana(er is a director or holds alon( with his relati-es, more than two per cent. of its paid.!p share capitalH F-G any body corporate whose 0oard of Directors, mana(in( director, or mana(er is acc!stomed to act in accordance with the ad-ice, directions or instr!ctions of a director or mana(erH F-iG any person !nder whose ad-ice, directions or instr!ctions a director or mana(er is acc!stomed to actH F-iiG any company which isE F#G a holdin(, s!bsidiary or an associate company of s!ch companyH or F0G a s!bsidiary of a holdin( company to which it is also a s!bsidiaryD /ro-ided that nothin( in s!b.cla!ses F-G and F-iG shall apply to the ad-ice, directions or instr!ctions (i-en in a professional capacityH F===G Arelati-eB with reference to any indi-id!al means the spo!se, brother, sister and all lineal ascendants and descendants of s!ch indi-id!al related to him either by marria(e or adoptionH F===aG Arem!nerationB means any money or its e3!i-alent (i-en or passed to any person for ser-ices rendered by him and incl!des per3!isites as defined !nder the %ncome.tax #ct, 1)"1H F===bG Asched!led ban2B means the sched!led ban2 as defined in cla!se FeG of section 2 of the ,eser-e 0an2 of %ndia #ct, 1)34H F===cG Asec!ritiesB means the sec!rities as defined in cla!se FhG of section 2 of the Sec!rities +ontracts F,e(!lationG #ct, 1)5"H F===dG ASec!rities and 'xchan(e 0oardB means the Sec!rities and 'xchan(e 0oard of %ndia established !nder section 3 of the Sec!rities and 'xchan(e 0oard of %ndia #ct, 1))2H F===eG AshareB means a share in the share capital of a company and incl!des stoc2H F===fG Ashelf prospect!sB means a prospect!s in respect of which the sec!rities or class of sec!rities incl!ded therein are iss!ed for s!bscription in one or more iss!es o-er a certain period witho!t the iss!e of a f!rther prospect!sH F===(G Asmall companyB means a company, other than a p!blic company,E FiG whose paid.!p share capital does not exceed s!ch amo!nt as may be prescribed and the prescribed amo!nt shall not be more than fi-e crore r!peesH or FiiG whose t!rno-er as per its last profit and loss acco!nt does not exceed s!ch amo!nt as may be prescribed and the prescribed amo!nt shall not be more than twenty crore r!peesD /ro-ided that nothin( in this cla!se shall apply to E

20

F#G a holdin( company or a s!bsidiary companyH F0G a company re(istered !nder section 4H or F+G a company or body corporate (o-erned by any special #ctH F===hG As!bscribed capitalB means s!ch part of the capital which is for the time bein( s!bscribed by the members of a companyH F===iG As!bsidiary companyB or As!bsidiaryB, in relation to any other company Fhereinafter referred to as the holdin( companyG, means a company in which the holdin( companyE FiG controls the composition of the 0oard of DirectorsH or FiiG exercises or controls more than one.half of the total -otin( power. Explanation.EFor the p!rposes of this cla!se, a company shall be deemed to be a s!bsidiary company of the holdin( company e-en if the control referred to in s!b.cla!se FiG or s!b.cla!se FiiG is of another s!bsidiary company of the holdin( companyH F===jG Asweat e3!ity sharesB means s!ch e3!ity shares as are iss!ed by a company to its directors or employees at a disco!nt or for consideration, other than cash, for their pro-idin( 2now.how or ma2in( a-ailable ri(hts in the nat!re of intellect!al property ri(hts or -al!e additions, by whate-er name calledH F===2G Atotal -otin( powerB means the total n!mber of -otes that may be cast at a meetin( of the company if all the members thereof cast their -otes either personally or by means of postal ballotH F===lG A9rib!nalB means the 6ational +ompany <aw 9rib!nal constit!ted !nder section 3")H F===mG A!nlimited companyB means a company not ha-in( any limit on the liability of its membersH F===nG A-otin( ri(htB means the ri(ht of a member of a company to -ote in any meetin( of the companyH F===oG Awhole.time directorB incl!des a director in the whole.time employment of the company. F2G >ords and expressions !sed and not defined in this #ct b!t defined in the Sec!rities +ontracts F,e(!lationG #ct, 1)5" or the Sec!rities and 'xchan(e 0oard of %ndia #ct, 1))2 or the Depositories #ct, 1))" shall ha-e the meanin(s respecti-ely assi(ned to them in that #ct. CHAPTER II INCORPORATION O" COMPANIES "or5()io* of 4o5-(*/. 3. F1G # company may be formed for any lawf!l p!rpose by anyE FaG se-en or more persons, where the company to be formed is to be a p!blic company, or FbG two or more persons, where the company to be formed is to be a pri-ate company, or FcG one person, where the company to be formed is to be a 1ne /erson +ompany,

21

by s!bscribin( their names or his name to a memorand!m in the manner prescribed and complyin( with the re3!irements of this #ct in respect of re(istrationD /ro-ided that the memorand!m of a 1ne /erson +ompany shall indicate the name of the person who shall, in the e-ent of the s!bscriber8s death, disability or otherwise, become the member of the companyD /ro-ided f!rther that it shall be the d!ty of the member of a 1ne /erson +ompany to intimate the ,e(istrar the chan(e, if any, in the name of the person referred to in the precedin( pro-iso and indicated in the memorand!m within s!ch time and in s!ch form as may be prescribed, and any s!ch chan(e shall not be deemed to be an alteration of the memorand!m. F2G # company formed !nder s!b.section F1G may be eitherE FaG a company limited by shares, or FbG a company limited by (!arantee, or FcG an !nlimited company. "or5()io* of 4o5-(*i13 6i)0 40(ri)(.l1 o.:14)3 1)4. 4. F1G >here it is pro-ed to the satisfaction of the +entral 4o-ernment that a person or an association of persons proposed to be re(istered !nder this #ct as a limited companyE FaG has for its objects the promotion of commerce, art, science, sports, ed!cation, research, social welfare, reli(ion, charity or any s!ch other objectH FbG shall apply its profits, if any, or other income in promotin( its objectsH and FcG prohibits the payment of any di-idend to its members, the +entral 4o-ernment may, by licence iss!ed in the manner as may be prescribed, and on s!ch conditions as it deems fit, allow that person or association of persons to be re(istered as a limited company !nder this section witho!t the addition to its name of the word A<imitedB, or as the case may be, the words A/ri-ate <imitedB or the letters and word A1/+ <imitedB, and there!pon the ,e(istrar shall, on application, re(ister s!ch person or association of persons as a company !nder this section. F2G 9he company re(istered !nder this section shall enjoy all the pri-ile(es and be s!bject to all the obli(ations of limited companies. F3G # firm may be a member of the company re(istered !nder this section. F4G # company re(istered !nder this section shall not alter the pro-isions of its memorand!m or articles except with the pre-io!s appro-al of the +entral 4o-ernment. F5G >here it is pro-ed to the satisfaction of the +entral 4o-ernment that a limited company re(istered !nder this #ct or !nder any pre-io!s company law has been formed with any of the objects specified in cla!se FaG of s!b.section F1G and with the restrictions and prohibitions as mentioned respecti-ely in cla!ses FbG and FcG of that s!b.section, it may, by licence, allow the company to be re(istered !nder this section s!bject to s!ch conditions as the +entral 4o-ernment deems fit and to chan(e its name by omittin( the word A<imitedB, or as the case may be, the words A/ri-ate limitedB or the letters and word A1/+ <imitedB from its name and there!pon the ,e(istrar

22

shall, on application, re(ister s!ch company !nder this section and all the pro-isions of this section shall apply to that company. F"G 9he +entral 4o-ernment may, by order, re-o2e the licence (ranted to a company re(istered !nder this section if the company contra-enes any of the re3!irements of this section or any of the conditions s!bject to which a licence is iss!ed or the affairs of the company are cond!cted fra!d!lently or in a manner -iolati-e of the objects of the company or prej!dicial to p!blic interest, and witho!t prej!dice to any other action a(ainst the company !nder this #ct, direct the company to con-ert its stat!s and chan(e its name to add the word A<imitedB or the words A/ri-ate <imitedB or the letters and word A1/+ <imitedB, as the case may be, to its name and there!pon the ,e(istrar shall, witho!t prej!dice to any action that may be ta2en !nder s!b.section F$G, on application, re(ister the company accordin(lyD /ro-ided that no s!ch order shall be made !nder this s!b.section !nless the company is (i-en a reasonable opport!nity of bein( heardD /ro-ided f!rther that a copy of e-ery s!ch order shall be (i-en to the ,e(istrar. F$G >here a licence is re-o2ed !nder s!b.section F"G, the +entral 4o-ernment may, if it is satisfied that it is essential in the p!blic interest, order that the company be wo!nd !p !nder this #ct or amal(amated with another company re(istered !nder this section. F&G >here a licence is re-o2ed !nder s!b.section F"G and where the +entral 4o-ernment is satisfied that it is essential in the p!blic interest that the company re(istered !nder this section sho!ld be amal(amated with another company re(istered !nder this section and ha-in( similar objects, then, notwithstandin( anythin( to the contrary contained in this #ct, the +entral 4o-ernment may, by order, notified in the 1fficial 4a=ette, pro-ide for s!ch amal(amation to form a sin(le company with s!ch constit!tion, properties, powers, ri(hts, interest, a!thorities and pri-ile(es and with s!ch liabilities, d!ties and obli(ations as may be specified in the order. F)G %f on the windin(.!p or dissol!tion of a company re(istered !nder this section, there remain, after the satisfaction of its debts and liabilities, any assets, they may be transferred to another company re(istered !nder this section and ha-in( similar objects, s!bject to s!ch conditions as the 9rib!nal may impose, or may be sold and proceeds thereof credited to the ,ehabilitation and %nsol-ency F!nd formed !nder section 244. F1*G # company re(istered !nder this section can amal(amate only with another company re(istered !nder this section and ha-in( similar objects. F11G >here a company ma2es any defa!lt in complyin( with any of the re3!irements laid down in this section, the company shall, witho!t prej!dice to any other action !nder the pro-isions of this section, be p!nishable with fine which shall not be less than ten la2h r!pees b!t which may extend to one crore r!pees and the directors of the company and e-ery officer of the company who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to three years or with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to twenty.fi-e la2h r!pees, or with both. M15or(*d,5. 5. F1G 9he memorand!m of a company shall stateE FaG the name of the company with the last word A<imitedB in the case of a p!blic limited company, or the last words A/ri-ate <imitedB in the case of a pri-ate limited company, or the last letters and word A1/+ <imitedB in the case of a 1ne /erson limited companyD

23

/ro-ided that nothin( in this cla!se shall apply to a company re(istered !nder section 4H FbG the State in which the re(istered office of the company is to be sit!atedH FcG the objects for which the company is proposed to be incorporated and any matter considered necessary for f!rtherance thereofH FdG the liability of members of the company, whether limited or !nlimited, and also state,E FiG in the case of a company limited by shares, the that liability of its members is limited to the amo!nt !npaid, if any, on the face -al!e of the shares held by themH and FiiG in the case of a company limited by (!arantee, the amo!nt !p to which each member !nderta2es to contrib!te E F#G to the assets of the company in the e-ent of its bein( wo!nd.!p while he is a member or within one year after he ceases to be a member and for payment of the debts and liabilities of the company or of s!ch debts and liabilities as may ha-e been contracted before he ceases to be a memberH and F0G to the costs, char(es and expenses of windin(.!p and for adj!stment of the ri(hts of the contrib!tories amon( themsel-esH FeG in the case of a company ha-in( a share capital,E FiG the amo!nt of share capital with which the company is to be re(istered and the di-ision thereof into shares of a fixed amo!nt and the n!mber of shares which the s!bscribers to the memorand!m a(ree to s!bscribe which shall not be less than one shareH and FiiG the n!mber of shares each s!bscriber to the memorand!m intends to ta2e, indicated opposite his name. F2G 9he name stated in the memorand!m shall notE FaG be identical with or resemble too nearly to the name of an existin( company re(istered !nder this #ct or any pre-io!s company lawH or FbG be s!ch that its !se by the companyE FiG will constit!te an offence !nder any law for the time bein( in forceH or FiiG is !ndesirable in the opinion of the +entral 4o-ernment. F3G >itho!t prej!dice to the pro-isions of s!b.section F2G, a company shall not be re(istered with a name which contains E FaG any word or expression which is li2ely to (i-e the impression that the company is in any way connected with, or ha-in( the patrona(e of, the +entral 4o-ernment, any State 4o-ernment, or any local a!thority, corporation or body constit!ted by the +entral or any State 4o-ernment !nder any law for the time bein( in forceH or FbG s!ch word or expression, as may be prescribed, !nless the pre-io!s appro-al of the +entral 4o-ernment has been obtained for the !se of any s!ch word or expression. F4G # person may ma2e an application, in s!ch form and manner and accompanied by s!ch fee, as may be prescribed, to the ,e(istrar for the reser-ation of a name set o!t in the application asE

24

FaG the name of the proposed companyH or FbG the name to which the company proposes to chan(e its name. F5G :pon receipt of an application !nder s!b.section F4G, the ,e(istrar may, if he is satisfied that the name to be reser-ed is not the one which may be rejected on any (ro!nd referred to in s!b. section F2G, reser-e the name for a period of sixty days from the date of the application, and on payment of s!ch additional fee as may be prescribed, for a f!rther period of sixty days. F"G 9he memorand!m of a company shall be in s!ch form, as may be prescribed. Ar)i4l13. ". F1G 9he articles of a company shall contain re(!lations for the company. F2G 9he articles shall also contain s!ch matters, as may be prescribedD /ro-ided that nothin( prescribed in this s!b.section shall be deemed to pre-ent a company from incl!din( s!ch additional matters in its articles as may be considered necessary for its mana(ement. F3G 9he articles may contain pro-isions for entrenchment to the effect that specified pro-isions of the articles may be altered only if conditions or proced!res as that are more restricti-e than those applicable in the case of a special resol!tion, are met or complied with. F4G 9he pro-isions for entrenchment referred to in s!b.section F3G shall only be made either on formation of a company, or by an amendment in the articles a(reed to by all the members of the company in the case of a pri-ate company and by a special resol!tion in the case of a p!blic company. F5G >here the articles contain pro-isions for entrenchment, whether made on formation or by amendment, the company shall (i-e notice to the ,e(istrar of s!ch pro-isions. F"G 9he +entral 4o-ernment may prescribe model articles for different types of companies. F$G 6othin( in this section shall apply to the articles of a company re(istered !nder any pre-io!s company law !nless amended !nder this #ct. I*4or-or()io* of 4o5-(*i13. $. F1G 9here shall be filed with the ,e(istrar within whose j!risdiction the re(istered office of a company is proposed to be sit!ated, the followin( doc!ments and information for re(istration, namely DE FaG the memorand!m and articles of the company d!ly si(ned by all the s!bscribers to the memorand!m in s!ch manner as may be prescribedH FbG a declaration in the prescribed form by an ad-ocate, a +hartered #cco!ntant, +ost #cco!ntant or +ompany Secretary, who is en(a(ed in the formation of the company, or by a person named in the articles as a director, mana(er or Secretary of the company, that all the re3!irements of this #ct and the r!les made there!nder in respect of re(istration and matters precedent or incidental thereto ha-e been complied withH FcG an affida-it from each of the s!bscribers to the memorand!m and from persons named as first directors, if any, in the articles that he is not con-icted of any offence in connection with the promotion, formation or mana(ement of any company, or that he has not been

25

fo!nd (!ilty of any fra!d or misfeasance or of any breach of d!ty to any company !nder this #ct or any pre-io!s company law d!rin( the precedin( fi-e years and that all the doc!ments filed with the ,e(istrar for re(istration of the company contain information that is correct and complete and tr!e to the best of his 2nowled(e and beliefH FdG the name of the State where the re(istered office of the company is proposed to be sit!ated on incorporation and the address for correspondence till its re(istered office is establishedH FeG the partic!lars of name, incl!din( s!rname or family name, residential address, nationality and s!ch other partic!lars of e-ery s!bscriber to the memorand!m alon( with proof of identity, as may be prescribed, and in the case of a s!bscriber bein( a company, s!ch partic!lars as may be prescribedH FfG the partic!lars of the persons mentioned in the articles as first directors of the company, their names, incl!din( s!rnames or family names, the Director %dentification 6!mber, residential address, nationality and s!ch other partic!lars incl!din( proof of identity as may be prescribedH and F(G the partic!lars of the interests of the persons mentioned in the articles as first directors of the company in other firms or bodies corporate alon( with their consent to act as directors of the company in s!ch form and manner as may be prescribed. F2G %f the ,e(istrar is satisfied that all the re3!irements of this #ct and the r!les made there!nder in respect of re(istration and matters precedent or incidental thereto ha-e been complied with, he shall re(ister all the doc!ments and information referred to in s!b.section F1G in the re(ister and iss!e a +ertificate of %ncorporation in the prescribed form to the effect that the proposed company is incorporated !nder this #ct. F3G 1n and from the date mentioned in the +ertificate of %ncorporation iss!ed !nder s!b.section F2G, the ,e(istrar shall allot to the company a A+orporate %dentity 6!mberB, which shall be a distinct identity for the company and which shall also be incl!ded in the certificate. F4G 9he company shall maintain and preser-e at its re(istered office copies of all doc!ments and information as ori(inally filed !nder s!b.section F1G till its dissol!tion !nder this #ct. F5G >here any person f!rnishes any false or incorrect partic!lars of any information or s!ppresses any material information, of which he is aware in any of the doc!ments filed with the ,e(istrar in relation to the re(istration of a company, he shall be p!nishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fi-e tho!sand r!pees b!t which may extend to one la2h r!pees, or with both. F"G >itho!t prej!dice to the pro-isions of s!b.section F4G, where the 9rib!nal, on an application made to it at any time after the incorporation of a company, is satisfied that the company has been (ot incorporated by f!rnishin( any false or incorrect information or representation or by s!ppressin( any material fact or information in any of the doc!ments or declaration filed or made for incorporatin( s!ch company, or by any fra!d!lent action, the promoters, the persons named as first directors of the company, the persons ma2in( declaration !nder cla!se FbG of s!b.section F1G shall each be p!nishable with imprisonment for a term which may extend to one year and with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to one la2h r!pees. F$G >itho!t prej!dice to the pro-isions of s!b.section F"G, the 9rib!nal may, if it is satisfied that the sit!ation so warrants,E

26

FaG pass s!ch orders, as it may thin2 fit, for re(!lation of the mana(ement of the company incl!din( chan(es, if any, in its memorand!m and articles, in p!blic interest or in the interest of the company and its members and creditorsH or FbG direct that liability of the members shall be !nlimitedH or FcG direct remo-al of the name of the company from the re(isterH or FdG pass an order for the windin( !p of the companyD /ro-ided that before ma2in( any order !nder this s!b.section,E FiG the company shall be (i-en a reasonable opport!nity of bein( heard in the matterH and FiiG the 9rib!nal shall ta2e into consideration the transactions entered into by the company, incl!din( the obli(ations, if any, contracted or payment of any liability. Eff14) of r1+i3)r()io*. &. From the date of incorporation mentioned in the +ertificate of %ncorporation, s!ch s!bscribers to the memorand!m and all other persons, as may, from time to time, become members of the company, shall be a body corporate by the name contained in the memorand!m, capable of exercisin( all the f!nctions of an incorporated company !nder this #ct and ha-in( perpet!al s!ccession and a common seal with power to ac3!ire, hold and dispose of property, both mo-able and immo-able, tan(ible and intan(ible, to contract and to s!e and be s!ed, by the said name. Eff14) of 515or(*d,5 (*d (r)i4l13. ). F1G S!bject to the pro-isions of this #ct, the memorand!m and articles shall, when re(istered, bind the company and the members thereof to the same extent as if they respecti-ely had been si(ned by the company and by each member, and contained co-enants on its and his part to obser-e all the pro-isions of the memorand!m and of the articles. F2G #ll monies payable by any member to the company !nder the memorand!m or articles shall be a debt d!e from him to the company. Co551*4151*) of .,3i*133 1)4. 1*. F1G # p!blic company ha-in( a share capital shall not commence any b!siness or exercise any borrowin( powers !nlessE FaG a declaration is filed by a director or s!bscriber in s!ch form and -erified in s!ch manner as may be prescribed, with the ,e(istrar that e-ery s!bscriber to the memorand!m has paid the -al!e of the shares a(reed to be ta2en by himH and FbG the company has filed with the ,e(istrar a -erification of its re(istered office in the manner as may be prescribed. F2G %f any defa!lt is made in complyin( with the re3!irements of this section, the company shall be p!nishable with fine which may extend to fi-e tho!sand r!pees and e-ery officer who is in defa!lt shall be p!nishable with fine which may extend to one tho!sand r!pees for e-ery day d!rin( which the defa!lt contin!es. F3G >here no declaration has been filed with the ,e(istrar !nder cla!se FaG of s!b.section F1G within a period of one h!ndred and ei(hty days of the date of incorporation of the company and the ,e(istrar has reasonable ca!se to belie-e that the company is not carryin( on any b!siness or

27

operations, he may, witho!t prej!dice to the pro-isions of s!b.section F2G, initiate action for the remo-al of the name of the company from the re(ister !nder +hapter @7%%%. R1+i3)1r1d offi41 of 4o5-(*/. 11. F1G # company shall, on and from the date of its incorporation and at all times thereafter, ha-e a re(istered office capable of recei-in( and ac2nowled(in( all comm!nications and notices as may be addressed to it. F2G 9he company shall f!rnish to the ,e(istrar -erification of its re(istered office within fifteen days of its incorporation in s!ch manner as may be prescribed. F3G '-ery company shall E FaG paint or affix its name and the address of its re(istered office, and 2eep the same painted or affixed, on the o!tside of e-ery office or place in which its b!siness is carried on, in a conspic!o!s position, in letters easily le(ible, and if the characters employed therefor are not those of the lan(!a(e or of one of the lan(!a(es in (eneral !se in that locality, also in the characters of that lan(!a(e or of one of those lan(!a(esH FbG ha-e its name en(ra-ed in le(ible characters on its sealH FcG (et its name, address of its re(istered office and the +orporate %dentity 6!mber alon( with telephone n!mber, fax n!mber, e.mail and website addresses printed in all its b!siness letters, billheads, letter paper and in all its notices and other official p!blicationsH and FdG ha-e its name printed on h!ndies, promissory notes, bills of exchan(e and s!ch other doc!ments as may be prescribed. F4G 6otice of e-ery chan(e of the sit!ation of the re(istered office, -erified in the manner prescribed, after the date of incorporation of the company, shall be (i-en to the ,e(istrar within fifteen days of the chan(e, who shall record the same. F5G 'xcept on the a!thority of a special resol!tion passed by a company, the re(istered office of the company shall not be chan(ed,E FaG in the case of an existin( company, o!tside the local limits of any city, town or -illa(e where s!ch office is sit!ated at the commencement of this #ct or where it may be sit!ated later by -irt!e of a special resol!tion passed by the companyH and FbG in the case of any other company, o!tside the local limits of any city, town or -illa(e where s!ch office is first sit!ated or where it may be sit!ated later by -irt!e of a special resol!tion passed by the company. F"G %f any defa!lt is made in complyin( with the re3!irements of this section, the company and e-ery officer who is in defa!lt shall be liable to a penalty of one tho!sand r!pees for e-ery day d!rin( which the defa!lt contin!es b!t not exceedin( one la2h r!pees. Al)1r()io* of 515or(*d,5. 12. F1G # company may, by a special resol!tion and after complyin( with the proced!re specified in this section, alter the pro-isions of its memorand!m.

28

F2G #ny chan(e in the name of a company shall be s!bject to the pro-isions of s!bsections F2G and F3G of section 5 and shall not ha-e effect except with the appro-al of the +entral 4o-ernment in writin(D /ro-ided that no s!ch appro-al shall be necessary where the only chan(e in the name of the company is the deletion therefrom, or addition thereto, of the word A/ri-ateB or letters A1/+B, conse3!ent on the con-ersion of any one class of companies to another class in accordance with the pro-isions of this #ct. F3G >hen any chan(e in the name of a company is made !nder s!b.section F2G, the ,e(istrar shall enter the new name in the re(ister in place of the old name and iss!e a fresh +ertificate of %ncorporation with the new name and the chan(e in the name shall be complete and effecti-e only on the iss!e of s!ch a certificate. F4G 9he alteration of the memorand!m relatin( to the place of the re(istered office from one State to another shall not ha-e any effect !nless it is appro-ed by the +entral 4o-ernment on an application made in this behalf. F5G 9he +entral 4o-ernment shall dispose of the application !nder s!b.section F4G within a period of sixty days and before passin( its order may satisfy itself that the alteration has the consent of the creditors, debent!re holders and others concerned with the company or that the s!fficient pro-ision has been made by the company either for the d!e dischar(e of all its debts and obli(ations or that ade3!ate sec!rity has been pro-ided for s!ch dischar(e. F"G # company shall, in relation to any alteration of its memorand!m, file with the ,e(istrarE FaG the special resol!tion passed by the company !nder s!b.section F1GH FbG the appro-al of the +entral 4o-ernment !nder s!b.section F2G, if the alternation in-ol-e any chan(e in the name of the companyH FcG certified copy of the order of the +entral 4o-ernment made !nder s!b.section F5G, if the alteration in-ol-es a transfer of the re(istered office from one State to another. # certified copy of the order of the +entral 4o-ernment appro-in( the alteration shall be filed by the company with the ,e(istrar of each of the States within s!ch time and in s!ch manner as may be prescribed, who shall re(ister the same. F$G >here an alteration of the memorand!m res!lts in the transfer of the re(istered office of a company from one State to another, a certified copy of the order of the +entral 4o-ernment appro-in( the alteration shall be filed by the company with the ,e(istrar of each of the States within s!ch time and in s!ch manner as may be prescribed, who shall re(ister the same, and the ,e(istrar of the State where the re(istered office is bein( shifted to shall iss!e a fresh +ertificate of %ncorporation indicatin( the alteration. F&G 6o alteration made !nder this section shall ha-e any effect !ntil it has been re(istered in accordance with the pro-isions of this section. F)G #ny alteration of the memorand!m, in the case of a company limited by (!arantee and not ha-in( a share capital, p!rportin( to (i-e any person a ri(ht to participate in the di-isible profits of the company otherwise than as a member, shall be -oid. Al)1r()io* of (r)i4l13.

29

13. F1G S!bject to the pro-isions of this #ct and to the conditions contained in its memorand!m, if any, a company may, by a special resol!tion, alter its articles incl!din( alterations ha-in( the effect of con-ersion of E FaG a pri-ate company into a p!blic company or a 1ne /erson +ompany, or FbG a p!blic company into a pri-ate company or a 1ne /erson +ompany, or FcG a 1ne /erson +ompany into a p!blic company or a pri-ate companyD /ro-ided that where a company bein( a pri-ate company alters its articles in s!ch a manner that they no lon(er incl!de the restrictions and limitations which are re3!ired to be incl!ded in the articles of a pri-ate company !nder this #ct, the company shall, as from the date of s!ch alteration, cease to be a pri-ate companyD /ro-ided f!rther that any alteration ha-in( the effect of con-ersion of a p!blic company into a pri-ate company or a 1ne /erson +ompany shall not ta2e effect except with the appro-al of the 9rib!nal which shall ma2e s!ch order as it may deem fit. F2G '-ery alteration of the articles !nder this section and a copy of any order of the 9rib!nal appro-in( the alteration as per s!b.section F1G shall be filed with the ,e(istrar, to(ether with a printed copy of the altered articles, within fifteen days in s!ch manner as may be prescribed, who shall re(ister the same. F3G#ny alteration of the articles re(istered !nder s!b.section F2G shall, s!bject to the pro-isions of this #ct, be -alid as if it were ori(inally in the articles. Al)1r()io* of 515or(*d,5 (*d (r)i4l13 )o .1 *o)1d i* 121r/ 4o-/. 14. F1G '-ery alteration made in the memorand!m or articles of a company shall be noted in e-ery copy of the memorand!m or articles, as the case may be. F2G >here a company ma2es any defa!lt in complyin( with the pro-isions of this section, the company shall be liable to a penalty, for each s!ch defa!lt, of one tho!sand r!pees for e-ery day d!rin( which the defa!lt contin!es b!t not exceedin( one la2h r!pees. R14)ifi4()io* of *(51 of 4o5-(*/. 15. F1G %f, thro!(h inad-ertence or otherwise, a company on its first re(istration or on its re(istration by a new name, is re(istered by a name which,E FaG in the opinion of the +entral 4o-ernment, is identical with or too nearly resembles the name by which a company in existence had been pre-io!sly re(istered, whether !nder this #ct or any pre-io!s company law, it may direct the company to chan(e its name and the company shall chan(e its name or new name, as the case may be, within a period of three months from the iss!e of s!ch direction, after adoptin( an ordinary resol!tion for the p!rposeH FbG on an application by a re(istered proprietor of a trade mar2 that the name is identical with or too nearly resembles a re(istered trade mar2 of s!ch proprietor !nder the 9rade ar2s #ct, 1))), made to the +entral 4o-ernment within three years of incorporation or re(istration of the company, whether !nder this #ct or any pre-io!s company law, in the opinion of the +entral 4o-ernment, is identical with or too nearly resembles an existin( trade mar2, it may direct the company to chan(e its name and the company shall chan(e

30

its name or new name, as the case may be, within a period of six months from the iss!e of s!ch direction, after adoptin( an ordinary resol!tion for the p!rpose. F2G >here a company chan(es its name or obtains a new name !nder s!b.section F1G, it shall within a period of fifteen days (i-e notice of s!ch chan(e to the ,e(istrar alon( with the order of the +entral 4o-ernment, who shall carry o!t necessary chan(es in the +ertificate of %ncorporation and the memorand!m. F3G %f a company ma2es defa!lt in complyin( with any direction (i-en !nder s!b.section F1G, the company shall be p!nishable with fine of one tho!sand r!pees for e-ery day d!rin( which the defa!lt contin!es and e-ery officer who is in defa!lt shall be p!nishable with fine which shall not be less than fi-e tho!sand r!pees b!t which may extend to one la2h r!pees. Co-i13 of 515or(*d,5 (r)i4l13 1)4. )o .1 +i21* )o 515.1r3. 1". F1G# company shall, on bein( so re3!ested by a member, send to him within se-en days of the re3!est and s!bject to the payment of s!ch fee as may be prescribed, a copy each of the followin( doc!ments, namelyDE FaG the memorand!m, FbG the articles, and FcG e-ery a(reement and e-ery resol!tion referred to in s!b.section F1G of section 1*", if and in so far as they ha-e not been embodied in the memorand!m or articles. F2G >here a company ma2es any defa!lt in complyin( with the pro-isions of this section, the company shall be liable for each defa!lt, to a penalty of one tho!sand r!pees for e-ery day d!rin( which the defa!lt contin!es b!t not exceedin( one la2h r!pees. R1;r1+i3)r()io* of 4o5-(*i13 (lr1(d/ r1+i3)1r1d. 1$. F1G # company of any class re(istered !nder this #ct may re.re(ister itself as a company of the same class or other class !nder this #ct by alteration of memorand!m and articles of the company in accordance with the pro-isions of this +hapter. F2G >here the re(istration is re3!ired to be done !nder this section, the ,e(istrar shall on an application made by the company, after satisfyin( himself that the pro-isions of this +hapter applicable for re(istration of companies ha-e been complied with, close the former re(istration of the company and after re(isterin( the doc!ments referred to in s!bsection F1G re(ister, iss!e a +ertification of %ncorporation in the same manner as its first re(istration. F3G 9he re(istration of a company !nder this section shall not affect any debts, liabilities, obli(ations or contracts inc!rred or entered into, by or on behalf of the company before the re. re(istration and those debts, liabilities, obli(ations and contracts may be enforced in the manner as if s!ch re(istration had not been done. S,.3idi(r/ 4o5-(*/ *o) )o 0old 30(r13 i* i)3 0oldi*+ 4o5-(*/. 1&. F1G 6o company shall, either by itself or thro!(h its nominees, hold any shares in its holdin( company and no holdin( company shall allot or transfer its shares to any of its s!bsidiary companies and any s!ch allotment or transfer of shares of a company to its s!bsidiary company shall be -oidD /ro-ided that nothin( in this s!b.section shall apply to a caseE

31

FaG where the s!bsidiary company holds s!ch shares as the le(al representati-e of a deceased member of the holdin( companyH or FbG where the s!bsidiary company holds s!ch shares as a tr!steeH or FcG where the s!bsidiary company is a shareholder e-en before it became a s!bsidiary company of the holdin( companyD /ro-ided f!rther that the s!bsidiary company referred to in the precedin( pro-iso shall ha-e a ri(ht to -ote at a meetin( of the holdin( company only in respect of the shares held by it as a le(al representati-e or as a tr!stee, as referred to in cla!se FaG or cla!se FbG of the said pro-iso. F2G 9he reference in this section to shares of a holdin( company which is a company limited by (!arantee or an !nlimited company, not ha-in( a share capital, shall be constr!ed as a reference to the interest of its members, whate-er be the form of interest. S1r2i41 of do4,51*)3. 1). F1G # doc!ment may be ser-ed on a company or an officer thereof by sendin( it to the company or the officer at the re(istered office of the company by post !nder a certificate of postin( or by re(istered post or by lea-in( it at its re(istered office or by means of s!ch electronic or other mode as may be prescribedD /ro-ided that where sec!rities are held with a depository, the records of the beneficial ownership may be ser-ed by s!ch depository on the company by means of electronic mode or by deli-ery of floppies or dis2s or any other similar de-ice. F2G # doc!ment may be ser-ed on ,e(istrar or any member by sendin( it to him by re(istered post or by deli-erin( at his office or address, by s!ch electronic or other mode as may be prescribedD /ro-ided that a member may re3!est for deli-ery of any doc!ment thro!(h a partic!lar mode, for which he will pay s!ch fee as may be determined by the company in its ann!al (eneral meetin(. A,)01*)i4()io* of do4,51*)3 -ro411di*+3 (*d 4o*)r(4)3. 2*. Sa-e as otherwise pro-ided in this #ct,E FaG a doc!ment or proceedin( re3!irin( a!thentication by a company, or FbG contracts made by or on behalf of a company, may be si(ned by any 2ey mana(erial personnel or an officer of the company d!ly a!thorised by the 0oard in this behalf. E914,)io* of .ill3 of 1940(*+1 1)4. 21. F1G # bill of exchan(e, h!ndi or promissory note shall be deemed to ha-e been made, accepted, drawn or endorsed on behalf of a company if made, accepted, drawn, or endorsed in the name of, or on behalf or on acco!nt of, the company by any person actin( !nder its a!thority, express or implied. F2G # company may, by writin( !nder its common seal, a!thorise any person, either (enerally or in respect of any specified matters, as its attorney, to exec!te other deeds on its behalf in any place either in %ndia or o!tside.

32

F3G # deed si(ned by s!ch an attorney on behalf of the company and !nder his seal shall bind the company and ha-e the effect as if it were made !nder its common seal.

33

CHAPTER III PROSPECTUS AND ALLOTMENT O" SECURITIES Po61r of S14,ri)i13 (*d E940(*+1 Bo(rd )o r1+,l()1 i33,1 (*d )r(*3f1r of 314,ri)i13 1)4. 22. 9he pro-isions contained in this +hapter and +hapter %7,E FaG in so far as they relate to iss!e and transfer of sec!rities and non.payment of di-idend by listed companies or those companies which intend to (et their sec!rities listed on any stoc2 exchan(e in %ndia, shall, except as pro-ided !nder this #ct, be administered by the Sec!rities and 'xchan(e 0oard by ma2in( re(!lationsH FbG in any other case, shall be administered by the +entral 4o-ernment. Explanation.EFor the remo-al of do!bts, it is hereby declared that all powers relatin( to all other matters incl!din( those relatin( to prospect!s, ret!rn of allotment, iss!e of shares and redemption of preference shares shall be exercised by the +entral 4o-ernment, the 9rib!nal or the ,e(istrar, as the case may be. M())1r3 )o .1 3)()1d i* -ro3-14),3. 23. F1G '-ery prospect!s iss!ed by or on behalf of a p!blic company either with reference to its formation or s!bse3!ently, or by or on behalf of any person who is or has been en(a(ed or interested in the formation of a p!blic company, shall be dated and si(ned and shallE FaG state the followin( information, namelyDE FiG names and addresses of the re(istered office of the company, +ompany Secretary, a!ditors, le(al ad-isers, ban2ers, tr!stees, if any, !nderwriters and s!ch other persons as may be prescribedH FiiG dates of the openin( and closin( of the iss!e, and declaration abo!t the iss!e of allotment letters and ref!nds within the prescribed timeH FiiiG a statement by the 0oard of Directors abo!t the separate ban2 acco!nt where all monies recei-ed o!t of the iss!e are to be transferred and disclos!re of details of all monies incl!din( !tilised and !n!tilised monies o!t of the iss!e in the prescribed mannerH Fi-G details abo!t !nderwritin( of the iss!eH F-G consent of the directors, a!ditors, ban2ers to the iss!e, expert8s opinion, if any, and of s!ch other persons, as may be prescribedH F-iG the a!thority for the iss!e and the details of the resol!tion passed thereforH F-iiG proced!re and time sched!le for allotment and iss!e of certificatesH F-iiiG capital str!ct!re of the company in the prescribed mannerH FixG s!ch partic!lars of the terms of the present iss!e as may be prescribedH FxG main objects and present b!siness of the company and its location, sched!le of implementation of the project and f!t!re prospectsH FxiG partic!lars of mana(ement perception of ris2 factorsH

34

FxiiG minim!m s!bscription, amo!nt payable by way of premi!m, iss!e of shares otherwise than on cash, option to s!bscribe for sec!rities to be dealt with in a depositoryH and FxiiiG details of directors, proposed directors incl!din( their appointments and rem!neration, and s!ch partic!lars of the nat!re and extent of their interests in the company as may be prescribedH FbG set o!t the followin( reports for the p!rposes of the financial information, namelyDE FiG reports by the a!ditors of the company with respect to its profits and losses and assets and liabilities and s!ch other matters as may be prescribedH FiiG reports relatin( to profits and losses for each of the fi-e financial years immediately precedin( the financial year of the iss!e of prospect!s incl!din( s!ch reports of the s!bsidiaries and in s!ch manner as may be prescribedH FiiiG reports made by the a!ditors !pon the profits and losses of the b!siness of the company for fi-e financial years, and assets and liabilities of its b!siness on the last date before the iss!e of prospect!s in the prescribed mannerH and Fi-G reports abo!t the b!siness or transaction to which the proceeds of the sec!rities are to be applied directly or indirectlyH FcG ma2e a declaration abo!t the compliance of the pro-isions of this #ct and a statement to the effect that nothin( in the prospect!s is contrary to the pro-isions of this #ct and the Sec!rities and 'xchan(e 0oard of %ndia #ct, 1))2H and FdG state s!ch other matters and set o!t s!ch other reports, as may be prescribedD /ro-ided that nothin( in this s!b.section shall apply to the iss!e of a prospect!s or form of application for shares and debent!res to the existin( members or debent!re holders of a company, irrespecti-e of whether any s!ch member or debent!re holder has a ri(ht to reno!nce the offer in fa-o!r of any other person. Explanation.E9he date indicated in the prospect!s shall be deemed to be the date of its p!blication. F2G 6o prospect!s shall be iss!ed by or on behalf of a company or in relation to an intended company !nless on or before the date of its p!blication, there has been deli-ered to the ,e(istrar for re(istration a copy thereof si(ned by e-ery person who is named therein as a director or proposed director of the company or by his d!ly a!thorised attorney. F3G # prospect!s iss!ed !nder s!b.section F1G shall not incl!de a statement p!rportin( to be made by an expert !nless the expert is a person who is not, and has not been, en(a(ed or interested in the formation or promotion or mana(ement, of the company and has (i-en his written consent to the iss!e of the prospect!s and has not withdrawn s!ch consent before the deli-ery of a copy of the prospect!s to the ,e(istrar for re(istration and a statement to that effect shall be incl!ded in the prospect!s. F4G '-ery prospect!s iss!ed !nder s!b.section F1G shall, on the face of it, FaG state that a copy has been deli-ered for re(istration to the ,e(istrar as re3!ired !nder s!b.section F2GH and

35

FbG specify any doc!ments re3!ired by this section to be attached to the copy so deli-ered or refer to statements incl!ded in the prospect!s which specify these doc!ments. F5G 9he ,e(istrar shall not re(ister a prospect!s !nless the re3!irements of this section with respect to its re(istration are complied with and the prospect!s is accompanied by the consent in writin( of all the persons named in the prospect!s. F"G 6o prospect!s shall be -alid if it is iss!ed more than ninety days after the date on which a copy thereof is deli-ered to the ,e(istrar !nder s!b.section F2G. F$G >here a prospect!s is iss!ed in contra-ention of the pro-isions of this section, the company shall be p!nishable with fine which shall not be less than fifty tho!sand r!pees b!t which may extend to three la2h r!pees and e-ery person who is 2nowin(ly a party to the iss!e of s!ch prospect!s shall be p!nishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty tho!sand r!pees b!t which may extend to three la2h r!pees, or with both. Off1r or i*2i)()io* for 3,.34ri-)io* of 314,ri)i13. 24. F1G # company may, witho!t prej!dice to the pro-isions of section 23, ma2e an offer or in-itation to a section of the p!blic, whether selected as members or debent!re holders of the company or as clients of the persons iss!in( the prospect!s or in any other manner, to s!bscribe for s!ch sec!rities as are mentioned in the offer or in-itation, irrespecti-e of whether s!ch sec!rities are incl!ded in a prospect!s and referred to therein as bein( reser-ed for s!ch offer or in-itation. F2G 6o offer or in-itation shall be treated as made to a section of the p!blic by -irt!e of s!b.section F1G, if the offer or in-itation can properly be re(arded in all the circ!mstancesE FaG as not bein( calc!lated to res!lt, directly or indirectly, in the sec!rities becomin( a-ailable for s!bscription or p!rchase by persons other than those recei-in( the offer or in-itation, or FbG otherwise as bein( a domestic concern of the persons ma2in( and recei-in( the offer or in-itationD /ro-ided that nothin( contained in this s!b.section shall apply to a case where the offer or in-itation to s!bscribe for the sec!rities is made to fifty persons or moreD /ro-ided f!rther that nothin( in the precedin( pro-iso shall apply to s!ch p!blic financial instit!tions or non.ban2in( financial companies as may be notified in the 1fficial 4a=ette by the +entral 4o-ernment from time to time. F3G # company ma2in( an offer or in-itation !nder this section shall allot its sec!rities within se-enty days from the date of receipt of the application money for s!ch sec!rities and if the company is not able to allot the sec!rities within that period, it shall repay the application money within ei(ht days from the date of completion of se-enty days. F4G 9he Sec!rities and 'xchan(e 0oard shall, in cons!ltation with the ,eser-e 0an2 of %ndia, ma2e re(!lations in respect of an offer or in-itation made to the p!blic by a p!blic financial instit!tion or non.ban2in( financial company referred to in cla!se FfG of section 45.% of the ,eser-e 0an2 of %ndia #ct, 1)34.

36

F5G # statement indicatin( the salient feat!res of the offer or in-itation made !nder this section shall, on or before the date of s!ch offer or in-itation, be deli-ered to the ,e(istrar for re(istration and the pro-isions of s!b.sections F4G to F$G of section 23 shall apply m!tatis m!tandis to s!ch offer or in-itation. Ad21r)i3151*) of -ro3-14),3. 25. >here an ad-ertisement of any prospect!s of a company is p!blished in any manner, it shall be necessary to specify therein the contents of its memorand!m as re(ards the objects, the liability of members and the amo!nt of share capital, of the company, and the names of the si(natories to the memorand!m and the n!mber of shares s!bscribed for by them, and its capital str!ct!re. S01lf -ro3-14),3. 2". F1G #ny class or classes of companies, as the Sec!rities and 'xchan(e 0oard may pro-ide by re(!lations in this behalf, may file a shelf prospect!s with the ,e(istrar at the sta(e of the first offer of sec!rities incl!ded therein which shall indicate a period not exceedin( one year as the period of -alidity of s!ch prospect!s which shall commence from the date of openin( of the first offer of sec!rities !nder that prospect!s, and in respect of a second or s!bse3!ent offer of s!ch sec!rities iss!ed d!rin( the period of -alidity of that prospect!s, no f!rther prospect!s is re3!ired. F2G # company filin( a shelf prospect!s shall be re3!ired to file an information memorand!m containin( all material facts relatin( to new char(es created, chan(es in the financial position of the company as ha-e occ!rred between the first offer of sec!rities or the pre-io!s offer of sec!rities and the s!cceedin( offer of sec!rities and s!ch other chan(es as may be prescribed, with the ,e(istrar within the prescribed time, prior to the iss!e of a second or s!bse3!ent offer of sec!rities !nder the shelf prospect!sD /ro-ided that where a company or any other person has recei-ed applications for the allotment of sec!rities alon( with ad-ance payments of s!bscription before the ma2in( of any s!ch chan(e, the company or other person shall intimate the chan(es to s!ch applicants and if they express a desire to withdraw their application, the company or other person shall ref!nd all the monies recei-ed as s!bscription within fifteen days thereof. F3G >here an information memorand!m is filed, e-ery time an offer of sec!rities is made !nder s!b.section F2G, s!ch memorand!m to(ether with the shelf prospect!s shall be deemed to be a prospect!s. R1d 01rri*+ -ro3-14),3. 2$. F1G # company proposin( to ma2e an offer of sec!rities may iss!e a red herrin( prospect!s prior to the iss!e of a prospect!s. F2G # company proposin( to iss!e a red herrin( prospect!s !nder s!b.section F1G shall file it with the ,e(istrar at least three days prior to the openin( of the s!bscription list and the offer. F3G # red herrin( prospect!s shall carry the same obli(ations as are applicable to a prospect!s and any -ariation between the red herrin( prospect!s and a prospect!s shall be hi(hli(hted as -ariations in the prospect!s. F4G :pon the closin( of the offer of sec!rities !nder this section, the prospect!s also statin( therein the total capital raised, whether by way of debt or share capital, and the closin( price of the sec!rities and any other details as are not incl!ded in the red herrin( prospect!s shall be filed with

37

the ,e(istrar and in the case of a listed company with the ,e(istrar and the Sec!rities and 'xchan(e 0oard. I33,1 of (--li4()io* for53 for 314,ri)i13. 2&. F1G 6o form of application for the p!rchase of any of the sec!rities of a company shall be iss!ed !nless s!ch form is accompanied by an abrid(ed prospect!sD /ro-ided that nothin( in this s!b.section shall apply if it is shown that the form of application was iss!ed . FaG in connection with a bona fide in-itation to a person to enter into an !nderwritin( a(reement with respect to s!ch sec!rities, or FbG in relation to sec!rities which were not offered to the p!blic. F2G # copy of the abrid(ed prospect!s shall, on a re3!est bein( made by any person before the closin( of the s!bscription list and the offer, be f!rnished to him. F3G >here a company ma2es any defa!lt in complyin( with the pro-isions of this section, it shall be liable to a penalty of fifty tho!sand r!pees for each defa!lt. Cri5i*(l li(.ili)/ for 5i33)()151*)3 i* -ro3-14),3. 2). >here a prospect!s, iss!ed, circ!lated or distrib!ted !nder this +hapter, incl!des any statement which is !ntr!e or misleadin( in form or context or where any incl!sion or omission of any matter is li2ely to mislead, e-ery person who a!thorises the iss!e of s!ch prospect!s shall be p!nishable with imprisonment for a term which may extend to three years and with fine which shall not be less than one la2h r!pees b!t which may extend to twenty fi-e la2h r!peesD /ro-ided that nothin( in this section shall apply to a person if he pro-es that s!ch statement or omission was immaterial or that he had reasonable (ro!nds to belie-e and did !p to the time of iss!e of the prospect!s belie-e that the statement was tr!e or the incl!sion or omission was necessary. Ci2il li(.ili)/ for 5i3; 3)()151*)3 i* -ro3-14),3. 3*. F1G >here a person has s!bscribed for sec!rities of a company actin( on any statement incl!ded, or the incl!sion or omission of any matter, in the prospect!s which is misleadin( and has s!stained any loss or dama(e as a conse3!ence thereof, the company and e-ery person whoE FaG is a director of the company at the time of the iss!e of the prospect!s, FbG has a!thorised himself to be named and is named in the prospect!s as a director of the company, or has a(reed to become s!ch director, either immediately or after an inter-al of time, FcG is a promoter of the company, FdG has a!thorised the iss!e of the prospect!s, and FeG is an expert referred to in s!b.section F3G section 23, shall, witho!t prej!dice to any p!nishment to which any person may be liable !nder section 31, be liable to pay compensation to e-ery person who has s!stained s!ch loss or dama(e.

38

F2G 6o person shall be liable !nder s!b.section F1G, if he pro-esE FaG that, ha-in( consented to become a director of the company, he withdrew his consent before the iss!e of the prospect!s, and that it was iss!ed witho!t his a!thority or consentH or FbG that the prospect!s was iss!ed witho!t his 2nowled(e or consent, and that on becomin( aware of its iss!e, he forthwith (a-e a reasonable p!blic notice that it was iss!ed witho!t his 2nowled(e or consent. F3G 6otwithstandin( anythin( contained in this section, where it is pro-ed that a prospect!s has been iss!ed with intent to defra!d the applicants for the sec!rities of a company or any other person or for any fra!d!lent p!rpose, e-ery person referred to in s!b.section F1G shall be personally responsible, witho!t any limitation of liability, for all or any of the losses or dama(e that may ha-e been inc!rred by any person who s!bscribed to the sec!rities on the basis of s!ch prospect!s. P,*i3051*) for fr(,d,l1*)l/ i*d,4i*+ -1r3o*3 )o i*213) 5o*1/. 31. #ny person who, either 2nowin(ly or rec2lessly ma2es any statement, promise or forecast which is false, decepti-e or misleadin(, or deliberately conceals any material facts, to ind!ce another person to enter into, or to offer to enter into . FaG any a(reement for, or with a -iew to, ac3!irin(, disposin( of, s!bscribin( for, or !nderwritin(, sec!ritiesH or FbG any a(reement the p!rpose or the pretended p!rpose of which is to sec!re a profit to any of the parties from the yield of sec!rities or by reference to fl!ct!ations in the -al!e of sec!rities, shall be p!nishable with imprisonment for a term which may extend to three years and with fine which shall not be less than one la2h r!pees b!t which may extend to fifty la2h r!pees. A4)io* )o .1 )(<1* ./ (ff14)1d -1r3o*3. 32. # s!it may be filed or any other action may be ta2en !nder section 3* or section 31 by any person, (ro!p of persons or any association of persons affected by any misleadin( statement or the incl!sion or omission of any matter in the prospect!s. P,*i3051*) for -1r3o*()io* for (47,i3i)io* 1)4. of 314,ri)i13. 33. F1G #ny person whoE FaG ma2es or abets ma2in( of an application in a fictitio!s name to a company for ac3!irin(, or s!bscribin( for, its sec!ritiesH or FbG ma2es or abets ma2in( of m!ltiple applications to the company in different names or in different combinations of his name or s!rname for ac3!irin( or s!bscribin( for its sec!ritiesH or FcG otherwise ind!ces directly or indirectly a company to allot, or re(ister any transfer of, sec!rities to him, or to any other person in a fictitio!s name, shall be p!nishable with imprisonment for a term which may extend to three years and with fine which shall not be less than fifty tho!sand r!pees b!t which may extend to fifty la2h r!pees.

39

F2G 9he pro-isions of s!b.section F1G shall be prominently reprod!ced in e-ery prospect!s iss!ed by a company and in e-ery form of application for sec!rities. F3G >here a person has been con-icted !nder this section, the +o!rt may also order dis(or(ement of (ains, if any, made by, and sei=!re and disposal of the sec!rities still in possession of, s!ch person. F4G 9he amo!nt recei-ed thro!(h dis(or(ement or disposal of sec!rities !nder s!b.section F3G shall be credited to the %n-estor 'd!cation and /rotection F!nd. Allo)51*) of 314,ri)i13 ./ 4o5-(*/. 34. F1G 6o allotment of any sec!rities of a company offered to the p!blic for s!bscription for the first time after its incorporation shall be made !nless the amo!nt stated in the prospect!s as the minim!m amo!nt has been s!bscribed and the s!ms payable on application for the amo!nt so stated ha-e been paid to and recei-ed by the company, whether in cash or by che3!e or other instr!ment. F2G 9he amo!nt payable on application on e-ery sec!rity shall not be less than fi-e per cent of the nominal amo!nt of the sec!rity. F3G %f the stated minim!m amo!nt has not been s!bscribed and the s!m payable on application is not recei-ed within a period of one h!ndred and twenty days from the date of iss!e of the prospect!s, the amo!nt recei-ed !nder s!b.section F1G shall be ret!rned within s!ch time and in s!ch manner as may be prescribed. F4G >hene-er a company ha-in( a share capital ma2es any allotment of shares, it shall file with the ,e(istrar a ret!rn of allotment in s!ch manner as may be prescribed. F5G 6othin( in this section shall apply to a pri-ate company. F"G %n case of any defa!lt !nder s!b.section F3G or s!b.section F4G, the company and its officer who is in defa!lt shall be liable to a penalty, for each defa!lt, of one tho!sand r!pees for e-ery day d!rin( which defa!lt contin!es b!t not exceedin( one la2h r!pees. S14,ri)i13 )o .1 d1(l) 6i)0 i* S)o4< E940(*+13. 35. F1G '-ery company intendin( to offer sec!rities to the p!blic for s!bscription by the iss!e of a prospect!s shall, before s!ch iss!e, ma2e an application to one or more reco(nised stoc2 exchan(e or exchan(es for permission for the sec!rities to be dealt with in s!ch stoc2 exchan(e or exchan(es. F2G >here a prospect!s states that an application !nder s!b.section F1G has been made, s!ch prospect!s shall also state the name or names of the stoc2 exchan(e, and any allotment whene-er made on an application in p!rs!ance of s!ch prospect!s shall be -oid if the permission has not been (ranted by s!ch stoc2 exchan(e or stoc2 exchan(es before the expiry of ten wee2s from the date of clos!re of the s!bscription listD /ro-ided that where an appeal a(ainst the decision of any reco(nised stoc2 exchan(e, ref!sin( permission for the sec!rities to be dealt with in that stoc2 exchan(e, has been preferred !nder section 22 of the Sec!rities +ontracts F,e(!lationG #ct, 1)5", s!ch allotment shall not be -oid !ntil the dismissal of the appeal.

40

F3G #ll monies recei-ed on application from the p!blic for s!bscription to the sec!rities shall be 2ept in a separate ban2 acco!nt in a sched!led ban2 and shall not be !tilised for any p!rpose other than . FaG for adj!stment a(ainst allotment of sec!rities where the sec!rities ha-e been permitted to be dealt with in the stoc2 exchan(e or stoc2 exchan(es specified in the prospect!s, or FbG for the repayment of monies within the prescribed time, recei-ed from applicants in p!rs!ance of the prospect!s, where sec!rities ha-e not been permitted to be so dealt with or where the company is for any other reason !nable to allot sec!rities. F4G #ny condition p!rportin( to re3!ire or bind any applicant for sec!rities to wai-e compliance with any of the re3!irements of this section shall be -oid. F5G %f a defa!lt is made in complyin( with the pro-isions of this section, the company shall be p!nishable with a fine which shall not be less than fi-e la2h r!pees b!t which may extend to fifty la2h r!pees and the officer who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty tho!sand r!pees b!t which may extend to three la2h r!pees, or with both. F"G # company may pay commission to any person in connection with the s!bscription to its sec!rities s!bject to s!ch conditions as may be prescribed. Glo.(l D1-o3i)or/ R141i-). 3". # company may, after passin( a special resol!tion in its (eneral meetin(, iss!e depository receipts to be dealt with in depository mode in any forei(n co!ntry in s!ch manner, and s!bject to s!ch conditions, as may be prescribed. CHAPTER I$ SHARE CAPITAL AND DEBENTURES Ki*d3 of 30(r1 4(-i)(l. 3$. F1G 9he share capital of the company limited by shares shall be of two 2inds, namelyDE FaG e3!ity share capital, and FbG preference share capital. F2G '3!ity share capital, with reference to any company limited by shares, means that part of the iss!ed share capital of the company which has no limits for participation, either with respect to di-idends or with respect to capital, in distrib!tion of profits or otherwise. F3G /reference share capital, with reference to any company limited by shares, means that part of the iss!ed share capital of the company which carries or wo!ld carry a preferential ri(ht with respect to . FaG payment of di-idend, either as a fixed amo!nt or an amo!nt calc!lated at a fixed rate, which may either be free of or s!bject to income.taxH and FbG repayment, in the case of a windin( !p or repayment of capital, of the amo!nt of the share capital paid.!p or deemed to ha-e been paid.!p.

41

N(),r1 of 30(r13 or d1.1*),r13. 3&. 9he shares or debent!res or other interest of any member in a company shall be mo-able property transferable in the manner pro-ided by the articles of the company. N,5.1ri*+ of 30(r13. 3). '-ery share in a company ha-in( a share capital shall be distin(!ished by its distincti-e n!mberD /ro-ided that nothin( in this section shall apply to a share held by a person whose name is entered as holder of beneficial interest in s!ch share in the records of a depository. C1r)ifi4()1 of 30(r13. 4*. F1G # certificate, iss!ed !nder the common seal of the company, specifyin( the shares held by any person, shall be prima facie e-idence of the title of the person to s!ch shares. F2G # d!plicate certificate of shares may be iss!ed, if s!ch certificate . FaG is pro-ed to ha-e been lost or destroyedH or FbG has been defaced, m!tilated or torn and is s!rrendered to the company. F3G 6otwithstandin( anythin( contained in the articles of a company, the manner of iss!e of a certificate of shares or the d!plicate thereof, the form of s!ch certificate, the partic!lars to be entered in the re(ister of members and other matters shall be s!ch as may be prescribed. F4G >here a share is held in depository form, the record of the depository is the prima facie e-idence of the interest of the beneficial owner. F5G %f a company with intent to defra!d iss!es a d!plicate certificate of shares, the company shall be p!nishable with fine which shall not be less than fi-e times the face -al!e of the shares in-ol-ed in the iss!e of the d!plicate certificate b!t which may extend to ten times the face -al!e of s!ch shares and e-ery officer of the company who is in defa!lt shall be p!nishable with imprisonment which may extend to three years and with fine which shall not be less than three la2h r!pees b!t which may extend to twenty fi-e la2h r!pees. F"G >itho!t prej!dice to any liability !nder the Depositories #ct, 1))", where any depository with an intention to defra!d a person has transferred shares, it shall be p!nishable with fine which shall not be less than three la2h r!pees b!t which may extend to twenty fi-e la2h r!pees. $o)i*+ ri+0)3. 41. F1G S!bject to the pro-isions of s!b.section F2G of section 44, . FaG e-ery member of a company limited by shares and holdin( e3!ity share capital therein, shall ha-e a ri(ht to -ote on e-ery resol!tion placed before the company, and FbG his -otin( ri(ht on a poll shall be in proportion to his share in the paid.!p e3!ity share capital of the company. F2G '-ery member of a company limited by shares and holdin( any preference share capital therein shall, in respect of s!ch capital, ha-e a ri(ht to -ote only on resol!tions placed before the company which directly affect the ri(hts attached to his preference shares, any resol!tion for the

42

windin( !p of the company or for the repayment or red!ction of its preference share capital and his -otin( ri(ht on a poll shall be in proportion to his share in the paid.!p preference share capital of the companyD /ro-ided that in respect of a resol!tion on a matter affectin( both the e3!ity shareholders and the preference shareholders, the proportion of the -otin( ri(hts of e3!ity shareholders to the -otin( ri(hts of the preference shareholders shall be in the same proportion as the paid.!p capital in respect of the e3!ity shares bears to the paid.!p capital in respect of the preference sharesD /ro-ided f!rther that where the di-idends payable in respect of a class of preference shares are in arrears for a period of three years or more, s!ch class of preference shareholders shall ha-e a ri(ht to -ote on all the resol!tions placed before a meetin( of the company. $(ri()io* of 30(r10old1r3= ri+0)3. 42. F1G >here a share capital of the company is di-ided into different classes of shares, the ri(hts attached to the shares of any class may be -aried with the consent in writin( of the holders of not less than three.fo!rths of the iss!ed shares of that class or by means of a special resol!tion passed at a separate meetin( of the holders of the iss!ed shares of that class,E FaG if pro-ision with respect to s!ch -ariation is contained in the memorand!m or articles of the company, or FbG in the absence of any s!ch pro-ision in the memorand!m or articles, if s!ch -ariation is not prohibited by the terms of iss!e of the shares of that class. F2G >here the holders of not less than ten per cent of the iss!ed shares of a class did not consent to s!ch -ariation or -ote in fa-o!r of the special resol!tion for the -ariation, they may apply to the 9rib!nal to ha-e the -ariation cancelled, and where any s!ch application is made, the -ariation shall not ha-e effect !nless and !ntil it is confirmed by the 9rib!nal. F3G 9he company shall, within thirty days of the date of the order of the 9rib!nal, file a copy thereof with the ,e(istrar. F4G >here any defa!lt is made in complyin( with the pro-isions of this section, the company shall be p!nishable with fine which shall not be less than twenty fi-e tho!sand r!pees b!t which may extend to fi-e la2h r!pees and e-ery officer of the company who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty fi-e tho!sand r!pees b!t which may extend to fi-e la2h r!pees, or with both. C(ll3 o* 30(r13 of 3(51 4l(33 )o .1 5(d1 o* ,*ifor5 .(3i3. 43. >here any calls for f!rther share capital are made on the shares of a class, s!ch calls shall be made on a !niform basis on all shares fallin( !nder that class. Explanation.— For the p!rposes of this section, shares of the same nominal -al!e on which different amo!nts ha-e been paid !p shall not be deemed to fall !nder the same class. Co5-(*/ )o (441-) ,*-(id 30(r1 4(-i)(l (l)0o,+0 *o) 4(ll1d ,-.

43

44. F1G # company may, if so a!thorised by its articles, accept from any member the whole or a part of the amo!nt remainin( !npaid on any shares held by him, e-en of no part of that amo!nt has been called !p. F2G # member of the company limited by shares shall not be entitled to any -otin( ri(hts in respect of the amo!nt paid by him !nder s!b.section F1G !ntil that amo!nt has been called !p. P(/51*) of di2id1*d i* -ro-or)io* )o (5o,*) -(id;,-. 45. # company may, if so a!thorised by its articles, pay di-idends in proportion to the amo!nt paid. !p on each share. A--li4()io* of -r15i,53 r141i21d o* i33,1 of 30(r13. 4". F1G >here a company iss!es shares at a premi!m, whether for cash or otherwise, a s!m e3!al to the a((re(ate amo!nt of the premi!m recei-ed on those shares shall be transferred to a ASec!rities /remi!m #cco!ntB and the pro-isions of this #ct relatin( to red!ction of share capital of a company shall, except as pro-ided in this section, apply as if the sec!rities premi!m acco!nt were the paid.!p share capital of the company. F2G 6otwithstandin( anythin( contained in s!b.section F1G, the sec!rities premi!m acco!nt may be applied by the companyE FaG towards the iss!e of !niss!ed shares of the company to the members of the company as f!lly paid bon!s sharesH FbG in writin( off the preliminary expenses of the companyH FcG in writin( off the expenses of, or the commission paid or disco!nt allowed on, any iss!e of shares or debent!res of the companyH FdG in pro-idin( for the premi!m payable on the redemption of any redeemable preference shares or of any debent!res of the companyH or FeG for the p!rchase of its own shares or other sec!rities !nder section "1. Pro0i.i)io* o* i33,1 of 30(r13 () di34o,*). 4$. F1G 'xcept as pro-ided in section 4&, a company shall not iss!e shares at a disco!nt. F2G #ny share iss!ed by a company at a disco!nted price shall be -oid. F3G >here a company contra-enes the pro-isions of this section, the company shall be p!nishable with fine which shall not be less than one la2h r!pees b!t which may extend to fi-e la2h r!pees and e-ery officer who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to six months or with fine which shall not be less than one la2h r!pees b!t which may extend to fi-e la2h r!pees, or with both. I33,1 of 361() 17,i)/ 30(r13. 4&. F1G 6otwithstandin( anythin( contained in section 4$, a company may iss!e sweat e3!ity shares of a class of shares already iss!ed, if the followin( conditions are f!lfilled, namely DE FaG the iss!e is a!thorised by a special resol!tion passed by the companyH

44

FbG the resol!tion specifies the n!mber of shares, the c!rrent mar2et price, consideration, if any, and the class or classes of directors or employees to whom s!ch e3!ity shares are to be iss!edH FcG not less than one year has, at the date of s!ch iss!e, elapsed since the date on which the company had commenced b!sinessH and FdG where the e3!ity shares of the company are listed on a reco(nised stoc2 exchan(e, the sweat e3!ity shares are iss!ed in accordance with the re(!lations made by the Sec!rities and 'xchan(e 0oard in this behalf and if they are not so listed, the sweat e3!ity shares are iss!ed in accordance with s!ch r!les as may be prescribed. F2G 9he ri(hts, limitations, restrictions and pro-isions as are for the time bein( applicable to e3!ity shares shall be applicable to the sweat e3!ity shares iss!ed !nder this section and the holders of s!ch shares shall ran2 pari pass! with other e3!ity shareholders. I33,1 (*d r1d15-)io* of -r1f1r1*41 30(r13. 4). F1G 6o company limited by shares shall, after the commencement of this #ct, iss!e any preference shares which are irredeemable. F2G # company limited by shares may, if so a!thorised by its articles, iss!e preference shares which are liable to be redeemed within a period not exceedin( twenty years from the date of their iss!e s!bject to s!ch conditions as may be prescribedD /ro-ided that a company may iss!e preference shares for a period exceedin( twenty years for s!ch infrastr!ct!ral projects as may be prescribed, s!bject to the redemption of s!ch percenta(e of shares as may be prescribed on an ann!al basis at the option of s!ch preferential shareholdersD /ro-ided f!rther thatE FaG no s!ch shares shall be redeemed except o!t of the profits of the company which wo!ld otherwise be a-ailable for di-idend or o!t of the proceeds of a fresh iss!e of shares made for the p!rposes of s!ch redemptionH FbG no s!ch shares shall be redeemed !nless they are f!lly paidH FcG where any s!ch shares are proposed to be redeemed o!t of the profits of the company, there shall, o!t of s!ch profits, be transferred, a s!m e3!al to the nominal amo!nt of the shares to be redeemed, to a reser-e f!nd, to be called the +apital ,edemption ,eser-e #cco!nt, and the pro-isions of this #ct relatin( to red!ction of share capital of a company shall, except as pro-ided in this section, apply as if the +apital ,edemption ,eser-e #cco!nt were paid.!p share capital of the companyH and FdG the premi!m, if any, payable on redemption shall be pro-ided for o!t of the profits of the company or o!t of the company8s share premi!m acco!nt, before s!ch shares are redeemed. F3G >here a company is not in a position to redeem any preference shares or to pay di-idend, if any, on s!ch shares in accordance with the terms of iss!e Fs!ch shares bein( hereinafter referred to as !nredeemed preference sharesG, it may, with the consent of the holders of three.fo!rths in -al!e of s!ch preference shares and with the appro-al of the 9rib!nal on a petition made by it in this behalf, iss!e f!rther redeemable preference shares e3!al to the amo!nt d!e, incl!din( the

45

di-idend thereon, in respect of the !nredeemed preference shares, and on the iss!e of s!ch f!rther redeemable preference shares, the !nredeemed prefrence shares shall be deemed to ha-e been redeemedD /ro-ided that the 9rib!nal shall, while (i-in( appro-al !nder this s!b.section, order the redemption forthwith of preference shares held by s!ch persons who ha-e not consented to the iss!e of f!rther redeemable preference shares. Explanation.— For the remo-al of do!bts, it is hereby declared that the iss!e of f!rther redeemable preference shares or the redemption of preference shares !nder this section shall not be deemed to be an increase or, as the case may be, a red!ction, in the share capital of the company. Tr(*3f1r (*d )r(*35i33io* of 314,ri)i13. 5*. F1G # company shall not re(ister a transfer of sec!rities of the company, or the interest of a member in the company in the case of a company ha-in( no share capital, other than the transfer between persons both of whose names are entered as holders of beneficial interest in the records of a depository, !nless a proper instr!ment of transfer, in s!ch form as may be prescribed, d!ly stamped, dated and exec!ted by or on behalf of the transferor and the transferee and specifyin( the name, address and occ!pation, if any, of the transferee has been deli-ered to the company by the transferor or the transferee within s!ch period from the date of exec!tion, as may be prescribed, alon( with the certificate relatin( to the sec!rities, or if no s!ch certificate is in existence, alon( with the letter of allotment of sec!ritiesD /ro-ided that where the instr!ment of transfer has been lost or the instr!ment of transfer has not been deli-ered within the prescribed period, the company may re(ister the transfer on s!ch terms as to indemnity as the 0oard may thin2 fit. F2G 6othin( in s!b.section F1G shall prej!dice the power of the company to re(ister, on receipt of an intimation of transmission of any ri(ht to sec!rities by operation of law from any person to whom s!ch ri(ht has been transmitted. F3G >here an application is made by the transferor alone and relates to partly paid shares, the transfer shall not be re(istered, !nless the company (i-es the notice of the application, in s!ch manner as may be prescribed, to the transferee and the transferee (i-es no objection to the transfer within two wee2s from the receipt of notice. F4G '-ery company shall, !nless prohibited by any pro-ision of law or any order of +o!rt, trib!nal or other a!thority, deli-er the certificates of all sec!rities allotted, transferred or transmittedE FaG within two months after incorporation, in the case of s!bscribers to the memorand!mH FbG within two months from the date of allotment, in the case of any allotment of any of its sharesH FcG within one month from the date of receipt by the company of the instr!ment of transfer !nder s!b.section F1G or, as the case may be, of the intimation of transmission !nder s!b. section F2G, in the case of a transfer or transmission of sec!ritiesH FdG within six months from the date of allotment in the case of any allotment of debent!re. F5G 9he transfer of any sec!rity or other interest of a deceased person in a company made by his le(al representati-e shall, e-en if the le(al representati-e is not himself a holder thereof, be -alid as if he had been the holder at the time of the exec!tion of the instr!ment of transfer.

46

F"G >here any defa!lt is made in complyin( with the pro-isions of s!b sections F1G to F5G of this section, the company shall be p!nishable with fine which shall not be less than twenty fi-e tho!sand r!pees b!t which may extend to fi-e la2h r!pees and e-ery officer of the company who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to six months or with fine which shall not be less than ten tho!sand r!pees b!t which may extend to one la2h r!pees, or with both. F$G >here the transfer of sec!rities is in contra-ention of any of the pro-isions of the Sec!rities and 'xchan(e 0oard of %ndia #ct, 1))2 or this #ct or any other law for the time bein( in force, the 9rib!nal may, on an application made by the depository, company, depository participant, the holder of the sec!rities or the Sec!rities and 'xchan(e 0oard, direct any company or a depository to set ri(ht the contra-ention and rectify its re(ister of records concerned. P,*i3051*) for -1r3o*()io* of 30(r10old1r. 51. >here any person deceitf!lly personates the owner of any share or interest and thereby obtains or attempts to obtain any s!ch share or interest or any co!pon, or recei-es or attempts to recei-e any money d!e to any s!ch owner, he shall be p!nishable with imprisonment for a term which shall not be less than one year b!t which may extend to three years or with fine which shall not be less than one la2h r!pees b!t which may extend to fi-e la2h r!pees. R1f,3(l of r1+i3)r()io* (*d (--1(l (+(i*3) r1f,3(l. 52. F1G %f a pri-ate company limited by shares ref!ses, whether in p!rs!ance of any power of the company !nder its articles or otherwise, to re(ister the transfer of, or the transmission by operation of law of the ri(ht to, any sec!rities or interest of a member in the company, it shall within one month from the date on which the instr!ment of transfer, or the intimation of s!ch transmission, as the case may be, was deli-ered to the company, send notice of the ref!sal to the transferor and the transferee or to the person (i-in( intimation of s!ch transmission, as the case may be, (i-in( reasons for s!ch ref!sal. F2G 9he transferee may appeal to the 9rib!nal a(ainst the ref!sal within one month from the date of receipt of the notice or in case no notice has been sent by the company, within fo!r months from the date on which the instr!ment of transfer or the intimation of transmission, as the case may be, was deli-ered to the company. F3G %f a p!blic company witho!t s!fficient ca!se ref!ses to re(ister the transfer of shares within one month from the date on which the instr!ment of transfer or the intimation of transmission, as the case may be, is deli-ered to the company, the transferee may, within two months of s!ch ref!sal or where no intimation has been recei-ed from the company, within three months of the deli-ery of the instr!ment of transfer or intimation of transmission, appeal to the 9rib!nal. F4G 9he 9rib!nal, while dealin( with an application preferred !nder s!b.section F1G or an appeal made !nder s!b.section F2G or s!b.section F3G, may, after hearin( the parties, either reject the application or dismiss the appeal, or by orderE FaG direct that the transfer or transmission shall be re(istered by the company and the company shall comply with s!ch order within ten days of the receipt of the orderH or FbG direct rectification of the re(ister and also direct the company to pay dama(es, if any, s!stained by any party a((rie-ed. F5G >here any person contra-enes the order of the 9rib!nal !nder this section, he shall be p!nishable with imprisonment for a term which shall not be less than one year b!t which may

47

extend to three years and with fine which shall not be less than one la2h r!pees b!t which may extend to fi-e la2h r!pees. R14)ifi4()io* of r1+i3)1r of 515.1r3. 53. F1G %f the name of any person is, witho!t s!fficient ca!se, entered in the re(ister of members of a company, or after ha-in( been entered in the re(ister, is, witho!t s!fficient ca!se, omitted therefrom, or if a defa!lt is made, or !nnecessary delay ta2es place in enterin( in the re(ister, the fact of any person ha-in( become or ceased to be a member, the person a((rie-ed, or any member of the company, or the company may appeal in s!ch form as may be prescribed, to the 9rib!nal, or to a competent co!rt o!tside %ndia, specified by the +entral 4o-ernment by notification, in respect of forei(n members or debent!re holders residin( o!tside %ndia, for rectification of the re(ister. F2G 9he 9rib!nal may, after hearin( the parties to the appeal !nder s!b.section F1G by order, either dismiss the appeal or direct that the transfer or transmission shall be re(istered by the company within ten days of the receipt of the order or direct rectification of the re(ister and in the latter case direct the company to pay dama(es, if any, s!stained by the party a((rie-ed or the records of a depository. F3G %f any defa!lt is made in complyin( with the order of the 9rib!nal !nder this section, the company and e-ery officer who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one la2h r!pees b!t which may extend to three la2h r!pees, or with both. P,.li4()io* of (,)0ori31d 3,.34ri.1d (*d -(id;,- 4(-i)(l. 54. F1G >here any notice, ad-ertisement or other official p!blication, or any b!siness letter, billhead or letter paper of a company contains a statement of the amo!nt of the a!thorised capital of the company, s!ch notice, ad-ertisement or other official p!blication, or s!ch letter, billhead or letter paper shall also contain a statement, in an e3!ally prominent position and in e3!ally conspic!o!s characters, of the amo!nt of the capital which has been s!bscribed and the amo!nt paid.!p. F2G %f any defa!lt is made in complyin( with the re3!irements of s!b.section F1G, the company shall be liable to a penalty of ten tho!sand r!pees and e-ery officer of the company who is in defa!lt shall be liable to a penalty of fi-e tho!sand r!pees, for each defa!lt. Po61r of li5i)1d 4o5-(*/ )o (l)1r i)3 30(r1 4(-i)(l. 55. F1G # limited company ha-in( a share capital may, if so a!thorised by its articles, alter its memorand!m in its (eneral meetin( toE FaG increase its share capital by s!ch amo!nt as it thin2s expedient by iss!in( new sharesH FbG consolidate and di-ide all or any of its share capital into shares of a lar(er amo!nt than its existin( sharesH FcG con-ert all or any of its f!lly paid.!p shares into stoc2, and recon-ert that stoc2 into f!lly paid.!p shares of any denominationH FdG s!b.di-ide its shares, or any of them, into shares of smaller amo!nt than is fixed by the memorand!m, so, howe-er, that in the s!b.di-ision the proportion between the amo!nt paid and the amo!nt, if any, !npaid on each red!ced share shall be the same as it was in the case of the share from which the red!ced share is deri-edH

48

FeG cancel shares which, at the date of the passin( of the resol!tion in that behalf, ha-e not been ta2en or a(reed to be ta2en by any person, and diminish the amo!nt of its share capital by the amo!nt of the shares so cancelled. F2G 9he cancellation of shares !nder s!b.section F1G shall not be deemed to be a red!ction of share capital. ",r)01r i33,1 of 30(r1 4(-i)(l. 5". F1G >here at any time, a company ha-in( a share capital proposes to increase its s!bscribed capital by the iss!e of f!rther shares, s!ch shares shall be offered E FaG to persons who, at the date of the offer, are holders of e3!ity shares of the company in proportion, as nearly as circ!mstances admit, to the share capital paid !p on those shares by circ!latin( an offer for sale s!bject to s!ch terms and conditions relatin( to the time within which the offer has to be accepted, the ren!nciation of s!ch offer and s!ch other matters as may be prescribedH FbG to employees !nder a scheme of employees8 stoc2 option, s!bject to s!ch conditions as may be prescribedH or FcG if it is a!thorised by a special resol!tion, to persons other than those mentioned in cla!se FaG or cla!se FbG, either for cash or for a consideration, if the price of s!ch shares is determined by the -al!ation report of a re(istered -al!er s!bject to s!ch conditions as may be prescribed. F2G 6othin( in this section shall apply to the increase of the s!bscribed capital of a p!blic company ca!sed by the exercise of an option as a term attached to the debent!res iss!ed or loan raised by the company to con-ert s!ch debent!res or loans into shares in the companyD /ro-ided that the terms of iss!e of s!ch debent!res or loan containin( s!ch an option ha-e been appro-ed before the iss!e of s!ch debent!res or the raisin( of loan by a special resol!tion passed by the company in (eneral meetin(. F3G 6otwithstandin( anythin( contained in s!b.section F2G, where any debent!res ha-e been iss!ed, or loan has been obtained from any 4o-ernment, by a company, and if that 4o-ernment considers it necessary in the p!blic interest so to do, it may, by order, direct that s!ch debent!res or loans or any part thereof shall be con-erted into shares in the company on s!ch terms and conditions as appear to the 4o-ernment to be reasonable in the circ!mstances of the case e-en if terms of the iss!e of s!ch debent!res or the raisin( of s!ch loans do not incl!de a term for pro-idin( for an option for s!ch con-ersionD /ro-ided that where the terms and conditions of s!ch con-ersion are not acceptable to the company, it may, within sixty days from the date of comm!nication of s!ch order, appeal to the 9rib!nal which shall after hearin( the company and the 4o-ernment pass s!ch order as it deems fit. F4G %n determinin( the terms and conditions of con-ersion !nder s!b.section F3G, the 4o-ernment shall ha-e d!e re(ard to the financial position of the company, the terms of iss!e of debent!res or loans, as the case may be, the rate of interest payable on s!ch debent!res or loans and s!ch other matters as it may consider necessary. F5G >here the 4o-ernment has, by an order made !nder s!b.section F3G, directed that any debent!re or loan or any part thereof shall be con-erted into shares in a company and where no

49

appeal has been preferred to the 9rib!nal !nder s!b.section F3G or where s!ch appeal has been dismissed, the memorand!m of s!ch company shall, where s!ch order has the effect of increasin( the a!thorised share capital of the company, stand altered and the a!thorised share capital of s!ch company shall stand increased by an amo!nt e3!al to the amo!nt of the -al!e of shares which s!ch debent!res or loans or part thereof has been con-erted in to. No)i41 )o .1 +i21* )o R1+i3)r(r for (l)1r()io* of 30(r1 4(-i)(l. 5$. F1G >hereE FaG a company alters its share capital in any manner specified in s!b.section F1G of section 55H FbG an order made by the 4o-ernment !nder s!b.section F3G read with s!b.section F5G of section 5" has the effect of increasin( the a!thorised capital of a companyH or FcG a company redeems any redeemable preference shares, the company shall file a notice in the prescribed form with the ,e(istrar within thirty days of s!ch alteration or increase, as the case may be, alon( with an altered memorand!m. F2G >here a company and any officer of the company who is in defa!lt contra-enes the pro-isions of s!b.section F1G, it or he shall be p!nishable with fine which shall not be less than one la2h r!pees b!t which may extend to twenty fi-e la2h r!pees. U*li5i)1d 4o5-(*/ )o -ro2id1 for r131r21 30(r1 4(-i)(l o* r1;r1+i3)r()io*. 5&. #n !nlimited company ha-in( a share capital may, by a resol!tion for re(istration as a limited company !nder this #ct, do either or both of the followin( thin(s, namelyDE FaG increase the nominal amo!nt of its share capital by increasin( the nominal amo!nt of each of its shares, s!bject to the condition that no part of the increased capital shall be capable of bein( called !p except in the e-ent and for the p!rposes of the company bein( wo!nd !pH FbG pro-ide that a specified portion of its !ncalled share capital shall not be capable of bein( called !p except in the e-ent and for the p!rposes of the company bein( wo!nd !p. R1d,4)io* of 30(r1 4(-i)(l. 5). F1G S!bject to confirmation by the 9rib!nal on an application by the company, a company limited by shares or limited by (!arantee and ha-in( a share capital may, by a special resol!tion, red!ce the share capital in any manner and in partic!lar, mayE FaG extin(!ish or red!ce the liability on any of its shares in respect of the share capital not paid.!pH or FbG either with or witho!t extin(!ishin( or red!cin( liability on any of its shares, . FiG cancel any paid.!p share capital which is lost or is !nrepresented by a-ailable assetsH or FiiG pay off any paid.!p share capital which is in excess of the wants of the company,

50

and alter its memorand!m by red!cin( the amo!nt of its share capital and of its shares accordin(lyD /ro-ided that no s!ch red!ction shall be made if the company is in arrears in the repayment of any deposits accepted by it, either before or after the commencement of this #ct, or the interest payable thereon. F2G 9he 9rib!nal shall (i-e notice of e-ery application made to it !nder s!b.section F1G to the +entral 4o-ernment and to the Sec!rities and 'xchan(e 0oard, in the case of listed companies, and the creditors of the company and shall ta2e into consideration the representations, if any, made to it by that 4o-ernment, the Sec!rities and 'xchan(e 0oard and the creditors within a period of three months from the date of receipt of the noticeD /ro-ided that where no representation has been recei-ed from the +entral 4o-ernment, the Sec!rities and 'xchan(e 0oard or the creditors within the said period, it shall be pres!med that they ha-e no objection to the red!ction. F3G 9he 9rib!nal may, if it is satisfied that the debt or claim of e-ery creditor of the company has been dischar(ed or determined or has been sec!red or his consent is obtained, ma2e an order confirmin( the red!ction on s!ch terms and conditions as it deems fit. F4G 9he order of confirmation of the red!ction by the 9rib!nal !nder s!b.section F3G shall be p!blished by the company in s!ch manner as the 9rib!nal may direct. F5G 9he company shall deli-er a certified copy of the order of the 9rib!nal !nder s!b.section F3G and of a min!te appro-ed by the 9rib!nal showin(E FaG the amo!nt of share capital, FbG the n!mber of shares into which it is to be di-ided, FcG the amo!nt of each share, and FdG the amo!nt, if any, at the date of re(istration deemed to be paid.!p on each share, to the ,e(istrar within thirty days of the receipt of the copy of the order, who shall re(ister the same and iss!e a certificate to that effect. F"G 6othin( in this section shall apply to b!y.bac2 of its own sec!rities by a company !nder section "1. F$G # member of the company, past or present, shall not be liable to any call or contrib!tion in respect of any share held by him exceedin( the amo!nt of difference, if any, between the amo!nt paid on the share, or red!ced amo!nt, if any, which is to be deemed to ha-e been paid thereon, as the case may be, and the amo!nt of the share as fixed by the order of red!ction. F&G >here the name of any creditor entitled to object to the red!ction of share capital !nder this section is, by reason of his i(norance of the proceedin(s for red!ction or of their nat!re and effect with respect to his debt or claim, not entered on the list of creditors, and after s!ch red!ction the company is !nable, within the meanin( of s!b.section F2G of section 24", to pay the amo!nt of his debt or claim,E FaG e-ery person, who was a member of the company at the date of the re(istration of the order for red!ction by the ,e(istrar, shall be liable to contrib!te to the payment of that debt or claim, an amo!nt not exceedin( the amo!nt which he wo!ld ha-e been liable to

51

contrib!te if the company had commenced windin( !p on the day immediately before the said dateH and FbG if the company is wo!nd !p, the 9rib!nal may, on the application of any s!ch creditor and proof of his i(norance as aforesaid, if it thin2s fit, settle a list of persons so liable to contrib!te, and ma2e and enforce calls and orders on the contrib!tories settled on the list, as if they were ordinary contrib!tories in a windin( !p. F)G 6othin( in s!b.section F&G shall affect the ri(hts of the contrib!tories amon( themsel-es. F1*G %f any officer of the companyE FaG 2nowin(ly conceals the name of any creditor entitled to object to the red!ctionH FbG 2nowin(ly misrepresents the nat!re or amo!nt of the debt or claim of any creditorH or FcG abets or is pri-y to any s!ch concealment or misrepresentation as aforesaid, he shall be p!nishable with imprisonment which may extend to two years or with fine which shall not be less than one la2h r!pees b!t which may extend to fi-e la2h r!pees, or with both. F11G >here a company fails to comply with the pro-isions of s!b.sections F4G and F5G, it shall be p!nishable with fine which shall not be less than fi-e la2h r!pees b!t which may extend to twenty. fi-e la2h r!pees. R13)ri4)io*3 o* -,r40(31 ./ 4o5-(*/ or +i2i*+ of lo(*3 ./ i) for -,r40(31 of i)3 30(r13. "*. F1G 6o company limited by shares or by (!arantee and ha-in( a share capital shall ha-e power to b!y its own shares !nless the conse3!ent red!ction of share capital is effected !nder the pro-isions of this #ct. F2G 6o p!blic company shall (i-e, whether directly or indirectly and whether by means of a loan, (!arantee, the pro-ision of sec!rity or otherwise, any financial assistance for the p!rpose of, or in connection with, a p!rchase or s!bscription made or to be made, by any person of or for any shares in the company or in its holdin( companyD /ro-ided that nothin( in this s!b.section shall apply toE FaG the lendin( of money by a ban2in( company in the ordinary co!rse of its b!sinessH FbG the pro-ision by a company of money in accordance with any scheme for the p!rchase of, or s!bscription for, f!lly paid.!p shares in the company or its holdin( company, if the p!rchase of, or the s!bscription for, the shares by tr!stees to be held by or for the benefit of the employees of the companyH or FcG the (i-in( of loans by a company to persons in the employment of the company other than its directors or 2ey mana(erial personnel, for an amo!nt not exceedin( their salary or wa(es for a period of six months with a -iew to enablin( them to p!rchase or s!bscribe for f!lly paid.!p shares in the company or its holdin( company to be held by them by way of beneficial ownership. F3G 6othin( in this section shall affect the ri(ht of a company to redeem any preference shares iss!ed by it !nder this #ct or !nder any pre-io!s company law.

52

F4G >here a company contra-enes the pro-isions of this section, it shall be p!nishable with fine which shall not be less than one la2h r!pees b!t which may extend to twenty.fi-e la2h r!pees and e-ery officer of the company who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to three years and with fine which shall not be less than one la2h r!pees b!t which may extend to twenty.fi-e la2h r!pees. Po61r of 4o5-(*/ )o -,r40(31 i)3 o6* 314,ri)i13. "1. F1G 6otwithstandin( anythin( contained in this #ct, b!t s!bject to the pro-isions of s!b.section F2G, a company may p!rchase its own shares or other specified sec!rities Fhereinafter referred to as b!y.bac2G o!t ofE FaG its free reser-es, FbG the sec!rities premi!m acco!nt, or FcG the proceeds of the iss!e of any shares or other specified sec!ritiesD /ro-ided that no b!y.bac2 of any 2ind of shares or other specified sec!rities shall be made o!t of the proceeds of an earlier iss!e of the same 2ind of shares or same 2ind of other specified sec!rities. F2G 6o company shall p!rchase its own shares or other specified sec!rities !nder s!b.section F1G, !nlessE FaG the b!y.bac2 is a!thorised by its articlesH FbG a special resol!tion has been passed at a (eneral meetin( of the company a!thorisin( the b!y.bac2D /ro-ided that nothin( contained in this cla!se shall apply to a case whereE FiG the b!y.bac2 is for less than ten per cent. of the total paid.!p e3!ity capital and free reser-es of the companyH and FiiG s!ch b!y.bac2 has been a!thorised by the 0oard by means of a resol!tion passed at its meetin(H FcG the b!y.bac2 is for less than twenty fi-e per cent. of the total paid.!p capital and free reser-es of the companyD /ro-ided that in respect of the b!y.bac2 of e3!ity shares in any financial year, the reference to twenty.fi-e per cent. in this cla!se shall be constr!ed with respect to its total paid.!p e3!ity capital in that financial yearH FdG the ratio of the a((re(ate of sec!red and !nsec!red debts owed by the company after b!y.bac2 is not more than twice the capital and its free reser-esD /ro-ided that the +entral 4o-ernment may, by order, notify a hi(her ratio of the debt to capital and free reser-es for a class or classes of companiesH FeG all the shares or other specified sec!rities for b!y.bac2 are f!lly paid.!pH FfG the b!y.bac2 of the shares or other specified sec!rities listed on any reco(nised stoc2 exchan(e is in accordance with the re(!lations made by the Sec!rities and 'xchan(e 0oard in this behalfH and

53

F(G the b!y.bac2 in respect of shares or other specified sec!rities other than those specified in cla!se FfG is in accordance with s!ch r!les as may be prescribedD /ro-ided that no offer of b!y.bac2 !nder this s!b.section shall be made within a period of one year rec2oned from the date of the precedin( offer of b!y.bac2, if any. F3G 9he notice of the meetin( at which the special resol!tion is proposed to be passed !nder cla!se FbG of s!b.section F2G shall be accompanied by an explanatory statement statin(E FaG a f!ll and complete disclos!re of all material factsH FbG the necessity for the b!y.bac2H FcG the class of shares or sec!rities intended to be p!rchased !nder the b!ybac2H FdG the amo!nt to be in-ested !nder the b!y.bac2H and FeG the time.limit for completion of b!y.bac2. F4G '-ery b!y.bac2 shall be completed within one year from the date of passin( of the special resol!tion !nder cla!se FbG, or as the case may be, the resol!tion passed by the 0oard !nder para FiiG of the pro-iso to that cla!se, of s!b.section F2G. F5G 9he b!y.bac2 !nder s!b.section F1G may beE FaG from the existin( shareholders or sec!rity holders on a proportionate basisH FbG from the open mar2etH FcG from odd lots, where the lot of shares or sec!rities of a p!blic company, whose shares are listed on a reco(nised stoc2 exchan(e, is smaller than s!ch mar2etable lot, as may be specified by the stoc2 exchan(eH or FdG by p!rchasin( the sec!rities iss!ed to employees of the company p!rs!ant to a scheme of stoc2 option or sweat e3!ity. .F"G >here a company proposes to b!y.bac2 its own shares or other specified sec!rities !nder this section in p!rs!ance of a special resol!tion !nder cla!se FbG of s!b.section F2G or a resol!tion !nder para FiiG of the pro-iso thereto, it shall, before ma2in( s!ch b!y.bac2, file with the ,e(istrar and the Sec!rities and 'xchan(e 0oard, a declaration of sol-ency si(ned by at least two directors of the company, one of whom shall be the mana(in( director, if any, in s!ch form as may be prescribed and -erified by an affida-it to the effect that the 0oard of Directors of the company has made a f!ll in3!iry into the affairs of the company as a res!lt of which they ha-e formed an opinion that it is capable of meetin( its liabilities and will not be rendered insol-ent within a period of one year from the date of declaration adopted by the 0oardD /ro-ided that no declaration of sol-ency shall be filed with the Sec!rities and 'xchan(e 0oard by a company whose shares are not listed on any reco(nised stoc2 exchan(e. F$G >here a company b!ys bac2 its own shares or other specified sec!rities, it shall extin(!ish and physically destroy the shares or sec!rities so bo!(ht bac2 within se-en days of the last date of completion of b!y.bac2.

54

F&G >here a company completes a b!y.bac2 of its shares or other specified sec!rities !nder this section, it shall not ma2e a f!rther iss!e of the same 2ind of shares or other sec!rities incl!din( allotment of new shares !nder cla!se FaG of s!b.section F1G of section 5" or other specified sec!rities within a period of six months except by way of a bon!s iss!e or in the dischar(e of s!bsistin( obli(ations s!ch as con-ersion of warrants, stoc2 option schemes, sweat e3!ity or con-ersion of preference shares or debent!res into e3!ity shares. F)G >here a company b!ys bac2 its shares or other specified sec!rities !nder this section, it shall maintain a re(ister of the shares or sec!rities so bo!(ht, the consideration paid for the shares or sec!rities bo!(ht bac2, the date of cancellation of shares or sec!rities, the date of extin(!ishin( and physically destroyin( the shares or sec!rities and s!ch other partic!lars as may be prescribed. F1*G # company shall, after the completion of the b!y.bac2 !nder this section, file with the ,e(istrar and the Sec!rities and 'xchan(e 0oard a ret!rn containin( s!ch partic!lars relatin( to the b!y.bac2 within thirty days of s!ch completion, as may be prescribedD /ro-ided that no ret!rn shall be filed with the Sec!rities and 'xchan(e 0oard by a company whose shares are not listed on any reco(nised stoc2 exchan(e. F11G >here a company ma2es any defa!lt in complyin( with the pro-isions of this section or any re(!lation made by the Sec!rities and 'xchan(e 0oard, for the p!rposes of cla!se FfG of s!b. section F2G, the company shall be p!nishable with fine which shall not be less than one la2h r!pees b!t which may extend to three la2h r!pees and any officer of the company who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to three years or with fine which shall not be less than one la2h r!pees b!t which may extend to three la2h r!pees, or with both. Explanation.EFor the p!rposes of this section and section "3, Aspecified sec!ritiesB incl!des employees8 stoc2 option or other sec!rities as may be notified by the +entral 4o-ernment from time to time. Tr(*3f1r of 41r)(i* 3,53 )o C(-i)(l R1d15-)io* R131r21 A44o,*). "2. >here a company p!rchases its own shares o!t of free reser-es, a s!m e3!al to the nominal -al!e of the shares so p!rchased shall be transferred to the +apital ,edemption ,eser-e #cco!nt and details of s!ch transfer shall be disclosed in the balance sheet. Pro0i.i)io* for .,/;.(4< i* 41r)(i* 4ir4,53)(*413. "3. 6o company shall directly or indirectly p!rchase its own shares or other specified sec!ritiesE FaG thro!(h any s!bsidiary company incl!din( its own s!bsidiary companiesH FbG thro!(h any in-estment company or (ro!p of in-estment companiesH or FcG if a defa!lt is made by the company in the repayment of deposits accepted either before or after the commencement of this #ct, interest payment thereon, redemption of debent!res or preference shares or payment of di-idend to any shareholder, or repayment of any term loan or interest payable thereon to any financial instit!tion or ban2in( company. D1.1*),r13. "4. F1G # company may iss!e debent!res either with an option to con-ert s!ch debent!res into shares at the time of redemption or otherwise.

55

F2G 6o company shall iss!e any debent!res carryin( any -otin( ri(hts. F3G #ll sec!red debent!res may be iss!ed only by s!ch class of companies and s!bject to s!ch terms and conditions as may be prescribed. F4G >here debent!res are iss!ed by a company !nder this section, the company shall create a Debent!re ,edemption ,eser-e #cco!nt o!t of the profits of the company a-ailable for payment of di-idend and the amo!nt credited to s!ch acco!nt shall not be !tilised by the company except for the redemption of debent!res. F5G 6o company shall iss!e a prospect!s or ma2e an offer or in-itation to the p!blic or to its members exceedin( fi-e h!ndred for the s!bscription of its debent!res, !nless the company has, before s!ch iss!e or offer, appointed one or more debent!re tr!stees and the conditions (o-ernin( the appointment of s!ch tr!stees shall be s!ch as may be prescribed. F"G # debent!re tr!stee shall ta2e steps to protect the interests of the debent!re holders and redress their (rie-ances and r!les may be made in this behalf. F$G #ny pro-ision contained in a tr!st deed for sec!rin( the iss!e of debent!res, or in any contract with the debent!re holders sec!red by a tr!st deed, shall be -oid insofar as it wo!ld ha-e the effect of exemptin( a tr!stee thereof from, or indemnifyin( him a(ainst, any liability for breach of tr!st, where he fails to show the de(ree of care and dili(ence re3!ired of him as a tr!stee, ha-in( re(ard to the pro-isions of the tr!st deed conferrin( on him any power, a!thority or discretionD /ro-ided that the liability of the debent!re tr!stee shall be s!bject to s!ch exemptions as may be a(reed !pon by a majority of debent!re holders holdin( not less than three.fo!rths in -al!e of the total debent!res at a meetin( held for the p!rpose. F&G # company shall pay interest and redeem the debent!res in accordance with the terms and conditions of their iss!e. F)G >here at any time the debent!re tr!stee comes to a concl!sion that the assets of the company are ins!fficient or are li2ely to become ins!fficient to dischar(e the principal amo!nt as and when it becomes d!e, the debent!re tr!stee may file a petition before the 9rib!nal and the 9rib!nal may, after hearin( the company and any other person interested in the matter, by order, impose s!ch restrictions on the inc!rrin( of any f!rther liabilities by the company as the 9rib!nal may consider necessary in the interests of the debent!re holders. F1*G >here a company fails to redeem the debent!res on the date of their mat!rity or fails to pay interest on the debent!res when it is d!e, the 9rib!nal may, on the application of any or all of the debent!re holders, or debent!re tr!stee and, after hearin( the parties concerned, direct, by order, the company to redeem the debent!res forthwith on payment of principal and interest d!e thereon. F11G >here any defa!lt is made in complyin( with the order of the 9rib!nal !nder this section, e-ery officer of the company who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to three years or with fine which shall not less than two la2h r!pees b!t which may extend to fi-e la2h r!pees, or with both. F12G # contract with the company to ta2e !p and pay for any debent!res of the company may be enforced by a decree for specific performance. F13G 9he +entral 4o-ernment may prescribe by r!les, for sec!rin( the iss!e of debent!res, the form of debent!re tr!st deed, the proced!re for the debent!re holders to inspect the tr!st deed and to obtain copies thereof and s!ch other matters.

56

No5i*()io* of 30(r13 or d1.1*),r13. "5. F1G '-ery holder of shares or debent!res of a company may, at any time, nominate, in the prescribed manner, any person to whom his shares or debent!res shall -est in the e-ent of his death. F2G >here the shares or debent!res of a company are held by more than one person jointly, the joint holders may to(ether nominate, in the prescribed manner, any person to whom all the ri(hts in the shares or debent!res shall -est in the e-ent of death of all the joint holders. F3G 6otwithstandin( anythin( contained in any other law for the time bein( in force or in any disposition, whether testamentary or otherwise, in respect of the shares or debent!res of a company, where a nomination made in the prescribed manner p!rports to confer on any person the ri(ht to -est the shares or debent!res of the company, the nominee shall, on the death of the holder of shares or debent!res or, as the case may be, on the death of the joint holders, become entitled to all the ri(hts in the shares or debent!res, of the holder or, as the case may be, of all the joint holders, in relation to s!ch shares, or debent!res, to the excl!sion of all other persons, !nless the nomination is -aried or cancelled in the prescribed manner. F4G >here the nominee is a minor, it shall be lawf!l for the holder of the shares or debent!res, ma2in( the nomination to appoint, in the prescribed manner, any person to become entitled to the shares or debent!res of the company, in the e-ent of the death of the nominee d!rin( his minority. CHAPTER $ ACCEPTANCE O" DEPOSITS B# COMPANIES Pro0i.i)io* o* (441-)(*41 of d1-o3i)3 fro5 -,.li4. "". F1G 1n and after the commencement of this #ct, no company shall in-ite, accept or renew deposits !nder this #ct from the p!blic except as pro-ided !nder this +hapterD /ro-ided that nothin( in this s!b.section shall apply to a ban2in( company and non ban2in( financial company as defined in the ,eser-e 0an2 of %ndia #ct, 1)34 and to s!ch other company as the +entral 4o-ernment may, after cons!ltation with the ,eser-e 0an2 of %ndia, specify in this behalf. F2G # company may, s!bject to the passin( of a resol!tion in (eneral meetin( and s!bject to s!ch r!les as may be prescribed in cons!ltation with the ,eser-e 0an2 of %ndia, accept deposits from its members on s!ch terms and conditions, incl!din( the pro-ision of sec!rity or for the repayment of s!ch deposits with interest, as may be a(reed !pon between the company and its members, s!bject to the f!lfilment of the followin( conditions, namelyDE FaG iss!ance of a circ!lar to its members incl!din( therein a statement showin( the financial position of the company, the credit ratin( obtained, the total n!mber of depositors and the amo!nt d!e towards deposits in respect of any pre-io!s deposits accepted by the company and s!ch other partic!lars in s!ch form and in s!ch manner as may be prescribedH FbG filin( a copy of the circ!lar alon( with s!ch statement with the ,e(istrar thirty days before the date of iss!e of the circ!larH FcG depositin( s!ch s!m which shall not be less than fifteen per cent. of the amo!nt of its deposits mat!rin( d!rin( a financial year and the financial year next followin(, in a Deposit ,epayment ,eser-e #cco!ntH

57

FdG pro-idin( s!ch deposit ins!rance in s!ch manner and to s!ch extent as may be prescribedH FeG certifyin( that the company has not defa!lted in the repayment of deposits accepted either before or after the commencement of this #ct or payment of interest on s!ch depositsH and FfG pro-idin( s!ch sec!rity for the d!e repayment of the amo!nt of deposit or the interest thereon incl!din( the creation of s!ch char(e on the company property or assets. F3G '-ery deposit accepted by a company !nder s!b.section F2G shall be repaid with interest in accordance with the terms and conditions of the a(reement referred to in that s!b.section. F4G >here a company fails to repay the deposit or part thereof or any interest thereon !nder s!b. section F3G, the depositor concerned may apply to the 9rib!nal for an order directin( the company to pay the s!m d!e or for any loss or dama(e inc!rred by him as a res!lt of s!ch non.payment and for s!ch other orders as the 9rib!nal may deem fit. R1-(/51*) of d1-o3i)3 1)4. (441-)1d .1for1 4o551*4151*) of )0i3 A4). "$. F1G >here in respect of any deposit accepted by a company before the commencement of this #ct, the amo!nt of s!ch deposit or part thereof or any interest d!e thereon remains !npaid on s!ch commencement or becomes d!e at any time thereafter, the company shallE FaG file, within a period of three months from s!ch commencement or from the date on which s!ch payment are d!e with the ,e(istrar a statement of all the deposits accepted by the company and s!ms !npaid on s!ch amo!nt with the interest payable thereon alon( with the arran(ements made for s!ch repayment, notwithstandin( anythin( contained in any other law for the time bein( in force or !nder the terms and conditions s!bject to which the deposit was accepted or any scheme framed !nder any lawH and FbG repay within one year from s!ch commencement from the date on which s!ch payments are d!e, whiche-er is earlier. F2G 9he 9rib!nal may on an application made by the company, after considerin( the financial condition of the company, the amo!nt of deposit or part thereof and the interest payable thereon and s!ch other matters, allow f!rther time as considered reasonable to the company to repay the deposit. F3G >here a company fails to repay the deposit or part thereof or any interest thereon within the time specified in s!b.section F1G or s!ch f!rther time as may be allowed by the 9rib!nal !nder s!b. section F2G, the company shall, in addition to the payment of the amo!nt of deposit or part thereof and the interest d!e, be p!nishable with fine which shall not be less than one crore r!pees b!t which may extend to ten crore r!pees and e-ery officer of the company who is in defa!lt shall be p!nishable with imprisonment which may extend to se-en years or with fine which shall not be less than twenty.fi-e la2h r!pees b!t which may extend to two crore r!pees, or with both. D(5(+13 for fr(,d. "&. F1G >here a company fails to repay the deposit or part thereof or any interest thereon referred to in section "$ within the time specified in s!b.section F1G of that section or s!ch f!rther time as may be allowed by the 9rib!nal !nder s!b.section F2G of that section, and it is pro-ed that the deposits had been accepted with intent to defra!d the depositors or for any fra!d!lent p!rpose, e-ery officer of the company who was responsible for the acceptance of s!ch deposit shall, witho!t prej!dice to the pro-isions contained in s!bsection F3G of that section, be personally

58

responsible, witho!t any limitation of liability, for all or any of the losses or dama(es that may ha-e been inc!rred by the depositors. F2G #ny s!it, proceedin(s or other action may be ta2en by any person, (ro!p of persons or any association of persons who had inc!rred any loss as a res!lt of the fail!re of the company to repay the deposits or part thereof or any interest thereon. CHAPTER $I REGISTRATION O" CHARGES D,)/ )o r1+i3)1r 40(r+13 1)4. "). F1G %t shall be the d!ty of e-ery company creatin( a char(e within %ndia or o!tside, on its property or assets or any of its !nderta2in(s, whether tan(ible or otherwise, and sit!ated in %ndia or o!tside, to re(ister the partic!lars of the char(e si(ned by the company and the char(e.holder to(ether with the instr!ments, if any, creatin( s!ch char(e in s!ch form, on payment of s!ch fee and in s!ch manner as may be prescribed, with the ,e(istrar within thirty days of its creationD /ro-ided that the ,e(istrar may, on an application by the company, allow s!ch re(istration to be made within a period of three h!ndred days of s!ch creation on payment of s!ch additional fee as may be prescribed. F2G >here a char(e is re(istered with the ,e(istrar !nder s!b.section F1G, he shall iss!e a certificate of re(istration of s!ch char(e in s!ch form and in s!ch manner as may be prescribed to the company and, as the case may be, to the person in whose fa-o!r the char(e is created. F3G 6otwithstandin( anythin( contained in any other law for the time bein( in force, no char(e created by a company shall be ta2en into acco!nt by the li3!idator or any other creditor !nless it is d!ly re(istered !nder s!b.section F1G and a certificate of re(istration of s!ch char(e is (i-en by the ,e(istrar !nder s!b.section F2G. F4G 6othin( in s!b.section F3G shall prej!dice any contract or obli(ation for the repayment of the money sec!red by a char(e. A--li4()io* for r1+i3)r()io* of 40(r+1. $*. >here a company fails to re(ister the char(e within the period specified in section "), witho!t prej!dice to its liability in respect of any offence !nder this +hapter, the person in whose fa-o!r the char(e is created may apply to the ,e(istrar for re(istration of the char(e alon( with the instr!ment created for the char(e, in s!ch form and manner as may be prescribed and the ,e(istrar may, on s!ch application, within fo!rteen days after (i-in( notice to the company, !nless the company itself re(isters the char(e or shows s!fficient ca!se why s!ch char(e sho!ld not be re(istered, allow s!ch re(istration on payment of s!ch fee and additional fee as may be prescribedD /ro-ided that where re(istration is effected on application of the person in whose fa-o!r the char(e is created, that person shall be entitled to reco-er from the company the amo!nt of any fee or additional fee paid by him to the ,e(istrar for the p!rpose of re(istration of char(e. S14)io* >9 )o (--l/ i* 41r)(i* 5())1r3. $1. 9he pro-isions of section ") relatin( to re(istration of char(es shall, so far as may be, apply to E

59

FaG a company ac3!irin( any property s!bject to a char(e within the meanin( of that sectionH or FbG any modification in the terms and conditions of any char(e re(istered !nder that section. D()1 of *o)i41 of 40(r+1. $2. >here any char(e on any property or assets of a company or any of its !nderta2in(s is re(istered !nder section "), any person ac3!irin( s!ch property, assets, !nderta2in(s or part thereof or any share or interest therein shall be deemed to ha-e notice of the char(e from the date of s!ch re(istration. R1+i3)1r of 40(r+13 )o .1 <1-) ./ R1+i3)r(r. $3. F1G 9he ,e(istrar shall, in respect of e-ery company, 2eep a re(ister containin( partic!lars of the char(es re(istered !nder this +hapter in s!ch form and in s!ch manner as may be prescribed. F2G # re(ister 2ept in p!rs!ance of this section shall be open to inspection by any person on payment of s!ch fee as may be prescribed for each inspection. Co5-(*/ )o r1-or) 3()i3f(4)io* of 40(r+1. $4. F1G # company shall (i-e intimation to the ,e(istrar in the prescribed form, of the payment or satisfaction in f!ll of any char(e re(istered !nder this +hapter within thirty days from the date of s!ch payment or satisfaction and the pro-isions of s!b.section F1G of section ") shall, as far as may be, apply to an intimation (i-en !nder this section. F2G 9he ,e(istrar shall, on receipt of intimation !nder s!b.section F1G, ca!se a notice to be sent to the holder of the char(e callin( !pon him to show ca!se within s!ch time not exceedin( fo!rteen days, as may be specified in s!ch notice, as to why payment or satisfaction in f!ll sho!ld not be recorded as intimated to the ,e(istrar, and if no ca!se is shown, by s!ch holder of the char(e the ,e(istrar shall order that a memorand!m of satisfaction shall be entered in the re(ister of char(es 2ept by him !nder section $3 and shall inform the company that he has done so. I*)i5()io* of (--oi*)51*) of r141i21r or 5(*(+1r. $5. F1G %f any person obtains an order for the appointment of a recei-er for, or of a person to mana(e, the property, s!bject to a char(e, of a company or if any person appoints s!ch recei-er or person !nder any power contained in any instr!ment, he shall, within s!ch time as may be prescribed, (i-e notice of s!ch appointment to the company and the ,e(istrar alon( with a copy of the order or instr!ment and the ,e(istrar shall, on payment of the prescribed fee, re(ister partic!lars of the recei-er, person or instr!ment. F2G #ny person appointed !nder s!b.section F1G shall, on ceasin( to hold s!ch appointment, (i-e to the company and the ,e(istrar a notice to that effect and the ,e(istrar shall re(ister s!ch notice. Co5-(*/=3 r1+i3)1r of 40(r+13. $". F1G '-ery company shall 2eep at its re(istered office a re(ister of char(es in s!ch form and in s!ch manner as may be prescribed, which shall incl!de therein all char(es and floatin( char(es affectin( any property or assets of the company or any of its !nderta2in(s, indicatin( in each case s!ch partic!lars as may be prescribed. F2G 9he re(ister of char(es 2ept !nder s!b.section F1G shall be open for inspection d!rin( b!siness ho!rsE

60

FaG by any member witho!t any payment of feeH or FbG by any other person on payment of s!ch fee as may be prescribed, s!bject to s!ch reasonable restrictions as the company may, by its articles, impose. P,*i3051*) for 4o*)r(21*)io*. $$. >here any company contra-enes any pro-ision of this +hapter, the company shall be p!nishable with fine which shall not be less than one la2h r!pees b!t which may extend to ten la2hs r!pees and any officer of the company who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to six months or with fine which shall not be less than ten tho!sand r!pees b!t which may extend to one la2h r!pees, or with both. CHAPTER $II MANAGEMENT AND ADMINISTRATION R1+i3)1r of 515.1r3 1)4. $&. F1G '-ery company shall 2eep and maintain followin( re(isters in s!ch form and in s!ch manner as may be prescribed, namelyDE FaG re(ister of members indicatin( separately e3!ity and preference shares held by each member and residin( in %ndia and o!tsideH FbG re(ister of debent!re holdersH and FcG re(ister of any other sec!rity holders. F2G '-ery re(ister maintained !nder s!b.section F1G shall incl!de an index of the names incl!ded therein. F3G 9he re(ister and index of beneficial owners maintained by a depository !nder section 11 of the Depositories #ct, 1))", shall be deemed to be the correspondin( re(ister and index for the p!rposes of this #ct. F4G # company may, if so a!thorised by its articles, 2eep in any co!ntry o!tside %ndia, in s!ch manner as may be prescribed, a part of the re(ister referred to in s!b.section F1G, called Aforei(n re(isterB containin( the names and partic!lars of the members, debent!re holders, other sec!rity holders or beneficial owners residin( o!tside %ndia. F5G # company shall file with the ,e(istrarE FaG partic!lars of the sit!ation of the place where s!ch re(ister of members, etc., is 2eptH and FbG in the e-ent of any chan(e in the sit!ation of s!ch place or of its discontin!ance, partic!lars of s!ch chan(e or discontin!ance within thirty days from the date of s!ch chan(e or discontin!ance. F"G %f any defa!lt is made in complyin( with the pro-isions of this section, the company shall be liable to a penalty of ten tho!sand r!pees and e-ery officer of the company who is in defa!lt shall be liable to a penalty of fi-e tho!sand r!pees, for each s!ch defa!lt. D14l(r()io* i* r13-14) of .1*1fi4i(l i*)1r13) i* (*/ 30(r1.

