Bare Act

THE COMPANIES ACT, 2013 

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ARRANGEMENT OF SECTIONS 

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CHAPTER I 

PRELIMINARY 

SECTIONS 

  1. Short title, extent, commencement and application. 
  2. Definitions. 

CHAPTER II 

INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO 

  1. Formation of company. 
  2. Memorandum. 
  3. Articles. 
  4. Act to override memorandum, articles, etc. 
  5. Incorporation of company. 
  6. Formation of companies with charitable objects, etc. 
  7. Effect of registration. 
  8. Effect of memorandum and articles. 
  9. [Omitted]. 
  10. Registered office of company. 
  11. Alteration of memorandum. 
  12. Alteration of articles. 
  13. Alteration of memorandum or articles to be noted in every copy. 
  14. Rectification of name of company. 
  15. Copies of memorandum, articles, etc., to be given to members. 
  16. Conversion of companies already registered. 
  17. Subsidiary company not to hold shares in its holding company. 
  18. Service of documents. 
  19. Authentication of documents, proceedings and contracts. 
  20. Execution of bills of exchange, etc. 

CHAPTER III 

PROSPECTUS AND ALLOTMENT OF SECURITIES 

PART I.—Public offer 

  1. Public offer and private placement. 
  2. Power of Securities and Exchange Board to regulate issue and transfer of securities, etc. 25. Document containing offer of securities for sale to be deemed prospectus. 26. Matters to be stated in prospectus. 
  3. Variation in terms of contract or objects in prospectus. 
  4. Offer of sale of shares by certain members of company. 
  5. Public offer of securities to be in dematerialised form. 
  6. Advertisement of prospectus. 
  7. Shelf prospectus. 
  8. Red herring prospectus. 
  9. Issue of application forms for securities. 
  10. Criminal liability for mis-statements in prospectus. 
  11. Civil liability for mis-statements in prospectus.

SECTIONS 

  1. Punishment for fraudulently inducing persons to invest money. 
  2. Action by affected persons. 
  3. Punishment for personation for acquisition, etc., of securities. 
  4. Allotment of securities by company. 
  5. Securities to be dealt with in stock exchanges. 
  6. Global depository receipt. 

PART II.—Private placement 

  1. Offer or invitation for subscription of securities on private placement. 

CHAPTER IV 

SHARE CAPITAL AND DEBENTURES 

  1. Kinds of share capital. 
  2. Nature of shares or debentures. 
  3. Numbering of shares. 
  4. Certificate of shares. 
  5. Voting rights 
  6. Variation of shareholders‘ rights. 
  7. Calls on shares of same class to be made on uniform basis. 
  8. Company to accept unpaid share capital, although not called up. 
  9. Payment of dividend in proportion to amount paid-up. 
  10. Application of premiums received on issue of shares. 
  11. Prohibition on issue of shares at discount. 
  12. Issues of sweat equity shares. 
  13. Issue and redemption of preference shares. 
  14. Transfer and transmission of securities. 
  15. Punishment for personation of shareholder. 
  16. Refusal of registration and appeal against refusal. 
  17. Rectification of register of members. 
  18. Publication of authorised, subscribed and paid-up capital. 
  19. Power of limited company to alter its share capital. 
  20. Further issue of share capital. 
  21. Issue of bonus shares. 
  22. Notice to be given to Registrar for alteration of share capital. 
  23. Unlimited company to provide for reserve share capital on conversion into limited company. 66. Reduction of share capital. 
  24. Restrictions on purchase by company or giving of loans by it for purchase of its shares. 68. Power of company to purchase its own securities. 
  25. Transfer of certain sums to capital redemption reserve account. 
  26. Prohibition for buy-back in certain circumstances. 
  27. Debentures. 
  28. Power to nominate. 

CHAPTERV 

ACCEPTANCE OF DEPOSITS BY COMPANIES 

  1. Prohibition on acceptance of deposits from public. 
  2. Repayment of deposits, etc., accepted before commencement of this Act. 75. Damages for fraud.

SECTIONS 

  1. Acceptance of deposits from public by certain companies. 

76A. Punishment for contravention of section 73 or section 76. 

CHAPTER VI 

REGISTRATION OF CHARGES 

  1. Duty to register charges, etc. 
  2. Application for registration of charge. 
  3. Section 77 to apply in certain matters. 
  4. Date of notice of charge. 
  5. Register of charges to be kept by Registrar. 
  6. Company to report satisfaction of charge. 
  7. Power of Registrar to make entries of satisfaction and release in absence of intimation from  company. 
  8. Intimation of appointment of receiver or manager. 
  9. Company‘s register of charges. 
  10. Punishment for contravention. 
  11. Rectification by Central Government in register of charges. 

CHAPTER VII 

MANAGEMENT AND ADMINISTRATION 

  1. Register of members, etc. 
  2. Declaration in respect of beneficial interest in any share. 
  3. Investigation of beneficial ownership of shares in certain cases. 
  4. Power to close register of members or debenture holders or other security holders. 92. Annual return. 
  5. Return to be filed with Registrar in case promoters‘ stake changes. 
  6. Place of keeping and inspection of registers, returns, etc. 
  7. Registers, etc., to be evidence. 
  8. Annual general meeting. 
  9. Power of Tribunal to call annual general meeting. 
  10. Power of Tribunal to call meetings of members, etc. 
  11. Punishment for default in complying with provisions of sections 96 to 98. 
  12. Calling of extraordinary general meeting. 
  13. Notice of meeting. 
  14. Statement to be annexed to notice. 
  15. Quorum for meetings. 
  16. Chairman of meetings. 
  17. Proxies. 
  18. Restriction on voting rights. 
  19. Voting by show of hands. 
  20. Voting through electronic means. 
  21. Demand for poll. 
  22. Postal ballot. 
  23. Circulation of members‘ resolution. 
  24. Representation of President and Governors in meetings. 
  25. Representation of corporations at meeting of companies and of creditors. 
  26. Ordinary and special resolutions. 
  27. Resolutions requiring special notice. 
  28. Resolutions passed at adjourned meeting. 
  29. Resolutions and agreements to be filed.

SECTIONS 

  1. Minutes of proceedings of general meeting, meeting of Board of Directors and other meeting  and resolutions passed by postal ballot. 
  2. Inspection of minute-books of general meeting. 
  3. Maintenance and inspection of documents in electronic form. 
  4. Report on annual general meeting. 
  5. Applicability of this Chapter to One Person Company. 

CHAPTER VIII 

DECLARATION AND PAYMENT OF DIVIDEND 

  1. Declaration of dividend. 
  2. Unpaid Dividend Account. 
  3. Investor Education and Protection Fund. 
  4. Right to dividend, rights shares and bonus shares to be held in abeyance pending registration of  transfer of shares. 
  5. Punishment for failure to distribute dividends. 

CHAPTER IX 

ACCOUNTS OF COMPANIES 

  1. Books of account, etc., to be kept by company. 
  2. Financial statement. 
  3. Re-opening of accounts on court‘s or Tribunal‘s orders. 
  4. Voluntary revision of financial statements or Board‘s report. 
  5. Constitution of National Financial Reporting Authority. 
  6. Central Government to prescribe accounting standards 
  7. Financial statement, Board‘s report, etc. 
  8. Corporate Social Responsibility. 
  9. Right of member to copies of audited financial statement. 
  10. Copy of financial statement to be filed with Registrar. 
  11. Internal Audit. 

CHAPTER X 

AUDIT AND AUDITORS 

  1. Appointment of auditors. 
  2. Removal, resignation of auditor and giving of special notice. 
  3. Eligibility, qualifications and disqualifications of auditors. 
  4. Remuneration of auditors. 
  5. Powers and duties of auditors and auditing standards. 
  6. Auditor not to render certain services. 
  7. Auditor to sign audit reports, etc. 
  8. Auditors to attend general meeting. 
  9. Punishment for contravention. 
  10. Central Government to specify audit of items of cost in respect of certain companies.  

CHAPTER XI 

APPOINTMENT AND QUALIFICATIONS OF DIRECTORS 

  1. Company to have Board of Directors.

SECTIONS 

  1. Manner of selection of independent directors and maintenance of data bank of independent  directors. 
  2. Appointment of director elected by small shareholders. 
  3. Appointment of directors. 
  4. Application for allotment of Director Identification Number. 
  5. Allotment of Director Identification Number. 
  6. Prohibition to obtain more than one Director Identification Number. 
  7. Director to intimate Director Identification Number. 
  8. Company to inform Director Identification Number to Registrar. 
  9. Obligation to indicate Director Identification Number. 
  10. Punishment for contravention. 
  11. Right of persons other than retiring directors to stand for directorship. 
  12. Appointment of additional director, alternate director and nominee director. 162. Appointment of directors to be voted individually. 
  13. Option to adopt principle of proportional representation for appointment of directors. 164. Disqualifications for appointment of director. 
  14. Number of directorships. 
  15. Duties of directors. 
  16. Vacation of office of director. 
  17. Resignation of director. 
  18. Removal of directors. 
  19. Register of directors and key managerial personnel and their shareholding. 
  20. Members‘ right to inspect. 
  21. Punishment. 

CHAPTER XII 

MEETINGS OF BOARD AND ITS POWERS 

  1. Meetings of Board. 
  2. Quorum for meetings of Board. 
  3. Passing of resolution by circulation. 
  4. Defects in appointment of directors not to invalidate actions taken. 
  5. Audit committee. 
  6. Nomination and Remuneration Committee and Stakeholders Relationship Committee. 179. Powers of Board. 
  7. Restrictions on powers of Board. 
  8. Company to contribute to bona fide and charitable funds, etc. 
  9. Prohibitions and restrictions regarding political contributions. 
  10. Power of Board and other persons to make contributions to national defence fund, etc. 184. Disclosure of interest by director. 
  11. Loan to directors, etc. 
  12. Loan and investment by company. 
  13. Investments of company to be held in its own name. 
  14. Related party transactions. 
  15. Register of contracts or arrangements in which directors are interested. 
  16. Contract of employment with managing or whole-time directors. 
  17. Payment to director for loss of office, etc., in connection with transfer of undertaking, property or shares. 192. Restriction on non-cash transactions involving directors. 
  18. Contract by One Person Company. 
  19. Prohibition on forward dealings in securities of company by director or key managerial  personnel. 
  20. Prohibition on insider trading of securities.

CHAPTER XIII 

APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL 

SECTIONS 

  1. Appointment of managing director, whole-time director or manager. 
  2. Overall maximum managerial remuneration and managerial remuneration in case of absence or  inadequacy of profits. 
  3. Calculation of profits. 
  4. Recovery of remuneration in certain cases. 
  5. Central Government or company to fix limit with regard to remuneration. 
  6. Forms of, and procedure in relation to, certain applications. 
  7. Compensation for loss of office of managing or whole-time director or manager. 203. Appointment of key managerial personnel. 
  8. Secretarial audit for bigger companies. 
  9. Functions of company secretary. 

CHAPTER XIV 

INSPECTION, INQUIRY AND INVESTIGATION 

  1. Power to call for information, inspect books and conduct inquiries. 
  2. Conduct of inspection and inquiry. 
  3. Report on inspection made. 
  4. Search and seizure. 
  5. Investigation into affairs of company. 
  6. Establishment of Serious Fraud Investigation Office. 
  7. Investigation into affairs of company by Serious Fraud Investigation Office. 213. Investigation into company‘s affairs in other cases. 
  8. Security for payment of costs and expenses of investigation. 
  9. Firm, body corporate or association not to be appointed as inspector. 
  10. Investigation of ownership of company. 
  11. Procedure, powers, etc., of inspectors. 
  12. Protection of employees during investigation. 
  13. Power of inspector to conduct investigation into affairs of related companies, etc. 220. Seizure of documents by inspector. 
  14. Freezing of assets of company on inquiry and investigation. 
  15. Imposition of restrictions upon securities. 
  16. Inspector‘s report. 
  17. Actions to be taken in pursuance of inspector‘s report. 
  18. Expenses of investigation. 
  19. Voluntary winding up of company, etc., not to stop investigation proceedings. 227. Legal advisers and bankers not to disclose certain information. 
  20. Investigation, etc., of foreign companies. 
  21. Penalty for furnishing false statement, mutilation, destruction of documents. 

CHAPTER XV 

COMPROMISES, ARRANGEMENTS AND AMALGAMATIONS 

  1. Power to compromise or make arrangements with creditors and members. 
  2. Power to Tribunal to enforce compromise or arrangement. 
  3. Merger and amalgamation of companies. 
  4. Merger or amalgamation of certain companies. 
  5. Merger or amalgamation of company with foreign company.

SECTIONS 

  1. Power to acquire shares of shareholders dissenting from scheme or contract approved by  majority. 
  2. Purchase of minority shareholding. 
  3. Power of Central Government to provide for amalgamation of companies in public interest. 238. Registration of offer of schemes involving transfer of shares. 
  4. Preservation of books and papers of amalgamated companies. 
  5. Liability of officers in respect of offences committed prior to merger, amalgamation, etc. 

CHAPTER XVI 

PREVENTION OF OPPRESSION AND MISMANAGEMENT 

  1. Application to Tribunal for relief in cases of oppression, etc. 
  2. Powers of Tribunal. 
  3. Consequence of termination or modification of certain agreements. 
  4. Right to apply under section 241. 
  5. Class action. 
  6. Application of certain provisions to proceedings under section 241 or section 245. 

CHAPTER XVII 

REGISTERED VALUERS 

  1. Valuation by registered valuers. 

CHAPTER XVIII 

REMOVAL OF NAMES OF COMPANIES FROM THE REGISTER OF COMPANIES 

  1. Power of Registrar to remove name of company from register of companies. 249. Restrictions on making application under section 248 in certain situations. 250. Effect of company notified as dissolved. 
  2. Fraudulent application for removal of name. 
  3. Appeal to Tribunal. 

CHAPTER XIX 

REVIVAL AND REHABILITATION OF SICK COMPANIES 

  1. Determination of sickness. 
  2. Application for revival and rehabilitation. 
  3. Exclusion of certain time in computing period of limitation. 
  4. Appointment of interim administrator. 
  5. Committee of creditors. 
  6. Order of Tribunal. 
  7. Appointment of administrator. 
  8. Powers and duties of company administrator. 
  9. Scheme of revival and rehabilitation. 
  10. Sanction of scheme. 
  11. Scheme to be binding. 
  12. Implementation of scheme. 
  13. Winding up of company on report of company administrator. 
  14. Power of Tribunal to assess damages against delinquent directors, etc. 
  15. Punishment for certain offences. 
  16. Bar of jurisdiction. 
  17. Rehabilitation and Insolvency Fund.

CHAPTER XX 

WINDING UP 

SECTIONS 

  1. Modes of winding up. 

PART I.—Winding up by the Tribunal 

  1. Circumstances in which company may be wound up by Tribunal. 272. Petition for winding up. 
  2. Powers of Tribunal. 
  3. Directions for filing statement of affairs. 
  4. Company Liquidators and their appointments. 
  5. Removal and replacement of liquidator. 
  6. Intimation to Company Liquidator, provisional liquidator and Registrar. 278. Effect of winding up order. 
  7. Stay of suits, etc., on winding up order. 
  8. Jurisdiction of Tribunal. 
  9. Submission of report by Company Liquidator. 
  10. Directions of Tribunal on report of Company Liquidator. 
  11. Custody of company‘s properties. 
  12. Promoters, directors, etc., to cooperate with Company Liquidator. 285. Settlement of list of contributories and application of assets. 
  13. Obligations of directors and managers. 
  14. Advisory Committee. 
  15. Submission of periodical reports to Tribunal. 
  16. Power of Tribunal on application for stay of winding up. 
  17. Powers and duties of Company Liquidator. 
  18. Provision for professional assistance to Company Liquidator. 
  19. Exercise and control of Company Liquidator‘s powers. 
  20. Books to be kept by Company Liquidator. 
  21. Audit of Company Liquidator‘s accounts. 
  22. Payment of debts by contributory and extent of set-off. 
  23. Power of Tribunal to make calls. 
  24. Adjustment of rights of contributories. 
  25. Power to order costs. 
  26. Power to summon persons suspected of having property of company, etc. 300. Power to order examination of promoters, directors, etc. 
  27. Arrest of person trying to leave India or abscond. 
  28. Dissolution of company by Tribunal. 
  29. Appeals from orders made before commencement of Act. 

PART II.—Voluntary winding up 

  1. Circumstances in which company may be wound up voluntarily. 305. Declaration of solvency in case of proposal to wind up voluntarily. 306. Meeting of creditors. 
  2. Publication of resolution to wind up voluntarily. 
  3. Commencement of voluntary winding up. 
  4. Effect of voluntary winding up. 
  5. Appointment of Company Liquidator. 
  6. Power to remove and fill vacancy of Company Liquidator. 312. Notice of appointment of Company Liquidator to be given to Registrar. 313. Cesser of Board‘s powers on appointment of Company Liquidator.

SECTIONS 

  1. Powers and duties of Company Liquidator in voluntary winding up. 
  2. Appointment of committees. 
  3. Company Liquidator to submit report on progress of winding up. 
  4. Report of Company Liquidator to Tribunal for examination of persons. 
  5. Final meeting and dissolution of company. 
  6. Power of Company Liquidator to accept shares, etc., as consideration for sale of property of  company. 
  7. Distribution of property of company. 
  8. Arrangement when binding on company and creditors. 
  9. Power to apply to Tribunal to have questions determined, etc. 
  10. Costs of voluntary winding up. 

PART III.—Provisions applicable to every mode of winding up 

  1. Debts of all descriptions to be admitted to proof. 
  2. Application of insolvency rules in winding up of insolvent companies. 
  3. Overriding preferential payments. 
  4. Preferential payments. 
  5. Fraudulent preference. 
  6. Transfers not in good faith to be void. 
  7. Certain transfers to be void. 
  8. Liabilities and rights of certain persons fraudulently preferred. 
  9. Effect of floating charge. 
  10. Disclaimer of onerous property. 
  11. Transfers, etc., after commencement of winding up to be void. 
  12. Certain attachments, executions, etc., in winding up by Tribunal to be void. 336. Offences by officers of companies in liquidation. 
  13. Penalty for frauds by officers. 
  14. Liability where proper accounts not kept. 
  15. Liability for fraudulent conduct of business. 
  16. Power of Tribunal to assess damages against delinquent directors, etc. 
  17. Liability under sections 339 and 340 to extend to partners or directors in firms or companies. 342. Prosecution of delinquent officers and members of company. 
  18. Company Liquidator to exercise certain powers subject to sanction. 
  19. Statement that company is in liquidation. 
  20. Books and papers of company to be evidence. 
  21. Inspection of books and papers by creditors and contributories. 
  22. Disposal of books and papers of company. 
  23. Information as to pending liquidations. 
  24. Official Liquidator to make payments into public account of India. 
  25. Company Liquidator to deposit monies into scheduled bank. 
  26. Liquidator not to deposit monies into private banking account. 
  27. Company Liquidation Dividend and Undistributed Assets Account. 
  28. Liquidator to make returns, etc. 
  29. Meetings to ascertain wishes of creditors or contributories. 
  30. Court, tribunal or person, etc., before whom affidavit may be sworn. 
  31. Power of Tribunal to declare dissolution of company void. 
  32. Commencement of winding up by Tribunal. 
  33. Exclusion of certain time in computing period of limitation.

PART IV.—Official Liquidators 

SECTIONS 

  1. Appointment of Official Liquidator. 
  2. Powers and functions of Official Liquidator. 
  3. Summary procedure for liquidation. 
  4. Sale of assets and recovery of debts due to company. 
  5. Settlement of claims of creditors by Official Liquidator. 
  6. Appeal by creditor. 
  7. Order of dissolution of company. 

CHAPTER XXI 

PART I.—Companies authorised to Register under this Act 

  1. Companies capable of being registered. 
  2. Certificate of registration of existing companies. 
  3. Vesting of property on registration. 
  4. Saving of existing liabilities. 
  5. Continuation of pending legal proceedings. 
  6. Effect of registration under this Part. 
  7. Power of Court to stay or restrain proceedings. 
  8. Suits stayed on winding up order. 
  9. Obligations of companies registering under this Part. 

PART II.—Winding up of unregistered companies 

  1. Winding up of unregistered companies. 
  2. Power to wind up foreign companies although dissolved. 
  3. Provisions of Chapter cumulative. 
  4. Saving and construction of enactments conferring power to wind up partnership firm, association  or company, etc., in certain cases. 

CHAPTER XXII 

COMPANIES INCORPORATED OUTSIDE INDIA 

  1. Application of Act to foreign companies. 
  2. Documents, etc., to be delivered to Registrar by foreign companies. 
  3. Accounts of foreign company. 
  4. Display of name, etc., of foreign company. 
  5. Service on foreign company. 
  6. Debentures, annual return, registration of charges, books of account and their inspection. 385. Fee for registration of documents. 
  7. Interpretation. 
  8. Dating of prospectus and particulars to be contained therein. 
  9. Provisions as to expert‘s consent and allotment.  
  10. Registration of prospectus. 
  11. Offer of India Depository Receipts. 
  12. Application of sections 34 to 36 and Chapter XX. 
  13. Punishment for contravention. 
  14. Company‘s failure to comply with provisions of this Chapter not to affect validity or contracts,  etc.

10 

CHAPTER XXIII 

GOVERNMENT COMPANIES 

SECTIONS 

  1. Annual reports on Government companies. 
  2. Annual reports where one or more State Governments are members of companies. 

CHAPTER XXIV 

REGISTRATION OFFICES AND FEES 

  1. Registration offices. 
  2. Admissibility of certain documents as evidence. 
  3. Provisions relating to filing of applications, documents, inspection, etc., in electronic form. 399. Inspection, production and evidence of documents kept by Registrar. 
  4. Electronic form to be exclusive, alternative or in addition to physical form. 401. Provision of value added services through electronic form. 
  5. Application of provisions of Information Technology Act, 2000. 
  6. Fee for filing, etc. 
  7. Fees, etc., to be credited into public account. 

CHAPTER XXV 

COMPANIES TO FURNISH INFORMATION OR STATISTICS 

  1. Power of Central Government to direct companies to furnish information or statistics. 

CHAPTER XXVI 

NIDHIS 

  1. Power to modify Act in its application to Nidhis

CHAPTER XXVII 

NATIONAL COMPANY LAW TRIBUNAL AND APPELLATE TRIBUNAL 

  1. Definitions. 
  2. Constitution of National Company Law Tribunal. 
  3. Qualification of President and Members of Tribunal. 
  4. Constitution of Appellate Tribunal. 
  5. Qualifications of Chairperson and members of Appellate Tribunal. 
  6. Selection of Members of Tribunal and Appellate Tribunal. 
  7. Term of office of President, Chairperson and other Members. 
  8. Salary, allowances and other terms and conditions of service of Members. 415. Acting President and Chairperson of Tribunal or Appellate Tribunal. 
  9. Resignation of Members. 
  10. Removal of Members. 
  11. Staff of Tribunal and Appellate Tribunal. 
  12. Benches of Tribunal. 
  13. Orders of Tribunal. 
  14. Appeal from orders of Tribunal. 
  15. Expeditious disposal by Tribunal and Appellate Tribunal. 
  16. Appeal to Supreme Court.  
  17. Procedure before Tribunal and Appellate Tribunal. 
  18. Power to punish for contempt.

11 

SECTIONS 

  1. Delegation of powers. 
  2. President, Members, officers, etc., to be public servants. 
  3. Protection of action taken in good faith. 
  4. Power to seek assistance of Chief Metropolitan Magistrate, etc. 
  5. Civil court not to have jurisdiction. 
  6. Vacancy in Tribunal or Appellate Tribunal not to invalidate acts or proceedings. 432. Right to legal representation. 
  7. Limitation. 
  8. Transfer of certain pending proceedings. 

CHAPTER XXVIII 

SPECIAL COURTS 

  1. Establishment of Special Courts. 
  2. Offences triable by Special Courts. 
  3. Appeal and revision. 
  4. Application of Code to proceedings before Special Court. 
  5. Offences to be non-cognizable. 
  6. Transitional provisions. 
  7. Compounding of certain offences. 
  8. Mediation and Conciliation Panel. 
  9. Power of Central Government to appoint company prosecutors. 
  10. Appeal against acquittal. 
  11. Compensation for accusation without reasonable cause. 
  12. Application of fines. 

CHAPTER XXIX 

MISCELLANEOUS 

  1. Punishment for fraud. 
  2. Punishment for false statement. 
  3. Punishment for false evidence. 
  4. Punishment where no specific penalty or punishment is provided. 
  5. Punishment in case of repeated default. 
  6. Punishment for wrongful withholding of property. 
  7. Punishment for improper use of ―Limited‖ or ―Private Limited‖. 
  8. Adjudication of penalties. 
  9. Dormant company. 
  10. Protection of action taken in good faith. 
  11. Non-disclosure of information in certain cases. 
  12. Delegation by Central Government of its powers and functions. 
  13. Power of Central Government of Tribunal to accord approval, etc., subject to conditions and to  prescribe fees on applications. 
  14. Condonation of delay in certain cases. 
  15. Annual report by Central Government. 
  16. Power to exempt class or classes of companies from provisions of this Act. 463. Power of court to grant relief in certain cases. 
  17. Prohibition of association or partnership of persons exceeding certain number. 465. Repeal of certain enactments and savings. 
  18. Dissolution of Company Law Board and consequential provisions. 
  19. Power of Central Government to amend Schedules. 
  20. Power of Central Government to make rules relating to winding up.

12 

SECTIONS 

  1. Power of Central Government to make rules. 470. Power to remove difficulties. 

SCHEDULE I 

SCHEDULE II 

SCHEDULE III 

SCHEDULE IV 

SCHEDULE V 

SCHEDULE VI 

SCHEDULE VII

13 

THE COMPANIES ACT, 2013 

ACT NO. 18 OF 2013 

[29th August, 2013.] 

An Act to consolidate and amend the law relating to companies. 

BE it enacted by Parliament in the Sixty-fourth Year of the Republic of India as follows:— CHAPTER I 

PRELIMINARY 

  1. Short title, extent, commencement and application.—(1) This Act may be called the Companies  Act, 2013. 

(2) It extends to the whole of India. 

(3) This section shall come into force at once and the remaining provisions of this Act shall come into  force on such date1as the Central Government may, by notification in the Official Gazette, appoint and  different dates may be appointed for different provisions of this Act and any reference in any provision to  the commencement of this Act shall be construed as a reference to the coming into force of that provision. 

