REGISTERED NO.D.221
The Gazette of India
EXTRAORDINARY PART II—Section 1
PUBLISHED BY AUTHORITY
No. 4) NEW DELHI, THURSDAY, JANUARY 19,
MINISTRY OF LAW New Delhi, the 19th January, 1956
The following Act of Parliament received the assent of the President on the 18th January, 1956 and is hereby published for general information:—
THE COMPANIES ACT, 1956 No. 1 OF 1956
[18th January,1956] An act to consolidate and amend the law relating to companies
and certain other associations. BE it enacted by Parliament in the Sixth Year of the Republic
of India as follows : — PART I
PRELIMINARY 1. Short title, commencement and extent.—(1) This Act may be
called the Companies Act, 1956. (2) It shall come into force on such date as the Central Govern-
ment may, by notification in the Official Gazette, appoint. (3) It extends to the whole of India except the State of Jammu
and Kashmir. 2. Definitions.—In this Act, unless the context otherwise re-
quires,— (1) "alter" and "alteration" shall include the making of
additions and omissions; (2) "articles" means the articles of association of a company
as originally framed or as altered from time to time in pursu- ance of any previous companies law or of this Act, including, so far as they apply to the company, the regulations contained, as the case may be, in Table B in the Schedule annexed to Act No. XIX of 1857 or in Table A in the First Schedule annexed to the Indian Companies Act,, 1882 (VI of 1882), or in Table A in the First Schedule annexed to the Indian Companies Act, 1913 (VII of 1913), or in Table A in Schedule I annexed to this Act:
(19)
20 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(3) "associate", in relation to a managing agent, means any of the following, and no others: —
(a) where the manag- ing agent is an indivi- dual :
any partner or relative of suchi individual; any firm in which such individual, partner or relative is a partner; any private company of which such individual or any such partner, relative or firm is the- managing agent or secretaries and treasurers or a director or the manager; and any body corporate- at any general meeting of which not less than one-third of the total voting power in regard to any matter may be exercised or con- trolled by any one or more of the following, namely, such individual, partner or partners, relative or re- latives, firm or firms; and private- company or companies;
(b) where the manag- ing agent Is a firm:
any member of such firm; any partner or relative of any such member; and any other firm in which any such member, partner or relative is a partner; any private company of which the firm first- mentioned, or any such member, partner, relative or other firm is the managing agent, or secretaries
and treasurers, or a director, or the manager; and any body corporate at any general meeting of which not less than one-third of the total voting power in regard to any matter may be exercised or con- trolled by any one or more of the following, namely, the firm first- mentioned, any such member or members, partner or partners, relative or relatives, other firm or firms and private company or com- panies;
(c) where the manag- ing agent is a body cor- porate:
({) any subsidiary or holding com- pany of such Body corporate; the- managing agent or secretaries
and treasurers, or a director, the manager or an officer of the1
Sue. 1] THE GAZETTE OF INDIA EXTRAORDINARY 21
body corporate or of any subsidiary or holding company thereof; any partner or relative of any such director or manager; any firm in which such director, manager, partner or relative, is a partner; and
(ii) any other body corporate at any general meeting of which not less than one-third of the total vot- ing power in regard to any matter may be exercised or controlled by any one or more of the following, namely, the body corporate and the companies and other persons speci- fied in paragraph (i) above; and
1 (d) where the manag- ing agent is a private Company or a body cor- porate having not more than fifty members:
in addition to the persons men- tioned in sub-clause (c), any mem- ber of the private company or body
corporate; Explanation.—If one person is an associate in relation to
another within the meaning of this clause, the latter shall also be deemed to be an associate in relation to Ihe former within its meaning;
(4) "associate", in relation to any secretaries and treasurers, means any of the following, and no others: —
(a) where the secre- taries and treasurers are a firm:
any member of such firm; any partner or relative of any such member; and any other firm in which any such member, partner or relative is a part- ner; any private company of which the firm first-mentioned, or any such member, partner, relative or other firm is the managing agent, or secre- taries and treasurers, or a director, or the manager; and any body corporate at any general meeting of which not less than one-third of the total voting power in regard to any matter may be exercised or controlled by any one or more of the following, namely, the firm first-mentioned, any such member or members, partner or partners, rela- tive or relatives, other firm or firms, and private company or companies;
32 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(b) where the secre- taries and treasurers are a body corporate:
(i) any subsidiary or holding com- pany of such body corporate; the managing agent or secretaries and treasurers, or a director, the manager or an officer of the Wbdy corporate or of any subsidiary or holding company thereof; any partner or relative of any such director or manager; any firm in which such director or manager, part- ner or relative, is a partner; and
(ii) any other body corporate at any general meeting of which not less than one-third of the total voting power in regard to any matter may be exercis- ed or controlled by any one or more of the following, namely, the body corporate and the companies and other persons specified in paragraph (i) above: and
(c) where the secre- taries and treasurers are a private company or a body corporate having not more than fifty members:
in addition to the persons mentioned in sub-clause (b), any member of the private company or body corporate;
Explanation.—If one person is an associate in relation to another within the meaning of this clause, the latter shall also be deemed to be an associate in relation to the former within its meaning;
(5) "banking company" has the same meaning as in the Banking Companies Act, 1949 (X of 1949);
(6) "Board of directors" or "Board", in relation to a com- pany, means the Board of directors of the company;
(7) "body corporate" or "corporation" includes a company incorporated outside India but does not include a corporation sole;
(8) "book and paper" and "book or paper" include accounts, deeds, writings, and documents;
(9) "branch office" means any establishment described as a branch by the company, not being an establishment specified in
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 23
an order passed by the Central Government in pursuance of section 8;
(20) "company" means a company as denned in section 3;
(11) "the Court" means, with respect to any matter relating to a company, the Court having jurisdiction under this Act with respect to that matter in relation to that company, as provided in section 10;
(12) "debenture" includes debenture stock, bonds and any other securities of a company, whether constituting a charge on the assets of the company or not;
(13) "director" includes any person occupying the position of director, by whatever name called;
(14) "District Court" means the principal Civil Court of original jurisdiction in a district, but does not include a High Court in the exercise of its ordinary original civil jurisdiction;
(15) "document" includes summons, notice, requisition, order, other legal piocess, and registers, whether issued, sent or kept in pursuance of this or any other Act or otherwise;
(16) "existing company" means an existing company as de- fined in section 3;
(17) "financial year" means, la luidtion to any boJy corpo- rate, the period in respect of which any profit and loss account of the body corporate laid before it in annual general meeting is made up, whether that period is a year or not:
Provided that, in relation to an insurance company, "finan- cial year" shall mean ihe calendar year referred to in sub-seo- tion (1) of section 11 of the Insurance Act, 1938 (IV of 1938);
(18) "Government company" means a Government com- pany within the meaning of section 617;
(19) "holding company" means a holding company within the meaning of section 4;
(20) "India" means the territory of India excluding the State of Jammu and Kashmir;
(21) "insurance company" means a company which carries on the business of insurance either solely or in conjunction with any other business or businesses;
(22) "issued generally" means, in relation to a prospectus, issued to persons irrespective of their being existing members or debenture holders of the body corporate to which the pros- pectus relates;
(23) "limited company" means a company limited by shares or by guarantee;
24 THE.GAZETTE OF INDIA EXTRAORDINARY [PAST II
(24) "manager" means an individual (not being the manag- ing agent) who, subject to the superintendence, control and di- rection of the Board of directors, has the management of the whole, or substantially the whole, of the affairs of a company, and includes a director or any other person occupying the posi- tion of a manager, by whatever name called, and whether under a contract of service or not;
(25) "managing agent" means any individual, firm or body corporate entitled, subject to the provisions of this Act, to the management of the whole, or substantially the whole, of the affairs of a company by virtue of an agreement with the com- pany, or by virtue of its memorandum or articles of association, and includes any individual, firm or body corporate occupying the position of a managing agent, by whatever name called;
(26) "managing director" means a director who, by virtue of an agreement with the company or of a resolution passed by the company in general meeting or by its Board of directors or, by virtue of its memorandum or articles of asso- ciation, is entrusted with any powers of management which would not otherwise be exercisable by him, and includes a director occupying the position of a managing director, by whatever name called;
(27) "member", in relation to a company, does not include a bearer of a share-warrant of the company issued in pursuance of section 114;
(28) "memorandum" means the memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous companies law or of this Act;
(29) "modify" and "modification" shall include the making of additions and omissions;
(30) "officer" includes any director, managing agent, secre- taries and treasurers, manager or secretary; where the manag- ing agent or the secretaries and treasurers are a firm, also in- cludes any partner in the firm; and where the managing agent or the secretaries and treasurers are a body corporate, also includes any director, managing agent, secretaries and treasurers or manager of the body corporate; but, save in sections 477, 478, 539, 543, 545, 621, 625 and 633 does not include an auditor;
(31) "officer who is in default", in relation to any provision referred to in section 5, has the meaning specified in that sec- tion;
(32) "paid-up capital" or "capital paid up" includes capital credited as paid up;
(33) "prescribed" means, as respects the provisions of this Act relating to the winding up of companies except sub-section (5) of section 503, sub-section (1) of section 549 and sub-section (3) of section 550, prescribed by rules made by the Supreme Court in consultation with High Courts, and as respects the other provisions of this Act including sub-section (5) of section 503, sub-section (I) of section 549 and sub-section (3) at section 559, prescribed by rules made by the Central Government;
SEC 1J THE GAZETTE OF INDIA EXTRAORDINARY 25
(34) "previous companies law" means any of the laws spe- cified in clause (ii) of sub-section (1) of section 3;
(35) "private company" means a private company as defin- ed in section 3;
(36) "prospectus" means any prospectus, notice, circular, advertisement or other document inviting offers from the pub- lic for the subscription or purchase of any shares in, or deben- tures of, a body corporate;
(37) "public company" means a public company as defined in section 3;
(38) "public holiday" means a public holiday within the meaning of the Negotiable Instruments Act, 1881 (XXVI of 1881):
Provided that no day declared by the Central Government to be a public holiday shall be deemed to be such a holiday, in relation to any meeting, unless the declaration was notified be- fore the issue of the notice convening such meeting;
(39) "recognised stock exchange" means, in relation to any provision of this Act in which it occurs, a stock exchange, whether in or outside India, which is notified by the Central Government in the Official Gazette as a recognised stock ex- change for the purposes of that provision;
(40) "Registrar" means a Registrar, or an Additional, a Joint, a Deputy or an Assistant Registrar, having the duty of registering companies under this Act;
(41) "relative" means, with reference to any person, any one who is related to such person in any of the ways specified in section 6, and no others;
(42) "Schedule" means a Schedule annexed to this Act; (43) "Scheduled Bank" has the same meaning as in the Re-
serve Bank of India Act, 1934 (II of 1934);
(44) "secretaries and treasurers" means any firm or body corporate (not being the managing agent) which, subject to the superintendence, control and direction of the Board of direc- tors, has the management of the whole, or substantially the whole, of the affairs of a company; and includes any firm or body corporate occupying the position of secretaries and treas- urers, by whatever name called, and whether under a contract of service or not;
(45) "secretary" meant the person, if any, who is appoint- •ei to perform the duties which may be performed by a secretary under this Act;
(46) "share" means share in the share capital of a company, and includes stock except where a distinction between stock and shares is expressed or implied;
(47) "subsidiary company" or "subsidiary" means a subsi- diary company within the meaning of section 4;
(48) "total voting power", in regard to any matter relating to a body corporate, means the total number of votes which
26 THE GAZETTE OF INDIA EXTRAORDINARY [PART If
may be cast in regard to that matter on a poll at a meeting of such body, if all the members thereof and all other persons, if any, having a right to vote on that matter are present at the meeting, and cast their votes;
(49) "trading corporation" means a trading corporation within the meaning of entries 43 and 44 in List I in the Seventh. Schedule to the Constitution;
(50) "variation" shall include abrogation; and "vary" shall include abrogate.
3. Definitions of "company", "existing company", "private com- pany" and "public company".—(1) In this Act, unless the context otherwise requires, the expressions "company", "existing company'^ "private company" and "public company" shall, subject to the provi- sions of sub-section (2), have the meanings specified below : —
(i) "company" means a company formed and registered under this Act or an existing company as denned in clause (ii);
(ii) "existing company" means a company formed and regis- tered under any of the previous companies laws specified below:—
(a) Any Act or Acts relating to companies in force be* fore the Indian Companies Act, 1866 (X of 1866) and repeal- ed by that Act;
(b) The Indian Companies Act, 1866 (X of 1866) ; (c) The Indian Companies Act, 1882 (VI of 1882) ; (d) The Indian Companies Act, 1913 (VII of 1913); (e) The Registration of Transferred Companies Ordi-
nance, 1942 (LIV of 1942); and (f) Any law corresponding to any of the Acts or the
Ordinance, aforesaid and in force in the merged territories or in a Part B State, or any part thereof, before the exten- sion thereto of the Indian Companies Act, 1913 (VII of 1913); (in) "private company" means a company which, by its
articles,—' (a) restricts the right to transfer its shares, if any; (b) limits the number of its members to fifty not includ-
ing— (i) persons who are in the employment of the com-
pany, and (ii) persons who, having been formerly in the emp-
loyment of the company, were members of the com- pany while in that employment and have continued to be members after the employment ceased; and (c) prohibits any invitation to the public to subscribe
for any shares in, or debentures of, the company : Provided that where two or more persons hold one or more
shares in a company jointly, they shall, for the purposes of this definition, be treated as a single member;
(iv) "public company" means a company which is not »- private company.
Sue. I] THE GAZETTE OF INDIA EXTRAORDINARY 27
(2) Unless the context otherwise requires, the following companies shall) not be included within the scope of any of the expressions defin- ed ir. clauses (i) to (iv) of sub-section (1), and such companies shall be deemed, for the purposes of this Act, to have been formed and registered outside India: —
(a) a company the registered office whereof is in Burma, Aden or Pakistan and which immediately before the separation of that country from India was a company as denned in clause (i) of sub-section (1);
(b) a company the registered office whereof is in the State of Jammu and Kashmir and which immediately before the 26th day of January, 1950, was a company as defined in clause (1) aforesaid.
4. Meaning of "holding company" and "subsidiary".—(1) For the purposes of this Act, a company shall, subject to the provisions of sub-section (3), be deemed to be a subsidiary of another if, but only
(a) that other controls the composition of its Board of direc- tors; or
(b) that other holds more than half in nominal value of its equity share capital; or
(c) the first-mentioned company is a subsidiary of any company which is that other's subsidiary. , Illustration Company B is a subsidiary of Company A, and Company C is a
subsidiary of Company B. Company C is a subsidiary of Company A, by virtue of clause (c) above. If Company D is a subsidiary of Company C, Company D will be a subsidiary of Company B and consequently also of Company A, by virtue of clause (c) above; and so on.
2) For the purposes of sub-section (1), the composition of a com- pany's Board of directors shall be deemed to be controlled by another company if, but only if, that other company by the exercise of some power exercisable by it at its discretion without the consent or con- currence of any other person, can appoint or remove the holders of all or a majority of the directorships; but for the purposes of this provision that other company shall be deemed to have power to ap- point to a directorship with respect to which any of the following conditions is satisfied, that is to say™
(a) that a person cannot be appointed thereto without the exercise in his favour by that other company of such a power as aforesaid;
(b) that a person's appointment thereto follows necessarily from his appointment as director, managing agent, secretaries and treasurers, or manager of, or to any other office or employment in, that other company; or
(c) that the directorship is held by that other company itself or by a subsidiary of it.
[(3) In determining whether one company is a subsidiary of another—
2$ THE GAZETTE OF INDIA EXTRAORDINARY [PAHT II
(a) any shares held or power exercisable by that other ccm* pany in a fiduciary capacity shall be treated as not held or ex- ercisable by it;
(b) subject to the provisions of clauses (c) and (d), any shares held or power exercisable—
(i) by any person as a nominee for that other company (except where that other is concerned only in a fiduciary capacity); or
(ii) by, or by a nominee for, a subsidiary of that other company, not being a subsidiary which is concerned only m a fiduciary capacity;
shall be treated as held or exercisable by that other company; (c) any shares held or power exercisable by any person by
virtue of the provisions of any debentures of the first-mention- ed company or of a trust deed for securing any issue of such debentures shall be disregarded;
(d) any shares held or power exercisable by, or by a no- minee lor, that other or its subsidiary [not being held or exer- cisable as mentioned in clause (c)] shall be treated as not held or exercisable by that other, if the ordinary business of that other or its subsidiary, as the case may be, includes the lend- ing of money and the shares are held or the power is exercisable as aforesaid by way of security only for the purposes of a transaction entered into in the ordinary course of that business.
(4) For the purposes of this Act, a company shall be deem- ed to be the holding company of another if, but only if, that other is its subsidiary.
(5) In this section, the expression "company" includes any body corporate, and the expression "equity share capital" has the same meaning as in sub-section (2) of section 85.
(6) In the case of a body corporate which is incorporated in a country outside India, a subsidiary or holding company of the body corporate under the law of such country shall be deemed to be a subsidiary or holding company of the body corporate within the meaning and for the purposes of this Act also, whether the requirements of this section are fulfilled or not-
5. Meaning: of "officer who is in default".—For the purpose of any provision in this Act which enacts that an officer of the cdmpany who is in default shall be liable to any punishment or penalty, whether by way of imprisonment, fine or otherwise, the expression "officer who is m default" means any officer of the company who is knowingly guilty of the default, non-compliance, failure, refusal or contravention mentioned in that provision, or who knowingly and wilfully authorises or permits such default, non-compliance, failure, refusal or contravention.
6. Meaning of 'relative'.—Two persons shall be deemed to ba "relatives' if, and only if, they are husband and wife, or the one or
SBC.I 1] THE GAZETTE OF INDIA EXTRAORDINARY 29
the spouse of the one is related to the other or the spouse of the other, whether by legitimate or illegitimate descent or by adoption and whether by full blood or by half blood, in any of the following waVs, namely: —
(i) as parent and child; (ii) as grand-parent and grand-child; (Hi) as brothers or sisters, or as brother and sister; (i-u) as uncle or aunt, and nephew or niece; (v) as first cousins, that is to say, as persons having a com-
mon grand-parent, provided the cousins are members of a Hindu Joint family whether governed by the Mitakshara, the Dayabagha, the Marumakhathayam, the Aliyasanthana or any other system of law.
7. Interpretation of "person in accordance with whose directions or instructions directors are accustomed to act".—Except where this Act expressly provides otherwise, a person shall not be deemed to be, within the meaning of any provision in this Act, a person in ac- cordance with whose directions or instructions the Board of direc- tors of a company is accustomed to act, by reason only that the Board acts on advice given by him in a professional capacity.
8. Power of Central Government to declare an establishment not to be a branch office.—The Central Government may by order, declare that in the case of any company, not being a banking or an insurance company, any establishment carrying on either the same or substantially the same activity as that carried on by the head office of the company, or any production or manufacture, shall not bo treated as a branch office of the company for all or any of the purposes of this Act.
9. Act to override memorandum, articles, etc.—Save as otherwise expressly provided in the Act—
(a) the provisions of this Act shall have effect notwithstand- ing 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 aforesaid shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be.
10. Jurisdiction of Courts.—(1) The Court having jurisdiction under this Act shall be—
(a) the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate, except to the extent to which jurisdiction has been con- ferred on any District Court or District Courts subordinate to that High Court in pursuance of sub-secti«n (2); antl
3o THE GAZETTE OF INDIA EXTRAORDINABY [PART II
(b) where jurisdiction has been so conferred, the District Court in regard to matters falling within the scope of the juris- diction conferred, in respect of companies having their registered offices in the district.
(2) The Central Government may, by notification in the Official Gazette and subject to such restrictions, limitations and conditions as it thinks fit, empower any District Court to exercise all or anyof the jurisdiction conferred by this Act upon the Court, not being the jurisdiction conferred—
(a) in respect- of companies generally, by sections 237, 391, 394, 395 and 397 to 407,both inclusive;
(b) in respect of companies with a paid-up share capital of not less than one lakh of rupees, by Part VII (sections 425to 560) and the other provisions of this Act relating to the winding up of companies.
(3) For the purposes of jurisdiction to wind up companies, the expression "registered office" means the place which has longest been the registered office of the company during the six months immedia- tely preceding the presentation of the petition for winding up.
PART II INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO
Certain companies, associations and partnerships to be registered as companies under Act
11. Prohibition of associations and partnerships exceeding certain number.—{1) No company, association or partnership consisting of more than ten persons shall be formed for the purpose of carrying on the business of banking, unless it is registered as a company under this Act, or is formed in pursuance of some other Indian law.
(2) No company, association or partnership consisting of more than twenty persons shall be formed for the purpose of carrying onany other business that has for its object the acquisition of gain by the company, association or partnership, or by the individual members thereof, unless it is registered as a company under this Act, or is formed in pursuance of some other Indian law.
(3) This section shall not apply to a joint family as such carrying on a business; and where a business is carried on by two or more Joint families, in computing the number of persons for the purposes of sub-sections (1) and (2),minor members of such families shall be excluded.
(4) Every member of a company, association or partnership carry- ing on business in contravention of this section shall be personally liable for all liabilities incurred in such business.
(5) Every person who is a member of a company, association ol partnership formed in contravention of this section shall be punish- able with fine which may extend to one thousand rupees.
Memorandum of Association 12. Mode of forming: incorporated company—(1) Any
seven or more persons, or where the company to be formed will be a private company, any two or more persons, asso- ciated for any lawful purpose may, by subscribing their names to
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 31
a memorandum of association and otherwise complying with the re- quirerr ents of this Act in respect of registration, form an incorporat- ed company, with or without limited liability.
(2) Such a company may be either— (a) a company having the liability of its members limited
by the memorandum to the amount, if any, unpaid on the shares respectively held by them (in this Act termed "a company limited by shares");
(b) a company having the liability of its members limited by the memorandum to such amount as the members may respec- tively undertake by the memorandum to contribute to the assets of the company in the event, of its being wound up (in this Act termed "a company limited by guarantee"); or
(c) a company not having any limit on the liability of its members (in this Act termed "an unlimited company").
13. Requirements with respect to memorandum.—(1) The me- morandum of every company shall state—
(a) the name of the company with "Limited" as the last word of the name in the case of a public limited company, and with "Private Limited" as the last words of the name in the case of a private limited company;
(b) the State in which the registered office of the company isi to be situate; and
(c) the objects of the company, and, except in the case of trading corporations, the State or States to whose territories the objects extend,
(2) The memorandum of a company limited by shares or by guarantee shall also state that the liability of its members is limit- ed. ,
(3) The memorandum of a company limited by guarantee shall also state that each member undertakes to contribute to the assets of the eompany in the event of its being wound up while he is a mem- ber or within one year after he ceases to be a member, for payment of the debts and liabilities of the company, or of such debts and liabilities of the company as may have been contracted before he ceases to be a member, as the case may be, and of the costs, charges and expenses of winding up, and for adjustment of the rights of the contributories among themselves, such amount as may be required, not Exceeding a specified amount.
(4) In the case of a company having a share capital— (a) unless the company is an unlimited company, the me-
morandum shall also state the amount of share capital with which the company is to be registered and the division thereof into shares of a fixed amount;
(b) no subscriber of the memorandum shall take less than one share; and
(c) each subscriber of the memorandum shall write opposite to his name the number of shares he takes.
32 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
14. Form of memorandum.—The memorandum of association of a company shall be in such one of the Forms in Tables B, C, D and E in Schedule I as may be applicable to the case of the company, or in a Form as near thereto as circumstances admit.
15. Printing and signature of memorandum.—The memorandum shall—
(a) be printed, (b) be divided into paragraphs numbered consecutively, and (c) be signed by each subscriber (who shall add his address,
description and occupation, if any,) in the presence of at least one witness who shall attest the signature and shall likewise add his address, description and occupation, if any.
16. Alteration of memorandum.—(1) A company shall not alter the conditions contained in its memorandum except in the cases, in the mode, and to the extent, for which express provision is made in this Act.
(2) Only those provisions which are required by section 13 or by any other specific provision contained in this Act, to be stated in the memorandum of the company concerned shall be deemed to be conditions contained in its memorandum.
(3) Other provisions contained in thp memorandum, including those relating to the appointment of a managing director, managing agent, secretaries and treasurers or manager, may be altered in the same manner as the articles of the company, but if there is any express provision in this Act permitting of the alteration of such provisions in any other manner, they may also be altered in such other manner.
(4) All references to the articles of a company in this Act shall be construed as including references to the other provisions aforesaid contained in its memorandum.
17. Special resolution and confirmation by Court required for alteration of memorandum.—(1) A company may, by special reso- lution, alter the provisions of its memorandum so as to change the place of its registered office from one State to another, or with res- pect to the objects of the company so far as may be required to enable it—
(a) to carry on its business more economically or more effi- ciently;
(b) to attain its main purpose by new or improved means;
(c) to enlarge or change the local area of its operations;
(d) to carry on some business which under existing cir- cumstances may conveniently or advantageously be combined with the business of the company;
SHC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 33
(e) to restrict or abandon any of the objects specified in the memorandum;
(f) to sell or dispose of the whole, or any part, of the under- taking, or of any of the undertakings, of the company; or
(gf) to amalgamate with any other company or body of per- sons.
(2) The alteration shall not take effect until, and except in so far as, it is confirmed by the Court on petition.
(3) Before confirming the alteration, the Court must be satis- Bed-
fa) that sufficient notice has been given to every holder of the debentures of the company, and to every other person or class of persons whose interests will, in the opinion of the Court, be affected by the alteration ; and
(b) that, with respect to every creditor who, in the opinion of the Court, is entitled to object to the alteration, and who signi- fies his objection in the manner directed by the Court, either his consent to the alteration has been obtained or his debt or claim has been discharged or has determined, or has been secur- ed to the satisfaction of the Court:
Provided that the Court may, in the case of any person or class of persons, for special reasons, dispense with the notice required by clause (a).
(4) Notice of the alteration shall also be given to the Registrar and he shall be given a reasonable opportunity to appear before the Court and state his objections and suggestions, if any, with respect to the confirmation of the alteration.
(5) The Court may make an order confirming the alteration either wholly or in part, and on such terms and conditions, if any, as it thinks fit, and may make such order as to costs as it thinks proper.
(6) The Court shall, in exercising its powers under this section, have regard to the rights and interests of the members of the com- pany and of every class of them, as well as to the rights and inter- ests of the creditors of the company and of every class of them.
(7) The Court may, if it thinks fit, adjourn the proceedings in order that an arrangement may be made to the satisfaction of the Court for the purchase of the interests of dissentient members; and may give such directions and make such orders as it thinks fit foi facilitating, or carrying into effect, any such arrangement:
Provided that no part of the capital of the company may be ex- pended in any such purchase.
18. Alteration to be registered within three months.-r-(J) A certifi- ed copy of the order confirming the alteration, together with a print- ed copy of the memorandum as altered, shall, within three months
34 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
from the date of the order, be filed by the company with the Regis- trar, and he shall register the same, and shall certify the registration under his hand.
(2) The certificate shall be conclusive evidence that all the re- quirements of this Act with respect to the alteration and the con- firmation thereof have been complied with, and thenceforth the memorandum as so altered shall be the memorandum of the com- pany.
(3) Where the alteration involves a transfer of the registered office from one State to another, a certified copy of the order confirm- ing the alteration shall be filed by the company with the Registrar of each of the States, and the Registrar of each such State shall register the same, and shall certify under his hand the registration thereof; and the Registrar of the State from which such office is transferred shall send to the Registrar of the other State all documents relating to the company registered, recorded or filed in his office.
(4) The Court may, at any time, by order, extend the time for the filing of documents under this section by such period as it thinks proper.
19. Effect of failure to register.—(1) No such alteration as is re- ferred to in section 17 shall have any effect until it has been duly registered in accordance with the provisions of section 18.
(2) If the registration is not effected within three months next after the date of the order of the Court confirming the alteration, or within such further time as may be allowed by the Court under sub- section (4) of section 18, such alteration and order and all proceed- ings connected therewith shall, at the expiry of such period of three months or of such further time, as the case may be, become void;
Provided that the Court may, on sufficient cause shown, revive the order on application made within a further period of one month.
Provisions with respect to names of companies
20. Companies not to be registered with undesirable names.— (2) No company shall be registered by a name which, in the opinion of the Central Government, is undesirable.
(2) Without prejudice to the generality of the foregoing power, a name which is identical with, or too nearly resembles, the name by which a company in existence has been previously regis- tered, may be deemed to be undesirable by the Central Government within the meaning of sub-section (1).
21. Change of name by company.—A company may, by special resolution and with the approval of the Central Government signified in writing, change its name.
22. Rectification of name of company,—{1) If, through inadver- tence or otherwise, a company on its first registration or on its registration by a new name, is registered by a name which, in the
SEC. lh THE GAZETTE OF INDIA EXTRAORDINARY 35
opinion of the Central Government, is identical with, or too nearly resembles, the name by which a company in existence has been pre- viously registered, whether under this Act or any previous companies law, the first-mentioned company—
, (a) may, by ordinary resolution and with the previous ap- proval of the Central Government signified in writing, change its name or new name; and
(b) shall, if the Central Government so directs within twelve months of its first registration or registration by its new name, as the case may be, or within twelve months of the commence- ment of this Act, whichever is later, by ordinary resolution and with the previous approval of the Central Government signified in writing, change its name or new name within a period of three months from the date of the direction or such longer period as the Central Government may think fit to allow.
(2) If a company makes default in complying with any direction given under clause (b) of sub-section (1), the company, and every officer who is in default, shall be punishable with fine which may extend to one hundred rupees for every day during which the default continues.
23. Registration of change of name and effect thereof.—(1) Where a company changes its name in pursuance of section 21 or 22, the Registrar shall enter the new name on the register in the place of the former name, and shall issue a fresh certificate of incorporation with the necessary alterations embodied therein; and the change of name shall be complete and effective only on the issue of such a certificate.
(2) The Registrar shall also make the necessary alteration in the memorandum of association of the company.
(3) The change of name shall not affect any rights or obligations of the company, or render defective any legal proceedings by or against it; and any legal proceedings which might have been con- tinued or commenced by or against the company by its former name may be continued by or against the company by its new name.
24. Change of name of existing private limited companies.— (1) In the case of a company which was a private limited company im- mediately before the commencement of this Act, the Registrar shall enter the word 'Private' before the word 'Limited' in the name of the company upon the register and shall also make the necessary alterations in the certificate of incorporation issued to the company and in its memorandum of association.
(2) Sub-section (3) of section 23 shall apply to a change of name under sub-section (1), as it applies to a change of name under section 21.
25. Power to dispense with "Limited" in name of charitable or other company.—(I) Where it is proved to the satisfaction of the Central Government that an association—
36 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(a) is about to be formed as a limited company for promot- ing commerce, art, science, religion, charity or any other useful object, and
(b) intends to apply its profits, if any, or other income in promoting its objects, and to prohibit the payment of any divi- dend to its members,
the Central Government may, by licence, direct that the association may be registered as a company with limited liability, without the addition to its name of the word "Limited" or the words "Private Limited".
(2) The association may thereupon be registered accordingly; and on registration shall enjoy all the privileges, and (subject to the provisions of this section) be subject to all the obligations, of limited companies.
(3) Where it is proved to the satisfaction of the Central Govern- ment—
(a) that the objects of a company registered undei this Act as a limited company are restricted to those specified in clause (a) of sub-section (i), and
(b) that by its constitution the company is required to apply its profits, if any, or other income in promoting its objects and is prohibited from paying any dividend to its members,
the Central Government may, by licence, authorise the company by a special resolution to change its name, including or consist- ing of the omission of the word "Limited" or the words "Private Limited"; and section 23 shall apply to a change of name under this sub-section as it applies to a change of name under section 21.
(4) A firm may be a member of any association or company licensed under this section, but on the dissolution of the "firm, its membership of the association or company shall cease.
(5) A licence may be granted by the Central Government under this section on such conditions and subject to such regulations as it thinks fit, and those conditions and regulations shall be binding on the body to which the licence is granted, and where the grant is under sub-section (1), shall, if the Central Government so directs, be inserted in the memorandum, or in the articles, or partly in the one and partly in the other.
(6) The body to which a licence is so granted shall be exempt from the provisions of this Act relating to—
(a) the use of the word "Limited" or the words "Private Limited" as any part of its name,
(b) the publishing of its name,
(c) if the Central Government so directs and to the extent specified in the direction, the obligation laid on the company to send lists of its members to the Registrar, and
SBCJ 1] THE GAZETTE OF INDIA EXTRAORDINARY 3j
(d) if the Central Government so directs and to the extent specified in the direction, the obligations laid on the company by Section 303.
| 7) The licence may at any time be revoked by the Central Gov- ern:nent, and upon revocation, the Registrar shall enter the word "Limited" or the words "Private Limited" at the end of the name upon the register of the body to which it was granted; and the body shall cease to enjoy the exemption aranted by this section:
Provided that, before a licence is so revoked, the Central Govern- ment shall give notice in writing of its intention to the body, and shall afford it an opportunity of being heard in opposition to the revocation.
(8) Where a body in respect of which a licence under this section is in force alters the provisions of its memorandum with respect to its objects, the Central Government may—
(a) revoke the licence if it sees fit to do so, or
(b) vary the licence by making it subject to such conditions and regulations as the Central Government thinks fit, in lieu of, or in addition to, the conditions and regulations, if any, to which the licence was formerly subject.
(9) Upon the revocation of a licence granted under this section to a body the name of which contains the words "Chamber of Com- merce", that body shall, within a period of three months from the date of revocation or such longer period as the Central Government may think fit to allow, change its name to a name which does not contain those words; and—
(a) the notice to be given under the proviso to sub-section (7) to that body shall include a statement of the effect of the foregoing provisions of this sub-section; and
(b) section 23 shall apply to a change of name under thJa sub-section as it applies to a change of name under section 21.
(10) If the body makes default in complying with the require- ments of sub-section (9), it shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues.
Articles of Association
26. Articles prescribing regulations.—There may in the case of a public company limited by shares, and there shall in the case of an unlimited company or a company limited by guarantee or a private coripany limited by shares, be registered with the memorandum, articles of association signed by the subscribers of the memorandum, prescribing regulations for the company.
27. Regulations required in case of unlimited company, company limited by guarantee or private company limited by shares.—(1) In the case of an unlimited company, the articles shall state the number
38 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
at members with which the company is to be registered and, if the company has a share capital, the amount of share capital with which the company is to be registered.
(2) In the case of a company limited by guarantee, the articles shall state the number of members with which the company is to be registered.
(3) In the case of a private company having a share capital, the articles shall contain provisions relating to the matters specified in sub-clauses (a), (b) and (c) of clause (in) of sub-section (1) of section 3; and in the case of any other private company, the articles shall contain provisions relating to the matters specified in the said sub-clauses (b) and (c).
28. Adoption and application of Table A in the case of companies limited by shares.— (1) The articles of association of a company limited by shares may adopt all or any of the regulations contained in Table A in Schedule I.
(2) In the case of any such company which is registered after the commencement of this Act, if articles are not registered, or if articles are registered, in so far as the articles do not exclude or modify the regulations contained in Table A aforesaid, those regula- tions shall, so far as applicable, be the regulations of the company in the same manner and to the same extent as if they were contained in duly registered articles.
29. Form of articles in the case of other companies.—The articles of association of any company, not being a company limited by shares, shall be in such one of the Forms in Tables C, D and E In Schedule I as may be applicable, or in a Form as near thereto as circumstances admit,
30. Form and signature of articles.—Articles shall— (a) be printed; (b) be divided into paragraphs numbered consecutively; and (c) be signed by each subscriber of the memorandum of as-
sociation (who shall add his address, description and occupation, if any,) in the presence of at least one witness who shall attest the signature and shall likewise add his address, description an3 occupation, if any-
31. Alteration of articles by special resolution.—(1) Subject to the provisions of this Act and to the conditions contained in its memo- randum, a company may, by special resolution, alter its articles.
(2) Any alteration so made shall, subject to the provisions of this Act, be as valid as if originally contained in the articles and be subject in like manner to alteration by special resolution
(3) The power of altering articles under this section shall, in the case of any company formed and registered under Act No. XIX of 1857 and Act No. VII of 1860 or either of them, extend to altering any provisions in Table B annexed to Act XIX of 1857, and shall also, in the case of an unlimited company formed and registered under the said Acts or either of them, extend to altering any regulations relat- ing to the amount of capital or its distribution into shares, notwith- standing that those regulations are contained in the memorandum.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 39
Change of registration of companies
32. Registration of unlimited company as limited, etc.—(i). Sub- ject to the provisions of this section,—
(a) a company registered as unlimited may register under ihis Act as a limited company; and
(b) a company already registered as a limited company may re-register under this Act.
(2) On registration in pursuance of this section, the Registrar shall close the former registration of the company, and may dispense with the delivery to him of copies of any documents with copies of which he was furnished on the occasion of the original registra- tion of the company; but, save as aforesaid, the registration shall take place in the same manner and shall have effect, as if it were the first registration of the company under this Act.
(3) The registration of an unlimited company as a limited company under this section shall not affect any debts, liabilities, obligations or contracts incurred or entered into, by, to, with or on behalf of, the company before the registration, and those debts, lia- bilities, obligations and contracts may be enforced in the manner provided by Part IX of this Act in the case of a company registered in pursuance of that Part.
General provisions wtth respect to memorandum and articles.
33. Registration of memorandum and articles.— (2) There shall be presented for registration, to the Registrar of the State in which the registered office of the company is stated by the memorandum to be situate—
(a) the memorandum of the compan- •
(b) its articles, if any; and
(c) the agreement, if any, which the company proposes to enter into with any individual, firm or body corporate to be appointed as its managing agent, or with any firm or body corporate to be appointed as its secretaries and treasurers,
(2) A declaration by an advocate of the Supreme Court or of a High Court, an attorney or a pleader entitled to appear before a High Court, or a chartered accountant practising in India, who is engaged in the formation of a company, or by a person named in the articles as a director, managing agent, secretaries and treasurers, manjager or secretary of the company, that all the requirements of this Act and the rules thereunder have been complied with In res- pect of registration and matters precedent and incidental thereto, yhall be filed with the Registrar; and the Registrar may accept Bucrj a declaration as sufficient evidence of such compliance.
(3) If the Registrar is satisfied that all the requirements afore- said] have been complied with by the company and that it is autho- rised to be registered under this Act, he shall retain and register the memorandum, the articles, if any, and the agreement referred to in clause (c) of sub-section (1), if any.
4o THE GAZETTE OF INDIA EXTRAORDINAKY [PART II
34. Effect of registration.—(1) On the registration of the memo- randum of a company, the Registrar shall certify under his hand that the company is incorporated and, in the case of a limited company, that the company is limited.
(2) From the date of incorporation mentioned in the certificate of incorporation, such of the subscribers of the memorandum and other persotis, as may from time to time be members of the com- pany, shall be a body corporate by the name contained in the memo- randum, capable forthwith of exercising all the functions of an incorporated company, and having perpetual succession and a com- mon seal, but with such liability on the part of the members to contribute to the assets of the company in the event of its being wound up as Is mentioned in this Act.
35. Collusiveness of certificate of incorporation.—A certificate of incorporation given by the Registrar in respect of any association shall be conclusive evidence that all the requirements of this Act have been complied with in respect of registration and matters precedent and incidental thereto, and that the association is a company authorised to be registered and duly registered under this Act.
36. Effect of memorandum and articles.—(1) Subject to the pro- visions of this Act, the memorandum and articles shall, when regis- tered, bind the company and the members thereof to the same extent as if they respectively had been signed by the company and by each member, and contained covenants on its and his part to observe all the provisions of the memorandum and of the articles.
(2) All money payable by any member to the company under the memorandum or articles shall be a debt due from him to the company.
37. Provision as to companies limited by guarantee.—(1) In the case of a company limited by guarantee and not having a share capital, and registered on or after the first day of April, 1914, every provision in the memorandum or articles or in any resoluiion of the company purporting to give any person a right to participate in the divisible profits of the company otherwise than as a member shall be void.
(2) For the purpose of the provisions of this Act relating to the memorandum of a company limited by guarantee and of this section, every provision in the memorandum or articles, or in any resolu- tion, of any company limited by guarantee and registered on or after the first day of April, 1914, purporting to divide the undertaking of the company into shares or interests, shall be treated as a provision for a share capital, notwithstanding that the nominal amount or number of the shares or interests is not specified thereby.
38. Effect of alteration in memorandum or articles.—Notwith- gtanding anything in the memorandum or articles of a company, no member of the company shall be bound by an alteration made in the memorandum or articles after the date on which he became a member, if and so far as the alteration requires him to take or sub- scribe for more shares than the number held by him at the date on whjrfi the alteration is made, or in any way increases his liability as
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 4l
at that date, to contribute to the share capital of, or otherwise to pay money to, the company:
Provided that this section shall not apply hi any case where the member agrees in writing either before or after a particular altera- tion is made, to be bound by the alteration.
39. Copies of memorandum and articles etc. to be given to mem- bers.—(1) A company shall, on being so required by a member, send to him within seven days of the requirement and subject to the payment of a fee of one rupee, a copy each of the following docu- ments as in force for the time being—
(a) the memorandum; (b) the articles, if any; (c) the agreement, if any, entered into or proposed to be
entered into, by the company with any person appointed or tc be appointed as its managing agent or as its secretaries and treasurers; and
(d) every other agreement and every resolution referred to in section 192, if and in so far as they have not been embodied in the memorandum or articles.
(2) If a company makes default in complying with the require- ments of this section, the company, and every officer of the company who ii in default, shall be punishable, for each offence, with flue which may extend to fifty rupees.
40. Alteration of memorandum or articles etc. to be noted In every copy.—(1) Where an alteration is made in the memorandum or articles of a company, in the agreement referred to in clause (c) of sub-section (1) of section 39 or in any other agreement, or any resolution, referred to in section 192, every copy of the memoran- dum, articles, agreement or resolution issued after the date of the alteration shall be in accordance with the alteration.
(2) I If, at any time, the company issues any copies of the memo- randum, articles, resolution or agreement, which are not in accord- ance with the alteration or alterations made therein before that time, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to ten rupees for each copy so issued.
Membership of company
41. Definition of "member".—(1) The subscribers of the memo- randu n of a company shall be deemed to* have agreed to become members of the company, and on its registration, shall be entered as mcnbers in its register of members.
(2) Every other person who agrees to become a member of a company and whose name is entered in its register of members, shall be a member of the company.
42. Membership of holding company.—(1) Except In the cases mentioned In this section, a body corporate cannot be a member of a company which is its holding company and any allotment or transfer of shares in a company to its subsidiary shall be void.
42 TkE GAZETTE OF INDIA EXTRAORDINARY [PART II
(2) Nothing in this section shall apply— (a) where the subsidiary is concerned as the legal repre-
sentative of a deceased member of the holding company; or (b) where the subsidiary is concerned as trustee, unless the
holding company or a subsidiary thereof is beneficially interest- ed under the trust and is not so interested only by way of security for the purposes of a transaction entered into by it in the ordinary course of a business which includes the lending of money.
(3) This section shall not prevent a subsidiary from continuing to be a member of its holding company if it was a member thereof either at the commencement of this Act or before becoming a subsidiary of the holding company, but, except in the cases referred to in sub- section (2), the subsidiary shall have no right to vote at meetings of the holding company or of any class of members thereof.
(4) Subject to sub-sectiori (2), sub-sections (1) and (3) shall apply in relation to a nominee for a body corporate which is a subsidiary, as if references in the said sub-sections (1) and (3) to such a body corporate included references to a nominee for it.
(5) In relation to a holding company which is either a company limited by guarantee or an unlimited company, the reference in this section to shares shall, whether or not the company has a share capital, be construed as including a reference to the interest of its members as such, whatever the form of that interest.
Private companies 43. Consequences of default in complying with conditions
constituting a company a private company.—Where the articles of a company include the provisions which, under clause (iii) of sub- section (1) of section 3, are required to be included in the articles of a company in order to constitute it a private company, but default is made in Complying with any of those provisions, the com- pany shall cease to be entitled to the privileges and exemptions conferred on private companies by or under this Act, and this Act shall apply to the company as if it were not a private company:
Provided that the Court, on being satisfied that the failure to> comply with the conditions was accidental or due to inadvertence or to some other sufficient cause, or that on other grounds it is just and equitable to grant relief, may, on the application of the company or any other person interested and on such terms and conditions- as seem to the Court just and expedient, order that the company be relieved from such consequences as aforesaid.
44. Prospectus or statement in lieu of prospectus to be filed by private company on ceasing to be private company.— (1) If a com- pany, being a private company, alters its articles in such a manner that they no longer include the provisions which, under clause (iii) of sub-section (1) of section 3, are required to be included in the articles of a company in order to constitute it a private company, the company—
(a) shall, as on the date of the alteration, cease to be » private company; and
SBC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 4j
(b) shall, within a period of fourteen days after the said date, file with the Registrar either a prospectus or a statement In lieu of prospectus, as specified in sub-section (2).
(2) (a) Every prospectus filed under sub-section (1) shall state the niatters specified in Part I of Schedule II and set out the reports specified in Part II of that Schedule, and the said Parts I and II snail have effect subject to the provisions contained in Part III of that Schedule.
(b) Every statement in lieu of prospectus filed under sub-section (1) shall be in the form and contain the particulars set out in Part I of Schedule IV, and in the cases mentioned in Part II of that Schedule, shall set out the reports specified therein, and the said Parts I and II shall have effect subject to the provisions contained in Part III of that Schedule.
(c) Where the persons making any such report as is referred to tn clause (a) or (b) have made therein, or have, without giving the reasons, indicated therein, any such adjustments as are mentioned in clause 32 of Schedule II or clause 5 of Schedule IV, as the case may be, the prospectus or statement in lieu of prospectus filed as aforesaid, shall have endorsed thereon or attached thereto, a written statement signed by those persons, setting out the adjustments and giving the reasons therefor.
(3) If default is made in complying with sub-section (1) or (2), the company, and every officer of the company who is in default, Bhall be punishable with fine which may extend to five hundred rupees for every day during which the default continues.
(4) Where any prospectus or statement in lieu of prospectus filed under this section includes any untrue statement, any person who authorised the filing of such prospectus or statement shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to five thousand rupees, or with both, unless he proves either that the statement was immaterial or that he had reasonable ground to believe, and did up to the time of the filing of the prospectus or statement believe, that the state- ment was true.
(5) For the purposes of this section— (a) a statement included in a prospectus or a statement in
lieu of prospectus shall be deemed to be untrue if it is mis- leading in the form and context in which it is included; and
(b) where the omission from a prospectus or a statement in lieu of prospectus of any matter is calculated to mislead, the prospectus or statement in lieu of prospectus shall be deemed, in respect of such omission, to be a prospectus or a statement in lieu of prospectus in. which an untrue statement is included.
(6) For the purposes of sub-section (4) and clause (\a) of sub- section (5), the expression "included" when used with reference to a prospectus or statement in lieu of prospectus, means included in the prospectus or statement in lieu of prospectus itself or contained
44 THE GAZETTE OF INDIA EXTSAORDINAPY [PART II
In any report or memorandum appearing on the face thereof, or by reference incorporated therein.
Reduction of Number of Members below Legal Minimum. 45. Members severally liable for debts where business carried on
with fewer than seven, or in the case of a private company, two members.—If at any time the number of members of a company is reduced, in the case of a public company, below seven, or in the case of a private company, below two, and the company carries on business for more than six months while the number is so reduced, every person who is a member of the company during the time that it so carries on business after those six months and is cognisant of the fact that it is carrying on business with fewer than seven members or two members, as the case may be, shall be severally liable for the payment of the whole debts of the company contracted during that time, and may be severally sued therefor.
Contracts and deeds, investments, seal etc. 46. Form of contracts.—(1) Contracts on behalf of a company may
be made as follows:— (a) a contract which, if made between private persons, would
by law foe required to be in writing signed by the parties to be charged therewith, may be made on behalf of the company in writing signed by any person acting under its authority, express or implied, and may in the same manner be varied or discharged;
(b) a contract which, if made between private persons, would by law be valid although made by parol only and not reduced Into writing, may be made by parol on behalf of the company by any person acting under its authority, express or implied, and may in the same manner be marled or discharged.
(2) A contract made according 1u this section shall bind the company.
47. Bills of exchange and promissory nates.—A bill of exchange, hundi or promissory note shall be deemed to have been made, accept- ed, drawn or endorsed on behalf of a company if drawn, accepted, made, or endorsed in the name of, or on behalf or on account of, the company by any person acting under its authority, express or implied.
48. Execution of deeds.—(I) A company may, by writing under its common seal, empower any person, either generally or in respect of any specified matters, as its attorney, to execute deeds on its behalf in any place either in or outside India.
(2) A deed signed by such an attorney on behalf of the company and under his seal where sealing is required, shall bind the com- pany and have the same effect as if it were under its common seal,
49. Investments of company to be held in its own name.—(2) Save as otherwise provided In sub-sections (#) to (5) and subject to the provisions of sub-sections (6) to (8),—
(a) all investments made by a company on its own behalf shall be made and held by it in its own name; and
(b) where any such investments are not so held at the commencement of this Act the company shall, within a period
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY
of one year from such commencement, either cause them to be transferred to, and hold them in, its own name, or dispose of them.
(3) Where the company has a right to appoint any person or persons, or where any nominee or nominees of the company has or have been appointed, as a director or directors of any other body corporate, shares in such other body corporate to an amount not exceeding the nominal value of the qualification shares which are required to be held by a director thereof, may be registered or held by such company jointly in the names of itself and of each such person or nominee or in the name of each such person or nominee expressly described as a nominee ol the company.
(3) A company may hold any shares in its subsidiary in the name or names of any nominee or nominees of the company, if and in so far as it is necessary so to do, to ensure that the number of mem- bers of the subsidiary is not reduced, where it is a public company, below seven, and where it is a private company, below two.
(4) Sub-section (1) shall not apply to investments made by a company whose principal business consists of the buying and selling of snares or securities.
(5) Nothing in this section shall be deemed to prevent a company— (a) from depositing with a bank, being the bankers of the
company, any shares or securities for the collection of any dividend or interest payable thereon; or
(b) from depositing with, or transferring to, any person any shares or securities, by way of security for the repayment of any loan advanced to the company or the performance of any obligation undertaken by it.
(6) The certificate or letter of allotment relating to the shares or securities in which investments have been made by a company shall, except in the cases referred to in sub-sections (4) and (5), be in the custody of such company or with a Scheduled Bank, being the bankers of the company.
(7) Where, in pursuance of sub-sections (2), (3), (4) or (5), any shares or securities in which investments have been made by a com- pany are not held by it in its own name, the company shall forth- with enter in a register maintained by it for the purpose—
(c7> the nature, value, and such other particulars as may be °cessary fully to identify the shares or securities in question;
and (b) the bank or person in whose name or custody the shares
or securities are held. (8) The register kept under sub-section (7) shall be open to the
iispection of any member or debenture holder of the company vathout charge, during business hours, subject to such reasonable restrictions as the company may, by its articles or in general meet- ing, impose, so that not less than two hours in each day are allowed for inspection.
(9) If default is made in complying with any of the requirements of sub-sections (1) to (8), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees.
46 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(10) If any inspection required under sub-section (8) is refused, the Court may, by order, direct an immediate inspection of the register.
Nothing in this sub-section shall be construed as prejudicing in any way the operation of sub-section (9).
(11) In this section, "securities" includes stock and debentures. 50. Power for company to have official seal for use outside India.—
(I) A company whose objects require or comprise the transaction of business outside India may, il authorised by its articles, have for use in any territory, district or place not situate in India an official seal which shall be a facsimile of the common seal of the company, with the addition on its face of the name of the territory, district or place where it is to be used.
(£) A company having an official seal for use in any such terri- tory, district or place may, by writing under its common seal, authorise any person appointed for the purpose in that territory, dis- trict or place to affix the official seal to any deed or other document to which the company is a party in that territory, district or place.
(3) The authority of any agent authorised under sub-section (2) shall, as between the company and any person dealing with the agent, continue during the period, if any, mentioned in the instru- ment conferring the authority, or if no period is there mentioned, until notice of the revocation or determination of the agents autho- rity has been given to the person dealing with him.
(4) The person affixing any such official seal shall, by writing under his hand, certify on the deed or other document to which the seal is affixed, the date on which and the place at which, it Is affixed.
(5) A deed or other document to which an official seal is duly affixed shall bind the company as if it had been sealed with the common seal of the company.
Service of Documents 51. Service of documents on company.—A document may be served
on a company or an officer thereof by sending it to the company or officer at the registered office of the company by post under a certi- ficate of posting or by registered post, or by leaving it at its register- ed office.
52. Service of documents on Registrar.—A document may be served on a Registrar by sending it to him at his office by post under a certificate of posting or by registered post, or by delivering it to, or leaving it for, him at his office.
53. Service of documents on members by company.—(1) A docu- ment may be served by a company on any member thereof either personally, or by sending it by post to him to his registered address, or if he has no registered address in India, to the address, if any, within India supplied by him to the company for the giving of notices to him.