61

$). F1G >here the name of a person is entered in the re(ister of members of a company as the holder of shares or class of shares in that company b!t who does not hold the beneficial interest in s!ch shares, s!ch person shall ma2e a declaration in s!ch form as may be prescribed to the company specifyin( the name and other partic!lars of the person who holds the beneficial interest in s!ch shares or class of shares. F2G'-ery person who holds or ac3!ires a beneficial interest in a share or class of shares of a company shall ma2e a declaration to the company specifyin( the nat!re of his interest, partic!lars of the person in whose name the shares stand re(istered in the boo2s of the company and s!ch other partic!lars as may be prescribed. F3G>here any chan(e occ!rs in the beneficial interest in s!ch shares or class of shares, the person referred to in s!b.section F1G and the beneficial owner specified in s!b.section F2G shall, within thirty days from the date of s!ch chan(e, ma2e a declaration to the company in s!ch form and containin( s!ch partic!lars as may be prescribed. F4G >here any declaration !nder this section is made to a company, the company shall ma2e a note of s!ch declaration in the re(ister concerned and shall file, within thirty days from the date of receipt of declaration by it, a ret!rn in the prescribed form with the ,e(istrar in respect of s!ch declaration with s!ch fee as may be prescribed, or with s!ch additional fee, as may be prescribed, within the time specified !nder section 3"4. F5G >here a company, re3!ired to file a ret!rn !nder s!b.section F4G, fails to do so before the expiry of the time specified !nder section 3"4 with additional fee, the company and e-ery officer who is in defa!lt shall be p!nishable with fine which shall not be less than fi-e h!ndred r!pees b!t which may extend to one tho!sand r!pees for e-ery day d!rin( which the defa!lt contin!es. F"G#ny instr!ment created by the ostensible owner of any share or class of shares, in respect of which a declaration is re3!ired to be made !nder this section, shall not be enforceable by the beneficial owner or any person claimin( thro!(h him !nless s!ch declaration is made. F$G6othin( in this section shall be deemed to prej!dice the obli(ation of a company to pay di-idend to its members !nder this #ct and the said obli(ation shall, on s!ch payment, stand dischar(ed. I*213)i+()io* of .1*1fi4i(l o6*1r30i- of 30(r13 i* 41r)(i* 4(313. &*. >here it appears to the +entral 4o-ernment that there are (ood reasons so to do, it may appoint one or more competent persons to in-esti(ate and report as to beneficial ownership with re(ard to any share or class of shares and the pro-isions of section 1&$ shall, as far as may be, apply to s!ch in-esti(ation as if it were an in-esti(ation ordered !nder that section. Po61r )o 4lo31 r1+i3)1r of 515.1r3 or d1.1*),r1 0old1r3 or o)01r 314,ri)/ 0old1r3. &1. F1G # company may, after (i-in( not less than se-en days8 pre-io!s notice in s!ch manner as may be prescribed, close the re(ister of members or the re(ister of debent!re holders or the re(ister of other sec!rity holders for any period or period or periods not exceedin( in a((re(ate forty.fi-e days in each year, b!t not exceedin( thirty days at any one time. F2G %f the re(ister of members or of debent!re holders or of other sec!rity holders is closed witho!t (i-in( the notice as pro-ided in s!b.section F1G, or after (i-in( shorter notice than that so pro-ided, or for a contin!o!s or an a((re(ate period in excess of the limits specified in that s!b.section, the company and e-ery officer of the company who is in defa!lt shall be liable to a penalty of fi-e tho!sand r!pees for e-ery day d!rin( which the re(ister is 2ept closed b!t not exceedin( one la2h r!pees.

62

A**,(l r1),r*. &2. F1G '-ery company shall prepare a ret!rn Fhereinafter referred to as the ann!al ret!rnG in the prescribed form containin( the partic!lars as they stood on the close of the financial year re(ardin(E FaG its re(istered office, principal b!siness acti-ities, partic!lars of its holdin(, s!bsidiary and associate companiesH FbG its shares, debent!res and other sec!rities and shareholdin( patternH FcG its indebtednessH FdG its members and debent!re holders alon( with chan(es therein since the close of the last financial yearH FeG its promoters, directors, 2ey mana(erial personnel alon( with chan(es therein since the close of the last financial yearH FfG meetin(s of members or a class thereof, 0oard and its -ario!s committees alon( with attendance detailsH F(G rem!neration of directors and 2ey mana(erial personnelH FhG penalties or p!nishment imposed on the company, its directors or officers and details of compo!ndin( of offencesH FiG matters related to certification of compliances, disclos!resH and FjG s!ch other matters as may be prescribed, and si(ned both by a director and the +ompany Secretary, or where there is no +ompany Secretary, by a +ompany Secretary in whole.time practiceD /ro-ided that the ann!al ret!rn, filed by a company ha-in( s!ch paid.!p capital and t!rno-er as may be prescribed, or a company whose shares are listed on a reco(nised stoc2 exchan(e, shall also be si(ned by a +ompany Secretary in whole.time practice certifyin( that the ann!al ret!rn states the facts correctly and ade3!ately and that the company has complied with all the pro-isions of this #ct, in the prescribed formD /ro-ided f!rther that in relation to a 1ne /erson +ompany and small company, the ann!al ret!rn shall be si(ned by the +ompany Secretary, or where there is no +ompany Secretary, by one director of the company. F2G #n extract of the ann!al ret!rn in s!ch form as may be prescribed shall form part of the 0oard8s ,eport. F3G '-ery company shall, within thirty days from the date on which the ann!al (eneral meetin( is held or where no ann!al (eneral meetin( is held in any year within thirty days from the date on which the ann!al (eneral meetin( sho!ld ha-e been held to(ether with the statement specifyin( the reasons for not holdin( the ann!al (eneral meetin(, file with the ,e(istrar a copy of the ann!al ret!rn with s!ch fee as may be prescribed, or with s!ch additional fee as may be prescribed, within the time as specified, !nder section 3"4. F4G %f a company fails to file its ann!al ret!rn !nder s!b.section F3G before the expiry of the period specified !nder section 3"4 with additional fee, the company shall be p!nishable with fine which

63

shall not be less than fifty tho!sand r!pees b!t which may extend to fi-e la2hs r!pees and e-ery officer of the company who is in defa!lt shall be p!nishable with imprisonment for six months or with fine which shall not be less than fifty tho!sand r!pees b!t which may extend to fi-e la2h r!pees, or with both. F5G >here a +ompany Secretary in whole.time practice certifies the ann!al ret!rn otherwise than in conformity with the re3!irements of this section or the r!les made there!nder, s!ch +ompany Secretary shall be p!nishable with fine which shall not be less than fifty tho!sand r!pees b!t which may extend to fi-e la2h r!pees. Pl(41 of <11-i*+ (*d i*3-14)io* of r1+i3)1r3 r1),r*3 1)4. &3. F1G 9he re(isters re3!ired to be 2ept and maintained by a company !nder section $& and copies of the ann!al ret!rn filed !nder section &2 shall be 2ept at the re(istered office of the companyD /ro-ided that s!ch re(isters or copies of ret!rn may also be 2ept at any other place in %ndia in which more than one.tenth of the total members entered in the re(ister of members reside, if appro-ed by a special resol!tion passed at a (eneral meetin( of the company and the ,e(istrar has been (i-en a copy of the proposed special resol!tion in ad-ance. F2G 9he re(isters and their indices, except when they are closed !nder the pro-isions of this #ct, and the copies of the ret!rns shall be open for inspection by any member, debent!re holder, other sec!rity holder or beneficial owner, d!rin( b!siness ho!rs witho!t payment of any fee and by any other person on payment of s!ch fee as may be prescribed. F3G #ny s!ch member, debent!re holder, other sec!rity holder or beneficial owner or any other person mayE FaG ta2e extracts from any re(ister, or index or ret!rn witho!t payment of any feeH or FbG re3!ire a copy of any s!ch re(ister or entries therein or ret!rn on payment of s!ch fee as may be prescribed. F4G 9he +entral 4o-ernment may also, by order, direct an immediate inspection of the doc!ment, or direct that the extract re3!ired shall forthwith be allowed to be ta2en by the person re3!irin( it. F5G %f any inspection or the ma2in( of any extract or copy re3!ired !nder this section is ref!sed, the company and e-ery officer of the company who is in defa!lt shall be liable, for each s!ch defa!lt, to a penalty of one tho!sand r!pees for e-ery day d!rin( which the ref!sal or defa!lt contin!es b!t not exceedin( one la2h r!pees. R1+i3)1r3 1)4. )o .1 12id1*41. &4. 9he re(isters, their indices and copies of ann!al ret!rns maintained !nder sections $& and &3 shall be prima facie e-idence of any matter directed or a!thorised to be inserted therein by or !nder this #ct. A**,(l +1*1r(l 511)i*+. &5. F1G '-ery company other than a 1ne /erson +ompany shall in each year hold in addition to any other meetin(s, a (eneral meetin( as its ann!al (eneral meetin( and shall specify the meetin( as s!ch in the notices callin( it, and not more than fifteen months shall elapse between the date of one ann!al (eneral meetin( of a company and that of the nextD

64

/ro-ided that in case of the first ann!al (eneral meetin(, it shall be held within a period of nine months from the date of closin( of the first financial year of the company and in any other case, within a period of six months, from the date of closin( of the financial yearD /ro-ided f!rther that if a company holds its first ann!al (eneral meetin( as aforesaid, it shall not be necessary for the company to hold any ann!al (eneral meetin( in the year of its incorporation or in the followin( yearD /ro-ided also that the ,e(istrar may, for any special reason, extend the time within which any ann!al (eneral meetin(, other than the first ann!al (eneral meetin(, shall be held, by a period not exceedin( three months. F2G '-ery ann!al (eneral meetin( shall be called d!rin( b!siness ho!rs, that is, between ) a.m. and " p.m. on any day that is not a 6ational Ioliday and shall be held either at the re(istered office of the company or at some other place within the city, town or -illa(e in which the re(istered office of the company is sit!atedD /ro-ided that the +entral 4o-ernment may exempt any company from the pro-isions of this s!b.section s!bject to s!ch conditions as it may impose. Po61r of Tri.,*(l )o 4(ll (**,(l +1*1r(l 511)i*+. &". F1G %f any defa!lt is made in holdin( the ann!al (eneral meetin( of a company !nder section &5, the 9rib!nal may, notwithstandin( anythin( contained in this #ct or the articles of the company, on the application of any member of the company, call, or direct the callin( of, an ann!al (eneral meetin( of the company and (i-e s!ch ancillary or conse3!ential directions as the 9rib!nal thin2s expedientD /ro-ided that s!ch directions may incl!de a direction that one member of the company present in person or by proxy shall be deemed to constit!te a meetin(. F2G # (eneral meetin( held in p!rs!ance of s!b.section F1G shall, s!bject to any directions of the 9rib!nal, be deemed to be an ann!al (eneral meetin( of the company !nder this #ct. Po61r of Tri.,*(l )o 4(ll 511)i*+3 of 515.1r3 1)4. &$. F1G %f for any reason it is impracticable to call a meetin( of a company, other than an ann!al (eneral meetin(, in any manner in which meetin(s of the company may be called, or to hold or cond!ct the meetin( of the company in the manner prescribed by this #ct or the articles of the company, the 9rib!nal may, either suo motu or on the application of any director of the company or of any member of the company who wo!ld be entitled to -ote at the meetin(,E FaG order a meetin( of the company to be called, held and cond!cted in s!ch manner as the 9rib!nal thin2s fitH and FbG (i-e s!ch ancillary or conse3!ential directions as the 9rib!nal thin2s expedient, incl!din( directions modifyin( or s!pplementin( in relation to the callin(, holdin( and cond!ctin( of the meetin(, the operation of the pro-isions of this #ct and articles of the companyD /ro-ided that s!ch directions may incl!de a direction that one member of the company present in person or by proxy shall be deemed to constit!te a meetin(.

65

F2G #ny meetin( called, held and cond!cted in accordance with any order made !nder s!b.section F1G shall, for all p!rposes, be deemed to be a meetin( of the company d!ly called, held and cond!cted. P,*i3051*) for d1f(,l) i* 4o5-l/i*+ 6i)0 -ro2i3io*3 of 314)io*3 85 )o 8?. &&. %f any defa!lt is made in holdin( a meetin( of the company in accordance with section &5 or section &" or section &$ or in complyin( with any directions of the +entral 4o-ernment or the 9rib!nal, as the case may be, the company and e-ery officer of the company who is in defa!lt shall be p!nishable with fine which may extend to one la2h r!pees and in the case of a contin!in( defa!lt, with a f!rther fine which may extend to fi-e tho!sand r!pees for e-ery day d!rin( which s!ch defa!lt contin!es. C(lli*+ of 19)r(ordi*(r/ +1*1r(l 511)i*+. &). F1G 9he 0oard may on its own whene-er it deems fit call an extraordinary (eneral meetin( in re(ard to any matter. F2G 9he 0oard shall at the re3!isition made by, E FaG in the case of a company ha-in( a share capital, s!ch n!mber of members as hold on the date of the receipt of the re3!isition, not less than one.tenth of s!ch of the paid.!p share capital of the company as on that date carries the ri(ht of -otin(H FbG in the case of a company not ha-in( a share capital, s!ch n!mber of members as ha-e on the date of receipt of the re3!isition, not less than one.tenth of the total -otin( power of all the members ha-in( on the said date a ri(ht to -ote, call an extraordinary (eneral meetin( of the company within the period specified in s!b.section F4G. F3G 9he re3!isition made !nder s!b.section F2G shall set o!t the matters for the consideration of which the meetin( is to be called and shall be si(ned by the re3!isitionists and sent to the re(istered office of the company. F4G %f the 0oard does not, within twenty.one days from the date of receipt of a -alid re3!isition in re(ard to any matter, proceed to call a meetin( for the consideration of that matter on a day not later than forty.fi-e days from the date of receipt of s!ch re3!isition, the meetin( may be called and held by the re3!isitionists themsel-es within a period of three months from the date of the re3!isition in the manner prescribed. F5G 9he manner in which an extraordinary (eneral meetin( shall be called by the 0oard shall, as nearly as may be, apply to the callin( of s!ch meetin( by the re3!isitionists !nder s!b.section F4G. F"G #ny reasonable expenses inc!rred by the re3!isitionists in callin( a meetin( !nder s!b.section F4G shall be reimb!rsed to the re3!isitionists by the company and the s!ms so paid shall be ded!cted from any fee or other rem!neration !nder s!b.section F1G of section 1$5 payable to s!ch of the directors who were in defa!lt in callin( the meetin(. No)i41 of 511)i*+. )*. F1G # (eneral meetin( of a company may be called by (i-in( not less than clear twenty.one days8 notice either in writin( or thro!(h electronic mode in s!ch manner as may be prescribedD /ro-ided that a (eneral meetin( may be called after (i-in( a shorter notice if consent is (i-en in writin( or by electronic mode by not less than ninety.fi-e per cent. of the members entitled to -ote at s!ch meetin(.

66

F2G '-ery notice of a meetin( shall specify the place, date, day and the ho!r of the meetin( and shall contain a statement of the b!siness to be transacted at s!ch meetin(. F3G 9he notice of e-ery meetin( of the company shall be (i-en toE FaG e-ery member of the company, le(al representati-e of any deceased member or the assi(nee of an insol-ent memberH FbG the a!ditor or a!ditors of the companyH and FcG e-ery director of the company. F4G #ny accidental omission to (i-e notice to, or the non.receipt of s!ch notice by, any member or other person who is entitled to s!ch notice for any meetin( shall not in-alidate the proceedin(s of the meetin(. E9-l(*()or/ 3)()151*) )o .1 (**191d 6i)0 *o)i41. )1. F1G # statement settin( o!t all the material facts concernin( each item of special b!siness to be transacted at a (eneral meetin(, incl!din(, in partic!lar, the nat!re of the concern or interest, if any, of e-ery director and the mana(er, if any, and of e-ery other 2ey mana(erial personnel shall be annexed to the notice callin( s!ch meetin(. F2G For the p!rposes of s!b.section F1G, E FaG in the case of an ann!al (eneral meetin(, all b!siness to be transacted thereat shall be deemed special, other thanE FiG the consideration of acco!nts, balance sheet and the reports of the 0oard of Directors and a!ditorsH FiiG the declaration of any di-idendH FiiiG the appointment of directors in place of those retirin(H Fi-G the appointment of, and the fixin( of the rem!neration of, the a!ditorsH and FbG in the case of any other meetin(, all b!siness shall be deemed to be specialD /ro-ided that where any item of special b!siness to be transacted at a meetin( of the company relates to or affects any other company, the extent of shareholdin( interest in that other company of e-ery director, mana(er, if any, and of e-ery other 2ey mana(erial personnel of the first mentioned company shall, if the extent of s!ch shareholdin( is not less than two per cent. of the paid.!p share capital of that company, also be set o!t in the statement. F3G >here any item of b!siness refers to any doc!ment, which is to be considered at the meetin(, the time and place where s!ch doc!ment can be inspected shall be specified in the statement !nder s!b.section F1G. F4G >here as a res!lt of the non.disclos!re or ins!fficient disclos!re in any statement referred to in s!b.section F1G, bein( made by a director, mana(er, if any, or other 2ey mana(erial personnel, any benefit which accr!es to s!ch director, mana(er or other 2ey mana(erial personnel or his relati-es, either directly or indirectly, the director, mana(er or other 2ey mana(erial personnel, as the case may be, shall hold s!ch benefit in tr!st for the company, and shall, witho!t prej!dice to any other action bein( ta2en a(ainst him !nder this #ct or !nder any law for the time bein( in force, be liable to compensate the company to the extent of the benefit recei-ed by him.

67

F5G >here any defa!lt is made in complyin( with the pro-isions of this section, e-ery officer of the company who is in defa!lt shall be p!nishable with fine which may extend to fifty tho!sand r!pees or fi-e times the amo!nt of benefit accr!in( to the director, mana(er or other 2ey mana(erial personnel or any of his relati-es, whiche-er is more. &,or,5 for 511)i*+3. )2. F1G :nless the articles of the company pro-ide for a lar(er n!mber, fi-e members personally present in the case of p!blic company and two members personally present in the case of a pri-ate company, shall be the 3!or!m for a meetin( of the company. F2G %f within half.an.ho!r from the time appointed for holdin( a meetin( of the company, the 3!or!m is not there,E FaG the meetin( shall stand adjo!rned to the same day in the next wee2 at the same time and place, or to s!ch other date and s!ch other time and place as the 0oard may determineH or FbG the meetin(, if called by re3!isitionists !nder section &), shall stand cancelledD /ro-ided that in case of an adjo!rnment or of a chan(e of day, time or place of meetin( !nder cla!se FaG, the company shall (i-e not less than three days8 notice to the members either indi-id!ally or by press anno!ncement. F3G %f at the adjo!rned meetin( also, a 3!or!m is not present within half.an.ho!r from the time appointed for holdin( meetin(, the members present shall be the 3!or!m. C0(ir5(* of 511)i*+3. )3. F1G :nless the articles of the company otherwise pro-ide, the members personally present at the meetin( shall elect one of themsel-es to be the +hairman thereof on a show of hands. F2G %f a poll is demanded on the election of the +hairman, it shall be ta2en forthwith in accordance with the pro-isions of this #ct and the +hairman elected on a show of hands !nder s!b.section F1G shall contin!e to be the +hairman of the meetin( !ntil some other person is elected as +hairman as a res!lt of the poll, and s!ch other person shall be +hairman for the rest of the meetin(. Pro9i13. )4. #ny member of a company entitled to attend and -ote at a meetin( of the company shall be entitled to appoint another person as a proxy to attend and -ote at the meetin( on his behalf in writin( or by electronic mode in s!ch manner and s!bject to s!ch conditions as may be prescribedD /ro-ided that a proxy shall not ha-e the ri(ht to spea2 at s!ch meetin( and shall not be entitled to -ote except on a poll. R13)ri4)io* o* 2o)i*+ ri+0)3. )5. F1G 6otwithstandin( anythin( contained in this #ct, the articles of a company may pro-ide that no member shall exercise any -otin( ri(ht in respect of any shares re(istered in his name on which any calls or other s!ms presently payable by him ha-e not been paid, or in re(ard to which the company has exercised any ri(ht of lien.

68

F2G # company shall not, except on the (ro!nds specified in s!b.section F1G, prohibit any member from exercisin( his -otin( ri(ht on any other (ro!nd. F3G 1n a poll ta2en at a meetin( of a company, a member entitled to more than one -ote, or his proxy or other person entitled to -ote for him, as the case may be, need not, if he -otes, !se all his -otes or cast in the same way all the -otes he !ses. $o)i*+ ./ 30o6 of 0(*d3. )". F1G #t any (eneral meetin(, a resol!tion p!t to the -ote of the meetin( shall, !nless a poll is demanded !nder section )& or the -otin( is carried o!t electronically, be decided on a show of hands. F2G # declaration by the +hairman of the meetin( of the passin( of a resol!tion or otherwise by show of hands !nder s!b.section F1G and an entry to that effect in the boo2s containin( the min!tes of the meetin( of the company shall be concl!si-e e-idence of the fact of passin( of s!ch resol!tion or otherwise. $o)i*+ )0ro,+0 1l14)ro*i4 51(*3. )$. :nless the articles pro-ide otherwise, a member may exercise his -ote at a meetin( by electronic means in the manner as may be prescribed. D15(*d for -oll. )&. F1G 0efore or on the declaration of the res!lt of the -otin( on any resol!tion on show of hands, a poll may be ordered to be ta2en by the +hairman of the meetin( on his own motion, and shall be ordered to be ta2en by him on a demand made in that behalf,E FaG in the case a company ha-in( a share capital, by the members present in person or by proxy and ha-in( not less than one.tenth of the total -otin( power or holdin( shares on which an a((re(ate s!m of not less than fi-e la2h r!pees has been paid !pH and FbG in the case of any other company, by any member or members present in person or by proxy and ha-in( not less than one.tenth of the total -otin( power. F2G 9he demand for a poll may be withdrawn at any time by the persons who made the demand. F3G # poll demanded for adjo!rnment of the meetin( or appointment of +hairman of the meetin( shall be ta2en forthwith. F4G # poll demanded on any 3!estion other than adjo!rnment of the meetin( or appointment of +hairman shall be ta2en at s!ch time, not bein( later than forty.ei(ht ho!rs from the time when the demand was made, as the +hairman of the meetin( may direct. F5G >here a poll is to be ta2en, the +hairman of the meetin( shall appoint s!ch n!mber of persons, as he deems necessary, to scr!tini=e the poll process and -otes (i-en on the poll and to report thereon to him in the manner as may be prescribed. F"G S!bject to the pro-isions of this section, the +hairman of the meetin( shall ha-e power to re(!late the manner in which the poll shall be ta2en. F$G 9he res!lt of the poll shall be deemed to be the decision of the meetin( on the resol!tion on which the poll was ta2en.

69

Po3)(l .(llo). )). F1G 6otwithstandin( anythin( contained in this #ct, a companyE FaG shall, in respect of s!ch items of b!siness as the +entral 4o-ernment may, by notification, declare to be transacted only by means of postal ballotH and FbG may, in respect of any item of b!siness, other than ordinary b!siness and any b!siness in respect of which directors or a!ditors ha-e a ri(ht to be heard at any meetin(, transact by means of postal ballot in s!ch manner as may be prescribed, instead of transactin( s!ch b!siness at a (eneral meetin(. F2G %f a resol!tion is assented to by the re3!isite majority of the shareholders by means of postal ballot, it shall be deemed to ha-e been d!ly passed at a (eneral meetin( con-ened in that behalf. Cir4,l()io* of 515.1r3= r13ol,)io*. 1**. F1G # company shall, on re3!isition in writin( of s!ch n!mber of members, as re3!ired in section &),E FaG (i-e notice to members of any resol!tion which may properly be mo-ed and is intended to be mo-ed at a meetin(H and FbG circ!late to members any statement with respect to the matters referred to in any proposed resol!tion or any b!siness to be dealt with at that meetin(. F2G # company shall not be bo!nd !nder this section to (i-e notice of any resol!tion or to circ!late any statement !nlessE FaG a copy of the re3!isition si(ned by the re3!isitionists For two or more copies which between them contain the si(nat!res of all the re3!isitionistsG is deposited at the re(istered office of the company,E FiG in the case of a re3!isition re3!irin( notice of a resol!tion, not less than six wee2s before the meetin(H FiiG in the case of any other re3!isition, not less than two wee2s before the meetin(H and FbG there is deposited or tendered with the re3!isition a s!m reasonably s!fficient to meet the company8s expenses in (i-in( effect theretoD /ro-ided that if, after a copy of a re3!isition re3!irin( notice of a resol!tion has been deposited at the re(istered office of the company, an ann!al (eneral meetin( is called on a date within six wee2s after the copy has been deposited, the copy, altho!(h not deposited within the time re3!ired by this s!b.section, shall be deemed to ha-e been properly deposited for the p!rposes thereof. F3G 9he company shall not be bo!nd to circ!late any statement as re3!ired by cla!se FbG of s!b. section F1G, if on the application either of the company or of any other person who claims to be a((rie-ed, the +entral 4o-ernment, by order, declares that the ri(hts conferred by this section are bein( ab!sed to sec!re needless p!blicity for defamatory matter.

70

F4G #n order made !nder s!b.section F3G may also direct that the cost inc!rred by the company by -irt!e of this section shall be paid to the company by the re3!isitionists, notwithstandin( that they are not parties to the application. F5G %f any defa!lt is made in complyin( with the pro-isions of this section, the company and its e-ery officer who is in defa!lt shall be liable to a penalty of twenty.fi-e tho!sand r!pees. R1-r131*)()io* of )01 Pr13id1*) (*d Go21r*or3 i* 511)i*+3. 1*1. F1G 9he /resident of %ndia or the 4o-ernor of a State, if he is a member of a company, may appoint s!ch person as he thin2s fit to act as his representati-e at any meetin( of the company or at any meetin( of any class of members of the company. F2G # person appointed to act !nder s!b.section F1G shall, for the p!rposes of this #ct, be deemed to be a member of s!ch a company and shall be entitled to exercise the same ri(hts and powers, incl!din( the ri(ht to -ote by proxy and postal ballot, as the /resident or, as the case may be, the 4o-ernor co!ld exercise as a member of the company. R1-r131*)()io* of 4or-or()io*3 () 511)i*+ of 4o5-(*i13 (*d of 4r1di)or3. 1*2. F1G # body corporate, whether a company within the meanin( of this #ct or not, may, E FaG if it is a member of a company within the meanin( of this #ct, by resol!tion of its 0oard of Directors or other (o-ernin( body, a!thorise s!ch person as it thin2s fit to act as its representati-e at any meetin( of the company, or at any meetin( of any class of members of the companyH FbG if it is a creditor, incl!din( a holder of debent!res, of a company within the meanin( of this #ct, by resol!tion of its directors or other (o-ernin( body, a!thorise s!ch person as it thin2s fit to act as its representati-e at any meetin( of any creditors of the company held in p!rs!ance of this #ct or of any r!les made there!nder, or in p!rs!ance of the pro-isions contained in any debent!re or tr!st deed, as the case may be. F2G # person a!thorised by resol!tion !nder s!b.section F1G shall be entitled to exercise the same ri(hts and powers, incl!din( the ri(ht to -ote by proxy and by postal ballot, on behalf of the body corporate which he represents as that body co!ld exercise if it were an indi-id!al member, creditor or holder of debent!res of the company. Ordi*(r/ (*d 3-14i(l r13ol,)io*3. 1*3. F1G # resol!tion shall be an ordinary resol!tion if it is re3!ired to be passed by the -otes cast, whether on a show of hands, or electronically or on a poll, as the case may be, in fa-o!r of the resol!tion, incl!din( the castin( -ote, if any, of the +hairman, by members who, bein( entitled so to do, -ote in person, or where proxies are allowed, by proxy or by postal ballot, exceed the -otes, if any, cast a(ainst the resol!tion by members, etc., so entitled and -otin(. F2G # resol!tion shall be a special resol!tion whenE FaG the intention to propose the resol!tion as a special resol!tion has been d!ly specified in the notice callin( the (eneral meetin( or other intimation (i-en to the members of the resol!tionH FbG the notice re3!ired !nder this #ct has been d!ly (i-enH and

71

FcG the -otes cast in fa-o!r of the resol!tion, whether on a show of hands, or electronically or on a poll, as the case may be, by members who, bein( entitled so to do, -ote in person, or where proxies are allowed, by proxy, are re3!ired to be not less than three times the n!mber of the -otes, if any, cast a(ainst the resol!tion by members so entitled and -otin(. R13ol,)io*3 r17,iri*+ 3-14i(l *o)i41. 1*4. >here, by any pro-ision contained in this #ct or in the articles, special notice is re3!ired of any resol!tion, notice of the intention to mo-e s!ch resol!tion shall be (i-en to the company by s!ch n!mber of members as may be prescribed and the company shall (i-e its members notice of the resol!tion in s!ch manner as may be prescribed. R13ol,)io*3 -(331d () (d:o,r*1d 511)i*+. 1*5. >here a resol!tion is passed at an adjo!rned meetin( ofE FaG a company, FbG the holders of any class of shares in a company, or FcG the 0oard of Directors of a company, the resol!tion shall, for all p!rposes, be treated as ha-in( been passed on the date on which it was in fact passed, and shall not be deemed to ha-e been passed on any earlier date. R13ol,)io*3 (*d (+r1151*)3 )o .1 fil1d. 1*". F1G # copy of e-ery resol!tion or any a(reement, in respect of s!ch matters as may be prescribed, to(ether with the explanatory statement !nder section )1, if any, annexed to the notice callin( the meetin( in which the resol!tion is proposed, shall be filed with the ,e(istrar within thirty days of the passin( or ma2in( thereof in the manner as may be prescribed, with s!ch fee as may be prescribed or with s!ch additional fee as may be prescribed within the time specified, !nder section 3"4. F2G %f a company fails to file the resol!tion or the a(reement !nder s!b.section F1G before the expiry of the period specified !nder section 3"4 with additional fee, the company shall be p!nishable with fine which shall not be less than fi-e la2h r!pees b!t which may extend to twenty fi-e la2h r!pees and e-ery officer who is in defa!lt, incl!din( li3!idator of the company, if any, shall be p!nishable with imprisonment for a term which may extend to six months or with fine which shall not be less than one la2h r!pees b!t which may extend to fi-e la2h r!pees, or with both. Mi*,)13 of -ro411di*+3 of +1*1r(l 511)i*+ 511)i*+ of Bo(rd of Dir14)or3 (*d o)01r 511)i*+ (*d r13ol,)io*3 -(331d ./ -o3)(l .(llo). 1*$. F1G '-ery company shall ca!se to be prepared, si(ned and 2ept min!tes of the proceedin(s of e-ery (eneral meetin(, incl!din( any meetin( called by the re3!isitionists !nder section &), and of proceedin(s of e-ery meetin( of any class of shareholders or creditors, and e-ery resol!tion passed by postal ballot and e-ery meetin( of its 0oard of Directors or of e-ery committee of the 0oard, within s!ch time and in s!ch manner as may be prescribed. F2G 9he min!tes of each meetin( shall contain a fair and correct s!mmary of the proceedin(s thereat. F3G #ll appointments of officers made at any of the meetin(s aforesaid shall be incl!ded in the min!tes of the meetin(.

72

F4G %n the case of a meetin( of the 0oard of Directors or of a committee of the 0oard, the min!tes shall also contain E FaG the names of the directors present at the meetin(H and FbG in the case of each resol!tion passed at the meetin(, the names of the directors, if any, dissentin( from, or not conc!rrin( with the resol!tion. F5G 9here shall not be incl!ded in the min!tes, any matter which, in the opinion of the +hairman of the meetin(,E FaG is or co!ld reasonably be re(arded as defamatory of any personH FbG is irrele-ant or immaterial to the proceedin(sH or FcG is detrimental to the interests of the company. F"G 9he +hairman shall exercise an absol!te discretion in re(ard to the incl!sion or non.incl!sion of any matter in the min!tes on the (ro!nds specified in s!b.section F5G. F$G in!tes 2ept in accordance with the pro-isions of this section shall be e-idence of the proceedin(s recorded therein. F&G >here min!tes ha-e been 2ept in accordance with s!b.section F1G and the r!les made there!nder, then, !ntil the contrary is pro-ed, the meetin( shall be deemed to ha-e been d!ly called and held, and all proceedin(s thereat to ha-e d!ly ta2en place, and the resol!tions passed by postal ballot to ha-e been d!ly passed and in partic!lar, all appointments of directors, 2ey mana(erial personnel, a!ditors or company secretary in practice, shall be deemed to be -alid. F)G 6o doc!ment p!rportin( to be a report of the proceedin(s of any (eneral meetin( of a company shall be circ!lated or ad-ertised at the expense of the company, !nless it incl!des the matters re3!ired by this section to be contained in the min!tes of the proceedin(s of s!ch meetin(. F1*G '-ery company shall obser-e s!ch secretarial standards as may be prescribed with respect to (eneral and 0oard meetin(s. F11G %f any defa!lt is made in complyin( with the pro-isions of this section and the r!les made there!nder in respect of any meetin(, the company shall be liable to a penalty of twenty fi-e tho!sand r!pees and e-ery officer of the company who is in defa!lt shall be liable to a penalty of fi-e tho!sand r!pees. I*3-14)io* of 5i*,)1;.oo<3 of +1*1r(l 511)i*+. 1*&. F1G 9he boo2s containin( the min!tes of the proceedin(s of any (eneral meetin( of a company, shallE FaG be 2ept at the re(istered office of the company, and FbG be open, d!rin( b!siness ho!rs, to the inspection by any member witho!t char(e, s!bject to s!ch reasonable restrictions as the company may, by its articles or in (eneral meetin(, impose, so, howe-er, that not less than two ho!rs in each b!siness day are allowed for inspection.

73

F2G #ny member shall be entitled to be f!rnished, within se-en wor2in( days after he has made a re3!est in that behalf to the company, and on payment of s!ch fees as may be prescribed, with a copy of any min!tes referred to in s!b.section F1G. F3G %f any inspection !nder s!b.section F1G is ref!sed, or if any copy re3!ired !nder s!b.section F2G is not f!rnished within the time specified therein, the company shall be liable to a penalty of twenty fi-e tho!sand r!pees and e-ery officer of the company who is in defa!lt shall be liable to a penalty of fi-e tho!sand r!pees for each s!ch ref!sal or defa!lt, as the case may be. F4G %n the case of any s!ch ref!sal or defa!lt, the +entral 4o-ernment may, witho!t prej!dice to any action bein( ta2en !nder s!b.section F3G, by order, direct an immediate inspection of the min!te.boo2s or direct that the copy re3!ired shall forthwith be sent to the person re3!irin( it. R1-or) o* +1*1r(l 511)i*+. 1*). F1G '-ery listed p!blic company shall prepare in the prescribed manner a report on each ann!al (eneral meetin( incl!din( the confirmation to the effect that the meetin( was con-ened, held and cond!cted as per the pro-isions of this #ct and the r!les made there!nder. F2G 9he company shall file with the ,e(istrar a copy of the report referred to in s!b.section F1G within thirty days of the concl!sion of the ann!al (eneral meetin( with s!ch fee as may be prescribed, or with s!ch additional fee as may be prescribed, within the time as specified, !nder section 3"4. F3G %f the company fails to file the report !nder s!b.section F2G before the expiry of the period specified !nder section 3"4 with additional fee, the company shall be p!nishable with fine which shall not be less than one la2h r!pees b!t which may extend to fi-e la2h r!pees and e-ery officer of the company who is in defa!lt shall be p!nishable with fine which shall not be less than twenty fi-e tho!sand r!pees b!t which may extend to one la2h r!pees. CHAPTER $III DECLARATION AND PA#MENT O" DI$IDEND D14l(r()io* of di2id1*d. 11*. F1G 6o di-idend shall be declared or paid by a company for any financial year exceptE FaG o!t of the profits of the company for that year arri-ed at after pro-idin( for depreciation in accordance with the pro-isions of s!b.section F2G, or o!t of the profits of the company for any pre-io!s financial year or years arri-ed at after pro-idin( for depreciation in accordance with the pro-isions of that s!b.section and remainin( !ndistrib!ted, or o!t of bothH or FbG o!t of money pro-ided by the +entral 4o-ernment or a State 4o-ernment for the payment of di-idend in p!rs!ance of a (!arantee (i-en by that 4o-ernmentD /ro-ided that a company may, before the declaration of any di-idend in any financial year, transfer s!ch percenta(e of its profits for that financial year as it may consider appropriate to the reser-es of the companyD /ro-ided f!rther that if owin( to inade3!acy or absence of profits in any financial year, the company proposes to declare di-idend o!t of the acc!m!lated profits earned by it in the pre-io!s financial year or years and transferred by it to the reser-es, s!ch declaration shall be made by a resol!tion passed at a meetin( of the 0oard with the consent of all the

74

directors and the appro-al of the financial instit!tions whose term loans are s!bsistin(, and thereafter in accordance with a special resol!tion passed by the shareholders at an ann!al (eneral meetin(. F2G For the p!rposes of cla!se FaG of s!b.section F1G, depreciation shall be pro-ided in any one of the followin( manners, namelyDE FaG the amo!nt of depreciation on assets as shown by the boo2s of the company at the end of each financial year at the rate prescribed in the r!les made in this behalfH FbG as re(ards any other depreciable asset for which no rate of depreciation has been laid down !nder this #ct, on s!ch basis as may be appro-ed by the +entral 4o-ernment by any (eneral order p!blished in the 1fficial 4a=ette or by a special order in any partic!lar caseD /ro-ided that if any asset is sold, discarded, demolished or destroyed for any reason before depreciation of s!ch asset has been pro-ided for in f!ll, the excess, if any, of the written down -al!e of s!ch asset o-er its sale proceeds or, as the case may be, its scrap -al!e, shall be written off in the financial year in which the asset is sold, discarded, demolished or destroyed. F3G 9he 0oard of Directors of a company may declare interim di-idend d!rin( any financial year o!t of the profits of the company for part of the year. F4G 9he amo!nt of the di-idend, incl!din( interim di-idend, shall be deposited in a sched!led ban2 in a separate acco!nt within fi-e days from the date of declaration of s!ch di-idend. F5G 6o di-idend shall be paid by a company in respect of any share therein except to the re(istered shareholder of s!ch share or to his order or to his ban2er and shall not be payable except in cashD /ro-ided that nothin( in this s!b.section shall be deemed to prohibit the capitalisation of profits or reser-es of a company for the p!rpose of iss!in( f!lly paid.!p bon!s shares or payin( !p any amo!nt for the time bein( !npaid on any shares held by the members of the companyD /ro-ided f!rther that any di-idend payable in cash may be made by che3!e or warrant or in any electronic mode to the shareholder entitled to the payment of the di-idend. F"G # company which fails to comply with the pro-isions of section "$ shall not, so lon( as s!ch fail!re contin!es, declare any di-idend on its e3!ity shares. U*-(id Di2id1*d A44o,*). 111. F1G >here a di-idend has been declared by a company b!t has not been paid or claimed within thirty days from the date of the declaration to any shareholder entitled to the payment of the di-idend, the company shall, within se-en days from the date of expiry of the said period of thirty days, transfer the total amo!nt of di-idend which remains !npaid or !nclaimed to a special acco!nt to be opened by the company in that behalf in any sched!led ban2 to be called the :npaid Di-idend #cco!nt. F2G %f any defa!lt is made in transferrin( the total amo!nt referred to in s!b.section F1G or any part thereof to the :npaid Di-idend #cco!nt of the company, it shall pay, from the date of s!ch defa!lt, interest on so m!ch of the amo!nt as has not been transferred to the said acco!nt, at the rate of twel-e per cent per ann!m and the interest accr!in( on s!ch amo!nt shall en!re to the benefit of the members of the company in proportion to the amo!nt remainin( !npaid to them.

75

F3G #ny person claimin( to be entitled to any money transferred !nder s!b.section F1G to the :npaid Di-idend #cco!nt of the company may apply to the company for payment of the money claimed. F4G#ny money transferred to the :npaid Di-idend #cco!nt of a company in p!rs!ance of this section which remains !npaid or !nclaimed for a period of se-en years from the date of s!ch transfer shall be transferred by the company to the F!nd established !nder s!bsection F1G of section 112 and the company shall send a statement in the prescribed form of the details of s!ch transfer to the a!thority or committee which administers the said F!nd and that a!thority or committee shall iss!e a receipt to the company as e-idence of s!ch transfer. F5G %f a company fails to comply with any of the re3!irements of this section, the company shall be p!nishable with fine which shall not be less than fi-e la2h r!pees b!t which may extend to twenty fi-e la2h r!pees and e-ery officer of the company who is in defa!lt shall be p!nishable with fine which shall not be less than one la2h r!pees b!t which may extend to fi-e la2h r!pees. I*213)or Ed,4()io* (*d Pro)14)io* ",*d. @@2. [email protected] T01 C1*)r(l Go21r*51*) 30(ll 13)(.li30 ( f,*d )o .1 4(ll1d )01 I*213)or Ed,4()io* (*d Pro)14)io* ",*d A01r1i*(f)1r i* )0i3 314)io* r1f1rr1d )o (3 )01 ",*dB. A2B T01r1 30(ll .1 4r1di)1d )o )01 ",*d C A(B )01 (5o,*) +i21* ./ )01 C1*)r(l Go21r*51*) ./ 6(/ of +r(*)3 (f)1r d,1 (--ro-ri()io* 5(d1 ./ P(rli(51*) ./ l(6 i* )0i3 .10(lf for .1i*+ ,)ili31d for )01 -,r-o313 of )01 ",*dD A.B do*()io*3 +i21* )o )01 ",*d ./ )01 C1*)r(l Go21r*51*) S)()1 Go21r*51*)3 4o5-(*i13 or (*/ o)01r i*3)i),)io* for )01 -,r-o313 of )01 ",*dD A4B )01 (5o,*) i* )01 U*-(id Di2id1*d A44o,*)3 of 4o5-(*i13 )r(*3f1rr1d )o )01 ",*d ,*d1r 3,.;314)io* AEB of 314)io* @@@D AdB )01 (5o,*) i* )01 +1*1r(l r121*,1 (44o,*) of )01 C1*)r(l Go21r*51*) 60i40 0(d .11* )r(*3f1rr1d )o )0() (44o,*) ,*d1r 3,.;314)io* A5B of 314)io* 205A of )01 Co5-(*i13 A4) @95> (3 i) 3)ood i551di()1l/ .1for1 )01 4o551*4151*) of )01 Co5-(*i13 AA51*d51*)B A4) @999 (*d r15(i*i*+ ,*-(id or ,*4l(i51d o* )01 4o551*4151*) of )0i3 A4)D A1B )01 (5o,*) l/i*+ i* )01 i*213)or Ed,4()io* (*d Pro)14)io* ",*d ,*d1r 314)io* 205C of )01 Co5-(*i13 A4) @95>D AfB )01 i*)1r13) or o)01r i*4o51 r141i21d o,) of i*213)51*)3 5(d1 fro5 )01 ",*dD A+B )01 (5o,*) r141i21d ,*d1r 3,.;314)io* AEB of 314)io* 33D (*d A0B 3,40 o)01r (5o,*) (3 5(/ .1 -r134ri.1d. A3B T01 ",*d 30(ll .1 ,)ili31d for )01 r1f,*d i* r13-14) of ,*4l(i51d di2id1*d3 )01 (--li4()io* 5o*i13 d,1 for r1f,*d (*d i*)1r13) )01r1o* (*d -ro5o)io* of i*213)or3= 1d,4()io* (6(r1*133 (*d -ro)14)io* i* (44ord(*41 6i)0 3,40 r,l13 (3 5(/ .1 -r134ri.1d. AEB T01 C1*)r(l Go21r*51*) 30(ll 4o*3)i),)1 ./ *o)ifi4()io* (* (,)0ori)/ 4o*3i3)i*+ of ( C0(ir-1r3o* 3,40 *,5.1r of 515.1r3 *o) 19411di*+ 3121* (3 )01 C1*)r(l Go21r*51*) 5(/ (--oi*) (*d (* Ad5i*i3)r()or 60o 30(ll .1 )01 C0i1f E914,)i21 Offi41r.

76

A5B T01 (,)0ori)/ 30(ll (d5i*i3)1r )01 ",*d (*d 5(i*)(i* 31-(r()1 (44o,*)3 (*d o)01r r1l12(*) r14ord3 i* r1l()io* )o )01 ",*d i* 3,40 for5 (3 5(/ .1 -r134ri.1d (f)1r 4o*3,l)()io* 6i)0 )01 Co5-)roll1r (*d A,di)or;G1*1r(l of I*di( A01r1i*(f)1r r1f1rr1d )o (3 )01 Co5-)roll1r (*d A,di)or;G1*1r(lB. A>B I) 30(ll .1 4o5-1)1*) for )01 (,)0ori)/ 4o*3)i),)1d ,*d1r 3,.;314)io* AEB )o 3-1*d 5o*1/ o,) of )01 ",*d for 4(rr/i*+ o,) )01 o.:14)3 for 60i40 )01 ",*d i3 13)(.li301d. A?B T01 (44o,*)3 of )01 ",*d 30(ll .1 (,di)1d ./ )01 Co5-)roll1r (*d A,di)or;G1*1r(l () 3,40 i*)1r2(l3 (3 5(/ .1 3-14ifi1d ./ 0i5 (*d 3,40 (44o,*)3 (3 41r)ifi1d ./ )01 Co5-)roll1r (*d A,di)or;G1*1r(l )o+1)01r 6i)0 )01 (,di) r1-or) )01r1o* 30(ll .1 for6(rd1d (**,(ll/ )o )01 C1*)r(l Go21r*51*) ./ )01 (,)0ori)/. A8B T01 (,)0ori)/ 30(ll -r1-(r1 i* 3,40 for5 (*d () 3,40 )i51 for 1(40 fi*(*4i(l /1(r (3 5(/ .1 -r134ri.1d i)3 (**,(l r1-or) +i2i*+ ( f,ll (44o,*) of i)3 (4)i2i)i13 d,ri*+ )01 fi*(*4i(l /1(r (*d for6(rd ( 4o-/ )01r1of )o )01 C1*)r(l Go21r*51*) (*d )01 C1*)r(l Go21r*51*) 30(ll 4(,31 )01 (**,(l r1-or) (*d )01 (,di) r1-or) +i21* ./ )01 Co5-)roll1r (*d A,di)or; G1*1r(l )o .1 l(id .1for1 1(40 Ho,31 of P(rli(51*). A9B A*/ -1r3o* 4l(i5i*+ )o .1 1*)i)l1d )o )01 (5o,*) r1f1rr1d i* 4l(,313 A4B (*d AdB of 3,.; 314)io* [email protected] 5(/ (--l/ )o )01 (,)0ori)/ for -(/51*) of )01 5o*1/ 4l(i51d. A5o,*) l/i*+ i* -r12io,3 ",*d )o .14o51 -(r) of ",*d ,*d1r )0i3 A4). 113. 9he amo!nt lyin( in the %n-estor 'd!cation and /rotection F!nd established !nder section 2*5+ of the +ompanies #ct, 1)5" shall stand credited to the %n-estor 'd!cation and /rotection F!nd established !nder s!b.section F1G of section 112. Ri+0) )o di2id1*d ri+0)3 30(r13 (*d .o*,3 30(r13 )o .1 01ld i* (.1/(*41 -1*di*+ r1+i3)r()io* of )r(*3f1r of 30(r13. @@E. >here any instr!ment of transfer of shares has been deli-ered to any company for re(istration and the transfer of s!ch shares has not been re(istered by the company, it shall, notwithstandin( anythin( contained in any other pro-ision of this #ct,E FaG transfer the di-idend in relation to s!ch shares to the :npaid Di-idend #cco!nt referred to in section 111 !nless the company is a!thorised by the re(istered holder of s!ch shares in writin( to pay s!ch di-idend to the transferee specified in s!ch instr!ment of transferH and FbG 2eep in abeyance in relation to s!ch shares, any offer of ri(hts shares !nder cla!se FaG of s!b.section F1G of section 5" and any iss!e of f!lly paid.!p bon!s shares in p!rs!ance of first pro-iso to s!b.section F5G of section 11*. P,*i3051*) for f(il,r1 )o di3)ri.,)1 di2id1*d3 6i)0i* )0ir)/ d(/3. @@5. >here a di-idend has been declared by a company b!t has not been paid or the warrant in respect thereof has not been posted within thirty days from the date of declaration to any shareholder entitled to the payment of the di-idend, e-ery director of the company shall, if he is 2nowin(ly a party to the defa!lt, be p!nishable with imprisonment which may extend to two years and with fine which shall not be less than one tho!sand r!pees for e-ery day d!rin( which s!ch defa!lt contin!es and the company shall be liable to pay simple interest at the rate of ei(hteen per cent per ann!m d!rin( the period for which s!ch defa!lt contin!esD

77

/ro-ided that no offence !nder this section shall be deemed to ha-e been committed in the followin( cases, namelyDE FaG where the di-idend co!ld not be paid by reason of the operation of any lawH FbG where a shareholder has (i-en directions to the company re(ardin( the payment of the di-idend and those directions cannot be complied withH FcG where there is a disp!te re(ardin( the ri(ht to recei-e the di-idendH FdG where the di-idend has been lawf!lly adj!sted by the company a(ainst any s!m d!e to it from the shareholderH or FeG where, for any other reason, the fail!re to pay the di-idend or to post the warrant within the period !nder this section was not d!e to any defa!lt on the part of the company. CHAPTER I% ACCOUNTS O" COMPANIES Boo<3 of (44o,*)3 1)4. )o .1 <1-) ./ 4o5-(*/. @@>. F1G '-ery company shall prepare and 2eep at its re(istered office boo2s of acco!nts and other rele-ant boo2s and papers which (i-e a tr!e and fair -iew of the state of the affairs of the company, incl!din( that of its branch office or offices, if any, and explain the transactions effected both at the re(istered office and its branches and s!ch boo2s shall be 2ept on accr!al basis and accordin( to the do!ble entry system of acco!ntin(D /ro-ided that all or any of the boo2s of acco!nts aforesaid and other rele-ant papers may be 2ept at s!ch other place in %ndia as the 0oard of Directors may decide and where s!ch a decision is ta2en, the company shall, within se-en days thereof, file with the ,e(istrar a notice in writin( (i-in( the f!ll address of that other placeD /ro-ided f!rther that the company may 2eep s!ch boo2s of acco!nts or other rele-ant papers in electronic mode in s!ch manner as may be prescribed. F2G >here a company has a branch office within %ndia or o!tside, it shall be deemed to ha-e complied with the pro-isions of s!b.section F1G, if proper boo2s of acco!nts relatin( to the transactions effected at the branch office are 2ept at that office and proper s!mmarised ret!rns periodically are sent by the branch office to the company at its re(istered office or the other place referred to in s!b.section F1G. F3G 9he boo2s of acco!nts and other boo2s and papers maintained by the company within %ndia shall be open for inspection at the re(istered office of the company or at s!ch other place in %ndia by any director d!rin( b!siness ho!rs, and in the case of financial information, if any, maintained o!tside the co!ntry, copies of s!ch financial information shall be maintained and prod!ced for inspection by any director s!bject to s!ch conditions as may be prescribedD /ro-ided that the inspection in respect of any s!bsidiary of the company shall be done only by any person a!thorised in this behalf by a resol!tion of the 0oard of Directors. F4G >here an inspection is made !nder s!b.section F3G, the officers and other employees of the company shall (i-e to the person ma2in( s!ch inspection all assistance in connection with the inspection which the company may reasonably be expected to (i-e.

78

F5G 9he boo2s of acco!nts of e-ery company relatin( to a period of not less than ei(ht financial years immediately precedin( a financial year, or where the company had been in existence for a period less than ei(ht years, in respect of all the precedin( years to(ether with the -o!chers rele-ant to any entry in s!ch boo2s of acco!nts shall be 2ept in (ood orderD /ro-ided that where an in-esti(ation has been ordered in respect of the company !nder section 1&3 or section 1&4, the +entral 4o-ernment may direct that the boo2s of acco!nts may be 2ept for s!ch lon(er period as it may deem fit. F"G >here any company contra-enes the pro-isions of this section, the mana(in( director, the whole.time director in char(e of finance, the +hief Financial 1fficer or any other person char(ed by the 0oard with the d!ty of complyin( with the re3!irements of this section shall be p!nishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty tho!sand r!pees b!t which may extend to fi-e la2h r!pees, or with both. "i*(*4i(l 3)()151*). 11$. F1G 9he financial statement shall (i-e a tr!e and fair -iew of the state of affairs of the company or companies as at the end of the financial year, comply with the acco!ntin( standards notified !nder section 11) and shall be in s!ch form as may be prescribed. F2G #t e-ery ann!al (eneral meetin( of a company held in p!rs!ance of section &5, the 0oard of Directors of the company shall lay before s!ch meetin( a financial statement for the financial year. F3G >here a company has one or more s!bsidiaries, it shall prepare a consolidated financial statement of all the s!bsidiaries in the same form and manner as that of its own which shall also be laid before the ann!al (eneral meetin( of the company alon( with the layin( of its financial statement !nder s!b.section F2G. F4G >here the financial statements of a company do not comply with the acco!ntin( standards referred to in s!b.section F1G, the company shall disclose in its financial statements, the de-iation from the acco!ntin( standards, the reasons for s!ch de-iation and the financial effects, if any, arisin( o!t of s!ch de-iation. F5G 9he +entral 4o-ernment may, on its own or on an application by a class or classes of companies, by notification, exempt any class or classes of companies from complyin( with any of the re3!irements of this section or the r!les made there!nder, if it is considered necessary to (rant s!ch exemption in the p!blic interest and any s!ch exemption may be (ranted either !nconditionally or s!bject to s!ch conditions as may be specified in the notification. F"G >here any company contra-enes the pro-isions of this section, the mana(in( director, the whole.time director in char(e of finance, the +hief Financial 1fficer or any other person char(ed by the 0oard with the d!ty of complyin( with the re3!irements of this section and in the absence of any of the officers mentioned abo-e, all the directors shall be p!nishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty tho!sand r!pees b!t which may extend to fi-e la2h r!pees, or with both. Explanation.EFor the p!rposes of this section, except where the context otherwise re3!ires, any reference to the financial statement shall incl!de any notes or doc!ments annexed or attached thereto, (i-in( information re3!ired to be (i-en by this #ct and allowed by this #ct to be (i-en in the form of s!ch notes or doc!ments. Co*3)i),)io* of N()io*(l Ad2i3or/ Co55i))11 o* A44o,*)i*+ (*d A,di)i*+ S)(*d(rd3.

79

@@8. [email protected] C1*)r(l Go21r*51*) 5(/ ./ *o)ifi4()io* 4o*3)i),)1 (* (d2i3or/ 4o55i))11 )o .1 4(ll1d )01 N()io*(l Ad2i3or/ Co55i))11 o* A44o,*)i*+ (*d A,di)i*+ S)(*d(rd3 A01r1i*(f)1r r1f1rr1d )o (3 )01 Ad2i3or/ Co55i))11B )o (d2i31 )01 C1*)r(l Go21r*51*) o* )01 for5,l()io* (*d l(/i*+ do6* of (44o,*)i*+ (*d (,di)i*+ -oli4i13 (*d 3)(*d(rd3 for (do-)io* ./ 4o5-(*i13 or 4l(33 of 4o5-(*i13 or )01ir (,di)or3 (3 )01 4(31 5(/ .1. A2B T01 Ad2i3or/ Co55i))11 30(ll 4o*3i3) of )01 follo6i*+ 515.1r3 *(51l/FG A(B ( C0(ir-1r3o* 60o 30(ll .1 ( -1r3o* of 15i*1*41 (*d 61ll 21r31d i* (44o,*)(*4/ fi*(*41 .,3i*133 (d5i*i3)r()io* .,3i*133 l(6 14o*o5i43 or 3i5il(r di34i-li*13 )o .1 *o5i*()1d ./ )01 C1*)r(l Go21r*51*)D A.B o*1 r1-r131*)()i21 of )01 C1*)r(l Go21r*51*) )o .1 *o5i*()1d ./ i)D A4B )01 C0(ir5(* of )01 C1*)r(l Bo(rd of Dir14) T(913 4o*3)i),)1d ,*d1r )01 C1*)r(l Bo(rd3 of R121*,1 A4) @9>3 or 0i3 *o5i*11D AdB o*1 r1-r131*)()i21 of )01 R131r21 B(*< of I*di( )o .1 *o5i*()1d ./ i)D A1B o*1 r1-r131*)()i21 of )01 S14,ri)i13 (*d E940(*+1 Bo(rd )o .1 *o5i*()1d ./ i)D AfB o*1 r1-r131*)()i21 of )01 Co5-)roll1r (*d A,di)or;G1*1r(l of I*di( )o .1 *o5i*()1d ./ 0i5D A+B o*1 515.1r 1(40 )o .1 *o5i*()1d ./ )01 I*3)i),)1 of C0(r)1r1d A44o,*)(*)3 of I*di( 4o*3)i),)1d ,*d1r )01 C0(r)1r1dA44o,*)(*)3 A4) @9E9 )01 I*3)i),)1 of Co3) (*d 'or<3 A44o,*)(*)3 of I*di( 4o*3)i),)1d ,*d1r )01 Co3) (*d 'or<3 A44o,*)(*)3 A4) @959 (*d )01 I*3)i),)1 of Co5-(*/ S14r1)(ri13 of I*di( 4o*3)i),)1d ,*d1r )01 Co5-(*/ S14r1)(ri13 A4) @980D A0B ( -1r3o* 60o i3 or 0(3 .11* ( -rof133or i* (44o,*)(*4/ fi*(*41 or .,3i*133 5(*(+151*) i* (*/ U*i21r3i)/ or d1151d U*i21r3i)/ )o .1 *o5i*()1d ./ )01 C1*)r(l Go21r*51*)D (*d AiB )6o r1-r131*)()i213 of )01 C0(5.1r3 of Co551r41 (*d I*d,3)r/ )o .1 *o5i*()1d ./ )01 C1*)r(l Go21r*51*). A3B T01 515.1r3 of )01 Ad2i3or/ Co55i))11 *o5i*()1d ./ )01 C1*)r(l Go21r*51*) 30(ll 0old offi41 for 3,40 )1r5 (3 5(/ .1 d1)1r5i*1d ./ i) () )01 )i51 of )01ir (--oi*)51*) (*d (*/ 2(4(*4/ i* )01 515.1r30i- of )01 Co55i))11 30(ll .1 fill1d ./ )01 C1*)r(l Go21r*51*) i* )01 3(51 5(**1r (3 )0() for )01 515.1r i* 60o31 2(4(*4/ i) i3 -ro-o31d )o .1 fill1d. AEB T01 515.1r3 of )01 Ad2i3or/ Co55i))11 30(ll .1 1*)i)l1d )o 3,40 f113 )r(21li*+ 4o*21/(*41 (*d o)01r (llo6(*413 (3 5(/ .1 -r134ri.1d. A5B T01 Ad2i3or/ Co55i))11 30(ll (f)1r 4o*3,l)i*+ )01 I*3)i),)1 of C0(r)1r1d A44o,*)(*)3 of I*di( 3,.5i) i)3 r14o551*d()io*3 )o )01 C1*)r(l Go21r*51*) o* 5())1r3 r1l()i*+ )o (44o,*)i*+ (*d (,di)i*+ -oli4i13 (*d 3)(*d(rd3 for (do-)io* ./ 4o5-(*i13 or 4l(33 of 4o5-(*i13 or )01ir (,di)or3 (3 )01 4(31 5(/ .1. C1*)r(l Go21r*51*) )o *o)if/ (44o,*)i*+ 3)(*d(rd3. 11). 9he +entral 4o-ernment may, after cons!ltation with the #d-isory +ommittee, by notification, lay down acco!ntin( standards for adoption by companies or class of companies.

80

"i*(*4i(l S)()151*) Bo(rd=3 r1-or) 1)4. 12*. F1G 9he financial statement, incl!din( consolidated financial statement, if any, shall be appro-ed by the 0oard of Directors before they are si(ned on behalf of the 0oard at least by the +hairman where he is a!thorised by the 0oard or by two directors o!t of which one shall be ana(in( Director or +hief 'xec!ti-e 1fficer, or, in the case of a 1ne /erson +ompany, only by one director, for s!bmission to the a!ditor for his report thereonD /ro-ided that s!ch financial statements shall be a!thenticated in s!ch manner as may be prescribed. F2G 9he a!ditors8 report shall be attached to e-ery financial statement. F3G 9here shall be annexed to e-ery financial statement laid before a company in (eneral meetin(, a report by its 0oard of Directors, which shall incl!deE FaG the extract of the ann!al ret!rn as pro-ided !nder s!b.section F2G of section &2, FbG n!mber of meetin(s of the 0oard, FcG Directors8 ,esponsibility Statement, FdG declaration by independent directors where they are re3!ired to be appointed !nder s!b.section F3G of section 132, FeG ,eport of the committee on directors8 rem!neration, FfG explanations or comments by the 0oard on e-ery 3!alification, reser-ation or ad-erse remar2 made by the a!ditor in his report, F(G partic!lars of loans, (!arantees or in-estments !nder s!b.section F2G of section 1"4, and FhG partic!lars of contracts or arran(ements !nder s!b.section F1G of section 1"". F4G 9he Directors8 ,esponsibility Statement referred to in s!b.section F3G shall state that . FaG in the preparation of the ann!al acco!nts, the applicable acco!ntin( standards had been followed alon( with proper explanation relatin( to material depart!resH FbG the directors had selected s!ch acco!ntin( policies and applied them consistently and made j!d(ments and estimates that are reasonable and pr!dent so as to (i-e a tr!e and fair -iew of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that periodH FcG the directors had ta2en proper and s!fficient care for the maintenance of ade3!ate acco!ntin( records in accordance with the pro-isions of this #ct for safe(!ardin( the assets of the company and for pre-entin( and detectin( fra!d and other irre(!laritiesH FdG the directors had prepared the ann!al acco!nts on a (oin( concern basisH and FeG the directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that s!ch internal financial controls ha-e been complied with.

81

F5G 9he 0oard8s report and any annex!res thereto !nder s!b.section F3G shall be si(ned by its +hairman if he is a!thorised by the 0oard and where he is not so a!thorised, shall be si(ned by at least two directors, one of whom shall be a mana(in( director, or by the director where there is one director. F"G # si(ned copy of e-ery financial statement, incl!din( consolidated financial statement, if any, shall be iss!ed, circ!lated or p!blished alon( with a copy each of J FaG any notes or doc!ments which are re3!ired to be attached to the financial statement in p!rs!ance of section 11$, FbG the a!ditors report, and FcG the 0oard8s report referred to in s!b.section F3G. F$G >here a company fails to comply with the pro-isions of this section, it shall be p!nishable with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to twenty.fi-e la2h r!pees and e-ery officer who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to three years or with fine which shall not be less than ten tho!sand r!pees b!t which may extend to fi-e la2h r!pees, or with both. Ri+0) of 515.1r )o 4o-i13 of (,di)1d .(l(*41 3011). @[email protected] F1G # copy of the financial statement, a!ditor8s report and e-ery other doc!ment re3!ired by law to be annexed or attached to the financial statement, which are to be laid before a company in its (eneral meetin(, shall be sent to e-ery member of the company, to e-ery tr!stee for the debent!re holder of any debent!res iss!ed by the company, and to all the persons other than s!ch member or tr!stee, bein( the person so entitled, twenty.one days before the date of the meetin(D /ro-ided that the +entral 4o-ernment may prescribe the manner of circ!lation of financial statements of companies ha-in( s!ch net worth and t!rno-er as may be prescribed. F2G # company shall allow e-ery member or tr!stee of the holder of any debent!res iss!ed by the company to inspect the doc!ments stated !nder s!b.section F1G at its re(istered office d!rin( b!siness ho!rs. F3G %f any defa!lt is made in complyin( with the pro-isions of this section, the company shall be liable to a penalty of twenty.fi-e tho!sand r!pees and e-ery officer of the company who is in defa!lt shall be liable to a penalty of fi-e tho!sand r!pees. Co-/ of fi*(*4i(l 3)()151*) )o .1 fil1d 6i)0 R1+i3)r(r. @22. F1G # copy of the financial statement alon( with all the doc!ments which are re3!ired to be annexed or attached to s!ch financial statement !nder this #ct, d!ly adopted at the ann!al (eneral meetin( of the company, shall be filed with the ,e(istrar within thirty days of the date of ann!al (eneral meetin( in s!ch manner, with s!ch fee or additional fee as may be prescribed within the time specified !nder section 3"4D /ro-ided that where the financial statement !nder s!b.section F1G is not adopted at ann!al (eneral meetin( or adjo!rned ann!al (eneral meetin(, s!ch !nadopted financial statement alon( with the re3!ired doc!ments !nder s!b.section F1G shall be filed with the ,e(istrar within thirty days of the date of ann!al (eneral meetin( and the ,e(istrar shall ta2e them in his records as pro-isional till the financial statement is filed with him after their adoption in the adjo!rned ann!al (eneral meetin( for that p!rposeD

82

/ro-ided f!rther that financial statement adopted in the adjo!rned ann!al (eneral meetin( shall be filed with the ,e(istrar within thirty days of the date of s!ch adjo!rned ann!al (eneral meetin( with s!ch fee or s!ch additional fee as may be prescribed within the time specified !nder section 3"4. F2G >here the ann!al (eneral meetin( of a company for any year has not been held, the financial statement alon( with the doc!ments re3!ired to be annexed or attached !nder s!b.section F1G, d!ly si(ned alon( with the statement of facts and reasons for not holdin( the ann!al (eneral meetin( shall be filed with the ,e(istrar within thirty days of the last date before which the ann!al (eneral meetin( sho!ld ha-e been held and in s!ch manner, with s!ch fee or additional fee as may be prescribed within the time specified, !nder section 3"4. F3G %f a company fails to file the copy of the financial statement !nder s!b.section F1G or s!b. section F2G, as the case may be, before the expiry of the period specified in section 3"4, the company shall be p!nishable with fine which shall not be less than one la2h r!pees b!t which may extend to ten la2h r!pees, and the mana(in( director or the mana(in( director and the +hief Financial 1fficer, if any, and, in the absence of the mana(in( director and the +hief Financial 1fficer, any other director who is char(ed by the 0oard with the responsibility of complyin( with the pro-isions of this section, and, in the absence of any s!ch director, all the directors of the company, shall be p!nishable with imprisonment for a term which may extend to six months or with fine which shall not be less than one la2h r!pees b!t which may extend to fi-e la2h r!pees, or with both. CHAPTER % AUDIT AND AUDITORS A--oi*)51*) of (,di)or3. @23. F1G S!bject to the pro-isions of this +hapter, e-ery company shall, at each ann!al (eneral meetin(, appoint an indi-id!al or a firm as an a!ditor who shall hold office from the concl!sion of that meetin( till the concl!sion of the next ann!al (eneral meetin(D /ro-ided that before s!ch appointment is made, the written consent of the a!ditor to s!ch appointment, and a certificate from him or it that the appointment, if made, will be in accordance with the conditions as may be prescribed, shall be obtained from the a!ditorD /ro-ided f!rther that the company shall inform the a!ditor concerned of his appointment, and also file a notice of s!ch appointment with the ,e(istrar within fifteen days of the meetin( in which the a!ditor is appointed. Explanation..EFor the p!rposes of this +hapter, AappointmentB incl!des reappointment. F2G 6otwithstandin( anythin( contained in s!b.section F1G, in the case of a 4o-ernment company or any other company owned and controlled, directly or indirectly, by the +entral 4o-ernment, or by any State 4o-ernment or 4o-ernments, or partly by the +entral 4o-ernment and partly by one or more State 4o-ernments, the +omptroller and #!ditor.4eneral of %ndia shall, in respect of a financial year, appoint an a!ditor d!ly 3!alified to be appointed as an a!ditor of companies !nder this #ct, within a period of one h!ndred and ei(hty days from the commencement of the financial year, who shall hold office till the adoption of acco!nts of that financial year. F3G 6otwithstandin( anythin( contained in s!b.section F1G, the first a!ditor of a company, other than a 4o-ernment company, shall be appointed by the 0oard of Directors within thirty days from the date of re(istration of the company and in the case of fail!re of the 0oard to appoint s!ch a!ditor, it shall inform the members of the company, who shall at an extraordinary (eneral meetin(

83

appoint s!ch a!ditor. 9he said a!ditor shall hold office till the concl!sion of the first ann!al (eneral meetin(. F4G 6otwithstandin( anythin( contained in s!b.section F1G or s!b.section F2G, in the case of a 4o-ernment +ompany, the first a!ditor shall be appointed by the +omptroller and #!ditor.4eneral of %ndia within thirty days from the date of re(istration of the company and in case the +omptroller and #!ditor.4eneral of %ndia does not appoint s!ch a!ditor within the said period, the 0oard of Directors of the company shall appoint s!ch a!ditor within next thirty days. %n the case of fail!re of the 0oard to appoint s!ch a!ditor within next thirty days, it shall inform the +entral 4o-ernment or the State 4o-ernment concerned and the +entral 4o-ernment or the State 4o-ernment concerned, as the case may be, shall appoint s!ch a!ditor, who shall hold office till the appointment of an a!ditor !nder s!b.section F2G. F5G #ny cas!al -acancy in the office of an a!ditor shall,E FiG in the case of a company other than a company whose acco!nts are s!bject to a!dit by an a!ditor appointed by the +omptroller and #!ditor.4eneral of %ndia, be filled by the 0oard of Directors, b!t if s!ch cas!al -acancy is as a res!lt of the resi(nation of an a!ditor, s!ch appointment shall also be appro-ed by the company at a (eneral meetin( con-ened within three months of the appro-al of the 0oardH FiiG in case of a company whose acco!nts are s!bject to a!dit by an a!ditor appointed by the +omptroller and #!ditor.4eneral of %ndia, be filled within thirty days, failin( which by the 0oard. F"G S!bject to the pro-isions of s!b.section F1G and the r!les made there!nder, a retirin( a!ditor may be re.appointed at an ann!al (eneral meetin(, ifE FaG he is not dis3!alified for re.appointmentH FbG he has not (i-en the company a notice in writin( of his !nwillin(ness to be re. appointedH and FcG a special resol!tion has not been passed at that meetin( appointin( some other a!ditor or pro-idin( expressly that he shall not be re.appointed. F$G >here at any ann!al (eneral meetin(, no a!ditor is appointed or re.appointed, the existin( a!ditor shall contin!e to be the a!ditor of the company. F&G >here the company constit!tes an #!dit +ommittee as re3!ired !nder section 15&, all appointments, incl!din( the fillin( of a cas!al -acancy of an a!ditor !nder this section shall be made after ta2in( into acco!nt the recommendations of s!ch committee. F)G 9he a!ditor appointed !nder this section may be remo-ed from his office before the expiry of his term only by a special resol!tion of the companyD /ro-ided that before ta2in( any action !nder this s!b.section, the a!ditor concerned shall be (i-en a reasonable opport!nity of bein( heard. F1*G >itho!t prej!dice to any action !nder the pro-isions of this #ct or any other law for the time bein( in force, the 9rib!nal, if it is satisfied that the a!ditor of a company has acted in a fra!d!lent manner or abetted or coll!ded in any fra!d by, or in relation to, the company or its directors or officers, it may, by order, direct the company to chan(e its a!ditors. Eli+i.ili)/ 7,(lifi4()io*3 (*d di37,(lifi4()io*3 of (,di)or3.

84

@2E. F1G # person shall be eli(ible for appointment as an a!ditor of a company only if he is a +hartered #cco!ntant in practice. F2G >here a firm is appointed as an a!ditor of a company, only the partners who are +hartered #cco!ntants in practice shall be a!thorised by the firm to act and si(n on behalf of the firm. F3G 6one of the followin( persons shall be eli(ible for appointment as an a!ditor of a company, namelyDE FaG a body corporateH FbG an officer or employee of the companyH FcG a person who is a partner, or who is in the employment, of an officer or employee of the companyH FdG a person who, or his relati-e or partnerE FiG is holdin( any sec!rity of the company or its s!bsidiary, or of its holdin( or associate company or a s!bsidiary of s!ch holdin( company, of -al!e in terms of s!ch percenta(e as may be prescribedH FiiG is indebted to the company, or its s!bsidiary, or its holdin( or associate company or a s!bsidiary of s!ch holdin( companyH or FiiiG has (i-en a (!arantee or pro-ided any sec!rity in connection with the indebtedness of any third person to the company, or its s!bsidiary, or its holdin( or associate company or a s!bsidiary of s!ch holdin( company, for s!ch amo!nt as may be prescribedH FeG a person or a firm who has b!siness relationship with the company, or its s!bsidiary, or its holdin( or associate company or s!bsidiary of s!ch holdin( company or associate company of s!ch nat!re as may be prescribedH FfG a person whose relati-e is in the employment of the company as a director or 2ey mana(erial personnelH F(G a person who is in employment elsewhere or a person or firm who holds appointment as an a!ditor in companies exceedin( s!ch n!mber as may be prescribed on the date of his appointment. F4G >here a person appointed as an a!ditor of a company inc!rs any of the dis3!alifications mentioned in s!b.section F3G after his appointment, he shall -acate his office as s!ch a!ditor and s!ch -acation shall be deemed to be a cas!al -acancy in the office of the a!ditor. R15,*1r()io* of (,di)or3. 125. F1G 9he rem!neration of the a!ditor of a company shall be fixed in its (eneral meetin( or in s!ch manner as may be determined therein. F2G 9he Arem!nerationB !nder s!b.section F1G in addition to the fee payable to an a!ditor, incl!de the expenses, if any, inc!rred by the a!ditor in connection with the a!dit of the company and anythin( (i-en to him otherwise than in cash, b!t does not incl!de any rem!neration paid to him for any other ser-ice rendered by him at the re3!est of the company. Po61r3 (*d d,)i13 of (,di)or3 (*d A,di)i*+ S)(*d(rd3.

85

12". F1G '-ery a!ditor of a company shall ha-e a ri(ht of access at all times to the boo2s of acco!nt and -o!chers of the company, whether 2ept at the re(istered office of the company or at any other place in %ndia, and shall be entitled to re3!ire from the officers of the company s!ch information and explanation as he may consider necessary for the performance of his d!ties as a!ditor and shall in3!ire into s!ch matters as may be prescribedD /ro-ided that the a!ditor of a company which is a holdin( company shall also ha-e the ri(ht of access to the records of all its s!bsidiaries in so far as it relates to the consolidation of its financial statement with that of its s!bsidiaries. F2G 9he a!ditor shall ma2e a report to the members of the company on the acco!nts examined by him and on e-ery financial statement or other doc!ment which are re3!ired by or !nder this #ct to be laid before the company in (eneral meetin( and the report shall after ta2in( into acco!nt the pro-isions of this #ct, the acco!ntin( and a!ditin( standards and matters which are re3!ired to be incl!ded in the a!dit report !nder the pro-isions of this #ct or any r!les made there!nder or !nder any order made !nder s!b.section F11G and to the best of his information and 2nowled(e, the said acco!nts, financial statement or other doc!ment (i-e a tr!e and fair -iew of the state of the company8s affairs as at the end of its financial year and s!ch other matters as may be prescribed. F3G 9he a!ditor8s report shall also stateE FaG whether he has obtained all the information and explanations which to the best of his 2nowled(e and belief were necessary for the p!rpose of his a!ditH FbG whether, in his opinion, proper boo2s of acco!nt as re3!ired by law ha-e been 2ept by the company so far as appears from his examination of those boo2s and proper ret!rns ade3!ate for the p!rposes of his a!dit ha-e been recei-ed from branches not -isited by himH FcG whether the report on the acco!nts of any branch office of the company a!dited !nder s!b.section F&G by a person other than the company a!ditor has been sent to him !nder the pro-iso to that s!b.section and the manner in which he has dealt with it in preparin( his reportH FdG whether the company8s balance sheet and profit and loss acco!nt dealt with in the report are in a(reement with the boo2s of acco!nt and ret!rnsH FeG whether, in his opinion, the financial statements comply with the acco!ntin( standards and the a!ditin( standardsH FfG the obser-ations or comments of the a!ditors which ha-e any ad-erse effect on the f!nctionin( of the companyH F(G whether any director is dis3!alified from bein( appointed as a director !nder s!b. section F2G of section 145H FhG any 3!alification, reser-ation or ad-erse remar2 relatin( to the maintenance of acco!nts and other matters connected therewithH FiG in case of listed companies, whether the company has complied with the internal financial controls and directions iss!ed by the 0oardH and FjG s!ch other matters as may be prescribed.

86

F4G >here any of the matters re3!ired to be incl!ded in the a!dit report !nder this section is answered in the ne(ati-e or with a 3!alification, the report shall state the reasons therefor. F5G %n the case of a 4o-ernment company, the a!ditor appointed by the +omptroller and #!ditor. 4eneral of %ndia !nder s!b.section F2G of section 123 shall s!bmit a copy of his a!dit report to the +omptroller and #!ditor.4eneral of %ndia which shall, amon( other thin(s, incl!de the directions, if any, iss!ed by the +omptroller and #!ditor.4eneral of %ndia in respect of the acco!ntin( standards, the -ariance, if any, from the acco!ntin( standards notified by the 4o-ernment, the action ta2en on s!ch directions and the impact thereof on the company8s acco!nts. F"G 9he +omptroller and #!ditor.4eneral of %ndia shall within sixty days from the date of receipt of the a!dit report !nder s!b.section F5G ha-e a ri(ht toE FaG comment !pon or s!pplement s!ch a!dit report, and FbG cond!ct any s!pplementary a!dit of the company8s acco!nts by himself or by s!ch person or persons as he may a!thorise in this behalf and s!ch person or persons shall ha-e the same ri(hts and obli(ations as the a!ditor who has s!bmitted the reportD /ro-ided that any comments (i-en by the +omptroller and #!ditor.4eneral on the report of the s!pplementary a!dit cond!cted by him shall be placed before the ann!al (eneral meetin( of the company at the same time and in the same manner as the a!dit report. F$G >itho!t prej!dice to the pro-isions of this +hapter, the +omptroller and #!ditor.4eneral of %ndia may, in case of any company co-ered !nder s!b.section F2G of section 123, if he so deems necessary, by an order, ca!se test a!dit to be cond!cted of the acco!nts of s!ch company. 9he pro-isions of section 1)# of the +omptroller and #!ditor.4eneral8s FD!ties, /owers and +onditions of Ser-iceG #ct, 1)$1, shall apply to the report of s!ch test a!dit. F&G >here a company has a branch office, the acco!nts of that office shall be a!dited either by the a!ditor appointed for the company Fhereinafter in this section referred to as the company8s a!ditorG !nder this #ct or by any other person 3!alified for appointment as an a!ditor of the company !nder this #ct and appointed as s!ch !nder section 123, or where the branch office is sit!ated in a co!ntry o!tside %ndia, the acco!nts of the branch office shall be a!dited either by the company8s a!ditor or by an acco!ntant or by other person d!ly 3!alified to act as an a!ditor of the acco!nts of the branch office in accordance with the laws of that co!ntry and the d!ties and powers of the company8s a!ditor with reference to the a!dit of the branch and the branch a!ditor, if any, shall be s!ch as may be prescribedD /ro-ided that the branch a!ditor shall prepare a report on the acco!nts of the branch examined by him and send it to the a!ditor of the company who shall deal with it in his report in s!ch manner as he considers necessary. F)G '-ery a!ditor shall comply with the a!ditin( standards. F1*G 9he +entral 4o-ernment may, after cons!ltation with the 6ational #d-isory +ommittee on #cco!ntin( and #!ditin( Standards, by notification, lay down a!ditin( standardsD /ro-ided that !ntil any a!ditin( standards are notified, any standard or standards of a!ditin( specified by the %nstit!te of +hartered #cco!ntants of %ndia shall be deemed to be the a!ditin( standards. F11G 9he +entral 4o-ernment may, after cons!ltation with the #d-isory +ommittee, by (eneral or special order, direct, in respect of s!ch class or description of companies, as may be specified in

87

the order, that the a!ditor8s report shall also incl!de a statement on s!ch matters as may be specified therein. A,di)or *o) )o r1*d1r 41r)(i* 31r2i413. 12$. #n a!ditor appointed !nder this #ct shall pro-ide the company only s!ch other ser-ices as are appro-ed by the 0oard of Directors or the a!dit committee, as the case may be, b!t which shall not incl!de any of the followin( ser-ices, namelyDE FaG acco!ntin( and boo2 2eepin( ser-icesH FbG internal a!ditH FcG desi(n and implementation of any financial information systemH FdG act!arial ser-icesH FeG in-estment ad-isory ser-icesH FfG in-estment ban2in( ser-icesH F(G renderin( of o!tso!rced financial ser-icesH and FhG mana(ement ser-ices. A,di)or )o 3i+* (,di) r1-or)3 1)4. 12&. 1nly the person appointed as an a!ditor of the company shall si(n the a!ditor8s report or si(n or certify any other doc!ment of the company, and the a!ditor8s report shall be read before the company in (eneral meetin( and shall be open to inspection by any member of the company. A,di)or3 )o ())1*d +1*1r(l 511)i*+. 12). #ll notices of, and other comm!nications relatin( to, any (eneral meetin( shall be forwarded to the a!ditor of the company, and the a!ditor shall, !nless otherwise exempted by the company, attend either by himself or thro!(h his a!thorised representati-e, who shall also be 3!alified to be an a!ditor, any (eneral meetin( and shall ha-e ri(ht to be heard at s!ch meetin( on any part of the b!siness which concerns him as the a!ditor. P,*i3051*) for 4o*)r(21*)io*. 13*. F1G >here any of the pro-isions of sections 123 to 12) is contra-ened, the company shall be p!nishable with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to fi-e la2h r!pees and any officer who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to one year or with fine which shall not be less than ten tho!sand r!pees b!t which may extend to one la2h r!pees, or with both. F2G >here an a!ditor of a company contra-enes any of the pro-isions of section 12" or section 12$ or section 12& he shall be p!nishable with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to fi-e la2h r!peesD /ro-ided that where it is pro-ed that an a!ditor has 2nowin(ly or wilf!lly contra-ened any of the pro-isions of the aforesaid sections, he shall be p!nishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one la2h r!pees b!t which may extend to twenty.fi-e la2h r!pees, or with both.

88

F3G >here an a!ditor has been con-icted !nder s!b.section F2G, he shall be liable toE FiG ref!nd the rem!neration recei-ed by him to the companyH and FiiG pay for dama(es to the company or to any other persons for loss arisin( o!t of incorrect or misleadin( statements of partic!lars made in his a!dit report. C1*)r(l Go21r*51*) )o 3-14if/ (,di) of i)153 of 4o3) i* r13-14) of 41r)(i* 4o5-(*i13. 131. F1G 6otwithstandin( anythin( contained in this +hapter, the +entral 4o-ernment may, by order, in respect of s!ch class of companies en(a(ed in the prod!ction, processin(, man!fact!rin(, minin( or infrastr!ct!ral acti-ities, as may be specified therein, direct that partic!lars relatin( to the !tilisation of material or labo!r or to s!ch other items of cost as may be prescribed shall also be incl!ded in the boo2s of acco!nt 2ept by s!ch class of companiesD /ro-ided that the +entral 4o-ernment shall, before iss!in( s!ch order in respect of any class of companies re(!lated !nder a special #ct, cons!lt the re(!latory body constit!ted or established !nder s!ch special #ct. F2G %f the +entral 4o-ernment is of the opinion, in relation to any company co-ered by an order !nder s!b.section F1G, that it is necessary to do so, it may, by order, direct that the a!dit of cost records of s!ch company shall be cond!cted in the manner specified therein. F3G >here a company incl!des the partic!lars relatin( to items of cost in the boo2s of acco!nt in p!rs!ance of a resol!tion passed by the company, the a!dit of cost records as contained in the boo2s of acco!nt of the company shall be cond!cted by a +ost #cco!ntant in practice who shall be appointed by the 0oard on s!ch rem!neration as may be determined by the members in s!ch manner as may be prescribedD /ro-ided that no person appointed !nder section 123 as an a!ditor of the company shall be appointed for cond!ctin( the a!dit of cost records. F4G #n a!dit cond!cted !nder this section shall be in addition to the a!dit cond!cted !nder section 12". F5G 9he 3!alifications, dis3!alifications, ri(hts, d!ties and obli(ations applicable to a!ditors !nder this +hapter shall, so far as may be applicable, apply to a cost a!ditor appointed !nder this section and it shall be the d!ty of the company to (i-e all assistance and facilities to the cost a!ditor appointed !nder this section for a!ditin( the cost records of the companyD /ro-ided that the report on the a!dit of cost records shall be s!bmitted by the +ost #cco!ntant in practice to the 0oard of Directors of the company. F"G # company shall within thirty days from the date of receipt of a copy of the cost a!dit report prepared in p!rs!ance of a direction !nder s!b.section F2G f!rnish the +entral 4o-ernment with s!ch report alon( with f!ll information and explanation on e-ery reser-ation or 3!alification contained therein. F$G %f, after considerin( the cost a!dit report referred to !nder this section and the information and explanation f!rnished by the company !nder s!b.section F"G, the +entral 4o-ernment is of opinion that any f!rther information or explanation is necessary, it may call for s!ch f!rther information and explanation and the company shall f!rnish the same within s!ch time as may be specified by that 4o-ernment. F&G >here any defa!lt is made in complyin( with the pro-isions of this section,E

89

FaG the company and e-ery officer who is in defa!lt shall be p!nishable with fine which shall not be less than one la2h r!pees b!t which may extend to fi-e la2h r!peesH FbG the cost a!ditor who is in defa!lt shall be p!nishable with fine which shall not be less than one la2h r!pees b!t which may extend to fi-e la2h r!pees. CHAPTER %I APPOINTMENT AND &UALI"ICATIONS O" DIRECTORS Co5-(*/ )o 0(21 Bo(rd of Dir14)or3. 132. F1G '-ery company shall ha-e a 0oard of Directors consistin( of only indi-id!als as directors and shall ha-e E FaG a minim!m n!mber of three directors in the case of a p!blic company, two directors in the case of a pri-ate company, and one director in the case of a 1ne /erson +ompanyH and FbG a maxim!m of twel-e directors, excl!din( the directors nominated by the lendin( instit!tions. F2G 1ne of the directors shall at least be a person ordinarily resident in %ndia. Explanation.—For the p!rposes of this s!b.section, Aordinarily resident in %ndiaB means a person who stays in %ndia for a total period of not less than one h!ndred and ei(hty.two days in a calendar year. F3G '-ery listed p!blic company ha-in( s!ch amo!nt of paid.!p share capital as may be prescribed shall ha-e at the least one.third of the total n!mber of directors as independent directors. 9he +entral 4o-ernment may prescribe the minim!m n!mber of independent directors in case of other p!blic companies and s!bsidiaries of any p!blic company. Explanation.EFor the p!rposes of this s!b.section, any fraction contained in s!ch one. third n!mber shall be ro!nded off as one. F4G '-ery company existin( on or before the commencement of this #ct shall comply with the re3!irements of the pro-isions of s!b.section F3G within one year from the date of commencement of this #ct. F5G A%ndependent directorB, in relation to a company, means a non.exec!ti-e director of the company, other than a nominee director,E FaG who, in the opinion of the 0oard, is a person of inte(rity and possesses rele-ant expertise and experienceH FbG who, neither himself nor any of his relati-esE FiG has or had any pec!niary relationship or transaction with the company, its holdin(, s!bsidiary or associate company, or its promoters, or directors amo!ntin( to ten per cent. or more of its (ross t!rno-er or total income d!rin( the two immediately precedin( financial years or d!rin( the c!rrent financial yearH

90

FiiG holds or has held any senior mana(ement position, position of a 2ey mana(erial personnel or is or had been employee of the company in any of the three financial years immediately precedin( the financial year in which he is proposed to be appointedH FiiiG is or has been an employee or a partner, in any of the three financial years immediately precedin( the financial year in which he is proposed to be appointed, ofE F#G a firm of a!ditors or company secretaries in practice or cost a!ditors of the company or its holdin(, s!bsidiary or associate companyH or F0G any le(al or a cons!ltin( firm that has or had any transaction with the company, its holdin(, s!bsidiary or associate company amo!ntin( to ten per cent. or more of the (ross t!rno-er of s!ch firmH Fi-G holds to(ether with his relati-es two per cent. or more of the total -otin( power of the companyH or F-G is a +hief 'xec!ti-e or director, by whate-er name called, of any nonprofit or(anisation that recei-es twenty.fi-e per cent. or more of its income from the company, any of its promoters, directors or its holdin(, s!bsidiary or associate company or that holds two per cent. or more of the total -otin( power of the companyH or FcG who possesses s!ch other 3!alifications as may be prescribed. Explanation.—For the p!rposes of this section, Anominee directorB means a director nominated by any instit!tion in p!rs!ance of the pro-isions of any law for the time bein( in force, or of any a(reement, or appointed by any 4o-ernment, to represent its shareholdin(. F"G #n independent director shall not be entitled to any rem!neration, other than sittin( fee, reimb!rsement of expenses for participation in the 0oard and other meetin(s and profit.related commission and stoc2 options as may be appro-ed by the members. A--oi*)51*) of Dir14)or3. 133. F1G >here no pro-ision is made in the articles of a company for the appointment of the first directors, the s!bscribers to the memorand!m who are indi-id!als shall be deemed to be the first directors of the company !ntil the directors are d!ly appointed in accordance with the pro-isions of this section. F2G Sa-e as otherwise expressly pro-ided in this #ct, e-ery director shall be appointed by the company in (eneral meetin(. F3G 6o person shall be appointed as a director of a company !nless he has been allotted the Director %dentification 6!mber FD%6G !nder section 135D /ro-ided that a person may be appointed as a director, if an application for the allotment of a D%6 has been made to the +entral 4o-ernment !nder section 134 and the same is pendin( with the +entral 4o-ernment and he may hold the office of a director till s!ch time that person is allotted D%6. F4G '-ery person proposed to be appointed as a director by the company in (eneral meetin( or otherwise, shall f!rnish his D%6 and a declaration that he is not dis3!alified to become a director !nder this #ct.

91

F5G # person appointed as a director shall not act as a director !nless he (i-es his consent to hold the office as s!ch director and s!ch consent shall be filed with the ,e(istrar within s!ch time and in s!ch manner as may be prescribedD /ro-ided that in the case of appointment of an independent director, the 0oard shall also (i-e a report in the (eneral meetin( that in its opinion he f!lfils the conditions specified in this #ct for s!ch an appointment. F"G :nless the articles pro-ide for the retirement of all the directors at e-ery ann!al (eneral meetin(, not exceedin( one.third of the total n!mber of directors of a p!blic company shall be liable to retire, and o!t of the remainin(, one.third shall retire by rotation at e-ery ann!al (eneral meetin( in accordance with s!ch proced!re and principles as may be prescribed and s!ch retirin( directors shall be entitled to be re.appointed. F$G >here a company fails to re.appoint a retirin( director or to appoint any person as a director in place of the retirin( director at any (eneral meetin(, s!ch appointment shall be made at any adjo!rned meetin( within s!ch time and in accordance with s!ch proced!re as may be prescribed. Explanation.EFor the p!rposes of this +hapter, AappointmentB of a director incl!des his re. appointment. A--li4()io* for (llo)51*) of Dir14)or Id1*)ifi4()io* N,5.1r. 134. '-ery %ndi-id!al intendin( to be appointed as director of a company shall ma2e an application for allotment of Director %dentification 6!mber to the +entral 4o-ernment in s!ch form and manner and alon( with s!ch fee as may be prescribed. Allo)51*) of Dir14)or Id1*)ifi4()io* N,5.1r. 135. 9he +entral 4o-ernment shall, within one month from the receipt of the application !nder section 134, allot a Director %dentification 6!mber to an applicant in s!ch manner as may be prescribed. Pro0i.i)io* )o o.)(i* 5or1 )0(* o*1 Dir14)or Id1*)ifi4()io* N,5.1r. 13". 6o indi-id!al, who has already been allotted a Director %dentification 6!mber !nder section 135, shall apply for, obtain or possess another Director %dentification 6!mber. Dir14)or )o i*)i5()1 Dir14)or Id1*)ifi4()io* N,5.1r. 13$. '-ery existin( director shall, within one month of the receipt of Director %dentification 6!mber from the +entral 4o-ernment, intimate his Director %dentification 6!mber to the company or all companies wherein he is a director. Co5-(*/ )o i*for5 Dir14)or Id1*)ifi4()io* N,5.1r )o R1+i3)r(r. 13&. F1G '-ery company shall, within fifteen days of the receipt of intimation !nder section 13$, f!rnish the Director %dentification 6!mber FD%6G of all its directors to the ,e(istrar or any other officer or a!thority as may be specified by the +entral 4o-ernment with s!ch fee as may be prescribed or with s!ch additional fee as may be prescribed within the time specified !nder section 3"4 and e-ery s!ch intimation shall be f!rnished in s!ch form and manner as may be prescribed. F2G >here a company fails to f!rnish D%6 !nder s!b.section F1G, before the expiry of the period specified !nder section 3"4 with additional fee, the company shall be p!nishable with fine which

92

shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to one la2h r!pees and e-ery officer of the company who is in defa!lt shall be p!nishable with imprisonment for a term of six months or with fine which shall not be less than fi-e tho!sand r!pees b!t which may extend to twenty.fi-e tho!sand r!pees, or with both. O.li+()io* )o i*di4()1 Dir14)or Id1*)ifi4()io* N,5.1r. 13). '-ery person or company, while f!rnishin( any ret!rn, information or partic!lars as are re3!ired to be f!rnished !nder this #ct, shall mention the Director %dentification 6!mber in s!ch ret!rn, information or partic!lars in case s!ch ret!rn, information or partic!lars relate to the director or contain any reference of any director. P,*i3051*) for 4o*)r(21*)io*. 14*. %f any indi-id!al or director, contra-enes any of the pro-isions of sections 133, 13" and 13$, he shall be p!nishable with imprisonment for a term which may extend to six months or with fine which may extend to fi-e tho!sand r!pees and where the contra-ention is a contin!in( one, with a f!rther fine which may extend to fi-e h!ndred r!pees for e-ery day d!rin( which the contra-ention contin!es. Ri+0) of -1r3o*3 o)01r )0(* r1)iri*+ dir14)or3 )o 3)(*d for dir14)or30i-. 141. F1G # person who is not a retirin( director shall, s!bject to the pro-isions of this #ct, be eli(ible for appointment to the office of a director at any (eneral meetin(, if he, or some member intendin( to propose him as a director, has, not less than fo!rteen days before the meetin(, left at the office of the company, a notice in writin( !nder his hand si(nifyin( his candidat!re as a director or, as the case may be, the intention of s!ch member to propose him as a candidate for that office, alon( with the deposit of s!ch s!m of money as may be prescribed and the amo!nt so deposited shall be ref!nded to s!ch person or, as the case may be, to the member, if the person proposed (ets elected as a director or (ets more than twenty.fi-e per cent. of total -otes cast. F2G9he company shall inform its members of the candidat!re of a person for the office of director !nder s!b.section F1G in the manner as may be prescribed. A--oi*)51*) of (ddi)io*(l dir14)or (l)1r*()1 dir14)or (*d *o5i*11 dir14)or. 142. F1G 9he articles of a company may confer on its 0oard of Directors the power to appoint any person, other than a person who fails to (et appointed as a director in a (eneral meetin(, as an additional director at any time who shall hold office !p to the date of the next ann!al (eneral meetin( or the last date on which the ann!al (eneral meetin( sho!ld ha-e been held, whiche-er is earlier. F2G 9he 0oard of Directors may, if so a!thorised by its articles or by a resol!tion passed by the company in (eneral meetin(, appoint a person, not bein( a person holdin( any alternate directorship for any other director in the company, to act as an alternate director for a director d!rin( his absence for a period of not less than three months from %ndiaD /ro-ided that a person who is proposed to be appointed as an alternate director for an independent director sho!ld be 3!alified to be appointed as an independent director !nder the pro-isions of this #ctD /ro-ided f!rther that an alternate director shall not hold office for a period lon(er than that permissible to the director in whose place he has been appointed and shall -acate the office if and when the director in whose place he has been appointed ret!rns to %ndiaD

93

/ro-ided also that if the term of office of the ori(inal director is determined before he so ret!rns to %ndia, any pro-ision for the a!tomatic re.appointment of retirin( directors in defa!lt of another appointment shall apply to the ori(inal, and not to the alternate director. F3G S!bject to the articles, the 0oard may appoint any person as a director nominated by any instit!tion in p!rs!ance of the pro-isions of any law for the time bein( in force or of any a(reement or by the +entral 4o-ernment or the State 4o-ernment by -irt!e of its shareholdin( in a 4o-ernment company. F4G %n the case of a p!blic company or a pri-ate company which is a s!bsidiary of a p!blic company, if the office of any director appointed by the company in (eneral meetin( is -acated before his term of office expires in the normal co!rse, the res!ltin( cas!al -acancy may, in defa!lt of and s!bject to any re(!lations in the articles of the company, be filled by the 0oard of Directors at a meetin( of the 0oardD /ro-ided that any person so appointed shall hold office only !p to the date !p to which the director in whose place he is appointed wo!ld ha-e held office if it had not been -acated. A--oi*)51*) of dir14)or3 )o .1 2o)1d i*di2id,(ll/. 143. F1G #t a (eneral meetin( of a company, a motion for the appointment of two or more persons as directors of the company by a sin(le resol!tion shall not be mo-ed !nless a proposal to mo-e s!ch a motion has first been a(reed to at the meetin( witho!t any -ote bein( cast a(ainst it. F2G # resol!tion mo-ed in contra-ention of s!b.section F1G shall be -oid, whether or not any objection was ta2en when it was mo-ed. F3G # motion for appro-in( a person for appointment, or for nominatin( a person for appointment as a director, shall be treated a nomination for his appointment. O-)io* )o (do-) -ri*4i-l1 of -ro-or)io*(l r1-r131*)()io* for (--oi*)51*) of dir14)or3. 144. 6otwithstandin( anythin( contained in this #ct, the articles of a company may pro-ide for the appointment of not less than two.thirds of the total n!mber of the directors of a company in accordance with the principle of proportional representation, whether by the sin(le transferable -ote or by a system of c!m!lati-e -otin( or otherwise and s!ch appointments may be made once in e-ery three years and cas!al -acancies of s!ch directors shall be filled as pro-ided in s!b. section F4G of section 142. Di37,(lifi4()io*3 for (--oi*)51*) of dir14)or. 145. F1G # person shall not be eli(ible for appointment as a director of a company, if E FaG he has been fo!nd to be of !nso!nd mind by a co!rt of competent j!risdiction and the said findin( is in forceH FbG he is an !ndischar(ed insol-entH FcG he has applied to be adj!dicated as an insol-ent and his application is pendin(H FdG he has been con-icted by a +o!rt of any offence in-ol-in( moral t!rpit!de and sentenced in respect thereof to imprisonment for not less than six months, and a period of fi-e years has not elapsed from the date of expiry of the sentenceH

94

FeG an order dis3!alifyin( him for appointment as a director has been passed by a +o!rt or 9rib!nal and the order is in forceH FfG he has not paid any calls in respect of any shares of the company held by him, whether alone or jointly with others, and six months ha-e elapsed from the last day fixed for the payment of the callH F(G he has been con-icted of the offence dealin( with related party transactions at any time d!rin( the last precedin( fi-e yearsH or FhG he has not obtained Director %dentification 6!mberE F2G 6o person who is or has been a director of a company whichE FaG has not filed financial statements or ann!al ret!rns for any contin!o!s period of three financial yearsH or FbG has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debent!res on the d!e date or pay interest d!e thereon or pay any di-idend declared and s!ch fail!re to pay or redeem contin!es for one year or more, shall be eli(ible to be re. appointed as a director of that company or appointed in other p!blic company for a period of fi-e years from the date on which the said company fails to do soD /ro-ided that in the case of a sic2 company !nder re-i-al and rehabilitation p!rs!ant to +hapter @%@, nothin( contained in this section shall apply to a person proposed to be appointed as a director for any defa!lt specified in cla!se FbG and committed prior to his appointment. F3G # pri-ate company may by its articles pro-ide for any dis3!alifications for appointment as a director in addition to those specified in s!b.sections F1G and F2GD /ro-ided that the dis3!alifications referred to in cla!ses FdG, FeG and F(G of s!b.section F1G shall not ta2e effectE FiG FiiG for thirty days from the date of con-iction or order of dis3!alificationH where an appeal or petition is preferred within thirty days as aforesaid a(ainst the con-iction res!ltin( in sentence or order, !ntil expiry of se-en days from the date on which s!ch appeal or petition is disposed ofH or where any f!rther appeal or petition is preferred a(ainst order or sentence within se-en days, !ntil s!ch f!rther appeal or petition is disposed of.