(4) The provisions of this Act shall apply to— 

(a) companies incorporated under this Act or under any previous company law; 

(b) insurance companies, except in so far as the said provisions are inconsistent with the  provisions of the Insurance Act, 1938 (4 of 1938) or the Insurance Regulatory and Development  Authority Act, 1999 (41 of 1999); 

(c) banking companies, except in so far as the said provisions are inconsistent with the provisions  of the Banking Regulation Act, 1949 (10 of 1949); 

(d) companies engaged in the generation or supply of electricity, except in so far as the said  provisions are inconsistent with the provisions of the Electricity Act, 2003 (36 of 2003); 

  

  1. 1st April 2014 – S. 2(2), (7), (13), (31), (41), (42), (47), (48), (62), (83), (85) and Explanation (d) of clause (87); ss. 3, 4, 5, 6;  s. 7 [except sub-section (7)]; s. 8 [except sub-section (9)]; ss. 9, 10, 11, 12 and 13; s. 14 [except second proviso to sub-section (1)  and sub-section (2)]; ss. 15, 16, 17 and 18; section 20; clause (b) of sub-section (1) and sub-section (2) of section 23; sub-section  (3) of section 25; ss. 26, 27 and 28; sub-section (3) of s. 33; clause (e) of sub-section (1) of s. 35; sub-section (4) of s. 39; sub 

section (6) of s. 40; ss. 41, 42 and 43; ss. 46 and 47; ss. 52, 53 and 54; s. 55 [except sub-section (3)]; s. 56; s. 61 [except proviso  to clause (b) of sub-section (1)]; s. 62 [except sub-sections (4) to (6)]; ss. 63 and 64; ss. 67 and 68; sub-section (2) of section 70;  s. 71 [except sub-sections (9) to (11)]; ss. 72 and 73; sub-section (1) of s. 74; ss. 76, 77, 78, 79, 80, 81, 82, 83, 84 and 85; ss. 87,  88, 89 and 90; ss. 92, 93, 94, 95 and 96; sub-section (6) of s.100; s. 101; third and fourth provisos to sub-section (1) and sub 

section (7) of s. 105; ss. 108, 109 and 110; clause (b) of sub-section (1) of s. 113; s. 115; ss. 117 and 118; s. 119 [except sub section (4)]; ss. 120, 121, 122 and 123; s. 126; ss. 128 and 129; s.134; ss. 136, 137, 138 and 139; s. 140 [except second proviso to  sub-section (4) and sub-section (5)]; ss. 141, 142, 143, 144, 145, 146, 147, 148, 149, 150, 151, 152, 153, 154, 155, 156, 157, 158,  159 and 160; sub-section (2) of s. 161; ss. 164, 165, 166, 167 and 168; s. 169 [except sub-section (4)]; ss. 170, 171, 172, 173, 174  and 175; ss. 177, 178 and 179; s. 184; ss. 186, 187, 188, 189, 190 and 191; s. 193; ss. 196, 197, 198, 199, 200 and 201; ss. 203,  204, 205, 206, 207, 208, 209, 210 and 211; s. 212 [except references of sub-section (10) of s. 66, sub-section (5) of s. 140], s.  213, sub-section (1) of s. 251 and sub-section (3) of s. 339 made in sub-section (6) and also sub-sections (8) to (10)]; ss. 214,  215; s. 216 [except sub-section (2)]; s. 217; ss. 219 and 220; s. 223; s. 224 [except sub-sections (2) and (5)]; s. 225; ss. 228 and 229; ss. 366, 367, 368 and 369; s. 370 (except the proviso); s. 371; s. 374; ss. 380 and 381; ss. 384 and 385; clause (a) of s. 386;  ss. 387, 388, 389 and 390; sub-section (1) of s. 391; ss. 392 and 393; ss. 395, 396, 397 and 398; s. 399 [except reference of word  Tribunal in sub-section (2)]; ss. 400, 401, 402, 403 and 404; s. 406; s. 442; ss. 454 and 455; s. 464; Schs. I, II, III, IV, V and VI, vide notification No. S.O. 902(E), dated 26th March, 2014, see Gazette of India, Extraordinary, Part II, sec.3(ii). 

1st April, 2014 – S. 135 and Sch. VII, vide notification No. S.O. 582(E), dated 27th February, 2014, see Gazette of India,  Extraordinary, Part II, sec. 3 (ii). 

6th June, 2014 –Sub-sections (2) and (3) of s. 74, vide notification No. S.O. 1459(E), dated 6th June, 2014, see Gazette of India,  Extraordinary, Part II, sec. 3(ii). 

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(e) any other company governed by any special Act for the time being in force, except in so far as  the said provisions are inconsistent with the provisions of such special Act; and 

(f) such body corporate, incorporated by any Act for the time being in force, as the Central  Government may, by notification, specify in this behalf, subject to such exceptions, modifications or  adaptation, as may be specified in the notification. 

  1. Definitions.— In this Act, unless the context otherwise requires,— 

(1) ―abridged prospectus‖ means a memorandum containing such salient features of a prospectus as  may be specified by the Securities and Exchange Board by making regulations in this behalf; 

(2) ―accounting standards‖ means the standards of accounting or any addendum thereto for companies  or class of companies referred to in section 133; 

(3) ―alter‖ or ―alteration‖ includes the making of additions, omissions and substitutions; 

(4) ―Appellate Tribunal‖ means the National Company Law Appellate Tribunal constituted under  section 410; 

(5) ―articles‖ means the articles of association of a company as originally framed or as altered from  time to time or applied in pursuance of any previous company law or of this Act; 

(6) ―associate company‖, in relation to another company, means a company in which that other  company has a significant influence, but which is not a subsidiary company of the company having such  influence and includes a joint venture company. 

Explanation.—For the purposes of this clause, ―significant influence‖ means control of at least twenty  per cent. of total share capital, or of business decisions under an agreement; 

(7) ―auditing standards‖ means the standards of auditing or any addendum thereto for companies or  class of companies referred to in sub-section (10) of section 143; 

(8) ―authorised capital‖ or ―nominal capital‖ means such capital as is authorised by the memorandum  of a company to be the maximum amount of share capital of the company; 

(9) ―banking company‖ means a banking company as defined in clause (c) of section 5 of the Banking  Regulation Act, 1949 (10 of 1949); 

(10) ―Board of Directors‖ or ―Board‖, in relation to a company, means the collective body of the  directors of the company; 

(11) ―body corporate‖ or ―corporation‖ includes a company incorporated outside India, but does not  include— 

(i) a co-operative society registered under any law relating to co-operative societies; and 

(ii) any other body corporate (not being a company as defined in this Act), which the Central  Government may, by notification, specify in this behalf; 

(12) ―book and paper‖ and ―book or paper‖ include books of account, deeds, vouchers, writings,  documents, minutes and registers maintained on paper or in electronic form; 

(13) ―books of account‖ includes records maintained in respect of— 

(i) all sums of money received and expended by a company and matters in relation to which the  receipts and expenditure take place; 

(ii) all sales and purchases of goods and services by the company; 

(iii) the assets and liabilities of the company; and 

(iv) the items of cost as may be prescribed under section 148 in the case of a company which  belongs to any class of companies specified under that section; 

(14) ―branch office‖, in relation to a company, means any establishment described as such by the  company; 

(15) ―called-up capital‖ means such part of the capital, which has been called for payment;

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(16) ―charge‖ means an interest or lien created on the property or assets of a company or any of its  undertakings or both as security and includes a mortgage; 

(17) ―chartered accountant‖ means a chartered accountant as defined in clause (b) of sub-section (1)  of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) who holds a valid certificate of practice  under sub-section (1) of section 6 of that Act; 

(18) ―Chief Executive Officer‖ means an officer of a company, who has been designated as such by  it; 

(19) ―Chief Financial Officer‖ means a person appointed as the Chief Financial Officer of a company; (20) ―company‖ means a company incorporated under this Act or under any previous company law; 

(21) ―company limited by guarantee‖ means a company having the liability of its members limited by  the memorandum to such amount as the members may respectively undertake to contribute to the assets  of the company in the event of its being wound up; 

(22) ―company limited by shares‖ means a company having the liability of its members limited by the  memorandum to the amount, if any, unpaid on the shares respectively held by them; 

(23) ―Company Liquidator‖, in so far as it relates to the winding up of a company, means a person  appointed by— 

(a) the Tribunal in case of winding up by the Tribunal; or 

(b) the company or creditors in case of voluntary winding up, 

as a Company Liquidator from a panel of professionals maintained by the Central Government under sub section (2) of section 275; 

(24) ―company secretary‖ or ―secretary‖ means a company secretary as defined in clause (c) of sub section (1) of section 2 of the Company Secretaries Act, 1980 (56 of 1980) who is appointed by a  company to perform the functions of a company secretary under this Act; 

(25) ―company secretary in practice‖ means a company secretary who is deemed to be in practice  under sub-section (2) of section 2 of the Company Secretaries Act, 1980 (56 of 1980); 

(26) ―contributory‖ means a person liable to contribute towards the assets of the company in the event  of its being wound up. 

Explanation.—For the purposes of this clause, it is hereby clarified that a person holding fully paid up shares in a company shall be considered as a contributory but shall have no liabilities of a contributory  under the Act whilst retaining rights of such a contributory; 

(27) ―control‖ shall include the right to appoint majority of the directors or to control the management  or policy decisions exercisable by a person or persons acting individually or in concert, directly or  indirectly, including by virtue of their shareholding or management rights or shareholders agreements or  voting agreements or in any other manner; 

(28) ―cost accountant‖ means a cost accountant as defined in clause (b) of subsection (1) of section 2  of the Cost and Works Accountants Act, 1959 (23 of 1959); 

(29) ―court‖ means— 

(i) the High Court having jurisdiction in relation to the place at which the registered office of the  company concerned is situate, except to the extent to which jurisdiction has been conferred on any  district court or district courts subordinate to that High Court under sub-clause (ii); 

(ii) the district court, in cases where the Central Government has, by notification, empowered any  district court to exercise all or any of the jurisdictions conferred upon the High Court, within the  scope of its jurisdiction in respect of a company whose registered office is situate in the district; 

(iii) the Court of Session having jurisdiction to try any offence under this Act or under any  previous company law;

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(iv) the Special Court established under section 435; 

(v) any Metropolitan Magistrate or a Judicial Magistrate of the First Class having jurisdiction to  try any offence under this Act or under any previous company law; 

(30) ―debenture‖ includes debenture stock, bonds or any other instrument of a company evidencing a  debt, whether constituting a charge on the assets of the company or not; 

(31) ―deposit‖ includes any receipt of money by way of deposit or loan or in any other form by a  company, but does not include such categories of amount as may be prescribed in consultation with the  Reserve Bank of India; 

(32) ―depository‖ means a depository as defined in clause (e) of sub-section (1) of section 2 of the  Depositories Act, 1996 (22 of 1996); 

(33) ―derivative‖ means the derivative as defined in clause (ac) of section 2 of the Securities  Contracts (Regulation) Act, 1956 (42 of 1956); 

(34) ―director‖ means a director appointed to the Board of a company; 

(35) ―dividend‖ includes any interim dividend; 

(36) ―document‖ includes summons, notice, requisition, order, declaration, form and register, whether  issued, sent or kept in pursuance of this Act or under any other law for the time being in force or  otherwise, maintained on paper or in electronic form; 

(37) ―employees‘ stock option‖ means the option given to the directors, officers or employees of a  company or of its holding company or subsidiary company or companies, if any, which gives such  directors, officers or employees, the benefit or right to purchase, or to subscribe for, the shares of the  company at a future date at a pre-determined price; 

(38) ―expert‖ includes an engineer, a valuer, a chartered accountant, a company secretary, a cost  accountant and any other person who has the power or authority to issue a certificate in pursuance of any  law for the time being in force; 

(39) ―financial institution‖ includes a scheduled bank, and any other financial institution defined or  notified under the Reserve Bank of India Act, 1934 (2 of 1934); 

(40) ―financial statement‖ in relation to a company, includes— 

(i) a balance sheet as at the end of the financial year; 

(ii) a profit and loss account, or in the case of a company carrying on any activity not for profit,  an income and expenditure account for the financial year; 

(iii) cash flow statement for the financial year; 

(iv) a statement of changes in equity, if applicable; and 

(v) any explanatory note annexed to, or forming part of, any document referred to in sub-clause  (i) to sub-clause (iv): 

Provided that the financial statement, with respect to One Person Company, small company and  dormant company, may not include the cash flow statement; 

(41) ―financial year‖, in relation to any company or body corporate, means the period ending on the  31st day of March every year, and where it has been incorporated on or after the 1st day of January of a  year, the period ending on the 31st day of March of the following year, in respect whereof financial  statement of the company or body corporate is made up: 

Provided that on an application made by a company or body corporate, which is a holding company  or a subsidiary of a company incorporated outside India and is required to follow a different financial year  for consolidation of its accounts outside India, the Tribunal may, if it is satisfied, allow any period as its  financial year, whether or not that period is a year:

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Provided further that a company or body corporate, existing on the commencement of this Act, shall,  within a period of two years from such commencement, align its financial year as per the provisions of  this clause; 

(42) ―foreign company‖ means any company or body corporate incorporated outside India which— 

(a) has a place of business in India whether by itself or through an agent, physically or through  electronic mode; and 

(b) conducts any business activity in India in any other manner. 

(43) ―free reserves‖ means such reserves which, as per the latest audited balance sheet of a company,  are available for distribution as dividend: 

Provided that— 

(i) any amount representing unrealised gains, notional gains or revaluation of assets, whether  shown as a reserve or otherwise, or 

(ii) any change in carrying amount of an asset or of a liability recognised in equity, including  surplus in profit and loss account on measurement of the asset or the liability at fair value, 

shall not be treated as free reserves; 

(44) ―Global Depository Receipt‖ means any instrument in the form of a depository receipt, by  whatever name called, created by a foreign depository outside India and authorised by a company making  an issue of such depository receipts; 

(45) ―Government company‖ means any company in which not less than fifty-one per cent. of the  paid-up share capital is held by the Central Government, or by any State Government or Governments, or  partly by the Central Government and partly by one or more State Governments, and includes a company  which is a subsidiary company of such a Government company; 

(46) ―holding company‖, in relation to one or more other companies, means a company of which such  companies are subsidiary companies; 

(47) ―independent director‖ means an independent director referred to in sub-section (6) of section  149; 

(48) ―Indian Depository Receipt‖ means any instrument in the form of a depository receipt created by  a domestic depository in India and authorised by a company incorporated outside India making an issue  of such depository receipts; 

(49) ―interested director‖ means a director who is in any way, whether by himself or through any of  his relatives or firm, body corporate or other association of individuals in which he or any of his relatives  is a partner, director or a member, interested in a contract or arrangement, or proposed contract or  arrangement, entered into or to be entered into by or on behalf of a company; 

(50) ―issued capital‖ means such capital as the company issues from time to time for subscription; (51) ―key managerial personnel‖, in relation to a company, means— 

(i) the Chief Executive Officer or the managing director or the manager; 

(ii) the company secretary; 

(iii) the whole-time director; 

(iv) the Chief Financial Officer; and 

(v) such other officer as may be prescribed; 

(52) ―listed company‖ means a company which has any of its securities listed on any recognised stock  exchange; 

(53) ―manager‖ means an individual who, subject to the superintendence, control and direction of the  Board of Directors, has the management of the whole, or substantially the whole, of the affairs of a 

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company, and includes a director or any other person occupying the position of a manager, by whatever  name called, whether under a contract of service or not; 

(54) ―managing director‖ means a director who, by virtue of the articles of a company or an  agreement with the company or a resolution passed in its general meeting, or by its Board of Directors, is  entrusted with substantial powers of management of the affairs of the company and includes a director  occupying the position of managing director, by whatever name called. 

Explanation.—For the purposes of this clause, the power to do administrative acts of a routine nature  when so authorised by the Board such as the power to affix the common seal of the company to any  document or to draw and endorse any cheque on the account of the company in any bank or to draw and  endorse any negotiable instrument or to sign any certificate of share or to direct registration of transfer of  any share, shall not be deemed to be included within the substantial powers of management; 

(55) ―member‖, in relation to a company, means— 

(i) the subscriber to the memorandum of the company who shall be deemed to have agreed to  become member of the company, and on its registration, shall be entered as member in its register of  members; 

(ii) every other person who agrees in writing to become a member of the company and whose  name is entered in the register of members of the company; 

(iii) every person holding shares of the company and whose name is entered as a beneficial owner  in the records of a depository; 

(56) ―memorandum‖ means the memorandum of association of a company as originally framed or as  altered from time to time in pursuance of any previous company law or of this Act; 

(57) ―net worth‖ means the aggregate value of the paid-up share capital and all reserves created out of  the profits and securities premium account, after deducting the aggregate value of the accumulated losses,  deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet, but  does not include reserves created out of revaluation of assets, write-back of depreciation and 

amalgamation; 

(58) ―notification‖ means a notification published in the Official Gazette and the expression ―notify‖  shall be construed accordingly; 

(59) ―officer‖ includes any director, manager or key managerial personnel or any person in  accordance with whose directions or instructions the Board of Directors or any one or more of the  directors is or are accustomed to act; 

(60) ―officer who is in default‖, for the purpose of any provision in this Act which enacts that an  officer of the company who is in default shall be liable to any penalty or punishment by way of  imprisonment, fine or otherwise, means any of the following officers of a company, namely:— 

(i) whole-time director; 

(ii) key managerial personnel; 

(iii) where there is no key managerial personnel, such director or directors as specified by the  Board in this behalf and who has or have given his or their consent in writing to the Board to such  specification, or all the directors, if no director is so specified; 

(iv) any person who, under the immediate authority of the Board or any key managerial  personnel, is charged with any responsibility including maintenance, filing or distribution of accounts  or records, authorises, actively participates in, knowingly permits, or knowingly fails to take active  steps to prevent, any default; 

(v) any person in accordance with whose advice, directions or instructions the Board of Directors  of the company is accustomed to act, other than a person who gives advice to the Board in a  professional capacity;

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(vi) every director, in respect of a contravention of any of the provisions of this Act, who is aware  of such contravention by virtue of the receipt by him of any proceedings of the Board or participation  in such proceedings without objecting to the same, or where such contravention had taken place with  his consent or connivance; 

(vii) in respect of the issue or transfer of any shares of a company, the share transfer agents,  registrars and merchant bankers to the issue or transfer; 

(61) ―Official Liquidator‖ means an Official Liquidator appointed under sub-section (1) of section  359; 

(62) ―One Person Company‖ means a company which has only one person as a member; 

(63) “ordinary or special resolution” means an ordinary resolution, or as the case may be, special  resolution referred to in section 114; 

(64) ―paid-up share capital‖ or ―share capital paid-up‖ means such aggregate amount of money  credited as paid-up as is equivalent to the amount received as paid-up in respect of shares issued and also  includes any amount credited as paid-up in respect of shares of the company, but does not include any  other amount received in respect of such shares, by whatever name called; 

(65) ―postal ballot‖ means voting by post or through any electronic mode; 

(66) ―prescribed‖ means prescribed by rules made under this Act; 

(67) ―previous company law‖ means any of the laws specified below:— 

(i) Acts relating to companies in force before the Indian Companies Act, 1866 (10 of 1866); (ii) the Indian Companies Act, 1866 (10 of 1866); 

(iii) the Indian Companies Act, 1882 (6 of 1882); 

(iv) the Indian Companies Act, 1913 (7 of 1913); 

(v) the Registration of Transferred Companies Ordinance, 1942 (Ord. 54 of 1942); (vi) the Companies Act, 1956 (1 of 1956); and 

(vii) any law corresponding to any of the aforesaid Acts or the Ordinances and in force— 

(A) in the merged territories or in a Part B State (other than the State of Jammu and Kashmir),  or any part thereof, before the extension thereto of the Indian Companies Act, 1913 (7 of 1913);  or 

(B) in the State of Jammu and Kashmir, or any part thereof, before the commencement of the  Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), in so far as banking, insurance  and financial corporations are concerned, and before the commencement of the Central Laws  (Extension to Jammu and Kashmir) Act, 1968 (25 of 1968), in so far as other corporations are 

concerned; 

(viii) the Portuguese Commercial Code, in so far as it relates to sociedades anonimas; and (ix) the Registration of Companies (Sikkim) Act, 1961 (Sikkim Act 8 of 1961); 

(68) ―private company‖ means a company having a minimum paid-up share capital 1*** as may be  prescribed, and which by its articles,— 

(i) restricts the right to transfer its shares; 

(ii) except in case of One Person Company, limits the number of its members to two hundred: 

Provided that where two or more persons hold one or more shares in a company jointly, they shall, for  the purposes of this clause, be treated as a single member: 

  

  1. The words ―of one lakh rupees or such higher paid-up share capital‖ omitted by Act 21 of 2015, s. 2 (w.e.f. 29-5-2015).

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Provided further that— 

(A) persons who are in the employment of the company; and 

(B) persons who, having been formerly in the employment of the company, were members of the  company while in that employment and have continued to be members after the employment ceased, 

shall not be included in the number of members; and 

(iii) prohibits any invitation to the public to subscribe for any securities of the company; (69) ―promoter‖ means a person— 

(a) who has been named as such in a prospectus or is identified by the company in the annual  return referred to in section 92; or 

(b) who has control over the affairs of the company, directly or indirectly whether as a  shareholder, director or otherwise; or 

(c) in accordance with whose advice, directions or instructions the Board of Directors of the  company is accustomed to act: 

Provided that nothing in sub-clause (c) shall apply to a person who is acting merely in a professional  capacity; 

(70) ―prospectus‖ means any document described or issued as a prospectus and includes a red herring  prospectus referred to in section 32 or shelf prospectus referred to in section 31 or any notice, circular,  advertisement or other document inviting offers from the public for the subscription or purchase of any  securities of body corporate; 

(71) ―public company‖ means a company which— 

(a) is not a private company; 

(b) has a minimum paid-up share capital 1*** as may be prescribed: 

Provided that a company which is a subsidiary of a company, not being a private company, shall be  deemed to be public company for the purposes of this Act even where such subsidiary company continues  to be a private company in its articles ; 

(72) ―public financial institution‖ means— 

(i) the Life Insurance Corporation of India, established under section 3 of the Life Insurance  Corporation Act, 1956 (31 of 1956); 

(ii) the Infrastructure Development Finance Company Limited, referred to in clause (vi) of sub section (1) of section 4A of the Companies Act, 1956 (1 of 1956) so repealed under section 465 of  this Act; 

(iii) specified company referred to in the Unit Trust of India (Transfer of Undertaking and  Repeal) Act, 2002 (58 of 2002); 

(iv) institutions notified by the Central Government under sub-section (2) of section 4A of the  Companies Act, 1956 (1 of 1956) so repealed under section 465 of this Act; 

(v) such other institution as may be notified by the Central Government in consultation with the  Reserve Bank of India: 

Provided that no institution shall be so notified unless— 

(A) it has been established or constituted by or under any Central or State Act; or 

  

  1. The words ―of five lakh rupees or such higher paid-up share capital,‖ omitted by Act 21 of 2015, s. 2 (w.e.f. 29-5-2015).

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(B) not less than fifty-one per cent. of the paid-up share capital is held or controlled by the  Central Government or by any State Government or Governments or partly by the Central  Government and partly by one or more State Governments; 

(73) ―recognised stock exchange‖ means a recognised stock exchange as defined in clause (f) of  section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956); 

(74) ―register of companies‖ means the register of companies maintained by the Registrar on paper or  in any electronic mode under this Act; 

(75) ―Registrar‖ means a Registrar, an Additional Registrar, a Joint Registrar, a Deputy Registrar or  an Assistant Registrar, having the duty of registering companies and discharging various functions under  this Act; 

(76) ―related party‖, with reference to a company, means— 

(i) a director or his relative; 

(ii) a key managerial personnel or his relative; 

(iii) a firm, in which a director, manager or his relative is a partner; 

(iv) a private company in which a director or manager is a member or director; 

(v) a public company in which a director or manager is a director or holds along with his  relatives, more than two per cent. of its paid-up share capital; 

(vi) any body corporate whose Board of Directors, managing director or manager is accustomed  to act in accordance with the advice, directions or instructions of a director or manager; 

(vii) any person on whose advice, directions or instructions a director or manager is accustomed  to act: 

Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or instructions  given in a professional capacity; 

(viii) any company which is— 

(A) a holding, subsidiary or an associate company of such company; or 

(B) a subsidiary of a holding company to which it is also a subsidiary; 

(ix) such other person as may be prescribed; 

(77) ‗‗relative‘‘, with reference to any person, means any one who is related to another, if— (i) they are members of a Hindu Undivided Family; 

(ii) they are husband and wife; or 

(iii) one person is related to the other in such manner as may be prescribed; 

(78) ―remuneration‖ means any money or its equivalent given or passed to any person for services  rendered by him and includes perquisites as defined under the Income-tax Act, 1961 (43 of 1961); 

(79) ―Schedule‖ means a Schedule annexed to this Act; 

(80) ―scheduled bank‖ means the scheduled bank as defined in clause (e) of section 2 of the Reserve  Bank of India Act, 1934 (2 of 1934); 

(81) ―securities‖ means the securities as defined in clause (h) of section 2 of the Securities Contracts  (Regulation) Act, 1956 (42 of 1956); 

(82) ―Securities and Exchange Board‖ means the Securities and Exchange Board of India established  under section 3 of the Securities and Exchange Board of India Act,1992 (15 of 1992); 

(83) ―Serious Fraud Investigation Office‖ means the office referred to in section 211; (84) ―share‖ means a share in the share capital of a company and includes stock;

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(85) ‗‗small company‘‘ means a company, other than a public company,— 

(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may  be prescribed which shall not be more than five crore rupees; or 

(ii) turnover of which as per its last profit and loss account does not exceed two crore rupees or  such higher amount as may be prescribed which shall not be more than twenty crore rupees: 

Provided that nothing in this clause shall apply to— 

(A) a holding company or a subsidiary company; 

(B) a company registered under section 8; or 

(C) a company or body corporate governed by any special Act; 

(86) ―subscribed capital‖ means such part of the capital which is for the time being subscribed by the  members of a company; 

(87) ―subsidiary company‖ or ―subsidiary‖, in relation to any other company (that is to say the  holding company), means a company in which the holding company— 

(i) controls the composition of the Board of Directors; or 

(ii) exercises or controls more than one-half of the total share capital either at its own or together  with one or more of its subsidiary companies: 

Provided that such class or classes of holding companies as may be prescribed shall not have layers of  subsidiaries beyond such numbers as may be prescribed. 