(2) Where a document is sent by post,— (a) service thereof shall be deemed to be effected by
properly addressing, prepaying and posting a letter containing \ the document, provided that where a member has Intimated to
SBC 1] THE GAZETTE OF INDIA EXTRAORDINARY ' 47
the company in advance that documents should be sent to him under a certificate of posting or by registered post with or with- out acknowledgement due and has deposited with the company a sum sufficient to defray the expenses of doing so, service of the document shall not be deemed to be effected unless it is sent in the manner intimated by the member; and
(b) unless the contrary is proved, such service shall be deemed to have been effected—
(i) in the case of a notice of a meeting, at the expira- tion of forty-eight hours after the letter containing the same is posted, and
(ii) in any other case, at the time at which the letter would be delivered in the ordinary course of post.
(3) A document advertised in a newspaper circulating in the neigh- bourhood of the registered office of the company shall be deemed to be duly served on the day on which the advertisement appears, on every member of the company who has no registered address in India and has not supplied to the company an address within India for the giving of notices to him.
(4) A document may be served by the company on the joint- holders of a share by serving it on the joint-holder named first in the register in respect of the share.
(5) A document may be served by the company on the persons entitled to a share in consequence of the death or insolvency of a member by sending it through the post in a prepaid letter addressed to them by name, or by the title of representatives of the deceased, or assignees of the insolvent, or by any like description, at the address, if any, in India supplied for the purpose by the persons claiming to be so entitled, or until such an address has been so supplied, by serving the document in any manner in which it might have been served if the death or insolvency had not occurred,
Authentication of Documents and Proceedings 54J Authentication of documents and proceedings.—Save as
otherwise expressly provided in this Act, a document or proceeding requiring authentication by a company may be signed by a director, the managing agent, the secretaries and treasurers, the manager, the secretary or other authorised officer of the company, and need not be under its common seal.
PART III PROSPECTUS AND ALLOTMENT, AND OTHER MATTERS RELATING TO ISSUE OF
SHARES OR DEBENTURES
J Prospectus 35. Dating of prospectus.—A prospectus issued by or on behalf
of a company or in relation to an intended company shall be dated, and' that date shall, unless the contrary is proved, be taken as the date of publication of the prospectus.
56. Matters to be stated and reports to be set out in prospectus.— (J) Every prospectus issued—
(a) by or on behalf of a company, or (b) by or on behalf of any person who is or has been
engaged or interested in the formation of a company.
48 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
shall state the matters specified in Part I of Schedule II and set out the reports specified in Part II of that Schedule; and the said Parts I and II shall have effect subject to the provisions contained in Part III of that Schedule.
(8) A condition requiring or binding an applicant for shares in or debentures of a company to waive compliance with any of the requirements of this section, or purporting to affect him with notice of any contract, document or matter not specifically referred to in the prospectus, shall be void.
(3) No one shall issue any form of application for shares in or debentures of a company, unless the form is accompanied by a pros- pectus which complies with the requirements of this section:
Provided that this sub-section shall not apply if it is shown that the form of application was issued either—
(a) in connection with a bona fide invitation to a person to enter into an underwriting agreement with respect to the shares or debentures; or
(b) in relation to shares or debentures which were not offered to the public.
If any person acts in contravention of the provisions of this sub- section, he shall be punishable with fine which may extend to five thousand rupees.
(4) A director or other person responsible for the prospectus shall not incur any liability by reason of any non-compliance with, or contravention of, any of the requirements of this section, if—
(a) as regards any matter not disclosed, he proves that he had no knowledge thereof; or
(b) he proves that the non-compliance or contravention arose from an honest mistake of fact on his part; or
(c) the non-compliance or contravention was in respect of matters which, in the opinion of the Court dealing with the case, were immaterial, or was otherwise such as ought, in the opinion of that Court, having regard to all the circumstances of the case, reasonably to be excused:
Provided that no director or other person shall incur any liability in respect of the failure to include in a prospectus a statement with respect to the matters specified in clause 18 of Schedule II, unless it is proved that he had knowledge of the matters not disclosed.
(5) This section shall not apply— (a) to the issue to existing members or debenture holders of
a company of a prospectus or form of application relating to shares in or debentures of the company, whether an applicant for shares or debentures will or will not have the right to re- nounce in favour of other persons; or
(b) to the issue of a prospectus or form of application relat- ing 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;
'SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 49
but, subject as aforesaid, this section shall apply to a prospectus or a form of application, whether issued on or with reference to the for- mation of a company or subsequently.
(6) Nothing in this section shall limit or diminish any liability which any person may incur under the general law or under this Act apart from this section.
57. Expert to be unconnected with formation or management of company.—A prospectus inviting persons to subscribe for shares in or debentures of a company shall not include a statement purporting to be made by an expert, unless the expert is a person who is not, and has not been, engaged or interested in the formation or promotion, or in the management, of the company.
58. Expert's consent to issue of prospectus containing statement by him.—A prospectus inviting persons to subscribe for shares in or debentures of a company and including a statement purporting to be made by an expert shall not be issued, unless—
(a) he has given his written consent to the issue thereof with the statement included in the form and context in which it ift included, and has not withdrawn such consent before the deli- very of a copy of the prospectus for registration; and
(b) a statement that he has given and has not withdrawn his consent as aforesaid appears in the prospectus.
59. Penalty and interpretation.—(1) If any prospectus is issued in contravention of section 57 or 58, the company, and every person, who is knowingly a party to the issue thereof, shall be punishable with fine which may extend to five thousand rupees.
(2) In sections 57 and 58, the expression "expert" Includes an engineer, a valuer, an accountant and any other person whose profes- sion gives authority to a statement made by him.
60. Registration of prospectus.—(1) No prospectus shall be issued by or on behalf of a company or in relation to an intended company unless, on or before the date of its publication, there has been deli- vered to the Registrar for registration a copy thereof signed by every person who is named therein as a director or proposed director of the company or by his agent authorised in writing, and having en- dorsed thereon or attached thereto—
(a) any consent to the issue of the prospectus required by section 58 from any person as an expert; and -
(b) in the case of a prospectus issued generally, also— (i) a copy of every contract required by clause 16 of
Schedule II to be specified in the prospectus, or, in the case of a contract not reduced into writing, a memorandum giving full particulars thereof; and
(ii) where the persons making any report required by Part II of that Schedule have made therein, or have, with- out giving the reasons, indicated therein, any such adjust- ments as are mentioned in clause 32 of that Schedule, a written statement signed by those persons setting out the adjustments and giving the reasons therefor,
(2) Every prospectus to which sub-section (1) applies shall, on the face of it,—
50 THE GAZETTE OF INDIA EXTRAORDINARY [PAHT II
(a) state that a copy has been delivered for registration as required by this section; and
(b) specify any documents required by this section to be endorsed on or attached to the copy so delivered, or refer to statements included in the prospectus which specify those docu- ments.
(3) The Registrar shall not register a prospectus,— (a) unless it is dated and the copy thereof signed in the
manner required by this section and unless further it has en- dorsed thereon or attached thereto the documents (if any) specified as aforesaid; and
(b) in case the prospectus names any person as the auditor, legal adviser, attorney, solicitor, banker or broker of the com- pany or proposed company, unless also it is accompanied by the consent in writing of the person so named, to act in the capacity stated.
(4) No prospectus shall be issued more than ninety days after the date on which a copy thereof is delivered for registration; and if a prospectus is so issued, it shall be deemed to be a prospectus a copy of which has not been delivered under this section to the Registrar.
(5) If a prospectus is issued without a copy thereof being deli- vered under this section to the Registrar or without the copy so deli- vered having endorsed thereon or attached thereto the required con- sent or documents, the company, and every person who is knowingly a party to the issue of the prospectus, shall be punishable with fine which may extend to five thousand rupees.
61. Terms' of contract mentioned in prospectus or statement in lieu of prospectus, not to be varied.—A company shall not, at any time, vary the terms of a contract referred to in the prospectus or state- ment in lieu of prospectus, except subject to the approval of, or except on authority given by, the company in general meeting.
62. Civil liability for mis-statements in prospectus.—(1) Subject to the provisions of this section, where a prospectus invites persons to subscribe for shares in or debentures of a company, the following persons shall be liable to pay compensation to every person who subscribes for any shares or debentures on the faith of the prospec- tus for any loss or damage he may have sustained by reason of any untrue statement included therein, that is to say,—
(a) every person who is a director of the company at the time of the issue of the prospectus;
(b) every person who has authorised himself to be named and is named in the prospectus either as a director, or as having agreed to become a director, either immediately or after an interval of time;
(c) every person who is a promoter of the company; and (d) every person who has authorised the issue of the pros-
pectus: Provided that where, under section 58, the consent of a person
Is required to the issue of a prospectus and he has given that consent, or where, under clause (b) of sub-section (3) of section 60, the con- sent of a persor named in a prospectus is required and he has given
3RC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 51
that consent, he shall not, by reason of having given such consent, be liable under this sub-section as a person who has authorised the issue of the prospectus except in respect of an untrue statement, if any, purporting to be made by him as an expert.
(2) No person shall be liable under sub-section (1), if he proves— (a) that, having consented to become a director of the com-
pany, he withdrew his consent before the issue of the prospectus, and that it was issued without his authority or consent;
(b) that the prospectus was issued without his knowledge or consent, and that on becoming aware of its issue, he forthwith gave reasonable public notice that it was issued without his knowledge or consent;
(c) that, after the issue of the prospectus and before allot- ment thereunder, he, on becoming aware of any untrue state- ment therein, withdrew his consent to the prospectus and gave reasonable public'notice of the withdrawal and of the reason therefor; or
(d) that— (i) as regards every untrue statement not purporting to
be made on the authority of an expert or of a public official document or statement, he had reasonable ground to believe, and did up to the time of the allotment of the shares or debentures, as the case may be, believe, that the statement was true; and
(ii) as regards every untrue statement purporting to be a statement by an expert or contained in what purports to be a copy of or an extract from a report or valuation of an expert, it was a correct and fair representation of the state- ment, or a correct copy of, or a correct and fair extract from, the report or valuation; and he had reasonable ground to believe, and did up to the time of the issue of the prospectus believe, that the person making the statement was competent to make it and that that person had given the consent re- quired by section 58 to the issue of the prospectus and had not withdrawn that consent before delivery of a copy df the prospectus for registration or, to the defendant's knowledge, before allotment thereunder; and
(ni) as regards every untrue statement purporting to be a statement made by an official person or contained in what purports to be a copy of or extract from a public official document, it was a correct and fair representation of the statement, or a correct copy of, or a correct and fair extract from, the document:
Provided that this sub-section shall not apply in the case of a per- son liable, by reason of his having given a consent required of him by section 58, as a person who has authorised the issue of the pros- pectus in respect of an untrue statement purporting to be made by' him as an expert.
(3) A person who, apart from this sub-section, would, under sub- section (1), be liable by reason of his having given a consent re- quired of him by section 58 as a person who has authorised the issue
833 G of I.
52 THE GAZETTE OF INDIA EXTRAORDINABY [PART II
of a prospectus in respect of an untrue statement purporting to be made by him as an expert, shall not be so liable, if he proves—
(a) that, having given his consent under section 58 to the issue "f the prospectus, he withdrew it in writing befoie delivery of a copy of the prospectus for registration;
(b) that, after delivery of a copy of the prospectus for regis- tration and before allotment thereunder, he, on becoming aware of the untrue statement, withdrew his consent in writing and gave reasonable public notice of the withdrawal and of the reason therefor; or
(c) that ne was competent to make the statement and that he had reasonable ground to believe, and did up to the time of the allotment of the shares or debentures, believe, that the state- ment was true.
(4) Where—
(a) the prospectus specifies the name of a person as a direc- tor of the company, or as having agreed to become a director thereof, and he has not consented to become a director, or has withdrawn his consent before the issue of the prospectus, and has not authorised or consented to the issue thereof; or
(fa) the consent of a person is required under section 58 to the issue of the prospectus and he either has not given that con- sent or has withdrawn it before the issue of the prospectus;
the directors of the company excluding those without whose know- ledge or consent the prospectus was issued, and every other person who authorised the issue thereof, shall be liable to indemnify the person referred to m clause (a) or clause (fa), as the case may be, against all damages, costs and expenses to which he may be made liable by reason ot his name having been inserted in the prospectus or of the inclusion therein of a statement purporting to be made by him as an expert, as the case may be, or in defending himself ag"inst any suit or legal proceeding brought against him in respect theieof;
Provided that a person shall not be deemed for the purposes of this sub-section to have authorised the issue of a prospectus by reason only of his having given the consent required by section 58 to the inclusion therein of a statement purporting to be made by him as an expert.
(5) Every person who, becomes liable to make any payment b\ virtue of this section, may recover contribution, as in cases of con- tract, from any other person who, if sued separately, would have been liable to make the same payment, unless the former person was, and the latter person was not, guilty of fraudulent misrepre- sentation.
(6) For the purposes of this section—
(a) the expression "promoter" means a promoter who was a party to the preparation of the prospectus or of the portion thereof containing the untrue statement, but does not include any person by reason of his acting in a professional capacity for persons engaged in procuring the formation of the company; and
S£C. 1] THE GAZETTE OF INDIA EXTRAORDINARY 53'
(b) the expression "expert" has the same meaning as in section 58.
C3. Criminal liability for mis-statements in prospectus.— (1) Whlere a prospectus issued after the commencement of this Act in- cludes any untrue statement, every person who authorised the issue of the Iprospectus shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to five thousand rupees, or with both, unless he proves either that the statement was immaterial or that he had reasonable ground to believe, and did up to the time of the issue of the prospectus believe, that the statement was true.
(2) A person shall not be deemed for the purposes of this section to have authorised the issue of a prospectus by reason only of his having given—
(a) the consent required by section 58 to the inclusion there- in of a statement purporting to be made by him as an expert, or
(b) the consent required by clause (b) of sub-section (3) of section 60.
64. Document containing offer of shares or debentures for sale to be deemed prospectus.—(1) Where a company allots or agrees to allot any shares in or debenture1" of the company with a view to all or any of those shares or debentures 'being offered for sale to the public, any document by which the offer for sale to the public is made shall, for all purposes, be deemed to be a prospectus issued by the company; and all enactments and rules of law as to the contents of prospectuses and as to liability in respect of statements in and omissions from prospectuses, or otherwise relating to prospectuses, shall apply with the modifications specified in sub-sections (3), (4) and (5), and have effect accordingly, as if the shares or debentures had been offered to the public for subscription and as if persons ac- cepting the offer in respect of any shares or debentures were subs- cribers for those shares or debentures, but without prejudice to the liability, if any, of the persons by whom the offer is made in respect of 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, shares or debentures was made with a view to the shares or deben- turt s being offered for sale to the public if it is shown—
(a) that an offer of the shares or debentures or of any of them for sale to the public was made within six months after the allotment or agreement to allot; or
(b) that at the date when the offer was made, the whole consideration to be received by the company in respect of the shares or debentures had not been received by it.
54 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(3) Section 56 as applied by this section shall have effect as> if it required a prospectus to state in addition to the matters required by that section to be stated in a prospectus—
(a) the net amount of the consideration received or to be re- ceived by the company in respect of the shares or debentures to- which the offer relates; and
(b) the place and time at which the contract under which the said shares or debentures have been or are to be allotted may be inspected.
(4) Section 60 as applied by this section shall have effect as if the persons making the offer were persons named in a prospectus as directors of a company.
(5) Where a person making an offer to which this section relates Is a company or a firm, it shall be sufficient if the document referred to in sub-section (2) is signed on behalf of the company or firm by two directors of the company or by not less than one-half of the part- ners in the firm, as the case may be; and any such director or part- ner may sign by his agent authorised in writing.
65. Interpretation oi provisions relating to prospectuses.—(1) For the purposes of the foregoing provisions of this Part—
(a) a statement included in a prospectus shall be deemed to be untrue, if the statement is misleading in the form and context in which it is included; and
(b) where the omission from a prospectus of any matter is calculated to mislead, the prospectus shall be deemed, in respect of such omission, to be a prospectus in which an untrue statement is included.
(2) For the purposes of sections 61, 62 and 63 and clause (o) of sub-section (1) of this section, the expression "included" when used with reference to a prospectus, means included in the prospectus it- self or contained in any report or memorandum appearing on the face thereof or by reference incorporated therein or issued therewith.
66. Newspaper advertisements of prospectus.—Where any pros- pectus is published as a newspaper advertisement, it shall not be necessary in the advertisement to specify (he contents of the memo- randum or the signatories thereto, or the number of shares subscrib- ed for by them.
67. Construction of references to offering shares or debentures to the public etc.— (1) Anv reference in this Act or in the articles of A company to offering shares or debentures to the public shall, subject to any provision to the contrary contained in this Act and subject also to ' the provisions of sub-sections (3) and (4), be construed as including a reference to offering them to any section of the public, whether selected as members or debenture holders of the company concerned or as clients of the person issuing the- prospectus or in tiny other manner.
Sffc. 1] THE GAZETTE OF INDIA EXTRAORDINARY 55
(2) Any reference in this Act or in the articles of a company to invitations to the public to subscribe for shares or debentures shall, subject as aforesaid, be construed as including a reference to invitations to subscribe for them extended to any section of the public, whether selected as members or debenture holders of the company concerned or as clients of the person issuing the prospectus on in any other manner.
(3) No offer or invitation shall be treated as made to the public by virtue of sub-section (1) or sub-section (2), as the case may be, if the offer or invitation can properly be regarded, in all the circum- stances—
(a) as not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation; or
(b) otherwise as being a domestic concern of the persons making and receiving the offer or invitation.
(4) Without prejudice to the generality of sub-section (3), a provision in a company's articles prohibiting invitations to the public to subscribe for shares or debentures shall not be taken as prohibiting the making to members or debenture holders of an invitation which can pioperly be regarded in the manner set forth in that sub-section.
(5) The provisions of this Act relating to private companies shall be construed in accordance with the provisions contained in sub- sections (J) to (4).
(58. Penalty for fraudulently inducing persons to invest money.— Any person who, either by knowingly or recklessly making any statement, promise or forecast which is false, deceptive or misleading, or by any dishonest concealment of material facts, induces or at- tempts to induce another person to enter into, or to offer to enter into—
(a) any agreement for, or with a view to, acquiring, dispos- ing of, subscribing for, or underwriting shares or debentures; or
(b) any agreement the purpose or pretended purpose of which is to secure a profit to any of the parties from the yield of shares or debentures, or by reference to fluctuations in the value of shares or debentures;
«h<ill be punishable with imprisonment for a term which may extend to five years, or with fine which may extend to ten thousand rupees, or with both.
Allotment
69. Prohibition of allotment unless minimum subscription received.—(1) No allotment shall be made of any share capital of
56 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
a company offered to the public for subscription, unless the amount stated in the prospectus as the minimum amount which, in the opinion of the Board of directors, must be raised by the issue of share capital in order to provide for the matters specified in clause 5 of Schedule II has been subscribed, and the sum payable on application for the amount so stated has been paid to and received by the com- pany, whether in cash or by a cheque or other instrument which has been paid.
(2) The amount so stated in the prospectus shall be reckoned exclusively of any amount payable otherwise than in money, and ia in this Act referred to as "the minimum subscription".
(3) The amount payable on application on each share shall not be less than five per cent, of the nominal amount of the share.
(4) All moneys received from applicants for shares shall be deposited and kept deposited in a Scheduled Bank until they are returned in accordance with the provisions of sub-section (5) or until the certificate to commence business is obtained under section 149.
In the event of any contravention of the provisions of this sub- section, every promoter, director or other person who is knowingly responsible for such contravention shall be punishable with fine which may extend to five thousand rupees.
(5) If the conditions aforesaid have not been complied with on the expiry of one hundred and twenty days after the first issue of the prospectus, all moneys received from applicants for shares shall be forthwith repaid to them without interest; and if any such money is not so repaid within one hundred and thirty days after the issue of the prospectus, the directors of the company shall be jointly and severally liable to repay that money with interest at the rate of six per cent, per annum from the expiry of the one hundred and thirtieth day:
Provided that a director shall not be so liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part.
(6) Any condition purporting to require or bind any applicant for shares to waive compliance with any requirement of this section shall be void.
(7) This section, except sub-section (3) thereof, shall not apply in relation to any allotment of shares subsequent to the first allot- ment of shares offered to the public for subscription.
70. Piohlbition of allotment in certain cases unless statement in lieu of prospectus delivered to Registrar.—(1) A company having a share capital, which does not issue a prospectus on or with refer- ence to its formation, or which has issued such a prospectus but has not proceeded to allot any of the shares offered to the public for
Sue. 1] THE GAZETTE OF INDIA EXTRAORDINARY 57
subscription, shall not allot any of its shares or debentures unless at least three days before the first allotment of either shares or debentures, there has been delivered to the Registrar for registra- tion a statement in lieu of prospectus signed by every person who is named therein as a director or proposed director of the com- pany or by his agent authorised in writing, in the form and contain- ing the particulars set out in Part I of Schedule III and, in the cases mentioned in Part II of that Schedule, setting out the reports specified therein, and the said Parts I and II shall have effect subject to the provisions contained in Part III of that Schedule.
(2) Every statement in lieu of prospectus delivered under sub- section (1), shall, where the persons making any such report as aforesaid have made therein, or have without giving the reasons indicated therein, any such adjustments as are mentioned in clause 5 of Schedule III, have endorsed thereon or attached thereto a written statement signed by those persons, setting out the adjust- ments and giving the reasons thereof.
(3) This section shall not apply to a private company.
(4) If a company acts in contravention of sub-section (1) or (2), the company, and every director of the company who wilfully authorises or permits the contravention, shall be punishable with fine which may extend to one thousand rupees.
(5) Where a statement in lieu of prospectus delivered to the Registrar under sub-section (1) includes any untrue statement, any person who authorised the delivery of the statement in lieu of prospectus for registration shall be punishable with imprisonment for a term which may extend to two years or with fine which may extend to five thousand rupees or with both, unless he proves either that the statement was immaterial or that he had reasonable ground to believe, and did up to the time of the delivery for registration of the statement in lieu of prospectus believe, that the statement was true.
(6) For the purposes of this section—
(a) a statement included in a statement in lieu of pros- pectus shall be deemed to be untrue if it is misleading in'the form and context in which it is included; and ,
(b) where the omission from a statement in lieu of pros- pectus of any matter is calculated to mislead, the statement in lieu of prospectus shall be deemed, in respect of such omission, to be a statement in lieu of prospectus in which sn untrue statement is included.
(7) For the purposes of sub-section (5) and clause (0) of sub- section (6), the expression "included", when used with reference
58 THE-GAZETTE OF INDIA EXTRAORDINARY [PART II
co a statement in lieu of prospectus, means included in the state- ment in lieu of prospectus itself or contained in any report or memorandum appearing on the face thereof, or by reference in- corporated therein, or issued therewith.
71. Effect of irregular allotment.—(1) An allotment made by a company to an applicant in contravention of the provisions of sec- tion 69 or 70 shall be voidable at the instance of the- applicant—
(a) within two months after the holding of the statutory meeting of the company, and not later, or
(b) in any case where the company is not required to hold a statutory meeting or where the allotment is made after the holding of the statutory meeting, within two months after the date of the allotment, and not later.
(2) The allotment shall be voidable as aforesaid, notwithstand- ing that the company is in course of being wound up,
(3) If any director of a company knowingly contravenes, oi wilfully authorises or permits the contravention of, any of the pro- visions of section 69 or 70 with respect to allotment, he shall be liable to compensate the company and the allottee respectively for any loss, damages or costs which the company or the allottee may have sustained or incurred thereby:
Provided that proceedings to recover any such loss, damages or costs shall not be commenced after the expiration of two years from the date of the allotment.
72. Applications for, and allotment of, shares and debentures.— (1) (a) No allotment shall be made of any shares in or debentures of a company in pursuance of a prospectus issued generally, and no pro- ceedings shall be taken on applications made in pursuance of a pros- pectus so issued, until the beginning of the fifth day after that on which the prospectus is first so issued or such later time, if any, as may be specified in the prospectus:
Provided that where, after a prospectus is first issued generally, a public notice is given by some person responsible under section 62 for the prospectus which has the effect of excluding, limiting or diminish- ing his responsibility, no allotment shall be made until the beginning of the fifth day after that on which such public notice is first given.
(b) Nothing in the foregoing proviso shall be deemed to exclude, hmit or diminish any liability that might be incurred in the case referred to therein under the general law or this Act,
(c) The beginning of the fifth day or such later time as is mention- ed in the first paragraph of clause (a), or the beginning of the fifth day mentioned in the second paragraph of that clause, as the case may be, is hereinafter in this Act referred to as "the time of the opening of the subscription lists".
(2) In sub-section (1), the reference to the day on which the prospectus is first issued generally shall be construed as referring to the day on which it is first so Issued as a newspaper advertisement:
Provided that, if it is not so issued as a nowspape advertisement before the fifth fl ^y after that on which it is first so issued in any
SEC.1 11 THE GAZETTE OF INDIA EXTRAORDINARY 59
other manner, the said reference shall be construed as referring to the day on which it is first so issued in any manner.
(3) The validity of an allotment shall not be affected by any contravention of the foregoing provisions of this section; but, in the event of any such contravention, the company, and every officer of the [company who is in default, shall be punishable with fine which may extend to five thousand rupees.
(4) In the application of this section to a prospectus offering shares or debentures for sale, sub-sections (1) to (3) shall have effect with the substitution of references to sale for references to allotment, and with the substitution for the reference to the company and every officer of the company who is in default of a reference to any person by or through whom the offer is made and who is knowingly guilty of, or wilfully authorises or permits, the contravention.
(5) An application for shares in, or debentures of, a company, which is made in pursuance of a prospectus issued generally shall not be revocable until after the expiration of the fifth day after the time of the opening of the subscription lists, or the giving, before the expiry of the said fifth day by some person responsible under section 62 for the prospectus, of a public notice having the effect under that section of excluding, limiting or diminishing the responsi- bility of the person giving it.
73. Allotment of shares and debentures to be dealt in on stock exchange.—(1) Where a prospectus, whether issued generally or not, states that application has been or will be made for permission for the shares or debentures offered thereby to be dealt in on a recognised stock exchange, any allotment made on an application in pursuance of the prospectus shall, whenever made, be void, if the permission has not been applied for before the tenth day after the first issue of the prospectus or, if the permission has not been granted before the expiry of three weeks from the date of the closing of the subscription lists or such longer period not exceeding six weeks as may, within the said three weeks, be notified to the applicant for permission by or on behalf of the stock exchange.
(2) Where the permission has not been applied for as aforesaid, or has not been granted as aforesaid, the company shall forthwith repay without interest all moneys received from applicants in pur- suance of the prospectus, and, if any such money is not repaid within eight days after the company becomes liable to repay it, the directors of the company shall be jointly and severally liable to repay that money with interest at the rate of five per cent, per annum from the expiry of the eighth day:
Provided that a director shall not be liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part.
(3) All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled Bank so long as the com- pany may become liable to repay it under sub-section (2), and if default is made in complying with this sub-section, the company, and every officer of the company who is in default, shall be punishable *vith fine which may extend to flve thousand rupees.
60 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(4) Any condition purporting to require or bind any applicant for shares or debentures to waive compliance with any of the require- ments of this section shall be void.
(5) For the purpose of this section, permission shall not be deemed to be refused if it is intimated that the application for permission though not at present granted, will be given further consideration
(C) This section shall have effect— (a) in relation to any shares or debentures agreed to be taken
by a person underwriting an offer thereof by a prospectus, as If he had applied therefor in pursuance of the prospectus; and
(b) in relation to a prospectus offering shares for sale, with the following modifications, namely,—
(i) references to sale shall be substituted for references to allotment;
(ii) the persons by whom the offer is made, and not the company, shall be liable under sub-section (2) to repay money received from applicants, and references to the com- pany's liability under that sub-section shall be construed accordingly; and
(in) for the reference in sub-section (3) to the company and every officer of the company who is in default, there shall be substituted a reference to any person by or through whom the offer is made and who is knowingly guilty of, or wilfully authorises or permits, the default.
(7) No prospectus shall state that application has been made for permission for the shares or debentures offered thereby to be dealt in on any stock exchange, unless it is a recognised stock exchange.
74. Manner of reckoning fifth, eighth and tenth days in sections 72 and 73.—In reckoning for the purposes of sections 72 and 73, the fifth day, the eighth day, or the tenth day after another day, any intervening day which is a public holiday under the Negotiable Instruments Act, 1881 (XXVI of 1881), shall be disregarded, and if the fifth, eighth, or tenth day (as so reckoned) is itself such a public holiday, there shall for the said purposes be substituted the first day thereafter which is not such a holiday.
75. Return as to allotments.—(1) Whenever a company having a share capital makes any allotment of its shares, the company shall, within one month thereafter,—
(a) file with the Registrar a return of the allotments, stating the number and nominal amount of the shares comprised in the allotment, the names, addresses and occupations of the allottees, and the amount, if any, paid or due and payable on each share;
(h) in the case of shares (not being bonus shares) allotted as fully or partly paid up otherwise than in cash, produce for the inspection and examination of the Registrar a contract in writing constituting the tUl" of the allottee to the allotment together with any contract of sale, or a contract for services or other considera- tion in respect of which that allotment was made, such contracts being duly stamped, and file with the Registrar copies verified in the prescribed manner of all such contracts and a return
Stfc. 11 THE GAZETTE OF INDIA EXTRAORDINARY 6l
stating the number and nominal amount of shares so allotted, the extent to which they are to be treated as paid up, and the consideration for which they have been allotted; and
(c) in the case of bonus shares, file with the Registrar a return stating the number and nominal amount of the bonus shares so allotted.
(2) Where a contract such as is mentioned in clause (b) of sub- section (I) is not reduced to writing, the company shall, within one month after the allotment, file with the Registrar the prescribed particulars of the contract stamped with the same stamp duty as would have been payable if the contract had been reduced to writ- ing; and those particulars shall be deemed to be an instrument within the meaning of the Indian Stamp Act, 1899 (II of 1899), and the Registrar may, as a condition of filing the particulars, require that the duty payable thereon be adjudicated under section 31 of that Act.
(3) If the Registrar is satisfied that in the circumstances of any particular case the period of one month specified in sub-sections (2) and (2) for compliance with the requirements of this section is in- adequate, he-may extend that period as he thinks fit; and if he does so, the provisions of sub-sections (1) and (2) shall have effect in that particular case as if for the said period of one month the extended period allowed by the Registrar were substituted.
(4) If default is made in complying with this section, every officer of the company who is in default shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues:
Provided that, in case of default in filing with the Registrar any document required to be filed bv this section within the time specified therein, the company, or any officer who is in default, may apply to the Court for relief, and the Court, if satisfied that the omission to file the document was accidental or due to inadvertence or that on other grounds it is just and equitable to grant relief, may make an order extending the time for the filing of the document for such period as the Court may think proper.
(5) Nothing in this section shall apply to the issue and allotment by a company of shares which under the provisions of its articles were forfeited for non-payment of calls.
Commissions and Discounts 76. Power to pay certain commissions and prohibition of pay-
ment of all other commissions, discounts, etc.—(2) A company may pay a commission to any person in consideration of—
(a) his subscribing or agreeing to subscribe, whether abso- lutely or conditionally, for any shares in, or debentures of, the company, or
(b) his procuring or agreeing to procure subscriptions, whe- ther absolute or conditional, for any shares in, or debentures of, the company,
if the following conditions are fulfilled, namely: — (i) the payment of the commission is authorised by the
articles;
6?. THE GAZETTE OF INDIA EXTRAOKDINARY [PART II
(ii) the commission paid or agreed to be paid does not ex- ceed in the case of shares, five per cent, of the price at which the shares are issued or the amount or rate authorised by the articles, whichever is less, and in the case of debentures, two and a half per cent, of the price at which the debentures are issued or the amount or rate authorised by the articles, which- ever is less;
(iii) the amount or rate per cent, of the commission paid or agreed tcr be paid is—
in the case of shares or debentures offered to the public for subscription, disclosed in the prospectus; and
in the case of shares or debentures not offered to the public for subscription, disclosed in the statement in lieu of prospectus, or in a statement in the prescribed form signed in like manner as a statement in lieu of prospectus and filed before the payment of the commission with the Registrar and, where a circular or notice, not being a prospectus in- viting subscription for the shares or debentures, is issued, also disclosed ir> that circular or notice; and (iv) the number of shares or debentures which persons have
agreed for a commission to subscribe absolutely or conditional- ly is disclosed in the manner aforesaid.
(2) Save as aforesaid and save as provided in section 79, no com- pany shall allot any of its shares or debentures or apply any of its capital moneys, either directly or indirectly, in payment of any commission, discount or allowance, to any person in consideration of—
(a) his subscribing or agreeing to subscribe, whether abso- lutely or conditionally, for any shares in, or debentures of, the company, or
(b) his procuring or agreeing to procure subscriptions, whe- ther absolute or conditional, for any shares in, or debentures of, the company,
whether the shares, debentures or money be so allotted or applied by being added to the purchase money of any property acquired by the company or to the contract price of any work to be executed for the company, or the money be paid out of the nominal purchase money or contract price, or otherwise.
(3) Nothing in this section shall affect the power of any company lo pay such brokerage as it has heretofore been lawful for a com- pany to pay.
(4) A vendor to, promoter of, or other person who receives pay- ment in shares, debentures or money from, a company shall have and shall be deemed always to have had power to apply any part of the shares, debentures or money so received in payment of any com- mission the payment of which, if made directly by the company, would have been legal under this section.
(5) If default is made in complying with the provisions of this section, the company, and every officer of the company who Is In default, shall be punishable with fine which may extend to five hundred rupees.
SEC}. 1] THE GAZETTE OF INDIA EXTRAORDINARY 6J
77. Restrictions on purchase by company, or loans by company for purchase, of its own or its holding company's shares.—(I) No company limited by shares, and no company limited by guarantee and having a share capital, shall have power to buy its own shares, unless the consequent reduction of capital is effected and sanctioned in pursuance of sections 100 to 104 or of section 402.
(2) No public company, and no private company which is a sub- sidiary of a public company, shall give, whether directly or indirect- ly, and whether by means of a loan, guarantee, the provision of se- curity or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person of or for any shares in the company or in its holding company:
Provided that nothing in this sub-section shall be taken to prohibit—
(a) the lending of money by a banking company in the ordinary course of its business: OT
(b) the provision by a company, in accordance with any scheme for the time being in force, of money for the purchase of, or subscription for, fully paid shares in the company or its holding company, being a purchase or subscription by trustees of or for shares to be held by or for the benefit of employees <rf the company, including any director holding a salaried office or employment in the company; or
(c) the making by a company of loans, within the limit laid down in sub-section (3), to persons (other than directors, managing agents, secretaries and treasurers or managers) bona fide in the employment of the company, with a view to enabling those persons to purchase or subscribe for fully paid shares in the company or its holding company to be held by themselves by way of beneficial ownership.
(3) No loan made to any person in pursuance of clause (c) of the foregoing proviso shall exceed in amount his salary or wages at that time for a period of six months
(4) If a company acts in contravention of sub-sections (2) to (3), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to one thousand rupees.
(5) Nothing in this section shall affect the right of a company to redeem any shares issued under section 80 or under any corres- ponding provision in any previous companies law.
Issue of Shares at Premium and Discount
78. Application of premiums received on issue of shares.—(1) Wiere a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount Or value of the pre- m.ums on those shares shall be transferred to an account, to be ca led "the share1 premium account"; and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the share premium account were paid-up share capital of the company.
64 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(2) The share premium account may, notwithstanding anything in sub-section (1), be applied by the company—
(a) in paying up unissued shares of the company to be issued to1 members of the company as fully paid bonus shares;
(b) in writing off the preliminary expenses of the company;
(c) in writing off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company; Or
(d) in providing for the premium payable on the redemp- tion of any redeemable preference shares or of any debentures of the company.
(3) Where a company has, before the commencement of this Act, issued any shares at a premium, this section shall apply as if the shares had been issued after the commencement of this Act:
Provided that any part of the premiums which has been so ap- plied that it does not at the commencement of this Act form an identifiable part of the company's reserves within the meaning of Schedule VI, shall be disregarded in determining the sum to be included in the share premium account.
79. Power to issue shares at a discount.—(1) A company shall not issue shares at a discount except as provided in this section.
(2) A company may issue at a discount shares in the company of a class already issued, if the following conditions are fulfilled, •namely: —
(i) the issue of the shares at a discount is authorised by a resolution passed by the company in general meeting, and sanctioned by the Court;
(K) the resolution specifies the maximum rate of discount (not exceeding ten per cent, or such higher percentage as the Central Government may permit in any special case) at which the shares are to be issued;
{id) not less than one year has at the date of the issue elapsed since the date on which the company was entitled to commence business; and
(iv) the shares to be issued at a discount are issued within two months after the date on which the issue is sanctioned by the Court or within such extended time as the Court may allow.
(3) Where a company has passed a resolution authorising the issue of shares at a discount, it may apply to the Court for an order sanctioning the issue; and on any such application, the Court, if, having regard to all the circumstances of the case, it thinks proper so to do, may make an order sanctioning the issue on such terms and conditions as it thinks fit.
(4) Every prospectus relating to the issue of the shares shall con- tain particulars of the discount allowed on the issue of the shares or
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 65
of so much of that discount as has not been written off at the date of the issue of the prospectus.
If default is made in complying with this sub-section, the com- pany, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees.
Redeemable Preference Shares 80. Power to issue redeemable preference shares.— (1) Subject
to the provisions of this section, a company limited by snares may, if so authorised by its articles, issue preference shares which are, or at the option of the company are to be liable, to be redeemed:
Provided that—
(a) no such shares shall be redeemed except out of profits of the company which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the pur- poses of the redemption;
(b) no such shares shall be redeemed unless they are fully paid;
(c) the premium, if any, payable on redemption shall have been provided for out of the profits of the company or out of the company's share premium account, before the shares are redeemed;
(d) where any such shares are redeemed otherwise than out of the proceeds of a fresh issue, there shall, out of profits which would otherwise have been available for dividend, be transferred to a reserve fund, to be called "the capital redemp- tion reserve fund", a sum equal to the nominal amount of the shares redeemed; and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the capital redemption re- serve fund were paid-up share capital of the company.
(2) Subject to the provisions of this section, the redemption of preference shares thereunder may be effected on such terms and in such manner as may be provided by the articles of the company.
(3) The redemption of preference shares under this section by a company shall not be taken as reducing the amount of its authorised share capital.
(4) Where in pursuance of this section, a company has redeemed or is about to redeem any preference shares, it shall have power to issue shares up to the nominal amount of the shares redeemed or to be redeemed as if those shares had never been issued; and accord- ingly the share capital of the company shall not, for the purpose of calculating the fees payable under section 601, be deemed to be in- creased by the issue of shares in pursuance of this sub-section:
Provided that, where new shares are issued before the redemp- tion of the old shares, the new shares shall not, so far as relates to stamp duty, be deemed to have been issued in pursuance of this sub- section unless the old shares are redeemed within one month af* the issue of the new shares.
66 THE GAZETTE OF INDIA EXTRAORDINARY [PART IL
(5) The capital redemption reserve fund may, notwithstanding anything in this section, be applied by the company, in paying up un- issued shares of the company td be issued to members of the com- pany as fully paid bonus shares.
(6) If a company fails to comply with the provisions of this sec tion, the company, and every officer of tha company who is in default, shall be punishable with fine which may extend to one thousand rupees.
Further Issue of Capital
81. Further issue of capital.—(1) Where at any time subsequent to the first allotment of shares in a company, it is proposed to in- crease the subscribed capita] of the company by the issue of new shares, then, subject to any directions to the contrary which may be given by the company in general meeting, and subject only to those directions—
(a) such new shares shall be offered to the persons who, at the date of the offer, are holders of the equity shares of the company, in proportion, as nearly as circumstances admit, to the capital paid up on those shares at that date ;
(b) the offer aforesaid shall be made by notice specifying the number of shares offered and limiting a time not being less than fifteen days from the date of the offer within which the offer, if not accepted, will be deemed to have been declined;
(c) unless the articles of the company otherwise provide, the offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares ofteued to him or any of them in favour of any other person ; and the notice referred to in clause (b) shall contain a statement of this right ;
(d) after the expiry of the time specified in the notice afore- said, or on receipt of earlier intimation from the person to whom such notice is given that he declines to accept the shares offered, the Board of directors may dispose of them in such manner as they think most beneficial to the company.
Explanation,—In this sub-section, "equity share capital" and 'equity shares" have the same meaning as in section 85.
(2) Nothing in clause (c) of sub-section (2) shall be deemed—
(a) to extend the time within which the offer should be accepted, or
(b, to authorise any person to exercise the right of renun- ciation for a second time, on the ground that the person In whose favour the renunciation was first made has declined to take the shares comprised in the renunciation.
(3) This section shall not apply to a private company.
She. ]] THE GAZETTE OF INDIA EXTRAORDINARY 67
PART IV
SHARE CAPITAL AND DEBENTURES
Nature, Numbering and Certificate of Shares
82. Nature of, shares.—The shares or other interest of any mem- ber in a company shall be movable property, transferable in the manner provided by the articles of the company.
83. Numbering of shares.—Each share in a company having a share capital shall be distinguished by its appropriate number,
84. Certificate of shares.—A certificate, under the common seal of the company, specifying any shares held by any member, shall be prima facie evidence of the title of the member to such shares.
Kinds of share capital
85. Two kinds of share capital.—(1) "preference share capital" means, with reference to any company limited by shares, whether formed before or after the commencement of this Act, that part of the share capital of the company which fulfils both the following requirements, namely: —
(a) that as respects dividends, it carries or will carry a pre- ferential right to be paid a fixed amount or an amount cal- culated at a fixed rate, which may bo either free of or subject to income-tax; and
"(b) that as respects capital, it carries or will carry, on a winding up or repayment of capital, a preferential right to be repaid the amount of the capital paid up or deemed to have been paid up, whether or not there is a preferential right to the payment of either or both of the following amounts, namely: —
(i) any money remaining unpaid, in respect of the amounts specified in clause (a), up to the date of the winding up or repayment of capital; and
(ii) any fixed premium or premium on any fixed scale, specified in the memorandum or articles of the company.
Explanation.—Capital shall be deemed to be preference capital, notwithstanding that it is entitled to either or both of the following righ;s, namely:—
(i) that, as respects dividends, in addition to the preferential :-ight to the amount specified m clause (a), it has a right to participate, whether fully or to a limited extent, with capital not entitled to the preferential right aforesaid;
(ii) that, as respects capital, in addition to the preferential right to the repayment, on a winding up, of the amounts specifi- ed in clause (b), it has a right to participate, whether fully or to a limited extent, with capital not entitled to that preferential
68 THE GAZETTE OF INDIA EXTRAORDINARY [FART II
right in any surplus which may remain after the entire capi- tal has been repaid.
(2) "equity share capital" means, with reference to any such company, all share capital which is not preference share capital.
(3) The expressions "preference share" and "equity share" shall be construed accordingly.
86. New issues of share capital to be only of two kinds.—The share capital of a company limited by shares formed after the com- mencement of this Act, or issued after such commencement, shall be of two kinds only, namely.—
(a) equity share capital; and
(b) preference share capital.
87. Voting rights.—(1) Subject to the provisions of section 89 and sub-section (2) of section 92—
(a) every member of a company limited by shares and hold- ing any equity share capital therein shall have a right to vote, in respect of such capital, on every resolution placed before the company; and
(b) his voting right on a poll shall be in proportion to hia share of the paid up equity capital of the company.
(2) (a) Subject as aforesaid and save as provided in clause (b) of this sub-section, every member of a company limited .by shares and holding any preference share capital therein shall, in respect of such capital, have a right to vote only on resolutions placed before the company which directly affect the rights attached to his preference shares.
Explanation,—Any resolution for winding up the company or for the repayment or reduction of its share capital shall be deemed directly to affect the rights attached to preference shares within the meaning of this clause.
(b) Subject as aforesaid, every member of a company limited by shares and holding any preference share capital therein shall, in res- pect of such capital, be entitled to vote on every resolution placed before the company at any meeting, if the dividend due on such capital or any part of such dividend has remained unpaid—
(i) in the case of cumulative preference shares, in res- pect of an aggregate period of not less than two years pre- ceding the date of commencement of the meeting; and
(ii) ,in the case of non-cumulative preference shares, either in respect of a period of not less than two years end- ing with the expiry of the financial year immediately preceding the commencement of the meeting or in respect of an aggregate period of not less than three years compris- ed in the six years ending with the expiry of the financial year aforesaid.
$EC. 11 THE GAZETTE OF INDIA EXTRAORDINARY 69
Explanation,—For ihe purposes of this clause, dividend shall be deemed to be due on preference shares in respect of any period, whether a dividend has been declared by the company on such shares for such period or not,—
(a) on the last day specified for the payment of such dividend for such period, in the articles or othe^ instrument executed by the company in that behalf; or
(£>) in case no day is so specified, on the day immediately following such period,
(c) Where the holder of any preference share has a right to vote on any resolution in accordance with the provisions of this sub-section, his voting right on a poll, as the holder of such share, shall, subject to the provisions of section 89 and sub-section (2) of section 92. be in the same proportion as the capital paid up in respect of the preference share bears to the total paid up equity capital of the company.
88. Prohibition of issue of shares with disproportionate rights.— No company formed after the commencement of this A'ct, or issuing any share capital after such commencement, shall issue any shares (not being preference shares) which carry voting rights or rights in the company as to dividend, capital or otherwise which are dispro- portionate to the rights attaching to the holders of other shares (not being preference shares),
89. Termination of disproportionately excessive voting rights in existing companies.—(1) If at the commencement of this Act any shares, by whatever name called, of any existing company limited by shares carry voting rights in excess of the voting rights attach- ing under sub-section (1) of section 87 to equity shares in respect of which the same amount of capital has been paid up, the company shall, within a period of one year from the commencement of this Act, reduce the voting rights in respect of the shares first mentioned so as to bring them into conformity with the voting rights attached to such equity shares under sub-section (I) of section 87.
(2) Before the voting rights are brought Into such conformity, the holders of the shares in question shall not exercise in respect thereof voting rights in excess of what would have been exercisable by them if the capital paid up on their shares had been equity share capital, in respect of the following resolutions placed before the company, namely:—
(a) any resolution relating to the appointment or re- appointment of a director or of a managing agent or secretaries and treasurers, or to any variation in the terms of an agreement between the company and a managing or wholetime director thereof or its managing agent or secretaries and treasurers;
(b) any resolution relating to the appointment of buying or selling agents;
, (c) any resolution relating *to the grant of a loan or to the giving of a guarantee or any other financial assistance, to any
j3 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
other body corporate having any person as managing agent or secretaries and treasurers who is also either the managing agent or the secretaries and treasurers of the company or an associate of such managing agent or secretaries and treasurers.
(3) If, by reason ol the failure of the requisite proportion of any class of members to agree, it is not found possible to comply with the provisions of sub-section (I), the company shall, within one month of the expiry of the period of one year mentioned in that sub- section, apply to the Court for an order specifying the manner in which the provisions of that sub-section shall be complied with; and any order made by the Court in this behalf shall bind the company and all its shareholders.
If default is made in complying with this sub-section, the com- pany, and every officer of the company who is in default, shall be punishable with fine which may extend to one thousand rupees.
(4) The Central Government may, in respect of any shares issued by a company before the 1st day of December, 1949, exempt the company from the requirements of sub-sections (1), (2) and (3),
• wholly or in part, if in the opinion of the Central Government the exemption is required either in the public interest or in the interests of the company or of any class of shareholders therein or of the creditors or any class of creditors thereof.
Every order of exemption made by the Central Government under this sub-section shall be laid before both Houses of Parlia- ment as soon as may be after it is made.
90. Savings-—Nothing in sections 85 to 89 shall,—
(a) in the case of any shares issued before the commence- ment of this Act, affect any voting rights attached to the shares save as otherwise provided in section 89, or any right attached to the shares as to dividend, capital or otherwise; or
(b) apply to a private company, unless it is a subsidiary of a public company.
Miscellaneous provisions as to share capital
91. Calls on shares of same class to be made on uniform basis.— Where after the commencement of this Act, any calls for further share capital are made on shares, such calls shall be made on a uni- fdrm basis on all shares falling under the same class.
Explanation.—For the purposes of this section, shares of the same nominal value on which different amounts have been paid up shall not be deemed to fall under the same class.
92. Power of company to accept unpaid share capital, although not called up.—(1) A company may, if so authorised by its articles, accept from any member the whole or a part of the amount re- maining unpaid on any shares held by him, although no part of that amount has been called up.
SE£. 1] THE GAZETTE OF INDIA EXTRAORDINARY 71
(2) The member shall not however be entitled, where the com- pany is one limited by shares, to any voting rights in respect erf the moneys so paid by him until the same would, but for such payment, bepome presently payable.
93. Payment of dividend in proportion to amount paid up.—A company may, il so authorised by its articles, pay dividends in pro- portion to the amount paid up on each share where a larger amount is paid up on some shares than on others.
94. Power of limited company to alter its share capital.—(1) A limited company having a share capital, may, if so authorised by its articles, alter the conditions of its memorandum as follows, that is to say, it may—
(a) increase its share capital by such amount as it thinks expedient by issuing new shares;
(b) consolidate and divide all or any of its share capital into shares ctf larger amount than its existing shares;
(c) convert all or any of its fully paid up shares into stock, and reconvert that stock into fully paid up shares of any de- nomination;
(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 re- duced 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 capi- tal by the amount of the shares so cancelled,
(2) The powers conferred by this section shall be exercised by the company in general meeting and shall not require to be confirm- ed by the Court.
(3) A cancellation of shares in pursuance of this section shall not be deemed to be a reduction of share capital vithin the meaning of this Act. rJ
J5. Notice to Registrar of consolidation of share capital, con- version of shares into stock, etc—(1) If a company having a share capital has—
(a) consolidated and divided its share' capital into shares of larger amount than its existing shares;
(b) converted any shares into stock;
(c) re-converted any stock into shares;
72 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(d) sub-divided its shares or any of them;
(e) redeemed any redeemable preference shares; or
(I) cancelled any shares, otherwise than in connection with a reduction of share capital under sections 100 to 104;
the company shall within one month after doing so, give notice thereof to the Registrar specifying, as the case may be, the shares consolidated, divided, converted, sub-divided, redeemed or cancel- led, or the stock reconverted.
(2) The .Registrar shall thereupon record the notice, and make any alterations which may be necessary in the company's memo- randum or articles or both.
(3) If default is made in complying with sub-section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
96. Effect of conversion of shares into stock.—Where a company having a share capital has converted any of its shares into stock, and given notice ctf the conversion to the Registrar, all the provisions of this Act which are applicable to shares only, shall cease to apply as to so much of the share capital as is converted into stock.
97. Notice of increase of share capital or of members.— (1) Where a company having a share capital, whether its shares have or hav« not been converted into stock, has increased its share capital beyond the authorised capital, and where a company, not being a company limited by shares, has increased the number of its members beyond the registered number, it shall file with the Registrar, notice of the increase of capital or of members within fifteen days after the pas- sing of the resolution authorising the increase; and the Registrar shall rerord the increase and also make any alterations which may be necesidry in the company's memorandum or articles or both.
(?) The notice to be given as aforesaid shall include particular* of the classes of shares affected and the conditions, if any, subject to which the new shares have been or are to be issued.
(3) If default is made in complying with this section, the com- pany, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for every day duiiiig which the default continues.
98. Power of unlimited company to provide for reserve share capital -m re-rcgistration.—An unlimited company having a share -ipital mjY. by its resolution for registration as a limited company in pursuance of this Act, do either or both of the following things,. namely: —
(a) increase the nominal amount of its share capital by In- creasing the nominal amount of each of its shares, but subject to
SEC. I1] THE GAZETTE OF INDIA EXTRAORDINARY 73
the condition that no part of the increased capital shall be ca- pable of being called up except in the event and for the pur- poses 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.
99. Reserve liability of limited company.—A limited company may, by special resolution, determine that any pqrtion of its share capital which has not been already called up shall not be capable of being called up, except in the event and for the purposes of the company being wound up, and thereupon that portion of its share capital shall not be capable of being called up except in that event and for those purposes.
Reduction oj Share Capital 100. Special resolution for reduction of share capital.—(i) Sub-
ject to confirmation by the Court, a company limited by shares or a company limited by guarantee and having a share capital, may, if so authorised by its articles, by special resolution, reduce its share capital in any way; and in particular and without prejudice to the generality of the foregoing power, may—
(a) extinguish or reduce the liability on any of its shares in respect of share capital not paid up;
(b) either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is lost, or is unrepresented by available assets; or
(c) either with or without extinguishing or reducing liability on any of its shares, pay off any paid-up share capital which is in excess of the wants of the company;
and may, if and so far as is necessary, alter its memorandum by reducing the amount of its share capital and of its shares accordingly.
(2) A special resolution under this section is in this Act referred to as "a resolution for reducing share capital".
101. Application, to Court for confirming order, objections by creditors, and settlement of list of objecting creditors.— (1) Where a company has passed a resolution for reducing share capital, it may apply, by petition, to the Court for an order confirming the reduction.