FiiiG

N,5.1r of dir14)or30i-3. 14". F1G 6o person, after the commencement of this #ct, shall hold office as a director, incl!din( any alternate directorship, in more than fifteen p!blic limited companies at the same time. F2G >here a person accepts an appointment as a director in contra-ention of s!b.section F1G, he shall be p!nishable with fine which shall not be less than fi-e tho!sand r!pees b!t which may extend to twenty.fi-e tho!sand r!pees for e-ery day d!rin( which the contra-ention contin!es. D,)i13 of dir14)or3. 14$. F1G S!bject to the pro-isions of this #ct, a director of a company shall act in accordance with the company8s articles.

95

F2G # director of a company shall act in (ood faith in order to promote the objects of the company for the benefit of its members as a whole, and in the best interest of the company. F3G # director of a company shall exercise his d!ties with d!e and reasonable care, s2ill and dili(ence. F4G # director of a company shall not in-ol-e in a sit!ation in which he may ha-e a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company. F5G # director of a company shall not achie-e or attempt to achie-e any !nd!e (ain or ad-anta(e either to himself or to his relati-es, partners, or associates. F"G# director of a company shall not assi(n his office and any assi(nment so made shall be -oid. F$G#ny director who contra-enes the pro-isions of this section shall be p!nishable with fine which shall not be less than one la2h r!pees b!t which may extend to fi-e la2h r!peesD /ro-ided that if he is fo!nd (!ilty of ma2in( any !nd!e (ain either to himself or to his relati-es, partners or associates he shall also be liable to pay an amo!nt e3!al to that (ain to the company. $(4()io* of offi41 of dir14)or. 14&. F1G 9he office of a director shall become -acant in caseE FaG he inc!rs any of the dis3!alifications specified in section 145H FbG he absents himself from all the meetin(s of the 0oard of Directors held d!rin( a period of twel-e months with or witho!t see2in( lea-e of absence of the 0oardH FcG he acts in contra-ention of the pro-isions relatin( to enterin( into contracts or arran(ements in which he is directly or indirectly interestedH FdG he fails to disclose his interest in any contract or arran(ementH FeG he becomes dis3!alified by an order of a +o!rt or trib!nalH FfG he is remo-ed in p!rs!ance of the pro-isions of this #ctH F(G he, ha-in( been appointed a director by -irt!e of his holdin( any office or other employment in the holdin(, s!bsidiary or associate company, ceases to hold s!ch office or other employment in that company. F2G %f a person, who after 2nowin( that the office of director held by him has become -acant on acco!nt of any dis3!alification specified in s!b.section F1G, acts as a director, shall be p!nishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one la2h r!pees b!t which may extend to fi-e la2h r!pees, or with both. F3G >here all the directors of a company -acate their offices !nder any of the dis3!alifications specified in s!b.section F1G, the promoter or, in his absence, the +entral 4o-ernment shall appoint the re3!ired n!mber of directors who shall hold office till the directors are appointed by the company in the (eneral meetin(.

96

F4G # pri-ate company may, by its articles, pro-ide any other (ro!nd for the -acation of the office of a director in addition to those specified in s!b.section F1G. R13i+*()io* of dir14)or. 14). F1G # director may resi(n from his office by (i-in( a notice in writin( to the company and the 0oard shall on receipt of s!ch notice ta2e note of the same and intimate the ,e(istrar in s!ch manner and in s!ch form as may be prescribed and shall also place the fact of s!ch resi(nation in the s!bse3!ent (eneral meetin( held by the companyD /ro-ided that a director may also forward a copy of his resi(nation to the ,e(istrar in the manner as may be prescribed. F2G 9he resi(nation of a director shall ta2e effect from the date on which the notice is recei-ed by the company or the date, if any, specified by the director in the notice, whiche-er is later. F3G >here as a res!lt of any -acancy in the 0oard, the n!mber of directors is red!ced below the 3!or!m fixed for a meetin( of the 0oard, the contin!in( director or directorFsG shall be deemed to constit!te the 3!or!m. F4G>here all the directors of a company resi(n from their offices, or -acate their offices !nder section 14&, the promoter or, in his absence, the +entral 4o-ernment shall appoint the re3!ired n!mber of directors who shall hold office till the directors are appointed by the company in (eneral meetin(. R15o2(l of dir14)or3. 15*. F1G # company may, by ordinary resol!tion, remo-e a director, not bein( a director appointed by the 9rib!nal !nder section 213, before the expiry of period of his office after (i-in( him a reasonable opport!nity of bein( heard and followin( s!ch proced!re as may be prescribed. F2G Special notice shall be re3!ired of any resol!tion, to remo-e a director !nder this section, or to appoint somebody in place of a director so remo-ed, at the meetin( at which he is remo-ed. F3G 1n receipt of notice of a resol!tion to remo-e a director !nder this section, the company shall forthwith send a copy thereof to the director concerned, and the director, whether or not he is a member of the company, shall be entitled to be heard on the resol!tion at the meetin(. F4G # -acancy created by the remo-al of a director !nder this section may, if he had been appointed by the company in (eneral meetin( or by the 0oard, be filled by the appointment of another director in his place by the meetin( at which he is remo-ed, pro-ided special notice of the intended appointment has been (i-en !nder s!b.section F2G. F5G # director so appointed shall hold office !ntil the date !p to which his predecessor wo!ld ha-e held office if he had not been remo-ed. F"G %f the -acancy is not filled !nder s!b.section F4G, it may be filled as a cas!al -acancy in accordance with the pro-isions of this #ctD /ro-ided that the director who was remo-ed from office shall not be re.appointed as a director by the 0oard of Directors. F$G 6othin( in this section shall be ta2enE

97

FaG as depri-in( a person remo-ed !nder this section of any compensation or dama(es payable to him in respect of the termination of his appointment as director as per the terms of contract or terms of his appointment as director, or of any other appointment terminatin( with the termination as directorH or FbG as dero(atin( from any power to remo-e a director !nder other pro-isions of this #ct. R1+i3)1r of dir14)or3 (*d <1/ 5(*(+1ri(l -1r3o**1l (*d )01ir 30(r10oldi*+. 151. F1G '-ery company shall 2eep at its re(istered office a re(ister containin( s!ch partic!lars of its directors and 2ey mana(erial personnel as may be prescribed, which shall incl!de the details of sec!rities held by each of them in the company or its holdin(, s!bsidiary or associate companies. F2G # ret!rn containin( s!ch partic!lars and doc!ments as may be prescribed, of the directors and the 2ey mana(erial personnel shall be filed with the ,e(istrar within thirty days from the appointment of e-ery director and 2ey mana(erial personnel, as the case may be, and within thirty days of any chan(e ta2in( place. M15.1r3= ri+0) )o i*3-14). 152. F1G 9he re(isters 2ept !nder s!b.section F1G of section 151 shall be open for inspection d!rin( b!siness ho!rs and the members shall ha-e a ri(ht to ta2e extracts therefrom and copies thereof shall, on a re3!est by the members, be pro-ided to them free of cost within thirty days. F2G 9he re(isters 2ept !nder section 151 shall also be 2ept open for inspection at e-ery ann!al (eneral meetin( of the company and shall be made accessible to any person attendin( the meetin(. F3G %f any inspection as pro-ided in s!b.section F1G is ref!sed, or if any copy re3!ired !nder that s!b.section is not sent within thirty days from the date of receipt of s!ch re3!est, the ,e(istrar shall on an application made to him order immediate inspection and s!pply of copies re3!ired there!nder. P,*i3051*). 153. >here a company contra-enes any of the pro-isions of this +hapter and for which no specific p!nishment is pro-ided therein, the company and e-ery director or employee who is responsible for s!ch contra-ention shall be p!nishable with fine which shall not be less than one la2h r!pees b!t which may extend to two la2h r!pees. CHAPTER %II MEETINGS O" BOARD AND ITS PO'ERS M11)i*+3 of Bo(rd. 154. F1G '-ery company shall hold the first meetin( of the 0oard of Directors within thirty days of the date of its incorporation and thereafter hold a minim!m n!mber of fo!r meetin(s of its 0oard of Directors e-ery year in s!ch a manner that not more than 12* days shall inter-ene between two consec!ti-e meetin(s of the 0oardD /ro-ided that the +entral 4o-ernment may, by notification, direct that the pro-isions of this s!b.section shall not apply in relation to any class or description of companies or shall apply s!bject to s!ch exceptions, modifications or conditions as may be specified in the notification.

98

F2G9he participation of directors in a meetin( of the 0oard may be either in person or thro!(h -ideo conferencin( or s!ch other electronic means, as may be prescribed, which are capable of recordin( and reco(nisin( the participation of the directors and of recordin( and storin( the proceedin(s of s!ch meetin(sD /ro-ided that the +entral 4o-ernment may, by notification, specify s!ch matters which shall not be dealt with in a meetin( thro!(h -ideo conferencin( or other electronic means. F3G # meetin( of the 0oard shall be called by (i-in( not less than se-en days8 notice in writin( or by electronic means to e-ery director at his address re(istered with the companyD /ro-ided that a meetin( of the 0oard may be called at shorter notice to transact !r(ent b!siness s!bject to the condition that at least one independent director, if any, shall be present at the meetin(D /ro-ided f!rther that in case of absence of independent directors from s!ch a meetin( of the 0oard, decisions ta2en at s!ch a meetin( shall be circ!lated to all the directors and will be final only on ratification thereof by at least one independent director. F4G '-ery officer of the company whose d!ty is to (i-e notice !nder this section and who fails to do so shall be liable to a penalty of twenty.fi-e tho!sand r!pees. &,or,5 for 511)i*+3 of Bo(rd. 155. F1G 9he 3!or!m for a meetin( of the 0oard of Directors of a company shall be one.third of its total stren(th or two directors, whiche-er is hi(her, and the participation of the directors by -ideo conferencin( or by other electronic means shall also be co!nted for the p!rposes of 3!or!m !nder this s!b.section. F2G >here at any time, the n!mber of interested directors exceeds, or is e3!al to, two.thirds of the total stren(th of the 0oard of Directors, the n!mber of directors who are not interested directors and present at the meetin(, bein( not less than two, shall be the 3!or!m d!rin( s!ch time. Explanation.EFor the p!rposes of this s!b.section, Ainterested directorB means a director within the meanin( of s!b.section F2G of section 1"2. F3G >here a meetin( of the 0oard co!ld not be held for want of 3!or!m, then, !nless the articles otherwise pro-ide, the meetin( shall a!tomatically stand adjo!rned to the same day at the same time and place in the next wee2 or if that day is a p!blic holiday, till the next s!cceedin( day, which is not a p!blic holiday, at the same time and place. Explanation.EFor the p!rposes of this section,E FiG any fraction of a n!mber shall be ro!nded off as oneH FiiG Atotal stren(thB shall not incl!de directors whose places are -acant. P(33i*+ of r13ol,)io* ./ 4ir4,l()io*. 15". F1G 6o resol!tion shall be deemed to ha-e been d!ly passed by the 0oard or by a committee thereof by circ!lation, !nless the resol!tion has been circ!lated in draft, to(ether with the necessary papers, if any, to all the directors, or members of the committee, as the case may be, at their !s!al addresses in %ndia, and has been appro-ed by a majority of the directors or members, who are entitled to -ote on the resol!tion.

99

F2G # resol!tion !nder s!b.section F1G shall be noted at a s!bse3!ent meetin( of the 0oard or the committee thereof, as the case may be, and made part of the min!tes of s!ch meetin(. D1f14)3 i* (--oi*)51*) of dir14)or3 *o) )o i*2(lid()1 (4)io*3 )(<1*. 15$. 6o act done by a person as a director shall be deemed to be in-alid, notwithstandin( that it was s!bse3!ently noticed that his appointment was in-alid by reason of any defect or dis3!alification or had terminated by -irt!e of any pro-ision contained in this #ct or in the articlesD /ro-ided that nothin( in this section shall be deemed to (i-e -alidity to any act done by the director after his appointment has been noticed by the company to be in-alid or to ha-e terminated. Co55i))113 of Bo(rd. 15&. F1G 9he 0oard of Directors of e-ery listed company and s!ch other class or description of companies, as may be prescribed, shall constit!te an #!dit +ommittee and a ,em!neration +ommittee of the 0oard. F2G9he #!dit +ommittee shall consist of a minim!m of three directors with independent directors formin( a majority and at least one director ha-in( 2nowled(e of financial mana(ement, a!dit or acco!nts. F3G 9he +hairman of an #!dit +ommittee shall be an independent director. F4G '-ery #!dit +ommittee of a company existin( immediately before the commencement of this #ct shall, within one year of s!ch commencement, be reconstit!ted in accordance with s!b. sections F2G and F3G. F5G '-ery #!dit +ommittee shall act in accordance with the terms of reference specified in writin( by the 0oard which shall incl!de, amon( other thin(s, the recommendation for appointment of a!ditors of the company, examination of the financial statements and the a!ditors8 report thereon, transactions of the company with related parties, -al!ation of !nderta2in(s or assets of the company, where-er it is necessary, e-al!ation of internal financial controls and related matters. F"G9he #!dit +ommittee may call for the comments of the a!ditors abo!t internal control systems, the scope of a!dit, incl!din( the obser-ations of the a!ditors and re-iew financial statements before their s!bmission to the 0oard. F$G9he #!dit +ommittee shall ha-e a!thority to in-esti(ate into any matter in relation to the items specified in s!b.section F5G or referred to it by the 0oard and for this p!rpose shall ha-e power to obtain professional ad-ice from external so!rces and ha-e f!ll access to information contained in the records of the company. F&G 9he a!ditors of a company and the 2ey mana(erial personnel shall ha-e a ri(ht to attend the meetin(s of the #!dit +ommittee when it considers the a!ditor8s report b!t shall not ha-e the ri(ht to -ote. F)G 9he 0oard8s report !nder s!b.section F3G of section 12* shall disclose the composition of an #!dit +ommittee and where the 0oard had not accepted any recommendation of the #!dit +ommittee, the same shall be disclosed in s!ch report alon( with the reasons therefor. F1*G 9he ,em!neration +ommittee shall consist of non.exec!ti-e directors as may be appointed by the 0oard o!t of which at least one shall be an independent director.

100

F11G 9he ,em!neration +ommittee shall determine the company8s policies relatin( to the rem!neration of the directors, incl!din( the rem!neration and other per3!isites of the directors, 2ey mana(erial personnel and s!ch other employees as may be decided by the 0oard. F12G 9he 0oard of Directors of a company ha-in( a combined membership of the shareholders, debent!re holders and other sec!rity holders of more than one tho!sand at any time d!rin( a financial year shall constit!te a Sta2eholders ,elationship +ommittee consistin( of a chairman who shall be a non.exec!ti-e director and s!ch other members of the 0oard as may be decided by the 0oard. F13G Sta2eholders ,elationship +ommittee shall consider and resol-e the (rie-ances of sta2eholders. F14G 9he chairman of each of the committees constit!ted !nder this section or, in his absence, any other member of the +ommittee a!thorised by him shall attend the (eneral meetin(s of the company. F15G %n case of any contra-ention of the pro-isions of this section, the company shall be p!nishable with fine which shall not be less than one la2h r!pees b!t which may extend to fi-e la2h r!pees and e-ery officer of the company who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to one year or with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to one la2h r!pees, or with both. Po61r3 of Bo(rd. 15). F1G 9he 0oard of Directors of a company shall be entitled to exercise all s!ch powers, and to do all s!ch acts and thin(s, as the company is a!thorised to exercise and do soD /ro-ided that in exercisin( s!ch power or doin( s!ch act or thin(, the 0oard shall be s!bject to the pro-isions contained in that behalf in this #ct, or in the memorand!m or articles of the company, or in any re(!lations not inconsistent therewith and d!ly made there!nder, incl!din( re(!lations made by the company in (eneral meetin(D /ro-ided f!rther that the 0oard shall not exercise any power or do any act or thin( which is directed or re3!ired, whether !nder this #ct or by the memorand!m or articles of the company or otherwise, to be exercised or done by the company in (eneral meetin(. F2G 6o resol!tion passed by the company in (eneral meetin( shall in-alidate any prior act of the 0oard which wo!ld ha-e been -alid if that resol!tion had not been passed. F3G 9he 0oard of Directors of a company shall exercise the followin( powers on behalf of the company by means of resol!tions passed at meetin(s of the 0oard, namelyDE FaG to ma2e calls on shareholders in respect of money !npaid on their sharesH FbG to a!thorise b!y.bac2 of sec!rities !nder section "1H FcG to iss!e sec!rities, incl!din( debent!res, whether in %ndia or o!tsideH FdG to borrow monies incl!din( arran(ement with its ban2ers for o-erdraft, cash credit or other acco!ntH FeG to in-est the f!nds of the companyH FfG to (rant loans or (i-e (!arantee or pro-ide sec!rity in respect of loansH

101

F(G to appro-e financial statement and the director8s reportH FhG to di-ersify the b!siness of the companyH FiG to appro-e amal(amation, mer(er or reconstr!ctionH FjG to ta2e o-er a company or ac3!ire a controllin( or s!bstantial sta2e in another companyD /ro-ided that the 0oard may, by a resol!tion passed at a meetin(, dele(ate to any committee of directors, the mana(in( director, the mana(er or any other principal officer of the company or in the case of a branch office of the company, the principal officer of the branch office, the powers specified in cla!ses FdG to FfG on s!ch conditions as it may specify. F4G 6othin( in this section shall be deemed to affect the ri(ht of the company in (eneral meetin( to impose restrictions and conditions on the exercise by the 0oard of any of the powers specified in this section. R13)ri4)io*3 o* -o61r3 of Bo(rd. 1"*. F1G 9he 0oard of Directors of a company shall exercise the followin( powers only with the consent of the company by a special resol!tion, namelyDE FaG to sell, lease or otherwise dispose of the whole of the !nderta2in( of the company or where the company owns more than one !nderta2in(, of the whole or s!bstantially the whole of any of s!ch !nderta2in(s. Explanation.EFor the p!rposes of this cla!se, FiG the word A!nderta2in(B shall mean an !nderta2in( in which the in-estment of the company exceeds twenty per cent of its net worth as per the a!dited balance sheet of the precedin( financial year or an !nderta2in( which (enerates twenty per cent of the total income of the company d!rin( the pre-io!s financial yearH FiiG the expression As!bstantially the whole of the !nderta2in(B in any financial year shall mean twenty per cent or more of the -al!e of the !nderta2in( as per the a!dited balance sheet of the precedin( financial yearH FbG to in-est otherwise in tr!st sec!rities the amo!nt of compensation recei-ed by it as a res!lt of any mer(er or amal(amationH FcG to borrow money exceedin( the a((re(ate of its paid.!p share capital and free reser-es, apart from temporary loans obtained from the company8s ban2ers in the ordinary co!rse of b!sinessH FdG to remit, or (i-e time for the repayment of, any debt d!e from a directorH FeG to contrib!te to charitable and other f!nds as donation in any financial year an amo!nt in excess of fi-e per cent of its a-era(e net profits for the three immediately precedin( financial years. F2G '-ery special resol!tion passed by the company in (eneral meetin( in relation to the exercise of the powers referred to in cla!se FcG or cla!se FeG of s!b.section F1G shall specify the total amo!nt

102

!p to which monies may be borrowed by the 0oard of Directors !nder cla!se FcG or, as the case may be, contrib!ted to charitable and other f!nds in any financial year !nder cla!se FeG. F3G 6othin( contained in cla!se FaG of s!b.section F1G shall affectE FaG the title of a b!yer or other person who b!ys or ta2es on lease any property, in-estment or !nderta2in( as is referred to in that cla!se, in (ood faithH or FbG the sale or lease of any property of the company where the ordinary b!siness of the company consists of, or comprises, s!ch sellin( or leasin(. F4G #ny special resol!tion passed by the company consentin( to the transaction as is referred to in cla!se FaG of s!b.section F1G may stip!late s!ch conditions as may be specified in s!ch resol!tion, incl!din( conditions re(ardin( the !se, disposal or in-estment of the sale proceeds which may res!lt from the transactionsD /ro-ided that this s!b.section shall not be deemed to a!thorise the company to effect any red!ction in its capital except in accordance with the pro-isions contained in this #ct. F5G 6o debt inc!rred by the company in excess of the limit imposed by cla!se FcG of s!b.section F1G shall be -alid or effect!al, !nless the lender pro-es that he ad-anced the loan in (ood faith and witho!t 2nowled(e that the limit imposed by that cla!se had been exceeded. Pro0i.i)io*3 (*d r13)ri4)io*3 r1+(rdi*+ -oli)i4(l 4o*)ri.,)io*3 1"1. F1G 6otwithstandin( anythin( contained in any other pro-ision of this #ct, a company, other than a 4o-ernment company and a company which has been in existence for less than three financial years, may contrib!te any amo!nt directly or indirectlyE FaG to any political party, or FbG to any person for a political p!rposeD /ro-ided that the amo!nt or, as the case may be, the a((re(ate of the amo!nt which may be so contrib!ted by the company in any financial year shall not exceed fi-e per cent. of its a-era(e net profits d!rin( the three immediately precedin( financial yearsD /ro-ided f!rther that no s!ch contrib!tion shall be made by a company !nless a resol!tion a!thorisin( the ma2in( of s!ch contrib!tion is passed at a meetin( of the 0oard of Directors and s!ch resol!tion shall, s!bject to the other pro-isions of this section, be deemed to be j!stification in law for the ma2in( and the acceptance of the contrib!tion a!thorised by it. F2G >itho!t prej!dice to the (enerality of the pro-isions of s!b.section F1G,E FaG a donation or s!bscription or payment ca!sed to be (i-en by a company on its behalf or on its acco!nt to a person who, to its 2nowled(e, is carryin( on any acti-ity which, at the time at which s!ch donation or s!bscription or payment was (i-en or made, can reasonably be re(arded as li2ely to affect p!blic s!pport for a political party shall also be deemed to be contrib!tion of the amo!nt of s!ch donation, s!bscription or payment to s!ch person for a political p!rposeH FbG the amo!nt of expendit!re inc!rred, directly or indirectly, by a company on an ad-ertisement in any p!blication, bein( a p!blication in the nat!re of a so!-enir, broch!re, tract, pamphlet or the li2e, shall also be deemed,E

103

FiG where s!ch p!blication is by or on behalf of a political party, to be a contrib!tion of s!ch amo!nt to s!ch political party, and FiiG where s!ch p!blication is not by or on behalf of, b!t for the ad-anta(e of a political party, to be a contrib!tion for a political p!rpose. F3G '-ery company shall disclose in its profit and loss acco!nt any amo!nt or amo!nt contrib!ted by it to any political party or to any person for a political p!rpose d!rin( the financial year to which that acco!nt relates, (i-in( partic!lars of the total amo!nt contrib!ted and the name of the party or person to which or to whom s!ch amo!nt has been contrib!ted. F4G >here a company ma2es any contrib!tion in contra-ention of the pro-isions of this section, the company shall be p!nishable with fine which may extend to fi-e times the amo!nt so contrib!ted and e-ery officer who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to six months and with fine which may extend to fi-e times the amo!nt so contrib!ted. Explanation.EFor the p!rposes of this section, Apolitical partyB means a political party re(istered !nder section 2)# of the ,epresentation of the /eople #ct, 1)51. Di34lo3,r1 of i*)1r13) ./ dir14)or 1"2. F1G '-ery director shall at the first meetin( of the 0oard in which he participates as a director and thereafter at the first meetin( of the 0oard in e-ery financial year or whene-er there is any chan(e in the disclos!res already made, then at the first 0oard meetin( held after the chan(e, disclose his concern or interest in any company or companies or bodies corporate, firms, or other association of indi-id!als which shall incl!de the shareholdin(, in s!ch manner as may be prescribed. F2G '-ery director of a company who is in any way, whether directly or indirectly, concerned or interested in a contract or arran(ement or proposed contract or arran(ement entered into or to be entered intoE FaG with a body corporate in which s!ch director, or s!ch directors in association with any other director, holds more than two per cent. shareholdin( of that body corporate, or is a promoter, mana(er, +hief 'xec!ti-e 1fficer of that body corporateH or FbG with a firm or other entity in which, s!ch director is a partner, owner or member, as the case may be, shall disclose the nat!re of his concern or interest at the meetin( of the 0oard in which the contract or arran(ement is disc!ssed and shall not participate in s!ch meetin(D /ro-ided that where any director who is not so concerned or interested at the time of enterin( into s!ch contract or arran(ement, he shall, if he becomes concerned or interested after the contract or arran(ement is entered into, disclose his concern or interest forthwith when he becomes concerned or interested or at the next first meetin( of the 0oard held after he becomes so concerned or interested. F3G # contract or arran(ement entered into by the company witho!t disclos!re !nder s!b.section F2G or with participation by a director who is concerned or interested in any way, directly or indirectly, in the contract or arran(ement, shall be -oidable at the option of the company. F4G >here a director contra-enes the pro-isions of s!b.section F1G, he shall be p!nishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty tho!sand r!pees b!t which may extend to one la2h r!pees, or with both.

104

F5G '-ery director who contra-enes the pro-isions of s!b.section F2G shall be p!nishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty tho!sand r!pees b!t which may extend to one la2h r!pees, or with both. F"G 6othin( in this sectionE FaG shall be ta2en to prej!dice the operation of any r!le of law restrictin( a director of a company from ha-in( any concern or interest in any contract or arran(ement with the companyH FbG shall apply to any contract or arran(ement entered into or to be entered into between two companies where any of the directors of the one company or two or more of them to(ether holds or hold not more than two per cent. of the paid.!p share capital in the other company. Lo(* )o dir14)or3 1)4. 1"3. F1G Sa-e as otherwise pro-ided in this #ct, no company shall, directly or indirectly, ad-ance any loan, incl!din( any loan represented by a boo2 debt, to any of its directors or to any other person in whom he is interested or (i-e any (!arantee or pro-ide any sec!rity in connection with any loan ta2en by him or s!ch other personD /ro-ided that nothin( contained in this s!b.section shall apply toE FaG the (i-in( of any loan to a mana(in( or whole.time directorE FiG as a part of the conditions of ser-ice extended by the company to all its employeesH or FiiG p!rs!ant to any scheme appro-ed by the members by a special resol!tionH FbG a company which in the ordinary co!rse of its b!siness pro-ides loans or (i-es (!arantees or sec!rities for the d!e repayment of any loan and in respect of s!ch loans an interest is char(ed at a rate not less than the ban2 rate declared by the ,eser-e 0an2 of %ndia. F2G >here any loan is ad-anced or a (!arantee or sec!rity is (i-en or pro-ided in contra-ention of the pro-isions of s!b.section F1G, the company shall be p!nishable with fine which shall not be less than fi-e la2h r!pees b!t which may extend to twenty. fi-e la2h r!pees, and the director or the other person to whom any loan is ad-anced or (!arantee or sec!rity is (i-en or pro-ided in connection with any loan ta2en by him or the other person, shall be p!nishable with imprisonment which may extend to six months or with fine which shall not be less than fi-e la2h r!pees b!t which may extend to twenty.fi-e la2h r!pees, or with both. Lo(* (*d i*213)51*) ./ 4o5-(*/. 1"4. F1G 6o company shall directly or indirectly E FaG (i-e any loan to any person or other body corporateH FbG (i-e any (!arantee or pro-ide sec!rity in connection with a loan to any other body corporate or personH or FcG ac3!ire by way of s!bscription, p!rchase or otherwise, the sec!rities of any other body corporate, exceedin( sixty per cent. of its paid.!p share capital and free reser-es or one h!ndred per cent. of its free reser-es, whiche-er is more.

105

F2G >here the (i-in( of any loan or (!arantee or pro-idin( any sec!rity or the ac3!isition !nder s!b.section F1G exceeds the limits specified in s!b.section F1G, prior appro-al by means of a special resol!tion passed at a (eneral meetin( shall be necessary. F3G9he company shall disclose to the members in the financial statements the f!ll partic!lars of the loans (i-en and the p!rpose for which the loan is proposed to be !tilised by the recipient of the loan. F4G 6o in-estment shall be made or loan or (!arantee or sec!rity (i-en by the company !nless the resol!tion sanctionin( it is passed at a meetin( of the 0oard with the consent of all the directors present at the meetin( and the prior appro-al of the p!blic financial instit!tion concerned where any term loan is s!bsistin(, is obtainedD /ro-ided that prior appro-al of a p!blic financial instit!tion shall not be re3!ired where the a((re(ate of the loans and in-estments so far made, the amo!nt for which (!arantee or sec!rity so far pro-ided to or in all other bodies corporate, alon( with the in-estments, loans, (!arantee or sec!rity proposed to be made or (i-en does not exceed the limit as specified in s!b.section F1G, and there is no defa!lt in repayment of loan instalments or payment of interest thereon as per the terms and conditions of s!ch loan to the p!blic financial instit!tion. F5G 6o company, which is re(istered !nder section 12 of the Sec!rities and 'xchan(e 0oard of %ndia #ct, 1))2 and co-ered !nder s!ch class or classes of companies as may be prescribed, shall ta2e inter.corporate loan or deposits exceedin( the prescribed limit. S!ch a company shall f!rnish in its financial statement the details of the loan or deposits. F"G6o loan shall be (i-en !nder this section at a rate of interest lower than the pre-ailin( ban2 rate bein( the standard rate made p!blic !nder section 4) of the ,eser-e 0an2 of %ndia #ct, 1)34. F$G6o company which is in defa!lt in the repayment of any deposits accepted before the commencement of this #ct or payment of interest thereon e-en after s!ch commencement, shall (i-e any loan or (i-e any (!arantee or pro-ide any sec!rity or ma2e an ac3!isition till s!ch defa!lt is s!bsistin(. F&G'-ery company (i-in( loan or (i-in( a (!arantee or pro-idin( sec!rity or ma2in( an ac3!isition !nder this section shall 2eep a re(ister which shall contain s!ch partic!lars and shall be maintained in s!ch manner as may be prescribed. F)G9he re(ister referred to in s!b.section F&G shall be 2ept at the re(istered office of the company and E FaG shall be open to inspection at s!ch officeH and FbG extracts may be ta2en therefrom by any member, and copies thereof may be f!rnished to any member of the company on payment of s!ch fee as may be prescribed. F1*G 6othin( contained in this section shall apply E FaG to a loan made, (!arantee (i-en or sec!rity pro-ided by E FiG a ban2in( company or an ins!rance company or a ho!sin( finance company in the ordinary co!rse of its b!siness or a company en(a(ed in the b!siness of financin( of companies pro-idin( infrastr!ct!ral facilitiesH FiiG a holdin( company to its wholly.owned s!bsidiaryH or

106

FiiiG a pri-ate company !nless it is a s!bsidiary of a p!blic company. FbG to any ac3!isition E FiG made by a non.ban2in( financial company re(istered !nder +hapter %%%. 0 of the ,eser-e 0an2 of %ndia #ct, 1)34 and whose principal b!siness is ac3!isition of sec!ritiesH FiiG made by a holdin( company by way of s!bscription, p!rchase or otherwise, the sec!rities of its wholly owned s!bsidiaryH or FiiiG of shares allotted in p!rs!ance of s!b.section F1G of section 5". F11G >here a company contra-enes the pro-isions of this section, it shall be p!nishable with fine which shall not be less than twenty. fi-e tho!sand r!pees b!t which may extend to one la2h r!pees and e-ery officer of the company who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to two years or with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to one la2h r!pees, or with both. I*213)51*)3 of 4o5-(*/ )o .1 01ld i* i)3 o6* *(51. 1"5. F1G #ll in-estments made or held by a company in any property, sec!rity or other asset shall be made and held by it in its own nameD /ro-ided that the company may hold any shares in its s!bsidiary company in the name of any nominee or nominees of the company, if and in so far as it is necessary to do so, to ens!re that the n!mber of members of the s!bsidiary company is not red!ced below the stat!tory limit. F2G6othin( in this section shall be deemed to pre-ent a company from holdin( in-estments in the name of a depository when s!ch in-estments are in the form of sec!rities held by the company as a beneficial owner. F3G>here in p!rs!ance of s!b.section F2G any shares or sec!rities in which in-estments ha-e been made by a company are not held by it in its own name, the company shall maintain a re(ister which shall contain s!ch partic!lars as may be prescribed and s!ch re(ister shall be open to the inspection by any member or debent!re holder of the company witho!t any char(e d!rin( b!siness ho!rs s!bject to s!ch reasonable restrictions as the company may by its articles or in (eneral meetin( impose. F4G>here a company contra-enes the pro-isions of this section, it shall be p!nishable with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to twenty.fi-e la2h r!pees and e-ery officer who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty fi-e tho!sand r!pees b!t which may extend to one la2h r!pees, or with both. R1l()1d -(r)/ )r(*3(4)io*3. 1"". F1G 'xcept with the consent of the 0oard of Directors of a p!blic company accorded by a resol!tion passed at a meetin( of the 0oard and s!bject to s!ch conditions as may be prescribed, no s!ch company shall enter into any contract or arran(ement with a related party with respect to E FaG sale, p!rchase or s!pply of any (oods or materialsH FbG sellin( or otherwise disposin( of, or b!yin(, property of any 2indH

107

FcG leasin( of property of any 2indH FdG a-ailin( or renderin( of any ser-icesH FeG appointment of any a(ents for p!rchase or sale of (oods, materials, ser-ices or propertyH FfG appointment to any office or place of profit in the company or its s!bsidiary companyH and F(G !nderwritin( the s!bscription of any sec!rities or deri-ati-es thereof, of the companyD /ro-ided that no contract or arran(ement, in the case of a company ha-in( a paid.!p share capital of not less than s!ch amo!nt, or transactions not exceedin( s!ch s!ms, as may be prescribed, shall be entered into except with the prior appro-al of the company by a special resol!tionD /ro-ided f!rther that nothin( in this s!b.section shall apply to any transactions entered into by the company in its ordinary co!rse of b!siness other than transactions which are not on an arm8s len(th basis. Explanation.EFor the p!rposes of this s!b.section, arm8s len(th transaction means a transaction between two related parties that is cond!cted on terms as if they were !nrelated, so that there is no 3!estion of a conflict of interest. F2G '-ery contract or arran(ement entered into !nder s!b.section F1G shall be referred to in the report of the directors to the shareholders alon( with the j!stification for enterin( into s!ch contract or arran(ement. F3G>here any contract or arran(ement is entered into by a director or any other employee, witho!t obtainin( the consent of the 0oard or appro-al by a special resol!tion in the (eneral meetin( !nder s!b.section F1G and if it is not ratified by the 0oard or, as the case may be, by the shareholders at a meetin( within three months from the date on which s!ch contract or arran(ement was entered into, s!ch contract or arran(ement shall be -oidable at the option of the 0oard and if the contract or arran(ement is with a related party to any director, or is a!thorised by any other director, the directors concerned shall indemnify the company a(ainst any loss inc!rred by it. F4G>itho!t prej!dice to anythin( contained in s!b.section F3G, it shall be open to the company to proceed a(ainst a director or other employee who had a!thorised for enterin( into s!ch contract or arran(ement in contra-ention of the pro-isions of this section for reco-ery of any loss or dama(e s!stained by it as a res!lt of s!ch contract or arran(ement. F5G #ny director or other employee of a p!blic company, who had a!thorised the contract or arran(ement in -iolation of the pro-isions of this section shall,E FiG in case of p!blic company whose shares are not listed in any stoc2 exchan(e, be p!nishable with fine which shall not be less than twenty. fi-e tho!sand r!pees b!t which may extend to fi-e la2h r!peesH and FiiG in case of listed p!blic company, be p!nishable with imprisonment for a term which may extend to one year or with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to fi-e la2h r!pees, or with both.

108

Explanation.E For the p!rposes of this section, Aoffice or place of profitB means any office or place E FaG in case the office or place is held by a director, if the director holdin( it obtains from the company anythin( by way of rem!neration o-er and abo-e the rem!neration to which he is entitled as s!ch director, whether as salary, fee, commission, per3!isites, the ri(ht to occ!py any rent.free premises as a place of residence, or otherwiseH FbG in case the office or place is held by an indi-id!al other than a director or by any firm, pri-ate company or other body corporate, if the indi-id!al, firm, pri-ate company or body corporate holdin( it obtains from the company anythin( by way of rem!neration, whether as salary, fee, commission, per3!isites, the ri(ht to occ!py any rent.free premises as a place of residence, or otherwise. R1+i3)1r of 4o*)r(4)3 or (rr(*+151*)3 i* 60i40 dir14)or3 (r1 i*)1r13)1d. 1"$. F1G '-ery company shall 2eep one or more re(isters (i-in( separately the partic!lars of all contracts or arran(ements to which s!b.section F2G of section 1"2 applies, incl!din( s!ch partic!lars and in s!ch manner as may be prescribed. F2G'-ery director, incl!din( a deemed director, or 2ey mana(erial personnel shall, within thirty days of his appointment, or relin3!ishment of, his office, as the case may be, disclose to the company the partic!lars specified in s!b.section F1G of section 1"2 relatin( to his concern or interest in the other associations which are re3!ired to be incl!ded in the re(ister !nder s!b. section F1G. F3G'-ery director, incl!din( a deemed director, shall (i-e notice in writin( to the company at a meetin( of the 0oard, of s!ch matters relatin( to himself as may be necessary for the p!rpose of enablin( the company to comply with the pro-isions of this section. F4G9he re(ister 2ept p!rs!ant to s!b.section F1G shall be 2ept at the re(istered office of the company and it shall be open for inspection at s!ch office d!rin( b!siness ho!rs and extracts may be ta2en therefrom, and copies thereof as may be re3!ired by any member of the company shall be f!rnished by the company to s!ch extent, in s!ch manner, and on payment of s!ch fee as may be prescribed. F5G9he re(isters to be 2ept !nder this section shall also be prod!ced at the commencement of e-ery ann!al (eneral meetin( of the company and shall remain open and accessible d!rin( the contin!ance of the meetin( to any person ha-in( the ri(ht to attend the meetin(. F"G6othin( in s!b.section F1G shall apply to any contract or arran(ement E FaG for the sale, p!rchase or s!pply of any (oods, materials or ser-ices if the -al!e of s!ch (oods and materials or the cost of s!ch ser-ices does not exceed fi-e la2h r!pees in the a((re(ate in any yearH or FbG by a ban2in( company for the collection of bills in the ordinary co!rse of its b!siness. F$G '-ery director who fails to comply with the pro-isions of this section and the r!les made there!nder shall be liable to a penalty of twenty.fi-e tho!sand r!pees. Co*)r(4) of 15-lo/51*) 6i)0 5(*(+i*+ or 60ol1;)i51 dir14)or3. 1"&. F1G '-ery company shall 2eep at its re(istered office, E

109

FaG where a contract of ser-ice with a mana(in( or whole.time director is in writin(, a copy of the contractH or FbG where s!ch a contract is not in writin(, a written memorand!m settin( o!t its terms. F2G +opies of the contract or the memorand!m 2ept !nder s!b.section F1G shall be open to inspection by any member of the company witho!t payment of fee. F3G %f any defa!lt is made in complyin( with the pro-isions of s!b.section F1G or s!b.section F2G, the company shall be liable to a penalty of twenty.fi-e tho!sand r!pees and e-ery officer of the company who is in defa!lt shall be liable to a penalty of fi-e tho!sand r!pees for each defa!lt. F4G9he pro-isions of this section shall not apply to a pri-ate company. P(/51*) )o dir14)or for lo33 of offi41 1)4. i* 4o**14)io* 6i)0 )r(*3f1r of ,*d1r)(<i*+ -ro-1r)/ or 30(r13. 1"). F1G 6o director of a company shall, in connection withE FaG the transfer of the whole or any part of any !nderta2in( or property of the company, or FbG the transfer to any person of all or any of the shares in a company bein( a transfer res!ltin( from E FiG an offer made to the (eneral body of shareholdersH FiiG an offer made by or on behalf of some other body corporate with a -iew to a company becomin( a s!bsidiary company of s!ch body corporate or a s!bsidiary company of its holdin( companyH FiiiG an offer made by or on behalf of an indi-id!al with a -iew to his obtainin( the ri(ht to exercise, or control the exercise of, not less than one.third of the total -otin( power at any (eneral meetin( of the companyH or Fi-G any other offer which is conditional on acceptance to a (i-en extent, recei-e any payment by way of compensation for loss of office or as consideration for retirement from office, or in connection with s!ch loss or retirement from s!ch company or from the transferee of s!ch !nderta2in( or property, or from the transferees of shares or from any other person, not bein( s!ch company, !nless partic!lars as may be prescribed with respect to the payment proposed to be made by s!ch transferee or person, incl!din( the amo!nt thereof, ha-e been disclosed to the members of the company and the proposal has been appro-ed by the company in (eneral meetin(. F2G6othin( in s!b.section F1G shall affect any payment made by a company to a mana(in( director or whole.time director or mana(er of the company by way of compensation for loss of office or as consideration for retirement from office or in connection with s!ch loss or retirement s!bject to limits or priorities, as may be prescribed. F3G%f the payment !nder s!b.section F1G or s!b.section F2G is not appro-ed for want of 3!or!m either in a meetin( or an adjo!rned meetin(, the proposal shall not be deemed to ha-e been appro-ed.

110

F4G>here a director of a company recei-es payment of any amo!nt in contra-ention of s!b.section F1G or the proposed payment is made before it is appro-ed in the meetin(, the amo!nt so recei-ed by the director shall be deemed to ha-e been recei-ed by him in tr!st for the company. F5G>here any director contra-enes any of the pro-isions of this section, he shall be p!nishable with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to one la2h r!pees. F"G6othin( in this section shall be ta2en to prej!dice the operation of any r!le of law re3!irin( disclos!re to be made with respect to any payment recei-ed !nder this section or any other li2e payments made to a director. R13)ri4)io* o* *o*;4(30 )r(*3(4)io*3 i*2ol2i*+ dir14)or3. 1$*. F1G 6o company shall enter into an arran(ement by which E FaG a director of the company or its holdin( company or a person connected with him ac3!ires or is to ac3!ire assets for consideration other than cash, from the companyH or FbG the company ac3!ires or is to ac3!ire assets for consideration other than cash, from s!ch a director or person so connected, !nless prior appro-al for s!ch arran(ement is accorded by a resol!tion of the company in (eneral meetin( and if the director or connected person is a director of its holdin( company, appro-al !nder this s!b.section shall also be re3!ired to be obtained by passin( a resol!tion in (eneral meetin( of the holdin( company. F2G9he notice for appro-al of the resol!tion by the company or holdin( company in (eneral meetin( !nder s!b.section F1G shall incl!de the partic!lars of the arran(ement alon( with the -al!e of the assets in-ol-ed in s!ch arran(ement d!ly calc!lated by a re(istered -al!er. F3G#ny arran(ement entered into by a company or its holdin( company in contra-ention of the pro-isions of this section shall be -oidable at the instance of the company !nlessE FaG the restit!tion of any money or other consideration which is the s!bject.matter of the arran(ement is no lon(er possible and the company has been indemnified by any other person for any loss or dama(e ca!sed to itH or FbG any ri(hts are ac3!ired bona fide for -al!e and witho!t notice of the contra-ention of the pro-isions of this section by any other person. Co*)r(4)3 ./ O*1 P1r3o* Co5-(*i13. 1$1. F1G >here a 1ne /erson +ompany limited by shares or by (!arantee enters into a contract with the sole member of the company who is also director of the company, the company shall, !nless the contract is in writin(, ens!re that the terms of the contract or offer are contained in a memorand!m or are recorded in the min!tes of the first meetin( of the 0oard of Directors of the company held next after the enterin( into the contractD /ro-ided that nothin( in this s!b.section shall apply to contracts entered into by the company in the ordinary co!rse of its b!siness. F2G 9he company shall inform the ,e(istrar abo!t e-ery contract entered into by the company and recorded in the min!tes of the meetin( of its 0oard of Directors !nder s!b.section F1G within fifteen

111

days of the date of appro-al by the 0oard of Directors with s!ch fee as may be prescribed, or with s!ch additional fee as may be prescribed within the time specified, !nder section 3"4. F3G >here the company fails to inform the ,e(istrar !nder s!b.section F2G before the expiry of the period specified !nder section 3"4 with additional fee, the company shall be p!nishable with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to one la2h r!pees and e-ery officer who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to one la2h r!pees, or with both. Pro0i.i)io* o* for6(rd d1(li*+3 i* 314,ri)i13 of 4o5-(*/ ./ ( <1/ 5(*(+1ri(l -1r3o**1l. 1$2. F1G 6o director of a company or any of its 2ey mana(erial personnel shall b!y E FaG a ri(ht to call for deli-ery at a specified price and within a specified time, of a specified n!mber of rele-ant shares or a specified amo!nt of rele-ant debent!res, FbG a ri(ht to ma2e deli-ery at a specified price and within a specified time, of a specified n!mber of rele-ant shares or a specified amo!nt of rele-ant debent!res, or FcG a ri(ht, as he may elect, to call for deli-ery at a specified price and within a specified time, or to ma2e deli-ery at a specified price and within a specified time, of a specified n!mber of rele-ant shares or a specified amo!nt of rele-ant debent!res. F2G >here a director or any 2ey mana(erial personnel contra-enes the pro-isions of s!b.section F1G, he shall be p!nishable with imprisonment for a term which may extend to two years or with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to one la2h r!pees, or with both. F3G >here a director or other 2ey mana(erial personnel ac3!ires any sec!rities in contra-ention of s!b.section F1G, he shall, witho!t prej!dice to any p!nishment which may be imposed !nder s!b. section F2G, be liable to s!rrender the same to the company and the company shall not re(ister the sec!rities so ac3!ired in his name in the re(ister, and if they are in dematerialised form, it shall inform the depository not to record s!ch ac3!isition. Explanation.EFor the p!rposes of this section, rele-ant shares and rele-ant debent!res mean shares and debent!res of the company in which the concerned person is a whole. time director or other 2ey mana(erial person or shares and debent!res of its holdin( and s!bsidiary companies. Pro0i.i)io* o* i*3id1r )r(di*+ of 314,ri)i13. 1$3. F1G 6o director or 2ey mana(erial personnel shall either on his own behalf or on behalf of any other person, deal in sec!rities of a company, or co!nsel abo!t, proc!re or comm!nicate, directly or indirectly, any non.p!blic price.sensiti-e information to any personD /ro-ided that nothin( contained in this s!b.section shall apply to any comm!nication re3!ired in the ordinary co!rse of b!siness or profession or employment or !nder any law. Explanation.EFor the p!rposes of this section, Aprice.sensiti-e informationB means any information which relates, directly or indirectly, to a company and which if p!blished is li2ely to materially affect the price of sec!rities of the company.

112

F2G %f any director or 2ey mana(erial personnel contra-enes the pro-isions of this section, he shall be p!nishable with imprisonment for a term which may extend to fi-e years or with fine which shall not be less than fi-e la2h r!pees b!t which may extend to one crore r!pees, or with both. CHAPTER %III APPOINTMENT AND REMUNERATION O" MANAGERIAL PERSONNEL A--oi*)51*) of 5(*(+i*+ dir14)or 60ol1;)i51 dir14)or or 5(*(+1r. 1$4. F1G 6o company shall appoint or employ at the same time a mana(in( director and mana(er. F2G 6o company shall appoint or re.appoint any person as its mana(in( director, whole.time director or mana(er for a term exceedin( fi-e years at a timeD /ro-ided that no re.appointment shall be made earlier than one year before the expiry of his term. F3G 6o company shall appoint any firm, body corporate or other association as its mana(er. F4G 6o company shall appoint or contin!e the employment of any person as its 2ey mana(erial personnel who E FaG is below the a(e of twenty.one years or has attained the a(e of se-enty yearsD /ro-ided that appointment of a person who has attained the a(e of se-enty years may be made by passin( a special resol!tionH FbG is an !ndischar(ed insol-ent or has at any time been adj!d(ed an insol-entH FcG has at any time s!spended payment to his creditors or ma2es, or has at any time made, a composition with themH or FdG has at any time been con-icted by a co!rt of an offence in-ol-in( moral t!rpit!de. F5G# mana(in( director, whole.time director or mana(er shall be appointed by the 0oard of Directors at a meetin( with the consent of all the directors present at s!ch meetin(, which shall be s!bject to appro-al by a special resol!tion at the next (eneral meetin( of the companyD /ro-ided that a notice con-enin( 0oard or (eneral meetin( for considerin( s!ch appointment shall incl!de the terms and conditions of s!ch appointment, rem!neration payable and s!ch other matters incl!din( interest, if any, of a director or directors in s!ch appointments, if any. F"G S!bject to the pro-isions of this #ct, where an appointment of a mana(in( director, whole.time director or mana(er is not appro-ed by the company at a (eneral meetin(, any act done by him before s!ch appro-al shall not be deemed to be in-alid. R15,*1r()io* of 5(*(+1ri(l -1r3o**1l. 1$5. F1G # mana(in( or whole.time director or a mana(er of a company may be paid rem!neration either by way of a monthly payment or at a specified percenta(e of the net profits of the company, comp!ted in the manner prescribed, or partly by monthly payment and partly by the percenta(e of net profits.

113

F2G >here any ins!rance is ta2en by a company on behalf of its mana(in( director, whole.time director, mana(er, +hief 'xec!ti-e 1fficer, +hief Financial 1fficer or +ompany Secretary for indemnifyin( any of them a(ainst any liability in respect of any ne(li(ence, defa!lt, misfeasance, breach of d!ty or breach of tr!st for which they may be (!ilty in relation to the company, the premi!m paid on s!ch ins!rance shall not be treated as part of the rem!neration payable to any s!ch personnel. F3G #ny director who is in receipt of any commission from the company and who is a mana(in( or whole.time director of the company shall not be dis3!alified from recei-in( any rem!neration or commission from any holdin( company or s!bsidiary company of s!ch company s!bject to its disclos!re by the company in the 0oard8s report. F4G '-ery person who contra-enes the pro-isions of this section shall be p!nishable with fine which shall not be less than one la2h r!pees b!t which may extend to fi-e la2h r!pees. R15,*1r()io* -(/(.l1 )o dir14)or3. 1$". F1G # director who is neither a whole.time director nor a mana(in( director of a company may be paid rem!neration in the form of E FaG fee for attendin( meetin(s of the 0oard or committees thereof in accordance with the articlesH and FbG profit.related commission with the prior appro-al of members by a special resol!tion. F2G %f any director draws or recei-es directly or indirectly by way of rem!neration any s!m in excess of the amo!nt !nder s!b.section F1G, he shall ref!nd s!ch s!m to the company within thirty days. Co5-1*3()io* for lo33 of offi41 of 5(*(+i*+ or 60ol1;)i51 dir14)or or 5(*(+1r. 1$$. F1G /ayment may be made by a company to a mana(in( or whole.time director or mana(er, b!t not to any other director by way of compensation for loss of office, or as consideration for retirement from office or in connection with s!ch loss or retirement. F2G 6o payment shall be made !nder s!b.section F1G in the followin( cases, namelyDE FaG where the director resi(ns from his office as a res!lt of the reconstr!ction of the company, or of its amal(amation with any other body corporate or bodies corporate, and is appointed as the mana(in( director, mana(er or other officer of the reconstr!cted company or of the body corporate res!ltin( from the amal(amationH FbG where the director resi(ns from his office otherwise than on the reconstr!ction of the company or its amal(amation as aforesaidH FcG where the office of the director is -acated !nder s!b.section F1G of section 14&H FdG where the company is bein( wo!nd !p, whether by an order of the 9rib!nal or -ol!ntarily, pro-ided the windin( !p was d!e to the ne(li(ence or defa!lt of the directorH FeG where the director has been (!ilty of fra!d or breach of tr!st in relation to, or of (ross ne(li(ence in or (ross mismana(ement of, the cond!ct of the affairs of the company or any s!bsidiary company or holdin( company thereofH and

114

FfG where the director has insti(ated, or has ta2en part directly or indirectly in brin(in( abo!t, the termination of his office. F3G#ny payment made to a mana(in( or whole.time director or mana(er in p!rs!ance of s!b. section F1G shall not exceed the rem!neration which he wo!ld ha-e earned if he had been in office for the remainder of his term or for three years, whiche-er is shorter, calc!lated on the basis of the a-era(e rem!neration act!ally earned by him d!rin( a period of three years immediately precedin( the date on which he ceased to hold office, or where he held the office for a lesser period than three years, d!rin( s!ch periodD /ro-ided that no s!ch payment shall be made to the director in the e-ent of the commencement of the windin( !p of the company, whether before or at any time within twel-e months after, the date on which he ceased to hold office, if the assets of the company on the windin( !p, after ded!ctin( the expenses thereof, are not s!fficient to repay to the shareholders the share capital, incl!din( the premi!ms, if any, contrib!ted by them. F4G 6othin( in this section shall be deemed to prohibit the payment to a mana(in( or whole.time director, or mana(er, of any rem!neration for ser-ices rendered by him to the company in any other capacity. A--oi*)51*) of <1/ 5(*(+1ri(l -1r3o**1l. 1$&. F1G '-ery company belon(in( to s!ch class or description of companies as may be prescribed shall ha-e whole.time 2ey mana(erial personnel. F2G'-ery whole.time 2ey mana(erial personnel of a company shall be appointed by means of a resol!tion of the 0oard containin( the terms and conditions of the appointment incl!din( the rem!neration. F3G # whole.time 2ey mana(erial personnel shall not hold office in more than one company at the same timeD /ro-ided that nothin( contained in this s!b.section shall disentitle a 2ey mana(erial personnel from bein( a director of any company with the permission of the company. F4G %f the office of any 2ey mana(erial personnel is -acated, the res!ltin( -acancy shall be filled !p by the 0oard at a meetin( of the 0oard within a period of six months from the date of s!ch -acancy. F5G >here a company fails to comply with any of the pro-isions of this section, it shall be liable to a penalty of one la2h r!pees and e-ery director and 2ey mana(erial personnel who is in defa!lt shall be liable to a penalty of twenty.fi-e tho!sand r!pees, for each s!ch defa!lt. CHAPTER %I$ INSPECTION IN&UIR# AND IN$ESTIGATION Po61r )o 4(ll for i*for5()io* i*3-14) .oo<3 (*d 4o*d,4) i*7,iri13. 1$). F1G >here on a scr!tiny of any doc!ment filed by a company or on any information recei-ed by him, the ,e(istrar is of the opinion that any f!rther information or explanation or any f!rther doc!ments relatin( to the company is necessary, he may by a written notice re3!ire the company E FaG to f!rnish in writin( s!ch information or explanationH or

115

FbG to prod!ce s!ch doc!ments, within s!ch reasonable time, as may be specified in the notice. F2G 1n the receipt of a notice !nder s!b.section F1G, it shall be the d!ty of the company and of its officers concerned to f!rnish s!ch information or explanation to the best of their 2nowled(e and power and to prod!ce the doc!ments to the ,e(istrar within the time specified or extended by the ,e(istrarD /ro-ided that where s!ch information or explanation relates to any past period, the officers who had been in the employment of the company for s!ch period, if so called !pon by the ,e(istrar thro!(h a notice ser-ed on them in writin(, shall also f!rnish s!ch information or explanation to the best of their 2nowled(e. F3G %f no information or explanation is f!rnished to the ,e(istrar within the time specified !nder s!b.section F1G or if the ,e(istrar on an examination of the doc!ments f!rnished is of the opinion that the information or explanation f!rnished is inade3!ate or does not disclose a f!ll and fair statement of the information re3!ired or if the ,e(istrar is satisfied on a scr!tiny of the doc!ments f!rnished that an !nsatisfactory state of affairs exists in the company with re(ard to compliance with the pro-isions of this #ct, he may, by another written notice, call on the company to prod!ce for his inspection s!ch f!rther boo2s of acco!nt, boo2s, papers and explanations as he may re3!ire at s!ch place and at s!ch time as he may specify in the noticeD /ro-ided that before any notice is ser-ed !nder this s!b.section, the ,e(istrar shall record his reasons in writin( for iss!in( s!ch notice. F4G %f the ,e(istrar is satisfied on the basis of information a-ailable with or f!rnished to him or on a representation made to him by any person that the b!siness of a company is bein( carried on for a fra!d!lent or !nlawf!l p!rpose, the ,e(istrar may, after informin( the company of the alle(ations made a(ainst it by a written order, call on the company to f!rnish in writin( any information or explanation on matters specified in the order within s!ch time as he may specify therein and carry o!t s!ch in3!iry as he deems fit pro-idin( the company a reasonable opport!nity of bein( heardD /ro-ided that the +entral 4o-ernment may, if it is satisfied that circ!mstances so warrant, direct the ,e(istrar or a competent inspector appointed by it for the p!rpose to carry o!t the in3!iry !nder this s!b.section. F5G >itho!t prej!dice to the fore(oin( pro-isions of this section, the +entral 4o-ernment may, if it is satisfied that circ!mstances so warrant, direct inspection of boo2s and papers of a company by an inspector appointed by it for the p!rpose. F"G >here a company fails to f!rnish any information called for !nder this section within the time or extended time pro-ided for the p!rpose, the company shall be p!nishable with a fine of fi-e h!ndred r!pees per day d!rin( the period for which the defa!lt contin!es and shall also be liable to a f!rther fine of r!pees one la2h for each offence. Co*d,4) of i*3-14)io* (*d i*7,ir/. 1&*. F1G >here a ,e(istrar or inspector calls for the boo2s of acco!nt and other boo2s and papers !nder section 1$), it shall be the d!ty of e-ery director, officer or other employee of the company to prod!ce all s!ch doc!ments to the ,e(istrar or inspector and f!rnish him with s!ch statements, information or explanations in s!ch form as the ,e(istrar or inspector may re3!ire and shall render all assistance to the ,e(istrar or inspector in connection with s!ch inspection. F2G 9he ,e(istrar or inspector, ma2in( an inspection or in3!iry !nder section 1$) may, d!rin( the co!rse of s!ch inspection or in3!iry, as the case may be,E

116

FaG ma2e or ca!se to be made copies of boo2s of acco!nt and other boo2s and papers, or FbG place or ca!se to be placed any mar2s of identification in s!ch boo2s in to2en of the inspection ha-in( been made. F3G 6otwithstandin( anythin( contained in any other law for the time bein( in force or in any contract to the contrary, the ,e(istrar or inspector ma2in( an inspection or in3!iry shall ha-e all the powers as are -ested in a ci-il co!rt !nder the +ode of +i-il /roced!re, 1)*&, while tryin( a s!it in respect of the followin( matters, namelyDE FaG s!mmonin( and enforcin( the attendance of persons and examinin( them on oathH and FbG inspection of any boo2s, re(isters and other doc!ments of the company at any place. F4G >here any defa!lt is made in complyin( with the directions iss!ed by the ,e(istrar or the inspector in exercise of the powers !nder the pro-isions of this section, the company shall be p!nishable with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to one la2h r!pees and e-ery officer who is in defa!lt shall be p!nishable with imprisonment which may extend to one year or with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to one la2h r!pees, or with both. F5G >here a director or other officer of the company has been con-icted of an offence !nder this section, he shall, on and from the date of his con-iction, be deemed to ha-e -acated his office as s!ch and shall be dis3!alified from holdin( the office of a director or any other employee in the company or any other company for a period of fi-e years from s!ch date. R1-or) o* i*3-14)io* 5(d1. 1&1. 9he ,e(istrar or inspector shall, after the inspection of the boo2s of acco!nt or an in3!iry !nder section 1$) and other boo2s and papers of the company !nder section 1&*, s!bmit a report in writin( to the +entral 4o-ernment alon( with s!ch doc!ments, if any, and s!ch report may, if necessary, incl!de a recommendation that f!rther in-esti(ation into the affairs of the company is necessary (i-in( his reasons in s!pport. S1(r40 (*d 31iH,r1. 1&2. F1G >here, !pon information in his possession or otherwise, the ,e(istrar or inspector has reasonable (ro!nd to belie-e that the boo2s and papers of a company, or relatin( to the mana(in( director or mana(er thereof, are li2ely to be destroyed, m!tilated, altered, falsified or secreted, he may, after obtainin( an order from the special co!rt for the sei=!re of s!ch boo2s and papers,E FaG enter, with s!ch assistance as may be re3!ired, and search, the place or places where s!ch boo2s or papers are 2ept, and FbG sei=e s!ch boo2s and papers as he considers necessary after allowin( the company to ta2e copies of, or extracts from, s!ch boo2s or papers at its cost. F2G 9he ,e(istrar or inspector shall ret!rn the boo2s and papers sei=ed !nder s!b.section F1G, as soon as may be, and in any case not later than the one h!ndred and ei(htieth day after s!ch sei=!re, to the company from whose c!stody or power s!ch boo2s or papers were sei=edD /ro-ided that the boo2s and papers may be called for by the ,e(istrar or inspector for a f!rther period of one h!ndred and ei(hty days by an order in writin( if they are needed a(ainD

117

/ro-ided f!rther that the ,e(istrar or inspector may, before ret!rnin( s!ch boo2s and papers as aforesaid, ta2e copies of, or extracts from them or place identification mar2s on them or any part thereof or deal with the same in s!ch other manner as he considers necessary. F3G 9he pro-isions of the +ode of +riminal /roced!re, 1)$3 relatin( to searches or sei=!res shall apply m!tatis m!tandis to e-ery search and sei=!re made !nder this section. I*213)i+()io* i*)o (ff(ir3 of 4o5-(*/. 1&3. F1G >here the +entral 4o-ernment is of the opinion, for reasons to be recorded in writin(, that it is necessary to in-esti(ate into the affairs of a company,E FaG on the receipt of a report of the ,e(istrar or inspector !nder section 1&1H FbG on intimation of a special resol!tion passed by a company that the affairs of the company o!(ht to be in-esti(atedH or FcG in p!blic interest, it may order an in-esti(ation into the affairs of the company. F2G >here an order is passed by a +o!rt or the 9rib!nal in any proceedin(s before it that the affairs of a company o!(ht to be in-esti(ated, the +entral 4o-ernment shall order an in-esti(ation into the affairs of that company. F3G For the p!rposes of this section, the +entral 4o-ernment may appoint one or more competent persons as inspectors to in-esti(ate into the affairs of the company and to report thereon in s!ch manner as the +entral 4o-ernment may direct. ,eport on inspection made. I*213)i+()io* i*)o 4o5-(*/=3 (ff(ir3 i* o)01r 4(313. 1&4. 9he 9rib!nal may, E FaG on an application made by E FiG not less than one h!ndred members or members holdin( not less than one.tenth of the total -otin( power in the case of a company ha-in( a share capitalH or FiiG not less than one.fifth of the persons on the company8s re(ister of members, in the case of a company ha-in( no share capital, and s!pported by s!ch e-idence as may be necessary for the p!rpose of showin( that the applicants ha-e (ood reasons for see2in( an order for cond!ctin( an in-esti(ation into the affairs of the companyH or FbG on an application made to it by any other person or otherwise, if it is satisfied that there are circ!mstances s!((estin( that E FiG the b!siness of the company is bein( cond!cted with intent to defra!d its creditors, members or any other persons or otherwise for a fra!d!lent or !nlawf!l p!rpose, or in a manner oppressi-e of any of its members or that the company was formed for any fra!d!lent or !nlawf!l p!rposeH FiiG persons concerned in the formation of the company or the mana(ement of its affairs ha-e in connection therewith been (!ilty of fra!d, misfeasance or other miscond!ct towards the company or towards any of its membersH or

118

FiiiG the members of the company ha-e not been (i-en all the information with respect to its affairs which they mi(ht reasonably expect, incl!din( information relatin( to the calc!lation of the commission payable to a mana(in( or other director, or the mana(er, of the company, order, after (i-in( a reasonable opport!nity to the parties concerned, that the affairs of the company o!(ht to be in-esti(ated by an inspector or inspectors appointed by the +entral 4o-ernment and where s!ch an order is passed , the +entral 4o-ernment shall appoint one or more competent persons as inspectors to in-esti(ate into the affairs of the company in respect of s!ch matters and to report there!pon to it in s!ch manner as the +entral 4o-ernment may direct. S14,ri)/ for -(/51*) of 4o3)3 (*d 19-1*313 of i*213)i+()io*. 1&5. F1G >here an in-esti(ation is ordered by the +entral 4o-ernment in p!rs!ance of s!b.section F1G of section 1&3, or in p!rs!ance of an order made by the 9rib!nal !nder section 1&4, the +entral 4o-ernment may before appointin( an inspector re3!ire the company or the applicants to (i-e sec!rity for s!ch amo!nt not exceedin( twenty.fi-e la2h r!pees as it may thin2 fit, for payment of the costs and expenses of the in-esti(ation. F2G #fter the completion of any in-esti(ation, the costs and expenses of s!ch in-esti(ation shall be wor2ed o!t and a notice shall be ser-ed on the company concerned for payment of the said amo!nt within a certain period specified in the notice and if the amo!nt is not paid within the time specified by the +entral 4o-ernment or s!ch extension of time as may be (i-en by it, the amo!nt shall be a char(e on the property and assets of the company and shall be reco-erable as s!ch !nder this #ct. "ir5 .od/ 4or-or()1 or (33o4i()io* *o) )o .1 (--oi*)1d (3 i*3-14)or. 1&". 6o firm, body corporate or other association shall be appointed as an inspector. I*213)i+()io* of o6*1r30i- of 4o5-(*/. 1&$. F1G >here it appears to the +entral 4o-ernment that there is (ood reason so to do, it may appoint one or more inspectors to in-esti(ate and report on the membership of any company and other matters relatin( to the company, for the p!rpose of determinin( the tr!e personsE FaG who are or ha-e been financially interested in the s!ccess or fail!re, whether real or apparent, of the companyH or FbG who are or ha-e been able to control or to materially infl!ence the policy of the company. F2G >itho!t prej!dice to its powers !nder s!b.section F1G, the +entral 4o-ernment shall appoint one or more inspectors !nder that s!b.section, if the 9rib!nal, in the co!rse of any proceedin(s before it, directs by an order that the affairs of the company o!(ht to be in-esti(ated as re(ards the membership of the company and other matters relatin( to the company, for the p!rposes specified in s!b.section F1G. F3G >hile appointin( an inspector !nder s!b.section F1G, the +entral 4o-ernment may define the scope of the in-esti(ation, whether as respects the matters or the period to which it is to extend or otherwise, and in partic!lar, may limit the in-esti(ation to matters connected with partic!lar shares or debent!res.

119

F4G S!bject to the terms of appointment of an inspector, his powers shall extend to the in-esti(ation of any circ!mstances s!((estin( the existence of any arran(ement or !nderstandin( which, tho!(h not le(ally bindin(, is or was obser-ed or is li2ely to be obser-ed in practice and which is rele-ant for the p!rposes of his in-esti(ation. Pro41d,r1 -o61r3 1)4. of i*3-14)or3. 1&&. F1G %t shall be the d!ty of all officers and other employees and a(ents of a company which is !nder in-esti(ation !nder this +hapter, and where the affairs of any other body corporate or a person are in-esti(ated !nder section 1&), of all officers and other employees incl!din( ex. employees and a(ents of s!ch body corporate or a personE FaG to preser-e and to prod!ce to an inspector or any person a!thorised by him in this behalf all boo2s and papers of, or relatin( to, the company or, as the case may be, relatin( to the other body corporate or the person, which are in their c!stody or powerH and FbG otherwise to (i-e to the inspector all assistance in connection with the in-esti(ation which they are reasonably able to (i-e. F2G 9he inspector may re3!ire any body corporate, other than a body corporate referred to in s!b. section F1G, to f!rnish s!ch information to, or prod!ce s!ch boo2s and papers before, him or any person a!thorised by him in this behalf as he may consider necessary if the f!rnishin( of s!ch information or the prod!ction of s!ch boo2s and papers is rele-ant or necessary for the p!rposes of his in-esti(ation. F3G 9he inspector shall not 2eep in his c!stody any boo2s and papers prod!ced !nder s!b.section F1G or s!b.section F2G for more than one h!ndred and ei(hty days and ret!rn the same to the company, body corporate, firm or indi-id!al by whom or on whose behalf the boo2s and papers were prod!cedD /ro-ided that the boo2s and papers may be called for by the inspector if they are needed a(ain for a f!rther period of one h!ndred and ei(hty days by an order in writin(. F4G #n inspector may examine on oathE FaG any of the persons referred to in s!b.section F1GH and FbG with the prior appro-al of the +entral 4o-ernment, any other person, in relation to the affairs of the company, or other body corporate or person, as the case may be, and for that p!rpose may re3!ire any of those persons to appear before him personally. F5G 6otes of any examination !nder s!b.section F4G shall be ta2en down in writin( and shall be read o-er to, or by, and si(ned by, the person examined, and may thereafter be !sed in e-idence a(ainst him. F"G %f any person fails witho!t reasonable ca!se or ref!sesE FaG to prod!ce to an inspector or any person a!thorised by him in this behalf any boo2 or paper which it is his d!ty !nder s!b.section F1G or s!b.section F2G to prod!ceH FbG to f!rnish any information which is his d!ty !nder s!b.section F2G to f!rnishH FcG to appear before the inspector personally when re3!ired to do so !nder s!b.section F4G or to answer any 3!estion which is p!t to him by the inspector in p!rs!ance of that s!b. sectionH or

120

FdG to si(n the notes of any examination referred to in s!b.section F5G, he shall be p!nishable with imprisonment for a term which may extend to six months and with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to one la2h r!pees, and also with a f!rther fine which may extend to two tho!sand r!pees for e-ery day after the first d!rin( which the fail!re or ref!sal contin!es. F$G 1fficers of the +entral 4o-ernment, any State 4o-ernment or stat!tory a!thority shall pro-ide reasonable assistance to the inspector for the p!rpose of the inspection, in3!iry or in-esti(ation, which the inspector may, with the prior appro-al of the +entral 4o-ernment, re3!ire. F&G 9he +entral 4o-ernment may enter into an a(reement with the 4o-ernment of a forei(n State for reciprocal arran(ements to assist in any inspection, in3!iry or in-esti(ation !nder this #ct or !nder the correspondin( law in force in that State. 9he +entral 4o-ernment may, by notification, render the application of this +hapter in relation to a forei(n State with which reciprocal arran(ements ha-e been made s!bject to s!ch modifications, exceptions, conditions and 3!alifications as may be deemed expedient for implementin( the a(reement with that State. Po61r of i*3-14)or3 )o 4o*d,4) i*213)i+()io* i*)o (ff(ir3 of r1l()1d 4o5-(*i13 1)4. 1&). %f an inspector appointed !nder section 1&3 or section 1&4 or section 1&$ to in-esti(ate into the affairs of a company considers it necessary for the p!rposes of the in-esti(ation, to in-esti(ate also the affairs of E FaG any other body corporate which is, or has at any rele-ant time been the company8s s!bsidiary company or holdin( company, or a s!bsidiary company of its holdin( companyH FbG any other body corporate which is, or has at any rele-ant time been mana(ed by any person as mana(in( director or as mana(er, who is, or was, at the rele-ant time, the mana(in( director or the mana(er of the companyH FcG any other body corporate whose 0oard of Directors comprises nominees of the company or is acc!stomed to act in accordance with the directions or instr!ctions of the company or any of its directorsH or FdG any person who is or has at any rele-ant time been the company8s mana(in( director or mana(er or employee, he shall, s!bject to the prior appro-al of the +entral 4o-ernment, in-esti(ate into and report on the affairs of the other body corporate or of the mana(in( director or mana(er, in so far as he considers that the res!lts of his in-esti(ation are rele-ant to the in-esti(ation of the affairs of the company for which he is appointedD /ro-ided that the +entral 4o-ernment shall, before accordin( appro-al !nder this section (i-e the body corporate or person a reasonable opport!nity to show ca!se why s!ch appro-al shall not be (i-en. S1iH,r1 of do4,51*)3 ./ i*3-14)or. 1)*. F1G >here in the co!rse of an in-esti(ation !nder this +hapter, the inspector has reasonable (ro!nds to belie-e that the boo2s and papers of, or relatin( to, any company or other body corporate or mana(in( director or mana(er of s!ch company are li2ely to be destroyed, m!tilated, altered, falsified or secreted, the inspector may E

121

FaG enter, with s!ch assistance as may be re3!ired, the place or places where s!ch boo2s and papers are 2ept in s!ch manner as may be re3!iredH and FbG sei=e boo2s and papers as he considers necessary after allowin( the company to ta2e copies of, or extracts from, s!ch boo2s, papers at its cost for the p!rposes of his in-esti(ation. F2G 9he inspector shall 2eep in his c!stody the boo2s and papers sei=ed !nder this section for s!ch a period not later than the concl!sion of the in-esti(ation as he considers necessary and thereafter shall ret!rn the same to the company or the other body corporate, or, as the case may be, to the mana(in( director or the mana(er or any other person from whose c!stody or power they were sei=edD /ro-ided that the inspector may, before ret!rnin( s!ch boo2s and papers as aforesaid, ta2e copies of, or extracts from them or place identification mar2s on them or any part thereof or deal with the same in s!ch manner as he considers necessary. F3G 9he pro-isions of the +ode of +riminal /roced!re, 1)$3, relatin( to searches or sei=!res shall apply m!tatis m!tandis to e-ery search or sei=!re made !nder this section. "r11Hi*+ of (331)3 o* (* i*7,ir/ (*d i*213)i+()io* of ( 4o5-(*/. 1)1. F1G >here it appears to the 9rib!nal, whether on a reference made to it by the +entral 4o-ernment or in connection with any in3!iry or in-esti(ation into the affairs of a company !nder sections 1&* and 1&3 or on any complaint made by any person in this behalf that the remo-al, transfer or disposal of f!nds, assets, properties of the company is li2ely to ta2e place in a manner that is prej!dicial to the interests of the company or its shareholders or creditors or in p!blic interest, it may by order direct that s!ch transfer, remo-al or disposal shall not ta2e place d!rin( s!ch period not exceedin( three years as may be specified in the order or may ta2e place s!bject to s!ch conditions and restrictions as the 9rib!nal may deem fit. F2G %n case of any remo-al, transfer or disposal of f!nds, assets, properties of the company in contra-ention of the order of the 9rib!nal !nder s!b.section F1G, the company shall be p!nishable with fine which shall not be less than one la2h r!pees b!t which may extend to twenty.fi-e la2h r!pees and e-ery officer who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to three years or with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to fi-e la2h r!pees, or with both. I5-o3i)io* of r13)ri4)io*3 ,-o* 314,ri)i13. 1)2. F1G >here it appears to the 9rib!nal, in connection with any in-esti(ation !nder section 1&$ or on a complaint made by any person in this behalf, that there is (ood reason to find o!t the rele-ant facts abo!t any sec!rities iss!ed or to be iss!ed by a company and the 9rib!nal is of the opinion that s!ch facts cannot be fo!nd o!t !nless certain restrictions, as it may deem fit, are imposed, the 9rib!nal may, by order, direct that the sec!rities shall be s!bject to s!ch restrictions as it may deem fit for s!ch period not exceedin( three years as may be specified in the order. F2G >here sec!rities in any company are iss!ed or transferred or acted !pon in contra-ention of an order of the 9rib!nal !nder s!b.section F1G, the company shall be p!nishable with fine which shall not be less than one la2h r!pees b!t which may extend to twenty.fi-e la2h r!pees and e-ery officer who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to fi-e la2h r!pees, or with both. I*3-14)or=3 r1-or).

122

1)3. F1G #n inspector appointed !nder this +hapter may, and if so directed by the +entral 4o-ernment shall, s!bmit interim reports to that 4o-ernment, and on the concl!sion of the in-esti(ation, shall s!bmit a final report to the +entral 4o-ernment. F2G '-ery report made !nder s!b.section F1G shall be in writin( or printed as the +entral 4o-ernment may direct. F3G 9he +entral 4o-ernment E FaG shall forward a copy of final report, other than an interim report, made by any inspector, to the company at its re(istered office and also to any body corporate or person dealt with in the report by -irt!e of section 1&)H FbG may, if it thin2s fit, f!rnish a copy of the final report, on re3!est and on payment of the prescribed fee, to any person E FiG who is a member of the company or other body corporate dealt with in the report !nder section 1&3 or section 1&)H or FiiG whose interest as a creditor of the company or other body corporate appears to the +entral 4o-ernment to be affectedH FcG shall, where the inspectors are appointed !nder section 1&3 in p!rs!ance of an order of a +o!rt or the 9rib!nal, forward a copy of any report to that +o!rt or the 9rib!nalH FdG shall, where the inspectors are appointed in p!rs!ance of the pro-isions of section 1&4, f!rnish a copy of the final report to the 9rib!nal or to the applicants who re3!ested in-esti(ationH FeG may also ca!se the final report to be p!blished. F4G 9he report of any inspector appointed !nder this +hapter and a!thenticated in s!ch manner, as may be prescribed, shall be admissible in any le(al proceedin( as e-idence in relation to any matter contained in the report. No 3,i) or -ro411di*+ )ill 3,.5i33io* of fi*(l r1-or). 1)4. 6o s!it or other proceedin( shall lie in any co!rt, the 9rib!nal or other a!thority in respect of any action initiated by the +entral 4o-ernment for ma2in( an in-esti(ation !nder this +hapter or for the appointment of an inspector there!nder and no proceedin(s of an inspector shall be called in 3!estion or stayed by any co!rt, the 9rib!nal or other a!thority on any (ro!nd whatsoe-er !ntil the concl!sion of the in-esti(ation and the s!bmission of a report by the inspector. A4)io*3 )o .1 )(<1* i* -,r3,(*41 of i*3-14)or=3 r1-or). 1)5. F1G %f, from an inspector8s report, made !nder section 1)3, it appears to the +entral 4o-ernment that any person has, in relation to the company or in relation to any other body corporate or other person whose affairs ha-e been in-esti(ated !nder section 1&3 or section 1&4 or section 1&), been (!ilty of any offence for which he is criminally liable, the +entral 4o-ernment may prosec!te s!ch person for the offence and it shall be the d!ty of all officers and other employees of the company or body corporate to (i-e the +entral 4o-ernment the necessary assistance in connection with the prosec!tion.

123

F2G %f any company or other body corporate is liable to be wo!nd !p !nder this #ct and it appears to the +entral 4o-ernment from any s!ch report made !nder section 1)3 that it is expedient so to do by reason of any s!ch circ!mstances as are referred to in section 1&4, the +entral 4o-ernment may, !nless the company or body corporate is already bein( wo!nd !p by the 9rib!nal, ca!se to be presented to the 9rib!nal by any person a!thorised by the +entral 4o-ernment in this behalfE FaG a petition for the windin( !p of the company or body corporate on the (ro!nd that it is j!st and e3!itable that it sho!ld be wo!nd !p, or FbG an application !nder section 212, or FcG both. F3G %f from any s!ch report as aforesaid, it appears to the +entral 4o-ernment that proceedin(s o!(ht, in the p!blic interest, to be bro!(ht by the company or any body corporate whose affairs ha-e been in-esti(ated !nder section 1&3 E FaG for the reco-ery of dama(es in respect of any fra!d, misfeasance or other miscond!ct in connection with the promotion or formation, or the mana(ement of the affairs, of s!ch company or body corporateH or FbG for the reco-ery of any property of s!ch company or body corporate which has been misapplied or wron(f!lly retained, the +entral 4o-ernment may itself brin( proceedin(s for windin(.!p in the name of s!ch company or body corporate. F4G 9he +entral 4o-ernment shall be indemnified by s!ch company or body corporate a(ainst any costs or expenses inc!rred by it in, or in connection with, any proceedin(s bro!(ht by -irt!e of s!b.section F3G. E9-1*313 of i*213)i+()io*. 1)". F1G 9he expenses of, and incidental to, an in-esti(ation by an inspector appointed by the +entral 4o-ernment !nder this +hapter other than expenses of inspection !nder section 1&5 shall be defrayed in the first instance by the +entral 4o-ernment, b!t shall be reimb!rsed by the followin( persons to the extent mentioned below, namelyDE FaG any person who is con-icted on a prosec!tion instit!ted, or who is ordered to pay dama(es or restore any property in proceedin(s bro!(ht, !nder section 1)5, to the extent that he may in the same proceedin(s be ordered to pay the said expenses as may be specified by the co!rt con-ictin( s!ch person, or orderin( him to pay s!ch dama(es or restore s!ch property, as the case may beH FbG any company or body corporate in whose name proceedin(s are bro!(ht as aforesaid, to the extent of the amo!nt or -al!e of any s!ms or property reco-ered by it as a res!lt of s!ch proceedin(sH FcG !nless, as a res!lt of the in-esti(ation, a prosec!tion is instit!ted !nder section 1)5, E FiG any company, body corporate, mana(in( director or mana(er dealt with by the report of the inspector, and FiiG the applicants for the in-esti(ation, where the inspector was appointed !nder section 1&4, to s!ch extent as the +entral 4o-ernment may direct.

124

F2G #ny amo!nt for which a company or body corporate is liable !nder cla!se FbG of s!b.section F1G shall be a first char(e on the s!ms or property mentioned in that cla!se. $ol,*)(r/ 6i*di*+;,- of 4o5-(*/ 1)4. *o) )o 3)o- i*213)i+()io* -ro411di*+3. 1)$. #n in-esti(ation !nder this +hapter may be initiated notwithstandin(, and no s!ch in-esti(ation shall be stopped or s!spended by reason only of, the fact thatE FaG an application has been made !nder section 212H FbG the company has passed a special resol!tion for -ol!ntary windin(.!pH or FcG any other proceedin( for the windin( !p of the company is pendin( before the 9rib!nal D /ro-ided that where a windin(.!p order is passed by the 9rib!nal in a proceedin( referred to in cla!se FcG, the inspector shall inform the 9rib!nal abo!t the pendency of the in-esti(ation proceedin( before it and the 9rib!nal shall pass s!ch order as it may deem fitD /ro-ided f!rther that nothin( in the windin(.!p order shall absol-e any director or other employee of the company from participatin( in the proceedin( before the inspector or any liability as a res!lt of the findin( by the inspector. L1+(l (d2i31r3 (*d .(*<1r3 *o) )o di34lo31. 1)&. 6othin( in this +hapter shall re3!ire the disclos!re to the 9rib!nal or to the +entral 4o-ernment or to the ,e(istrar or to an inspector appointed by the +entral 4o-ernmentE FaG by a le(al ad-iser, of any pri-ile(ed comm!nication made to him in that capacity, except as respects the name and address of his clientH or FbG by the ban2ers of any company, body corporate, or other person, of any information as to the affairs of any of their c!stomers, other than s!ch company, body corporate, or person. I*213)i+()io* 1)4. of for1i+* 4o5-(*i13. 1)). 9he pro-isions of this +hapter shall apply m!tatis m!tandis to inspection, in3!iry or in-esti(ation in relation to forei(n companies. P1*(l)/ for f,r*i30i*+ f(l31 3)()151*) 5,)il()io* d13)r,4)io* of do4,51*)3. 2**. >here a person who is re3!ired to pro-ide an explanation or ma2e a statement d!rin( the co!rse of inspection, in3!iry or in-esti(ation, or an officer or other employee of a company or other body corporate which is also !nder in-esti(ation, E FaG destroys, m!tilates or falsifies, or is a party to the destr!ction, m!tilation or falsification of, doc!ments relatin( to the property, assets or affairs of the company or the body corporateH FbG ma2es, or is a party to the ma2in( of, a false entry in any doc!ment concernin( the company or body corporateH or FcG pro-ides an explanation which is false or which he 2nows to be false,

125

he shall be p!nishable with imprisonment for a term which may extend to three years and with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to fi-e la2h r!pees. CHAPTER %$ COMPROMISES ARRANGEMENTS AND AMALGAMATIONS Po61r )o 4o5-ro5i31 or 5(<1 (rr(*+151*)3 6i)0 4r1di)or3 (*d 515.1r3. 2*1. F1G >here a compromise or arran(ement is proposedE FaG between a company and its creditors or any class of them, or FbG between a company and its members or any class of them, the 9rib!nal may, on the application of the company or of any creditor or member of the company, or in the case of a company which is bein( wo!nd!p, of the li3!idator, order a meetin( of the creditors or class of creditors, or of the members or class of members, as the case may be, to be called, held and cond!cted in s!ch manner as the 9rib!nal directs. Explanation.EFor the p!rposes of this s!b.section, arran(ement incl!des a reor(anisation of the company8s share capital by the consolidation of shares of different classes or by the di-ision of shares into shares of different classes, or by both of those methods. F2G 9he company or any other person, by whom an application is made !nder s!b.section F1G shall disclose to the 9rib!nal by affida-itE FaG all material facts relatin( to the company, s!ch as the latest financial position of the company, the latest a!ditor8s report on the acco!nts of the company and the pendency of any in-esti(ation or proceedin(s a(ainst the companyH FbG red!ction of share capital of the company, if any, incl!ded in the compromise or arran(ementH FcG any scheme of corporate debt restr!ct!rin( consented to by not less than se-enty.fi-e per cent. of the sec!red creditors in -al!e, incl!din(E FiG a creditor8s responsibility statement, FiiG safe(!ards for the protection of other sec!red and !nsec!red creditors, FiiiG report by the a!ditor that the f!nd re3!irements of the company after the corporate debt restr!ct!rin( as appro-ed shall conform to the li3!idity test based !pon the estimates pro-ided to them by the 0oard, Fi-G where the company proposes to adopt the corporate debt restr!ct!rin( (!idelines specified by the ,eser-e 0an2 of %ndia, a statement to that effect, and F-G a -al!ation report in respect of the shares and the property and all assets, tan(ible and intan(ible, mo-able and immo-able, of the company by a re(istered -al!er. F3G >here a meetin( is proposed to be called in p!rs!ance of an order of the 9rib!nal !nder s!b. section F1G, a notice of s!ch meetin( shall be sent to all the creditors or class of creditors and to all the members or class of members and the debent!re holders of the company, either indi-id!ally or by an ad-ertisement, which shall be accompanied by a statement disclosin( the details of the compromise or arran(ement, the -al!ation report, if any, and explainin( their effect on creditors, members and the debent!re holders and the effect of the compromise or arran(ement on any

126

material interests of the directors of the company or the debent!re tr!stees, and s!ch other matters as may be prescribedD /ro-ided that where an ad-ertisement is iss!ed !nder this s!b.section, it shall indicate the time within which copies of the compromise or arran(ement shall be made a-ailable to the concerned persons free of char(e from the re(istered office of the company. F4G # notice !nder s!b.section F3G shall pro-ide that the persons to whom the notice is sent shall intimate in writin( their consent to the adoption of the compromise or arran(ement within one month from the date of receipt of s!ch noticeD /ro-ided that any objection to the compromise or arran(ement shall be made only by persons holdin( not less than ten per cent. of the shareholdin( or ha-in( o!tstandin( debt amo!ntin( to not less than fi-e per cent. of the total o!tstandin( debt as per the latest a!dited financial statement. F5G # notice !nder s!b.section F3G alon( with all the doc!ments in s!ch form as may be prescribed shall also be sent to the +entral 4o-ernment, the ,eser-e 0an2 of %ndia, the Sec!rities and 'xchan(e 0oard, the ,e(istrar, the respecti-e stoc2 exchan(es, the 1fficial <i3!idator, the +ompetition +ommission of %ndia established !nder s!b.section F1G of section $ of the +ompetition #ct, 2**2, if necessary, and s!ch other a!thorities which are li2ely to be affected by the compromise or arran(ement and shall re3!ire that representations, if any, to be made by them shall be made within one month from the date of receipt of s!ch notice, failin( which, it shall be pres!med that they ha-e no representations to ma2e on the proposals. F"G >here, at a meetin( held in p!rs!ance of s!b.section F1G, a majority representin( three.fo!rths in -al!e of the creditors, or class of creditors or members or class of members, as the case may be, present and -otin( in person or by proxy or by postal ballot, a(ree to any compromise or arran(ement and if s!ch compromise or arran(ement is sanctioned by the 9rib!nal by an order, the same shall be bindin( on the company, all the creditors, or class of creditors or members or class of members, as the case may be, or, in case of a company bein( wo!nd.!p, on the li3!idator and the contrib!tories of the company. F$G #n order made by the 9rib!nal !nder s!b.section F"G shall pro-ide for all or any of the followin( matters, namelyDE FaG where the compromise or arran(ement pro-ides for con-ersion of preferential shares into e3!ity shares, s!ch preference shareholders shall be (i-en an option to either obtain arrears of di-idend in cash or accept e3!ity shares e3!al to the -al!e of the di-idend payableH FbG the protection of any class of creditorsH FcG if the compromise or arran(ement res!lts in the -ariation of the shareholders8 ri(hts, it shall be (i-en effect to !nder the pro-isions of section 42H FdG if the compromise or arran(ement is a(reed to by the creditors !nder s!b.section F"G, any proceedin(s pendin( before the 0oard for %nd!strial and Financial ,econstr!ction established !nder section 4 of the Sic2 %nd!strial +ompanies FSpecial /ro-isionsG #ct, 1)&5 shall abateH FeG s!ch other matters as are in the opinion of the 9rib!nal necessary to effecti-ely implement the terms of the compromise or arran(ement.

127

F&G 9he order of the 9rib!nal shall be filed with the ,e(istrar by the +ompany within thirty days of the receipt of the order. F)G 6o compromise or arran(ement !nder this section shall incl!de any b!y.bac2 of sec!rities as is pro-ided !nder section "1. F1*G #ny compromise or arran(ement may incl!de ta2eo-er offer made in s!ch manner as may be prescribedD /ro-ided that in case of listed companies, ta2eo-er offer shall be as per the (!idelines iss!ed by the Sec!rities and 'xchan(e 0oard. Explanation.EFor the p!rposes of this section, Ata2eo-er offerB means an offer to ac3!ire all the shares in a company or where there is more than one class of shares, all the shares of one or more classes, other than shares that at the date of the offer are already held by the offeror, and the terms of the offer are the same in relation to all the shares to which the offer relates or where the shares to which the offer relates incl!de shares of different classes, in relation to all the shares of each class. F11G #n a((rie-ed party may ma2e an application to the 9rib!nal in the e-ent of any (rie-ances with respect to the ta2eo-er offer of companies other than listed companies in s!ch manner as may be prescribed and the 9rib!nal may, on application, pass s!ch order as it may deem fit. Explanation.EFor the remo-al of do!bts, it is hereby declared that the pro-isions of section 5) shall not apply to the red!ction of share capital effected in p!rs!ance of the order of the 9rib!nal !nder this section. Po61r of Tri.,*(l )o 1*for41 4o5-ro5i31 or (rr(*+151*). 2*2. F1G >here the 9rib!nal ma2es an order !nder section 2*1 sanctionin( a compromise or an arran(ement in respect of a company, itE FaG shall ha-e power to s!per-ise the implementation of the compromise or arran(ementH and FbG may, at the time of ma2in( s!ch order or at any time thereafter, (i-e s!ch directions in re(ard to any matter or ma2e s!ch modifications in the compromise or arran(ement as it may consider necessary for the proper implementation of the compromise or arran(ement. F2G %f the 9rib!nal is satisfied that the compromise or arran(ement sanctioned !nder section 2*1 cannot be implemented satisfactorily with or witho!t modifications, and the company is !nable to pay its debts as per the scheme, it may ma2e an order for windin(.!p the company and s!ch an order shall be deemed to be an order made !nder section 24&. F3G 9he pro-isions of this section shall, so far as may be, also apply to a company in respect of which an order has been made before the commencement of this #ct sanctionin( a compromise or an arran(ement. M1r+1r (*d (5(l+(5()io* of 4o5-(*i13. 2*3. F1G >here an application is made to the 9rib!nal !nder section 2*1 for the sanctionin( of a compromise or an arran(ement proposed between a company and any s!ch persons as are mentioned in that section, and it is shown to the 9rib!nalE

128

FaG that the compromise or arran(ement has been proposed for the p!rposes of, or in connection with, a scheme for the reconstr!ction of the company or companies in-ol-in( mer(er or the amal(amation of any two or more companiesH and FbG that !nder the scheme, the whole or any part of the !nderta2in(, property or liabilities of any company Fhereinafter referred to as the transferor companyG is re3!ired to be transferred to another company Fhereinafter referred to as the transferee companyG, or is proposed to be di-ided amon( and transferred to two or more companies, the 9rib!nal may on s!ch application, order a meetin( of the creditors or class of creditors or the members or class of members, as the case may be, to be called, held and cond!cted in s!ch manner as the 9rib!nal may direct and the pro-isions of s!b.sections F3G to F"G of section 2*1 shall apply m!tatis m!tandis. F2G >here an order has been made by the 9rib!nal !nder s!b.section F1G, mer(in( companies or the companies in respect of which a di-ision is proposed, shall also be re3!ired to circ!late the followin( for the meetin( so ordered by the 9rib!nal, namelyDE FaG the draft of the proposed terms of the scheme drawn !p and adopted by the directors of the mer(in( companyH FbG confirmation that a copy of the draft scheme has been filed with the ,e(istrarH FcG a report adopted by the directors of the mer(in( companies explainin( effect of compromise on each class of shareholders layin( o!t in partic!lar the share exchan(e ratio, specifyin( any special -al!ation diffic!ltiesH FdG the report of the expert with re(ard to -al!ation, if anyH FeG a s!pplementary acco!ntin( statement if the last ann!al acco!nts of any of the mer(in( company relate to a financial year endin( more than six months before the first meetin( of the company s!mmoned for the p!rposes of appro-in( the schemeH FfG appro-al of the draft of the proposed terms by an ordinary resol!tion of the transferor company or, as the case may be, each of the transferor companies in the case of mer(er by formation by a new company. F3G 9he 9rib!nal, after satisfyin( itself that the proced!re specified in s!b.sections F1G and F2G has been complied with, may, by order, sanction the compromise or arran(ement or by a s!bse3!ent order, ma2e pro-ision for all the followin( matters, namelyDE FaG the transfer to the transferee company of the whole or any part of the !nderta2in(, property or liabilities of the transferor company from a date to be determined by the parties !nless the 9rib!nal, for reasons to be recorded by it in writin(, decides otherwiseH FbG the allotment or appropriation by the transferee company of any shares, debent!res, policies or other li2e instr!ments in the company which, !nder the compromise or arran(ement, are to be allotted or appropriated by that company to or for any personH FcG the contin!ation by or a(ainst the transferee company of any le(al proceedin(s pendin( by or a(ainst any transferor company on the date of transferH FdG dissol!tion, witho!t windin( !p, of any transferor companyH

129

FeG the pro-ision to be made for any persons who, within s!ch time and in s!ch manner as the 9rib!nal directs, dissent from the compromise or arran(ementH FfG where there is an allotment of any forei(n direct in-estment, s!ch allotment to the transferor company and the transferee company at s!ch percenta(e as may be specified in the orderH F(G the transfer of the employees of the transferor company to the transferee companyH FhG where the transferor company is a listed company and the transferee company is an !nlisted company,J FiG the transferee company shall contin!e to be an !nlisted companyH FiiG if shareholders of the transferor company decide to opt o!t of the transferee company, pro-ision shall be made for payment of the -al!e of shares held by them and other benefits in accordance with a pre.determined price form!la or after a -al!ation is made, and the arran(ements !nder this pro-ision may be made by the 9rib!nalH FiiiG if the transferor company is not dissol-ed, it shall become an !nlisted company and if it is left with a small portion of the assets, the p!blic shareholders may decide to opt o!t of the company and pro-ision shall be made for the payment of the -al!e of shares and other benefits in accordance with a predetermined price form!la or after a -al!ation is madeH FiG where the transferor company is dissol-ed, the fee, if any, paid by the transferee company on its a!thorised capital shall be set.off a(ainst any fees payable by the transferee company on its a!thorised capital s!bse3!ent to the amal(amationH and FjG s!ch incidental, conse3!ential and s!pplementary matters as are deemed necessary to sec!re that the mer(er or amal(amation is f!lly and effecti-ely carried o!t. F4G >here an order !nder this section pro-ides for the transfer of any property or liabilities, then, by -irt!e of the order, that property shall be transferred to the transferee company and the liabilities shall be transferred to and become the liabilities of the transferee company and any property may, if the order so directs, be freed from any char(e which shall by -irt!e of the compromise or arran(ement, cease to ha-e effect. F5G >ithin thirty days after the ma2in( of an order !nder this section, e-ery company in relation to which the order is made shall ca!se a certified copy thereof to be filed with the ,e(istrar for re(istration. F"G >here any defa!lt is made in complyin( with the pro-isions of this section, the transferor company or the transferee company or both shall be p!nishable with fine which shall not be less than one la2h r!pees b!t which may extend to twenty.fi-e la2h r!pees and e-ery officer of s!ch companies who is in defa!lt, shall be p!nishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one la2h r!pees b!t which may extend to three la2h r!pees, or with both. Explanation.EFor the p!rposes of this section,E FiG in a scheme in-ol-in( a mer(er, where !nder the scheme the !nderta2in(, property and liabilities of one or more companies, incl!din( the company in respect of which the compromise or arran(ement is proposed, are to be transferred to another existin(

130

company, it is a mer(er by absorption, or where the !nderta2in(, property and liabilities of two or more companies, incl!din( the company in respect of which the compromise or arran(ement is proposed, are to be transferred to a new company, whether or not a p!blic company, it is a mer(er by formation of a new companyH FiiG references to mer(in( companies are in relation to a mer(er by absorption, to the transferor and transferee companies, and, in relation to a mer(er by formation of a new company, to the transferor companiesH FiiiG a scheme in-ol-es a di-ision where !nder the scheme the !nderta2in(, property and liabilities of the company in respect of which the compromise or arran(ement is proposed are to be di-ided amon( and transferred to two or more companies each of which is either an existin( company or a new companyH and Fi-G property incl!des assets, ri(hts and interests of e-ery description and liabilities incl!de debts and obli(ations of e-ery description. M1r+1r or (5(l+(5()io* of 41r)(i* 4o5-(*i13. 2*4. F1G 6otwithstandin( the pro-isions of section 2*3, a scheme of mer(er or amal(amation may be entered into between two small companies or between a holdin( company and its wholly. owned s!bsidiary company, s!bject to the followin(, namelyDE FaG a notice of the proposed scheme in-itin( comments or objections, if any, from any persons affected by the scheme within thirty days is iss!ed by both the transferor and the transferee companyH FbG the objections recei-ed are considered by the companies in their respecti-e (eneral meetin(s and the scheme is appro-ed by the respecti-e members or class of members at a (eneral meetin( by passin( a special resol!tionH and FcG the scheme is appro-ed by three.fo!rths in -al!e of the creditors or class of creditors of respecti-e companies indicated in a meetin( con-ened by the company by (i-in( a notice of twenty.one days alon( with the scheme to its creditors for the p!rpose or otherwise appro-ed in writin(. F2G 9he transferee company shall file a copy of the scheme so appro-ed in the manner as may be prescribed, with the ,e(istrar and the 1fficial <i3!idator. F3G 1n the receipt of the scheme, if the ,e(istrar or the 1fficial <i3!idator has no objections or comments to the scheme, the ,e(istrar shall re(ister the same and iss!e a confirmation thereof to the companies. F4G %f the 1fficial <i3!idator has any objections or comments, he may comm!nicate the same in writin( to the ,e(istrar within a period of thirty daysD /ro-ided that if no s!ch comm!nication is made by the 1fficial <i3!idator, it shall be pres!med that he has no objection to the scheme. F5G %f the ,e(istrar after recei-in( the comments of the 1fficial <i3!idator or for any reason is of the opinion that s!ch a scheme is not in p!blic interest or in interest of the creditors, he may file an application before the 9rib!nal within ninety days of the receipt of the scheme !nder s!b.section F2G statin( his objections and re3!estin( that 9rib!nal may consider the scheme !nder section 2*3.

131

F"G 1n receipt of an application from the ,e(istrar or from any person, if the 9rib!nal, for reasons to be recorded in writin(, is of the opinion that the scheme sho!ld be considered as per the proced!re laid down in section 2*3, the 9rib!nal may direct accordin(ly or it may confirm the scheme by passin( s!ch order as it deems fitD /ro-ided that if the ,e(istrar or the 1fficial <i3!idator does not ha-e any objections to the scheme or they do not file any application !nder this section before the 9rib!nal, it shall be deemed that they ha-e no objection to the scheme. F$G # copy of the order !nder s!b.section F"G shall be comm!nicated to the ,e(istrar and the persons concerned and the ,e(istrar shall re(ister the scheme and iss!e a confirmation thereof to the companies. F&G 9he re(istration of the scheme shall be deemed to ha-e the effect of dissol!tion of the transferor company witho!t process of windin( !p. F)G 9he re(istration of the scheme shall ha-e the followin( effects, namelyDE FaG transfer of property or liabilities of the transferor company to the transferee company so that the property becomes the property of the transferee company and the liabilities become the liabilities of the transferee companyH FbG the char(es, if any, on the property of the transferor company shall be applicable and enforceable as if the char(es were on the property of the transferee companyH FcG le(al proceedin(s by or a(ainst the transferor company pendin( before any co!rt of law shall be contin!ed by or a(ainst the transferee companyH and FdG where the scheme pro-ides for p!rchase of shares held by the dissentin( shareholders or settlement of debt d!e to dissentin( creditors, s!ch amo!nt, to the extent it is !npaid, shall become the liability of the transferee company. F1*G 9he transferee company shall file an application with the ,e(istrar alon( with the scheme re(istered, indicatin( the re-ised a!thorised capital and pay the prescribed fee d!e on re-ised capitalD /ro-ided that the fee, if any, paid by the transferor company on its a!thorised capital prior to its mer(er or amal(amation with the transferee company shall be set off a(ainst the fees payable by the transferee company on its a!thorised capital enhanced by the mer(er or amal(amation. A5(l+(5()io* ./ 5,),(l (+r1151*). 2*5. F1G 9he pro-isions of this +hapter shall apply m!tatis m!tandis to schemes of mer(ers and amal(amations between companies re(istered !nder this #ct and companies incorporated in the j!risdictions of s!ch co!ntries as may be notified from time to time by the +entral 4o-ernment. F2G# forei(n company may mer(e or amal(amate into a company re(istered !nder this #ct or -ice -ersa and the terms and conditions of the scheme of mer(er or amal(amation may pro-ide, amon( other thin(s, for the payment of consideration to the shareholders of the mer(in( company in cash, or in %ndian Depository ,eceipts, or partly in cash and partly in %ndian Depository ,eceipts, as the case may be, as per the scheme to be drawn !p for the p!rpose. Po61r )o (47,ir1 30(r13 of 30(r10old1r3 di331*)i*+ fro5 340151 or 4o*)r(4) (--ro21d ./ 5(:ori)/.

132

2*". F1G >here a scheme or contract in-ol-in( the transfer of shares or any class of shares in a company Fthe transferor companyG to another company Fthe transferee companyG has, within fo!r months after the ma2in( of an offer in that behalf by the transferee company, been appro-ed by the holders of not less than nine.tenths in -al!e of the shares whose transfer is in-ol-ed, other than shares already held at the date of the offer by, or by a nominee of the transferee company or its s!bsidiary companies, the transferee company may, at any time within two months after the expiry of the said fo!r months, (i-e notice in the prescribed manner to any dissentin( shareholder that it desires to ac3!ire his shares. F2G >here a notice !nder s!b.section F1G is (i-en, the transferee company shall, !nless on an application made by the dissentin( shareholder, within one month from the date on which the notice was (i-en, the 9rib!nal thin2s fit to order otherwise, be entitled to and bo!nd to ac3!ire those shares on the terms on which, !nder the scheme or contract, the shares of the appro-in( shareholders are to be transferred to the transferee company. F3G >here a notice has been (i-en by the transferee company !nder s!b.section F1G and the 9rib!nal has not, on an application made by the dissentin( shareholder, to the trib!nal made an order to the contrary, the transferee company shall, on the expiry of one month from the date on which the notice has been (i-en, or, if an application to the 9rib!nal by the dissentin( shareholder is then pendin(, after that application has been disposed of, send a copy of the notice to the transferor company to(ether with an instr!ment of transfer, to be exec!ted on behalf of the shareholder by any person appointed by the transferee company and on its own behalf by the transferor company, and pay or transfer to the transferor company the amo!nt or other consideration representin( the price payable by the transferee company for the shares which, by -irt!e of this section, that company is entitled to ac3!ire, and the transferor company shallE FaG there!pon re(ister the transferee company as the holder of those shares, and FbG within one month of the date of s!ch re(istration, inform the dissentin( shareholders of the fact of s!ch re(istration and of the receipt of the amo!nt or other consideration representin( the price payable to them by the transferee company. F4G #ny s!m recei-ed by the transferor company !nder this section shall be paid into a separate ban2 acco!nt, and any s!ch s!m and any other consideration so recei-ed shall be held by that company in tr!st for the se-eral persons entitled to the shares in respect of which the said s!m or other consideration were respecti-ely recei-ed and shall be disb!rsed to the entitled shareholders within sixty days. F5G %n relation to an offer made by a transferee company to shareholders of a transferor company before the commencement of this #ct, this section shall ha-e effect with the followin( modifications, namelyDE FaG in s!b.section F1G, for the words Athe shares whose transfer is in-ol-ed other than shares already held at the date of the offer by, or by a nominee of, the transferee company or its s!bsidiaries,B, the words Athe shares affectedB shall be s!bstit!tedH and FbG in s!b.section F3G, the words Ato(ether with an instr!ment of transfer, to be exec!ted on behalf of the shareholder by any person appointed by the transferee company and on its own behalf by the transferor companyB shall be omitted. Explanation.—For the p!rposes of this section, Adissentin( shareholderB incl!des a shareholder who has not assented to the scheme or contract and any shareholder who has failed or ref!sed to transfer his shares to the transferee company in accordance with the scheme or contract.