Explanation.—For the purposes of this clause,— 

(a) a company shall be deemed to be a subsidiary company of the holding company even if the  control referred to in sub-clause (i) or sub-clause (ii) is of another subsidiary company of the holding  company; 

(b) the composition of a company‘s Board of Directors shall be deemed to be controlled by  another company if that other company by exercise of some power exercisable by it at its discretion  can appoint or remove all or a majority of the directors; 

(c) the expression ―company‖ includes any body corporate; 

(d) ―layer‖ in relation to a holding company means its subsidiary or subsidiaries; 

(88) ―sweat equity shares‖ means such equity shares as are issued by a company to its directors or  employees at a discount or for consideration, other than cash, for providing their know-how or making  available rights in the nature of intellectual property rights or value additions, by whatever name called; 

(89) ―total voting power‖, in relation to any matter, means the total number of votes which may be  cast in regard to that matter on a poll at a meeting of a company if all the members thereof or their proxies  having a right to vote on that matter are present at the meeting and cast their votes; 

(90) ―Tribunal‖ means the National Company Law Tribunal constituted under section 408; 

(91) ―turnover‖ means the aggregate value of the realisation of amount made from the sale, supply or  distribution of goods or on account of services rendered, or both, by the company during a financial year; 

(92) ―unlimited company‖ means a company not having any limit on the liability of its members; 

(93) ―voting right‖ means the right of a member of a company to vote in any meeting of the company  or by means of postal ballot; 

(94) ―whole-time director‖ includes a director in the whole-time employment of the company;

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(95) words and expressions used and not defined in this Act but defined in the Securities Contracts  (Regulation) Act, 1956 (42 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of  1992) or the Depositories Act, 1996 (22 of 1996) shall have the meanings respectively assigned to them  in those Acts. 

CHAPTER II 

INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO 

  1. Formation of company.— (1) A company may be formed for any lawful purpose by— (a) seven or more persons, where the company to be formed is to be a public company; (b) two or more persons, where the company to be formed is to be a private company; or 

(c) one person, where the company to be formed is to be One Person Company that is to say, a  private company, 

by subscribing their names or his name to a memorandum and complying with the requirements of this  Act in respect of registration: 

Provided that the memorandum of One Person Company shall indicate the name of the other person,  with his prior written consent in the prescribed form, who shall, in the event of the subscriber‘s death or  his incapacity to contract become the member of the company and the written consent of such person  shall also be filed with the Registrar at the time of incorporation of the One Person Company along with  its memorandum and articles: 

Provided further that such other person may withdraw his consent in such manner as may be  prescribed: 

Provided also that the member of One Person Company may at any time change the name of such  other person by giving notice in such manner as may be prescribed: 

Provided also that it shall be the duty of the member of One Person Company to intimate the  company the change, if any, in the name of the other person nominated by him by indicating in the  memorandum or otherwise within such time and in such manner as may be prescribed, and the company  shall intimate the Registrar any such change within such time and in such manner as may be prescribed: 

Provided also that any such change in the name of the person shall not be deemed to be an alteration  of the memorandum. 

(2) A company formed under sub-section (1) may be either— 

(a) a company limited by shares; or 

(b) a company limited by guarantee; or 

(c) an unlimited company. 

  1. Memorandum.— (1) The memorandum of a company shall state— 

(a) the name of the company with the last word ―Limited‖ in the case of a public limited  company, or the last words ―Private Limited‖ in the case of a private limited company: 

Provided that nothing in this clause shall apply to a company registered under section 8; (b) the State in which the registered office of the company is to be situated; 

(c) the objects for which the company is proposed to be incorporated and any matter considered  necessary in furtherance thereof; 

(d) the liability of members of the company, whether limited or unlimited, and also state,— 

(i) in the case of a company limited by shares, that liability of its members is limited to the  amount unpaid, if any, on the shares held by them; and

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(ii) in the case of a company limited by guarantee, the amount up to which each member  undertakes to contribute— 

(A) to the assets of the company in the event of its being wound-up while he is a member  or within one year after he ceases to be a member, for payment of the debts and liabilities of  the company or of such debts and liabilities as may have been contracted before he ceases to  be a member, as the case may be; and 

(B) to the costs, charges and expenses of winding-up and for adjustment of the rights of  the contributories among themselves; 

(e) in the case of a company having a share capital,— 

(i) the amount of share capital with which the company is to be registered and the division  thereof into shares of a fixed amount and the number of shares which the subscribers to the  memorandum agree to subscribe which shall not be less than one share; and 

(ii) the number of shares each subscriber to the memorandum intends to take, indicated  opposite his name; 

(f) in the case of One Person Company, the name of the person who, in the event of death of the  subscriber, shall become the member of the company. 

(2) The name stated in the memorandum shall not— 

(a) be identical with or resemble too nearly to the name of an existing company registered under  this Act or any previous company law; or 

(b) be such that its use by the company— 

(i) will constitute an offence under any law for the time being in force; or 

(ii) is undesirable in the opinion of the Central Government. 

(3) Without prejudice to the provisions of sub-section (2), a company shall not be registered with a  name which contains— 

(a) any word or expression which is likely to give the impression that the company is in any way  connected with, or having the patronage of, the Central Government, any State Government, or any  local authority, corporation or body constituted by the Central Government or any State Government  under any law for the time being in force; or 

(b) such word or expression, as may be prescribed, 

unless the previous approval of the Central Government has been obtained for the use of any such word or  expression. 

(4) A person may make an application, in such form and manner and accompanied by such fee, as  may be prescribed, to the Registrar for the reservation of a name set out in the application as— 

(a) the name of the proposed company; or 

(b) the name to which the company proposes to change its name. 

(5) (i) Upon receipt of an application under sub-section (4), the Registrar may, on the basis of  information and documents furnished along with the application, reserve the name for a period of sixty  days from the date of the application. 

(ii) Where after reservation of name under clause (i), it is found that name was applied by furnishing  wrong or incorrect information, then,— 

(a) if the company has not been incorporated, the reserved name shall be cancelled and the person  making application under sub-section (4) shall be liable to a penalty which may extend to one lakh  rupees;

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(b) if the company has been incorporated, the Registrar may, after giving the company an  opportunity of being heard— 

(i) either direct the company to change its name within a period of three months, after passing  an ordinary resolution; 

(ii) take action for striking off the name of the company from the register of companies; or (iii) make a petition for winding up of the company. 

(6) The memorandum of a company shall be in respective forms specified in Tables A, B, C, D and E  in Schedule I as may be applicable to such company. 

(7) Any provision in the memorandum or articles, in the case of a company limited by guarantee and  not having a share capital, purporting to give any person a right to participate in the divisible profits of the  company otherwise than as a member, shall be void. 

  1. Articles.— (1) The articles of a company shall contain the regulations for management of the company. 

(2) The articles shall also contain such matters, as may be prescribed: 

Provided that nothing prescribed in this sub-section shall be deemed to prevent a company from  including such additional matters in its articles as may be considered necessary for its management. 

(3) The articles may contain provisions for entrenchment to the effect that specified provisions of the  articles may be altered only if conditions or procedures as that are more restrictive than those applicable  in the case of a special resolution, are met or complied with. 

(4) The provisions for entrenchment referred to in sub-section (3) shall only be made either on  formation of a company, or by an amendment in the articles agreed to by all the members of the company  in the case of a private company and by a special resolution in the case of a public company. 

(5) Where the articles contain provisions for entrenchment, whether made on formation or by  amendment, the company shall give notice to the Registrar of such provisions in such form and manner as  may be prescribed. 

(6) The articles of a company shall be in respective forms specified in Tables, F, G, H, I and J in  Schedule I as may be applicable to such company. 

(7) A company may adopt all or any of the regulations contained in the model articles applicable to  such company. 

(8) In case of any company, which is registered after the commencement of this Act, in so far as the  registered articles of such company do not exclude or modify the regulations contained in the model  articles applicable to such company, those regulations shall, so far as applicable, be the regulations of that  company in the same manner and to the extent as if they were contained in the duly registered articles of  the company. 

(9) Nothing in this section shall apply to the articles of a company registered under any previous  company law unless amended under this Act. 

  1. Act to override memorandum, articles, etc.— Save as otherwise expressly provided in this  Act— 

(a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained  in the memorandum or articles of a company, or in any agreement executed by it, or in any resolution  passed by the company in general meeting or by its Board of Directors, whether the same be  registered, executed or passed, as the case may be, before or after the commencement of this Act; and 

(b) any provision contained in the memorandum, articles, agreement or resolution shall, to the  extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be.

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  1. Incorporation of company.— (1) There shall be filed with the Registrar within whose jurisdiction  the registered office of a company is proposed to be situated, the following documents and information  for registration, namely:— 

(a) the memorandum and articles of the company duly signed by all the subscribers to the  memorandum in such manner as may be prescribed; 

(b) a declaration in the prescribed form by an advocate, a chartered accountant, cost accountant or  company secretary in practice, who is engaged in the formation of the company, and by a person  named in the articles as a director, manager or secretary of the company, that all the requirements of  this Act and the rules made thereunder in respect of registration and matters precedent or incidental  thereto have been complied with; 

(c) an affidavit from each of the subscribers to the memorandum and from persons named as the  first directors, if any, in the articles that he is not convicted of any offence in connection with the  promotion, formation or management of any company, or that he has not been found guilty of any  fraud or misfeasance or of any breach of duty to any company under this Act or any previous  company law during the preceding five years and that all the documents filed with the Registrar for  registration of the company contain information that is correct and complete and true to the best of his  knowledge and belief; 

(d) the address for correspondence till its registered office is established; 

(e) the particulars of name, including surname or family name, residential address, nationality and  such other particulars of every subscriber to the memorandum along with proof of identity, as may be  prescribed, and in the case of a subscriber being a body corporate, such particulars as may be  prescribed; 

(f) the particulars of the persons mentioned in the articles as the first directors of the company,  their names, including surnames or family names, the Director Identification Number, residential  address, nationality and such other particulars including proof of identity as may be prescribed; and 

(g) the particulars of the interests of the persons mentioned in the articles as the first directors of  the company in other firms or bodies corporate along with their consent to act as directors of the  company in such form and manner as may be prescribed. 

(2) The Registrar on the basis of documents and information filed under sub-section (1) shall register  all the documents and information referred to in that subsection in the register and issue a certificate of  incorporation in the prescribed form to the effect that the proposed company is incorporated under this  Act. 

(3) On and from the date mentioned in the certificate of incorporation issued under sub-section (2),  the Registrar shall allot to the company a corporate identity number, which shall be a distinct identity for  the company and which shall also be included in the certificate. 

(4) The company shall maintain and preserve at its registered office copies of all documents and  information as originally filed under sub-section (1) till its dissolution under this Act. 

(5) If any person furnishes any false or incorrect particulars of any information or suppresses any  material information, of which he is aware in any of the documents filed with the Registrar in relation to  the registration of a company, he shall be liable for action under section 447. 

(6) Without prejudice to the provisions of sub-section (5) where, at any time after the incorporation of  a company, it is proved that the company has been got incorporated by furnishing any false or incorrect  information or representation or by suppressing any material fact or information in any of the documents  or declaration filed or made for incorporating such company, or by any fraudulent action, the promoters,  the persons named as the first directors of the company and the persons making declaration under clause  (b) of subsection (1) shall each be liable for action under section 447. 

(7) Without prejudice to the provisions of sub-section (6), where a company has been got  incorporated by furnishing any false or incorrect information or representation or by suppressing any  material fact or information in any of the documents or declaration filed or made for incorporating such 

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company or by any fraudulent action, the Tribunal may, on an application made to it, on being satisfied  that the situation so warrants,— 

(a) pass such orders, as it may think fit, for regulation of the management of the company  including changes, if any, in its memorandum and articles, in public interest or in the interest of the  company and its members and creditors; or 

(b) direct that liability of the members shall be unlimited; or 

(c) direct removal of the name of the company from the register of companies; or (d) pass an order for the winding up of the company; or 

(e) pass such other orders as it may deem fit: 

Provided that before making any order under this sub-section,— 

(i) the company shall be given a reasonable opportunity of being heard in the matter; and 

(ii) the Tribunal shall take into consideration the transactions entered into by the company,  including the obligations, if any, contracted or payment of any liability. 

  1. Formulation of companies with charitable objects, etc.— (1) Where it is proved to the  satisfaction of the Central Government that a person or an association of persons proposed to be  registered under this Act as a limited company— 

(a) has in its objects the promotion of commerce, art, science, sports, education, research, social  welfare, religion, charity, protection of environment or any such other object; 

(b) intends to apply its profits, if any, or other income in promoting its objects; and (c) intends to prohibit the payment of any dividend to its members, 

the Central Government may, by licence issued in such manner as may be prescribed, and on such  conditions as it deems fit, allow that person or association of persons to be registered as a limited  company under this section without the addition to its name of the word ―Limited‖, or as the case may be,  the words ―Private Limited‖ , and thereupon the Registrar shall, on application, in the prescribed form,  register such person or association of persons as a company under this section. 

(2) The company registered under this section shall enjoy all the privileges and be subject to all the  obligations of limited companies. 

(3) A firm may be a member of the company registered under this section. 

(4) (i) A company registered under this section shall not alter the provisions of its memorandum or  articles except with the previous approval of the Central Government. 

(ii) A company registered under this section may convert itself into company of any other kind only  after complying with such conditions as may be prescribed. 

(5) Where it is proved to the satisfaction of the Central Government that a limited company registered  under this Act or under any previous company law has been formed with any of the objects specified in  clause (a) of sub-section (1) and with the restrictions and prohibitions as mentioned respectively in  clauses (b) and (c) of that sub-section, it may, by licence, allow the company to be registered under this  section subject to such conditions as the Central Government deems fit and to change its name by  omitting the word ―Limited‖, or as the case may be, the words ―Private Limited‖ from its name and  thereupon the Registrar shall, on application, in the prescribed form, register such company under this  section and all the provisions of this section shall apply to that company. 

(6) The Central Government may, by order, revoke the licence granted to a company registered under  this section if the company contravenes any of the requirements of this section or any of the conditions  subject to which a licence is issued or the affairs of the company are conducted fraudulently or in a  manner violative of the objects of the company or prejudicial to public interest, and without prejudice to  any other action against the company under this Act, direct the company to convert its status and change  its name to add the word ―Limited‖ or the words ―Private Limited‖, as the case may be, to its name and 

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thereupon the Registrar shall, without prejudice to any action that may be taken under sub-section (7), on application, in the prescribed form, register the company accordingly: 

Provided that no such order shall be made unless the company is given a reasonable opportunity of  being heard: 

Provided further that a copy of every such order shall be given to the Registrar. 

(7) Where a licence is revoked under sub-section (6), the Central Government may, by order, if it is  satisfied that it is essential in the public interest, direct that the company be wound up under this Act or  amalgamated with another company registered under this section: 

Provided that no such order shall be made unless the company is given a reasonable opportunity of  being heard. 

(8) Where a licence is revoked under sub-section (6) and where the Central Government is satisfied  that it is essential in the public interest that the company registered under this section should be  amalgamated with another company registered under this section and having similar objects, then,  notwithstanding anything to the contrary contained in this Act, the Central Government may, by order,  provide for such amalgamation to form a single company with such constitution, properties, powers,  rights, interest, authorities and privileges and with such liabilities, duties and obligations as may be  specified in the order. 

(9) If on the winding up or dissolution of a company registered under this section, there remains, after  the satisfaction of its debts and liabilities, any asset, they may be transferred to another company  registered under this section and having similar objects, subject to such conditions as the Tribunal may  impose, or may be sold and proceeds thereof credited to the Rehabilitation and Insolvency Fund formed  under section 269. 

(10) A company registered under this section shall amalgamate only with another company registered  under this section and having similar objects. 

(11) If a company makes any default in complying with any of the requirements laid down in this  section, the company shall, without prejudice to any other action under the provisions of this section, be  punishable with fine which shall not be less than ten lakh rupees but which may extend to one crore  rupees and the directors and every officer of the company who is in default shall be punishable with  imprisonment for a term which may extend to three years or with fine which shall not be less than twenty 

five thousand rupees but which may extend to twenty-five lakh rupees, or with both: 

Provided that when it is proved that the affairs of the company were conducted fraudulently, every  officer in default shall be liable for action under section 447. 

  1. Effect of registration.— From the date of incorporation mentioned in the certificate of  incorporation, such subscribers to the memorandum 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 memorandum,  capable of exercising all the functions of an incorporated company under this Act and having perpetual  succession 1*** with power to acquire, hold and dispose of property, both movable and immovable,  tangible and intangible, to contract and to sue and be sued, by the said name. 
  2. Effect of memorandum and articles.— (1) Subject to the provisions of this Act, the  memorandum and articles shall, when registered, bind the company and the members thereof to the same  extent as if they respectively had been signed by the company and by each member, and contained  covenants on its and his part to observe all the provisions of the memorandum and of the articles. 

(2) All monies payable by any member to the company under the memorandum or articles shall be a  debt due from him to the company. 

  1. 11. [Commencement of business, etc.] Omitted by the Companies (Amendment) Act, 2015 (21 of  2015), s. 4 (w.e.f. 29-5-2015)

  

  1. The words ―and a common seal‖ omitted by Act 21 of 2015, s.3 (w.e.f. 29-5-2015).

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  1. Registered office of company.— (1) A company shall, on and from the fifteenth day of its  incorporation and at all times thereafter, have a registered office capable of receiving and acknowledging  all communications and notices as may be addressed to it. 

(2) The company shall furnish to the Registrar verification of its registered office within a period of  thirty days of its incorporation in such manner as may be prescribed. 

(3) Every company shall— 

(a) paint or affix its name, and the address of its registered office, and keep the same painted or  affixed, on the outside of every office or place in which its business is carried on, in a conspicuous  position, in legible letters, and if the characters employed therefor are not those of the language or of  one of the languages in general use in that locality, also in the characters of that language or of one of  those languages; 

1[(b) have its name engraved in legible characters on its seal, if any;] 

(c) get its name, address of its registered office and the Corporate Identity Number along with  telephone number, fax number, if any, e-mail and website addresses, if any, printed in all its business  letters, billheads, letter papers and in all its notices and other official publications; and 

(d) have its name printed on hundies, promissory notes, bills of exchange and such other  documents as may be prescribed: 

Provided that where a company has changed its name or names during the last two years, it shall paint  or affix or print, as the case may be, along with its name, the former name or names so changed during the  last two years as required under clauses (a) and (c): 

Provided further that the words ‗‗One Person Company‘‘ shall be mentioned in brackets below the  name of such company, wherever its name is printed, affixed or engraved. 

(4) Notice of every change of the situation of the registered office, verified in the manner prescribed,  after the date of incorporation of the company, shall be given to the Registrar within fifteen days of the  change, who shall record the same. 

(5) Except on the authority of a special resolution passed by a company, the registered office of the  company shall not be changed,— 

(a) in the case of an existing company, outside the local limits of any city, town or village where  such office is situated at the commencement of this Act or where it may be situated later by virtue of  a special resolution passed by the company; and 

(b) in the case of any other company, outside the local limits of any city, town or village where  such office is first situated or where it may be situated later by virtue of a special resolution passed by  the company: 

Provided that no company shall change the place of its registered office from the jurisdiction of one  Registrar to the jurisdiction of another Registrar within the same State unless such change is confirmed by  the Regional Director on an application made in this behalf by the company in the prescribed manner. 

(6) The confirmation referred to in sub-section (5) shall be communicated within a period of thirty  days from the date of receipt of application by the Regional Director to the company and the company  shall file the confirmation with the Registrar within a period of sixty days of the date of confirmation who  shall register the same and certify the registration within a period of thirty days from the date of filing of  such confirmation. 

(7) The certificate referred to in sub-section (6) shall be conclusive evidence that all the requirements  of this Act with respect to change of registered office in pursuance of subsection (5) have been complied  with and the change shall take effect from the date of the certificate. 

  

  1. Subs. by Act 21 of 2015, s. 5, for cl. (b) (w.e.f. 29-5-2015).

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(8) If any default is made in complying with the requirements of this section, the company and every  officer who is in default shall be liable to a penalty of one thousand rupees for every day during which the  default continues but not exceeding one lakh rupees. 

  1. Alteration of memorandum.— (1) Save as provided in section 61, a company may, by a special  resolution and after complying with the procedure specified in this section, alter the provisions of its memorandum. 

(2) Any change in the name of a company shall be subject to the provisions of subsections (2) and (3)  of section 4 and shall not have effect except with the approval of the Central Government in writing: 

Provided that no such approval shall be necessary where the only change in the name of the company  is the deletion therefrom, or addition thereto, of the word ―Private‖, consequent on the conversion of any  one class of companies to another class in accordance with the provisions of this Act. 

(3) When any change in the name of a company is made under sub-section (2), the Registrar shall  enter the new name in the register of companies in place of the old name and issue a fresh certificate of  incorporation with the new name and the change in the name shall be complete and effective only on the  issue of such a certificate. 

(4) The alteration of the memorandum relating to the place of the registered office from one State to  another shall not have any effect unless it is approved by the Central Government on an application in  such form and manner as may be prescribed. 

(5) The Central Government shall dispose of the application under sub-section (4) within a period of  sixty days and before passing its order may satisfy itself that the alteration has the consent of the  creditors, debenture-holders and other persons concerned with the company or that the sufficient  provision has been made by the company either for the due discharge of all its debts and obligations or  that adequate security has been provided for such discharge. 

(6) Save as provided in section 64, a company shall, in relation to any alteration of its memorandum,  file with the Registrar— 

(a) the special resolution passed by the company under sub-section (1); 

(b) the approval of the Central Government under sub-section (2), if the alteration involves any  change in the name of the company. 

(7) Where an alteration of the memorandum results in the transfer of the registered office of a  company from one State to another, a certified copy of the order of the Central Government approving the  alteration shall be filed by the company with the Registrar of each of the States within such time and in  such manner as may be prescribed, who shall register the same, and the Registrar of the State where the  registered office is being shifted to, shall issue a fresh certificate of incorporation indicating the alteration. 

(8) A company, which has raised money from public through prospectus and still has any unutilised  amount out of the money so raised, shall not change its objects for which it raised the money through  prospectus unless a special resolution is passed by the company and— 

(i) the details, as may be prescribed, in respect of such resolution shall also be published in the  newspapers (one in English and one in vernacular language) which is in circulation at the place where  the registered office of the company is situated and shall also be placed on the website of the  company, if any, indicating therein the justification for such change; 

(ii) the dissenting shareholders shall be given an opportunity to exit by the promoters and  shareholders having control in accordance with regulations to be specified by the Securities and  Exchange Board. 

(9) The Registrar shall register any alteration of the memorandum with respect to the objects of the  company and certify the registration within a period of thirty days from the date of filing of the special  resolution in accordance with clause (a) of sub-section (6) of this section. 

(10) No alteration made under this section shall have any effect until it has been registered in  accordance with the provisions of this section.

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(11) Any alteration of the memorandum, in the case of a company limited by guarantee and not  having a share capital, purporting to give any person a right to participate in the divisible profits of the  company otherwise than as a member, shall be void. 

  1. Alteration of articles.— (1) Subject to the provisions of this Act and the conditions contained in  its memorandum, if any, a company may, by a special resolution, alter its articles including alterations  having the effect of conversion of— 

(a) a private company into a public company; or 

(b) a public company into a private company: 

Provided that where a company being a private company alters its articles in such a manner that they  no longer include the restrictions and limitations which are required to be included in the articles of a  private company under this Act, the company shall, as from the date of such alteration, cease to be a  private company: 

Provided further that any alteration having the effect of conversion of a public company into a private  company shall not take effect except with the approval of the Tribunal which shall make such order as it  may deem fit. 

(2) Every alteration of the articles under this section and a copy of the order of the Tribunal approving  the alteration as per sub-section (1) shall be filed with the Registrar, together with a printed copy of the  altered articles, within a period of fifteen days in such manner as may be prescribed, who shall register the  same. 

(3) Any alteration of the articles registered under sub-section (2) shall, subject to the provisions of  this Act, be valid as if it were originally in the articles. 

  1. Alteration of memorandum or articles to be noted in every copy.— (1) Every alteration made  in the memorandum or articles of a company shall be noted in every copy of the memorandum or articles,  as the case may be. 

(2) If a company makes any default in complying with the provisions of sub-section (1), the company  and every officer who is in default shall be liable to a penalty of one thousand rupees for every copy of  the memorandum or articles issued without such alteration. 

  1. Rectification of name of company.— (1) If, through inadvertence or otherwise, a company on its  first registration or on its registration by a new name, is registered by a name which,— 

(a) in the opinion of the Central Government, is identical with or too nearly resembles the name  by which a company in existence had been previously registered, whether under this Act or any  previous company law, it may direct the company to change its name and the company shall change  its name or new name, as the case may be, within a period of three months from the issue of such  direction, after adopting an ordinary resolution for the purpose; 

(b) on an application by a registered proprietor of a trade mark that the name is identical with or  too nearly resembles to a registered trade mark of such proprietor under the Trade Marks Act, 1999,  made to the Central Government within three years of incorporation or registration or change of name  of the company, whether under this Act or any previous company law, in the opinion of the Central  Government, is identical with or too nearly resembles to an existing trade mark, it may direct the  company to change its name and the company shall change its name or new name, as the case may be,  within a period of six months from the issue of such direction, after adopting an ordinary resolution  for the purpose. 

(2) Where a company changes its name or obtains a new name under sub-section (1), it shall within a  period of fifteen days from the date of such change, give notice of the change to the Registrar along with  the order of the Central Government, who shall carry out necessary changes in the certificate of  incorporation and the memorandum. 

(3) If a company makes default in complying with any direction given under sub-section (1), the  company shall be punishable with fine of one thousand rupees for every day during which the default 

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continues and every officer who is in default shall be punishable with fine which shall not be less than  five thousand rupees but which may extend to one lakh rupees. 

  1. Copies of memorandum, articles, etc., to be given to members.— (1) A company shall, on  being so requested by a member, send to him within seven days of the request and subject to the payment  of such fees as may be prescribed, a copy of each of the following documents, namely:— 

(a) the memorandum; 

(b) the articles; and 

(c) every agreement and every resolution referred to in sub-section (1) of section 117, if and in so  far as they have not been embodied in the memorandum or articles. 

(2) If a company makes any default in complying with the provisions of this section, the company and  every officer of the company who is in default shall be liable for each default, to a penalty of one  thousand rupees for each day during which such default continues or one lakh rupees, whichever is less. 

  1. Conversion of companies already registered.— (1) A company of any class registered under  this Act may convert itself as a company of other class under this Act by alteration of memorandum and  articles of the company in accordance with the provisions of this Chapter. 

(2) Where the conversion is required to be done under this section, the Registrar shall on an  application made by the company, after satisfying himself that the provisions of this Chapter applicable  for registration of companies have been complied with, close the former registration of the company and  after registering the documents referred to in sub-section (1), issue a certificate of incorporation in the  same manner as its first registration. 

(3) The registration of a company under this section shall not affect any debts, liabilities, obligations  or contracts incurred or entered into, by or on behalf of the company before conversion and such debts,  liabilities, obligations and contracts may be enforced in the manner as if such registration had not been  done. 

  1. Subsidiary company not to hold shares in its holding company.— (1) No company shall,  either by itself or through its nominees, hold any shares in its holding company and no holding company  shall allot or transfer its shares to any of its subsidiary companies and any such allotment or transfer of  shares of a company to its subsidiary company shall be void: 

Provided that nothing in this sub-section shall apply to a case— 

(a) where the subsidiary company holds such shares as the legal representative of a deceased  member of the holding company; or 

(b) where the subsidiary company holds such shares as a trustee; or 

(c) where the subsidiary company is a shareholder even before it became a subsidiary company of  the holding company: 

Provided further that the subsidiary company referred to in the preceding proviso shall have a right to  vote at a meeting of the holding company only in respect of the shares held by it as a legal representative  or as a trustee, as referred to in clause (a) or clause (b) of the said proviso. 