(2) Where the proposed reduction of share capital involves either the diminution of liability in respect of unpaid hhare capital or the payment to any shareholder of any paid-up share capital, and in any other case if the Court so directs, the following provisions shall have effect, subject to the provisions of sub-section (3): —
I (a) every creditor of the company who at the date fixed b[y the Court is entitled to any debt or claim which, if that date were the commencement of the winding up of the company, would be admissible in proof against the company, shall be entitled to object to the reduction;
74 THE GAZETTE OF INDIA EXTRAORDINARY [PARI IZ
(b) the Court bhall settle a list of creditor so entitled to object, and for that purpose shall ascertain, as far as possible without requiring an application from any creditor, the names of those creditors and the nature and amount of their debta or claims, and may publish notices fixing a day or days within which creditors not entered on the list are to claim to be so entered or are to be excluded from the right of objecting to the reduction;
(c) where a creditor entered on the list whose debt or claim is not discharged or has not determined does not consent to the reduction, the Court may, if it thinks fit, dispense with the consent of that creditor, on the company securing payment of his debt or claim by appropriating, as the Court may direct the following amount:—
(i) if the company admits the full amount oi the debt or claim, or, though not admitting it, is willing to provide for it, then, the full amount of the debt or claim;
(it) ii" the company does not admit and is not vailing to provide for the full amount of the debt or claim, or if the amount is contingent or not ascertained, then, an amount fixed by the Court after the like inquiry and adjudication •as if the company were being wound up by the Court.
(3) Where a proposed reduction of share capital involves either the diminution of any liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, the Court may, if, having regard to any special circumstances of the case, it thinks proper so to do, direct that the provisions of sub- section (2) shall not apply as regards any class or any classes of creditors.
102. Order confirming reduction and powers of Court onmak- ing such order.— (1) The Court, if satisfied with respect to every creditor of the company who under section 101 is entitled to object to the reduction, that either his consent to the reduction has been obtained or his debt or claim has been discharged, or has determined, or has been secured, may make an order confirming the reduction on such terms and conditions as it thinks fit.
(2) Where the Court makes any such order, it may—
(a) if for any special reason it thinks proper so to do, make an order directing that the company shall, during such Dcriod commencing on, or at any time after, the date of the order, as is specified in the order, add to its name as the last words thereof the words "and reduced"; and
(b) make an order requiring the company to publish as the Court directs the reasons for reduction or such other information in regard thereto as the Court may think expedient with a view to giving proper information to the public, and, if the Court thinks fit, the causes which led to the reduction
(3) Where a company is ordered to add to its name the words "and reduced", those words shall, until the expiration of the period
.SEC', 1] THE GAZETTE OF INDIA EXTRAORDINARY 75
specified in the order, be deemed to be part of the name of the company.
103. Registration of order and minute of reduction.—(1) The .Registrar—
(a) on production to him of an order of the Court confirm- ing the reduction of the share capital of a company; and
(b) on the delivery to him of a certified copy of the order and of a minute approved by the Court showing, with respect to the share capital of the company as altered by the order, (1) the amount of the share capital, (ii) the number of shares into which it is to be divided, (Hi) the amount of each share, and (iv) the amount, if any, at the date of the registration deemed to be paid up on each share;
shall register the order and minute.
(2) On the registration of the order and minute, and not before, the resolution for reducing share capital as confirmed by the order shall take effect.
(3) Notice of the registration shall be published in such manner as the Court may direct.
(4) The Registrar shall certify under his hand the registration of the order and minuie, and his certificate shall be conclusive evidence that all the requirements of this Act with respect to reduction of share capital have been complied with, and that the share capital of the company is such as is stated in the minute.
(5) The minute when registered shall be deemed to be substi- tuted for the corresponding part of the memorandum of the com- pany, and shall be valid and alterable as if it had been originally contained therein.
(6) The substitution of any such minute as aforesaid for part of the memorandum of the company shali be deemed to be an alteration of the memorandum within the meaning and for the purposes of section 40.
104. Liability of members in respect of reduced shares.—(1) A member of the company, past or present, shall not be liable, in respect of any share, to any call or contribution exceeding in amount the] difference, if any, between the amount paid on the share, or the reduced amount, if any, which is to be deemed to have been paid thereon, as the case may be, and the amount of the share as fixed by the minute of reduction:
Provided that, if any creditor entitled in respect of any debt or claim to object to the reduction of share capital is, by reason of his ignorance of *he nroceedine;s for reduction or of their nature and offeci with respect to his debt or claim, not entered on the list of creditors, and aftor the reduction the company is unable, within the
76 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
meaning of section 434, to pay the amount of his debt or claim, then—
(a) every person who was a member of the company at the date of the registration of the order for reduction and minute, shall be liable to contribute for the payment of that ttebt or claim an amount not exceeding the amount which he would have been liable to contribute if the company had commenced to be wound up on the day immediately before the said date, and
(b) if the company is wound up, the Court, on the appli- cation of any such creditor and proof of his ignorance as aforesaid, may, if it thinks fit, settle accordingly a list of per- sons so liable to contribute, and make and enforce calls and oi dei s on the contnbutories settled on the list, as if they were ordinary contributones in a winding up.
(2) Nothing m this section shall affect the rights of the contri- butones among themselves.
105. Penalty for concealing name of creditor, etc.—If any officer of the company—
(a) knowingly conceals the name of any creditor entitled to object to the reduction,
(b) knowingly misrepresents the nature or amount of the debt or claim of any creditor; or
(c) abets or is privy to any such concealment or misre- presentation as aforesaid,
he shall be punishable with imprisonment for a term which may extend to one year, or with fine, or with both.
Variation of Shareholders' Rights
106. Alteration of rights of holders of special classes of shares.— (1) In the case of a company the share capital of which is divided into different classes of shares, provision may be made by the memorandum or articles for authorising the variation of the rights attached to any class of shares in the company, subject to—
(a) the consent of the holders of any specified proportion, not being less than three-fourths of the issued shares of that class, or
(b) the sanction of a resolution passed at a separate meet- ing of the holders of those shares, and supported by the votes of the holders of any specified proportion, not being less than three-fourths, of those shares
(2) Any provision m the memorandum or articles of a company In force immediately before the commencement of this Act which specifies for the purpose aforesaid any proportion which is less than three-fourths of the shareholders of the class concerned shall after buch commencement have effect as if a proportion of three- fourths had been specified therein instead
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY qj
107. Rights of dissentient shareholders.—(1) If, in pursuance of any] provision such as is referred to in section 106, the rights, attached to any such class of shares are at any time varied, the holder!; of not less in the aggregate than ten per cent, of the issued shares'of that class, being persons who did not consent to or vote in favour of the resolution for the variation, may. apply to the Court to have the variation cancelled, and where any such appli- cation is made, the variation shall not have effect unless and until it is confirmed by the Court.
(2) An application under this section shall be made within twenty-one days after the date on which the consent was given* or the resolution was passed, as the case may be, and may be made on behalf of the shareholders entitled to make the application by such one or more of their number as they may appoint in writing for the purpose.
(X) On any such application, the Court, after hearing the appli- cant and any other persons who apply to the Court to be heard and appear to the Court to be interested in the application, may, if it is satisfied, having regard to all the circumstances of the case, that the variation would unfairly prejudice the shareholders of the class represented by the applicant, disallow the variation; and shall, if not so satisfied, confirm the variation.
(4} The decision of the Court on any such application shall be final.
(5) The company shall, within fifteen days after the service on che company of any order made on any such application, forward a copy of the order to the Registrar; and if default is made in com- plying with this provision, the company, and every officer of the company who is in default, shall be punishable with iine which may extend to fifty rupees.
Transfer of shares and debentures
108. Transfer not to be registered except on production of instrument of transfer.—(1) A company shall not register a transfer of shares in, or debentures of, the company, unless a proper ins- trument of transfer duly stamped and executed by or on behalf of the transferor and by or on behalf of tho transferee and specify- ing 1he name, address and occupation, if any, of the transferee, has been delivered to the company along with the certificate relating to the shares or debentures, or if no such certificate is in exist?nce, along with the letter of allotment of the shares or debentures:
Provided that where, on an application in writing made to the company by the transferee and bearing the stamp required for an instrument of transfer, it is proved to the satisfaction of ihe-
78 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
Board of directors that the instrument of transfer signed by or on behalf of the transferor and by or on behalf of the transferee has been lost, the company may register the transfer on such terms as "to indemnity as the Board may think fit:
Provided further that nothing in this section shall prejudice any power of the company to register as shareholder or debenture holder any person to whom the right to any shares in, or deben- tures of, the company has been transmitted by operation of law.
(2) In the case of a company having no share capital, bub-section (i) shall apply as if the references therein to shares were references instead to the interest of the member in the company.
109. Transfer by legal representative.—A transfer of the share or other interest in a company of a deceased member thereof made by his legal representative shall, although the legal representative is not himself a member, be as valid as if he had been a member at the time of +he execution of the instrument of transfer.
HO. Application for transfer.—(1) An application for the regis- tration of a transfer of the shares or other interest of a member in a company may be made either by the transferor or by the trans- feree.
(2) Where the application is made by the transferor and relates to partly paid shares, the transfer shall not be registered, unless the company gives notice of the application to the transferee and the transferee makes no objection to the transfer within two weeks from the receipt of the notice.
(3) For the purposes of sub-section (2), notice to the transferee shall be deemed to have been duly given if it is despatched by pre- paid registered post to the transferee at the address given in the instrument of transfer, and shall be deemed to have been duly delivered at the time at which it would have been delivered in the ordinary course,of post.
111. Power to refuse registration and appeal against refusal. (1) Nothing in sections 108, 109 and 110 shall prejudice any power of the company under its articles to refuse to register the transfer of, or the transmission by operation of law of the right to, any shares vr interest of a member in, or debentures of, the company.
(2) If, in pursuance of any such power, a company refuses to register any such transfer or transmission of right, it shall, within two months from the date on which the instrument of transfer, or the intimation of such transmission, as the case may be, was delivered to the company, send notice of the refusal to th« transferee and the transferor or to the person giving intimation of such trans- mission, as the case may be.
If default is made in complying with this sub-section, the com- pany, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for every day during which the default continue.
SEC, 1] THE GAZETTE OF INDIA EXTRAORDINARY 79,
(3) The transferor or transferee, or the person who gave intima- tion of the transmission by operation of law, as the case may be,. may, where the company is a public company or a private company, which iu a subsidiary of a public company, appeal to the Central Government against any refusal of the company to register the transfer or transmission, or against any failure on its part, within the period referred to in sub-section (2), either to register the trans- fer or transmission or to send notice of its refusal to register the same.
(4) An appeal to the Central Government under sub-section (3) shall be made—
(a) in case the appeal is against the refusal to register a transfer or transmission, within two months of the receipt by him of the notice of refusal; and
(b) in case the appeal is against the failure referred to in sub-section (3), within two months from the expiry of the period referred to in sub-section (2).
(5) The Central Government shall, after causing reasonable notice to be given to the company and also to, the transferor and the transferee or, as the case may require, to the person giving intimation of the transmission by operation of law and the previous owner, if any, and giving them a reasonable opportunity to make their representations, if any, in writing, by order, direct either that the transfer or transmission shall be registered by the company or that it need not be registered by it; and in the former case, the company shall give effect to the decision forthwith-
(6) The Central Government may, in its order aforesaid, give such incidental and consequential directions as to the payment of costs or otherwise as it thinks fit.
(7) AH proceedings in appeals under sub-section (3) or in relation, thereto shall be confidential, and no suit, prosecution or other legal proceeding shall lie in respect of any allegation made in such, proceedings, whether orally or otherwise.
(8) In the case of a private company which is not a subsidiary of a public company, where the right to any shares or interest of a member in, or debentures of, the company, is transmitted by a sale thereof held by a Court or other public authority, the provisions of sub-sections (3) to (7) shall apply as if the company were a public- company :
Provided that the Central Government may, in lieu of an order under sub-section (5), pass an order directing the company to register the transmission of the right unless any member or members of the company specified in the order acquire the right aforesaid within such time as may be allowed for the purpose by the order, on pay- ment to the purchaser of the price paid by him therefor or such other sum as the Central Government may determine to be a reason- able compensation for the right in all the circumstances of the case.
112. Certification of transfers.—(I) The certification by a com- ' pany of any instrument of transfer of shares in, or debentures of, the company, shall be taken as a representation by the company to any- person acting on the faith of the certification that there have been-
:8o THE GAZETTE OF INDIA EXTRAORDINARY [PART II
produced to the company such documents as on the face of them show a prima facie title to the shares or debentures In the transferor named in the instrument of transfer*, but not as a representation that the transferor has any title to the shares or debentures.
(2) Where any person acts on the faith of an erroneous certifica- tion made by a company negligently, the company shall be under the .same liability to him as if the certification had been made fraudulent- ly.
(3) For the purposes of this section— (a) an Instrument of transfer shall be deemed to be certifi-
cated if it bears the words "certificate lodged" or words to the like effect;
(b) the certification of an instrument of transfer shall be deemed to be made by a company, if—
(i) the person issuing the certificated instrument is a person authorised to issue such instruments of transfer on the company's behalf; and
(ii) the certification is signed by any officer or servant _ of the company or any other person, authorised to certificate transfers on the company's behalf, or if a body corporate has been so authorised, by any officer or servant of that body corporate; (c) a certification shall be deemed to be signed by any per-
son, if it purports to be authenticated by his signature unless it is shown that the signature was placed there neither by him- self nor by'any person authorised to use the signature for the purpose of certificating transfers on the company's behalf.
Issue of Certificate of Shares, etc. 113. Limitation of time for issue of certificates.—(I) Every com-
pany shall, within three months after the allotment of any of its •shares, debentures or debenture stock, and within three months after the application for the registration of the transfer of any such shares, -debentures or debenture stock, complete and have ready for delivery the certificates of all shares, the debentures, and the certificates of all debenture stock allotted or transferred, unless the conditions of issue of the shares, debentures or debenture stock otherwise provide.
The expression "transfer", for the purposes of this sub-section, •means a transfer duly stamped and otherwise valid, and does not in- clude any transfer which the company is for any reason entitled to refuse to register and does not register.
(2) If default is made in complying with sub-section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees -for every day during which the default continues.
(3) If any company on which a notice has been served requiring It to make good any default in complying with the provisions of sub- section' (1), fails to make good the default within ten days after the
' service of the notice, the Court may, on the application of the person -entitled to have the certificates or the debentures delivered to him, make an order directing the company and any officer of the company
SEC. l i THE GAZETTE OF INDIA EXTRAORDINARY 8l
to make good the default within such time as may be specified in the order and any such order may provide that all costs of and incidental to the application shall be borne by the company or by any officer of the comoany responsible for the default.
Share warrants H4. Issue and effect of share warrants to bearer.—(1) A public
company limited by shares, if so authorised Jay its articles, may, with the previous approval of the Central Government, with respect to any fully paid-up shares, issue under its common seal a warrant stating that the bearer of the warrant is entitled to the shares therein specified, and may provide, by coupons or otherwise, for the payment of the future dividends on the shares specified in the warrant.
(2) The warrant aforesaid is in this Act referred to as a "share warrant".
• (3) A share warrant shall entitle the bearer thereof to the shares therein specified, and the shares may be transferred by delivery of the warrant.
115. Share warrants and entries in register of members.—(1) On the issue of a share warrant, the company shall strike out of its register of members the name of the member then entered therein as holding the shares specified in the warrant as if he had ceased to be a member, and shall enter in that register the following particulars, namely: —
(a) the fact of the issue of the warrant; (b) a statement of the shares specified in the warrant, dis-
tinguishing each share by its number; and (c) the date of the issue of the warrant.
(2) The bearer of a share warrant shall, subject to the articles of the company, be entitled, on surrendering the warrant for cancella- tion and paying such fee to the company as the Board of directors may from time to time determine, to Jiave his name entered as a member in the register of members.
(3) The company shall be responsible for any loss incurred by any person by reason of the company entering in its register of mem- bers the name of a bearer of a share warrant in resoect of the shares therein specified, without the warrant being surrendered and cancelled.
(4) Until the warrant is surrendered, the particulars specified in sub-section (1) shall be deemed to be the particulars required by this Act to be entered in the register of members; and, on the surrender, the date of the surrender shall be entered in that register.
(5) Subject to the provisions of this Act, the bearer of a share wan ant may, if the articles of the company so provide, be deemed to be a member of the company within the meaning of this Act, for any purposes defined in the articles.
(r>) If default is made in complying with any of the require- ments of this section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to flfty rupees for every day during which the default continues.
82 THE GAZETTE OF INDIA EXTRAOBDINARY LPART II
Penalty for personation of shareholder
116. Penalty for personation of shareholder.—If any person deceitfully personates an owner of any share or interest in a company, or of any share warrant or coupon issued in pmsuance of this Act, and thereby obtains or attempts to obtain any such share or interest or any such ghare warrant or- coupon, or receives or tttempts to receive any money due to any such owner, he shall be punishable with imprisonment for a term which may extend to three years and shall also be liable to fine.
Special Provisions as to Debentures 117. Debentures with voting rights not to be issued hereafter.—
No company shall, after the commencement of this Act, issue any debentures carrying voting rights at any meeting of the company, whether generally or in respect of particular classes of business.
118. Right to obtain copies of and Inspect trust deed.—(1) A copy ol any trust deed for securing any issue of debentures shall be iorwarded to the holder of any such debentures or any member of the company, at his request and within seven days of the making thereof, on payment—
(a) in the case of a printed trust deed, of the sum of one rupee; and
(b) in the case of a trust deed which has not been printed, of six annas for every one hundred words or fractional part thereof required to be copied.
(2) If a copy is refused, or is not forwarded withirr the time specified in sub-section (I), the company, and every officer of the company who is in default, shall be punishable, for each offence, with fine which may extend to fifty rupees and with a further lino which may extend to twenty rupees for every day during which the offence continues.
(3) The Court may also, by order, direct that the copy required shall forthwith be sent to the person requiring it.
(4) The trust deed referred to in sub-section (1) shall also be open to inspection by any member or debenture holder of the com- pany in the same manner, to the same extent, and on payment of the same fees, as if it were the register of members of thp company.
119. Liability of trustees for debenture holders.—(1) Subject to the provisions of this section, any provision contained in a trubt deed for securing an issue of debentures, or m any contract with the
- holders of debentures secured by a trust deed, shall be void in so iar as it would have the effect of exempting a trustee thereof from, or Indemnifying him against, liability for breach of trust, where he fails to show the degree of care and diligence required of him as trustee, having regard to the provisions of the trust deed conferring on him any powers, authorities or discretions.
(2) Sub-section (1) shall not invalidate— (a) any release otherwise validly given in respect of any-
thing done or omitted to be done by a trustee before the giving of the release; or
SKC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 83
(b) any provision enabling such a release to be given— (i) on the agreement thereto of a majority of not less
1han three-fourths in value of the debenture holders present md voting m person or, where proxies are permitted, by proxy, at a meeting summoned for the purpose; and
(u) either with respect to specific acts or omissions or on the trustee dying or ceasing to act.
(3) Sub-section (I) shall not operate— (a) to invalidate any provision in lorce at the commence-
ment of this Act so long as any person then entitled to the benefit of that provision or afterwards given the benefit thereof under sub-section (4) remains a trustee of the deed in question; or
(b) to deprive any person of any exemption or right to be indemnified in respect of anything done or omitted to be done by him while any such provision was in force.
(4) While any trustee of a trust deed remains entitled to the benefit ot a provision saved by sub-section (3), the benefit of that provision may be given either—
(a) to all trustees of the deed, present and future; or (b) to any named trustees or proposed trustees thereof;
by a resolution passed by a majority of not less than three-fourths in value of the debenture holders present in person or, where proxies are permitted, by proxy, at a meeting called for the purpose m ac- cordance with the provisions of the deed or, if the deed makes no provision for calling meetings, at a meeting called for the purpose in any manner approved by the Court.
120. Perpetual debentures.—A condition contained In any deben- tures or in any deed for securing any debentures, whether issued or executed before or after the commencement of this Act, shall not be invalid by reason only that thereby, the debentures axe made irre- deemable or redeemable only on the happening of a contingency, however remote, or on the expiration of a period, however long.
121. Power to re-issue redeemed debentures in certain cases.—(2) Where either before or after the commencement of this Act, a com- pany has redeemed any debentures previously issued, then,—
(a) unless any provision to the contrary, whether express or implied, is contained in the articles, or in the conditions of issue, or in any contract entered into by the company; or
(b) unless the company has, by passing a resolution to that effect or by some other act, manifested its intention that the debentures shall be cancelled;
the! company shall have, and shall be deemed always to have had, the right to keep the debentures alive for the purposes of re-issue; and in exercising such a right, the company shall have, and. shall be deemed always to have had, power to re-issue the debentures either by re-issuing the same debentures or by issuing other debentures in their place. '
«4 THE GAZETTE OF INDIA EXTRAORDINARY [PAHT II
(2) Upon such re-issue, the person entitled to the debentures shall have, and shall be deemed always to have had, the same rights and priorities as if the debentures had never been redeemed.
(3) Where with the object of keeping debentures alive for the purpose of re-iasue, they have, either before or after the commence- ment of this Act, been transferred lo a nominee of the company, a transfer from that nominee shall be deemed to be a re-issue for the purposes of this section.
(4) Where a company has, either before or after the commence- ment of this Act, deposited any of its debentures to secure advances from time to time on current account or otherwise, the debentures shall not be deemed to have been redeemed by reason only of the account of the company having ceased to be in debit whilst the debentures remained so deposited.
(5) The re-issue of a debenture or the issue of another debenture in its place under the power by this section given to, or deemed to have been possessed by, a company, whether the re-issue or issue was made before or after the commencement of this Act, shall be treated as the issue of a new debenture for the purposes of stamp duty, bui it shall not bo so treated for the purposes of any provision limiting the amount or number of debentures to be issued:
Provided that any person lending money on the security of a debenture re-issued under this section which appears to be duly stamped may give the debenture in evidence in any proceedings for enforcing his security without payment of the stamp duty or any penalty in respect thereof, unless he had notice or, but for his negli- gence, might have discovered, that the debenture was not duly stamped; but in any such case the company shall be liable to pay the proper stamp duty and penalty.
(0) Nothing in this section shall prejudice— (a) the operation of any decree or order of a Court of com-
petent jurisdiction pronounced or made before the twenty-fifth day of February, 1910, as between the parties to the proceedings in which the decree or order was made;
(b) where an appeal has been preferred against any such de- cree or order, the operation of any decree or order passed on such appeal, as between the parties to such appeal; or
(c) any power to issue debentures in the place of any deben- tures paid off or otherwise satisfied or extinguished, reserved to a company by its debentures or the securities for the same.
122. Specific performance of contract lo subscribe for deben- tures.—A contract with a company to take up and pay for any deben- tures of the company may be enforced by a decree for specific per- formance.
123. Payments of certain debts out of assets subject to floating charge in priority to claims under the charge.—(1) Where either—
(a) a receiver is appointed on behalf of the holders of any debentures of a company secured by a floating charge; or
(b) possession is taken by or on behalf of those debenture holders of any property comprised in or subject to the charge;
SEC, 1J THE GAZETTE OF INDIA EXTRAORDINARY 85
then, if the itompany is not at the time in course of being wound up. the debts which in every winding up arc, under tht- provisions of Part VII relating to preferential payments to be paid in priority to -all other debts, shall be paid forthwith out of any assets coming to the hands of the receiver or other person taking pujsession as afore- said in priority to any claim for principal or interest in respect of the debentures.
(2) In the application of the provisions aforesaid, section 530 shall be construed as if the provision for payment of accrued holiday remuneration becoming payable on the termination of employment before or by the effect ol the winding-up order or resolution were a provision for payment of such remuneration becoming payable on the termination of employment before or by the effect of the appoint- ment of the receiver or possession being taken as aforesaid.
(3) The'periods of time mentioned in the said provisions of Part VII shall be reckoned from the date of appointment of the receiver or of possession being taken as aforesaid, as the case may be.
(4) Where the date referred to in sub-section (3) occurred before the commencement of this Act, sub-sections (1) and (3) shall have effect with the substitution, for references to the said provisions of Part VII, of references to the provisions which, bv virtue of sub-sec- tion (9) of section 530, are deemed to remain in force in the case therein mentioned, and sub-section (2) shall not apply.
(5) Any payments made under this section shall be recouped, as "far as may be, out of the assets nf the company available for pay- ment of general creditors.
PART V REGISTRATION OF CHARGES
124. "Charge" to include mortgage in this Part.—In this Part, the expression, "charge" includes a mortgage.
125. Certain charges to he void against liquidator or creditors un- less registered.—(1) Subject to the provisions of this Part, every charge created on or after the 1st day of April, 1914, by a company and being a charge to which this section applies shall, so far as any security on the company's property or undertaking is conferred thereby, be void against the liquidator and any creditor of the com- pany, unless the prescribed particulars of the charge, together with the instrument, if any, by which the charge is created or evidenced, or -a copy thereof verified in the prescribed manner, are filed with the Registrar for registration in the manner required by this Act within twenty-one days after the date of its creation.
(2) Nothing in sub-section (1) shall prejudice any contract or obligation for the repayment of the money secured by the charge,
(3) When a charge becomes void under this section, the money •secured thereby shall immediately become payable.
(4) Thib section applies to the following charges:—
(a) a charge for the purpose of securing any issue of debentures;
(b) a charge on uncalled share capital of the company;
86 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(c) a charge on any immovable property, wherever situ«t«r or any interest therein;
(d) a charge on any book debts of the company;
(e) a charge, not being a pledge, on any movable property of the company;
(f) a floating charge on the undertaking or any property of the company including stock-in-trade;
(g) a charge on calls made but not paid; (h) a charge on a ship or any share in a ship; (i) a charge on goodwill, on a patent or a licence under a
patent, on a trade mark. r»r on a copyright or a licence under » copyright.
(5) In the case oT a charge created out of India and comprising solely property situate outside India, twenty-one days after the date on which the instrument creating or evidencing the charge or a copy thereof could, in due course of post and if despatched with due dili- gence, have been received in India, shall be substituted for twenty- one days after the date of the creation of the charge, as the time within which the particulars and instrument or copy are to be filed with the Registrar.
(6) Where a charge is created in India but comprises property outside India, the instrument creating or purporting to create the charge under this section or a copy thereof verified in the prescribed manner, may be filed for registration, notwithstanding that further proceedings may be necessary to make the charge valid or effectual' according to the law of the country in which the property is situate.
(7) Where a negotiable instrument has been given to secure the payment of any book debts of a company, the deposit of the instru- ment for the purpose of securing an advance to the company shall not, for the purposes of this section, be treated as a charge on those book debts.
(8) The holding of debentures entitling the holder to a charge on Immovable property shall not, for the purposes of this section, be deemed to be an interest in immovable property.
126. Date of notice of charge.—Where any charge on any property of a company required to be registered under section 125 has been so registered, any person acquiring such property or any part there- of, or any share or interest therein, shall be deemed to have notice of the charge as from the date of such registration.
127. Registration of charges on properties acquired subject to charge.—(1) Where a company acquires any property which is sub- ject to a charge of any such kind as would, if it had been created by the company after the acquisition of the property, have been, required to be registered under this Part, the company shall cause the prescribed particulars of the charge, together with a copy (certi- fied in the prescribed manner to be a correct copy) of the instru- ment, if any, by which the charge was created or is evidenced, to be delivered to the Registrar for registration in the manner required
SEC 1] THE GAZETTE OF INDIA EXTRAORDINARY 87
by this Act within twenty-one days after the date on which the ac- quisition is completed:
Provided that, if the property is situate, and the charge was creat- ed, outside India, twenty-one days after the date on which a copy of the instrument could, in due course of post and if despatched with due diligence, have been received in India shall be substituted for twenty-one days after the completion of the acquisition as the time within which the particulars and the copy of the instrument are to be delivered to the Registrar.
('?) If default is made in complying with sub-section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees.
128. Particulars in case of series of debentures entitling holders part passu-—Where a series of debentures containing, or giving by reference to any other instrument, any charge to the benefit of which the debenture holders of that series are entitled pari passu is created by a company, it shall, for the purposes of section 125, be sufficient, if there are filed with the Registrar, within twenty-one days after the execution of the deed containing the charge or, if there is no such deed, after the execution of any debentures of the series, the following particulars: —
(a) the total amount secured by the whole series; (b) the dates of the resolutions authorising the issue of the
series and the date of the covering deed, if any, by which the security is created or defined;
(c) a general description of the property charged; and (d) the names of the trustees, if any, for the debenture
Holders; together with the deed containing the charge, or a copy of the deed verified in the prescribed manner, or if there is no such deed, one of the debentures of the series:
Provided that, where more than one issue is made of debentures in the series, there shall be filed with the Registrar, for entry in the register, particulars of the date and amount of each issue; but an omission to do this shall not affect the validity of the debentures issued.
129. Particulars in case of commission etc., on debentures.—• Where any commission, allowance or discount has been paid or made either directly or indirectly by a company to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any debentures of the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any such debentures, the particulars required to be filed for registration under sections 125 and 128 shall include parti- culars as to the amount or rate per cent of the commission, discount or allowance so paid or made; but an omission to do this shall not affect the validity of the debentures issued:
Provided that the deposit of any debentures as security for any debt of the company shall not, for the purposes of this section, be treated an the issue of the debentures at a discount.
88 THE GAZETTE OF INDIA EXTRAOBDINABY [PART II
130. Register of charges to be kept by Registrar.—(I) The Registrar shall keep, with respect to each company, a register in the- prescribed form of all the charges requiring registration under this. Part, and shall, on payment of the prescribed fee, enter in the regis- ter, with respect to every such charge, the following particulars:—
(a) in the case of a charge to the benefit of which the holders of a series of debentures are entitled, such particulars as are- specified in sections 128 and 129;
(b) in the case of any other charge— (i) if the charge is a charge created by the company,
the date of its creation; and if the charge was a charge existing on property acquired by the company, the date of the acquisition of the property;
(ii) the amount secured by the charge; (Hi) short particulars of the property charged; and (iv) the persons entitled to the charge.
(2) After making the entry required by sub-section (2), the- Registrar shall return the instrument, if any, or the verified copy thereof, as the case may be, filed in accordance with the provisions, of this Part, to the person filing the same.
(3) The register kept in pursuance of this section shall be open< to inspection by any person on payment of a fee of one rupee for °ach inspection.
131. Index to register of charges.—The Registrar shall keep at chronological index, in the prescribed form and with the prescribed particulars, of the charges registered with him in pursuance of this Part.
132. Certificate of registration.—The Registrar shall give a certi- ficate under his hand of the registration of any charge registered m pursuance of this Part, stating the amount thereby secured; and' the certificate shall be conclusive evidence that the requirements of this Part as to registration have been complied with.
133. Endorsement of certificate of registration on debenture or certificate of debenture stock.—(1) The company shall cause a copy of every certificate of registration given under section 132, to be- endorsed on every debenture or certificate of debenture stock which is issued by the company and the payment of which is secur- ed by the charge so registered:
Provided. that nothing in this sub-section shall be construed as- requiring a company to cause a certificate of registration of any charge so given to be endorsed on any debenture or certificate of debenture stock issued by the company before the charge was created.
(2) If any person knowingly delivers, or wilfully authorises or permits the delivery of, anv debenture or certificate of debenture' stock which, under the provisions »f sub-section (1), is required to have endorsed on it a c**py of a certificate of registration without the' copy being so endorsed upon it, he shall, without prejudice to any- other liability, be punishable with fine which may extend to one' thousand rupees.
Sw\ 1] THE GAZETTE OF INDIA EXTRAORDINARY 89
134. Duty of company as regards registration and right of in- terested party.—(1) It shall be the duty of a company to file with the Registrar for registration the particulars of every charge creat- ed by the company, and of every issue of debentures of a series, re- quiring registration under this Part; but registration of any such charge may also be effected on the application of any person interest- ed therein.
(2) Where registration 15 effected on the application of some per- son other than the company, that person shall be entitled to recover from the company the amount of any fees properly paid by him to the Registrar on the registration.
135. Provisions of Part to apply to modification of charges.— Whenever the terms or conditions, or the extent or operation, of any charge Tegistered under this Part are or is modified, it shall be the duty of the company to send to the Registrar the particulars of such modification, and the provisions of this Part as to registration of a charge shall apply to such modification of the charge.
136. Copy of instrument creating charge to be kept by company at registered office.—Every company shall cause a copy of every instrument creating any charge requiring registration under this Part to be kept at the registered office of the company:
Provided that, in the case of a series of uniform debentures, a copy of one debenture of the series shall be sufficient.
137. Entry in register of charges of appointment of receiver or manager.—(2) If any person obtains an order foi" the appointment of a receiver of, or of a person to manage, the property of a company, or If any person appoints such receiver or person under any powers contained in any instrument, he shall, within fifteen days from the date of the passing of the order or of the making of the appointment under the said powers, give notice of the fact to the Registrar; and the Registrar shall, on payment of the prescrib- td iee, enter the fact in the register of charges.
(2) Where any person so appointed under the powers contained in any instrument ceases to act as such, he shall, on so ceasing, give to the Registrar notice to that effect; and the Registrar shall enter the notice in the register of charges.
(3) If any person makes default in complying with the require- m e n t of sub-section (1) or (2), he shall be punishable with fine which may extend to fifty rupees for ev&ry day during which the default continues.
138. Company to report satisfaction and procedure there- after—(1) The company shall give intimation to the Registrar of the payment or satisfaction, in whole or in part, of any charge relat- ing 10 the company and requiring registration under this Part, within twenty-one days from the date of such payment or satis- faction.
(?) The Registrar shall, on receipt of such intimation, cause a notice to be sent to the holder of the charge calling upon him to show cause within a time (not exceeding fourteen days) specified in s,uch notice, why payment or satisfaction should not be recorded as intimated to the Registrar.
9o THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(3) If no cause is shown, ihe Registrar shall order that a memo- randum of satisfaction in whole or in part, as the case may be, shall b? entered in the register of charges.
(4) If cause is shown, the Registrar shall record a note to that effect in the register, and shall inform the company that he has done so.
(5) Nothing in this section shall be deemed to affect the power of the Registrar to make an entry in the register of charges under sec- tion 139 otherwise than on receipt of an intimation from the company.
139. Power of Registrar to make entries of satisfaction and release in absence of intimation from company.—The Registrar may, on evidence being given to his satisfaction with respect to any registered charge,—
(a) that the debt for which the charge was given has been paid or satisfied in whole or in part ; or
(b) that part of the property or undertaking charged has been released from the charge or has ceased to form part of the company's property or undertaking;
enter in the register of charges a memorandum of satisfaction in whole or in part, or of the fact that part of the property or under- taking has been released from the charge or has ceased to form part of the company's property or undertaking, as the case may be, not- withstanding the fact that no intimation has been received by him from the company.
140. Copy of memorandum of satisfaction to be furnished to company.—Where the Registrar enters a memorandum of satisfac- tion in whole or in part, in pursuance of section 138 or 139, he shall furnish the company with a copy of the memorandum.
141. Rectification by Court of register of charges.—(1) The Court, on being satisfied—
(a) that the omission to register a charge within the time required by this Part, or that the omission or mis-statement of any particular with respect to any such charge or any memoran- dum of satisfaction or other entry made in pursuance of section 138 or 139, was accidental, or due to inadvertence, or to some other sufficient cause, or is not of a nature to prejudice the position of creditors or shareholders of the company; or
(b) that on other grounds it is just and equitable to grant relief;
may, on the application of the company or any person interested and on such terms and conditions as seem to the Court just and expedi- ent, order that the t ;mc for the registration shall be extended or, as the case may require, that the omission or mis-statement shall be rectified.
(2) The Court may make such order as to the costs of an applica- tion under sub-section (1J as It thinks fit.
SKC. 1] THE GAZETTE OF INDIA EXTRAOHDINABY 91
(3) Where the Court extends the time for the registration of a charge^ the order shall not prejudice any rights acquired in respect of the f property concerned before the charge is actually registered.
142 Penalties.—(1) If default is made in filing with the Registrar tor registration the particulars—
(a) of any charge created by the company; (b) of the payment or satisfaction, in whole or in part, of a
debt in respect of which a charge has been registered under this Par t ; or
(c) of the issues cf debentures of a series; requiring registration with the Registrar under the provisions of this Part, then, unless the registration has been effected on the applica- tion of some other person, the company, and every officer of the company or other person who is in default, shall be punishable with fine which may extend to five hundred rupees for every day dur- ing which the default continues.
(2) Subject as aforesaid, if any company makes default in com- plying with any of the other requirements of this Act as to the regis- tration with the Registrar of any charge created by the company or of any fact connected therewith, the company, and every officer of the company who is in default, shall, without prejudice to any other liability, be punishable with fine which may extend to one thousand rupees.
143. Company's register of charges.—(1) Every company shall keep at its registered office a register of charges and enter therein all charges specifically affecting property of the company and all floating charges on the undertaking or on any property of the com- pany, giving in each case—
(i) a short description of the property charged; (ii) the amount of the charge; and (iii) except in the case of securities to bearer, the names of
the persons entitled to the charge. (2) If any officer of the company knowingly omits, or wilfully
authorises or permits the omission of, any entry required to be made in pursuance of sub-section (1), he shall be punishable with fine which may extend to five hundred rupees,
144. Bight to inspect copies of instruments creating charges and company's register of charges.—(1) The copies of instruments creat- ing charges kept in pursuance of section 136, and the register of charges kept in pursuance of section 143, shall be open during business hours (but subject to such reasonable restrictions as the company in general meeting may impose, so that not less than two pours in each day are allowed for inspection) to the inspection of any creditor or member of the company without fee, at the registered office of the company.
(2) The register of charges kept in pursuance of section 143 shall also be open, during business hours but subject to the reasonable restrictions aforesaid, to the inspection of any other person on pay- ment of a fee of one rupee for each inspection, at the registered office of the company.
92 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(3) If inspection of the said copies or register is refused, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees and with a further fine which may extend to twenty rupees for every day during which the refusal continues.
(4) The Court may also by order compel an immediate inspection of the said copies or register.
145. Application of Part to charges requiring registration under It but not under previous law.—In respect of any charge created bcluie the commencement of this Act which, if this Act had been in force at the relevant time, would have had to be registered by the company in pursuance of this Part but which did not require registration under the Indian Companies Act, 1913 (VII of 1913), and in respect of all matters relating to such charge, Ihe provisions of this Part shall apply and have effect in all respects, as if the date of commencement of this Act had been substituted therein for the date of creation of the charge, or the date of completion of the acquisition of the property subject to the charge* as the case may be.
Nothing contained in this section shall be deemed to afreet the relative priorities as they existed immediately before the commen- cement of this Act, as between charges on the same property.
PART VI MANAGEMENT AND ADMINISTRATION
CHAPTER I GENERAL PROVISIONS
Registered Office and Name 146. Registered office of company.—(1) A company shall, as
from the day on which it begins to carry on business, or as from 'he twenty-eighth day atler the date of its incorporation, whichever is earlier, have a registered office to which all communications and notices may be addressed.
(2) Notice of the situation of the registered office, and of every change therein, shall be given within twenty-eight days after the date of 1he incorporation of the company or after the date of the change, as the case may be, to the Registrar who shall record the same:
Provided that except on the authority of a special resolution passed by the company, the registered office of the company shall not be removed—
(a) in the case of an existing company, outside the local limits of any city, town or village where such office is situated at the commencement of this Act, or where it may be situated later by virtue of a special resolution passed by the company; and
(b) in the case of any other company, ou jj.de 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. i.'O The inclusion in the annual return of a company of a state-
ment as to the addiess of its registered office shall not be taken to natlsn- the obligatkn imposed by sub-section (2).
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 93.
(4) If default is made in complying with the requirements of this section, the company, and every officer of the company who is in default, shall bi* punishable with fine which may extend to fifty mipees for every day during which the default continues.
lii. Publication of name by company.—(1) Every company— (a) shall paint or affix its name, and keep the same painted
or affixed, on the outside of every office or place in which its business is carried on, in a conspicuous position, in letters easily legible; and if the characters employed therefor are not those of the language, or of one of the languages, in general use in that locality, also in the characters of that language or of one of those languages;
(b) shall have its name engraven in legible characters on its seal; and
(c) shall have its name mentioned in legible characters in all its business letters, in all its bill heads and letter paper,, and in all its notices, advertisements and other official publica- tions; and in all bills of exchange, hundies, promissory notes, endorsements, cheques and orders for money or goods purport- ing to be signed by or on behalf of the company, and in all billa of parcels, invoices, receipts and letters of credit of the com- pany. (2) If a company does not paint or affix its name, or keep the
same painted or affixed in the manner directed by clause (a) of sub-section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for not so painting or affixing its name, and for ever} day during which its name is not so kept painted or affixed.
(3) If a company fails to comply with clause (?>) or clause (c) of sub-section (1), the company shall be punishable with fine which may extend to five hundred rupees.
(4) If an officer of a company or any person on its behalf— (a) uses, or authorises the use of, any seal purporting to be
a seal of the company whereon its name is not engraven in the manner aforesaid;
(b) issues, or authorises the issue of, any business letter, bill head, letter paper, notice, advertisement or other official publication of the company wherein its name is not mentioned in the manner aforesaid;
(c) signs, or authorises to be signed, on behalf of thecom- pany, any bill of exchange, hundi, promissory note, endorsement, cheque or order for money or goods wherein its name is not mentioned in the manner aforesaid; or
(d) issues, or authorises the issue of, any bill of parcels, invoice, receipt or letter of credit of the company, wherein its name is not mentioned in the manner aforesaid;
such officer or person shall be punishable with fine which may extend to five hundred rupees, and shall further be personally liable to the holder of the bill of exchange, hundi, promissory note, cheque
94 THE GAZETTE OF INDIA EXTRAORDINARY [PABT II
or order for money or goods, for the amount thereof, unless it Is duly paid by the company.
148, Publication of authorised as well as subscribed and paid-up capital .—(I) Where any notice, advertisement or other official .publication, or any business letter, bill head or letter paper, of a company contains a statement of the amount of the authorised capital of the company, such notice, advertisement or other official publication, or such letter, bill head or letter paper, shall also contain a statement, in an equally prominent position and in equally con- spicuous characters, of the amount of the capital which has been subscribed and the amount paid up.
(2) If default is made in complying with the requirements of sub-section (I), the company, and every officer of the company who is in default, shaH bo punishable with fine which may extend to one thousand rupees.
Restrictions on Commencement of Business
149. Restrictions on commencement of business.— (1) Where a company having a share capital has issued a prospectus inviting the public to subscribe for its shares, the company shall not commence any business or exercise any borrowing powers, unless—
(a) shares held subject to the payment of the whole amount thereof in cash have been allotted to an amount not less in the whole than the minimum subscription;
(b) every director of the company has paid to the company, on each of the shares taken or contracted to be taken by him and for which he is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares offered for public subscription;
(c) no money is, or may become, liable to be repaid to ap- plicants for any shares or debentures which have been offered for public subscription by reason of any failure to apply for, or to obtain, permission for the shares or debentures to be dealt in on any recognized stock exchange; and
(d) there has been filed with the Registrar a duly verified declaration by one of the directors or the secretary, in the prescribed form, that clauses (a), (b) and (c) of this sub-sec- tion, have been complied with. (2) Where a company having a j-hare capital has not issued a
prospectus inviting the public to subscribe for its shares, the com- pany shall not commence1 any business or exercise any borrowing powers, unless—
(a) there has been filed with the Registrar a statement in li(ju of prospectus;
(b) every director of the company has paid to the company, on each of the shares taken or contracted to be taken by him and for which he is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares payable in cash; and
(c) there has been filed with the Registrar a duly verified declaration by one of the directors or the secretary, in the
SEC, 1] THE GAZETTE OF INDIA EXTRAORDINARY 95
prescribed form, that clause (b) of this sub-section has been complied with. ' (3) The Registrar shall, on the filing of a duly verified declaration
in accordance with the provisions of sub-section (]) or sub-section (2), as the case may be, and, in the case of a company which is required by sub-section (2) to file a statement in lieu of prospectus, also of such a statement, certify that the company is entitled to com- mence business, and that certificate shall be conclusive evidence that the company is so entitled.
(4) Any contract made by a company before the date at which it is entitled to commence business shall be provisional only, and shall not be binding on the company until that date, and on that date it shall become binding.
(5) Nothing in this section shall prevent the simultaneous offer for subscription or allotment of any shares and debentures or the receipt of any money payable on applications for debentures.
(6) If any company commences business or exercises borrowing powers In contravention of this section, every person who ia res- ponsible for the contravention shall, without prejudice to any other liability, be punishable with fine which may extend to five hundred rupees for eveiy day during which the contravention continues
(7) Nothing in this section shall apply to— (a) a private company; or (b) a company registered before the first day of April, 1914r
which has not issued a prospectus inviting the public to sub- scribe for its shares.
(8) The provisions of this section, in so far as they do not relate to shares, shall also apply to a company limited by guarantee and not having a share capital. '
Registers of members and debenture holders 150. Register of Members.—(1) Every company shall keep in,
one or more books a register of its members, and enter therein the follow.ng particulars —
(a) the name and address, and the occupation, if any, of each member;
(b) in the case of a company having a share capital, the shares held by each member, distinguishing each share by its- number, and the amount paid or agreed to be considered as paid on those shares;
(c) the date at which each person was entered in the register as a memhpr; and
(d) the date at which any person ceased to be a member: Provided that where the company has converted any of its shares
into stock and given notice of the conversion to the Registrar, the register shall shnw the amount of stock held by each of the members concerned instead of the shares so converted which were previously held by him.
(2) If default is made in complying with sub-section (1), the company, and every officer of the company who is in default, shall
g6 THE GAZETTE OF INDIA EXTRAORDINARY |PART II
be punishable with fine which may extend to fifty rupees for every- day during which the default continues.
151. Index of members.—(I) Every company having more than fifty members shall, unless the register of members is in such a form as in itself to constitute an index, keep an index (which may be in the form of a card index) of the names of the members of the company and shall, within fourteen days after the date on which any altera- tion is made in the register of members, make the necessary altera- tion in the index.
(2) The index shall- in respect of each member, contain a suffi- cient indication to enable the entries relating to that member in the register to be readily found.
(3) The index shall, at all times, be kept at the same place as the register of members.
(4) If default is made in complying with sub-seclion (1), (2) or (3), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees.
152. Register and index of debenture holders.—(1) Every company shall keep in one or more books a register of the holders of its debentures and enter therein the following particulars, namely:—
(a) the name and address, and the occupation, if any, of each debenture holder;
(b) the debentures held by each holder, distinguishing each debenture by its number, and the amount paid or agreed to be considered as paid on those debentures;
(c) the date at which each person was enteied in the legister as a debenture holder; and
(d) the date at which any person ceased to be a debenture holder. (2) (a) Every company having more than fifty debenture holders
shall, unless the register of debenture holders is in such a form as in itself to constitute an index, keep an index (which may be in the form of a card index) of the names of the debenture holders of the company and shall, within fourteen days after the date on which any alteration is made in the register of debenture holders, make the necessary alteration in the index
(b) The index shall, in respect of each debenture holder, contain a sufficient indication to enable the entries relating to that holder in the register to be readily found.
(3) If default is made in complying with sub-section (1) or (2), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees.
(4) Sub-sections (1) to (3) shall not apply with respect to deben- tures which, ex facie, vre payable to the bearer thereof.
153. Trusts not to be entered on register.—No notice of any trust, express, implied or constructive, shall be entered on the register of members or of debpnture holders, or be receivable by the Registrar
SLC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 97
154. Power to close register of members er debenture holders.— <J) A company may, after giving not less than seven clays' previous notice by advertisement m some newspaper circulating in the district in which the registered office of the company is situate, close the register of members or the register of debenture holders for any period or periods not exceeding in the aggregate forty-five days in each year, but not exceeding thirty days at any one time.
(2) If the register of members or of debenture holders is closed without giving the notice provided in sub-section (2), or after giving shorter notice than that so provided, or for a continuous or an aggregate period in excess of the limits specified in chat sub-section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to live hundred rupees i'oi every day during which the register is so closed.
155. Power of Court to rectify register of members.— (1) If— (a) the name of any person is, without sufficient cause,
entered in or omitted from the register of members of a com- pany; or
(b) default is made, or unnecessary delay takes place, in entering on 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 com- pany, may apply to the Court for rectification of the register.
(2) The Court may either reject the application or order rectifi- cation of the register; and in the latter case, may direct the com- pany to pay the damages, if any, sustained by any party aggrieved.
Tn either case, the Court in its discretion may make such order as to costs as it thinks fit,
(3) On an application under this section, the Court— (a) may decide any question relating to the title of any
person who is a party to the application to have his name entered in or omitted from the register, whether the question arises between members or alleged members, or between members or alleged members on the one hand and the company on the other hand; and
(b) generally, may decide any question which it is necessary or expedient to decide in connection with the application for lectification.
(4) From any order passed by the Court on the application, or on any issue raised therein and tried separately, an appeal shall lie on th 2 grounds mentioned in section 100 of the Code of Civil Procedure. 39)8 (Act V of 1908)—
(a) if the order be passed by a District Court, to the High Court;
(b) if the order be passed by a single Judge of a High Court consisting of three or more Judges, to a Bench of that High Court.
156. Notice to Registrar of rectification of register.—In the case of a company required by this Act to file a list of its members with
98 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
the Registrar, the Court, when making an order for rectification of the register, shall, by its order, direct notice ol the rectification to be filed with the Registrar within fourteen days from the dale ~>i the making of the order.
Foreign registers of members or debentfre holders
157. Power for company to keep foreign register of members or debenture holders.—(1) A company which has a share capital or which has issued debentures may, if so authorised by its articles, keep in any State or country outside India a branch register of members or debenture holders resident in that State or country (in this Act called a "foreign register").
(2) The company shall, within one month from the date of the opening of any foreign register, file with the Registrar notice of the situation of the office where such register is kept; and in the event of any change in the situation of such office or of its discontinuance, shall, within one month from the date of such change or discontinu- ance, as the case may be, file notice with the Registrar of such change or discontinuance.
(3) If default is made in complying with the requirements of sub-section (2), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for every dav during which the default continues.
158. Provisions as to foreign registers.— (1) A foreign register shall be deemed to be part of the company's register (in this section called the "principal register") of members or of debenture holders, as the case may be.
(2) A foreign register shall be kept, shall be open to inspection, and may be closed, and extracts may be taken therefrom and copies thereof may be required, in the same manner, mutatis mutandis, as is applicable to the principal register under this Act, except that the advertisement before closing the register shall be inserted in some newspaper circulating in the district wherein the foreign register is kept.
(3) (a) The Central Government may, by notification in the Official Gazette, direct that the provisions of clause (b) shall apply, or cease to apply, to foreign registers kept in any State or country outside India.
(b) If a foreign register is kept by a company in any State or country to which a direction under clause (a) applies for the time being, the decision of any competent Court in that State or country in regard to the rectification of the register shall have the same force and effect as If it were the decision of a com- petent Court in India.
(4) The company shall—
(a) transmit to its registered office in India a copy of every entry in any foreign register as soon as may be after the entry is made; and
SBC. 1] THE GAZETTE OF INDIA EXTRAORDINARY qO
(b) keep at such office a duplicate of every foreign register duly entered up from time to time.
(5) Every such duplicate shall, for all the purposes of this Act, be deemed to be part of the principal register.
(16) Subject to the provisions of this section with respect to dupli- cate! registers, the shares or debentures registered in any foreign register shall be distinguished from the shares or debentures register- ed in the principal register and in every other foreign register; and no transaction with respect to any shares or debentures registered in a foreign register shall, during the continuance of that registration, be registered in any other register.
(7) The company may discontinue the keeping of any foreign register; and thereupon all entries in that register shall be transferred to some other foreign register kept by the company in the same part of the world or to the principal register.
(8) Subject to the provisions of this Act, a company may, by its articles, make such regulations as it thinks fit in regard to its foreign registers.
(9) If default is made in complying with sub-section (4), ths company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees.
Annual Returns 159. Annual return to be made by company having a shara
capital.— (1) Every company having a share capital shall, within forty-two days from the day on which each of the annual general meetings referred to in section 166 is held, prepare and file with the Registrar a return containing the particulars specified in Part I ot Schedule V, as they stood on that day, regarding—
(a) its registered office, (b) the register of its members, (c) the register of its debenture holders, (d) its shares and debentures, (e) its indebtedness, (f) its members and debenture holders, past and present, and (g) its directors, managing directors, managing agents,
secretaries and treasurers and managers, past and present. (2) The said return shall be in the Form set out in Part II of
Schedule V or as near thereto as circumstances admit: Provided that where the company has converted any of its shares
into stbck and given notice of the conversion to the Registrar, the list referred to in paragraph 5 of Part I of Schedule V shall state the amount of stock held by each of the members concerned instead of the shares so converted previously held by him.
160J Annual return to be made by company not having a share capital.—(i) Every company not having a share capital shall, within forty-two days from the day on which each of the annual general meetings referred to in section 166 is held, prepare and file with th«
lOO t&k GAZETTE OF INDIA EXTRAORDINARY [fc>AHT tt
Registrar a re tu rn stating the following part iculars as they stood on tha t day: —
(a) the address of the registered office of the company;
(b) all such part iculars wi th respect to the persons who, at the date of the return , were the directors of the company, its managing agent, its secretaries and treasurers and its manager as are set out hi section 303.
(2) There shall be annexed to the re tu rn a statement containing part iculars of the total amount of the indebtedness of the company as on the day aforesaid in respect of all charges which are or were required to be registered with the Registrar under this Act or under • n y previous companies law, or which would have been required to be registered unde r this Act if they had been created after t he commencement of this Act.
161. F u r t h e r provisions regarding annual r e t u r n and certificate to be annexed thereto.—(1) The copy of the annual r e t u r n filed wi th the Registrar under section 159 or 160, as the case may be, shall be jjigned both by a director and by the managing agent, secretaries and treasurers , manager or secretary of the company, or where there is no managing agent, secretaries and treasurers , manager or sec- retary, by two directors of the company, one of whom shall be the managing director where there is one.