133

P,r40(31 of 5i*ori)/ 30(r10oldi*+. 2*$. F1G %n the e-ent of an ac3!irer, or a person actin( in concert with s!ch ac3!irer, becomin( re(istered holder of ninety per cent. or more of the iss!ed e3!ity share capital of a company, or in the e-ent of any person or (ro!p of persons becomin( ninety per cent. majority or holdin( ninety per cent. of the iss!ed e3!ity share capital of a company, by -irt!e of an amal(amation, share exchan(e, con-ersion of sec!rities or for any other reason, s!ch ac3!irer, person or (ro!p of persons, as the case may be, shall notify the company of their intention to b!y the remainin( e3!ity shares. F2G 9he ac3!irer, person or (ro!p of persons !nder s!b.section F1G may offer to the minority shareholders of e3!ity shares of the company for b!yin( the e3!ity shares held by s!ch shareholders at a price determined on the basis of -al!ation by a re(istered -al!er in accordance with s!ch r!les as may be prescribed. F3G >itho!t prej!dice to the pro-isions of s!b.sections F1G and F2G, the minority shareholders of the company may offer to the majority shareholders to p!rchase the minority e3!ity shareholdin( of the company at the price determined in accordance with s!ch r!les as may be prescribed !nder s!b.section F2G. F4G 9he majority shareholders shall deposit an amo!nt e3!al to the -al!e of shares to be ac3!ired by them !nder s!b.section F2G or s!b.section F3G, as the case may be, in a separate ban2 acco!nt to be operated by the transferor company for payment to the minority shareholders and s!ch amo!nt shall be disb!rsed to the entitled shareholders within sixty days. F5G %n the e-ent of a p!rchase !nder this section, whether wholly or partially, the transferor company shall act as a transfer a(ent for recei-in( and payin( the price to the minority shareholders and as an a(ent for ta2in( deli-ery of the shares and deli-erin( s!ch shares to the majority, as the case may be. F"G %n the absence of a physical deli-ery of shares by the shareholders within the time specified by the company, the share certificates shall be deemed to be cancelled, and the transferor company shall be a!thorised to iss!e shares in lie! of the cancelled shares and complete the transfer in accordance with law and ma2e payment of the price o!t of deposit made !nder s!b.section F4G by the majority in ad-ance to the minority by dispatch of s!ch payment. F$G %n the e-ent of a majority shareholder or shareholders re3!irin( a f!ll p!rchase and ma2in( payment of price by deposit with the company for any shareholder or shareholders who ha-e died or ceased to exist, or whose heirs, s!ccessors, administrators or assi(nees ha-e not been bro!(ht on record by transmission, the ri(ht of s!ch shareholders to ma2e an offer for sale of minority e3!ity shareholdin( shall contin!e and be a-ailable for a period of three years from the date of majority ac3!isition or majority shareholdin(. F&G >here the shares of minority shareholders ha-e been ac3!ired in p!rs!ance of this section and as on or prior to the date of transfer followin( s!ch ac3!isition, the shareholders holdin( se-enty.fi-e per cent. or more minority e3!ity shareholdin( ne(otiate or reach an !nderstandin( on a hi(her price for any transfer, proposed or a(reed !pon, of the shares held by them witho!t disclosin( the fact or li2elihood of transfer ta2in( place on the basis of s!ch ne(otiation, !nderstandin( or a(reement, the majority shareholders shall share the additional compensation so recei-ed by them with s!ch minority shareholders on a pro rata basis. Explanation.EFor the p!rposes of this section, the expressions Aac3!irerB and Aperson actin( in concertB shall ha-e the meanin(s respecti-ely assi(ned to them in cla!se FbG and cla!se FeG of s!b.re(!lation F1G of re(!lation 2 of the Sec!rities and 'xchan(e 0oard of %ndia FS!bstantial #c3!isition of Shares and 9a2eo-ersG ,e(!lations, 1))$.

134

Po61r of C1*)r(l Go21r*51*) )o -ro2id1 for (5(l+(5()io* of 4o5-(*i13 i* -,.li4 i*)1r13). 2*&. F1G >here the +entral 4o-ernment is satisfied that it is essential in p!blic interest that two or more companies sho!ld amal(amate, the +entral 4o-ernment may, by order notified in the 1fficial 4a=ette, pro-ide for the amal(amation of those companies into a sin(le company with s!ch constit!tion, with s!ch property, powers, ri(hts, interests, a!thorities and pri-ile(es, and with s!ch liabilities, d!ties, and obli(ations, as may be specified in the order. F2G 9he order !nder s!b.section F1G may also pro-ide for the contin!ation by or a(ainst the transferee company of any le(al proceedin(s pendin( by or a(ainst any transferor company and s!ch conse3!ential, incidental and s!pplemental pro-isions as may, in the opinion of the +entral 4o-ernment, be necessary to (i-e effect to the amal(amation. F3G '-ery member or creditor, incl!din( a debent!re holder, of each of the transferor companies before the amal(amation shall ha-e, as nearly as may be, the same interest in or ri(hts a(ainst the transferee company as he had in the company of which he was ori(inally a member or creditor, and in case the interest or ri(hts of s!ch member or creditor in or a(ainst the transferee company are less than his interest in or ri(hts a(ainst the ori(inal company, he shall be entitled to compensation to that extent, which shall be assessed by s!ch a!thority as may be prescribed and e-ery s!ch assessment shall be p!blished in the 1fficial 4a=ette, and the compensation so assessed shall be paid to the member or creditor concerned by the transferee company. F4G #ny person a((rie-ed by any assessment of compensation made by the prescribed a!thority !nder s!b.section F3G may, within thirty days from the date of p!blication of s!ch assessment in the 1fficial 4a=ette, prefer an appeal to the 9rib!nal and there!pon the assessment of the compensation shall be made by the 9rib!nal. F5G 6o order shall be made !nder this section !nlessE FaG a copy of the proposed order has been sent in draft to each of the companies concernedH FbG the time for preferrin( an appeal !nder s!b.section F4G has expired, or where any s!ch appeal has been preferred, the appeal has been finally disposed ofH and FcG the +entral 4o-ernment has considered, and made s!ch modifications, if any, in the draft order as it may deem fit in the li(ht of any s!((estions and objections which may be recei-ed by it from any s!ch company within s!ch period as the +entral 4o-ernment may fix in that behalf, not bein( less than two months from the date on which the copy aforesaid is recei-ed by that company, or from any class of shareholders therein, or from any creditors or any class of creditors thereof. F"G +opies of e-ery order made !nder this section shall, as soon as may be after it has been made, be laid before each Io!se of /arliament. R1+i3)r()io* of off1r of S401513 i*2ol2i*+ )r(*3f1r of 30(r13. 2*). F1G %n relation to e-ery offer of a scheme or contract in-ol-in( the transfer of shares or any class of shares in the transferor company to the transferee company !nder this +hapter,E FaG e-ery circ!lar containin( s!ch offer and recommendation to the members of the transferor company by its directors to accept s!ch offer shall be accompanied by s!ch information and in s!ch manner as may be prescribedH

135

FbG e-ery s!ch offer shall contain a statement by or on behalf of the transferee company, disclosin( the steps it has ta2en to ens!re that necessary cash will be a-ailableH and FcG e-ery s!ch circ!lar shall be presented to the ,e(istrar for re(istration and no s!ch circ!lar shall be iss!ed !ntil it is so re(isteredD /ro-ided that the ,e(istrar may ref!se, for reasons to be recorded in writin(, to re(ister any s!ch circ!lar which does not contain the information re3!ired to be (i-en !nder cla!se FaG or which sets o!t s!ch information in a manner li2ely to (i-e a false impression, and comm!nicate s!ch ref!sal to the parties within thirty days of the application. F2G #n appeal shall lie to the 9rib!nal a(ainst an order of the ,e(istrar ref!sin( to re(ister any circ!lar !nder s!b.section F1G. F3G 9he director who iss!es a circ!lar which has not been presented for re(istration and re(istered !nder cla!se FcG of s!b.section F1G, shall be p!nishable with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to fi-e la2h r!pees. Pr131r2()io* of .oo<3 (*d -(-1r3 of (5(l+(5()1d 4o5-(*i13. 21*. 9he boo2s and papers of a company which has been amal(amated with, or whose shares ha-e been ac3!ired by, another company !nder this +hapter shall not be disposed of witho!t the prior permission of the +entral 4o-ernment and before (rantin( s!ch permission, that 4o-ernment may appoint a person to examine the boo2s and papers or any of them for the p!rpose of ascertainin( whether they contain any e-idence of the commission of an offence in connection with the promotion or formation, or the mana(ement of the affairs, of the transferor company or its amal(amation or the ac3!isition of its shares. Li(.ili)/ of )01 offi41r3 i* r13-14) of off1*413 4o55i))1d -rior )o (5(l+(5()io* )r(*3f1r 1)4. 211. 6otwithstandin( anythin( contained in any other #ct, the liability in respect of offences committed !nder this #ct by the officers in defa!lt, of the transferor company prior to its mer(er, amal(amation or ac3!isition shall contin!e after s!ch mer(er, amal(amation or ac3!isition. CHAPTER %$I PRE$ENTION O" OPPRESSION AND MISMANAGEMENT A--li4()io* )o Tri.,*(l for r1li1f i* 4(313 of o--r133io* 1)4. 212. F1G #ny member of a company who complains thatE FaG the affairs of the company ha-e been or are bein( cond!cted in a manner prej!dicial to p!blic interest or in a manner prej!dicial or oppressi-e to him or any other member or membersH or FbG the material chan(e, not bein( a chan(e bro!(ht abo!t by, or in the interests of, any creditors, incl!din( debent!re holders or any class of shareholders of the company, has ta2en place in the mana(ement or control of the company, whether by an alteration in the 0oard of Directors, or mana(er, or in the ownership of the company8s shares, or if it has no share capital, in its membership, or in any other manner whatsoe-er, and that by reason of s!ch chan(e, it is li2ely that the affairs of the company will be cond!cted in a manner prej!dicial to its interests or its members or any class of members,

136

may apply to the 9rib!nal, pro-ided s!ch member has a ri(ht to apply !nder section 215, for an order !nder this +hapter. F2G 9he +entral 4o-ernment, if it is of the opinion that the affairs of the company are bein( cond!cted in a manner prej!dicial to p!blic interest, it may itself apply to the 9rib!nal for an order !nder this +hapter. Po61r3 of Tri.,*(l. 213. F1G %f, on any application made !nder section 212, the 9rib!nal is of the opinionE FaG that the company8s affairs ha-e been or are bein( cond!cted in a manner prej!dicial or oppressi-e to any member or members or prej!dicial to p!blic interestH and FbG that to wind !p the company wo!ld !nfairly prej!dice s!ch member or members, b!t that otherwise the facts wo!ld j!stify the ma2in( of a windin( !p order on the (ro!nd that it was j!st and e3!itable that the company sho!ld be wo!nd !p, the 9rib!nal may, with a -iew to brin(in( to an end the matters complained of, ma2e s!ch order as it thin2s fit. F2G >itho!t prej!dice to the (enerality of the powers !nder s!b.section F1G, an order !nder that s!b.section may pro-ide for E FaG the re(!lation of the cond!ct of the affairs of the company in f!t!reH FbG the p!rchase of the shares or interests of any members of the company by other members thereof or by the companyH FcG in the case of a p!rchase of its shares by the company as aforesaid, the conse3!ent red!ction of its share capitalH FdG restrictions on the transfer of the shares of the companyH FeG the termination, settin( aside or modification, of any a(reement, howsoe-er arri-ed at, between the company and the mana(in( director, any other director or mana(er, !pon s!ch terms and conditions as may, in the opinion of the 9rib!nal, be j!st and e3!itable in the circ!mstances of the caseH FfG the termination, settin( aside or modification of any a(reement between the company and any person other than those referred to in cla!se FeGD /ro-ided that no s!ch a(reement referred to in cla!se FeG or cla!se FfG shall be terminated, set aside or modified except after d!e notice and after obtainin( the consent of the party concernedH F(G the settin( aside of any transfer, deli-ery of (oods, payment, exec!tion or other act relatin( to property made or done by or a(ainst the company within three months before the date of the application !nder this section, which wo!ld, if made or done by or a(ainst an indi-id!al, be deemed in his insol-ency to be a fra!d!lent preferenceH FhG remo-al of the mana(in( director, mana(er or any of the directors of the companyH

137

FiG the manner in which the mana(in( director or mana(er of the company may be appointed s!bse3!ent to an order remo-in( the existin( mana(in( director or mana(er of the company made !nder cla!se FhGH FjG appointment of s!ch n!mber of persons as directors, who may be re3!ired by the 9rib!nal to report to the 9rib!nal on s!ch matters as the 9rib!nal may directH F2G imposition of costs as may be deemed fit by the 9rib!nalH FlG any other matter for which, in the opinion of the 9rib!nal, it is j!st and e3!itable that pro-ision sho!ld be made. F3G # certified copy of the order of the 9rib!nal !nder s!b.section F1G shall be filed by the company with the ,e(istrar within thirty days of the order of the 9rib!nal. F4G 9he 9rib!nal may, on the application of any party to the proceedin(, ma2e any interim order which it thin2s fit for re(!latin( the cond!ct of the company8s affairs !pon s!ch terms and conditions as appear to it to be j!st and e3!itable. F5G >here an order of the 9rib!nal !nder s!b.section F1G ma2es any alteration in the memorand!m or articles of a company, then, notwithstandin( any other pro-ision of this #ct, the company shall not ha-e power, except to the extent, if any, permitted in the order, to ma2e, witho!t the lea-e of the 9rib!nal, any alteration whatsoe-er which is inconsistent with the order, either in the memorand!m or in the articles. F"G S!bject to the pro-isions of s!b.section F1G, the alterations made by the order in the memorand!m or articles of a company shall, in all respects, ha-e the same effect as if they had been d!ly made by the company in accordance with the pro-isions of this #ct and the said pro-isions shall apply accordin(ly to the memorand!m or articles so altered. F$G # certified copy of e-ery order alterin(, or (i-in( lea-e to alter, a company8s memorand!m or articles, shall within thirty days after the ma2in( thereof, be filed by the company with the ,e(istrar who shall re(ister the same. F&G >here any defa!lt is made in complyin( with the pro-isions of s!b.section F5G, the company shall be p!nishable with fine which shall not be less than one la2h r!pees b!t which may extend to twenty.fi-e la2h r!pees and e-ery officer of the company who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty. fi-e tho!sand r!pees b!t which may extend to one la2h r!pees, or with both. Co*317,1*41 of )1r5i*()io* or 5odifi4()io*3 of 41r)(i* (+r1151*)3. 214. F1G >here an order made !nder section 213 terminates, sets aside or modifies an a(reement s!ch as is referred to in s!b.section F2G of that section, E FaG s!ch order shall not (i-e rise to any claims whate-er a(ainst the company by any person for dama(es or for compensation for loss of office or in any other respect either in p!rs!ance of the a(reement or otherwiseH FbG no mana(in( director or other director or mana(er whose a(reement is so terminated or set aside shall, for a period of fi-e years from the date of the order terminatin( or settin( aside the a(reement, witho!t the lea-e of the 9rib!nal, be appointed, or act, as the mana(in( director or other director or mana(er of the companyD

138

/ro-ided that the 9rib!nal shall not (rant lea-e !nder this cla!se !nless notice of the intention to apply for lea-e has been ser-ed on the +entral 4o-ernment and that 4o-ernment has been (i-en a reasonable opport!nity of bein( heard in the matter. F2G #ny person who 2nowin(ly acts as a mana(in( director or other director or mana(er of a company in contra-ention of cla!se FbG of s!b.section F1G, and e-ery other director who is 2nowin(ly a party to s!ch contra-ention, shall be p!nishable with imprisonment for a term which may extend to six months or with fine which may extend to fi-e la2h r!pees, or with both. Ri+0) )o (--l/ ,*d1r 314)io* [email protected] 215. F1G 9he followin( members of a company shall ha-e the ri(ht to apply !nder section 212, namelyDE FaG in the case of a company ha-in( a share capital, not less than one h!ndred members of the company or not less than one.tenth of the total n!mber of its members, whiche-er is less, or any member or members holdin( not less than one.tenth of the iss!ed share capital of the company, s!bject to the condition that the applicant or applicants ha-e paid all calls and other s!ms d!e on their sharesH FbG in the case of a company not ha-in( a share capital, not less than one.fifth of the total n!mber of its membersD /ro-ided that the 9rib!nal may, on an application made to it in this behalf, wai-e all or any of the re3!irements specified in cla!se FaG or cla!se FbG so as to enable the members to apply !nder section 212. Explanation.EFor the p!rposes of this s!b.section, where any share or shares are held by two or more persons jointly, they shall be co!nted only as one member. F2G >here any members of a company are entitled to ma2e an application !nder s!bsection F1G, any one or more of them ha-in( obtained the consent in writin( of the rest, may ma2e the application on behalf and for the benefit of all of them. Cl(33 (4)io*. 21". F1G #ny one or more members or class of members or one or more creditors or any class of creditors may, if they are of the opinion that the mana(ement or control of the affairs of the company are bein( cond!cted in a manner prej!dicial to the interests of the company or its members or creditors, file an application before the 9rib!nal on behalf of the members and creditors for see2in( all or any of the followin( orders, namelyDE FaG to restrain the company from committin( an act which is !ltra -ires the articles or memorand!m of the companyH FbG to restrain the company from committin( breach of any pro-ision of the company8s memorand!m or articlesH FcG to declare a resol!tion alterin( the memorand!m or articles of the company as -oid if the resol!tion was passed by s!ppression of material facts or obtained by misstatement to the members or creditorsH FdG to restrain the company and its directors from actin( on s!ch resol!tionH

139

FeG to restrain the company from doin( an act which is contrary to the pro-isions of this #ct or any other law for the time bein( in forceH FfG to restrain the company from ta2in( action contrary to any resol!tion passed by the members. F2G #ny order passed by the 9rib!nal shall be bindin( on the company and all its members and creditors. F3G #ny company which fails to comply with an order passed by the 9rib!nal !nder this section shall be p!nishable with fine which shall not be less than fi-e la2h r!pees b!t which may extend to twenty.fi-e la2h r!pees and e-ery officer of the company who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to three years and with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to one la2h r!pees, or with both. A--li4()io* of 41r)(i* -ro2i3io*3 )o -ro411di*+3 ,*d1r 314)io*3 [email protected] (*d [email protected]>. 21$. 9he pro-isions of sections 312 to 31" Fboth incl!si-eG shall apply mutatis mutandis in relation to a fra!d!lent application made to the 9rib!nal !nder section 212 or section 21". CHAPTER %$II REGISTERED $ALUERS $(l,()io* ./ r1+i3)1r1d 2(l,1r3. 21&. >here !nder any pro-ision of this #ct, -al!ation is re3!ired to be made in respect of any property, stoc2s, shares, debent!res, sec!rities or (oodwill Fhereinafter in this +hapter referred to as the assetsG or net worth of a company or its assets, it shall be -al!ed by a person re(istered as a -al!er !nder this +hapter and appointed by the a!dit committee or in its absence by the 0oard of Directors of that company. R1+i3)r()io* of 2(l,1r3. 21). F1G 9he +entral 4o-ernment shall maintain a re(ister to be called as the re(ister of -al!ers in which it shall enter the names and addresses of persons re(istered !nder s!bsection F2G as -al!ers. F2G #ny +hartered #cco!ntant, +ost and >or2s #cco!ntant, +ompany Secretary or other persons possessin( s!ch 3!alifications as may be prescribed may apply to the +entral 4o-ernment in the prescribed form for bein( re(istered as a -al!er !nder this sectionD /ro-ided that no company or body corporate shall be eli(ible to apply. F3G '-ery application !nder s!b.section F2G shall be accompanied by s!ch fee as may be prescribed, containin( a declaration to the effect that the applicant shallE FaG ma2e an impartial and tr!e -al!ation of any assets which may be re3!ired to be -al!edH FbG ma2e the -al!ation in accordance with s!ch r!les as may be prescribed, and FcG shall not !nderta2e -al!ation of any assets in which he has a direct or indirect interest or becomes so interested at any time d!rin( the -al!ation of the assets.

140

A--oi*)51*) of 4o55i))11 of 19-1r)3. 22*. F1G 9he +entral 4o-ernment may, for the p!rposes of section 21), by an order, appoint a committee of experts consistin( of s!ch n!mber of 3!alified persons holdin( s!ch 3!alifications as may be prescribed. F2G 9he committee appointed !nder s!b.section F1G shall scr!tinise the applications recei-ed !nder s!b.section F2G of section 21) and recommend s!itable names for the p!rpose of incl!sion in the re(ister of -al!ers. Pr(4)i41 (3 r1+i3)1r1d 2(l,1r3. 221. F1G 6o person, either alone or in partnership with any other person, shall practice, describe or project himself as a re(istered -al!er for the p!rposes of this #ct or permit himself to be so described or projected !nless he is re(istered as a -al!er, or, as the case may be, he and all his partners are so re(istered !nder this +hapter. F2G 9he report of -al!ation of any assets by a re(istered -al!er shall be s!bmitted in the prescribed form and be -erified in the prescribed manner. F3G # re(istered -al!er shall not char(e at a rate exceedin( the rate as may be prescribed in this behalf. ",r*i30i*+ of P(r)i4,l(r3 i* 41r)(i* 4(313. 222. >here any person who is re(istered as a -al!er !nder section 21) or who has made an application for re(istration as a -al!er !nder that section is, at any time thereafter,E FaG sentenced to a term of imprisonment for any offenceH or FbG in a case where he is a member of any association or instit!te ha-in( as its object the control, s!per-ision, re(!lation or enco!ra(ement of the profession of +hartered #cco!ntant, cost and wor2s acco!ntants or company secretaries or s!ch other profession as the +entral 4o-ernment may specify in this behalf by notification, fo!nd (!ilty of miscond!ct in his professional capacity, by s!ch association or instit!te, he shall immediately after s!ch con-iction or findin( intimate the partic!lars thereof to the +entral 4o-ernment. R15o2(l (*d r13)or()io* of *(513 of 2(l,1r3 fro5 r1+i3)1r. 223. F1G 9he +entral 4o-ernment may remo-e the name of any person from the re(ister of -al!ers where it is satisfied, after (i-in( that person a reasonable opport!nity of bein( heard and after s!ch f!rther in3!iry, if any, as it thin2s fit,E FaG that his name has been entered in the re(ister by error or on acco!nt of misrepresentation or s!ppression of a material factH or FbG that he has been con-icted of any offence and sentenced to a term of imprisonment or has been (!ilty of miscond!ct in his professional capacity which, in the opinion of the +entral 4o-ernment, renders his name !nfit to be 2ept in the re(ister. F2G 9he +entral 4o-ernment may on application and on s!fficient ca!se bein( shown, restore in the re(ister the name of any person remo-ed therefrom.

141

F3G >itho!t prej!dice to the pro-isions of s!b.sections F1G and F2G, the +entral 4o-ernment shall, once in three years, re-iew the performance of all the re(istered -al!ers and may remo-e the name of any person from the re(ister of -al!ers where it is satisfied, after (i-in( that person a reasonable opport!nity of bein( heard and after s!ch f!rther in3!iry, if any, as it thin2s fit to ma2e, that his performance is s!ch that his name sho!ld not remain on the re(ister of -al!ers. F4G 9he in3!iry to be made !nder this section shall be made by s!ch officer and he shall, for the p!rpose of s!ch in3!iry, ha-e s!ch powers, as may be prescribed. CHAPTER %$III REMO$AL O" NAMES O" COMPANIES "ROM THE REGISTER Po61r of R1+i3)r(r )o r15o21 *(51 of ( 4o5-(*/ fro5 r1+i3)1r. 224. F1G >here the ,e(istrar has reasonable ca!se to belie-e that E FaG a company has failed to commence its b!siness within one year of its incorporationH FbG the s!bscribers to the memorand!m ha-e not paid the s!bscription which they had !nderta2en to pay within a period of one h!ndred and ei(hty days from the date of incorporation of a company and a declaration !nder s!b.section F1G of section 1* to this effect has not been filed within one h!ndred and ei(hty days of its incorporationH or FcG a company is not carryin( on any b!siness or operation for a period of one year and has not made any application within s!ch period for obtainin( the stat!s of a dormant company !nder section 413, he shall send a notice to the company and all the directors of the company, of his intention to remo-e the name of the company from the re(ister and re3!estin( them to send their representations alon( with copies of the rele-ant doc!ments, if any, within a period specified in the notice. F2G >itho!t prej!dice to the pro-isions of s!b.section F1G, a company by a special resol!tion or consent of se-enty.fi-e per cent. members in terms of share capital may also file an application in the prescribed manner to the ,e(istrar for remo-in( the name of the company from the re(ister on all or any of the (ro!nds specified in s!b.section F1G and the ,e(istrar shall, on receipt of s!ch application, ca!se a p!blic notice to be iss!ed in the prescribed mannerD /ro-ided that in the case of a company re(!lated !nder a special #ct, appro-al of the re(!latory body constit!ted or established !nder that #ct shall also be obtained and enclosed with the application. F3G 6othin( in s!b.section F2G shall apply to a company re(istered !nder section 4. F4G # notice iss!ed !nder s!b.section F1G or s!b.section F2G shall be p!blished in the prescribed manner and also in the 1fficial 4a=ette for the information of the (eneral p!blic. F5G #t the expiry of the time mentioned in the notice, the ,e(istrar may, !nless ca!se to the contrary is shown by the company, stri2e off its name the re(ister, and shall p!blish notice thereof in the 1fficial 4a=ette, and on the p!blication in the 1fficial 4a=ette of this notice, the company shall stand dissol-ed. F"G 9he ,e(istrar, before passin( an order !nder s!b.section F5G, shall satisfy himself that s!fficient pro-ision has been made for the realisation of all amo!nt d!e to the company and for the payment or dischar(e of its liabilities and obli(ations by the company within a reasonable time

142

and, if necessary, obtain necessary !nderta2in(s from the mana(in( director, director or other persons in char(e of the mana(ement of the companyD /ro-ided that notwithstandin( the !nderta2in(s referred to in this s!b.section, the assets of the company shall be made a-ailable for the payment or dischar(e of all its liabilities and obli(ations e-en after the date of the order remo-in( the name of the company from the re(ister. F$G 9he liability, if any, of e-ery director, mana(er or other officer who was exercisin( any power of mana(ement, and of e-ery member of the company dissol-ed !nder s!b.section F5G, shall contin!e and may be enforced as if the company had not been dissol-ed. F&G 6othin( in this section shall affect the power of the 9rib!nal to wind !p a company the name of which has been str!c2 off the re(ister. No (--li4()io* ,*d1r 314)io* 22E i* 41r)(i* 3i),()io*3. 225. F1G #n application !nder s!b.section F2G of section 224 on behalf of a company shall not be made if, at any time in the pre-io!s three months, the companyE FaG has chan(ed its nameH FbG has traded or otherwise carried on b!sinessH FcG has made a disposal for -al!e, of property or ri(hts held by it, immediately before cesser of trade or otherwise carryin( on of b!siness, for the p!rpose of disposal for (ain in the normal co!rse of tradin( or otherwise carryin( on of b!sinessH FdG has en(a(ed in any other acti-ity except the one which is necessary or expedient for the p!rpose of ma2in( an application !nder that section, or decidin( whether to do so, or concl!din( the affairs of the company, or complyin( with any stat!tory re3!irementH FeG has made an application to the 9rib!nal for the sanctionin( of a compromise or arran(ement and the matter has not been finally concl!dedH or FfG is bein( wo!nd !p !nder +hapter @@, whether -ol!ntarily or by the 9rib!nal. F2G %f a company files an application !nder s!b.section F2G of section 224 in -iolation of s!b.section F1G, it shall be p!nishable with fine which may extend to one la2h r!pees. F3G #n application filed !nder s!b.section F2G of section 224 shall be withdrawn by the company or rejected by the ,e(istrar as soon as conditions !nder s!b.section F1G are bro!(ht to his notice. Eff14) of ( 4o5-(*/ *o)ifi1d (3 di33ol21d. 22". >here a company stands dissol-ed !nder section 224, it shall on and from the date mentioned in the notice !nder s!b.section F5G of that section cease to operate as a company and the +ertificate of %ncorporation iss!ed to it shall be deemed to ha-e been cancelled from s!ch date except for the p!rpose of realisin( the amo!nt d!e to the company and for the payment or dischar(e of the liabilities or obli(ations of the company. "r(,d,l1*) (--li4()io* for r15o2(l of *(51. 22$. F1G >here it is fo!nd that an application by a company !nder s!b.section F2G of section 224 has been made with the object of e-adin( the liabilities of the company or with the intention to

143

decei-e the creditors or to defra!d any other persons, the persons in char(e of the mana(ement of the company shall, notwithstandin( that the company has been notified as dissol-ed, be jointly and se-erally liable to any person or persons who had inc!rred loss or dama(e as a res!lt of the company bein( notified as dissol-ed. F2G >itho!t prej!dice to any action !nder s!b.section F1G, the ,e(istrar may also recommend prosec!tion of the persons responsible for the filin( of an application !nder s!b.section F2G of section 224. A--1(l )o Tri.,*(l. 22&. F1G #ny person a((rie-ed by an order of the ,e(istrar notifyin( a company as dissol-ed !nder section 224, may file an appeal to the 9rib!nal within a period of three years from the date of the order of the ,e(istrar and if the 9rib!nal is of the opinion that the remo-al of the name of the company from the re(ister is not j!stified in -iew of the absence of any of the (ro!nds on which the order was passed by the ,e(istrar, it may order restoration of the name of the company in the re(isterD /ro-ided that before passin( any order !nder this section, the 9rib!nal shall (i-e a reasonable opport!nity of ma2in( representations and of bein( heard to the ,e(istrar, the company and all the persons concerned. F2G # copy of the order passed by the 9rib!nal shall be filed by the company with the ,e(istrar within thirty days from the date of the order and on receipt of the order, the ,e(istrar shall ca!se the name of the company to be restored in the re(ister and shall iss!e a fresh +ertificate of %ncorporation. F3G %f a company, or any member or creditor thereof, feels a((rie-ed by the company ha-in( its name str!c2 off the re(ister, the 9rib!nal on an application made by the company, member or creditor before the expiry of twenty years from the p!blication in the 1fficial 4a=ette of the notice !nder s!b.section F5G of section 224 may, if satisfied that the company was, at the time of its name bein( str!c2 off, carryin( on b!siness or in operation or otherwise it is j!st that the name of the company be restored to the re(ister, order the name of the company to be restored to the re(ister, and the 9rib!nal may, by the order, (i-e s!ch other directions and ma2e s!ch pro-isions as deemed j!st for placin( the company and all other persons in the same position as nearly as may be as if the name of the company had not been str!c2 off from the re(ister. CHAPTER %I% RE$I$AL AND REHABILITATION O" SICK COMPANIES D1)1r5i*()io* of 3i4<*133. 22). F1G >here on a demand by the sec!red creditors of a company representin( fifty per cent. or more of its o!tstandin( amo!nt of debt, the company has failed to pay the debt within thirty days of the ser-ice of the notice of demand or to sec!re or compo!nd it to the reasonable satisfaction of the creditors, any sec!red creditor may file an application to the 9rib!nal in the prescribed manner alon( with the rele-ant e-idence for s!ch defa!lt, non.repayment or fail!re to offer sec!rity or compo!nd it, for a determination that the company be declared as a sic2 company. F2G 9he applicant !nder s!b.section F1G may alon( with an application !nder that s!b.section or at any sta(e of the proceedin(s thereafter, ma2e an application for the stay of any proceedin( for the windin( !p of the company or for exec!tion, distress or the li2e a(ainst any property and assets of the company or for the appointment of a recei-er in respect thereof and that no s!it for the reco-ery of any money or for the enforcement of any sec!rity a(ainst the company shall lie or be proceeded with.

144

F3G 9he 9rib!nal may pass an order in respect of an application !nder s!b.section F2G which shall be operati-e for a period of one h!ndred and twenty days. F4G 9he company referred to in s!b.section F1G may also file an application to the 9rib!nal on one or more of the (ro!nds specified in that s!b.section. F5G >here an application !nder s!b.section F1G or s!b.section F4G has been filed,E FaG the company shall not dispose of or otherwise enter into any obli(ations with re(ard to, its properties or assets except as re3!ired in the normal co!rse of b!sinessH FbG the 0oard of Directors shall not ta2e any steps li2ely to prej!dice the interests of the creditors. F"G 9he 9rib!nal shall, within sixty days of the receipt of an application !nder s!b.section F1G or s!b.section F4G, determine whether the company is a sic2 company or notD /ro-ided that no s!ch determination shall be made in respect of an application !nder s!b. section F1G !nless the company has been (i-en notice of the application and a reasonable opport!nity to reply to the notice within thirty days of the receipt thereof. A--li4()io* for r12i2(l (*d r10(.ili)()io*. 23*. F1G 1n the determination of a company as a sic2 company by the 9rib!nal !nder section 22), any sec!red creditor of that company or the company may ma2e an application to the 9rib!nal for the determination of the meas!res that may be adopted with respect to the re-i-al and rehabilitation of s!ch companyD /ro-ided that where the financial assets of the sic2 company had been ac3!ired by any sec!ritisation company or reconstr!ction company !nder s!b.section F1G of section 5 of the Sec!ritisation and ,econstr!ction of Financial #ssets and 'nforcement of Sec!rity %nterest #ct, 2**2, no s!ch application shall be made witho!t the consent of three.fo!rths of the sec!red creditors in -al!e of the amo!nt o!tstandin( a(ainst financial assistance disb!rsed to the sic2 company. F2G #n application !nder s!b.section F1G shall be accompanied by E FaG a!dited financial statements of the company relatin( to the immediately precedin( financial year, FbG s!ch partic!lars and doc!ments, d!ly a!thenticated in s!ch manner, alon( with s!ch fee as may be prescribed, and FcG a draft scheme of re-i-al and rehabilitation of the company in s!ch manner as may be prescribedD /ro-ided that where the sic2 company has no draft scheme of re-i-al and rehabilitation to offer, it shall file a declaration to that effect alon( with the application. F3G #n application !nder s!b.section F1G shall be made to the 9rib!nal within sixty days from the date of determination of the company as a sic2 company by the 9rib!nal !nder section 22). A--oi*)51*) of i*)1ri5 (d5i*i3)r()or.

145

231. F1G 1n the receipt of an application !nder section 23*, the 9rib!nal shall, not later than se-en days from s!ch receipt, E FaG fix a date for hearin( not later than ninety days from date of its receiptH FbG appoint an interim administrator to con-ene a meetin( of creditors of the company in accordance with the pro-isions of section 232 to be held not later than forty.fi-e days from receipt of the order of the 9rib!nal appointin( him to consider whether on the basis of the partic!lars and doc!ments f!rnished with the application made !nder section 23*, the draft scheme, if any, filed alon( with s!ch application or otherwise and any other material a-ailable, it is possible to re-i-e and rehabilitate the sic2 company and s!ch other matters, which the interim administrator may consider necessary for the p!rpose and to s!bmit his report to the 9rib!nal within sixty days from the date of the orderD /ro-ided that where no draft scheme is filed by the company and a declaration has been made to that effect by the 0oard of Directors, the 9rib!nal may direct the interim administrator to ta2e o-er the mana(ement of the companyH and FcG iss!e s!ch other directions to the interim administrator as the 9rib!nal may consider necessary to protect and preser-e the assets of the sic2 company and for its proper mana(ement. F2G >here an interim administrator has been directed to ta2e o-er the mana(ement of the company, the directors and the mana(ement of the company shall extend all possible assistance and cooperation to the interim administrator to mana(e the affairs of the company. Co55i))11 of 4r1di)or3. 232. F1G 9he interim administrator shall appoint a committee of creditors with s!ch n!mber of members as he may determine, b!t not exceedin( se-en, and as far as possible a representati-e each of e-ery class of creditors sho!ld be represented in that committee. F2G 9he holdin( of the meetin( of the committee of creditors and the proced!re to be followed at s!ch meetin(s, incl!din( the appointment of its +hairman, shall be decided by the interim administrator. F3G 9he interim administrator may direct any promoter, director or any 2ey mana(erial personnel to attend any meetin( of the committee of creditors and to f!rnish s!ch information as may be considered necessary by the interim administrator. Ord1r of Tri.,*(l. 233. 1n the date of hearin( fixed by the 9rib!nal and on consideration of the report of the interim administrator filed !nder s!b.section F1G of section 231, if the 9rib!nal is satisfied that the creditors representin( three.fo!rths in -al!e of the amo!nt o!tstandin( a(ainst the sic2 company present and -otin( ha-e resol-ed thatE FaG it is not possible to re-i-e and rehabilitate s!ch company, the 9rib!nal shall record s!ch opinion and order that the proceedin(s for the windin( !p of the company be initiatedH or FbG by adoptin( certain meas!res the sic2 company may be re-i-ed and rehabilitated, the 9rib!nal shall appoint a company administrator for the company and ca!se s!ch administrator to prepare a scheme of re-i-al and rehabilitation of the sic2 companyD

146

/ro-ided that the 9rib!nal may, if it thin2s fit, appoint an interim administrator as the company administrator. A--oi*)51*) of (d5i*i3)r()or. 234. F1G 9he interim administrator or the company administrator, as the case may be, shall be appointed by the 9rib!nal from a panel maintained by the +entral 4o-ernment consistin( of the names of ad-ocates, company secretaries, chartered acco!ntants, cost and wor2s acco!ntants and s!ch other professionals as may, by notification, be specified by the +entral 4o-ernment. F2G 9he terms and conditions of the appointment of interim and company administrators shall be s!ch as may be ordered by the 9rib!nal. F3G 9he 9rib!nal may direct the company administrator to ta2e o-er the assets or mana(ement of the company and for the p!rpose of assistin( him in the mana(ement of the company, the company administrator may, with the appro-al of the 9rib!nal, en(a(e the ser-ices of s!itable expert or experts. Po61r3 (*d d,)i13 of 4o5-(*/ (d5i*i3)r()or. 235. F1G 9he company administrator shall perform s!ch f!nctions as the 9rib!nal may direct. F2G >itho!t prej!dice to the pro-isions of s!b.section F1G, the company administrator may ca!se to be prepared with respect to the company E FaG a complete in-entory of E FiG all assets and liabilities of whate-er nat!reH FiiG all boo2s of acco!nts, re(isters, maps, plans, records, doc!ments of title and all other doc!ments of whate-er nat!reH FbG a list of shareholders and a list of creditors showin( separately in the list of creditors, the sec!red creditors and !nsec!red creditorsH FcG a -al!ation report in respect of the shares and assets in order to arri-e at the reser-e price for the sale of any ind!strial !nderta2in( of the company or for the fixation of the lease rent or share exchan(e ratioH FdG an estimate of the reser-e price, lease rent or share exchan(e ratioH FeG pro forma acco!nts of the company, where no !p.to.date a!dited acco!nts are a-ailableH and FfG a list of wor2men of the company and their d!es referred to !nder s!b.section F3G of section 3**. S40151 of r12i2(l (*d r10(.ili)()io*. 23". F1G 9he company administrator shall prepare or ca!se to be prepared a scheme of re-i-al and rehabilitation of the sic2 company after considerin( the draft scheme filed alon( with the application !nder section 23*. F2G # scheme prepared in relation to any sic2 company !nder s!b.section F1G may pro-ide for any one or more of the followin( meas!res, namelyDE

147

FaG the financial reconstr!ction of the sic2 companyH FbG the proper mana(ement of the sic2 company by any chan(e in, or by ta2in( o-er, the mana(ement of s!ch sic2 companyH FcG the amal(amation of E FiG the sic2 company with any other companyH or FiiG any other company with the sic2 companyH FdG ta2eo-er of the sic2 company by a sol-ent companyH FeG the sale or lease of a part or whole of any asset or b!siness of the sic2 companyH FfG the rationalisation of mana(erial personnel, s!per-isory staff and wor2men in accordance with lawH F(G s!ch other pre-enti-e, ameliorati-e and remedial meas!res as may be appropriateH FhG repayment or resched!lin( or restr!ct!rin( of the debts or obli(ations of the sic2 company to any of its creditors or class of creditorsH FiG s!ch incidental, conse3!ential or s!pplemental meas!res as may be necessary or expedient in connection with or for the p!rposes of the meas!res specified in cla!ses FaG to FhG. S(*4)io* of 340151. 23$. F1G 9he scheme prepared by the company administrator !nder section 23" shall be placed before the creditors of the sic2 company in a meetin( con-ened for their appro-al by the company administrator within the period of sixty days from his appointment, which may be extended by the 9rib!nal !p to a period not exceedin( one h!ndred twenty days. F2G 9he company administrator shall con-ene separate meetin(s of sec!red and !nsec!red creditors of the sic2 company and if the scheme is appro-ed by the !nsec!red creditors representin( one.fo!rth in -al!e of the amo!nt owed by the company to s!ch creditors and the sec!red creditors, representin( three.fo!rths in -al!e of the amo!nt o!tstandin( a(ainst financial assistance disb!rsed by s!ch creditors to the sic2 company, the company administrator shall s!bmit the scheme before the 9rib!nal for sanctionin( the schemeD /ro-ided that where the scheme relates to amal(amation of the sic2 company with any other company, s!ch scheme shall, in addition to the appro-al of the creditors of the sic2 company !nder this s!b.section, be laid before the (eneral meetin( of both the companies for appro-al by their respecti-e shareholders and no s!ch scheme shall be proceeded with !nless it has been appro-ed, with or witho!t modification, by a special resol!tion passed by the shareholders of that company. F3G 1n the receipt of the scheme !nder s!b.section F2G, the 9rib!nal shall within sixty days therefrom, after satisfyin( that the scheme had been -alidly appro-ed in accordance with this section, pass an order sanctionin( s!ch scheme. F4G >here a sanctioned scheme pro-ides for the transfer of any property or liability of the sic2 company to any other company or person or where s!ch scheme pro-ides for the transfer of any property or liability of any other company or person in fa-o!r of the sic2 company, then, by -irt!e of, and to the extent pro-ided in, the scheme, on and from the date of comin( into operation of the

148

sanctioned scheme or any pro-ision thereof, the property shall be transferred to, and -est in, and the liability shall become the liability of, s!ch other company or person or, as the case may be, the sic2 company. F5G 9he sanction accorded by the 9rib!nal !nder s!b.section F3G shall be concl!si-e e-idence that all the re3!irements of the scheme relatin( to the reconstr!ction or amal(amation or any other meas!re specified therein ha-e been complied with and a copy of the sanctioned scheme certified in writin( by an officer of the 9rib!nal to be a tr!e copy thereof shall in all le(al proceedin(s be admitted as e-idence. F"G # copy of the sanctioned scheme referred to in s!b.section F3G shall be filed with the ,e(istrar by the sic2 company within a period of thirty days from the date of receipt of a copy thereof. S40151 )o .1 .i*di*+. 23&. 1n and from the date of the comin( into operation of the sanctioned scheme or any pro-ision thereof, the scheme or s!ch pro-ision shall be bindin( on the sic2 company and the transferee company or, as the case may be, the other company and also on the shareholders, creditors and (!arantors of the said companies. I5-l151*)()io* of )01 340151. 23). F1G 9he 9rib!nal shall, for the p!rpose of effecti-e implementation of the scheme, ha-e power to enforce, modify or terminate any contract or a(reement or any obli(ation p!rs!ant to s!ch a(reement or contract entered into by the company with any other person. F2G 9he 9rib!nal may, if it deems necessary or expedient so to do, by order in writin(, a!thorise the company administrator appointed !nder section 234 to implement a sanctioned scheme till its s!ccessf!l implementation on s!ch terms and conditions as may be specified in the order and may for that p!rpose re3!ire him to file periodic reports on the implementation of the sanctioned scheme. F3G >here the whole or s!bstantial assets of the !nderta2in( of the sic2 company are sold !nder a sanctioned scheme, the sale proceeds shall be applied towards implementation of the scheme in s!ch manner as the 9rib!nal may direct. F4G >here it is diffic!lt to implement the scheme for any reason or the scheme fails d!e to non. implementation of obli(ations !nder the scheme by the parties concerned, the company administrator a!thorised to implement the scheme and where there is no s!ch administrator, the company, the sec!red creditors, or the transferee company in a case of amal(amation, may ma2e an application before the 9rib!nal for modification of the scheme or to declare the scheme as failed, and that the company may be wo!nd !p. F5G 9he 9rib!nal shall, within thirty days of presentation of an application !nder s!bsection F4G, pass an order for modification of the scheme or, as the case may be, declarin( the scheme as failed and pass an order for the windin( !p of the company if three.fo!rths in -al!e of the sec!red creditors consent to the modification of the scheme or windin( !p of the company. F"G >here an application !nder s!b.section F4G has been made before the 9rib!nal and s!ch application is pendin( before it, s!ch application shall abate, if the sec!red creditors representin( not less than three.fo!rths in -al!e of the amo!nt o!tstandin( a(ainst financial assistance disb!rsed to the sic2 company ha-e ta2en any meas!res to reco-er their sec!red debt !nder s!b. section F4G of section 13 of the Sec!ritisation and ,econstr!ction of Financial #ssets and 'nforcement of Sec!rity %nterest #ct, 2**2.

149

'i*di*+ ,- of 4o5-(*/ o* r1-or) of 4o5-(*/ (d5i*i3)r()or. 24*. F1G %f the scheme is not appro-ed by the creditors in the manner specified in s!b.section F2G of section 23$, the company administrator shall s!bmit a report to the 9rib!nal and the 9rib!nal shall order for the windin( !p of the sic2 company. F2G 1n the passin( of an order !nder s!b.section F1G, the 9rib!nal shall cond!ct the proceedin(s for windin( !p of the sic2 company in accordance with the pro-isions of +hapter @@. Po61r of Tri.,*(l )o (33133 d(5(+13 (+(i*3) d1li*7,1*) dir14)or3 1)4. 241. F1G %f, in the co!rse of the scr!tiny or implementation of any scheme or proposal incl!din( the draft scheme or proposal, it appears to the 9rib!nal that any person who has ta2en part in the promotion, formation or mana(ement of the sic2 company or its !nderta2in(, incl!din( any past or present director, mana(er or officer or employee of the sic2 companyE FaG has misapplied or retained, or become liable or acco!ntable for, any money or property of the sic2 companyH or FbG has been (!ilty of any misfeasance, malfeasance or nonfeasance or breach of tr!st in relation to the sic2 company, it may, by order, direct him to repay or restore the money or property, with or witho!t interest, as it thin2s j!st, or to contrib!te s!ch s!m to the assets of the sic2 company or the other person, entitled thereto by way of compensation in respect of the misapplication, retainer, misfeasance, malfeasance, nonfeasance or breach of tr!st as the 9rib!nal thin2s j!st and properD /ro-ided that s!ch direction by the 9rib!nal shall be witho!t prej!dice to any other le(al action that may be ta2en a(ainst the person. F2G %f the 9rib!nal is satisfied on the basis of the information and e-idence in its possession with respect to any person who is or was a director or an officer or other employee of the sic2 company, that s!ch person by himself or alon( with others had di-erted the f!nds or other property of s!ch company for any p!rpose other than the p!rposes of the company or had mana(ed the affairs of the company in a manner hi(hly detrimental to the interests of the company, the 9rib!nal shall, by order, direct the p!blic financial instit!tions, sched!led ban2s and State le-el instit!tions not to pro-ide, for a maxim!m period of ten years from the date of the order, any financial assistance to s!ch person or any firm of which s!ch person is a partner or any company or other body corporate of which s!ch person is a director, by whate-er name called, or to dis3!alify the said director, promoter, mana(er from bein( appointed as a director in any company re(istered !nder this #ct for a maxim!m period of six years. F3G 6o order shall be made by the 9rib!nal !nder this section a(ainst any person !nless s!ch person has been (i-en a reasonable opport!nity of bein( heard. P,*i3051*) for 41r)(i* off1*413. 242. >hoe-er -iolates the pro-isions of this +hapter or any scheme, or any order, of the 9rib!nal or the #ppellate 9rib!nal or ma2es a false statement or (i-es false e-idence before the 9rib!nal or the #ppellate 9rib!nal, or attempts to tamper the records of reference or appeal filed !nder this #ct, he shall be p!nishable with imprisonment for a term which may extend to se-en years and with fine which may extend to ten la2h r!pees. B(r of :,ri3di4)io*.

150

243. 6o appeal shall lie in any co!rt or other a!thority and no ci-il co!rt shall ha-e any j!risdiction in respect of any matter in respect of which the 9rib!nal or the #ppellate 9rib!nal is empowered by or !nder this +hapter and no inj!nction shall be (ranted by any co!rt or other a!thority in respect of any action ta2en or proposed to be ta2en in p!rs!ance of any power conferred by or !nder this +hapter. R10(.ili)()io* (*d I*3ol21*4/ ",*d. 2EE. [email protected] T01r1 30(ll .1 for51d for )01 -,r-o313 of r10(.ili)()io* r12i2(l (*d li7,id()io* of 3i4< 4o5-(*i13 ( ",*d )o .1 4(ll1d )01 R10(.ili)()io* (*d I*3ol21*4/ ",*d. A2B T01r1 30(ll .1 4r1di)1d )o )01 ",*dG A(B (*/ (5o,*) +i21* (3 +r(*)3 ./ )01 C1*)r(l Go21r*51*) for )01 -,r-o313 of )0i3 ",*d A.B (*/ (5o,*) +i21* )o )01 ",*d fro5 (*/ o)01r 3o,r41 A4B (*/ i*4o51 fro5 i*213)51*) of )01 (5o,*) i* )01 ",*d (*d AdB (*/ (5o,*) d1-o3i)1d ./ )01 4o5-(*i13 (3 4o*)ri.,)io* )o )01 ",*d. A3B A 4o5-(*/ )0() 0(3 4o*)ri.,)1d (*/ (5o,*) )o )01 ",*d 30(ll i* )01 121*) of -ro411di*+3 i*i)i()1d i* r13-14) of 3,40 4o5-(*/ ,*d1r )0i3 C0(-)1r or C0(-)1r %% 5(/ 5(<1 (* (--li4()io* )o )01 Tri.,*(l for 6i)0dr(6(l of f,*d3 *o) 19411di*+ )01 (5o,*) 4o*)ri.,)1d ./ i) for 5(<i*+ -(/51*)3 )o 6or<51* -ro)14)i*+ )01 (331)3 of )01 4o5-(*/ or 511)i*+ )01 i*4id1*)(l 4o3)3 d,ri*+ -ro411di*+3. AEB T01 ",*d 30(ll .1 5(*(+1d ./ (* i*d1-1*d1*) (d5i*i3)r()or )o .1 (--oi*)1d ./ )01 C1*)r(l Go21r*51*) i* )01 5(**1r (3 5(/ .1 -r134ri.1d. CHAPTER %% 'INDING UP Mod13 of 6i*di*+ ,-. 245. F1G9he windin( !p of a company may be eitherE FaG by the 9rib!nal, or FbG -ol!ntary. F2G 6otwithstandin( anythin( contained in any other #ct, the pro-isions of this #ct with respect to windin( !p shall apply to the windin( !p of a company in any of the modes specified !nder s!b. section F1G. P(r) I 'i*di*+ ,- ./ )01 Tri.,*(l Cir4,53)(*413 i* 60i40 ( 4o5-(*/ 5(/ .1 6o,*d ,- ./ Tri.,*(l. 24". F1G # company may be wo!nd !p by the 9rib!nal,E

151

FaG if the company is !nable to pay its debtsH FbG if the company has, by special resol!tion, resol-ed that the company be wo!nd !p by the 9rib!nalH FcG if the company has acted a(ainst the interests of the so-erei(nty and inte(rity of %ndia, the sec!rity of the State, friendly relations with forei(n States, p!blic order, decency or moralityH FdG if the 9rib!nal has ordered the windin( !p of the company !nder +hapter @%@H FeG if on an application made by the ,e(istrar or any other person a!thorised by the +entral 4o-ernment by notification !nder this #ct, the 9rib!nal is of the opinion that the affairs of the company ha-e been cond!cted in a fra!d!lent manner or the company was formed for fra!d!lent and !nlawf!l p!rpose or the persons concerned in the formation or mana(ement of its affairs ha-e been (!ilty of fra!d, misfeasance or miscond!ct in connection therewith and that it is proper that the company be wo!nd !pH FfG if the company has made a defa!lt in filin( with the ,e(istrar its financial statements or ann!al ret!rns for immediately precedin( fi-e consec!ti-e financial yearsH or F(G if the 9rib!nal is of the opinion that it is j!st and e3!itable that the company sho!ld be wo!nd !p. F2G # company shall be deemed to be !nable to pay its debts,E FaG if a creditor, by assi(nment or otherwise, to whom the company is indebted for an amo!nt exceedin( one la2h r!pees then d!e, has ser-ed on the company, by ca!sin( it to be deli-ered at its re(istered office, by re(istered post or otherwise, a demand re3!irin( the company to pay the amo!nt so d!e and the company has failed to pay the s!m within twenty.one days after the receipt of s!ch demand or to pro-ide ade3!ate sec!rity or re. str!ct!re or compo!nd the debt to the reasonable satisfaction of the creditorH FbG if any exec!tion or other process iss!ed on a decree or order of any co!rt or trib!nal in fa-o!r of a creditor of the company is ret!rned !nsatisfied in whole or in partH or FcG if it is pro-ed to the satisfaction of the 9rib!nal that the company is !nable to pay its debts, and, in determinin( whether a company is !nable to pay its debts, the 9rib!nal shall ta2e into acco!nt the contin(ent and prospecti-e liabilities of the company. P1)i)io* for 6i*di*+ ,-. 24$. F1G S!bject to the pro-isions of this section, a petition to the 9rib!nal for the windin( !p of a company shall be presented byE FaG the company, FbG any creditor or creditors, incl!din( any contin(ent or prospecti-e creditor or creditors, FcG any contrib!tory or contrib!tories, FdG all or any of the persons specified in cla!ses FaG, FbG and FcG to(ether, FeG the ,e(istrar,

152

FfG any person a!thorised by the +entral 4o-ernment in that behalf, or F(G in a case fallin( !nder cla!se FdG of s!b.section F1G of section 24", by the +entral 4o-ernment or a State 4o-ernment. F2G # sec!red creditor, the holder of any debent!res, whether or not any tr!stee or tr!stees ha-e been appointed in respect of s!ch and other li2e debent!res, and the tr!stee for the holders of debent!res, shall be deemed to be creditors within the meanin( of cla!se FbG of s!b.section F1G. F3G # contrib!tory shall be entitled to present a petition for the windin( !p of a company, notwithstandin( that he may be the holder of f!lly paid.!p shares, or that the company may ha-e no assets at all or may ha-e no s!rpl!s assets left for distrib!tion amon( the shareholders after the satisfaction of its liabilities, and shares in respect of which he is a contrib!tory or some of them were either ori(inally allotted to him or ha-e been held by him, and re(istered in his name, for at least six months d!rin( the ei(hteen months immediately before the commencement of the windin( !p or ha-e de-ol-ed on him thro!(h the death of a former holder. F4G 9he ,e(istrar shall be entitled to present a petition for windin( !p !nder s!b.section F1G on any of the (ro!nds specified in s!b.section F1G of section 24", except on the (ro!nd specified in cla!se FdG of that s!b.sectionD /ro-ided that the ,e(istrar shall not present a petition on the (ro!nd that the company is !nable to pay its debts !nless it appears to him either from the financial condition of the company as disclosed in its balance sheet or from the report of an inspector appointed !nder section 1&3 that the company is !nable to pay its debtsD /ro-ided f!rther that the ,e(istrar shall obtain the pre-io!s sanction of the +entral 4o-ernment to the presentation of a petitionD /ro-ided also that the +entral 4o-ernment shall not accord its sanction !nder the precedin( pro-iso, !nless the company concerned has been (i-en a reasonable opport!nity of ma2in( representations. F5G # petition filed by the company for windin( !p before the 9rib!nal shall be admitted only if accompanied by a statement of affairs in s!ch form and in s!ch manner as may be prescribed. F"G 0efore a petition for windin( !p of a company presented by a contin(ent or prospecti-e creditor is admitted, the lea-e of the 9rib!nal shall be obtained for the admission of the petition and s!ch lea-e shall not be (ranted, !nless in the opinion of the 9rib!nal there is a prima facie case for the windin( !p of the company and !ntil s!ch sec!rity for costs has been (i-en as the 9rib!nal thin2s reasonable. Po61r3 of Tri.,*(l. 24&. F1G 9he 9rib!nal may, on receipt of a petition for windin( !p !nder section 24$ pass any of the followin( orders, namelyDE FaG dismiss it, with or witho!t costsH FbG ma2e any interim order as it thin2s fitH FcG appoint a pro-isional li3!idator of the company till the ma2in( of a windin( !p orderH FdG ma2e an order for the windin( !p of the company with or witho!t costsH or

153

FeG any other order as it thin2s fitD /ro-ided that an order !nder this s!b.section shall be made within ninety days from the date of presentation of the petitionD /ro-ided f!rther that before appointin( a pro-isional li3!idator !nder cla!se FcG, the 9rib!nal shall (i-e notice to the company and afford a reasonable opport!nity to it to ma2e its representations, if any, !nless for special reasons to be recorded in writin(, the 9rib!nal thin2s fit to dispense with s!ch noticeD /ro-ided also that the 9rib!nal shall not ref!se to ma2e a windin( !p order on the (ro!nd only that the assets of the company ha-e been mort(a(ed for an amo!nt e3!al to or in excess of those assets, or that the company has no assets. F2G >here a petition is presented on the (ro!nd that it is j!st and e3!itable that the company sho!ld be wo!nd !p, the 9rib!nal may ref!se to ma2e an order of windin( !p, if it is of the opinion that some other remedy is a-ailable to the petitioners and that they are actin( !nreasonably in see2in( to ha-e the company wo!nd !p instead of p!rs!in( that other remedy. Dir14)io*3 for fili*+ 3)()151*) of (ff(ir3. 24). F1G >here a petition for windin( !p is filed before the 9rib!nal by any person other than the company, the 9rib!nal shall, if satisfied that a prima facie case for windin( !p of the company is made o!t, by an order direct the company to file its objections alon( with a statement of its affairs within thirty days of the order in s!ch form and in s!ch manner as may be prescribed /ro-ided that the 9rib!nal may direct the petitioner to deposit s!ch sec!rity for costs as it may consider reasonable as a precondition to iss!e directions to the company. F2G # company, which fails to file the statement of affairs as referred to in s!b.section F1G, shall forfeit the ri(ht to oppose the petition and s!ch directors and officers of the company as fo!nd responsible for s!ch non.compliance, shall be p!nishable as per the pro-ision of s!b.section F4G. F3G 9he directors and other officers of the company, in respect of which an order for windin( !p is passed by the 9rib!nal !nder cla!se FdG of s!b.section F1G of section 24&, shall, within sixty days of s!ch order, s!bmit, at the cost of the company, the boo2s of acco!nts of the company completed and a!dited !p to the date of the order, to s!ch li3!idator and in the manner specified by the 9rib!nal. F4G >here a contra-ention of this section occ!rs, the directors and other officers of the company who are responsible for s!ch contra-ention shall be p!nishable with imprisonment for a term which may extend to six months or with fine which may extend to fi-e la2h r!pees, or with both. Co5-(*/ Li7,id()or3 (*d )01ir (--oi*)51*)3. 25*. F1G For the p!rposes of windin( !p of a company by the 9rib!nal, there shall be a +ompany <i3!idator who shall be appointed by the 9rib!nal at the time of the passin( of the order of windin( !p. F2G 9he pro-isional li3!idator or the +ompany <i3!idator, as the case may be, shall be appointed from a panel maintained by the +entral 4o-ernment consistin( of the names of chartered acco!ntants, ad-ocates, company secretaries, cost and wor2s acco!ntants or firms or bodies corporate ha-in( s!ch chartered acco!ntants, ad-ocates, company secretaries, cost and wor2s acco!ntants and s!ch other professionals as may be notified by the +entral 4o-ernment or from a firm or a body corporate of persons ha-in( a combination of s!ch professionals as may be

154

prescribed and ha-in( at least ten years8 experience in company matters and s!ch other 3!alifications as may be prescribed. F3G 9he +entral 4o-ernment may remo-e the name of any person or firm or body corporate from the panel maintained !nder s!b.section F2G on the (ro!nds of miscond!ct, fra!d, misfeasance, breach of d!ties or professional incompetenceD /ro-ided that the +entral 4o-ernment before remo-in( him or it from the panel shall (i-e him or it a reasonable opport!nity of bein( heard. F4G 9he terms and conditions of appointment of a li3!idator and the fee payable to him shall be specified by the 9rib!nal on the basis of tas2 re3!ired to be performed, experience, 3!alification and si=e of the company. F5G 1n appointment as pro-isional li3!idator or +ompany <i3!idator, as the case may be, s!ch li3!idator shall file a declaration in the prescribed form disclosin( conflict of interest or lac2 of independence in respect of his appointment, if any, with the 9rib!nal and s!ch obli(ation shall contin!e thro!(ho!t the term of his appointment. F"G >hile passin( a windin( !p order, the 9rib!nal may appoint a pro-isional li3!idator, if any, appointed !nder cla!se FcG of s!b.section F1G of section 24&, as the +ompany <i3!idator for the cond!ct of the proceedin(s for the windin( !p of the company. R15o2(l (*d r1-l(4151*) of li7,id()or. 251. F1G 9he 9rib!nal may, on a reasonable ca!se bein( shown and for reasons to be recorded in writin(, remo-e the pro-isional li3!idator or the +ompany <i3!idator, as the case may be, as li3!idator of the company on any of the followin( (ro!nds, namelyDE FaG miscond!ct, FbG fra!d or misfeasance, FcG professional incompetence or fail!re to exercise d!e care and dili(ence in performance of the powers and f!nctionsH FdG inability to act as li3!idator, FeG conflict of interest or lac2 of independence d!rin( the term of his appointment that wo!ld j!stify remo-al. F2G %n the e-ent of death, resi(nation or remo-al of the li3!idator !nder this section, the 9rib!nal may transfer the wor2 assi(ned to him to another +ompany <i3!idator for reasons to be recorded in writin(. F3G >here the 9rib!nal is of the opinion that any li3!idator is responsible for ca!sin( any loss or dama(e to the company d!e to fra!d or misfeasance or fail!re to exercise d!e care and dili(ence in the performance of his powers and f!nctions, the 9rib!nal may reco-er or ca!se to be reco-ered s!ch loss or dama(e from the li3!idator and pass s!ch other orders as it may thin2 fit. F4G 9he 9rib!nal shall, before passin( any order !nder this section, pro-ide a reasonable opport!nity of bein( heard to the li3!idator. 'i*di*+ ,- ord1r )o .1 4o55,*i4()1d )o R1+i3)r(r.

155

252. F1G >here the 9rib!nal ma2es an order for the windin( !p of a company, it shall, within a period not exceedin( fifteen days from the date of passin( of the order, ca!se intimation thereof to be sent to the +ompany <i3!idator and the ,e(istrar. F2G 1n receipt of the copy of the windin( !p order, the ,e(istrar shall ma2e an endorsement to that effect in his records relatin( to the company and notify in the 1fficial 4a=ette that s!ch an order has been made. F3G 9he windin( !p order shall be deemed to be a notice of dischar(e to the officers, employees and wor2men of the company, except when the b!siness of the company is contin!ed. Eff14) of 6i*di*+ ,- ord1r. 253. 9he order for the windin( !p of a company shall operate in fa-o!r of all the creditors and all contrib!tories of the company as if it had been made o!t on the joint petition of creditors and contrib!tories. S)(/ of 3,i)3 1)4. o* 6i*di*+ ,- ord1r. 254. F1G >hen a windin( !p order has been passed or a pro-isional li3!idator has been appointed, no s!it or other le(al proceedin( shall be commenced, or if pendin( at the date of the windin( !p order, shall be proceeded with, by or a(ainst the company, except with the lea-e of the 9rib!nal and s!bject to s!ch terms as the 9rib!nal may imposeD /ro-ided that any application to the 9rib!nal see2in( lea-e !nder this section shall be disposed of by the 9rib!nal within sixty days. F2G 6othin( in s!b.section F1G shall apply to any proceedin( pendin( in appeal before the S!preme +o!rt or a Ii(h +o!rt. I,ri3di4)io* of Tri.,*(l. 255. 9he 9rib!nal shall, notwithstandin( anythin( contained in any other law for the time bein( in force, ha-e j!risdiction to entertain, or dispose of,E FaG any s!it or proceedin( by or a(ainst the companyH FbG any claim made by or a(ainst the company, incl!din( claims by or a(ainst any of its branches in %ndiaH FcG any application made !nder section 2*4H FdG any scheme s!bmitted !nder section 23$H FeG any 3!estion of priorities or any other 3!estion whatsoe-er, whether of law or fact, which may relate to or arise in the co!rse of the windin( !p of the company, whether s!ch s!it or proceedin( has been instit!ted, or is instit!ted or s!ch claim or 3!estion has arisen or arises or s!ch application has been made or is made or s!ch scheme has been s!bmitted, or is s!bmitted, before or after the order for the windin( !p of the company. S,.5i33io* of r1-or) ./ Co5-(*/ Li7,id()or.

156

25". F1G >here the 9rib!nal has made a windin( !p order or appointed a +ompany <i3!idator, s!ch <i3!idator shall, within sixty days from the order, s!bmit to the 9rib!nal, a +ompany report containin( the followin( partic!lars, namelyDE FaG the nat!re and details of the assets of the company incl!din( their location and -al!e, statin( separately the cash balance in hand and in the ban2, if any, and the ne(otiable sec!rities, if any, held by the companyD /ro-ided that the -al!ation of the assets shall be obtained from re(istered -al!ers for this p!rposeH FbG amo!nt of capital iss!ed, s!bscribed and paid !pH FcG the existin( and contin(ent liabilities of the company incl!din( names, addresses and occ!pations of its creditors, statin( separately the amo!nt of sec!red and !nsec!red debts, and in the case of sec!red debts, partic!lars of the sec!rities (i-en, whether by the company or an officer thereof, their -al!e and the dates on which they were (i-enH FdG the debts d!e to the company and the names, addresses and occ!pations of the persons from whom they are d!e and the amo!nt li2ely to be realised on acco!nt thereofH FeG (!arantees, if any, extended by the companyH FfG list of contrib!tories and d!es if any payable by them and details of any !npaid callH F(G details of trade mar2s and intellect!al properties, if any, owned by the companyH FhG details of s!bsistin( contracts, joint -ent!res and collaborations, if anyH FiG details of holdin( and s!bsidiary companies, if anyH FjG details of le(al cases filed by or a(ainst the companyH and F2G any other information which the 9rib!nal may direct or the +ompany <i3!idator may consider necessary to incl!de. F2G 9he +ompany <i3!idator shall incl!de in his report the manner in which the company was promoted or formed and whether in his opinion any fra!d has been committed by any person in its promotion or formation or by any officer of the company in relation to the company since the formation thereof and any other matters which, in his opinion, it is desirable to brin( to the notice of the 9rib!nal. F3G 9he +ompany <i3!idator shall also ma2e a report on the -iability of the b!siness of the company or the steps which, in his opinion, are necessary for maximisin( the -al!e of the assets of the company. F4G 9he +ompany <i3!idator may also, if he thin2s fit, ma2e any f!rther report or reports. F5G #ny person describin( himself in writin( to be a creditor or a contrib!tory of the company shall be entitled by himself or by his a(ent at all reasonable times to inspect the report s!bmitted in accordance with this section and ta2e copies thereof or extracts therefrom on payment of the prescribed fee. Dir14)io*3 of Tri.,*(l o* r1-or) of Co5-(*/ Li7,id()or.

157

25$. F1G 9he 9rib!nal shall, on consideration of report of +ompany <i3!idator, fix a time limit within which the entire proceedin(s shall be completed and the company be dissol-edD /ro-ided that the 9rib!nal may, if it is of the opinion, at any sta(e of the proceedin(s, or on examination of the reports s!bmitted to it by the +ompany <i3!idator and after hearin( the +ompany <i3!idator, creditors or contrib!tories, that it will not be ad-anta(eo!s or economical to contin!e the proceedin(s, re-ise the time limit within which the entire proceedin(s shall be completed and the company be dissol-ed. F2G 9he 9rib!nal may, on examination of the reports s!bmitted to it by the +ompany <i3!idator and after hearin( the +ompany <i3!idator, creditors or contrib!tories, order sale of the company as a (oin( concern or its assets or part thereofD /ro-ided that the 9rib!nal may, where it considers fit, appoint a Sale +ommittee comprisin( s!ch creditors, promoters and officers of the company as the 9rib!nal may decide to assist the +ompany <i3!idator in sale !nder this s!b.section. F3G >here a report is recei-ed from the +ompany <i3!idator or the +entral 4o-ernment or any person that a fra!d has been committed in respect of the company, the 9rib!nal shall, witho!t prej!dice to the process of windin( !p, order for in-esti(ation !nder section 1&3, and on consideration of the report of s!ch in-esti(ation it may pass order and (i-e directions !nder sections 314 to 31$. F4G 9he 9rib!nal may order for ta2in( s!ch steps and meas!res, as may be necessary to protect, preser-e or enhance the -al!e of the assets of the company. F5G 9he 9rib!nal may pass s!ch other order or (i-e s!ch other directions as it considers fit. C,3)od/ of 4o5-(*/=3 -ro-1r)i13. 25&. F1G >here a windin( !p order has been made or where a pro-isional li3!idator has been appointed, the li3!idator shall, on the order of the 9rib!nal, forthwith ta2e into his c!stody or !nder his control all the property, effects and actionable claims to which the company is or appears to be entitled to and ta2e s!ch steps and meas!res, as may be necessary, to protect and preser-e the properties of the company. F2G 6otwithstandin( anythin( contained in s!b.section F1G, all the property and effects of the company shall be deemed to be in the c!stody of the 9rib!nal from the date of the order for the windin( !p of the company. F3G 1n an application by the +ompany <i3!idator or otherwise, the 9rib!nal may, at any time after the ma2in( of a windin( !p order, re3!ire any contrib!tory for the time bein( on the list of contrib!tories, and any tr!stee, recei-er, ban2er, a(ent, officer or other employee of the company, to pay, deli-er, s!rrender or transfer forthwith, or within s!ch time as the 9rib!nal directs, to the +ompany <i3!idator, any money, property or boo2s and papers in his c!stody or !nder his control to which the company is or appears to be entitled. Dir14)or3 offi41r3 (*d 15-lo/113 )o 4o;o-1r()1 6i)0 Co5-(*/ Li7,id()or. 25). F1G 9he promoters, directors, officers and employees, past and present, of the company shall extend f!ll co.operation to the +ompany <i3!idator in dischar(e of his f!nctions and d!ties. F2G >here any person, witho!t reasonable ca!se, fails to dischar(e his obli(ations !nder s!b. section F1G, he shall be p!nishable with imprisonment which may extend to six months or with fine

158

which may extend to fi-e tho!sand r!pees for e-ery day d!rin( which the defa!lt contin!es, or with both. S1))l151*) of li3) of 4o*)ri.,)ori13 (*d (--li4()io* of (331)3. 2"*. F1G #s soon as may be after the passin( of a windin( !p order by the 9rib!nal, the 9rib!nal shall settle a list of contrib!tories, ca!se rectification of re(ister of members in all cases where rectification is re3!ired in p!rs!ance of this #ct and shall ca!se the assets of the company to be applied for the dischar(e of its liabilityD /ro-ided that where it appears to the 9rib!nal that it wo!ld not be necessary to ma2e calls on or adj!st the ri(hts of contrib!tories, the 9rib!nal may dispense with the settlement of a list of contrib!tories. F2G %n settlin( the list of contrib!tories, the 9rib!nal shall distin(!ish between those who are contrib!tories in their own ri(ht and those who are contrib!tories as bein( representati-es of, or liable for the debts of, others. F3G >hile settlin( the list of contrib!tories, the 9rib!nal shall incl!de e-ery present and past member who shall be liable to contrib!te to the assets of the company an amo!nt s!fficient for payment of the debts and liabilities and the costs, char(es and expenses of windin( !p, and for the adj!stment of the ri(hts of the contrib!tories amon( themsel-es, s!bject to the followin( conditions, namelyDE FaG a past member shall not be liable to contrib!te if he has ceased to be a member for the precedin( one year or more before the commencement of the windin( !pH FbG a past member shall not be liable to contrib!te in respect of any debt or liability of the company contracted after he ceased to be a memberH FcG no past member shall be liable to contrib!te !nless it appears to the 9rib!nal that the present members are !nable to satisfy the contrib!tions re3!ired to be made by them in p!rs!ance of this #ctH FdG in the case of a company limited by shares, no contrib!tion shall be re3!ired from any past or present member exceedin( the amo!nt, if any, !npaid on the shares in respect of which he is liable as s!ch memberH FeG in the case of a company limited by (!arantee, no contrib!tion shall be re3!ired from any past or present member exceedin( the amo!nt !nderta2en to be contrib!ted by him to the assets of the company in the e-ent of its bein( wo!nd !p b!t if the company has a share capital, s!ch member shall be liable to contrib!te to the extent of any s!m !npaid on any shares held by him as if the company were a company limited by shares. O.li+()io*3 of dir14)or3 (*d 5(*(+1r3. 2"1. %n the case of a limited company, any director or mana(er, whether past or present, whose liability is !nlimited !nder the pro-isions of this #ct, shall, in addition to his liability, if any, to contrib!te as an ordinary member, be liable to ma2e a f!rther contrib!tion as if he were at the commencement of windin( !p, a member of an !nlimited companyD /ro-ided that E FaG a past director or mana(er shall not be liable to ma2e s!ch f!rther contrib!tion, if he has ceased to hold office for a year or !pwards before the commencement of the windin( !pH

159

FbG a past director or mana(er shall not be liable to ma2e s!ch f!rther contrib!tion in respect of any debt or liability of the company contracted after he ceased to hold officeH FcG s!bject to the articles of the company, a director or mana(er shall not be liable to ma2e s!ch f!rther contrib!tion !nless the 9rib!nal deems it necessary to re3!ire the contrib!tion in order to satisfy the debts and liabilities of the company, and the costs, char(es and expenses of the windin( !p. Co55i))11 of i*3-14)io*. 2"2. F1G 9he 9rib!nal may, while passin( an order of windin( !p of a company, direct that there shall be, a committee of inspection for the company to ad-ise the +ompany <i3!idator and to report to the 9rib!nal on s!ch matters as the 9rib!nal may direct. F2G # committee of inspection appointed by the 9rib!nal shall consist of not more than twel-e members, bein( creditors and contrib!tories of the company or s!ch other persons in s!ch proportion as the 9rib!nal may, 2eepin( in -iew the circ!mstances of the company !nder li3!idation, direct. F3G 9he +ompany <i3!idator shall con-ene a meetin( of creditors and contrib!tories, as ascertained from the boo2s and doc!ments, of the company within thirty days from the date of order of windin( !p for enablin( the 9rib!nal to determine the persons who may be members of the committee of inspection. F4G 9he committee of inspection shall ha-e the ri(ht to inspect the boo2s of acco!nt and other doc!ments, assets and properties of the company !nder li3!idation at a reasonable time. F5G 9he pro-isions relatin( to the con-enin( of the meetin(s, the proced!re to be followed thereat and other matters relatin( to cond!ct of b!siness by the committee shall be s!ch as may be prescribed. F"G 9he meetin( of committee of inspection shall be chaired by the +ompany <i3!idator. S,.5i33io* of -1riodi4(l r1-or)3 )o )01 Tri.,*(l. 2"3. F1G 9he +ompany <i3!idator shall ma2e periodical reports to the 9rib!nal and in any case ma2e a report at the end of each 3!arter with respect to the pro(ress of the windin( !p of the company in s!ch form and in s!ch manner as may be prescribed. F2G 9he 9rib!nal may, on an application by the +ompany <i3!idator, re-iew the orders made by it and ma2e s!ch modifications as it thin2s fit. Po61r of Tri.,*(l o* (--li4()io* for 3)(/ of 6i*di*+ ,-. 2"4. F1G 9he 9rib!nal may, at any time after ma2in( a windin( !p order on an application of creditors or any other person, if satisfied, ma2e an order that it is j!st and fair that an opport!nity to re-i-e and rehabilitate the company be pro-ided stayin( the proceedin(s for s!ch time b!t not exceedin( one h!ndred and ei(hty days and on s!ch terms and conditions as it thin2s fitD /ro-ided that an order !nder this s!b.section shall be made by the 9rib!nal only on an application made to it enclosin( a scheme for rehabilitation after three.fo!rths of sec!red creditors and one.half of !nsec!red creditors in -al!e of the company ha-e resol-ed at a meetin( con-ened by each class of creditors by (i-in( their consent in writin( to the scheme.

160

F2G 9he 9rib!nal may, while passin( the order !nder s!b.section F1G, re3!ire the applicant to f!rnish s!ch sec!rity as to costs as it considers fit. F3G >here an order !nder s!b.section F1G is passed by the 9rib!nal, the pro-isions of +hapter @%@ shall be followed in respect of the consideration and sanction of the scheme of re-i-al of the company. F4G >itho!t prej!dice to the pro-isions of s!b.section F1G, the 9rib!nal may at any time after ma2in( a windin( !p order, on an application of +ompany <i3!idator, ma2e an order stayin( the windin( !p proceedin(s or any part thereof, for s!ch time and on s!ch terms and conditions as it thin2s fit. F5G 9he 9rib!nal may, before ma2in( an order !nder this section, re3!ire the +ompany <i3!idator to f!rnish to it a report with respect to any facts or matters which are in his opinion rele-ant to the application. F"G # copy of e-ery order made !nder this section shall forthwith be forwarded by the +ompany <i3!idator to the ,e(istrar who shall ma2e an endorsement of the order in his boo2s and records relatin( to the company. Po61r3 (*d d,)i13 of Co5-(*/ Li7,id()or. 2"5. F1G S!bject to directions by the 9rib!nal, if any, in this re(ard, the +ompany <i3!idator, in a windin( !p by the 9rib!nal, shall ha-e the powerE FaG to carry on the b!siness of the company so far as may be necessary for the beneficial windin( !p of the companyH FbG to do all acts and to exec!te, in the name and on behalf of the company, all deeds, receipts, and other doc!ments, and for that p!rpose, to !se, when necessary, the company8s sealH FcG to sell the immo-able and mo-able property and actionable claims of the company by p!blic a!ction or pri-ate contract, with power to transfer s!ch property to any person or body corporate, or to sell the same in parcelsH FdG to sell the whole of the !nderta2in( of the company as a (oin( concernH FeG to raise on the sec!rity of the assets of the company, any money re3!iredH FfG to instit!te or defend any s!it, prosec!tion, or other le(al proceedin(, ci-il or criminal, in the name and on behalf of the companyH F(G to in-ite and settle claim of creditors and distrib!te sale proceeds in accordance with priorities established by this #ctH FhG to inspect the records and ret!rns of the company on the files of the ,e(istrar or any other a!thorityH FiG to pro-e ran2 and claim in the insol-ency of any contrib!tory for any balance a(ainst his estate, and to recei-e di-idends in the insol-ency, in respect of that balance, as a separate debt d!e from the insol-ent, and rateably with the other separate creditorsH

161

FjG to draw, accept, ma2e and endorse any bill of exchan(e, h!ndi or promissory note in the name and on behalf of the company, with the same effect with respect to the liability of the company as if the bill, h!ndi, or note had been drawn, accepted, made or endorsed by or on behalf of the company in the co!rse of its b!sinessH F2G to ta2e o!t, in his official name, letters of administration to any deceased contrib!tory, and to do in his official name any other act necessary for obtainin( payment of any money d!e from a contrib!tory or his estate which cannot be con-eniently done in the name of the company, and in all s!ch cases, the money d!e shall, for the p!rpose of enablin( the +ompany <i3!idator to ta2e o!t the letters of administration or reco-er the money, be deemed to be d!e to the +ompany <i3!idator himselfH FlG to obtain any professional assistance, and for protection of the assets of the company appoint an a(ent to do any b!siness which the +ompany <i3!idator is !nable to do himselfH FmG to do all s!ch other acts and thin(s as may be necessary for the windin( !p of the company and distrib!tion of its assetsH and FnG to apply to the 9rib!nal for s!ch orders or directions as may be necessary for the windin( !p of the company. F2G 9he exercise of powers by the +ompany <i3!idator !nder s!b.section F1G shall be s!bject to the o-erall control of the 9rib!nal. F3G 6otwithstandin( the pro-isions of s!b.section F1G, the +ompany <i3!idator shall perform s!ch d!ties as the 9rib!nal may specify in this behalf. Pro2i3io* for -rof133io*(l (33i3)(*41 )o Co5-(*/ Li7,id()or. 2"". F1G 9he +ompany <i3!idator may, with the sanction of the 9rib!nal, appoint one or more chartered acco!ntants or company secretaries or cost acco!ntants or le(al practitioners or s!ch other professionals as may be necessary to assist him in the performance of his d!ties and f!nctions !nder the #ct. F2G #ny person appointed !nder this section shall disclose forthwith to the 9rib!nal in the prescribed form any conflict of interest or lac2 of independence in respect of his appointment. E91r4i31 (*d 4o*)rol of Co5-(*/ Li7,id()or=3 -o61r3. 2"$. F1G S!bject to the pro-isions of this #ct, the +ompany <i3!idator shall, in the administration of the assets of the company and the distrib!tion thereof amon( its creditors, ha-e re(ard to any directions which may be (i-en by the resol!tion of the creditors or contrib!tories at any (eneral meetin( or by the committee of inspection. F2G #ny directions (i-en by the creditors or contrib!tories at any (eneral meetin( shall, in case of conflict, be deemed to o-er ride any directions (i-en by the committee of inspection. F3G 9he +ompany <i3!idatorE FaG may s!mmon meetin(s of the creditors or contrib!tories, whene-er he thin2s fit, for the p!rpose of ascertainin( their wishesH and FbG shall s!mmon s!ch meetin(s at s!ch times, as the creditors or contrib!tories, as the case may be, may, by resol!tion, direct, or whene-er re3!ested in writin( to do so by not less than one.tenth in -al!e of the creditors or contrib!tories, as the case may be.

162

F4G #ny person a((rie-ed by any act or decision of the +ompany <i3!idator may apply to the 9rib!nal, and the 9rib!nal may confirm, re-erse or modify the act or decision complained of and ma2e s!ch f!rther order as it thin2s j!st in the circ!mstances. Boo<3 )o .1 <1-) ./ Co5-(*/ Li7,id()or. 2"&. F1G 9he +ompany <i3!idator shall 2eep proper boo2s in s!ch manner as may be prescribed in which he shall ca!se entries or min!tes to be made of proceedin(s at meetin(s and of s!ch other matters as may be prescribed. F2G #ny creditor or contrib!tory may, s!bject to the control of the 9rib!nal, inspect any s!ch boo2s, personally or thro!(h his a(ent. A,di) of Co5-(*/ Li7,id()or=3 (44o,*)3. 2"). F1G 9he +ompany <i3!idator shall maintain proper and re(!lar boo2s of acco!nts incl!din( acco!nts of receipts and payments made by him in s!ch form and manner as may be prescribed. F2G 9he +ompany <i3!idator shall, at s!ch times as may be prescribed b!t not less than twice in each year d!rin( his ten!re of office, present to the 9rib!nal an acco!nt of the receipts and payments as s!ch li3!idator in the prescribed form in d!plicate, which shall be -erified by a declaration in the prescribed form and manner. F3G 9he 9rib!nal shall ca!se the acco!nts to be a!dited in s!ch manner as it thin2s fit, and for the p!rpose of the a!dit, the +ompany <i3!idator shall f!rnish to the 9rib!nal with s!ch -o!chers and information as the 9rib!nal may re3!ire, and the 9rib!nal may, at any time, re3!ire the prod!ction of, and inspect, any boo2s of acco!nt 2ept by the +ompany <i3!idator. F4G >hen the acco!nts of the company ha-e been a!dited, one copy thereof shall be filed by the +ompany <i3!idator with the 9rib!nal, and the other copy shall be deli-ered to the ,e(istrar and it shall be open to inspection by any creditor, contrib!tory or person interested. F5G >here an acco!nt referred to in s!b.section F4G relates to a 4o-ernment company, the +ompany <i3!idator shall forward a copy thereofE FaG to the +entral 4o-ernment, if that 4o-ernment is a member of the 4o-ernment companyH or FbG to any State 4o-ernment, if that 4o-ernment is a member of the 4o-ernment companyH or FcG to the +entral 4o-ernment and any State 4o-ernment, if both the 4o-ernments are members of the 4o-ernment company. F"G 9he +ompany <i3!idator shall ca!se the acco!nts when a!dited, or a s!mmary thereof, to be printed, and shall send a printed copy of the acco!nts or s!mmary thereof by post to e-ery creditor and e-ery contrib!toryD /ro-ided that the 9rib!nal may dispense with the compliance of the pro-isions of this s!b. section in any case it deems fit. P(/51*) of d1.)3 ./ 4o*)ri.,)or/ (*d 19)1*) of 31);off.

163

2$*. F1G 9he 9rib!nal may, at any time after passin( of a windin( !p order, pass an order re3!irin( any contrib!tory for the time bein( on the list of contrib!tories to pay, in the manner directed by the order, any money d!e to the company, from him or from the estate of the person whom he represents, excl!si-e of any money payable by him or the estate by -irt!e of any call in p!rs!ance of this #ct. F2G 9he 9rib!nal, in ma2in( an order !nder s!b.section F1G may,E FaG in the case of an !nlimited company, allow to the contrib!tory, by way of set.off, any money d!e to him or to the estate which he represents, from the company, on any independent dealin( or contract with the company, b!t not any money d!e to him as a member of the company in respect of any di-idend or profitH and FbG in the case of a limited company, allow to any director or mana(er whose liability is !nlimited, or to his estate, s!ch set.off. F3G %n the case of any company, whether limited or !nlimited, when all the creditors ha-e been paid in f!ll, any money d!e on any acco!nt whate-er to a contrib!tory from the company may be allowed to him by way of set.off a(ainst any s!bse3!ent call. Po61r of Tri.,*(l )o 5(<1 4(ll3. 2$1. 9he 9rib!nal may, at any time after the passin( of a windin( !p order, and either before or after it has ascertained the s!fficiency of the assets of the company,E FaG ma2e calls on all or any of the contrib!tories for the time bein( on the list of the contrib!tories, to the extent of their liability, for payment of any money which the 9rib!nal considers necessary to satisfy the debts and liabilities of the company, and the costs, char(es and expenses of windin( !p, and for the adj!stment of the ri(hts of the contrib!tories amon( themsel-esH and FbG ma2e an order for payment of any calls so made. Ad:,3)51*) of ri+0)3 of 4o*)ri.,)ori13. 2$2. 9he 9rib!nal shall adj!st the ri(hts of the contrib!tories amon( themsel-es and distrib!te any s!rpl!s amon( the persons entitled thereto. Po61r )o ord1r 4o3)3. 2$3. 9he 9rib!nal may, in the e-ent of the assets of a company bein( ins!fficient to satisfy its liabilities, ma2e an order for the payment o!t of the assets, of the costs, char(es and expenses inc!rred in the windin( !p, in s!ch order of priority inter se as the 9rib!nal thin2s j!st. Po61r )o 3,55o* -1r3o*3 3,3-14)1d of 0(2i*+ -ro-1r)/ of 4o5-(*/ 1)4. 2$4. F1G 9he 9rib!nal may, at any time after the appointment of a pro-isional li3!idator or the passin( of a windin( !p order, s!mmon before it any officer of the company or person 2nown or s!spected to ha-e in his possession any property or boo2s or papers, of the company, or 2nown or s!spected to be indebted to the company, or any person whom the 9rib!nal thin2s to be capable of (i-in( information concernin( the promotion, formation, trade, dealin(s, property, boo2s or papers, or affairs of the company.

164

F2G 9he 9rib!nal may examine any officer or person so s!mmoned on oath concernin( the matters aforesaid, either by word of mo!th or on written interro(atories, and may, in the former case, red!ce his answers to writin( and re3!ire him to si(n them. F3G 9he 9rib!nal may re3!ire any officer or person so s!mmoned to prod!ce any boo2s and papers relatin( to the company in his c!stody or power, b!t, where he claims any lien on boo2s or papers prod!ced by him, the prod!ction shall be witho!t prej!dice to s!ch lien, and the 9rib!nal shall ha-e power to determine all 3!estions relatin( to that lien. F4G 9he 9rib!nal may direct the li3!idator to file before it a report in respect of property, debt, etc., of the company in possession of other persons. F5G %f 9rib!nal finds thatE FaG a person is indebted to the company, the 9rib!nal may order him to pay to the pro-isional li3!idator or, as the case may be, the li3!idator at s!ch time and in s!ch manner as the 9rib!nal may consider j!st, the amo!nt in which he is indebted, or any part thereof, either in f!ll dischar(e of the whole amo!nt or not, as the 9rib!nal thin2s fit, with or witho!t costs of the examinationH FbG a person is possessin( any property belon(in( to the company, the 9rib!nal may order him to deli-er to the pro-isional li3!idator or, as the case may be, the li3!idator, that property or any part thereof, at s!ch time, in s!ch manner and on s!ch terms as to the 9rib!nal may consider j!st. F"G %f any officer or person so s!mmoned fails to appear before the 9rib!nal at the time appointed witho!t a reasonable ca!se, the 9rib!nal may impose an appropriate cost. F$G '-ery order made !nder s!b.section F5G shall be exec!ted in the same manner as decrees for the payment of money or for the deli-ery of property !nder the +ode of +i-il /roced!re, 1)*&. F&G #ny person ma2in( any payment or deli-ery in p!rs!ance of an order made !nder s!b.section F5G shall by s!ch payment or deli-ery be, !nless otherwise directed by s!ch order, dischar(ed from all liability whatsoe-er in respect of s!ch debt or property. Po61r )o ord1r 19(5i*()io* of -ro5o)1r3 dir14)or3 1)4. 2$5. F1G >here an order has been made for the windin( !p of a company by the 9rib!nal, and the +ompany <i3!idator has made a report to the 9rib!nal !nder this #ct, statin( that in his opinion a fra!d has been committed by any person in the promotion or formation of the company, or by any officer of the company in relation to the company since its formation, the 9rib!nal may, after considerin( the report, direct that s!ch person or officer shall attend before the 9rib!nal on a day appointed by it for that p!rpose, and be examined as to the promotion or formation or the cond!ct of the b!siness of the company or as to his cond!ct and dealin(s as an officer thereof. F2G 9he +ompany <i3!idator shall ta2e part in the examination, and for that p!rpose he or it may, if specially a!thorised by the 9rib!nal in that behalf, employ s!ch le(al assistance as may be sanctioned by the 9rib!nal. F3G 9he person shall be examined on oath and shall answer all s!ch 3!estions as the 9rib!nal may p!t, or allow to be p!t, to him. F4G # person ordered to be examined !nder this section E

165

FaG shall, before his examination, be f!rnished at his own cost with a copy of the +ompany <i3!idator8s reportH and FbG may at his own cost employ chartered acco!ntants or company secretaries or cost acco!ntants or le(al practitioners entitled to appear before the 9rib!nal !nder section 3)3, who shall be at liberty to p!t to him s!ch 3!estions as the 9rib!nal may consider j!st for the p!rpose of enablin( him to explain or 3!alify any answers (i-en by him. F5G %f any s!ch person applies to the 9rib!nal to be exc!lpated from any char(es made or s!((ested a(ainst him, it shall be the d!ty of the +ompany <i3!idator to appear on the hearin( of s!ch application and call the attention of the 9rib!nal to any matters which appear to the +ompany <i3!idator to be rele-ant. F"G %f the 9rib!nal, after considerin( any e-idence (i-en or hearin( witnesses called by the +ompany <i3!idator, allows the application made !nder s!b.section F5G, the 9rib!nal may order payment to the applicant of s!ch costs as it may thin2 fit. F$G 6otes of the examination shall be ta2en down in writin(, and shall be read o-er to or by, and si(ned by, the person examined, and may thereafter be !sed in e-idence a(ainst him, and shall be open to the inspection by any creditor or contrib!tory at all reasonable times. F&G 9he 9rib!nal may, if it thin2s fit, adjo!rn the examination from time to time. F)G #n examination !nder this section may, if the 9rib!nal so directs, be held before any person or a!thority a!thorised by the 9rib!nal. F1*G 9he powers of the 9rib!nal !nder this section as to the cond!ct of the examination, b!t not as to costs, may be exercised by the person or a!thority before whom the examination is held in p!rs!ance of s!b.section F)G. Arr13) of -1r3o* )r/i*+ )o 7,i) I*di( or (.34o*d. 2$". #t any time either before or after passin( a windin( !p order, if the 9rib!nal is satisfied that a contrib!tory or a person ha-in( property, acco!nts or papers of the company in his possession is abo!t to 3!it %ndia or otherwise to abscond, or is abo!t to remo-e or conceal any of his property, for the p!rpose of e-adin( payment of calls or of a-oidin( examination respectin( the affairs of the company, the 9rib!nal may ca!seE FaG the contrib!tory to be arrested and 2ept in c!stody !ntil s!ch time as the 9rib!nal may orderH and FbG his boo2s and papers and mo-able property to be sei=ed and safely 2ept !ntil s!ch time as the 9rib!nal may order. Di33ol,)io* of 4o5-(*/ ./ Tri.,*(l. 2$$. F1G >hen the affairs of a company ha-e been completely wo!nd !p, the +ompany <i3!idator shall ma2e an application to the 9rib!nal for dissol!tion of s!ch company. F2G 9he 9rib!nal shall on an application filed by the +ompany <i3!idator !nder s!b.section F1G or when the 9rib!nal is of the opinion that it is j!st and reasonable in the circ!mstances of the case that an order for the dissol!tion of the company sho!ld be made, ma2e an order that the company be dissol-ed from the date of the order, and the company shall be dissol-ed accordin(ly.

166

F3G # copy of the order shall, within thirty days from the date thereof, be forwarded by the +ompany <i3!idator to the ,e(istrar who shall record in the re(ister relatin( to the company a min!te of the dissol!tion of the company. F4G %f the +ompany <i3!idator ma2es a defa!lt in forwardin( a copy as aforesaid, he shall be p!nishable with fine which may extend to fi-e tho!sand r!pees for e-ery day d!rin( which the defa!lt contin!es. A--1(l3 fro5 ord1r3 5(d1 .1for1 4o551*4151*) of A4). 2$&. 6othin( in this +hapter shall affect the operation or enforcement of any order made by any +o!rt in any proceedin(s for the windin( !p of a company immediately before the commencement of this #ct and an appeal a(ainst s!ch order shall be filed before s!ch a!thority competent to hear s!ch appeals before s!ch commencement. PART II $ol,*)(r/ 'i*di*+ UCir4,53)(*413 i* 60i40 4o5-(*/ 5(/ .1 6o,*d ,- 2ol,*)(ril/. 2$). # company may be wo!nd !p -ol!ntarily,E FaG if the company in (eneral meetin( passes a resol!tion re3!irin( the company to be wo!nd !p -ol!ntarily as a res!lt of the expiry of the period for its d!ration, if any, fixed by its articles or on the occ!rrence of any e-ent in respect of which the articles pro-ide that the company sho!ld be dissol-edH or FbG if the company passes a special resol!tion that the company be wo!nd !p -ol!ntarily. D14l(r()io* of 3ol21*4/ i* 4(31 of -ro-o3(l )o 6i*d ,- 2ol,*)(ril/. 2&*. F1G >here it is proposed to wind !p a company -ol!ntarily, its director or directors, or in case the company has more than two directors, the majority of its directors, shall, at a meetin( of the 0oard, ma2e a declaration -erified by an affida-it to the effect that they ha-e made a f!ll in3!iry into the affairs of the company and they ha-e formed an opinion that the company has no debt or whether it will be able to pay its debts in f!ll from the proceeds of assets sold in -ol!ntary windin( !p. F2G # declaration made as aforesaid shall ha-e no effect for the p!rposes of this #ct, !nless E FaG it is made within the fi-e wee2s immediately precedin( the date of the passin( of the resol!tion for windin( !p the company and it is deli-ered to the ,e(istrar for re(istration before that dateH FbG it contains a declaration that the company is not bein( wo!nd !p to defra!d any person or personsH FcG it is accompanied by a copy of the report of the a!ditors of the company prepared in accordance with the pro-isions of this #ct, on the profit and loss acco!nt of the company for the period commencin( from the date !p to which the last s!ch acco!nt was prepared and endin( with the latest practicable date immediately before the ma2in( of the declaration and the balance sheet of the company made o!t as on that date which wo!ld also contain a statement of the company8s assets and liabilities on that dateH and

167

FdG where there are any assets of the company, it is accompanied by a report of the -al!ation of the assets of the company prepared by a re(istered -al!er. F3G >here the company is wo!nd !p in p!rs!ance of a resol!tion passed within a period of fi-e wee2s after the ma2in( of the declaration, b!t its debts are not paid or pro-ided for in f!ll, it shall be pres!med, !ntil the contrary is shown, that the director or directors did not ha-e reasonable (ro!nds for his or their opinion !nder s!b.section F1G. F4G #ny director of a company ma2in( a declaration !nder this section witho!t ha-in( reasonable (ro!nds for the opinion that the company will be able to pay its debts in f!ll from the proceeds of assets sold in -ol!ntary windin( !p shall be p!nishable with imprisonment for a term which shall not be less than three years b!t which may extend to fi-e years or with fine which shall not be less than fifty tho!sand r!pees b!t which may extend to three la2h r!pees, or with both. M11)i*+ of 4r1di)or3. 2&1. F1G 9he company shall also alon( with the callin( of meetin( of the company at which the resol!tion for the -ol!ntary windin( !p is to be proposed, ca!se a meetin( of its creditors either on the same day or on the next day and shall ca!se a notice of s!ch meetin( to be sent by re(istered post to the creditors with the notice of the meetin( of the company !nder section 2$). F2G 9he 0oard of Directors of the company shallE FaG ca!se to be presented a f!ll statement of the position of the company8s affairs to(ether with a list of creditors of the company, if any, copy of declaration !nder section 2&* and the estimated amo!nt of the claims before s!ch meetin(H and FbG appoint one of the directors to preside at the meetin(. F3G >here two.thirds in -al!e of creditors of the company are of the opinion thatE FaG it is in the interest of all parties that the company be wo!nd !p -ol!ntarily, the company shall be wo!nd !p -ol!ntarilyH or FbG the company will not be able to pay for its debts in f!ll from the proceeds of assets sold in -ol!ntary windin( !p and pass a resol!tion that it will be in interest of all parties if the company is wo!nd !p !nder the s!per-ision of the 9rib!nal, the company shall within fo!rteen days thereafter file an application before the 9rib!nal. F4G 6otice of any resol!tion passed at a creditors8 meetin( in p!rs!ance of this section shall be (i-en by the company to the ,e(istrar within ten days of the passin( thereof. F5G >here any defa!lt is made in complyin( with the pro-isions of this section, the company shall be p!nishable with fine which shall not be less than fifty tho!sand r!pees b!t which may extend to two la2h r!pees and any director or directors who are in defa!lt shall be p!nishable with imprisonment for a term which may extend to six months or with fine which shall not be less than fifty tho!sand r!pees b!t which may extend to two la2h r!pees, or with both. P,.li4()io* of r13ol,)io* )o 6i*d ,- 2ol,*)(ril/. 2&2. F1G >here a company has passed a resol!tion for -ol!ntary windin( !p and a resol!tion !nder s!b.section F3G of section 2&1 is passed, it shall within fo!rteen days of the passin( of the resol!tion (i-e notice of the resol!tion by ad-ertisement in the 1fficial 4a=ette and also in some newspaper circ!latin( in the district where the re(istered office or the principal office of the company is sit!ate.

168

F2G %f any defa!lt is made in complyin( with s!b.section F1G, the company and e-ery officer of the company who is in defa!lt shall be p!nishable with fine which may extend to fi-e tho!sand r!pees for e-ery day d!rin( which the defa!lt contin!es. Co551*4151*) of 2ol,*)(r/ 6i*di*+ ,-. 2&3. # -ol!ntary windin( !p shall be deemed to commence on the date of passin( of the resol!tion for -ol!ntary windin( !p !nder section 2$). Eff14) of 2ol,*)(r/ 6i*di*+ ,-. 2&4. %n the case of a -ol!ntary windin( !p, the company shall from the commencement of the windin( !p cease to carry on its b!siness except as far as re3!ired for the beneficial windin( !p of its b!siness. A--oi*)51*) of Co5-(*/ Li7,id()or. 2&5. F1G 9he company in its (eneral meetin(, where a resol!tion of -ol!ntary windin( !p is passed, shall appoint a +ompany <i3!idator from the panel prepared by the +entral 4o-ernment for the p!rpose of windin( !p its affairs and distrib!tin( the assets of the company and recommend the fee to be paid to the +ompany <i3!idator. F2G >here the creditors ha-e passed a resol!tion for windin( !p the company !nder s!b.section F3G of section 2&1, the appointment of +ompany <i3!idator !nder this section shall be effecti-e only after it is appro-ed by the majority of creditors in -al!e of the companyD /ro-ided that where s!ch creditors do not appro-e the appointment of s!ch +ompany <i3!idator, creditors shall appoint another +ompany <i3!idator. F3G 9he creditors while appro-in( the appointment of +ompany <i3!idator appointed by the company or appointin( the +ompany <i3!idator of their own choice, as the case may be, pass s!itable resol!tion with re(ard to the fee of the +ompany <i3!idator. F4G 1n appointment as +ompany <i3!idator, s!ch li3!idator shall file a declaration in the prescribed form disclosin( conflict of interest or lac2 of independence in respect of his appointment, if any, with the company and the creditors and s!ch obli(ation shall contin!e thro!(ho!t the term of his or its appointment. Po61r )o r15o21 (*d fill 2(4(*4/ of Co5-(*/ Li7,id()or. 2&". F1G # +ompany <i3!idator appointed !nder section 2&5 may be remo-ed by the company where his appointment has been made by the company and, by the creditors, where the appointment is appro-ed or made by s!ch creditors. F2G >here a +ompany <i3!idator is so!(ht to be remo-ed !nder this section, he shall be (i-en a notice in writin( statin( the (ro!nds of remo-al from his office by the company or the creditors, as the case may be. F3G >here three.fo!rth members of the company or three.fo!rth of creditors in -al!e, as the case may be, after consideration of the reply, if any, filed by the +ompany <i3!idator, in their meetin( decide to remo-e the +ompany <i3!idator, he shall -acate his office.

169

F4G %f a -acancy occ!rs by death, resi(nation, remo-al or otherwise in the office of any +ompany <i3!idator appointed !nder section 2&5, the company or the creditors, as the case may be, fill the -acancy in the manner specified in that section. No)i41 of (--oi*)51*) of Co5-(*/ Li7,id()or )o .1 +i21* )o R1+i3)r(r. 2&$. F1G 9he company shall (i-e notice to the ,e(istrar of the appointment of a +ompany <i3!idator alon( with the name and partic!lars of the +ompany <i3!idator, of e-ery -acancy occ!rrin( in the office of +ompany <i3!idator, and of the name of the +ompany <i3!idator appointed to fill e-ery s!ch -acancy within ten days of s!ch appointment or the occ!rrence of s!ch -acancy. F2G >here any defa!lt is made in complyin( with the pro-isions of this section, the company and e-ery officer of the company who is in defa!lt shall be p!nishable with fine which may extend to fi-e h!ndred r!pees for e-ery day d!rin( which the defa!lt contin!es. C1331r of Bo(rd=3 -o61r3 o* (--oi*)51*) of Co5-(*/ Li7,id()or. 2&&. 1n the appointment of a +ompany <i3!idator, all the powers of the 0oard of Directors and of the mana(in( or whole.time directors and mana(er, if any, shall cease, except for the p!rpose of (i-in( notice of s!ch appointment of the +ompany <i3!idator to the ,e(istrar. Po61r3 (*d d,)i13 of Co5-(*/ Li7,id()or i* 2ol,*)(r/ 6i*di*+ ,-. 2&). F1G 9he +ompany <i3!idator shall perform s!ch f!nctions and dischar(e s!ch d!ties as determined from time to time by the company or the creditors, as the case may be. F2G 9he +ompany <i3!idator shall settle the list of contrib!tories, which shall be prima facie e-idence of the liability of the persons named therein to be contrib!tories. F3G 9he +ompany <i3!idator shall call (eneral meetin(s of the company for the p!rpose of obtainin( the sanction of the company by ordinary or special resol!tion, as the case may re3!ire, or for any other p!rpose he may consider necessary. F4G 9he +ompany <i3!idator shall maintain re(!lar and proper boo2s of acco!nt in s!ch form and in s!ch manner as may be prescribed and the members and creditors and any officer a!thorised by the +entral 4o-ernment may inspect s!ch boo2s of acco!nt. F5G9he +ompany <i3!idator shall pay the debts of the company and shall adj!st the ri(hts of the contrib!tories amon( themsel-es. F"G 9he +ompany <i3!idator shall obser-e d!e care and dili(ence in the dischar(e of his d!ties. F$G %f the +ompany <i3!idator fails to comply with the pro-isions of this section he shall be p!nishable with fine which may extend to ten la2h r!pees. A--oi*)51*) of 4o55i))113. 2)*. >here there are no creditors of a company, s!ch company in its (eneral meetin( and, where a meetin( of creditors is held !nder section 2&1, s!ch creditors may appoint s!ch committees as considered appropriate to s!per-ise the -ol!ntary li3!idation and assist the +ompany <i3!idator in dischar(in( his or its f!nctions. Co5-(*/ Li7,id()or )o 3,.5i) r1-or) o* -ro+r133 of 6i*di*+ ,-.