(2) The reference in this section to the shares of a holding company which is a company limited by  guarantee or an unlimited company, not having a share capital, shall be construed as a reference to the  interest of its members, whatever be the form of interest. 

  1. Service of documents.— (1) A document may be served on a company or an officer thereof by  sending it to the company or the officer at the registered office of the company by registered post or by speed post or by courier service or by leaving it at its registered office or by means of such electronic or  other mode as may be prescribed: 

Provided that where securities are held with a depository, the records of the beneficial ownership may  be served by such depository on the company by means of electronic or other mode.

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(2) Save as provided in this Act or the rules made thereunder for filing of documents with the  Registrar in electronic mode, a document may be served on Registrar or any member by sending it to him  by post or by registered post or by speed post or by courier or by delivering at his office or address, or by  such electronic or other mode as may be prescribed: 

Provided that a member may request for delivery of any document through a particular mode, for  which he shall pay such fees as may be determined by the company in its annual general meeting. 

Explanation.—For the purposes of this section, the term ‗‗courier‘‘ means a person or agency which  delivers the document and provides proof of its delivery. 

  1. Authentication of documents, proceedings and contracts.— Save as otherwise provided in this  Act,— 

(a) a document or proceeding requiring authentication by a company; or 

(b) contracts made by or on behalf of a company, 

may be signed by any key managerial personnel or an officer of the company duly authorised by the  Board in this behalf. 

  1. Execution of bills of exchange, etc.— (1) A bill of exchange, hundi or promissory note shall be  deemed to have been made, accepted, drawn or endorsed on behalf of a company if made, accepted,  drawn, or endorsed in the name of, or on behalf of or on account of, the company by any person acting under its authority, express or implied. 

(2) A company may, by writing 1[under its common seal, if any,] authorise any person, either generally or in respect of any specified matters, as its attorney to execute other deeds on its behalf in any  place either in or outside India: 

2[Provided that in case a company does not have a common seal, the authorisation under this sub section shall be made by two directors or by a director and the Company Secretary, wherever the  company has appointed a Company Secretary.] 

(3) A deed signed by such an attorney on behalf of the company and under his seal shall bind the  company 3***. 

CHAPTER III 

PROSPECTUS AND ALLOTMENT OF SECURITIES 

PART I.—Public offer 

  1. Public offer and private placement.— (1) A public company may issue securities— 

(a) to public through prospectus (herein referred to as “public offer”) by complying with the  provisions of this Part; or 

(b) through private placement by complying with the provisions of Part II of this Chapter; or (c) through a rights issue or a bonus issue in accordance with the provisions of this Act and in  case of a listed company or a company which intends to get its securities listed also with the  provisions of the Securities and Exchange Board of India Act, 1992 (15 of 1992) and the rules and  regulations made thereunder. 

(2) A private company may issue securities— 

(a) by way of rights issue or bonus issue in accordance with the provisions of this Act; or (b) through private placement by complying with the provisions of Part II of this Chapter. 

Explanation.—For the purposes of this Chapter, “public offer” includes initial public offer or further  public offer of securities to the public by a company, or an offer for sale of securities to the public by an  existing shareholder, through issue of a prospectus. 

  

  1. Subs. by Act 21 of 2015, s. 6, for ―under its common seal‖ (w.e.f. 29-5-2015). 
  2. Ins. by s. 6, ibid. (w.e.f. 29-5-2015). 
  3. The words ―and have the effect as if it were made under its common seal‖ omitted by s. 6, ibid. (w.e.f. 29-5-2015).

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  1. Power of Securities and Exchange Board to regulate issue and transfer of securities, etc.— (1) The provisions contained in this Chapter, Chapter IV and in section 127 shall,— 

(a) in so far as they relate to — 

(i) issue and transfer of securities; and 

(ii) non-payment of dividend, 

by listed companies or those companies which intend to get their securities listed on any recognised  stock exchange in India, except as provided under this Act, be administered by the Securities and  Exchange Board by making regulations in this behalf; 

(b) in any other case, be administered by the Central Government. 

Explanation.—For the removal of doubts, it is hereby declared that all powers relating to all other  matters relating to prospectus, return of allotment, redemption of preference shares and any other matter  specifically provided in this Act, shall be exercised by the Central Government, the Tribunal or the  Registrar, as the case may be. 

(2) The Securities and Exchange Board shall, in respect of matters specified in subsection (1) and the  matters delegated to it under proviso to sub-section (1) of section 458, exercise the powers conferred upon  it under sub-sections (1), (2A), (3) and (4) of section 11, sections 11A, 11B and 11D of the Securities and  Exchange Board of India Act, 1992 (15 of 1992). 

  1. Document containing offer of securities for sale to be deemed prospectus.— (1) Where a  company allots or agrees to allot any securities of the company with a view to all or any of those  securities being offered for sale to the public, any document by which the offer for sale to the public is  made shall, for all purposes, be deemed to be a prospectus issued by the company; and all enactments and  rules of law as to the contents of prospectus and as to liability in respect of mis-statements, in and  omissions from, prospectus, or otherwise relating to prospectus, shall apply with the modifications  specified in subsections (3) and (4) and shall have effect accordingly, as if the securities had been offered to the public for subscription and as if persons accepting the offer in respect of any securities were  subscribers for those securities, but without prejudice to the liability, if any, of the persons by whom the  offer is made in respect of mis-statements contained in the document or otherwise in respect thereof. 

(2) For the purposes of this Act, it shall, unless the contrary is proved, be evidence that an allotment  of, or an agreement to allot, securities was made with a view to the securities being offered for sale to the  public if it is shown— 

(a) that an offer of the securities or of any of them for sale to the public was made within six  months after the allotment or agreement to allot; or 

(b) that at the date when the offer was made, the whole consideration to be received by the  company in respect of the securities had not been received by it. 

(3) Section 26 as applied by this section shall have effect as if — 

(i) it required a prospectus to state in addition to the matters required by that section to be stated  in a prospectus— 

(a) the net amount of the consideration received or to be received by the company in respect  of the securities to which the offer relates; and 

(b) the time and place at which the contract where under the said securities have been or are  to be allotted may be inspected; 

(ii) the persons making the offer were persons named in a prospectus as directors of a company. 

(4) Where a person making an offer to which this section relates is a company or a firm, it shall be  sufficient if the document referred to in sub-section (1) is signed on behalf of the company or firm by two  directors of the company or by not less than one-half of the partners in the firm, as the case may be.

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  1. Matters to be stated in prospectus.— (1) Every prospectus issued by or on behalf of a public  company either with reference to its formation or subsequently, or by or on behalf of any person who is  or has been engaged or interested in the formation of a public company, shall be dated and signed and  shall— 

(a) state the following information, namely:— 

(i) names and addresses of the registered office of the company, company secretary, Chief  Financial Officer, auditors, legal advisers, bankers, trustees, if any, underwriters and such other  persons as may be prescribed; 

(ii) dates of the opening and closing of the issue, and declaration about the issue of allotment  letters and refunds within the prescribed time; 

(iii) a statement by the Board of Directors about the separate bank account where all monies  received out of the issue are to be transferred and disclosure of details of all monies including  utilised and unutilised monies out of the previous issue in the prescribed manner; 

(iv) details about underwriting of the issue; 

(v) consent of the directors, auditors, bankers to the issue, expert‘s opinion, if any, and of  such other persons, as may be prescribed; 

(vi) the authority for the issue and the details of the resolution passed therefor; 

(vii) procedure and time schedule for allotment and issue of securities; 

(viii) capital structure of the company in the prescribed manner; 

(ix) main objects of public offer, terms of the present issue and such other particulars as may  be prescribed; 

(x) main objects and present business of the company and its location, schedule of  implementation of the project; 

(xi) particulars relating to— 

(A) management perception of risk factors specific to the project; 

(B) gestation period of the project; 

(C) extent of progress made in the project; 

(D) deadlines for completion of the project; and 

(E) any litigation or legal action pending or taken by a Government Department or a  statutory body during the last five years immediately preceding the year of the issue of  prospectus against the promoter of the company; 

(xii) minimum subscription, amount payable by way of premium, issue of shares otherwise  than on cash; 

(xiii) details of directors including their appointments and remuneration, and such particulars  of the nature and extent of their interests in the company as may be prescribed; and 

(xiv) disclosures in such manner as may be prescribed about sources of promoter‘s  contribution; 

(b) set out the following reports for the purposes of the financial information, namely:— 

(i) reports by the auditors of the company with respect to its profits and losses and assets and  liabilities and such other matters as may be prescribed; 

(ii) reports relating to profits and losses for each of the five financial years immediately  preceding the financial year of the issue of prospectus including such reports of its subsidiaries  and in such manner as may be prescribed:

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Provided that in case of a company with respect to which a period of five years has not  elapsed from the date of incorporation, the prospectus shall set out in such manner as may be  prescribed, the reports relating to profits and losses for each of the financial years immediately  preceding the financial year of the issue of prospectus including such reports of its subsidiaries; 

(iii) reports made in the prescribed manner by the auditors upon the profits and losses of the  business of the company for each of the five financial years immediately preceding issue and  assets and liabilities of its business on the last date to which the accounts of the business were  made up, being a date not more than one hundred and eighty days before the issue of the  prospectus: 

Provided that in case of a company with respect to which a period of five years has not  elapsed from the date of incorporation, the prospectus shall set out in the prescribed manner, the  reports made by the auditors upon the profits and losses of the business of the company for all  financial years from the date of its incorporation, and assets and liabilities of its business on the  last date before the issue of prospectus; and 

(iv) reports about the business or transaction to which the proceeds of the securities are to be  applied directly or indirectly; 

(c) make a declaration about the compliance of the provisions of this Act and a statement to the  effect that nothing in the prospectus is contrary to the provisions of this Act, the Securities Contracts  (Regulation) Act, 1956 (42 of 1956) and the Securities and Exchange Board of India Act, 1992 (15 of  1992) and the rules and regulations made thereunder; and 

(d) state such other matters and set out such other reports, as may be prescribed. 

(2) Nothing in sub-section (1) shall apply— 

(a) to the issue to existing members or debenture-holders of a company, of a prospectus or form  of application relating to shares in or debentures of the company, whether an applicant has a right to  renounce the shares or not under sub-clause (ii) of clause (a) of sub-section (1) of section 62 in favour  of any other person; or 

(b) to the issue of a prospectus or form of application relating to shares or debentures which are,  or are to be, in all respects uniform with shares or debentures previously issued and for the time being  dealt in or quoted on a recognised stock exchange. 

(3) Subject to sub-section (2), the provisions of sub-section (1) shall apply to a prospectus or a form  of application, whether issued on or with reference to the formation of a company or subsequently. 

Explanation.—The date indicated in the prospectus shall be deemed to be the date of its publication. 

(4) No prospectus shall be issued by or on behalf of a company or in relation to an intended company  unless on or before the date of its publication, there has been delivered to the Registrar for registration, a  copy thereof signed by every person who is named therein as a director or proposed director of the  company or by his duly authorised attorney. 

(5) A prospectus issued under sub-section (1) shall not include a statement purporting to be made by  an expert unless the expert is a person who is not, and has not been, engaged or interested in the formation  or promotion or management, of the company and has given his written consent to the issue of the  prospectus and has not withdrawn such consent before the delivery of a copy of the prospectus to the  Registrar for registration and a statement to that effect shall be included in the prospectus. 

(6) Every prospectus issued under sub-section (1) shall, on the face of it,— 

(a) state that a copy has been delivered for registration to the Registrar as required under sub section (4); and 

(b) specify any documents required by this section to be attached to the copy so delivered or refer  to statements included in the prospectus which specify these documents.

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(7) The Registrar shall not register a prospectus unless the requirements of this section with respect to  its registration are complied with and the prospectus is accompanied by the consent in writing of all the  persons named in the prospectus. 

(8) No prospectus shall be valid if it is issued more than ninety days after the date on which a copy  thereof is delivered to the Registrar under sub-section (4). 

(9) If a prospectus is issued in contravention of the provisions of this section, the company shall be  punishable with fine which shall not be less than fifty thousand rupees but which may extend to three lakh  rupees and every person who is knowingly a party to the issue of such prospectus shall be punishable with  imprisonment for a term which may extend to three years or with fine which shall not be less than fifty  thousand rupees but which may extend to three lakh rupees, or with both. 

  1. Variation in terms of contract or objects in prospectus.—(1) A company shall not, at any time,  vary the terms of a contract referred to in the prospectus or objects for which the prospectus was issued,  except subject to the approval of, or except subject to an authority given by the company in general  meeting by way of special resolution: 

Provided that the details, as may be prescribed, of the notice in respect of such resolution to  shareholders, shall also be published in the newspapers (one in English and one in vernacular language) in  the city where the registered office of the company is situated indicating clearly the justification for such  variation: 

Provided further that such company shall not use any amount raised by it through prospectus for  buying, trading or otherwise dealing in equity shares of any other listed company. 

(2) The dissenting shareholders being those shareholders who have not agreed to the proposal to vary  the terms of contracts or objects referred to in the prospectus, shall be given an exit offer by promoters or  controlling shareholders at such exit price, and in such manner and conditions as may be specified by the  Securities and Exchange Board by making regulations in this behalf. 

  1. Offer of sale of shares by certain members of company.— (1) Where certain members of a  company propose, in consultation with the Board of Directors to offer, in accordance with the provisions  of any law for the time being in force, whole or part of their holding of shares to the public, they may do  so in accordance with such procedure as may be prescribed. 

(2) Any document by which the offer of sale to the public is made shall, for all purposes, be deemed  to be a prospectus issued by the company and all laws and rules made thereunder as to the contents of the  prospectus and as to liability in respect of mis-statements in and omission from prospectus or otherwise  relating to prospectus shall apply as if this is a prospectus issued by the company. 

(3) The members, whether individuals or bodies corporate or both, whose shares are proposed to be  offered to the public, shall collectively authorise the company, whose shares are offered for sale to the  public, to take all actions in respect of offer of sale for and on their behalf and they shall reimburse the  company all expenses incurred by it on this matter. 

  1. Public offer of securities to be in dematerialised form.— (1) Notwithstanding anything  contained in any other provisions of this Act,— 

(a) every company making public offer; and 

(b) such other class or classes of public companies as may be prescribed, 

shall issue the securities only in dematerialised form by complying with the provisions of the Depositories  Act, 1996 (22 of 1996) and the regulations made thereunder. 

(2) Any company, other than a company mentioned in sub-section (1), may convert its securities into  dematerialised form or issue its securities in physical form in accordance with the provisions of this Act  or in dematerialised form in accordance with the provisions of the Depositories Act, 1996 (22 of 1996) and the regulations made thereunder. 

  1. Advertisement of prospectus.— Where an advertisement of any prospectus of a company is  published in any manner, it shall be necessary to specify therein the contents of its memorandum as 

38 

regards the objects, the liability of members and the amount of share capital of the company, and the names of the signatories to the memorandum and the number of shares subscribed for by them, and its  capital structure. 

  1. Shelf prospectus.— (1) Any class or classes of companies, as the Securities and Exchange Board  may provide by regulations in this behalf, may file a shelf prospectus with the Registrar at the stage of the  first offer of securities included therein which shall indicate a period not exceeding one year as the period  of validity of such prospectus which shall commence from the date of opening of the first offer of  securities under that prospectus, and in respect of a second or subsequent offer of such securities issued  during the period of validity of that prospectus, no further prospectus is required. 

(2) A company filing a shelf prospectus shall be required to file an information memorandum  containing all material facts relating to new charges created, changes in the financial position of the  company as have occurred between the first offer of securities or the previous offer of securities and the  succeeding offer of securities and such other changes as may be prescribed, with the Registrar within the  prescribed time, prior to the issue of a second or subsequent offer of securities under the shelf prospectus: 

Provided that where a company or any other person has received applications for the allotment of  securities along with advance payments of subscription before the making of any such change, the  company or other person shall intimate the changes to such applicants and if they express a desire to  withdraw their application, the company or other person shall refund all the monies received as  subscription within fifteen days thereof. 

(3) Where an information memorandum is filed, every time an offer of securities is made under sub section (2), such memorandum together with the shelf prospectus shall be deemed to be a prospectus. 

Explanation.—For the purposes of this section, the expression “shelf prospectus” means a prospectus  in respect of which the securities or class of securities included therein are issued for subscription in one or more issues over a certain period without the issue of a further prospectus. 

  1. Red herring prospectus.— (1) A company proposing to make an offer of securities may issue a  red herring prospectus prior to the issue of a prospectus. 

(2) A company proposing to issue a red herring prospectus under sub-section (1) shall file it with the  Registrar at least three days prior to the opening of the subscription list and the offer. 

(3) A red herring prospectus shall carry the same obligations as are applicable to a prospectus and any  variation between the red herring prospectus and a prospectus shall be highlighted as variations in the  prospectus. 

(4) Upon the closing of the offer of securities under this section, the prospectus stating therein the  total capital raised, whether by way of debt or share capital, and the closing price of the securities and any  other details as are not included in the red herring prospectus shall be filed with the Registrar and the  Securities and Exchange Board. 

Explanation.—For the purposes of this section, the expression “red herring prospectus” means a  prospectus which does not include complete particulars of the quantum or price of the securities included  therein. 

  1. Issue of application forms for securities.— (1) No form of application for the purchase of any  of the securities of a company shall be issued unless such form is accompanied by an abridged  prospectus: 

Provided that nothing in this sub-section shall apply if it is shown that the form of application was  issued— 

(a) in connection with a bona fide invitation to a person to enter into an underwriting agreement  with respect to such securities; or 

(b) in relation to securities which were not offered to the public. 

(2) A copy of the prospectus shall, on a request being made by any person before the closing of the  subscription list and the offer, be furnished to him.

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(3) If a company makes any default in complying with the provisions of this section, it shall be liable  to a penalty of fifty thousand rupees for each default. 

  1. Criminal liability for mis-statements in prospectus.— Where a prospectus, issued, circulated  or distributed under this Chapter, includes any statement which is untrue or misleading in form or context  in which it is included or where any inclusion or omission of any matter is likely to mislead, every person  who authorises the issue of such prospectus shall be liable under section 447: 

Provided that nothing in this section shall apply to a person if he proves that such statement or  omission was immaterial or that he had reasonable grounds to believe, and did up to the time of issue of  the prospectus believe, that the statement was true or the inclusion or omission was necessary. 

  1. Civil liability for mis-statements in prospectus.—(1) Where a person has subscribed for  securities of a company acting on any statement included, or the inclusion or omission of any matter, in  the prospectus which is misleading and has sustained any loss or damage as a consequence thereof, the  company and every person who— 

(a) is a director of the company at the time of the issue of the prospectus; 

(b) has authorised himself to be named and is named in the prospectus as a director of the  company, or has agreed to become such director, either immediately or after an interval of time; 

(c) is a promoter of the company; 

(d) has authorised the issue of the prospectus; and 

(e) is an expert referred to in sub-section (5) of section 26, 

shall, without prejudice to any punishment to which any person may be liable under section 36, be liable  to pay compensation to every person who has sustained such loss or damage. 

(2) No person shall be liable under sub-section (1), if he proves— 

(a) that, having consented to become a director of the company, he withdrew his consent before  the issue of the prospectus, and that it was issued without his authority or consent; or 

(b) that the prospectus was issued without his knowledge or consent, and that on becoming aware  of its issue, he forthwith gave a reasonable public notice that it was issued without his knowledge or  consent. 

(3) Notwithstanding anything contained in this section, where it is proved that a prospectus has been  issued with intent to defraud the applicants for the securities of a company or any other person or for any  fraudulent purpose, every person referred to in subsection (1) shall be personally responsible, without any  limitation of liability, for all or any of the losses or damages that may have been incurred by any person  who subscribed to the securities on the basis of such prospectus. 

  1. Punishment for fraudulently inducing persons to invest money. — Any person who, either  knowingly or recklessly makes any statement, promise or forecast which is false, deceptive or misleading,  or deliberately conceals any material facts, to induce another person to enter into, or to offer to enter  into,— 

(a) any agreement for, or with a view to, acquiring, disposing of, subscribing for, or underwriting  securities; or 

(b) any agreement, the purpose or the pretended purpose of which is to secure a profit to any of  the parties from the yield of securities or by reference to fluctuations in the value of securities; or 

(c) any agreement for, or with a view to obtaining credit facilities from any bank or financial  institution, 

shall be liable for action under section 447. 

  1. Action by affected persons.—A suit may be filed or any other action may be taken under section  34 or section 35 or section 36 by any person, group of persons or any association of persons affected by  any misleading statement or the inclusion or omission of any matter in the prospectus.

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  1. Punishment for personation for acquisition, etc., of securities.—(1) Any person who— 

(a) makes or abets making of an application in a fictitious name to a company for acquiring, or  subscribing for, its securities; or 

(b) makes or abets making of multiple applications to a company in different names or in  different combinations of his name or surname for acquiring or subscribing for its securities; or 

(c) otherwise induces directly or indirectly a company to allot, or register any transfer of,  securities to him, or to any other person in a fictitious name, 

shall be liable for action under section 447. 

(2) The provisions of sub-section (1) shall be prominently reproduced in every prospectus issued by a  company and in every form of application for securities. 

(3) Where a person has been convicted under this section, the Court may also order disgorgement of  gain, if any, made by, and seizure and disposal of the securities in possession of, such person. 

(4) The amount received through disgorgement or disposal of securities under subsection (3) shall be  credited to the Investor Education and Protection Fund. 

  1. Allotment of securities by company.—(1) No allotment of any securities of a company offered  to the public for subscription shall be made unless the amount stated in the prospectus as the minimum  amount has been subscribed and the sums payable on application for the amount so stated have been paid  to and received by the company by cheque or other instrument. 

(2) The amount payable on application on every security shall not be less than five per cent. of the  nominal amount of the security or such other percentage or amount, as may be specified by the Securities  and Exchange Board by making regulations in this behalf. 

(3) If the stated minimum amount has not been subscribed and the sum payable on application is not  received within a period of thirty days from the date of issue of the prospectus, or such other period as  may be specified by the Securities and Exchange Board, the amount received under sub-section (1) shall  be returned within such time and manner as may be prescribed. 

(4) Whenever a company having a share capital makes any allotment of securities, it shall file with  the Registrar a return of allotment in such manner as may be prescribed. 

(5) In case of any default under sub-section (3) or sub-section (4), the company and its officer who is  in default shall be liable to a penalty, for each default, of one thousand rupees for each day during which  such default continues or one lakh rupees, whichever is less. 

  1. Securities to be dealt with in stock exchanges.—(1) Every company making public offer shall,  before making such offer, make an application to one or more recognised stock exchange or exchanges  and obtain permission for the securities to be dealt with in such stock exchange or exchanges. 

(2) Where a prospectus states that an application under sub-section (1) has been made, such  prospectus shall also state the name or names of the stock exchange in which the securities shall be dealt  with. 

(3) All monies received on application from the public for subscription to the securities shall be kept  in a separate bank account in a scheduled bank and shall not be utilised for any purpose other than— 

(a) for adjustment against allotment of securities where the securities have been permitted to be  dealt with in the stock exchange or stock exchanges specified in the prospectus; or 

(b) for the repayment of monies within the time specified by the Securities and Exchange Board,  received from applicants in pursuance of the prospectus, where the company is for any other reason  unable to allot securities. 

(4) Any condition purporting to require or bind any applicant for securities to waive compliance with  any of the requirements of this section shall be void.

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(5) If a default is made in complying with the provisions of this section, the company shall be  punishable with a fine which shall not be less than five lakh rupees but which may extend to fifty lakh  rupees and every officer of the company who is in default shall be punishable with imprisonment for a  term which may extend to one year or with fine which shall not be less than fifty thousand rupees but  which may extend to three lakh rupees, or with both. 

(6) A company may pay commission to any person in connection with the subscription to its  securities subject to such conditions as may be prescribed. 

  1. Global depository receipt.— A company may, after passing a special resolution in its general  meeting, issue depository receipts in any foreign country in such manner, and subject to such conditions, as may be prescribed. 

PART II.—Private placement 

  1. Offer or invitation for subscription of securities on private placement.—(1) Without  prejudice to the provisions of section 26, a company may, subject to the provisions of this section, make  private placement through issue of a private placement offer letter. 

(2) Subject to sub-section (1), the offer of securities or invitation to subscribe securities, shall be  made to such number of persons not exceeding fifty or such higher number as may be prescribed,  [excluding qualified institutional buyers and employees of the company being offered securities under a  scheme of employees stock option as per provisions of clause (b) of sub-section (1) of section 62], in a  financial year and on such conditions (including the form and manner of private placement) as may be  prescribed. 

Explanation I.—If a company, listed or unlisted, makes an offer to allot or invites subscription, or  allots, or enters into an agreement to allot, securities to more than the prescribed number of persons,  whether the payment for the securities has been received or not or whether the company intends to list its  securities or not on any recognised stock exchange in or outside India, the same shall be deemed to be an  offer to the public and shall accordingly be governed by the provisions of Part I of this Chapter. 

Explanation II.—For the purposes of this section, the expression— 

(i) “qualified institutional buyer‘‘ means the qualified institutional buyer as defined in the  Securities and Exchange Board of India (Issue of Capital and Disclosure Requirments) Regulations,  2009 as amended from time to time. 

(ii) “private placement” means any offer of securities or invitation to subscribe securities to a  select group of persons by a company (other than by way of public offer) through issue of a private  placement offer letter and which satisfies the conditions specified in this section. 

(3) No fresh offer or invitation under this section shall be made unless the allotments with respect to  any offer or invitation made earlier have been completed or that offer or invitation has been withdrawn or  abandoned by the company. 

(4) Any offer or invitation not in compliance with the provisions of this section shall be treated as a  public offer and all provisions of this Act, and the Securities Contracts (Regulation) Act, 1956 (42 of  1956) and the Securities and Exchange Board of India Act, 1992 (15 of 1992) shall be required to be complied with. 

(5) All monies payable towards subscription of securities under this section shall be paid through  cheque or demand draft or other banking channels but not by cash. 

(6) A company making an offer or invitation under this section shall allot its securities within sixty  days from the date of receipt of the application money for such securities and if the company is not able to  allot the securities within that period, it shall repay the application money to the subscribers within fifteen  days from the date of completion of sixty days and if the company fails to repay the application money  within the aforesaid period, it shall be liable to repay that money with interest at the rate of twelve per  cent. per annum from the expiry of the sixtieth day:

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Provided that monies received on application under this section shall be kept in a separate bank  account in a scheduled bank and shall not be utilised for any purpose other than— 

(a) for adjustment against allotment of securities; or 

(b) for the repayment of monies where the company is unable to allot securities. 