• (4) Th,ere shall also be filed wi th the Registrar along with the r e t u r n a certificate signed by both the signatories of t h e re turn , ftating—
fa) that the return states the facts as they stood on the day of the annual general meeting aforesaid, correctly and com- pletely; and
(b) in the case of a private company, also, (i) that the com- pany has not, since the date of the annual general meeting with reference to which the last return was submitted, or in the case of a first return, since the date of the incorporation of the com- pany, issued any invitation to the public to subscribe for any shares or debentures of the company, and (ii) that, where the annual return discloses the fact that the number of members of the company exceeds fifty, the excess consists wholly of persons who under sub-clause (b) of clause (iii) of sub-section (1) of section 3 are not to be included in reckoning the number of fifty.
162. Penalty and interpretation.—(1) If a company fails to comply with any of the provisions contained in sections 159, 160, or 161, the company, and every officer of the companv who is in default, shall be punishable with" fine which may extend to fifty rupees for every day during which the default continues.
(2) For the purposes of this section and sections 159, 160, and 161, the expressions "officer" and "director" shall include any per- son in accordance with whose directions or instructions the Board of directors of the Company is accustomed to act.
«KC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 10
General provisions regarding registers and returns 168. Place of keeping, an<L inspection of, registers and returns.—
i.1) Tie register of members commencing from the date of the regis- tration of the company, the index of members, the register and in- dex oa debenture holders, and copies of all annXial returns prepared under sections 159 and 160, together with the copies of certificates -and documents required to be annexed thereto under sections 160 and 161, shall be kept at the registered office of the company.
(2) The registers, indexes, returns, and copies of certificates and other documents referred to in sub-section (I) shall, except when the register of members or debenture holders is closed under the provisions of this Act, be open during business hours ((subject to such reasonable restrictipns, as the company may impose, so ihat not less than two hours in each day are allowed for inspection) to the inspection—
(a) of any member or debenture holder, without fee; and (b) of any other person, on payment of a fee of one rupee
for each inspection. <3) Any such member, debenture holder ot other person may—
(a) make extracts from any register, index, or copy referred to in sub-section (1) without fee or additional fee, as the case may be; or
(b) require a copy of any such register, index or copy or of any part thereof, on payment of six annas for every one hun- dred words or fractional part thereof required to be copied.
(4) The company shall cause any copy required by any person «nder clause (b) of sub-section (3) to be sent to that person within a period of ten days, exclusive of non-working days, commencing on the day next after the day on which the requirement is received toy the company.
(5) If any inspection, or the making of any extract required un- der this section, is refused, or if any copy required under this sec- tion is not sent within the period specified in sub-section (4), the company, and every officer of the company who is in default, shall be punishable, in respect of each offence, with fine which may ex- tend to fifty rupees for every day during which the refusal or de- fault continues.
(6) The Court may also, by order, compel an immediate inspec- tion of the document, or direct that the extract required shall forth- with bv, allowed to be taken by the person requiring it, or that tho copy required shall forthwith be sent to the person requiring it, as the (;ase may be.
164. Registers etc., to be evidence.—The register of members, the register of debenture holders, and the annual returns, certi- ficates and statements referred to in sections 159, 160, and 161 shall be prima facie evidence of any matters directed or authorised to be inserted therein by this Act.
I 0 2 THE GAZETTE OF INDIA EXTRAORDINARY [PAHI H
Meetings and Proceedings 165. Statutory meeting and statutory report of company.—(1)
Every company limited by shares, and every company limited by guarantee and having a share capital, shall, within a period of not less than one month nor more than six months from the date a t which the company is entitled to commence business, hold a general meeting of the members of the company, which shall be called "the- statutory meeting".
(2) The Board of directors shall, at least twenty-one days before the day on which the meeting is held, forward a report (in this Act referred to as "the statutory report") to every member of the com- pany:
Provided that if the statutory report is forwarded later than i* required above, it shall, notwithstanding that fact, be deemed to> have been duly forwarded if it is so agreed to by all the members, entitled to attend and vote at the meeting.
(3) The statutory report shall set out— (a) the total number of shares allotted, distinguishing shares,
allotted as fully or partly paid up otherwise than in cash, and stating in the case of shares partly paid up, the extent to which they are so paid up, and in either case, the consideration for which they have been allotted;
(b) the total amount of cash received by the company in, respect of all the shares allotted, distinguished as aforesaid;
(c) an abstract of the receipts of the company and of the- payments made thereout, up to a date within seven days of the date of the report, exhibiting under distinctive headings the receipts of the company from shares and debentures and other sources, the payments made thereout, and particulars concerning the balance remaining in hand, and an account or estimate of the preliminary expenses of the company, showing separately any commission or discount paid or to be paid on the issue or sale of shares or debentures;
(d) the names, addresses and occupations of the directors of the company and of its auditors; and also, if there be any, of its managing agent, secretaries and treasurers, manager, and secretary; and the changes, if any, which have occurred in such names, addresses and occupations since the date of the incorpora- tion of the company;
(e) the particulars of any contract which, or the modifica- tion or the proposed modification of which, is to be submitted to the meeting for its approval, together in the latter case with the particulars of the modification or proposed modification;
(f) the extent, if any, to which each under-writing con- tract, if any, has not been carried out, and the reasons therefor;
(g) the arrears, if any, due on calls from every director; from the managing agent, every partner of the managing agent every firm in which the managing agent is a partner, and where the managing agent is a private company every director thereof- from the secretaries and treasurers; where they are a.
Sac. 1J THE GAZETTE Or INDIA EXTRAORDINARY 103
firm, from every partner therein; and where they are a private comriany, from every director thereof; and from the manager, and I
(h) the particulars of any commission or brokerage paid or to be paid in connection with the issue or sale of shares or debentures to any director; to the managing agent, any partner of the managing agent, any firm in which the managing agent is a partner; and where the managing agent is a private com- pany, to any director thereof; to the secretaries and treasurers; where they are a firm, to any partner therein; and where they are a private company, to any director thereof; or to the manager. (4) The statutory report shall be certified as correct by not less
than two directors of the company one of whom shall be a manag- ing director, where there is one.
After the statutory report has been certified as aforesaid, the auditors of the company shall, in so far as the report relates to the shares allotted by the company, the cash received In respect of such shares and the receipts and payments of the company on capi- tal account, certify it as correct.
(5) The Board shall enuse a copy of the statutory report certified as is required by this section to be delivered to the Registrar for registration forthwith, after copies thereof have been sent to the members of the company.
(6) The Board shall cause a list showing the names, addresses •and occupations of the members of the company, and the number of shares held by them respectively, to be produced at the commence- ment of the statutory meeting, and to remain open and accessible to any member of the company during the continuance of the meeting.
(7) The members of the company present at the meeting shall be at liberty to discuss any matter relating to the formation of the company or arising out of the statutory report, whether previous notice has been given or not; but no resolution may be passed oi which notice has not been given in accordance with the provisions of this Act.
(8) The meeting may adjourn from time to time, and at any adjourned meeting, any resolution of which notice has been given in accordance with the provisions of this Act, whether before 01 after the former meeting, may be passed; and the adjourned meeting shall have the same powers as an original meeting.
(9) Ifl default is made in complying with the provisions of this section, &yery director or other officer of the company who is in default spall be punishable with fine which may extend to five hundred pupees-
(10) This section shall not apply to a private company.
166. Annual general meeting.—(1) (a) Every company shall, in addition to any other meetings, hold a general meeting which shall be styled its annual general meeting at the intervals, and in ac- cordance with the provisions, specified below.
104 THE GAZETTE OF INDIA EXTRAORDINARY [PART I t
(b) The first annual general meeting shall be held by a company within eighteen months of its incorporation.
(c) The next annual general meeting o± the company shall be held by It within nine months after the expiry of the financial year in which the first annual general meeting was held; and thereafter an annual general meeting shall be held by the company within nine months after the expiry of each financial year:
Provided that the Registrar may, for any special reason, extend the time within which any annual general meeting (not being the first annual general meeting),,shallvbe., held, by a further period not exceeding six months.
(d) Except in the case referred to in the foregoing proviso, not more than fifteen months shall elapse between the date of one- annual general meeting and that of the next.
(2) Every annual general meeting shall be called for a time during, business hours, on a day that is not a public holiday, and shall be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situate; and the notices calling the meeting shall specify it as the annual general meeting.
167. PoWer of Central Government to call annual general meetings —(1) If default is made in holding an annual general meeting in ac- cordance with section 166, the Central Government may, notwith- standing anything in this Act or in the articles of the company, on the application of any member of the company, call, or direct the *alling of, a general meeting of the company and give such ancillary- or consequential directions as the Central Government thinks ex- pedient in relation to the calling, holding and conducting of the meeting.
Explanation.—The directions that may be given under this sub- section may include a direction that one member of the company- present in person or by proxy shall be deemed to constitute a meeting.
(2) A general meeting held in pursuance of sub-section (1) shaUv subject to- any directions of the Central Government, be deemed to- be an annual general meeting of the company-
168. Penalty for default in complying with section 166 or 167.— If default is made in holding a meeting of the company in accord- ance with section 166, or in complying with any directions of the Central Government under sub-section (1) of section 167, the com- pany, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees-
169. Calling of extraordinary general meeting on requisition.— (1) The Board of directors of a company shall, on the requisition at such number of members of the company as is specified in sub-sec- tion (4), forthwith proceed duly to call an extraordinary general meeting of the company.
SBC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 105
(2) The requisition shall set out the matters for the considera- tion of which the meeting is to be called, shall be signed by the requisitionists, and shall be deposited at the registered office of the company. •
(3) The requisition may consist of several documents in like form, dach signed by one or more requisitionists.
(4) The number of members entitled to requisition a meeting Jn regard to any matter shall be—
(a) in the case of a company having a share capital, such number of them as hold at the date of the deposit of the re- quisition, not less than one-tenth of such of the paid-up capital of the company as at that date carries the right of voting In regard to that matter;
(b) in the case of a company not having a share capital, such number of them as have at the date of deposit of the re- quisition not less than one-tenth of the total voting power of all the members having at the said date a right to vote in regard to that matter. (5) Where two or more distinct matters are specified in the
requisition, the provisions of sub-section (4) shall apply separately In regard to each such matter; and the requisition shall accordingly be valid only in respect of those matters in regard to which the condition specified in that sub-section is fulfilled.
(6) If the Board does not, within twenty-one days from the date of the deposit of a valid requisition in regard to any matters, proceed duly to call a meeting for the consideration of those matters on a day not later than forty-five days from the date of the deposit of the requisition, the meeting may be called—
(a) by the requisitionists themselves, (b) in the case of a company having a share capital, by
such of the requisitionists as represent either a majority in value of the paid-up share capital held by all of them or not less than one-tenth of such of the paid-up share capital of the company as is referred to in clause (a) of sub-section (4), whichever is Jess; or
(c) in the case of a company not having a share capital, by such of the requisitionists as represent not less than one-tenth of the total voting power of all the members of the company referred to in clause (b) of sub-section (4).
Explanation.—For the purposes of this sub-section, the Board shall, m the case of a meeting at which a resolution is to be proposed as a special resolution, be deemed not to have duly convened the meeting if they do not give such notice thereof as is required by sub-section (2) of section 189.
(7) A meeting called under sub-section (6) by the requisitionists or any of them—
(a) shall be called in the same manner, as nearly as possible, as that in which meetings are to be called by the Board; but
(b) shall not be held after the expiration of three months from the date of the deposit of the requisition.
106 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
Explanation.—Nothing in clause (b) shall be deemed to prevent a meeting duly commenced before the expiry of the period of three months aforesaid, from adjourning to some day after the expiry of that period.
(8) Where two or more persons hold any shares or interest in a company jointly, a requisition, or a notice calling a meeting, signed by one or some only of them shall, for the purposes of this section, have the same force and effect as if i t h a a been signed by all of them.
(9) Any reasonable expenses incurred by the requisitionists by reason of the failure of the Board duly to call a meeting shall be repaid to the requisitionists by the company; and any sum so repaid shall be retained by the company out of any sums due or to become due from the company by way of fees or other remuneration for their services to such of the directors as were in default.
170. Sections 171 to 186 to apply to meetings.—(1) The provisions of sections 171 to 186—
(i) shall, notwithstanding anything to the contrary in the articles of the company, apply with respect to general meetings of a public company, and of a private company which is a subsidiary of a public company; and
(ii) shall, unless otherwise specified therein or unless the articles of the company otherwise provide, apply with respect to general meetings of a private company which is not a sub- sidiary of a public company.
(2) (a) Section 176, with such adaptations and modifications, if any, as may be prescribed, shall apply with respect to meetings of any class of members, or of debenture holders or any class of deben- ture holders, of a company, in like manner as it applies with respect to general meetings of the company,
(b) Unless the articles of the company or a contract binding on the persons concerned otherwise provide, sections 171 to 175 and sections 177 to 186 with such adaptations and modifications, if any, as may be prescribed, shall apply with respect to meetings of any class of members, or of debenture holders or any class of deben- ture holders, of a company, in like manner as they apply with respect to general meetings of the company.
171. Length of notice for calling meeting.—(1) A general meet- ing of a company may be called by giving not less than twenty- one days' notice in writing.
(2) A general meeting may be called after giving shorter notice than that specified in sub-section (1), if consent is accorded thereto—
(i) in the case of an annual general meeting, by all the members entitled to vote thereat; and
(ii) in the case of any other meeting, by members of the company (a) holding, if the company has a share capital, not
1 less than 65 per cent, of such part of the paid-up share capital
SEC. 1] THE GAZETTE OP INDIA EXTRAORDINARY 107
of the company as gives a right to vote at the meeting, or (b) having, if the company has no share capital, not less than 95 per cent, of the total voting power exercisable at that meeting t|
Provided that where any members of a company are entitled to voj;e only on some resolution or resolutions to be moved at a meet- ing and not on the others, those members shall be taken into account for the purposes of this sub-section in respect of the former resolution or resolutions and not in respect of the latter.
172. Contents and manner of service of notice and persons on whom it is to be served.—(1) Every notice of a meeting of a company shall specify the place and the day and hour of the meet- ing, and shall contain a statement of the business to be transacted thereat.
(2) Notice of every meeting of the company shall be given—
({) to every member of the company, in any manner autho- rised by sub-sections (1) to (4) of section 53;
(ii) to the persons entitled to a share in consequence of the death or insolvency of a member, by sending it through the post in a prepaid letter addressed to them by name, or by the title of representatives of the deceased, or assignees of the in- solvent, or by any like description, at the address, if any, in India supplied for the purpose by the persons claiming to be so entitled, or until such an address has been so supplied, by giving the notice in any manner in which it might have been given if the death or insolvency had not occurred; and
(iii) to the auditor or auditors for the time being of the company, in any manner authorised by section 53 in the case of any member or members of the company.
(3) The accidental omission to give notice to, or the non-receipt of notice by, any member or other person to whom it should be given shall not invalidate the proceedings at the meeting.
173. Explanatory statement to be annexed to notice.—(1) For the purposes of this section—
(a) in the case of an annual general meeting, all business to be transacted at the meeting shall be deemed special, with the exception of business relating to (i) the consideration of the accounts, balance sheet and the reports of the Board of directors and auditors, (ii) the declaration of a dividend, (iii) the appointment of directors in the place of those retiring, and (iv) the appointment of, and the fixing of the remuneration of, the auditors; and
(b) in the case of any other meeting, all business shall be deemed special.
(2) Where any rtems of business to be transacted at the meeting tre deemed to be special as aforesaid, there shall be annexed to the
108 THE GAZETTE OF INDJA EXTBAORDINAHY [PART II
notice of the meeting a statement setting out all material facts con- cerning each such item of business, including in particular the nature an'd' extent of the interest, if any, therein, of every director, the managing agent, if any, the secretaries and treasurers, if any, and the manager, if any,
(3) Where any item of business consists of the according of ap- proval to any document by the meeting, the time and place where the document can be inspected shall be specified in the statement aforesaid.
174. Quorum for meeting.—(1) Unless the articles of the company provide for a larger number, five members personally present in the case of public company, and two members personally present in the case of a private company, shall be the quorum for a meeting of the company.
(2) Unless the articles of the company otherwise provide, the provisions of sub-sections (3), (4) and (5) shall apply with respect to the meetings of a pubjlc or private company.
(3) If within half an hour from the time appointed for holding a meeting of the company, a quorum is not present, the meeting, if called upon the requisition of members, shall stand dissolved.
(4) In any other case, the meeting shall stand adjourned to the same day in the next week, at the same time and place, or to such other day and at such other time and place as the Board may deter- mine-
(5) If at the adjourned meeting also, a quorum is not present within half an hour from the titne appointed for holding the meet- ing, the members present shall be a quorum.
175. Chairman of meeting.—(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 i3 demanded on the election of the chairman, it shall be taken forthwith in accordance with the provisions of this Act, the chairman elected on a show of hands exercising all the powers of the chairman under the said provisions.
(3) If some other person is elected chairman as a result of the poll, he shall be chairman for the rest of the meeting.
176. 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 (whether a member or not) as his proxy to attend and vote instead of himself; but a proxy so appointed shall not have any right to speak at the meeting:
Provided that, unless the articles otherwise provide— (a) this sub-section shall not apply in the case of a company
not having a share capital; (b) a member of a private company shall not be entitled to
appoint more than one proxy to attend on the same occasion; and
SEC. lj THE GAZETTE OF INDIA EXTRAORDINARY 109
ĉ) a proxy shall not be entitled to vote except on a poll. (2) In every notice calling a~meeting Qt,axOmpa«y which has a
share capital}'or"the articles of which provide for voting by proxy at the nieeting, there shall appear with reasonable prominence a state- ment 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 himge.lf, and that a proxy need not be a member.
If default is made in complying with this sub-section as respects any meeting, every officer of the company who is In default shall be punishable with fine wWqh may extend to, five hundred rupees.
(3) Any provision contained in the articles of a public company, or of a private company which is a subsidiary of a public company, shall be void, in so far as it would have the effect of requiring the instrument appointing, a proxy, or any other document necessary to show the validity of or otherwise relating td~the* appointment of a proxy, to be received by the company or any other person more than forty-eight hours before the meeting in order that the appointment may be effective thereat.
(4) If for the purpose of any meeting of a company, invitations to aopoint as proxy a person Or one Qf a number of persons specified in the invitations are issued at the company's expense to any mem- ber entitled to have a notice of the meeting sent to him and to vote thereat by proxy, every oificer of the company who knowingly issues the Invitations as aforesaid or wilfully authorises or permits thejr issue shall be punishable wifh fine which may extend to one thousand rupees: •
Provided that an officer shall not be punishable under this sub- section by reason only of the issue to a mefhber at his request in writing of a form of appointment naming the proxy, or of a list of persons willing to act as proxies, if the form or list is available on request in writing to every member entitled to vote at the meeting by proxy.
(5) The instrument appointing a proxy shall— (a) be in writing; and (b) be signed by tjhe appointer or his attorney duly autho-
rised 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. ''•
(6) An instrument appointing a proxy, if in any of the forms set out in Schedule IX, shall not be questioned on the ground that it falls to comply with, any special requirements specified for such instrument by the articles. y
(7) Every member entitled to vote at a meeting of the company, or on any resolution to be moved thereat, shall be entitled during the period beginning twenty-four hours before the time fixed for the commencement of the meeting and ending with the conclusion of the meeting, to inspect the proxies lodged, at any time during the business hours of the company, provided not less than three days' notice in writing of the intention so to inspect is given to the com- pany.
HO THE GAZETTE OF INDIA EXTRAORDINARY [PAHT II
177. Voting to be by show of hands in first instance.—At any general meeting, a resolution put to the vote of the meeting shall, unless a poll is demanded under section 179, be decided on a show of hands.
178. Chairman's declaration of result of voting by show of handf to be conclusive.—A declaration by the chairman in pursuance of section 177 that on a show of hands, a resolution has or has not been carried, or has or has not been carried either unanimously or by a particular majority, and an entry to that effect in the books containing the minutes of the proceedings of the company, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes cast in favour of or against such resolution
179. Demand for poll.—(I) Before or on the declaration of the result of the voting on any resolution on a show of hands, a poll may be ordered to be taken by the chairman of the meeting of his own motion, and shall be ordered to be taken by him on a demand made in that behalf by the persons or person specified below, that is to say,—
(a) in the case of a public company, by at least five members having the right to vote on the resolution and present in person or by proxy,
(b) in the case of a private company, by one member having the right to vote on the resolution and present in person or by proxy if not more than seven such members are personally present, and by two such members present in person or by proxy if more than seven such members are personally present,
(c) by any member or members present in person or by proxy and having not less than one-tenth of the total voting power in respect of the resolution, or
(d) by any member or members present in person or by proxy and holding shares in the company conferring a right to vote on the resolution, being shares on which an aggregate sum has been paid up which is not less than one-tenth of the total sum paid up on all the shares conferring that right.
\2) The demand for a poll may be withdrawn at any time by the person or persons who made the demand.
* 180. Time of taking poll.—(1) A poll demanded on a. question of adjournment shall be taken forthwith.
(2) A poll demanded on any other question (not being n question relating to the election of a chairman which is provided for In section 175) shall be taken at such time not being later than forty- eight hours from the time when the demand was made, as the chairman may direct.
181. Restriction on exercise of voting right of members who hlave not paid calls etc.—Notwithstanding anything contained in this Act, the articles of a company may provide that no member shall exer- cise any voting right in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid, or in regard to which the company has and has exer- cised any right of lien.
Sue. 1]| THE GAZETTE OF INDIA EXTRAORDINARY m
182. Restrictions on exercise of voting right in other cased to be void,—A public company, or a private company which Is a subsidiary of a public company, shall not prohibit any member from Exercising his voting right on the ground that he has not held his sbjare or other interest in the company for any specified period preceding the date on which the vote is taken, or on any other ground not being a ground set out in section 181.
183. Bight of member to use his votes differently.—On a poll taken at a meeting of a company, a member entitled to more than one vote, or his proxy, or other person entitled to vote for him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses.
184. Scrutineers at poll.—(1) Where a poll is to be taken, the chairman of the meeting shall appoint two scrutineers to scrutinise the votes given on the poll and to report thereon to him.
(2) The chairman shall have power, at any time before the result of the poll is declared, to remove a scrutineer from office and to fill vacancies in the office of scrutineer arising from such removal or from any other cause.
(3) Of the two scrutineers appointed under this section, one shall always be a member (not being an officer or employee of the com- pany) present at the meeting, provided such a member is available and willing to be appointed.
185. Manner of taking poll and result thereof.—(1) Subject to the provisions of this Act, the chairman of the meeting shall have power to regulate the manner in which a poll shall be taken.
(2) The result of the poll shall be deemed to be the decision of the meeting on the resolution on which the poll was taken.
186. Power of Court to order meeting to be called.—(1) If for any reason it is impracticable to call a meeting of a company, other than an annual general meeting, in any manner in which meetings of the company may be called, or to hold or conduct the meeting of the company in the manner prescribed by this Act or the articles, the Court may, either of its own motion or on the application of any director of the company, or of any member of the company who would be entitled to vote at the meeting,—
(a) order a meeting of the company to be called, held and conducted in such manner as the Court thinks fit; and
(b) give such ancillary or consequential directions as the Court thinks expedient, including directions modifying or supple- menting in relation to the calling, holding and conducting of the meeting, the operation of the provisions of this Act and of the company's articles.
Explanation—The directions that may be given under this sub- section may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meet- ing-
(2) Any meeting called, held and conducted in accordance with any such order shall, for all purposes, be deemed to be a meeting of the company duly called, held and conducted.
112 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
187. Representation of corporations a.( meetings ol companies anil of creditors.—(1) A body corporate (wheth'eV £ 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 govern- ing body, authorise such person as it thinks fit to act as its representative at any meeting of ±hercpmpanyT 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 con- tained in any debenture or trust deed, as the case may be.
(2) A person authorised by resolution as aforesaid shall be entitled to exercise the same rights and powers (Including the right to vote by proxy) on behalf of the body corporate which he repre- sents as that body could exercise if it were a member, creditor or holder of debentures of the company.
188. Circulation of members' resolutions.—(1) Subject to the pro- visions of this section, a company shall, on the requisition in writing of such number of members as is hereinafter specified and (unless the company otherwise resolves) at the expense of the requisi- tionists,—
(a) give to members of the company entitled to receive notice of the next annual general meeting, notice of any resolu- tion which may properly be moved and is intended to be moved at that meeting;
(b) circulate to members entitled to have notice of any general meeting sent to them, any statement of not more than one thousand words with respect to the matter referred to in any proposed resolution, or any business to be dealt with at that meeting.
(2) The number of members necessary for a requisition under sub-section (1) shall be—
(a) such number of members as represent not less than one- twentieth of the total voting power of all the members having at the date of the requisition a right to vote on the resolution or business to which the requisition relates; or
(b) not less than one hundred members having the right aforesaid and holding shares in the company on which there has been paid up an aggregate sum of not less than one lakh of rupees in all.
(3) Notice of any such resolution shall be given, and any such statement shall be circulated, to members of the company entitled to have notice of the meeting sent to them, by serving a copy of the resolution or statement on each member in any manner permitted
SEC. Ill THE GAZfcTTE OF INDIA EXTRAORDINARY 113
for service of notice of the meeting; and notice of any such resolu- tion shall be given to any other member of the company by giving notice of the general effect of the resolution in any manner permitted for igiving him notice of meetings of the company:
Provided that the copy shall be served, or notice of the effect of the resolution shall be given, as the case may be, in the same manner and, so far as practicable, at the same time as notice of the meeting, and where it is not practicable for it to be served or given at that time, it shall be served or given as soon as practicable thereafter.
(4) A company shall not be bound under this section to give notice of any resolution or to circulate any statement unless—
(a) a copy of the requisition signed by the requisitionista (or two or more copies which between them contain the signa- tures of all the requisitionists) is deposited at the registered office of the company—
(i) in the case of a requisition requiring notice of a reso- lution, not less than six weeks before the meeting;
{ii) in the case of any other requisition, not less than two weeks before the meeting; and (b) there is deposited or tendered with the requisition a
sum reasonably sufficient to meet the company's expenses in giving effect thereto:
Provided that if, after a copy of a requisition requiring notice of a resolution has been deposited at the registered office of the com- pany, an annual general meeting is called for a date six weeks or less after the copy has been deposited, the copy, although not deposited within the time required by this sub-section, shall be deemed to have been properly deposited for the purposes thereof.
(5) The company shall also not be bound under this section to circulate any statement if, on the application either of the company or of any other person who claims to be aggrieved, the Court is satisfied that the rights conferred by this section are being abused to secure needless publicity for defamatory matter; and the Court may order the company's costs on an application under this section to be paid in whole or in part by the requisitionists, notwithstanding that they are not parties to the application.
(G) A banking company shall not be bound to circulate any state- ment under this section, if, in the opinion of its Board of directors, the circulation will injure the interests of the company.
(7) Notwithstanding anything in the company's articles, the busi- ness which may be dealt with at an annual general meeting shall include any resolution of which notice is given in accordance with this section, and for the purposes of this sub-section, notice shall be deemed to have been so given, notwithstanding the accidental omis- sion, in giving it, of one or more members.
(8) If default is made in complying with the provisions of tm& section, every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees.
U 4 THEGAZETTE OF INDIA EXTRAORDINARY [PABT II
189. Ordinary and special resolutions.—(1) A resolution shall be an ordinary resolution when at a general meeting of which the notice required under this Act has been duly given, the votes cast (whether on a show of hands, or on a poll, as the case 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, 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 reso- lution has been duly specified in the notice calling the general meeting or other intimation given to the members of the resolu- tion;
(b) the notice required under this Act has been duly given of the general meeting; and
(c) the votes cast in favour of the resolution (whether on a show of hands, or on a poll, as the case may be,) by members who, being entitled so to do, vote in person,' or where proxies are allowed, by proxy, are not less than three times the number of the votes, if any, cast against the resolution by members so entitled and voting.
190. Resolutions requiring special notice.—(I) Where, by any pro- vision contained in this Act or in the articles, special notice is requir- ed of any resolution, notice of the intention to move the resolution shall be given to the company not less than twenty-eight days before the meeting at which it is to be moved, exclusive of the day on which the notice is served or deemed to be served and the day of the meet- ing.
(2) The company shall give its members notice of any such reso- lution at the same time and in the same manner as it gives notice of the meeting, or if that is not practicable, shall give them notice thereof, either by advertisement in a newspaper having an appro- priate circulation or in any other mode allowed by the articles, not less than twenty-one days before the meeting.
(3) If, after notice of the intention to move such a resolution has been given to the company, a meeting is called for a date twenty- eight days or less after the notice has been given, then, notwithstand- ing anything contained in sub-sections (1) and (2), the notice, though not given within the time required by this section, shall be deemed to have been properly given for the purposes thereof.
191. Resolutions passed at adjourned meetings.—Where a resolu- tion is passed at an adjourned meeting of-—
(a) a company; (b) the holders of any class of shares in a company; or (c) the Board of directors of a company;
the resolution shall, for all purposes, be treated as having been pass- ed on the date on which it was in fact passed, and shall not be deemed to have been passed on any earlier date.
SKC. 1| THE GAZETTE OF INDIA EXTRAORDINARY 115
192. Registration of certain resolutions and agreements.—(I) A. copy of every resolution or agreement to which this section applies shall, within fifteen days after the passing or making thereof, be printed or typewritten and duly certified under the signature of an officer of the company and filed with the Registrar who shall record the same.
(2) Where articles have been registered, a copy of every such resolution or agreement for the time being in force shall be embodi- ed in or annexed to every copy of the articles issued after the passing of the resolution or the making of the agreement.
(3) Where articles have not been registered, a printed copy of every such resolution or agreement shall be forwarded to any mem- ber at his request, on payment of one rupee.
(4) This section shall apply to— (a) special resolutions; (b) resolutions which have been agreed to by all the mem-
bers 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 appoint- ment, re-appointment or renewal of the appointment, or varia- tion of the terms of appointment, of a managing director;
(d) any agreement relating to the appointment, re-appoint- ment or renewal of the appointment of a managing agent or secretaries and treasurers for a company, or varying the terms of any such agreement, executed by the company;
(e) resolutions or agreements which have been agreed to by all the members of any class of shareholders but which, if not so agreed to, would not have been effective for their purpose unless they had been passed by some particular majority or otherwise in some 'particular manner; and all resolutions or agreements which effectively bind all the members of any class of shareholders though not agreed to by all those members; and
(f) resolutions requiring a company to be wound up volun- tarily passed in pursuance of sub-section (1) of section 484.
(5) If default is made in complying with sub-section (2), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to twenty rupees for every day during which the default continues.
(6) If default is made in complying with sub-section (2) or (3), the cempany, and every officer of the company who is in default, shall be punishable with fine which may extend to ten rupees for each copy in respect of which default is made.
(7) For the purposes of sub-sections (5) and (6), the liquidator of a company shall be deemed to be an officer of the company.
193. Minutes of proceedings of general meetings and of Board and other meetings.—(1) Every company shall cause minutes of all proceedings of general meetings, and of all proceedings at meetings
116 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
of its Board of directors or of committees of the Board, to be enter- ed in books kept for that purpose.
(2) The minutes of each meeting shall contain a fair and correct summary of the proceedings thereat.
(3) All appointments of officers made at any of the meetings aforesaid shall be included in the minutes of the meeting.
(4) In the rcase 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,
tha names of the directors, if any, dissenting from, or not con- curring in, the resolution. (5) Nothing contained in sub-sections (1) to (4) shall be deemed
to require the inclusion in any such minutes of any matter which, in the opinion of the chairman of the meeting—
(a) is, or could reasonably be regarded as, defamatory of any person;
(b) is irrelevant or immaterial to the proceedings; or (c) is detrimental to the interests of the company.
Explanation.—The chairman shall exercise an absolute discretion in regard to the inclusion or non-inclusion of any matter in the minutes on the grounds specified in this sub-section.
(6) If default is made in complying with the foregoing provi- sions of this section in respect of any meeting, the company, and •every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees.
194. Minutes to be evidence.—Any such minute, if purporting to be signed by the chairman of the meeting at which the proceedings took place or by the chairman of the next succeeding meeting, shall be evidence of the proceedings.
195. Presumptions to be drawn where minutes duly drawn and •signed.—Where minutes of the proceedings of any general meeting of the company or of any meeting of its Board of directors or of a committee of the Bdard have been made and signed in accordance •with the provisions of sections 193 and 194, then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken place, and in particular, all appointments of directors or liquidators made at the meeting shall be deemed to be valid.
196. Inspection of minute books of general meetings.— (1) The "books containing the minutes of the proceedings of any genera] meeting of a company held on or after the 15th day of January,. 1937, shall—
(a) be kept at the registered office of the company, and (b) be open, during business hours, to the inspection of
any member without charge, subject to such reasonable restric- tions as the company may, by its articles or in general meeting impose, so however that not less than two hours in each day are allowed for inspection.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 117
(2) Any member shall be entitled to be furnished, within seven days after he has made a request in that behalf to the company, with a copy of any minutes referred to in sub-section (1), on payment of six annas for every one hundred words or fractional part thereof required TO be copied.
(3) If any inspection required under sub-section (1) is refused, or if any copy required under sub-section (2) is not furnished within the time specified therein, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees in respect of each offence.
(4) In the case of any such refusal or default, the Court may, by order, compel an immediate inspection of the minute books or direct that the copy required shall forthwith be sent to the person requiring it.
197. Publication of reports of proceedings of general meetings.— (1) No document purporting to be a report of the proceedings of any general meeting of a company shall be circulated or advertised at the expense of the company, unless it includes the matters requir- ed by section 193 to be contained in the minutes of the proceedings of such meeting.
(2) If any report is circulated or advertised in contravention of sub-section (1), the company, and every officer of the company who is in default, shall be punishable, in respect of each offence, with flne which may extend to five hundred rupees.
Managerial Remuneration, etc. 198. Overall maximum managerial remuneration and minimum
managerial remuneration in the absence or inadequacy of profits.— (1) Save as otherwise expressly provided in this Act, in the case of a public company or a private company which is a subsidiary of a public company, the total remuneration payable by the company to its directors, its managing agent or secretaries and treasurers, if any, and its manager, i* any, shall not exceed eleven per cent, of the net profit' of the ' »mpany, computed in the manner laid down in sections 349 350 and 351, except that the remuneration of the directors shalT ot be deducted from the gross profits.
(2) The percentage aforesaid shall be exclusive of any fees pay- able to directors for meetings of the Board attended by them.
(3) Nothing contained in sub-sections (1) and (2) shall be deemed—
(a) to prohibit the payment of a monthly remuneration to directors in accordance with the provisions of section 309 or to a manager in accordance with the provisions of section 387; or
(b|) to affect the operation of sections 352, 353, 354, 356, 357, 358, 359 or 360.
(4) Notwithstanding anything contained in sub-sections (1) to (3), if in any financial year, a company has no profits or its profits are inadequate, the company may pay to any director or directors in- cluding managing or whole-time directors, if any, its managing agent or secretaries and treasurers, if any, and its manager, if any, or if there are two or more of them holding office in the company,
n8 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
to all of them together, by way of minimum remuneration, such sum not exceeding fifty thousand rupees per annum as it considers reasonable:
Provided that where a monthly payment is being made or is pro- posed to be made to any managing or whole-time director or director?1 and the manager or to any one or more of them and the Central Government is satisfied that for the efficient conduct of the business of the company, the minimum remuneration of fifty thousand rupees per annum is or will be insufficient, the Central Government may, by order, sanction an increase in the minimum remuneration to such sum, for such period, and subject to such conditions, if any, as may be specified in the order.
199. Calculation of commission etc., in certain cases.—(1) Where any commission or other remuneration payable to any officer or employee of a company (not being a director, the managing agent secretaries and treasurers or a manager) is fixed at a percentage of, or Is otherwise based on, the net profits of the company, such profits shall be calculated in the manner set out in sections 349, 350 and 351.
(2) Any provision in force at the commencement of this Act for the payment of any commission or other remuneration in any manner based on the net profits of a company, shall continue to be in force for a period of one year from such commencement; and thereafter shall become subject to the provisions of sub-section (i).
200. Prohibition of tax-free payments.—(I) No company shall pay to any officer or employee thereof, whether in his capacity as such or otherwise, remuneration free of any tax, or otherwise calcu- lated by reference to, or varying with, any tax payable by him, or the rate or standard rate of any such tax, or the amount thereof.
Explanation.—In this sub-section, the expression ".tax" comprises any kind of income-tax including super-tax.
(2) Where by virtue of any provision in force immediately before the commencement of this Act, whether contained in the company's articles, or in any contract made with the company, or in any re- solution passed by the company in general meeting or by the company's Board of directors, any officer or employee of the com- pany holding any office at the commencement of this Act is en- titled to remuneration in any of the modes prohibited by sub-sec- tion (1), such provision shall have effect during the residue of the term for which he is entitled to hold such office at such commen- cement, as if it provided instead for the payment of a gross sum subject to the tax in question, which, after deducting such tax, would yield the net sum actually specified in such provision.
(3) This section shall not apply to any remuneration—
(a) which fell due before the commencement of this Act, or
(b) which may fall due after the commencement of this Act, In respect of any period before such commencement.
Sj'c 1] THE GAZETTE OF INDIA EXTRAORDINARY 119
201. Avoidance of provisions relieving liability of officers and auditors of company.—(1) Save as provided in this section, any pro- vision, whether contained in the articles of a company or in an .agreement with a company or in any other instrument, for exempt- ing any officer of the company or any person employed by the company as auditor from, or indemnifying him against, any liability .vhich, by virtue of any rule of law, would otherwise attach to him m respect of any negligence, default, misfeasance, breach of duty or breach of trust of which he may be guilty in relation to the •company, shall be void:
Provided that a company may, in pursuance of any such provi- sion as aforesaid, indemnify any such officer or auditor against any liability incurred by him in defending any proceedings, whether civil or criminal, in which judgment is given in his favour or in which he is acquitted or discharged or in connection with any appli- cation under section 633 in which relief is granted to him by the ^ourt.
(2) Nothing contained in the proviso to sub-section (2) shall apply to the constituted attorney of the managing agent of a company, unless such attorney is, or is deemed to be, an officer of the company.
Prevention of Management by Undesirable Persons
202. Undischarged insolvent not to manage companies—(1) If any person, being an undischarged insolvent,—
(a) discharges any of the functions of a director, or acts as or discharges any of the functions of the managing agent, secretaries and treasurers, or manager, of any company; or
(b) directly or indirectly takes part or is concerned in the promotion, formation or management of any company;
he shall be punishable with imprisonmexit for a term which may extend to two years, or with fine which may extend to five thousand rupees, or with both.
(2) In this section, "company" includes—
(a) an unregistered company; and
<b) a body corporate incorporated outside India, which has an established place of business within India.
203. Power to restrain fraudulent persons from managing tcortipanies.— (1) Where—
(a) a person is convicted of any offence in connection with the promotion, formation or management of a company; or
(b) in the course of winding up a company it appears that a person—
120 THE GAZETTE OF INDIA EXTEAORDINARY [PART II
(i) has been guilty of any offence for which he 1» punishable (whether he has been convicted or not) under section 542; or
(ii) hes otherwise been guilty, while an officer of the company, of any fraud or misfeasance in relation to the company or of any breach of his di^ty to the company;
the Court may make an order that that person shall not, without the leave of the Court, be a director of, or in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of a company, for such period not exceeding five years as may be specified in the order.
(2) In sub-section (1), the expression "the Court",—
(a) in relation to the making of an order against any person by virtue of clause (a) thereof, includes the Court by which he is convicted, as well as any Court having jurisdiction to wind up the company as respects which the offence was committed; and
• (b) in relation to the granting of leave, means any Court having jurisdiction to wind up the company as respects which leave is sought,
(3) A person intending to apply for the making of an order under this section by the Court having jurisdiction to wind up a company shall give not less than ten days' notice of his intention to the person against whom the order is sought, and at the hearing of the application, the last-mentioned person may appear and himself give evidence or call witnesses.
(4) An application for the making of an order under this section bv the Court having jurisdiction to wind up a company may be made by the Official Liquidator, or by the liquidator of the company, or by any person who is or has been a member or creditor of the company.
(5) On the hearing of any application for an order under this section by the Official Liquidator or the liquidator, or of any application for leave under this section by a person against whom an order has been made on the application of the Official Liquidator or liquidator, the Official Liquidator or liquidator shall appear and call the attention of the Court to any matters which seem to him io be relevant, and may himself give evidence or call witnesses.
(6) An order may be made by virtue of sub-clause (ii) of clause; (b) of sub-section (1), notwithstanding that the person concerned may be criminally liable in respect of the matters on the ground of which the order is to be made, and for the purposes of the said sub-clause (ii), the expression "officer" shall include any person in accordance with whose directions or instructions the Board of directors of the company has been accustomed to act.
(7) If any person acts in contravention of an order made under this section, he shall, in respect of each offence, be punishable with
SEC. 1] ' THE GAZETTE OF INDIA EXTRAORDINARY 121
Imprisonment for a term which may extend to two years, or with fine which may extend to five thousand rupees, or with both.
(8) The provisions of this section shall be in addition to, and without prejudice to the operation of, any other provision contained in this! Act. Restriction on appointment of -firmsand bodies corporate to offices
204, Restriction on appointment of firm or body corporate to office or place of profit under a company.—(1) Save as provided in sub-section (2), no company shall, after the commencement of this Act, appoint or employ any firm or body corporate to or in anv office or place of profit under the company, other than the office of managing agent or secretaries and treasurers, for a term exceed- ing five years at a time.
(2) Sub-section (2) shall not apply to the appointment or em- ployment of a firm or body corporate as a technician or a consultant,—
(i) unless the firm or body corporate aforesaid is already the managing agent or secretaries and treasurers of the com- pany; or
(ii) unless a partner in the firm aforesaid, or a director or member of the body corporate aforesaid being a private com- pany, or a director of the body corporate aforesaid not being a private company, is—
already the managing agent of the company; or a member of the firm, a director or member of the
private company, or a director of the body corporate not being a private company, which firm, private company or body cor- porate is already the managing agent or the secretaries and treasurers of the company.
(3) Any firm or body corporate holding at the commencement of this Act any office or place of profit under the company shall, unless its term of office expires earlier, be deemed to have vacated its office immediately on the expiry of five years from the com- mencement of this Act.
(4) Nothing contained in sub-section (1) shall be deemed to prohibit the re-appointment, re-employment, or extension of the term of office, of any firm or body corporate by further periods not exceeding five years on each occasion:
Provided that any such re-appointment, re-employment or exten- sion shall not be sanctioned earlier than two years from the date on which it is to come into force.
1(5) Any office or place in a company shall be deemed to be an office or place of profit under the company, within the meaning of thi|s section, if the person holding it obtains anything by way of remuneration, whether as salary, fees, commission, perquisites, the right to occupy free of rent any premises as a place of residence, or otherwise.
(6) This section shall not apply to a private company, unless it is a subsidiary of a public company.
122 THE GAZETTE OF itfDIA EXTRAORDINARY [PART II
Dividends and manner and time of payment thereof
205. Dividend to be paid only out of profits.—No dividend shall be declared or paid except out of the profits of the company or out of moneys provided by the Central or a State Government for the payment of the dividend in pursuance of a guarantee given by such Government.
Explanation.—Nothing in this section shall be deemed to affect in any manner the operation of section 208.
206. Dividend not to be paid except to registered shareholders or to their order or to their bankers.—(1) No dividend shall be paid by a company in respect of any share therein, except—
(a) to the registered holder of such share or to his order or to his bankers; or
(b) in case a share warrant has been issued in respect of the share in pursuance of section 114, to the bearer of such warrant or to his bankers,
(2) Nothing contained in sub-section (1) shall be deemed to require the bankers of a registered shareholder to make a separate application to the company for the payment of the dividend.
207. Penalty for failure to distribute dividends within three months,—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 three months from the date of the declaration, to any shareholder entitled to the payment of the dividend, every director of the company; its managing agent or secretaries and treasurers; and where the managing agent is a firm or body corporate, every partner in the firm and every director of the body corporate; and where the secretaries and treasurers are a firm, every partner in the firm and where they are a body corporate, every director thereof; shall, if he is knowingly a party to the default, be punishable with simple imprisonment for a term which may extend to seven days and shall also be liable to fine;
Provided that no offence shall be deemed to have been committed within the meaning of the foregoing provision in the following cases, namely: —
(a) where the dividend could not be paid by reason of the operation of any lav/; '
(b) where a shareholder has given directions to the com- pany regarding the payment of the dividend and those directions cannot be complied with;
(c) where there is a dispute regarding the right to receive the dividend;
(d) where the dividend has been 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 divi- dend or to post the warrant within the period aforesaid was not due to any default on the part of the company.
SEC. I] THE GAZETTE OF INDIA EXTRAORDINARY 123
Payments of interest out of capital 208. Power of company to pay interest out of capital in certain
«ases.—1(1) Where any shares in a company are issued for the pur- pose of raising money to defray the expenses of the construction of any work or building, or the provision of any plant,, which cannot be made profitable for a lengthy period, the company may—
(a) pay interest on so much of that share capital as is for the time being paid up, for the period and subject to the condi- tions and restrictions mentioned in sub-sections (2) to (7); and
(b) charge the sum so paid by way of interest, to capital as part of the cost of construction of the work or building or the provision of the plant,
(2) No such payment shall be made unless it is authorised by the -articles or by a special resolution.
(3) No such payment, whether authorised by the articles or by special resolution, shall be made without the previous sanction of the Central Government.
The grant of such sanction shall be conclusive evidence, for the purposes of this section, that the shares of the company, in respect of which such sanction is given, have been issued for a purpose specified in this section.
(4) Before sanctioning any such payment, the Central Govern- ment may, at the expense of the company, appoint a person to in- quire into, and report to the Central Government on, the circums- tances of the case; and may, before making the appointment, re- quire the company to give security for the payment of the costs of the inquiry.
(5) The payment of interest shall be made only for such period as may be determined by the Central Government; and that period shall in no case extend beyond the close of the half-year next after the half-year during which the work or building has been actually • completed or the plant provided.
(6) The rate of interest shall in no case exceed four per cent, per annum or such other rate as the Central Government may, by notifi- cation in the Official Gazette, direct.
(7) The payment of the interest shall not operate as a reduction •of the amount paid up on the shares in respect of which it is paid-'
(8) Nothing in this section shall affect any company to which the Indian Railway Companies Act, 1895 (X of 1895), or the Indian Tramways Act, 1902 (IV of 1902), applies.
Accounts 209. Books of account to be kept by company.—{1) Every com-
pany shall keep at its registered office or at such other place in India as the Board of directors thinks fit, proper books of account with irespect to—
(a) all sums of money received and expended by the com- pany and the matters in respect of which the receipt and expendi- ture take place;
(b) all sales and purchases of goods by the company; and (0) the assets and liabilities of the company.
124 THEGAZETTE OF INDIA EXTRAORDINARY [PART i r
(2) Where a company has a branch office, whether in or outside India, the company shall be deemed to have complied with the pro- visions of sub-section (1), if proper books of account relating to the transactions effected at the branch office are kept at that office and proper summarised returns, made up to dates at intervals of not more than three months, are sent by the branch office to the com- pany at its registered office or the other place referred to in sub- section (2).
(3) For the purposes of sub-sections (I) and (2), proper books of account shall not be deemed to be kept with respect to the matters specified therein, if there are not kept such books as are necessary to give a true and fair view of the state of the affairs of the company or branch office, as the case may be, and to explain its transactions.
(4) The books of account shall be open to inspection by any director during business hours.
(5) If any of the persons referred to in sub-section (6) fails to take all reasonable steps to secure compliance by the company with the requirements of this section, or has by his own wilful act been, the cause of any default by the company thereunder, he shall, in res- pect of each offence, be punishable with fine which may extend to one thousand rupees:
Provided that in any proceedings against a person in respect of an offence under this section consisting of a failure to take reasonable steps to secure compliance by the company with the requirements of this section, it shall be a defence to prove that he had reasonable ground to believe, and did believe, that a competent and reliable per- son was charged with the duty of seeing that those requirement? were complied with and was in a position to discharge that duty.
(6) The persons referred to in sub-section (5) are the following, namely: —
(a) where the company has a managing agent or secretaries and treasurers, such managing agent or secretaries and treasurers;
(b) where such managing agent or secretaries and. treasurers are a firm, every partner in the firm;
(c) where such managing agent or secretaries ana treasurers are a body corporate, every director of such body corporate; and
(d) where the company has neither a managing agent noi secretaries and treasurers, every director of the company.
(7) If any person, not being a person referred to in sub-section (6), having been charged by the managing agent, secretaries and treasurers, or Board of directors, as the case may be, with the duty of seeing that the requirements of this section are complied with, makes default in doing so, he shall, in respect of each offence, be punishable with* fine which may extend to one thousand rupees.
210. Annual accounts and balance sheet.—(1) At every annual general meeting of a company held in pursuance of section 166, the Board of directors of the company shall lay before the company—
SF.C. 1] THE GAZETTE OF INDIA EXTRAORDINAKY 125 ,
(a) a balance sheet as at the end of the period specified in sub-section (3); and
(b) a profit and loss account for that period.
(2) In the case of a company not carrying on business for profit an income and expenditure account shall be laid before the company at ita annual general meeting instead of a profit and loss accouni, and all references to "profit and loss account", "profit" and "loss" In this section and elsewhere in this Act, shall be construed, in relation to such a company, as references respectively to the "income and expenditure account," "the excess of income over expenditure," and "the excess of expenditure over income".
(3) The profit and loss account shall relate— (a) in the case of the first annual general meeting of thf*
company, to the period beginning with the incorporation of the company and ending with a day which shall not precede the day of the meeting by more than nine months; and
(b) in the case of any subsequent annual general meeting of the company, to the period beginning with the day im- mediately after the period for which the account was last sub- mitted and ending with a day which shall not precede the day of the meeting by more than nine months, or in cases where an extension of time has been granted for holding the meeting under the proviso to section 166 (1) (c), by more than nine months and the extension so granted.
(4) The period to which the account aforesaid relates is referred to in this Act as a "financial year"; and it may be less or more than a calendar year, but it shall not exceed fifteen months:
Provided that it may extend to eighteen montha where special permission has been granted in that behalf by the Registrar.
(5) If any person, being a director of a company, fails to take all reasonable steps to comply with the provisions of this section, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both:
Provided that in any proceedings against a person in respect of an offence under this section, it shall be a defence to prove that he had reasonable ground to believe, and did believe, that a competent and reliable person was charged with the duty of seeing that the provisions of this section were complied with and was in a position 10 discharge that duty.
Provided further that no person shall be sentenced to imprison- ment for any such offence unless it was committed wilfully.
(6) If any person, not being a director of the company, having been charged by the Board of directors with the duty of seeing that the provisions of this section are complied with, makes default in doing so, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both:
T26 THE GAZETTE OF INDIA EXTRAORDINARY [PAHT II
Provided that no person shall be sentenced to imprisonment for any such offence unless it was committed wilfully.
211. Form and contents of balance sheet and profit and loss ac- count.—(I) Every balance sheet of a company shall give a true and fair view of the state of affairs of the company as at the end of the financial year and shall, subject to the provisions of this section, be in the Form set out in Part I of Schedule VI, or as near thereto as circumstances admit:
Provided that nothing contained in this sub-section shall apply to any insurance or banking company, or to any other class of com- pany for which a form of balance sheet has been specified in or under the Act governing such class of company.
(2) Every profit and loss account of a company shall give a true and fair view of the profit or loss of the company for the financial year and shall, subject as aforesaid, comply with the requirements of Part II of Schedule VI, so far as they are applicable thereto:
Provided that nothing contained in this sub-section shall apply to any insurance or banking company, or to any other class of com- pany for which a form of profit and loss account has been specified in or under the Act governing such class of company.
(3) The Central Government may, by notification in the Official Gazette, exempt any class of companies from compliance with any of the requirements in Schedule VI if, in its opinion, it is necessary to grant the exemption in the national interest.
Any such exemption may be granted either unconditionally or subject to such conditions as may be specified in the notification.
(4) The Central Government may, on the application or with the •consent of the Board of directors of the company, by order, modify In relation to that company any of the requirements of this Act as to the matters to be stated in the company's balance sheet or profit and loss account for the purpose of adapting them to the circum- stances of the company.
(5) The balance sheet and the profit and loss account of a com- pany shall not be treated as not disclosing a true and fair view of thr -state of affairs of the company, merely by reason of the fact that they do not disclose—-
(i) in the case of an insurance company, any matters whirb are not required to be disclosed by the Insurance Act, 1.938 (IV of 1938);
(ii) in the case of a banking company, any matters which are not required to be disclosed by the Banking Companies Act, 1949 (X of t949);
fiii) in the case of a company engaged in the generation or supply of electricity, any matters which are not required to be disclosed by the Electricity Supply Act, 1948 (LIV of 1948);
(w) in the case of a company governed by any other special Act for the time being in force, any matters which are not re- quired to be disclosed by that special Act; or
SFC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 127
(v) in the case of any company, any matters which are not required to be disclosed by virtue of the provisions contained in Schedule VI or by virtue of a notification issued under sub-sec- tion (3) or an order issued under sub-section (4).