170

2)1. F1G 9he +ompany <i3!idator shall report 3!arterly on the pro(ress of windin( !p of the company in s!ch form and manner as may be prescribed to the members and creditors and shall also call a meetin( of the members and the creditors as and when necessary b!t atleast one meetin( each of creditors and members in e-ery 3!arter and apprise them of the pro(ress of the windin( !p of the company in s!ch form and in s!ch manner as may be prescribed. F2G %f the +ompany <i3!idator fails to comply with the pro-isions of s!b.section F1G, he shall be p!nishable, in respect to each s!ch fail!re, with fine which may extend to ten la2h r!pees. R1-or) of Co5-(*/ Li7,id()or )o Tri.,*(l for 19(5i*()io* of -1r3o*3. 2)2. F1G >here a report is recei-ed from the +ompany <i3!idator that a fra!d has been committed by any person in respect of the company, the 9rib!nal shall, witho!t prej!dice to the process of windin( !p, order for in-esti(ation !nder section 1&3 and on consideration of the report of s!ch in-esti(ation, the 9rib!nal may pass s!ch order and (i-e s!ch directions !nder this +hapter as it may consider necessary incl!din( the direction that s!ch person shall attend before the 9rib!nal on a day appointed by it for that p!rpose and be examined as to the promotion or formation or the cond!ct of the b!siness of the company or as to his cond!ct and dealin(s as officer thereof or otherwise. F2G 9he pro-isions of section 2$5 shall apply m!tatis m!tandis in relation to any examination directed !nder s!b.section F1G. "i*(l 511)i*+ (*d di33ol,)io* of 4o5-(*/. 2)3. F1G #s soon as the affairs of a company are f!lly wo!nd !p, the +ompany <i3!idator shall prepare a report of the windin( !p showin( that the property and assets of the company ha-e been disposed of and its debt f!lly dischar(ed or dischar(ed to the satisfaction of the creditors and thereafter call a (eneral meetin( of the company for the p!rpose of layin( the final windin( !p acco!nts before it and (i-in( any explanation therefor. F2G 9he meetin( referred to in s!b.section F1G shall be called by the +ompany <i3!idator in s!ch form and manner as may be prescribed. F3G %f the majority of the members of the company after considerin( the report of the +ompany <i3!idator are satisfied that the company shall be wo!nd !p, they may pass a resol!tion for its dissol!tion. F4G >ithin two wee2s after the meetin(, the +ompany <i3!idator shallE FaG send to the ,e(istrarE FiG a copy of the final windin( !p acco!nts of the company and shall ma2e a ret!rn in respect of each meetin( and of the date thereof, and FiiG copies of the resol!tions passed in the meetin(sH and FbG file an application alon( with his report !nder s!b.section F1G in s!ch manner as may prescribed before the 9rib!nal for passin( an order of dissol!tion of the company. F5G %f the 9rib!nal is satisfied, after considerin( the report of the +ompany <i3!idator that the process of windin( !p has been fair and j!st, the 9rib!nal shall pass an order dissol-in( the company within sixty days of the receipt of the application !nder s!b.section F4G. F"G 9he +ompany <i3!idator shall file a copy of the order !nder s!b.section F5G with the ,e(istrar within thirty day.

171

F$G 9he ,e(istrar, on recei-in( the copy of the order passed by the 9rib!nal !nder s!b.section F5G, shall forthwith p!blish a notice in the 1fficial 4a=ette that the company is dissol-ed. F&G >here the +ompany <i3!idator fails to comply with the pro-isions of this section, he shall be p!nishable with fine which may extend to one la2h r!pees. Po61r of Co5-(*/ Li7,id()or )o (441-) 30(r13 1)4. (3 4o*3id1r()io* for 3(l1 of -ro-1r)/ of 4o5-(*/. 2)4. F1G >here a company Fthe transferor companyG is proposed to be, or is in the co!rse of bein(, wo!nd !p -ol!ntarily and the whole or any part of its b!siness or property is proposed to be transferred or sold to another company Fthe transferee companyG, the +ompany <i3!idator of the transferor company may, with the sanction of a special resol!tion of the company conferrin( on him either a (eneral a!thority or an a!thority in respect of any partic!lar arran(ement,E FaG recei-e, by way of compensation wholly or in part for the transfer or sale, shares, policies, or other li2e interest in the transferee company, for distrib!tion amon( the members of the transferor companyH or FbG enter into any other arran(ement whereby the members of the transferor company may, in lie! of recei-in( cash, shares, policies or other li2e interest or in addition thereto, participate in the profits of, or recei-e any other benefit from, the transferee companyD /ro-ided that no s!ch arran(ement shall be entered into witho!t the consent of the sec!red creditors. F2G #ny transfer, sale or other arran(ement in p!rs!ance of this section shall be bindin( on the members of the transferor company. F3G #ny member of the transferor company who did not -ote in fa-o!r of the special resol!tion and expresses his dissent therefrom in writin( addressed to the +ompany <i3!idator and left at the re(istered office of the company within se-en days after the passin( of the resol!tion, may re3!ire the li3!idator eitherE FaG to abstain from carryin( the resol!tion into effectH or FbG to p!rchase his interest at a price to be determined by a(reement or the re(istered -al!er. F4G %f the +ompany <i3!idator elects to p!rchase the member8s interest, the p!rchase money, raised by him in s!ch manner as may be determined by a special resol!tion, shall be paid before the company is dissol-ed. Di3)ri.,)io* of -ro-1r)/ of 4o5-(*/. 2)5. S!bject to the pro-isions of this #ct as to o-erridin( preferential payments !nder section 3*1, the assets of a company shall, on its windin( !p, be applied in satisfaction of its liabilities pari pass! and, s!bject to s!ch application, shall, !nless the articles otherwise pro-ide, be distrib!ted amon( the members accordin( to their ri(hts and interests in the company. Arr(*+151*) 601* .i*di*+ o* 4o5-(*/ (*d 4r1di)or3. 2)". F1G #ny arran(ement other than the arran(ement referred to in section 2)4 entered into between the company which is abo!t to be, or is in the co!rse of bein( wo!nd !p and its creditors shall be bindin( on the company and on the creditors if it is sanctioned by a special resol!tion of

172

the company and acceded to by the creditors who hold three.fo!rths in -al!e of the total amo!nt d!e to all the creditors of the company. F2G #ny creditor or contrib!tory may, within three wee2s from the completion of the arran(ement, apply to the 9rib!nal and the 9rib!nal may there!pon amend, -ary, confirm or set aside the arran(ement. Po61r )o (--l/ )o Tri.,*(l )o 0(21 7,13)io*3 d1)1r5i*1d 1)4. 2)$. F1G 9he +ompany <i3!idator or any contrib!tory or creditor may apply to the 9rib!nalE FaG to determine any 3!estion arisin( in the co!rse of the windin( !p of a companyH or FbG to exercise as respects the enforcin( of calls, the stayin( of proceedin(s or any other matter, all or any of the powers which the 9rib!nal mi(ht exercise if the company were bein( wo!nd !p by the 9rib!nal. F2G 9he +ompany <i3!idator or any creditor or contrib!tory may apply to the 9rib!nal for an order settin( aside any attachment, distress or exec!tion p!t into force a(ainst the estate or effects of the company after the commencement of the windin( !p. F3G 9he 9rib!nal, if satisfied on an application !nder s!b.section F1G or s!b.section F2G that the determination of the 3!estion or the re3!ired exercise of power or the order applied for will be j!st and beneficial, may allow the application on s!ch terms and conditions as it thin2s fit or may ma2e s!ch other order on the application as it thin2s fit. F4G # copy of an order stayin( the proceedin(s in the windin( !p, made !nder this section, shall forthwith be forwarded by the company, or otherwise as may be prescribed, to the ,e(istrar, who shall ma2e a min!te of the order in his boo2s relatin( to the company. Co3)3 of 2ol,*)(r/ 6i*di*+ ,-. 2)&. #ll costs, char(es and expenses properly inc!rred in the windin( !p, incl!din( the fee of the +ompany <i3!idator, shall, s!bject to the ri(hts of sec!red creditors, if any, be payable o!t of the assets of the company in priority to all other claims.

PART III Pro2i3io*3 (--li4(.l1 )o 121r/ 5od1 of 6i*di*+ ,D1.)3 of (ll d134ri-)io*3 )o .1 (d5i))1d )o -roof. 2)). %n e-ery windin( !p, s!bject, in the case of insol-ent companies, to the application in accordance with the pro-isions of this #ct of the law of insol-ency, all debts payable on a contin(ency, and all claims a(ainst the company, present or f!t!re, certain or contin(ent, ascertained or so!ndin( only in dama(es, shall be admissible to proof a(ainst the company. A--li4()io* of i*3ol21*4/ r,l13 i* 6i*di*+ ,- of i*3ol21*) 4o5-(*i13. 3**. F1G %n the windin( !p of an insol-ent company, the same r!les shall pre-ail and be obser-ed with re(ard toE FaG debts pro-ableH

173

FbG the -al!ation of ann!ities and f!t!re and contin(ent liabilitiesH and FcG the respecti-e ri(hts of sec!red and !nsec!red creditors, as are in force for the time bein( !nder the law of insol-ency with respect to the estates of persons adj!d(ed insol-entD /ro-ided that the sec!rity of e-ery sec!red creditor shall be deemed to be s!bject to a pari pass! char(e in fa-o!r of the wor2men to the extent of the wor2men8s portion therein, and, where a sec!red creditor, instead of relin3!ishin( his sec!rity and pro-in( his debts, opts to realise his sec!rity,E FiG the li3!idator shall be entitled to represent the wor2men and enforce s!ch char(eH FiiG any amo!nt realised by the li3!idator by way of enforcement of s!ch char(e shall be applied rateably for the dischar(e of wor2men8s d!esH and FiiiG so m!ch of the debts d!e to s!ch sec!red creditor as co!ld not be realised by him or the amo!nt of the wor2men8s portion in his sec!rity, whiche-er is less, shall ran2 pari pass! with the wor2men8s d!es for the p!rposes of section 3*1. F2G #ll persons who in any s!ch case wo!ld be entitled to pro-e and recei-e di-idends o!t of the assets of the company, may come in !nder the windin( !p, and ma2e s!ch claims a(ainst the company as they respecti-ely are entitled to ma2e by -irt!e of this sectionD /ro-ided that if a sec!red creditor, instead of relin3!ishin( his sec!rity and pro-in( his debts, proceeds to realise his sec!rity, he shall be liable to pay his portion of the expenses inc!rred by the li3!idator, incl!din( a pro-isional li3!idator, if any, for the preser-ation of the sec!rity before its realisation by the sec!red creditor. Explanation.— For the p!rposes of this s!b.section, the portion of expenses inc!rred by the li3!idator for the preser-ation of a sec!rity which the sec!red creditor shall be liable to pay shall be the whole of the expenses less an amo!nt which bears to s!ch expenses the same proportion as the wor2men8s portion in relation to the sec!rity bears to the -al!e of the sec!rity. F3G For the p!rposes of this section, section 3*1 and section 3*2,E FaG Awor2men88, in relation to a company, means the employees of the company, bein( wor2men within the meanin( of cla!se FsG of section 2 of the %nd!strial Disp!tes #ct, 1)4$H FbG Awor2men8s d!es88, in relation to a company, means the a((re(ate of the followin( s!ms d!e from the company to its wor2men, namelyDE FiG all wa(es or salary incl!din( wa(es payable for time or piece wor2 and salary earned wholly or in part by way of commission of any wor2man in respect of ser-ices rendered to the company and any compensation payable to any wor2man !nder any of the pro-isions of the %nd!strial Disp!tes #ct, 1)4$H FiiG all accr!ed holiday rem!neration becomin( payable to any wor2man or, in the case of his death, to any other person in his ri(ht on the termination of his employment before or by the effect of the windin( !p order or resol!tionH FiiiG !nless the company is bein( wo!nd !p -ol!ntarily merely for the p!rposes of reconstr!ction or amal(amation with another company or !nless the company has, at the commencement of the windin( !p, !nder s!ch a contract with ins!rers as is

174

mentioned in section 14 of the >or2men8s +ompensation #ct, 1)23, ri(hts capable of bein( transferred to and -ested in the wor2men, all amo!nt d!e in respect of any compensation or liability for compensation !nder the said #ct in respect of the death or disablement of any wor2man of the companyH Fi-G all s!ms d!e to any wor2man from a pro-ident f!nd, a pension f!nd, a (rat!ity f!nd or any other f!nd for the welfare of the wor2men, maintained by the companyH FcG Awor2men8s portion88, in relation to the sec!rity of any sec!red creditor of a company, means the amo!nt which bears to the -al!e of the sec!rity the same proportion as the amo!nt of the wor2men8s d!es bears to the a((re(ate of the amo!nt of wor2men8s d!es and the amo!nt of the debts d!e to the sec!red creditors. Illustration 9he -al!e of the sec!rity of a sec!red creditor of a company is ,s.1,**,***. 9he total amo!nt of the wor2men8s d!es is ,s.1,**,***. 9he amo!nt of the debts d!e from the company to its sec!red creditors is ,s.3,**,***. 9he a((re(ate of the amo!nt of wor2men8s d!es and the amo!nt of debts d!e to sec!red creditors is ,s.4,**,***. 9he wor2men8s portion of the sec!rity is, therefore, one. fo!rth of the -al!e of the sec!rity, that is ,s.25,***. O21rridi*+ -r1f1r1*)i(l -(/51*)3. 3*1. F1G 6otwithstandin( anythin( contained in any other pro-ision of this #ct or any other law for the time bein( in force, in the windin( !p of a company,E FaG wor2men8s d!es, and FbG debts d!e to sec!red creditors to the extent s!ch debts ran2 !nder cla!se FiiiG of the pro-iso to s!b.section F1G of section 3** pari pass! with s!ch d!es, shall be paid in priority to all other debts. F2G 9he debts payable !nder s!b.section F1G shall be paid in f!ll, !nless the assets are ins!fficient to meet them, in which case they shall abate in e3!al proportions. Pr1f1r1*)i(l -(/51*)3. 3*2. F1G %n a windin( !p, s!bject to the pro-isions of section 3*1, there shall be paid in priority to all other debts,E FaG all re-en!es, taxes, cesses and rates d!e from the company to the +entral or a State 4o-ernment or to a local a!thority at the rele-ant date, and ha-in( become d!e and payable within the twel-e months immediately before that dateH FbG all wa(es or salary incl!din( wa(es payable for time or piece wor2 and salary earned wholly or in part by way of commission of any employee in respect of ser-ices rendered to the company and d!e for a period not exceedin( fo!r months within the twel-e months immediately before the rele-ant date, s!bject to the condition that the amo!nt payable !nder this cla!se to any wor2man shall not exceed s!ch amo!nt as may be prescribedH FcG all accr!ed holiday rem!neration becomin( payable to any employee, or in the case of his death, to any other person claimin( !nder him, on the termination of his employment before, or by the windin( !p order, or, as the case may be, the dissol!tion of the companyH FdG !nless the company is bein( wo!nd !p -ol!ntarily merely for the p!rposes of reconstr!ction or amal(amation with another company, all amo!nt d!e in respect of contrib!tions payable d!rin( the twel-e months immediately before the rele-ant date by the

175

company as the employer of any persons !nder the 'mployees8 State %ns!rance #ct, 1)4& or any other law for the time bein( in forceH FeG !nless the company has, at the commencement of windin( !p, !nder s!ch a contract with any ins!rer as is mentioned in section 14 of the >or2men8s +ompensation #ct, 1)23, ri(hts capable of bein( transferred to and -ested in the wor2men, all amo!nt d!e in respect of any compensation or liability for compensation !nder the said #ct in respect of the death or disablement of any employee of the companyD /ro-ided that where any compensation !nder the said #ct is a wee2ly payment, the amo!nt payable !nder this cla!se shall be ta2en to be the amo!nt of the l!mp s!m for which s!ch wee2ly payment co!ld, if redeemable, be redeemed, if the employer has made an application !nder that #ctH FfG all s!ms d!e to any employee from a pro-ident f!nd, a pension f!nd, a (rat!ity f!nd or any other f!nd for the welfare of the employees, maintained by the companyH and F(G the expenses of any in-esti(ation held in p!rs!ance of sections 1&4 and 1&$, in so far as they are payable by the company. F2G >here any payment has been made to any employee of a company on acco!nt of wa(es or salary or accr!ed holiday rem!neration, himself or, in the case of his death, to any other person claimin( thro!(h him, o!t of money ad-anced by some person for that p!rpose, the person by whom the money was ad-anced shall, in a windin( !p, ha-e a ri(ht of priority in respect of the money so ad-anced and paid, !p to the amo!nt by which the s!m in respect of which the employee or other person in his ri(ht wo!ld ha-e been entitled to priority in the windin( !p has been red!ced by reason of the payment ha-in( been made. F3G 9he debts en!merated in this section shallE FaG ran2 e3!ally amon( themsel-es and be paid in f!ll, !nless the assets are ins!fficient to meet them, in which case they shall abate in e3!al proportionsH and FbG so far as the assets of the company a-ailable for payment to (eneral creditors are ins!fficient to meet them, ha-e priority o-er the claims of holders of debent!res !nder any floatin( char(e created by the company, and be paid accordin(ly o!t of any property comprised in or s!bject to that char(e. F4G S!bject to the retention of s!ch s!ms as may be necessary for the costs and expenses of the windin( !p, the debts !nder this section shall be dischar(ed forthwith so far as the assets are s!fficient to meet them, and in the case of the debts to which priority is (i-en by cla!se FdG of s!b. section F1G, formal proof thereof shall not be re3!ired except in so far as may be otherwise prescribed. F5G %n the e-ent of a landlord or other person distrainin( or ha-in( distrained on any (oods or effects of the company within three months immediately before the date of a windin( !p order, the debts to which priority is (i-en by this section shall be a first char(e on the (oods or effects so distrained on or the proceeds of the sale thereofD /ro-ided that, in respect of any money paid !nder any s!ch char(e, the landlord or other person shall ha-e the same ri(hts of priority as the person to whom the payment is made. F"G For the p!rposes of this section,E

176

FaG any rem!neration in respect of a period of holiday or of absence from wor2 thro!(h sic2ness or other (ood ca!se shall be deemed to be wa(es in respect of ser-ices rendered to the company d!rin( that periodH FbG the expression Aaccr!ed holiday rem!nerationB incl!des, in relation to any person, all s!ms which, by -irt!e either of his contract of employment or of any enactment incl!din( any order made or direction (i-en there!nder, are payable on acco!nt of the rem!neration which wo!ld, in the ordinary co!rse, ha-e become payable to him in respect of a period of holiday, had his employment with the company contin!ed !ntil he became entitled to be allowed the holidayH FcG the expression AemployeeB does not incl!de a wor2manH and FdG the expression Arele-ant dateB meansE FiG in the case of a company bein( wo!nd !p by the 9rib!nal, the date of appointment or first appointment of a pro-isional li3!idator, or if no s!ch appointment was made, the date of the windin( !p order, !nless, in either case, the company had commenced to be wo!nd !p -ol!ntarily before that dateH and FiiG in any other case, the date of the passin( of the resol!tion for the -ol!ntary windin( !p of the company. "r(,d,l1*) -r1f1r1*41. 3*3. F1G >here a company has (i-en preference to a person who is one of the company8s creditors or a s!rety or (!arantor for any of the company8s debts or other liabilities, and the company does anythin( or s!ffers anythin( done which has the effect of p!ttin( that person into a position which, in the e-ent of the company (oin( into li3!idation, will be better than the position he wo!ld ha-e been in if that thin( had not been done prior to six months of ma2in( windin( !p application, the 9rib!nal, if satisfied, may order as it may thin2 fit for restorin( the position to what it wo!ld ha-e been if the company had not (i-en that preference. F2G %f the 9rib!nal is satisfied that there is a preference transfer of property, mo-able or immo-able, or any deli-ery of (oods, payment, exec!tion made, ta2en or done by or a(ainst a company within six months before ma2in( windin( !p application, the 9rib!nal may order as it may thin2 fit and may declare s!ch transaction in-alid and restore the position.

Tr(*3f1r3 *o) i* +ood f(i)0 )o .1 2oid. 3*4. #ny transfer of property, mo-able or immo-able, or any deli-ery of (oods, made by a company, not bein( a transfer or deli-ery made in the ordinary co!rse of its b!siness or in fa-o!r of a p!rchaser or enc!mbrance in (ood faith and for -al!able consideration, if made within a period of one year before the presentation of a petition for windin( !p by the 9rib!nal or the passin( of a resol!tion for -ol!ntary windin( !p of the company, shall be -oid a(ainst the +ompany <i3!idator. C1r)(i* )r(*3f1r3 )o .1 2oid. 3*5. #ny transfer or assi(nment by a company of all its properties or assets to tr!stees for the benefit of all its creditors shall be -oid. Li(.ili)i13 (*d ri+0)3 of 41r)(i* -1r3o*3 fr(,d,l1*)l/ -r1f1rr1d.

177

3*". F1G >here a company is bein( wo!nd !p and anythin( made, ta2en or done after the commencement of this #ct is in-alid !nder section 3*3 as a fra!d!lent preference of a person interested in property mort(a(ed or char(ed to sec!re the company8s debt, then witho!t prej!dice to any ri(hts or liabilities arisin(, apart from this pro-ision, the person preferred shall be s!bject to the same liabilities, and shall ha-e the same ri(hts, as if he had !nderta2en to be personally liable as a s!rety for the debt, to the extent of the mort(a(e or char(e on the property or the -al!e of his interest, whiche-er is less. F2G 9he -al!e of the interest of the person preferred shall be determined as at the date of the transaction constit!tin( the fra!d!lent preference, as if the interest were free of all enc!mbrances other than those to which the mort(a(e or char(e for the company8s debt was then s!bject. F3G 1n any application made to the 9rib!nal with respect to any payment on the (ro!nd that the payment was a fra!d!lent preference of a s!rety or (!arantor, the 9rib!nal shall ha-e j!risdiction to determine any 3!estions with respect to the payment arisin( between the person to whom the payment was made and the s!rety or (!arantor and to (rant relief in respect thereof, notwithstandin( that it is not necessary so to do for the p!rposes of the windin( !p, and for that p!rpose, may (i-e lea-e to brin( in the s!rety or (!arantor as a third party as in the case of a s!it for the reco-ery of the s!m paid. F4G 9he pro-isions of s!b.section F3G shall apply m!tatis m!tandis in relation to transactions other than payment of money. Eff14) of flo()i*+ 40(r+1. 3*$. >here a company is bein( wo!nd !p, a floatin( char(e on the !nderta2in( or property of the company created within the twel-e months immediately precedin( the commencement of the windin( !p, shall, !nless it is pro-ed that the company immediately after the creation of the char(e was sol-ent, be in-alid, except for the amo!nt of any cash paid to the company at the time of, or s!bse3!ent to the creation of, and in consideration for, the char(e, to(ether with interest on that amo!nt at the rate of fi-e per cent. per ann!m or s!ch other rate as may be notified by the +entral 4o-ernment in this behalf in the 1fficial 4a=ette. Di34l(i51r of o*1ro,3 -ro-1r)/. 3*&. F1G >here any part of the property of a company which is bein( wo!nd !p consists ofE FaG land of any ten!re, b!rdened with onero!s co-enantsH FbG shares or stoc2s in companiesH FcG any other property which is !nsaleable or is not readily saleable by reason of the possessor thereof bein( bo!nd either to the performance of any onero!s act or to the payment of any s!m of moneyH or FdG !nprofitable contracts, the +ompany <i3!idator may, notwithstandin( that he has endea-o!red to sell or has ta2en possession of the property or exercised any act of ownership in relation thereto or done anythin( in p!rs!ance of the contract, with the lea-e of the 9rib!nal and s!bject to the pro-isions of this section, by writin( si(ned by him, at any time within twel-e months after the commencement of the windin( !p or s!ch extended period as may be allowed by the 9rib!nal, disclaim the propertyD

178

/ro-ided that where the +ompany <i3!idator had not become aware of the existence of any s!ch property within one month from the commencement of the windin( !p, the power of disclaimin( the property may be exercised at any time within twel-e months after he has become aware thereof or s!ch extended period as may be allowed by the 9rib!nal. F2G 9he disclaimer shall operate to determine, as from the date of disclaimer, the ri(hts, interest, and liabilities of the company in or in respect of the property disclaimed, b!t shall not, except so far as is necessary for the p!rpose of releasin( the company and the property of the company from liability, affect the ri(hts, interest or liabilities of any other person. F3G 9he 9rib!nal, before or on (rantin( lea-e to disclaim, may re3!ire s!ch notices to be (i-en to persons interested, and impose s!ch terms as a condition of (rantin( lea-e, and ma2e s!ch other order in the matter as the 9rib!nal considers j!st. F4G 9he +ompany <i3!idator shall not be entitled to disclaim any property in any case where an application in writin( has been made to him by any person interested in the property re3!irin( him to decide whether he will or will not disclaim and the +ompany <i3!idator has not, within a period of twenty.ei(ht days after the receipt of the application or s!ch extended period as may be allowed by the 9rib!nal, (i-e notice to the applicant that he intends to apply to the 9rib!nal for lea-e to disclaim, and in case the property is a contract, if the +ompany <i3!idator after s!ch an application as aforesaid does not within the said period or extended period disclaim the contract, he shall be deemed to ha-e adopted it. F5G 9he 9rib!nal may, on the application of any person who is, as a(ainst the +ompany <i3!idator, entitled to the benefit or s!bject to the b!rden of a contract made with the company, ma2e an order rescindin( the contract on s!ch terms as to payment by or to either party of dama(es for the non.performance of the contract, or otherwise as the 9rib!nal considers j!st, and any dama(es payable !nder the order to any s!ch person may be pro-ed by him as a debt in the windin( !p. F"G 9he 9rib!nal may, on an application by any person who either claims any interest in any disclaimed property or is !nder any liability not dischar(ed !nder this #ct in respect of any disclaimed property, and after hearin( any s!ch persons as it thin2s fit, ma2e an order for the -estin( of the property in, or the deli-ery of the property to, any person entitled thereto or to whom it may seem j!st that the property sho!ld be deli-ered by way of compensation for s!ch liability as aforesaid, or a tr!stee for him, and on s!ch terms as the 9rib!nal considers j!st, and on any s!ch -estin( order bein( made, the property comprised therein shall -est accordin(ly in the person named therein in that behalf witho!t any con-eyance or assi(nment for the p!rposeD /ro-ided that where the property disclaimed is of a leasehold nat!re, the 9rib!nal shall not ma2e a -estin( order in fa-o!r of any person claimin( !nder the company, whether as !nder.lessee or as mort(a(ee or holder of a char(e by way of demise, except !pon the terms of ma2in( that personE FaG s!bject to the same liabilities and obli(ations as those to which the company was s!bject !nder the lease in respect of the property at the commencement of the indin( !pH or FbG if the 9rib!nal thin2s fit, s!bject only to the same liabilities and obli(ations as if the lease had been assi(ned to that person at that date, and in either e-ent as if the lease had comprised only the property comprised in the -estin( order, and any mort(a(ee or !nder. lessee declinin( to accept a -estin( order !pon s!ch terms shall be excl!ded from all interest in and sec!rity !pon the property, and, if there is no person claimin( !nder the company who is willin( to accept an order !pon s!ch terms, the 9rib!nal shall ha-e power to -est the estate and interest of the company in the property in any person liable, either personally or in a representati-e character, and either alone or jointly with the company, to

179

perform the lessee8s co-enants in the lease, free and dischar(ed from all estates, enc!mbrances and interests created therein by the company. F$G #ny person affected by the operation of a disclaimer !nder this section shall be deemed to be a creditor of the company to the amo!nt of the compensation or dama(es payable in respect of s!ch effect, and may accordin(ly pro-e the amo!nt as a debt in the windin( !p. Tr(*3f1r3 1)4. (f)1r 4o551*4151*) of 6i*di*+ ,- )o .1 2oid. 3*). F1G %n the case of a -ol!ntary windin( !p, any transfer of shares in the company, not bein( a transfer made to or with the sanction of the +ompany <i3!idator, and any alteration in the stat!s of the members of the company, made after the commencement of the windin( !p, shall be -oid. F2G %n the case of a windin( !p by the 9rib!nal, any disposition of the property, incl!din( actionable claims, of the company, and any transfer of shares in the company or alteration in the stat!s of its members, made after the commencement of the windin( !p, shall, !nless the 9rib!nal otherwise orders, be -oid. +ertain attachments, exec!tions, etc., in windin( !p by 9rib!nal to be -oid. 31*. F1G >here any company is bein( wo!nd !p by the 9rib!nal,E FaG any attachment, distress or exec!tion p!t in force, witho!t lea-e of the 9rib!nal a(ainst the estate or effects of the company, after the commencement of the windin( !pH or FbG any sale held, witho!t lea-e of the 9rib!nal of any of the properties or effects of the company, after s!ch commencement, shall be -oid. F2G 6othin( in this section shall apply to any proceedin(s for the reco-ery of any tax or impost or any d!es payable to the 4o-ernment. Off1*413 ./ offi41r3 of 4o5-(*i13 i* li7,id()io*. 311. F1G %f any person, bein( a past or present officer of a company which, at the time of the commission of the alle(ed offence, is bein( wo!nd !p, whether by the 9rib!nal or -ol!ntarily, or which is s!bse3!ently ordered to be wo!nd !p by the 9rib!nal or which s!bse3!ently passes a resol!tion for -ol!ntary windin( !p,E FaG does not, to the best of his 2nowled(e and belief, f!lly and tr!ly disclose to the +ompany <i3!idator all the property, mo-able and immo-able, of the company, and how and to whom and for what consideration and when the company disposed of any part thereof, except s!ch part as has been disposed of in the ordinary co!rse of the b!siness of the companyH FbG does not deli-er !p to the +ompany <i3!idator, or as he directs, all s!ch part of the mo-able and immo-able property of the company as is in his c!stody or !nder his control and which he is re3!ired by law to deli-er !pH FcG does not deli-er !p to the +ompany <i3!idator, or as he directs, all s!ch boo2s and papers of the company as are in his c!stody or !nder his control and which he is re3!ired by law to deli-er !pH FdG within the twel-e months immediately before the commencement of the windin( !p or at any time thereafter,E

180

FiG conceals any part of the property of the company to the -al!e of one tho!sand r!pees or more, or conceals any debt d!e to or from the companyH FiiG fra!d!lently remo-es any part of the property of the company to the -al!e of one tho!sand r!pees or moreH FiiiG conceals, destroys, m!tilates or falsifies, or is pri-y to the concealment, destr!ction, m!tilation or falsification of, any boo2 or paper affectin( or relatin( to, the property or affairs of the companyH Fi-G ma2es, or is pri-y to the ma2in( of, any false entry in any boo2 or paper affectin( or relatin( to, the property or affairs of the companyH F-G fra!d!lently parts with, alters or ma2es any omission in, or is pri-y to the fra!d!lent partin( with, alterin( or ma2in( of any omission in, any boo2 or paper affectin( or relatin( to the property or affairs of the companyH F-iG by any false representation or other fra!d, obtains on credit, for or on behalf of the company, any property which the company does not s!bse3!ently pay forH F-iiG !nder the false pretence that the company is carryin( on its b!siness, obtains on credit, for or on behalf of the company, any property which the company does not s!bse3!ently pay forH or F-iiiG pawns, pled(es or disposes of any property of the company which has been obtained on credit and has not been paid for, !nless s!ch pawnin(, pled(in( or disposin( of is in the ordinary co!rse of the b!siness of the companyH FeG ma2es any material omission in any statement relatin( to the affairs of the companyH FfG 2nowin( or belie-in( that a false debt has been pro-ed by any person !nder the windin( !p, fails for a period of one month to inform the +ompany <i3!idator thereofH F(G after the commencement of the windin( !p, pre-ents the prod!ction of any boo2 or paper affectin( or relatin( to the property or affairs of the companyH FhG after the commencement of the windin( !p or at any meetin( of the creditors of the company within the twel-e months next before the commencement of the windin( !p, attempts to acco!nt for any part of the property of the company by fictitio!s losses or expensesH or FiG is (!ilty of any false representation or other fra!d for the p!rpose of obtainin( the consent of the creditors of the company or any of them, to an a(reement with reference to the affairs of the company or to the windin( !p, he shall be p!nishable with imprisonment for a term which shall not be less than three years b!t which may extend to fi-e years and with fine which shall not be less than one la2h r!pees b!t which may extend to three la2h r!peesD /ro-ided that it shall be a (ood defence if the acc!sed pro-es that he had no intent to defra!d or to conceal the tr!e state of affairs of the company or to defeat the law. F2G >here any person pawns, pled(es or disposes of any property in circ!mstances which amo!nt to an offence !nder s!b.cla!se F-iiiG of cla!se FdG of s!b.section F1G, e-ery person who ta2es in pawn or pled(e or otherwise recei-es the property, 2nowin( it to be pawned, pled(ed, or disposed

181

of in s!ch circ!mstances as aforesaid, shall be p!nishable with imprisonment for a term which shall not be less than three years b!t which may extend to fi-e years and with fine which shall not be less than three la2h r!pees b!t which may extend to fi-e la2h r!pees. Explanation.E For the p!rposes of this section, the expression AofficerB incl!des any person in accordance with whose directions or instr!ctions the directors of the company ha-e been acc!stomed to act. P1*(l)/ for fr(,d3 ./ offi41r3. 312. %f any person, bein( at the time of the commission of the alle(ed offence an officer of a company incl!din( a company which is s!bse3!ently ordered to be wo!nd !p by the 9rib!nal or which s!bse3!ently passes a resol!tion for -ol!ntary windin( !p,E FaG has, by false pretences or by means of any other fra!d, ind!ced any person to (i-e credit to the companyH FbG with intent to defra!d creditors of the company or any other person, has made or ca!sed to be made any (ift or transfer of or char(e on, or has ca!sed or conni-ed at the le-yin( of any exec!tion a(ainst, the property of the companyH or FcG with intent to defra!d creditors of the company, has concealed or remo-ed any part of the property of the company since the date of any !nsatisfied j!d(ment or order for payment of money obtained a(ainst the company or within two months before that date, he shall be p!nishable with imprisonment which shall not be less than one year b!t which may extend to three years and with fine which shall not be less than one la2h r!pees b!t which may extend to three la2h r!pees. Li(.ili)/ 601r1 -ro-1r (44o,*)3 *o) <1-). 313. F1G >here a company is bein( wo!nd !p and if it is shown that proper boo2s of acco!nt were not 2ept by the company thro!(ho!t the period of two years immediately precedin( the commencement of the windin( !p, or the period between the incorporation of the company and the commencement of the windin( !p, whiche-er is shorter, e-ery officer of the company who is in defa!lt shall, !nless he shows that he acted honestly and that in the circ!mstances in which the b!siness of the company was carried on, the defa!lt was exc!sable, be p!nishable with imprisonment which shall not be less than one year b!t which may extend to three years and with fine which shall not be less than one la2h r!pees b!t which may extend to three la2h r!pees. F2G For the p!rposes of s!b.section F1G, it shall be deemed that proper boo2s of acco!nt ha-e not been 2ept in the case of any company, if there ha-e not been 2eptE FaG s!ch boo2s of acco!nt as are necessary to exhibit and explain the transactions and financial position of the b!siness of the company, incl!din( boo2s containin( entries made from day.to.day in s!fficient detail of all cash recei-ed and all cash paidH and FbG where the b!siness of the company has in-ol-ed dealin(s in (oods, statements of the ann!al stoc2 ta2in(s and, except in the case of (oods sold by way of ordinary retail trade, of all (oods sold and p!rchased, showin( the (oods and the b!yers and the sellers thereof in s!fficient detail to enable those (oods and those b!yers and sellers to be identified. Li(.ili)/ for fr(,d,l1*) 4o*d,4) of .,3i*133.

182

314. F1G %f in the co!rse of the windin( !p of a company, it appears that any b!siness of the company has been carried on with intent to defra!d creditors of the company or any other persons or for any fra!d!lent p!rpose, the 9rib!nal, on the application of the 1fficial <i3!idator, or the +ompany <i3!idator or any creditor or contrib!tory of the company, may, if it thin2s it proper so to do, declare that any past or present director, mana(er, or officer of the company or any persons who were 2nowin(ly parties to the carryin( on of the b!siness in the manner aforesaid shall be personally responsible, witho!t any limitation of liability, for all or any of the debts or other liabilities of the company as the 9rib!nal may directD /ro-ided that on the hearin( of an application !nder this s!b.section, the 1fficial <i3!idator or the +ompany <i3!idator, as the case may be, may himself (i-e e-idence or call witnesses. F2G >here the 9rib!nal ma2es any s!ch declaration, it may (i-e s!ch f!rther directions as it thin2s proper for the p!rpose of (i-in( effect to that declaration and in partic!lar, FaG ma2e pro-ision for ma2in( the liability of any s!ch person !nder the declaration a char(e on any debt or obli(ation d!e from the company to him, or on any mort(a(e or char(e or any interest in any mort(a(e or char(e on any assets of the company held by or -ested in him, or any person on his behalf, or any person claimin( as assi(nee from or thro!(h the person liable or any person actin( on his behalfH FbG ma2e s!ch f!rther order as may be necessary for the p!rpose of enforcin( any char(e imposed !nder this s!b.section. F3G >here any b!siness of a company is carried on with s!ch intent or for s!ch p!rpose as is mentioned in s!b.section F1G, e-ery person who was 2nowin(ly a party to the carryin( on of the b!siness in the manner aforesaid, shall be p!nishable with imprisonment which shall not be less than one year b!t which may extend to three years and with fine which shall not be less than one la2h r!pees b!t which may extend to three la2h r!pees. F4G 9his section shall apply, notwithstandin( that the person concerned may be p!nishable !nder any other law for the time bein( in force in respect of the matters on the (ro!nd of which the declaration is to be made. Explanation.EFor the p!rposes of this section, FaG the expression Aassi(neeB incl!des any person to whom or in whose fa-o!r, by the directions of the person liable, the debt, obli(ation, mort(a(e or char(e was created, iss!ed or transferred or the interest was created, b!t does not incl!de an assi(nee for -al!able consideration, not incl!din( consideration by way of marria(e, (i-en in (ood faith and witho!t notice of any of the matters on the (ro!nd of which the declaration is madeH FbG the expression AofficerB incl!des any person in accordance with whose directions or instr!ctions the directors of the company ha-e been acc!stomed to act. Po61r of Tri.,*(l )o (33133 d(5(+13 (+(i*3) d1li*7,1*) dir14)or3 1)4. 315. F1G %f in the co!rse of windin( !p of a company, it appears that any person who has ta2en part in the promotion or formation of the company, or any past or present director, mana(er, +ompany <i3!idator or officer of the companyE FaG has misapplied, or retained, or become liable or acco!ntable for, any money or property of the companyH or

183

FbG has been (!ilty of any misfeasance or breach of tr!st in relation to the company, the 9rib!nal may, on the application of the 1fficial <i3!idator, or the +ompany <i3!idator, or of any creditor or contrib!tory, made within the period specified in that behalf in s!b.section F2G, in3!ire into the cond!ct of the person, director, mana(er, +ompany <i3!idator or officer aforesaid, and order him to repay or restore the money or property or any part thereof respecti-ely, with interest at s!ch rate as the 9rib!nal considers j!st, or to contrib!te s!ch s!m to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance or breach of tr!st, as the 9rib!nal considers j!st. F2G #n application !nder s!b.section F1G shall be made within fi-e years from the date of the windin( !p order, or of the first appointment of the +ompany <i3!idator in the windin( !p, or of the misapplication, retainer, misfeasance or breach of tr!st, as the case may be, whiche-er is lon(er. F3G 9his section shall apply, notwithstandin( that the matter is one for which the person concerned may be p!nishable !nder this #ct or any other law for the time bein( in force. Li(.ili)/ ,*d1r 314)io*3 [email protected] (*d [email protected] )o 19)1*d )o dir14)or3 i* fir53 or 4o5-(*i13. 31". >here a declaration !nder section 314 or an order !nder section 315 is or may be made in respect of a firm or body corporate, the 9rib!nal shall also ha-e power to ma2e a declaration !nder section 314, or pass an order !nder section 315, as the case may be, in respect of any person who was at the rele-ant time a partner in that firm or a director of that partners or body corporate. Pro314,)io* of d1li*7,1*) offi41r3 (*d 515.1r3 of 4o5-(*/. 31$. F1G %f it appears to the 9rib!nal in the co!rse of a windin( !p by the 9rib!nal, that any past or present officer, or any member, of the company has been (!ilty of any offence in relation to the company, the 9rib!nal may, either on the application of any person interested in the windin( !p or s!o mot!, direct the li3!idator to prosec!te the offender or to refer the matter to the ,e(istrar. F2G %f it appears to the +ompany <i3!idator in the co!rse of a -ol!ntary windin( !p that any past or present officer, or any member, of the company has been (!ilty of any offence in relation to the company !nder this #ct, he shall forthwith report the matter to the ,e(istrar and shall f!rnish to him s!ch information and (i-e to him s!ch access to and facilities for inspectin( and ta2in( copies of any boo2s and papers, bein( information or boo2s and papers in the possession or !nder the control of the +ompany <i3!idator and relatin( to the matter in 3!estion, as the ,e(istrar may re3!ire. F3G >here any report is made !nder s!b.section F2G to the ,e(istrar, he,E FaG if he thin2s fit, may apply to the +entral 4o-ernment for an order to ma2e f!rther in3!iry into the affairs of the company by any person desi(nated by him and for conferrin( on s!ch person all the powers of in-esti(ation as are pro-ided !nder this #ctH FbG if he considers that the case is one in which a prosec!tion o!(ht to be instit!ted, shall report the matter to the +entral 4o-ernment, and that 4o-ernment may, after ta2in( s!ch le(al ad-ice as it thin2s fit, direct the ,e(istrar to instit!te prosec!tionD /ro-ided that no report shall be made by the ,e(istrar !nder this cla!se witho!t first (i-in( the acc!sed person a reasonable opport!nity of ma2in( a statement in writin( to the ,e(istrar and of bein( heard thereon.

184

F4G %f it appears to the 9rib!nal in the co!rse of a -ol!ntary windin( !p that any past or present officer, or any member, of the company has been (!ilty as aforesaid, and that no report with respect to the matter has been made by the +ompany <i3!idator to the ,e(istrar !nder s!b. section F2G, the 9rib!nal may, on the application of any person interested in the windin( !p or s!o mot!, direct the +ompany <i3!idator to ma2e s!ch a report, and on a report bein( made, the pro-isions of this section shall ha-e effect as tho!(h the report had been made in p!rs!ance of the pro-isions of s!b.section F2G. F5G >hen any prosec!tion is instit!ted !nder this section, it shall be the d!ty of the li3!idator and of e-ery officer and a(ent of the company past and present to (i-e all assistance in connection with the prosec!tion which he is reasonably able to (i-e. Explanation.EFor the p!rposes of this s!b.section, the expression Aa(entB, in relation to a company, shall be deemed to incl!de any ban2er or le(al ad-iser of the company and any person employed by the company as a!ditor. F"G %f any person fails or ne(lects to (i-e assistance re3!ired by s!b.section F5G, he shall be liable to pay fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to one la2h r!pees. Co5-(*/ Li7,id()or )o 191r4i31 41r)(i* -o61r3 3,.:14) )o 3(*4)io*. 31&. F1G 9he +ompany <i3!idator mayE FaG with the sanction of the 9rib!nal, when the company is bein( wo!nd !p by the 9rib!nalH and FbG with the sanction of a special resol!tion of the company and prior appro-al of the 9rib!nal, in the case of a -ol!ntary windin( !p,E FiG pay any class of creditors in f!llH FiiG ma2e any compromise or arran(ement with creditors or persons claimin( to be creditors, or ha-in( or alle(in( themsel-es to ha-e any claim, present or f!t!re, certain or contin(ent, a(ainst the company, or whereby the company may be rendered liableH or FiiiG compromise any call or liability to call, debt, and liability capable of res!ltin( in a debt, and any claim, present or f!t!re, certain or contin(ent, ascertained or so!ndin( only in dama(es, s!bsistin( or alle(ed to s!bsist between the company and a contrib!tory or alle(ed contrib!tory or other debtor or person apprehendin( liability to the company, and all 3!estions in any way relatin( to or affectin( the assets or liabilities or the windin( !p of the company, on s!ch terms as may be a(reed, and ta2e any sec!rity for the dischar(e of any s!ch call, debt, liability or claim, and (i-e a complete dischar(e in respect thereof. F2G 6otwithstandin( anythin( contained in s!b.section F1G, in the case of a windin( !p by the 9rib!nal, the +entral 4o-ernment may ma2e r!les to pro-ide that the +ompany <i3!idator may, !nder s!ch circ!mstances, if any, and s!bject to s!ch conditions, restrictions and limitations, if any, as may be prescribed, exercise any of the powers referred to in s!b.cla!se FiiG or s!b.cla!se FiiiG of cla!se FbG of s!b.section F1G witho!t the sanction of the 9rib!nal. F3G #ny creditor or contrib!tory may apply in the manner prescribed to the 9rib!nal with respect to any exercise or proposed exercise of powers by the +ompany <i3!idator !nder this section, and the 9rib!nal shall after (i-in( a reasonable opport!nity to s!ch applicant and the +ompany <i3!idator, pass s!ch orders as it may thin2 fit.

185

S)()151*) )0() ( 4o5-(*/ i3 i* li7,id()io*. 31). F1G >here a company is bein( wo!nd !p, whether by the 9rib!nal or -ol!ntarily, e-ery in-oice, order for (oods or b!siness letter iss!ed by or on behalf of the company or a +ompany <i3!idator of the company, or a recei-er or mana(er of the property of the company, bein( a doc!ment on or in which the name of the company appears, shall contain a statement that the company is bein( wo!nd !p. F2G %f any defa!lt is made in complyin( with the pro-isions of this section, the company, and e-ery officer of the company, the +ompany <i3!idator and any recei-er or mana(er, who wilf!lly a!thorises or permits the defa!lt, shall be p!nishable with fine which shall not be less than fifty tho!sand r!pees b!t which may extend to three la2h r!pees. Boo<3 (*d -(-1r3 of 4o5-(*/ )o .1 12id1*41. 32*. >here a company is bein( wo!nd !p, all boo2s and papers of the company and of the +ompany <i3!idator shall, as between the contrib!tories of the company, be prima facie e-idence of the tr!th of all matters p!rportin( to be recorded therein. I*3-14)io* of .oo<3 (*d -(-1r3 ./ 4r1di)or3 (*d 4o*)ri.,)ori13. 321. F1G #t any time after the ma2in( of an order for the windin( !p of a company by the 9rib!nal, any creditor or contrib!tory of the company may inspect the boo2s and papers of the company only in accordance with, and s!bject to s!ch r!les as may be prescribed. F2G 6othin( in s!b.section F1G shall be ta2en as excl!din( or restrictin( any ri(hts conferred by any law for the time bein( in forceE FaG on the +entral 4o-ernment or a State 4o-ernment, FbG on any a!thority or officer thereof, or FcG on any person actin( !nder the a!thority of any s!ch 4o-ernment or of any s!ch a!thority or officer. Di3-o3(l of .oo<3 (*d -(-1r3 of 4o5-(*/. 322. F1G >hen the affairs of a company ha-e been completely wo!nd !p and it is abo!t to be dissol-ed, its boo2s and papers and those of the +ompany <i3!idator may be disposed of as followsDE FaG in the case of windin( !p by the 9rib!nal, in s!ch manner as the 9rib!nal directsH and FbG in the case of -ol!ntary windin( !p, in s!ch manner as the company by special resol!tion with the prior appro-al of the creditors directs. F2G #fter the expiry of fi-e years from the dissol!tion of the company, no responsibility shall de-ol-e on the company, the +ompany <i3!idator, or any person to whom the c!stody of the boo2s and papers has been entr!sted, by reason of any boo2 or paper not bein( forthcomin( to any person claimin( to be interested therein. F3G 9he +entral 4o-ernment may, by r!les,E

186

FaG pre-ent for s!ch period as the +entral 4o-ernment thin2s proper the destr!ction of the boo2s and papers of a company which has been wo!nd !p and of its +ompany <i3!idatorH and FbG enable any creditor or contrib!tory of the company to ma2e representations to the +entral 4o-ernment in respect of the matters specified in cla!se FaG and to appeal to the 9rib!nal from any order which may be made by the +entral 4o-ernment in the matter. F4G %f any person acts in contra-ention of any s!ch r!les or of any direction of the +entral 4o-ernment there!nder, he shall be p!nishable with imprisonment for a term which may extend to six months or with fine which may extend to fifty tho!sand r!pees, or with both. I*for5()io* (3 )o -1*di*+ li7,id()io*3. 323. F1G %f the windin( !p of a company is not concl!ded within one year after its commencement, the +ompany <i3!idator shall, !nless he is exempted from so doin( either wholly or in part by the +entral 4o-ernment, within two months of the expiry of s!ch year and thereafter !ntil the windin( !p is concl!ded, at inter-als of not more than one year or at s!ch shorter inter-als, if any, as may be prescribed, file a statement in the prescribed form and containin( the prescribed partic!lars d!ly a!dited, by a person 3!alified to act as a!ditor of the company, with respect to the proceedin(s in, and position of, the li3!idation,E FaG in the case of a windin( !p by the 9rib!nal, with the 9rib!nalH and FbG in the case of a -ol!ntary windin( !p, with the ,e(istrar D /ro-ided that no s!ch a!dit as is referred to in this s!b.section shall be necessary where the pro-isions of section 2") apply. F2G >hen the statement is filed with the 9rib!nal !nder cla!se FaG of s!b.section F1G, a copy shall sim!ltaneo!sly be filed with the ,e(istrar and shall be 2ept by him alon( with the other records of the company. F3G >here a statement referred to in s!b.section F1G relates to a 4o-ernment company in li3!idation, the +ompany <i3!idator shall forward a copy thereofE FaG to the +entral 4o-ernment, if that 4o-ernment is a member of the 4o-ernment companyH FbG to any State 4o-ernment, if that 4o-ernment is a member of the 4o-ernment companyH or FcG to the +entral 4o-ernment and any State 4o-ernment, if both the 4o-ernments are members of the 4o-ernment company. F4G #ny person statin( himself in writin( to be a creditor or contrib!tory of the company shall be entitled, by himself or by his a(ent, at all reasonable times, on payment of the prescribed fee, to inspect the statement referred to in s!b.section F1G, and to recei-e a copy thereof or an extract therefrom. F5G #ny person fra!d!lently statin( himself to be a creditor or contrib!tory !nder s!b.section F4G shall be deemed to be (!ilty of an offence !nder section 1&2 of the %ndian /enal +ode, and shall, on the application of the +ompany <i3!idator, be p!nishable accordin(ly.

187

F"G %f a +ompany <i3!idator fails to comply with any of re3!irements of this section, he shall be p!nishable with fine which may extend to fi-e tho!sand r!pees for e-ery day d!rin( which the fail!re contin!es. F$G %f a +ompany <i3!idator ma2es wilf!l defa!lt in ca!sin( the statement referred to in s!b.section F1G a!dited by a person who is not 3!alified to act as an a!ditor of the company, he shall be p!nishable with imprisonment for a term which may extend to six months or with fine which may extend to one la2h r!pees, or with both. Offi4i(l Li7,id()or )o 5(<1 -(/51*)3 i*)o -,.li4 (44o,*) of I*di(. 324. '-ery 1fficial <i3!idator shall, in s!ch manner and at s!ch times as may be prescribed, pay the moneys recei-ed by him as 1fficial <i3!idator of any company, into the p!blic acco!nt of %ndia in the ,eser-e 0an2 of %ndia. Co5-(*/ Li7,id()or )o d1-o3i) i*)o 3401d,l1d .(*<. 325. F1G '-ery +ompany <i3!idator of a company shall, in s!ch manner and at s!ch times as may be prescribed, deposit the monies recei-ed by him in his capacity as s!ch in a sched!led ban2 to the credit of a special ban2 acco!nt opened by him in that behalfD /ro-ided that if the 9rib!nal considers that it is ad-anta(eo!s for the creditors or contrib!tories or the company, it may permit the acco!nt to be opened in s!ch other ban2 specified by it. F2G %f any +ompany <i3!idator at any time retains for more than ten days a s!m exceedin( fi-e tho!sand r!pees or s!ch other amo!nt as the 9rib!nal may, on the application of the +ompany <i3!idator, a!thorise him to retain, then, !nless he explains the retention to the satisfaction of the 9rib!nal, he shallE FaG pay interest on the amo!nt so retained in excess, at the rate of twel-e per cent. per ann!m and also pay s!ch penalty as may be determined by the ,e(istrarH FbG be liable to pay any expenses occasioned by reason of his defa!ltH and FcG also be liable to ha-e all or s!ch part of his rem!neration, as the 9rib!nal may consider j!st, disallowed, or may also be remo-ed from his office. Li7,id()or *o) )o d1-o3i) 5o*i13 i*)o -ri2()1 .(*<i*+ (44o,*). 32". 6either the 1fficial <i3!idator nor the +ompany <i3!idator of a company shall deposit any monies recei-ed by him in his capacity as s!ch into any pri-ate ban2in( acco!nt. Co5-(*/ Li7,id()io* Di2id1*d (*d U*di3)ri.,)1d A331)3 A44o,*). 32$. F1G >here any company is bein( wo!nd !p and the li3!idator has in his hands or !nder his control any money representin(E FaG di-idends payable to any creditor b!t which had remained !npaid for six months after the date on which they were declared, or FbG assets ref!ndable to any contrib!tory which ha-e remained !ndistrib!ted for six months after the date on which they become ref!ndable,

188

the li3!idator shall forthwith deposit the said money into a separate special acco!nt to be 2nown as the +ompany <i3!idation Di-idend and :ndistrib!ted #ssets #cco!nt maintained in a sched!led ban2. F2G 9he li3!idator shall, on the dissol!tion of the company, pay into the +ompany <i3!idation Di-idend and :ndistrib!ted #ssets #cco!nt any money representin( !npaid di-idends or !ndistrib!ted assets in his hands at the date of dissol!tion. F3G 9he li3!idator shall, when ma2in( any payment referred to in s!b.sections F1G and F2G, f!rnish to s!ch officer as the +entral 4o-ernment may appoint in this behalf, a statement in the prescribed form, settin( forth, in respect of all s!ms incl!ded in s!ch payment, the nat!re of the s!ms, the names and last 2nown addresses of the persons entitled to participate therein, the amo!nt to which each is entitled and the nat!re of his claim thereto, and s!ch other partic!lars as may be prescribed. F4G 9he li3!idator shall be entitled to a receipt from the sched!led ban2 for any money paid to it !nder s!b.sections F1G and F2G, and s!ch receipt shall be an effect!al dischar(e of the +ompany <i3!idator in respect thereof. F5G >here a company is bein( wo!nd !p -ol!ntarily, the +ompany <i3!idator shall, when filin( a statement in p!rs!ance of s!b.section F1G of section 323, indicate the s!m of money which is payable !nder s!b.sections F1G and F2G of this section d!rin( the six months precedin( the date to which the said statement is prepared, and shall, within fo!rteen days of the date of filin( the said statement, pay that s!m into the +ompany <i3!idation Di-idend and :ndistrib!ted #ssets #cco!nt. F"G #ny person claimin( to be entitled to any money paid into the +ompany <i3!idation Di-idend and :ndistrib!ted #ssets #cco!nt, whether paid in p!rs!ance of this section or !nder the pro-isions of any pre-io!s company law apply to the 9rib!nal for an order for payment thereof, and the 9rib!nal, if satisfied that the person claimin( is entitled, may ma2e an order for the payment to that person of the s!m d!eD /ro-ided that before ma2in( s!ch an order, the 9rib!nal shall ca!se a notice to be ser-ed on s!ch officer as the +entral 4o-ernment may appoint in this behalf, callin( on the officer to show ca!se within one month from the date of the ser-ice of the notice why the order sho!ld not be made. F$G#ny money paid into the +ompany <i3!idation Di-idend and :ndistrib!ted #ssets #cco!nt in p!rs!ance of this section, which remains !nclaimed thereafter for a period of fifteen years, shall be transferred to the (eneral re-en!e acco!nt of the +entral 4o-ernment, b!t a claim to any money so transferred may be preferred !nder s!b.section F"G and shall be dealt with as if s!ch transfer had not been made and the order, if any, for payment on the claim will be treated as an order for ref!nd of re-en!e. F&G #ny li3!idator retainin( any money which sho!ld ha-e been paid by him into the +ompany <i3!idation Di-idend and :ndistrib!ted #ssets #cco!nt !nder this section shallE FaG pay interest on the amo!nt so retained at the rate of twel-e per cent. per ann!m and also pay s!ch penalty as may be determined by the ,e(istrarD /ro-ided that the +entral 4o-ernment may in any proper case remit either in part or in whole the amo!nt of interest which the li3!idator is re3!ired to pay !nder this cla!seH FbG be liable to pay any expenses occasioned by reason of his defa!ltH and

189

FcG where the windin( !p is by the 9rib!nal, also be liable to ha-e all or s!ch part of his rem!neration, as the 9rib!nal may consider j!st, to be disallowed, and to be remo-ed from his office by the 9rib!nal. Li7,id()or )o 5(<1 r1),r*3 1)4. 32&. F1G %f any +ompany <i3!idator who has made any defa!lt in filin(, deli-erin( or ma2in( any ret!rn, acco!nt or other doc!ment, or in (i-in( any notice which he is by law re3!ired to file, deli-er, ma2e or (i-e, fails to ma2e (ood the defa!lt within fo!rteen days after the ser-ice on him of a notice re3!irin( him to do so, the 9rib!nal may, on an application made to it by any contrib!tory or creditor of the company or by the ,e(istrar, ma2e an order directin( the +ompany <i3!idator to ma2e (ood the defa!lt within s!ch time as may be specified in the order. F2G #ny order !nder s!b.section F1G may pro-ide that all costs of and incidental to the application shall be borne by the +ompany <i3!idator. F3G 6othin( in this section shall prej!dice the operation of any enactment imposin( penalties on a +ompany <i3!idator in respect of any s!ch defa!lt as aforesaid. M11)i*+3 )o (341r)(i* 6i3013 of 4r1di)or3 or 4o*)ri.,)ori13. 32). F1G %n all matters relatin( to the windin( !p of a company, the 9rib!nal mayE FaG ha-e re(ard to the wishes of creditors or contrib!tories of the company, as pro-ed to it by any s!fficient e-idenceH FbG if it thin2s fit for the p!rpose of ascertainin( those wishes, direct meetin(s of the creditors or contrib!tories to be called, held and cond!cted in s!ch manner as the 9rib!nal may directH and FcG appoint a person to act as chairman of any s!ch meetin( and to report the res!lt thereof to the 9rib!nal. F2G >hen ascertainin( the wishes of creditors, re(ard shall be had to the -al!e of each creditor8s debt. F3G >hen ascertainin( the wishes of contrib!tories, re(ard shall be had to the n!mber of -otes which may be cast by each contrib!tory. Co,r) )ri.,*(l or -1r3o* 1)4. .1for1 60o5 (ffid(2i) 5(/ .1 36or*. 33*. F1G #ny affida-it re3!ired to be sworn !nder the pro-isions, or for the p!rposes, of this +hapter may be swornE FaG in %ndia before any co!rt, trib!nal, j!d(e or person lawf!lly a!thorised to ta2e and recei-e affida-itsH and FbG in any other co!ntry before any co!rt, j!d(e or person lawf!lly a!thorised to ta2e and recei-e affida-its in that co!ntry or before an %ndian diplomatic or cons!lar officer. F2G #ll trib!nals, j!d(es, ?!stices, commissioners and persons actin( j!dicially in %ndia shall ta2e j!dicial notice of the seal, stamp or si(nat!re, as the case may be, of any s!ch co!rt, trib!nal, j!d(e, person, diplomatic or cons!lar officer, attached, appended or s!bscribed to any s!ch affida-it or to any other doc!ment to be !sed for the p!rposes of this +hapter. Po61r3 of Tri.,*(l )o d14l(r1 di33ol,)io* of 4o5-(*/ 2oid.

190

331. F1G >here a company has been dissol-ed, whether in p!rs!ance of this +hapter or of section 2*3 or otherwise, the 9rib!nal may at any time within two years of the date of the dissol!tion, on application by the +ompany <i3!idator of the company or by any other person who appears to the 9rib!nal to be interested, ma2e an order, !pon s!ch terms as the 9rib!nal thin2s fit, declarin( the dissol!tion to be -oid, and there!pon s!ch proceedin(s may be ta2en as if the company had not been dissol-ed. F2G %t shall be the d!ty of the person on whose application the order was made, within thirty days after the ma2in( of the order or s!ch f!rther time as the 9rib!nal may allow, to file a certified copy of the order with the ,e(istrar who shall re(ister the same, and if s!ch person fails so to do, he shall be p!nishable with fine which may extend to ten tho!sand r!pees for e-ery day d!rin( which the defa!lt contin!es. Co551*4151*) of 6i*di*+ ,- ./ Tri.,*(l. 332. F1G >here, before the presentation of a petition for the windin( !p of a company by the 9rib!nal, a resol!tion has been passed by the company for -ol!ntary windin( !p, the windin( !p of the company shall be deemed to ha-e commenced at the time of the passin( of the resol!tion, and !nless the 9rib!nal, on proof of fra!d or mista2e, thin2s fit to direct otherwise, all proceedin(s ta2en in the -ol!ntary windin( !p shall be deemed to ha-e been -alidly ta2en. F2G %n any other case, the windin( !p of a company by the 9rib!nal shall be deemed to commence at the time of the presentation of the petition for the windin( !p. E94l,3io* of 41r)(i* )i51 i* 4o5-,)i*+ -1riod of li5i)()io*. 333. 6otwithstandin( anythin( contained in the <imitation #ct, 1)"3 or in any other law for the time bein( in force, in comp!tin( the period of limitation specified for any s!it or application in the name and on behalf of a company which is bein( wo!nd !p by the 9rib!nal, the period from the date of commencement of the windin( !p of the company to a period of one year immediately followin( the date of the windin( !p order shall be excl!ded. PART I$ Offi4i(l Li7,id()or3 A--oi*)51*) of Offi4i(l Li7,id()or. 33E. [email protected] "or )01 -,r-o313 of )0i3 A4) 3o f(r (3 i) r1l()13 )o )01 6i*di*+ ,- of 4o5-(*i13 ./ )01 Tri.,*(l )01 C1*)r(l Go21r*51*) 5(/ (--oi*) (3 5(*/ Offi4i(l Li7,id()or3 (3 i) 5(/ 4o*3id1r *14133(r/ (*d 5(/ (l3o (--oi*) Ioi*) D1-,)/ orA33i3)(*) Offi4i(l Li7,id()or3 )o (33i3) 0i5 i* di340(r+1 of 0i3 f,*4)io*3. A2B T01 li7,id()or3 (--oi*)1d ,*d1r 3,.;314)io* [email protected] 30(ll .1 60ol1;)i51 offi41r3 of )01 C1*)r(l Go21r*51*). A3B T01 3(l(r/ (*d o)01r (llo6(*413 of )01 Offi4i(l Li7,id()or Ioi*) Offi4i(l Li7,id()or D1-,)/ Offi4i(l Li7,id()or A33i3)(*) Offi4i(l Li7,id()or 30(ll .1 -(id ./ )01 C1*)r(l Go21r*51*). Po61r3 (*d f,*4)io*3 of Offi4i(l Li7,id()or. 335. F1G 9he 1fficial <i3!idator shall exercise s!ch powers and perform s!ch d!ties as the +entral 4o-ernment may prescribe.

191

F2G >itho!t prej!dice to the pro-isions of s!b.section F1G, the 1fficial <i3!idator mayE FaG exercise all or any of the powers as may be exercised by a +ompany <i3!idator !nder the pro-isions of this #ctH FbG cond!ct in3!iries or in-esti(ations, if directed by the 9rib!nal or the +entral 4o-ernment in respect of matters arisin( o!t of windin( !p proceedin(sH and FcG maintain s!ch statistics, information and records as may be prescribed relatin( to companies !nder windin( !p. S,55(r/ -ro41d,r1 for li7,id()io*. 33". F1G >here the company to be wo!nd !p !nder this +hapter has assets of boo2 -al!e not exceedin( one crore r!pees, the 9rib!nal may order it to be wo!nd !p by s!mmary proced!re pro-ided !nder this /art. F2G >here an order !nder s!b.section F1G is made the 9rib!nal shall appoint the 1fficial <i3!idator as the li3!idator of the company. F3G 9he 1fficial <i3!idator shall forthwith ta2e into his c!stody or control all assets, effects and actionable claims to which the company is or appears to be entitled. F4G 9he 1fficial <i3!idator shall, within thirty days of appointment, s!bmit a report to the 9rib!nal in s!ch manner and form as may be prescribed incl!din( a report whether in his opinion, any fra!d has been committed in promotion, formation or mana(ement of the affairs of the company or not. F5G 1n receipt of the report !nder s!b.section F4G, if the 9rib!nal is satisfied that any fra!d has been committed by the promoters, directors or any other officer of the company, it may direct f!rther in-esti(ation into the affairs of the company and that a report shall be s!bmitted within s!ch time as may be specified. F"G #fter considerin( the in-esti(ation report !nder s!b.section F5G, the 9rib!nal may order that windin( !p may be proceeded !nder /art % of this +hapter or !nder the pro-ision of this /art. S(l1 of (331)3 (*d r14o21r/ of d1.)3 d,1 )o 4o5-(*/. 33$. F1G 9he 1fficial <i3!idator shall expeditio!sly dispose of all the assets within sixty days of his appointment. F2G 9he 1fficial <i3!idator shall ser-e a notice within thirty days of his appointment callin( !pon the debtors of the company or the contrib!tories, as the case may be, to deposit within thirty days with him the amo!nt payable to the company. F3G >here any debtor does not deposit the amo!nt !nder s!b.section F2G, the 9rib!nal may pass s!ch orders as it thin2s fit. F4G 9he amo!nt reco-ered by the 1fficial <i3!idator shall be deposited in accordance with the pro-isions of section 324. S1))l151*) of 4l(i53 of 4r1di)or3 ./ Offi4i(l Li7,id()or. 33&. F1G 9he 1fficial <i3!idator within thirty days shall call !pon the creditors of the company to pro-e their claims in the manner prescribed within thirty days of the receipt of s!ch call.

192

F2G 9he 1fficial <i3!idator shall prepare a list of claims of creditors in the manner as may be prescribed and each creditor shall be comm!nicated of the claims accepted or rejected for reasons to be recorded in writin(. A--1(l ./ 4r1di)or. 33). F1G #ny creditor a((rie-ed by the decision of the 1fficial <i3!idator !nder section 33& may file an application before the 9rib!nal within thirty days. F2G 9he 9rib!nal may after callin( the report from the 1fficial <i3!idator either dismiss the application or modify the decision of the 1fficial <i3!idator. F3G 9he 1fficial <i3!idator shall ma2e payment to the creditors whose claims ha-e been accepted. Ord1r of di33ol,)io* of 4o5-(*/. 34*. F1G 9he 1fficial <i3!idator shall s!bmit a final report to the 9rib!nal when he is satisfied that the company is finally wo!nd !p. F2G 9he 9rib!nal on receipt of s!ch report shall order that the company be dissol-ed. F3G >here an order is made !nder s!b.section F2G by the 9rib!nal, the ,e(istrar shall stri2e off the name of the company from the re(ister of companies and p!blish a notification to this effect.

193

CHAPTER %%I COMPANIES INCORPORATED OUTSIDE INDIA A--li4()io* of A4) )o for1i+* 4o5-(*i13. 341. >here not less than fifty per cent. of the paid.!p share capital, whether e3!ity or preference or partly e3!ity and partly preference, of a forei(n company is held by one or more citi=ens of %ndia or by one or more companies or bodies corporate incorporated in %ndia, or by one or more citi=ens of %ndia and one or more companies or bodies corporate incorporated in %ndia, whether sin(ly or in the a((re(ate, s!ch company shall comply with the pro-isions of this +hapter and s!ch other pro-isions of this #ct as may be prescribed with re(ard to the b!siness carried on by it in %ndia as if it were a company incorporated in %ndia. Do4,51*)3 1)4. )o .1 d1li21r1d )o R1+i3)r(r ./ for1i+* 4o5-(*i13. 342. F1G '-ery forei(n company shall, within thirty days of the establishment of its place of b!siness in %ndia, deli-er to the ,e(istrar for re(istrationE FaG a certified copy of the charter, stat!tes, or memorand!m and articles, of the company or other instr!ment constit!tin( or definin( the constit!tion of the company and, if the instr!ment is not in the 'n(lish lan(!a(e, a certified translation thereof in the 'n(lish lan(!a(eH FbG the f!ll address of the re(istered or principal office of the companyH FcG a list of the directors and secretary of the company containin( s!ch partic!lars as may be prescribedH FdG the name and address or the names and addresses of one or more persons resident in %ndia a!thorised to accept on behalf of the company ser-ice of process and any notices or other doc!ments re3!ired to be ser-ed on the companyH and FeG the f!ll address of the office of the company in %ndia which is to be deemed its principal place of b!siness in %ndia. F2G '-ery forei(n company existin( at the commencement of this #ct shall, if it has not deli-ered to the ,e(istrar before s!ch commencement, the doc!ments and partic!lars specified in s!b.section F1G of section 5)2 of the +ompanies #ct, 1)5", contin!e to be s!bject to the obli(ation to deli-er those doc!ments and partic!lars in accordance with that #ct. F3G >here any alteration is made or occ!rs in the doc!ments deli-ered to the ,e(istrar !nder this section, the forei(n company shall, within thirty days of s!ch alteration, deli-er to the ,e(istrar for re(istration, a ret!rn containin( the partic!lars of the alteration in the prescribed form. A44o,*)3 of for1i+* 4o5-(*/. 343. F1G '-ery forei(n company shall, in e-ery calendar year,E FaG ma2e o!t a balance sheet and profit and loss acco!nt in s!ch form, containin( s!ch partic!lars and incl!din( or ha-in( annexed or attached thereto s!ch doc!ments, incl!din(, in partic!lar, doc!ments relatin( to e-ery s!bsidiary company of the forei(n company, as !nder the pro-isions of this #ct it wo!ld, if it had been a company within the meanin( of this #ct, ha-e been re3!ired to ma2e o!t and lay before the company in (eneral meetin(H and FbG deli-er a copy of those doc!ments to the ,e(istrarD

194

/ro-ided that the +entral 4o-ernment may, by notification, direct that, in the case of any forei(n company or class of forei(n companies, the re3!irements of cla!se FaG shall not apply, or shall apply s!bject to s!ch exceptions and modifications as may be specified in that notification. F2G %f any s!ch doc!ment as is mentioned in s!b.section F1G is not in the 'n(lish lan(!a(e, there shall be annexed to it a certified translation thereof in the 'n(lish lan(!a(e. F3G '-ery forei(n company shall send to the ,e(istrar alon( with the doc!ments re3!ired to be deli-ered to him !nder s!b.section F1G, a copy of a list in the prescribed form of all places of b!siness established by the company in %ndia as at the date with reference to which the balance sheet referred to in s!b.section F1G is made o!t. Di3-l(/ of *(51 1)4. of for1i+* 4o5-(*/. 344. '-ery forei(n company shallE FaG conspic!o!sly exhibit on the o!tside of e-ery office or place where it carries on b!siness in %ndia, the name of the company and the co!ntry in which it is incorporated, in letters easily le(ible in 'n(lish characters, and also in the characters of the lan(!a(e or one of the lan(!a(es in (eneral !se in the locality in which the office or place is sit!ateH FbG ca!se the name of the company and of the co!ntry in which the company is incorporated, to be stated in le(ible 'n(lish characters in all b!siness letters, bill.heads and letter paper, and in all notices, and other official p!blications of the companyH and FcG if the liability of the members of the company is limited, ca!se notice of that factE FiG to be stated in e-ery s!ch prospect!s iss!ed and in all b!siness letters, bill. heads, letter paper, notices, ad-ertisements and other official p!blications of the company, in le(ible 'n(lish charactersH and FiiG to be conspic!o!sly exhibited on the o!tside of e-ery office or place where it carries on b!siness in %ndia, in le(ible 'n(lish characters and also in le(ible characters of the lan(!a(e or one of the lan(!a(es in (eneral !se in the locality in which the office or place is sit!ate. S1r2i41 o* for1i+* 4o5-(*/. 345. #ny process, notice, or other doc!ment re3!ired to be ser-ed on a forei(n company shall be deemed to be s!fficiently ser-ed, if addressed to any person whose name and address ha-e been deli-ered to the ,e(istrar !nder section 342 and left at, or sent by post to, the address which has been so deli-ered to the ,e(istrar or by electronic mode. D1.1*),r13 (**,(l r1),r* r1+i3)r()io* of 40(r+13 .oo<3 of (44o,*) (*d )01ir i*3-14)io*. 34". F1G 9he pro-isions of section "4 shall apply m!tatis m!tandis to a forei(n company. F2G 9he pro-isions of section &2 shall, s!bject to s!ch exceptions, modifications and adaptations as may be made therein by r!les made !nder this #ct, apply to a forei(n company as they apply to a company incorporated in %ndia. F3G 9he pro-isions of section 11" shall apply to a forei(n company to the extent of re3!irin( it to 2eep at its principal place of b!siness in %ndia the boo2s of acco!nt referred to in that section, with

195

respect to monies recei-ed and spent, sales and p!rchases made, and assets and liabilities, in the co!rse of or in relation to its b!siness in %ndia. F4G 9he pro-isions of +hapter 7% shall apply m!tatis m!tandis to char(es on properties which are created or ac3!ired by any forei(n company. F5G 9he pro-isions of +hapter @%7 shall apply m!tatis m!tandis to the %ndian b!siness of a forei(n company as they apply to a company incorporated in %ndia. "11 for r1+i3)r()io* of do4,51*)3. 34$. 9here shall be paid to the ,e(istrar for re(isterin( any doc!ment re3!ired by the pro-isions of this +hapter to be re(istered by him, s!ch fee and with additional fee, if any, as may be prescribed. I*)1r-r1)()io*. 34&. For the p!rposes of this +hapter,E FaG the expression AcertifiedB means certified in the prescribed manner to be a tr!e copy or a correct translationH FbG the expression AdirectorB, in relation to a forei(n company, incl!des any person in accordance with whose directions or instr!ctions the 0oard of Directors of the company is acc!stomed to actH and FcG the expression Aplace of b!sinessB incl!des a share transfer or share re(istration office. D()i*+ of -ro3-14),3 (*d -(r)i4,l(r3 )o .1 4o*)(i*1d )01r1i*. 34). F1G 6o person shall iss!e, circ!late or distrib!te in %ndia any prospect!s offerin( to s!bscribe for sec!rities of a company incorporated or to be incorporated o!tside %ndia, whether the company has or has not established, or when formed will or will not establish, a place of b!siness in %ndia, !nless the prospect!s is dated and si(ned, and FaG contains partic!lars with respect to the followin( matters, namelyDE FiG the instr!ment constit!tin( or definin( the constit!tion of the companyH FiiG the enactments or pro-isions by or !nder which the incorporation of the company was effectedH FiiiG address in %ndia where the said instr!ment, enactments or pro-isions, or copies thereof, and if the same are not in the 'n(lish lan(!a(e, a certified translation thereof in the 'n(lish lan(!a(eH Fi-G the date on which and the co!ntry in which the company wo!ld be or was incorporatedH and F-G whether the company has established a place of b!siness in %ndia and, if so, the address of its principal office in %ndiaH and FbG states the matters specified !nder section 23D

196

/ro-ided that s!b.cla!ses FiG, FiiG and FiiiG of cla!se FaG of this s!b.section shall not apply in the case of a prospect!s iss!ed more than two years after the date at which the company is entitled to commence b!siness. F2G#ny condition re3!irin( or bindin( an applicant for sec!rities to wai-e compliance with any re3!irement imposed by -irt!e of s!b.section F1G, or p!rportin( to imp!te him with notice of any contract, doc!ments or matter not specifically referred to in the prospect!s, shall be -oid. F3G 6o person shall iss!e to any person in %ndia a form of application for sec!rities of s!ch a company or intended company as is mentioned in s!b.section F1G, !nless the form is iss!ed with a prospect!s which complies with the pro-isions of this +hapter and s!ch iss!e does not contra-ene the pro-isions of section 35*D /ro-ided that this s!b.section shall not apply if it is shown that the form of application was iss!ed in connection with a bona fide in-itation to a person to enter into an !nderwritin( a(reement with respect to sec!rities. F4G 9his section shall not applyE FaG to the iss!e to existin( members or debent!re holders of a company of a prospect!s or form of application relatin( to sec!rities of the company, whether an applicant for sec!rities will or will not ha-e the ri(ht to reno!nce in fa-o!r of other personsH and FbG except in so far as it re3!ires a prospect!s to be dated, to the iss!e of a prospect!s relatin( to sec!rities which are or are to be in all respects !niform with sec!rities pre-io!sly iss!ed and for the time bein( dealt in or 3!oted on a reco(nised stoc2 exchan(e, b!t, s!bject as aforesaid, this section shall apply to a prospect!s or form of application whether iss!ed on or with reference to the formation of a company or s!bse3!ently. F5G 6othin( in this section shall limit or diminish any liability which any person may inc!r !nder any law for the time bein( in force in %ndia or !nder this #ct apart from this section. Pro2i3io*3 (3 )o 19-1r)=3 4o*31*) (*d (llo)51*). 35*. F1G 6o person shall iss!e, circ!late or distrib!te in %ndia any prospect!s offerin( for s!bscription in sec!rities of a company incorporated or to be incorporated o!tside %ndia, whether the company has or has not been established, or when formed will or will not establish, a place of b!siness in %ndia,E FaG if, where the prospect!s incl!des a statement p!rportin( to be made by an expert, he has not (i-en, or has before deli-ery of the prospect!s for re(istration withdrawn, his written consent to the iss!e of the prospect!s with the statement incl!ded in the form and context in which it is incl!ded, or there does not appear in the prospect!s a statement that he has (i-en and has not withdrawn his consent as aforesaidH or FbG if the prospect!s does not ha-e the effect, where an application is made in p!rs!ance thereof, of renderin( all persons concerned bo!nd by all the pro-isions of sections 2& and 35, so far as applicable. F2G For the p!rposes of this section, a statement shall be deemed to be incl!ded in a prospect!s, if it is contained in any report or memorand!m appearin( on the face thereof or by reference incorporated therein or iss!ed therewith.

197

R1+i3)r()io* of -ro3-14),3. 351. 6o person shall iss!e, circ!late or distrib!te in %ndia any prospect!s offerin( for s!bscription in sec!rities of a company incorporated or to be incorporated o!tside %ndia, whether the company has or has not established, or when formed will or will not establish, a place of b!siness in %ndia, !nless before the iss!e, circ!lation or distrib!tion of the prospect!s in %ndia, a copy thereof certified by the chairman and two other directors of the company as ha-in( been appro-ed by resol!tion of the mana(in( body has been deli-ered for re(istration to the ,e(istrar and the prospect!s states on the face of it that a copy has been so deli-ered, and there is endorsed on or attached to the copy, any consent to the iss!e of the prospect!s re3!ired by section 35* and s!ch doc!ments as may be prescribed. Off1r of I*di(* D1-o3i)or/ R141i-)3. 352. 6otwithstandin( anythin( contained in any other law for the time bein( in force, the +entral 4o-ernment may ma2e r!les applicable forE FaG the offer of %ndian Depository ,eceiptsH FbG the re3!irement of disclos!res in prospect!s or letter of offer iss!ed in connection with %ndian Depository ,eceiptsH FcG the manner in which the %ndian Depository ,eceipts shall be dealt with in a depository mode and by c!stodian and !nderwritersH and FdG the manner of sale, transfer or transmission of %ndian Depository ,eceipts, by a company incorporated or to be incorporated o!tside %ndia, whether the company has or has not established, or will or will not establish, any place of b!siness in %ndia. A--li4()io* of 314)io*3 29 )o [email protected] (*d C0(-)1r %%. 353. F1G 9he pro-isions of sections 2) to 31 Fboth incl!si-eG shall apply to the iss!e of a prospect!s by a company incorporated o!tside %ndia !nder section 351 as they apply to prospect!s iss!ed by an %ndian company. F2G 9he pro-isions of +hapter @@ shall apply m!tatis m!tandis for clos!re of the place of b!siness of a forei(n company in %ndia as if it were a company incorporated in %ndia. P,*i3051*) for 4o*)r(21*)io*. 354. >itho!t prej!dice to the pro-isions of section 353, where a forei(n company fails to comply with any of the pro-isions of this +hapter, the company shall be p!nishable with fine which shall not be less than one la2h r!pees b!t which may extend to three la2h r!pees and in the case of a contin!in( offence, with an additional fine which may extend to fifty tho!sand r!pees for e-ery day d!rin( which the defa!lt contin!es and e-ery officer who is in defa!lt shall be p!nishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to one la2h r!pees, or with both. Co5-(*/=3 f(il,r1 )o 4o5-l/ 6i)0 -ro2i3io*3 of )0i3 C0(-)1r *o) )o (ff14) 2(lidi)/ of 4o*)r(4)3 1)4. 355. #ny fail!re by a company to comply with the pro-isions of this +hapter shall not affect the -alidity of any contract, dealin( or transaction entered into by the company or its liability to be s!ed in respect thereof, b!t the company shall not be entitled to brin( any s!it, claim any set.off, ma2e

198

any co!nter.claim or instit!te any le(al proceedin( in respect of any s!ch contract, dealin( or transaction, !ntil the company has complied with the pro-isions of this #ct applicable to it.

199

CHAPTER %%II GO$ERNMENT COMPANIES A**,(l r1-or)3 o* Go21r*51*) 4o5-(*i13. 35". F1G >here the +entral 4o-ernment is a member of a 4o-ernment company, the +entral 4o-ernment shall ca!se an ann!al report on the wor2in( and affairs of that company to beE FaG prepared within three months of its ann!al (eneral meetin( before which the comments (i-en by the +omptroller and #!ditor.4eneral and the a!dit report are placed !nder the pro-iso to s!b.section F"G of section 12"H and FbG as soon as may be after s!ch preparation, laid before both Io!ses of /arliament to(ether with a copy of the a!dit report and any comments !pon or s!pplement to the a!dit report, made by the +omptroller and #!ditor.4eneral. F2G >here in addition to the +entral 4o-ernment, any State 4o-ernment is also a member of a 4o-ernment +ompany, that State 4o-ernment shall ca!se a copy of the ann!al report prepared !nder s!b.section F1G to be laid before the Io!se or both Io!ses of the State <e(islat!re to(ether with a copy of the a!dit report and the comments !pon or s!pplement to the a!dit report referred to !nder s!b.section F1G. F3G >here the +entral 4o-ernment is not a member of a 4o-ernment company, e-ery State 4o-ernment which is a member of that company, or where only one State 4o-ernment is a member of the company, that State 4o-ernment shall ca!se an ann!al report on the wor2in( and affairs of the company to beE FaG prepared within the time specified in s!b.section F1G H and FbG as soon as may be after s!ch preparation, laid before the Io!se or both Io!ses of the State <e(islat!re with a copy of the a!dit report and comments !pon or s!pplement to the a!dit report referred to !nder s!b.section F1G. F4G 9he pro-isions of this section shall, so far as may be, apply to a 4o-ernment company in li3!idation as they apply to any other 4o-ernment company. Po61r )o 5odif/ A4) i* i)3 (--li4()io* )o Go21r*51*) 4o5-(*i13. 35$. F1G Sa-e as otherwise expressly pro-ided, the +entral 4o-ernment may, by notification, direct that any of the pro-isions of this #ct shall not apply, or shall apply with s!ch exceptions, modifications and adaptations, as may be specified in that notification, to any 4o-ernment company. F2G # copy of e-ery notification proposed to be iss!ed !nder s!b.section F1G shall be laid in draft before each Io!se of /arliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more s!ccessi-e sessions, and if, before the expiry of the session immediately followin( the session or the s!ccessi-e sessions aforesaid, both Io!ses a(ree in disappro-in( the iss!e of the notification or both Io!ses a(ree in ma2in( any modification in the notification, the notification shall not be iss!ed or, as the case may be, shall be iss!ed only in s!ch modified form as may be a(reed !pon by both the Io!ses.

200

CHAPTER %%III REGISTRATION O""ICES AND "EES R1+i3)r()io* offi413. 35&. F1G For the p!rposes of exercisin( s!ch powers and dischar(in( s!ch f!nctions as are conferred on the +entral 4o-ernment by or !nder this #ct or !nder the r!les made there!nder and for the p!rposes of re(istration of companies !nder this #ct, the +entral 4o-ernment shall, by notification, establish s!ch n!mber of offices at s!ch places as it thin2s fit, specifyin( their j!risdiction. F2G 9he +entral 4o-ernment may appoint a Director 4eneral of ,e(istration, s!ch n!mber of ,e(istrars, #dditional, ?oint, Dep!ty and #ssistant ,e(istrars as it considers necessary for the re(istration of companies !nder this #ct, and the powers and d!ties that may be exercisable by s!ch officers shall be s!ch as may be prescribed. F3G 9he terms and conditions of ser-ice, incl!din( the salaries payable to persons appointed !nder s!b.section F2G, shall be s!ch as may be prescribed. F4G 9he +entral 4o-ernment may direct a seal or seals to be prepared for the a!thentication of doc!ments re3!ired for, or connected with, the re(istration of companies. Ad5i33i.ili)/ of 41r)(i* do4,51*)3 (3 12id1*41. 35). 6otwithstandin( anythin( contained in any other law for the time bein( in force, any doc!ment reprod!cin( or deri-ed from ret!rns and doc!ments filed by a company with the ,e(istrar on paper or in electronic form or stored on any electronic data stora(e de-ice or comp!ter readable media by the ,e(istrar, and a!thenticated by the ,e(istrar or any other officer empowered by the +entral 4o-ernment in s!ch manner as may be prescribed, shall be deemed to be a doc!ment for the p!rposes of this #ct and the r!les made there!nder and shall be admissible in any proceedin(s there!nder witho!t f!rther proof or prod!ction of the ori(inal as e-idence of any contents of the ori(inal or of any fact stated therein of which direct e-idence is admissible. Pro2i3io*3 r1l()i*+ )o fili*+ of (--li4()io*3 do4,51*)3 i*3-14)io* 1)4. i* 1l14)ro*i4 for5. 3"*. F1G 6otwithstandin( anythin( to the contrary contained in this #ct, and witho!t prej!dice to the pro-isions contained in section " of the %nformation 9echnolo(y #ct, 2*** the +entral 4o-ernment may ma2e r!les so as to re3!ire from s!ch date as may be prescribed in the r!les that J FaG s!ch applications, balance sheet, prospect!s, ret!rn, declaration, memorand!m, articles, partic!lars of char(es, or any other partic!lars or doc!ment as may be re3!ired to be filed or deli-ered !nder this #ct or r!les made there!nder, shall be filed in the electronic form and a!thenticated in s!ch manner as may be prescribedH FbG s!ch doc!ment, notice, any comm!nication or intimation, as may be re3!ired to be ser-ed or deli-ered !nder this #ct, in the electronic form and a!thenticated in s!ch manner as may be prescribedH FcG s!ch applications, balance sheet, prospect!s, ret!rn, re(ister, memorand!m, articles, partic!lars of char(es, or any other partic!lars or doc!ment and ret!rn filed !nder this #ct or r!les made there!nder shall be maintained by the ,e(istrar in the electronic form and re(istered or a!thenticated, as the case may be, in s!ch manner as may be prescribedH FdG s!ch inspection of the memorand!m, articles, re(ister, index, balance sheet, ret!rn or any other partic!lars or doc!ment maintained in the electronic form, as is otherwise

201

a-ailable for inspection !nder this #ct or r!les made there!nder, may be made by any person thro!(h the electronic form in s!ch manner as may be prescribedH FeG s!ch fees, char(es or other s!ms payable !nder this #ct or r!les made there!nder shall be paid thro!(h the electronic form and in s!ch manner as may be prescribedH and FfG the ,e(istrar shall re(ister chan(e of re(istered office, alteration of memorand!m or articles, prospect!s, iss!e +ertificate of %ncorporation, re(ister s!ch doc!ment, iss!e s!ch certificate, record notice, recei-e s!ch comm!nication as may be re3!ired to be re(istered or iss!ed or recorded or recei-ed, as the case may be, !nder this #ct or r!les made there!nder or perform d!ties or dischar(e f!nctions or exercise powers !nder this #ct or r!les made there!nder or do any act which is by this #ct directed to be performed or dischar(ed or exercised or done by the ,e(istrar in the electronic form in s!ch manner as may be prescribed. Explanation.— For the remo-al of do!bts, it is hereby clarified that the r!les made !nder this section shall not relate to imposition of fines or other pec!niary penalties or demand or payment of fees or contra-ention of any of the pro-isions of this #ct or p!nishment therefor. F2G 9he +entral 4o-ernment may, by notification, frame a scheme to carry o!t the pro-isions of s!b.section F1G thro!(h the electronic form. El14)ro*i4 for5 )o .1 194l,3i21 (l)1r*()i21 or i* (ddi)io*. 3"1. 9he +entral 4o-ernment may also pro-ide in the r!les made !nder section 3"* that the electronic form for the p!rposes specified in that section shall be excl!si-e, or in the alternati-e or in addition to the physical form, therefor. Pro2i3io* of 2(l,1 (dd1d 31r2i413 )0ro,+0 1l14)ro*i4 for5. 3"2. 9he +entral 4o-ernment may pro-ide s!ch -al!e added ser-ices thro!(h the electronic form and le-y s!ch fee thereon as may be prescribed. A--li4()io* of -ro2i3io*3 of I*for5()io* T140*olo+/ A4) 2000. 3"3. #ll the pro-isions of the %nformation 9echnolo(y #ct, 2*** relatin( to the electronic records, incl!din( the manner and format in which the electronic records shall be filed, in so far as they are not inconsistent with this #ct, shall apply in relation to the records in electronic form specified !nder section 3"*. "11 for fili*+ 1)4. 3"4. F1G #ny doc!ment, re3!ired to be s!bmitted, filed, re(istered or recorded, or any fact or information re3!ired or a!thorised to be re(istered !nder this #ct, shall be s!bmitted, filed, re(istered or recorded within the time specified in the rele-ant pro-ision on payment of s!ch fee as may be prescribedD /ro-ided that any doc!ment, fact or information may be s!bmitted, filed, re(istered or recorded, after the time specified in rele-ant pro-ision for s!ch s!bmission, filin(, re(isterin( or recordin(, within a period of two h!ndred and se-enty days from the date by which it sho!ld ha-e been s!bmitted, filed, re(istered or recorded, as the case may be, on payment of s!ch additional fee as may be prescribed.

202

F2G >here a company fails or commits any defa!lt to s!bmit, file, re(ister or record any doc!ment, fact or information !nder s!b.section F1G before the expiry of the period specified in the pro-iso to that s!b.section with additional fee, the company and its officers who are in defa!lt, shall, witho!t prej!dice to the liability for payment of fee and additional fee, be liable for the action or liability pro-ided !nder this #ct for s!ch fail!re or defa!lt. "113 1)4. )o .1 4r1di)1d i*)o -,.li4 (44o,*). 3"5. #ll fees, char(es, and other s!ms recei-ed by any ,e(istrar, #dditional, ?oint, Dep!ty, or #ssistant ,e(istrar, or any other officer of the +entral 4o-ernment in p!rs!ance of any pro-ision of this #ct shall be paid into the p!blic acco!nt of %ndia in the ,eser-e 0an2 of %ndia.

203

CHAPTER %%I$ COMPANIES TO "URNISH IN"ORMATION OR STATISTICS Po61r of C1*)r(l Go21r*51*) )o dir14) 4o5-(*i13 )o f,r*i30 i*for5()io* or 3)()i3)i43. 3"". F1G 9he +entral 4o-ernment may, by order, re3!ire companies (enerally, or any class of companies, or any company, to f!rnish s!ch information or statistics with re(ard to their or its constit!tion or wor2in(, and within s!ch time, as may be specified in the order. F2G '-ery order !nder s!b.section F1G shall be p!blished in the 1fficial 4a=ette and may be addressed to companies (enerally or to any class of companies, in s!ch manner, as the +entral 4o-ernment may thin2 fit and the date of s!ch p!blication shall be deemed to be the date on which re3!irement for information or statistics is made on s!ch companies or class of companies, as the case may be. F3G For the p!rpose of satisfyin( itself that any information or statistics f!rnished by a company in p!rs!ance of any order !nder s!b.section F1G is correct and complete, the +entral 4o-ernment may by order re3!ire s!ch company to prod!ce s!ch records or doc!ments in its possession or allow inspection thereof by s!ch officer or f!rnish s!ch f!rther information as that 4o-ernment may consider necessary. F4G %f any company fails to comply with an order made !nder s!b.section F1G or s!b.section F3G, or 2nowin(ly f!rnishes any information or statistics which is incorrect or incomplete in any material respect, the company shall be p!nishable with fine which may extend to twenty.fi-e tho!sand r!pees and e-ery officer who is in defa!lt, shall be p!nishable with imprisonment for a term which may extend to six months or with fine which may extend to twenty.fi-e tho!sand r!pees, or with both. F5G >here a forei(n company carries on b!siness in %ndia, all references to a company in this section shall be deemed to incl!de references to the forei(n company in relation, and only in relation, to s!ch b!siness.

204

CHAPTER %%$ NIDHIS Po61r )o 5odif/ A4) i* i)3 (--li4()io* )o Nid0i3. 3"$. F1G %n this section, A6idhiB means a company which has been incorporated with the object of c!lti-atin( the habit of thrift and sa-in(s amon(st its members, recei-in( deposits from, and lendin( to, its members only, for their m!t!al benefit, and which the +entral 4o-ernment has, by notification, declared to be a 6idhi. F2G Sa-e as otherwise expressly pro-ided, the +entral 4o-ernment may, by notification, direct that any of the pro-isions of this #ct shall not apply, or shall apply with s!ch exceptions, modifications and adaptations as may be specified in that notification, to any 6idhi. F3G # copy of e-ery notification iss!ed !nder s!b.section F1G shall, as soon as may be after it is iss!ed, be laid before each Io!se of /arliament. F4G # copy of e-ery notification proposed to be iss!ed !nder s!b.section F2G, shall be laid in draft before each Io!se of /arliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more s!ccessi-e sessions, and if, before the expiry of the session immediately followin( the session or the s!ccessi-e sessions aforesaid, both Io!ses a(ree in disappro-in( the iss!e of the notification or both Io!ses a(ree in ma2in( any modification in the notification, the notification shall not be iss!ed or, as the case may be, shall be iss!ed only in s!ch modified form as may be a(reed !pon by both the Io!ses.

205

CHAPTER %%$I NATIONAL COMPAN# LA' TRIBUNAL AND APPELLATE TRIBUNAL D1fi*i)io*3. 3"&. %n this +hapter, !nless the context otherwise re3!ires,E FaG A+hairpersonB means the +hairperson of the #ppellate 9rib!nalH FbG A?!dicial emberB means a member of the 9rib!nal or the #ppellate 9rib!nal appointed as s!ch and incl!des the /resident or the +hairperson, as the case may beH FcG A emberB means a member, whether ?!dicial or 9echnical of the 9rib!nal or the #ppellate 9rib!nal, and incl!des the /resident or the +hairperson, as the case may beH FdG A/residentB means the /resident of the 9rib!nalH FeG A9echnical emberB means a appointed as s!ch. ember of the 9rib!nal or the #ppellate 9rib!nal

Co*3)i),)io* of N()io*(l Co5-(*/ L(6 Tri.,*(l. 3"). 9he +entral 4o-ernment shall, by notification, constit!te, with effect from s!ch date as may be specified therein, a 9rib!nal to be 2nown as the A6ational +ompany <aw 9rib!nalB consistin( of a /resident and s!ch n!mber of ?!dicial and 9echnical members, as the +entral 4o-ernment may deem necessary, to be appointed by it by notification, to exercise and dischar(e s!ch powers and f!nctions as are, or may be, conferred on it by or !nder this #ct or any other law for the time bein( in force. &,(lifi4()io*3 of Pr13id1*) (*d M15.1r3 of Tri.,*(l. 3$*.F1G 9he /resident shall be a person who is or has been a ?!d(e of a Ii(h +o!rt for fi-e years. F2G # person shall not be 3!alified for appointment as a ?!dicial ember !nless heE

FaG has for at least ten years been a member of the %ndian <e(al Ser-ice or the %ndian +ompany <aw Ser-ice F<e(al 0ranchG, or held any e3!i-alent post in the +entral 4o-ernment or a State 4o-ernment, o!t of which at least three years of ser-ice in the pay. scale which is not less than the pay.scale of the ?oint Secretary to the 4o-ernment of %ndiaH or FbG has for at least ten years held a j!dicial office in the territory of %ndiaH or FcG has for at least ten years been an ad-ocate of a Ii(h +o!rt. Explanation.EFor the p!rposes of cla!ses FbG and FcG,E FiG in comp!tin( the period d!rin( which a person has held a j!dicial office in the territory of %ndia, there shall be incl!ded any period, after he has held any j!dicial office, d!rin( which the person has been an ad-ocate of a Ii(h +o!rt or has held the office of a member of any other trib!nal or any post !nder the +entral 4o-ernment or any State 4o-ernment, re3!irin( special 2nowled(e of lawH FiiG in comp!tin( the period d!rin( which a person has been an ad-ocate of a Ii(h +o!rt, there shall be incl!ded any period, after he became an ad-ocate, d!rin( which the person

206

has held any j!dicial office or the office of a member of any other trib!nal or any post !nder the +entral 4o-ernment or any State 4o-ernment, re3!irin( special 2nowled(e of law. F3G # person shall not be 3!alified for appointment as a 9echnical ember !nless heE

FaG has for at least ten years been a member of the %ndian +ompany <aw Ser-ice or held any e3!i-alent post in the +entral 4o-ernment or a State 4o-ernment, o!t of which at least three years of ser-ice in the pay.scale which is not less than the pay.scale of the ?oint Secretary to the 4o-ernment of %ndiaH or FbG is or has been a ?oint Secretary to the 4o-ernment of %ndia !nder the +entral Staffin( Scheme, or has held any other post !nder the +entral 4o-ernment or a State 4o-ernment carryin( pay.scale which is not less than the pay.scale of the ?oint Secretary to the 4o-ernment of %ndia, for at least three years and has ade3!ate 2nowled(e of and experience in dealin( with matters relatin( to companiesH or FcG is or has been in practice as a +hartered #cco!ntant for at least twenty yearsH or FdG is or has been in practice as a +ost #cco!ntant for at least twenty yearsH or FeG is or has been in practice as a +ompany Secretary for at least twenty yearsH or FfG is a person of ability, inte(rity and standin( ha-in( special 2nowled(e and experience, for not less than twenty years, in law, finance, ban2in( mana(ement, ind!strial administration, economics, labo!r matters, or s!ch other disciplines related to mana(ement, cond!ct of affairs, re-i-al, rehabilitation and windin( !p of companies. Co*3)i),)io* of A--1ll()1 Tri.,*(l. 3$1. 9he +entral 4o-ernment shall, by notification, constit!te, with effect from s!ch date as may be specified therein, an #ppellate 9rib!nal to be 2nown as the A6ational +ompany <aw #ppellate 9rib!nalB consistin( of a +hairperson and s!ch n!mber of ?!dicial and 9echnical embers, not exceedin( ele-en, as the +entral 4o-ernment may deem fit, to be appointed by it by notification, for hearin( appeals a(ainst the orders of the 9rib!nal. &,(lifi4()io*3 of C0(ir-1r3o* (*d M15.1r3 of A--1ll()1 Tri.,*(l. 3$2. F1G 9he +hairperson shall be a person who is or has been a ?!d(e of the S!preme +o!rt or the +hief ?!stice of a Ii(h +o!rt. F2G # ?!dicial ember shall be a person who is or has been a ?!d(e of a Ii(h +o!rt or is a ?!dicial ember of the 9rib!nal, for fi-e years. F3G # 9echnical ember shall be a person of ability, inte(rity and standin( ha-in( special 2nowled(e and experience, for not less than twenty.fi-e years, in law, finance, ban2in( mana(ement, ind!strial administration, economics, labo!r matters, or s!ch other disciplines related to mana(ement, cond!ct of affairs, re-i-al, rehabilitation and windin( !p of companies. S1l14)io* of M15.1r3 of Tri.,*(l (*d A--1ll()1 Tri.,*(l. 3$3. F%G 9he /resident of the 9rib!nal and the +hairperson and the ?!dicial embers of the #ppellate 9rib!nal shall be appointed after cons!ltation with the +hief ?!stice of %ndia. F2G 9he embers of the 9rib!nal and the 9echnical embers of the #ppellate 9rib!nal shall be appointed on the recommendation of a Selection +ommittee consistin( of J

207

FaG +hief ?!stice of %ndia or his nomineeH +hairperson, FbG Secretary in the FcG Secretary in the inistry of +orporate #ffairsH inistry of <aw and ?!sticeH ember, ember, and

FdG two other Secretaries to the 4o-ernment of %ndia to be nominated by the +entral 4o-ernmentH F3G 9he Secretary, inistry of +orporate #ffairs shall be the +on-ener of the Selection +ommittee.

F4G 9he Selection +ommittee shall determine its proced!re for recommendin( persons !nder s!b. section F2G. F5G 6o appointment of the embers of the 9rib!nal or the #ppellate 9rib!nal shall be in-alid merely by reason of any -acancy or any defect in the constit!tion of the Selection +ommittee. T1r5 of offi41 of Pr13id1*) C0(ir-1r3o* (*d o)01r M15.1r3. 3$4. F1G # ember of the 9rib!nal shall hold office as s!ch !ntil he attains,E

FaG in the case of the /resident, the a(e of sixty se-en yearsH FbG in the case of any other F2G # ember, the a(e of sixty.fi-e years.

ember of the #ppellate 9rib!nal shall hold office as s!ch !ntil he attains,E FaG in the case of the +hairperson, the a(e of se-enty yearsH FbG in the case of any other ember, the a(e of sixty.se-en years.

S(l(r/ (llo6(*413 (*d o)01r )1r53 (*d 4o*di)io*3 of 31r2i41 of M15.1r3. 3$5. 9he salary, allowances and other terms and conditions of ser-ice of the 9rib!nal and the #ppellate 9rib!nal shall be s!ch as may be prescribedD embers of the

/ro-ided that neither the salary and allowances nor the other terms and conditions of ser-ice of the embers shall be -aried to their disad-anta(e after their appointment. A4)i*+ Pr13id1*) (*d C0(ir-1r3o* of Tri.,*(l (*d A--1ll()1 Tri.,*(l. 3$". F1G %n the e-ent of the occ!rrence of any -acancy in the office of the /resident or the +hairperson by reason of his death, resi(nation or otherwise, the senior.most ember shall act as the /resident or the +hairperson, as the case may be, !ntil the date on which a new /resident or +hairperson appointed in accordance with the pro-isions of this #ct to fill s!ch -acancy enters !pon his office. F2G >hen the /resident or the +hairperson is !nable to dischar(e his f!nctions owin( to absence, illness or any other ca!se, the senior.most ember shall dischar(e the f!nctions of the /resident or the +hairperson, as the case may be, !ntil the date on which the /resident or the +hairperson res!mes his d!ties. R13i+*()io* of M15.1r3. 3$$. 9he /resident, the +hairperson or any ember may, by notice in writin( !nder his hand addressed to the +entral 4o-ernment, resi(n from his officeD

208

/ro-ided that the /resident, the +hairperson or the ember shall contin!e to hold office !ntil the expiry of three months from the date of receipt of s!ch notice by the +entral 4o-ernment or !ntil a person d!ly appointed as his s!ccessor enters !pon his office or !ntil the expiry of his term of office, whiche-er is the earliest. R15o2(l of M15.1r3. 3$&. F1G 9he +entral 4o-ernment may, after cons!ltation with the +hief ?!stice of %ndia, remo-e from office the /resident, the +hairperson or any ember, whoE FaG has been adj!d(ed an insol-entH or FbG has been con-icted of an offence which, in the opinion of the +entral 4o-ernment, in-ol-es moral t!rpit!deH or FcG has become physically or mentally incapable of actin( as s!ch /resident, +hairperson or emberH or FdG has ac3!ired s!ch financial or other interest as is li2ely to affect prej!dicially his f!nctions as s!ch /resident, +hairperson or emberH or FeG has so ab!sed his position as to render his contin!ance in office prej!dicial to the p!blic interestD /ro-ided that the /resident, the +hairperson or the ember shall not be remo-ed on any of the (ro!nds specified in cla!ses FbG to FeG witho!t (i-in( him a reasonable opport!nity of bein( heard. F2G >itho!t prej!dice to the pro-isions of s!b.section F1G, the /resident, the +hairperson or the ember shall not be remo-ed from his office except by an order made by the +entral 4o-ernment on the (ro!nd of pro-ed misbeha-io!r or incapacity after an in3!iry made by a ?!d(e of the S!preme +o!rt nominated by the +hief ?!stice of %ndia on a reference made to him by the +entral 4o-ernment in which s!ch /resident, +hairperson or ember had been informed of the char(es a(ainst him and (i-en a reasonable opport!nity of bein( heard. F3G 9he +entral 4o-ernment shall, after cons!ltation with the S!preme +o!rt, ma2e r!les to re(!late the proced!re for the in3!iry on the (ro!nd of pro-ed misbeha-io!r or incapacity referred to in s!b.section F2G. S)(ff of Tri.,*(l (*d A--1ll()1 Tri.,*(l. 3$). F1G 9he +entral 4o-ernment shall, in cons!ltation with the 9rib!nal and the #ppellate 9rib!nal, pro-ide the 9rib!nal and the #ppellate 9rib!nal, as the case may be, with s!ch officers and other employees as may be necessary for the exercise of the powers and dischar(e of the f!nctions of the 9rib!nal and the #ppellate 9rib!nal. F2G 9he officers and other employees of the 9rib!nal and the #ppellate 9rib!nal shall dischar(e their f!nctions !nder the (eneral s!perintendence and control of the /resident, or as the case may be, the +hairman or any other ember to whom powers for exercisin( s!ch s!perintendence and control are dele(ated by him. F3G 9he salaries and allowances and other conditions of ser-ice of the officers and other employees of the 9rib!nal and the #ppellate 9rib!nal shall be s!ch as may be prescribed.