(7) All offers covered under this section shall be made only to such persons whose names are  recorded by the company prior to the invitation to subscribe, and that such persons shall receive the offer  by name, and that a complete record of such offers shall be kept by the company in such manner as may  be prescribed and complete information about such offer shall be filed with the Registrar within a period  of thirty days of circulation of relevant private placement offer letter. 

(8) No company offering securities under this section shall release any public advertisements or  utilise any media, marketing or distribution channels or agents to inform the public at large about such an  offer. 

(9) Whenever a company makes any allotment of securities under this section, it shall file with the  Registrar a return of allotment in such manner as may be prescribed, including the complete list of all  security-holders, with their full names, addresses, number of securities allotted and such other relevant  information as may be prescribed. 

(10) If a company makes an offer or accepts monies in contravention of this section, the company, its  promoters and directors shall be liable for a penalty which may extend to the amount involved in the offer  or invitation or two crore rupees, whichever is higher, and the company shall also refund all monies to  subscribers within a period of thirty days of the order imposing the penalty. 

CHAPTER IV 

SHARE CAPITAL AND DEBENTURES 

  1. Kinds of share capital.—The share capital of a company limited by shares shall be of two kinds,  namely:— 

(a) equity share capital— 

(i) with voting rights; or 

(ii) with differential rights as to dividend, voting or otherwise in accordance with such rules  as may be prescribed; and 

(b) preference share capital: 

Provided that nothing contained in this Act shall affect the rights of the preference shareholders who  are entitled to participate in the proceeds of winding up before the commencement of this Act. 

Explanation.—For the purposes of this section,— 

(i) ‗‗equity share capital‘‘, with reference to any company limited by shares, means all share  capital which is not preference share capital; 

(ii) ‗‗preference share capital‘‘, with reference to any company limited by shares, means that part  of the issued share capital of the company which carries or would carry a preferential right with  respect to— 

(a) payment of dividend, either as a fixed amount or an amount calculated at a fixed rate,  which may either be free of or subject to income-tax; and 

(b) repayment, in the case of a winding up or repayment of capital, of the amount of the share  capital paid-up or deemed to have been paid-up, whether or not, there is a preferential right to the  payment of any fixed premium or premium on any fixed scale, specified in the memorandum or  articles of the company; 

(iii) capital shall be deemed to be preference capital, notwithstanding that it is entitled to either or  both of the following rights, namely:—

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(a) that in respect of dividends, in addition to the preferential rights to the amounts specified  in sub-clause (a) of clause (ii), it has a right to participate, whether fully or to a limited extent,  with capital not entitled to the preferential right aforesaid; 

(b) that in respect of capital, in addition to the preferential right to the repayment, on a  winding up, of the amounts specified in sub-clause (b) of clause (ii), it has a right to participate,  whether fully or to a limited extent, with capital not entitled to that preferential right in any  surplus which may remain after the entire capital has been repaid. 

  1. Nature of shares or debentures.—The shares or debentures or other interest of any member in a  company shall be movable property transferable in the manner provided by the articles of the company. 
  2. Numbering of shares.— Every share in a company having a share capital shall be distinguished  by its distinctive number: 

Provided that nothing in this section shall apply to a share held by a person whose name is entered as  holder of beneficial interest in such share in the records of a depository. 

  1. Certificate of shares.—(1) A certificate, 1[issued under the common seal, if any, of the company or signed by two directors or by a director and the Company Secretary, wherever the company has  appointed a Company Secretary], specifying the shares held by any person, shall be prima facie evidence  of the title of the person to such shares. 

(2) A duplicate certificate of shares may be issued, if such certificate — 

(a) is proved to have been lost or destroyed; or 

(b) has been defaced, mutilated or torn and is surrendered to the company. 

(3) Notwithstanding anything contained in the articles of a company, the manner of issue of a  certificate of shares or the duplicate thereof, the form of such certificate, the particulars to be entered in  the register of members and other matters shall be such as may be prescribed. 

(4) Where a share is held in depository form, the record of the depository is the prima facie evidence  of the interest of the beneficial owner. 

(5) If a company with intent to defraud issues a duplicate certificate of shares, the company shall be  punishable with fine which shall not be less than five times the face value of the shares involved in the  issue of the duplicate certificate but which may extend to ten times the face value of such shares or rupees  ten crores whichever is higher and every officer of the company who is in default shall be liable for action  under section 447. 

  1. Voting rights.—(1) Subject to the provisions of section 43 and sub-section (2) of section 50,— 

(a) every member of a company limited by shares and holding equity share capital therein, shall  have a right to vote on every resolution placed before the company; and 

(b) his voting right on a poll shall be in proportion to his share in the paid-up equity share capital  of the company. 

(2) Every member of a company limited by shares and holding any preference share capital therein  shall, in respect of such capital, have a right to vote only on resolutions placed before the company which  directly affect the rights attached to his preference shares and, any resolution for the winding up of the  company or for the repayment or reduction of its equity or preference share capital and his voting right on 

a poll shall be in proportion to his share in the paid-up preference share capital of the company: 

Provided that the proportion of the voting rights of equity shareholders to the voting rights of the  preference shareholders shall be in the same proportion as the paid-up capital in respect of the equity  shares bears to the paid-up capital in respect of the preference shares: 

  

  1. Subs. by Act 21 of 2015, s. 7, for ―issued under the common seal of the company‖ (w.e.f. 29-5-2015).

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Provided further that where the dividend in respect of a class of preference shares has not been paid  for a period of two years or more, such class of preference shareholders shall have a right to vote on all  the resolutions placed before the company. 

  1. Variations of shareholders‘ rights.—(1) Where a share capital of the company is divided into  different classes of shares, the rights attached to the shares of any class may be varied with the consent in writing of the holders of not less than three-fourths of the issued shares of that class or by means of a  special resolution passed at a separate meeting of the holders of the issued shares of that class,— 

(a) if provision with respect to such variation is contained in the memorandum or articles of the  company; or 

(b) in the absence of any such provision in the memorandum or articles, if such variation is not  prohibited by the terms of issue of the shares of that class: 

Provided that if variation by one class of shareholders affects the rights of any other class of  shareholders, the consent of three-fourths of such other class of shareholders shall also be obtained and  the provisions of this section shall apply to such variation. 

(2) Where the holders of not less than ten per cent. of the issued shares of a class did not consent to  such variation or vote in favour of the special resolution for the variation, they may apply to the Tribunal  to have the variation cancelled, and where any such application is made, the variation shall not have effect  unless and until it is confirmed by the Tribunal: 

Provided that an application under this section shall be made within twenty-one days after the date on  which the consent was given or the resolution was passed, as the case may be, and may be made on behalf  of the shareholders entitled to make the application by such one or more of their number as they may  appoint in writing for the purpose. 

(3) The decision of the Tribunal on any application under sub-section (2) shall be binding on the  shareholders. 

(4) The company shall, within thirty days of the date of the order of the Tribunal, file a copy thereof  with the Registrar. 

(5) Where any default is made in complying with the provisions of this section, the company shall be  punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to  five lakh rupees and every officer of the company who is in default shall be punishable with  imprisonment for a term which may extend to six months or with fine which shall not be less than twenty 

five thousand rupees but which may extend to five lakh rupees, or with both. 

  1. Calls on shares of same class to be made on uniform basis.—Where any calls for further share  capital are made on the shares of a class, such calls shall be made on a uniform basis on all shares falling  under that class. 

Explanation.—For the purposes of this section, shares of the same nominal value on which different  amounts have been paid-up shall not be deemed to fall under the same class. 

  1. Company to accept unpaid share capital, although not called up.—(1) A company may, if so  authorised by its articles, accept from any member, the whole or a part of the amount remaining unpaid on  any shares held by him, even if no part of that amount has been called up. 

(2) A member of the company limited by shares shall not be entitled to any voting rights in respect of  the amount paid by him under sub-section (1) until that amount has been called up. 

  1. Payment of dividend in proportion to amount paid-up.—A company may, if so authorised by  its articles, pay dividends in proportion to the amount paid-up on each share. 
  2. Application of premiums received on issue of shares.—(1) Where a company issues shares at a  premium, whether for cash or otherwise, a sum equal to the aggregate amount of the premium received on  those shares shall be transferred to a ―securities premium account‖ and the provisions of this Act relating  to reduction of share capital of a company shall, except as provided in this section, apply as if the  securities premium account were the paid-up share capital of the company.

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(2) Notwithstanding anything contained in sub-section (1), the securities premium account may be  applied by the company— 

(a) towards the issue of unissued shares of the company to the members of the company as fully  paid bonus shares; 

(b) in writing off the preliminary expenses of the company; 

(c) in writing off the expenses of, or the commission paid or discount allowed on, any issue of  shares or debentures of the company; 

(d) in providing for the premium payable on the redemption of any redeemable preference shares  or of any debentures of the company; or 

(e) for the purchase of its own shares or other securities under section 68. 

(3) The securities premium account may, notwithstanding anything contained in sub-sections (1) and  (2), be applied by such class of companies, as may be prescribed and whose financial statement comply  with the accounting standards prescribed for such class of companies under section 133,— 

(a) in paying up unissued equity shares of the company to be issued to members of the company  as fully paid bonus shares; or 

(b) in writing off the expenses of or the commission paid or discount allowed on any issue of  equity shares of the company; or 

(c) for the purchase of its own shares or other securities under section 68. 

  1. Prohibition on issue of shares at discount.—(1) Except as provided in section 54, a company  shall not issue shares at a discount. 

(2) Any share issued by a company at a discounted price shall be void. 

(3) Where a company contravenes the provisions of this section, the company shall be punishable  with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every  officer who is in default shall be punishable with imprisonment for a term which may extend to six  months or with fine which shall not be less than one lakh rupees but which may extend to five lakh  rupees, or with both. 

  1. Issue of sweat equity shares.—(1) Notwithstanding anything contained in section 53, a company  may issue sweat equity shares of a class of shares already issued, if the following conditions are fulfilled, namely:— 

(a) the issue is authorised by a special resolution passed by the company; 

(b) the resolution specifies the number of shares, the current market price, consideration, if any,  and the class or classes of directors or employees to whom such equity shares are to be issued; 

(c) not less than one year has, at the date of such issue, elapsed since the date on which the  company had commenced business; and 

(d) where the equity shares of the company are listed on a recognised stock exchange, the sweat  equity shares are issued in accordance with the regulations made by the Securities and Exchange  Board in this behalf and if they are not so listed, the sweat equity shares are issued in accordance with  such rules as may be prescribed. 

(2) The rights, limitations, restrictions and provisions as are for the time being applicable to equity  shares shall be applicable to the sweat equity shares issued under this section and the holders of such  shares shall rank pari passu with other equity shareholders. 

  1. Issue and redemption of preference shares.—(1) No company limited by shares shall, after the  commencement of this Act, issue any preference shares which are irredeemable.

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(2) A company limited by shares may, if so authorised by its articles, issue preference shares which  are liable to be redeemed within a period not exceeding twenty years from the date of their issue subject  to such conditions as may be prescribed: 

Provided that a company may issue preference shares for a period exceeding twenty years for  infrastructure projects, subject to the redemption of such percentage of shares as may be prescribed on an  annual basis at the option of such preferential shareholders: 

Provided further that— 

(a) no such shares shall be redeemed except out of the profits of the company which would  otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the  purposes of such redemption; 

(b) no such shares shall be redeemed unless they are fully paid; 

(c) where such shares are proposed to be redeemed out of the profits of the company, there shall,  out of such profits, be transferred, a sum equal to the nominal amount of the shares to be redeemed, to  a reserve, to be called the Capital Redemption Reserve Account, and the provisions of this Act  relating to reduction of share capital of a company shall, except as provided in this section, apply as if  the Capital Redemption Reserve Account were paid-up share capital of the company; and 

(d) (i) in case of such class of companies, as may be prescribed and whose financial statement  comply with the accounting standards prescribed for such class of companies under section 133, the  premium, if any, payable on redemption shall be provided for out of the profits of the company,  before the shares are redeemed: 

Provided also that premium, if any, payable on redemption of any preference shares issued on or  before the commencement of this Act by any such company shall be provided for out of the profits of  the company or out of the company‘s securities premium account, before such shares are redeemed. 

(ii) in a case not falling under sub-clause (i) above, the premium, if any, payable on redemption  shall be provided for out of the profits of the company or out of the company‘s securities premium  account, before such shares are redeemed. 

(3) Where a company is not in a position to redeem any preference shares or to pay dividend, if any,  on such shares in accordance with the terms of issue (such shares hereinafter referred to as unredeemed  preference shares), it may, with the consent of the holders of three-fourths in value of such preference  shares and with the approval of the Tribunal on a petition made by it in this behalf, issue further  redeemable preference shares equal to the amount due, including the dividend thereon, in respect of the  unredeemed preference shares, and on the issue of such further redeemable preference shares, the  unredeemed preference shares shall be deemed to have been redeemed: 

Provided that the Tribunal shall, while giving approval under this sub-section, order the redemption  forthwith of preference shares held by such persons who have not consented to the issue of further  redeemable preference shares. 

Explanation.—For the removal of doubts, it is hereby declared that the issue of further redeemable  preference shares or the redemption of preference shares under this section shall not be deemed to be an  increase or, as the case may be, a reduction, in the share capital of the company. 

(4) The capital redemption reserve account may, notwithstanding anything in this section, be applied  by the company, in paying up unissued shares of the company to be issued to members of the company as  fully paid bonus shares. 

Explanation.—For the purposes of sub-section (2), the term ‗‗infrastructure projects‘‘ means the  infrastructure projects specified in Schedule VI. 

  1. Transfer and transmission of securities.—(1) A company shall not register a transfer of  securities of the company, or the interest of a member in the company in the case of a company having 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, unless a proper instrument of transfer, in such form as

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may be prescribed, duly stamped, dated and executed by or on behalf of the transferor and the transferee  and specifying the name, address and occupation, if any, of the transferee has been delivered to the  company by the transferor or the transferee within a period of sixty days from the date of execution, along  with the certificate relating to the securities, or if no such certificate is in existence, along with the letter  of allotment of securities: 

Provided that where the instrument of transfer has been lost or the instrument of transfer has not been  delivered within the prescribed period, the company may register the transfer on such terms as to  indemnity as the Board may think fit. 

(2) Nothing in sub-section (1) shall prejudice the power of the company to register, on receipt of an  intimation of transmission of any right to securities by operation of law from any person to whom such  right has been transmitted. 

(3) Where an application is made by the transferor alone and relates to partly paid shares, the transfer  shall not be registered, unless the company gives the notice of the application, in such manner as may be  prescribed, to the transferee and the transferee gives no objection to the transfer within two weeks from  the receipt of notice. 

(4) Every company shall, unless prohibited by any provision of law or any order of Court, Tribunal or  other authority, deliver the certificates of all securities allotted, transferred or transmitted— 

(a) within a period of two months from the date of incorporation, in the case of subscribers to the  memorandum; 

(b) within a period of two months from the date of allotment, in the case of any allotment of any  of its shares; 

(c) within a period of one month from the date of receipt by the company of the instrument of  transfer under sub-section (1) or, as the case may be, of the intimation of transmission under sub section (2), in the case of a transfer or transmission of securities; 

(d) within a period of six months from the date of allotment in the case of any allotment of  debenture: 

Provided that where the securities are dealt with in a depository, the company shall intimate the  details of allotment of securities to depository immediately on allotment of such securities. 

(5) The transfer of any security or other interest of a deceased person in a company made by his legal  representative shall, even if the legal representative is not a holder thereof, be valid as if he had been the  holder at the time of the execution of the instrument of transfer. 

(6) Where any default is made in complying with the provisions of sub-sections (1) to (5), the  company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which  may extend to five lakh rupees and every officer of the company who is in default shall be punishable  with fine which shall not be less than ten thousand rupees but which may extend to one lakh rupees. 

(7) Without prejudice to any liability under the Depositories Act, 1996 (22 of 1996), where any depository or depository participant, with an intention to defraud a person, has transferred shares, it shall  be liable under section 447. 

  1. Punishment for personation of shareholder.—If any person deceitfully personates as an owner  of any security or interest in a company, or of any share warrant or coupon issued in pursuance of this  Act, and thereby obtains or attempts to obtain any such security or interest or any such share warrant or coupon, or receives or attempts to receive any money due to any such owner, he shall be punishable with  imprisonment for a term which shall not be less than one year but which may extend to three years and  with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees. 
  2. Refusal of registration and appeal against refusal.—(1) If a private company limited by shares  refuses, whether in pursuance of any power of the company under its articles or otherwise, to register the  transfer of, or the transmission by operation of law of the right to, any securities or interest of a member  in the company, it shall within a period of thirty days from the date on which the instrument of transfer, or 

48 

the intimation of such transmission, as the case may be, was delivered to the company, send notice of the  refusal to the transferor and the transferee or to the person giving intimation of such transmission, as the  case may be, giving reasons for such refusal. 

(2) Without prejudice to sub-section (1), the securities or other interest of any member in a public  company shall be freely transferable: 

Provided that any contract or arrangement between two or more persons in respect of transfer of  securities shall be enforceable as a contract. 

(3) The transferee may appeal to the Tribunal against the refusal within a period of thirty days from  the date of receipt of the notice or in case no notice has been sent by the company, within a period of sixty  days from the date on which the instrument of transfer or the intimation of transmission, as the case may  be, was delivered to the company. 

(4) If a public company without sufficient cause refuses to register the transfer of securities within a  period of thirty days from the date on which the instrument of transfer or the intimation of transmission,  as the case may be, is delivered to the company, the transferee may, within a period of sixty days of such  refusal or where no intimation has been received from the company, within ninety days of the delivery of  the instrument of transfer or intimation of transmission, appeal to the Tribunal. 

(5) The Tribunal, while dealing with an appeal made under sub-section (3) or sub-section (4), may,  after hearing the parties, either dismiss the appeal, or by order— 

(a) direct that the transfer or transmission shall be registered by the company and the company  shall comply with such order within a period of ten days of the receipt of the order; or 

(b) direct rectification of the register and also direct the company to pay damages, if any,  sustained by any party aggrieved. 

(6) If a person contravenes the order of the Tribunal under this section, he shall be punishable with  imprisonment for a term which shall not be less than one year but which may extend to three years and  with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees. 

  1. Rectification of register of members.—(1) If the name of any person is, without sufficient  cause, entered in the register of members of a company, or after having been entered in the register, is,  without sufficient cause, omitted therefrom, or if a default is made, or unnecessary delay takes place in  entering in the register, the fact of any person having become or ceased to be a member, the person 

aggrieved, or any member of the company, or the company may appeal in such form as may be  prescribed, to the Tribunal, or to a competent court outside India, specified by the Central Government by  notification, in respect of foreign members or debenture holders residing outside India, for rectification of  the register. 

(2) The Tribunal may, after hearing the parties to the appeal under sub-section (1) by order, either  dismiss the appeal or direct that the transfer or transmission shall be registered by the company within a  period of ten days of the receipt of the order or direct rectification of the records of the depository or the  register and in the latter case, direct the company to pay damages, if any, sustained by the party  aggrieved. 

(3) The provisions of this section shall not restrict the right of a holder of securities, to transfer such  securities and any person acquiring such securities shall be entitled to voting rights unless the voting  rights have been suspended by an order of the Tribunal. 

(4) Where the transfer of securities is in contravention of any of the provisions of the Securities  Contracts (Regulation) Act, 1956 (42 of 1956), the Securities and Exchange Board of India Act, 1992 (15  of 1992) or this Act or any other law for the time being in force, the Tribunal may, on an application  made by the depository, company, depository participant, the holder of the securities or the Securities and  Exchange Board, direct any company or a depository to set right the contravention and rectify its register  or records concerned. 

(5) If any default is made in complying with the order of the Tribunal under this section, the company  shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five 

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lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for  a term which may extend to one year or with fine which shall not be less than one lakh rupees but which  may extend to three lakh rupees, or with both. 

  1. Publication of authorised, subscribed and paid-up capital.—(1) Where any notice,  advertisement or other official publication, or any business letter, billhead or letter paper of a company  contains a statement of the amount of the authorised capital of the company, such notice, advertisement or  other official publication, or such letter, billhead or letter paper shall also contain a statement, in an  equally prominent position and in equally conspicuous characters, of the amount of the capital which has  been subscribed and the amount paid-up. 

(2) If any default is made in complying with the requirements of sub-section (1), the company shall  be liable to pay a penalty of ten thousand rupees and every officer of the company who is in default shall  be liable to pay a penalty of five thousand rupees, for each default. 

  1. Power of limited company to alter its share capital.—(1) A limited company having a share  capital may, if so authorised by its articles, alter its memorandum in its general meeting to— 

(a) increase its authorised share capital by such amount as it thinks expedient; 

(b) consolidate and divide all or any of its share capital into shares of a larger amount than its  existing shares: 

Provided that no consolidation and division which results in changes in the voting percentage of  shareholders shall take effect unless it is approved by the Tribunal on an application made in the  prescribed manner; 

(c) convert all or any of its fully paid-up shares into stock, and reconvert that stock into fully  paid-up shares of any denomination; 

(d) sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the  memorandum, so, however, that in the sub-division the proportion between the amount paid and the  amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from  which the reduced share is derived; 

(e) cancel shares which, at the date of the passing of the resolution in that behalf, have not been  taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount  of the shares so cancelled. 

(2) The cancellation of shares under sub-section (1) shall not be deemed to be a reduction of share  capital. 

  1. Further issue of share capital.—(1) Where at any time, a company having a share capital  proposes to increase its subscribed capital by the issue of further shares, such shares shall be offered— 

(a) to persons who, at the date of the offer, are holders of equity shares of the company in  proportion, as nearly as circumstances admit, to the paid-up share capital on those shares by sending a  letter of offer subject to the following conditions, namely:— 

(i) the offer shall be made by notice specifying the number of shares offered and limiting a  time not being less than fifteen days and not exceeding thirty days from the date of the offer  within which the offer, if not accepted, shall be deemed to have been declined; 

(ii) unless the articles of the company otherwise provide, the offer aforesaid shall be deemed  to include a right exercisable by the person concerned to renounce the shares offered to him or  any of them in favour of any other person; and the notice referred to in clause (i) shall contain a  statement of this right; 

(iii) after the expiry of the time specified in the notice aforesaid, or on receipt of earlier  intimation from the person to whom such notice is given that he declines to accept the shares  offered, the Board of Directors may dispose of them in such manner which is not dis advantageous to the shareholders and the company;

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(b) to employees under a scheme of employees‘ stock option, subject to special resolution passed  by company and subject to such conditions as may be prescribed; or 

(c) to any persons, if it is authorised by a special resolution, whether or not those persons include  the persons referred to in clause (a) or clause (b), either for cash or for a consideration other than  cash, if the price of such shares is determined by the valuation report of a registered valuer subject to  such conditions as may be prescribed. 

(2) The notice referred to in sub-clause (i) of clause (a) of sub-section (1) shall be despatched through  registered post or speed post or through electronic mode to all the existing shareholders at least three days  before the opening of the issue. 

(3) Nothing in this section shall apply to the increase of the subscribed capital of a company caused  by the exercise of an option as a term attached to the debentures issued or loan raised by the company to  convert such debentures or loans into shares in the company: 

Provided that the terms of issue of such debentures or loan containing such an option have been  approved before the issue of such debentures or the raising of loan by a special resolution passed by the  company in general meeting. 

(4) Notwithstanding anything contained in sub-section (3), where any debentures have been issued, or  loan has been obtained from any Government by a company, and if that Government considers it  necessary in the public interest so to do, it may, by order, direct that such debentures or loans or any part  thereof shall be converted into shares in the company on such terms and conditions as appear to the  Government to be reasonable in the circumstances of the case even if terms of the issue of such  debentures or the raising of such loans do not include a term for providing for an option for such  conversion: 

Provided that where the terms and conditions of such conversion are not acceptable to the company, it  may, within sixty days from the date of communication of such order, appeal to the Tribunal which shall  after hearing the company and the Government pass such order as it deems fit. 

(5) In determining the terms and conditions of conversion under sub-section (4), the Government  shall have due regard to the financial position of the company, the terms of issue of debentures or loans,  as the case may be, the rate of interest payable on such debentures or loans and such other matters as it  may consider necessary. 

(6) Where the Government has, by an order made under sub-section (4), directed that any debenture  or loan or any part thereof shall be converted into shares in a company and where no appeal has been  preferred to the Tribunal under sub-section (4) or where such appeal has been dismissed, the  memorandum of such company shall, where such order has the effect of increasing the authorised share  capital of the company, stand altered and the authorised share capital of such company shall stand  increased by an amount equal to the amount of the value of shares which such debentures or loans or part  thereof has been converted into. 

  1. Issue of bonus shares.—(1) A company may issue fully paid-up bonus shares to its members, in  any manner whatsoever, out of— 

(i) its free reserves; 

(ii) the securities premium account; or 

(iii) the capital redemption reserve account: 

Provided that no issue of bonus shares shall be made by capitalising reserves created by the  revaluation of assets. 

(2) No company shall capitalise its profits or reserves for the purpose of issuing fully paid-up bonus  shares under sub-section (1), unless— 

(a) it is authorised by its articles;

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(b) it has, on the recommendation of the Board, been authorised in the general meeting of the  company; 

(c) it has not defaulted in payment of interest or principal in respect of fixed deposits or debt  securities issued by it; 

(d) it has not defaulted in respect of the payment of statutory dues of the employees, such as,  contribution to provident fund, gratuity and bonus; 

(e) the partly paid-up shares, if any outstanding on the date of allotment, are made fully paid-up; (f) it complies with such conditions as may be prescribed. 

(3) The bonus shares shall not be issued in lieu of dividend. 

  1. Notice to be given to Registrar for alteration of share capital.—(1) Where — (a) a company alters its share capital in any manner specified in sub-section (1) of section 61; 

(b) an order made by the Government under sub-section (4) read with sub-section (6) of section  62 has the effect of increasing authorised capital of a company; or 

(c) a company redeems any redeemable preference shares, 

the company shall file a notice in the prescribed form with the Registrar within a period of thirty days of  such alteration or increase or redemption, as the case may be, along with an altered memorandum. 

(2) If a company and any officer of the company who is in default contravenes the provisions of sub section (1), it or he shall be punishable with fine which may extend to one thousand rupees for each day  during which such default continues, or five lakh rupees, whichever is less. 

  1. Unlimited company to provide for reserve share capital on conversion into limited  company.—An unlimited company having a share capital may, by a resolution for registration as a  limited company under this Act, do either or both of the following things, namely— 

(a) increase the nominal amount of its share capital by increasing the nominal amount of each of  its shares, subject to the condition that no part of the increased capital shall be capable of being called  up except in the event and for the purposes of the company being wound up; 

(b) provide that a specified portion of its uncalled share capital shall not be capable of being  called up except in the event and for the purposes of the company being wound up. 