(6) For the purposes of this section, except where the context Otherwise requires, any reference to a balance sheet or profit and loss account shall include any notes thereon or documents annexed thereto, giving information required by this Act, and allowed by this Act to be given in the form of such notes or documents.
(7) If any such person as is referred to in sub-section (6) of sec- tion 209 fails to take all reasonable steps to secure compliance by the company, as respects any accounts laid before the company in general meeting, with the provisions of this section and with the other requirements of this Act as to the matters to be stated in the accounts, he shall, in respect of each offence, be punishable with im- prisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both:
Provided that in any proceedings against a person in respect of an offence under this section, it shall be a defence to prove that he had reasonable ground to believe and did believe that a competent and reliable person was charged with the duty of seeing that the provi- sions of this section and the other requirements aforesaid were com- plied with and was in a position to discharge that duty:
Provided further that no person shall be sentenced to imprison- ment for any such offence unless it was committed wilfully.
(8) If any person, not being a person referred to in sub-section (6) of section 209, having been charged by the managing agent, sec- retaries and treasurers, or Board of directors, as the case may be, with the duty of seeing that the provisions of this section and the other requirements aforesaid are complied with, makes default in doing so, he shall, in respect of each offence, be punishable with im- prisonment for a term which may extend to six months or with fine which may extend to one thousand rupees, or with both:
Provided that no person shall be sentenced to imprisonment for any such offence unless it was committed wilfully.
212. Balance sheet of holding company to include certain parti- culars as to its subsidiaries.—(i) There shall be attached to the balance sheet of a holding company having a subsidiary or subsi diaries at the end of the financial year as at which the holding com- pany's balance sheet is made out, the following documents in respect of such subsidiary or of each such subsidiary, as the case may be; —
(a) a copy of the balance sheet of the subsidiary; (b) a copy of its profit and loss account; (c) a copy of the report of its Board of directors; (d) a copy of the report of its auditors; O) a statement of the holding company's interest in the sub-
sidiary as specified in sub-section (3); (f) the statement referred to in sub-section (5), if any; and
128 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(g) the report referred to in sub-section (6), if any. (2) (a) The balance sheet referred to in clause (a) of sub-section
(,i) shall be made out, in accordance with the requirements of this ^.ci, as at the end of the financial year of the subsidiary next before the day as at which the holding company's balance sheet is made oui.
(b) The profit and loss account and the reports of the Board of directors and of the auditors, referred to in clauses (b), (c) and (d) of sub-section (I), shall be made out, in accordance with the re- quirements of this Act, for the financial year of the subsidiary re- ferred to in clause (a).
(c) The financial year aforesaid of the subsidiary shall not end on a day which precedes the day on which the holding company's financial year ends by more than six months.
(d) Where the financial year of a subsidiary is shorter in duration than that of its holding company, references to the financial year ol the subsidiary in clauses (a), (b) and (c) shall be construed as re- ferences to two or more financial years of the subsidiary the duration of which, in the aggregate, is not less than the duration of the hold- ing company's financial year.
(3) The statement referred to in clause (e) of sub-section (1) shall specify—
(a) the extent of the holding company's interest in the subsi- diary at the end of the financial year or of the last of the financial years of the subsidiary referred to in sub-section (2) ;
(b) the net aggregate amount, so far as it concerns members of the holding company and is not dealt with in the company's accounts, of the subsidiary's profits after deducting its losses or vice versa—
(i) for the financial year or years of the subsidiary aforesaid ; and
(ii) for the previous financial years of the subsidiary since it became the holding company's subsidiary; (c) the net aggregate amount of the profits of the subsidiary
after deducting its losses or vice versa— (i) for the financial year or years of the subsidiarj
aforesaid ; and (ii) for the previous financial years of the subsidiary
since it became the holding company's subsidiary;
so far as those profits are dealt with, or provision is made for those losses, in the company's accounts.
(4) Clauses (b) and (c) of sub-section (3) shall apply only to profits and losses of the subsidiary which may properly be treated in the holding company's accounts as revenue profits or losses, and the profits or losses attributable to any shares in a subsidiary for the time being held by the holding company or any other of its subsi- diaries shall not (for that or any other purpose) be treated as afore- said so far as they are profits or losses for the period before the date
SEC, i] THE GAZETTE OF INDIA EXTRAORDINARY 129
on or as from which the shares were acquired by the company or any of Its subsidiaries, except that they may in a proper case be so treated where—
(a) the company is itself the subsidiary of another body corporate; and
(b) the shares were acquired from that body corporate or a subsidiary of it;
and for the purpose of determining whether any profits or losses are to be treated as profits or losses for the said period, the profit or loss for any financial year ot the subsidiary may, if it is not practicable to apportion it with reasonable accuracy by reference to the facts, •be treated as accruing from aay to day during that year and be apportioned accordingly.
(5) Where the financial year or years of a subsidiary referred to An sub-section (2) do not coincide with the financial year of the hold- ing company, a statement cqntaining information on the following matters shall also be attached to the balance sheet of the holding company:-—
(a) whether there has been any, and, if so, what change in the holding company's interest in the subsidiary between the end of the financial year or of the last of the financial years of the subsidiary and the end of the holding company's financial year;
(b) details of any material changes which have occurred between the end of the financial year or of the last of the finan- cial years of the subsidiary and the end of the holding company's financial year in respect of—
(i) the subsidiary's fixed assets; (ii) its investments; (in) the moneys lent by it; (iv) the moneys borrowed by it for any purpose other
than that of meeting current liabilities.
(6) If, for any reason, the Board of directors of the holding com- pany is unable to obtain information on any of the matters required to be specified by sub-section (4), a report in writing to that effect *shall be attached to the balance sheet of the holding company.
(7) The documents referred to in clauses (e), (f) and (g) ot SUD- section (2) shall be signed by the persons by whom the balance .sheet of the holding company is required to be signed.
(8) The Central Government may, on the application or with the •coisent of the Board of directors of the company, direct that in relation to any subsidiary, the provisions of this section shall not apply, or shall apply only to such extent as may be specified in the direction.
(9) If any such person as is referred to in sub-section (6) of sec- tion 209 fails to take all reasonable steps to comply with the provi- sions of this section, he shall, in respect of each offence, be punish- able with imprisonment for a term which may extend to six months, ^r with fine which may extend to one thousand rupees, or with both:
130 THE GAZETTE OF INDIA EXTRAORDINARY [PART It
Provided that in any proceedings against a person in respect of an offence under this section, it shall be a defence to prove that he nad reasonable ground to believe, and did believe, that a competent and reliable person was charged with the duty of seeing that the provisions of this section were complied with and was in a position Lo discharge that duty:
Provided further that no person shall be sentenced to imprison- ment for any such offence unless it was committed wilfully.
(10) If any person, not being a person referred to in sub-sectlon. (6) of section 209, having been charged by the managing agent, secretaries and treasurers, or Board of directors, as the case may be, with the duty of seeing that the provisions of this section are complied with, makes default in doing so, he shall, in respect of each- offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both:
Provided that no person shall be sentenced to imprisonment for any such offence unless it was committed wilfully.
213. Financial year of holding company and subsidiary.—(1) Where it appears to the Central Government desirable for a holding, company or a holding company's subsidiary, to extend its financial vear so that the subsidiary's financial year may end with that of the holding company, and for that purpose to postpone the submission of the relevant accounts to a general meeting, the Central Govern- ment may, on the application or with the consent of the Board of directors of the company whose financial year is to be extended, direct that in the case of that company, the submission of accounts fo a general meeting, the holding of an annual general meeting or the making of an annual return, shall not be required to be sub- mitted, held or made, earlier than the dates specified in the direction, notwithstanding anything to the contrary in this Act or in any other Act for the time being in force.
(2) The Central Government shall, on the application of the Board of directors of a holding company or a holding company's sub- sidiary, exorcise the powers conferred on that Government by sub- section (1) if it is necessary so to do, in order to secure that the end of the financial year of the subsidiary does not precede the end of the holding company's financial year by more than six monthsr where that is not the case at the commencement of this Act, or at the Hate on which the relationship of holding company and subsidiary "omes into existence where that date is later than the commence- ment of this Act.
214. Bights of holding company's representatives and members.— (I) A holding company may, by resolution, authorise representatives named in the" resolution to inspect the books of account kept by any of its subsidiaries; and the books of account of any such subsidiary shall be open to inspection by those representatives at any time during business hours-
(2) The rights conferred by section 235 upon members of a com- pany may be exercised, in respect of any subsidiary, by members of the holding company as if they alone were members of the sub- sidiary.
SFC. lh THE GAZETTE OF INDIA EXTRAORDINARY 13
21 >. Authentication of balance sheet and profit and loss account.— (1) Save as provided by sub-sectjort (2), every balance sheet and every profit and loss account of a company shall be signed on behalf of the| Board of directors—
(i) in the case of a banking company, by the persons speci- fied in clause (a) or clause (b), as the case may be, of sub-sec- tion (2) of section 29 of the Banking Companies Act, 1949 (X of 1949);
(ii) in the case of any other company, by its managing agent,, secretaries and treasurers, manager or secretary, if any, and by not less than two directors of the company one of whom shall be a managing director where there is one.
{2) In the case of a company not being a banking company, when only one of its directors is for the time being in India, the balance sheet and the profit and loss account shall be signed by such director; but in such a case there shall be attached to the balance sheet and the profit and loss account a statement signed by him explaining the reason for non-compliance with the provisions of sub-section (1).
(3) The balance sheet and the profit and loss account shall be approved by the Board of directors before they are signed on behalf of the Board in accordance with the provisions of this section and before they are submitted to the auditors for their report thereon.
216. Profit and loss account to be annexed and auditors' report to be attached to balance sheet.—The profit and loss account shall be annexed to the balance sheet and the auditors' report shall be attach- ed thereto.
217. Board's report.— (1) There shall be attached to every balance sheet laid before a company in general meeting, a report by its Board of directors, with respect to—
(a) the state of the company's affairs ;
(b) the amounts, if any, which it proposes to carry tc any reserves either in such balance sheet or in a subsequent balance sheet; and
(c) the amount, if any, which it recommends should be paid by way of dividend.
(2) The Board's report shall, so far as is material for the apprecia- tion of the state of the company's affairs by its members and will not in the Board's opinion be harmful to the business of the com- pany or of any of, its subsidiaries, deal with any changes which have occurred during the financial year-—
(a) in the nature of the company's business;
(b) in the company's subsidiaries or in the nature of the business carried on by them; and
(c) generally in the classes of business in which the company has an interest,
(3) The Board shall also be bound to give the fullest informa- tion and explanation? in its report aforesaid, or in cases falling
132 THR GAZETTE OF INDIA EXTRAORDINARY LPAHT II
under the proviso to section 222, in an addendum to that report, on every reservation, qualification or adverse remark contained in the auditors' report.
(4) The Board's repoit and any addendum thereto shall be signed by its chairman it he is authorised in that behalf by the Board; and where he is not so authorised, shall be signed by such number of directors as are required to sign the balance sheet and the profit and loss account of the company by virtue of sub-sections (1) and (2) ol section 215.
(5) If any person, being a director of a company, fails to takt all reasonable steps to comply with the provisions of sub-sections U) to (3), or being the chanman, signs the Board's report other- wise than in conformity with the provisions of sub-section (4), he shaLl, in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to two thousand rupees, or with both:
Provided that no person shall be sentenced to imprisonmeni for any such offence unless it was committed wilfully:
Provided further that in any proceedings against a person IV respect of an offence under sub-section (2), it shall be a defence to prove that he had reasonable ground to believe, and did believe, that a competent and reliable person was charged wilh the duty ot seeing that the provisions of that sub-section were complied with and was in a position to discharge that duty.
(6) If any person, not being a director, having been* charged by the Board of directors with the duty of seeing that the provisions of sub-sections (1) to (3) are complied with, makes default in doing so, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to two thousand rupees, or with both:
Provided that no person shall be sentenced to imprisonment for any such offence unless it was committed wilfully.
218. Penalty for improper issue, circulation or publication of balance sheet or profit and loss account.—(a) If any copy of a balance sheet or profit and loss account which has not been signed as required by section 215 is issued, circulated or published; or
(b) It any copy of a balance sheet is issued, circulated or pub- lished without there being annexed or attached thereto, as the case may be, a copy each of (i) the profit and loss account, (li) any ac- counis, reports or statements which, by virtue pt section 212, are required to be attached to the balance sheet, (ai) the auditors' re- poit, and (iv) the Board's report referred to in section 217;
the company, and every officer of the company who is in default shall be punishable with fine which may extend to five hundred rupees,
219. Right of member to copies of balance sheet and auditors' repeat.— (1) A copy of every balance shipet (including the profit and loss account, the auditors' report and every other document re- quired by law to be annexed or attached, as the case may be, to the
SEC. I'; ^lliu GAZETTE OF INDIA EXTRAORDINARY 133
balance sheet) which is to be laid before a company in general meet- ing shall, not less than twenty-one days before the date of the meeting, be sent to every member of the company, to every hoJdei of debentures issued by "the company (not being debentures which ex- jacii are payable to the bearer theieof), to every trustee tor the holders of any debentures issued by the company, whether such member, holder or trustee is or is not entitled to have notices of general meetings of the company sent to him, and to all persons other than such members, holders or trustees, being persons so entitled.
Provided that—
(a) in the case of a company not having a share capital, this sub-section shall not require the sending of a copy of the documents aforesaid to a member, or holder of debentures, of the company who is not entitled to have notices of general meetings of the company sent to him;
Ob) this sub-section shall not require a copy of the documents aforesaid to be sent—
(1) to a member, or holder of debentures, of the com- pany, who is not entitled to have notices of general meet- ings of the company sent tĉ , him and of whose address the company is unaware;
(li) to more than one of the joint holders of any shares or debentures none of whom is entitled to have such notices sent to him; or
(in) in the case of joint holders of any shares or dfber.- tures some of whom are and some of whom aro not entitled to have such notices sent to them, to those who aie not so entitled; and
(c) if the copies of the documents aforesaid are sent less "than twenty-one days before the date of the meeting, they shall, notwithstanding that fact, be deemed to have been duly sent if it is so agreed by all the members entitled to vote at the meeting, (2) Any member or holder of debentures of a company, whether
he is or is not entitled to have copies of trie company's balance sheet sent to him shall, on demand, bo entitled to be furnished without charge, and any person from whom the company has accepted a sum of money by way of deposit shall, on demand accompanied by the payment of a fee of one rupee, be entitled to be furnished, with a copy of the last balance sheet of the company and of every docu- ment required by law to be annexed or attached thereto, including the profit and loss account and the auditors' report.
(3) If default is made in complying with sub-section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees.
(4) If, when any person makes a demand for a copy of anv document with which he is entitled to be furnished by virtue of sub-section (2), default is made in complying with the demand
134 T H E GAZETTE OF INDIA EXTRAORDINARY [PART II
within seven days after the making thereof, the eompanj, and every officer of the company who is in default, shall be punish- able with fine which may extend to five hundred rupees, unless it is proved that that person had already made a demand for and been furnished with a copy of the document.
The Court may also, by order, direct that the copy demanded shall forthwith be furnished to the person concerned.
(5) Sub-sections (1) to (4) shall not apply in relation to a balance sheet of a private company laid before it before the commence- ment of this Act; and in such a case the right of any person, to have sent to him or to be furnished with a copy of the balance sheet, and the liability of the company in respect of a failure to satisfy that right, shall be the same as they would have been if this Act had not been passed.
220. Three copies of balance sheet, etc. to be filed with Regis- trar.—(1) After the balance sheet and the profit and loss account have been laid before a company at an annual general meeting as aforesaid, there shall be filed with the Registrar at the aame time as the copy of the annual return referred to in section 161—
(a) in the case of a public company, three copies of the balance sheet and the profit and loss account, signed by the managing director, managing agent, secretaries and trea- surers, manager or secretary of the company, or if there be none of these, by a director of the company, together with three copies of all documents which are required by this Act to be annexed or attached to such balance sheet or profit andl loss account;
(b) in the case of a private company, three copie., of the balance sheet certified to be true copies by the company's auditors and of the auditors' report in so far as it relates to the- balance sheet.
(2) If the annual general meeting of a public or private com- pany before which a balance sheet is laid as aforesaid does not adopt the balance sheet, a statement of that fact and of the reasons- therefor shall be annexed to the balance sheet and to the copies- thereof required to be filed with the Registrar.
(3) If default is made in complying with the requirements of sub-sections (2) and (2), the company, and every officer of the company who is in default, shall be liable to the like punishment as is provided by section 162 for a default in complying with the pro- visions of sections 159, 160 or 161.
221. Duty of officer to make disclosure of payments, etc.— (I> Where any particulars or information is required to be given in the balance sheet or profit and loss account of a company or in any document required to be annexed or attached thereto, it shall be the duty of the concerned officer of the company to furnish without delay to the company, and also to the company's auditor whenever he so requires, those particulars or that infor- mation in as full a manner as possible.
5;-.c. l'j THE GAZETTE OF INDIA EXTRAORDINARY 135
(2) Where the officer concerned is a firm or body corporate acting as managing agent or as secretaries and treasurers, the duty afore- said shall extend to every partner in the firm, or to every director of thi body corporate, as the case may be.
(3) The particulars or information referred to in sub-section (I) may relate to payments made to any director, managing agent, secretaries and treasurers, or other person by any other company, body corporate, firm or person.
(4) If any person knowingly makes default in performing the duty cast on him by the foregoing provisions of this section, he shall be punishable with imprisonment which may extend to six months, or with fine which may extend to five thousand rupees, or with both.
222. Construction of references to documents annexed to accounts.—References in this Act to documents annexed or required to be annexed to a company's accounts or any of them shall not include the Board's report, the auditors' report or any docu- ment attached or required to be attached to those accounts:
Provided that any information which is required by this Act to be given in the accounts, and is allowed by it to be given in a statement annexed to the accounts, may be given in the Board's report instead of in the accounts; and if any such information is so given, the report shall be annexed to the accounts and this Act shall apply in relation thereto accordingly, except that the auditors shall report thereon only in so far as it gives the said information.
223. Certain companies to publish statement in the Form in Table F in Schedule I— (1) Every company which is a limited banking company, an insurance company, or a deposit, provident or benefit society, shall, before it commences business and also on the first Monday in February and the first Monday in Augus.t in every year during which it carries on business, make a statement in the Form in Table F in Schedule I, or in a Form as near thereto as circumstances, admit.
(2) A copy of the statement, together with a copy of the last audited balance sheet laid before the members of the company, shall be displayed and until the display of the next following statement, shall be kept displayed, in a conspicuous nlace in the registered office of the company, and in every branch office or place where the business of the company is carried on.
(3) Every member, and every creditor, of the company shall be entitled, on payment of a sum of eight annas, to be furnished with a copt of the statement, within seven days of such payment,
(4) If default is made in complying with any of the require- ments of this section, the company, and every officer of the com- pany who is in default, shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
(5) This section shall not apply to a life assurance company or provident insurance society to which the provisions of the Insur- ance Act I93P (IV of 1938), as to the annual statements to be made
136 THE GAZETTE OF INDIA EXTRAORDINARY [PART IE
by such company or society, apply with or without modifications, if, the company or society complies with those provisions.
Audit 224. Appointment and remuneration of auditors.— (1) Every
company shall, at each annual general meeting, appoint an auditor or auditors to hold office from Ihe conclusion of that meeting until the conclusion of the next annual general meeting.
(2) At any annual general meeting, a retiring auditor, by whatsoever authority appointed, shall be re-appointed, unless—
(a) he is not qualified lor re-appointment;
(b) he has given ihe company nolice in writing of hr^ unwillingness to be re-appointed;
(c) a resolution has been passed at that meeting appoint- ing somebody instead of him or providing expressly that he shall not be re-appointed; or
(d) where notice has been given of an intended resolution 10 appoint some person or persons in the place of a retiring auditor, and by reason of the death, incapacity or disqualification of that person or of all those persons, as the case may be, the resolution cannot be proceeded with.
(3) Where at an annual general meeting no auditors arc: ap- pointed or reappointed, the Central Government may appoint a person to fill the vacancy.
.1) The company shall, within seven days of the Central Govern- ment's power under sub-section (3), becoming exercisable, give- ncace of that fact to that Government; and, if a company fails to give such notice, the company, and every officer of the compan> who is in defauli, shall be punishable with fine which may extend-, to five hundred rupees.
(5) The first auditor or auditors of a company shall be appoint- ed by the Board of directors within one month of the date of registration of the company; and the auditor or auditors so appointed shall hold office until the conclusion of 1he first annual general' meeting:
Provided that— (a) the company may, at a general meeting, remove any
such auditor or all or any of such auditors and appoint iD' his or their places any other person or persons who have been nominated for appointment by any member of the company and of whose nomination notice has been given to the mem- bers of the company not less than fourteen days before the- date of the meeting; and
(b) if the Board fails to exercise its powers under this sub- section, the company in general meeting may appoint the first auditor or auditors.
(6) (a) The Board may fill any casual vacancy in the office of an auditor; but while any such vacancy continues, th^ remain- ing auditor or auditors, if any, may act:
Src 1] THE GAZETTE OF INDIA EXTRAORDINARY 137
Provided that where such vacancy is caused by the resignation ol an auditor, the vacancy shall only be lilled by the company in general meeting.
(b\ kny auditor appointed in a casual vacancy shall hold office until the conclusion of the next annual general meeting.
(7) Except as provided in the proviso to sub-section (5), any auditor appointed under this boction may be removed irom office before the expiry of his term only by the company in general meeting, alter obtaining the previous approval of the1 Central Government in that behalf.
(8) The remuneration of the auditors ol a company —
(a) in the case of an auditor appointed by the Board fir the Central Government, may be fixed by the Board or the Central Government, as the case may be; and
(b) subject to clause (a), shall be fixed by the company in general meeting or in such manner as the company in general meeting may determine.
For the purposes of this sub-section, any sums paid by the company in respect of the auditors' expenses shall be deemed to, be included in the expression "remuneration",
225. Provisions as to resolutions for appointing or removing auditors.— (1) Special notice shall be required for a resolution at an annual general meeting appointing as auditor a person other than a retiring auditor, or providing oxpiessly that a retiring auditor shall not be re-appomted.
(2) On receipt ol! notice of such a resolution, the company shall. foitinvith 'jcnd a copj thereof to the retiring auditor.
(3) Where notice is given of such a resolution and the retiring auditor makes with respect thereto representations in writing to the company (not exceeding a reasonable length) and requests their notification to members of the company, the company shall unless the representations are received by it too lnt« for It to do so,-
(a) in any notice of the resolution given to members ol the company, state the fact of the representations having been made; and
(b) send a copy of the representations to every member of the company to whom notice of the meeting is sent, whether before or after the receipt of the representations by th ; company;
and if a copy of the representations is not sent as aforesaid because they were received too late or because of the company's default, the auditor may (without prejudice to his right to be heard orally) require that the representations shall be read out at the meeting:
Provided that copies of the representations need not be sent out and the representations need not be read out at the meeting if, on the application either of the company or of any other person
138 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
who claims to be aggrieved, the Court is satisfied that the rights conferred by this sub-section are being abused to secure needless publicity lor defamatory matter; and the Court may order the company's costs on such an application to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the appli- cation.
[4) Sub-sections (2) and (3) shall apply to a resolution to remove the first auditors or any of them under sub-section (5) of section 224 or to the removal of any auditor or auditors under sub-section (7) of that section, as they apply in relation to a reso- lution that a retiring auditor shall not be re-appointed.
226. Qualifications and disqualifications of auditors.— (1) A person shall not be qualified for appointment as auditor of a com- pany unless he is a chartered accountant within the meaning of the Chartered Accountants Act, 1949 (XXXVIII of 1949):
Provided that a firm whereof all the partners practising in India are qualified for appointment as aforesaid may be appointed by its firm name to be auditor of a company, in which case any partner so practising may act in the name of the firm.
(2) (a) Notwithstanding anything contained in sub-section (1), but subject to the provisions of any rules made under clause (b), the holder of a certificate granted under a law in force in the whole or any portion of a Part B State immediately before the com- mencement of the Part B States (Laws) Act, 1951 (III of 1951), entitling him to act as an auditor of companies in that State or aiy portion thereof, shall be entitled to be appointed to act as an auditor of companies registered anywhere in that State.
(b) The Central Government may, by notification in the Official Gazette, make rules providing for the grant, renewal, suspension or cancellation of auditors' certificates to persons in Part B States for the purposes of clause (a), and prescribing conditions and restrictions for such grant, renewal, suspension or cancellation.
(.?) None of the following persons shall be qualified for appoint- ment as auditor of a company—
(a) a body corporate; (b) an officer or employee of the company;
(c) a person who is a partner, or who is in the employ- ment, of an officer or employee of the company;
(d) a person who is indebted to the company for an amount exceeding one thousand rupees, or who has given any guarantee or provided any security in connection with the indebtedness of any third person to the company for an amount exceeding one thousand rupees;
(e) a person who is a director or member of a private company, or a partner of a firm, which is the managing agent or the secretaries and treasurers of the company;
if) a person who is a director, or the holder of shares exceeding five per cent, in nominal value of the subscribed
SLC. ]'j THE GAZETTE OF INDIA EXTRAORDINARY _ 139
capital, of any body corporate which is the managing agent or the secretaries and treasurers, of the company:
Provided that any shares held by such person as nominee or trustee for any third person and in which the holder has no bene- ficial) interest shall be excluded in computing the percentage of shares held by him lor the purpose of this clause.
Explanation.—References m this sub-section to an officer or employee shall be construed as not including references to an auditor.
(4) A person shall also not be qualified for appointment as auditoi of a company if he is, by virtue of sub-section (3), dis- qualified for appointment as auditor of any other body corporate which is that company's subsidiary or holding company or a sub- sidiary of that company's holding company, or would be so dis- qualified if the: body corporate were a company.
(5) If an auditor becomes subject, after his appointment, to any of the disqualifications specified in sub-sections (j) and (4), he shall be deemed to have vacated his office as such.
227. Powers and duties of auditors.— (1) Every auditor of a company shall have a right of access at all times to the books and accounts and vouchers of the company, whether kept at the head office of the company or elsewhere, and shall be entitled to require from the officers of the company such information and explanations as the auditor may think necessary for the performance of bis duties as auditor.
(2) The auditor shall make a report to the members of the company on the accounts examined by him, and on every balance sheet and profit and loss account and on every other document de- clared by this Act to be part of or annexed to the balance sheet or profit and loss account, which are laid before the company in general meeting during his tenure of office, and the report shall state whether, in his opinion and to the best of his information and according to the explanations given to him, the said accounts give the information required by this Act in the manner so required and give a true and fair view—
(i) in the case of the balance sheet, of the state of the company's affairs as at the end of its financial year; and
(U) in the case of the profit and loss account, of the profit or loss for its financial year.
(3) The auditor's report shall also state—
(a) whether he has obtained all the information and ex- planations which to the best of his knowledge and belief were necessary for the purposes of his audit;
(b) whether, in his opinion, proper books of account as required by law have been kept by the company so far as appears from his examination of those books, and proper re- turns adequate for the purposes of his audit have been re- ceived from branches not visited by him;
140 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(c) whether the company's balance sheet and profit and loss account dealt with by ihe report are in agreement with the books oi acc6unt and leturns.
(4) Where any of the matters referred to in clauses (i) and (li) of sub-section (2) or in clauses (a), (b) and (c) of sub-section. (3) is answered in the negative or with a qualification, the auditor's report .shall slate the reason lor the answer.
(5) Where the company is one which is not lequired to dis- clu^e any matters by virtue ol any provisions contained in this or in any other Act, if the balance sheet and the profit and loss account specify those provisions and if, in the opinion of the auditor and to the best of his information and according to the explanations' given to him, they give the information required by this Act in the manner so required and, subject to the provisions aforesaid, give a true and fair view, in the "case of the balance sheet, of the state of the company's affairs as at the end of its financial year, and in the case of the profit and loss account, of the profit or loss for its
1 financial year, the auditor's report' shall state that in his opinion and to the best of his information and according to the explanations given to him, the accounts of the company are properly drawn up> so as to disclose the state of the company's affairs as at the date of its balance sheet and its profit or loss for its financial year end- ing on that date, so far as is required by the provisions of this or any other Act applicable to the company.
228. Audit of accounts of branch office of company.—(1) Where a company has a branch office, the accounts of that office shall, un- less the company in general meeting decides otherwise, be audited by a person qualified for appointment as auditor of the company under section 226, or where the branch office is situate in a country outside India, either by a person qualified as aforesaid or by an accountant duly qualified to act as an auditor of the accounts of the branch office in accordance with the laws of that country.
(2) Where the accounts of any branch office are not so audited, the company's auditor—
(a) shall be entitled to visit the branch office, if he deems it necessary to do so for the performance of his duties as auditor, and
(b) shall have a Hgbt of access at all times to the books and accounts and vouchers of the company maintained at the branch office:
Provided that in the case of a banking company having a branch office outside Tndia, it shall be sufficient if the auditor is allowed access to such copies of, and extracts from, the books and accounts of the branch as have been transmitted to the principal office of the company in India.
229. Signature of audit report etc.—Only the person appointed as auditor of the company, or where a firm is so appointed in pur- suance of the proviso to sub-section (1) of section 226, only a partner in the firm practising in India, may sign the auditor's report, or sign or authenticate anv other document of the company required' by law to be signed or authenticated by the auditor.
SEC. 11 THE GAZETTE OF INDIA EXTRAORDINARY 141
238. Reading and inspection of auditor's report.—The auditor's report shall be read before the company in general meeting and shall be open to inspection by any member ol the company.
231. [Right of auditor to attend general meeting.— All notices of, and other communications relating to, any general meeting of a company which any member of the company is entitled to have sent to him shall also be forwarded to the auditor of the company; and the auditor shall be entitled to attend any general meeting and to be heard at any general meeting which he attends on any part oi the business which concerns him as auditor.
232. Penalty for non-compliance with sections 225 to 231.—If de- fault is made by a company in complying with any of the provisions contained in sections 225 to 231, the company, and every officer oi the company who is in default, shall be punishable with fine which may extend to five hundred rupees.
233. Penalty for non-compliance by auditor with sections 227 and 229.—If any auditor's report is made, or any document of the com- pany is signed or authenticated, otherwise than in conformity with the requirements of sections 227 and 229, the auditor concern- ed, and the person, if any, other than the auditor who signs the re- port or signs or authenticates the document, shall, if the default is wilful, be punishable with fine which may extend to one thousand rupees.
Poiver of Registrar to call for information etc.
234. Power of Registrar to call for information or explanation.— (I) Where, on perusing any document which a company is required to submit to him under this Act, the Registrar is of opinion that any information or explanation is necessary in order that such docu- ment may afford full particulars of the matter to which it purports to relate, he may, by a written order, call on the company submit- ting the document to furnish in writing such information or ex- planation, within such time as he may specify in the order.
(2) On receipt by the company of an order under sub-section (1), it shall be the duty of the company, and of all persons who are officers of the company, to furnish such information or explanation to the best of their power.
(3) On receipt of a copy of an order under sub-section (1), it shall also be the duty of every person who has been an officer of the company to furnish such information or explanation to the best of his power.
(41 If the company, or any such person as is referred to in sub- section (2) or (3), refuses or neglects to furnish any such infor- mation or explanation,—
(a) the company, and each such person, shall be punish- able with fine which may extend to fifty rupees in respect of each offence; and
(b) the Court may, on the application of the Registrar and after notice to the company, make an order on the com- pany for production of such documents as, in the opinion of'
142 THE GAZETTE OF-INDIA EXTRAORDINARY [PART II
the Court, may reasonably be required by the Registrar for the purpose referred tv in sub-section (i) and allow the Registrar inspection thereof on such terms and conditions as it thinks fit.
(5) On receipt of any document containing such information or explanation, the Registrar may annex it to the original document submitted to him; and any document so annexed shall be subject to the like provisions as tu inspection, the taking of extracts, and the furnishing of copies, as the ariginal document is subject.
(6) If such information or explanation is not furnished within the specified time, or if after perusal of such information or ex- planation the Registrar is of opinion that the document in question discloses an unsatisfactory state of affairs, or that it does not dis- close a full and fair statement of the matter to which it purports to relate, the Registrar shall report in writing the circumstances of the case to the Central Government.
(7) If it is represented to the Registrar on materials placed be- fore him by any contributory or creditor or any other person interested that the business of a company is being carried on in fraud of its creditors or of persons dealing with the company or otherwise for a fraudulent or unlawful purpose, he may, after giving the com- pany an opportunity of being heard, by a written order, call on the company to furnish in writing any information or explanation on matters specified in the order, within such time as he may specify therein; and the provisions of sub-sections (2), (3), (4) and (6) of this section shall apply to such order.
If upon inquiry the Registrar is satisfied that any representation on which he took action under this sub-section was frivolous or vexatious, he shall disclose the identity of his informant to the company.
(8) The provisions of this section shall apply mutatis •mutandis to documents which a liquidator, or a foreign company within the meaning of section 591, is required to file under this Act.
Investigation
235. Investigation of affairs of company on application by mem- bers or report by Registrar.—The Central Government may appoint one or more competent persons as inspectors to investigate the affairs of any company and,to report thereon in such manner as the Central Government may direct,—
(a) in the case of a company having a share capital, on the application either of not less than two hundred members or of members holding not less than one-tenth of the total voting power therein;
(b) in the case of a company not having a share capital, on the application of not less than one-fifth in number of the per- sons on the company's register of members;
(c) in the case of any company, on a report by the Registrar under sub-section (6). or sub-section (7) read with sub- section (6), of section 234.
&«•:. 11 THE GAZETTE OF INDIA EXTRAORDINARY 143
236. Application vby members to be supported by evidence and power to call for security.—An application by members of a com- pany under clause (a) or (b) of section 235 shall be supported by sjuch evidence as the Central Government may require for the purpose of showing that the applicants have good reason for require ing the investigation; and the Central Government may, before appointing an inspector, require the applicants to give secuiity, for such amount not exceeding one thousand rupees as it may think fit, for payment cf the costs of the investigation.
237. Investigation of company's affairs in other cases.—Without prejudice to its powers under section 235, the Central Government—
(a) shall appoint one or more competent persons as inspectors to investigate the affairs of a company and to report thereon in such manner as the Central Government may direct, if—
(i) the company, by special resolution; or
(ii) the Court, by order,
declares that the affairs of the company ought to be investigated by an inspector appointed by the Central Government; and
(b) may do so if, in the opinion of the Central Government, there are circumstances suggesting1—
(i) that the business of the company is being conducted with intent to defraud its creditors, members or any other persons, or otherwise for a fraudulent or unlawful purpose,- or in a manner oppressive of any of its members, or that the company was formed for any fraudulent or unlawful purpose;
(ii) that persons concerned in the formation of the com- pany or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other mis- conduct towards the company nr towards any of its members; or
(iii) that the members of the company have not been given all the information with respect to its affairs which they might reasonably expect, including information relating to the calculation of the commission payable to a managing or other director, the managing agent, the secretaries and treasurers, or the manager, of the company.
238. Firm, body corporate or association not to be appointed as inspector.—No firm, body corporate or other association shall be appointed as an inspector under section 235 or 237.
239. Power of inspectors to carry investigation into affairs of related companies or of managing agent or associate.—(1) If an ins- pector appointed under section 235 or 237 to investigate the affairs of a company thinks it necessary for the purposes of his investigation to investigate also the affairs of—
(a) any other body corporate which is, or has at any relevant time been, the company's subsidiary or holding company, or a
144 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
subsidiary of UL, holding company, or a holding company of its subsidiary;
(b) any other body corporate which i:;. or- has at any relevant time been, managed—
(i) by any pci-,{t- as rmnaging agent or as secretaries and treasurers who is. or was at the relevant time, cither the managing agent or the secretaries and treasurers of the company;
(ii) by any person who ib, or was at the relevant time, an associate of the managing agent or secretaries and treasurers of the company; or
(iii) by any person of whom the managing agent or secretaries and' Treasurers of the company is, or was at the relevant time, an associate; (c) any other bodv corporate which is, or ha.s at any rele
vant time been, managed by the company; or
(d) any person who is, or has at any relevant time been, the company's managing agent or secretaries and treasurers or an associate oi such managing agent or secretaries and treasurers,
the inspector shall, subject to the provisions of sub-section (2), have power so to do, and shall report on the affairs ol the other body cor- porate or of the managing agent, secretaries and treasurers or asso- ciate of the managing agent or secretaries and treasurers, so far as he
_ thinks the results of his investigation thereof are relevant 1o the in- ' vestigation of the affairs of the first-mentioned company.
(2) In the case of any body corporate or person referred to in clause (b) (ii), \b) (hi), (c), or (d) of sub-section (1), the inspector shall not exercise his power of investigating into, and reporting on, its or his affairs without first having obtained the prior approval of the Centra] Government thereto.
240. Production of documents and evidence.— !}) It shall be the duty of all officers and agents of the company, and where the com- pany is or was managed bv a managing agent or secretaries and treasurers, of all officers and agents of the managing agent or secretaries and treasurers, and where the affairs of any other body corporate, or of a managing agent or secretaries and treasurers, or of an associate of a managing agent or secretaries and treasurers, arc investigated by virtue of section 239, of all officers and agents of such body corporate, managing agent, secretaries and treasurers, or associate, and where such managing agent, secretaiies and trea- surers or associate is or was a firm, of all partners in the firm—
(a) to oroduce to an inspector all books and papers of, or relating to, the company or, as the case may be, of or relating to the other body corporate, managing agent, secretaries and treasurers or associate, which are in their custody or power; and
(b) otherwise to give to the inspector all assistance in con- nection with the investigation which they are reasonably able to Hive.
(2) An inspector may examine on oath any of the persons referred to in sub-section (I), in relation to the affairs of the company, other
Sue ]] THE GAZETTE OF INDIA EXTRAORDlNAfiV I45
boay corporate, managing agent secretaries and treasurers or associate, as the case may be; and may administer an oath according-
(3) If any such person rei u s e s - fa) to produce to an inspector any book or paper which it is
his duly under sub-section (1) to produces or (b) to answer any question which is put to him by an inspec-
tor in pursuance of sub-section (2), the inspector may certity the refusal under his hand to the Court; and the' Court may thereupon inquire into the case; and after hearing any witnesses who may be produced against or on behalf of the alleged offender and after hearing any statement which may be ottered in di_4'erice, punish the offender as Lf he had been guilty of contempt of the Court.
(4) It aii inspector thinks it necessary ior the purpose of his in- vestigation that a person whom he has no power to examine on oath should be so examined, he may apply to the Court and the Court may, if it sect, lit, order that person to attend and be examin- ed on oath before it on any matter relevant to the investigation, and on any such examination—
(a) the inspector may take part therein either personally or by a legal practitioner;
(b) the Court may put such questions to the person examined as the Court thinks fit;
(c) the person examined shall answer all such questions as the Court may put or allow to bo put to him, but may al his own cost employ a legal practitioner, who shall be at liberty to put to such pei son such questions as the Court may deem just for the purpose of enabling him to explain or qualify any answers given by him:
Provided that, notwithstanding anything in clause (c), the Court may allow the person examined such costs as in its discretion it may think fit, and any costs so allowed shall be treated as part of the ex- penses of the investigation.
(5) Notes of any examination under sub-section (2) or (4) shall be taken down in writing and shall be read over to or by, and signed by, the person examined, and may thereafter be used in evidence against him.
(6) In this section-- (a) the expression "officers", in relation to any company or
body corporate, includes any trustee ior the debenture holders of such company or body corporate;
(b) the expression "agent", in relation to any company, body corporate or person, means any one acting or purporting to act for or on behalf of such company, body corporate or person, and includes the bankers and legal advisers of, and persons employed as auditors by, such company, body corporate or person; and
(c) any reference to officers, agents or partners shall be con- strued as a reference to past as well as present officers, agents or partners, as the case may be.
146 THE GAZET1E OF INDIA EXTRAORDINARY [PART II
241. Inspectors' report.—(I) The inspectors may, and if so directed by the Central Government shall, make interim reports to that Gov- ernment, and on the conclusion of the investigation, shall make a final report to the Central Government.
Any such report shall be written or printed, as the Central Gov- ernment may direct.
(2) The Central Government-•
(a) shall forward a copy of any report made by the mspeciois to the company at its registered office, and also to any body corpo- rate, managing agent, secretaries and treasurers or associate deelt with in the report by virtue of section 239;
(b) may, if it thinks fit, furnish a copy thereof, on requesi and on payment of the prescribed fee, to any person—
(i) who is a member of the company or other body corporate (including a managing agent, secretaries and treasurers, or an associate of a managing agent or secreta- ries and treasurers, where such managing agent, secreta- ries and treasurers or associate is a body corporate) dealt with in the report by virtue of section 239;
(ii) who is a partner in the firm, where such managing agent, secretaries and treasurers or associate is a firm; or
(Hi) whose interests as a creditor of the company, other body corporate, managing agent, secretaries and treasurers or associate aforesaid appear to the Central Government to be affected;
(c) shall, where the inspectors are appointed under clause (a) or (b) of section 235, furnish, at the request of the applicants for the investigation, a copy of the report to them;
(d) shall, where the inspectors are appointed under section 237 in pursuance of an order of the Court, furnish a copy of the report to the Court; and
(e) may also cause the report to be published. 242. Prosecution.— (2) If, from any report made under section
241, it appears to the Central Government that any person has, in relation to the company or in relation to any other body corporate, managing agent, secretaries and treasurers, or associate of a manag- ing agent or secretaries and treasurers, whose affairs have been in- vestigated by virtue of section 239, been guilty of any offence for which he is criminally liable, the Central Government may, after taking such legal advice as it thinks fit, prosecute such person for the offence; and it shall be the duty of all officers and agents of the company, body corporate, managing agent, secretaries and treasur- ers, or associate, as the case may be, (other than the accused in the proceedings), to give the Central Government all assistance in con- nection with the prosecution which they are reasonably able to give.
(2) Sub-section (6) of section 240 shall apply for the purposes of this section, as it applies for the purposes of that section.
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243. Application for winding up of company or an order under section 397 or 398.—If any such company or other body corporate, or any such managing agent, secretaries and treasurers, or associate, being a body corporate, is liable to be wound up under this Act and it appears to the Central Government from any such report as afore- said thai) it is expedient so to do by reason of any such circumstances as are referred to in sub-clause (i) or (ii) of clause (b) of section 237, the Central Government may, unless the company, body corpo- rate, managing agent, secretaries and treasurers or associate is al- ready being wound up by the Court, cause to be presented to the Court by any person authorised by the Central Government in this behalf—
(a) a petition for the winding up of the company, body cor- porate, managing agent, secretaries and treasurers, or associate, on the ground that it is just and equitable that it should be wound up;
(b) an application lor an order under section 397 or 398; or
(c) both a petition and an application as aforesaid.
244. Proceedings for recovery of damages or property.— (1) If from any such report as aforesaid, it appears to the Central Govern- ment that proceedings ought, in the public interest, to be brought by the company or any body corporate whose affairs have been investi- gated in pursuance of clause (a), (b) or (c) of section 239,—
(a) for the recovery of damages in respect of any fraud, mis- feasance or other misconduct in connection with the promotion or formation, or the management of the affairs, of such company or body corporate; or
(b) for the recovery of any property of such company, wr body corporate, which has been misapplied or wrongfully re- tained;
the Central Government may itself bring proceedings for that purpose in the name of such company or body corporate.
(2) The Central Government shall indemnify such company or body corporate against any costs or expenses incurred by it in, or in connection with, any proceedings brought by virtue of sub- section (I).
245. Expenses of investigation.— (1) The expenses of and in- cidental to an investigation by an inspector appointed by the Central Government under section 235 or 237 shall be defrayed in the first instance by the Central Government; but the following persons shall, to the fextent mentioned below, be liable to reimburse the Central Govern nent in respect of such expenses:—
(a) any person who is convicted on a prosecution instituted in pursuance of section 242, or who is ordered to pay damages or restore any property in proceedings brought by virtue of section 244, may, in the same proceedings, be ordered to pay the said expenses to such extent as may be specified by the Court convict- ing such person, or ordering him to pav such damages or restoro such property, as the case may be;
148 THE GAZETTE OF INDIA EXTRAOEDINARY [PART II
(b) any company or body corporate in whose name proceed- ings are brought as aforesaid shall be liable, to the extent of the amount or value of any sums or property recovered by it as a result of the proceedings; and
(c) unless, as a result of the investigation, a prosecution is instituted in pursuance of section 242,—
(i) any company, body corporate, managing agent, secre- taries and treasurers or associate dealt with by the report, where the inspector was appointed under clause (a) or (b) of section 235 or clause (a) of section 237, shall be liable to reimburse the Central Government in respect of the whole of the expenses, unles"s, and except in so far as, the Central Government otherwise directs; and
(ii) the applicants for the investigation, where the inspec- tor was appointed under clause (a) or (b) of section 235, shall be liable to such extent, if any, as the Central Govern- ment may direct.
(2) Any amount for which a company or body corporate is liable by virtue of clause (b) of sub-section (1) shall be a first charge on the sums or property mentioned in that clause.
(3) The report of an inspector appointed under clause (c) of section 235 or clause (b) of section 237, may if he thinks fit, and shall if the Central Government so directs, include a recommendation as to the directions, if any, which he thinks appropriate, in the light of his investigation, to be given under clause (c) of sub-section (1).
(4) For the purposes of this section, any costs or expenses incurred by the Central Government in or in connection with proceedings brought by virtue of section 244 (including expenses incurred by virtue of sub-section (2) thereof) shall be treated as expenses of the investigation giving rise to the proceedings.
(5) (a) Any liability to reimburse the Central Government impos- ed by clauses (a) and (b) of sub-section (1) shall, subject to satisfac- tion of the right of the Central Government to reimbursement, be a liability also to indemnify all persons against liability under clause (c) of that sub-section.
(b) Any such liability imposed by the said clause (a) shall, subject as aforesaid, be a liability also to indemnify all . persons against liability under the said clause (b).
(c) Any person liable under the said clause (a) or (b) or sub- clause (i) or (ii) of the said clause (c) shall be entitled to contribu- tion, from any other persons liable under the same clause or sub- clause, as the case may be, according to the amount of their respect- ive liabilities thereunder.
(6) In so far as the expenses to be defrayed by the Central Gov- ernment under this section are not recovered thereunder, they shall be paid out of moneys provided by Parliament.
246. Inspectors' report to be evidence.—A copy of any report of any inspector or inspectors appointed under section 235 or 237 authenti- cated in such manner, if any, as may be prescribed, shall be admissi- ble in any legal proceeding as evidence of the opinion of the inspec- tor or inspectors in relation to any matter contained in the report
SBC. I] | THE GAZETTE OF INDIA EXTRAORDINARY 149
247. Investigation of ownership of company.— (1) Where it ap- pears to the Central Government that there is good reason so to do, it may appoint one or more inspectors to investigate and report on the membership of any company and other matters relating to the compahy, for the purpose ol determining the true persons-—
' (a) who are or have been financially interested in the success or failure, whether real or apparent, of the company; or
(b) who are or have been able to control or materially to influence the policy of the company.
(2) When appointing an inspector under sub-section (I), the Central Government may define the scope of his investigation, whether as respects the matters or the period to which it is to extend or otherwise, and in particular, may limit the investigation to mat- ters connected with particular shares or debentures.
(3) Subject to the terms of an inspector's appointment, his powers shall extend to the investigation of any circumstances suggesting the existence of any arrangement or understanding which, though not legally binding, is or was observed or is likely to be observed in practice and which is relevant to the purposes of his investigation.
(4) Subject as aforesaid, the powers of the inspector shall also extend, where the company has or at any time had a managing agent or secretaries and treasurers,—
(a) in case such managing agent or secretaries and treasur- ers are or were a body corporate, to the investigation of the ownership of the shares of such body corporate, and of who the persons are or were who control or manage or controlled or managed its affairs;
(b) in case such managing agent or secretaries and treasur- ers are or were a firm, to the investigation of who the persons are or were who control or manage or controlled or managed its affairs as partners in the firm or otherwise and of the respec- tive interests therein of the partners; and
(c) in all cases, to the investigation of who the persons are or were who are or were entitled to any share of, or any amount forming part of, the remuneration of such managing agent or secretaries and treasurers.
(5) For the purposes of any investigation under this section, sections 239, 240 and 241 shall apply with the necessary modifications of references to the affairs of the company or to those of any other body corporate or of any managing agent, secretaries and treasurers, or associate: •
Provided that the said sections shall apply in relation to all persons (including persons concerned only on behalf of others) who are or have been, or whom the inspector has reasonable cause to believe to be or to have been,—
(i) financially interested in the success or failure, or the apparent success or failure, of the company, or of any other
150 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
body corporate, managing agent, secretaries and treasurers or associate whose membership or constitution is investigated with that of the company; or
(li) able to control or materially to influence the policy of such company, body corporate, managing agent, secretaries and treasurers or associate;
as they apply in relation to officers and agents of the company, of the other body corporate, or of the managing agent, secretaries and treasurers or associate, as the case may be:
Provided further that the Central Government shall not be bound to furnish the company or any other person with a copy of any report by an inspector appointed under this section or with a complete copy thereof, if it is of opinion that there is good reason for not divulging the contents of the report or of parts thereof; but in such a case, the Central Government shall cause to be kept by the Registrar a copy of any such report, or as the case may be, of the parts thereof, as respects which it is not of that opinion.
(6) The expenses of any investigation under this section shall be defrayed by the Central Government out of moneys provided by Parliament, unless the Central Government directs that the ex- Denses or any part thereof should be paid by the persons on whose application the investigation was ordered.
248. Information regarding persons having an interest in company, or in body corporate or firm acting as managing agent thereof.-—• (1) Where it appears to the Central Government that there is good reason to investigate the ownership of any shares in or debentures of a company, or of a body corporate which acts or has acted as the managing agent or secretaries and treasurers of a company, and that It is unnecessary to appoint an inspector for the purpose, the Central Government may require any person whom it has reasonable cause to believe—
(a) to be, or to have been, interested in those shares or debentures; or
(b) to act, or to have acted, in relation to those shares or debentures, as the legal adviser or agent of someone interested therein;
to give the Central Government any information which he has, or can reasonably be expected to obtain, as to the present and past interests in those shares or debentures, and the names and addresses sf the persons interested and of any persons who act or have acted on their behalf in relation to the shares or debentures.
(2) For the purposes of sub-section (1). a person shall be deemed to have an interest in a share or debenture—
(a) if he has any right to acquire or dispose of the share or debenture or any interest therein or to vote in respect thereof;
(b) if his consent is necessary for the exercise of any of the rights of other persons interested therein; or
(c) if other persons interested therein can be required, or are accustomed, to exercise their rights Jn accordance with his directions or instructions.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 151
(3) Where it appears to the Central Government that there is good reason to investigate the ownership of any interest in a firm which acts or has acted as managing agent or as secretaries and treasurers of any company, and that it is unnecessary to appoint an inspector for the purpose, the Central Government may require any person whom it has reasonable cause to believe—
(a) to have, or to have had, any interest in the firm; or
(b) to act, or to have acted, in relation to any such interest, as the legal adviser or agent of someone interested therein;
to give the Central Government any information which he has, or can reasonably be expected to obtain, as to the present and past interests held in the firm, and the names and addresses of the per- sons interested and of any persons who act or have acted on their behalf in relation to any such interest.
(4) Any person-
fa) who fails to give any information required of him under this section; or
(b) who, in giving any such information, makes any state- ment which he knows to be false in a material particular, or recklessly makes any statement which is false in a material particular;
shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to five thousand rupees, or with both.
249. Investigation of associateship with managing agent etc.— (1) Where any question arises as to whether any body corporate firm, or individual is or is not cr was or was not, an associate of the mpnaging agent or secretaries and treasurers of a company and it appears to the Central Government that there is good reason to investigate such question, it may either—
(a) appoint an inspector for the purpose of making the in- vestigation; or
(b) if it considers it unnecessary to appoint an inspector as aforesaid, require any person whom it has reasonable cause to believe to be in a position to give relevant information in regard to the question, to furnish the Central Government with infor- mation on such matters as may be specified by it.
(2) The provisions of section 247 shall apply mutatis mutandis to cases falling under clause (a) of sub-section (I) and those of section 248 to cases falling under clause (b) of that sub-section.
250. Imposition of restrictions on shares or debentures.— (1) Where in connection with an investigation under section 247, 248 or 249, it appears to the Central Government that there is difficulty in finding out the relevant facts about any shares (whether iesued or to be issued), and that the difficulty is due wholly or mainly to the unwillingness of the persons concerned or any of them to assist the investigation as required by this Act, the Central Government
I 5 2 THE GAZETTE OP INDIA EXTRAORDINARY [PART II
may, by order, direct that the shares shall, until further order, be subject to the restrictions imposed by this section.
(2) So long as any shares aie directed to be subject to the res- trictions imposed by this section,—
(a) any transfer of those shares shall be void; (b) where those shares are to be issued, they shall not be
issued; and any issue thereof or any transfer of the right to be issued therewith, shall be void;
(c) no voting rights shall be exercisable in iespect of those shares;
(d) no further shares shall be issued in right of those shares or in pursuance of any offer made to the holder thereof; and any issue of such shares, or any transfer of the right to be issued therewith shall be void; and
(e) except in a liquidation, no payment shall be made of any sums due from the company on those shares, whether in respect of dividend, capital or otherwise.