209

B1*4013 of Tri.,*(l. 3&*. F1G 9here shall be constit!ted s!ch n!mber of 0enches of the 9rib!nal, as may, by notification, be specified by the +entral 4o-ernment. F2G 9he /rincipal 0ench of the 9rib!nal shall be at 6ew Delhi which shall be presided o-er by the /resident of the 9rib!nal. F3G 9he powers of the 9rib!nal shall be exercisable by 0enches consistin( of two whom one shall be a ?!dicial ember and the other shall be a 9echnical emberD embers o!t of

/ro-ided that it shall be competent for the embers of the 9rib!nal a!thorised in this behalf to f!nction as a 0ench consistin( of a sin(le ember and exercise the powers of the 9rib!nal in respect of s!ch class of cases or s!ch matters pertainin( to s!ch class of cases, as the /resident may, by (eneral or special order, specifyD /ro-ided f!rther that if at any sta(e of the hearin( of any s!ch case or matter, it appears to the ember that the case or matter is of s!ch a nat!re that it o!(ht to be heard by a 0ench consistin( of two embers, the case or matter may be transferred by the /resident, or, as the case may be, referred to him for transfer, to s!ch 0ench as the /resident may deem fit. F4G 9he /resident shall, for the disposal of any case relatin( to rehabilitation, restr!ct!rin(, re-i-in( or windin( !p, of companies, constit!te one or more Special 0enches consistin( of three or more embers, of which at least one of them shall necessarily be a ?!dicial ember. F5G %f the embers of a 0ench differ in opinion on any point or points, it shall be decided accordin( to the majority, if there is a majority, b!t if the embers are e3!ally di-ided, they shall state the point or points on which they differ, and the case shall be referred by the /resident for hearin( on s!ch point or points by one or more of the other embers of the 9rib!nal and s!ch point or points shall be decided accordin( to the opinion of the majority of embers who ha-e heard the case, incl!din( those who first heard it. Ord1r3 of Tri.,*(l. 3&1. F1G 9he 9rib!nal may, after (i-in( the parties to any proceedin( before it, a reasonable opport!nity of bein( heard, pass s!ch orders therein as it thin2s fit. F2G 9he 9rib!nal may, at any time within two years from the date of the order, with a -iew to rectifyin( any mista2e apparent from the record, amend any order passed by it, and shall ma2e s!ch amendment, if the mista2e is bro!(ht to its notice by the partiesD /ro-ided that no s!ch amendment shall be made in respect of any order a(ainst which an appeal has been preferred !nder this #ct. F3G 9he 9rib!nal shall send a copy of e-ery order passed !nder this section to all the parties concerned. A--1(l fro5 ord1r3 of Tri.,*(l. 3&2. F1G #ny person a((rie-ed by an order of the 9rib!nal may prefer an appeal to the #ppellate 9rib!nal. F2G 6o appeal shall lie to the #ppellate 9rib!nal from an order made by the 9rib!nal with the consent of parties.

210

F3G '-ery appeal !nder s!b.section F1G shall be filed within a period of forty.fi-e days from the date on which a copy of the order of the 9rib!nal is made a-ailable to the person a((rie-ed and shall be in s!ch form, and accompanied by s!ch fee, as may be prescribedD /ro-ided that the #ppellate 9rib!nal may entertain an appeal after the expiry of the said period of forty.fi-e days from the date aforesaid, b!t within a f!rther period not exceedin( forty.fi-e days, if it is satisfied that the appellant was pre-ented by s!fficient ca!se from filin( the appeal within that period. F4G 1n the receipt of an appeal !nder s!b.section F1G, the #ppellate 9rib!nal shall, after (i-in( the parties to the appeal a reasonable opport!nity of bein( heard, pass s!ch orders thereon as it thin2s fit, confirmin(, modifyin( or settin( aside the order appealed a(ainst. F5G 9he #ppellate 9rib!nal shall send a copy of e-ery order made by it to the 9rib!nal and the parties to appeal. E9-1di)io,3 di3-o3(l ./ Tri.,*(l (*d A--1ll()1 Tri.,*(l. 3&3. '-ery proceedin( presented before the 9rib!nal and e-ery appeal filed before the #ppellate 9rib!nal shall be dealt with and disposed of by it as expeditio!sly as possible and e-ery endea-o!r shall be made by the 9rib!nal or the #ppellate 9rib!nal, as the case may be, for the disposal of the proceedin( or appeal within three months from the date of commencement of the proceedin( before the 9rib!nal or the filin( of the appeal before the #ppellate 9rib!nal. A--1(l )o S,-r151 Co,r). 3&4. #ny person a((rie-ed by any order of the #ppellate 9rib!nal may file an appeal to the S!preme +o!rt within sixty days from the date of comm!nication of the order of the #ppellate 9rib!nal to him on any 3!estion of law arisin( o!t of s!ch orderD /ro-ided that the S!preme +o!rt may, if it is satisfied that the appellant was pre-ented by s!fficient ca!se from filin( the appeal within the said period, allow it to be filed within a f!rther period not exceedin( sixty days. Pro41d,r1 .1for1 Tri.,*(l (*d A--1ll()1 Tri.,*(l. 3&5. F1G 9he 9rib!nal and the #ppellate 9rib!nal shall not, while disposin( of any proceedin( before it or, as the case may be, an appeal before it, be bo!nd by the proced!re laid down in the +ode of +i-il /roced!re, 1)*&, b!t shall be (!ided by the principles of nat!ral j!stice, and, s!bject to the other pro-isions of this #ct and of any r!les made there!nder, the 9rib!nal and the #ppellate 9rib!nal shall ha-e power to re(!late their own proced!re. F2G 9he 9rib!nal and the #ppellate 9rib!nal shall ha-e, for the p!rposes of dischar(in( their f!nctions !nder this #ct, the same powers as are -ested in a ci-il co!rt !nder the +ode of +i-il /roced!re, 1)*& while tryin( a s!it in respect of the followin( matters, namelyDE FaG s!mmonin( and enforcin( the attendance of any person and examinin( him on oathH FbG re3!irin( the disco-ery and prod!ction of doc!mentsH FcG recei-in( e-idence on affida-itsH

211

FdG s!bject to the pro-isions of sections 123 and 124 of the %ndian '-idence #ct, 1&$2, re3!isitionin( any p!blic record or doc!ment or a copy of s!ch record or doc!ment from any officeH FeG iss!in( commissions for the examination of witnesses or doc!mentsH FfG dismissin( a representation for defa!lt or decidin( it ex parteH F(G settin( aside any order of dismissal of any representation for defa!lt or any order passed by it ex parteH and FhG any other matter which may be prescribed by the +entral 4o-ernment. F3G #ny order made by the 9rib!nal or the #ppellate 9rib!nal may be enforced by that 9rib!nal in the same manner as if it were a decree made by a co!rt in a s!it pendin( therein, and it shall be lawf!l for the 9rib!nal or the #ppellate 9rib!nal to send for exec!tion of its orders to the co!rt within the local limits of whose j!risdiction,E FaG in the case of an order a(ainst a company, the re(istered office of the company is sit!ateH or FbG in the case of an order a(ainst any other person, the person concerned -ol!ntarily resides or carries on b!siness or personally wor2s for (ain. F4G #ll proceedin(s before the 9rib!nal or the #ppellate 9rib!nal shall be deemed to be j!dicial proceedin(s within the meanin( of sections 1)3 and 22&, and for the p!rposes of section 1)" of the %ndian /enal +ode and the 9rib!nal and the #ppellate 9rib!nal shall be deemed to be ci-il co!rts for the p!rposes of section 1)5 and +hapter @@7% of the +ode of +riminal /roced!re, 1)$3. Po61r )o -,*i30 for 4o*)15-). 3&". 9he 9rib!nal and the #ppellate 9rib!nal shall ha-e the same j!risdiction, powers and a!thority in respect of contempt of themsel-es as the Ii(h +o!rt has and may exercise, for this p!rpose, the powers !nder the pro-isions of the +ontempt of +o!rts #ct, 1)$1, s!bject to the modifications thatE FaG the reference therein to a Ii(h +o!rt shall be constr!ed as incl!din( a reference to the 9rib!nal and the #ppellate 9rib!nalH and FbG the reference to #d-ocate.4eneral in section 15 of the said #ct shall be constr!ed as a reference to s!ch <aw 1fficers as the +entral 4o-ernment may, by notification, specify in this behalf. D1l1+()io* of -o61r3. 3&$. 9he 9rib!nal or the #ppellate 9rib!nal may, by (eneral or special order, direct, s!bject to s!ch conditions, if any, as may be specified in the order, any of its officers or employees or any other person a!thorised by it to in3!ire into any matter connected with any proceedin( or, as the case may be, appeal before it and to report to it in s!ch manner as may be specified in the order. M15.1r3 offi41r3 1)4. )o .1 -,.li4 31r2(*)3. 3&&. 9he /resident, embers, officers and other employees of the 9rib!nal and the +hairperson, embers, officers and other employees of the #ppellate 9rib!nal shall be deemed to be p!blic ser-ants within the meanin( of section 21 of the %ndian /enal +ode.

212

Pro)14)io* of (4)io* )(<1* i* +ood f(i)0. 3&). 6o s!it, prosec!tion or other le(al proceedin( shall lie a(ainst the 9rib!nal, the /resident, ember, officer or other employee, or a(ainst the #ppellate 9rib!nal, the +hairperson, ember, officer or other employee or li3!idator or any other person a!thorised by the 9rib!nal or the #ppellate 9rib!nal for the dischar(e of any f!nction !nder this #ct in respect of any loss or dama(e ca!sed or li2ely to be ca!sed by any act which is in (ood faith done or intended to be done in p!rs!ance of this #ct. Po61r )o 311< (33i3)(*41 of C0i1f M1)ro-oli)(* M(+i3)r()1 1)4. 3)*. F1G 9he 9rib!nal may, in any proceedin( relatin( to a sic2 company or windin( !p of any other company, in order to ta2e into c!stody or !nder its control all property, boo2s of acco!nt or other doc!ments, re3!est, in writin(, the +hief etropolitan a(istrate, +hief ?!dicial a(istrate or the District +ollector within whose j!risdiction any s!ch property, boo2s of acco!nt or other doc!ments of s!ch sic2 or other company, are sit!ate or fo!nd, to ta2e possession thereof, and the +hief etropolitan a(istrate, +hief ?!dicial a(istrate or the District +ollector, as the case may be, shall, on s!ch re3!est bein( made to him,E FaG ta2e possession of s!ch property, boo2s of acco!nt or other doc!mentsH and FbG ca!se the same to be entr!sted to the 9rib!nal or other person a!thorised by it. F2G For the p!rpose of sec!rin( compliance with the pro-isions of s!b.section F1G, the +hief etropolitan a(istrate, +hief ?!dicial a(istrate or the District +ollector may ta2e or ca!se to be ta2en s!ch steps and !se or ca!se to be !sed s!ch force as may, in his opinion, be necessary. F3G 6o act of the +hief etropolitan a(istrate, +hief ?!dicial a(istrate or the District a(istrate done in p!rs!ance of this section shall be called in 3!estion in any co!rt or before any a!thority on any (ro!nd whatsoe-er. Ci2il 4o,r) *o) )o 0(21 :,ri3di4)io*. 3)1. 6o ci-il co!rt shall ha-e j!risdiction to entertain any s!it or proceedin( in respect of any matter which the 9rib!nal or the #ppellate 9rib!nal is empowered to determine by or !nder this #ct or any other law for the time bein( in force and no inj!nction shall be (ranted by any co!rt or other a!thority in respect of any action ta2en or to be ta2en in p!rs!ance of any power conferred by or !nder this #ct or any other law for the time bein( in force by the 9rib!nal or the #ppellate 9rib!nal. $(4(*4/ i* Tri.,*(l or A--1ll()1 Tri.,*(l *o) )o i*2(lid()1 (4)3 or -ro411di*+3. 3)2. 6o act or proceedin( of the 9rib!nal or the #ppellate 9rib!nal shall be 3!estioned or shall be in-alid merely on the (ro!nd of the existence of any -acancy or defect in the constit!tion of the 9rib!nal or the #ppellate 9rib!nal, as the case may be. Ri+0) )o l1+(l r1-r131*)()io*. 3)3. # party to any proceedin( or appeal before the 9rib!nal or the #ppellate 9rib!nal, as the case may be, may either appear in person or a!thorise one or more chartered acco!ntants or company secretaries or cost acco!ntants or le(al practitioners or any other person to present his case before the 9rib!nal or the #ppellate 9rib!nal, as the case may be.

213

Li5i)()io*. 3)4. 9he pro-isions of the <imitation #ct, 1)"3 shall, as far as may be, apply to proceedin(s or appeals before 9rib!nal or the #ppellate 9rib!nal, as the case may be. Tr(*3f1r of 41r)(i* -1*di*+ -ro411di*+3. 3)5. 1n the date of the constit!tion of the 9rib!nal,E FaG all matters, proceedin(s or cases pendin( before the 0oard of +ompany <aw #dministration Fhereinafter in this section referred to as the +ompany <aw 0oardG constit!ted !nder s!b.section F1G of section 1*' of the +ompanies #ct, 1)5", immediately before s!ch date shall stand transferred to the 9rib!nal and the 9rib!nal shall dispose of s!ch matters, proceedin(s or cases in accordance with the pro-isions of this #ctH FbG any person a((rie-ed by any decision or order of the +ompany <aw 0oard made before s!ch date may file an appeal to the Ii(h +o!rt within sixty days from the date of comm!nication of the decision or order of the +ompany <aw 0oard to him on any 3!estion of law arisin( o!t of s!ch orderD /ro-ided that the Ii(h +o!rt may if it is satisfied that the appellant was pre-ented by s!fficient ca!se from filin( an appeal within the said period, allow it to be filed within a f!rther period not exceedin( sixty daysH FcG all proceedin(s !nder the +ompanies #ct, 1)5", incl!din( proceedin(s relatin( to arbitration, compromise, arran(ements and reconstr!ction and windin( !p of companies, pendin( immediately before s!ch date before any District +o!rt or Ii(h +o!rt, shall stand transferred to the 9rib!nal and the 9rib!nal may proceed to deal with s!ch proceedin(s either de no-o or from the sta(e before their transferD /ro-ided that nothin( in this cla!se shall apply to any proceedin(s for the windin( !p of a company s!bject to the s!per-ision of co!rt pendin( before any District +o!rt or Ii(h +o!rt immediately before s!ch date, and s!ch proceedin(s shall, after s!ch date, contin!e to be dealt with by the District +o!rt or the Ii(h +o!rt, as the case may be, andE FiG the company shall be wo!nd !p in the same manner and with the same incidents, and FiiG any appeal a(ainst any order of the District +o!rt or the Ii(h +o!rt shall lie to the competent co!rt to which appeal wo!ld ha-e lain, as if the +ompanies #ct, 1)5" had contin!ed to be in force.

214

CHAPTER %%$II SPECIAL COURTS E3)(.li3051*) of 3-14i(l 4o,r)3. 39>. [email protected] T01 C1*)r(l Go21r*51*) 5(/ for )01 -,r-o31 of -ro2idi*+ 3-11d/ )ri(l of off1*413 ,*d1r )0i3 A4) ./ *o)ifi4()io* 13)(.li30 (3 5(*/ 3-14i(l 4o,r)3 (3 5(/ .1 *14133(r/. A2B A 3-14i(l 4o,r) 30(ll 4o*3i3) of ( 3i*+l1 :,d+1 60o 30(ll .1 (--oi*)1d ./ )01 C1*)r(l Go21r*51*) 6i)0 )01 4o*4,rr1*41 of )01 C0i1f I,3)i41 of )01 Hi+0 Co,r) 6i)0i* 60o31 :,ri3di4)io* )01 :,d+1 )o .1 (--oi*)1d i3 6or<i*+. A3B A -1r3o* 30(ll *o) .1 7,(lifi1d for (--oi*)51*) (3 ( :,d+1 of ( 3-14i(l 4o,r) ,*l133 01 i3 i551di()1l/ .1for1 3,40 (--oi*)51*) 0oldi*+ offi41 of ( S133io*3 I,d+1 or (* Addi)io*(l S133io*3 I,d+1. Off1*413 )ri(.l1 ./ 3-14i(l 4o,r)3. 3)$. F1G 6otwithstandin( anythin( contained in the +ode of +riminal /roced!re, 1)$3,E FaG all offences !nder this #ct shall be triable only by the special co!rt established for the area in which the re(istered office of the company in relation to which the offence is committed or where there are more special co!rts than one for s!ch area, by s!ch one of them as may be specified in this behalf by the Ii(h +o!rt concernedH FbG where a person acc!sed of, or s!spected of the commission of, an offence !nder this #ct is forwarded to a a(istrate !nder s!b.section F2G or s!b.section F2#G of section 1"$ of the +ode of +riminal /roced!re, 1)$3, s!ch a(istrate may a!thorise the detention of s!ch person in s!ch c!stody as he thin2s fit for a period not exceedin( fifteen days in the whole where s!ch a(istrate is a ?!dicial a(istrate and se-en days in the whole where s!ch a(istrate is an 'xec!ti-e a(istrateD /ro-ided that where s!ch a(istrate considers that the detention of s!ch person !pon or before the expiry of the period of detention is !nnecessary, he shall order s!ch person to be forwarded to the special co!rt ha-in( j!risdictionH FcG the special co!rt may exercise, in relation to the person forwarded to it !nder cla!se FbG, the same power which a a(istrate ha-in( j!risdiction to try a case may exercise !nder section 1"$ of the +ode of +riminal /roced!re, 1)$3 in relation to an acc!sed person who has been forwarded to him !nder that sectionH and FdG a special co!rt may, !pon per!sal of the police report of the facts constit!tin( an offence !nder this #ct or !pon a complaint in that behalf, ta2e co(ni=ance of that offence witho!t the acc!sed bein( committed to it for trial. F2G >hen tryin( an offence !nder this #ct, a special co!rt may also try an offence other than an offence !nder this #ct with which the acc!sed may, !nder the +ode of +riminal /roced!re, 1)$3 be char(ed at the same trial. F3G 6otwithstandin( anythin( contained in the +ode of +riminal /roced!re, 1)$3 the special co!rt may, if it thin2s fit, try in a s!mmary way any offence !nder this #ct which is p!nishable with imprisonment for a term not exceedin( three yearsD

215

/ro-ided that in the case of any con-iction in a s!mmary trial, no sentence of imprisonment for a term exceedin( one year shall be passedD /ro-ided f!rther that when at the commencement of, or in the co!rse of, a s!mmary trial, it appears to the special co!rt that the nat!re of the case is s!ch that the sentence of imprisonment for a term exceedin( one year may ha-e to be passed or that it is, for any other reason, !ndesirable to try the case s!mmarily, the special co!rt shall, after hearin( the parties, record an order to that effect and thereafter recall any witnesses who may ha-e been examined and proceed to hear or rehear the case in accordance with the proced!re for the re(!lar trial. A--1(l (*d r12i3io*. 3)&. 9he Ii(h +o!rt may exercise, so far as may be applicable, all the powers conferred by +hapters @@%@ and @@@ of the +ode of +riminal /roced!re, 1)$3 on a Ii(h +o!rt, as if a special co!rt within the local limits of the j!risdiction of the Ii(h +o!rt were a +o!rt of Session tryin( cases within the local limits of the j!risdiction of the Ii(h +o!rt. A--li4()io* of Cod1 )o -ro411di*+3 .1for1 ( 3-14i(l 4o,r). 3)). Sa-e as otherwise pro-ided in this #ct, the pro-isions of the +ode of +riminal /roced!re, 1)$3 shall apply to the proceedin(s before a special co!rt and for the p!rposes of the said pro-isions, the special co!rt shall be deemed to be a +o!rt of Session and the person cond!ctin( a prosec!tion before a special co!rt shall be deemed to be a /!blic /rosec!tor. Off1*413 )o .1 *o*;4o+*iH(.l1. 4**. F1G 6otwithstandin( anythin( in the +ode of +riminal /roced!re, 1)$3, e-ery offence !nder this #ct shall be deemed to be non.co(ni=able within the meanin( of the said +ode. F2G 6o +o!rt shall ta2e co(ni=ance of any office !nder this #ct which is alle(ed to ha-e been committed by any company or any officer thereof, except on the complaint in writin( of the ,e(istrar, a shareholder of the company, or of a person a!thorised by the +entral 4o-ernment in that behalfD /ro-ided that the co!rt may ta2e co(ni=ance of offences relatin( to iss!e and transfer of sec!rities and non.payment of di-idend on a complaint in writin( by a person a!thorised by the Sec!rities and 'xchan(e 0oard of %ndiaD /ro-ided f!rther that nothin( in this s!b.section shall apply to a prosec!tion by a company of any of its officers. F3G 6otwithstandin( anythin( contained in the +ode of +riminal /roced!re, 1)$3, where the complainant !nder s!b.section F1G is the ,e(istrar or a person a!thorised by the +entral 4o-ernment, the presence of s!ch officers before the +o!rt tryin( the offences shall not be necessary !nless the co!rt re3!ires his personal attendance at the trial. F4G 9he pro-isions of s!b.section F2G shall not apply to any action ta2en by the li3!idator of a company in respect of any offence alle(ed to ha-e been committed in respect of any of the matters in +hapter @@ or in any other pro-ision of this #ct relatin( to windin( !p of companies. Explanation.E# li3!idator of a company shall not be deemed to be an officer of the company within the meanin( of s!b.section F1G.

216

Tr(*3i)io*(l -ro2i3io*3. 4*1. #ny offence committed !nder this #ct, which is triable by a special co!rt shall, !ntil a special co!rt is established, be tried by a +o!rt of Session exercisin( j!risdiction o-er the area, notwithstandin( anythin( contained in the +ode of +riminal /roced!re, 1)$3D /ro-ided that nothin( contained in this section shall affect the powers of the Ii(h +o!rt !nder section 4*$ of the +ode to transfer any case or class of cases ta2en co(ni=ance by a +o!rt of Session !nder this section. Co5-o3i)io* of 41r)(i* off1*413. 4*2. 6otwithstandin( anythin( contained in the +ode of +riminal /roced!re, 1)$3, any offence p!nishable !nder this #ct, not bein( an offence p!nishable with imprisonment only or with imprisonment and also with fine, may, either before or after the instit!tion of any prosec!tion, be compo!nded by the a((rie-ed person or persons with the permission of the co!rt ha-in( j!risdiction to try the offence. Po61r of C1*)r(l Go21r*51*) )o (--oi*) 4o5-(*/ -ro314,)or3. E03. No)6i)03)(*di*+ (*/)0i*+ 4o*)(i*1d i* )01 Cod1 of Cri5i*(l Pro41d,r1 @9?3 )01 C1*)r(l Go21r*51*) 5(/ (--oi*) +1*1r(ll/ or for (*/ 4(31 or i* (*/ 4(31 or for (*/ 3-14ifi1d 4l(33 of 4(313 i* (*/ lo4(l (r1( o*1 or 5or1 -1r3o*3 (3 4o5-(*/ -ro314,)or3 for )01 4o*d,4) of -ro314,)io*3 (ri3i*+ o,) of )0i3 A4) (*d )01 -1r3o*3 3o (--oi*)1d (3 4o5-(*/ -ro314,)or3 30(ll 0(21 (ll )01 -o61r3 (*d -ri2il1+13 4o*f1rr1d ./ )01 Cod1 o* P,.li4 Pro314,)or3 (--oi*)1d ,*d1r 314)io* 2E of )01 Cod1. A--1(l (+(i*3) (47,i))(l. 4*4. 6otwithstandin( anythin( contained in the +ode of +riminal /roced!re, 1)$3, the +entral 4o-ernment may, in any case arisin( !nder this #ct, direct any company prosec!tor or a!thorise any other person either by name or by -irt!e of his office, to present an appeal from an order of ac3!ittal passed by any +o!rt, other than a Ii(h +o!rt, and an appeal presented by s!ch prosec!tor or other person shall be deemed to ha-e been -alidly presented to the appellate co!rt. Co5-1*3()io* for (44,3()io* 6i)0o,) r1(3o*(.l1 4(,31. 4*5. 9he pro-isions of section 25* of the +ode shall apply m!tatis m!tandis to acc!sation witho!t reasonable ca!se before the special co!rt or the +o!rt of Session. A--li4()io* of fi*13. 4*". 9he +o!rt imposin( any fine !nder this #ct may direct that the whole or any part thereof shall be applied in or towards payment of the costs of the proceedin(s, or in or towards the payment of a reward to the person on whose information the proceedin(s were instit!ted.

217

CHAPTER %%$III MISCELLANEOUS P,*i3051*) for f(l31 3)()151*)3. 4*$. Sa-e as otherwise pro-ided in this #ct, if in any ret!rn, report, certificate, balance sheet, prospect!s, statement or other doc!ment re3!ired by or for the p!rposes of any of the pro-isions of this #ct, any person ma2es a statement,E FaG which is false in any material partic!lars, 2nowin( it to be falseH or FbG which omits any material fact, 2nowin( it to be material, he shall be p!nishable with imprisonment for a term which may extend to three years and with fine which may extend to fi-e la2h r!pees. P,*i3051*) for f(l31 12id1*41. 4*&. Sa-e as otherwise pro-ided in this #ct, if any person intentionally (i-es false e-idenceE FaG !pon any examination on oath or solemn affirmation, a!thorised !nder this #ctH or FbG in any affida-it, deposition or solemn affirmation, in or abo!t the windin( !p of any company !nder this #ct, or otherwise in or abo!t any matter arisin( !nder this #ct, he shall be p!nishable with imprisonment for a term which shall not less than three years b!t which may extend to se-en years and with fine which may extend to ten la2h r!pees. P,*i3051*) 601r1 *o 3-14ifi4 -1*(l)/ or -,*i3051*) i3 -ro2id1d. 4*). %f a company or any other person contra-enes any of the pro-isions of this #ct or the r!les made there!nder, or any condition, limitation or restriction s!bject to which any appro-al, sanction, consent, confirmation, reco(nition, direction or exemption in relation to any matter has been accorded, (i-en or (ranted, and for which no penalty or p!nishment is pro-ided elsewhere in this #ct, the company and e-ery officer of the company who is in defa!lt or s!ch other person shall be p!nishable with fine which may extend to ten tho!sand r!pees, and where the contra-ention is a contin!in( one, with a f!rther fine which may extend to one tho!sand r!pees for e-ery day after the first d!rin( which the contra-ention contin!es. P,*i3051*) i* 4(31 of r1-1()1d d1f(,l). 41*. %n case a company or any officer who is in defa!lt repeats the defa!lt, he shall be p!nishable with imprisonment as pro-ided, b!t in case of defa!lts for which fine is pro-ided either alon( with or excl!si-e of imprisonment, with fine which shall be twice the amo!nt of fine for s!ch defa!lt. P,*i3051*) for 6ro*+f,l 6i)00oldi*+ of -ro-1r)/. 411. F1G %f any officer or employee of a companyE FaG wron(f!lly obtains possession of any property, incl!din( cash of the companyH or FbG ha-in( any s!ch property incl!din( cash in his possession, wron(f!lly withholds it or 2nowin(ly applies it for the p!rposes other than those expressed or directed in the articles and a!thorised by this #ct,

218

he shall, on the complaint of the company or of any creditor or contrib!tory thereof, be p!nishable with fine which shall be not less than one la2h r!pees b!t which may extend to fi-e la2h r!pees. F2G 9he +o!rt tryin( an offence !nder s!b.section F1G may also order s!ch officer or employee to deli-er !p or ref!nd, within a time to be fixed by it, any s!ch property or cash wron(f!lly obtained or wron(f!lly withheld or 2nowin(ly misapplied, or in defa!lt, to !nder(o imprisonment for a term which may extend to two years. P,*i3051*) for i5-ro-1r ,31 ofJLi5i)1dK JPri2()1 Li5i)1dK orJOPC Li5i)1dK. 412. %f any person or persons trade or carry on b!siness !nder any name or title of which the word A<imitedB or the words A/ri-ate <imitedB or the letters and word A1/+ <imitedB or any contraction or imitation thereof is or are the last word or words, that person or each of those persons shall, !nless d!ly incorporated with limited liability, be p!nishable for !sin( that name or title with fine which shall not be less than one la2h r!pees b!t which may extend to fi-e la2h r!pees. Ad:,di4()io* of -1*(l)i13. [email protected] [email protected] T01 C1*)r(l Go21r*51*) 5(/ ./ (* ord1r -,.li301d i* )01 Offi4i(l G(H1))1 (--oi*) (3 5(*/ offi41r3 of )01 C1*)r(l Go21r*51*) *o) .1lo6 )01 r(*< of R1+i3)r(r (3 (d:,di4()i*+ offi41r3 for (d:,d+i*+ -1*(l)/ ,*d1r )01 -ro2i3io*3 of )0i3 A4) i* )01 5(**1r (3 5(/ .1 -r134ri.1d. A2B T01 C1*)r(l Go21r*51*) 30(ll 60il1 (--oi*)i*+ (d:,di4()i*+ offi41r3 3-14if/ )01ir :,ri3di4)io* i* )01 ord1r ,*d1r 3,.;314)io* [email protected] A3B T01 Ad:,di4()i*+ Offi41r 5(/ ./ (* ord1r i5-o31 )01 -1*(l)/ o* )01 4o5-(*/ (*d )01 offi41r 60o i3 i* d1f(,l) 3)()i*+ (*/ *o*;4o5-li(*41 or (*/ d1f(,l) ,*d1r )01 r1l12(*) -ro2i3io* of )01 A4). AEB T01 Ad:,di4()i*+ Offi41r 30(ll .1for1 i5-o3i*+ (*/ -1*(l)/ +i21 ( r1(3o*(.l1 o--or),*i)/ of .1i*+ 01(rd )o 3,40 4o5-(*/ (*d )01 offi41r 60o i3 i* d1f(,l). A5B A*/ -1r3o* (++ri121d ./ (* ord1r 5(d1 ./ )01 (d:,di4()i*+ offi41r ,*d1r 3,.;314)io* AEB 5(/ -r1f1r (* (--1(l )o )01 R1+io*(l Dir14)or 0(2i*+ :,ri3di4)io* i* )01 5())1r. A>B E21r/ (--1(l ,*d1r 3,.;314)io* A5B 30(ll .1 fil1d 6i)0i* 3i9)/ d(/3 fro5 )01 d()1 o* 60i40 )01 4o-/ of )01 ord1r 5(d1 ./ )01 (d:,di4()i*+ offi41r i3 r141i21d ./ )01 (++ri121d -1r3o* (*d 30(ll .1 i* 3,40 for5 5(**1r (*d .1 (44o5-(*i1d ./ 3,40 f11 (3 5(/ .1 -r134ri.1d. A?B T01 R1+io*(l Dir14)or 5(/ (f)1r +i2i*+ )01 -(r)i13 )o )01 (--1(l (* o--or),*i)/ of .1i*+ 01(rd -(33 3,40 ord1r (3 01 )0i*<3 fi) 4o*fir5i*+ 5odif/i*+ or 31))i*+ (3id1 )01 ord1r (--1(l1d (+(i*3). F&G FiG where company does not pay the penalty imposed by the adj!dicatin( officer or the ,e(ional Director within a period of ninety days from the date of the receipt of the copy of the order, it shall be p!nishable with fine which shall not be less than twenty.fi-e tho!sand r!pees b!t which may extend to fi-e la2h r!peesH FiiG where an officer in defa!lt does not pay the penalty within a period of ninety days from the date of the receipt of the copy of the order, he shall be p!nishable with imprisonment which may extend to six months or with fine which shall not be less than ten tho!sand r!pees b!t which may extend to one la2h r!pees, or with both.

219

Dor5(*) 4o5-(*/. 414. F1G >here a company is formed and re(istered !nder this #ct for a f!t!re project or to hold an asset or intellect!al property and has no si(nificant acco!ntin( transaction, s!ch a company or an inacti-e company may ma2e an application to the ,e(istrar in s!ch manner as may be prescribed for obtainin( the stat!s of a dormant company. Explanation.E For the p!rposes of this section,E FiG Ainacti-e companyB means a company which has not been carryin( on any b!siness or operation, or has not made any si(nificant acco!ntin( transaction d!rin( the last two financial years, or has not filed financial statements and ann!al ret!rns d!rin( the last two financial yearsH FiiG Asi(nificant acco!ntin( transactionB shall not incl!de payment of fees by a company to the ,e(istrar, payments made by it to f!lfil the re3!irements of this #ct or any other law and payments for maintenance of its office and records. F2G 9he ,e(istrar on consideration of the application allow the stat!s of a dormant company to the applicant and iss!e a certificate in s!ch form as may be prescribed to that effect. F3G 9he ,e(istrar shall maintain a re(ister of dormant companies in s!ch form as may be prescribed. F4G %n case of a company which has not filed financial statements or ann!al ret!rns for two financial years consec!ti-ely, the ,e(istrar shall iss!e a notice to that company and enter the name of s!ch company in the re(ister maintained for dormant companies. F5G # dormant company shall ha-e s!ch minim!m n!mber of directors, file s!ch doc!ments and pay s!ch ann!al fee as may be prescribed to the ,e(istrar to retain its dormant stat!s in the re(ister and may become an acti-e company on an application made in this behalf accompanied by s!ch doc!ments and fee as may be prescribed. F"G 9he ,e(istrar shall stri2e off the name of a dormant company from the re(ister of dormant companies, which has failed to comply with the re3!irements of this section. Pro)14)io* of (4)io* )(<1* i* +ood f(i)0. 415. 6o s!it, prosec!tion or other le(al proceedin( shall lie a(ainst the 4o-ernment or any officer of 4o-ernment or any other person in respect of anythin( which is in (ood faith done or intended to be done in p!rs!ance of this #ct or of any r!les or orders made there!nder, or in respect of the p!blication by or !nder the a!thority of the 4o-ernment or s!ch officer, of any report, paper or proceedin(s. No*;di34lo3,r1 of i*for5()io* i* 41r)(i* 4(313. 41". 6otwithstandin( anythin( contained in any other law for the time bein( in force, the ,e(istrar, any officer of 4o-ernment or any other person shall not be compelled to disclose to any co!rt, trib!nal or other a!thority the so!rce from where he (ot any information whichE FaG has led the +entral 4o-ernment to order an in-esti(ation !nder section 1&3H or FbG is or has been material or rele-ant in connection with s!ch in-esti(ation.

220

D1l1+()io* ./ C1*)r(l Go21r*51*) of i)3 -o61r3 (*d f,*4)io*3. 41$. F1G 9he +entral 4o-ernment may, by notification, and s!bject to s!ch conditions, limitations and restrictions as may be specified therein, dele(ate any of its powers or f!nctions !nder this #ct other than the power to ma2e r!les to s!ch a!thority or officer as may be specified in the notification. F2G # copy of e-ery notification iss!ed !nder s!b.section F1G shall, as soon as may be after it is iss!ed, be laid before each Io!se of /arliament. Po61r3 of C1*)r(l Go21r*51*) or Tri.,*(l )o (44ord (--ro2(l 1)4. 3,.:14) )o 4o*di)io*3 (*d )o -r134ri.1 f113 o* (--li4()io*3. 41&. F1G >here the +entral 4o-ernment or the 9rib!nal is re3!ired or a!thorised by any pro-ision of this #ctE FaG to accord appro-al, sanction, consent, confirmation or reco(nition to or in relation to, any matterH FbG to (i-e any direction in relation to any matterH or FcG to (rant any exemption in relation to any matter, then, in the absence of anythin( to the contrary contained in that pro-ision or any other pro-ision of this #ct, the +entral 4o-ernment or the 9rib!nal may accord, (i-e or (rant s!ch appro-al, sanction, consent, confirmation, reco(nition, direction or exemption, s!bject to s!ch conditions, limitations or restrictions as it may thin2 fit to impose and may, in the case of a contra-ention of any s!ch condition, limitation or restriction, rescind or withdraw s!ch appro-al, sanction, consent, confirmation, reco(nition, direction or exemption. F2G Sa-e as otherwise pro-ided in this #ct, e-ery application which may be, or is re3!ired to be, made to the +entral 4o-ernment or the 9rib!nal !nder any pro-ision of this #ctE FaG in respect of any appro-al, sanction, consent, confirmation or reco(nition to be accorded by that 4o-ernment or the 9rib!nal to, or in relation to, any matterH FbG in respect of any direction or exemption to be (i-en or (ranted by that 4o-ernment or the 9rib!nal in relation to any matter H or FcG in respect of any other matter, shall be accompanied by s!ch fee as may be prescribedD /ro-ided that different fees may be prescribed for applications in respect of different matters or in case of applications by different classes of companies. Co*do*()io* of d1l(/3 i* 41r)(i* 4(313. 41). 6otwithstandin( anythin( contained in this #ct,E FaG where any application re3!ired to be made to the +entral 4o-ernment !nder any pro-ision of this #ct in respect of any matter is not made within the time specified therein, that 4o-ernment may, for reasons to be recorded in writin(, condone the delayH and

221

FbG where any doc!ment re3!ired to be filed with the ,e(istrar !nder any pro-ision of this #ct is not filed within the time specified therein, the +entral 4o-ernment may, for reasons to be recorded in writin(, condone the delay. A**,(l r1-or) ./ C1*)r(l Go21r*51*). 42*. 9he +entral 4o-ernment shall ca!se a (eneral ann!al report on the wor2in( and administration of this #ct to be prepared and laid before each Io!se of /arliament within one year of the close of the year to which the report relates. Po61r )o 5odif/ 41r)(i* -ro2i3io*3 of A4) i* )01ir (--li4()io* )o -ri2()1 4o5-(*/ O*1 P1r3o* Co5-(*/ (*d 35(ll 4o5-(*/. 421. F1G Sa-e as otherwise expressly pro-ided, the +entral 4o-ernment may, by notification, direct that any of the pro-isions of +hapters %%%, %7, 7%% and %@ to @%%% of this #ct shall not apply, or shall apply with s!ch exceptions, modifications and adaptations as may be specified in that notification, to pri-ate company, 1ne /erson +ompany and small company or any of them. F2G # copy of e-ery notification proposed to be iss!ed !nder s!b.section F1G, shall be laid in draft before each Io!se of /arliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more s!ccessi-e sessions, and if, before the expiry of the session immediately followin( the session or the s!ccessi-e sessions aforesaid, both Io!ses a(ree in disappro-in( the iss!e of the notification or both Io!ses a(ree in ma2in( any modification in the notification, the notification shall not be iss!ed or, as the case may be, shall be iss!ed only in s!ch modified form as may be a(reed !pon by both the Io!ses. Pro0i.i)io* of (33o4i()io* or -(r)*1r30i- of -1r3o*3 19411di*+ 41r)(i* *,5.1r. 422. F1G 6o association or partnership consistin( of more than s!ch n!mber of persons as may be prescribed shall be formed for the p!rpose of carryin( on any b!siness that has for its object the ac3!isition of (ain by the association or partnership or by the indi-id!al members thereof, !nless it is re(istered as a company !nder this #ct or is formed !nder any other law for the time bein( in forceD /ro-ided that the n!mber of persons which may be prescribed !nder this s!b.section shall not exceed one h!ndred. F2G 6othin( in s!b.section F1G shall apply toE FaG a Iind! !ndi-ided family carryin( on any b!sinessH or FbG an association or partnership, if it is formed by professionals who are (o-erned by special #cts. F3G '-ery member of an association or partnership carryin( on b!siness in contra-ention of s!b. section F1G shall be personally liable for all liabilities inc!rred in s!ch b!siness and shall be p!nishable with fine which may extend to one la2h r!pees. R1-1(l of 41r)(i* 1*(4)51*)3 (*d 3(2i*+3. 423. F1G 9he +ompanies #ct, 1)5" and the ,e(istration of +ompanies FSi22imG #ct, 1)"1 Fhereinafter in this section referred to as the repealed enactmentsG shall stand repealedD

222

/ro-ided that the pro-isions of /art %@ # of the +ompanies #ct, 1)5" shall be applicable m!tatis m!tandis to a prod!cer company in a manner as if the +ompanies #ct, 1)5" has not been repealedD /ro-ided f!rther that !ntil the constit!tion of the 9rib!nal and the #ppellate 9rib!nal, the pro-isions of the +ompanies #ct, 1)5" in re(ard to the j!risdiction, powers, a!thority and f!nctions of the 0oard of +ompany <aw #dministration and +o!rt shall contin!e to apply as if the +ompanies #ct, 1)5" has not been repealed . F2G 6otwithstandin( the repeal !nder s!b.section F1G of the repealed enactments,E FaG anythin( done or any action ta2en or p!rported to ha-e been done or ta2en, incl!din( any r!le, notification, inspection, order or notice made or iss!ed or any appointment or declaration made or any direction (i-en or any proceedin( ta2en or any penalty or fine imposed !nder the repealed enactments shall, insofar as it is not inconsistent with the pro-isions of this #ct, be deemed to ha-e been done or ta2en !nder the correspondin( pro-isions of this #ctH FbG s!bject to the pro-isions of cla!se FaG, any order, r!le, notification, re(!lation, appointment, con-eyance, mort(a(e, deed, doc!ment or a(reement made, fee directed, resol!tion passed, direction (i-en, proceedin( ta2en, instr!ment exec!ted or iss!ed, or thin( done !nder or in p!rs!ance of any repealed enactment shall, if in force at the commencement of this #ct, contin!e to be in force, and shall ha-e effect as if made, directed, passed, (i-en, ta2en, exec!ted, iss!ed or done !nder or in p!rs!ance of this #ctH FcG any person appointed to any office !nder or by -irt!e of any repealed enactment shall be deemed to ha-e been appointed to that office !nder or by -irt!e of this #ctH FdG the offices existin( on the commencement of this #ct for the re(istration of companies shall contin!e as if they ha-e been established !nder the pro-isions of this #ctH FeG the incorporation of companies re(istered !nder the repealed enactments shall contin!e to be -alid and the pro-isions of this #ct shall apply to s!ch companies as if they were re(istered !nder this #ctH FfG all re(isters and all f!nds constit!ted and established !nder the repealed enactments shall be deemed to be re(isters and f!nds constit!ted or established !nder the correspondin( pro-isions of this #ctH F(G any prosec!tion instit!ted !nder the repealed enactments and pendin( immediately before the commencement of this #ct before any +o!rt shall, s!bject to the pro-isions of this #ct, contin!e to be heard and disposed of by the said +o!rtH FhG any inspection, in-esti(ation or in3!iry ordered to be done !nder the +ompanies #ct, 1)5" shall contin!e to be proceeded with as if s!ch inspection, in-esti(ation or in3!iry has been ordered !nder the correspondin( pro-isions of this #ct. F3G 9he mention of partic!lar matters in s!b.section F2G shall not be held to prej!dice the (eneral application of section " of the 4eneral +la!ses #ct, 1&)$ with re(ard to the effect of repeal of the repealed enactments as if the ,e(istration of +ompanies FSi22imG #ct, 1)"1 were also a +entral #ct.

223

Di33ol,)io* of Co5-(*/ L(6 Bo(rd (*d 4o*317,1*)i(l -ro2i3io*. 424. F1G 6otwithstandin( anythin( contained in section 422, the 0oard of +ompany <aw #dministration constit!ted !nder the +ompanies #ct, 1)5" Fhereinafter in this section referred to as the +ompany <aw 0oardG shall stand dissol-ed on the constit!tion of the 9rib!nal and the #ppellate 9rib!nal. F2G 9he persons holdin( the offices of +hairman, 7ice. +hairman and embers, and officers and other employees of the +ompany <aw 0oard immediately before the constit!tion of the 9rib!nal and the #ppellate 9rib!nal shall -acate their respecti-e offices on s!ch constit!tion and no s!ch +hairman, 7ice.+hairman and embers and officers or other employees shall be entitled to claim any compensation for the premat!re termination of the term of his office or of any contract of ser-ice, if anyD /ro-ided that e-ery officer or other employee, who had been appointed on dep!tation basis to the +ompany <aw 0oard, shall, on s!ch dissol!tion, stand re-erted to his parent cadre, inistry or Department, as the case may beD /ro-ided f!rther that e-ery officer and other employee of the +ompany <aw 0oard, employed on re(!lar basis by that 0oard, shall become, on and from s!ch dissol!tion the officer and other employee, respecti-ely, of the +entral 4o-ernment with the same ri(hts and pri-ile(es as to pension, (rat!ity and other li2e benefits as wo!ld ha-e been admissible to him if he had contin!ed to ser-e that 0oard and shall contin!e to do so !nless and !ntil his employment in the +entral 4o-ernment is d!ly terminated or !ntil his rem!neration, terms and conditions of employment are d!ly altered by that 4o-ernmentD /ro-ided also that notwithstandin( anythin( contained in the %nd!strial Disp!tes #ct, 1)4$ or in any other law for the time bein( in force, any officer or other employee who becomes an officer or other employee of the +entral 4o-ernment !nder the precedin( pro-iso shall not be entitled to any compensation !nder this #ct or !nder any other law for the time bein( in force and no s!ch claim shall be entertained by any co!rt, trib!nal or other a!thorityD /ro-ided also that where the +ompany <aw 0oard has established a pro-ident f!nd, s!perann!ation f!nd, welfare f!nd or other f!nd for the benefit of the officers and other employees employed in that 0oard, the monies relatable to the officers and other employees who ha-e become officers or employees of the +entral 4o-ernment shall, o!t of the monies standin( to the credit of s!ch pro-ident f!nd, s!perann!ation f!nd, welfare f!nd or other f!nd, stand transferred to, and -est in, the +entral 4o-ernment and s!ch monies which stand so transferred shall be dealt with by that 4o-ernment in s!ch manner as may be prescribed. Po61r )o r15o21 diffi4,l)i13. 425. F1G %f any diffic!lty arises in (i-in( effect to the pro-isions of this #ct, the +entral 4o-ernment may, by order p!blished in the 1fficial 4a=ette, ma2e s!ch pro-isions, not inconsistent with the pro-isions of this #ct, as appear to it to be necessary or expedient for remo-in( the diffic!ltyD /ro-ided that no s!ch order shall be made after the expiry of a period of three years from the date of commencement of section 1 of this #ct. F2G '-ery order made !nder this section shall, as soon as may be after it is made, be laid before each Io!se of /arliament.

224

Po61r of C1*)r(l Go21r*51*) )o 5(<1 r,l13. 42". F1G 9he +entral 4o-ernment may, by notification, ma2e r!les for carryin( o!t the p!rposes of this #ct. F2G >itho!t prej!dice to the (enerality of the pro-isions of s!b.section F1G, the +entral 4o-ernment may ma2e r!les for all or any of the matters which by this #ct are re3!ired to be, or may be, prescribed or in respect of which pro-ision is to be or may be made by r!les. F3G #ny r!le made !nder s!b.section F1G may pro-ide that a contra-ention thereof shall be p!nishable with fine which may extend to fi-e tho!sand r!pees and where the contra-ention is a contin!in( one, with a f!rther fine which may extend to fi-e h!ndred r!pees for e-ery day after the first d!rin( which s!ch contra-ention contin!es. F4G '-ery r!le made by the +entral 4o-ernment !nder s!b.section F1G shall be laid as soon as may be after it is made before each Io!se of /arliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more s!ccessi-e sessions, and if, before the expiry of the session immediately followin( the session or the s!ccessi-e sessions aforesaid, both Io!ses a(ree in ma2in( any modification in the r!le or both Io!ses a(ree that the r!le sho!ld not be made, the r!le shall thereafter ha-e effect only in s!ch modified form or be of no effect, as the case may beH so, howe-er, that any s!ch modification or ann!lment shall be witho!t prej!dice to the -alidity of anythin( pre-io!sly done !nder that r!le.

225

STATEMENT O" OBIECTS AND REASONS 9he +ompanies #ct, 1)5" Fhereinafter referred to as the #ctG, was enacted with the object to consolidate and amend the law relatin( to companies and certain other associations. Sim!ltaneo!sly, +ompanies #ct, 1)13, then in force, was repealed. 2. any chan(es ha-e ta2en place in the national and international economic en-ironment since the enactment of the said #ct. 9his has made the economy more di-erse, complex and dynamic. %n this milie!, the corporate form of or(ani=ation is increasin(ly emer(in( as the preferred -ehicle for economic and commercial acti-ity and has contrib!ted si(nificantly to the (rowth of the %ndian economy and the emer(ence of ser-ice, information and 2nowled(e.based enterprises. 9he n!mber of companies has expanded from 3*,*** in 1)5" to nearly & la2h companies f!nctionin( as of date. +ompanies are now mobilisin( reso!rces at a scale !nima(inable e-en a decade a(o, contin!o!sly enterin( into and brin(in( new acti-ities into the fold of the %ndian economy, exportin( a wide ran(e of (oods and ser-ices and pro-idin( increasin( employment opport!nities. 3. 9he expansion and (rowth of the %ndian economy has also (enerated considerable interest in the international in-estin( comm!nity. Iowe-er, there is a need for s!stainin( (rowth in a (lobalised and competiti-e en-ironment. 9he increasin( options and a-en!es for international b!siness, trade and capital flows ha-e made it imperati-e for the (rowin( %ndian economy to note only to harness its entreprene!rial and economic reso!rces efficiently b!t also to be competiti-e in attractin( in-estment to s!stain the impressi-e (rowth recorded by it in recent years. any in-estors are also loo2in( towards the stat!tory and re(!latory framewor2 for the corporate sector in the co!ntry while decidin( on their in-estment options. odernisation of corporate re(!lation, (o-ernin( -ario!s aspects of settin( !p of enterprises, str!ct!res for sharin( of ris2 and reward, their (o-ernance and acco!ntability to sta2eholders, financial proced!res and responsibility for disclos!res, proced!res for rehabilitation, li3!idation and windin( !p is, therefore, critical to the perceptions of in-estors and determinin( their b!siness and in-estment decisions. 4. %n the bac2(ro!nd of the abo-e de-elopments and reco(nisin( that the competiti-e and technolo(y dri-en b!siness en-ironment today re3!ire the corporate entities to be pro-ided (reater a!tonomy of operation and inno-ation with reasonable process re3!irements and compliance costs, a need was felt to help s!stain the (rowth of the %ndian corporate sector by enablin( a new le(al framewor2 that wo!ld be compact, amenable to clear interpretation, and respond in a timely and appropriate manner to meet the re3!irements of e-er e-ol-in( economic acti-ities and b!siness models, while fosterin( a positi-e en-ironment for in-estment and (rowth. %n addition, there is also a need to a-oid o-erlappin( and conflicts of j!risdiction in the area of sectoral re(!lations. 9herefore piecemeal re.en(ineerin( of the corporate re(!latory framewor2 was not considered ade3!ate to enable the systemic chan(es re3!ired. Ience, a comprehensi-e re-iew of the +ompanies #ct, 1)5", and introd!ction of a re-ised stat!tory framewor2 in the form of a new +ompanies 0ill has been considered essential to achie-e the desired reform. 5. %n the abo-e bac2drop, the re-iew of the +ompanies #ct, 1)5" and draftin( of a new +ompanies 0ill was ta2en !p by the 4o-ernment on the basis of a detailed cons!ltati-e process. # K+oncept /aper on new +ompany <awK was placed on the website of the inistry on 4th #!(!st, 2**4. 9he inp!ts recei-ed were p!t to a detailed examination in the inistry. 9he 4o-ernment also constit!ted an 'xpert +ommittee on +ompany <aw !nder the +hairmanship of Dr. ?.?. %rani on 2nd December, 2**4 to ma2e recommendations in respect of new +ompany <aw. 9he +ommittee incl!ded representati-es from concerned Departments and inistries, /rofessional %nstit!tes and trade bodies and indi-id!al experts as members or special in-itees. 9he +ommittee deliberated extensi-ely on -ario!s iss!es and s!bmitted its report to the 4o-ernment on 31st ay, 2**5. #fter considerin( the report of the +ommittee and other inp!ts recei-ed from time.to.time, the 4o-ernment too2 !p the exercise of comprehensi-e re-iew of the +ompanies #ct, 1)5". 0roadly the objecti-e of the re-iew was toE

226

FiG retain essential feat!res of the existin( framewor2, se(re(ate s!bstanti-e law from the proced!res to enable a clear framewor2 for (ood corporate (o-ernance that addresses the concerns of all sta2eholders e3!itablyH FiiG re-ise the law so as to enable a compact stat!te that is amenable to easy !nderstandin( and interpretationH FiiiG enable (reater flexibility in proced!ral aspects so that with the chan(e of time the proced!ral framewor2, to be prescribed thro!(h r!les, may be amended witho!t amendment of the s!bstanti-e enactmentH Fi-G establish a climate that enco!ra(es settin( !p of b!sinesses and their (rowth while enablin( meas!res to protect the interests of sta2eholders and in-estors, incl!din( small in-estors, thro!(h le(al basis for so!nd corporate (o-ernance practices and effecti-e enforcementH F-G pro-ide a framewor2 for responsible self.re(!lation thro!(h determination of corporate matters thro!(h decisions by shareholders, in the bac2(ro!nd of clear acco!ntability for s!ch decisions, ob-iatin( the need for a re(ime based on 4o-ernment appro-alsH F-iG address the practical concerns of small b!sinesses so that people may deal with and in-est in companies with confidence, promote international competiti-eness of %ndian b!sinesses and pro-ide them with the flexibility to meet the challen(es of the (lobal economyH F-iiG incorporate international practices based on the models s!((ested by the :nited 6ations +ommission on %nternational 9rade <aw F:6+%9,#<GH and F-iiiG pro-ide for a reasonable and appropriate framewor2 for enforcement of the law that enables proper in-esti(ation and imposition of appropriate sanctions comprisin( of penalties for non.compliance and p!nishment for -iolation of the law and for fra!d!lent cond!ct, 2eepin( in -iew the experience res!ltin( from past stoc2 mar2et scams and concerns expressed by ?oint /arliamentary +ommittees thereon. ". Finally, a comprehensi-ely re-ised 0ill, the +ompanies 0ill, 2**& was prepared in cons!ltation with inistry of <aw and was introd!ced in the <o2 Sabha on 23 rd 1ctober, 2**& in the 14th <o2 Sabha and was s!bse3!ently referred to the Department related /arliamentary Standin( +ommittee on Finance for examination and report. Iowe-er, before the said +ommittee co!ld present its report, 14th <o2 Sabha was dissol-ed and the +ompanies 0ill, 2**& lapsed as per cla!se F5G of article 1*$ of the +onstit!tion of %ndia. %n -iew of this, it is proposed to introd!ce the +ompanies 0ill, 2**). $. 9he +ompanies 0ill, 2**), inter alia, pro-ides forDE FiG the basic principles for all aspects of internal (o-ernance of corporate entities and a framewor2 for their re(!lation, irrespecti-e of their area of operation, from incorporation to li3!idation and windin( !p, in a sin(le, comprehensi-e, le(al framewor2 to be administered by the +entral 4o-ernment. %n doin( so, the 0ill also see2s to harmonise the +ompany law framewor2 with the sectoral re(!lationH FiiG artic!lation of shareholders democracy with protection of the ri(hts of minority sta2eholders, responsible self.re(!lation with ade3!ate disclos!res and acco!ntability and also red!ction of 4o-ernment control o-er internal corporate processesH

227

FiiiG easy transition of companies operatin( !nder the +ompanies #ct, 1)5", to the new framewor2 as also from one type of company to another. Freedom with re(ard to the n!mbers and layers of s!bsidiary companies that a company may ha-e, s!bject to disclos!res in respect of their relationship and transactions or dealin(s between themH Fi-G a new entity in the form of 1ne./erson +ompany F1/+G while empowerin( 4o-ernment to pro-ide a simpler compliance re(ime for small companies. ,etention of the concept of /rod!cer +ompanies, while pro-idin( a more strin(ent re(ime for companies with charitable objects to chec2 mis!seH F-G application of the s!ccessf!l e.4o-ernance initiati-e of the inistry of +orporate #ffairs F +#.21G to all the processes in-ol-ed in meetin( compliance obli(ations. +ompany processes may also be carried o!t thro!(h electronic modeH F-iG speedy incorporation process, with detailed declarations and disclos!res abo!t the promoters, directors, etc., at the time of incorporation itself. '-ery company director wo!ld be re3!ired to ac3!ire a !ni3!e Director identification n!mberH F-iiG relaxation of restrictions limitin( the n!mber of persons in associations or partnership etc., to a maxim!m 1**, with no ceilin( as to associations or partnerships, formed by professionals re(!lated by Special #ctsH F-iiiG d!ties and liabilities of the directors and e-ery company to ha-e at least one director resident in %ndia. 9he 0ill also pro-ides for independent directors to be appointed on the 0oards of s!ch companies as may be prescribed, alon( with attrib!tes determinin( independence. 9he re3!irement to appoint independent directors, where applicable, to listed p!blic companies is one.third of the total n!mber of directors. For other p!blic companies, the re3!irement and n!mber may be prescribed thro!(h r!lesH FixG stat!tory reco(nition to a!dit committee, rem!neration committee and sta2eholders relationship committee of the 0oard and the +hief 'xec!ti-e 1fficer F+'1G, the +hief Financial 1fficer F+F1G and the +ompany Secretary to be as 5ey ana(erial /ersonnel F5 /GH FxG companies not to be allowed to raise deposits from the p!blic except on the basis of permission a-ailable to them thro!(h other Special #cts. 9he 0ill prohibits insider tradin( by company directors or 5ey ana(erial /ersonnel and declares it as an offence with criminal liabilityH FxiG reco(nition of both acco!ntin( and a!ditin( standards. 9he role, ri(hts and d!ties of the a!ditors defined so as to maintain inte(rity and independence of the a!dit process. +onsolidation of financial statements of s!bsidiaries with those of holdin( companies is proposed to be made mandatoryH FxiiG a sin(le for!m for appro-al of mer(ers and ac3!isitions alon( with a shorter mer(er process for holdin( and wholly owned s!bsidiary companies or between two or more small companies as well as reco(nition of cross border mer(es. +oncept of deemed appro-al also pro-ided in certain sit!ationsH FxiiiG a framewor2 for enablin( fair -al!ations in companies for -ario!s p!rposes. #ppointment of -al!ers is proposed to be made by a!dit committee or in its absence by the 0oard of DirectorsH

228

Fxi-G claim of an in-estor o-er a di-idend or a benefit from a sec!rity not claimed for more than a period of se-en years not to be extin(!ished, and %n-estor 'd!cation and /rotection F!nd F%'/FG to be administered by a stat!tory a!thorityH Fx-G shareholders associations or (ro!p of shareholders to be enabled to ta2e le(al action in case of any fra!d!lent action on the part of company and to ta2e part in in-estor protection acti-ities and K+lass #ction S!itsKH Fx-iG a re-ised framewor2 for re(!lation of insol-ency, incl!din( rehabilitation, li3!idation and windin( !p of companies and the process to be completed in a time bo!nd mannerH Fx-iiG consolidation of fora for dealin( with rehabilitation of companies, their li3!idation and windin( !p in the sin(le for!m of 6ational +ompany <aw 9rib!nal with appeal to 6ational +ompany <aw #ppellate 9rib!nal with s!itable transitional pro-isions. 9he nat!re of the ,ehabilitation and ,e-i-al F!nd proposed in the +ompanies FSecond #mendmentG #ct, 2**2 to be replaced by ,ehabilitation and %nsol-ency F!nd with -ol!ntary contrib!tions lin2ed to entitlements to draw money in a sit!ation of insol-encyH Fx-iiiG a more effecti-e re(ime for inspections and in-esti(ations of companies while layin( down the maxim!m as well as minim!m 3!ant!m of penalty for each offence with s!itable deterrence for repeated defa!lts. +ompany is identified as a separate entity for imposition of monetary penalties from the officers in defa!lt. %n case of fra!d!lent acti-ities, pro-isions for reco-ery and dis(or(ement ha-e been incl!dedH FxixG le-y of additional fee in a non.discretionary manner for proced!ral noncompliance, s!ch as late filin( of stat!tory doc!ments, to be enabled thro!(h r!les. Defa!lts of proced!ral nat!re to be penalised by le-y of monetary penalties by the adj!dicatin( officers not below the le-el of ,e(istrars. 9he appeals a(ainst orders of adj!dicatin( officers to lie with s!itably desi(nated hi(her a!thoritiesH FxxG special +o!rts to deal with offences !nder the 0ill. +ompany matters s!ch as mer(ers and amal(amations, red!ction of capital, insol-ency incl!din( rehabilitation, li3!idations and windin( !p are proposed to be dealt with by the 6ational +ompany <aw 9rib!nal. $. %n -iew of the extensi-e chan(es made in the +ompanies #ct, 1)5", it has been considered necessary to repeal the said #ct and enact the +ompanies 0ill, 2**). &. 9he 6otes on cla!ses explain, in detail, pro-isions of the 0ill. ). 9he 0ill see2s to achie-e the abo-e objecti-es.

6'> D'<I%H 9he 15th ?!ly, 2**). LLLLLLLLLL

SALMAN KHURSHID.

229

PRESIDENT=S RECOMMENDATION UNDER ARTICLE @@? O" THE CONSTITUTION O" INDIA !!!!!!!!!!! LCo-/ of l1))1r [email protected];CL;I d()1d )01 @? )0 I,l/ 2009 fro5 S0ri S(l5(* K0,r30id Mi*i3)1r of S)()1 for Cor-or()1 Aff(ir3 )o )01 S14r1)1(r/;G1*1r(l Lo< S(.0(N 9he /resident, ha-in( been informed of the s!bject manner of the proposed +ompanies 0ill, 2**), recommends introd!ction of the 0ill in the Io!se !nder article 11$F1G of the +onstit!tion and also recommends to the Io!se the consideration of the 0ill !nder article 11$F3G of the +onstit!tion.

230

No)13 o* Cl(,313 +la!se 1. E %t has been made flexible to enforce -ario!s sections on different dates and different states. S!b.cla!se F4G ma2es position clear as to application of this #ct. +la!se 2. E 9his cla!se corresponds to section 2 of the +ompanies #ct, 1)5" and defines -ario!s expressions !sed in the 0ill. +la!se 3. E 9his cla!se corresponds to section 12 of the +ompanies #ct, 1)5" and see2s to pro-ide minim!m n!mber of persons to form a p!blic, pri-ate or 1ne /erson +ompany for any lawf!l p!rpose, by s!bscribin( their names to the memorand!m. emorand!m of 1ne /erson +ompany shall indicate the name of a person who shall become member, in the e-ent of death, disability or otherwise of the sin(le member. 9he companies formed !nder this cla!se may be limited by shares or limited by (!arantee or an !nlimited company. +la!se 4. E 9his cla!se corresponds to section 25 of the +ompanies #ct, 1)5" and empowers the +entral 4o-ernment to re(ister an association as limited company ha-in( charitable objects to promote commerce, art, science, sports, ed!cation, research, social welfare, reli(ion, charity, etc. witho!t addin( to its name the words M<imited8, M/ri-ate <imited8 or M1/+ <imited8. 9he profit or any income of the company shall be !sed for promotin( the objects of the company. /ayment of di-idend to members is prohibited. 9he +entral 4o-ernment shall iss!e license on s!ch terms and conditions as shall be prescribed by it for re(istration of s!ch companies and these companies shall be s!bject to certain exemptions and restrictions. %n case of contra-ention of these cla!se or the conditions imposed, the +entral 4o-ernment may re-o2e the license and order the company to be wo!nd !p or amal(amated with another company ha-in( similar objects. # firm may be allowed to become a member of s!ch company. +la!se 5 E9his cla!se corresponds to sections 13, 14 and 2* of the +ompanies #ct, 1)5" and see2s to pro-ide for the re3!irements with respect to memorand!m of a company. 9he memorand!m shall mention the name of a company, State in which the re(istered office of the company is to be sit!ated, objects for which the company is proposed to be incorporated, liability of members, etc. +la!se ".E 9his cla!se corresponds to sections 2", 2$, 2& and 2) of the +ompanies #ct, 1)5" and see2s to pro-ide the contents and model of articles of association. 9he articles may contain an entrenchment pro-ision also. +la!se $.E 9his cla!se corresponds to section 33 of the +ompanies #ct, 1)5" and see2s to pro-ide for the proced!re to be followed for incorporation of a company. emorand!m and articles of association d!ly si(ned, a declaration in a prescribed form to the effect that the re3!irements of the #ct in respect of re(istration ha-e been complied with, affida-it from the s!bscribers to the memorand!m and from the first directors, to the effect, that they are not con-icted and ha-e not been fo!nd (!ilty of any fra!d or misfeasance, etc. !nder this #ct d!rin( the last fi-e years, complete details of name, address of the company, partic!lars of e-ery s!bscriber and the persons named as first directors shall be (i-en to the ,e(istrar. 9hereafter, the ,e(istrar of companies shall re(ister the company and iss!e a +ertificate of %ncorporation and allot a +orporate %dentity 6!mber. 9he persons f!rnishin( false information in this connection shall be liable for p!nishment and the company which is re(istered shall be liable for windin( !p on the order of 9rib!nal. +la!se &. E 9his cla!se corresponds to section 34 of the +ompanies #ct, 1)5" and see2s to pro-ide for the effect of re(istration of a company. 9he cla!se pro-ides that from the date of incorporation, the s!bscribers become the members of the company. 9he company shall be a body corporate with a name, capable of exercisin( all the f!nctions of an incorporated company

231

!nder this #ct and shall ha-e perpet!al s!ccession and a common seal with power to ac3!ire, hold and dispose of property, to contract, to s!e and be s!ed, by the said name. +la!se ). E 9his cla!se corresponds to section 3" of the +ompanies #ct, 1)5" and see2s to pro-ide for the effect of memorand!m and articles whereby the memorand!m and articles shall be bindin( on the company and the members to the extent as if they respecti-ely had been si(ned by the company and by each member. #ll moneys payable by members to the company shall be debt d!e from him to the company. +la!se 1*. E 9his cla!se corresponds to section 14) of the +ompanies #ct, 1)5" and see2s to pro-ide that the company ha-in( a share capital shall not commence b!siness or exercise any borrowin( powers !nless a declaration is filed with ,e(istrar by a director or s!bscriber that e-ery s!bscriber to the memorand!m has paid the -al!e of shares ta2en by him, and the company has filed with the ,e(istrar the -erification of its re(istered office. %f a company has not filed s!ch declaration within 1&* days of the date of incorporation. 9he ,e(istrar of companies may remo-e the name of the company if ,e(istrar has reasonable ca!se to belie-e that the company is not carryin( on b!siness or operations and is not filin( declaration within 1&* days of the date of incorporation. +la!se 11. E 9his cla!se corresponds to sections 14" and 14$ of the +ompanies #ct, 1)5" and see2s to pro-ide that from the date of incorporation and at all times thereafter, a company shall ha-e a re(istered office capable of recei-in( and ac2nowled(in( all comm!nications and notices addressed to it. %n case of any chan(e of the re(istered office, the company has to (i-e notice to the ,e(istrar of companies within a stip!lated time. #ny chan(e of re(istered office o!tside the local limits of any city, town or -illa(e shall be done only with the appro-al of members thro!(h special resol!tion. +la!se 12. E 9his cla!se corresponds to section 1" of the +ompanies #ct, 1)5" and see2s to pro-ide that a company may alter the pro-isions of its memorand!m with appro-al of the members thro!(h special resol!tion. 6o alteration shall ha-e any effect !nless it is re(istered with the ,e(istrar. >here there is chan(e in the name of a company, the ,e(istrar shall iss!e a fresh certificate of incorporation. #ny alteration of the memorand!m relatin( to the place of re(istered office from one State to another shall be effecti-e only with the appro-al of the +entral 4o-ernment on an application filed to it. # copy of the order to this effect has to be filed with the ,e(istrar. +la!se 13. E 9his cla!se corresponds to section 31 of the +ompanies #ct, 1)5" and see2s to pro-ide for alteration of articles. # company may alter its articles incl!din( alterations ha-in( effect of con-ersion of a pri-ate company or a 1ne /erson +ompany into a p!blic company or a 1ne /erson +ompany or a p!blic company into pri-ate company with the appro-al of members thro!(h special resol!tion and appro-ed of the 9rib!nal will be re3!ired for con-ersion of a p!blic company into a pri-ate company or 1/+. # copy of order of 9rib!nal shall be filed with the ,e(istrar to(ether with a printed copy of the altered articles. +la!se 14. E 9his cla!se corresponds to section 4* of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery alteration made in the memorand!m or articles of a company shall be noted in e-ery copy of the memorand!m and articles of association. +la!se 15. E 9his cla!se corresponds to section 22 of the +ompanies #ct, 1)5" and see2s to empower the +entral 4o-ernment to (i-e direction to the company to rectify its name if the name re(istered is identical with or too nearly resembles the name, by which a company in existence has been pre-io!sly re(istered, or the name is identical with or too nearly resemblin( to a re(istered trade mar2.

232

+la!se 1". E 9his cla!se corresponds to section 3) of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery company shall on bein( so re3!ested by a member, send copies of memorand!m, and articles of association, a(reement or resol!tion on payment of fees. +la!se 1$. E 9his cla!se corresponds to section 32 of the +ompanies #ct, 1)5" and see2s to pro-ide that a company may re.re(ister itself in same or any other class of companies by alterin( its memorand!m and articles of association. 9he re.re(istration shall not affect any debts, liabilities, obli(ations or contracts inc!rred or entered into by the company. +la!se 1&. E 9his cla!se corresponds to section 42 of the +ompanies #ct, 1)5" and see2s to pro-ide that s!bsidiary company shall not hold shares in its holdin( company and no holdin( company shall allot or transfer its shares to any of its s!bsidiary companies and any s!ch allotment or transfer of shares of a company to its s!bsidiary company shall be -oid. +la!se 1). E 9his cla!se corresponds to section 51, 52 and 53 of the +ompanies #ct, 1)5" and see2s to pro-ide for the mode in which doc!ments may be ser-ed on the company, on the members and also on the ,e(istrars. +la!se 2*. E 9his cla!se corresponds to section 54 of the +ompanies #ct, 1)5" and see2s to pro-ide for a!thentication of doc!ments, proceedin(s and contracts, etc. +la!se 21. E 9his cla!se corresponds to section 4$ of the +ompanies #ct, 1)5" and see2s to pro-ide for exec!tion of bills of exchan(e, h!ndi, promissory notes and other deeds. # company may, by writin( !nder its common seal, a!thorise any person as its attorney to exec!te deeds on company8s behalf. Deed si(ned by s!ch an attorney on behalf of the company and !nder his seal shall bind the company and ha-e same effect as if it were made !nder its common seal. +la!se 22. E 9his cla!se corresponds to section 55# of the +ompanies #ct, 1)5" and see2s to pro-ide that the powers relatin( to iss!e, transfer and tradin( of sec!rities and nonpayment of di-idend by listed companies or those companies which intend to (et their sec!rities listed on any stoc2 exchan(e in %ndia, be administered by the Sec!rities and 'xchan(e 0oard of %ndia, and in other cases be administered by the +entral 4o-ernment. +la!se 23. E 9his cla!se corresponds to section 5" and Sched!le %% of the +ompanies #ct, 1)5" and see2s to pro-ide for the matters to be stated and information to be (i-en in the prospect!s. /rospect!s shall not be iss!ed before the date of its p!blication. 6o statement of an expert shall be incl!ded in the prospect!s !nless he is en(a(ed or interested in formation of a company and has (i-en his written consent to the iss!e of prospect!s before the deli-ery of a copy of the prospect!s to the ,e(istrar for re(istration. ,e(istrar shall re(ister the prospect!s only after the re(istration re3!irements are complied with. /rospect!s is to be iss!ed within ninety days from the date of deli-ery of prospect!s to the ,e(istrar. %n case, a prospect!s is iss!ed by a company in contra-ention of the pro-ision of this section, the company and person 2nowin(ly party to s!chcontra-ention shall be p!nishable. +la!se 24. E 9his cla!se corresponds to section "$ of the +ompanies #ct, 1)5" and see2s to pro-ide that a company may ma2e an offer or in-itation to the p!blic to s!bscribe for sec!rities. # statement indicatin( the salient feat!res of the offer or in-itation has to be filed with the ,e(istrar of companies for re(istration. +la!se 25. E 9his cla!se corresponds to section "" of the +ompanies #ct, 1)5" and see2s to pro-ide that where an ad-ertisement of any prospect!s of a company is p!blished, it shall specify therein the contents of memorand!m as re(ards to the objects, the liability of members and the amo!nt of share capital, the names of the si(natories and the n!mber of shares s!bscribed by them and also its capital str!ct!re, etc.

233

+la!se 2". E 9his cla!se corresponds to section "*# of the +ompanies #ct, 1)5" and see2s to pro-ide that any class or classes of companies prescribed by the Sec!rities and 'xchan(e 0oard of %ndia may file a shelf prospect!s with the ,e(istrar of companies at the sta(e of the first offer of sec!rities for a period of one year. 6o f!rther iss!e of prospect!s is re3!ired in respect of a second or s!bse3!ent offer of sec!rities incl!ded in s!ch prospect!s for a period of one year. +ompany shall also file information memorand!m on new char(es created, of any chan(e in financial position with the ,e(istrar of companies prior to the iss!e of a second or s!bse3!ent offer !nder shelf prospect!s. +la!se 2$. E 9his cla!se corresponds to section "*0 of the +ompanies #ct, 1)5" and see2s to pro-ide for iss!e of redherrin( prospect!s prior to iss!e of a prospect!s. # company proposin( to iss!e a red herrin( prospect!s shall file it with ,e(istrar at least three days prior to the openin( of the s!bscription list and the offer. +la!se 2&. E 9his cla!se corresponds to s!b.section F3G of section 5" of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery form of application iss!ed for p!rchase of any sec!rities of a company shall be accompanied by an abrid(ed prospect!s. +la!se 2). E 9his cla!se corresponds to section "3 of the +ompanies #ct, 1)5" and pro-ides for criminal liability for misstatements in prospect!s. 9he person who a!thorises the iss!e of s!ch prospect!s shall be p!nishable with fine and imprisonment. +la!se 3*. E 9his cla!se corresponds to section "2 of the +ompanies #ct, 1)5" and see2s to pro-ide that in case any person s!bscribes for sec!rities on the basis of misleadin( statements or incl!sion or omission of any matter in the prospect!s res!ltin( in any loss or dama(e, the person who has a!thorised the iss!e of s!ch prospect!s or a director, promoter, whosoe-er is liable, shall ha-e to compensate e-ery person who has s!stained s!ch loss or dama(e. +la!se 31. E 9his cla!se corresponds to section "& of the +ompanies #ct, 1)5" and see2s to pro-ide that s!ch persons who fra!d!lently ind!ces persons to in-est money by ma2in( statement which is false, decepti-e, misleadin( or deliberately conceals any facts, shall be p!nishable with imprisonment and with fine. +la!se 32. E 9his is a new cla!se which see2s to pro-ide that a s!it may be filed or any other action may be ta2en by any person, (ro!p of persons or any association of persons who ha-e been affected by any misleadin( statement or the incl!sion or omission of any matter in the prospect!s. +la!se 33. E 9his cla!se corresponds to section "&# of the +ompanies #ct, 1)5" and see2s to pro-ide that any person who ma2es abates ma2in( of an application in fictitio!s name or ma2es or abates ma2in( of m!ltiple applications or otherwise ind!ces companies to allot shares in fictitio!s name, shall be p!nishable with imprisonment and with fine. 9he cla!se f!rther pro-ides that +o!rt may order dis(or(ement of any s!ch (ain and sei=!re and disposal of s!ch sec!rities. +la!se 34. E 9his cla!se corresponds to section ") of the +ompanies #ct, 1)5" prohibitin( allotment of sec!rities where the minim!m amo!nt has not been s!bscribed, the amo!nt is to be ref!nded to all the applicants within a (i-en time frame. +la!se 35. E 9his cla!se corresponds to section $3 of the +ompanies #ct, 1)5" and see2s to pro-ide that prospect!s has to mention the name of the stoc2 exchan(e where the sec!rities are to be dealt with. #ny allotment witho!t permission of the stoc2 exchan(e shall be -oid. #ll moneys recei-ed on application from the p!blic for s!bscription to the sec!rities shall be 2ept in a separate ban2 acco!nt. %n case of defa!lt, the company and e-ery officer of the company who is in defa!lt shall be p!nishable with fine or with imprisonment or with both. # company may pay commission to any person in connection with the s!bscription to its sec!rities.

234

+la!se 3". E 9his is a new cla!se which pro-ides that a company may iss!e depository receipts to be dealt with in a depository mode in any forei(n co!ntry. +la!se 3$. E 9his cla!se corresponds to section &5 and &" and see2s to pro-ide that there shall be two 2inds of share capital namely e3!ity share capital and preference share capital. /referential share capital carries a preferential ri(ht with respect to payment of di-idend and also for repayment of capital at the time of windin( !p. +la!se 3&. E 9his cla!se corresponds to section &2 of the +ompanies #ct, 1)5" and see2s to pro-ide that the shares and debent!res are mo-able property transferable in a manner pro-ided in the articles of a company. +la!se 3). E 9his cla!se corresponds to section &3 of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery share in a company ha-in( a share capital shall be distin(!ished by appropriate n!mber. 9his cla!se does not apply to shares held with the depository. +la!se 4*. E 9his cla!se corresponds to section &4 of the +ompanies #ct, 1)5" and see2s to pro-ide that a certificate iss!ed by a company shall be prima facie e-idence of the title of the person to s!ch shares. %t pro-ides the manner for iss!ance of d!plicate share certificate and the partic!lars to be entered in the re(ister of members. +la!se 41. E 9his cla!se corresponds to section &$ of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery member who is a holder of e3!ity share shall ha-e the ri(ht to -ote on e-ery resol!tion placed before the company. Iis -otin( ri(ht on a poll shall be in proportion to his share in the paid !p e3!ity share capital of the company. '-ery member of a company who is holdin( preference shares shall ha-e a ri(ht to -ote only on s!ch resol!tions which directly affect the ri(hts attached to his preference shares. +la!se 42. E 9his cla!se corresponds to section 1*" and 1*$ of the +ompanies #ct, 1)5" and see2s to pro-ide that where share capital is di-ided into different classes of shares, the ri(hts attached to any class of shares may be -aried with the written consent of the holders of not less than three.fo!rths of the iss!ed shares or by special resol!tion. >here the holders of ten per cent. of the iss!ed share capital did not consent to s!ch -ariation, they may apply to 9rib!nal for cancellation or modification in s!ch -ariation. +la!se 43. E 9his cla!se corresponds to section )1 of the +ompanies #ct, 1)5" and see2s to pro-ide that where any calls for f!rther share capital are made on the shares of a class, s!ch call shall be made on !niform basis on all shares fallin( !nder that class. +la!se 44. E 9his cla!se corresponds to section )2 of the +ompanies #ct, 1)5" and see2s to pro-ide that a company can accept from any member the whole or a part of the amo!nt remainin( !npaid on any shares witho!t bein( called !p and he will not be entitled to any -otin( ri(hts on the amo!nt paid by him !nless amo!nt has been called !p. +la!se 45. E 9his cla!se corresponds to section )3 of the +ompanies #ct, 1)5" and see2s to pro-ide that a company, if a!thorised by its articles, pay di-idends in proportion to the amo!nt paid !p on each share. +la!se 4". E 9his cla!se corresponds to section $& of the +ompanies #ct, 1)5" and see2s to pro-ide that a company shall transfer the amo!nt recei-ed by it as share premi!m to share premi!m acco!nt and state the means in which the amo!nt in the acco!nt can be applied.

235

+la!se 4$. E 9his cla!se corresponds to section $) of the +ompanies #ct, 1)5" and see2s to pro-ide that (enerally companies are prohibited from iss!in( shares at a disco!nt except in the case of iss!e of sweat e3!ity shares. +la!se 4&. E 9his cla!se corresponds to section $)# of the +ompanies #ct, 1)5" and see2s to pro-ide that on f!lfillin( certain conditions, a company may iss!e sweat e3!ity shares of a class of shares already iss!ed. 9he ri(hts, limitations, restrictions and pro-isions applicable to e3!ity shares shall be applicable to sweat e3!ity shares and holders of s!ch shares ran2 pari pass! with other e3!ity shareholders. +la!se 4). E 9his cla!se corresponds to section &* and &*# of the +ompanies #ct, 1)5" and see2s to pro-ide that no company limited by shares shall iss!e irredeemable preference shares. # company may iss!e preference shares for a period not exceedin( twenty years. Iowe-er, for infrastr!ct!ral project preference shares can be iss!ed for more than twenty years. +la!se 5*. E 9his cla!se corresponds to section 1*&, 1*)0, 11* and 113 of the +ompanies #ct, 1)5" and see2s to pro-ide that transfer of sec!ritiesNinterest of a member not to be re(istered except on prod!ction of instr!ment of transfer d!ly stamped, dated and exec!ted. %n case of loss of the instr!ment, the company may re(ister the transfer in terms of indemnity. >here an application relates to partly paid !p shares, the transfer shall not be re(istered !nless a notice is iss!ed to the transferee. %n case of ref!sal of transfer of shares, transferee may appeal to the 9rib!nal. +la!se 51. E 9his cla!se corresponds to section 11" of the +ompanies #ct, 1)5" and see2s to pro-ide p!nishment for a person who deceitf!lly personates the owner of any share or interest. +la!se 52. E 9his cla!se corresponds to s!b.sectionKs F1G and F2G of section 111 of the +ompanies #ct, 1)5" and see2s to pro-ide for that if a company witho!t s!fficient ca!se ref!ses to re(ister the transfer of shares, appeal a(ainst s!ch ref!sal shall lie to the 6ational +ompany <aw 9rib!nal. +la!se 53. E 9his cla!se corresponds to section 111# of the +ompanies #ct, 1)5" and see2s to pro-ide that if the name of any person has been entered in or has been omitted from the re(ister of members witho!t s!fficient ca!se, the member or the person a((rie-ed may appeal to 9he 9rib!nal or to a competent co!rt o!tside %ndia in respect of forei(n members or debent!re holders for rectification of re(ister. 9he 9rib!nal may either dismiss the appeal or direct for rectification of re(ister, transfer or transmission. 9he 9rib!nal may also direct to pay dama(es to the a((rie-ed party. +la!se 54. E 9his cla!se corresponds to section 14& of the +ompanies #ct, 1)5" and see2s to pro-ide that where any notice, ad-ertisement or other official p!blication, or any b!siness letter, etc., of a company contains a statement of the amo!nt of the a!thorised capital of the company, s!ch notice, ad-ertisement or other official p!blication, or s!ch letters billhead or letter paper shall also state the s!bscribed and paid !p capital. +la!se 55. E 9his cla!se corresponds to section )4 of the +ompanies #ct, 1)5" and see2s to pro-ide that a limited company ha-in( a share capital may alter its capital cla!se of memorand!m in its (eneral meetin(. +la!se 5". E 9his cla!se corresponds to section &1 of the +ompanies #ct, 1)5" and see2s to pro-ide that a company ha-in( a share capital can increase its s!bscribed capital by the iss!e of f!rther shares to its existin( members, to employees thro!(h employee8s stoc2 option or to the (eneral p!blic, after ha-in( the shares -al!ed by re(istered -al!ers. 9his pro-ision is not apply to con-ersion of debent!res or loans into shares of the company.

236

+la!se 5$. E 9his cla!se corresponds to sections )5 and )$ of the +ompanies #ct, 1)5" and see2s to pro-ide for the companies to (i-e notice to ,e(istrar of alteration or increase of share capital alon( with an altered memorand!m. +la!se 5&. E 9his cla!se corresponds to section )& of the +ompanies #ct, 1)5" and see2s to pro-ide that an !nlimited company ha-in( a share capital may be rere(istered as a limited company by increasin( the nominal amo!nt of each share. 9his cla!se f!rther pro-ides that the company can not call !npaid portion of share capital except in the e-ent of windin( !p. +la!se 5). E 9his cla!se corresponds to sections 1** to 1*5 of the +ompanies #ct, 1)5" and see2s to pro-ide that on the confirmation by the 9rib!nal a limited company may red!ce its share capital and alter its memorand!m accordin(ly. 9his cla!se f!rther pro-ides that the 9rib!nal shall (i-e notice to the +entral 4o-ernment and to the S'0% and consider the representations recei-ed in this behalf. 9he company shall deli-er a certified copy of the order of the 9rib!nal to the ,e(istrar who shall iss!e a certificate to this effect to the company. 9he cla!se does not apply to b!y bac2 of its own sec!rities. +la!se "*. E 9his cla!se corresponds to section $$ of the +ompanies #ct, 1)5" and see2s to pro-ide the restrictions on p!rchase by companies or (i-in( loans to others for p!rchase of its own shares. 9his cla!se f!rther pro-ides that the company8s ri(ht to redeem any preference shares iss!ed by it is not affected by s!ch restriction. +la!se "1. E 9his cla!se corresponds to section $$# of the +ompanies #ct, 1)5" and see2s to pro-ide that a company may p!rchase its own shares o!t of its free reser-es, the sec!rities premi!m acco!nt or from the proceeds of the iss!e of any shares or other specified sec!rities. 9he cla!se pro-ides for the conditions to be f!lfilled for b!y.bac2 of sec!rities. '-ery b!y.bac2 sho!ld be completed within one year from the date of passin( of the special resol!tion. # declaration of sol-ency has to be filed by the company to the ,e(istrar and S'0% before the b!y.bac2 is proposed. #fter completion of b!y.bac2 a ret!rn has to be filed with ,1+ and Sec!rities and 'xchan(e 0oard of %ndia. #fter b!yin( bac2, the company shall physically destroy all the shares. +la!se "2. E 9his cla!se corresponds to section $$## of the +ompanies #ct, 1)5" and see2s to pro-ide that in case of b!y.bac2 of shares o!t of free reser-es, a s!m e3!al to the nominal -al!e of the shares so p!rchased shall be transferred to capital redemption reser-e acco!nt. +la!se "3. E 9his cla!se corresponds to section $$0 of the +ompanies #ct, 1)5" and see2s to prohibit b!y.bac2 thro!(h any s!bsidiary company, thro!(h any in-estment company or thro!(h s!ch company which has defa!lted in ma2in( repayment of deposits, interest thereon, redemption of debent!res, payment of di-idend, etc. +la!se "4. E 9his cla!se corresponds to sections 11$, 11$#, 11$0, 11$+ and 11& to 123 of the +ompanies #ct, 1)5" and see2s to pro-ide that a company may iss!e debent!res with an option to con-ert into shares at the time of redemption b!t cannot iss!e debent!res with -otin( ri(hts. 1n iss!e of debent!res, the company shall create a Debent!re ,edemption ,eser-e #cco!nt. 9he company shall not iss!e prospect!s to more than fi-e h!ndred persons witho!t appointin( a debent!re tr!stee. 9he d!ty of the debent!re tr!stee is to protect the interest of the debent!re holders and redress their (rie-ances. 9his cla!se f!rther pro-ides that in the e-ent of the fail!re of the company in ma2in( repayment of mat!rity -al!e of debent!res or to pay interest, the trib!nal may, on an application, pass s!ch order to ma2e the payment to the mat!red debent!re holders and interest d!e thereon. +la!se "5. E 9his cla!se corresponds to section 1*)# of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery share holder or debent!re holder may appoint a nominee or a joint nominee who shall be the owner of the instr!ment in the e-ent of death of the holder or the joint holder !nless the nomination is -aried or cancelled.

237

+la!se "". E 9his cla!se corresponds to section 5&# of the +ompanies #ct, 1)5" and see2s to pro-ide that no company shall in-ite, accept or renew deposits from p!blic. %t can do so only from members of the company s!bject to f!lfillent of certain conditions. %n case of fail!re to repay the deposit or interest thereon the 9rib!nal may order for repayment or pay for any loss or dama(e. +la!se "$. E 9his is a new cla!se which see2s to pro-ide that the deposit accepted before this #ct comes into force by the company or any interest d!e thereon shall be repaid within one year. 'xtension of time for repayment may be (ranted by the 9rib!nal on an application. +la!se "&. E 9his new cla!se see2s to pro-ide that in case the company fails to pay the deposit or any interest thereon and it is pro-ed that the deposits had been accepted with intent to defra!d the depositors, e-ery officer who was responsible for acceptance of deposits shall be personally responsible, witho!t any limitation of liability for all losses or dama(es inc!rred by the depositors. +la!se "). E 9his cla!se corresponds to section 125 of the +ompanies #ct, 1)5" and see2s to pro-ide that a company creatin( a char(e within or o!tside %ndia, shall, re(ister the said char(e with the ,e(istrar within thirty days. 9he ,e(istrar after re(isterin( the char(e, shall iss!e a certificate of re(istration. 9he li3!idator or any other creditor shall not ta2e into acco!nt any char(e created !nless re(istered with the ,e(istrar. +la!se $*. E 9his new cla!se corresponds to section 13& of the +ompanies #ct, 1)5" and see2s to pro-ide that where a company fails to re(ister the char(e, the person in whose fa-o!r the char(e is created may apply to the ,e(istrar for re(istration of char(es. +la!se $1. E 9his cla!se corresponds to section 12$ and 135 of the +ompanies #ct, 1)5" and see2s to pro-ide that the re3!irement of re(isterin( the char(e created by a company shall also apply to a company ac3!irin( any property s!bject to char(e or any modification in terms and conditions of any char(e already re(istered. +la!se $2. E 9his cla!se corresponds to section 12" of the +ompanies #ct, 1)5" and see2s to pro-ide that any person ac3!irin( a property, assets !nderta2in( for which a char(e is already re(istered, it wo!ld be deemed that he has complete 2nowled(e of char(e from the date the char(e is re(istered. +la!se $3. E 9his cla!se corresponds to section 13* of the +ompanies #ct, 1)5" and see2s to pro-ide that the ,e(istrar shall, in respect of e-ery company, 2eep a re(ister containin( partic!lar of char(es so re(istered. 9he re(ister shall be open for inspection on payment of fee. +la!se $4. E 9his cla!se corresponds to section 13& of the +ompanies #ct, 1)5" and see2s to pro-ide that a company shall intimate to ,e(istrar abo!t the payment or satisfaction in f!ll of any char(e so re(istered. 9he ,e(istrar shall iss!e notice to holder of the char(e callin( a show ca!se why payment or satisfaction sho!ld not be recorded and in case of no reply, the memorand!m of satisfaction shall be entered in the re(ister of char(es. +la!se $5. E 9his cla!se corresponds to section 13$ of the +ompanies #ct, 1)5" and see2s to pro-ide that if a person obtains an order for the appointment of a recei-er or a person to mana(e the property s!bject to char(e, he shall (i-e notice to the company and the ,e(istrar abo!t s!ch an order. 9he person appointed as recei-er shall also (i-e notice to the company and the ,e(istrar on his ceasin( to hold s!ch appointment. +la!se $". E 9his cla!se corresponds to section 143 of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery company shall 2eep a re(ister of char(es at its re(istered office and this re(ister shall be open for inspection d!rin( b!siness ho!rs by members witho!t fee and by any other person with fee.

238

+la!se $$. E 9his cla!se corresponds to section 142 of the +ompanies #ct, 1)5" and see2s to pro-ide for the penal pro-isions for contra-enin( any of the pro-isions of the chapter. +la!se $&. E 9his cla!se corresponds to sections 15*, 151 and 152 of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery company shall 2eep and maintain the re(ister of members, re(ister of debent!re holders and re(ister of any other sec!rity holders. 9his cla!se f!rther pro-ides that e-ery re(ister shall incl!de an index of the name. # company, if a!thori=ed by its articles, may 2eep a forei(n re(ister o!tside %ndia. 9his cla!se also pro-ides that a company shall file with the ,e(istrar, the partic!lars and sit!ation of place where the re(ister is to be 2ept and any chan(es in the sit!ation of s!ch place. +la!se $). E 9his cla!se corresponds to section 1&$+ of the +ompanies #ct, 1)5" and see2s to pro-ide that a declaration is to be (i-en to the company by any person who is a member b!t not holdin( the beneficial interest in s!ch shares. F!rther, the person holdin( beneficial interest shall declare the nat!re of his interest and other partic!lars on those shares to the company. #ny chan(es in the beneficial interest is also to be declared. 9his cla!se also pro-ides that the company shall ma2e a note of all the declaration made to it and file a ret!rn with ,e(istrar. +la!se &*. E 9his cla!se corresponds to section 1&$D of the +ompanies #ct, 1)5" and see2s to pro-ide that the +entral 4o-ernment may appoint one or more competent persons to in-esti(ate and report as to the beneficial ownership. +la!se &1. E 9his cla!se corresponds to section 154 of the +ompanies #ct, 1)5" and see2s to pro-ide that a company may close the re(ister of members, debent!re holders and other sec!rity holders for rectification by (i-in( minim!m se-en days notice. +la!se &2. E 9his cla!se corresponds to section 15) of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery company shall prepare an ann!al ret!rn containin( certain partic!lars s!ch as re(istered office, principal b!siness acti-ities, partic!lars of holdin(, s!bsidiary and associate companies, its shares, debent!res and other sec!rities, members, promoters, etc. 9he ann!al ret!rn shall be si(ned both by a director and a company secretary. >here there is no company secretary or in case of listed companies, the ret!rn shall be si(ned by the +ompany Secretary in whole.time practice and file the same with the ,e(istrar. +ompany secretary in practice shall also be p!nished if he certifies otherwise than in conformity of this section or r!les. +la!se &3. E 9his cla!se corresponds to section 1"3 of the +ompanies #ct, 1)5" and see2s to pro-ide that re(ister of members, and copies of ann!al ret!rns, debent!re holders and any other sec!rity holders shall be 2ept at the re(istered office and can also be 2ept at any place other than re(istered office where more than one.tenth of total members reside, if appro-ed by special resol!tion. 9his cla!se f!rther pro-ides that the re(isters and the indices shall be open to inspection and any member can ta2e extracts d!rin( any b!siness ho!rs witho!t payment of any fee and other persons can also (et with payment of fee. 9he +entral 4o-ernment may by order direct inspection of doc!ments and to ha-e an extractor copy of s!ch re(isters by any person. +la!se &4. E 9his cla!se corresponds to section 1"4 of the +ompanies #ct, 1)5" and see2s to pro-ide that the re(ister indices and copies of ann!al ret!rns shall be prima facie e-idence of any matter. +la!se &5. E 9his cla!se corresponds to section 1"" of the +ompanies #ct, 1)5" and see2s to pro-ide for that e-ery company other than 1ne /erson +ompany in addition to any other meetin( shall hold a (eneral meetin( as its ann!al (eneral meetin(. 9here sho!ld not be a (ap of more than fifteen months between two ann!al (eneral meetin(s. 9his cla!se f!rther pro-ides that first ann!al (eneral meetin( shall be held within a period of nine months from the closin( of first

239

financial year and within a period of six months in all other cases. 9his cla!se also pro-ides that ann!al (eneral meetin( shall be called on any day which is not a 6ational Ioliday and may be held either at re(istered office of a company or at some other place where the re(istered office of the company is sit!ated. 9he +entral 4o-ernment may exempt any company from this compliance. +la!se &". E 9his cla!se corresponds to section 1"$ of the +ompanies #ct, 1)5" and see2s to pro-ide that in case of any defa!lt in holdin( ann!al (eneral meetin( of a company, the 9rib!nal on the application of any member of the company, call or direct the callin( of an ann!al (eneral meetin(. 9he 9rib!nal may also direct that one member of the company present in person or by proxy shall be deemed to constit!te a meetin(. +la!se &$. E 9his cla!se corresponds to section 1&" of the +ompanies #ct, 1)5" and see2s to pro-ide that if for any reason, it is impracticable to call a meetin( of a company other than an ann!al (eneral meetin( the 9rib!nal shall ha-e the power to order for callin( the meetin( either s!o mot! or on the application of any director of the company or of any member of a company. +la!se &&. E 9his cla!se corresponds to section 1"& of the +ompanies #ct, 1)5" and see2s to pro-ide that if any defa!lt is made in holdin( a meetin( of the company or in complyin( with any directions of the +entral 4o-ernment, or 9rib!nal, the company and e-ery officer of the company shall be p!nishable with fine. +la!se &). E 9his cla!se corresponds to section 1") of the +ompanies #ct, 1)5" and see2s to pro-ide that the 0oard may call an extraordinary (eneral meetin( on its own or on a re3!est from s!ch n!mber of members holdin( not less than one.tenth of paid !p capital of the company. %n case of company not ha-in( a share capital, s!ch n!mber of members ha-in( not less than one. tenth of the total -otin( power of all the members call an extraordinary (eneral meetin(. %n case the 0oard does not call the meetin( within twenty.one days re3!isitionists may call the meetin(. 9his cla!se f!rther pro-ides that any reasonable expenses inc!rred by the re3!isitionists shall be reimb!rsed. +la!se )*. E 9his cla!se corresponds to sections 1$1 and 1$2 of the +ompanies #ct, 1)5" and see2s to pro-ide that (eneral meetin( may be called by (i-in( at least 21 days8 notice to all members, le(al representati-e of any deceased member or the assi(nees of the insol-ent members, the a!ditors and directors in writin( or thro!(h electronic mode. # shorter notice may also be (i-en with the consent of ninety.fi-e per cent. of the members entitled to -ote. +la!se )1. E 9his cla!se corresponds to section 1$3 of the +ompanies #ct, 1)5" and see2s to pro-ide that a statement settin( o!t all the material facts concernin( each item of special b!siness to be transacted at a (eneral meetin(, shall be annexed to the notice callin( s!ch meetin(. 9his cla!se f!rther pro-ides for all the b!sinesses that shall be deemed to be special. %n case of non. disclos!re or ins!fficient disclos!re in any statement made by director, mana(er or other 2ey mana(erial personnel which res!lts into any benefit for themsel-es or their relati-es, shall ha-e to be compensated. +la!se )2. E 9his cla!se corresponds to section 1$4 of the +ompanies #ct, 1)5" and see2s to pro-ide that !nless the articles of the company pro-ide for a lar(er n!mber, fi-e members personally present in case of a p!blic company and two members personally present in case of a pri-ate company shall be the 3!or!m for a meetin(. 9his cla!se f!rther pro-ides that if the 3!or!m is not present within half.an.ho!r, the meetin( shall stand adjo!rned for the next wee2 at the same time and place or s!ch other time and place as decided by the 0oard. Iowe-er, the meetin( called by re3!isitionist shall stand cancelled in the absence of 3!or!m. %n case of adjo!rnment or of chan(e of day, time and place of meetin(, the company shall (i-e not less than three days8 notice to the members where 3!or!m is not present in the adjo!rned meetin( also, the members present shall be the 3!or!m.

240

+la!se )3. E 9his cla!se corresponds to section 1$5 of the +ompanies #ct, 1)5" and see2s to pro-ide that members shall elect one amon( themsel-es to be the chairman by show of hands. 9he cla!se f!rther pro-ides that if a poll is demanded on the election of the +hairman, the +hairman elected by show of hands shall contin!e to be the +hairman of the meetin( !ntil some other person is elected as +hairman as a res!lt of poll. +la!se )4. E 9his cla!se corresponds to section 1$" of the +ompanies #ct, 1)5" and see2s to pro-ide that a member who is entitled to attend and -ote can appoint another person as a proxy to attend and -ote at the meetin( on his behalf, in writin( or by electronic mode. Iowe-er, proxy shall not ha-e the ri(ht to spea2 at a meetin( and shall not be entitled to -ote except on poll. +la!se )5. E 9his cla!se corresponds to section 1&1 of the +ompanies #ct, 1)5" and see2s to pro-ide that no member shall exercise any -otin( ri(ht in respect of any shares re(istered in his name on which any calls or other s!ms presently payable by him ha-e not been paid or on which company has exercised any ri(ht or lien. 6o member can be prohibited from exercisin( his -otin( ri(ht on any other (ro!nd. +la!se )". E 9his cla!se corresponds to section 1$$ of the +ompanies #ct, 1)5" and see2s to pro-ide that at (eneral meetin(, a resol!tion p!t to -ote shall, !nless a poll is demanded or the -otin( is carried o!t electronically, be decided on a show of hands. # declaration by the +hairman and an entry in the min!tes boo2 is concl!si-e e-idence that resol!tion is passed. +la!se )$. E 9his is a new cla!se and it pro-ides that a member may exercise his -ote at a meetin( by electronic means. +la!se )&. E 9his cla!se corresponds to section 1$) of the +ompanies #ct, 1)5" and see2s to pro-ide that before or on declaration of res!lt of the -otin( on any resol!tion by a show of hands, the +hairman of the meetin( on his own or on demand made by members order for a poll. 9his +la!se f!rther pro-ides that the demand for poll may be withdrawn by the persons who made the demand. 9he +hairman of the meetin( shall appoint scr!tiniser for obser-in( the poll process and -otes (i-en on poll and to report thereon. 9he res!lt of the poll shall be deemed to be the decision of the meetin( on the resol!tion. 9he +hairman shall re(!late the manner in which poll shall be ta2en. +la!se )). E 9his cla!se corresponds to section 1)2# of the +ompanies #ct, 1)5" and see2s to pro-ide that the +entral 4o-ernment may declare items of b!siness that can be transacted only by postal ballot and also in respect of any item of b!siness other than ordinary b!siness and any b!siness in respect of which directors or a!ditors ha-e a ri(ht to be heard at any meetin( may also be transacted thro!(h postal ballot. +la!se 1**. E 9his cla!se corresponds to section 1&& of the +ompanies #ct, 1)5" and see2s to pro-ide that a company shall, on re3!isition in writin( of s!ch n!mber of members, (i-e notice or circ!late statement on proposed resol!tion to members intended to be mo-ed in the meetin(. 9he statement need not be circ!lated if the +entral 4o-ernment declare that the ri(ht conferred is bein( ab!sed to sec!re needless p!blicity for defamatory matters. +la!se 1*1. E 9his cla!se corresponds to section 1&$# of the +ompanies #ct, 1)5" and see2s to pro-ide that /resident of %ndia or the 4o-ernor of a State, if he is a member of a company, may appoint s!ch person as he thin2s fit, to act as his representati-e at any meetin( and to -ote by proxy and postal ballot as member of the company. +la!se 1*2. E 9his cla!se corresponds to section 1&$ of the +ompanies #ct, 1)5" and see2s to pro-ide that where a body corporate is a member or a creditor of the company and it a!thorise any person as its representati-e at any meetin( of the company or any class of members of the

241

company or at any meetin( of creditors of the company, s!ch representati-e shall be entitled to exercise the same ri(hts and powers incl!din( ri(ht to -ote by proxy and by postal ballot on behalf of the body corporate which he represents. +la!se 1*3. E 9his cla!se corresponds to section 1&) of the +ompanies #ct, 1)5" and see2s to pro-ide that a resol!tion shall be an ordinary resol!tion if the -otes cast in fa-o!r of the resol!tion exceeds the -otes, if any, cast a(ainst the resol!tion by the members. # resol!tion shall be special when it is d!ly specified in the notice, callin( the (eneral meetin( and -otes casted in fa-o!r is three times the -otes cast a(ainst the resol!tion. +la!se 1*4. E 9his cla!se corresponds to Section 1)* of the +ompanies #ct, 1)5" and see2s to pro-ide that where a special notice is re3!ired of any resol!tion, notice of the intention to mo-e s!ch resol!tion is to be (i-en by s!ch n!mbers of member as may be prescribed. +la!se 1*5. E 9his cla!se corresponds to Section 1)1 of the +ompanies #ct, 1)5" and see2s to pro-ide that where a resol!tion is passed at an adjo!rned meetin(, the resol!tion shall be treated as passed on the day it was act!ally passed and not on any earlier date. +la!se 1*". E 9his cla!se corresponds to Section 1)2 of the +ompanies #ct, 1)5" and see2s to pro-ide that a copy of e-ery resol!tion and an a(reement to(ether with a explanatory statement shall be filed with the ,e(istrar within 3* days of its passin(. 9he ,e(istrar shall re(ister the same and in case of any defa!lt, e-ery officer who is in defa!lt incl!din( the li3!idator shall be liable with fine. +la!se 1*$. E 9his cla!se corresponds to Sections 1)3, 1)4 and 1)$ of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery +ompany shall prepare, si(n and 2eep min!tes of proceedin(s of e-ery 4eneral eetin(, incl!din( the meetin( called by the re3!isitionists and all proceedin(s of meetin( of any class of share holders or creditors or 0oard of Directors or +ommittee of the 0oard and also resol!tion passed by postal ballot. %n case of meetin( of 0oard of Directors or of a committee of 0oard, the min!tes shall contain name of the directors present and also name of dissentin( director or a director who has not conc!rred the resol!tion. 9he +hairman shall exercise his absol!te discretion in respect of incl!sion or non.incl!sion of the matters which is re(arded as defamatory of any person, irrele-ant or detrimental to company8s interest in the min!tes. in!tes 2ept shall be e-idence of the proceedin(s recorded in a meetin(. 9his cla!se also see2s to pro-ide that e-ery company shall obser-e secretarial standards with respect to (eneral and 0oard meetin(. +la!se 1*&. E 9his cla!se corresponds to Section 1)" of the +ompanies #ct, 1)5" and see2s to pro-ide that the min!tes boo2 of (eneral meetin(s shall be 2ept at the re(istered office of a +ompany and shall be open for inspection to members d!rin( b!siness ho!rs witho!t any char(e. # member shall be entitled for a copy of any min!tes s!bject to payment of fees. 9he copy sho!ld be made a-ailable to him within se-en days of his ma2in( re3!est. >here the company ref!ses inspection or fails to f!rnish a copy of min!tes within specified time, the +entral 4o-ernment is empowered to direct immediate inspection on sendin( copy of min!tes in the matter and the company and e-ery officer of the company shall be p!nishable with fine. +la!se 1*). E 9his new cla!se see2s to pro-ide that e-ery listed company shall prepare a report on each ann!al (eneral meetin( incl!din( the confirmation to the effect that the meetin( was con-ened, held and cond!cted as per the pro-ision of the #ct and the r!les made there!nder. # copy of this report shall be filed with the ,e(istrar. +la!se 11*. E 9his cla!se corresponds to section 2*5 of the +ompanies #ct, 1)5" and see2s to pro-ide that di-idend shall be declared by a company for any financial year at a (eneral meetin( o!t of the profits for that year or any pre-io!s year or years arri-ed at after pro-idin( for depreciation or o!t of money pro-ided by the +entral 4o-ernment or a State 4o-ernment for the

242

payment of di-idend. Iowe-er, before the declaration of any di-idend certain percenta(e of profit shall be transferred to the reser-es of the company. %n case of inade3!acy of profits or loss or absence of profit in any financial year di-idend can be declared and paid o!t of acc!m!lated profits transferred to reser-es by passin( 0oard resol!tion !nanimo!sly and special resol!tion in ann!al (eneral meetin(. 9he cla!se pro-ides for the manner of pro-idin( depreciation. 9he 0oard may declare interim di-idend o!t of profits. 9he amo!nt of di-idend shall be deposited in a sched!led ban2 in separate acco!nt within fi-e days. Di-idend shall be paid by che3!e or warrant or in any electronic mode to the shareholders entitled to the payment of di-idend. 6o di-idend can be declared in the e-ent of fail!re to repay the deposits accepted by company. +apitali=ation of profits for iss!in( bon!s shares is not prohibited. +la!se 111. E 9his cla!se corresponds to section 2*5# of the +ompanies #ct, 1)5" and see2s to pro-ide that where the di-idend is not paid or claimed within thirty days, the company shall, within se-en days, transfer the total !npaid or !nclaimed amo!nt to a !npaid di-idend acco!nt to be opened by the company in a sched!led ban2. %n case of any defa!lt in transferrin( the amo!nt, the company shall be liable to pay interest on the amo!nt as has not been transferred. 9he amo!nt remainin( !npaid or !nclaimed for se-en years shall be transferred to %n-estor 'd!cation and /rotection F!nd. # statement of s!ch amo!nt is re3!ired to be sent to the #!thority administratin( the F!nd. +la!se 112. E 9his cla!se corresponds to section 2*5+ of the +ompanies #ct, 1)5" and see2s to pro-ide that the +entral 4o-ernment shall establish a f!nd to be called the %n-estor 'd!cation and /rotection F!nd. F!nd shall be !tilised for ref!nd of !nclaimed di-idends, application monies d!e for ref!nd and interest thereon, the promotion of in-estors8 ed!cation, awareness and protection. 9o administer the f!nd, the +entral 4o-ernment shall constit!te an a!thority consistin( of +hairperson, maxim!m of se-en members and #dministrator. #cco!nts wo!ld be a!dited by +omptroller and #!ditor 4eneral and the a!dit report alon( with d!ly certified acco!nts to be forwarded to the +entral 4o-ernment. 9he a!thority shall prepare its ann!al report and the ann!al report alon( with a!dit report to be laid before each Io!se of /arliament by the +entral 4o-ernment. +la!se 113. E 9his cla!se see2s to pro-ide that all amo!nt lyin( in the existin( f!nd, i.e. %n-estor 'd!cation and /rotection F!nd as per section 2*5+ of the +ompanies #ct, 1)5" shall stand credited to the %n-estor 'd!cation and /rotection F!nd established !nder this #ct. +la!se 114. E 9his cla!se corresponds to section 2*"# of the +ompanies #ct, 1)5" and see2s to pro-ide that where any instr!ment of transfer of shares is not re(istered, the amo!nt of di-idend shall be transferred to the :npaid Di-idend #cco!nt and to 2eep in abeyance the ri(hts to any ri(ht shares or bon!s shares. +la!se 115. E 9his cla!se corresponds to section 2*$ of the +ompanies #ct, 1)5" and see2s to pro-ide that where the di-idend has been declared b!t has not been paid or the warrants ha-e not been posted, within thirty days of declaration e-ery director who is 2nowin(ly party to the defa!lt shall be p!nishable with imprisonment !p to two years with fine and the company shall be liable to pay interest of 1& per cent. per ann!m thereon. +la!se 11". E 9his cla!se corresponds to section 2*) of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery company shall prepare and 2eep at its re(istered office boo2s of acco!nts and other rele-ant boo2s and papers which (i-e a tr!e and fair -iew of the state of the affairs of the company and its branch offices. Iowe-er, if 0oard decides to 2eep boo2s and other papers at any other place in %ndia, a notice to this effect shall be (i-en to the ,e(istrar and rele-ant boo2s and paper can also be 2ept in electronic mode. For branch offices of the company in %ndia or o!tside, it shall be deemed to ha-e complied with the pro-isions of this section, if s!mmarised ret!rns are sent periodically to the re(istered office. 9he boo2s of acco!nt and other boo2s and papers maintained by the company shall be open for inspection by any director. # person d!ly a!thorised

243

by the 0oard can only inspect boo2s of acco!nt of s!bsidiaries companies. 9his cla!se f!rther pro-ides that boo2s of acco!nt of e-ery company shall be 2ept for ei(ht years. %n case, an in-esti(ation has been ordered, the +entral 4o-ernment shall ha-e power to as2 the company to 2eep the boo2s of acco!nt for a period lon(er than ei(ht years. +la!se 11$. E 9his cla!se corresponds to section 211 of the +ompanies #ct, 1)5" and see2s to pro-ide that the financial statements shall (i-e a tr!e and fair -iew of the state of affairs of the company and shall comply with acco!ntin( standards. 9he financial statement shall be laid in the ann!al (eneral meetin( of that financial year. %n case of s!bsidiary companies, the company shall prepare a consolidated statement of all s!bsidiaries and lay before the ann!al (eneral meetin(. 9he +entral 4o-ernment shall ha-e the power to exempt a class or classes of companies from any of the re3!irement of this section. +la!se 11&. E 9his cla!se corresponds to section 21* # of the +ompanies #ct, 1)5" and see2s to pro-ide that the +entral 4o-ernment may by notification constit!te an ad-isory committee to be called the 6ational #d-isory +ommittee on #cco!ntin( and #!ditin( Standards to ad-ise the +entral 4o-ernment on acco!ntin( and a!ditin( policies and standards for adoption. 9he cla!se f!rther pro-ides for the members who shall constit!te the #d-isory +ommittee. 9he members of the #d-isory +ommittee shall be entitled to fees, tra-ellin(, con-eyance and other allowances. 9he #d-isory +ommittee in cons!ltation with %ndian %nstit!te of +hartered #cco!ntants of %ndia shall ma2e recommendations to the +entral 4o-ernment on the matters relatin( to acco!ntin( and a!ditin( policies and standards. +la!se 11). E 9his cla!se corresponds to section 211F3+G of the +ompanies #ct, 1)5" and it see2s to pro-ide that the +entral 4o-ernment may, after cons!ltation with the #d-isory +ommittee, notify the #cco!ntin( standard or standards for adoption by companies. +la!se 12*. E 9his cla!se corresponds to sections 215, 21" and 21$ of the +ompanies #ct, 1)5" and see2s to pro-ide that the financial statement incl!din( consolidated financial statements sho!ld be appro-ed by the 0oard of Directors before they are si(ned and s!bmitted to a!ditors for their report. 9he a!ditor8s report is to be attached to e-ery financial statement. # report by the 0oard of Directors containin( details on the matters specified incl!din( directors responsibility statement shall be annexed to e-ery financial statement laid before company. 9he 0oard8s report and e-ery annex!re has to be d!ly si(ned. # si(ned copy of e-ery financial statement shall be circ!lated, iss!ed or p!blished alon( with all notes or doc!ments, the a!ditor8s report and 0oard report. +la!se 121. E 9his cla!se corresponds to section 21) of the +ompanies #ct, 1)5" and see2s to pro-ide that a copy of financial statement, a!ditor8s report alon( with annex!resN attachments shall be sent to e-ery member, e-ery tr!stee for the debent!re holder, and all other persons who are so entitled 21 days before the date of (eneral meetin(s. # specific manner of circ!lation may be prescribed by the +entral 4o-t. '-ery member, tr!stee, etc. is allowed to inspect the financial statements and a!ditor8s report etc. at the re(istered office of the company d!rin( any b!siness ho!rs. +la!se 122. E 9his cla!se corresponds to section 22* of the +ompanies #ct, 1)5" and see2s to pro-ide that copies of financial statements and all s!ch doc!ments which are annexed to the financial statement and adopted at the ann!al (eneral meetin( shall be filed with ,e(istrar. %n case a company does not hold an ann!al (eneral meetin( in any year, a statement of facts and reasons has to be filed with the ,e(istrar. 9his cla!se f!rther pro-ides that in case the acco!nts are not adopted at ann!al (eneral meetin( or in adjo!rned meetin(, the !n.adopted acco!nts shall be filed with the ,e(istrar and the ,e(istrar shall ta2e them in his records as pro-isional till the final acco!nts are filed.