  1. 66. Reduction of share capital.—(1) Subject to confirmation by the Tribunal on an application by  the company, a company limited by shares or limited by guarantee and having a share capital may, by a special resolution, reduce the share capital in any manner and in particular, may— 

(a) extinguish or reduce the liability on any of its shares in respect of the share capital not paid up; or 

(b) either with or without extinguishing or reducing liability on any of its shares,— (i) cancel any paid-up share capital which is lost or is unrepresented by available assets; or (ii) pay off any paid-up share capital which is in excess of the wants of the company, 

alter its memorandum by reducing the amount of its share capital and of its shares accordingly: 

Provided that no such reduction 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 Act, or the interest payable  thereon. 

(2) The Tribunal shall give notice of every application made to it under sub-section (1) to the Central  Government, Registrar and to the Securities and Exchange Board, in the case of listed companies, and the  creditors of the company and shall take into consideration the representations, if any, made to it by that  Government, Registrar, the Securities and Exchange Board and the creditors within a period of three  months from the date of receipt of the notice:

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Provided that where no representation has been received from the Central Government, Registrar, the  Securities and Exchange Board or the creditors within the said period, it shall be presumed that they have  no objection to the reduction. 

(3) The Tribunal may, if it is satisfied that the debt or claim of every creditor of the company has been  discharged or determined or has been secured or his consent is obtained, make an order confirming the  reduction of share capital on such terms and conditions as it deems fit: 

Provided that no application for reduction of share capital shall be sanctioned by the Tribunal unless  the accounting treatment, proposed by the company for such reduction is in conformity with the  accounting standards specified in section 133 or any other provision of this Act and a certificate to that  effect by the company‘s auditor has been filed with the Tribunal. 

(4) The order of confirmation of the reduction of share capital by the Tribunal under sub-section (3)  shall be published by the company in such manner as the Tribunal may direct. 

(5) The company shall deliver a certified copy of the order of the Tribunal under sub-section (3) and  of a minute approved by the Tribunal showing— 

(a) the amount of share capital; 

(b) the number of shares into which it is to be divided; 

(c) the amount of each share; and 

(d) the amount, if any, at the date of registration deemed to be paid-up on each share, 

to the Registrar within thirty days of the receipt of the copy of the order, who shall register the same and  issue a certificate to that effect. 

(6) Nothing in this section shall apply to buy-back of its own securities by a company under section  68. 

(7) A member of the company, past or present, shall not be liable to any call or contribution in respect  of any share held by him exceeding the amount of difference, if any, between the amount paid on the  share, or reduced amount, if any, which is to be deemed to have been paid thereon, as the case may be,  and the amount of the share as fixed by the order of reduction. 

(8) Where the name of any creditor entitled to object to the reduction of share capital under this  section is, by reason of his ignorance of the proceedings for reduction or of their nature and effect with  respect to his debt or claim, not entered on the list of creditors, and after such reduction, the company is  unable, within the meaning of sub-section (2) of section 271, to pay the amount of his debt or claim,— 

(a) every person, who was a member of the company on the date of the registration of the order  for reduction by the Registrar, shall be liable to contribute to the payment of that debt or claim, an  amount not exceeding the amount which he would have been liable to contribute if the company had  commenced winding up on the day immediately before the said date; and 

(b) if the company is wound up, the Tribunal may, on the application of any such creditor and  proof of his ignorance as aforesaid, if it thinks fit, settle a list of persons so liable to contribute, and  make and enforce calls and orders on the contributories settled on the list, as if they were ordinary  contributories in a winding up. 

(9) Nothing in sub-section (8) shall affect the rights of the contributories among themselves. (10) If any officer of the company— 

(a) knowingly conceals the name of any creditor entitled to object to the reduction; (b) knowingly misrepresents the nature or amount of the debt or claim of any creditor; or (c) abets or is privy to any such concealment or misrepresentation as aforesaid, 

he shall be liable under section 447.

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(11) If a company fails to comply with the provisions of sub-section (4), it shall be punishable with  fine which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees. 

  1. Restriction on purchase by company or giving of loans by it for purchase of its shares.—(1)  No company limited by shares or by guarantee and having a share capital shall have power to buy its own  shares unless the consequent reduction of share capital is effected under the provisions of this Act. 

(2) No public company shall give, whether directly or indirectly and whether by means of a loan,  guarantee, the provision of security or otherwise, any financial assistance for the purpose of, or in  connection with, a purchase or subscription made or to be made, by any person of or for any shares in the  company or in its holding company. 

(3) Nothing in sub-section (2) shall apply to— 

(a) the lending of money by a banking company in the ordinary course of its business; 

(b) the provision by a company of money in accordance with any scheme approved by company  through special resolution and in accordance with such requirements as may be prescribed, for the  purchase of, or subscription for, fully paid-up shares in the company or its holding company, if the  purchase of, or the subscription for, the shares held by trustees for the benefit of the employees or  such shares held by the employee of the company; 

(c) the giving of loans by a company to persons in the employment of the company other than its  directors or key managerial personnel, for an amount not exceeding their salary or wages for a period  of six months with a view to enabling them to purchase or subscribe for fully paid-up shares in the  company or its holding company to be held by them by way of beneficial ownership: 

Provided that disclosures in respect of voting rights not exercised directly by the employees in respect  of shares to which the scheme relates shall be made in the Board’s report in such manner as may be  prescribed. 

(4) Nothing in this section shall affect the right of a company to redeem any preference shares issued  by it under this Act or under any previous company law. 

(5) If a company contravenes the provisions of this section, it shall be punishable with fine which  shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer  of the company who is in default shall be punishable with imprisonment for a term which may extend to  three years and with fine which shall not be less than one lakh rupees but which may extend to twenty 

five lakh rupees. 

  1. Power of company to purchase its own securities.—(1) Notwithstanding anything contained in  this Act, but subject to the provisions of sub-section (2), a company may purchase its own shares or other  specified securities (hereinafter referred to as buy-back) out of— 

(a) its free reserves; 

(b) the securities premium account; or 

(c) the proceeds of the issue of any shares or other specified securities: 

Provided that no buy-back of any kind of shares or other specified securities shall be made out of the  proceeds of an earlier issue of the same kind of shares or same kind of other specified securities. 

(2) No company shall purchase its own shares or other specified securities under sub-section (1),  unless— 

(a) the buy-back is authorised by its articles; 

(b) a special resolution has been passed at a general meeting of the company authorising the buy back: 

Provided that nothing contained in this clause shall apply to a case where— 

(i) the buy-back is, ten per cent. or less of the total paid-up equity capital and free reserves of the  company; and

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(ii) such buy-back has been authorised by the Board by means of a resolution passed at its  meeting; 

(c) the buy-back is twenty-five per cent. or less of the aggregate of paid-up capital and free  reserves of the company: 

Provided that in respect of the buy-back of equity shares in any financial year, the reference to  twenty-five per cent. in this clause shall be construed with respect to its total paid-up equity capital in that  financial year; 

(d) the ratio of the aggregate of secured and unsecured debts owed by the company after buy-back  is not more than twice the paid-up capital and its free reserves: 

Provided that the Central Government may, by order, notify a higher ratio of the debt to capital  and free reserves for a class or classes of companies; 

(e) all the shares or other specified securities for buy-back are fully paid-up; 

(f) the buy-back of the shares or other specified securities listed on any recognised stock  exchange is in accordance with the regulations made by the Securities and Exchange Board in this  behalf; and 

(g) the buy-back in respect of shares or other specified securities other than those specified in  clause (f) is in accordance with such rules as may be prescribed: 

Provided that no offer of buy-back under this sub-section shall be made within a period of one year  reckoned from the date of the closure of the preceding offer of buy-back, if any. 

(3) The notice of the meeting at which the special resolution is proposed to be passed under clause (b)  of sub-section (2) shall be accompanied by an explanatory statement stating— 

(a) a full and complete disclosure of all material facts; 

(b) the necessity for the buy-back; 

(c) the class of shares or securities intended to be purchased under the buy-back; (d) the amount to be invested under the buy-back; and 

(e) the time-limit for completion of buy-back. 

(4) Every buy-back shall be completed within a period of one year from the date of passing of the  special resolution, or as the case may be, the resolution passed by the Board under clause (b) of sub section (2). 

(5) The buy-back under sub-section (1) may be— 

(a) from the existing shareholders or security holders on a proportionate basis; 

(b) from the open market; 

(c) by purchasing the securities issued to employees of the company pursuant to a scheme of  stock option or sweat equity. 

(6) Where a company proposes to buy-back its own shares or other specified securities under this  section in pursuance of a special resolution under clause (b) of sub-section (2) or a resolution under item  (ii) of the proviso thereto, it shall, before making such buy-back, file with the Registrar and the Securities  and Exchange Board, a declaration of solvency signed by at least two directors of the company, one of  whom shall be the managing director, if any, in such form as may be prescribed and verified by an  affidavit to the effect that the Board of Directors of the company has made a full inquiry into the affairs of  the company as a result of which they have formed an opinion that it is capable of meeting its liabilities  and will not be rendered insolvent within a period of one year from the date of declaration adopted by the  Board: 

Provided that no declaration of solvency shall be filed with the Securities and Exchange Board by a  company whose shares are not listed on any recognised stock exchange.

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(7) Where a company buys back its own shares or other specified securities, it shall extinguish and  physically destroy the shares or securities so bought back within seven days of the last date of completion  of buy-back. 

(8) Where a company completes a buy-back of its shares or other specified securities under this  section, it shall not make a further issue of the same kind of shares or other securities including allotment  of new shares under clause (a) of sub-section (1) of section 62 or other specified securities within a period  of six months except by way of a bonus issue or in the discharge of subsisting obligations such as  conversion of warrants, stock option schemes, sweat equity or conversion of preference shares or  debentures into equity shares. 

(9) Where a company buys back its shares or other specified securities under this section, it shall  maintain a register of the shares or securities so bought, the consideration paid for the shares or securities  bought back, the date of cancellation of shares or securities, the date of extinguishing and physically  destroying the shares or securities and such other particulars as may be prescribed. 

(10) A company shall, after the completion of the buy-back under this section, file with the Registrar  and the Securities and Exchange Board a return containing such particulars relating to the buy-back  within thirty days of such completion, as may be prescribed: 

Provided that no return shall be filed with the Securities and Exchange Board by a company whose  shares are not listed on any recognised stock exchange. 

(11) If a company makes any default in complying with the provisions of this section or any  regulation made by the Securities and Exchange Board, for the purposes of clause (f) of sub-section (2),  the company shall be punishable with fine which shall not be less than one lakh rupees but which may  extend to three lakh rupees and every officer of the company who is in default shall be punishable with  imprisonment for a term which may extend to three years or with fine which shall not be less than one  lakh rupees but which may extend to three lakh rupees, or with both. 

Explanation I.—For the purposes of this section and section 70, ―specified securities‖ includes  employees‘ stock option or other securities as may be notified by the Central Government from time to  time. 

Explanation II.—For the purposes of this section, ―free reserves‖ includes securities premium  account. 

  1. Transfer of certain sums to capital redemption reserve account.—(1) Where a company  purchases its own shares out of free reserves or securities premium account, a sum equal to the nominal  value of the shares so purchased shall be transferred to the capital redemption reserve account and details  of such transfer shall be disclosed in the balance sheet. 

(2) The capital redemption reserve account may be applied by the company, in paying up unissued  shares of the company to be issued to members of the company as fully paid bonus shares. 

  1. Prohibition for buy-back in certain circumstances.—(1) No company shall directly or  indirectly purchase its own shares or other specified securities— 

(a) through any subsidiary company including its own subsidiary companies; 

(b) through any investment company or group of investment companies; or 

(c) if a default, is made by the company, in the repayment of deposits accepted either before or  after the commencement of this Act, interest payment thereon, redemption of debentures or  preference shares or payment of dividend to any shareholder, or repayment of any term loan or  interest payable thereon to any financial institution or banking company: 

Provided that the buy-back is not prohibited, if the default is remedied and a period of three years  has lapsed after such default ceased to subsist. 

(2) No company shall, directly or indirectly, purchase its own shares or other specified securities in  case such company has not complied with the provisions of sections 92, 123, 127 and section 129.

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  1. Debentures.—(1) A company may issue debentures with an option to convert such debentures into shares, either wholly or partly at the time of redemption: 

Provided that the issue of debentures with an option to convert such debentures into shares, wholly or  partly, shall be approved by a special resolution passed at a general meeting. 

(2) No company shall issue any debentures carrying any voting rights. 

(3) Secured debentures may be issued by a company subject to such terms and conditions as may be  prescribed. 

(4) Where debentures are issued by a company under this section, the company shall create a  debenture redemption reserve account out of the profits of the company available for payment of dividend  and the amount credited to such account shall not be utilised by the company except for the redemption of  debentures. 

(5) No company shall issue a prospectus or make an offer or invitation to the public or to its members  exceeding five hundred for the subscription of its debentures, unless the company has, before such issue  or offer, appointed one or more debenture trustees and the conditions governing the appointment of such  trustees shall be such as may be prescribed. 

(6) A debenture trustee shall take steps to protect the interests of the debenture-holders and redress  their grievances in accordance with such rules as may be prescribed. 

(7) Any provision contained in a trust deed for securing the issue of debentures, or in any contract  with the debenture-holders secured by a trust deed, shall be void in so far as it would have the effect of  exempting a trustee thereof from, or indemnifying him against, any liability for breach of trust, where he  fails to show the degree of care and due diligence required of him as a trustee, having regard to the  provisions of the trust deed conferring on him any power, authority or discretion: 

Provided that the liability of the debenture trustee shall be subject to such exemptions as may be  agreed upon by a majority of debenture-holders holding not less than three-fourths in value of the total  debentures at a meeting held for the purpose. 

(8) A company shall pay interest and redeem the debentures in accordance with the terms and  conditions of their issue. 

(9) Where at any time the debenture trustee comes to a conclusion that the assets of the company are  insufficient or are likely to become insufficient to discharge the principal amount as and when it becomes  due, the debenture trustee may file a petition before the Tribunal and the Tribunal may, after hearing the  company and any other person interested in the matter, by order, impose such restrictions on the incurring  of any further liabilities by the company as the Tribunal may consider necessary in the interests of the  debenture-holders. 

(10) Where a company fails to redeem the debentures on the date of their maturity or fails to pay  interest on the debentures when it is due, the Tribunal may, on the application of any or all of the  debenture-holders, or debenture trustee and, after hearing the parties concerned, direct, by order, the  company to redeem the debentures forthwith on payment of principal and interest due thereon. 

(11) If any default is made in complying with the order of the Tribunal under this section, every  officer of the company who is in default shall be punishable with imprisonment for a term which may  extend to three years or with fine which shall not be less than two lakh rupees but which may extend to  five lakh rupees, or with both. 

(12) A contract with the company to take up and pay for any debentures of the company may be  enforced by a decree for specific performance. 

(13) The Central Government may prescribe the procedure, for securing the issue of debentures, the  form of debenture trust deed, the procedure for the debenture-holders to inspect the trust deed and to  obtain copies thereof, quantum of debenture redemption reserve required to be created and such other  matters.

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  1. Power to nominate.—(1) Every holder of securities of a company may, at any time, nominate, in the prescribed manner, any person to whom his securities shall vest in the event of his death. 

(2) Where the securities of a company are held by more than one person jointly, the joint holders may  together nominate, in the prescribed manner, any person to whom all the rights in the securities shall vest  in the event of death of all the joint holders. 

(3) Notwithstanding anything contained in any other law for the time being in force or in any  disposition, whether testamentary or otherwise, in respect of the securities of a company, where a  nomination made in the prescribed manner purports to confer on any person the right to vest the securities  of the company, the nominee shall, on the death of the holder of securities or, as the case may be, on the  death of the joint holders, become entitled to all the rights in the securities, of the holder or, as the case  may be, of all the joint holders, in relation to such securities, to the exclusion of all other persons, unless  the nomination is varied or cancelled in the prescribed manner. 

(4) Where the nominee is a minor, it shall be lawful for the holder of the securities, making the  nomination to appoint, in the prescribed manner, any person to become entitled to the securities of the  company, in the event of the death of the nominee during his minority. 

CHAPTER V 

ACCEPTANCE OF DEPOSITS BY COMPANIES 

  1. Prohibition on acceptance of deposits from public.—(1) On and after the commencement of  this Act, no company shall invite, accept or renew deposits under this Act from the public except in a  manner provided under this Chapter: 

Provided that nothing in this sub-section shall apply to a banking company and nonbanking financial  company as defined in the Reserve Bank of India Act, 1934 (2 of 1934) and to such other company as the  Central Government may, after consultation with the Reserve Bank of India, specify in this behalf. 

(2) A company may, subject to the passing of a resolution in general meeting and subject to such rules  as may be prescribed in consultation with the Reserve Bank of India, accept deposits from its members on  such terms and conditions, including the provision of security, if any, or for the repayment of such  deposits with interest, as may be agreed upon between the company and its members, subject to the  fulfilment of the following conditions, namely:— 

(a) issuance of a circular to its members including therein a statement showing the financial  position of the company, the credit rating obtained, the total number of depositors and the amount due  towards deposits in respect of any previous deposits accepted by the company and such other  particulars in such form and in such manner as may be prescribed; 

(b) filing a copy of the circular along with such statement with the Registrar within thirty days  before the date of issue of the circular; 

(c) depositing such sum which shall not be less than fifteen per cent. of the amount of its deposits  maturing during a financial year and the financial year next following, and kept in a scheduled bank  in a separate bank account to be called as deposit repayment reserve account; 

(d) providing such deposit insurance in such manner and to such extent as may be prescribed; 

(e) certifying that the company has not committed any default in the repayment of deposits  accepted either before or after the commencement of this Act or payment of interest on such deposits;  and 

(f) providing security, if any for the due repayment of the amount of deposit or the interest  thereon including the creation of such charge on the property or assets of the company: 

Provided that in case where a company does not secure the deposits or secures such deposits  partially, then, the deposits shall be termed as ‗‗unsecured deposits‘‘ and shall be so quoted in every  circular, form, advertisement or in any document related to invitation or acceptance of deposits.

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(3) Every deposit accepted by a company under sub-section (2) shall be repaid with interest in  accordance with the terms and conditions of the agreement referred to in that sub-section. 

(4) Where a company fails to repay the deposit or part thereof or any interest thereon under sub section (3), the depositor concerned may apply to the Tribunal for an order directing the company to pay  the sum due or for any loss or damage incurred by him as a result of such non-payment and for such other  orders as the Tribunal may deem fit. 

(5) The deposit repayment reserve account referred to in clause (c) of sub-section (2) shall not be used  by the company for any purpose other than repayment of deposits. 

  1. Repayment of deposits, etc., accepted before commencement of this Act.—(1) Where in  respect of any deposit accepted by a company before the commencement of this Act, the amount of such  deposit or part thereof or any interest due thereon remains unpaid on such commencement or becomes  due at any time thereafter, the company shall— 

(a) file, within a period of three months from such commencement or from the date on which  such payments, are due, with the Registrar a statement of all the deposits accepted by the company  and sums remaining unpaid on such amount with the interest payable thereon along with the  arrangements made for such repayment, notwithstanding anything contained in any other law for the  time being in force or under the terms and conditions subject to which the deposit was accepted or  any scheme framed under any law; and 

(b) repay within one year from such commencement or from the date on which such payments are  due, whichever is earlier. 

(2) The Tribunal may on an application made by the company, after considering the financial  condition of the company, the amount of deposit or part thereof and the interest payable thereon and such  other matters, allow further time as considered reasonable to the company to repay the deposit. 

(3) If a company fails to repay the deposit or part thereof or any interest thereon within the time  specified in sub-section (1) or such further time as may be allowed by the Tribunal under sub-section (2),  the company shall, in addition to the payment of the amount of deposit or part thereof and the interest  due, be punishable with fine which shall not be less than one crore rupees but which may extend to ten  crore rupees and every officer of the company who is in default shall be punishable with imprisonment  which may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but  which may extend to two crore rupees, or with both. 

  1. Damages for fraud.—(1) Where a company fails to repay the deposit or part thereof or any  interest thereon referred to in section 74 within the time specified in sub-section (1) of that section or such  further time as may be allowed by the Tribunal under sub-section (2) of that section, and it is proved that  the deposits had been accepted with intent to defraud the depositors or for any fraudulent purpose, every  officer of the company who was responsible for the acceptance of such deposit shall, without prejudice to  the provisions contained in subsection (3) of that section and liability under section 447, be personally  responsible, without any limitation of liability, for all or any of the losses or damages that may have been  incurred by the depositors. 

(2) Any suit, proceedings or other action may be taken by any person, group of persons or any  association of persons who had incurred any loss as a result of the failure of the company to repay the  deposits or part thereof or any interest thereon. 

  1. Acceptance of deposits from public by certain companies.—(1) Notwithstanding anything  contained in section 73, a public company, having such net worth or turnover as may be prescribed, may  accept deposits from persons other than its members subject to compliance with the requirements  provided in sub-section (2) of section 73 and subject to such rules as the Central Government may, in  consultation with the Reserve Bank of India, prescribe: 

Provided that such a company shall be required to obtain the rating (including its networth, liquidity  and ability to pay its deposits on due date) from a recognised credit rating agency for informing the public 

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the rating given to the company at the time of invitation of deposits from the public which ensures  adequate safety and the rating shall be obtained for every year during the tenure of deposits: 

Provided further that every company accepting secured deposits from the public shall within thirty  days of such acceptance, create a charge on its assets of an amount not less than the amount of deposits  accepted in favour of the deposit holders in accordance with such rules as may be prescribed. 

(2) The provisions of this Chapter shall, mutatis mutandis, apply to the acceptance of deposits from  public under this section. 

1[76A. Punishment for contravention of section 73 or section 76.—Where a company accepts or  invites or allows or causes any other person to accept or invite on its behalf any deposit in contravention  of the manner or the conditions prescribed under section 73 or section 76 or rules made thereunder or if a  company fails to repay the deposit or part thereof or any interest due thereon within the time specified  under section 73 or section 76 or rules made thereunder or such further time as may be allowed by the  Tribunal under section 73,— 

(a) the company shall, in addition to the payment of the amount of deposit or part thereof and the  interest due, be punishable with fine which shall not be less than one crore rupees but which may  extend to ten crore rupees; and 

(b) every officer of the company who is in default shall be punishable with imprisonment which  may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but which  may extend to two crore rupees, or with both: 

Provided that if it is proved that the officer of the company who is in default, has contravened such  provisions knowingly or wilfully with the intention to deceive the company or its shareholders or  depositors or creditors or tax authorities, he shall be liable for action under section 447.] 

CHAPTER VI 

REGISTRATION OF CHARGES 

  1. Duty to register charges, etc.—(1) It shall be the duty of every company creating a charge  within or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise,  and situated in or outside India, to register the particulars of the charge signed by the company and the  charge-holder together with the instruments, if any, creating such charge in such form, on payment of  such fees and in such manner as may be prescribed, with the Registrar within thirty days of its creation: 

Provided that the Registrar may, on an application by the company, allow such registration to be  made within a period of three hundred days of such creation on payment of such additional fees as may be  prescribed: 

Provided further that if registration is not made within a period of three hundred days of such  creation, the company shall seek extension of time in accordance with section 87: 

Provided also that any subsequent registration of a charge shall not prejudice any right acquired in  respect of any property before the charge is actually registered. 

(2) Where a charge is registered with the Registrar under sub-section (1), he shall issue a certificate of  registration of such charge in such form and in such manner as may be prescribed to the company and, as  the case may be, to the person in whose favour the charge is created. 

(3) Notwithstanding anything contained in any other law for the time being in force, no charge  created by a company shall be taken into account by the liquidator or any other creditor unless it is duly  registered under sub-section (1) and a certificate of registration of such charge is given by the Registrar  under sub-section (2). 

(4) Nothing in sub-section (3) shall prejudice any contract or obligation for the repayment of the  money secured by a charge. 

  

  1. Ins. by Act 21 of 2015, s. 8 (w.e.f. 29-5-2015). 

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  1. Application for registration of charge.—Where a company fails to register the charge within  the period specified in section 77, without prejudice to its liability in respect of any offence under this  Chapter, the person in whose favour the charge is created may apply to the Registrar for registration of  the charge along with the instrument created for the charge, within such time and in such form and  manner as may be prescribed and the Registrar may, on such application, within a period of fourteen days  after giving notice to the company, unless the company itself registers the charge or shows sufficient  cause why such charge should not be registered, allow such registration on payment of such fees, as may  be prescribed: 

Provided that where registration is effected on application of the person in whose favour the charge is  created, that person shall be entitled to recover from the company the amount of any fees or additional  fees paid by him to the Registrar for the purpose of registration of charge. 

  1. Section 77 to apply in certain matters.—The provisions of section 77 relating to registration of  charges shall, so far as may be, apply to— 

(a) a company acquiring any property subject to a charge within the meaning of that section; or 

(b) any modification in the terms or conditions or the extent or operation of any charge registered  under that section. 

  1. Date of notice of charge.—Where any charge on any property or assets of a company or any of  its undertakings is registered under section 77, any person acquiring such property, assets, undertakings or  part thereof or any share or interest therein shall be deemed to have notice of the charge from the date of  such registration. 
  2. Register of charges to be kept by Registrar.—(1) The Registrar shall, in respect of every  company, keep a register containing particulars of the charges registered under this Chapter in such form  and in such manner as may be prescribed. 

(2) A register kept in pursuance of this section shall be open to inspection by any person on payment  of such fees as may be prescribed for each inspection. 

  1. Company to report satisfaction of charge.—(1) A company shall give intimation to the  Registrar in the prescribed form, of the payment or satisfaction in full of any charge registered under this  Chapter within a period of thirty days from the date of such payment or satisfaction and the provisions of  sub-section (1) of section 77 shall, as far as may be, apply to an intimation given under this section. 

(2) The Registrar shall, on receipt of intimation under sub-section (1), cause a notice to be sent to the  holder of the charge calling upon him to show cause within such time not exceeding fourteen days, as  may be specified in such notice, as to why payment or satisfaction in full should not be recorded as  intimated to the Registrar, and if no cause is shown, by such holder of the charge, the Registrar shall order  that a memorandum of satisfaction shall be entered in the register of charges kept by him under section 81  and shall inform the company that he has done so: 

Provided that the notice referred to in this sub-section shall not be required to be sent, in case the  intimation to the Registrar in this regard is in the specified form and signed by the holder of charge. 

(3) If any cause is shown, the Registrar shall record a note to that effect in the register of charges and  shall inform the company. 

(4) Nothing in this section shall be deemed to affect the powers of the Registrar to make an entry in  the register of charges under section 83 or otherwise than on receipt of an intimation from the company. 

  1. Power of Registrar to make entries of satisfaction and release in absence of intimation from  company.—(1) The Registrar may, on evidence being given to his satisfaction with respect to any  registered charge,— 

(a) that the debt for which the charge was given has been paid or satisfied in whole or in part; or 

(b) that part of the property or undertaking charged has been released from the charge or has  ceased to form part of the company‘s property or undertaking,

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enter in the register of charges a memorandum of satisfaction in whole or in part, or of the fact that part of  the property or undertaking has been released from the charge or has ceased to form part of the  company‘s property or undertaking, as the case may be, notwithstanding the fact that no intimation has  been received by him from the company. 