(3) Where the Central Government makes an order directing that any shares shall be subject to the said restrictions, or refuses to make an order directing that any shares shall cease to be subject thereto, any person aggrieved thereby may apply to the Court, and the Court may, if it sees fit, direct that the shares shall cease to be subject to the said restrictions.
(4) Any order (whether of the Central Government or of the Court), directing that any shares shall cease to be subject to the said restrictions, which is expressed to be made with a view to permitting a transfer of those shares, may continue the restrictions mentioned in clauses (d) and (e) of sub-section (2), either in whole or in part, so far as they relate to any right acquired, or offer made, before the transfer.
(5) Any person who— (a) exercises, or purports to exercise, any right to dispose of
any snares or of any right to be issued with any such shares, when to his knowledge, he is not entitled to do so, by reason of any of the said restrictions applicable to the case;
(b) votes in respect of any such shares whether as holder or proxy, or appoints a proxy to vote in respect thereof, when, to his knowledge, he is not entitled to do so by reason of any of the said restrictions applicable to the case; or
(c) being the holder of any such shares, fails to give notice of the fact of their being subject to the said restrictions to any person whom he does not know to be aware of that fact but whom he knows to be entitled, apart from such restrictions, to vote in respect of those shares, whether as holder or as proxy;
shall be punishable with imprisonment for a term which may ex- tend to six months, or with fine which may extend to five thousand rupees, or with both.
(6) Where shares in any company are issued In contravention of such of the said restrictions as may be applicable to the case, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees.
SFX, 1] THE GAZETTE OF INDIA EXTRAORDINARY 153
(7) A prosecution shall not be instituted under this section except by, or with the consent of, the Central Government.
(8) This section shall apply in relation to debentures as it applies in relation to shares.
251. Saving for legal advisers and bankers.—Nothing in sections 234 to 250 shall require the disclosure to the Registrar or to the Cen- tral Government or to an inspector appointed by that Government-
fa) by a legal adviser, of any privileged communication made to him in that capacity, except as respects the name and address of his client; or
(b) by the bankers of any company, body corporate, manag- ing agent, secretaries and treasurers or other person, referred to in the sections aforesaid, as such bankers, of any information as to the affairs of any of their customers other than such com- pany, body corporate, managing agent, secretaries and treasu- rers or person.
CHAPTER II
DIRECTORS
Uonsutution of Board of Directors 252. Minimum number of directors.— (1) Every public company,
and every private company which is a subsidiary of a public com- pany, shall have at least three directors.
(2) Every private company which is not a subsidiary of a public company shall have at least two directors.
(3) The directors of a company collectively are referred to in this Act as the "Board of directors" or "Board".
253. Only individuals to be directors.—No body corporate, asso- ciation or firm shall be appointed director of a public or private com- pany, and only an individual shall be so appointed.
254. Subscribers of memorandum deemed to be directors.—In de- fault of and subject to any regulations in the articles of a company, subscribers of the memorandum who are individuals, shall be deem- ed to be the directors of the company, until the directors are duly appointed in accordance with section 255.
255. Appointment of directors and proportion of those who are to retire by rotation.—(2) Not less than two-thirds of the total number of directors of a public company, or of a private company which is a subsidiary of a public company, shall—
(a) be persons whose period of office is liable to determina- tion by retirement of directors by rotation; and
\b) save as otherwise expressly provided in this Act, be appointed by the company in general meeting. (2) Tfie remaining directors in the case of any such company, and
the directors generally in the case of a private company which is not a subsidiary of a public company, shall, in default of and subject to any regulations in the articles of the company, also be appointed by the company in general meeting.
256. Ascertainment of directors retiring by rotation and filling of vacancies.—(1) At the first annual general meeting of a oublic
T54 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
company, or a private company which is a subsidiary of a public company, held next after the date of the general meeting at which the first directors are appointed in accordance with section 255 and at every subsequent annual general meeting, one-third oi such of the directors for the time being as are liable to retire by rotation, or ]f their number is not three or a multiple of three, then, thenum- ber nearest to one-third, shall retire from office.
(2) The directors to retire by rotation at every annual general meeting shall be those who have been longest in office since their last appointment, but as between persons who became directors on the same day, those who are to retire shall, in default of and subject to any agreement among themselves, be determined by lot.
(3) At the annual general meeting at which a director retires as aforesaid, the company may fill up the vacancy by appointing the retiring director or some other person thereto,
(4) (a) If the place of the retiring director is not so filled up and the meeting has not expressly resolved not to fill the vacancy, the meeting shall stand adjourned till the same day in the next week, at Hie same time and place, or if that day is a public holiday, till the next succeeding day which is not a public holiday, at the same time and place.
(b) If at the adjourned meeting also, the place of the retiring director is not filled up and that meeting also has not expressly resolved not to fill the vacancy, the retiring director shall be deemed to have been re-appointed at the adjourned meeting, unless—
(i) at that meeting or at the previous meeting a resolution for the re-appointment of such director has been put to the meet- ing and lost;
(ii) the retiring director has, by a notice in writing address- ed to the company or its Board of directors, expressed his un- willingness to be so re-appointed;
(iii) he is not qualified or is disqualified for appointment; (iv) a resolution, whether special or ordinary, is required
for his appointment or re-appointment in virtue of any provisions of this Act; or
(i>) the proviso to sub-section (2) of section 263 or sub- section (3) of section 280 is applicable1 to the case. (5) Where a director is to retire at- any annual general meeting
both in virtue of sub-section (2) and m virtue of sub-section (2) of section 280, he shall be deemed, for the purposes of this sec- tion, to retire in virtue of sub-section (2) of this section.
257. Right of persons other than retiring directors io stand for directorship.—(1) A person who is not a retiring director shall, sub- ject to the provisions of this Act, be eligible for appointment to the office of director at any general meeting, if he or some member intending to propose him has, not less than fourteen days before the meeting, left at the office of the company a notice in writing under his hand signifying his candidature for the office of director or the intention or such member to propose him as a candidate for that office, as the case may be.
(2) Sub-section (1) shall not apply to a private company, unless it is a subsidiary of a public company.
SEC. lj THE GAZETTE OF INDIA EXTRAORDINARY 155
2511. Right of company to increase or reduce the number of directors.—(1) Subject to the provisions of sections 252, 255 and 259, c company in general meeting may, by ordinary resolution, increase or reduce the number of its directors within the limits fixed in that behalf by its articles.
259. Increase in number of directors to require Government •auction.—In the case of a public company or a private company which is a subsidiary of a public company, any increase in the num- ber of its directors, except—
(a) in the case of a company which was in existence on the 21st day of July, 1951, an increase which was within1 the per- missible maximum under its articles as in force on that date, and
(b) in the case of a company which came or may come into existence after that date, an increase which is within the per- missible maximum under its articles as first registered,
shall not have any effect unless approved by the Central Government; and shall become void if, and in so far as, it is disapproved by that Government.
260. Additional directors.—Nothing in section 255, 258 or 259 shall affect any power conferred on the Board of directors by the articles to appoint additional directors:
Provided that such additional directors shall hold office only up to the date of the next annual general meeting of the company:
Provided further that the number of the directors and additional directors together shall not exceed the maximum strength fixed for the Board by the articles.
261. Certain persons not to be appointed directors, except by special resolution.— (1) If a public company, or a private company whicm is a subsidiary of a public company, has a managing agent and sjuch managing agent is authorised by the articles or by an agreement to appoint any director to the Board, none of the follow- ing persons shall be appointed as a director of the company whose period of office is liable to determination by retirement of directors by rotation, except by a special resolution passed by the company:—
(a) any person who is an officer or employee of, or who holds any office or place of profit under, the company or any sub- sidiary thereof:
Provided that nothing in this clause shall apply to the director of such company or subsidiary, or to the holder of any qfflce or place of profit under such company or subsidiary which nay be held by a director of the company by virtue of section 314;
(b) where any office or place of profit which would dis- qualify a person under clause (a), read with the proviso thereto, is held by any firm, any partner in, or employee of, the firm;
(e) where any such office or place of profit is held by a pri- vate company, any member, officer or employee of such com- pany;
15(5 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(d) where any such office or place of profit is held by a body corporate, any officer or employee of such body corporate;
(e) any person who is entitled, by virtue of any agreement, to any share of, or any amount out of, the remuneration received by the managing agent;
(f) any associate, or officer or employee, of the managing agent; or *
(g) any person who is an officer or employee of, or who holds any office or place of profit under, any body corporate under ,the management of the managing agent or any subsidiary of such body corporate:
Provided that nothing in clause {g) shall apply to the director of such body corporate or subsidiary or to the holder of any office or place of profit under such body corporate or subsidiary which may be held by a director of such body corporate by virtue of section 314.
(2) Special notice shall be required of any resolution appointing, or approving the appointment of, any person referred to in clauses (a) to (g) of sub-section (1), as a director of the company.
(3) The notice given to the company of any such resolution, and the notice thereof given by the company to its members, shall set out the reasons which make the resolution necessary.
(4) Nothing in this section shall be deemed to prevent any director holding any office immediately before the commencement of this Act from continuing to hold that office up to the next annual general meeting of the company.
262. Filling of casual vacancies among directors,—(1) In the case' of a public company > or a private company which is a subsidiary of a public company, if the office of any director appointed by the company in general meeting is vacated before his term of office will expire in the normal course, the resulting casual vacancy may, in default of and subject to any regulations in the articles of the company, be filled by the Board of directors at a meeting of the Board.
(2) Any person so appointed shall hold office only up to the date up to which the director in whose place he is appointed would have held office if it had not been vacated as aforesaid.
263. Appointment of directors to b© voted on individually.—(1) At a general meeting of a public company or of a private company which is a subsidiary of a public company, a motion shall not be made for the appointment of two or more persons as directors of the company by a single resolution, unless a resolution that it shall be BO made has first been agreed to by the meeting without any vote being given against it.
(2) A resolution moved in contravention of sub-section (1) shall be void, whether or not objection was taken at the time to its being BO moved:
Provided that where a resolution so moved is passed, no provision for the automatic re-appointment of retiring directors in default of another appointment shall apply.
SEC. 11 THE GAZETTE OF INDIA EXTRAORDINARY 157
(3) For the purposes of this section, a motion for approving a person's appointment, or for nominating a person for appointment, shall bs treated as a motion for his appointment.
264. Consent of candidate for directorship to be filed with Regis- trar. (1) A person who is not a retiring director shall not be capable of being appointed director of a company unless he has, by himself or by his agent authorised m writing, signed and filed with the Registrar, a consent in writing to act as such director.
(2) Sub-section (1) shall not apply to a private company unless it is a subsidiary of a public company.
265. Option to company to adopt proportional representation for the appointment of directors—Notwithstanding anything contained in this Act, the articles of a company may provide for the appoint- ment of not less than two-thirds of the total number of the directors of a public company or of a private company which is a subsidiary of a public company, according to the principle of proportional re- presentation, whether by the single transferable vote or by a system of cumulative voting or otherwise, the appointments being made once in every three years and interim casual vacancies being filled in accordance with the provisions, mutatis mutandis, ot section 262.
266. Restrictions on appointment or advertisement of director.— (1) A person shall not be capable of being appointed director of a company by the articles, and shall not be named as a director or proposed director of a company in a prospectus issued by or on behalf of the company, or as proposed director of an intended c6m- pany in a prospectus issued in relation to that intended company, or in a statement in lieu of prospectus filed with the Registrar by or on behalf of a company, unless, before the registration of the articles, the publication of the prospectus, or the filing of the state- ment in lieu of prospectus, as the case may be, he has, by himself or by his agent authorised in writing,—
(a) signed and filed with the Registrar a consent in writing to act as such director; and
(b) either— (i) signed the memorandum for shares not being less in
number or value than that of his qualification shares, if any; or
(ii) taken his qualification shares, if any, from the com- pany and paid or agreed to pay for them; or
(Hi) signed and filed with the Registrar an undertaking in writing to take from the company his qualification shares, if any, and pay for them; or
(iv) made and filed with the Registrar an affidavit to the effect that shares, not being less in number or value than that of his qualification shares, if any, are registered in his name.
(2) Where a person has signed and filed as aforesaid an undertak- ing to take and pay for his qualification shares, he shall, as regards those shares, be in the same position as if he had signed the memo- randum for shares of that number or value.
I 58 THE GAZETTE OP INDIA EXTRAORDINARY [PART II
(3) References in this section to the share qualification of a director or proposed director shall be construed as including only a share qualification required within a period determined by reference to the time of appointment, and references therein to qualification shares shall be construed accordingly.
(4) On the application for registration of the memorandum and the articles, if any, of a company, the applicant shall file with the Registrar a list of the persons who have consented to be directors of the company; and, if this list contains the name of any person who has not so consented,, the applicant shall be punishable with fine which may extend to five hundred rupees.
(5) This section shall not apply to— (a) a company not having a share capital, (b) a private company; (c) a company which was a private company before becom-
ing a public company; or (d) a prospectus issued by or on behalf of a company after
the expiry of one year from the date on which the company was entitled to commence business.
Managing"Directors, etc.
267. Certain persons not to be appointed managing directors.— No company shall, after the commencement >of this Act, appoint or employ, or continue the appointment or employment of, any per- son as its managing or whole-time director who—
(a) is an undischarged insolvent, or has at any time been adjudged an insolvent;
(b) suspends, or ha3 at any time suspended, payment to his creditors, or makes, or has at any time made, a composition with them; or
(c) is, or has at any time been, convicted by a Court in India of an offence involving moral turpitude.
268. Amendment of provision relating to managing, whole-time or non-rotational directors to require Government approval.—In the case of a public company or a private company which is a subsidiary of a public company, an amendment of any provision relating to the appointment or re-appointment of a managing or whole time director or of a director not liable to retire by rotation, whether that provision be contained in the company's memorandum or articles, or in an agree- ment entered into by it, or in any resolution passed by the company in general meeting or by its Board of directors, shall not have anv effect unless approved by the Central Government; and the amend- ment shall become void if, and in so far as, it is disapproved by that Government.
269. Appointment of managing or whole-time director to require Government approval.—In the case of a public company or a private company which is a subsidiary of a public company, the appointment of a managing or whole time director for the first time after the com- mencement of this Act in the case of an existing company, and after
Sue. 1] THE GAZETTE OF INDIA EXTRAORDINARY 159
the expiry of three months from the date of its incorporation in the case of any other company, shall not have any effect unless approv- ed by the Central Government; and shall become void if, and in so far as.Jit is disapproved by that Government.
Share qualification
270. f ime within which share qualification is to be obtained and maximum amount thereof.—(I) Without prejudice to the restrictions imposed by section 266, it shall be the duty of every director who is required by the articles of the company to hold e specified share qualification and who is not already qualified in that respect, to obtain his qualification within two months after his appointment as director.
(2) Any provision in the articles of the company (whether made before or after the commencement of this Act) shall be void in 60 far as it requires a person to hold the qualification shares before his appointment as a director or to obtain them within a shorter time than two months after his appointment as such.
(3) The nominal value of the qualification shares shall not exceed live thousand rupees, or the nominal value of one share where it exceeds five thousand rupees.
(4) For the purpose of any provision in the articles requiring a director to hold a specifled^share qualification, the bearer of a share warrant shall not be deemed to be the holder of the shares specified in the warrant.
271. Filing of declaration of share qualification by director.— Every director, not being a technical director or a director appoint- ed by the Central or a State Government, shall within two months after his appointment, or in the case of a director holding office at the commencement of this Act, within two months after such com- mencement, file with the company a declaration specifying the qualification shares held by him.
272. Penalty.—If, after the expiry of the said period of two months, any person acts as a director of the company when he does not hold the qualification shares referred to in section 270, he shall be punishable with fine which may extend to fifty rupees for every day between such expiry and the last day on which he acted as a director.
273. Saving.—Sections 270 to 272 shall not apply to a private company, unless it is a subsidiary of a public company
Disqualifications 0/ Directors
t\it. Disqualifications of directors.—(1) A person shall not be capable of being appointed director of a company, if—
(a) he has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force;
(b) he is an undischarged insolvent;
(c) he has applied to be adjudicated as an insolvent and his application is pending;
160 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(d) he has been convicted by a Court In India of any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than six months, and a period of five years has not elapsed from the date of expiry of the sentence;
(e) he has not paid any call in respect of shares of the com- pany held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call; or
(f) an order disqualifying him for appointment as director has been passed by a Court in pursuance of section 203 and is in force, unless the leave of the Court has been obtained for his appointment in pursuance of that section.
(2) The Central Government may, by notification in the Official Gazette, remove—
(a) the disqualification incurred by any person in virtue of clause (d) of sub-section (1), either generally or in relation to any company or companies specified in the notification; or
(b) the disqualification incurred by any person in virtue of clause (e) of sub-section (1).
(3) A private company which is not a subsidiary of a public company may, by its articles, provide that a person shall be disquali- fied for appointment as a director on any grounds in addition to those specified in sub-section (1).
Restrictions on number of directorships
275. No person to be a director of more than twenty companies.— After the commencement of this Act, no person shall, save as other- wise provided in section 276, hold office at the same time as director in more than twenty companies.
276. Choice to be made by director of more than twenty compa- nies at commencement of Act.—(2) Any person holding office as director in more than twenty companies immediately before the commencement of this Act shall, within two months from such commencement,—
(a) choose not more than twenty of those companies, as companies in which he wishes to continue to hold the office of director;
(b) resign his office as director m the other companies; and (c) intimate the choice made by him under clause (a) to
each of the companies in which he was holding the office of director before such commencement, to the Registrar having jurisdiction in respect of each such company, and also to the Cen- tral Government.
(2) Any resignation made in pursuance of clause (b) of sub- section (1) shall become effective immediately on the despatch thereof to the company concerned.
(3) No such person shall act as director— (a) in more than twenty companies, after the expiry of two
months from the commencement of this Act: or
SEC 111 THE GAZETTE OF INDIA EXTRAORDINARY 161
(b) of any company after despatching the resignation of his office as director thereof, in pursuance of clause (b) of sub- section (2).
27TJ. Choice by person becoming director of more than twenty companies after commencement of Act.—(2) Where a person already holding the office of director in twenty companies is appointed, after the commencement of this Act, as a director of any other company, the appointment—
(a) shall not take effect unless such person has, within fifteen days thereof, effectively vacated his office as director in any of the companies in which he was already a director; and
(b) shall become void immediately on the expiry of the fifteen days if he has not, before such expiry, effectively vacated his office as director in any of the other companies aforesaid.
(2) Where a person already holding the office of director in nine- teen companies or less is appointed, after the commencement of this Act, as a director of other companies, making the total number of his directorships more than twenty, he shall choose the director- ships which he wishes to continue to hold or to accept, so however that the total number of the directorships, old and new, held by him shall not exceed twenty
Nane of the new appointments of director shall take effect until such (choice is made; and all the new appointments shall become void if the choice is not made wi-thin fifteen days of the day on which the last of them was made.
278. Exclusion of certain directorships for the purposes of sections 275, 276 and 277.—(1) In calculating, for the purposes of sections 275, 276 and 277, the number of companies of which a person may be a director, the following companies shall be excluded, namely: —
(a) a private company which is neither a subsidiary nor a holding company of a public company;
(b) an unlimited company;
(c) an association not carrying on business for profit or which prohibits the payment of a dividend;
(d) a company in which such person is only an alternate director, that is to say, a director who is only qualified to act as such during the absence or incapacity of some other director.
(2) In making the calculation aforesaid, a ompany referred to in clauses (a), (b) and (c) of sub-section (2) all he excluded for a period of three months from the date on whi i the company ceases to fell within the purview of those clauses.
279. Penalty.—Any person who holds office, or acts, as a director of more than twenty companies in contravention of the foregoing provisions shall be punishable with fine which may extend to five thousand rupees in respect of each of those companies after the first twenty.
162 THE GAZETTE OS INDIA EXTRAORDINARY [PART II
Retiring age of Directors 280. Ape limit.—{1) Save as otherwise provided in section 281. a
person shall not be capable of being appointed a director of a public company or of a private company which Js a subsidiary of a public company, if he has attained the age of sixty-five years.
(2) Save as aforesaid, a director of a public company or of a private company which is a subsidiary of a public company shall vacate his office at the conclusion of the annual general meeting commencing next after he attains the age of sixty-five years:
Provided that this sub-section shall not apply to a director who is in office at the commencement of this Act so as to require the termination of the appointment then held by him before the con- clusion of the third annual general meeting held after the com- mencement of this Act, but shall apply so as to terminate the ap- pointment aforesaid at the conclusion of that meeting, if he had attained the age of sixty-five years before the commencement of the meeting.
(3) Where a person retires by virtue of sub-section (2), no provi- sion for the automatic re-appointment of retiring directors in default of another appointment shall apply; and if at the meeting at the conclusion of which he retires, the vacancy is not filled, it may be filled as a casual vacancy under section 262.
281. Age limit not to apply if company so resolves.— (1) Nothing in section 280 shall prevent the appointment of a director who has attained the age of sixty-five years or require a director to retire who has attained that age, if his appointment is or was made or approved by a resolution passed by the company in general meeting and specifically declaring that the age limit shall not apply to him.
(2) Special notice shall be required of any such resolution; and unless such notice is given, the resolution shall be void,
(3) Notice of any such resolution given to the company, and by the company to its members, must state or must have stated the age of the person to whom it relates.
282. Duty of director to disclose age.—(/) Any person who is appointed, or to his knowledge is proposed to be appointed, director of a company at a time when he has attained the age of sixty-five years or such lower age, if any, as may be specified in the company's articles in this behalf, shall give notice of his age to the company:
Provided that this sub-section shall not apply in relation to a person's re-appointment on the termination of his previous appoint- ment as director of the company, if notice has been given as afore- said in connection with, or at any time during the continuance of, such previous appointment or any appointment as director prior thereto.
(2) Any person who—
(.a) fails to give notice of his age as required by sub-sectisn (2); or
Ssc. 1] THE GAZETTE OF INDIA EXTRAORDINARY 163
(b) acts as director under any appointment which is invalid, or which has terminated, by leason of his age;
shall be punishable with fine which may extend to fifty rupees for every day during which the failure continues or during which, he continues to act as aforesaid, as the case may be.
(3) For the purposes of clause (b) of sub-section (2), a person who has acted as director under an appointment which is invalid or has terminated, shall be deemed to have continued so to act throughout the period from the date of the invalid appointment or the date on which the appointment terminated, as the case may be, until the last day on which he acted thereunder.
Vacation of Office by Directors
283. Vacation of office by directors.— (1) The office of a director shall be vacated if—
(a) he fails to obtain within the time specified in sub-section (/) of section 270, or at any time thereafter ceases to hold, the share qualification, if any, required of him by the articles of the company;
(b) he is found to be of unsound mind by 0 Court of compe- tent jurisdiction;
(c) he applies to be adjudicated an insolvent;
(d) he is adjudged an insolvent;
(e) he is convicted by a Court in India of any offence and is sentenced in respect thereof to imprisonment for not less than six months;
(f) he fails to pay any call in respect of shares of the com- pany hold by him, whether alone or jointly with others, with- in six ntionths from the last date fixed for the payment of the call; I
(g) he absents himself from three consecutive meetings of the Board of directors, or from all meetings of the Board for a continuous period of three months, whichever is longer, without obtaining leave of absence from the Board;
(h) he, or any firm in which he is a partner or any private company of which he is a director, accepts a loan, or any guar- antee or security for a loan, from the company in contravention of section 295;
(i) he acts in contravention of section 299; (3) le becomes disqualified by an order of Court under
section 203; or (7c) he is removed in pursuance of section 284.
(2) Notwithstanding anything in clauses (d), (fj) and (j) of sub- section (1), the disqualification referred to in those clauses shall not take effect—
(a) for thirty days from the date of the adjudication, sentence or order;
164 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(to) where any appeal or petition is preferred within the thirty days aforesaid against the adjudication, sentence or convic- tion resulting in the sentence, or order until the expiry of seven days from the date on which such appeal or petition is disposed of; or
(c) where within the seven days aforesaid, any further appeal or petition is preferred in respect of the adjudication, sentence, conviction, or order, and the appeal or petition, if allowed, would result in the removal of the disqualification, until such further appeal or petition is disposed of.
(3) A private company which is not a subsidiary of a public com- pany may, by its articles, provide, that the office of director shall be vacated on/ any grounds in addition to those specified in sub- section (1).
284. Removal of directors.—(1) A company may, by ordinary re- solution, remove a director (not being a director appointed by th>a Central Government in pursuance of section 408) before the expiry of his period of office:
Provided that this sub-section shall not, in the case of a private company, authorise the removal of a director holding office for life on the 1st day of April, 1952, whether or not he is subject to retire- ment under an age limit by virtue of the articles or otherwise:
Provided further that nothing contained in this sub-section shall apply where the company has availed itself of the option given to it under section 265 to appoint not less than two-thirds of the total number of directors according to the principle of proportional re- presentation.
(2) Special notice shall be required of any resolution to remove a director under this section, or to appoint somebody instead of a director so removed at the meeting at which he is removed.
(3) On receipt of notice of a resolution to remove a director under this section, the company shall forthwith send a copy thereof to the director concerned, and the director (whether or not he is a member of the company) shall be entitled to be heard on the resolution at the meeting.
(4) Where notice is given of a resolution to remove a director under this section and the director concerned makes with respect thereto representations in writing to the company (not exceeding a reasonable length) and requests their notification to members of the company, the company shall, unless the representations are re- ceived by it too late for it to do so,—
(a) in any notice of the resolution given to members of the company, state the fact of the representations having been made; and
(b) send a copy of the representations to every member of the company to whom notice of the meeting is sent (whether before or after receipt of the representations by the company);
and if a copy of the representations is not sent as aforesaid because they were received too late or because of the company's default, the director may (without prejudice to his right to be heard orally) require that the representations shall be read out at the meeting:
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 165
Provided that copies of the representations need not be sent out and the representations need not be read out at the meeting if, o» the application either of the company or of any other person who claims to be aggrieved, the Court is satisfied that the rights con- ferred by this sub-section are being abused to secure needless publi- city for defamatory matter; and the Court may order the company's costs on the application to be paid in whole or in part by the director notwithstanding that he is not a party to it.
(5) A vacancy created by the removal of a director under this section may, if he had been appointed by the company in general meeting or by the Board in pursuance of section 262, be filled by the appointment of another director in his stead by the meeting at which he is removed, provided special notice of the intended appointment has been given under sub-section (2).
A director so appointed shall hold office until the date up to which his predecessor would have held office if he had not been removed as aforesaid.
(6) If the vacancy is not filled under sub-section (5), it may be filled as a casual vacancy in accordance with the provisions, so far as they may be applicable, of section 262, and all the provisions of that section shall apply accordingly:
Provided that the director who was removed from office shall not be re-appointed as a director by the Board of directors.
(7) Nothing in this section shall be taken— (a) as depriving a person removed thereunder of any com-
pensation or damages payable to him in respect of the termina- tion of his appointment as director or of any appointment termi- nating with that as director; or
(b) as derogating from any power to remove a director whi|ch may exist apart from this section.
Meetings of Board
285. Board to meet once in every three months.—In the case of every company, a meeting of its Board of directors shall be held at least once in every three calendar months.
286. Notice of meetings.—(1) Notice of every meeting of the Board of directors of a company shall be given in writing to every director for the time being in India, and at his usual address in India to every other director.
(2) Every officer of the company whose duty it is to give notice as aforesaid and who fails to do so shall be punishable with fine which may extend to one hundred rupees.
287. Quorum for meetings.—
(1) In this section— (a) "total strength" means the total strength of the Board
of directors of a company as determined in pursuance of this Act, after deducting therefrom the number of the directors, if any, whose places may be vacant, at the time; and
!66 THE GAZETTE OF INDIA EXTRAORDINARY [PAHT II
(b) "interested diiector" means any director whose presence cannot, by reason of section 300, count for the purpose of form- ing a quorum a a meeting of the Board, at the time of the discussion or vou,- on any matter.
(2) The quorum for a meeting of the Board of directors of a company shall be one-third of its total strength (any fraction con- tained in that one-third being rounded off as one), or two directors, whichever is higher:
Provided that where at any time the number of interested direc- tors exceeds or is equal to two-thirds of the total strength, the number of the remaining duuciois, .hat \A to say, the number of the directors who are not interested, shall be the quorum during such time.
288. Procedure where meeting adjourned for want of quorum.— (1) It a meeting of the Board could not be held for want of quorum, then, unless the articles otherwise provide, the meeting shall automatically stand adjourned till the same day in the next week, at the same time and place, or if that day is a public holiday, till the next succeeding day which is not a public holiday, at the same time and place.
(2) The provisions of section 285 shall not be deemed to have been contravened merely by reason of the fact that a meeting of the Board which had been called in compliance with the terms of that section could not be held for want of a quorum.
289. Passing of resolutions by circulation.—No resolution shall be deemed to have been duly passed by the Board or by a committee thereof by circulation, unless the resolution has been circulated in draft, together with the necessary papers, if any, to all the direc- tors, or to all the members of the committee, then in India (not being less in number than the quorum fixed for a meeting of the Board or committee, as the case may be,), and to all other directors or members at their usual address in India, and has been approved by such of the directors as are then in India, or by a majority of such of them, as are entitled to vote on the resolution,
290. Validity of acts of directors.—Acts done by a person as a director shall be valid, notwithstanding that it may afterwards be discovered that his appointment was invalid by reason of any defect or disqualification or had terminated by virtue of any provision con- tained in this Act or in the articles:
Provided that nothing in this section shall be deemed to give validity to acts done by a director after his appointment has been shown to the company to be invalid or to have terminated.
Board's powers and restrictions thereon
291. General powers of Board.— (1) Subject to the provisions of this Act, the Board of directors of a company shall be entitled to exercise all'such powers, and to do all such acts and things, as the company is authorised to exercise and do:
Provided that the Board shall not exercise any power or do any act or thing which is directed or required, whether by this or any
SEC. I] THE GAZETTE OF INDIA EXTRAORDINARY 167
other Act or by the memorandum or articles of the company or other- wise, to be exercised or done by the company in general meeting:
Provided further that in exercising any such power or doing any such act or thing, the Board shall be subject to the provisions con- tained in that behalf in this or any other Act, or in the memoran- dum or articles of the company, or in any regulations not inconsistent therewith and duly made thereundei, including regulations made by the company in general meeting.
(2) No regulation made by the company in general meeting shall invalidate any prior act of the Board which would have been valid il that regulation had not been made.
292. Certain powers to be exercised by Board only at meeting.—• (1) The Board of dhtrtors of a company shall exercise the following powers on behalf of the company, and it shall dn so only by means of resolutions passed at meetings of the Board: —
(a) the power to make calls on shareholders in respect of money unpaid on their shares;
(b) the power to issue debentures;
(c) the power to borrow moneys otherwise than on deben- tures;
(d) the power to invest the funds of the company; and (e) the power to make loans:
Provided that the Board may, by a resolution passed at a meeting, delegate to any committee of directors, the managing director, the managing agent, secretaries and treasurers, or the manager of the company, or in the case of a banking company, also to a manager or other principal officer of a branch office of the company, the powers specified in clauses (c), (d) and (e), to the extent specified in sub- sections (2), (3), and (4) respectively.
(2) Every resolution delegating the power referred to in clause (c) of sub-section (1) shall specify the total amount up to which moneys may be borrowed by the delegate.
(3) Every resolution delegating the power referred to in clause (d) of sub-section (I) shall specify the total amount up to which the fluids may be invested, and the nature of the investments which may be made, by the delegate.
(4) Every resolution delegating the power referred to in clause (e) of sub-section (1) shall specify the total amount up to which loans may toe made by the delegate, the purposes for which the loans may be mdde, and the maximum amount of loans which may be made for each such purpose in individual cases.
(5) Nothing in this section shall be deemed to affect the right of the company in general meeting to impose restrictions and conditions on the exercise by the Board of any of the powers specified in sub- section (I).
168 THE GAZETTE OF INDIA. EXTRAORDINARY [PART II
293. Restrictions on powers of Board.—(1) The Board of directors of a public company, or of a private company which is a subsidiary of a public company, shall not, except with the consent of such public company or subsidiary in general meeting,—
(a) sell, lease or otherwise dispose of the whole, or substan- tially the whole, of the undertaking of the company, or where the company owns more than one undertaking, of the whole, or substantially the whole, of any such undertaking;
(b) remit, or give time for the re-payment of, any debt due by a director;
(c) invest, otherwise than in trust securities, the sale proceeds resulting from the acquisition, after the commence- ment of this Act, without the consent of the company, of any such undertaking as is referred to in clause (a), or of any premises or properties used for any such undertaking and with- out which it cannot be carried on or can be carried on only with difficulty or only after a considerable time;
(d) borrow moneys after the commencement of this Act, where the moneys to be borrowed, together with the moneys already borrowed by the company, (apart from temporary loans obtained from the company's bankers in the ordinary course ol business) will exceed the aggregate of the paid-up capital of the company and its free reserves, that is to say, reserves not set apart for any specific purpose; or
(e) contribute, after the commencement of this Act, to chari- table and other funds not directly relating to the business of the company or the welfare of its employees, any amounts the aggregate of which will, in any financial year, exceed twenty- five thousand rupees, or five per cent, of its average net profits as determined in accordance with the provisions of sections 349 and 350 during the three financial years immediately preceding, whichever is greater.
Explanation.—Where a portion of a financial year of the com- pany falls before the commencement of this Act, and a portion falls after such commencement, the latter portion shall be deemed to be a financial year within the meaning, and for the purposes, of clause (e).
(2) Nothing contained in clause (a) of sub-section (1) shall affect—
(a) the title of a buyer or other person who buys or takes a lease of any such undertaking as is referred to in that clause, in good faith and after exercising due Care and caution; or
(b) the selling or leasing of any property of the company where the ordinary business of the company consists of, or com- prises, such selling or leasing.
(3) Any resolution passed by the company permitting any trans- action such as is referred to In clause (a) of sub-section (2) may attach such conditions to the permission as may be specified in the resolution, including conditions regarding the use, disposal or invest* ment of the sale proceeds which may result from the transaction:
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 169
Provided that this sub-section shall not be deemed to authorise the company to effect any redaction in its capital except in accord- ance with the provisions contained in that behalf in this Act,
(4) The .acceptance by a banking company, in the ordinary course of its business, of deposits of money from the public, repayable on demand or I otherwise, and withdrawable by cheque, draft, order or otherwise, shall not be deemed to be a borrowing of moneys by the banking company within the meaning of clause (d) of sub- section (2).
(5) No debt incurred by the company in excess of the limit im- posed by clause (d) of sub-section (l) shall be valid or effectual, unless the lender proves that he advanced the loan in good faith and without knowledge that the limit imposed by that clause nad been exceeded.
294. Appointment of sole selling agents to require approval of company in general meeting.—(1) After the commencement of this Act, the Board of directors of a company shall not appoint a sole selling agent for any area, except subject to the condition that the appointment shall cease to be valid if it is not approved by the company in general meeting within a period of six months from the date on which the appointment is made.
(.2) If the company in general meeting disapproves of the appoint- ment, or does not approve of it within the period of six months aforesaid, it shall cease to be valid with effect from the date of such disapproval, or the expiry of the period of six months aforesaifi, whichever is earlier.
(3) Where before tne commencement of this Act, a company has appointed a sole selling agent for any area for a period of not less than five years, the appointment shall be placed before the company in general meeting within a period of six months from such com- mencement and the company in general meeting may, by resolu- tion—
(a) if the appointment was made on or after yie 15th day of February, 1955, terminate the appointment forthwith or with effect from such later date as may be specified in the resolution; and
(b) if the appointment was made before the date specified in clause (a), terminate the appointment with effect from such date as may be specified in the resolution, not being earlier than five years from the date on which the appointment was made, or the expiry of one year from the commencement of this Act, whichever is later.
295. Loans to directors, etc.—(1) Save as otherwise provided In sub-section [2), no company (hereinafter in this section referred to as "the lending company") shall, without obtaining the previous appro- val of the Central Government in that behalf, make any loan to, or give any guarantee or provide any security in connection with a loan made by any other person to, or to any other person by,—
^ (a) any director of the lending company or of a company which is its holding company or any partner or relative of any
170 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
such director; (b) any firm in which any such director or relative is a
partner;
(c) any private company of which any such director is a director or member;
(d) any body corporate at a general meeting of which not less than twenty-five per cent, of the total voting power may be ex- ercised or controlled by any such director, or by two or more such directors together; or
(e) any body corporate, the Board of directors, managing director, managing agent, secretaries and treasurers, or manager whereof is accustomed to act in accordance with the directions or instructions of the Board, or of any director or directors, of the lending company. (2) Sub-section (1) shall not apply to any loan made, guarantee
given or security provided—
(a) by a private company unless it is a subsidiary of a public company;
(b) by a banking company; (c) by a holding company to its subsidiary; or (d) by a company which is the managing agent or secretaries
and treasurers of another company to the latter.
(3) Where any loan made, guarantee given or security provided by a lending company and outstanding at the commencement of this Act could not have been made, given or provided, without the pre- vious approval of the Central Government, if this section had then been in force, the lending company shall, within six months from the commencement of this Act or such further time not exceeding six months as the Central Government may grant for that purpose, either obtain the approval of the Central Government to the trans- action or enforce the repayment of the loan made, or In connection with which the guarantee was given or the security was provided, notwithstanding any agreement to the contrary.
(4) Every person who is knowingly a party to any contraven- tion of sub-section (1) or (3), including in particular any person to whom the loan is made or who has taken the loan in respect of which the guarantee is given or the security is provided, shall be punishable cither with fine which may extend to five thousand rupees or with simple imprisonment for a term which may extend to six months:
Provided that where any such loan, or any loan in connection with which any such guarantee or security has been given or provid- ed by the lending company, has been repaid in full, no punishment by way of imprisonment shall be imposed under this sub-section; and where the loan has been re-paid in part, the maximium punish- ment which may be imposed under this sub-section by way of imprisonment shall be proportionately reduced.
(5) All persons who are knowingly parties to any contravention of sub-section (1) or (3) shall be liable, jointly and severally, to the
(EC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 171
lending company for the repayment of the loan or for making good the sum which the lending company may have been called upon to jay in virtue of the guarantee given or the security provided by
$uch company.
(6) No officer of the lending company or of the borrowing body Corporate shall be punishable under sub-section (4) or shall incur the liability referred to in sub-section (5) in respect of any loan made, guarantee given or security provided in contravention of clause (d) or (e) of sub-section (1), unless at the time when the loan was made, the guarantee was given or the security was provided by the lend- ing company, he knew or had express notice that that clause was being contravened thereby.
296. Saving regarding book-debts.—Nothing contained in section 295 shall apply to a book-debt which Is required to be treated by virtue of the provision contained ,in that behalf in Schedule VI as a loan or an advance for the purpose of preparing the balance sheet of the company, unless the transaction represented by the book- debt was from its inception in the nature of a loan or an advance.
297. Board's sanction to be required for certain contracts in which particular directors are interested,—(1) Except with the consent of the Board of directors of a company, a director of the company or his relative, a firm in which such a director or relative is a partner, any other partner in such a firm, or a private company of which the director is a member or director, shall not enter into any contract with the company—
(a) for the sale, purchase or supply of any goods, materials or services; or
(b) after the commencement of this Act, for underwriting the subscription of_ any shares in, or debentures of, the company.
(2) Nothing contained in clause (a) of sub-section (1) shall affect any contract or contracts for the sale, purchase or supply of any goods, materials or services in which either the company, or the director, firm, partner or private company, as the case may be, regularly trades or does business, provided that the value of such goods and materials and the cost of such services do not exceed five thousand rupees in the aggregate in any calendar year com- prised in the period of the contract or contracts.
(3) The consent of the Board required by sub-section (I) shall not be deemed to have been given within the meaning of that sub- section, unless the consent is accorded—
(a) by a resolution passed at a meeting of the Board; and
(b) before the contract is entered into, or within two months of the date on which it was entered into.
(4) Where such consent is not accorded to the contract before It is entered into, anything done in pursuance of the contract shall, if such consent is ultimately not accorded, be voidable at the option of the Board.
172 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(5) Sub-sections (3) and (4) shall not apply to any case where consent has been accorded to the contract before the commence- ment of this Act.
298. Power of directors to carry on business when managing agent or secretaries and treasurers are deemed to have vacated office, etc.— Where in pursuance of any provisions contained in this Act, the managing agent or secretaries and treasurers of a company are deemed to have vacated or to have been suspended from office, or are removed or suspended from office, or cease to act or to be entitled to act as managing agent or secretaries and treasurers, or where a permanent or temporary vacancy has otherwise occurred in the office of managing agent or secretaries and treasurers, then notwithstanding anything contained in this Act, the Board of directors shall have power to carry on, or arrange for the carrying on of, the affairs of the company until the managing agent or secretaries and treasurers again (become entitled to act as such, or until the company in general meeting resolves otherwise.
Procedure, etc., where Director interested 299. Disclosure of interests by director.— (1) Every director of a
company who is in any way, whether directly or indirectly, concern- ed or interested in a contract or arrangement, or proposed contract or arrangement, entered into or to be entered into, by or on behalf of the company, shall disclose the nature of his concern or interest at a meeting of the Board of directors.
(2) (a) In the case of a proposed contract or arrangement, the disclosure required to be made by a director under sub-section (1) shall be made at the meeting of the Board at which the question of entering into the contract or arrangement is first taken into consi- deration, or if the director was not, at the date of that meeting, con- cerned or interested in the proposed contract or arrangement, at the first meeting of the Board held after he becomes so concerned or Interested
(b) In the case of any other contract or arrangement, the requir- ed disclosure shall be made at the first meeting of the Board held after the director becomes concerned or Interested In the contract or arrangement.
(3) (a) For the purposes of sub-sections (1) and (2), a general notice given to the Board by a director, to the effect that he is a director or a member of a specified body corporate or is a member of a specified firm and is to be regarded as concerned or interested in any contract or arrangement which may, after the date of the notice, be entered into with that body corporate or firm, shall be deemed to be a sufficient disclosure of concern or interest in relation to any contract or arrangement so made.
(b) Any such general notice shall expire at the end of the financial year in which it is given, but may be renewed for further periods of one financial year at a time, by a fresh notice given in the last month of the financial year in which it would otherwise expire.
(c) No such general notice, and no renewal thereof, shall be of effect unless either, it is given at a meeting of the Board, or the director concerned takes reasonable steps to secure that it is brought
Sac. IT THE GAZETTE OF INDIA EXTRAORDINARY 173
(4) Every director who fails to comply with sub-section (1) or (2) shall be punishable with fine which may extend to five thousand rupees.
(5) Nothing in this section shall be taken to prejudice the opera- tion of any rule of law restricting a director of a company from having any concern or interest in any contracts or arrangements with the company.
300. Interested director not to participate or vote in Board's pro- ceedings.—\(1) No director of a company shall, as a director, take any part in the discussion of, or vote on, any contract or arrange- ment entered into, or to be entered into, by or on behalf of the company, if he is in any way, whether directly or indirectly, con- cerned or interested in the contract or arrangement; nor shall his presence count for the purpose of forming a quorum at the time of any such discussion or vote; and if he does vote, his vote shall be Void.
(2) Sub-section (1) shall not apply to— (a) a private company which is neither a subsidiary nor a
holding company of a public company; (b) a private company which is a subsidiary of a public
company, in respect of any contract or arrangement entered into, or to be entered into, by the private company with the holding company thereof;
(c) any contract of indemnity against any loss which the directors, or any one or more of them, may suffer by reason of becoming or being sureties or a surety for the company;
(d) any contract or arrangement entered into or to be entered into with a public company, or a private company which is a subsidiary of a public company, in which the interest of the director aforesaid consists solely in his being a director of such company and the holder of not more than shares of such number or value therein as is requisite to qualify him for appointment as a director thereof, he having been nominated as such direc- tor by the company referred to in sub-section (1); or
(e) a public company, or a private company which is a sub- sidiary of a public company, in respect of which a notification is issued under sub-section (3), to the extent specified in the notifi- cation. (3) In the case of a public company or a private company which
is a subsidiary of a public company, if the Central Government is of opinion that having regard to the desirability of establishing or promoting any industry, business or trade, it would not be in the public interest to apply all or any of the prohibitions contained In sub-section (2) to the company, the Central Government may, by notification in the Official Gazette, direct that that sub-section shall not appH to such company, or shall apply thereto subject to such exceptions, modifications and conditions as may be specified in the notification.
(4) Every director who knowingly contravenes the'provisions of this section shall be punishable with fine which may extend to five thousand rupees.
174 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
301. Register of contracts, companies and firms in which directors are interested.—(i) A register shall be kept by every company, in which shall be entered particulars of all contracts or arrangements to which section 297 or 299 applies, including the following particu- lars, namely:—
(a) the date of the contract or arrangement; (b) the names of the parties thereto; (c) the principal terms and conditions thereof; (d) the date on which it was placed before the Board; (e) the names of the directors voting for and against the
contract or arrangement and the names of those remaining neutral.
(2) Particulars of every such contract or arrangement shall be entered in the register aforesaid within three days of the meeting of the Board at which the contract or arrangement is approved; and the register shall be placed before the next meeting of the Board and shall then be signed by all the directors present at that meeting.
(3) The register aforesaid shall also specify, in relation to each director of the company, the names of the bodies corporate and firms of which notice has been given by him under sub-section (3) of section 299.
(4) If default is made in complying with the provisions of sub- section (1), (2) or (3), the company, and every officer of the company who is in default, shall, In respect of each default, be punishable with fine which may extend to five hundred rupees.
(5) The register aforesaid shall be kept at the registered office of the company; and it shall be open to inspection at such office, and extracts may be taken therefrom and copies thereof may be required, by any member of the company to the same extent, in •the same manner, and on payment of the same fee, as in the case •of the register of members of the company; and the provisions of section 163 shall apply accordingly.
302, Disclosure to members of director's interest in contract ap- pointing manager, managing- director, managing agent or secretaries and treasurers.—(1) Where a company-
fa) enters into a contract for the appointment of a manager of the company, In which contract any director of the company is in any way, whether directly or indirectly, concerned or in- terested; or
(b) varies any such contract already in existence and in which a director is concerned or interested as aforesaid;
the company shall, within twenty-one days from the date of enter- ing into the1 contract or of the varying of the contract, as the case may be, send 1o every member of the company an abstract of the terms of the contract or variation, together with a memorandum clearly specifying the nature of the concern or interest of the direc- tor in such contract or variation.
Stx. 1] THE GAZETTE OF INDIA EXTRAORDINARY • 175
(2) Where a company enters into a contract for, the appointment of a managing director of the company, or varies any such contract which is already in existence, the company shall send an abstract of the terms of the contract or variation to every member ot the company within the time specified in sub-section (1); and if any other director of the company is concerned or interested in the con- tract or variation, a memorandum clearly specifying the nature of the concerh or interest of such other director in the contract or variation shall also be sent to every member of the company with the abstract aforesaid.
(3) Where a company proposes to enter into a contract for the appointment of a managing agent or of secretaries and treasurers, in which contract any director of the company is concerned or interested as aforesaid, or proposes to vary any such contract already in existence in which a director is concerned or interested as aforesaid, the company shall send the abstract and memorandum referred to in sub-section (2) to every member of the company, in sufficient time before the general meet- ing of the company at which the proposal is to be considered.
(4) Where a director, becomes concerned or interested as afore- said in any such contract as is referred to in sub-section (2), (2) or (3) alter it is made, the abstract and the memorandum, it any, referred ko in the said sub-section shall be sent to every member of the company within twenty-one days from the date on which the director (becomes so concerned or interested.
(5) If default is made in complying with the foregoing provi- sions of this section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to one thousand rupees.
(6) All contracts entered into by a company for the appointment of a manager, managing director, managing agent or secretaries and treasurers, shall be kept at the registered office of the company; and' shall be open to the inspection of any member of the company at such office; and extracts may be taken therefrom and copies thereof may be required by any such member, to the same extent, in the same manner and on payment of the same fee, as in the case of the register of members of the company; and the provisions of section 163 shall apply accordingly.
(7) The provisions of this section shall apply in relation to any resolution or proposed resolution of the Board of directors of a company appointing a manager or a managing or whole-time direc- tor, or I varying any previous contract or resolution of the company relating to the appointment of a manager or a managing or whole- time director, as they apply in relation to any contract or proposed contract for the like purpose.
Register of Directors, etc.
303. Register of directors, managing agents, secretaries and! treasurers etc.—(1) Every company shall keep at its registered office- a register of its directors, managing director, managing agent,.
176 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
secretaries and treasurers, manager and secretary, containing with respect to each of them the following particulars, that is to say:—
(a) in the case of an individual, his present name and sur- name in full; any former name or surname in full; his usual residential address; his nationality; and, if that nationality is not the nationality of origin, his nationality of origin; his busi- ness occupation, if any; if he holds the office of director, manag- ing director, managing agent, manager or secretary in ^ny other body corporate, the particulars of each such office held by him; and except in the case of a private company which is not a subsidiary of a public company, the date of his birth;
(b) in the case of a body corporate, its corporate name and registered or principal office; and the full name, address, nationality, and nationality of origin, if different from that nationality, of each of its directors; and if it holds the office of managing agent, secretaries and treasurers, manager or secre- tary in any other body corporate, the particulars of each such office;
(c) in the case of a firm, the name of the firm, the full name, address, nationality, and nationality of origin, if different from that nationality, of each partner; and the date on which each became a partner; and if the firm holds the office of managing agent, secretaries and treasurers, manager or secretary in any other body corporate, the particulars of each such office;
(d) if any director or directors have been nominated by a body corporate, its corporate name; all the particulars referred to in clause (a) in respect of each director so nominated, and also all the particulars referred to in clause (b) in respect of the body corporate;
(e) if any director or directors have been nominated by a firm, the name of the firm, all the particulars referred to in clause (a) in respect of each director so nominated, and also all the particulars referred to in clause (c) in respect of the firm.
•Explanation.—For the purposes of this sub-section—
(1) any person in accordance with whose instructions, the Board of directors of a company is accustomed to act shall be deemed to be a director of the company;
(2) in the case of a person usually known by a title different from his surname, the expression "surname" means that title; and
(.?) references to a former name or surname do not include— (i) in the case of a person usually known by an Indian
title different from his surname, the name by which he was known previous to the adoption of, or succession to, the title;
(ii) in the case of any person, a former name or sur- name, where that name or surname was changed or disused
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 177
before the person bearing the name attained the age of eighteen years, or has been changed or disused for a period of not less than twenty years; and
(in) in the case of a married woman, the name or sur- name by which she was known previous to the marriage.
(2) The company shall, within the periods respectively mentioned in this sub-section, send to the Registrar a return in the prescribed form containing the particulars specified in the said register and a notification in the prescribed form of any change among its direc- tors, managing directors, managing agents, secretaries and treasurers, managers or secretaries or in any of the particulars contained in the register, specifying the date of the change.
The period within which the said return is to be sent shall be a period of twenty-eight days from the appointment ot the first directors of the company and the period within which the said noti- fication of a change is to be sent shall be twenty-eight days irom the happening thereof.
(3) If default is made in complying with sub-section (1) or (2), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for every day during which the default continues
304. Inspection of the register.—(1) The register kept under section 303 shall be open to the inspection of any member of the company without charge and of any other person on payment of one rupee for each inspection during business hours subject to such reasonable restrictions as the company may by its articles or in general meeting impose, so that not less than two hours in each day are allowed for inspection.
(2) If any inspection required under sub-section (I) is refused,— (a) the company, and every officer of the company who is in
default, shall be punishable with fine which may extend to fifty rupees; and
(b) the Court may, by order, compel an immediate inspec- tion of the register.
305. Duty of directors etc., to make disclosure.—Every director [including a person deemed to be a director by virtue of the Ex- planation to sub-section (1) of section 303], managing director, managing agent, secretaries and treasurers, manager or secretary of any company, who is appointed to the office of director, managing director, managing agent, secretaries and treasurers, manager or secretary of any other body corporate shall, within twenty days of his appointment, disclose to the company aforesaid the particulars relating to the office in the other body corporate which are required to be specified under sub-section (1) of section 303; and if he fails to do so, he shall be punishable with fine which may extend to five hundred rupees.
306. Register to be kept by Registrar and inspection thereof.— (1) The Registrar shall keep a separate register or registers in which there shall be entered the particulars received by him under sub-section (2) of section 303 in respect of companies, so however that all entries in respect of each such company shall be together.
178 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(2) The registei* or registers aforesaid shall be open to inspec- tion by any member of the public at any time during office hours, on payment of the prescribed fee.
Register 0/ Directors' Shareholdings
307. Register of directors' shareholdings, etc.—(1) Every com- pany shall keep a register showing, as respects each director of the company, the number, description and amount of any shares in, or debentures of, the company or any other body corporate, being the company's subsidiary or holding company, or a subsidiary of the company's holding company, which are held by him or in trust for him, or of which he has any right to become the holder whether on payment or not.
(2) Where any shares or debentures have to be recorded in the said register or to be omitted therefrom, in relation to any director, by reason of a transaction entered into after the commencement of this Act and while he is a director, the register shall also show the date of, and the price or other consideration for, the transaction:
Provided that where there is an interval between the agreement for any such transaction and the completion thereof, the date so shown shall be that of the agreement.
(3) The nature and extent of any interest or right in or over any shares or debentures recorded in relation to a director in the said register shall, if he so requires, be indicated in the register.
(4) The company shall not, by virtue of anything done for the purposes of this section, be affected with notice of, or be put upon inquiry as to, the rights of any person in relation to any shares or debentures.