244

+la!se 123. E 9his cla!se corresponds to section 224 of the +ompanies #ct, 1)5" and see2s to pro-ide that a company shall appoint an indi-id!al or a firm as an a!ditor at ann!al (eneral meetin( s!bject to his written consent who shall hold office till concl!sion of next ann!al (eneral meetin(. # notice of appointment sho!ld be filed with the ,e(ister. 9he +omptroller and #!ditor 4eneral of %ndia appoints a!ditor of 4o-ernment +ompanies failin( which +entral 4o-ernmentNState 4o-ernment appoints a!ditor on the re3!est of the company. First a!ditor is appointed by 0oard within 3* days of incorporation and in case of fail!re to appoint, the members at a (eneral meetin( shall appoint and +omptroller and #!ditor 4eneral of %ndia shall appoint a!ditor of 4o-ernment companies failin( which 0oard shall appoint first a!ditor and in case of fail!re +entral 4o-ernmentNState 4o-ernment will appoint. 9he cla!se f!rther pro-ides for the pro-isions relatin( to the cas!al -acancy, resi(nation, reappointment and remo-al of a!ditor. 9he 9rib!nal is empowered to chan(e the a!ditor in case of any fra!d by him. +la!se 124. E 9his cla!se corresponds to section 224F10G and 22" of the +ompanies #ct, 1)5" and see2s to pro-ide for appointment of only +hartered #cco!ntant in practice as a!ditors. 9he cla!se f!rther pro-ides for the persons who are not eli(ible for appointment as an a!ditor of a company. #n a!ditor who is dis3!alified s!bse3!ent to his appointment, has to -acate office. +la!se 125. E 9his cla!se corresponds to section 224 of the +ompanies #ct, 1)5" and see2s to pro-ide for rem!neration of a!ditors of the company. 9he rem!neration is to be fixed in the (eneral meetin(. 9he +la!se f!rther defines the term Mrem!neration8. +la!se 12". E 9his cla!se corresponds to section 22$ of the +ompanies #ct, 1)5" and see2s to pro-ide for the powers and d!ties of a!ditors. '-ery a!ditor can access boo2s of acco!nt, -o!chers and see2 s!ch information and explanation from the company and en3!ire s!ch matters as he considers necessary. %n case of financial statements, a!ditor of holdin( company can access records of s!bsidiaries. 9he a!ditor has to ma2e a report to the members on that acco!nts, financial statement or other doc!ments re3!ired to be laid in (eneral meetin( (i-e a tr!e and fair -iew of the state of the company8s affairs and s!ch other matters as may be prescribed. 9he report shall state reasons for ne(ati-e and 3!alified remar2s. 9he cla!se also pro-ides the manner in which a!dit report of a 4o-ernment company shall be finalised by the +omptroller and #!ditor 4eneral. 9his cla!se also pro-ides to notify the a!ditin( standard by the +entral 4o-ernment. +la!se 12$. E 9his is a new cla!se and it see2s to pro-ide that an a!ditor can do s!ch ser-ices as appro-ed by the 0oard or a!dit committee. 9he cla!se f!rther pro-ides for the ser-ices which the a!ditor cannot perform. +la!se 12&. E 9his cla!se corresponds to section 22) of the +ompanies #ct, 1)5" and see2s to pro-ide that its a!ditor8s report can be si(ned by the person appointed as an a!ditor of the company. Ie shall also si(n or certify any other doc!ment of the company. +la!se 12). E 9his cla!se corresponds to section 231 of the +ompanies #ct, 1)5" and see2s to pro-ide that a!ditor or his representati-e, 3!alified to be an a!ditor, shall (et all the notices of (eneral meetin(s and shall attend the same and be heard on any part of the b!siness concernin( him as the a!ditor. +la!se 13*. E 9his cla!se corresponds to sections 232 and 233 of the +ompanies #ct, 1)5" and see2s to pro-ide for the penalties for contra-ention of pro-isions of the cla!ses 123 to 12). %n case an a!ditor 2nowin(ly or wilf!lly contra-enes he shall be p!nishable with imprisonment or with fine or with both. 9he #!ditor is also re3!ired to ref!nd rem!neration recei-ed by him to company and for any dama(es to the company or to any person s!ffered d!e to misleadin( or incorrect statements of partic!lars made in his report. +la!se 131. E 9his cla!se corresponds to section 2330 of the +ompanies #ct, 1)5" and see2s to empower +entral 4o-ernment after cons!ltation with re(!latory body to direct certain companies

245

to incl!de in the boo2s of acco!nt partic!lars relatin( to !tilisation of material or labo!r or to s!ch other items of cost. 9he +entral 4o-ernment may direct the a!dit of cost records of the company by +ost #cco!ntant in practice appointed by 0oard and on s!ch rem!neration as determined by the members. 9he cla!se f!rther pro-ides that the 3!alifications, dis3!alifications, ri(hts, d!ties and obli(ations as apply to a!ditor shall also be applicable to cost a!ditor as well. 9he +entral 4o-ernment may call for f!rther information and explanation if necessary after considerin( cost a!dit report. +la!se 132. E 9his cla!se correspondin( to some of the pro-isions of sections 252, 253 and 25) of the +ompanies #ct, 1)5" and some new pro-isions. %t see2s to pro-ide that e-ery company shall ha-e a 0oard of Directors and prescribes the minim!m and maxim!m n!mber of directors. 9he cla!se also see2s to pro-ide that e-ery company shall ha-e at least one director who wo!ld be ordinarily resident in %ndia. 9he cla!se f!rther pro-ides the conditions for appointment of independent director. 9he cla!se also see2s to define the terms Mindependent director8 and Mnominee director8 and see2s to pro-ide that an %ndependent Director shall not be entitled to any rem!neration, other than sittin( fee, reimb!rsement of expenses for participation in 0oard meetin( and profit related commission and stoc2 options as appro-ed by the members. +la!se 133. E 9his cla!se corresponds to some of the pro-isions of sections 254 to 25" and 2"4 of the #ct and some new pro-isions and see2s to pro-ide the manner in which the directors incl!din( the first directors shall be appointed by a company. 9he cla!se see2s to pro-ide that other than first directors, the directors shall be appointed in (eneral meetin(s. 9he cla!se f!rther pro-ides for the pro-isions of D%6 and pro-ide that e-ery director wo!ld obtain D%6 from the +entral 4o-ernment before he acts as a director in any company. '-ery proposed director shall f!rnish his D%6, a declaration that he is not dis3!alified to become a director and a consent to hold office as director before he is appointed. F!rther in case of independent directors, the 0oard shall (i-e a report in the 4eneral meetin( that e-ery independent directors appointed f!lfils the conditions specified for his appointment. 9he cla!se also pro-ides for the manner in which rotation of directors shall ta2e place. +la!se 134. E 9his cla!se corresponds to section 2""# of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery indi-id!al intendin( to be appointed as director shall ma2e an application for allotment of Director %dentification 6!mber FD%6G to the +entral 4o-ernment alon( with fee. +la!se 135. E 9his cla!se corresponds to section 2""0 of the +ompanies #ct, 1)5" and see2s to pro-ide that the +entral 4o-ernment shall allot Director %dentification 6!mber FD%6G to the applicant within one month from the receipt of the application. +la!se 13". E 9his cla!se corresponds to section 2""+ of the +ompanies #ct, 1)5" and see2s to pro-ide that no indi-id!al, who has already been allotted a Director %dentification 6!mber shall apply, obtain or possess another Director %dentification 6!mber. +la!se 13$. E 9his cla!se corresponds to section 2""D of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery existin( director shall, intimate his Director %dentification 6!mber within one month of its receipt to the company or all companies wherein he is a director. +la!se 13&. E 9his cla!se corresponds to section 2""' of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery company shall f!rnish the Director %dentification 6!mbers of all its directors to the ,e(istrar or any other officer or a!thority as specified by the +entral 4o-ernment. +la!se 13). E 9his cla!se corresponds to section 2""F of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery person or company, while f!rnishin( any ret!rn, information or partic!lars shall mention the Director %dentification 6!mber in s!ch ret!rn, information or partic!lars.

246

+la!se 14*. E 9his cla!se corresponds to section 2""4 of the +ompanies #ct, 1)5" and see2s to pro-ide that if any indi-id!al or director, or a company contra-enes any of the pro-isions, of cla!ses 133, 13" and 13$ shall be p!nishable with fine and where the contra-ention is a contin!in( one, with a f!rther fine. +la!se 141. E 9his cla!se corresponds to section 25$ of the +ompanies #ct, 1)5" and see2s to pro-ide that a person, not bein( a retirin( director shall be eli(ible for appointment as a director at any (eneral meetin(. 9he cla!se f!rther pro-ides the manner in which the persons other than retirin( director can stand for directorship and the company shall inform its members of the candidat!re of a person for the office of director. +la!se 142. E 9his cla!se corresponds to sections 2"*, 2"2 and 313 of the +ompanies #ct, 1)5" and contains some new pro-isions. 9he 0oard if a!thorised by articles may appoint any person, other than a person who fails to (et appointed as a director in a (eneral meetin(, as an additional director at any time. 9he cla!se f!rther see2s to pro-ide that the 0oard may, if so a!thorised by its articles or by a resol!tion passed by the company, appoint a person, to act as an alternate director for a director d!rin( his absence for a period of not less than three months from %ndia. 9he cla!se also see2s to pro-ide that only a person, who is 3!alified to be appointed as an independent director, shall be eli(ible to be appointed as an alternate director in place of an independent director. 9he cla!se pro-ides that an alternate director shall not hold office lar(er than permissible and shall -acate the office if and when the director in whose place he has been appointed ret!rns to %ndia. 9he cla!se f!rther pro-ides that in the case of a p!blic company or a pri-ate company which is a s!bsidiary of a p!blic company, the cas!al -acancy may be filled by the 0oard of Directors at a meetin( of the 0oard. 9he cla!se also pro-ides that any person so appointed shall hold office !p to the date !p to which the director in whose place he is appointed wo!ld ha-e held office if it had not been -acated. +la!se 143. E 9his cla!se corresponds to section 2"3 of the +ompanies #ct, 1)5" and see2s to pro-ide that at a (eneral meetin( of a company, a motion for the appointment of two or more persons as directors by a sin(le resol!tion shall not be mo-ed !nless a proposal to mo-e s!ch a motion has first been a(reed to at the meetin( witho!t any -ote bein( cast a(ainst it. +la!se 144. E 9his cla!se corresponds to section 2"5 of the +ompanies #ct, 1)5" and see2s to pro-ide that the articles of a company may pro-ide for the appointment of not less than two.thirds of the total n!mber of the directors in accordance with the principle of proportional representation. +la!se 145. E 9his cla!se corresponds to section 2$4 of the +ompanies #ct, 1)5" and see2s to pro-ide the circ!mstances and sit!ations !nder which a person shall not be eli(ible for appointment as a director of a company. 9he cla!se f!rther pro-ides for the sit!ations in which a director shall not be eli(ible to be re.appointed as a director of that company or appointed in other p!blic company for a period of fi-e years. 9he cla!se also pro-ides that a pri-ate company may by its articles pro-ide for any other dis3!alifications in addition to those specified in this cla!se. +la!se 14".E 9his cla!se corresponds to section 2$5 of the +ompanies #ct, 1)5" and see2s to pro-ide that no person, shall hold office as a director, in more than fifteen p!blic limited companies at the same time. +la!se 14$.E 9his is a new cla!se and see2s to pro-ide that a director of a company shall act in accordance with the company8s articles. %t f!rther see2s to pro-ide for the -ario!s d!ties of directors. %n case of contra-ention, director is p!nishable with fine and if a director is fo!nd (!ilty of ma2in( any !nd!e (ain either to himself or to his relati-es, partners or associates he shall also be liable to pay an amo!nt, e3!al to that (ain, to the company. +la!se 14&. E 9his cla!se corresponds to section 2&3 of the +ompanies #ct, 1)5" and see2s to pro-ide the (ro!nds and circ!mstances !nder which the office of a director shall become -acant.

247

9he cla!se f!rther pro-ides that where a person acts as a director after he is aware that the office of director held by him has become -acant on acco!nt of any dis3!alification, he shall be p!nishable with fine. >here all the directors -acate their offices !nder any of the dis3!alifications, the promoter or, in his absence, the +entral 4o-ernment shall appoint the re3!ired n!mber of directors who shall hold office till the directors are appointed in the (eneral meetin(. 9he cla!se also pro-ides that a pri-ate company may pro-ide for any other (ro!nd for -acation of office. +la!se 14). E 9his is a new cla!se and see2s to pro-ide that a director may resi(n from his office by (i-in( a notice in writin( and the 0oard shall, on receipt of s!ch notice intimate the ,e(istrar and place s!ch resi(nation in the s!bse3!ent (eneral meetin( of the company. 9he cla!se f!rther pro-ides for the date on which the notice of resi(nation shall ta2e effect. 9he cla!se see2s to pro-ide that where the n!mber of directors is red!ced below the 3!or!m fixed, the contin!in( director or directorFsG shall be deemed to constit!te the 3!or!m. +la!se 15*. E 9his cla!se corresponds to section 2&4 of the +ompanies #ct, 1)5" and see2s to pro-ide that a company may, by ordinary resol!tion remo-e a director Fnot bein( a director appointed by the 9rib!nal !nder section 213G. Special notice shall be re3!ired of any resol!tion, to remo-e a director or to appoint somebody in place of a director so remo-ed. 9he cla!se f!rther pro-ides that the director shall be entitled to be heard on the resol!tion at the meetin(. # -acancy created by the remo-al of a director may be filled by the appointment of another director in his place by the meetin( at which he is remo-ed. 9he cla!se see2s to pro-ide that the director who was remo-ed from office shall not be re.appointed as a director by the 0oard of Directors. +la!se 151. E 9his cla!se corresponds to section 3*3 and 3*$ of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery company shall 2eep at its re(istered office a re(ister containin( partic!lars of its directors and the 2ey mana(erial personnel incl!din( the details of sec!rities held by each of them in the company or its holdin(, s!bsidiary or associate companies. # ret!rn containin( partic!lars and doc!ments of appointment or any chan(e in the directors and the 2ey mana(erial personnel shall be filed with the ,e(istrar. +la!se 152. E9his cla!se corresponds to section 3*4 of the +ompanies #ct, 1)5" and also see2s to pro-ide the manner in which re(ister 2ept !nder cla!se 151 shall be open for inspection. 9he members shall ta2e extracts therefrom and obtain copies thereof free of cost. 9he cla!se see2s to pro-ide that if any inspection as pro-ided in this cla!se is ref!sed, or if any copy re3!ired there!nder is not sent within thirty days from the date of receipt of s!ch re3!est, the ,e(istrar shall on an application made to him order immediate inspection and s!pply of copies re3!ired there!nder. +la!se 153. E 9his cla!se is new cla!se which see2s to pro-ide that where a company contra-enes any of the pro-isions of this +hapter and no specific p!nishment is pro-ided therein, the company, e-ery director or employee who is responsible shall be p!nishable with fine. +la!se 154. E 9his cla!se corresponds to section 2&5 and 2&" of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery company shall hold the first meetin( of the 0oard of Directors within thirty days of the date of its incorporation and hold a minim!m n!mber of fo!r meetin(s of its 0oard of Directors e-ery year. 9he participation of directors in a meetin( of the 0oard may be either in person or thro!(h -ideo conferencin( or s!ch other electronic means. 9he cla!se f!rther pro-ides that a notice of the meetin( of 0oard shall be (i-en to e-ery director at his address re(istered with the company. 9he meetin( of the 0oard may be called at shorter notice to transact !r(ent b!siness where at least one independent director, if any, shall be present. +la!se 155. E 9his cla!se corresponds to section 2&$ and 2&& of the +ompanies #ct, 1)5" and see2s to pro-ide that the 3!or!m for a meetin( of the 0oard of Directors of a company shall be one.third of its total stren(th or two directors, whiche-er is hi(her, and the directors participatin( by -ideo conferencin( or other electronic means shall be co!nted for 3!or!m. %t f!rther pro-ides that

248

where the n!mber of interested directors exceeds, or is e3!al to, two.thirds of the total stren(th of the 0oard, the n!mber of directors who are not interested and present at the meetin(, bein( not less than two, shall be the 3!or!m. 9he cla!se f!rther pro-ides that the meetin( shall stand adjo!rned if it co!ld not be held for want of 3!or!m. +la!se 15". E 9his cla!se corresponds to section 2&) of the +ompanies #ct, 1)5" and see2s to pro-ide that no resol!tion shall be deemed to ha-e been d!ly passed by the 0oard or by a committee thereof by circ!lation !nless the resol!tion has been circ!lated in draft, to all the directors, or members of the committee at their addresses in %ndia, and has been appro-ed by a majority. 9he cla!se also pro-ides that s!ch a resol!tion shall be noted and made part of min!tes at a s!bse3!ent meetin(. +la!se 15$. E 9his cla!se corresponds to section 2)* of the +ompanies #ct, 1)5" and see2s to pro-ide that any act done by a person as a director shall not be in-alid if it is s!bse3!ently disco-ered that his appointment was in-alid. 9he cla!se f!rther pro-ides that nothin( shall be (i-en -alidity to any act done by the director after his appointment has been noticed by the company to be in-alid or to ha-e terminated. +la!se 15&. E 9his cla!se contains some pro-isions of section 2)2# of the +ompanies #ct, 1)5" and contains some new pro-isions and see2s to pro-ide the re3!irement and manner of constit!tin( a!dit, rem!neration, sta2eholders relationship committees of the 0oard. 9he cla!se also pro-ides for the re3!irements in respect of s!ch committees. 9he #!dit +ommittee shall consist of a minim!m of three directors with independent directors formin( a majority and at least one director ha-in( 2nowled(e of financial mana(ement, a!dit or acco!nts. 9he +hairman of an #!dit +ommittee shall be an independent director. ,em!neration +ommittee shall consist of non.exec!ti-e directors as appointed by the 0oard o!t of which at least one shall be an independent director. S!ch ,em!neration +ommittee shall determine the company8s policies relatin( to the rem!neration of the directors, 2ey mana(erial personnel and s!ch other employees as may be decided by the +ommittee. 9he cla!se f!rther pro-ides that the 0oard ha-in( a combined membership of the shareholders, debent!re holders and other sec!rity holders of more than one tho!sand at any time d!rin( a financial year shall constit!te a sta2eholders relationship committee which shall consist of a chairman who is a non.exec!ti-e director and s!ch other members of the 0oard as decided by the 0oard. Sta2eholders ,elationship +ommittee shall consider and resol-e the (rie-ances of sta2eholders. +la!se 15). E 9his cla!se corresponds to sections 2)1 and 2)2 of the +ompanies #ct, 1)5" and see2s to pro-ide that the 0oard of Directors shall be entitled to exercise all s!ch powers, and to do all s!ch acts and thin(s, as the company is a!thorised to exercise and do except those that are to be exercised or done by the company in (eneral meetin(. 9he cla!se f!rther specifies the powers to be exercised by the 0oard of Directors on behalf of the company. +la!se 1"*. E 9his cla!se corresponds to section 2)3 of the +ompanies #ct, 1)5" and see2s to pro-ide for the powers of the 0oard of Directors of a company to be exercised only with the consent of the company by a special resol!tion. +la!se 1"1. E 9his cla!se corresponds to section 2)3# of the +ompanies #ct, 1)5". %t see2s to pro-ide the manner and limits !p to which a company shall be able to contrib!te the amo!nt to any political party or to any person for a political p!rpose. 9he cla!se f!rther pro-ides the manner in

249

which e-ery company shall disclose in its profit and loss acco!nt any amo!nt so contrib!ted by it d!rin( any financial year. +la!se 1"2. E 9his cla!se corresponds to section 2)) of the +ompanies #ct, 1)5" and see2s to pro-ide the manner and periodicity in which e-ery director shall ma2e disclos!res of his concern or interest in any company or bodies corporate, firms, or other association of indi-id!als. %t also see2s to pro-ide that e-ery director of a company who is concerned or interested in a contract or arran(ement shall disclose the nat!re of his concern or interest at the meetin( of the 0oard and shall not participate in s!ch meetin(. 9he cla!se f!rther pro-ides that a contract or arran(ement entered into by the company witho!t disclos!re or with participation by a director who is so concerned or interested shall be -oidable at the option of the company. +la!se 1"3. E 9his cla!se corresponds to section 2)5 of the +ompanies #ct, 1)5" and see2s to pro-ide the circ!mstances and manner in which a company shall ad-ance any loan to any of its directors or to any other person in whom he is interested or (i-e any (!arantee or pro-ide any sec!rity in connection with any loan ta2en by him or s!ch other person. +la!se 1"4. E 9his cla!se corresponds to section 3$2# of the +ompanies #ct, 1)5" and see2s to pro-ide the manner in which and limits !p to which a company shall (i-e any loan or (i-e any (!arantee or pro-ide sec!rity in connection with a loan to any other body corporate or person or ac3!ire by way of s!bscription, p!rchase or otherwise, the sec!rities of any other body corporate. 9he cla!se f!rther pro-ides that the companies as pro-idin( or associatin( loans shall disclose in financial statements f!ll partic!lars of the loans (i-en in-estments made or (!arantees or sec!rities pro-ided. 9he cla!se also pro-ides for the manner in which re(isters will be 2ept by a company to record transactions and the manner in which s!ch re(isters shall be a-ailable for inspection. 9he cla!se exempts certain cate(ories of companies from the pro-isions of this cla!se. +la!se 1"5. E 9his cla!se corresponds to section 4) of the +ompanies #ct, 1)5" and see2s to pro-ide that all in-estments made or held by a company in any property, sec!rity or other asset shall be made and held by it in its own name. %t also see2s to pro-ide that the company may hold any shares in its s!bsidiary company in the name of any nominee of the company, if it is necessary to ens!re that the n!mber of members of the s!bsidiary company is not red!ced below the stat!tory limit. 9he cla!se f!rther pro-ides that where any sec!rities in which in-estments ha-e been made by a company are not held by it in its own name, the company shall maintain a re(ister containin( s!ch partic!lars and s!ch re(ister shall be open for inspection. +la!se 1"". E 9his cla!se corresponds to section 2)$ of the +ompanies #ct, 1)5" and see2s to pro-ide the manner in which contracts or arran(ements by a company with related parties shall be made and disclosed. %t pro-ides for the matter that re3!ires the consent of 0oard of Directors of company or prior appro-al by special resol!tion. %t see2s to pro-ide that e-ery s!ch contract or arran(ement shall be referred to in the 0oard8s ,eport to the shareholders alon( with the j!stification. %t also pro-ides that where any contract or arran(ement is entered into by a director or any other employee, witho!t complyin( with the pro-isions and if it is not ratified by the appro-in( a!thority, s!ch contract or arran(ement shall be -oidable at the option of the 0oard. +la!se 1"$. E 9his cla!se corresponds to section 3*1 of the +ompanies #ct, 1)5" and see2s to pro-ide the partic!lars and the manner in which s!ch partic!lars shall be entered by the company in the re(isters of contracts or arran(ements in which directors are concerned or interested. %t f!rther pro-ides that the re(ister 2ept !nder this cla!se shall be 2ept at the re(istered office of the company and open for inspection. 9he re(ister shall also be prod!ced at e-ery ann!al (eneral meetin( of the company and shall remain open and accessible d!rin( the meetin( to any person ha-in( the ri(ht to attend the meetin(. +la!se 1"&. E 9his cla!se corresponds to section 3*2 of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery company shall 2eep at its re(istered office a copy of contract of ser-ice entered

250

into by it with a mana(in( or whole.time director or where s!ch a contract is not in writin(, a written memorand!m settin( o!t its terms shall be 2ept. %t also pro-ides that copies of s!ch contract and the memorand!m shall be open to inspection by any member. 9he pro-isions of this cla!se shall not apply to any pri-ate company. +la!se 1"). E 9his cla!se corresponds to section 31) and 32* of the +ompanies #ct, 1)5" and see2s to pro-ide the circ!mstances and manner in which a director of a company shall recei-e any payment by way of compensation for loss of office or as consideration for retirement from office, etc. %t f!rther pro-ides that where a director of a company recei-es payment of any amo!nt in contra-ention of this cla!se or the proposed payment is made before it is appro-ed by the meetin(, the amo!nt so recei-ed by the director shall be deemed to ha-e been recei-ed by him in tr!st for the company. +la!se 1$*. E 9his is a new cla!se and see2s to pro-ide for the manner in respect of re(!lation of arran(ements between a company and its directors in respect of ac3!isition of assets for consideration other than cash. 9he cla!se pro-ides that s!ch arran(ements shall re3!ire prior appro-al by a resol!tion in (eneral meetin( and if the director or connected person is a director of its holdin( company, appro-al is re3!ired to be obtained by passin( a resol!tion in (eneral meetin( of the holdin( company. 9he cla!se also pro-ides the circ!mstances when an arran(ement entered into by a company or its holdin( company in contra-ention of the pro-isions is -oidable at the instance of the company. +la!se 1$1. E 9his is a new cla!se and see2s to pro-ide for the manner in which certain transactions or contracts are entered between a one person company and its sole member. %t see2s to pro-ide that where a 1ne /erson +ompany <imited by shares or by (!arantee enters into a contract with the sole member of the company who is also director, the company shall, !nless the contract is in writin(, ens!re that the terms of the contract or offer are contained in a memorand!m or are recorded in the min!tes of the first 0oard meetin( held after enterin( into the contract and e-ery s!ch contract shall be informed to the ,e(istrar. +la!se 1$2. E 9his is a new cla!se and see2s to prohibit whole.time director or any of its 2ey mana(erial personnel from b!yin( certain 2inds of f!t!re contracts in relation to sec!rities of the company. %t f!rther pro-ides that where whole.time director or 2ey mana(erial personnel ac3!ires any sec!rities in contra-ention of this cla!se he shall, s!rrender s!ch sec!rities and the company shall not re(ister the same in his name in the re(ister and if they are in dematerialised form, it shall inform the depository not to record s!ch ac3!isition. +la!se 1$3. E 9his is a new cla!se and see2s to prohibit directors or 2ey mana(erial person of the company shall deal in sec!rities of a company, or co!nsel, proc!re or comm!nicate, directly or indirectly, abo!t any !np!blished price.sensiti-e information to any person. +la!se 1$4. E 9his cla!se corresponds to sections 1)$#, 2"$, 2"), 31$, 3&4, 3&5 of the +ompanies #ct, 1)5" and see2s to pro-ide that no company shall appoint or employ a mana(in( director and mana(er at the same time and f!rther that no company shall appoint or reappoint any person as its mana(in( director, whole.time director or mana(er for a term exceedin( fi-e years at a time. %t also pro-ides that no company shall appoint any firm, body corporate, or other association as its mana(er. 9he cla!se also pro-ides the dis3!alification in respect of appointment of 2ey mana(erial personnel. %t also see2s to pro-ide the manner in which a mana(in( director, whole.time director or mana(er shall be appointed. +la!se 1$5. E 9his cla!se corresponds to section 3*) of the +ompanies #ct, 1)5" and see2s to pro-ide that rem!neration to mana(erial personnel can be paid either by way of a monthly payment or at a specified percenta(e of the net profits, or partly by monthly payment and partly by the percenta(e of net profits. %t f!rther pro-ides that where any ins!rance is ta2en by a company on behalf of its mana(in( director, whole.time director, mana(er, +hief 'xec!ti-e 1fficer, +hief

251

Financial 1fficer or +ompany Secretary for indemnifyin( any of them a(ainst any liability in respect of any ne(li(ence, defa!lt, etc., for which they may be (!ilty, the premi!m paid on s!ch ins!rance shall not be treated as part of the rem!neration payable to any s!ch personnel. +la!se 1$". E 9his cla!se corresponds to section 3*) of the +ompanies #ct, 1)5" and see2s to pro-ide the 2ind of rem!neration which can be paid to a director who is neither a whole.time director nor a mana(in( director of a company. %t pro-ides that s!ch a director can be paid fee for attendin( meetin(s of the 0oard or committees thereof. %t f!rther see2s to pro-ide that s!ch a director can be paid profit.related commission with the prior appro-al of members by a special resol!tion. 9he cla!se f!rther pro-ides that where any director draws or recei-es any s!m as rem!neration in excess of the amo!nt, he shall ref!nd s!ch s!m to the company. +la!se 1$$. E 9his cla!se corresponds to section 31& of the +ompanies #ct, 1)5" and see2s to pro-ide the circ!mstances and manner in which any mana(in( or whole.time director or mana(er, shall be entitled to recei-e payment by way of compensation for loss of office, or as consideration for retirement from office or in connection with s!ch loss or retirement. 9he cla!se also specify the 3!ant!m of s!ch compensation. +la!se 1$&. E 9his is a new cla!se and see2s to pro-ide that e-ery company belon(in( to s!ch class or description of companies, as prescribed by the +entral 4o-ernment, shall ha-e whole. time 2ey mana(erial personnel. %t also see2s to pro-ide that a whole.time 2ey mana(erial personnel shall not hold office in more than one company at the same time except that of a director if company permits him in this re(ard. +la!se 1$). E 9his cla!se corresponds to section 2*)# and 234 of the +ompanies #ct, 1)5" and see2s to empower ,e(istrar of +ompanies to call for any information, explanation or doc!ments and to inspect boo2s of acco!nt of the company etc. 9he +ompany and its officers shall f!rnish the information or explanation in doc!ments within the specified time. >here the ,e(istrar is satisfied on the basis of information in doc!ments that the b!siness of the company is cond!cted in a fra!d!lent manner, he may, order an in3!iry. F!rther, the +entral 4o-ernment too can order for an in3!iry by the ,e(istrar or by an inspector appointed by it. +la!se 1&*. E 9his cla!se corresponds to section 2*)# of the +ompanies #ct, 1)5" and see2s to pro-ide the proced!re to be adopted for inspection or in3!iries to be made by the ,e(istrar or %nspector. '-ery director, officer or employee shall be bo!nd to pro-ide the information or the doc!ments called for. %t empowers the ,e(istrar and %nspector with the powers of the +i-il +o!rt !nder +ode of +i-il /roced!res, 1)*& for s!mmonin(, examinin( on oath, inspection of boo2s and other doc!ments, etc. +la!se 1&1. E 9his cla!se corresponds to section 2*)# of the +ompanies #ct, 1)5" and see2s to pro-ide that the ,e(istrar or %nspector shall s!bmit a report to the +entral 4o-ernment after inspection of boo2s of acco!nts or the examinin( any person as the case may be and will incl!de his recommendations for f!rther in-esti(ation if necessary d!ly s!pported by reasons or doc!ments. +la!se 1&2. E 9his cla!se corresponds to section 234# of the +ompanies #ct, 1)5" and see2s to pro-ide for sei=!re of doc!ments by the ,e(istrar if he has reasonable (ro!nd to belie-e that the same is li2ely to be destroyed, m!tilated, altered, falsified, etc., with the permission of special co!rt. 9he ,e(istrar has to ret!rn the sei=ed doc!ments within 1&* days to the company from whose c!stody the doc!ments were sei=ed. +la!se 1&3. E 9his cla!se corresponds to section 235 of the +ompanies #ct, 1)5" and see2s to empower the +entral 4o-ernment to order an in-esti(ation into the affairs of a company either on the report of ,e(istrar or on special resol!tion passed by a company or in p!blic interest. F!rther, this cla!se also empowers +o!rt on the 9rib!nal to order that the affairs of a company o!(ht to be

252

in-esti(ated. For the p!rpose of in-esti(ation, the +entral 4o-ernment has the power to appoint %nspectorFsG and see2 report. +la!se 1&4. E 9his cla!se corresponds to section 23$ of the +ompanies #ct, 1)5" and see2s to empower the 9rib!nal to order an in-esti(ation by the +entral 4o-ernment in case an application is made by at least 1** members or by member ha-in( one.tenth of total -otin( power or one.fifth of the members in case of company with no share capital see2 an in-esti(ation into the affairs of the company or on an application s!((estin( fra!d, misfeasance or miscond!ct or when any information is withheld. 9his cla!se f!rther empowers the +entral 4o-ernment to appoint %nspectorFsG and see2 report. +la!se 1&5. E 9his cla!se corresponds to section 23" and 245 of the +ompanies #ct, 1)5" and see2s to pro-ide that the company or the applicants ha-e to (i-e sec!rity for payment of the costs and expenses of the in-esti(ation and shall deposit an amo!nt not exceedin( ,s.25 la2hs towards the cost of in-esti(ation. %t pro-ides that on completion of in-esti(ation, the cost of in-esti(ation shall be wor2ed o!t and notice thereof shall be ser-ed on the company for payment of s!ch amo!nt within specified time. 9he amo!nt so payable shall be a char(e on property and reco-erable accordin(ly. +la!se 1&". E 9his cla!se corresponds to section 23& of the +ompanies #ct, 1)5" and see2s to pro-ide bar on firm, body corporate or other association for an appointment as %nspector. +la!se 1&$. E 9his cla!se corresponds to section 24$ of the +ompanies #ct, 1)5" and see2s to empower the +entral 4o-ernment to appoint one or more %nspectors to in-esti(ate and report on the membership of the company. S!ch an in-esti(ation shall incl!de any arran(ement or !nderstandin( obser-ed in practice rele-ant for the p!rpose of in-esti(ation. +la!se 1&&. E 9his cla!se corresponds to section 24* of the +ompanies #ct, 1)5" and see2s to pro-ide that it shall be the d!ty of all officer and employees of the company which is !nder in-esti(ation to prod!ce boo2s and papers and (i-e all assistance to the %nspector. 9he cla!se pro-ides for the powers of the %nspector. 9he %nspector may examine any person on oath and notes of s!ch examination shall be ta2en in writin(. %n case of fail!re to the f!rnish information or to appear for examination on oath, the offence is p!nishable with imprisonment and fine. +la!se 1&). E 9his cla!se corresponds to section 23) of the +ompanies #ct, 1)5" and see2s to empower the %nspector to in-esti(ate the affairs of any other body corporate where s!ch corporate body is or has been a holdin( company or s!bsidiary company or has the same ana(in( Director or ana(er or where 0oard of Directors act on the directions of s!ch company, and if necessary s!bject to prior appro-al of the +entral 4o-ernment, can in-esti(ation into the affairs of s!ch body corporate or ana(in( Director or ana(er, etc., be done. +la!se 1)*. E 9his cla!se corresponds to section 24*# of the +ompanies #ct, 1)5" and see2s to deal with sei=!re of doc!ments by the %nspector when he has reasonable (ro!nd to belie-e that they are li2ely to be destroyed, m!tilated, altered, falsified, etc. 9he %nspector has to ret!rn the sei=ed doc!ments after concl!sion of in-esti(ation. %t empowers the %nspector to cond!ct search, sei=e boo2s or papers in terms of the pro-isions of the code of +riminal /roced!re 1)$3. +la!se 1)1. E 9his is a new cla!se and see2s to pro-ide that where in connection with in3!iry or in-esti(ation into the affairs of the company or a reference by the +entral 4o-ernment or on complaint by any person that transfer or disposal of f!nds, properties or assets is li2ely to ta2e place which is pre.j!dicial to the interest of company, its shareholders, creditors on in p!blic interest then 9rib!nal may order for a period free=in( s!ch transfer, remo-al or disposal of assets for a period of three year.

253

+la!se 1)2. E 9his cla!se corresponds to section 25* of the +ompanies #ct, 1)5" and see2s to pro-ide for imposition of restrictions by the 9rib!nal in connection with in-esti(ation !nder cla!se 1&$ on the sec!rities of the company for a period not exceedin( three years. +la!se 1)3. E 9his cla!se corresponds to section 241 and 24" of the +ompanies #ct, 1)5" and see2s to pro-ide for s!bmission of the interim and final report of in-esti(ation to the +entral 4o-ernment. S!ch a report shall be in writin( or printed. 9he +entral 4o-ernment shall forward a copy of report to the company and may f!rnish a copy on payment of prescribed fee to any person who is ember of +ompany or creditor of company or the body corporate affected. >here-er applicable, a report shall also be f!rnished to +o!rt or 9rib!nal. F!rther, s!ch a report can be s!bmitted as e-idence in any le(al proceedin(s. +la!se 1)4. E 9his is a new cla!se and see2s to pro-ide that no s!it or proceedin(s shall lie in any +o!rt or 9rib!nal or other a!thority in respect of any action initiated by the +entral 4o-ernment for ma2in( an in-esti(ation or for appointment of any inspector in this re(ard and no proceedin(s of an inspection shall be called in 3!estion or stayed by any +o!rt or 9rib!nal or any a!thority till s!ch in-esti(ation report is s!bmitted. +la!se 1)5. E 9his cla!se corresponds to section 242, 243 and 244 of the +ompanies #ct, 1)5" and see2s to empowers the +entral 4o-ernment to prosec!te s!ch person for the offence and cast d!ty on officers, employees or the company or body corporate to pro-ide necessary assistance in connection with the prosec!tion. 9his cla!se f!rther deals with action to be ta2en on the in-esti(ation report which incl!des windin(.!p , misfeasance, reco-ery proceedin(s, etc. +la!se 1)". E 9his cla!se corresponds to section 245 of the +ompanies #ct, 1)5" and see2s to pro-ide that expenses of in-esti(ation shall be borne by the +entral 4o-ernment in the first instance. 9hereafter, it shall be borne by person so con-icted on a prosec!tion instit!ted or who is ordered to pay dama(es or restore the property to the extent he may be ordered to pay the said expenses as specified by the +o!rt. F!rther, any amo!nt which company is liable to pay shall be the first char(e on the property. +la!se 1)$. E 9his cla!se corresponds to section 25*# of the +ompanies #ct, 1)5" and see2s to pro-ide with contin!ation of in-esti(ation e-en after -ol!ntary windin(.!p or application is pendin( before the 9rib!nal. F!rther, it pro-ides that windin(.!p order shall not absol-e director or employee from participatin( in the proceedin(s before the %nspector or any liability as a res!lt of findin(s by %nspector. +la!se 1)&. E 9his cla!se corresponds to section 251 of the +ompanies #ct, 1)5" and see2s to pro-ide the ri(hts of the le(al #d-isers or ban2ers of the body corporate or other person, not to disclose to the 9rib!nal or to the +entral 4o-ernment or to the %nspector any information as to the affairs of any of their c!stomers, other than s!ch company or body corporate. +la!se 1)). E 9his is a new cla!se and see2s to pro-ide that the pro-isions of inspection or in-esti(ation applicable to %ndian +ompanies shall also apply m!tatis m!tandis to inspection or in-esti(ation of forei(n companies. +la!se 2**. E 9his cla!se is a new cla!se which see2s to pro-ide p!nishment for f!rnishin( false statements, m!tilation or destr!ction of doc!ments d!rin( the co!rse of inspection or in-esti(ation. +la!se 2*1. E 9his cla!se corresponds to section 3)1 of the +ompanies #ct, 1)5" and see2s to pro-ide powers to 9rib!nal to ma2e order on the application of the company or any creditor or member or in case of company bein( wo!nd.!p, of li3!idator for the proposed compromise or arran(ements incl!din( debt restr!ct!rin(, etc., between company, its creditors and members. #n application by affida-it shall disclose all material facts relatin( to company, red!ction of share capital etc. >here a meetin( is called, a notice shall be sent to all creditors, members, debent!re

254

holders indi-id!ally or by ad-ertisement which shall be accompanied by statement disclosin( the details of compromise or arran(ement. 9he order of the 9rib!nal sanctionin( compromises or arran(ement shall be filed with the ,e(istrar. 9a2eo-er of companies ha-e been incl!ded in compromise or arran(ement. #n a((rie-ed party may appeal to the 9rib!nal in the e-ent of any (rie-ances with respect to the ta2eo-er offer in case of companies other than listed companies. +la!se 2*2. E 9his cla!se corresponds to section 3)2 of the +ompanies #ct, 1)5" and see2s to pro-ide powers to 9rib!nal to enforce compromise or arran(ements with creditors and members as ordered !nder cla!se 2*1. 9he cla!se also pro-ides that, if the 9rib!nal is satisfied that s!ch compromise or arran(ement cannot be implemented satisfactorily with or witho!t modifications, and the company is !nable to pay its debts as per the scheme, it may ma2e an order for windin(. !p of the company. +la!se 2*3. E 9his cla!se corresponds to section 3)4 of the +ompanies #ct, 1)5" and see2s to pro-ide powers to 9rib!nal to order for holdin( meetin( of the creditors or the members and to ma2e orders on the proposed reconstr!ction, mer(er or amal(amation of companies. 9he cla!se pro-ides for the manner and proced!re in which the meetin( so ordered by the 9rib!nal to be held. >here the 9rib!nal orders for transfer of any property or liability, that property or liability shall be transferred to and become the property or liabilities of the transferee company and any property may, if the orders so directs be freed of any char(e by -irt!e of compromise or arran(ement. '-ery company shall file a certified copy of the order within thirty days with the ,e(istrar for re(istration. +la!se 2*4. E 9his is a new cla!se and see2s to pro-ide for mer(er or amal(amation between two small companies or between a holdin( company and its wholly owned s!bsidiary company by (i-in( a notice of the proposed scheme in-itin( comments or objections by both the transferor and the transferee company. 9he scheme is to be appro-ed by the respecti-e members at a (eneral meetin( by passin( a special resol!tion and by three.fo!rths in -al!e of the creditors of respecti-e companies. 9ransferee +ompany shall file a copy of the appro-ed scheme with the ,e(istrar and the 1fficial <i3!idator. %f the ,e(istrar is of the opinion that s!ch a scheme is not in p!blic interest or in interest of the creditors, he may file an application before the 9rib!nal statin( his objections and re3!estin( it to consider the scheme for reconstr!ction mer(er or amal(amation, etc., !nder cla!se 2*3. 9he 9rib!nal may direct accordin(ly or it may confirm the scheme by passin( s!ch order as it deem fit. 9he transferor company shall be deemed to be dissol-ed on re(istration of the scheme. 9his cla!se also pro-ides for effects of re(istration of the scheme with the ,e(istrar. +la!se 2*5. E 9his is a new cla!se and see2s to pro-ide the mode of mer(er or amal(amation between re(istered companies !nder the proposed le(islation and companies incorporated in the j!risdictions of s!ch co!ntries as notified from time to time by the +entral 4o-ernment by m!t!al a(reement. 9his cla!se f!rther pro-ides that forei(n company may mer(e or amal(amate into a company or -ice -ersa and the terms and conditions of the scheme of mer(er or amal(amation may pro-ide for the payment of consideration to the shareholders of the mer(in( company in cash or partly in cash or partly in %ndian Depository ,eceipts. +la!se 2*". E 9his cla!se corresponds to section 3)5 of the +ompanies #ct, 1)5" and see2s to pro-ide the manner in which the transferee company shall ac3!ire shares of the shareholders dissentin( from the scheme or contract as appro-ed by the majority shareholders holdin( not less than nine.tenths in -al!e of the shares whose transfer is in-ol-ed. 9he transferee company shall send a copy of the notice to the transferor company to(ether with an instr!ment of transfer, to be exec!ted and pay the consideration representin( the price payable by the transferee company for the shares. S!ch consideration recei-ed by transferor company shall be paid into separate ban2 acco!nt and any other consideration shall be held by company in tr!st and shall be disb!rsed to the entitled shareholders.

255

+la!se 2*$. E 9his cla!se corresponds to section 3)5 of the +ompanies #ct, 1)5" and see2s to pro-ide the proced!re and manner in which the re(istered holder of at least )* per cent shares of a company shall notify the company of their intention to b!y the remainin( e3!ity shares of minority shareholders, by -irt!e of an amal(amation, share exchan(e, con-ersion of sec!rities, etc., pro-ison for -al!ation of shares ha-e been pro-ided by a re(istered -al!er. 9his cla!se pro-ides for the proced!re to be followed for ac3!irin( shares held by minority sharareholders. +la!se 2*&.E 9his cla!se corresponds to section 3)" of the +ompanies #ct, 1)5" and see2s to pro-ide power to +entral 4o-ernment to pro-ide for amal(amation of two or more companies in p!blic interest by passin( an order to be notified in the 1fficial 4a=ette. '-ery member or creditor or debent!re holder shall ha-e same interest or ri(hts a(ainst transferee company as he had in ori(inal company and where the interest or ri(ht is less than his interest or ri(ht, he shall be entitled to compensation by transferee company. #ny a((rie-ed person may approach 9rib!nal for re.assessment of compensation. +la!se 2*).E 9his cla!se see2s to pro-ide mode of re(istration of offer of schemes or contract in-ol-in( the transfer of shares. '-ery circ!lar containin( s!ch offer and recommendation and containin( a statement shall be accompanied by re3!isite information and m!st be re(istered with the ,e(istrar before iss!e. 9he ,e(istrar may ref!se to re(ister any s!ch circ!lar which does not contain the re3!isite information. 9his cla!se f!rther see2s to pro-ide that power to appeal shall lie with 9rib!nal in the e-ent of ref!sal of re(istration of offer of scheme by ,e(istrar of companies. +la!se 21*.E 9his cla!se corresponds to section 3)"# of the +ompanies #ct, 1)5" and see2s to pro-ide that no company which has been amal(amated or whose shares has been ac3!ired by another company to dispose of its boo2s of acco!nts and papers witho!t the prior permission of the +entral 4o-ernment. 9he 4o-ernment may appoint a person to examine boo2s and papers to as certain whether they contain any e-idence of commission of offence in connection with promotion, formation, mana(ement, etc., of the company. +la!se 211.E 9his cla!se see2s to pro-ide that the liability in respect of offences committed by the officers in defa!lt of transferor company prior to its mer(erNamal(amationN ac3!isition shall contin!e after s!ch mer(er or amal(amation or ac3!isition. +la!se 212.E 9his cla!se corresponds to section 3)$ of the +ompanies #ct, 1)5" and see2s to pro-ide the circ!mstances in which an application may be made to the 9rib!nal by any member of a company or by the +entral 4o-ernment for relief in cases of oppression and mismana(ement in the affairs of the company. +la!se 213.E 9his cla!se corresponds to sections 3)$, 3)&, 4*2, 4*3 and 4*4 of the +ompanies #ct, 1)5" and see2s to pro-ide for powers of 9rib!nal to pass an order with a -iew to brin( to an end the matters complained of oppression and mis.mana(ement. 9he cla!se pro-ides that a certified copy of order of 9rib!nal shall be filed with the ,e(istrar. 9he 9rib!nal may ma2e any interim order as it thin2s j!st and e3!itable. >here 9rib!nal8s order re3!ire alteration of articles, a certified copy of the same be filed with the ,e(istrar. +la!se 214. E 9his cla!se corresponds to section 4*$ of the +ompanies #ct, 1)5" and see2s to pro-ide for conse3!ence of termination or modifications of certain a(reements by an order passed by the 9rib!nal. S!ch order shall not (i-e rise to any claims a(ainst the company by any person for dama(es or compensation for loss of office. F!rther, no s!ch mana(in( director or director or mana(er whose a(reement is so terminated shall be appointed for a period of fi-e years from the date of the order witho!t the lea-e of the 9rib!nal. +la!se 215.E 9his cla!se corresponds to section 3)) of the +ompanies #ct, 1)5" and see2s to pro-ide that the members of a company not less than one h!ndred in n!mber or not less than one. tenth of the total n!mber of members whiche-er is less or any memberFsG holdin( not less than

256

one.tenth of the iss!ed share capital and in case of company witho!t share capital not less than one.fifth of the total n!mber of its members can file an application to the 9rib!nal for relief in cases of oppression and mis.mana(ement. 9he cla!se f!rther pro-ides that the 9rib!nal may wai-e all or any of the re3!irements specified therein. +la!se 21".E 9his is a new cla!se and see2s to pro-ide that any one or more members or one or more creditors may file an application before the 9rib!nal on behalf of the members and creditors if they are of the opinion that the mana(ement or control of the affairs of company are bein( cond!cted in a manner prej!dicial to the interests of the company or its members or creditors and to restrain the company from oppression and mis.mana(ement. 9he order passed by the 9rib!nal shall be bindin( on the company and all its members and creditors. +la!se 21$. E 9his cla!se see2s to pro-ide that cla!ses 312.31" Fboth incl!si-eG relatin( to power to p!nish for contempt of the 9rib!nal, etc., shall apply in relation to a fra!d!lent application made to the 9rib!nal for oppression and mis.mana(ement. +la!se 21&.E 9his is a new cla!se and see2s to pro-ide that -al!ation in respect of any property, stoc2s, shares, debent!res, sec!rities, (oodwill or net worth of a company or its assets shall be -al!ed by a person re(istered as a -al!er, appointed by the a!dit committee or in its absence by the 0oard of Directors of the company. +la!se 21).E 9his is a new cla!se and see2s to pro-ide the proced!re for re(istration as -al!er. 9he +entral 4o-ernment shall maintain a re(ister called the re(ister of -al!ers in which the names and addresses of persons re(istered as -al!ers are to be recorded. %t also pro-ides that a +hartered #cco!ntant, +ost and >or2s #cco!ntant, +ompany Secretary or other persons possessin( prescribed 3!alifications may apply to the +entral 4o-ernment to be re(istered as a -al!er. 9he cla!se f!rther pro-ides that no company or body corporate shall be eli(ible to apply as re(istered -al!er. +la!se 22*.E 9his is a new cla!se see2in( to pro-ide powers to the +entral 4o-ernment for appointment of a committee of experts to recommend s!itable names for the p!rpose of incl!sion in the re(ister of -al!ers. +la!se 221.E9his is a new cla!se see2in( to restricts a person to practice, describe or project himself as a re(istered -al!er !nless he is re(istered as a -al!er. F!rther, the cla!se see2s to pro-ide for s!bmission of the report of -al!ation of any assets by a re(istered -al!er in s!ch form and -erified in s!ch manner as may be prescribed. 9he re(istered -al!er shall not char(e at a rate exceedin( the rate prescribed. +la!se 222.E 9his is a new cla!se and see2s to pro-ide that a re(istered -al!er or a person who has made an application for re(istration as a -al!er is sentenced to a term of imprisonment for any offence or fo!nd (!ilty of miscond!ct in his professional capacity, shall immediately after s!ch con-iction or findin( intimate the partic!lars thereof to the +entral 4o-ernment. +la!se 223. E 9his is a new cla!se and see2s to pro-ide the circ!mstances !nder which the name of a -al!er may be remo-ed from the re(ister or restored in the re(ister by the +entral 4o-ernment. 9he +entral 4o-ernment shall re-iew the performance of all re(istered -al!ers once in three years and may remo-e the name of any person after (i-in( opport!nity of bein( heard. +la!se 224. E 9his cla!se corresponds to section 5"* of the +ompanies #ct, 1)5" and see2s to pro-ide the circ!mstances !nder which the ,e(istrar shall send a notice to the company and all the directors of the company of his intention to remo-e the name of the company from the re(ister. 9he cla!se f!rther pro-ides that a company by a special resol!tion or with the consent of se-enty. fi-e per cent. members in terms of share capital may also file an application to the ,e(istrar for

257

remo-in( the name of the company from the re(ister. >here company is re(!lated !nder special law, appro-al of the re(!latory body constit!ted, shall also be obtained and enclosed with application. 9he cla!se f!rther see2s to pro-ide that at the expiry of the time mentioned in the notice, the ,e(istrar may stri2e of the name of the company from the re(ister, and on the p!blication in the 1fficial 4a=ette of this notice, the company shall stand dissol-ed. Iowe-er, the ,e(istrar, before passin( an order shall satisfy himself that s!fficient pro-ision has been made for the realisation of all amo!nt d!e to the company and for the payment or dischar(e of its liabilities and obli(ations by the company within a reasonable time. 9he liability of e-ery director, mana(er or other officer exercisin( any power of mana(ement and e-ery member of company dissol-ed shall contin!e and may be enforced as if company had not been dissol-ed. +la!se 225. E 9his is a new cla!se and see2s to pro-ide certain sit!ations in which no application be made by the company !nder s!b.cla!se F2G of cla!se 224 for remo-in( its name from the re(ister. %t f!rther pro-ides penalty if a company files an application in -iolation of the conditions prescribed. #n application filed by a company for remo-in( its name shall be withdrawn by the company or rejected by the ,e(istrar as soon as conditions when no application for remo-in( name of the company from re(ister is bro!(ht to his notice. +la!se 22". E 9his cla!se see2s to pro-ide that where a company is dissol-ed it shall cease to operate as a company and the +ertificate of %ncorporation is deemed to ha-e been cancelled except for the p!rpose of realisin( the amo!nt d!e to the company and for the payment or dischar(e of the liabilities or obli(ations of the company. +la!se 22$. E 9his is a new cla!se and see2s to pro-ide penalty in case fra!d!lent application is made for remo-al of name of the company from the re(ister with the object of e-adin( the liabilities of the company or with the intention to decei-e the creditors or to defra!d any other persons. F!rther, the ,e(istrar may also recommend prosec!tion a(ainst the persons responsible for the filin( s!ch applications. +la!se 22&.E 9his cla!se corresponds to s!b.section F"G of section 5"* of the +ompanies #ct, 1)5" and see2s to pro-ide that any person, a((rie-ed by an order of the ,e(istrar notifyin( a company as dissol-ed !nder cla!se can file an appeal to the 9rib!nal within 3 years for restoration of the name of the company in the re(ister. %f 9rib!nal is of the opinion that remo-al of name is not j!stified or in the absence of any (ro!nd, may order for restoration of the name. 9he company shall file the copy of order with ,e(istrar and the ,e(istrar shall restore the name and iss!e a fresh +ertificate of %ncorporation. 9he cla!se f!rther pro-ides that where the name of the company is str!c2 off from the re(ister, the name of the company may be restored, if the 9rib!nal is satisfied that the company was carryin( on b!siness or operates or otherwise and it is j!st to restore the name of company to the re(ister before the expiry of twenty years. +la!se 22). E 9his cla!se corresponds to section 424# of the +ompanies #ct, 1)5" and see2s to pro-ide the manner in which a company be declared sic2. %n case a company fails to pay its debt, the creditor may file an application to the 9rib!nal for determination that the company be declared as a sic2 company. #n applicant may at any time apply for stay of proceedin(s of windin(.!p. 9he 9rib!nal may pass an order on the application. 9he company at its own may also file an application to the 9rib!nal for declarin( it as a sic2 company. #fter filin( application before the 9rib!nal the company shall not dispose of its assets except as re3!ired in the normal co!rse of b!siness and the 0oard of Directors shall not ta2e any steps li2ely to prej!dice the interests of the creditors. 9he 9rib!nal shall determine whether the company is sic2 or not within sixty days. +la!se 23*.E 9his cla!se see2s to pro-ide that any sec!red creditor of sic2 company may ma2e an application to the 9rib!nal for the determination of the meas!res that may be adopted with respect to the re-i-al and rehabilitation of s!ch company. 9his cla!se f!rther pro-ides for certain

258

conditions to be f!lfilled in case the financial assets of the sic2 company had been ac3!ired as per the Sec!ritisation and ,econstr!ction of Financial #ssets and 'nforcement of Sec!rities %nterest #ct, 2**2. #n application shall be accompanied by a!dited financial statements of the company and a draft scheme of re-i-al and rehabilitation of the company alon( with fee. +la!se 231.E 9his is a new cla!se and see2s to pro-ide that the 9rib!nal shall fix a date of hearin( not later than ninety days from date of the receipt of an application and appoint an interim administrator to con-ene a meetin( of creditors of the company to ascertain whether it is possible to re-i-e and rehabilitate the sic2 company. %n case, no draft scheme is filed by the company, the 9rib!nal may direct the interim administrator to ta2e o-er the mana(ement of the company to protect and preser-e the assets of the sic2 company and for its proper mana(ement. +la!se 232.E 9his is a new cla!se and see2s to pro-ide that the interim administrator shall appoint a committee of creditors ha-in( not more than se-en members incl!din( a representati-e of e-ery class of creditor, if any. 9he interim administrator may direct any promoter, director or any other 2ey mana(erial personnel to attend any meetin( of the committee of creditors and to f!rnish s!ch information as considered necessary by the interim administrator. +la!se 233.E 9his is a new cla!se and see2s to pro-ide that if the 9rib!nal is satisfied with the report of the interim administrator wherein the creditors representin( three.fo!rths in -al!e of the amo!nt o!tstandin( a(ainst the sic2 company present and -otin( ha-e resol-ed that it is not possible to re-i-e and rehabilitate s!ch company, the 9rib!nal shall order that the proceedin(s for the windin(.!p of the company be initiatedH or shall appoint a company administrator for the company and ad-ice s!ch administrator to prepare a scheme of re-i-al and rehabilitation of the sic2 company. 9he 9rib!nal may, appoint an interim administrator as the company administrator. +la!se 234.E 9his is a new cla!se and see2s to pro-ide that the interim administrator or company administrator shall be appointed by the 9rib!nal from a panel of ad-ocates, company secretaries, chartered acco!ntants, cost and wor2s acco!ntants, etc. 9he 9rib!nal may direct the company administrator to ta2e o-er the assets or mana(ement of the company to assist him in the mana(ement of the company. 9he company administrator may en(a(e the ser-ices of experts. +la!se 235.E 9his cla!se corresponds to section 424I of the +ompanies #ct, 1)5" and see2s to pro-ide that the company administrator shall prepare a complete in-entory of all assets and liabilities, all boo2s of acco!nt, a list of shareholders and creditors, a -al!ation report in respect of the shares and assets in order to arri-e at the reser-e price for the sale of any ind!strial !nderta2in( of the company or for the fixation of the lease rent or share exchan(e ratio, proforma acco!nts of company where a!dited acco!nts are not a-ailable and a list of wor2men of the company. +la!se 23".E 9his cla!se corresponds to section 424D of the +ompanies #ct, 1)5" and see2s to pro-ide that the company administrator shall prepare a scheme of re-i-al and rehabilitation of the sic2 company. 9he cla!se f!rther pro-ides for the -ario!s meas!res to be considered while preparin( the scheme. +la!se 23$.E 9his cla!se corresponds to section 424D of the +ompanies #ct, 1)5" and see2s to pro-ide that the scheme prepared by the company administrator will be placed before the separately con-ened meetin(s of sec!red and !nsec!red creditors of the sic2 company. %f the scheme is appro-ed by the !nsec!red and sec!red creditors, the company administrator shall s!bmit the scheme before the 9rib!nal for sanctionin( the scheme. >here the scheme relates to amal(amation of the sic2 company with any other company, s!ch scheme shall be laid before the (eneral meetin(s of the companies for appro-al by its shareholders and separately in the meetin(s of sec!red and !nsec!red creditors. 1n the receipt of the scheme, the 9rib!nal after satisfyin( that the scheme had been -alidly appro-ed pass an order sanctionin( s!ch scheme.

259

9he sanction accorded by the 9rib!nal shall be concl!si-e e-idence and a copy of the sanctioned scheme shall be filed with the ,e(istrar by the sic2 company. +la!se 23&.E 9his cla!se see2s to pro-ide that on and from the date of the comin( into operation of the sanctioned scheme, its pro-isions shall be bindin( on the sic2 company and the transferee company and also on the shareholders, creditors and (!arantors of the said companies. +la!se 23).E 9his cla!se corresponds to section 424 4 of the +ompanies #ct, 1)5" and see2s to pro-ide that the 9rib!nal for effecti-e implementation of the scheme may a!thorise the company administrator to implement a sanctioned scheme. >here it is diffic!lt to implement the scheme for any reason or the scheme fails d!e to non. implementation of obli(ations by the parties concerned, the company administrator or in his absence, the company, the sec!red creditors, or the transferee company in a case of amal(amation, may ma2e an application before the 9rib!nal for modification of the scheme or to declare the scheme as failed, as the case may be, and may re3!est that the company may be wo!nd.!p. 9he 9rib!nal shall, pass an order for modification of the scheme or declarin( the scheme as failed and pass an order for the windin(.!p of the company. +la!se 24*.E 9his is a new cla!se and see2s to pro-ide that if the scheme is not appro-ed by the creditors in the manner specified, the company administrator shall s!bmit a report to the 9rib!nal and the 9rib!nal shall order for the windin(.!p of the sic2 company. +la!se 241.E 9his cla!se corresponds to section 424 5 of the +ompanies #ct, 1)5" and see2s to pro-ides that if it appears to the 9rib!nal in the co!rse of scr!tiny or implementation of any scheme that any person who has ta2en part in the promotion, formation or mana(ement of the sic2 company or its !nderta2in( has misapplied or retained, or become liable or acco!ntable for, any money or property of the sic2 companyH or has been (!ilty of any misfeasance, malfeasance or nonfeasance or breach of tr!st in relation to the sic2 company, the 9rib!nal may by order, direct him to repay or restore the money or property, with or witho!t interest, as it thin2s j!st, or to contrib!te to the assets of the sic2 company. F!rther, if the 9rib!nal is satisfied on the basis of the information and e-idence with respect to any person who by himself or alon( with others had di-erted the f!nds or property or had mana(ed the affairs of the company in a manner hi(hly detrimental to the interests of the company, the 9rib!nal shall, direct the p!blic financial instit!tions, sched!led ban2s and State le-el instit!tions not to pro-ide, any financial assistance for a maxim!m period of ten yearsto s!ch person or any firm of which s!ch person is a partner or any company or other body corporate of which s!ch person is a director or to dis3!alify a person from bein( appointed as a director for a period of six years. +la!se 242.E 9his cla!se corresponds to section 424< of the +ompanies #ct, 1)5" and see2s to pro-ide the p!nishment if any person -iolates the pro-isions relatin( to the re-i-al and rehabilitation of sic2 companies or any scheme, or any order, of the 9rib!nal or the #ppellate 9rib!nal or ma2es a false statement or (i-es false e-idence or attempts to tamper the records of reference or appeal filed !nder this #ct. +la!se 243.E 9his is a new cla!se and see2s to pro-ide that no appeal shall lie and no inj!nction shall be (ranted by any co!rt or other a!thority in respect of any action ta2en or proposed to be ta2en in p!rs!ance of any power conferred by or !nder this +hapter. F!rther, no ci-il co!rt shall ha-e any j!risdiction in respect of matter which 9rib!nal or #ppellate 9rib!nal is empowered. +la!se 244.E 9his cla!se corresponds to section 441+ of the +ompanies #ct, 1)5" and see2s to pro-ide that a F!nd to be called the ,ehabilitation and %nsol-ency F!nd shall be formed for the p!rposes of rehabilitation, re-i-al and li3!idation of sic2 companies. 9he cla!se pro-ides for the amo!nts to be credited to the F!nd. 9he F!nd shall be mana(ed by an independent administrator to be appointed by the +entral 4o-ernment. 9he f!nd can be !tilised only by the companies who

260

contrib!ted to the f!nd to the extent to its contrib!tion for ma2in( payment to the wor2men protectin( the assets of company, etc. +la!se 245.E 9his cla!se corresponds to section 425 of the +ompanies #ct, 1)5". 9he cla!se see2s to pro-ide two modes of windin(.!p s!ch as by the 9rib!nal or -ol!ntary. +la!se 24".E 9his cla!se corresponds to sections 433 and 434 of the +ompanies #ct, 1)5" and see2s to pro-ide the circ!mstances !nder which a company may be wo!nd.!p by the 9rib!nal. 9he cla!se f!rther see2s to define the circ!mstances when a company is deemed to be !nable to pay its debts. +la!se 24$.E9his cla!se corresponds to section 43) of the +ompanies #ct, 1)5" and see2s to a!thorise the persons or a!thority who can file or present a petition to the 9rib!nal for the windin(. !p of a company. 9his cla!se f!rther see2s to a!thorise a sec!red creditor, holder of any debent!re and tr!stee for the holders of debent!res and contrib!tory to file the petition for windin(. !p of a company. # petition filed by the company for windin(.!p shall be accompanied by a statement of affairs of the company. +la!se 24&.E 9his cla!se corresponds to section 443 of the +ompanies #ct, 1)5" and see2s to pro-ide the time within which the 9rib!nal may pass an order either dismissin( the petition for windin(.!p or ma2e an order for windin(.!pH or ma2e any interim order or appoint a pro-isional li3!idator. 9he cla!se f!rther pro-ided that when a petition is presented on j!st and e3!itable (ro!nd, the 9rib!nal may ref!se it if it is of the opinion that any other remedy is a-ailable. +la!se 24).E 9his cla!se corresponds to section 43)# of the +ompanies #ct, 1)5" and see2s to empower the 9rib!nal to direct the company to file its objections alon( with a statement of its affairs when a petition is made by a person other than the company. Fail!re to file the statement of affairs will forfeit the ri(ht to oppose the petition and the directors and officers as fo!nd responsible for s!ch non.compliance, shall be p!nishable. 9he cla!se f!rther see2s to pro-ide p!nishment to the directors and other officers of the company who ha-e contra-ened the pro-isions of this cla!se s!ch as non filin( of the statement of affairs and completed and a!dited boo2s of acco!nts of the company. +la!se 25*.E 9his cla!se corresponds to sections 44&, 44) and 45* of the +ompanies #ct, 1)5". 9his cla!se see2s to pro-ide for the appointment of pro-isional li3!idator or the +ompany <i3!idator for the p!rpose of windin(.!p of a company from a panel of professionals maintained by the +entral 4o-ernment. S!ch professionals m!st be ha-in( atleast ten years of experience in company matters or s!ch other 3!alifications. 9he cla!se also empowers the +entral 4o-ernment to remo-e the name of a person from the panel of professionals on the (ro!nd of miscond!ct, fra!d, etc., after (i-in( him an opport!nity of bein( heard. 9he cla!se f!rther pro-ides that the 9rib!nal shall specify the terms and conditions and fee payable to the li3!idator. +la!se 251.E 9his is a new cla!se and see2s to pro-ide the (ro!nds on which the 9rib!nal may remo-e the pro-isional li3!idator or the +ompany <i3!idator as li3!idator of the company. %n case of death, resi(nation or remo-al, the 9rib!nal may transfer the wor2 assi(ned to another company li3!idator after recordin( the reasons in writin(. 9he cla!se also a!thorises the 9rib!nal to reco-er s!ch loss or dama(e from the li3!idator who fails to perform his d!ty after pro-idin( him a reasonable opport!nity of bein( heard. +la!se 252.E 9his cla!se corresponds to sections 444 and 445 of the +ompanies #ct, 1)5" and see2s to pro-ide for the order of 9rib!nal for the windin(.!p of a company to the +ompany <i3!idator and the ,e(istrar within a period of fifteen days from the date of passin( of s!ch order. 9he ,e(istrar on receipt of orders ma2e an endorsement of it in its record and notify the same in the 1fficial 4a=ette. 9he order of the 9rib!nal wo!ld be deemed to be a notice of dischar(e to the

261

officers, employees and wor2men of the company except when the b!siness of the company is contin!ed. +la!se 253.E 9his cla!se corresponds to section 44$ of the +ompanies #ct, 1)5" and see2s to pro-ide that the windin(.!p order shall operate in fa-o!r of all the creditors and contrib!tories of the company. +la!se 254.E 9his cla!se corresponds to section 44" of the +ompanies #ct, 1)5" and see2s to pro-ide that on passin( of windin(.!p order or appointment of pro-isional li3!idator, all s!its, etc., by or a(ainst the company shall not be commenced or if pendin(, to be proceeded except with the lea-e of the 9rib!nal. 9he cla!se f!rther see2s to pro-ide for the time frame within which an application see2in( lea-e is to be disposed of by the 9rib!nal. Iowe-er, this pro-ision shall not apply to any proceedin(s pendin( in appeal before the S!preme +o!rt or a Ii(h +o!rt. +la!se 255.E 9his cla!se see2s to pro-ide the j!risdiction of 9rib!nal to entertain or dispose of any s!it or proceedin(s or claim by or a(ainst the company and also to entertain or dispose of any 3!estion of law arisin( before or after windin(.!p. +la!se 25".E 9his cla!se corresponds to section 455 of the +ompanies #ct, 1)5" and see2s to pro-ide for s!bmission of report containin( the partic!lars of the nat!re and details of assets of the company, amo!nt of iss!ed, s!bscribed and paid.!p capital, etc., to the 9rib!nal by +ompany <i3!idator within sixty days from the date of order of the 9rib!nal. 9he cla!se also see2s to pro-ide that the +ompany <i3!idator shall incl!de in his report the manner in which the company was promoted or formed and whether any fra!d has been committed by any person in its promotion or formation. 9he company li3!idator shall also report on the -iability of the b!siness of the company or the steps which are necessary for maximisin( the -al!es of the assets of the company. 9he cla!se also entitle the creditor or a contrib!tory of the company to inspect the report s!bmitted and to ta2e copies thereof or extracts therefrom on payment of the fee. +la!se 25$.E 9his is a new cla!se and see2s to empower the 9rib!nal to consider the report of +ompany <i3!idator and fix a time limit or re-ise the time limit already fixed within which the entire proceedin(s shall be completed and the company dissol-ed. 9he cla!se f!rther see2s to empower the 9rib!nal to order for sale of assets of the company or appointment of sale committee to assist the company li3!idator in sale. 9he cla!se see2s to empower the 9rib!nal, to order for in-esti(ation where a report is recei-ed from the +ompany <i3!idator or the +entral 4o-ernment or any person that a fra!d has been committed in respect of the company and also order s!ch steps as may be necessary to protect, preser-e or enhance the -al!e of the assets of the company. +la!se 25&.E 9his cla!se corresponds to section 45" of the +ompanies #ct, 1)5" and see2s to cast d!ty !pon pro-isional li3!idator or the li3!idator on the order of the 9rib!nal to ta2e into his c!stody all the property, effects and actionable claims to which the company is entitled to and ta2e s!ch steps and meas!res, as may be necessary, to protect and preser-e the properties of the company. 9his cla!se f!rther pro-ides that all the property and effects of the company shall be deemed to be in the c!stody of the 9rib!nal from the date of the order for the windin(.!p of the company. 9his cla!se also pro-ides for filin( of an application by the company li3!idator see2in( directions of the 9rib!nal with re(ard to s!rrender or transfer of any money, property, boo2s and papers by any tr!stee, recei-er, ban2er, a(ent, officer or other employee of the company. +la!se 25).E 9his is a new cla!se and see2s to pro-ide for co.operation by the promoters, directors, officers and employees, past and present, of the company to the +ompany <i3!idator in dischar(e of his f!nctions and d!ties. 9his cla!se f!rther see2s to pro-ide that if any of the aforesaid person fails to dischar(e his obli(ations, he shall be p!nishable with imprisonment or with fine or with both.

262

+la!se 2"*.E 9his cla!se corresponds to section 4"$ of the +ompanies #ct, 1)5" and see2s to pro-ide for settlement of list of contrib!tories, rectification of re(ister of members, to ma2e calls on or adj!st the ri(hts of contrib!tories, etc. 9his cla!se f!rther pro-ides for adoption of proced!re by the 9rib!nal while settlin( the list and ri(hts of contrib!tories. +la!se 2"1.E 9his is a new cla!se and see2s to p!t obli(ations on directors and mana(ers of limited company whose liability is !nlimited, to contrib!te in addition to his liability to contrib!te as an ordinary member. 9he cla!se f!rther pro-ides for the exemptions when a past Director or mana(er shall not be liable to ma2e f!rther contrib!tion as if he were at the commencement of windin(.!p, a member of an !nlimited company. +la!se 2"2.E 9his cla!se corresponds to sections 4"4 and 4"5 of the +ompanies #ct, 1)5" and see2s to pro-ide for the constit!tion of a committee of inspection by the 9rib!nal to ad-ise the +ompany <i3!idator and to report to the 9rib!nal on matters as the 9rib!nal may direct. 9his cla!se f!rther pro-ides the maxim!m n!mber of members bein( creditors or contrib!tories and other persons as directed by 9rib!nal, who can become members of the committee. 9he cla!se also see2s to direct +ompany <i3!idator to con-ene a meetin( of the creditors and contrib!tories to ascertain the composition of the committee of inspection. %t finally see2s to pro-ide that the meetin( of committee of inspection shall be chaired by the +ompany <i3!idator. +la!se 2"3.E 9his is a new cla!se and see2s to pro-ide that the +ompany <i3!idator shall ma2e 3!arterly reports to the 9rib!nal with respect to the pro(ress of the windin(.!p of the company. 9he cla!se f!rther pro-ides that the 9rib!nal may, on an application by the +ompany <i3!idator, re-iew the orders made by it and ma2e s!ch modifications as it thin2s fit. +la!se 2"4.E 9his cla!se corresponds to section 4"" of the +ompanies #ct, 1)5" and see2s to empower the 9rib!nal to stay the proceedin(s of windin(.!p for s!ch time not exceedin( one h!ndred and ei(hty days and on after satisfyin( itself that it is fair and j!st to re-i-e and rehabilitate the company. 9he cla!se pro-ides that before ma2in( an order, the 9rib!nal may re3!ire the company li3!idator to f!rnish a report of any rele-ant facts or matter. 9he cla!se f!rther cast d!ty !pon the +ompany <i3!idator to forward a copy of e-ery order to the ,e(istrar who shall ma2e an endorsement of the order in the boo2s and records relatin( to the company. +la!se 2"5.E 9his cla!se corresponds to section 45$ of the +ompanies #ct, 1)5" and see2s to pro-ide the powers exercisable by the +ompany <i3!idator -i=. power to carry on the b!siness of the company, to sell the mo-able and immo-able property of the company, to defend or instit!te any s!it, to raise any money on the sec!rity of assets of the company, etc. 9he cla!se finally pro-ides that the company li3!idator shall perform the d!ties as may be specified by the 9rib!nal. +la!se 2"".E 9his cla!se corresponds to section 45) of the +ompanies #ct, 1)5" and see2s to allow the +ompany <i3!idator, with the sanction of the 9rib!nal, to appoint chartered acco!ntants or company secretaries or cost acco!ntants or le(al practitioners or s!ch other professionals as may be necessary to assist him in the performance of his d!ties and f!nctions. 9he cla!se f!rther see2s for disclos!re by the person to the 9rib!nal of any conflict of interest or lac2 of independence in respect of his appointment. +la!se 2"$. E 9his cla!se corresponds to section 4"* of the +ompanies #ct, 1)5" and see2s to allow +ompany <i3!idator to administer the distrib!tion of assets amon( its creditors in accordance with the directions (i-en by the resol!tion of the creditors or contrib!tories at any (eneral meetin( or by the committee of inspection. %n case of conflict, the directions (i-en by the creditors or contrib!tories at any (eneral meetin( are deemed to o-erride any directions (i-en by the committee of inspection. 9he cla!se f!rther see2s to empower the +ompany <i3!idator to s!mmon (eneral meetin(s of the creditors or contrib!tories. #ny person a((rie-ed by any act or decision of the +ompany <i3!idator may apply to the 9rib!nal who may confirm, re-erse or modify the act or decision and ma2e s!ch f!rther order as it thin2 j!st in the circ!mstances.

263

+la!se 2"&.E 9his cla!se corresponds to section 4"1 of the +ompanies #ct, 1)5" and see2s to pro-ide that the company li3!idator shall 2eep proper boo2s and ma2e necessary entries. Ie shall also prepare the min!tes of the proceedin(s at meetin(s. 9he cla!se f!rther pro-ides that the boo2s may be inspected by any creditor or contrib!tory or thro!(h his a(ent. +la!se 2").E 9his cla!se corresponds to section 4"2 of the +ompanies #ct, 1)5" and see2s to pro-ide for the maintenance of boo2s of acco!nt by the +ompany <i3!idator. 9he +ompany <i3!idator shall present to the 9rib!nal a receipt and payments acco!nt in d!plicate d!ly -erified by a declaration, twice in each year d!rin( his ten!re of office. %t also see2s for filin( of copy of s!ch a!dited acco!nts with the ,e(istrar and the 9rib!nal. 9his cla!se f!rther see2s to pro-ide that the +ompany <i3!idator shall send the printed copy of the a!dited acco!nts to e-ery creditor and e-ery contrib!tory. 9his cla!se also pro-ides for forwardin( a copy of acco!nts to +entral or State 4o-ernment in case of a 4o-ernment +ompany. +la!se 2$*.E 9his cla!se corresponds to section 4") of the +ompanies #ct, 1)5" and see2s to pro-ide that the 9rib!nal may pass an order re3!irin( the contrib!tory to contrib!te any amo!nt d!e by him. 9his cla!se f!rther pro-ides in case of an !nlimited company, contrib!tory can set off any amo!nt payable to him by the company. # director or mana(er can similarly set off the amo!nt when their liability is !nlimited in a limited company. 9his cla!se finally pro-ides that s!ch set off facility shall also be (i-en to a contrib!tory after all the creditors ha-e been repaid in f!ll irrespecti-e of whether the company is limited or !nlimited. +la!se 2$1.E 9his cla!se corresponds to section 4$* of the +ompanies #ct, 1)5" and see2s to pro-ide that the 9rib!nal may, at any time after the passin( of a windin( !p order, ma2e calls on all or any of the contrib!tories to the extent of their liability, for payment of any money which the 9rib!nal considers necessary to satisfy the debts and liabilities of the company. +la!se 2$2.E 9his cla!se corresponds to section 4$5 of the +ompanies #ct, 1)5" and see2s to empower the 9rib!nal to adj!st the ri(hts of the contrib!tories amon( themsel-es and distrib!te any s!rpl!s amon( the persons entitled. +la!se 2$3.E 9his cla!se corresponds to section 4$" of the +ompanies #ct, 1)5" and see2s to pro-ide that the 9rib!nal to order for payment o!t of the assets, of the costs, char(es and expenses inc!rred in windin( !p in order of priority, when the assets of the company are ins!fficient to satisfy its liabilities. +la!se 2$4.E 9his cla!se corresponds to section 4$$ of the +ompanies #ct, 1)5" and see2s to pro-ide that the 9rib!nal may s!mmon and examinin( before it any officer of the company or person 2nown or s!spected to ha-e in his possession any property or boo2s or papers, of the company, or 2nown or s!spected to be indebted to the company or capable of (i-in( information relatin( to formation, promotion or affairs of the company. 9his cla!se f!rther pro-ides that the 9rib!nal may direct the <i3!idator to file before it a report in respect of property, debt, etc., of the company in possession of other persons. %t also see2s to empower 9rib!nal to impose an appropriate cost if any officer or person so s!mmoned fails to appear before the 9rib!nal at the appointed time witho!t a reasonable ca!se. +la!se 2$5.E 9his cla!se corresponds to section 4$& of the +ompanies #ct, 1)5" and see2s to pro-ide that the 9rib!nal may order examination of any person on the report made by the +ompany <i3!idator that in his opinion, a fra!d has been committed by s!ch person in promotion or formation or the cond!ct of the b!siness of the company. 9he person shall be examined on oath and shall answer all the 3!estions as p!t by the 9rib!nal. %t also see2s to pro-ide that any creditor or contrib!tories may also ta2e part in the examination either personally or by any a(ent with the permission of the 9rib!nal. %t pro-ides that +ompany <i3!idator shall ta2e part in the examination and !nderta2e s!ch le(al assistance as may be sanctioned by the 9rib!nal.

264

+la!se 2$".E 9his cla!se corresponds to section 4$) of the +ompanies #ct, 1)5" and see2s to pro-ide that the 9rib!nal may pass an order at any time either before or after passin( a windin( !p order, to arrest a contrib!tory or any person ha-in( property, acco!nts or papers who is abo!t to abscond or 3!it %ndia or is abo!t to remo-e or conceal any of his property, for the p!rpose of e-adin( payment of calls or to a-oid examination of affairs of the company. %t f!rther see2s to pro-ide that the boo2s and papers and mo-able property shall be sei=ed and 2ept safely !ntil 9rib!nal orders. +la!se 2$$.E 9his cla!se corresponds to section 4&1 of the +ompanies #ct, 1)5" and see2s to pro-ide that the +ompany <i3!idator shall ma2e an application to the 9rib!nal for dissol!tion of a company which has been completely wo!nd !p . 9he 9rib!nal shall ma2e an order that the company be dissol-ed from the date of the order, and the company shall be dissol-ed accordin(ly. # copy of the order shall be filed by the +ompany <i3!idator within thirty days with the ,e(istrar who shall record in the re(ister. 9his cla!se f!rther see2s to pro-ide p!nishment with fine for fail!re on the part of <i3!idator in forwardin( copy to ,e(istrar. +la!se 2$&.E 9his cla!se corresponds to section 4&3 of the +ompanies #ct, 1)5" and see2s to pro-ide that the pro-isions contained in +hapter @@ shall ha-e no effect in case of any order made by any +o!rt in any proceedin(s for the windin( !p of a company immediately before the commencement of this #ct and an appeal a(ainst s!ch order shall be filed before s!ch a!thority competent to hear s!ch appeals before the commencement of the #ct. +la!se 2$).E 9his cla!se corresponds to section 4&4 of the +ompanies #ct, 1)5" and see2s to pro-ide the circ!mstances for -ol!ntarily windin( !p of a company. 9his cla!se pro-ides that the company may be wo!nd !p if the company passes a resol!tion re3!irin( the company to be wo!nd !p -ol!ntarily as a res!lt of the expiry of the period for its d!ration, if any, fixed by its articles or on the occ!rrence of any e-ent in respect of which the articles pro-ide that the company sho!ld be dissol-ed. #lternati-ely, the company may be -ol!ntarily wo!nd !p by passin( a special resol!tion. +la!se 2&*.E 9his cla!se corresponds to section 4&& of the +ompanies #ct, 1)5" and see2s to pro-ide for ma2in( declaration of sol-ency by the company director at least fi-e wee2s before the date of passin( of resol!tion to windin( !p of the company and deli-ered to the ,e(istrar for re(istration. 9he declaration shall be accompanied by a copy of a!ditorKs report on the /rofit and <oss #cco!nt and 0alance Sheet of the company and a copy of report by re(istered -al!er on the assets of the company. 9his cla!se f!rther see2s to pro-ide that where the declaration of the directors pro-ed to be wron(, s!ch directors shall be p!nishable with imprisonment or with fine or with both. +la!se 2&1.E 9his cla!se corresponds to section 5** of the +ompanies #ct, 1)5" and see2s to pro-ide for callin( of meetin( of the company and its creditors at which the resol!tion for the -ol!ntary windin( !p is to be proposed. 9his cla!se pro-ides that where two.thirds creditors are of the opinion that the company be wo!nd !p -ol!ntarily, it shall be wo!nd !p -ol!ntarily and where they pass a resol!tion that the company be wo!nd !p by 9rib!nal, an application be filed with the 9rib!nal. 9he resol!tion so passed at a creditors meetin( is re3!ired to be filed with the ,e(istrar within ten days of the passin( thereof. +la!se 2&2.E 9his cla!se corresponds to section 4&5 of the +ompanies #ct, 1)5" and see2s to pro-ide for p!blication of resol!tion to wind !p -ol!ntarily by ad-ertisement in the 1fficial 4a=ette and also in some newspaper circ!latin( in the district where the re(istered office or the principal office of the company is sit!ated.

265

+la!se 2&3.E 9his cla!se corresponds to section 4&" of the +ompanies #ct, 1)5" and see2s to (i-e effect that the date of commencement of -ol!ntary windin( !p shall be the date of passin( of the resol!tion for the same. +la!se 2&4.E 9his cla!se corresponds to section 4&$ of the +ompanies #ct, 1)5" and see2s to restrict the company to carry on the b!siness except to the extent necessary for its beneficial windin( !p. +la!se 2&5.E 9his cla!se corresponds to section 5*2 of the +ompanies #ct, 1)5" and see2s to pro-ide that in case of -ol!ntary windin( !p, the company shall appoint a +ompany <i3!idator in (eneral meetin( from panel prepared by the +entral 4o-ernment. %n case creditors do not appro-e the appointment of s!ch +ompany <i3!idator, creditors shall appoint another +ompany <i3!idator. 9his cla!se f!rther see2s to pro-ide for filin( of a declaration by s!ch <i3!idator disclosin( conflict of interest or lac2 of independence in respect of his appointment, if any, with the company and the creditors and s!ch obli(ation shall contin!e thro!(ho!t the term of appointment. +la!se 2&".E 9his cla!se corresponds to section 4)2 of the +ompanies #ct, 1)5" and see2s to pro-ide for remo-al of <i3!idator by the +ompany or creditor where the appointment has been made by company or creditor respecti-ely. 9his cla!se also see2s to pro-ide for -acation of office by <i3!idator and appointment of +ompany <i3!idator in case of -acancy occ!rin( as a res!lt of death, resi(nation, remo-al or otherwise. +la!se 2&$.E 9his cla!se corresponds to section 4)3 of the +ompanies #ct, 1)5" and see2s to pro-ide for (i-in( of notice to the ,e(istrar of the appointment of a +ompany <i3!idator alon( with the name and partic!lars of the +ompany <i3!idator. +la!se 2&&.E 9his cla!se corresponds to section 4)1 of the +ompanies #ct, 1)5" and see2s to pro-ide that on the appointment of a +ompany <i3!idator, all the powers of the 0oard of directors and of the mana(in( or whole.time directors and mana(er, if any, shall cease, except for the p!rpose of (i-in( notice of s!ch appointment to the ,e(istrar. +la!se 2&).E 9his cla!se corresponds to section 512 of the +ompanies #ct, 1)5" and see2s to pro-ide the powers and d!ties of a li3!idator in a -ol!ntary windin( !p s!ch as settlement of the list of contrib!tories, call (eneral meetin(s of the company for the p!rpose of obtainin( the sanction of the company by ordinary or special resol!tion, maintain re(!lar and proper boo2s of acco!nt, pay the debts of the company and shall adj!st the ri(hts of the contrib!tories amon( themsel-es and obser-e d!e care and dili(ence in the dischar(e of his d!ties. +la!se 2)*.E 9his cla!se corresponds to section 5*3 of the +ompanies #ct, 1)5" and see2s to pro-ide for appointment of committee by the creditors or by the company in (eneral meetin( to s!per-ise the -ol!ntary li3!idation and assist the +ompany <i3!idator in dischar(in( his or its f!nctions. +la!se 2)1.E 9his cla!se corresponds to section 5*& of the +ompanies #ct, 1)5" and see2s to pro-ide for s!bmission of 3!arterly report on pro(ress of windin( !p of company by the +ompany <i3!idator. 9he cla!se f!rther pro-ides that a meetin( of the members and the creditors be called as and when necessary b!t at least one meetin( each of creditors and members be held in e-ery 3!arter and apprise them of the pro(ress of the windin( !p of the company. 9his cla!se f!rther see2s to pro-ide p!nishment with a fine, if the +ompany <i3!idator fails to comply with the pro-isions of this cla!se. +la!se 2)2.E 9his cla!se corresponds to section 51) of the +ompanies #ct, 1)5" and see2s to empower the 9rib!nal to consider the report of the +ompany <i3!idator and order for in-esti(ation, if the report specifies that a fra!d has been committed by any person in respect of the company. %t

266

also see2s for examination and attendance of any person ind!l(in( in the promotion or formation or the cond!ct of b!siness of the company. +la!se 2)3.E 9his cla!se corresponds to section 5*) of the +ompanies #ct, 1)5" and see2s to pro-ide for preparation of report by the +ompany <i3!idator re(ardin( windin( !p of company showin( that the property and assets of the company ha-e been disposed of and its debt are f!lly dischar(ed or dischar(ed to the satisfaction of the creditors and call a (eneral meetin( of the company for the p!rpose of layin( the final windin( !p acco!nts before it, and passin( of resol!tion for company8s dissol!tion. +ompany <i3!idator is re3!ired to file the report alon( with copy of the final windin( !p acco!nts and resol!tion passed in the meetin( with the ,e(istrar. %t also see2s to pro-ide for filin( of application by the <i3!idator with the 9rib!nal with the re3!est for passin( of order dissol-in( the company and the 9rib!nal shall pass s!ch order within sixty days from the date of receipt of s!ch application. %t f!rther see2s to pro-ide for filin( of the order of 9rib!nal with the ,e(istrar within thirty days. 9his cla!se see2s to cast d!ty !pon the ,e(istrar for p!blication of a notice in the 1fficial 4a=ette that the company is dissol-ed. +la!se 2)4.E9his cla!se corresponds to section 4)4 of the +ompanies #ct, 1)5" and see2s to empower the +ompany <i3!idator of the transferor company to accept shares, etc., by way of compensation wholly or in part for sale of property, etc., of the company where the transferor company is proposed to be wo!nd !p -ol!ntarily and the whole or any part of its b!siness or property is proposed to be transferred or sold to the transferee company. 9his cla!se f!rther see2s to pro-ide that the <i3!idator may abstain from carryin( the resol!tion into effect or to p!rchase his interest at a price to be determined by a(reement or the re(istered -al!er, where any member of the transferor company did not -ote in fa-o!r of the special resol!tion and expresses his dissent in writin( addressed to the +ompany <i3!idator within se-en days after passin( of the resol!tion. %t also see2s to pro-ide that if the +ompany <i3!idator elects to p!rchase the member8s interest, the p!rchase money, raised by him in s!ch manner as may be determined by a special resol!tion, shall be paid before the company is dissol-ed. +la!se 2)5.E9his cla!se corresponds to section 511 of the +ompanies #ct, 1)5" and see2s to pro-ide for distrib!tion of property of the company on its windin( !p in satisfaction of its liabilities pari pass! !nless the articles of the company otherwise pro-ides. +la!se 2)".E9his cla!se corresponds to section 51$ of the +ompanies #ct, 1)5" and see2s to empower 9rib!nal to amend, -ary, confirm or set aside the arran(ement entered into between a company and its creditors. 9he arran(ement as aforesaid shall be sanctioned by a special resol!tion and also by the creditors holdin( three.fo!rths in -al!e of debt. +la!se 2)$.E9his cla!se corresponds to section 51& of the +ompanies #ct, 1)5" and see2s to allow +ompany <i3!idator or any contrib!tory or creditor to apply to the 9rib!nal for determination of any 3!estion arisin( in the co!rse of windin( !p of a company or in respect of the enforcin( of calls, the stayin( of proceedin(s or any other matter. 9he 9rib!nal may pass an order stayin( the proceedin(s in the windin( !p forthwith to the ,e(istrar who shall ma2e a min!te of the order in his boo2s relatin( to the company. +la!se 2)&.E9his cla!se corresponds to section 52* of the +ompanies #ct, 1)5" and see2s to pro-ide for the payment of all costs, char(es and expenses properly inc!rred in the windin( !p, incl!din( the fee of the +ompany <i3!idator o!t of the assets of the company in priority to all other claims. +la!se 2)).E9his cla!se corresponds to section 52& of the +ompanies #ct, 1)5" and see2s to pro-ide that all debts payable on a contin(ency, and all claims a(ainst the company, present or f!t!re, certain or contin(ent, ascertained or so!ndin( only in dama(es shall be as proof a(ainst the company.

267

+la!se 3**.E9his cla!se corresponds to section 52) of the +ompanies #ct, 1)5" and see2s to pro-ide for application of existin( insol-ency r!les !nder the law of sosl-encyin windin( !p of insol-ent companies with re(ard to debts, -al!ation of ann!ities, etc. 9his cla!se f!rther see2s to pro-ide that the li3!idator shall enforce s!ch char(e on the sec!rity of sec!red creditors representin( wor2men8s portion therein. #ny person entitled to any di-idend may ma2e his claim. +la!se 3*1.E9his cla!se corresponds to section 52)# of the +ompanies #ct, 1)5" and see2s to pro-ide that wor2men8s d!es and debts d!e to sec!red creditors shall be paid in priority to all other debts. +la!se 3*2.E9his cla!se corresponds to section 53* of the +ompanies #ct, 1)5" and see2s to pro-ide for payment of -ario!s o!tstandin( claims or d!es which will be paid in priority of other debts s!ch as all re-en!es, taxes, cesses d!e to the +entral 4o-ernment or State 4o-ernment, all wa(es as salary for the time wor2 or payable by way of commission, amo!nt d!e !nder 'mployees State %ns!rance #ct and >or2men8s +ompensation #ct, s!m d!e !nder pro-ident, pension and (rat!ity f!nd. 9he debts mentioned in this cla!se shall be paid in f!ll forthwith. %f the (oods of the company bein( distain by any person, s!ch debts shall be (i-en first priority. +la!se 3*3.E9his cla!se corresponds to section 531 of the +ompanies #ct, 1)5" and see2s to pro-ide that the 9rib!nal, after satisfyin( itself, may declare the transaction relatin( to preference transfer of property, mo-able or immo-able, or any deli-ery of (oods, payment, exec!tion made, ta2en or done by or a(ainst a company within six months before ma2in( windin( !p application as in-alid and restore the position. +la!se 3*4.E9his cla!se corresponds to section 531# of the +ompanies #ct, 1)5" and see2s to pro-ide that the 9rib!nal may declare any transfer of property, mo-able or immo-able, or any deli-ery of (oods, etc. made by a company within a period of one year before the presentation of a petition for windin( !p, as -oid a(ainst the +ompany <i3!idator bein( s!ch transfer was not in (ood faith. +la!se 3*5.E9his cla!se corresponds to section 532 of the +ompanies #ct, 1)5" and see2s to pro-ide for declaration of any transfer or assi(nment by a company of all its properties or assets to tr!stees for the benefit of all its creditors as -oid. +la!se 3*".E9his cla!se corresponds to section 533 of the +ompanies #ct, 1)5" and see2s to pro-ide protection to the creditor of a company which is bein( wo!nd !p and where the creditor or the person preferred has been paid by the company with the fra!d!lent moti-e on the part of the company to relie-e from liability or red!ce the liability of a person who has stood s!rety or (!arantee to the creditor on behalf of the company. +la!se 3*$.E9his cla!se corresponds to section 534 of the +ompanies #ct, 1)5" and see2s to prohibit companies which are in insol-ent condition from creatin( any floatin( char(es on their assets, with a -iew to sec!rin( past liabilities. %t also empowers the +entral 4o-ernment to prescribe by r!les re(ardin( the rate of floatin( char(e. +la!se 3*&.E9his cla!se corresponds to section 535 of the +ompanies #ct, 1)5" and see2s to pro-ide to enable the company li3!idator to (et rid of onero!s property by disclaimin( it. 9his cla!se f!rther see2s to pro-ide the time sched!le within which the company li3!idator and 9rib!nal are re3!ired to complete s!ch actions as necessary. 9he 9rib!nal before or on (rantin( lea-e to disclaim may re3!ire s!ch notices to be (i-en to persons interested and impose s!ch terms and conditions of (rantin( lea-e, and ma2e s!ch other order in the matter as the 9rib!nal considers j!st. +la!se 3*).E9his cla!se corresponds to section 53" of the +ompanies #ct, 1)5" and see2s to empower the +ompany <i3!idator in -ol!ntary windin( !p to sanction transfers after windin( !p

268

and declare any alteration in the stat!s of members of the company made after the commencement of the windin( !p as -oid. 9his cla!se f!rther see2s to pro-ide declaration of any disposition of the property, etc., as -oid, if the same is made witho!t the order of the 9rib!nal in the case of a windin( !p by the 9rib!nal. +la!se 31*.E9his cla!se corresponds to section 53$ of the +ompanies #ct, 1)5" and see2s to prohibit any attachment, sale, distress, etc., witho!t lea-e of the 9rib!nal a(ainst the estate or effects of the company, after the commencement of the windin( !p. 9his cla!se pro-ides for non. applicability of abo-e pro-isions to the proceedin(s for reco-ery of any tax or impost or any d!es payable to the 4o-ernment. +la!se 311.E9his cla!se corresponds to section 53& of the +ompanies #ct, 1)5" and see2s to pro-ide that if any past or present officer of the company commits certain offences, s!ch as not deli-erin( mo-able and immo-able property of the company, not deli-ers boo2s and papers of the company, not (i-in( tr!e disclos!res, (!ilty of fra!d, etc., shall be p!nishable with imprisonment or with fine or with both. 9he cla!se f!rther pro-ides p!nishment to any person who pawns, pled(es or disposes of any property in circ!mstances which amo!nt to an offence and who ta2es or otherwise recei-es the property, 2nowin( it to be pawned, etc., shall be p!nishable with imprisonment or with fine or with both. +la!se 312.E9his cla!se corresponds to section 54* of the +ompanies #ct, 1)5" and see2s to pro-ide that if any person who is fo!nd to ha-e (i-en false pretences or by means of any other fra!d, ind!ced any person to (i-e credit to the company, to defra!d the creditors, conceal or remo-ed any part of the property is p!nishable with imprisonment or with fine or with both. +la!se 313.E9his cla!se corresponds to section 541 of the +ompanies #ct, 1)5" and see2s to pro-ide that a company is bein( wo!nd !p sho!ld 2eep proper boo2s of acco!nt thro!(ho!t the period of two years immediately precedin( the commencement of the windin( !p. +la!se 314.E9his cla!se corresponds to section 542 of the +ompanies #ct, 1)5" and see2s to pro-ide that for fra!ds by past or present officers and liability for fra!d!lent cond!ct of b!siness is p!nishable with imprisonment or with fine or with both. 9his cla!se f!rther see2s to confer power !pon 9rib!nal to fix the responsibility of errin( directors or officer of the company for fra!d!lent cond!ct of b!siness. +la!se 315.E9his cla!se corresponds to section 543 of the +ompanies #ct, 1)5" and see2s to confer power !pon the 9rib!nal to assess the dama(es a(ainst delin3!ent directors, mana(er, li3!idator or officer of the company for misapplication, retainer, misfeasance or breach of tr!st. +la!se 31".E9his cla!se corresponds to section 544 of the +ompanies #ct, 1)5" and see2s to pro-ide that the 9rib!nal to extend the liability of ex.partners or directors of the company !nder cla!se 314 relatin( to fra!d!lent cond!ct of b!siness or !nder cla!se 315 relatin( to misfeasance or breach of tr!st. +la!se 31$.E9his cla!se corresponds to section 545 of the +ompanies #ct, 1)5" and see2s to pro-ide that the 9rib!nal to prosec!te the delin3!ent officers and members of the company for bein( (!ilty of offence in relation to the company. +la!se 31&.E9his cla!se corresponds to section 54" of the +ompanies #ct, 1)5" and see2s to pro-ide that the +ompany <i3!idator shall exercise (eneral powers of windin( !p of the company8s affairs relatin( to compromisin(, settin(, and collectin( debts and payin( o!t claims etc., s!bject to the sanction of the 9rib!nal.