(2) The Registrar shall inform the affected parties within thirty days of making the entry in the  register of charges kept under sub-section (1) of section 81. 

  1. Intimation of appointment of receiver or manager.—(1) If any person obtains an order for the  appointment of a receiver of, or of a person to manage, the property, subject to a charge, of a company or  if any person appoints such receiver or person under any power contained in any instrument, he shall,  within a period of thirty days from the date of the passing of the order or of the making of the 

appointment, give notice of such appointment to the company and the Registrar along with a copy of the  order or instrument and the Registrar shall, on payment of the prescribed fees, register particulars of the  receiver, person or instrument in the register of charges. 

(2) Any person appointed under sub-section (1) shall, on ceasing to hold such appointment, give to the company and the Registrar a notice to that effect and the Registrar shall register such notice. 

  1. Company‘s register of charges.—(1) Every company shall keep at its registered office a register  of charges in such form and in such manner as may be prescribed, which shall include therein all charges  and floating charges affecting any property or assets of the company or any of its undertakings, indicating  in each case such particulars as may be prescribed: 

Provided that a copy of the instrument creating the charge shall also be kept at the registered office of  the company along with the register of charges. 

(2) The register of charges and instrument of charges, kept under sub-section (1) shall be open for  inspection during business hours— 

(a) by any member or creditor without any payment of fees; or 

(b) by any other person on payment of such fees as may be prescribed, 

subject to such reasonable restrictions as the company may, by its articles, impose. 

  1. Punishment for contravention.—If any company contravenes any provision of this Chapter, the  company shall be punishable with fine which shall not be less than one lakh rupees but which may extend  to ten lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty five thousand rupees but which may extend to one lakh rupees, or with both. 
  2. Rectification by Central Government in register of charges.—(1) The Central Government on  being satisfied that— 

(i) (a) the omission to file with the Registrar the particulars of any charge created by a company  or any charge subject to which any property has been acquired by a company or any modification of  such charge; or 

(b) the omission to register any charge within the time required under this Chapter or the  omission to give intimation to the Registrar of the payment or the satisfaction of a charge, within the  time required under this Chapter; or 

(c) the omission or mis-statement of any particular with respect to any such charge or  modification or with respect to any memorandum of satisfaction or other entry made in pursuance of  section 82 or section 83, 

was accidental or due to inadvertence or some other sufficient cause or it is not of a nature to prejudice  the position of creditors or shareholders of the company; or 

(ii) on any other grounds, it is just and equitable to grant relief, 

it may on the application of the company or any person interested and on such terms and conditions as it  may seem to the Central Government just and expedient, direct that the time for the filing of the 

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particulars or for the registration of the charge or for the giving of intimation of payment or satisfaction  shall be extended or, as the case may require, that the omission or mis-statement shall be rectified. 

(2) Where the Central Government extends the time for the registration of a charge, the order shall  not prejudice any rights acquired in respect of the property concerned before the charge is actually  registered. 

CHAPTER VII 

MANAGEMENT AND ADMINISTRATION 

  1. Register of members, etc.—(1) Every company shall keep and maintain the following registers  in such form and in such manner as may be prescribed, namely:— 

(a) register of members indicating separately for each class of equity and preference shares held  by each member residing in or outside India; 

(b) register of debenture-holders; and 

(c) register of any other security holders. 

(2) Every register maintained under sub-section (1) shall include an index of the names included  therein. 

(3) The register and index of beneficial owners maintained by a depository under section 11 of the  Depositories Act, 1996 (22 of 1996), shall be deemed to be the corresponding register and index for the  purposes of this Act. 

(4) A company may, if so authorised by its articles, keep in any country outside India, in such manner  as may be prescribed, a part of the register referred to in sub-section (1), called ―foreign register‖  containing the names and particulars of the members, debenture-holders, other security holders or  beneficial owners residing outside India. 

(5) If a company does not maintain a register of members or debenture-holders or other security  holders or fails to maintain them in accordance with the provisions of sub-section (1) or sub-section (2),  the company and every officer of the company who is in default shall be punishable with fine which shall  not be less than fifty thousand rupees but which may extend to three lakh rupees and where the failure is a  continuing one, with a further fine which may extend to one thousand rupees for every day, after the first  during which the failure continues. 

  1. Declaration in respect of beneficial interest in any share.—(1) Where the name of a person is  entered in the register of members of a company as the holder of shares in that company but who does not  hold the beneficial interest in such shares, such person shall make a declaration within such time and in  such form as may be prescribed to the company specifying the name and other particulars of the person  who holds the beneficial interest in such shares. 

(2) Every person who holds or acquires a beneficial interest in share of a company shall make a  declaration to the company specifying the nature of his interest, particulars of the person in whose name  the shares stand registered in the books of the company and such other particulars as may be prescribed. 

(3) Where any change occurs in the beneficial interest in such shares, the person referred to in sub section (1) and the beneficial owner specified in sub-section (2) shall, within a period of thirty days from  the date of such change, make a declaration to the company in such form and containing such particulars  as may be prescribed. 

(4) The Central Government may make rules to provide for the manner of holding and disclosing  beneficial interest and beneficial ownership under this section. 

(5) If any person fails, to make a declaration as required under sub-section (1) or sub-section (2) or  sub-section (3), without any reasonable cause, he shall be punishable with fine which may extend to fifty  thousand rupees and where the failure is a continuing one, with a further fine which may extend to one  thousand rupees for every day after the first during which the failure continues.

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(6) Where any declaration under this section is made to a company, the company shall make a note of  such declaration in the register concerned and shall file, within thirty days from the date of receipt of  declaration by it, a return in the prescribed form with the Registrar in respect of such declaration with  such fees or additional fees as may be prescribed, within the time specified under section 403. 

(7) If a company, required to file a return under sub-section (6), fails to do so before the expiry of the  time specified under the first proviso to sub-section (1) of section 403, the company and every officer of  the company who is in default shall be punishable with fine which shall not be less than five hundred  rupees but which may extend to one thousand rupees and where the failure is a continuing one, with a  further fine which may extend to one thousand rupees for every day after the first during which the failure  continues. 

(8) No right in relation to any share in respect of which a declaration is required to be made under this  section but not made by the beneficial owner, shall be enforceable by him or by any person claiming  through him. 

(9) Nothing in this section shall be deemed to prejudice the obligation of a company to pay dividend  to its members under this Act and the said obligation shall, on such payment, stand discharged. 

  1. Investigation of beneficial ownership of shares in certain cases.—Where it appears to the  Central Government that there are reasons so to do, it may appoint one or more competent persons to  investigate and report as to beneficial ownership with regard to any share or class of shares and the  provisions of section 216 shall, as far as may be, apply to such investigation as if it were an investigation  ordered under that section. 
  2. Power to close register of members or debenture-holders or other security holders.—(1) A  company may close the register of members or the register of debenture-holders or the register of other  security holders for any period or periods not exceeding in the aggregate forty-five days in each year, but  not exceeding thirty days at any one time, subject to giving of previous notice of at least seven days or  such lesser period as may be specified by Securities and Exchange Board for listed companies or the  companies which intend to get their securities listed, in such manner as may be prescribed. 

(2) If the register of members or of debenture-holders or of other security holders is closed without  giving the notice as provided in sub-section (1), or after giving shorter notice than that so provided, or for  a continuous or an aggregate period in excess of the limits specified in that sub-section, the company and  every officer of the company who is in default shall be liable to a penalty of five thousand rupees for  every day subject to a maximum of one lakh rupees during which the register is kept closed. 

  1. Annual return.—(1) Every company shall prepare a return (hereinafter referred to as the annual return) in the prescribed form containing the particulars as they stood on the close of the financial year  regarding— 

(a) its registered office, principal business activities, particulars of its holding, subsidiary and  associate companies; 

(b) its shares, debentures and other securities and shareholding pattern; 

(c) its indebtedness; 

(d) its members and debenture-holders along with changes therein since the close of the previous  financial year; 

(e) its promoters, directors, key managerial personnel along with changes therein since the close  of the previous financial year; 

(f) meetings of members or a class thereof, Board and its various committees along with  attendance details; 

(g) remuneration of directors and key managerial personnel; 

(h) penalty or punishment imposed on the company, its directors or officers and details of  compounding of offences and appeals made against such penalty or punishment;

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(i) matters relating to certification of compliances, disclosures as may be prescribed; 

(j) details, as may be prescribed, in respect of shares held by or on behalf of the Foreign  Institutional Investors indicating their names, addresses, countries of incorporation, registration and  percentage of shareholding held by them; and 

(k) such other matters as may be prescribed, 

and signed by a director and the company secretary, or where there is no company secretary, by a  company secretary in practice: 

Provided that in relation to One Person Company and small company, the annual return shall be  signed by the company secretary, or where there is no company secretary, by the director of the company. 

(2) The annual return, filed by a listed company or, by a company having such paid-up capital and  turnover as may be prescribed, shall be certified by a company secretary in practice in the prescribed  form, stating that the annual return discloses the facts correctly and adequately and that the company has  complied with all the provisions of this Act. 

(3) An extract of the annual return in such form as may be prescribed shall form part of the Board‘s  report. 

(4) Every company shall file with the Registrar a copy of the annual return, within sixty days from the  date on which the annual general meeting is held or where no annual general meeting is held in any year  within sixty days from the date on which the annual general meeting should have been held together with  the statement specifying the reasons for not holding the annual general meeting, with such fees or  additional fees as may be prescribed, within the time as specified, under section 403. 

(5) If a company fails to file its annual return under sub-section (4), before the expiry of the period  specified under section 403 with additional fees, the company shall be punishable with fine which shall  not be less than fifty thousand rupees but which may extend to five lakhs rupees and every officer of the  company who is in default shall be punishable with imprisonment for a term which may extend to six  months or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh  rupees, or with both. 

(6) If a company secretary in practice certifies the annual return otherwise than in conformity with the  requirements of this section or the rules made thereunder, he shall be punishable with fine which shall not  be less than fifty thousand rupees but which may extend to five lakh rupees. 

  1. Return to be filed with Registrar in case promoters‘ stake changes.—Every listed company  shall file a return in the prescribed form with the Registrar with respect to change in the number of shares  held by promoters and top ten shareholders of such company, within fifteen days of such change. 
  2. Place of keeping and inspection of registers, returns, etc.—(1) The registers required to be kept  and maintained by a company under section 88 and copies of the annual return filed under section 92 shall  be kept at the registered office of the company: 

Provided that such registers or copies of return may also be kept at any other place in India in which  more than one-tenth of the total number of members entered in the register of members reside, if  approved by a special resolution passed at a general meeting of the company and the Registrar has been  given a copy of the proposed special resolution in advance: 

Provided further that the period for which the registers, returns and records are required to be kept  shall be such as may be prescribed. 

(2) The registers and their indices, except when they are closed under the provisions of this Act, and  the copies of all the returns shall be open for inspection by any member, debenture-holder, other security  holder or beneficial owner, during business hours without payment of any fees and by any other person on  payment of such fees as may be prescribed. 

(3) Any such member, debenture-holder, other security holder or beneficial owner or any other person  may— 

(a) take extracts from any register, or index or return without payment of any fee; or

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(b) require a copy of any such register or entries therein or return on payment of such fees as may  be prescribed. 

(4) If any inspection or the making of any extract or copy required under this section is refused, the  company and every officer of the company who is in default shall be liable, for each such default, to a  penalty of one thousand rupees for every day subject to a maximum of one lakh rupees during which the  refusal or default continues. 

(5) The Central Government may also, by order, direct an immediate inspection of the document, or  direct that the extract required shall forthwith be allowed to be taken by the person requiring it. 

  1. Registers, etc., to be evidence.—The registers, their indices and copies of annual returns  maintained under sections 88 and 94 shall be prima facie evidence of any matter directed or authorised to  be inserted therein by or under this Act. 
  2. Annual general meeting.— (1) Every company other than a One Person Company shall in each  year hold in addition to any other meetings, a general meeting as its annual general meeting and shall specify the meeting as such in the notices calling it, and not more than fifteen months shall elapse  between the date of one annual general meeting of a company and that of the next: 

Provided that in case of the first annual general meeting, it shall be held within a period of nine  months from the date of closing of the first financial year of the company and in any other case, within a  period of six months, from the date of closing of the financial year: 

Provided further that if a company holds its first annual general meeting as aforesaid, it shall not be  necessary for the company to hold any annual general meeting in the year of its incorporation: 

Provided also that the Registrar may, for any special reason, extend the time within which any annual  general meeting, other than the first annual general meeting, shall be held, by a period not exceeding three  months. 

(2) Every annual general meeting shall be called during business hours, that is, between 9 a.m. and 6  p.m. on any day that is not a National Holiday and shall be held either at the registered office of the  company or at some other place within the city, town or village in which the registered office of the  company is situate: 

Provided that the Central Government may exempt any company from the provisions of this sub section subject to such conditions as it may impose. 

Explanation.—For the purposes of this sub-section, ―National Holiday‖ means and includes a day  declared as National Holiday by the Central Government. 

  1. Power of Tribunal to call annual general meeting.—(1) If any default is made in holding the  annual general meeting of a company under section 96, the Tribunal may, notwithstanding anything  contained in this Act or the articles of the company, on the application of any member of the company,  call, or direct the calling of, an annual general meeting of the company and give such ancillary or  consequential directions as the Tribunal thinks expedient: 

Provided that such directions may include a direction that one member of the company present in  person or by proxy shall be deemed to constitute a meeting. 

(2) A general meeting held in pursuance of sub-section (1) shall, subject to any directions of the  Tribunal, be deemed to be an annual general meeting of the company under this Act. 

  1. Power of Tribunal to call meetings of members, etc.—(1) If for any reason it is impracticable  to call a meeting of a company, other than an annual general meeting, in any manner in which meetings of  the company may be called, or to hold or conduct the meeting of the company in the manner prescribed  by this Act or the articles of the company, the Tribunal may, either suo motu or on the application of any director or member of the company who would be entitled to vote at the meeting,— 

(a) order a meeting of the company to be called, held and conducted in such manner as the  Tribunal thinks fit; and

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(b) give such ancillary or consequential directions as the Tribunal thinks expedient, including  directions modifying or supplementing in relation to the calling, holding and conducting of the  meeting, the operation of the provisions of this Act or articles of the company: 

Provided that such directions may include a direction that one member of the company present in  person or by proxy shall be deemed to constitute a meeting. 

(2) Any meeting called, held and conducted in accordance with any order made under sub-section (1)  shall, for all purposes, be deemed to be a meeting of the company duly called, held and conducted. 

  1. Punishment for default in complying with provisions of sections 96 to 98.—If any default is  made in holding a meeting of the company in accordance with section 96 or section 97 or section 98 or in  complying with any directions of the Tribunal, the company and every officer of the company who is in  default shall be punishable with fine which may extend to one lakh rupees and in the case of a continuing  default, with a further fine which may extend to five thousand rupees for every day during which such  default continues. 
  2. Calling of extraordinary general meeting.—(1) The Board may, whenever it deems fit, call an  extraordinary general meeting of the company. 

(2) The Board shall, at the requisition made by,— 

(a) in the case of a company having a share capital, such number of members who hold, on the  date of the receipt of the requisition, not less than one-tenth of such of the paid-up share capital of the  company as on that date carries the right of voting; 

(b) in the case of a company not having a share capital, such number of members who have, on  the date of receipt of the requisition, not less than one-tenth of the total voting power of all the  members having on the said date a right to vote, 

call an extraordinary general meeting of the company within the period specified in sub-section (4). 

(3) The requisition made under sub-section (2) shall set out the matters for the consideration of which  the meeting is to be called and shall be signed by the requisitionists and sent to the registered office of the  company. 

(4) If the Board does not, within twenty-one days from the date of receipt of a valid requisition in  regard to any matter, proceed to call a meeting for the consideration of that matter on a day not later than  forty-five days from the date of receipt of such requisition, the meeting may be called and held by the  requisitionists themselves within a period of three months from the date of the requisition. 

(5) A meeting under sub-section (4) by the requisitionists shall be called and held in the same manner  in which the meeting is called and held by the Board. 

(6) Any reasonable expenses incurred by the requisitionists in calling a meeting under sub-section (4)  shall be reimbursed to the requisitionists by the company and the sums so paid shall be deducted from any  fee or other remuneration under section 197 payable to such of the directors who were in default in calling  the meeting. 

  1. Notice of meeting.—(1) A general meeting of a company may be called by giving not less than  clear twenty-one days‘ notice either in writing or through electronic mode in such manner as may be  prescribed: 

Provided that a general meeting may be called after giving a shorter notice if consent is given in  writing or by electronic mode by not less than ninety-five per cent. of the members entitled to vote at such  meeting. 

(2) Every notice of a meeting shall specify the place, date, day and the hour of the meeting and shall  contain a statement of the business to be transacted at such meeting. 

(3) The notice of every meeting of the company shall be given to— 

(a) every member of the company, legal representative of any deceased member or the assignee  of an insolvent member;

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(b) the auditor or auditors of the company; and 

(c) every director of the company. 

(4) Any accidental omission to give notice to, or the non-receipt of such notice by, any member or  other person who is entitled to such notice for any meeting shall not invalidate the proceedings of the  meeting. 

  1. Statement to be annexed to notice.—(1) A statement setting out the following material facts  concerning each item of special business to be transacted at a general meeting, shall be annexed to the  notice calling such meeting, namely:— 

(a) the nature of concern or interest, financial or otherwise, if any, in respect of each items of— (i) every director and the manager, if any; 

(ii) every other key managerial personnel; and 

(iii) relatives of the persons mentioned in sub-clauses (i) and (ii); 

(b) any other information and facts that may enable members to understand the meaning, scope  and implications of the items of business and to take decision thereon. 

(2) For the purposes of sub-section (1),— 

(a) in the case of an annual general meeting, all business to be transacted thereat shall be deemed  special, other than— 

(i) the consideration of financial statements and the reports of the Board of Directors and  auditors; 

(ii) the declaration of any dividend; 

(iii) the appointment of directors in place of those retiring; 

(iv) the appointment of, and the fixing of the remuneration of, the auditors; and 

(b) in the case of any other meeting, all business shall be deemed to be special: 

Provided that where any item of special business to be transacted at a meeting of the company relates  to or affects any other company, the extent of shareholding interest in that other company of every  promoter, director, manager, if any, and of every other key managerial personnel of the first mentioned  company shall, if the extent of such shareholding is not less than two per cent. of the paid-up share capital  of that company, also be set out in the statement. 

(3) Where any item of business refers to any document, which is to be considered at the meeting, the  time and place where such document can be inspected shall be specified in the statement under sub section (1). 

(4) Where as a result of the non-disclosure or insufficient disclosure in any statement referred to in  sub-section (1), being made by a promoter, director, manager, if any, or other key managerial personnel,  any benefit which accrues to such promoter, director, manager or other key managerial personnel or their  relatives, either directly or indirectly, the promoter, director, manager or other key managerial personnel,  as the case may be, shall hold such benefit in trust for the company, and shall, without prejudice to any  other action being taken against him under this Act or under any other law for the time being in force, be  liable to compensate the company to the extent of the benefit received by him. 

(5) If any default is made in complying with the provisions of this section, every promoter, director,  manager or other key managerial personnel who is in default shall be punishable with fine which may  extend to fifty thousand rupees or five times the amount of benefit accruing to the promoter, director,  manager or other key managerial personnel or any of his relatives, whichever is more.

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  1. Quorum for meetings.—(1) Unless the articles of the company provide for a larger number,— (a) in case of a public company,— 

(i) five members personally present if the number of members as on the date of meeting is not  more than one thousand; 

(ii) fifteen members personally present if the number of members as on the date of meeting is  more than one thousand but up to five thousand; 

(iii) thirty members personally present if the number of members as on the date of the  meeting exceeds five thousand; 

(b) in the case of a private company, two members personally present, shall be the quorum for a  meeting of the company. 

(2) If the quorum is not present within half-an-hour from the time appointed for holding a meeting of  the company— 

(a) the meeting shall stand adjourned to the same day in the next week at the same time and place,  or to such other date and such other time and place as the Board may determine; or 

(b) the meeting, if called by requisitionists under section 100, shall stand cancelled: 

Provided that in case of an adjourned meeting or of a change of day, time or place of meeting under  clause (a), the company shall give not less than three days notice to the members either individually or by  publishing an advertisement in the newspapers (one in English and one in vernacular language) which is  in circulation at the place where the registered office of the company is situated. 

(3) If at the adjourned meeting also, a quorum is not present within half-an-hour from the time  appointed for holding meeting, the members present shall be the quorum. 

  1. Chairman of meetings.—(1) Unless the articles of the company otherwise provide, the  members personally present at the meeting shall elect one of themselves to be the Chairman thereof on a  show of hands. 

(2) If a poll is demanded on the election of the Chairman, it shall be taken forthwith in accordance  with the provisions of this Act and the Chairman elected on a show of hands under sub-section (1) shall  continue to be the Chairman of the meeting until some other person is elected as Chairman as a result of  the poll, and such other person shall be the Chairman for the rest of the meeting. 

  1. Proxies.— (1) Any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person as a proxy to attend and vote at the meeting on his  behalf: 

Provided that a proxy shall not have the right to speak at such meeting and shall not be entitled to  vote except on a poll: 

Provided further that, unless the articles of a company otherwise provide, this subsection shall not  apply in the case of a company not having a share capital: 

Provided also that the Central Government may prescribe a class or classes of companies whose  members shall not be entitled to appoint another person as a proxy: 

Provided also that a person appointed as proxy shall act on behalf of such member or number of  members not exceeding fifty and such number of shares as may be prescribed. 

(2) In every notice calling a meeting of a company which has a share capital, or the articles of which  provide for voting by proxy at the meeting, there shall appear with reasonable prominence a statement  that a member entitled to attend and vote is entitled to appoint a proxy, or, where that is allowed, one or  more proxies, to attend and vote instead of himself, and that a proxy need not be a member. 

(3) If default is made in complying with sub-section (2), every officer of the company who is in  default shall be punishable with fine which may extend to five thousand rupees.

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(4) Any provision contained in the articles of a company which specifies or requires a longer period  than forty-eight hours before a meeting of the company, for depositing with the company or any other  person any instrument appointing a proxy or any other document necessary to show the validity or  otherwise relating to the appointment of a proxy in order that the appointment may be effective at such  meeting, shall have effect as if a period of forty-eight hours had been specified in or required by such  provision for such deposit. 

(5) If for the purpose of any meeting of a company, invitations to appoint as proxy a person or one of  a number of persons specified in the invitations are issued at the company‘s expense to any member  entitled to have a notice of the meeting sent to him and to vote thereat by proxy, every officer of the  company who knowingly issues the invitations as aforesaid or wilfully authorises or permits their issue  shall be punishable with fine which may extend to one lakh rupees: 

Provided that an officer shall not be punishable under this sub-section by reason only of the issue to a  member at his request in writing of a form of appointment naming the proxy, or of a list of persons  willing to act as proxies, if the form or list is available on request in writing to every member entitled to  vote at the meeting by proxy. 

(6) The instrument appointing a proxy shall— 

(a) be in writing; and 

(b) be signed by the appointer or his attorney duly authorised in writing or, if the appointer is a  body corporate, be under its seal or be signed by an officer or an attorney duly authorised by it. 

(7) An instrument appointing a proxy, if in the form as may be prescribed, shall not be questioned on  the ground that it fails to comply with any special requirements specified for such instrument by the  articles of a company. 

(8) Every member entitled to vote at a meeting of the company, or on any resolution to be moved  thereat, shall be entitled during the period beginning twenty-four hours before the time fixed for the  commencement of the meeting and ending with the conclusion of the meeting, to inspect the proxies  lodged, at any time during the business hours of the company, provided not less than three days‘ notice in  writing of the intention so to inspect is given to the company. 

  1. Restriction on voting rights.—(1) Notwithstanding anything contained in this Act, the articles  of a company may provide that no member shall exercise any voting right in respect of any shares  registered in his name on which any calls or other sums presently payable by him have not been paid, or  in regard to which the company has exercised any right of lien. 

(2) A company shall not, except on the grounds specified in sub-section (1), prohibit any member  from exercising his voting right on any other ground. 

(3) On a poll taken at a meeting of a company, a member entitled to more than one vote, or his proxy,  where allowed, or other person entitled to vote for him, as the case may be, need not, if he votes, use all  his votes or cast in the same way all the votes he uses. 

  1. Voting by show of hands.—(1) At any general meeting, a resolution put to the vote of the  meeting shall, unless a poll is demanded under section 109 or the voting is carried out electronically, be decided on a show of hands. 

(2) A declaration by the Chairman of the meeting of the passing of a resolution or otherwise by show  of hands under sub-section (1) and an entry to that effect in the books containing the minutes of the  meeting of the company shall be conclusive evidence of the fact of passing of such resolution or  otherwise. 

  1. Voting through electronic means.—The Central Government may prescribe the class or classes  of companies and manner in which a member may exercise his right to vote by the electronic means.

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  1. Demand for poll.—(1) Before or on the declaration of the result of the voting on any resolution  on show of hands, a poll may be ordered to be taken by the Chairman of the meeting on his own motion,  and shall be ordered to be taken by him on a demand made in that behalf,— 

(a) in the case a company having a share capital, by the members present in person or by proxy,  where allowed, and having not less than one-tenth of the total voting power or holding shares on  which an aggregate sum of not less than five lakh rupees or such higher amount as may be prescribed  has been paid-up; and 

(b) in the case of any other company, by any member or members present in person or by proxy,  where allowed, and having not less than one-tenth of the total voting power. 

(2) The demand for a poll may be withdrawn at any time by the persons who made the demand. 

(3) A poll demanded for adjournment of the meeting or appointment of Chairman of the meeting shall  be taken forthwith. 

(4) A poll demanded on any question other than adjournment of the meeting or appointment of  Chairman shall be taken at such time, not being later than forty-eight hours from the time when the  demand was made, as the Chairman of the meeting may direct. 

(5) Where a poll is to be taken, the Chairman of the meeting shall appoint such number of persons, as  he deems necessary, to scrutinise the poll process and votes given on the poll and to report thereon to him  in the manner as may be prescribed. 

(6) Subject to the provisions of this section, the Chairman of the meeting shall have power to regulate  the manner in which the poll shall be taken. 

(7) The result of the poll shall be deemed to be the decision of the meeting on the resolution on which  the poll was taken. 

  1. Postal ballot.—(1) Notwithstanding anything contained in this Act, a company— 

(a) shall, in respect of such items of business as the Central Government may, by notification,  declare to be transacted only by means of postal ballot; and 

(b) may, in respect of any item of business, other than ordinary business and any business in  respect of which directors or auditors have a right to be heard at any meeting, transact by means of  postal ballot, 

in such manner as may be prescribed, instead of transacting such business at a general meeting. 