(5) The said register shall, subject to the provisions of this section, be kept at the registered office of the company, and shall be open to inspection during business hours (subject to such reasonable restrictions as the company may, by its articles or in general meeting, impose, so that not less than two hours in each day are allowed for inspection) as follows:—
(a) during the period beginning fourteen davs before the date of the company's annual general meeting and ending three days after the date of its conclusion, it shall be open to the inspection of any member or holder of debentures of the com- pany; and
(b) during that or any other period, it shall be open to the inspection of any person acting on behalf of the Central Government or of the Registrar.
In computing the fourteen days and the three days mentioned In this sub-section, any day which is a Saturday, a Sunday or a public holiday shall be disregarded.
(6) Without prejudice to the rights conferred by sub-section (5), the Central Government or the Registrar may, at any time, require a copy of the said register, or any part thereof.
(7) The said register shall also be produced at the commence- ment of every annual general meeting of the company and
S&C. 11 ' THE GAZETTE OF INDIA EXTRAOBDINARY 179
shall remain open and accessible during the continuance of the meeting to any person having the right to attend the meeting.
If default is made in complying with this sub-section the com- pany, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees.
(8) If default is made in complying with sub-section (1) or (2), or if any inspection required under this section is refused, or if any copy required thereunder is not sent within a reasonable time, thei company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees and also with a further fine which may extend to twenty rupees for every day during which the default continues.
(9) In the case of any such refusal, the Court may also, by order, compel an immediate inspection of the register.
(10) For the purposes of this section— (a) any person in accordance with whose directions or
instructions the Board of directors of a company is accustomed to act, shall be deemed to be a director of the company; and
(b) a director of a company shall be deemed to hold, or to have an interest or a right in or over, any shares or deben- ture*, if a body corporate other than the company holds them or has that interest or right in or over them, and either—
(i) that body corporate or its Board ol directors is accustomed to act in accordance with his directions or instructions; or
(ii) he is entitled to exercise or control the exercise of one-third or more of the total voting power exercisable at any general meeting of that body corporate.
308. Duty of directors and persona deemed to be directors to make disclosure of shareholdings.—(1) Every director of a com- pany, apd every person deemed to be a director of the company by virtue of sub-section (20) of section 307, shall give notice to the company of such matters relating to himself as may be neces- sary for the purpose of enabling the company to comply with the provisions of that section.
(2) Any such notice shall be given in writing, and if it is not Riven at a meeting of the Board, the person giving the notice shall take all reasonable steps to secure that it is brought up and read at the meeting of the Board next after it is given.
(3) Any person who fails to comply with sub-section (1) or (2) shall be punishable with Imprisonment for a term which may extend to two years, or with fine which may extend to five thousand rupeesj or with both.
Remuneration of Directors
309. Remuneration of directors.—(1) The remuneration payable to the directors of a company, including any managing or whole- time director, shall be determined, in accordance with and subject to the provisions of section 198 and this section, either by the articles
i8o THK GAZETTE OF INDIA EXTRAORDINARY [PART II
of the company, or by a resolution or, if the articles so require, by a special resolution, passed by the company in general meeting.
(2) A director may receive remuneration either by way of a monthly payment, or by way of a fee for each meeting attended, or partly by the one way and partly by the other.
(3) In lieu of or In addition to the remuneration specified in sub-section (2), remuneration may be paid to a director who is either in the whole-time employment oi the company or a manag- ing director, at a specified percentage of the net profits of the com- pany:
Provided that such percentage shall not exceed five for any one such director, or where there is more than one such director, ten for all of them together.
(4) In the case of a director who is neither in the whole-time employment of the company nor a managing director and whose remuneration does not include anything by way of a monthly pay- ment, the company may, by special resolution, authorise the pay- ment, to such director, or where there is more than one such direc- tor, to all of them together-
fa) if the company has a managing or whole-time director, a managing agent or secretaries and treasurers, or a manager, of a commission not exceeding one per cent, of the net profits of the company;
(b) in any other case, of a commission not exceeding three per cent, of the net profits of the company.
(5) The net profits referred to in sub-sections (3) and (4) shall be computed in the manner referred to in section 198, sub-section (I).
(6) No director of a company who is in receipt of any commis- sion from the company and who is either in the whole-time employ- ment of the company or a managing director shall be entitled to receive any commission or other remuneration from any subsidiary of such company.
(7) The special resolution referred to in sub-section (4) shall not remain In force for a period of more than five years; but may be renewed, from time to time, by special resolution for further periods of not more than five years at a time:
Provided that no renewal shall be effected earlier than one year from the date on which it is to come into force.
(8) The provisions of this section shall come into force imme- diately on the commencement of this Act or, where such commence- ment does not coincide with the end of a financial year of the company, with effect from the expiry of the financial year imme- diately succeeding such commencement.
(9) The provisions of this section shall not apply to a private company unless it is a subsidiary of a public company.
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310. Provision for increase in remuneration to require Govern- ment sanction.—In the case of a public company, or a private com- pany which is a subsidiary of a public company, an amendment of any provision relating to the remuneration of any director including a managing or whole-time director, which purports to increase or has the effect of increasing, whether directly or indirectly, the amount thereof, whether that provision be contained in the com- pany's memorandum or articles, or in an agreement entered into by it, or in any resolution passed by the company in general meeting or by its Board of directors, shalli not have any effect unless ap- proved by the Central Government; and the amendment shall be- come vcx:d if, and in so far as, it is disapproved by that Govern- ment.
311. Increase in remuneration of managing director on re- appointment or appointment after Act to require Government sanction.—In the case of a public company, or a private company which is a subsidiary of a public company, if the terms of any re-appointment or appointment of a managing or whole-time direc- tor, made after the commencement of this Act, purport to increase or have the effect of increasing, whether directly or indirectly, the remuneration which the managing or whole-time director or the previous managing or whole-time director, as the case may be, was receiving immediately before such re-appointment or appoint- ment, the re-appointment or appointment shall not have any effect unless approved by the Central Government; and shall become void if, and in so far as, it is disapproved by that Government.
Miscellaneous Provisions 312. Prohibition of assignment of office by director.—Any assign-
ment of his office made after the commencement of this Act by any director of a company shall be void.
313. Appointment and term of office of alternate directors.—(1) The Board of directors of a company may, if so authorised by its articles or by a resolution passed by the company in general meeting, appoint an alternate director to act for a director (herein- after in this section called "the original director") during his ab- sence for a period of not less than three months from the State in which meetings of the Board are ordinarily held.
(2) An alternate director appointed under sub-section (2) shall vacate office if and when the original director returns to the State in which meetings of the Board are ordinarily held.
(3) If the term of office of the original director is determined before he so returns to the State aforesaid, any provision for the automatic re-appointment of retiring directors in default of another aopoMtment shall apply to the original, and not to the alternate, director.
314. Director etc. not to bold office or place of profit.— (1) Except with the previous consent of the company accorded by a special resolution, no director of a company, no partner or relative of such a director, no firm in which such a director or relative is a partner, no private company of which such a director is a director or mem- ber, and no director, managing agent, secretaries and treasurers, or manager of such a private company shall hold any office or place of profit, except that of managing director, managing agent, secretaries
182 THE GAZETTE OF INDIA EXTRAORDINARY [PART IE
and treasurers, manager, legal or technical adviser, banker, or trustee for the holders of debentures of the company,—
(a) under the company; or (b) under any subsidiary of the company, unless the re-
muneration received from such subsidiary m respect of such- office or place is paid over to the company or its holding com- pany.
(2) If any office or place of profit under the company or a subsi- diary thereof is held in contravention of the provisions of sub-section« (1), the director concerned shall be deemed to have vacated his office
as director with effect from the first day on which the contravention, occurs; and shall also be liable to refund to the company any remu- neration received, or the monetary equivalent of any perquisites- or advantage enjoyed by him, in respect of such office or place of profit.
(3) Any office or place in a company shall be deemed to be an1 office or place of profit under the company within the meaning of sub-section (i),—
(a) in case the office or place is held by a director, if the- director holding it obtains anything by way of remuneration over and above the remuneration to which he is entitled as suchi director, whether as salary, fees, commission, perquisites, the right to occupy free of rent any premises as a place of residence, or otherwise;
(b) in case the office or place is held by an individual other' than a director or by any firm, private company or other body corporate, if the Individual, firm, private company or body cor- porate holding it obtains anything by way of remuneration; whether as salary, fees, commission, perquisities, the right to- occupy free of rent any premises as a place of residence, or otherwise.
Restrictions on appointment of managing directors
315. Application of sections 316 and 317.—Sections 316 and 3 i r shall not apply to a private company, unless it is a subsidiary of a» public company.
316. Number of companies of which one person may be appoint- ed managing director.— (1) No company shall, after the commence- ment of this Act, appoint or employ any person as managing direc- tor, if he is either the managing director or the manager of any other company, except as provided in sub-section (2).
(2) A company may appoint or employ a person as its managing director, if he is the managing director or manager of one, and off not more than one, other company:
Provided that such appointment or employment is made or ap- proved by a resolution passed at a meeting of the Board with the consent of all the directors present at the meeting and of which meeting, and of the resolution to be moved thereat, specific notice.- has been given to all the directors then In India.
SBC. 11 THE GAZETTE OF INDIA EXTRAORDINARY 183
(3) Where, at the commencement of this Act, any person is holding the office either of managing director or of manager in more than two companies, he shall, within one year from the com- mencement of this Act, choose not more than two of those compa- nies as companies in which he wishes to continue to hold the office of managing director or manager, as the case may be; and the pro- visions of clauses (b) and (c) of sub-section (1) and of sub-sections (2) and (3) of section 276 shall apply mutatis mutandis in relation to this case, as those provisions apply in relation to the case of a director.
(4) Notwithstanding anything contained in sub-sections (1) to (3), the Central Government may, by order, permit any person to be .appointed as a managing director of more than two companies if the Central Government is satisfied that it is necessary that the •companies should, for their proper working, function as a single unit and have a common managing director.
317. Managing director not to be appointed for more than five years at a time.— (1) No company shall, after the commencement of this Act, appoint or employ any individual as its managing direc- tor for a term exceeding five years at a time.
(2) Any individual holding at the commencement of this Act the -office of managing director in a company shall, unless his term ex- pires earlier, be deemed to have vacated his office immediately on the expify of five years from the commencement of this Act.
(3) Nothing contained in sub-section (1) shall be deemed to pro- nibit the re-appointment, re-employment, or the extension of the term of office, of any person by further periods not exceeding five years on each occasion:
Provided that any such re-appointment, re-employment or ex- tension shall not be sanctioned earlier than two years from the date on which it is to come into force.
Compensation for loss of office
318. Compensation for loss of office not permissible except to managing or whole-time directors or to directors who are managers.—(1) Payment may be made by a company, except in the cases specified in sub-section (3) and subject to the limit specified in sub-section (4), to a managing director, or a director holding the office of manager or in the whole time employment of the company, by way of compensation for loss of office, or as consideration for retirement from office, or in connection with such loss or retirement.
(2) No such payment shall be made by the company to any othei director.
(3) NTo payment shall be made to a managing or other director in pursuance of sub-section (1), in the following cases, namely:—
(a) where the director resigns his office in view of the re- construction of the company, or of its amalgamation with any other body corporate or bodies corporate, and is appointed as
184 THE GAZETTE OF INDIA EXTRAORDINARY [PART Q.
the managing director, managing agent, secretaries and treasur- ers, manager or other officer of the reconstructed company or of the body corporate resulting from the amalgamation;
(b) where the director resigns his office otherwise than on. the reconstruction of the company or its amalgamation as afore- said;
(c) where the office of the director is vacated by virtue of section 203, section 280, or any of the clauses, (a) to (k), of sub- section (I) of section 283;
(d) where the company is being wound up, whether by or subject to the supervision of the Court or voluntarily, provid- ed the winding up was due to the negligence or default of the- director;
(e) where the director has been guilty of fraud or breach of trust in relation to, or of gross negligence in or gross mis- management of, the conduct of the affairs of the company or any subsidiary or holding company thereof;
(f) where the director has instigated, or has taken part directly or indirectly in bringing about, the termination of his- office.
(4) Any payment made to a managing or other director in pur- suance of sub-section (1) shall not exceed the remuneration which he would have earned if he had been in office for the unexpired residue of his term or for three years, whichever is shorter, calculated on the basis of the average remuneration actually earned by him during a period of three years immediately preceding the date on which he ceased to hold the office, or where he held the office for a lesser period than three years, during such period:
Provided that no such payment shall be made to the director in> the event of the commencement of the winding up of the company; whether before, or at any time within twelve months after, the date on which he ceased to hold office, if the assets of the company on the winding up, after deducting the expenses thereof, are not sufficient to- repay to the share-holders the share capital (including the pre- miums, if any,) contributed by them.
(5) Nothing in this section shall be deemed to prohibit the pay- ment to a managing director, or a director holding the office of manager, of any remuneration for services rendered by him to the- company in any other capacity.
319. Payment to director* etc., for loss of office etc., in connection with transfer of undertaking or property.—(I) No director of a com- pany shall, In connection with the transfer of the whole or any part of any undertaking or property of the company, receive any pay- ment, by way of compensation for loss of office, or as consideration for retirement from office, or in connection with such loss or retire- ment—
(a) from such company; or (b) from the transferee of such undertaking or property or
from any other person (not being such company), unless parti- culars with respect to the payment proposed to be made by such transferee or person (including the amount thereof) have been
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 185
disclosed to the members of the company and the proposal haa been approved by the company In general meeting. (2) Where a director of a company receives payment of any
amount in contravention of sub-section (1), the amount shall be deemed to have been received by him in trust for the company.
(3) Sub-sections (1) and (2) shall not affect in any manner the operation qf section 318.
320 Payment to director for loss of office etc., in connection with transfer of shares.—(1) No director of a company shall, in con- nection with the transfer to any persons of all or any of the shares in a company, being a transfer resulting from—
(i) an offer made to the general body of shareholders; (ii) an offer made by or on behalf of some other body cor-
porate with a view to the company becoming a subsidiary of such body corporate or a subsidiary of its holding company;
(lit) an offer made by or on behalf of an individual with a view to his obtaining the right to exercise, or control the exercise of, not less than one-third of the total voting power at any gene- ral meeting of the company; or
(iv) any other offer which is conditional on acceptance to a given extent;
receive any payment by way of compensation for loss of office, or as consideration for retirement from office, or in connection with such loss or retirement,—
(a) from such company; or (b) except as otherwise provided in this section, from the
transferees of the shares or from any other person (not being such company).
(2) In the case referred to in clause (b) of sub-section (I), it shall be the duty of the director concerned to take all reasonable steps to secure that particulars with respect to the payment pro- posed to be made by the transferees or other person (including the amount thereof) are included in, or sent with, any notice of the offer made for their shares which is given to any shareholders.
(3) If- (a) any such director fails to take reasonable steps aa
aforesaid; or
<M any person who has been properly required by any such director to include the said particulars in, or send them withj any such notice as aforesaid fails so to do;
he shall be punishable with fine which may extend to two hundred and fifty rupees.
(4) If-
(a) the requirements of sub-section (2) are not complied with in relation to any such payment aa is governed by clause (b) of sub-section (2); or
186 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(b) the making of the proposed payment is not, before the transfer of any shares in pursuance of the offer, approved by a meeting, called for the purpose, of the holders of the shares to which the offer relates and other holders of shares of the same class (other than shares already held at the date of the offer by, or by a nominee for, the offeror, or where the offeror is a com- pany, by, or by a nominee for, any subsidiary thereof) as any of the said shares;
any sum received by the director on account of the payment shall be deemed to have been received by him in trust for any persons who have sold their shares as a result of the offer made, and the expenses incurred by him in distributing that sum amongst those persons shall be borne by him and not retained out of that sum.
(5) If at a meeting called for the purpose of approving any payment as required by clause (b) of sub-section (4), a quorum is not present and, after the meeting has been adjourned to a later date, a quorum is again not present, the payment shall, for the pur- poses of that sub-section, be deemed to have been approved.
321. Provisions supplementary to sections 318, 319 and 320.—(I) Where in proceedings for the recovery of any payment as having, by virtue of sub-section (2) of section 319 or sub-section (4) of section 320, been received by any person in trust, it is shown that—
(d) the payment was made in pursuance of any arrange- ment entered into as part of the agreement for the transfer in question, or within one year before, or within two years after, that agreement or the offer leading thereto; and
(b) the company or any person to whom the transfer was made was privy to that arrangement;
i the payment shall be deemed, except in so far as the contrary is shown, to be one to which that sub-section applies.
(2) If in connection with any such transfer as is mentioned in section 319 or in section 320,—
(a) the price to be paid, to a director of the company whose office is to be abolished or who is to retire from office, for any shares in the company held by him is in excess of the price which could at the time have been obtained by other holders of the like shares; or
(b) any valuable consideration is given to any such director; the excess or the money value of the consideration, as the case may be, shall for the purposes of that section, be deemed to have been a payment made to him by way of compensation for loss of office, or as consideration for retirement from office, or in connection with such loss or retirement.
(3) References in sections 318, 319, and 320 to payments made to any director of a company by way of compensation for loss of office, or as consideration for retirement from office, or in connection with such loss or retirement, do not include any bonn fide payment by way of damages for breach of contract or by way of pension in respect of past services; and for the purposes of this sub-section the
SEC. I] THE GAZETTE OF INDIA EXTRAQBDINARY 187
expression "pension" includes any superannuation allowance, superannuation gratuity or similar payment.
(4) Nothing in sections 319 and 320 shall be taken to prejudice the operation of any rule of law requiring disclosure to be made with respect to any such payments as are therein mentioned or with respect to any other like payments made or to be made to the •directors of a company.
Directors with unlimited liability
322. Directors, etc., with unlimited liability in limited company.— (1) In a limited company, the liability of the directors or of any director or of the managing agent, secretaries and treasurers or mana- ger may, if so provided by the memorandum, be unlimited.
(2) In a limited company in which the liability of a director, managing agent, secretaries and treasurers or manager is unlimited, -the directors, the managing agent, secretaries and treasurers and the manager of the company, and the member who proposes a person for appointment to the office of director, managing agent, secretaries and treasurers or manager, shall add to that proposal a statement "that the liability of the person holding that office will be unlimited; and before the person accepts the office or acts therein, notice in writing that his liability will be unlimited, shall be given to him by the following or one of the following persons, namely, the pro- moters of the company, its directors, its managing agent, secretaries and treasurers or manager, if any, and its officers.
(3) If any director, managing agent, secretaries and treasurers, manager or proposer makes default in adding such a state- ment, or if any promoter, director, managing agent, secretaries and treasurers, manager or officer of the company makes default in giving such a notice, he shall be punishable with fine which may extend to one thousand rupees and shall also be liable for any •damage which the person so appointed may sustain from the de- fault; but the liability of the person appointed shall not be affected by the default.
323. Special resolution of limited company making liability of directors etc., unlimited.—(1) A limited company may, if so authorised by its articles, by special resolution, alter its memoran- dum so as to render unlimited the liability of its directors or of any director or ol its managing agent, secretaries and treasurers or manager.
<2) Upon the passing of any such special resolution, the pro- visions thereof shall be as valid as If they had been originally con- tained in the memorandum:
Provided that no alteration of the memorandum making the liability of any of the officers referred to in sub-section (2) un- limited shall apply to such officer, if he was holding the office froin before the date of the alteration, until the expirv of his then tenn. unless he has accorded his consent to his liability becoming un- limited.
i88 THE GAZETTE OF INDIA. EXTRAORDINARY [PART K
CHAPTER IH
MANAGING AGENTS
Prohibition of appointment oj managing agent in certaincases 324. Power of Central Government to notify that companies
engaged in specified classes of industry or business shall not have managing agents.—(2) Subject to such rules as may be prescribed in this behalf, the Central Government may, by notification in the Offi- cial Gazette, declare that, as from such date as may be specified in the notification, the provisions of sub-section (2) shall apply to all companies, whether Incorporated before or after the commencement of this Act, which are engaged on that date or may thereafter be en- gaged, wholly or in part, in such class or description of industry or business as may be specified in the notification.
(2) Thereupon,— (a) where any such company has a managing agent on the
specified date, the term of office of that managing agent shall, if it does not expire earlier, expire at the end of three years from the specified date, or on the 15th day of August, 1960, whichever is later; and the company shall not re-appoint or appoint thfr same or any other managing agent; and
(b) where any such company has no managing agent on the specified date, or where it is incorporated on or alter that date, it shall not appoint a managing agent.
(3) Copies of all rules prescribed under sub-section (J) shall, as soon as may be after they have been prescribed, be laid before both Houses of Parliament.
(4) A copy of every notification proposed to be issued under sub- section (1) shall be laid in draft before both Houses of Parliament for a period of not less than thirty days while they are in session; and if, within that period, either House disapproves of the issue of the notification or approves of such issue only with modifications,, the notification shall not be issued or, as the case may require, shall be issued only with such modifications as may be agreed on by both the Houses.
325. Managing agency company not to have managing agent.—(1) No company acting as the managing agent of any other company shall, after the commencement of this Act, appoint a managing agent for itself, whether it transacts any other kind of business in addition or not.
(2) No company having a managing agent shall, after the com- mencement of this Act, be appointed as the managing agent of any other company.
(3) Any appointment of managing agent made in contravention of sub-section (2) or (2) shall be void.
(4) Where at the commencement of this Act a company having a managing agent is itself acting as a managing agent of any other company, the term of office of the company first mentioned as managing agent of the other company shall, if it does not expire earlier in accordance ^ith the provisions applicable thereto imme- diately before such commencement [including any provisions con- tained in the Indian Companies Act, 1913 (VII of 1913)], expire on th* 15th day of August, 1956.
SfcC J| THE GAZETTE OF INDIA EXTBAtttllflNkBY 18?
Appointment and term 0/ o^ice 326. Central Government to approve of appointment, etc., of
managing agent; and circumstances in which approval may be accorded.—(1) In respect of any company to which neither the pro- hibition specified in section 324 nor that specified in section 325 applies, a managing agent shall not be appointed or re-appointed,—
(a) except by the company m general meeting; and (fy) unless the approval of the Central Government has been
obtained for such appointment or re-appointment. (2) The Central Government shall not accord its approval under
sub-section (2) in any case, unless it is satisfied— (a) that it is not against the public interest to allow the
company to have a managing agent; (b) that the managing agent proposed is, in its opinion, a fit
and proper person to be appointed or re-appointed as such, and that the conditions of the managing agency agreement proposed are fair and reasonable; and
(c) that the managing agent proposed has fulfilled any con- ditions which the Central Government requires him to fulfil.
327. Application of sections 328 to 331.—The provisions of sections 328 to 331 shall apply to—
(a) a public company; (b) a private company which is a subsidiary of a public
company; and (c) a private company which is not a subsidiary of a public
company, unless the Central Government, by general or special order, specifically exempts the private company.
328. Term of office of managing agent.—(1) After the commence- ment of this Act, no company shall—
(0) in case it appoints a managing agent for the first time (that is to say, in case the company has nad no managing agent at any time since its formation), make the appointment for a term exceeding fifteen years;
(b) hi any other case, re-appoint or appoint a managing agent for a term exceeding ten years at a time;
(c) re-appoint a managing agent for a fresh term, when the existing term of the managing agent has two years or more to run:
Provided that the Central Government may, if satisfied that it is in the interest of the company so to do, permit the re-appointment of a managing agent at an earlier time than that specified in clause (c).
(2) For the purpose of sub-section (1), re-appointment does not include the re-appointment of any person on fresh, additional or changed conditions for any period not extending beyond his existing term, but otherwise Includes—
(a) the renewal, or the extension of the term, of a previous appointment; and
(b) the appointment of any person or persons having an Interest in the previous managing agency. (3) Any appointment or re-appointment of a managing agent,
made in contravention of the provisions of sub-sections (I) and
tgo THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(2) shall be void m respect of the entire term for which the appoint- ment or re-appointment is made.
Variation of Managing Agency Agreement
329. Variation of managing agency agreement.—A resolution of the company in general meeting shall be required for varying the terms of a managing agency agreement; and before such a resolution is passed, the previous sanction of the Central Government shall be obtained therefor.
Special provisions regarding jexisting managing agents
330. Term of office of existing managing agents te terminate on 15th August, 1960.—Where a company has a managing agent at the commencement of this Act, the term of office of such managing agent shall, if it does not expire earlier in accordance with the provisions applicable thereto immediately before such commencement [in- cluding any provisions contained in the Indian Companies Act, 1913 (VII of 1913)], expire on the 15th day of August, 1960, unless before that date he is re-appointed for a fresh term in accordance with any provision contained m this Act.
331. Application of Act to existing managing agents.—All pro- visions of this Act, other than those relating to the term for which the office can be held, shall apply to every managing agent" holding office at the commencement of this Act, with effect from such commencement.
Restrictions on Number of Managing Agencies
332. No person to be managing agent of more than ten com- panies after 15th August, I960.—(1) After the 15th day of August, 1960, no person shall, at the same time, hold office as managing agent in more than ten companies.
(2) Where a person holding office as managing agent m more than ten companies before that date fails to comply with sub-section (1), the Central Government may permit him to hold office as managing agent with effect from that date in respect of such of those companies, not exceeding ten in number, as it may determine.
(3) In calculating the number of companies of which a person may be a managing agent in pursuance of this section, the following companies shall be excluded, namely:—
(a) a private company which is neither a subsidiary nor a holding company of a public company;
(b) an unlimited company; (c) an association which aoes not carry on business for
profit, or which prohibits the payment of a dividend.
(4) For the purposes of this section, each of the following persons shall also be deemed to hold office as managing agent of the company:—
(a) where the managing agent of the company is a firm, every partner in the firm;
SEC, 1] THE GAZETTE OF INDIA EXTRAORDINARY 191
(b | where the managing agent of the company is itself a company, every person who is a director, the secretaries and treasurers or a manager, of the latter company, and every member thereof who is entitled to exercise not less than twenty per cent, of the total voting power therein.
(5) Any person who acts as a managing agent of more than ten companies in contravention of this section shall be punishable with fine which may extend to one thousand rupees in respect of each of those companies in excess of ten, for each day on which he so acts.
Right to charge on assets
333. Right of managing agent to charge on company's assets.—A managing agent whose office stands terminated under section 3?.4r or 332 shall be entitled to a charge on the assets of the company in respect of all moneys which are due to him from the company at the- date of such termination, or which he may have to pay after that date in respect of any liability or obligation properly incurred by him on behalf of the company before such date, subject to all exist- ing charges and incumbrances, if any, on such assets.
Vacation of Office, Removal and Resignation
334. Vacation of office on insolvency, dissolution or winding up, etc.—Subject to the provisions of section 340, the managing agent of a company shall be deemed to have vacated his office as such—
(a) in case the managing agent is an individual, if he is adjudged an insolvent;
(b) in the same case, if the managing agent applies to be adjudicated an insolvent;
(c) in case the managing agent is a firm, on its dissolution from any cause whatsoever, including the insolvency of * partner in the firm;
(d) in case the managing agent is a body corporate, on the commencement of its winding up whether by or subject to the supervision of the Court, or voluntarily;
(e) in all cases, on the commencement of the winding up of the company managed by the managing agent, whether by or subject to the supervision of the Court or voluntarily.
335. Suspension from office where receiver appointed.—(1) The managing agent of a company shall be deemed to have been sus- pended) from his office as such, if a receiver is appointed for his- properw—
(a) by a Court, or (b) by or on behalf of the creditors of the managing agent,
including the holders of debentures issued by the managing- agent, in pursuance of any power conferred by an instrument executed by the managing agent:
Provided that the Court which appointed the receiver, or which- will have jurisdiction to wind up the managed company, as the case
THE GAZETTE OF INDIA EXTRAORDINARY [PAHT II
may be, may, bywder, direct that the managing agent shall continue to act as such for such period and subject to such restrictions and conditions, if any, as may be specified in the order.
(2) The Court may, at any time, cancel or vary any order passed by it under the proviso to sub-section (2).
336. Vacation of office on conviction in certain cases.—Subject to "the provisions of seqtions 340 and 341, the managing agent of a company shall also be deemed to have vacated his office as such, if—
(a) the managing agent;
(b) in case the managing agent is a firm, any partner in the firm; or
(c) in case the managing agent is a b,ody corporate, any director of, or any officer holding a general power of attorney from, such body corporate;
is convicted by a Court in India, after the commencement of this Act, of any offence, and sentenced therefor to imprisonment for a period of not less than six months.
337. Removal for fraud or breach of trust.—A company in general meeting may, by ordinary resolution, remove its managing agent from -office—-
(t) for fraud or breach of trust in relation to the affairs of the company or of any subsidiary or holding company thereof, whether committed before or after the commencement of this Act;
(it) for fraud or breach of trust, whether committed before or after such commencement, in relation to the affairs of any other body corporate, if a Court of Law, whether in or outside India, finds such fraud or breach of trust to have been duly established; or
(Hi) subject to the provisions of sections 340 and 341, where the managing agent is a firm or body corporate, if any partner in the firm, or any director of, or any officer holding a general power of attorney from, the body corporate is guilty of any such fraud or breach of trust as is referred to in clause (i).
338. Removal for gross negligence or mismanagement.—A com- pany in genera] meeting may, by special resolution, remove its
' managing agent from office for gross negligence in, or for gross mis- management of. the affairs of the company or of any subsidiary "thereof.
339. Power to call meetings for the purposes of sections 337 and 338 and procedure.— (1) Without prejudice to any other provision contained in this Act or in the articles of the company for the calling -of meetings, any two directors of the company may call a general meeting of the company for the purpose of considering any resolu- -tic.n of the nature referred to in section 337 or 338.
SEC. 11 THE GAZETTE OF INDIA EXTRAOMMHABY 193
(2) On receipt of notice of any such resolution, a copy of th^ resolution shall be sent forthwith to the managing agent by the company.'
(3) The managing agent shall have, in relation to any such resolu- tion, all the rights which a director of the company has under sec- tion 284 in relation to any resolution for removing him from office, including, in particular, the right to make representations to the company in writing, to have such representations sent to members of the company and to have them read out at the meeting and also the right to be heard on the resolution at the meeting.
340. Time when certain disqualifications will take effect.—(1) The disqualifications imposed by clause (a) of section 334, by sub-section (1) of section 335, by section 336, and by any resolution passed in pursuance of clause (ii) of section 337, shall not take effect—
(a) for thirty days from the date of the order of adjudication, appointment of the receiver, sentence, or finding of the Court as the case may be, or
(b) where any appeal or petition is preferred within the thirty days aforesaid against the order, appointment, sentence or conviction resulting in the sentence, or finding, until the expiry of seven days from the date on which such appeal or petition is disposed of, or
(c) where within the seven days aforesaid, any further appeal or petition is preferred in respect of the order, appointment sentence, conviction or finding, as the case may be, and the appeal or petition, if allowed, would result in the removal of the dis- qualification, or in making the resolution inapplicable, as the case may be, until such further appeal or petition is disposed of
(2) In the cases referred to in sub-section (1), the Board may suspend the managing agent from office immediately on, or at any time after, the adjudication, appointment, sentence or finding referred to in clause (a) of that sub-section and until the disposal of the appeals and petitions, if any, referred to in clauses (b) and (c) thereof, or until the convicted partner, director or officer is expelled or dismissed in pursuance of section 341, as the case may be.
341. Conviction not to operate as disqualification if convicted partner, director, etc., is expelled.—(I) In the cases referred to in olauses (b) and (c) of section 336, it shall be open to the managing agent, notwithstanding anything to the contrary in any other law or agreement, for the time being in force, to expel or dismiss the convicted partner, director or officer, within thirty days from the date of his sentence; and in that event, the disqualifications imposed by the clauses aforesaid shall cease to apply.
(2) Sub-section (1) shall not affect the operation of section 34(? in any case to which that section would otherwise apply.
194 THEGAZETTE OF INDIA EXTRAORDINARY [PART II
342. Resignation of office by managing agent.—(I) Unless the managing agency agreement otherwise provides, a managing agent may, by notice to the Board, resign his office with effect from such date as may be specified in the notice.
(2) The managing agent shall cease to act as such with effect from the date so specified or from such later date, if any, as may be mutually agreed on between him and the Board; but his resigna- tion shall not be effective until it is considered as provided in sub- section (3).
3̂) When notice of resignation is given as aforesaid, the Board* shall—
(a) prepare a statement of the affairs of the company as at the date specified in the notice of resignation or such subsequent date (not being later than that on which the managing agent ceases to act as such under sub-section (2) ) as the directors may think' suitable, tr gether with a balance sheet made out as at that date, and a profit and los$ account for the period subsequent to the date for which the last such account was prepared and laid before the company in general meeting, and ending on that date;
(b) obtain a report from the auditors of the company on- such-balance sheet and profit and loss account, in accordance with* sections 227, 228 and 229; and
(c) place the managing agent's resignation together with the' statement of affairs, balance sheet, profit and loss account and auditors' report mentioned above, before the company in general meeting.
(4) In relation to any report made by the auditors as aforesaid, sections 230, 231, 232 and 233 shai; apply in like manner as they apply in relation to the auditors' report referred to therein.
(5) .The company in general meeting may, by resolution, accept the resignation or take such other action with reference thereto as- it may deem fit.
Transfers of, and Succession to. Office 343. Transfer of office by managing agent.—A transfer of his office-
by the managing agent of a company shall not take effect unless it is approved both by the company in general meeting and by the Central Government.
344- Managing- agency not to be heritable after commencement of Act.~Any agreement made by a company other than a private company which is not a subsidiary of a public company, with its managing agent after the commencement of this Act shall be void in so far as it provides for succession to the office by inheritance or devise.
345. Succession to managing- agency by Inheritance or devise under agreement before commencement of Act, to be subject to- Central Government's approval.—(2) Where the office of the man- aging agent of a company is held by an individual at the commence- ment of this Act and the managing agency agreement provides for succession to the officp by inheritance or devise, no person shall
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 195
succeed to the office on the death of the holder thereof, unless the succession of such person thereto is approved by the Central Govern- ment; and that Government shall not accord such approval unless, in its opinion, such person is a fit and proper person to hold the office of managing agent of the company.
(2) The provisions of sub-section (1) shall not apply to a private company which is not a subsidiary of a public company.
Changes in Constitution of Firms and Corporations
346. Changes in constitution of managing agency firm or corpora- tion to be approved by Central Government.—(1) Notwithstanding anything to the contrary contained in any other provision of this Act, where the managing agent of a public company, or of a private com- pany which is a subsidiary of a public company, is a firm or body corporate and any change takes place in the constitution of the firm or body corporate, the managing agent shall cease to act as such on .the expiry of six months from the date on which the change takes place or such further time as the Central Government may (whether before or after the expiry of the six months) allow in that behalf, unless th^ approval 01 the Central Government has been accorded before such expiry to the changed constitution of the firm or body corporate.
Explanation.—For the purposes aforesaid, a change in the consti- tution of a body corporate means—
(a) its conversion from a private to a public company, or from a public to a private company;
(b) any change among the directors or managers of the cor- poration, whether caused by the death or retirement of a director or manager, the appointment of a new director or manager, or otherwise;
(c) any change in the ownership of shares in the body cor- porate or in the case of a body corporate not having a share capital, any change in its membership.
(2) Where a managing agent is a body corporate (other than a private company) the shares whereof are for the time being dealt in, or quoted on, a recognised stock exchange, no change in the ownership of the shares of the company shall be deemed to be a change in its constitution within the meaning and for the purposes of sub-section (1), unless the Central Government, by notification in the Official Gazette, otherwise directs:
Provided that no such notification shall be issued in respect 01 any company, unless the Central Government is of opinion that any change in the ownership of its shares has taken place or is likely to take place, which has affected or is likely to affect prejudicially the affairs of any company which is being managed by the managing agent.
347. Application of Schedule VIII to certain managing agents.— (1) The provisions of Schedule VIII shall apply—
(a) to every firm or private company which acts as the managing agent of any company, whether public or private; and
1120 L.S.
I96 THE GA&ETTE OF INtHA UXTBAOBDtNARY [PART II
(b) save as provided in sub-section (2), to every other body corporate (not being a private company) which acts as the managing agent of any company, whether public or private.
(2) A body corporate (not being a private company) acting as managing agent shall, if and so long as its shares are dealt In, or quoted on, any recognised stock exchange, be exempt from the ope- ration of sub-section (1), unless the Central Government, by notifi- cation in the Official Gazette, otherwise directs:
Provided that the Central Government may, by order, modify or limit the operation of this sub-section in relation to any body cor- porate in such manner as that Government thinks fit.
(3) If default is made by a managing agent to which Schedule VIII applies in complying with the provisions thereof,—
(a) if the managing agent is a firm, every partner therein who is in default, and
(b) if the managing agent is a body corporate, the body corporate, and every director or other officer thereof who is in default,
shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
Remuneration of managing agents
348. Remuneration of managing agent ordinarily not to exceed 10 per cent, of net profits.—Save as otherwise expressly provided In this Act, a company shall not pay to its managing agent, in respect of any financial year beginning at or after the commencement of this Act, by way of remuneration, whether in respect of his services as managing agent or in any other capacity, any sum in excess of ten per cent, of the net profits of the company for that financial year.
349. Determination of net profits.—(1) In computing for the purpose of section 348, the net profits of a company in any financial year—
(a) credit shall be given for the sums specified in sub- section (2), and credit shall not be given for those specified in sub-section (3); and
(b) the sums specified in sub-section (4) shall be deducted, and those specified in sub-section (5) shall not be deducted.
(2) In making the computation aforesaid, credit shall be given for the following sums:—
bounties and subsidies received from any Government, or any public authority constituted or authorised in this behalf by any Government, unless and except in so far as the Central Government otherwise directs.
(3) In making the computation aforesaid, credit shall not be given for the following sums:—
(a) profits, by way of premium, on shares or debentures of the company, which are issued or sold by the company;
SEC. 11 ' THE GAZETTE OF INDIA EXTRAORDINABY 197
(b) profits on sales by the company of forfeited shares; (c) profits from the sale of the undertaking or any of the
undertakings of the company or of any part thereof; (d) profits from the sale of any immovable property or fixed
assets of a capital nature comprised in the undertaking or any of the undertakings of the company, unless the business of the company consists, whether wholly or partly, of buying and sell- ing any such property or assets. (4) In making the computation aforesaid, the following sums
shall be deducted:— (a) all the usual working charges; (b) directors' remuneration; (c) bonus or commission paid or payable to any member of
the company's staff, or to any engineer, technician or person employed or engaged by the company, whether on a whole-time or on a part-time basis;
(d) any tax notified by the Central Government as being in the nature of a tax on excess or abnormal profits;
(e) any tax on business profits imposed for special reasons or in special circumstances and notified by the Central Govern- ment in this behalf;
(f) interest on debentures issued by the company; (gf) interest on mortgages executed by the company and on
loans and advances secured by a charge on its fixed or floating assets;
(h) interest on unsecured loans and advances; (i) expenses on repairs, whether to immovable or to mov-
able property, provided the repairs are not of a capital nature; (j) outgoings; (k) depreciation to the extent specified in section 350; (Z) the loss (not including any loss of a capital nature) in-
curred in any year which begins at or after the commencement of this Act, in so far as it has not been taken into account In arriving at the net profits of that year or of any subsequent year preceding the year in respect of which the net profits have to be ascertained;
(m) any compensation or damages to be paid in virtue of any legal liability, including a liability arising from a breach of contract;
(n) any sum paid by way of insurance against the risk ol meeting any liability such as is referred to in clause (m).
(5) In making the computation aforesaid, the following sums shall not be deducted:—
(a) the remuneration payable to the managing agent; (b) income-tax and super-tax payable by the company under
the Indian Income-tax Act, 1922 (XI of 1922), or any other tax
I 9 8 THE GAZETTE OF INDIA EXTRAORDINARY [PABT II
on the income of the company not falling under clauses (d) and (e) of sub-section (4);
(c) any compensation, damages or payments made volun- tarily, that is to say, otherwise than in virtue of a liability such as is referred to in clause (m) of sub-section (4).
350. Ascertainment of depreciation.—The amount of depreciation to be deducted in pursuance of clause (k) of sub-section (4) of section 349—
(a) shall be the amount of normal depreciation allowable under the Indian Income-tax Act 1922 (XI of 1922) for the finan- cial year for which the net profits are to be computed;
(b) shall not include any special, initial or other deprecia- tion or any development rebate, whether allowable under that Act or otherwise;
(c) shall not include any arrears of depreciation:
Provided that arrears of depreciation may be taken into account in the first of the financial years referred to in section 348, in so far ae these arrears have not been taken into account in arriving at the net profits of any financial year or years preceding the first financial year aforesaid.
351. Special provision where there is a profit-sharing arrangement between two or more companies.—Where there is an arrangement between two or more companies to share their profits, and not less than two of those companies have the same managing agent, any profits paid in pursuance of the arrangement by any of the com- panies having that managing agent to any other or others of them shall—
(ia) be excluded from the net profits of the company making such payment; and
(b) be included in the net profits of the company receiving such payment, or where more than one company receives such payment, be included in the net profits of each of the receiving companies, to the extent of the payment received by it.
352. Payment of additional remuneration.—Additional remunera- tion in excess of the limits specified in sections 198 and 348 may be paid to the managing agent if, and only if, such remuneration Is sanctioned by a special resolution of the company and is approved by the Central Government as being in the public interest.
353. Time of payment of remuneration.—The remuneration pay- able to the managing agent for any financial year or part thereof shall not be paid to him, until the accounts of the company for such financial year have been audited and laid before the company in general meeting:
Provided that the minimum remuneration, if any, payable in pursuance of section 198 may be paid to the managing agent in such suitable instalments as may be specified either in the articles of the company or in a resolution passed by the company at an annual general meeting or in the managing agency agreement executed by the company.
Sue. 1] THE GAZETTE OF INDIA EXTRAORDINARY 199
354. Managing agent not entitled to office allowance but entitled to be reimbursed in respect of expenses.—The managing agent shall not be paid any office allowance, but he may be reimbursed in res- pect of any expenses incurred by him on behalf of the company and sanctioned by the Board or by the company in general meeting; and nothing contained in sections 348 to 353 shall be deemed to prohibit his being so reimbursed.
355. Saving.-—Sections 348 to 354 shall not apply to a private company unless it is a subsidiary of a public company.
Appointments as Selling and Buying Agents 356. Appointment of managing agent or associate as selling agent
of goods produced by the company.— (1) No managing agent and no associate of a managing agent, shall receive any commission or other remuneration from the company, in respect of sales of goods produced by the managed company, if the sales are made from the premises at which they are produced or from the head office of the managing agent or from any place in India.
(2) For sales of any goods produced by the company which are effected from any place outside India not being a place specified in sub-section (1), the managing agent, or an associate of the manag- ing agent, may be appointed as a selling agent subject to the follow- ing conditions, namely:—
(a) that the managing agent or associate maintains an office at such place for his own business, that is to say, for a business not connected with that of the company;
(b) that the remuneration payable in respect of the work done as selling agent by the managing agent or associate is in accordance with the terms of a special resolution passed by the company in that behalf; and
(c) that no other sums are payable by the company to the managing agent or associate whether by way of expenses or otherwise. (3) Any appointment made in pursuance of sub-section (2) shall
not be made for a term exceeding five years but may be renewed from time to time for a term not exceeding five years on each occasion:
Provided that such renewal shall not be effected earlier than one year from the date on which it is to come into force.
(4) The special resolution referred to in clause (b) of sub-section (2) shall set out the material terms subject to which the appoint- ment of selling agent is made.
(5) Every appointment made under sub-section (2) and all parti- culars relating thereto shall be entered in a register maintained by the company for the purpose.
357. Application of section 356 to case where business of company consists of the supply or rendering of any services.—Where and in so far as the business of a company consists in the supply or render- ing of any services, the provisions of section 356 shall apply in res- pect of any such business procured for the company by its managing agent or any associate of its managing agent from any place outside
200 THE GAZETTE OF INDIA EXTRAQRDINARY [PABT II
India, in like manner as those provisions apply in respect of sales of any goods produced by a company which are effected from that place.
358. Appointment of managing agent or associate as buying agent for company.—(2) No managing agent, and no associate of a managing agent, shall receive any payment whatever, from the company except expenses, if any, sanctioned under section 354 in respect of purchases of goods made on its behalf either in India, or in cases to which sub-section (2) does not apply, outside India.
(2) Where purchases of goods are made on behalf of a company by its managing agent or any associate of its managing agent, at any place outside India, then, if the managing agent or associate main- tains an office at such place not only for such purchase but also for his own business, that is to say, for a business not connected with that of the company, he may receive, at the option of the company, either—
(a) such part of the expenses of such office as may reason- ably be attributed to the purchases made on behalf of the com- pany as aforesaid; or
(b) remuneration, by way of commission or otherwise, in respect of the work done by the managing agent or associate in making such purchases.
(3) in cases to which clause (a) of sub-section (2) applies, the maximum amount which may be paid to the managing agent shall be specified in a special resolution passed by the company; and in cases to which clause (b) of that sub-section applies, the remunera- tion payable to the managing agent or associate shall be in accord- ance with the terms of a special resolution, passed by the company in that behalf.
(4) The special resolution referred to in sub-section (3) shall set out in sufficient detail the nature of the office maintained by the managing agent or associate outside India, the purposes for which it is maintained, the scale of its operations, the expenses incurred in maintaining the office, and the proportion of those expenses which may be reasonably attributed to the work done on behalf of the company.
(5) The special resolution shall not remain in force for a term exceeding three years but may be renewed from time to time for a term not exceeding three years on each occasion:
Provided that no renewal shall take place earlier than one year from the date on which it is to come into force.
(6) Every resolution passed in pursuance of this section shall be entered in a register maintained by the company for the purpose.
359. Commission, etc., of managing agent as buying or selling agent of other concerns.—(2) A company in general meeting may, by resolution, authorise its managing agent or any associate of its managing agent to retain any commission or other remuneration earned or to be earned by such agent or associate as the managing agent, secretaries and treasurers, manager, agent, secretary or selling
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 201
or buying agent of any firm, body corporate or other concern in respect of any goods, power, freight, repairs or other services, for the sale, purchase, supply or rendering of which a contract has been, or is to beL entered into by such firm, body or concern with the com- pany, provided the prices or amounts charged to or received by the company are at rates which are not Less favourable to the company than the market rates or which are otherwise reasonable.
(2) Every contract so entered into and all particulars relating thereto shall be entered in a separate register maintained by the company for the purpose.
360. Contracts between managing agent or associate and com- pany for the sale or purchase of goods or the supply of services, etc.— (1) A company may, by special resolution, approve of any contract being entered into with its managing agent or an associate of its managing agent,—
(a) for the sale, purchase or supply of any property, movable or immovable, or for the supply or rendering of any service other than that of managing agent; or
(b) for the underwriting of any shares or debentures to be issued or sold by the company.
(2) The special resolution aforesaid shall— (a) set out the material terms of the contract proposed to be
entered into; and (b) provide specifically that for any property supplied or
sold, or any services supplied or rendered, by the company, the managing agent or associate shall make payment to the com- pany within one month from the date of the supply or sale of the goods, or the supply or rendering of the service, as the case may be.
(3) Every such contract and all particulars relating thereto shall be entered in a separate register maintained by the company for the purpose.
(4) Nothing contained in clause (a) of sub-section (I) shall affect any coritract or contracts for the sale, purchase or supply of any property or services in which either the company or the managing agent or associate, as the case may be, regularly trades or does business, provided that the value of such property and the cost of such services do not exceed five thousand rupees in the aggregate in any calendar year comprised in the period of the contract or contracts.
361. Existing contracts relating to matters dealt with in sections 356 to 360 to terminate on 1st March, 1958.—AH contracts jn force at the commencement of this Act, to which a company or the managing agent or an associate of the managing agent of a company is a par ;y, shall, in so far as the contracts relate to any of the matters referred to in sections 356 to 360, be deemed to terminate on the first day of March, 1958, unless they terminate on an earlier date.
382. Registers to be open to inspection.—The registers referred to In sections 356 to 360 shall be open to inspection, and extracts may be taken therefrom and copies thereof may be required, by
202 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
any member of the company, in the same manner, to the same extent and on payment of the same fees, as in the case of the register of members of the company.
363. Remuneration received in contravention of foregoing sections to be held in trust for company.—Where the managing agent of a company, or an associate of the managing agent, receives any sum from the company, whether directly or indirectly, by way of remune- ration, rebate, commission, expenses or otherwise,—
(a) in the case of a public company or a private company which is a subsidiary of a public company, in contravention of sections 348 to 354 and sections 356 to 361; or
(b) in the case of a private company which is not a sub- sidiary of a public company, in contravention of sections 35S to 361;
the managing agent or associate shall account to the company for such sum as if he held it in trust for the company.
Assignment of, or charge on, remuneration
364. Company not to bo bound by assignment of, or charge on, managing agent's remuneration.—Any assignment of, or charge on, his remuneration, or any part thereof, effected by a managing agent shall be void as against the company.
This section shall not affect the rights inter se of the managing agent and any person other than the company.
Compensation for termination of office
365. Prohibition of payment of compensation for loss of office in certain cases.—A company shall not pay or be liable to pay to its managing agent any compensation for the loss of his office in the following cases :—
(a) where the managing agent resigns hi? office in view of the reconstruction of the company or of its amalgamation with any other body corporate or bodies corporate and is appointed as the managing agent, secretaries and treasurers, manager or other officer of the reconstructed company or of the body corpo- rate resulting from the amalgamation;
(b) where the managing agent resigns his office, otherwise than on the reconstruction of the company or its amalgamation as aforesaid;
(c) where the managing agent vacates his office in pur- suance of section 324, 330 or 332;
(d) where the managing agent is deemed to have vacated his office in pursuance of clause (a), (b), (c) or (d) of section 334 or of section 336;
(e) where the managing agent is deemed to have vacated his office in pursuance of clause (e) of section 334, provided the winding up of the company was due to the negligence or default of the managing agent;
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 203
(/) where the managing agent is deemed to have been sus- pended, or is suspended, from his office in pursuance of section ;i35 or sub-section (2) of section 340;
(g) where the managing agent is removed from office by a resolution in pursuance of section 337 or 338; and
(h) where the managing agent has instigated, or has taken part in bringing about, the termination of his office.
366. Limit of compensation for loss of office.—The compensation which may be paid by a company to its managing agent for loss of office shall not exceed the remuneration which he would have earned if he had been in office for the unexpired residue of his term, or for three years, whichever is shorter, calculated on the basis of the average remuneration actually earned by him during a period of three years immediately preceding the date on which his office ceased or was terminated, or where ne held the office for a lesser period than three years, during such period:
Provided that in the event of the winding up of the company commencing, whether before, or at any time within twelve months after, the date of the cessation or termination of the office of managing agent, no compensation shall be payable to him if the assets of the company on the winding up, after deduction of the expenses thereof, are not sufficient to repay the share capital (in- cluding the premiums, if any,) contributed by the members of the company.
Other rights and liabilities not affected on termination of office 367. Managing agent's rights and liabilities after termination of
office.—Where the office of a managing agent ceases or is termi- nated—
(a) the managing agent and the company shall be entitled to enforce any claim or demand which each may have against the other, in respect of anything done or omitted to be done by either of them before the cessation or termination of the manag- ing agency; and
(b) the rights and liabilities, in relation to the company, of the managing agent in any other capacity, shall not be affected.
Restrictions on powers 368. Managing agent to be subject to control of Board and to res-
trictions in Schedule VII.—The managing agent of a company, whe- ther appointed before or after the commencement of this Act, shall exercise his powers subject to the superintendence, control and direction of its Board of directors and subject also to the provisions of the memorandum and articles of the company and to the restric- tion;; contained in Schedule VII.
369. Loans to managing agent.—(1) No public company, and no private company which is a subsidiary of a public company, shall make any loan to, or give any guarantee or provide any security in connection with a loan made by any other person to, or to any other person by,—
(a) its managing agent or any associate of its managing agent; or
204 T H E GAZETTE OF INDIA EXTRAORDINARY [PART II
(b) any body corporate in respect of which the Central Government, by order, declares that it is satisfied that the Board of directors, managing director, managing agent, secretaries and treasurers or manager thereof is accustomed to act in accordance with the directions or instructions of the managing agent 01 associate of the managing agent, notwithstanding that the body corporate may not itself be an associate of the managing agent.
(2) Nothing contained in sub-section (1) or i» section 295 shall apply to any credit given by the company to its managing agent for the purpose of facilitating the company's business and held by such agent in his own name in one or more current accounts, sub- ject to limits previously approved by the directors of the company and on no account exceeding twenty thousand rupees in the aggregate.
370. Loans etc., to companies under the same management.—(I) No company (hereinafter in this section referred to as "the lending company") shall—
(a) make any loan to, or (b) give any guarantee, or provide any security, in connec-
tion with a loan made by any other person to, or to any other person by,
any body corporate which is under the same management as the lending company, unless the making of such loan, the giving of euch guarantee or the provision of such security has been previously authorised by a special resolution of the lending company.
Explanation.—For the purposes of this sub-section, two bodies corporate shall be deemed to be under the same management—
(i) if the managing agent, secretaries and treasurers, managing director or manager of the one body, or where such managing agent or secretaries and treasurers are a firm, any partner in the firm, or where such managing agent or secretaries and treasurers are a private company, any director of such company, is—-
(a) the managing agent, secretaries and treasurers, manag- ing director or manager of the other body; or
(b) a partner in the firm acting as managing agent or secretaries and treasurers of the other body; or
(c) a director of the private company acting as managing agent or secretaries and treasurers of the other body; or
(ii) if a majority of the directors of the one body constitute, or at any time within the six months immediately preceding constituted, a majority of the directors of the other body.