269

+la!se 31).E9his cla!se corresponds to section 54$ of the +ompanies #ct, 1)5" and see2s to pro-ide that in case of e-ery in-oice, b!siness letters, etc., iss!ed by the company after the windin( !p of the company shall contain a statement that the company is wo!nd !p. +la!se 32*.E9his cla!se corresponds to section 54& of the +ompanies #ct, 1)5" and see2s to pro-ide that the boo2s and papers of the company be prima facie e-idence of the tr!th of all matters p!rportin( to be recorded therein, in case a company is wo!nd !p. +la!se 321.E9his cla!se corresponds to section 54) of the +ompanies #ct, 1)5" and see2s to pro-ide for inspection of boo2s and papers relatin( to windin( !p of a company by the creditors and contrib!tories. %t finally pro-ides that the abo-e pro-isions shall not excl!de or restrict any ri(ht conferred by any law on the +entral 4o-ernment or State 4o-ernment or any officer or a!thority of the 4o-ernment. +la!se 322.E9his cla!se corresponds to section 55* of the +ompanies #ct, 1)5" and see2s to pro-ide for disposal of boo2s and papers after the affairs of a company ha-e been completely wo!nd !p and it is abo!t to be dissol-ed. %t f!rther pro-ides that no responsibility shall be imposed !pon re(ardin( the boo2s and papers after the expiry of fi-e years from the dissol!tion of the company. %t also see2s to empower the +entral 4o-ernment to prescribe by r!les the period, form and manner of retention of s!ch boo2s and papers of company which has been wo!nd !p. +la!se 323.E9his cla!se corresponds to section 551 of the +ompanies #ct, 1)5" and see2s to pro-ide for f!rnishin( of information or statement where the windin( !p of a company is not concl!ded within one year after its commencement and d!ly a!dited by a person 3!alified to act as a!ditor of the company, within two months after the expiry of the year. S!ch statement shall be filed periodically. %t also see2s to empower the +entral 4o-ernment to prescribe by r!les s!ch form and manner in which the statement is to be filed by the +ompany <i3!idator. +la!se 324.E9his cla!se corresponds to section 552 of the +ompanies #ct, 1)5" and see2s to pro-ide for ma2in( payments into the /!blic #cco!nts of %ndia in the ,eser-e 0an2 of %ndia by the 1fficial <i3!idator. +la!se 325.E9his cla!se corresponds to section 553 of the +ompanies #ct, 1)5" and see2s to pro-ide that the +ompany <i3!idator shall ma2e payments into a sched!led 0an2 and credit it into a Special 0an2 #cco!nt 2nown as the +ompany <i3!idation #cco!nt opened by him of the monies recei-ed by him as li3!idator. 9he cla!se finally pro-ide for payment of interest and penalty, in case, of the <i3!idators retains any specified s!m for more than the prescribed period. +la!se 32".E9his cla!se corresponds to section 554 of the +ompanies #ct, 1)5" and see2s to pro-ide that the f!nds of the company in windin( !p shall not be 2ept in pri-ate sector ban2s. +la!se 32$.E9his cla!se corresponds to section 555 of the +ompanies #ct, 1)5" and see2s to pro-ide that !npaid di-idends and !ndistrib!ted assets of the companies bein( wo!nd !p which are in the hands of the <i3!idator shall be paid by the <i3!idator into the +ompany <i3!idation Di-idend and :ndistrib!ted #ssets #cco!nt. 9he cla!se also see2s to pro-ide that the abo-e pro-isions shall also be applied in case of dissol!tion of a company. %t also see2s to pro-ide that the <i3!idator shall forthwith f!rnish a statement to the +entral 4o-ernment. 9his cla!se also see2s to pro-ide that the <i3!idator shall be (i-en a receipt from the ,eser-e 0an2 of %ndia for the money paid by him. 9his cla!se also see2s to pro-ide that the 9rib!nal may pass an order for the payment of re3!ired s!m to the claimant o!t of the said acco!nt. +la!se 32&.E9his cla!se corresponds to section 55" of the +ompanies #ct, 1)5" and see2s to pro-ide that if the +ompany <i3!idator fails to ma2e (ood the defa!lts committed by him within fo!rteen days from the date of ser-ice of notice on him. 9he 9rib!nal may ma2e an order to ma2e (ood the defa!lt on re3!est by any creditor, contrib!tory, etc.

270

+la!se 32).E9his cla!se corresponds to section 55$ of the +ompanies #ct, 1)5" and see2s to empower the 9rib!nal, in all matters relatin( to windin( !p of a company, to ascertain the wishes of creditors or contrib!tories by callin( their meetin(s. +la!se 33*.E9his cla!se corresponds to section 55& of the +ompanies #ct, 1)5" and see2s to pro-ide for filin( affida-it before any co!rt, 9rib!nal, ?!d(e or person lawf!lly a!thorised to recei-e affida-its in %ndia and in any other co!ntry, as the case may be. +la!se 331.E9his cla!se corresponds to section 55) of the +ompanies #ct, 1)5" and see2s to empower the 9rib!nal to declare dissol!tion of company -oid on an application made by the +ompany <i3!idator of the company or by any other person at any time within two years from the date of dissol!tion. %t also see2s to pro-ide for filin( of order of the 9rib!nal, with the ,e(istrar who shall re(ister the same and if s!ch person fails so to do, he shall be p!nishable with fine. +la!se 332.E9his cla!se corresponds to section 441 of the +ompanies #ct, 1)5" and see2s to pro-ide that where before the presentation of petition for windin( !p by 9rib!nal, a resol!tion for -ol!ntary windin( !p has been passed, the proceedin(s of -ol!ntary windin( !p of a company shall commence from the date of passin( of the resol!tion, !nless the 9rib!nal, on proof of fra!d or mista2e, thin2s otherwise. %t also see2s to pro-ide that in any other case, the windin( !p of a company by the 9rib!nal shall be deemed to commence at the time of the presentation of the petition for the windin( !p. +la!se 333.E9his cla!se corresponds to section 45&# of the +ompanies #ct, 1)5" and see2s to pro-ide that while comp!tin( the period of limitation specified for any s!it or application in the name and on behalf of a company which is bein( wo!nd !p by the 9rib!nal, the period from the date of commencement of the windin( !p of the company to a period of one year immediately followin( the date of the windin( !p order shall be excl!ded. +la!se 334.E9his is a new cla!se which see2s to empower the +entral 4o-ernment for appointment of as many 1fficial <i3!idators as it may consider necessary and may also appoint ?oint, Dep!ty or #ssistant 1fficial <i3!idators to assist him in dischar(e of his f!nctions in relation to the windin( !p of companies by the 9rib!nal. %t also see2s to pro-ide that the salary and allowances to the 1fficial <i3!idator, etc., shall be paid by the +entral 4o-ernment. +la!se 335.E9his cla!se corresponds to section 45$ of the +ompanies #ct, 1)5" and see2s to pro-ide for the powers and d!ties of the 1fficial <i3!idator. 9he 1fficial <i3!idator shall exercise powers s!ch as cond!ctin( in3!iries or in-esti(ations, maintainin( information and records, etc., of the companies !nder windin( !p. +la!se 33".E9his is a new cla!se which see2s to pro-ide for windin( !p of company ha-in( assets of boo2 -al!e not exceedin( one crore r!pees thro!(h s!mmary proced!re. 9his cla!se also see2s to empower the 9rib!nal to appoint 1fficial <i3!idator as the li3!idator of the company, who shall s!bmit a report to the 9rib!nal indicatin( whether any fra!d has been committed in promotion, formation or mana(ement of affairs of the company. %t also see2s to pro-ide that the 9rib!nal if satisfied that fra!d has been committed, may order for the in-esti(ation of the affairs of the company. 9he cla!se finally pro-ides that the 9rib!nal may order for the windin( !p of the company after considerin( the in-esti(ation report. +la!se 33$.E9his is a new cla!se which see2s to pro-ide that the 1fficial <i3!idator shall dispose of all the assets and collect the amo!nt payable to the company from the debtors and contrib!tories. %t also see2s to pro-ide that the 1fficial <i3!idator shall deposit the amo!nt reco-ered into the p!blic acco!nt of %ndia in the ,eser-e 0an2 of %ndia.

271

+la!se 33&.E9his is a new cla!se which see2s to pro-ide for settlement of claims of creditors by the 1fficial <i3!idator. +la!se 33).E9his is a new cla!se which see2s to pro-ide that any creditor a((rie-ed by the decision of the 1fficial <i3!idator may apply to the 9rib!nal who shall either dismiss the application or modify order of 1fficial <i3!idator. %f the claim has been accepted, the 1fficial <i3!idator shall ma2e payment to the creditors. +la!se 34*.E9his is a new cla!se which see2s to pro-ide for s!bmission of final report to the 9rib!nal by the 1fficial <i3!idator when he is satisfied that the company can be finally wo!nd !p. 9he 9rib!nal shall on recei-in( the report order for the dissol!tion of the company. #fter the order is passed, the ,e(istrar shall stri2e off the name of the company from the re(ister of companies and a notification to this effect be p!blished in the 1fficial 4a=ette. +la!se 341.E9his cla!se corresponds to section 5)1 of the +ompanies #ct, 1)5" and see2s to pro-ide that where not less than 5* per cent. of the paid !p capital of forei(n company is held by one or more citi=ens of %ndia or one or more companies incorporated in %ndia or by one or more citi=ens and one or more companies of %ndia, s!ch company shall comply with pro-isions as if it were a company incorporated in %ndia. +la!se 342.E9his cla!se corresponds to sections 5)2 and 5)3 of the +ompanies #ct, 1)5" and see2s to pro-ide the doc!ments which e-ery forei(n company shall deli-er to the ,e(istrar for re(istration after the establishment of their place of b!siness in %ndia. %t also see2s to pro-ide that if any alterations are made or occ!r in the doc!ments, the forei(n company shall deli-er a ret!rn in this re(ard to the ,e(istrar. +la!se 343.E9his cla!se corresponds to section 5)4 of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery forei(n company shall, in e-ery calendar year prepare a balance sheet and profit and loss acco!nt and shall lay before the company in (eneral meetin( and deli-er a copy of s!ch doc!ments to the ,e(istrar. %n case s!ch doc!ment is not in 'n(lish, a certified translation thereof in 'n(lish shall also be filed. F!rther e-ery forei(n company shall also file a list of the places of b!siness in %ndia as at the date of its balance sheet. +la!se 344.E9his cla!se corresponds to section 5)5 of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery forei(n company shall exhibit on the o!tside of e-ery office or place where it carries on b!siness in %ndia, the name of the company and the co!ntry in which it is incorporated, in 'n(lish and in local lan(!a(es in (eneral !se in the locality in which the office or place is sit!ated. 9he forei(n company will write its name, liability of its members and name of the co!ntry in which it is incorporated in le(ible 'n(lish characters in all b!siness letters, billheads, letter paper, and prospect!s, etc. +la!se 345.E9his cla!se corresponds to section 5)" of the +ompanies #ct, 1)5" and see2s to pro-ide the manner in which doc!ments which are re3!ired to be ser-ed on a forei(n company shall be deemed to be s!fficiently ser-ed. +la!se 34".E9his cla!se corresponds to section "** of the +ompanies #ct, 1)5" and see2s to pro-ide that the pro-isions relatin( to iss!e of debent!res, preparation and filin( of ann!al ret!rn, preparation of boo2s of acco!nt and manner in which they may be 2ept, re(istration of char(es and inspection and in-esti(ation of boo2s of acco!nt shall apply mutatis mutandis to a forei(n company. +la!se 34$.E9his cla!se corresponds to section "*1 of the +ompanies #ct, 1)5" and see2s to pro-ide the fee which a forei(n company will ha-e to pay to the ,e(istrar for re(isterin( any doc!ment.

272

+la!se 34&.E9his cla!se corresponds to section "*2 of the +ompanies #ct, 1)5" and see2s to define the expressions AcertifiedB, AdirectorB and Aplace of b!sinessB for forei(n companies. +la!se 34).E9his cla!se corresponds to section "*3 of the +ompanies #ct, 1)5" and see2s to pro-ide the (!idelines for iss!e of prospect!s in %ndia offerin( to s!bscribe for sec!rities of a company incorporated o!tside %ndia. 9he condition re3!irin( or bindin( an applicant for sec!rities to wai-e compliance with any re3!irement shall be treated as -oid. 9his cla!se f!rther pro-ides that in case of non.compliance, a director or other person responsible for iss!e of prospect!s shall not inc!r any liability by reason of non.compliance or contra-ention if it is pro-ed that he had no 2nowled(e or contra-ention was an honest mista2e of fact. 9his section shall not apply in case the prospect!s is iss!ed to existin( members or debent!re holders of a company. +la!se 35*.E9his cla!se corresponds to section "*4 of the +ompanies #ct, 1)5" and see2s to pro-ide that if the prospect!s incl!des a statement p!rportin( to be made by an expert, s!ch statement m!st be incl!ded in the prospect!s in the form and context in which it is incl!ded and there does not appear in the prospect!s, a statement that he has (i-en and has not withdrawn his consent. +la!se 351.E9his cla!se corresponds to section "*5 of the +ompanies #ct, 1)5" and see2s to pro-ide that a copy of the prospect!s of a company incorporated or to be incorporated o!tside %ndia certified by the +hairman and two other directors of the company as ha-in( been appro-ed by resol!tion of the mana(in( body has to be deli-ered to the ,e(istrar for re(istration alon( with the re3!ired doc!ments. +la!se 352.E9his cla!se corresponds to section "*5# of the +ompanies #ct, 1)5" and see2s to pro-ide r!les applicable for the offer of %ndian Depository ,eceipts, the re3!irement of disclos!res in prospect!s or letter of offer iss!ed in connection with %ndian Depository ,eceipts, the manner in which the %ndian Depository ,eceipts shall be dealt with in a depository mode and by c!stodian and !nderwritersH and the manner of sale, transfer or transmission of %ndian Depository ,eceipts by a company incorporated or to be incorporated o!tside %ndia. +la!se 353.E9his cla!se corresponds to sections "*" and "*$ of the +ompanies #ct, 1)5" and see2s to pro-ide that the pro-isions relatin( to criminal and ci-il liability for misstatement in a prospect!s, fra!d!lently ind!cin( persons to in-est money shall apply to the iss!e of a prospect!s by a company incorporated or to be incorporated o!tside %ndia. +la!se 354.E9his cla!se corresponds to section 5)& of the +ompanies #ct, 1)5" and see2s to pro-ide that where a company fails to comply with any of the pro-isions relatin( to companies incorporated o!tside %ndia, the company shall be p!nishable with fine. +la!se 355.E9his cla!se corresponds to section 5)) of the +ompanies #ct, 1)5" and see2s to pro-ide that any fail!re by a company to comply with the pro-isions of the +hapter relatin( to companies incorporated o!tside %ndia shall not affect the -alidity of any contract, dealin( or transaction entered into by the company or its liability to be s!ed in respect thereof. Iowe-er, the company will not be entitled to brin( any s!it, claim, set.off, etc., !ntil it has complied with the pro-isions of this +hapter. +la!se 35".E9his cla!se corresponds to section "1)# of the +ompanies #ct, 1)5" and see2s to pro-ide that where the +entral 4o-ernment is a member of a 4o-ernment company, it shall arran(e to prepare an ann!al report on the wor2in( and affairs of the company alon( with a!dit report and comments of +omptroller and #!ditor 4eneral and laid before both Io!ses of /arliament. %t also see2s to pro-ide that where a State 4o-ernment is a member of a 4o-ernment +ompany, it shall also prepare an ann!al report alon( with aforesaid enclos!res and laid before both the Io!ses of the State <e(islat!re.

273

+la!se 35$.E9his cla!se corresponds to section "2* of the +ompanies #ct, 1)5" and see2s to pro-ide that the +entral 4o-ernment, may notify any pro-isions of this #ct which shall not be applicable or shall apply with modification to any 4o-ernment +ompany. 9his cla!se f!rther see2s to pro-ide that s!ch notification shall be laid in draft before each Io!se of /arliament before it is so notified and shall be s!bject to modification by both the Io!ses. +la!se 35&.E9his cla!se corresponds to section "*) of the +ompanies #ct, 1)5" and see2s to pro-ide that for the p!rpose of re(istration of companies, the +entral 4o-ernment shall establish s!ch n!mber of offices at s!ch places and with s!ch j!risdiction as it thin2s fit. %t f!rther see2s to pro-ide that the +entral 4o-ernment may appoint a Director 4eneral of ,e(istration, s!ch n!mber of ,e(istrars, #dditional, ?oint, Dep!ty and #ssistant ,e(istrars as it considers necessary for the re(istration of companies. 9his cla!se also pro-ides for the terms and conditions of ser-ice, incl!din( the salaries payable to persons aforesaid. %t finally pro-ides that the +entral 4o-ernment may direct the preparation of seal or seals for a!thentication of doc!ments re3!ired in connection with the re(istration of companies. +la!se 35).E9his cla!se corresponds to section "1*# of the +ompanies #ct, 1)5" and see2s to permit companies to file ret!rns and doc!ments on paper or in electronic form or stored on any electronic data stora(e de-ice or comp!ter readable media by the ,e(istrar and f!rther see2s to pro-ide that s!ch filin(s shall also be deemed to be a doc!ment for the p!rposes of this #ct and shall be admissible as e-idence in any proceedin(s there!nder. +la!se 3"*.E9his cla!se corresponds to section "1*0 of the +ompanies #ct, 1)5" and see2s to empower the +entral 4o-ernment to ma2e r!les in re(ard to filin( of -ario!s applications, doc!ments, ret!rns, etc., ser-ice or deli-ery of any doc!ment, notice or comm!nication, etc., maintenance of -ario!s applications, doc!ments and ret!rns filed, manner of inspection of the -ario!s doc!ments, payment of fees, char(es or other s!ms payable in the electronic form and the manner in which -ario!s re(istry f!nctions -i=. alteration of memorand!m, articles, prospect!s, iss!in( certificate of incorporation, etc., shall be performed by ,e(istrar in electronic form. 9his cla!se also see2s to pro-ide that the +entral 4o-ernment may notify a scheme to carry o!t the pro-isions of this cla!se. +la!se 3"1.E9his is a new cla!se and see2s to empower the +entral 4o-ernment to pro-ide in the r!les that the electronic form shall be excl!si-e, or in the alternati-e or in addition to the physical form. +la!se 3"2.E9his cla!se corresponds to section "1*D of the +ompanies #ct, 1)5" and see2s to pro-ide that the +entral 4o-ernment may pro-ide s!ch -al!e added ser-ices thro!(h the electronic form and le-y fee thereon. +la!se 3"3.E9his cla!se corresponds to section "1*' of the +ompanies #ct, 1)5" and see2s to pro-ide that all the pro-isions of the %nformation 9echnolo(y #ct, 2*** relatin( to the electronic records, shall apply in relation to the records in electronic form as specified !nder this #ct. +la!se 3"4.E9his cla!se corresponds to section "11 of the +ompanies #ct, 1)5" and see2s to pro-ide that any doc!ment to be filed, re(istered or recorded !nder this #ct shall be on payment of fee and char(es. +la!se 3"5.E9his cla!se corresponds to section "12 of the +ompanies #ct, 1)5" and see2s to pro-ide that all fees, char(es and other s!ms recei-ed by any ,e(istrar, #dditional, ?oint, Dep!ty, or #ssistant ,e(istrar, or any other officer of the +entral 4o-ernment shall be paid into the p!blic acco!nt of %ndia in the ,eser-e 0an2 of %ndia. +la!se 3"".E9his cla!se corresponds to section "15 of the +ompanies #ct, 1)5" and see2s to pro-ide that the +entral 4o-ernment may order any company, to f!rnish s!ch information or

274

statistics with re(ard to its constit!tion or wor2in(, within specified time. S!ch an order shall be p!blished in the 1fficial 4a=ette. 9his cla!se f!rther see2s to pro-ide that the +entral 4o-ernment for the p!rpose of satisfyin( itself may order s!ch company to prod!ce s!ch records or doc!ments or allow inspection thereof or f!rnish s!ch f!rther information as that 4o-ernment may consider necessary. 9his cla!se also see2s to pro-ide that where a forei(n company carries on b!siness in %ndia, all the references in this section shall be applicable to the forei(n company as well. +la!se 3"$.E9his cla!se corresponds to section "2*# of the +ompanies #ct, 1)5" and see2s to pro-ide that the +entral 4o-ernment may notify a company to be a 6idhi company. 9he +entral 4o-ernment may also notify the pro-isions of this #ct which shall not apply or shall to a 6idhi +ompany. 9his cla!se finally pro-ides that the notification shall be laid before each Io!se of /arliament. +la!se 3"&.E9his cla!se corresponds to section 1*FD and 1*F, of the +ompanies #ct, 1)5" and see2s to pro-ide definitions of +hairperson, ?!dicial embers, ember, /resident, 9echnical ember in #ppellate 9rib!nal and 9rib!nal. +la!se 3").E9his cla!se corresponds to section 1*F0 of the +ompanies #ct, 1)5" and see2s to deal with the constit!tion of 6ational +ompany <aw 9rib!nal F6+<9G. 9he 6+<9 shall consist of /resident and s!ch n!mber of ?!dicial and 9echnical embers as +entral 4o-ernment may deem necessary. +la!se 3$*.E9his cla!se corresponds to section 1*FD of the +ompanies #ct, 1)5" and see2s to pro-ide the 3!alifications of /resident and embers of the 9rib!nal. +la!se 3$1.E9his cla!se corresponds to section 1*F, of the +ompanies #ct, 1)5" and see2s to deal with the formation of the 6ational +ompany <aw #ppellate 9rib!nal F6+#<9G consistin( of +hairperson and ?!dicial and 9echnical embers which shall not exceed ele-en. +la!se 3$2.E9his cla!se corresponds to section 1*F, of the +ompanies #ct, 1)5" and see2s to pro-ide that +hairperson of 6+<#9 shall be a j!d(e of S!preme +o!rt or +hief ?!stice of Ii(h +o!rt, the ?!dicial ember shall be a j!d(e of Ii(h +o!rt or ?!dicial ember of 9rib!nal for 5 years. 9he 9echnical ember shall be a person ha-in( atleast experience of 25 years in ban2in(, mana(ement, economics, etc. +la!se 3$3.E 9his cla!se corresponds to section 1*[email protected] of the +ompanies #ct, 1)5" and see2s to pro-ide that /resident of the 9rib!nal and +hairperson or the ?!dicial embers of the #ppellate 9rib!nal shall be appointed after cons!ltation with +hief ?!stice of %ndia. embers of the 9rib!nal and 9echnical ember of the #ppellate 9rib!nal shall be appointed on the recommendations of a Selection +ommittee consistin( of +hief ?!stice of %ndia or his nominee, Secretary in the inistry of +orporate #ffairs as +on-ener of Selection +ommittee, Secretary in the inistry of <aw and ?!stice and two other Secretaries of the 4o-ernment of %ndia to be nominated by the +entral 4o-ernment. +la!se 3$4.E 9his cla!se corresponds to sections 1*F' and 1*F9 of the +ompanies #ct, 1)5" and see2s to pro-ide the terms of office of /resident, +hairperson and embers of the 9rib!nal or #ppellate 9rib!nal. +la!se 3$5.E 9his cla!se corresponds to sections 1*F4 and 1*F> of the +ompanies #ct, 1)5" and see2s to pro-ide the salary, allowances and other terms and conditions of ser-ice of embers of the 9rib!nal or #ppellate 9rib!nal. +la!se 3$".E 9his cla!se corresponds to sections 1*FI and1*FS of the +ompanies #ct, 1)5" and see2s to pro-ide that in the e-ent of death, resi(nation, absence, etc., of the /resident or

275

+hairperson, the senior.most ember of the 9rib!nal or #ppellate 9rib!nal shall dischar(e the d!ties of /resident or +hairperson, as the case may be. +la!se 3$$.E 9his cla!se corresponds to sections 1*F% and 1*F: of the +ompanies #ct, 1)5" and see2s to deal with the resi(nation of /resident, +hairperson, embers. %t pro-ides that /resident, +hairperson or member may address his resi(nation to the +entral 4o-ernment. +la!se 3$&.E 9his cla!se corresponds to sections 1*F? and 1*F7 of the +ompanies #ct, 1)5" and see2s to pro-ide the (ro!nds for remo-al of the +hairperson or /resident or embers of the #ppellate 9rib!nal or 9rib!nal by the +entral 4o-ernment in cons!ltation with the +hief ?!stice of %ndia. %t pro-ides remo-al on the (ro!nd of insol-ency, con-iction of offence in-ol-in( moral t!rpit!de, on bein( mentally or physically incapable, etc. 9he +entral 4o-ernment in cons!ltation with the S!preme +o!rt will re(!late the proced!re for the in3!iry, if any, of the alle(ed misbeha-io!r of the members. +la!se 3$).E 9his cla!se corresponds to sections 1*F5 and 1*4# of the +ompanies #ct, 1)5" and see2s to pro-ide that the +entral 4o-ernment in cons!ltation with 9rib!nal and #ppellate 9rib!nal may pro-ide the officers and staff of the 9rib!nal or #ppellate 9rib!nal who shall dischar(e their f!nction !nder the s!perintendence and control of the +hairperson or /resident or embers, as the case may be. +la!se 3&*.E 9his cla!se corresponds to section 1*F< of the +ompanies #ct, 1)5" and see2s to pro-ide for the constit!tion of 0enches of the 9rib!nal. %t pro-ides that the /rincipal 0ench shall be at 6ew Delhi. F!rther, it pro-ides that powers of the /rincipal 0ench shall be exercised by two embers and a sin(le ember may also f!nction as a 0ench in certain cases. 9he /resident may for disposal of the caseFsG relatin( to rehabilitation, restr!ct!rin( or re-i-in( the windin( !p of companies may constit!te Special 0enches consistin( of three or more members. <astly, in case of difference of opinion, matter shall be decided by the majority. +la!se 3&1. E 9his cla!se corresponds to section 1*F of the +ompanies #ct, 1)5" and see2s to pro-ide that the 9rib!nal may rectify any mista2e within two years from the date of order passed by it. 9his cla!se f!rther pro-ides that a copy of each order shall be sent to all the concerned parties by the 9rib!nal. +la!se 3&2.E 9his cla!se corresponds to section 1*F; of the +ompanies #ct, 1)5" and see2s to pro-ide appeal a(ainst the order of the 9rib!nal in the #ppellate 9rib!nal. %t pro-ides that appeal may be filed within 45 days from the date of order and in case #ppellate 9rib!nal is satisfied that delay is j!stified then f!rther period of 45 days is allowed. 9he #ppellate 9rib!nal after accordin( an opport!nity of hearin( may confirm, modify or set aside order of the 9rib!nal and pro-ide copy of order to the 9rib!nal and parties to appeal. +la!se 3&3.E9his is a new cla!se to pro-ide expeditio!s disposal of cases before 9rib!nal or #ppellate 9rib!nal. %t pro-ides that the 9rib!nal or the #ppellate 9rib!nal shall ma2e e-ery effort to dispose of cases within three months from the date of commencement of proceedin(s before 9rib!nal or filin( of appeal before #ppellate 9rib!nal. +la!se 3&4.E 9his cla!se corresponds to section 1*4F of the +ompanies #ct, 1)5" and see2s to pro-ide that an appeal a(ainst the order of the #ppellate 9rib!nal shall be filed before the S!preme +o!rt within sixty days and in case of j!stified delay within a f!rther period of sixty days only on any 3!estion of law arisin( from s!ch an order. +la!se 3&5.E 9his cla!se corresponds to section 1*FO# of the +ompanies #ct, 1)5" and see2s to pro-ide the proced!re to be adopted by the 9rib!nal or #ppellate 9rib!nal to dispose of any proceedin(. %t pro-ides that 9rib!nal or #ppellate 9rib!nal shall not follow the +ode of +i-il /roced!re, 1)*& b!t wo!ld be (!ided by the principles of nat!ral j!stice. 9he 9rib!nal or the

276

#ppellate 9rib!nal may re(!late their own proced!re. Iowe-er, while dischar(in( their f!nctions, it wo!ld ha-e the power -ested with the +i-il +o!rt in respect of any s!it for s!mmonin( and enforcin( the attendance of any person, examinin( him on oath, etc. 1rders passed by it shall be enforced as a decree passed by the co!rt and may be sent for exec!tion to the co!rt !nder whose j!risdiction, the company or the person, as the case may be, has re(istered office or resides respecti-ely. +la!se 3&".E 9his cla!se corresponds to section 1*4 of the +ompanies #ct, 1)5" and see2s to pro-ide that the 9rib!nal or the #ppellate 9rib!nal shall ha-e the same powers of contempt as that of Ii(h +o!rt !nder the pro-isions of the +ontempt of +o!rts #ct, 1)$1. +la!se 3&$.E 9his cla!se see2s to pro-ide that the 9rib!nal or the #ppellate 9rib!nal may by (eneral or special order a!thorise any person to in3!ire into the matter connected with any proceedin( and report to it. +la!se 3&&.E 9his cla!se corresponds to section 1*FC of the +ompanies #ct, 1)5" and see2s to pro-ide that the /resident, +hairperson, embers, 1fficers and employees of the 9rib!nal and the #ppellate 9rib!nal shall be treated as p!blic ser-ants within the meanin( of section 21 of the %ndian /enal +ode. +la!se 3&).E 9his cla!se corresponds to section 1*FO of the +ompanies #ct, 1)5" and see2s to pro-ide for the protection of action ta2en in (ood faith by the /resident, +hairperson, members, officers, etc., of the 9rib!nal or #ppellate 9rib!nal. +la!se 3)*.E9his cla!se corresponds to section 1*F/ of the +ompanies #ct, 1)5" and see2s to pro-ide for the power of the 9rib!nal to ta2e the assistance of +hief etropolitan a(istrate, +hief ?!dicial a(istrate or the District +ollector for ta2in( into c!stody all property, boo2s of acco!nt, etc. and acts shall not be 3!estioned in any co!rt or before any a!thority in case of a sic2 company or windin( !p of any company. +la!se 3)1.E 9his cla!se corresponds to section 1*40 of the +ompanies #ct, 1)5". 9his cla!se see2s to pro-ide that no ci-il co!rt shall ha-e j!risdiction in respect of any matters that are assi(ned to the 9rib!nal or the #ppellate 9rib!nal. +la!se 3)2.E 9his cla!se corresponds to section 1*4+ of the +ompanies #ct, 1)5" and see2s to pro-ide that proceedin(s of the 9rib!nal or #ppellate 9rib!nal shall not be in-alid merely on the (ro!nd of existence of any -acancy or defect in its constit!tion. +la!se 3)3. E 9his cla!se corresponds to section 1*4D of the +ompanies #ct, 1)5" and see2s to pro-ide that a party to the proceedin( may appear in person or a!thorise a +hartered #cco!ntant, +ost #cco!ntant, +ompany Secretary or <e(al /ractitioners to present the case before the 9rib!nal or the #ppellate 9rib!nal. +la!se 3)4. E 9his cla!se corresponds to section 1*4' of the +ompanies #ct, 1)5" and see2s to pro-ide that pro-isions of the <imitations #ct, 1)"3 shall apply to the proceedin(s before the 9rib!nal or the #ppellate 9rib!nal. +la!se 3)5. E 9his cla!se corresponds to sections 1*F# and "4$# of the +ompanies #ct, 1)5" and see2s to pro-ide that on formation of 9rib!nal, all matters pendin( before +ompany <aw 0oard shall stand transferred to the 9rib!nal. Similarly, all proceedin(s relatin( to compromise, arran(ements and reconstr!ction and windin( !p of the companies pendin( before any District +o!rts or a Ii(h +o!rts shall be transferred to the 9rib!nal except windin( !p proceedin(s pendin( before District +o!rts or Ii(h +o!rts.

277

+la!se 3)". E 9his is a new cla!se which deals with the establishment of Special +o!rts by the +entral 4o-ernment in cons!ltation with the +hief ?!stice of the Ii(h +o!rt within whose j!risdiction the ?!d(e to be appointed is wor2in(. %t f!rther pro-ides that person so appointed as ?!d(e of Special +o!rt shall be one who immediately before s!ch appointment is holdin( the office of a Session ?!d(e or an #dditional Sessions ?!d(e. +la!se 3)$.E 9his is a new cla!se which see2s to pro-ide that all offences !nder this #ct shall be triable by the Special +o!rts. Iowe-er, where an acc!sed is prod!ced before a(istrate, the a(istrate may order detention of s!ch person and if he considers the detention !nnecessary, he shall forward the case to the Special +o!rt. 9he Special +o!rt wo!ld ha-e the liberty to try s!mmary in s!mmary way for offences p!nishable with imprisonment for a term not exceedin( three years altho!(h it may order for the re(!lar trial. +la!se 3)&.E 9his is a new cla!se which see2s to pro-ide that Ii(h +o!rts shall ha-e the power of appeal or re-ision as if special co!rts were +o!rt of Session tryin( cases within the local limits of the j!risdiction of the Ii(h +o!rt. +la!se 3)).E 9his is a new cla!se which see2s to pro-ide for the application of code to the proceedin(s before the Special +o!rt. %t pro-ides that Special +o!rt shall be deemed to be a +o!rt of Session and the pro-isions of the +ode of +riminal /roced!re, 1)$3 shall apply to the Special +o!rt. +la!se 4**. E 9his cla!se corresponds to some of the pro-isions of sections "21 to "31 of the +ompanies #ct, 1)5" and see2s to pro-ide that e-ery offence p!nishable !nder this #ct shall be non.co(ni=able. 9he +o!rt shall ta2e co(ni=ance only on complaint made by ,e(istrar, shareholder of the company of a person a!thorised by the +entral 4o-ernment. +la!se 4*1.E 9his is a new cla!se which pro-ides that till s!ch time Special +o!rts are established, the existin( +o!rt of Session will contin!e to exercise j!risdiction. Iowe-er, it will not affect the powers of Ii(h +o!rt to transfer any case. +la!se 4*2. E 9his cla!se corresponds to section "21# of the +ompanies #ct, 1)5" and see2s to pro-ide that any offence which is not p!nishable with imprisonment only or imprisonment and also with fine may be compo!nded by the a((rie-ed person. +la!se 4*3.E 9his cla!se corresponds to section "24# of the +ompanies #ct, 1)5" and see2s to pro-ide that the +entral 4o-ernment may appoint any n!mber of +ompany /rosec!tors who shall ha-e the same powers and pri-ile(es as that of /!blic /rosec!tor. +la!se 4*4.E 9his cla!se corresponds to section "240 of the +ompanies #ct, 1)5" and see2s to pro-ide that the +entral 4o-ernment shall ha-e the power to direct the +ompany /rosec!tor or a!thorise any other person to appeal a(ainst the order of ac3!ittal passed by any co!rt, other than a Ii(h +o!rt. +la!se 4*5. E 9his is a new cla!se which deals with compensation for acc!sation witho!t reasonable ca!se before the Special +o!rt or +o!rt of Session. +la!se 4*".E 9his cla!se corresponds to section "2" of the +ompanies #ct, 1)5" and see2s to pro-ide that any fine imposed or any part thereof may be applied towards payment of cost of proceedin(s or towards payment of reward to person on whose information the proceedin(s were instit!ted. +la!se 4*$.E 9his cla!se corresponds to section "2& of the +ompanies #ct, 1)5" and see2s to pro-ide that if in any ret!rn, report, etc., any person who ma2es a false statement or omits material facts, shall be p!nishable with imprisonment and with fine.

278

+la!se 4*&.E 9his cla!se corresponds to section "2) of the +ompanies #ct, 1)5" and see2s to pro-ide that in case of (i-in( false e-idence, the concerned person shall be liable to imprisonment and fine. +la!se 4*). E 9his cla!se corresponds to section "2)# of the +ompanies #ct, 1)5" and see2s to pro-ide for p!nishment where no specific p!nishment or penalty is pro-ided elsewhere in the +ompanies #ct. +la!se 41*.E 9his cla!se see2s to pro-ide that if any defa!lt is repeated, it shall be p!nishable with imprisonment as pro-ided and twice the amo!nt of fine for s!ch defa!lt. +la!se 411.E 9his cla!se corresponds to section "3* of the +ompanies #ct, 1)5" and see2s to pro-ide penalty for wron(f!l procession or holdin( of the property of the company by any officer or employee of company. +la!se 412.E 9his cla!se corresponds to section "31 of the +ompanies #ct, 1)5" and see2s to pro-ide p!nishment for improper !se of the title words, Mlimited8, Mpri-ate limited8 or M1/+ limited8. +la!se 413.E 9his is a new cla!se which pro-ides that +entral 4o-ernment may appoint adj!dicatin( officers for adj!d(in( penalty !nder the pro-ision of this #ct. 9he company or officer shall be (i-en an opport!nity to be heard before imposin( any penalty. #((rie-ed person may appeal to ,e(ional Director. #ny person not payin( penalty shall be p!nished with imprisonment or fine or with both. +la!se 414.E 9his is a new cla!se and see2s to deal with dormant company. %t pro-ides that a dormant company shall be one which has not been carryin( any b!siness or has not made any si(nificant acco!ntin( transaction in the last two financial years. S!ch a company may ma2e an application to ,e(istrar for obtainin( the stat!s of a dormant company. 9he ,e(istrar shall maintain the re(ister of dormant company, which shall 2eep the minim!m n!mber of directors and pay ann!al fees. 9his cla!se f!rther pro-ides that in case of a company which has not filed 0alance Sheet, /rofit and <oss #cco!nt or ann!al ret!rn for two financial years, the ,e(istrar shall enter the name in the re(ister maintained for dormant company. Iowe-er, if the dormant company fails to comply with the re3!irements of this cla!se then the ,e(istrar shall ha-e the power to stri2e off its name. +la!se 415.E 9his cla!se see2s to pro-ide that no s!it, prosec!tion or other le(al proceedin(s shall lie a(ainst the 4o-ernment or any other person a!thorised by the 4o-ernment for acts done or intended to be done in (ood faith. +la!se 41".E 9his cla!se corresponds to section "35## of the +ompanies #ct, 1)5" and see2s to pro-ide that no official shall be compelled to disclose to any co!rt, trib!nal or other a!thority the so!rce of any information which has led to an order of in-esti(ation into the affairs of the company. +la!se 41$.E 9his cla!se corresponds to section "3$ of the +ompanies #ct, 1)5" and see2s to empower the +entral 4o-ernment to dele(ate any of its powers or f!nctions to any a!thority or officer by notification. %t pro-ides that any power can be dele(ated other than power to ma2e r!les. %t f!rther pro-ides that a copy of notification shall be placed before both the Io!ses of /arliament. +la!se 41&.E 9his cla!se corresponds to section "3$# of the +ompanies #ct, 1)5" and see2s to pro-ide that while accordin( appro-al, sanction, consent, confirmation etc., (i-in( directions or (rantin( exemptions the +entral 4o-ernment or the 9rib!nal may impose s!ch conditions or restrictions as it thin2 fit.

279

+la!se 41).E 9his cla!se corresponds to section "3$0 of the +ompanies #ct, 1)5" and see2s to pro-ide that whene-er any application is to be made to +entral 4o-ernment or any doc!ment is re3!ired to be filed with ,e(istrar within specified time, the +entral 4o-ernment may, after recordin( the reasons for delay, condone the delay. +la!se 42*.E 9his cla!se corresponds to section "3& of the +ompanies #ct, 1)5" and see2s to pro-ide that the +entral 4o-ernment shall prepare ann!al report on the wor2in( of the #ct and shall be laid before both the Io!ses of /arliament. +la!se 421.E 9his cla!se see2s to pro-ide that in case of one person company or small company, the +entral 4o-ernment may by notification exempt the compliance of certain pro-isions. Iowe-er, a copy of draft notification shall be laid before both the Io!se of /arliament. +la!se 422.E 9his cla!se corresponds to section 11 of the +ompanies #ct, 1)5" and see2s to pro-ide that the n!mber of persons in any association or partnership shall not exceed one h!ndred. 9his cla!se f!rther pro-ides that the abo-e restriction shall not apply to an association or partnership, constit!ted by professionals and Iind! :ndi-ided Family. +la!se 423.E 9his cla!se deals with repealin( of the +ompanies #ct, 1)5" and the ,e(istration of +ompanies FSi22imG #ct, 1)"1. Iowe-er, the pro-isions relatin( to prod!cer companies shall be applicable mutatis mutandis as if +ompanies #ct has not been repealed. %t f!rther pro-ides that till the formation of 9rib!nal and #ppellate 9rib!nal, the pro-isions of the +ompanies #ct, 1)5" with re(ard to +ompany <aw 0oard shall contin!e to apply. +la!se 424.E 9his cla!se corresponds to section 1*F# of the +ompanies #ct, 1)5" and see2s to pro-ide that on the constit!tion of the 9rib!nal and #ppellate 9rib!nal, the +ompany <aw 0oard shall stand dissol-ed. %t pro-ides that conse3!ent !pon formation of the 9rib!nal or #ppellate 9rib!nal, the persons holdin( the office of +hairman, 7ice.+hairman or embers shall stand -acated witho!t any compensation for premat!re termination. F!rther, the officials on dep!tation shall be re-erted to their parent cadre and the officials of the 0oard shall become officials of the +entral 4o-ernment with the same ri(hts and pri-ile(es. +la!se 425.E 9his is a new cla!se which see2s to pro-ide that +entral 4o-ernment may by order remo-e any diffic!lties which may arise in (i-in( effect to the pro-isions within three years of commencement of the #ct by p!blishin( it in the 1fficial 4a=ette and layin( before each Io!se of /arliament. +la!se 42".E 9his cla!se corresponds to section "42 of the +ompanies #ct, 1)5" and see2s to pro-ide that the +entral 4o-ernment shall ha-e the power to ma2e r!les. '-ery r!le made !nder this cla!se shall be laid before both the Io!ses of the /arliament.

280

"INANCIAL MEMORANDUM +la!se 112 pro-ides for establishment of %n-estor 'd!cation and /rotection F!nd for promotion of in-estor awareness and protection. 9o carry o!t the objecti-es of the F!nd, the +entral 4o-ernment shall constit!te an #!thority with s!ch members b!t not exceedin( se-en, as the +entral 4o-ernment may appoint, to administer the F!nd. 9his cla!se is similar to section 2*5+ of the +ompanies #ct, 1)5" Fhereinafter referred to as the existin( #ctG. +la!se 11& pro-ides for constit!tion of 6ational #d-isory +ommittee on #cco!ntin( and #!ditin( Standards F6#+##SG to ad-ise the +entral 4o-ernment on the form!lation and layin( down of acco!ntin( and a!ditin( policies and #cco!ntin( and #!ditin( standards for adoption by companies or their a!ditors. 9he members of the #d-isory +ommittee shall be entitled to s!ch fees, tra-ellin(, con-eyance and other allowances as may be prescribed in the r!les. 9his cla!se is similar to section 21*# of the existin( #ct. +la!se 1&3 of the 0ill empowers the +entral 4o-ernment to appoint inspectors to in-esti(ate the affairs of companies. +la!se 1)5 of the 0ill empowers the +entral 4o-ernment to prosec!te the offenders on the basis of the report of the in-esti(ation. 9he expenses on in-esti(ation, !nder certain circ!mstances are to be initially defrayed by the +entral 4o-ernment o!t of the moneys pro-ided by the /arliament and are !ltimately reco-erable from the persons concerned. +la!se 1$) empowers the ,e(istrars and the officers a!thorised by the +entral 4o-ernment to inspect the boo2s of acco!nt of companies. 9hese cla!ses are similar to the pro-isions of section 235, 242 and 2*)# of the existin( #ct. +la!se 244 empowers the +entral 4o-ernment to appoint an independent administrator to mana(e the ,ehabilitation and %nsol-ency F!nd. 9his cla!se is similar to sections 441# to 441D of the +ompanies #ct, 1)5" with some modifications. +la!se 334 empowers +entral 4o-ernment to appoint 1fficial li3!idators incl!din( ?oint, Dep!ty or #ssistant 1fficial <i3!idators who are to be the whole time officers of the +entral 4o-ernment, i.e., whose salary shall be paid by +entral 4o-ernment. +la!se 334 is similar to the pro-isions of section 44& of the existin( #ct. +la!se 35& of the 0ill empowers the +entral 4o-ernment to establish re(istration offices to appoint a Director.4eneral of ,e(istration and ,e(istrars, #dditional, ?oint and #ssistant ,e(istrars and to fix their ser-ice. +la!se 35& is similar to the pro-isions of section "*) of the existin( #ct. +la!ses 3") , 3$1 and 3$5 of the 0ill pro-ide for the constit!tion of the 6ational +ompany <aw 9rib!nal and 6ational +ompany <aw #ppellate 9rib!nal respecti-ely. 9hese cla!ses are similar to sections 1*F0 to 1* F4 and 1*F, to 1* [email protected] of the +ompanies #ct, 1)5". For establishment of these instit!tions, the f!nds are already bein( pro-ided by the /arliament. +la!se 3)" of the 0ill empowers the +entral 4o-ernment to establish, by notification, s!ch n!mber of Special +o!rts as may be necessary for the p!rpose of pro-idin( speedy trial of offences !nder the proposed le(islation. 9he intention !nder this cla!se is to desi(nate specified ?!d(e or ?!d(es from existin( j!dicial set !p to try on offences !nder the proposed 0ill. +la!se 4*3 of the 0ill empowers the +entral 4o-ernment to appoint +ompany /rosec!tors for the cond!ct of prosec!tions arisin( o!t of the proposed le(islation. 9he +ompany /rosec!tors already appointed !nder the existin( #ct will contin!e to f!nction !nder the proposed le(islation.

281

+la!se 413 of the 0ill pro-ides for appointment of adj!dicatin( officers to impose penalties for proced!ral non.compliance. 9he officers not below the ran2 of ,e(istrar shall be notified as Kadj!dicatin( officersK. 9he expendit!re on an a!thority to administer %n-estor 'd!cation and /rotection F!nd, 6ational #d-isory +ommittee on #cco!ntin( and #!ditin( Standards, inspectin( officers, administrator to mana(e the ,ehabilitation and %nsol-ency F!nd, appointment of whole time 1fficial li3!idators Fincl!din( ?oint, Dep!ty or #ssistant 1fficial <i3!idatorsG, settin( !p of re(istration offices, appoitment of Director.4eneral of ,e(istration and ,e(istrars, #dditional, ?oint and #ssistant ,e(istrars, constit!tion of 6ational +ompany <aw 9rib!nal and 6ational +ompany <aw #ppellate 9rib!nal, Special +o!rts, appointment of adj!dicatin( officers and appointment of +ompany /rosec!tors will be met o!t of the existin( b!d(etary allocations of the inistry of +orporate #ffairs. 9he 0ill, therefore, will not in-ol-e any additional expendit!re of rec!rrin( or non.rec!rrin( nat!re.

282

MEMORANDUM REGARDING DELEGATED LEGISLATION %tem FaG of s!b.cla!se F1G of cla!se F2G proposes to empower the +entral 4o-ernment to prescribe the salient feat!res of a prospect!s to be contained in abrid(ed prospect!s. S!b.item Fi-G of item FmG of s!b.cla!se F1G of cla!se F2G proposes to empower the +entral 4o-ernment to prescribe items of costs for a class of companies specified !nder section 131. S!b.item FiG of item F===(G of s!b.cla!se F1G of cla!se 2 proposes to empower the +entral 4o-ernment to prescribe the amo!nt of paid.!p share capital for bein( a small company which shall not be more than fi-e crore r!pees. S!b.item FiiG of item F===(G of s!b.cla!se F1G of cla!se 2 proposes to empower the +entral 4o-ernment to prescribe the amo!nt of t!rno-er which shall not be more than twenty crore r!pees for bein( a small company. S!b.cla!se F1G of cla!se 3 proposes to empower the +entral 4o-ernment to prescribe the manner in which the name of s!bscriber to a memorand!m of a company shall be (i-en for complyin( with the re3!irements for re(isterin( a company !nder the #ct. Second pro-iso to s!b.cla!se F1G of cla!se 3 proposes to empower the +entral 4o-ernment to prescribe time and form for intimation by the sole member of a one person company for chan(e of name of his s!ccessor to the ,e(istrar of +ompanies. S!b.cla!se F1G of cla!se 4 proposes to empower the +entral 4o-ernment to prescribe the manner and conditions for iss!in( licence to a company to be formed for charitable objects, etc. %tem FbG of s!b.cla!se F3G of cla!se 5 proposes to empower the +entral 4o-ernment to prescribe words on expressions which can be a part of name of a company only with the pre-io!s appro-al of the +entral 4o-ernment. S!b.cla!se F4G of cla!se 5 proposes to empower the +entral 4o-ernment to prescribe the form, manner and fees re3!ired for ma2in( an application to ,e(istrar for 2eepin( a name reser-ed by a company. S!b.cla!se F5G of cla!se 5 proposes to empower the +entral (o-ernment to prescribe the fee re3!ired for ser-in( the name for a f!rther period of sixty days. S!b.cla!se F"G of +la!se 5 proposes to empower the +entral 4o-ernment to prescribe the form of emorand!m of #ssociation of a company. S!b.cla!se F2G of cla!se " proposes to empower the +entral 4o-ernment to prescribe the matters to be contained in #rticle of #ssociation of a company. S!b.cla!se F"G of cla!se " proposes to empower the +entral 4o-ernment to prescribe model articles for different types of companies. %tem FaG of s!b.cla!se F1G of cla!se $ proposes to empower the +entral 4o-ernment to prescribe the manner in which a memorand!m is to be si(ned by all s!bscribers. %tem FbG of s!b.cla!se F1G of cla!se $ proposes to empower the +entral 4o-ernment to prescribe form of declaration in which an ad-ocate, +hartered #cco!ntant, +ost #cco!ntant or +ompany Secretary or director, mana(er, etc., en(a(ed in the formation of a company, shall declare that all

283

re3!irements of the #ct and r!les in respect of re(istration and the matters precedent or incidental thereto ha-e been complied with. %tem FeG of s!b.cla!se F1G of cla!se $ proposes to empower the +entral 4o-ernment to prescribe the items for proof of identity of a s!bscriber to the memorand!m of a company. %tem FfG of s!b.cla!se F1G of cla!se $ proposes to empower the +entral 4o-ernment to prescribe the partic!lars re(ardin( proof of identity of a person who has been mentioned as first director in the #rticles of the company. %tem F(G of s!b.cla!se F1G of cla!se $ proposes to empower the +entral 4o-ernment to prescribe the form and manner in which the interests of first directors of a company in other firms or bodies corporate are to be f!rnishedNdisclosed alon( with their consent to act as director. S!b.cla!se F2G of cla!se $ proposes to empower the +entral 4o-ernment to prescribe the form for certificate of incorporation to be iss!ed by the ,e(istrar. %tem FaG s!b.cla!se F1G of cla!se 1* proposes to empower the +entral 4o-ernment to prescribe a form of declaration and manner of its -erification to be filed by a director or s!bscriber in respect of payment of -al!e of shares for which they ha-e a(reed as their s!bscription. %tem FbG of s!b.cla!se F1G of cla!se 1* proposes to empower the +entral 4o-ernment to prescribe the manner in which -erification of re(istered office shall be f!rnished to the ,e(istrar. S!b.cla!se F2G of cla!se 11 proposes to empower the +entral 4o-ernment to prescribe the manner in which the -erification of the company8s re(istered office is to be made. %tem FdG of s!b.cla!se F3G of cla!se 11 proposes to empower the +entral 4o-ernment to prescribe the doc!ments on which the company is to (et its name printed. S!b.cla!se F4G of cla!se 11 proposes to empower the +entral 4o-ernment to prescribe the manner for -erification of chan(e in the sit!ation of the company8s re(istered office. /ro-iso of s!b.cla!se F"G of cla!se 12 proposes to empower the +entral 4o-ernment to prescribe time and manner in which the company has to file the order of the +entral 4o-ernment appro-in( the alteration in-ol-in( transfer of re(istered office of a company from one State to another with the ,e(istrar of each State. S!b.cla!se F2G of cla!se 13 proposes to empower the +entral 4o-ernment to prescribe the manner in which copy of altered #rticles of #ssociation are to be filed with the ,e(istrar. S!b.cla!se F1G of cla!se 1" proposes to empower the +entral 4o-ernment to prescribe fee, which members are re3!ired to pay to the company for sendin( a copy of the memorand!m, articles, a(reements and resol!tions referred to in cla!se 1*", on his re3!est. S!b.cla!se F1G of cla!se 1) proposes to empower the +entral 4o-ernment to prescribe the electronic modes and other modes in which the doc!ments can be ser-ed on a company or an officer thereof. S!b.cla!se F2G of cla!se 1) proposes to empower the +entral 4o-ernment to prescribe the electronic modes and other modes in which the doc!ments can be ser-ed to the ,e(istrar or any member of the company. S!b.item FiG of item FaG of s!b.cla!se F1G of cla!se 23 proposes to empower the +entral 4o-ernment to prescribe s!ch other persons whose names, etc., are to be (i-en in prospect!s.

284

S!b.item FiiG of item FaG of s!b.cla!se F1G of cla!se 23 proposes to empower the +entral 4o-ernment to prescribe time for iss!e of allotment letters and ref!nds, etc., relatin( to iss!e of sec!rities. S!b.item FiiiG of item FaG of s!b.cla!se F1G of cla!se 23 proposes to empower the +entral 4o-ernment to prescribed manner of disclos!re abo!t details of monies, i.e. !tilised and !n!tilised o!t of iss!e. S!b.item F-G of item FaG of s!b.cla!se F1G of cla!se 23 proposes to empower the +entral 4o-ernment to prescribe the other persons whose consent is re3!ired for iss!e of prospect!s. S!b.item F-iiiG of item FaG of s!b.cla!se F1G of cla!se 23 proposes to empower the +entral 4o-ernment to prescribe capital str!ct!re of the company, in prospect!s. S!b.item FixG of item FaG of s!b.cla!se F1G of cla!se 23 proposes to empower the +entral 4o-ernment to prescribe partic!lars of the terms of the present iss!e, in prospect!s. S!b.item FxiiiG of item FaG of s!b.cla!se F1G of cla!se 23 proposes to empower the +entral 4o-ernment to prescribe details of directors, proposed directors incl!din( their appointments and rem!neration and extent of their interests in the company, in prospect!s. S!b.item FiG of item FbG of s!b.cla!se F1G of cla!se 23 proposes to empower the +entral 4o-ernment to prescribe this in addition to reports of the a!ditor of the company with respect to profit, loss, assets and liabilities of the company, in prospect!s. S!b.item FiiG of item FbG of s!b.cla!se F1G of cla!se 23 proposes to empower the +entral 4o-ernment to prescribe matters relatin( to company8s s!bsidiaries, in prospect!s. S!b.item FiiiG of item FbG of s!b.cla!se F1G of cla!se 23 proposes to empower the +entral 4o-ernment to prescribe the manner in which reports are to be made by the a!ditors for last fi-e financial years in prospect!s. %tem FdG of s!b.cla!se F1G of cla!se 23 proposes to empower the +entral 4o-ernment to prescribe matters and reports to be incl!ded in prospect!s iss!ed by a company in addition to information re3!ired !nder this section. Second pro-iso of s!b.section F2G of section 24, empower the +entral 4o-ernment to notify p!blic financial instit!tions on non.ban2in( financial companies to whom first pro-iso shall not apply. S!b.cla!se F2G of cla!se 2" proposes to empower the +entral 4o-ernment to prescribe chan(es, which ha-e occ!rred in the first offer of the sec!rity and the s!cceedin( offer of sec!rities to be incl!ded in information memorand!m. S!b.cla!se F3G of cla!se 34 proposes to empower the +entral 4o-ernment to prescribe the manner and time within which the minim!m amo!nt has not been s!bscribed within a period of one h!ndred and twenty days from the date of iss!e of prospect!s. S!b.cla!se F4G of cla!se 34 proposes to empower the +entral 4o-ernment to prescribe the manner in which a ret!rn of allotment has to be filed with the ,e(istrar by companies. %tem FbG of s!b.cla!se F3G of cla!se 35 proposes to empower the +entral 4o-ernment to prescribe time, in which the monies recei-ed from applicant in p!rs!ance of the prospect!s, has to be ret!rned.

285

S!b.cla!se F"G of cla!se 35 proposes to empower the +entral 4o-ernment to prescribe the conditions on which a company may pay commission to any person for s!bscription to its sec!rities. +la!se 3" proposes to empower the +entral 4o-ernment to prescribe conditions and manner in which a company may iss!e depository receipts to be dealt in depository mode in any forei(n co!ntry. S!b.cla!se F3G of cla!se 4* proposes to empower the +entral 4o-ernment to prescribe the manner of iss!e of a share certificate or the d!plicate thereof the form of s!ch certificate and the partic!lars to be entered in the re(ister of members and other matters. %tem FdG of s!b.cla!se F1G of cla!se 4& proposes to empower the +entral 4o-ernment to prescribe r!les for iss!in( sweat e3!ity shares by !nlisted companies. S!b.cla!se F2G of cla!se 4) proposes to empower the +entral 4o-ernment to prescribe conditions for iss!in( and redeemin( preferential shares. First pro-iso to s!b.cla!se F2G of cla!se 4) proposes to empower the +entral 4o-ernment to prescribe infrastr!ct!re projects, for which a company may iss!e preferential shares for more than twenty years. %t also proposes to empower the +entral 4o-ernment to prescribe the percenta(e of shares which shall be redeemed on an ann!al basis. S!b.cla!se F1G of cla!se 5* proposes to empower the +entral 4o-ernment to prescribe share transfer form and time within which this has to be deli-ered to the company. /ro-iso of s!b.cla!se F1G of cla!se 5* proposes to empower the +entral 4o-ernment to prescribe time if, within which, the instr!ment of transfer of sec!rities is not been deli-ered, the company may re(istered the transfer of sec!rities on the terms of indemnity. S!b.cla!se F3G of cla!se 5* proposes to empower the +entral 4o-ernment to prescribe the manner of notice of the application to be (i-en by a company to the transferee in case of transfer of partly paid shares. S!b.cla!se F1G of cla!se 53 proposes to empower the +entral 4o-ernment to prescribe the form in which an application is to be made to the 9rib!nal for rectification of re(ister of members and also to notify competent co!rt o!tside %ndia in respect of forei(n ind!stries or debent!re holders residin( o!tside %ndia. %tem FaG of s!b.cla!se F1G of cla!se 5" proposes to empower the +entral 4o-ernment to prescribe terms and conditions relatin( to the time within which the offer of shares has to be accepted or reno!nced by a shareholder. %tem FbG of s!b.cla!se F1G of cla!se 5" proposes to empower the +entral 4o-ernment to prescribe conditions to iss!e shares to its employees !nder the scheme of employee stoc2 option. %tem FcG of s!b.cla!se F1G of cla!se 5" proposes to empower the +entral 4o-ernment to prescribe the conditions for -al!ation report of a re(istered -al!er to determine the price of shares. S!b.cla!se F1G of cla!se 5$ proposes to empower the +entral 4o-ernment to prescribe the form for filin( notice for alteration of share capital to the ,e(istrar. %tem FdG of s!b.cla!se F2G of cla!se "1 proposes to empower the +entral 4o-ernment to notify hi(her ratio of debt to capital and free reser-es for a class or classes of companies.

286

%tem F(G of s!b.cla!se F2G of cla!se "1 proposes to empower the +entral 4o-ernment to prescribe r!les for b!y.bac2 of sec!rities by a company, which is not listed with any stoc2 exchan(e. S!b.cla!se F"G of cla!se "1 proposes to empower the +entral 4o-ernment to prescribe the form of declaration of sol-ency by directors of a company. S!b.cla!se F)G of cla!se "1 proposes to empower the +entral 4o-ernment to prescribe partic!lars to be entered in re(ister maintained re(ardin( sec!rities bo!(ht bac2 by a company. S!b.cla!se F1*G of cla!se "1 proposes to empower the +entral 4o-ernment to prescribe partic!lars to be filed, by a company, with ,e(istrar of +ompanies and Sec!rities and 'xchan(e 0oard of %ndia after completion of b!y.bac2 of sec!rities. Explanation to cla!se "1 proposes to empower the +entral 4o-ernment to notify sec!rities as specified sec!rities other than employees stoc2 option. S!b.cla!se F3G of cla!se "4 proposes to empower the +entral 4o-ernment to prescribe terms and conditions and class of companies which can iss!e sec!red debent!res. S!b.cla!se F5G of cla!se "4 proposes to empower the +entral 4o-ernment to prescribe the conditions for (o-ernin( the appointment of tr!stees for iss!e of debent!res by a company. S!b.cla!se F13G of cla!se "4 proposes to empower the +entral 4o-ernment to prescribe r!les for sec!rin( of the iss!e of debent!res, the form of debent!re tr!st deed, the proced!re for debent!re holder to inspect tr!st deed and to obtain copies thereof and other related matters. S!b.cla!se F1G of cla!se "5 proposes to empower the +entral 4o-ernment to prescribe the manner in which a holder of shares or debent!res of a company may nominate any person to whom his shares or debent!res shall -est in the e-ent of his death. S!b.cla!se F2G of cla!se "5 proposes to empower the +entral 4o-ernment to prescribe the manner in which joint holder of shares and debent!res may nominate any person in case of death of all the joint holders. S!b.cla!se F3G of cla!se "5 proposes to empower the +entral 4o-ernment to prescribe the manner in which a nomination is to be -aried or cancelled. S!b.cla!se F4G of cla!se "5 proposes to empower the +entral 4o-ernment to prescribe the manner in which any person may be appointed and become entitled to the shares or debent!res of the company, in the e-ent of the death of the nominee d!rin( his minority. S!b.cla!se F2G of cla!se "" proposes to empower the +entral 4o-ernment to ma2e r!les in cons!ltation with the ,eser-e 0an2 of %ndia with respect to acceptance of deposits from members. %tem FaG of s!b.cla!se F2G of cla!se "" proposes to empower the +entral 4o-ernment to prescribe the form and manner in which partic!lars are to be contained in circ!lar to members of company for in-itin( deposits. %tem FdG of s!b.cla!se F2G of cla!se "" proposes to empower the +entral 4o-ernment to prescribe the manner and limit for pro-idin( ins!rance a(ainst deposits. S!b.cla!se F1G of cla!se ") proposes to empower the +entral 4o-ernment to prescribe the form and manner in which a char(e can be created and fee to be char(ed thereon.

287

/ro-iso of s!b.cla!se F1G of cla!se ") proposes to empower the +entral 4o-ernment to prescribe additional fee on payment of which an application for re(isterin( char(es can be made within a period of three h!ndred days. S!b.cla!se F2G of cla!se ") proposes to empower the +entral 4o-ernment to prescribe the form and manner in which certificate of re(istration of char(es is to be iss!ed by ,e(istrar of +ompanies to the company or person in whose fa-o!r the char(e is created. +la!se $* proposes to empower the +entral 4o-ernment to prescribe the form and manner in which a person in whose fa-o!r the char(e is created may apply for re(istration of char(e when company fails to do so and also the fee and additional fee which ,e(istrar may char(e for s!ch re(istration. S!b.cla!se F1G of cla!se $3 proposes to empower the +entral 4o-ernment to prescribe the form and partic!lars to be incl!ded in re(ister of char(es to be 2ept by the ,e(istrar. S!b.cla!se F2G of cla!se $3 proposes to empower the +entral 4o-ernment to prescribe fee to be paid by a person for inspectin( the re(ister of char(es. S!b.cla!se F1G of cla!se $4 proposes to empower the +entral 4o-ernment to prescribe the form in which a company shall intimate the ,e(istrar of the payment or satisfaction of char(es. S!b.cla!se F1G of cla!se $5 proposes to empower the +entral 4o-ernment to prescribe time within which a notice is to be (i-en to the company and ,e(istrar for appointment of a recei-er and to prescribe fee for re(isterin( partic!lars of the recei-er, person or instr!ment with the ,e(istrar. S!b.cla!se F1G of cla!se $" proposes to empower the +entral 4o-ernment to prescribe the form and manner of re(ister of char(es and floatin( char(es to be 2ept by a company at its re(istered office and the partic!lars to be incorporated in the ,e(ister. %tem FbG of s!b.cla!se F2G of cla!se $" proposes to empower the +entral 4o-ernment to prescribe fee for inspectin( the re(ister of char(es by a person other than a member. S!b.cla!se F1G of cla!se $& proposes to empower the +entral 4o-ernment to prescribe the form and manner in which followin( re(isters are to be maintainedD E FaG ,e(ister of members indicatin( separately e3!ity and preference shares held by each member and residin( in %ndia and o!tsideH FbG ,e(ister of debent!re holdersH FcG ,e(ister of any other sec!rity holders. S!b.cla!se F4G of cla!se $& proposes to empower the +entral 4o-ernment to prescribe the manner in which part of the re(isters referred to in s!b.cla!se F1G of cla!se $&, called Aforei(n re(isterB are to be 2ept in any co!ntry o!tside of %ndia. S!b.cla!se F1G of cla!se $) proposes to empower the +entral 4o-ernment to prescribe the form of declaration by a person to the company who does not hold the beneficial interests in shares b!t whose name is there as a member in the re(ister of members of the company, specifyin( the name and other partic!lars of the person who holds the beneficial interest in s!ch shares. S!b.cla!se F2G of cla!se $) proposes to empower the +entral 4o-ernment to prescribe partic!lars to be incl!ded in declaration to the company by a person who holds or ac3!ires a beneficial

288

interest in the shares of a company b!t whose name is not there in the re(ister of members of the company. S!b.cla!se F3G of cla!se $) proposes to empower the +entral 4o-ernment to prescribe the form and partic!lars to be incl!ded therein in case of any chan(e in a declaration made by a person to the company who holds the beneficial interest in shares of the company and the person whose name is there in re(ister of members of the company b!t who does not hold any beneficial interest in s!ch shares. S!b.cla!se F4G of cla!se $) proposes to empower the +entral 4o-ernment to prescribe the form of ret!rn in which declarations are made !nder this section to be filed by a company with the ,e(istrar. S!b.cla!se F1G of cla!se &1 proposes to empower the +entral 4o-ernment to prescribe the manner of notice to be (i-en to members of a company before closin( the re(ister of members or debent!re holders or any other sec!rity holders. S!b.cla!se F1G of cla!se &2 proposes to empower the +entral 4o-ernment to prescribe form containin( the partic!lars in respect of ann!al ret!rn. %tem FjG of s!b.cla!se F1G of cla!se &2 proposes to empower the +entral 4o-ernment to prescribe the form of ann!al ret!rn and other matters to be incl!ded therein. /ro-iso to s!b.cla!se F1G of cla!se &2 proposes to empower the +entral 4o-ernment to prescribe the paid.!p capital and t!rno-er of a company or whose shares are listed on a reco(nised stoc2 exchan(e, shall, in addition to bein( si(ned by ana(in( Director and the +ompany Secretary shall also be si(ned by a +ompany Secretary in whole.time practice and to prescribe the form for s!ch certification. S!b.cla!se F2G of cla!se &2 proposes to empower the +entral 4o-ernment to prescribe the extracts of the ann!al ret!rn that shall form part of the 0oard8s ,eports. S!b.cla!se F3G of cla!se &2 proposes to empower the +entral 4o-ernment to prescribe fee and additional fee for filin( ann!al ret!rn with the ,e(istrar. S!b.cla!se F2G of cla!se &3 proposes to empower the +entral 4o-ernment to prescribe fee for inspectin( the re(isters maintained !nder s!b.cla!se F1G of cla!se $& by a person who is not a members, debent!re holders of company. %tem FbG of s!b.cla!se F3G of cla!se &3 proposes to empower the +entral 4o-ernment to prescribe fee for a copy of re(isters or entries or ret!rns maintained !nder s!b.cla!se F1G of cla!se $&. S!b.cla!se F4G of cla!se &) proposes to empower the +entral 4o-ernment to prescribe the manner in which a meetin( may be called by the re3!isitionists in case the 0oard fails to call the meetin(. S!b.cla!se F1G of cla!se )* proposes to empower the +entral 4o-ernment to prescribe the manner for callin( a (eneral meetin( of the company. +la!se )4 proposes to empower the +entral 4o-ernment to prescribe the manner and the conditions s!bject to which a proxy can be appointed by shareholders. +la!se )$ proposes to empower the +entral 4o-ernment to prescribe the manner in which a member may exercise his -ote at a meetin( by electronic means.

289

S!b.cla!se F5G of cla!se )& proposes to empower the +entral 4o-ernment to prescribe the manner in which the +hairman of meetin( shall (et the poll process scr!tinised and report thereon. S!b.cla!se F1G of cla!se )) proposes to empower the +entral 4o-ernment to prescribe the manner and matters on which a b!siness can be transacted at a (eneral meetin( thro!(h postal ballot. +la!se 1*4 proposes to empower the +entral 4o-ernment to prescribe the n!mber of members who can (i-e a notice of their intention to mo-e a resol!tion re3!irin( special notice and the manner in which s!ch notice of the resol!tion shall be (i-en. S!b.cla!se F1G of cla!se 1*" proposes to empower the +entral 4o-ernment to prescribe the matters and the manner in which the resol!tions passed in (eneral meetin( are to be filed with the ,e(istrar. S!b.cla!se F1G of cla!se 1*$ proposes to empower the +entral 4o-ernment to prescribe the time within which and manner in which a company shall prepare and 2eep min!tes of proceedin(s of e-ery (eneral meetin(, meetin( called by re3!isitionists, meetin( of class of shareholders or creditors, resol!tion passed by postal ballot and meetin(s of the 0oard and any of its committees. S!b.cla!se F1*G of cla!se 1*$ proposes to empower the +entral 4o-ernment to prescribe the secretarial standards for (eneral and 0oard meetin(s of a company. S!b.cla!se F2G of cla!se 1*& proposes to empower the +entral 4o-ernment to prescribe fee for f!rnishin( a copy of min!tes of any (eneral meetin( to any member of the company. S!b.cla!se F1G of cla!se 1*) proposes to empower the +entral 4o-ernment to prescribe the manner in which a report on ann!al (eneral meetin( shall be prepared. S!b.cla!se F2G of cla!se 1*) proposes to empower the +entral 4o-ernment to prescribe fee to be paid by member of a company for bein( f!rnished with copy of min!tes, etc. %tem FaG of s!b.cla!se F2G of cla!se 11* proposes to empower the +entral 4o-ernment to prescribe rate of depreciation on assets of the company. S!b.cla!se F4G of cla!se 111 proposes to empower the +entral 4o-ernment to prescribe the form of statement to be filed by company with a!thority administerin( the f!nd on transfer of !npaid money to %n-estorKs 'd!cation and /rotection F!nd. %tem F(G of s!b.cla!se F2G of cla!se 112 proposes to empower the +entral 4o-ernment to prescribe other amo!nts which shall be transferred to %n-estorKs 'd!cation and /rotection F!nd. S!b.cla!se F3G of cla!se 112 proposes to empower the +entral 4o-ernment to prescribe r!les for !tilisation of %n-estorKs 'd!cation and /rotection F!nd. S!b.cla!se F5G of cla!se 112 proposes to empower the +entral 4o-ernment to prescribe the form in which a!thority shall maintain acco!nts and other rele-ant records after cons!ltin( +omptroller and #!ditor 4eneral of %ndia. S!b.cla!se F&G of cla!se 112 proposes to empower the +entral 4o-ernment to prescribe the form and time for preparin( ann!al report by the a!thority (i-in( a f!ll acco!nt of its acti-ities d!rin( the financial year. Second pro-iso of s!b.cla!se F1G of cla!se 11" proposes to empower the +entral 4o-ernment to prescribe the manner in which boo2s of acco!nt can be 2ept in electronic mode.

290

S!b.cla!se F3G of cla!se 11" proposes to empower the +entral 4o-ernment to prescribe the conditions for ma2in( inspection of boo2s of acco!nt and other records by a director. S!b.cla!se F1G of cla!se 11$ proposes to empower the +entral 4o-ernment to prescribe the form of in which financial statements are to be prepared by a company at the end of each financial year. S!b.cla!se F4G of cla!se 11& proposes to empower the +entral 4o-ernment to prescribe fees, tra-elin(, con-eyance and other allowances to the members of 6ational #d-isory +ommittee on #cco!ntin( and #!ditin( Standards. /ro-iso to s!b.cla!se F1G of cla!se 12* proposes to empower the +entral 4o-ernment to prescribe the manner in which financial statements shall be a!thenticated. /ro-iso to s!b.cla!se F1G of cla!se 121 proposes to empower the +entral 4o-ernment to prescribe the net worth and t!rno-er of companies and manner in which s!ch company shall circ!late their Financial Statements. S!b.cla!se F1G of cla!se 122 proposes to empower the +entral 4o-ernment to prescribe the manner to file the financial statements with the ,e(istrar. S!b.cla!se F2G of cla!se 122 proposes to empower the +entral 4o-ernment to prescribe the manner to file the financial statements where ann!al (eneral meetin( has not been held alon( with the statement of facts and reasons for not holdin( the ann!al (eneral meetin( with the ,e(istrar. /ro-iso of s!b.cla!se F1G of cla!se 123 proposes to empower the +entral 4o-ernment to prescribe the conditions for ma2in( an appointment of an a!ditor in a company. S!b.item FiG of item FdG of s!b.cla!se F3G cla!se 124 proposes to empower the +entral 4o-ernment to prescribe the percenta(e which a person or his relati-e or partner sho!ld not hold as sec!rities of the company or its s!bsidiary, etc., for bein( eli(ible for appointment as an a!ditor of a company. S!b.item FiiiG of item FdG of s!b.cla!se F3G of cla!se 124 proposes to empower the +entral 4o-ernment to prescribe the amo!nt (i-en by a person or his relati-e or partner as a (!arantee or sec!rity in connection with the indebtness of any third person to the company or its s!bsidiary, or its holdin( or associate company or a s!bsidiary of s!ch holdin( company which shall dis3!alify a person from bein( appointed as an a!ditor of the company. %tem FeG of s!b.cla!se F3G of cla!se 124 proposes to empower the +entral 4o-ernment to prescribe the b!siness relationships which if a person has with the company or its s!bsidiary, or its holdin( or associate company, or a s!bsidiary of s!ch holdin( company shall not be appointed as an a!ditor of the company. %tem F(G of s!b.cla!se F3G of cla!se 124 proposes to empower the +entral 4o-ernment to prescribe the n!mber of companies beyond which a person shall not be appointed as an a!ditor of the company. S!b.cla!se F1G of cla!se 12" proposes to empower the +entral 4o-ernment to prescribe the matters, which an a!ditor shall in3!ire into as he consider necessary for the performance of his d!ties. S!b.cla!se F2G of cla!se 12" proposes to empower the +entral 4o-ernment to prescribe the matters, which an a!ditor shall incl!de in its report to the members of the company.

291

%tem FjG of s!b.cla!se F3G of cla!se 12" proposes to empower the +entral 4o-ernment to prescribe additional matters to be incl!ded in a!ditors8 report. S!b.cla!se F&G of cla!se 12" proposes to empower the +entral 4o-ernment to prescribe the powers and d!ties of branch a!ditors or company8s a!ditor with reference to the a!dit of branch offices of a company. S!b.cla!se F1G of cla!se 131 proposes to empower the +entral 4o-ernment to prescribe the items of cost to be incl!ded in the boo2s of acco!nt 2ept by specified class of companies. S!b.cla!se F2G of cla!se 131 proposes to empower the +entral 4o-ernment to specify the manner in which a!dit of cost records of a company shall be cond!cted. S!b.cla!se F3G of cla!se 131 proposes to empower the +entral 4o-ernment to prescribe the manner in which a +ost #cco!ntant shall be appointed in a company. S!b.cla!se F3G of cla!se 132 proposes to empower the +entral 4o-ernment to prescribe amo!nt of paid.!p share capital for listed companies which shall be re3!ired to appoint one.third of its total directors as independent directors. %t also proposes to empower the +entral 4o-ernment to prescribe minim!m n!mber of independent directors in case of p!blic companies and s!bsidiaries of any p!blic company which are not listed. %tem FcG of s!b.cla!se F5G of cla!se 132 proposes to empower the +entral 4o-ernment to prescribe other 3!alifications to be possessed by an independent director. S!b.cla!se F5G of cla!se 133 proposes to empower the +entral 4o-ernment to prescribe the time within which and manner in which consent (i-en by a director shall be filed with the re(istrar. S!b.cla!se F"G of cla!se 133 proposes to empower the +entral 4o-ernment to prescribe the proced!re and principles in accordance with which directors shall retire by rotation !nder s!ch s!b.cla!se. S!b.cla!se F$G of cla!se 133 proposes to empower the +entral 4o-ernment to prescribe the time and proced!re in respect of ma2in( of appointment of director in case a company fails to re. appoint a director or to appoint a person as a director in place of a retirin( director. +la!se 134 proposes to empower the +entral 4o-ernment to prescribe the form, manner and the fees payable in respect of application for Director %dentification 6!mber. +la!se 135 proposes to empower the +entral 4o-ernment to prescribe manner in which Director %dentification 6!mber shall be allotted by the +entral 4o-ernment. S!b.cla!se F1G of cla!se 13& proposes to empower the +entral 4o-ernment to specify apart from ,e(istrar any other a!thority to whom Director %dentification 6!mber may be f!rnished by a company !nder s!ch s!b.cla!se. S!b.cla!se F1G of cla!se 141 proposes to empower the +entral 4o-ernment to prescribe the s!m of money to be deposited in connection with proposin( the candidat!re of a person as a director in the company. S!b.cla!se F2G of cla!se 141 empower the +entral 4o-ernment to prescribe the manner in which the company shall inform its members of the candidat!re of a person for office of director.

292

S!b.cla!se F1G of cla!se 14) proposes to empower the +entral 4o-ernment to prescribe manner and form in which 0oard shall intimate ,e(istrar in respect of notice of resi(nation (i-en by a director !nder this s!b.cla!se. /ro-iso to s!b.cla!se F1G of cla!se 14) of the 0ill proposes to empower the +entral 4o-ernment to prescribe the manner in which a director himself may forward a copy of his resi(nation to the ,e(istrar !nder this cla!se. S!b.cla!se F1G of cla!se 15* proposes to empower the +entral 4o-ernment to prescribe the proced!re to be followed by a company while remo-in( a director from his office before the expiry of period of his office. S!b.cla!se F1G of cla!se 151 proposes to empower the +entral 4o-ernment to prescribe the partic!lars in respect of directors and 2ey mana(erial personnel to be entered in the re(ister re3!ired to be 2ept by the company p!rs!ant to this cla!se. S!b.cla!se F2G of cla!se 151 proposes to empower the +entral 4o-ernment to prescribe the partic!lars and doc!ments to be contained in the ret!rn to be filed with the ,e(istrar !nder s!ch s!b.cla!se. /ro-iso to s!b.cla!se F1G of cla!se 154 proposes to empower the +entral 4o-ernment to iss!e directions by way of notifications, to the effect that pro-isions in respect of s!b.cla!se F1G shall not apply in relation to any class or description of companies or shall apply s!bject to s!ch exceptions, modifications or conditions as may be specified in the notification. S!b.cla!se F2G of cla!se 154 proposes to empower the +entral 4o-ernment to prescribe other means of comm!nication, which are capable of recordin( and reco(nisin( the participation of the directors and of recordin( and storin( the proceedin(s of s!ch meetin(s, which may be !sed for holdin( meetin(s of the 0oard. /ro-iso to s!b.cla!se F2G of cla!se 154 proposes to empower the +entral 4o-ernment to specify s!ch matters which shall not be dealt with in a meetin( of the 0oard thro!(h -ideo conferencin( or other electronic means. S!b.cla!se F1G of cla!se 15& proposes to empower the +entral 4o-ernment to prescribe class or description of companies which shall ha-e to constit!te an a!dit committee and a rem!neration committee of the 0oard. S!b.cla!se F1G of cla!se 1"2 proposes to empower the +entral 4o-ernment to prescribe the manner in which a director shall ma2e disclos!re in respect of companies, firms and other bodies corporate in which he has any concern or interest. S!b.cla!se F5G of cla!se 1"4 proposes to empower the +entral 4o-ernment to prescribe the limits !p to which s!ch class of companies (o-erned by section 12 of the Sec!rities and 'xchan(e 0oard of %ndia #ct, 1))2 which may be prescribed by the +entral 4o-ernment, shall (i-e loan, or (!arantee or ma2e in-estments. 9his s!b.cla!se also see2s to empower +entral 4o-ernment to prescribe class of companies (o-erned by section 12 of the Sec!rities and 'xchan(e 0oard of %ndia #ct, 1))2 in respect of which limits prescribed supra wo!ld be applicable. S!b.cla!se F&G of cla!se 1"4 empower the +entral 4o-ernment to prescribe the partic!lars which shall be incl!ded and the manner in which a re(ister shall be 2ept by a company (i-in( loan or pro-idin( (!arantee, etc.

293

S!b.cla!se F)G of cla!se 1"4 empower the +entral 4o-ernment to prescribe the fees payable for ta2in( extracts or obtainin( copies of any part of re(ister maintained !nder s!b.cla!se F&G by any company. S!b.cla!se F3G of cla!se 1"5 proposes to empower the +entral 4o-ernment to prescribe the partic!lars to be contained in the re(ister to be 2ept by a company in respect of sec!rities, which are not held in its name. /ro-iso to s!b.cla!se F1G of cla!se 1"" proposes to empower the +entral 4o-ernment to prescribe the lower limit of paid.!p capital of a company or the !pper limit of transactions of a company for enterin( into contract or arran(ement, except with the prior appro-al by way of special resol!tion. S!b.cla!se F1G of cla!se 1"$ proposes to empower +entral 4o-ernment to prescribe partic!lars and manner in which re(isterFsG in respect of contracts or arran(ements to which s!b.cla!se F2G of cla!se 1"2 applies shall be 2ept by e-ery company. S!b.cla!se F4G of cla!se 1"$ proposes to empower the +entral 4o-ernment to prescribe the manner and fees payable for inspection of re(ister maintained !nder s!b.cla!se F1G. S!b.cla!se F1G of cla!se 1") proposes to empower the +entral 4o-ernment to prescribe the partic!lars, with reference to payment proposed to be made by transferee or person, which are to be disclosed to members in -iew of pro-isions of s!ch s!b.cla!se. S!b.cla!se F2G of cla!se 1") proposes to empower the +entral 4o-ernment to prescribe limits or priorities in respect of any payment made by a company to a mana(in( director or whole.time director or mana(er of the company by way of compensation for loss of office or as consideration for retirement from office or in connection with s!ch loss or retirement, which shall not be effected by the pro-isions of s!b.cla!se F1G of this cla!se. S!b.cla!se F1G of cla!se 1$5 proposes to empower the +entral 4o-ernment to prescribe the manner in which net profits of a company shall be comp!ted for the p!rpose of ascertainin( the payment of rem!neration to a mana(in( or whole.time director or a mana(er of a company. S!b.cla!se F1G of cla!se 1$& proposes to empower the +entral 4o-ernment to prescribe class or description of companies who shall be re3!ired to ha-e whole.time 2ey mana(erial personnel. %tem FbG of s!b.cla!se F3G of cla!se 1)3 proposes to empower the +entral 4o-ernment to prescribe fee for f!rnishin( a copy of the final report. S!b.cla!se F4G of cla!se 1)3 proposes to empower the +entral 4o-ernment to prescribe the manner in which %nspector may a!thenticate the report. S!b.cla!se F3G of cla!se 2*1 proposes to empower the +entral 4o-ernment to prescribe the other methods which shall be disclosed in the statement apart from the disclos!re indicated in the said s!b.cla!se. S!b.cla!se F5G of cla!se 2*1 proposes to empower the +entral 4o-ernment to prescribe the form and accompanied doc!ments in which a notice shall be sent !nder s!b.cla!se F3G of the said cla!se. S!b.cla!se F1*G of cla!se 2*1 proposes to empower the +entral 4o-ernment to prescribe r!les re(ardin( the manner, terms and conditions for ta2eo-er offer to be made.

294

S!b.cla!se F11G of cla!se 2*1 proposes to empower the +entral 4o-ernment to prescribe the manner in which an a((rie-ed party may appeal to the 9rib!nal, in the e-ent of any (rie-ances with respect to the ta2eo-er offer in case of !nlisted companies. S!b.cla!se F2G of cla!se 2*4 proposes to empower the +entral 4o-ernment to prescribe the manner in which the transferee company shall file a copy of the appro-ed scheme with the ,e(istrar and the 1fficial <i3!idator. S!b.cla!se F1*G of cla!se 2*4 proposes to empower the +entral 4o-ernment to prescribe fee d!e on re-ised capital for filin( an application with the ,e(istrar alon( with the scheme re(istered and indication the re-ised a!thorised capital. S!b.cla!se F1G of cla!se 2*5 proposes to empower the +entral 4o-ernment to notify the names of co!ntries to which the pro-isions of the +hapter shall apply. S!b.cla!se F1G of cla!se 2*" proposes to empower the +entral 4o-ernment to prescribe the manner in which the notice is to be (i-en by the transferee company to any dissentin( shareholders that the transferee company desired to ac3!ire his share. S!b.cla!se F2G of cla!se 2*$ proposes to empower the +entral 4o-ernment to prescribe the r!les for determinin( the price for b!yin( of e3!ity shares from the minority shareholders. S!b.cla!se F3G of cla!se 2*$ proposes to empower the +entral 4o-ernment to prescribe the r!les for determinin( the price for b!yin( of e3!ity shares from the majority shareholders. S!b.cla!se F3G of cla!se 2*& proposes to empower the +entral 4o-ernment to prescribe the a!thority for assessment of compensation to be paid to the member or creditor by the transferee company. %tem FaG of s!b.cla!se F1G of cla!se 2*) proposes to empower the +entral 4o-ernment to prescribe the information and the manner in which e-ery circ!lar containin( the offer shall be accompanied with. S!b.cla!se F2G of cla!se 21) proposes to empower the +entral 4o-ernment to prescribe 3!alifications of persons for re(istration as a re(istered -al!er other than +hartered #cco!ntants, +ost and >or2s #cco!ntants and company secretaries and form to apply for licensin( a re(istered -al!er. S!b.cla!se F3G of cla!se 21) proposes to empower the +entral 4o-ernment to prescribe fee for filin( application to the +entral 4o-ernment for re(istration as a re(istered -al!er. %tem FbG of s!b.cla!se F3G of cla!se 21) proposes to empower the +entral 4o-ernment to prescribe r!les to ma2e the -al!ation. S!b.cla!se F1G of cla!se 22* proposes to empower the +entral 4o-ernment to prescribe the n!mber of experts and their minim!m 3!alification for appointment of s!ch experts in the committee of experts. S!b.cla!se F2G of cla!se 221 proposes to empower the +entral 4o-ernment to prescribe form in which -al!ation report shall be s!bmitted as well as the manner of its -erification. S!b.cla!se F3G of cla!se 221 proposes to empower the +entral 4o-ernment to prescribe the maxim!m rate which shall be char(ed by the re(istered -al!er.

295

S!b.cla!se F4G of cla!se 223 proposes to empower the +entral 4o-ernment to prescribe the en3!iry officers as well as their powers. S!b.cla!se F1G of cla!se 224 proposes to empower the +entral 4o-ernment to specify the notice period for remo-al of name of a company. S!b.cla!se F2G of cla!se 224 proposes to empower the +entral 4o-ernment to prescribe the format of p!blic notice to be iss!ed by the ,e(istrar. S!b.cla!se F4G of cla!se 224 proposes to empower the +entral 4o-ernment to prescribe the manner in which p!blic notice shall be p!blished by the ,e(istrar. S!b.cla!se F1G of cla!se 22) proposes to empower the +entral 4o-ernment to prescribe the manner in which an application is to be filed to the 9rib!nal. %tem FbG of s!b.cla!se F2G of cla!se 23* proposes to empower the +entral 4o-ernment to prescribe partic!lar and doc!ments and manner of a!thentication as well as the re3!isite fee for an application to be made to 9rib!nal in respect of re-i-al and rehabilitation of sic2 company. %tem FcG of s!b.cla!se F2G of cla!se 23* proposes to empower the +entral 4o-ernment to prescribe the draft scheme of re-i-al and rehabilitation. S!b.cla!se F1G of cla!se 234 proposes to empower the +entral 4o-ernment to notify the name of the professionals s!ch as ad-ocates, +ompany Secretary, +hartered #cco!ntant, +ost and >or2s #cco!ntant to be appointed as interim administrator or company administrator. S!b.cla!se F4G of cla!se 244 proposes to empower the +entral 4o-ernment to prescribe the r!les re(ardin( the manner in which the rehabilitation and insol-ency f!nd shall be mana(ed. S!b.cla!se F5G of cla!se 24$ proposes to empower the +entral 4o-ernment to prescribe the form and manner in which a statement of affairs is to be filed alon( with the petition for windin( !p before the 9rib!nal. S!b.cla!se F1G of cla!se 24) proposes to empower the +entral 4o-ernment to prescribe the form and manner in which the company is to file its objection alon( with a statement of its affairs on receipt of orders of the 9rib!nal on a petition for windin( !p filed by any person other than the company. S!b.cla!se F2G of cla!se 25* proposes to empower the +entral 4o-ernment to maintain a panel of professionals consistin( of their names, experience and other 3!alifications and also empower to notify the cate(oryNclass of professionals who can be considered for appointment as pro-isional li3!idator. S!b.cla!se F5G of cla!se 25* proposes to empower the +entral 4o-ernment to prescribe the form in which a declaration is to be filed by the pro-isional li3!idator or company li3!idator, disclosin( conflict of interest or lac2 of independence in respect of his appointment, if any, with the 9rib!nal. S!b.cla!se F5G of cla!se 25" proposes to empower the +entral 4o-ernment to prescribe the fee for payment of ta2in( copies or extracts of statements to be s!bmitted by the company li3!idator. S!b.cla!se F5G of cla!se 2"2 proposes to empower the +entral 4o-ernment to prescribe the form and manner relatin( to the con-enin( of the meetin(s, the proced!re to be followed thereat and other matters relatin( to cond!ct of b!siness by the committee of inspection.

296

S!b.cla!se F1G of cla!se 2"3 proposes to empower the +entral 4o-ernment to prescribe the form and manner in which a periodical reports on the pro(ress of the windin( !p of the company is to be made to the 9rib!nal by the +ompany <i3!idator. S!b.cla!se F2G of cla!se 2"" proposes to empower the +entral 4o-ernment to prescribe the form in which the person appointed to assist +ompany <i3!idator shall discloser information relatin( to any conflict of interest or lac2 of independence in respect of his appointment. S!b.cla!se F1G of cla!se 2"& proposes to empower the +entral 4o-ernment to prescribe the form and manner in which the +ompany <i3!idator shall 2eep proper boo2s, min!tes of the proceedin(s at the meetin( and other matters in relation to the company !nder li3!idation. S!b.cla!se F1G of cla!se 2") proposes to empower the +entral 4o-ernment to prescribe the form and manner in which the +ompany <i3!idator shall maintain proper and re(!lar boo2s of acco!nt incl!din( acco!nts of all receipts and payments made by him in relation to the company !nder li3!idation. S!b.cla!se F2G of cla!se 2") proposes to empower the +entral 4o-ernment to prescribe the followin( DE F1G 6!mber of times the +ompany <i3!idator shall present to the 9rib!nal acco!nt of receipts and payment made to the <i3!idator. F2G Form in which receipts and payments shall be presented to the 9rib!nal. F3G Form of declaration and manner of its -erification. S!b.cla!se F4G of cla!se 2&5 proposes to empower the +entral 4o-ernment to prescribe the form and manner in which a declaration shall be by the +ompany <i3!idator disclosin( any conflict of interest or lac2 of independence in respect of his appointment with the company and the creditors and s!ch obli(ation shall contin!e thro!(ho!t the term of his or its appointment. S!b.cla!se F4G of cla!se 2&) proposes to empower the +entral 4o-ernment to prescribe the form and manner in which the +ompany <i3!idator shall maintain re(!lar and proper boo2s of acco!nt. 9his cla!se also empower the +entral 4o-ernment to a!thorise any officer, apart from members and creditors and to inspect s!ch boo2s of acco!nt. S!b.cla!se F1G of cla!se 2)1 proposes to empower the +entral 4o-ernment to prescribe the form and manner of ,eport on the pro(ress of windin( !p in which the +ompany <i3!idator shall present it to creditors. S!b.cla!se F2G of cla!se 2)3 proposes to empower the +entral 4o-ernment to prescribe the form and manner in which meetin( of the company shall be called for the p!rpose of layin( the final windin( !p acco!nts. %tem FbG of s!b.cla!se F4G of cla!se 2)3 proposes to empower the +ompany <i3!idator to prescribe the manner in which +ompany <i3!idator shall file application alon( with his report to trib!nal for passin( an order on dissol!tion of company. S!b.cla!se F4G of cla!se 2)$ proposes to empower the +entral 4o-ernment to prescribe the form and manner in which a copy of an order stayin( the proceedin(s in the windin( !p shall be forwarded by the company to the ,e(istrar.

297

%tem FbG of s!b.cla!se F1G of cla!se 3*2 proposes to empower the +entral 4o-ernment to prescribe the limit on amo!nt payable on acco!nt of all wa(es or salary incl!din( wa(es payable for time or piece wor2 and salary earned wholly or in part by way of commission, etc. S!b.cla!se F2G of cla!se 31& proposes to empower the +entral 4o-ernment to prescribe the circ!mstances, conditions, restrictions and limitations !nder which the company li3!idator shall exercise powers witho!t sanction of the 9rib!nal. S!b.cla!se F3G of cla!se 31& proposes to empower the +entral 4o-ernment to prescribe the manner in which any creditor or contrib!tory may file application to the 9rib!nal on powers exercised by company li3!idator. S!b.cla!se F1G of cla!se 321 proposes to empower the +entral 4o-ernment to prescribe the r!les in accordance of which any creditor or contrib!tory of the company may inspect the boo2s and papers of the company. S!b.cla!se F1G of cla!se 323 proposes to empower the +entral 4o-ernment to prescribe the form and manner in which a statement is to be filed d!ly a!dited by a person 3!alified to act as a!ditor of the company, in relation to company where windin( !p is not concl!ded within one year after its commencement. S!b.cla!se F4G of cla!se 323 proposes to empower the +entral 4o-ernment to prescribe the fee on payment of which in which any creditor or contrib!tory of the company may inspect the statement and recei-e a copy thereof or an extract therfrom. +la!se 324 proposes to empower the +entral 4o-ernment to prescribe the manner and time in which +ompany <i3!idator shall pay the monies recei-ed by him as <i3!idator of any 4o-ernment company, into the p!blic acco!nt of %ndia in the ,eser-e 0an2 of %ndia. S!b.cla!se F1G of cla!se 325 proposes to empower the +entral 4o-ernment to prescribe the manner and time in which the +ompany <i3!idator shall deposit the monies recei-ed by him in his capacity as +ompany <i3!idator in a sched!led ban2 to the credit of special ban2 acco!nt. S!b.cla!se F3G of cla!se 32$ proposes to empower the +entral 4o-ernment to prescribe the form and manner in which the li3!idator shall f!rnish the statement indicatin( therein all s!ms incl!ded in payment, the nat!re of the s!ms, the names and last 2nown addresses of the persons entitled to participate therein, the amo!nt to which each is entitled and the nat!re of his claim thereto. S!b cla!se F1G of cla!se 335 proposes to empower the +entral 4o-ernment to prescribe the power and d!ties of 1fficial <i3!idator. %tem FcG to s!b.cla!se F2G of cla!se 335 proposes to empower the +entral 4o-ernment to prescribe the statistics, information and records relatin( to companies !nder windin( !p, which the 1fficial <i3!idator may maintain. S!b cla!se F4G of cla!se 33" proposes to empower the +entral 4o-ernment to prescribe the form and manner of the report to be s!bmitted by 1fficial <i3!idator to trib!nal on any fra!d which has been committed in promotion, formation or mana(ement of the affairs of the company. S!b.cla!se F1G of cla!se 33& proposes to empower the +entral 4o-ernment to prescribe the manner in which 1fficial <i3!idator shall call !pon the creditors to pro-e their claim. S!b.cla!se F2G of cla!se 33& proposes to empower the +entral 4o-ernment to prescribe the manner in which the 1fficial <i3!idator shall prepare a list of claims of creditors.

298

+la!se 341 proposes to empower the +entral 4o-ernment to notify certain companies to comply with the pro-isions of +hapter @@% and s!ch other pro-isions of this #ct with re(ard to the b!siness carried on by it in %ndia as if it were a company incorporated in %ndia. %tem FcG of s!b.cla!se F1G of cla!se 342 proposes to empower the +entral 4o-ernment to prescribe partic!lars to be contained in the list of the directors and secretary to filed by forei(n companies. S!b.cla!se F3G of cla!se 342 proposes to empower the +entral 4o-ernment to prescribe form in which all the alteration has to be deli-ered by the forei(n company to the ,e(istrar for re(istration. S!b.cla!se F3G of cla!se 343 proposes to empower the +entral 4o-ernment to prescribe form in which a copy of list of all places of b!siness established by the company in %ndia has to be deli-ered by forei(n company to the ,e(istrar. +la!se 34$ proposes to empower the +entral 4o-ernment to prescribe the fee for re(isterin( doc!ments with the ,e(istrar by forei(n companies. +la!se 351 proposes to empower the +entral 4o-ernment to prescribe s!ch doc!ments of forei(n companies which has or has not established a place of b!siness in %ndia for the p!rpose of re(istration of prospect!s. +la!se 352 proposes to empower the +entral 4o-ernment to frame r!les for followin(DE FaG the offer of %ndian Depository ,eceiptsH FbG the re3!irement of disclos!res in prospect!s or letter of offer iss!ed in connection with %ndian Depository ,eceiptsH FcG the manner in which the %ndian Depository ,eceipts shall be dealt with in a depository mode and by c!stodian and !nderwritersH and FdG the manner of sale, transfer or transmission of %ndian Depository ,eceipts S!b.cla!se F1G of cla!se 35$ proposes to empower the +entral 4o-ernment to (i-e directions, by notification in the 1fficial 4a=ette that any of the pro-isions of the 0ill shall not apply to any 4o-ernment +ompany or shall apply to any 4o-ernment +ompany with s!ch exception, modification and adaptation as may be specified in the notification. S!b.cla!se F1G of cla!se 35& proposes to empower the +entral 4o-ernment to establish s!ch n!mber of offices and at s!ch places as it thin2s fit specifyin( their j!risdiction for the p!rpose of re(istration of companies !nder this #ct. S!b.cla!se F2G of cla!se 35& proposes to empower the +entral 4o-ernment to prescribe power which shall be exercisable by Director 4eneral of ,e(istration, ,e(istrars, #dditional, ?oint, Dep!ty and #ssistant ,e(istrars. S!b.cla!se F3G of cla!se 35& proposes to empower the +entral 4o-ernment to ma2e r!les in re(ard to prescribin( the terms and conditions of ser-ice, incl!din( the salaries payable to persons appointed !nder this cla!se. S!b.cla!se F4G of cla!se 35& proposes to empower the +entral 4o-ernment to direct preparation of seal or seals for a!thentication of doc!ments re3!ired for, or connected with, the re(istration of companies.

299

+la!se 35) proposes to empower the +entral 4o-ernment to prescribe the manner of a!thentication of doc!ments filed by company in electronic form, etc., for the p!rpose. %tem FaG of s!b.cla!se F1G of cla!se 3"* proposes to empower the +entral 4o-ernment to ma2e r!les of filin( for -ario!s application, doc!ments and ret!rns, etc., in electronic form incl!din( the manner of their a!thentication. %tem FbG of s!b.cla!se F1G of cla!se 3"* proposes to empower the +entral 4o-ernment to ma2e r!les of ser-ice or deli-ery of any doc!ment, notice or comm!nication, etc., in the electronic form and the manner of their a!thentication. %temFcG of s!b.cla!se F1G of cla!se 3"* proposes to empower the +entral 4o-ernment to ma2e r!les for maintenance of -ario!s applications, doc!ments and ret!rn filed with the ,e(istrar in the electronic form and manner of their re(istration or a!thentication. %tem FdG of s!b.cla!se F1G of cla!se 3"* proposes to empower the +entral 4o-ernment to ma2e r!les re(ardin( the manner of inspection of the -ario!s doc!ments maintained in the electronic form. %tem FeG of s!b.cla!se F1G of cla!se 3"* proposes to empower the +entral 4o-ernment to ma2e r!les for payment of fees, char(es or other s!ms payable thro!(h the electronic form. %tem FfG of s!b.cla!se F1G of cla!se 3"* proposes to empower the +entral 4o-ernment to ma2e r!les and the manner in which -ario!s re(istry f!nctions shall be performed by ,e(istrar in electronic form. S!b.cla!se F2G of cla!se 3"* to empower the +entral 4o-ernment to frame, by notification, a scheme to carry o!t the pro-isions of s!b.cla!se F1G of this cla!se. +la!se 3"2 proposes to empower the +entral 4o-ernment to pro-ide -al!e.added ser-ices thro!(h electronic form and le-y fee thereon. S!b.cla!se F1G of cla!se 3"4 proposes to empower the +entral 4o-ernment to prescribe fee and char(es re3!ired to be paid on acco!nt of (i-in(, filin(, re(isterin( or recordin( of any doc!ment or fact !nder the pro-isions of this #ct. /ro-iso to s!b.cla!se F1G of cla!se 3"4 proposes to empower the +entral 4o-ernment to prescribe the additional fee for doc!ments to be s!bmitted, filed, re(istered or recorded, on any fact or information re3!ired !nder this #ct. S!b.cla!se F1G of cla!se 3"" proposes to empower the +entral 4o-ernment to iss!e an order re3!irin( any company or companies to f!rnish information or statistics with re(ard to its or their or its constit!tion or wor2in( and time or to prod!ce records or doc!ments in its possession or allow inspection thereof by any officer or f!rnish s!ch f!rther information as that 4o-ernment may consider necessary. S!b.cla!se F2G of cla!se 3"$ proposes to empower the +entral 4o-ernment to (i-e directions, by notification in the 1fficial 4a=ette, that any of the pro-isions of the #ct shall apply to any 6idhi or shall apply to any 6idhi with s!ch exception, modification and adaptation as may be specified in the notification. +la!se 3") proposes to empower the +entral 4o-ernment to constit!te by notification a 9rib!nal to be 2nown as 6ational +ompany <aw 9rib!nal and appointment of +hairperson and j!dicial and technical member thereof.

300

+la!se 3$1 proposes to empower the +entral 4o-ernment to constit!te by notification an #ppellate 9rib!nal to be 2nown as 6ational +ompany <aw #ppellate 9rib!nal and appointment of +hairperson and j!dicial and technical member thereof. +la!se 3$5 proposes to empower the +entral 4o-ernment to prescribe for salary, allowances and other terms of conditions payable to the embers of the 9rib!nalN#ppellate 9rib!nal. S!b.cla!se F3G of cla!se 3$) proposes to empower the +entral 4o-ernment to prescribe for salary, allowances and other terms and conditions payable to the officersNemployees of the 9rib!nalN#ppellate 9rib!nal. +la!se 3&* proposes to empower the +entral 4o-ernment to prescribe the n!mber of benches of 6+<9. S!b.cla!se F3G of cla!se 3&2 proposes to empower the +entral 4o-ernment to prescribe the form and fee for filin( an appeal a(ainst the order of the 9rib!nal. %tem FhG of s!b.cla!se F2G of cla!se 3&5 proposes to empower the +entral 4o-ernment to prescribe matters other than those specified in this s!b.cla!se, in respect of which the 9rib!nal and #ppellate 9rib!nal shall be the same powers as are -ested in a ci-il co!rt. S!b.cla!se F1G of cla!se 3)" proposes to empower the +entral 4o-ernment to specify the n!mber of special co!rts to be established for the p!rpose of pro-idin( speedy trial of offences !nder this #ct. S!b.cla!se F1G of cla!se 413 proposes to empower the +entral 4o-ernment to prescribe the manner of imposin( penalty by an officer not below the ran2 of ,e(istrar. S!b.cla!se F"G of cla!se 413 proposes to empower the +entral 4o-ernment to prescribe form, manner and fee for filin( an appeal by the a((rie-ed person a(ainst the order made by adj!dicatin( officer. S!b.cla!se F1G of cla!se 414 proposes to empower the +entral 4o-ernment to prescribe manner for obtainin( the stat!s of a dormant company for s!ch companies which are re(istered !nder this #ct for a f!t!re project or to hold an asset or intellect!al property and has no si(nificant acco!ntin( transaction or is an inacti-e company. S!b.cla!se F2G of cla!se 414 proposes to empower the +entral 4o-ernment to prescribe form of certificate to be iss!ed by ,e(istrar allowin( the stat!s of a dormant company. S!b.cla!se F3G of cla!se 414 proposes to empower the +entral 4o-ernment to prescribe form of re(ister of dormant companies to be maintained by the ,e(istrar. S!b.cla!se F5G of cla!se 414 proposes to empower the +entral 4o-ernment to prescribe minim!m n!mber of directors, doc!ments to be filed and ann!al fee to be paid to ,e(istrar by a dormant company to retain its dormant stat!s and also empower the +entral 4o-ernment to prescribe form of application, doc!ments and fee to be paid to ,e(istrar for becomin( an acti-e company. S!b.cla!se F2G of cla!se 41& proposes to empower the +entral 4o-ernment to prescribe fee for application to be made to the +entral 4o-ernment or to the 9rib!nal in respect of any appro-al, sanction, consent, confirmation or reco(nition and also in respect of any direction or exemption to be (i-en or (ranted by the 4o-ernment or the 9rib!nal.

301

S!b.cla!se F1G of cla!se 422 proposes to empower the +entral 4o-ernment to prescribe maxim!m n!mber of persons for formin( association or partnership !nless it is re(istered !nder this #ct or is formed !nder any other law for the time bein( in force. /ro-iso 4 to s!b.cla!se F2G of cla!se 424 proposes to empower the +entral 4o-ernment to prescribe the manner in which pro-ident f!nd, s!perann!ation f!nd, welfare f!nd or other f!nd for the benefit of the officer and other employees of the +ompany <aw 0oard, who has become officers and employees of the +entral 4o-ernment shall be dealt with by it conse3!ent !pon dissol!tion of +ompany <aw 0oard. 9he matters in respect of which notification may be iss!ed or r!les may be made in accordance with the aforesaid pro-isions of the 0ill are matters of proced!re and detail and it is not practicable to pro-ide for them in the 0ill itself. 9he dele(ation of le(islati-e power is, therefore, of a normal character.

302

LOK SABHA GGGG A BILL )o 4o*3olid()1 (*d (51*d )01 l(6 r1l()i*+ )o 4o5-(*i13. GGGG AS0ri S(l5(* K0,r30id Mi*i3)1r of Cor-or()1 Aff(ir3B

GMGIPMRNDG3283LSAS5BG2E;?;2009.

303

Sponsor Documents

Or use your account on DocShare.tips

Hide

Forgot your password?

Or register your new account on DocShare.tips

Hide

Lost your password? Please enter your email address. You will receive a link to create a new password.

Back to log-in

Close