(2) If a resolution is assented to by the requisite majority of the shareholders by means of postal  ballot, it shall be deemed to have been duly passed at a general meeting convened in that behalf. 

  1. Circulation of members‘ resolution.—(1) A company shall, on requisition in writing of such  number of members, as required in section 100,— 

(a) give notice to members of any resolution which may properly be moved and is intended to be  moved at a meeting; and 

(b) circulate to members any statement with respect to the matters referred to in proposed  resolution or business to be dealt with at that meeting. 

(2) A company shall not be bound under this section to give notice of any resolution or to circulate  any statement unless— 

(a) a copy of the requisition signed by the requisitionists (or two or more copies which, between  them, contain the signatures of all the requisitionists) is deposited at the registered office of the  company,— 

(i) in the case of a requisition requiring notice of a resolution, not less than six weeks before  the meeting; 

(ii) in the case of any other requisition, not less than two weeks before the meeting; and

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(b) there is deposited or tendered with the requisition, a sum reasonably sufficient to meet the  company‘s expenses in giving effect thereto: 

Provided that if, after a copy of a requisition requiring notice of a resolution has been deposited at the  registered office of the company, an annual general meeting is called on a date within six weeks after the  copy has been deposited, the copy, although not deposited within the time required by this sub-section,  shall be deemed to have been properly deposited for the purposes thereof. 

(3) The company shall not be bound to circulate any statement as required by clause (b) of sub section (1), if on the application either of the company or of any other person who claims to be aggrieved,  the Central Government, by order, declares that the rights conferred by this section are being abused to  secure needless publicity for defamatory matter. 

(4) An order made under sub-section (3) may also direct that the cost incurred by the company by  virtue of this section shall be paid to the company by the requisitionists, notwithstanding that they are not  parties to the application. 

(5) If any default is made in complying with the provisions of this section, the company and every  officer of the company who is in default shall be liable to a penalty of twenty-five thousand rupees. 

  1. Representation of President and Governors in meetings.—(1) The President of India or the  Governor of a State, if he is a member of a company, may appoint such person as he thinks fit to act as his  representative at any meeting of the company or at any meeting of any class of members of the company. 

(2) A person appointed to act under sub-section (1) shall, for the purposes of this Act, be deemed to  be a member of such a company and shall be entitled to exercise the same rights and powers, including  the right to vote by proxy and postal ballot, as the President or, as the case may be, the Governor could  exercise as a member of the company. 

  1. Representation of corporations at meeting of companies and of creditors.—(1) A body  corporate, whether a company within the meaning of this Act or not, may, — 

(a) if it is a member of a company within the meaning of this Act, by resolution of its Board of  Directors or other governing body, authorise such person as it thinks fit to act as its representative at  any meeting of the company, or at any meeting of any class of members of the company; 

(b) if it is a creditor, including a holder of debentures, of a company within the meaning of this  Act, by resolution of its directors or other governing body, authorise such person as it thinks fit to act  as its representative at any meeting of any creditors of the company held in pursuance of this Act or  of any rules made thereunder, or in pursuance of the provisions contained in any debenture or trust  deed, as the case may be. 

(2) A person authorised by resolution under sub-section (1) shall be entitled to exercise the same  rights and powers, including the right to vote by proxy and by postal ballot, on behalf of the body  corporate which he represents as that body could exercise if it were an individual member, creditor or  holder of debentures of the company. 

  1. Ordinary and special resolutions.—(1) A resolution shall be an ordinary resolution if the  notice required under this Act has been duly given and it is required to be passed by the votes cast,  whether on a show of hands, or electronically or on a poll, as the case may be, in favour of the resolution, including the casting vote, if any, of the Chairman, by members who, being entitled so to do, vote in  person, or where proxies are allowed, by proxy or by postal ballot, exceed the votes, if any, cast against  the resolution by members, so entitled and voting. 

(2) A resolution shall be a special resolution when— 

(a) the intention to propose the resolution as a special resolution has been duly specified in the  notice calling the general meeting or other intimation given to the members of the resolution; 

(b) the notice required under this Act has been duly given; and 

(c) the votes cast in favour of the resolution, whether on a show of hands, or electronically or on a  poll, as the case may be, by members who, being entitled so to do, vote in person or by proxy or by 

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postal ballot, are required to be not less than three times the number of the votes, if any, cast against  the resolution by members so entitled and voting. 

  1. Resolutions requiring special notice.—Where, by any provision contained in this Act or in the  articles of a company, special notice is required of any resolution, notice of the intention to move such  resolution shall be given to the company by such number of members holding not less than one per cent.  of total voting power or holding shares on which such aggregate sum not exceeding five lakh rupees, as  may be prescribed, has been paid-up and the company shall give its members notice of the resolution in  such manner as may be prescribed. 
  2. Resolutions passed at adjourned meeting.—Where a resolution is passed at an adjourned  meeting of— 

(a) a company; or 

(b) the holders of any class of shares in a company; or 

(c) the Board of Directors of a company, 

the resolution shall, for all purposes, be treated as having been passed on the date on which it was in fact  passed, and shall not be deemed to have been passed on any earlier date. 

  1. Resolutions and agreements to be filed.—(1) A copy of every resolution or any agreement, in  respect of matters specified in sub-section (3) together with the explanatory statement under section 102,  if any, annexed to the notice calling the meeting in which the resolution is proposed, shall be filed with  the Registrar within thirty days of the passing or making thereof in such manner and with such fees as  may be prescribed within the time specified under section 403: 

Provided that the copy of every resolution which has the effect of altering the articles and the copy of  every agreement referred to in sub-section (3) shall be embodied in or annexed to every copy of the  articles issued after passing of the resolution or making of the agreement. 

(2) If a company fails to file the resolution or the agreement under sub-section (1) before the expiry of  the period specified under section 403 with additional fees, the company shall be punishable with fine  which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees and every  officer of the company who is in default, including liquidator of the company, if any, shall be punishable 

with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees. (3) The provisions of this section shall apply to— 

(a) special resolutions; 

(b) resolutions which have been agreed to by all the members of a company, but which, if not so  agreed to, would not have been effective for their purpose unless they had been passed as special  resolutions; 

(c) any resolution of the Board of Directors of a company or agreement executed by a company,  relating to the appointment, re-appointment or renewal of the appointment, or variation of the terms  of appointment, of a managing director; 

(d) resolutions or agreements which have been agreed to by any class of members but which, if  not so agreed to, would not have been effective for their purpose unless they had been passed by a  specified majority or otherwise in some particular manner; and all resolutions or agreements which  effectively bind such class of members though not agreed to by all those members; 

(e) resolutions passed by a company according consent to the exercise by its Board of Directors  of any of the powers under clause (a) and clause (c) of sub-section (1) of section 180; 

(f) resolutions requiring a company to be wound up voluntarily passed in pursuance of section  304; 

(g) resolutions passed in pursuance of sub-section (3) of section 179: 1*** 

  

  1. The word ―and‖ omitted by Act 21 of 2015, s. 9 (w.e.f. 29-5-2015).

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1[Provided that no person shall be entitled under section 399 to inspect or obtain copies of  such resolutions; and] 

(h) any other resolution or agreement as may be prescribed and placed in the public domain. 

  1. Minutes of proceedings of general meeting, meeting of Board of Directors and other  meeting and resolutions passed by postal ballot.—(1) Every company shall cause minutes of the  proceedings of every general meeting of any class of shareholders or creditors, and every resolution  passed by postal ballot and every meeting of its Board of Directors or of every committee of the Board, to  be prepared and signed in such manner as may be prescribed and kept within thirty days of the conclusion  of every such meeting concerned, or passing of resolution by postal ballot in books kept for that purpose  with their pages consecutively numbered. 

(2) The minutes of each meeting shall contain a fair and correct summary of the proceedings thereat. 

(3) All appointments made at any of the meetings aforesaid shall be included in the minutes of the  meeting. 

(4) In the case of a meeting of the Board of Directors or of a committee of the Board, the minutes  shall also contain— 

(a) the names of the directors present at the meeting; and 

(b) in the case of each resolution passed at the meeting, the names of the directors, if any, dissenting from, or not concurring with the resolution. 

(5) There shall not be included in the minutes, any matter which, in the opinion of the Chairman of  the meeting,— 

(a) is or could reasonably be regarded as defamatory of any person; or 

(b) is irrelevant or immaterial to the proceedings; or 

(c) is detrimental to the interests of the company. 

(6) The Chairman shall exercise absolute discretion in regard to the inclusion or non-inclusion of any  matter in the minutes on the grounds specified in sub-section (5). 

(7) The minutes kept in accordance with the provisions of this section shall be evidence of the  proceedings recorded therein. 

(8) Where the minutes have been kept in accordance with sub-section (1) then, until the contrary is  proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to  have duly taken place, and the resolutions passed by postal ballot to have been duly passed and in  particular, all appointments of directors, key managerial personnel, auditors or company secretary in  practice, shall be deemed to be valid. 

(9) No document purporting to be a report of the proceedings of any general meeting of a company  shall be circulated or advertised at the expense of the company, unless it includes the matters required by  this section to be contained in the minutes of the proceedings of such meeting. 

(10) Every company shall observe secretarial standards with respect to general and Board meetings  specified by the Institute of Company Secretaries of India constituted under section 3 of the Company  Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government. 

(11) If any default is made in complying with the provisions of this section in respect of any meeting,  the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company  who is in default shall be liable to a penalty of five thousand rupees. 

(12) If a person is found guilty of tampering with the minutes of the proceedings of meeting, he shall  be punishable with imprisonment for a term which may extend to two years and with fine which shall not  be less than twenty-five thousand rupees but which may extend to one lakh rupees. 

  

  1. Ins. by Act 21 of 2015, s. 9 (w.e.f. 29-5-2015).

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  1. Inspection of minute-books of general meeting.—(1) The books containing the minutes of the  proceedings of any general meeting of a company or of a resolution passed by postal ballot, shall— 

(a) be kept at the registered office of the company; and 

(b) be open, during business hours, to the inspection by any member without charge, subject to  such reasonable restrictions as the company may, by its articles or in general meeting, impose, so,  however, that not less than two hours in each business day are allowed for inspection. 

(2) Any member shall be entitled to be furnished, within seven working days after he has made a  request in that behalf to the company, and on payment of such fees as may be prescribed, with a copy of  any minutes referred to in sub-section (1). 

(3) If any inspection under sub-section (1) is refused, or if any copy required under sub-section (2) is  not furnished within the time specified therein, the company shall be liable to a penalty of twenty-five  thousand rupees and every officer of the company who is in default shall be liable to a penalty of five  thousand rupees for each such refusal or default, as the case may be. 

(4) In the case of any such refusal or default, the Tribunal may, without prejudice to any action being  taken under sub-section (3), by order, direct an immediate inspection of the minute-books or direct that  the copy required shall forthwith be sent to the person requiring it. 

  1. Maintenance and inspection of documents in electronic form.—Without prejudice to any  other provisions of this Act, any document, record, register, minutes, etc.,— 

(a) required to be kept by a company; or 

(b) allowed to be inspected or copies to be given to any person by a company under this Act, may  be kept or inspected or copies given, as the case may be, in electronic form in such form and manner  as may be prescribed. 

  1. Report on annual general meeting.—(1) Every listed public company shall prepare in the  prescribed manner a report on each annual general meeting including the confirmation to the effect that  the meeting was convened, held and conducted as per the provisions of this Act and the rules made  thereunder. 

(2) The company shall file with the Registrar a copy of the report referred to in subsection (1) within  thirty days of the conclusion of the annual general meeting with such fees as may be prescribed, or with  such additional fees as may be prescribed, within the time as specified, under section 403. 

(3) If the company fails to file the report under sub-section (2) before the expiry of the period  specified under section 403 with additional fees, the company shall be punishable with fine which shall  not be less than one lakh rupees but which may extend to five lakh rupees and every officer of the  company who is in default shall be punishable with fine which shall not be less than twenty-five thousand  rupees but which may extend to one lakh rupees. 

  1. Applicability of this Chapter to One Person Company.—(1) The provisions of section 98 and  sections 100 to 111 (both inclusive) shall not apply to a One Person Company. 

(2) The ordinary businesses as mentioned under clause (a) of sub-section (2) of section 102 which a  company, other than a One Person Company, is required to transact at its annual general meeting, shall be  transacted, in case of One Person Company, as provided in sub-section (3). 

(3) For the purposes of section 114, any business which is required to be transacted at an annual  general meeting or other general meeting of a company by means of an ordinary or special resolution, it  shall be sufficient if, in case of One Person Company, the resolution is communicated by the member to  the company and entered in the minutes-book required to be maintained under section 118 and signed and  dated by the member and such date shall be deemed to be the date of the meeting for all the purposes  under this Act. 

(4) Notwithstanding anything in this Act, where there is only one director on the Board of Director of  a One Person Company, any business which is required to be transacted at the meeting of the Board of  Directors of a company, it shall be sufficient if, in case of such One Person Company, the resolution by 

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such director is entered in the minutes-book required to be maintained under section 118 and signed and  dated by such director and such date shall be deemed to be the date of the meeting of the Board of  Directors for all the purposes under this Act. 

CHAPTER VIII 

DECLARATION AND PAYMENT OF DIVIDEND 

  1. Declaration of dividend.—(1) No dividend shall be declared or paid by a company for any  financial year except— 

(a) out of the profits of the company for that year arrived at after providing for depreciation in  accordance with the provisions of sub-section (2), or out of the profits of the company for any  previous financial year or years arrived at after providing for depreciation in accordance with the  provisions of that sub-section and remaining undistributed, or out of both; or 

(b) out of money provided by the Central Government or a State Government for the payment of  dividend by the company in pursuance of a guarantee given by that Government: 

Provided that a company may, before the declaration of any dividend in any financial year, transfer  such percentage of its profits for that financial year as it may consider appropriate to the reserves of the  company: 

Provided further that where, owing to inadequacy or absence of profits in any financial year, any  company proposes to declare dividend out of the accumulated profits earned by it in previous years and  transferred by the company to the reserves, such declaration of dividend shall not be made except in  accordance with such rules as may be prescribed in this behalf: 

Provided also that no dividend shall be declared or paid by a company from its reserves other than  free reserves: 

1[Provided also that no company shall declare dividend unless carried over previous losses and  depreciation not provided in previous year or years are set off against profit of the company for the  current year.] 

(2) For the purposes of clause (a) of sub-section (1), depreciation shall be provided in accordance  with the provisions of Schedule II. 

(3) The Board of Directors of a company may declare interim dividend during any financial year out  of the surplus in the profit and loss account and out of profits of the financial year in which such interim  dividend is sought to be declared: 

Provided that in case the company has incurred loss during the current financial year up to the end of the quarter immediately preceding the date of declaration of interim dividend, such interim dividend shall  not be declared at a rate higher than the average dividends declared by the company during the  immediately preceding three financial years. 

(4) The amount of the dividend, including interim dividend, shall be deposited in a scheduled bank in  a separate account within five days from the date of declaration of such dividend. 

(5) No dividend shall be paid by a company in respect of any share therein except to the registered  shareholder of such share or to his order or to his banker and shall not be payable except in cash: 

Provided that nothing in this sub-section shall be deemed to prohibit the capitalization of profits or  reserves of a company for the purpose of issuing fully paid-up bonus shares or paying up any amount for  the time being unpaid on any shares held by the members of the company: 

Provided further that any dividend payable in cash may be paid by cheque or warrant or in any  electronic mode to the shareholder entitled to the payment of the dividend. 

(6) A company which fails to comply with the provisions of sections 73 and 74 shall not, so long as  such failure continues, declare any dividend on its equity shares. 

  

  1. Ins. by Act 21 of 2015, s. 10 (w.e.f. 29-5-2015).

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  1. Unpaid Dividend Account.— (1) Where a dividend has been declared by a company but has  not been paid or claimed within thirty days from the date of the declaration to any shareholder entitled to  the payment of the dividend, the company shall, within seven days from the date of expiry of the said  period of thirty days, transfer the total amount of dividend which remains unpaid or unclaimed to a  special account to be opened by the company in that behalf in any scheduled bank to be called the Unpaid  Dividend Account. 

(2) The company shall, within a period of ninety days of making any transfer of an amount under sub section (1) to the Unpaid Dividend Account, prepare a statement containing the names, their last known  addresses and the unpaid dividend to be paid to each person and place it on the website of the company, if  any, and also on any other website approved by the Central Government for this purpose, in such form,  manner and other particulars as may be prescribed. 

(3) If any default is made in transferring the total amount referred to in sub-section (1) or any part  thereof to the Unpaid Dividend Account of the company, it shall pay, from the date of such default,  interest on so much of the amount as has not been transferred to the said account, at the rate of twelve per  cent. per annum and the interest accruing on such amount shall ensure to the benefit of the members of  the company in proportion to the amount remaining unpaid to them. 

(4) Any person claiming to be entitled to any money transferred under sub-section (1) to the Unpaid Dividend Account of the company may apply to the company for payment of the money claimed. 

(5) Any money transferred to the Unpaid Dividend Account of a company in pursuance of this section  which remains unpaid or unclaimed for a period of seven years from the date of such transfer shall be  transferred by the company along with interest accrued, if any, thereon to the Fund established under sub section (1) of section 125 and the company shall send a statement in the prescribed form of the details of  such transfer to the authority which administers the said Fund and that authority shall issue a receipt to the  company as evidence of such transfer. 

(6) All shares in respect of which 1[dividend has not been paid or claimed for seven consecutive years  or more shall be] transferred by the company in the name of Investor Education and Protection Fund  along with a statement containing such details as may be prescribed: 

Provided that any claimant of shares transferred above shall be entitled to claim the transfer of shares  from Investor Education and Protection Fund in accordance with such procedure and on submission of  such documents as may be prescribed. 

2[Explanation.— For the removal of doubts, it is hereby clarified that in case any dividend is paid or  claimed for any year during the said period of seven consecutive years, the share shall not be transferred  to Investor Education and Protection Fund.] 

(7) If a company fails to comply with any of the requirements of this section, the company shall be  punishable with fine which shall not be less than five lakh rupees but which may extend to twenty-five  lakh rupees and every officer of the company who is in default shall be punishable with fine which shall  not be less than one lakh rupees but which may extend to five lakh rupees. 

  1. Investor Education and Protection Fund.— (1) The Central Government shall establish a  Fund to be called the Investor Education and Protection Fund (herein referred to as the Fund). 

(2) There shall be credited to the Fund— 

(a) the amount given by the Central Government by way of grants after due appropriation made  by Parliament by law in this behalf for being utilised for the purposes of the Fund; 

(b) donations given to the Fund by the Central Government, State Governments, companies or  any other institution for the purposes of the Fund; 

  

  1. Subs. by Act 21 of 2015, s. 11,. for ―unpaid or unclaimed dividend has been transferred under sub-section (5) shall also be‖  (w.e.f. 29-5-2015). 
  2. Ins. by s. 11, ibid. (w.e.f. 29-5-2015).

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(c) the amount in the Unpaid Dividend Account of companies transferred to the Fund under sub section (5) of section 124; 

(d) the amount in the general revenue account of the Central Government which had been  transferred to that account under sub-section (5) of section 205A of the Companies Act, 1956 (1 of  1956), as it stood immediately before the commencement of the Companies (Amendment) Act, 1999 (21 of 1999), and remaining unpaid or unclaimed on the commencement of this Act; 

(e) the amount lying in the Investor Education and Protection Fund under section 205C of the  Companies Act, 1956 (1 of 1956); 

(f) the interest or other income received out of investments made from the Fund; 

(g) the amount received under sub-section (4) of section 38; 

(h) the application money received by companies for allotment of any securities and due for  refund; 

(i) matured deposits with companies other than banking companies; 

(j) matured debentures with companies; 

(k) interest accrued on the amounts referred to in clauses (h) to (j); 

(l) sale proceeds of fractional shares arising out of issuance of bonus shares, merger and  amalgamation for seven or more years; 

(m) redemption amount of preference shares remaining unpaid or unclaimed for seven or more  years; and 

(n) such other amount as may be prescribed: 

Provided that no such amount referred to in clauses (h) to (j) shall form part of the Fund unless such  amount has remained unclaimed and unpaid for a period of seven years from the date it became due for  payment. 

(3) The Fund shall be utilised for— 

(a) the refund in respect of unclaimed dividends, matured deposits, matured debentures, the  application money due for refund and interest thereon; 

(b) promotion of investors‘ education, awareness and protection; 

(c) distribution of any disgorged amount among eligible and identifiable applicants for shares or  debentures, shareholders, debenture-holders or depositors who have suffered losses due to wrong  actions by any person, in accordance with the orders made by the Court which had ordered  disgorgement; 

(d) reimbursement of legal expenses incurred in pursuing class action suits under sections 37 and  245 by members, debenture-holders or depositors as may be sanctioned by the Tribunal; and 

(e) any other purpose incidental thereto, 

in accordance with such rules as may be prescribed: 

Provided that the person whose amounts referred to in clauses (a) to (d) of sub-section (2) of section  205C transferred to Investor Education and Protection Fund, after the expiry of the period of seven years  as per provisions of the Companies Act, 1956 (1 of 1956), shall be entitled to get refund out of the Fund  in respect of such claims in accordance with rules made under this section. 

Explanation.—The disgorged amount refers to the amount received through disgorgement or disposal  of securities. 

(4) Any person claiming to be entitled to the amount referred in sub-section (2) may apply to the  authority constituted under sub-section (5) for the payment of the money claimed.

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(5) The Central Government shall constitute, by notification, an authority for administration of the  Fund consisting of a chairperson and such other members, not exceeding seven and a chief executive  officer, as the Central Government may appoint. 

(6) The manner of administration of the Fund, appointment of chairperson, members and chief  executive officer, holding of meetings of the authority shall be in accordance with such rules as may be  prescribed. 

(7) The Central Government may provide to the authority such offices, officers, employees and other  resources in accordance with such rules as may be prescribed. 

(8) The authority shall administer the Fund and maintain separate accounts and other relevant records  in relation to the Fund in such form as may be prescribed after consultation with the Comptroller and  Auditor-General of India. 

(9) It shall be competent for the authority constituted under sub-section (5) to spend money out of the  Fund for carrying out the objects specified in sub-section (3). 

(10) The accounts of the Fund shall be audited by the Comptroller and Auditor-General of India at  such intervals as may be specified by him and such audited accounts together with the audit report  thereon shall be forwarded annually by the authority to the Central Government. 

(11) The authority shall prepare in such form and at such time for each financial year as may be  prescribed its annual report giving a full account of its activities during the financial year and forward a  copy thereof to the Central Government and the Central Government shall cause the annual report and the  audit report given by the Comptroller and Auditor-General of India to be laid before each House of  Parliament. 

  1. Right to dividend, rights shares and bonus shares to be held in abeyance pending  registration of transfer of shares.—Where any instrument of transfer of shares has been delivered to  any company for registration and the transfer of such shares has not been registered by the company, it shall, notwithstanding anything contained in any other provision of this Act,— 

(a) transfer the dividend in relation to such shares to the Unpaid Dividend Account referred to in  section 124 unless the company is authorised by the registered holder of such shares in writing to pay  such dividend to the transferee specified in such instrument of transfer; and 

(b) keep in abeyance in relation to such shares, any offer of rights shares under clause (a) of sub section (1) of section 62 and any issue of fully paid-up bonus shares in pursuance of first proviso to  sub-section (5) of section 123. 

  1. Punishment for failure to distribute dividends.—Where a dividend has been declared by a  company but 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 dividend, every director of  the company shall, if he is knowingly a party to the default, be punishable with imprisonment which may 

extend to two years and with fine which shall not be less than one thousand rupees for every day during  which such default continues and the company shall be liable to pay simple interest at the rate of eighteen  per cent. per annum during the period for which such default continues: 

Provided that no offence under this section shall be deemed to have been committed:— (a) where the dividend could not be paid by reason of the operation of any law; 

(b) where a shareholder has given directions to the company regarding the payment of the  dividend and those directions cannot be complied with and the same has been communicated to him; 

(c) where there is a dispute regarding the right to receive the dividend; 

(d) where the dividend has been lawfully adjusted by the company against any sum due to it from  the shareholder; or 

(e) where, for any other reason, the failure to pay the dividend or to post the warrant within the  period under this section was not due to any default on the part of the company.

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CHAPTER IX 

ACCOUNTS OF COMPANIES 

  1. Books of account, etc., to be kept by company.—(1) Every company shall prepare and keep at  its registered office books of account and other relevant books and papers and financial statement for  every financial year which give a true and fair view of the state of the affairs of the company, including  that of its branch office or offices, if any, and explain the transactions effected both at the registered office  and its branches and such books shall be kept on accrual basis and according to the double entry system  of accounting: 

Provided that all or any of the books of account aforesaid and other relevant papers may be kept at  such other place in India as the Board of Directors may decide and where such a decision is taken, the  company shall, within seven days thereof, file with the Registrar a notice in writing giving the full address  of that other place: 

Provided further that the company may keep such books of account or other relevant papers in  electronic mode in such manner as may be prescribed. 

(2) Where a company has a branch office in India or outside India, it shall be deemed to have  complied with the provisions of sub-section (1), if proper books of account relating to the transactions  effected at the branch office are kept at that office and proper summarized returns periodically are sent by  the branch office to the company at its registered office or the other place referred to in sub-section (1). 

(3) The books of account and other books and papers maintained by the company within India shall  be open for inspection at the registered office of the company or at such other place in India by any  director during business hours, and in the case of financial information, if any, maintained outside the  country, copies of such financial information shall be maintained and produced for inspection by any  director subject to such conditions as may be prescribed: 

Provided that the inspection in respect of any subsidiary of the company shall be done only by the  person authorised in this behalf by a resolution of the Board of Directors. 

(4) Where an inspection is made under sub-section (3), the officers and other employees of the  company shall give to the person making such inspection all assistance in connection with the inspection  which the company may reasonably be expected to give. 

(5) The books of account of every company relating to a period of not less than eight financial years  immediately preceding a financial year, or where the company had been in existence for a period less than  eight years, in respect of all the preceding years together with the vouchers relevant to any entry in such  books of account shall be kept in good order: 

Provided that where an investigation has been ordered in respect of the company under Chapter XIV,  the Central Government may direct that the books of account may be kept for such longer period as it  may deem fit. 

(6) If the managing director, the whole-time director in charge of finance, the Chief Financial Officer  or any other person of a company charged by the Board with the duty of complying with the provisions of  this section, contravenes such provisions, such managing director, whole-time director in charge of  finance, Chief Financial officer or such other person of the company shall be punishable with  imprisonment for a term which may extend to one year or with fine which shall not be less than fifty  thousand rupees but which may extend to five lakh rupees or with both. 

  1. Financial statement.— (1) The financial statements shall give a true and fair view of the state  of affairs of the company or companies, comply with the accounting standards notified under section 133  and shall be in the form or forms as may be provided for different class or classes of companies in  Schedule III: 

Provided that the items contained in such financial statements shall be in accordance with the  accounting standards:

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