(2) Nothing contained in sub-section (2) shall apply to any loan made, guarantee given or security provided—
(a) by a holding company to its subsidiary; or (b) by the managing agent or secretaries and treasurers
to any company under his or their management.
SKC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 2o5
371. Penalty for contravention of section 369 or 370.—(1) Every person who is a party to any contravention of section 369 or 370, including in particular any person to whom the loan is made, or in whose interest the guarantee is given or the security is provided, dhall Ibe punishable with fine which may extend to five thousand rupees or with simple imprisonment for a term which may extend to six months:
Provided that where any such loan, or any loan in connection with which any such guarantee or security has been given or pro- vided by the lending company, has been repaid in full, no punish- ment by way of imprisonment shall be imposed under this sub- section; and where the loan has been repaid in part, the maximum punishment which may be imposed under this sub-section by way of imprisonment shall be proportionately reduced.
(2) All persons who are knowingly parties to any such con- travention shall be liable, jointly and severally, to the lending com- pany for the repayment of the loan, or for making good the sum which the lending company may have been called upon to pay in virtue of the guarantee given or the security provided by such company.
37?. Purchase by company of shares, etc., of other companies in •'"same group.—(1) A company (hereinafter in this section and sec-
tion 373 referred to as "the investing company") shall not be entitled to subscribe for, or purchase, the shares or debentures of any body corporate belonging to the same group as the investing company, except to the extent and except in accordance with the restrictions and conditions specified in this section.
(2) The Board of directors of the investing company shall be entitled to invest in any shares or debentures of any other body corporate in the same group up to ten per cent, of the subscribed capital of such other body corporate:
Provided that the aggregate of the investments so made by the Board in all other bodies corporate in the same group shall not exceed twenty per cent, of the subscribed capital of the investing company.
(3) The investing company shall not make any investment in the shares or debentures of any other body corporate in the same group, in excess of the limits specified in sub-section (2) and the proviso thereto, unless the investment is sanctioned by a resolution of the investing company and unless further it is approved by the Central Government.
(4) No investment shall be made by the Board of directors of a company in pursuance of sub-section (2), unless it is sanctioned by a resolution passed at a meeting of the Board with the consent of all the directors present at the meeting, except those not entitled to vote thereon, and unless further notice of the resolution to be moved at the meeting has been given to every director in the manner specified in section 286-
(5) Every company shall keep a register of all investments made by it in shares and debentures of bodies corporate in the same group, showing, in respect of each investment, the following particulars: --
(a) the name of the body corporate in which the investment is made;
206 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(b) the date on which the investment is made; and (c) the nature and extent of the investment.
(6) Particulars of every investment to which sub-section (5) applies shall, within three days of the making thereof, be entered in the register aforesaid.
(7) If default is made in complying with the provisions of sub- section (5) or (6), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees.
(8) The register aforesaid shall be kept at the registered office of the company, and shall be open to inspection at such office; and extracts may be taken therefrom and copies thereof may be requir- ed, by any member of the company to the same extent, in the same manner, and on payment ol the same fees as in the case of the regis- ter of members of the company; and the provisions of section 163 shall apply accordingly.
(9) Every company shall annex to each balance sheet prepared by it after the commencement of this Act, a list of the bodies corpo- rate in the same group m the shares or debentures of which invest- ments have been made by it, and the nature and extent of the investments so made in each such body corporate.
(JO) For the purposes of this section, a body corporate shall be deemed to be in the same group as the investing company—
(a) if the body corporate is the managing agent of the investing company; or
(b) if the body corporate and the investing company should, in virtue of the Explanation to sub-section (1) of section 370, be deemed to be under the same management.
(11) The provisions of this section (except sub-section (9) ) shall apply to an investment company, that is to say, to a company whose principal business is the acquisition of shares, stock, debentures or other securities.
(12) This section shall not apply—
(a) to any banking or insurance company;
(b) to a private company, unless it is a subsidiary of a pub- lic company;
(c) to investments by a holding company in its subsidiary, or
(d) to investments by a managing agent or secretaries and treasurers in a company managed by him or them. , -
373. Investments made before commencement of Act.—Where any investments have been made by a company at any time after the first day of April, 1952, which, if section 372 had been then in force, could not have been made except on the authority of a resolu- tion passed by the investing company and the approval of the Central Government, the authority of the company by means of a resolution and the approval of the Central Government shall be
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 2O7
obtained to such investments, within six months from the commence- men; of this Act; and if such authority and approval are not so obtained, the Board of directors of the company shall dispose of the investments, in so far as they may be in excess ol the limits specified in sub-section (2) of section 372 and the proviso to that sub-bection, within two years from the commencement of this Act.
374. Penalty (or contravention of section 372 or 373.—If default is made in complying with the provisions of section 372 or 373, every officer of the company who is in default shall be punishable with fine which may extend to five thousand rupees.
375. Managing agent not to engage in business competing with business of managed company.—{1) A managing agent shall not engage on his own account in any business which is of the same nature as, and directly competes with, the business carried* on by a company of which he is the managing agent or by a subsidiary of such company, unless such company by special resolution permits him to do so.
(2) For the purposes of sub-section (2), a managing agent shall be deemed to be engaged in business on his own account, if such business is carried on by—
(a) a firm in which he is a partner; or
(b) a private company at any general meeting of which not less than twenty per cent, of the total voting power may be exercised or controlled by any of the following persons, or by any two or more of them acting together, namely, (i) the manag- ing agent aforesaid; (ii) where such managing agent is a firm, any partner in the firm; and (iii) where such managing agent is a body corporate, any officer of the body corporate;
(c) a body corporate (not being a private company) at any general meeting of which not less than seventy per cent, of the total voting power may be exercised or controlled by any of the following persons, or by any two or more of them acting together, namely, (i) the managing agent aforesaid; (ii) where such managing agent is a firm, any partner in the firm; and (iii) where such managing agent is a body corporate, any officer of such body corporate.
(3) If a managing agent engages in any business in contraven- tion of this section, he shall be deemed to have received all profits and benefits accruing to him from such business, in trust for the company under his management or the subsidiary of such company, as the case may be; and where such profits and benefits are deemed to have been so received by the managing agent in trust for two or more such companies or subsidiaries, such profits and benefits
208 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
shall be held by the managing agent in trust for each ot them in such proportions as may be agreed upon between them or, failing such agreement, as may be decided by the Court.
376. Condition prohibiting reconstruction or amalgamation of company except on continuance of managing agent etc. to be void.— Where any provision in the memorandum or articles of a company, or in any resolution passed in general meeting by, or by the Board of directors of, the company, or in an agreement between the com- pany and its managing agent or any other person, whether made before or after the commencement of this Act, prohibits the recons- truction of the company or its amalgamation with any other-body corporate or bodies corporate, either absolutely or except on the condition that the managing director, managing agent, secretaries and treasurers, or manager of the company is appointed or re-ap- pointed .as secretaries and 'treasurers, managing director, managing agent, or manager of the reconstructed company or of the body resulting from amalgamation, as the case may be, shall become void with effect from the commencement of this Act, or be void, as the case may be.
377. Restrictions on right of managing agent to appoint direc- tors.—(1) The managing agent of a company may, if so authorised by its articles, appoint not more than two directors where the total number of the directors exceeds five, and one director where the total number does not exceed five.
(2) The managing agent may, at any time, remove any director BO appointed, and appoint another director in his place or in the place of a director so appointed who resigns or otherwise vacates his office.
(J) Any provision contained in the articles of, or in any agree- ment with, the company, authorising the managing agent to appoint more than the number of directors authorised under sub-section (2), which is in force immediately before the commencement of this Act, shall, in regard to the excess, by void, with effect from the expiry of one month from such commencement.
(4) Where at the commencement of this Act, the number of directors appointed by the managing agent exceeds the number authorised under sub-section (1), the managing agent shall deter- mine which of them shall continue to hold office, and intimate the choice made by him to the company before the expiry of one month from such commencement; and only the director or directors so chosen shall continue to hold office as directors after such expiry.
(5) If no choice is made by the managing agent as aforesaid, all the directors appointed by him shall, with effect from the expiry of one month from the commencement of this Act, be deemed to have vacated their offices.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 20&
CHAPTER IV
A. SECRETARIES AND TREASURERS
3(78. Appointment of secretaries and treasurers.—Subject to the provisions of this Chapter, a company may appoint a firm or body corporate as its secretaries and treasurers:
Provided that no company shall, at the same time, have both a managing agent and secretaries and treasurers.
379. Provisions applicable to managing agents to apply to secre- taries and treasurers with the exceptions and modifications specified in sections 380 to 383.—Subject to the exceptions and modifications specified in sections 380 to 383,—
(a) all the provisions of this Act applicable to, or in relation to, a managing agent which is a firm or body corporate shall apply to secretaries and treasurers; and
(b) all the provisions of this Act applicable to, or In rela- tion to, any person or persons connected or associated in any manner with such a managing agent shall apply to, or in rela- tion to, any person or persons connected or associated • with secretaries and treasurers in the like manner; and
subject as aforesaid, all references in this Act to a managing agent or any person or persons connected or associated in any manner with a managing agent shall be construed accordingly, as including a reference to secretaries and treasurers or to the person or persons connected or associated with them in the like manner.
380. Sections 324, 330 and 332 not to apply.—Sections 324, 330 and 332 shall not apply to secretaries and treasurers.
J381. Section 348 to apply subject to a modification.—Section 348 shall apply to secretaries and treasurers subject to the modifica- tion that for the words "ten per cent, of the net annual profits" occurring in the section, the words "seven and a half per cent, of the net annual profits" shall be substituted.
382. Secretaries and treasurers not to appoint directors.—Sec- retaries and treasurers shall have no right to appoint any director
2IO THE GAZETTE OF INDIA EXTRAORDINARY [PAHT II
of the company; and sections 377 and 261 shall not apply to, or in relation to, secretaries and treasurers, or persons connected or associated with them in the manner in which the persons specified in section 261 are connected or associated with managing agents,
383. Secretaries and treasurers not to sell goods or articles produced by company, etc., unless authorised by Board.—Secreta- ries and treasurers shall have no right, unless, and except to the extent to which, they are authorised by the Board of directors, to sell any goods or articles manufactured or produced by the com- pany, or to purchase, obtain, or acquire machinery, stores, goods or materials for the purposes of the company, or to sell the same when no longer required for those purposes.
B. MANAGERS
384. Firm or body corporate not to be appointed manager,—No public company, and no private company which is a subsidiary of a public company, shall, after the commencement of this Act, appoint or employ, or after the expiry of six months from such commencement, continue the appointment or employment of, any firm, body corporate or association as its manager.
385. Certain persons not to be appointed managers.— (2) No com- pany shall, after the commencement of this Act, appoint or employ, or continue the appointment or employment of, any person as its manager who—
(a) is an undischarged insolvent, or has at any time within the preceding five years been adjudged an insolvent; or
(b) suspends, or has at any time within the preceding five years suspended, payment to his creditors; or makes, or has at any time within the preceding five years made, a composition with them; or
(c) is, or has at any time within the preceding five years been, convicted by a Court in India of an offence involving moral turpitude.
(2) The Central Government may, by notification in the Official Gazette, remove the disqualification incurred by any person in virtue of clause (a), (b), or (c) of sub-section (1), either generally or in relation to any company or companies specified in the notification.
STCC. 11 THE GAZETTE OF INDIA EXTRAORDINARY 2ri
386 Number of companies of which a person may be appointed manager.—(2) No company shall, after the commencement of this Act, appoint or employ any person as manager, if he is either the manager or the managing director of any other company, except as provided,in sub-section (2).
(2) A company may appoint or employ a person as its manager, -if lie1 ts the manager or managing director of one, and not more than bile, dther company:
Provided that such appointment or employment is made or approved by a resolution passed at a meeting of the Board with the consent of all the directors present at the meeting, and of which meeting and of the resolution to be moved thereat, specific notice has been given to all the directors then in India.
(3) Where, at the commencement of this Act, any person is hold- ing the office either of manager or of managing director in more than two companies, he shall, within one year from the commencement of thiY, Act, choose not more than two of those companies as com- panies m which he wishes to continue to hold the office of manager or managing d'rector, as the case may be; and the provisions of clauses (b) and (c) of sub-section (1) and of sub-sections (2) and (3) of section 276 shall apply mutatis mutandis in relation to this case, as those provisions apply in relation to the case of a director.
(4t) Notwithstanding anything contained in sub-sections (1) to (3), the Central Government may, by order, permit any person to be appointed as a manager of more than two companies, if the Central Government is satisfied that it is necessary that the com- panies should, for their proper working, function as a single unit and have a common manager.
(5) This section shall not apply to a private company, unless it is a subsidiary of a public company.
387. Remuneration of manager.—The manager of a company may, subject to the provisions of section 198, receive remuneration either by way of a monthly payment, or by way of a specified percentage, not exceeding five, of the "net profits" of the company calculated in the manner laid down in sections 349, 350, and 351, or partly by the one way and partly by the other.
388. Application of sections 310, 311, 312 and 317 to managers.— The provisions of sections 310, 311 and 317 shall apply in relation to the manager of a company as they ap]3ry in relation to a manag- ing director thereof, and those of section 312 shall apply in re- lation to the manager of a company, as they apply to a director thereof.
212 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
CHAPTER V
ARBITRATION, COMPROMISES, ARRANGEMENTS AND RECONSTRUCTIONS
389. Power for companies to refer matters to arbitration.—(1) A company may, by written agreement, refer to arbitration, in accord- ance with the Arbitration Act, 1940 (X of 1940), an existing or future difference between itself and any other company or person.
(2) A company which is a party to an arbitration may delegate to the arbitrator power to settle any terms or to determine any matter, capable of being lawfully settled or determined by the company itself, or by its Board of directors, managing director, managing agent, secretaries and treasurers, or manager.
(3) The provisions of the Arbitration Act, 1940 (X of 1940), shall apply to all arbitrations in pursuance of this Act to which a com- pany is a paity
390. Interpretation of sections 391 and 35)3.—In sections 391 and 3D3,—
(a) the expression "company" means any company liable 10 be wound i\n under this Act;
(> ) thj expression "arrangement" includes a reorganization ni thi? .share ^apit'il of the company by the consolidation ni shares ol' diffei'-nt classes, or by the division of shares Into shares of MfTe-• r.\ Anses or, by '-> .(h Au">.;._• rneth idt=; end
(c) unsecured creditors who may have Mod suits or obtained rietvct^ sh ill be deemed to be of the same class as other unsecur- ed creditors
:VH, ^ W L Tto compromise or make arrangements with creditors an1"! •nenihers—(1) Where a compromise or arrangement is pro- posed—
(a) between a company and its creditors or any class of them; or
(b) between a company and its members or any class of them;
the Court may, on the application of the company or of any creditor or member of the company, or, in the case of a company which is being wound UD, of the liquidator, order a meeting of the creditors
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 213
or class of creditors, or of the members or class of members, as the case miy be, to be called, held and conducted in such manner as the Comrt directs.
(2) If a majority in number representing three-fourths in value of the creditors, or class of creditors, or members, or class of members, as the case may be, present and voting either in person or, where proxies are allowed, by proxy, at the meeting, agree to any compro- mise or arrangement, the compromise or arrangement shall, if sanc- tioned by the Court, be binding on all the creditors, all the creditors of the class, all the members, or all the members of the class, as the case may be, and also on the company, or, in the case of a com- pany which is being wound up, on the liquidator and contributories of the company.
\3) An order made by the Court under sub-section (2) shall have no effect until a certified copy of the order has been filed with the Registrar.
(4) A copy of every such order shall be annexed to every copy of the memorandum of the company issued after the certified copy of the order hab been filed as aforesaid, or in the case of a company not having a memorandum, to every copy so issued of the instru- ment constituting or defining the constitution of the company.
(5) If default is made in complying with sub-section (4), the company, and every officer of the company who is in default, shall be pun'sli,,blc with fine which may extend to ten rupees for each copv m 1 expect of which default is made.
(6) The Court may, at any time after an application has been made to it under this section, stay the commencement or continua- tion of .inv suit or nroceeding against the company on such terms as the Court thinks fit, until the appijoaiion is finally disposed of,
(7) An appeal shall lie from any oider made by a Court exercis- ing original iurisdiction under this section to the Court empowered to hc.11 appeals from the decisions of that Court, or if more than one Court is so empowered, to the Court of inferior jurisdiction.
The, provisions of sub-sections (3) to (6) shall apply in relation to the appellate order and the appeal as they apply in relation to the original order and the application.
392. Power of High Court to enforce compromises and arrange- ments.-^U) Where a High Court makes an order under section 391 sanctioning a compromise or an arrangement in respect of a com- pany, it—
(a) shall have power to supervise the carrying out of the wompromise or arrangement; and
i!4 THE GAZEOTEi OF IMOWi SJJJTR£QRD|N43Yi [?ART,JI
, (trji amay,1! at, the,' tfcne * of i xoakijUtgi sjuch, •order i loivjat, any .tin^s- thereafter}' gwe Isudaiidirectionsl.injr^gatd 40 (>any matter or make such modifications in the compromise ,QF , >arrangement as jt may consider necessary for the proper working of the ^compromise or arrangement.
(2) If the Court aforesaid is satisfied that a compromise or ar- rangement sanctioned • under section 391 cannot1 be Worked-satis- factorily with1 or without modifications, it may, either on its own motion or on' the application of any person interested in the affairs of the company make an order winding up the company, and such an order shall be deemed to be an order iriade under section 433 of this Act.
(3) The provisions of this section shall, so far as may be, also- apply to a company in respect of which an order has been made before the commencement of this Act under section 153 of the Indian C6mpanies Act, 1913 (VII of 1913), sanctioning a compro- mise or an arrangement.
393. Information as to compromises or arrangements with creditors and members.—(i) Where a meeting of creditors or any- class of creditors, or of members or any class of members, is called under section 391,—
(a) with every notice calling the meeting which is sent to a creditor or member, there shall be sent also a statement setting forth the terms of the compromise or arrangement and explaining its effect; and in particular, stating any material interests of the directors, managing director, managing agent, secretaries and treasurers or manager of the company, whether in their capacity as such or as members or creditors of the company or otherwise, and the effect on those interests, of the compromise or arrangement, if, and in so far as, it is different from the effect on the like in- terests of other persons; and
(b) in every notice calling the meeting which is given by advertisement, there shall be included either such a statement as aforesaid or a notification of the place at which and the manner in which creditors or members entitled to attend the meeting may obtain copies of such a statement as aforesaid.
(2) Where the compromise or arrangement affects the rights of debenture holders of the company, the said statement shall give the like information and explanation as respects the trustees of any deed for securing the issue of the debentures as it is required to give is respects the company's directors.
(5) Where a notice given by advertisement includes a notifica- tion that copies of a statement setting forth the terms of the com- promise or arrangement proposed and explaining its effect can be obtained by creditors or members entitled to attend the meeting, every creditor or member so entitled shall, on making an applica-
1+i6ri in! the manner indicated by ' the notice, be jfiurnished by the company, free of charge, with a Copy of the statement.
dfcy«tf|i imw)&m&mTmwm$LKmfi»tmr &$
' cijfWlieite'dAiuiris'W&de inf complying1'with any 0* (hfe) require- ments of this section, the company, and every officer of the company who is in default, shall be punishable-with fine which may extend to five thousand rupees; and for the pu^fcse of this; sub-section any liquidator of the company and any trustee of a deed for securing the issue of debentures of the company shall be deemed to be an officer of the company:
I Provided that a person shall not be punishable under this sub-
section if he shows that the default was due to the refusal of any other person, being a director, managing director, managing agent, secretaries and treasurers, manager or trustee for debenture holders, to supply the necessary particulars as to his material interests.
(5) Every director, managing director, managing agent, sepre/j tfaries and treasurers or rnanager of the company, and every trustee for debenture holders of the company, shall give notice to th^ company of such matters relating to himself as may be n,ecessar^r for the purposes of this section; and if he fails to do so, he shall be punishable with fine which may extend to five, hundred rupees.
394. Provisions for facilitating reconstruction and amalgamation of companies.—(1) Where an application is rnade to the Co'urt under •section 391 for the sanctioning of a compromise or arrangement pro- posed between a company and any such persons as are mentioned in thkf sectioh. antf it is shown tri the OourV-
(a) that the compromise1 or arrangement 'has been1 proposed for the purposes of, or in connection with, a scheme for the reconstruction of any company or companies, or the1 amalgama- tion of any two or more companies; and
(b) that uridef the Scheme the" 'whole or any part of the undertaking, property or liabilities of any company (Joncern- ed in the scheme (in this section referred to as a transferor (tbmpanVh.is1 t6 be transferred; to. Another company (Jin) this sec-
1 £iotf ref%rea to 'as "the transferee company"); <i' > <>-'
-the Court may, either by the1 order- 'sanctioning"tHe /compromise or arrangement or by a subsequent order, make provision for all or aifyiof the foll'aVTWg Tnatters,;-^
if" n i l ' / i \) , 11 i , i . i
i ;,{i) <W W*13^*" to, .the, transferee' (Jompany'of the who!6 or
transferor, .qompany;,,s
t ' j ' (H>'lVe'^lptme'?iVOT>'ripV6TOtioti 1lby Wt 'ttah'sferee' boni-
c-pany[ ,of ^jf, shares, de^ent'ujes, policies', pt othei 1 like interest
-in ^hat company 'wh'iph, "un^et thel'cpmprdmisd' or1 .air^Hgemerli, raf?, ,tp, ,be al̂ dtjie'd or app1i^pIJt:iatea"by ih^t'cbmpanjCtd p'r1 f6t Sny
!'r iiu)ltlie1/conti1iiua lti(!»tl1'by pr agiirist'Tth« traW f̂e-rye -company
.'of any"flfeM pr6c;yeoIir;1gs> pendihg By til1 agaihdt'hny tranaferdr company! l< ' " f ' ' ' ' l! ' " l ' '̂ ' " •
2i6 TJfiE GAZETTE OF INDIA EXTRAORDINARY [PAHT II
(iv) the dissolution, without winding up, of any transferor company;
(u) the provision to be made for any persons uho, within such time and in such manner as the Court directs, discern from, the compromise or arrangement; and
(vi) such incidental, consequential and supplemental matters as are necessary to secure liiaL the reconstruction or amalgama- tion shall be fully and effective^ carried out.
(2) Where an order under this section provides for the transfer of any property or liabilities, then, by virtue of the order, that pro- perty shall be transferred to and vesr in, and those liabilities shall be transferred to and become the labilities of, the transferee com- pany; and in the case of any property, if the order so directs, freed from any charge which is, by virtue of the compromise or arrange- ment, to cease to have effect.
(3) Within fourteen days after the making of an order under this section, every company in relation lo which the order is made shall cause a certified copy thereof to be filed with the Registrar for registration.
If default is made In complying with this sub-section, the com- pany, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees.
(4) In this section—
(a) "property" includes property, rights and powers of every description; and "liabilities" includes duties of every description; and
(b) "transferee company" does not include any company other than a company within the meaning of this Act; but "transferor company" includes any body corporate, whether a company within the meaning of this Act or not.
395. Power and duty to acquire shares of shareholders dissenting from scheme or contract approved by majority.—(1) Where a scheme or contract involving the transfer of shares or any class of shares in a company (in this section referred to as "the transferor com- pany") to another company (in this section referred to as "the transferee company"), has, within four months after the making of the offer in that behalf by the transferee company, been approved by the holders of not less than nine-tenths in value of the shares whose transfer Is involved (other than shares already held at the date of the offer by, or by a nominee for, the transferee company or its subsidiary), the transferee company may, at any time within two months after the expiry of the said four months, give notice in the prescribed manner to any dissenting shareholder, that it desires to acquire his shares; and when such a notice is given, the transferee
T3EC. 1] THE GAZETTE OF INDIA EXTRAOBDIB 2t?
company shall, unless, on an application made by the dissenting shareholder within one month irom the date on which the notice was given, the Court thinks fit to order otherwise, be entitled and bound to acqvire those shares on the terms on which, under tht; sencme or contract, the shares of the approving shareholders are to be trans- ferred to the transferee company:
Provided that where shares in the transferor company of the sr.irie class as the shares whose transfer is involved are already held as aforesaid to a value greater than one-U-nth of the aggregate of 'he values of all the shares in the company of such class,, the foregoing provisions of this sub-section shall not apply, unless—
(a) the transferee company offers the same terms 1o all holders of the shares of that class (other than those already l.vld as aforesaid) whose transfer is involved; and
(b) the holders who approve the scheme or contract, besl les holding not less than nine-tenths in value of the shares (oiher than those already held as aforesaid) whose transfer •„ involved, are not less than three-fourths in number of the holders ol those shares.
(2) Where, in pursuance of any such scheme or contract as afore- said, shares, or shares of any class, in a company are transferred to another company or its nominee, and those shares together with any other shares or any other shares of the same class, as the case may be, in the first-mentioned company held at the date of the transfer by, or by a nominee for, the transferee company or its subsidiary com- prise nine-tenths in value of the shares, or the shares of that class, as the case may be, in the first-mentioned company, then,—
(a) the transferee company shall, within one month from the date of the transfer (unless on a previous transfer in pursuance of the scheme or contract it has already complied with this requirement), give notice of that fact in the prescribed manner to the holders of the remaining shares or of the remain- ing shares of that class, as the case may be, who have not assented to the scheme or contract; and
(b) any such holder may, within three months from the giving of the notice to him, require the transferee company to adquire the shares in question;
and where a shareholder gives notice under clause (b) with respect to any shares, the transferee company shall be entitled and bound to acquire those shares on the terms on which, under the scheme or contract, the shares of the approving shareholders were transferred to it, or on such other terms as may be agreed, or as thr Court on the application of either the transferee company or th^ shareholder thinks fit to order.
(^) Where a notice has been given by the transferee company under sub-section (1) and the Court has not, on an application made by the dissenting shareholder, made an order to the contrary, the transferee company shall, on the expiry of one month from the date <vn which the notice has been given, or, if an application to the Court by the dissenting shareholder is then pending, after that appli- cation has been disposed of, transmit a copy of the notice to the transferor company together with an instrument of transfer executed
a»* T^mmwrnim^iiMsmMF 1' && a*
on behB'tflof")fhe's^ar1efr61der''by 'afty pê soVi appointed by the fransT feree company arid' on Its own behalf by the transferee company, and pay or transfer to] the transferor company the aniount or other consideration representing1 the pride payable by the transferee eom- pany for the shares ^hich, by virtue of this section, that company is, entitled to acquire; and the transferor company shall thereupon register the transferee company as the holder of those shares:
Provided that an instrument of transfer shall not be required for any share for which a share1 warrant is for the time being outstanding.'
(4) Any SUms received by the transferor company under this section shall be paid1 into a separate bank account, and any such sums and any other consideration so received shall be held by that company in trust for the several persons entitled to the shares in respect of which the said sums or other consideration were respectively received.
(5) In this section— (a) "dissenting shareholder" includes a shareholder who has
not assented to the scheme or contract and any shareholder, who has failed or refused to transfer his shares to the transferee company in accordance with the scheme or contract;
(b) "transferor company" and "transferee company" shall have the same meaning as in section 394.
(6) In relation' to an offer made by the transferee company to Lhareholders of the transferor company before the commencement of this Act, this section shall ha-ve effect^-
(a) with the substitution, in sub-section (1), for the words "the shared whose transfer is involved (other than shares already held at the tfate of the offer by, or by a nominee for, ihe trans- feree company or its subsidiary)," of the words "the shares affected" and with the omission of the proviso to that sub- section; '
(b) with the omission of sub-section (2),; (c) with the omission in subjection (3) of the words
"together with an instrument of transfer executed ph. behalf of the shareholder1 by any person &t)bointed by the transferee, com- pany and on its own behalf by the transferee company" and of the proviso to' tfrat su>Sectidh ;'a'nd
(d) with' tft£ oniissioh of clhtlse (^) of sub-section <5). 396. Power of Central tiroveiwwut to provide itrt amalgamation
ol companies in national interest.—it) Where the-Central Govern m$nt is satisfied that.-it .is essential in the national interest-that two or more companies should amalgamate, then, notwithstanding-'any- thing contained in sections 394 and 395 but subiecj; to the $w*>visions of this section, the Central Government may, by order., notified jua the Official Gdzettt, provide for the amalgamation of those companies into a single company with1 sucH Constitution; with su,ch,property, powers, right?, interests, authorities and privilege^; and wjth.su^h liabilities, duties, and obligations; as may be specified in the orders .
(2) The, order • aforesaid may contain sudjij consequential,- inci- dental arid supplemental provisions #a may* in̂ the ppiniQ^of- tfte Central Government, be necessary to give effect to the amalgamation.
iW ^wsmew^m u » W ' m "M Every. rqemW'or editor tmcludi4g''a'J debenture holder) of each of the companies before the airialgamjffion'sh&ll have, &feriearly «3 may be, the £ame interest m or rights against the company result- ing'from, the amalgamation as he had in the company of which he Was origina^y a member or creditor; and to the extent to Which the inter ;st or rights of such member or creditor in or against the compjany resulting from the amalgamation are less than his interest in or rights against the original company, he shall be entitled to compensation which shall be assessed by such authority as may be prescribed
The compensation so assessed shall be paid tp the, member or -creditor concerned by the company resulting from the amalgamation
(4) No order shall be made under this section, unless— (a) a copy of the proposed order has been sent in draft to
each of the companies concerned; and (b) the Central Government has considered, and madft such
imodiflcations, if any, in the draft order as may seem to it desirabje an the light of any suggestions and objections which may ibet received by it from any such company within s,u<?h period as the Central Government may fix in that behalf, not being le§s than two months from the date on which the copy aforesaid is received by that company, or from any class of shareholders therein^ tor from any creditors or any class ot creditors thereof (5) Copies of every order made under this section shall, as soon
asimay b e t t e r it has been ma<ie, be laid before, both Jlouses of Parliament
CHAPTER VI , tfefVfeMtOpr OF trtntESSioN ANI»MISMANAGEMENT
A Pov^riS OF CO(U#T 397. Application to Court for relief in cases of oppres-
sion.—(1) Any members of a company who complain that the affairs of the company are being conducted in a maniSer oppressive to any member or me'mBers ^including any onle or more of them- selves) may; apply -to the Court for an order under thifl section, provided11such members haven a right so ta apply m virtue of section 399 i (2) If, on anyi application under sub-section. (1), the Court is of opiiiion -̂"- r i i - t i
(a) tha.̂ the company's affairs. Ate. being conducted in a manner oppressive to any memb'er or members; and
(I}) tha^fo^jyi^d, up the fflWP311^ w ^ d unfairly,prejudice su-cb, member qr- members, ;bu.t that otherwise the fa<its_ wot̂ ld juatif y the .making of a wmding-up oider on the ground that it was ju^t and equitable that the company should be wound u$,
^herC|aurt may, with a view to bringing to an ^nd the matters com- .plpined of, make such order as it thinks fit ' "" 598T.'ApplfttitioA to Court' lor1 relief In tfasefc '*f inisttiftllftgfe- *fflfcAfe— (I) Any members of a cdmpdny V̂ 46 Cdmplaifl— »
(<t) ttiat the, afters' ô the cotripany arfe Weing1 tfondUct̂ d in a Ihahher prejudicial to the interests lofĵ hfe 'company^ or
32o THK GAZETTE OF INDIA EXTRAORDINARY [PABT U.
(b) that a material change (not being a change brought about by, or in the interests of, any creditors including debenture- holders, or any class ol" shareholders, of the company) has taken place in the management or control of the company, whether by an alteration in its Board of directors, or of its managing a^ent or secretaries and treasurers, or in the constitution or con- trol of the firm or body corporate acting as its managing agent or •) -cretaries and treasurers, or in the ownership ol the com- pany's shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be con- ducted in a manner prejudicial to the interests of the company;
may apply to the Court for an order under this section, provided such members have a right so to apply in virtue of section 399.
(2) li, on any application under sub-section (1), the Court is of opinion that the affairs of the company are being conducted as afore- said or that by reason of any material change as aforesaid in the management or control of the company, it is likely that the affairs of the company will bo conducted as aforesaid, the Court may, with a view to bringing to an end or preventing the matters complained of or apprehended, make such order as it thinks fit.
399. Bight to apply under sections 397 and 398.—(1) The following members of a company shall have the right to apply under section 397 or 398: —
(a) in the case of a company having a share capital, not leaa than one hundred members of the company or not less than one- tenth of the total number of its members, whichever is less, or any member or members holding not less than one-tenth of the issued share capital of the company, provided that the applicant or applicants have paid all calls and other sums due on their- shares;
(b) in the case of a company not having a share capital, not less than one-fifth of the total number of its memb^rn (2) For the purposes of sub-section (i) , where any share or shares
are held by two or more persons jointly, they shall be counted only as one member.
(3) Where any members of a company are entitled to make an application in virtue of sub-section (1), any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them.
(4) The Central Government may, If in Its opinion circumstance* exist which make it just and equitable so to do, authorise any member or members of the company to apply to the Court under section 30T or 398, notwithstanding that the requirements of clause (o) or clause . (b), as the case may be, of sub-section (1) are not fulfilled.
(5) The Central Government may, before authorising any member or members as aforesaid, require such member or members to give security for such amount as the Central Government may deem reasonable, for the payment of any costs which the Court dealing with the application may order such member or members to pay to any other person or persons who are* parties to the application.
SHC. tl THE OA2BTTE OF tUDlA fcXTRAORDQfAllV 221
400. Notice to be given to Central Government of application* under sections 397 and 398.—The Court shall give notice of every application made to it under section 397 or 398 to the Central Govern- ment, and shall take into consideration the representations, if aay, made trt it by that Government before passing a final order under that seqtion.
401. Right of Central Government to apply under sections 39T and 398.—The Central Government may itself apply to the Court for an order under section 397 or 398, or cause an application to be made to the Court for such an order by any person authou&ed by it in this behalf.
402. Powers of Court 011 application under section 397 or 398.— Without prejudice to the generality OL the powers of the i_'i un under section 397 or 398, any order under either section may provide for—
(a) the regulation of the conduct of the company's affairs in future;
(b) the purchase of the shares or interests of any members of the company by other members thereof or bj^ the company;
(c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital;
(d) the termination, setting aside or modification of any agreement, howsoever arrived at, between the company on the one hand, and any of the following persons, on the other, namely: —
i) the managing director, ii) any other director,
{lii) the managing agent, (iv) the secretaries and treasurers, and (v) the manager,
upon such terms and conditions as may, in the opinion of the Court, be just and equitable in all the circumstances' of the case.
(e) the termination, setting aside or modification of any agreement between the company and any person not referred to in clause (d), provided that no such agreement shall be termi- nated, set aside or modified except after due notice to the party concerned and provided further that no such agreement shall be modified except after obtaining the consent of the party concerned;
(f) the setting aside of any transfer, delivery of goods, pay- ment, execution or other act relating to property made or done by or against the company within three months before the date of the application under section 397 or 398, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference;
(g) any other matter for which in the opinion of the Court it is just and equitable that provision should be made.
403. Interim order by Court.—Pending the making by it of a final order under section 397 or 398, as the case may be, the Court may, on the application of any party to the proceeding, make any interim order which it thinks fit for regulatin? the conduct of the company's
22} iM^tSSiSS^eW^JJl^^ia&iBSllMOBfAWBT [Pfcir If.
affairs, upon such terms and conditions as appear to it to be just and equitable.
404. Effect of alteration of memorandum or articles of company" by order tttfdef section 397 or 398.—(1) Where an order under section 397 or 398 makes any alteration in the memorandum or articles of a company, then, notwithstanding any other provision of this Act, the company shall not have power, except to the extent, if any, per- mitted m the order, to make without the leave of the Court, any alteration whatsoever which is inconsistent with the order, either' in the memorandum or in the articles.
(2) Subject to the provisions of sub-section (1), the alterations made by the order shall, in all respects, have the same effect as if they had been duly made by the company in accordance with the provisions of this Act; and the said provisions shall apply accord- ingly to the memorandum or articles as so altered.
(3) A certified copy of every order altering, or giving leave to alter, a company's memorandum or articles, shall within fifteen days after the making thereof, be filed by the company with the Registrar who shall register the same.
(4) If default is made in complying with the provisions of sub- section (3), the company, and every officer oi the company who Js in default, shall be punishable with fine which may extend to five thousand rupees.
405. Addition of respondents to application under section 397 or 398.—If the managing director or any other director,-the managing agent, secretaries and treasurers or the manager, of a company, or any other person, who has not been impleaded as a Respondent to any application under section 397 or 398 applies to he added as a respondent thereto, the Court shall, if it is satisfied that there is sulncient cause for doing so, direct that he may be added as a res- pondent accordingly.
406. Application of sections 539 to 544 to proceedings under sec- tions 397 and 398.—In relation to an application under section 397 or 398, sections 539 to 544, both inclusive, shall apply in the form set forth in Schedule XI
467. Consequences*f termination ormrodificatiflB of cert»k> agree- ments.— (i) Where an-order of a Court ma<Je undej: section 397 or 398 terminates, sets wsidet Or modifies; an agreementtd\ich aft,is, r^fer- red to in clause (d) or (e) of section 402,— [, ) u f r
(a) the order, shall not .give rise to any claim, whatever against the company by any person for dam&g^S or for1 compen- sation for loss of office or in any other respect either'rm'pur- suance, of the agreement or otherwis^1, , , / - :'
(b) no managing' or other director,, nidh'agfiiig1 ageitf, secre- taries and treasurers, or manager whos.ef 'agreement, 1$ sd termi- nated or set aside and no person who, at the date of the order terminating or setting aside the agreement was., ol- subsequently becomes, an as'sbciate of such' managing1' agent or secretaries and treasurers, shall, for $ ,period pf fiye vearai |rom th£ date of
-the. order terminating the agreement ^jraho^t' the leaye.of ,jiie Goupt, be appointed, or act, as the, i^fiag^pg or [Ot^tf dlrec'toi, managing agent, secretaries and treasurers,' or manag^k ol the company.
-Btitf.-'jg THE GAZB'XTii.QF TNTHA EXTRAORDINARY 225
: '-'i (a)"-' tyji Any person who knowingly acts #s a managing or other ' £irecW, mahaging agent, secretaries and treasurers, or manager of -a1 company in contravention of clause (b) of sub-section (2);
- . ( i) where the "person "so acting as managing agent or as secre- taries and treasurers is a firm or body corporate, every partner in
- the prm, or every director of the body corporate who is knowingly 1a party to such contravention; and
(c) every other director or every director, as the case may ber " of t^ie company, who is knpwingly a party to such contravention;
shall be punishable with imprisonment for a term which may extend to one year, or with fine which may extend to five thousand rupees, or with both.
(3) No Court shall grant leave under clause (b) of sub-section (1) unless notice pf the intention to apply for leave has been served on the Central Government and that Government has been given an opportunity of being heard in the matter.
B. POWERS OF CENTRAL GOVERNMENT
408, Powers of Government to prevent oppression or mis- management.—(1) Notwithstanding anything contained in this Act, the Central Government may appoint not more than two persons, be- ing members of the company, to hold office as directors thereof for su<Jh period, n6t exceeding three years on any one occasion, as it may think fit, if the Central Government, on the application of not less than two hundred members of the company or of members of the company holding not less than one-tenth of the total voting power therein, is satisfied, after such inquiry as it deems fit to make, that it is necessary to make the appointment or appointments in order to prevent the affairs of the company being conducted either in a manner which is oppressive to any members of the company or in a manner which is prejudicial to the interests of the company:
Provided that in lieu of passing an order as aforesaidj the Central Government may, if the company has not availed itself of the option given to it under section 265, direct the company to amend its articles in the manner provided in that section and make fresh appointments of directors in pursuance of the articles as so amended, within such time as may be specified in that behalf by the Central Government.
(2) In case the Central Government passes an order under the proviso to sub-section (1), it may, if it thinks fit, direct that until new directors are appointed in pursuance of the order aforesaid, not more than two members of the company specified by the Central Government shall hold office as additional directors of the company.
(3) For the purpose of reckoning two-thirds or any other propor- tion of the total number of directors of the company, any director or directors appointed by the Central Government under sub-section (1) of (2) shall not be taken into account.
409. Power of Central Government to prevent change in Board ol directors likely to affect company prejudicially.—(1) Where a complaint is made to the Central Government by the managing
J224 THE GAZETTE OF INDIA EXTRAORDINAHY [PAHT II
director or any other director, the managing agent, or the secretaries and treasurers, of a company that as a result of a change which has taken place or is likely to take place in the ownership of any shares held in the company, a change in the Board of directors is likely to take place which (if allowed) would affect prejudicially the affairs of the company, the Central Government may, if satisfied, after such inquiry as it thinks fit to make that it is just and proper so to do, by order, direct that no resolution passed or action taken to effect a change in the Board of directors after the date of the complaint shall have effect unless confirmed by the Central Govern- ment; and any such order shall have effect notwithstanding anything to the contrary contained in any other provision of this Act or in the memorandum or articles of the company, or in any agreement with, or any resolution passed in general meeting by, or by the Board of directors of, the company.
(2) The Central Government shall have power when any such complaint is received by it, to make an interim order to the effect set out in sub-section (1), before making or completing the inquiry aforesaid.
(3) Nothing contained in sub-section (1) and (2) shall apply to a private company, unless it is a subsidiary of a public company.
CHAPTER VII
CONSTITUTION AND POWERS OF ADVISORY COMMISSION
410. Appointment of Advisory Commission.—For the purpose of advising the Central Government on the matter referred to in clause (a) of section 411, on the applications referred to in clause (b) ol that section and on such other matters as the Central Govern- ment may think fit, the Central Government shall—
(n) constitute a Commission (hereinafter called the "Advisory Commission") consisting of not more than five persons with suitable qualifications; and
(M appoint one of those persons to be the Chairman of the Commission.
tit. Duties of Advisory Commission.—-It shall be the duty of the Advis'iiy Commission to inquire into and advise the Central Government—•
(a) before a notification is issued under section 324 in respect of any description of industry or business, on the necessity for, and advisability of, issuing the notification;
(b) on all applications made to the Central Government under section 25.9, 268, 269, 310, 311, 326, 328, 329, 332, 343, 345, 346, 052, 408, or 409; and
(c) on all other matters which may be referred to the Commission by the Central Government.
412. Forms and procedure in cases referred to Advisory Com- mission.— 11) Every application made to the Central Government under any of the sections referred to in clause (b) of section 411 shall be In such form as may be prescribed.
(2) (a) Before any application is made by a company to the Central Government under any of the sections aforesaid, there shall
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 225
be issued by or on behalf of the company a general notice to the .members thereof, indicating the nature of the application proposed to be made.
(b) Such notice shall be published at least once in a newspaper in a principal language of the district in which the registered office of the company is situate and circulating in that district, and at least once in English in an English newspaper circulating in that district.
(c) Copies of the notices, together with a certificate by the com- pany as to the due publication thereof, shall be attached to the application.
(d) Nothing in clause (a), (b) or (c) shall apply to a private company which is not the managing agent of a public company.
413. Powers of Advisory Commission.—For the purpose of making any inquiry under section 411, the Advisory Commission m a y -
fa) require the production before it of any books or other documents in the possession, custody or control of the company and relating to any matter under inquiry;
(b) call for any further information or explanation, if the Commission is of opinion that such information or explanation is necessary in order that the books or other documents pro- duced before it may afford full particulars of the matter to which they purport to relate;
(c) with such assistants as it thinks necessary, inspect any books or other documents so produced and make copies thereof
J • l a k " e x t r a c t s t h e r e f r o m ;
<d) require any mana^im? director or any other director, managing ageni, secretaries and treasurers, manager or other vTictr of the company, or any shareholder 01 any other person I'IIO, in the opinion of the Commission, is likely to iurnish in- tia 1 nation vvi+h respect to the affairs of the company relating to any matter under inquiry, to appear before it and examine such penon on oath or require him to furnish such information as may he ivyiired, and arii*unu-.ter an oath accordingly to the
•p°rsnn for the puiposc 414. Penalties.—If any person refuses or neglects to produce
^ny book or other document in his possession or custody which he is required to produce under section 413 or to answer any question put to him relating to any matter under inquiry, he shall be punishable with imprisonment for a term which may extend to two years and shall also be liable to fine.
415. Immunity for action taken in good faith.—No suit or other legal proceeding shall lie against the Commission or the Chairman or any member thereof or against the Central Govern- ment, in respect of anything which is in good faith done or intended to be done in pursuance of this Chapter, or of the provisions referred to in section 411, or of any rules or orders made thereunder.
CHAPTER Vni MISCELLANEOUS PROVISIONS
Contracts where company is undisclosed principal 416. Contracts by agents of company in which company is un-
dlsclesed principal.—(1) Every person, being the managing agent,
2,26 THE GAZETTE ÔF INDIA EXTRAORDINARY [PART II
secretaries (and treasurers, manager or other agent of a public com- pany or of'ai private company -wHich is a subsidiary of a public company, who enters into a contract for or tin behalf of the company in which contract the company is an undisclosed principal Shall, at the time of entering into the contract, make a .memorandum in Writing of the terms of the contract, and specify therein the person with whom it is entered into.
(£) Every such person who enters into a contract as aforesaid, shall forthwith deliver the memorandum to the company and send copies thereof to each of the directors; and such memorandum shall be filed in the office of the company and laid before the Board o£ directors at its next meeting.
(3) If default is made in complying with the requirements of this section,—-
(a) the contract shall, at the option of the company, be voidable as against the company; and
(b) the person who enters into the contract, or every officer of the company who is in default, as the case may he, shall be punishable with fine which may extend to two hundred rupees-
Employees' securities and provident funds 417. Employees' securities to be deposited in Scheduled Bank.—
' (1) All moneys or securities deposited with a company by its em- ployees in pursuance of their contracts of service with the company shall be kept or deposited by the company in a special account to be opened by the company for the purpose in a Scheduled Bank.
(2) No portion of such moneys or securities shall be utilised by the company except for the purposes agreed to in the contracts of service.
(3) A receipt for moneys deposited with a company by its em- ployee shall not be deemed to be a security within the meaning of this section; and the moneys themselves shall accordingly be deposit- ed with a Scheduled Bank as provided in sub-section (I).
418. Provisions applicable to provident funds of employees.— (/) Where a provident fund has been constituted by a company for its employees or any class of its employees, all moneys contributed to such fund (whether by the company or by the employees) or accruing by way of interest or otherwise to such fund, shall be either deposited in a Post Office Savings Bank account or invested in the securities mentioned or referred to in clauses (a) to (e) of section 20 of the Indian Trusts Act, 1882 (II of 1882) :
Provided that where one-tenth part of the whole amount of the- moneys belonging to such fund exceeds the maximum amount which may be deposited in a Post Office Savings Bank account under the rules regulating such deposits for the time being in force, the amount of such excess may be kept or deposited in a special account ta be opened for the purpose in a Scheduled Bank.
(2) Notwithstanding anything to the contrary in the rules of any provident fund to which sub-section (1) applies or in any contract bet"*^f-n. n company and its (,irrp],^ "es. no emj,xkf̂ ee shall be entitled t6"rocvive, fn rcsnect of .suc'i p/H-iion QJ f̂ie" amounV^tos cre'dj^jp
Sac. 1J THE GAZETTE OF INDIA EXTRAORDINARY 227
such fuiid as is invested in accordance with the provisions of sub- section [I), interest at a rate exceeding the rate of interest yielded by suchf investment.
(3) Nothing in sub-section (1) shall affect any rights of an em- ployee under the rules of a provident fund to obtain advances from or to withdraw money standing to his credit in the fund, where the fund is a recognised provident fund within the meaning of clause (a) of section 58A of the Indian Income-tax Act, 1922 (XI of 1922), or where the rules of the fund contain provisions corresponding to rules 4, 5, 6, 7, 8, and 9 of the Indian Income-tax (Provident Funds Relief) Rules.
(4) Where a separate trust has been created by a company with respect to any provident fund referred to in sub-section (1), the company shall be bound to collect the contributions of the employees concerned and pay such contributions as well as its own contribu- tions, if any, to the trustees; but in other respects, the obligations laid on the company by this section shall devolve on the trustees and shall be discharged by them instead of by the company.
419. Right of employee to see bank's receipt for moneys or secu- rities referred to in section 417 or 418.—An employee shall be en- titled, on request made in this behalf to the company, or to the trustees referred to in sub-section (4) of section 418, as the case may be, to see the bank's receipt for any money or security such as is referred to in sections 417 and 418.
42Q. Penalty for contravention of sections 417, 418 and 419.—Any officer of a company, or any such trustee of a provident fund as is referred to in sub-section (4) of section 418 who, knowingly, contra- venes, or authorises or permits the contravention of, the provisions of section 417, 418 or 419, shall be punishable with fine which may extend to five hundred rupees.
Receivers and Managers 421. Filing of accounts of receivers.—Every receiver of the pro-
perty of a company who has been appointed under a power conferred by any instrument and who has taken possession, shall once In every half year while he remains in possession, and also on ceasing to act as receiver, file with the Registrar an abstract in the prescribed form of his receipts and payments during the period to which the abstract relates.
422. Invoices, etc., to refer to receiver where there is one.—Where a receiver of the property of a company has been appointed, every invoice, order for goods, or business letter issued by or on behalf of the company, or the receiver of the company, being a document on or In which the name of the company appears, shall contain a statement that a receiver has been appointed.
423. Penalty for non-compliance with sections 421 and 422. If default is made in complying with the requirements of section 421 or 422, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to two hundred rupees.
For the purposes of this section, the receiver shall be deemed to be an officer of the company.
228 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
424. Application of sections 421 to 423 to receivers and manager* appointed by Court and managers appointed In pursuance of an instrument—The provisions of sections 421, 422 and 423 shall apply to the receiver of, or any person appointed to manage, the property of a company, appointed by a Court or to any person appointed to manage the property of a company under any powers contained in an instrument, in like manner as they apply to a receiver appointed under any powers contained in an instrument.
PART VII WINDING UP
CHAPTER I PRELIMINARY
Modes of Winding Up 425. Modes of winding up.—(1) The winding up of a company
may be either— (a) by the Court; or (b) voluntary; or (c) subject to the supervision of the Court.
(2) The provisions of this Act with, respect to winding up apply, unless the contrary appears, to the winding up of a company in any of those modes.
Contributories 426. Liability as contributories of present and past members.—
(3) In the event of a company being wound up, every present and past member shall be liable to contribute to the assets of the com- pany to an amount sufficient for payment of its debts and liabilities and the costs, charges and expenses of the winding up, and for the adjustment of the rights of the contributories among themselves, subject to the provisions of section 427 and subject also to the follow- ing qualifications, namely: —
(a) a past member shall not be liable to contribute If he haB ceased to be a member for one year or upwards before the com- mencement of the winding up;
(b) a past member shall not be liable to contribute In respect of any debt or liability of the company contracted after he ceased to be a member;
(c) no past member shall be liable to contribute unless it appears to the Court that the present members are unable to satisfy the contributions required to be made by them in pursu- ance of this Act;
(d) in the case of a company limited by shares, no contribu- tion shall be required from any past or present member exceed- ing the amount, if any, unpaid on the shares in respect of which he is liable as such member;
(e) in the case of a company limited bv guarantee, no con- tribution shall, subject to the provisions of sub-section (2), be required from any past or present member exceeding the amount undertaken to be contributed by him to the assets of the com- pany in the event of its being wound up;
SEC 1] THE GAZETTE OF INDIA EXTRAORDINARY 229
(f) nothing in this Act shall invalidate any provision con- tained in any policy of insurance or other contract whereby the liability of individual members on the policy or contract is res- tricted, or whereby the funds of the company are alone made liable in respect of the policy or contract;
(g) a sum due to any past or present member of the com- pany in his character as such, by way of dividends, profits or otherwise, shall not be deemed to be a debt of the company pay- able to that member, in a case of competition between himself and any other creditor who is not a past or present member of the company; but any such sum shall be taken into account for the purpose of the final adjustment of the rights of the contri- butories among themselves.
(2) In the winding up of a company limited by guarantee which has a share capital, every member of the company shall be liable, in addition to the amount undertaken to be contributed by him to the assets of the company in the event of its being wound up, to contri- bute to the extent of any sums unpaid on any shares held by him as if the company were a company limited by shares-
427. Obligations of directors, managing agents and managers whose liability Is unlimited.—In the winding up of a limited com- pany, any director, managing agent, secretaries and treasurers or manager, whether past or present, whose liability is, under the pro- visions of this Act, unlimited, shall, in addition to his liability, if any, to contribute as an ordinary member, be liable to make a further contribution as if he were, at the commencement of the winding up, a member of an unlimited company:
Provided that—
(a) a past director, managing agent, secretaries and treasurers or manager shall not be liable to make such further contribution, if he has ceased to hold office for a year or upwards before the commencement of the winding up;
(b) a past director, managing agent, secretaries and treasurers or manager shall not be liable to make such further contribution in respect of any debt or liability of the company contracted after he ceased to hold office;
(c) subject to the articles of the company, a director, manag- ing agent, secretaries and treasurers or manager shall not be liable to make such further contribution, unless the Court deems it necessary to require the contribution in order to satisfy the debts and liabilities of the company, and the costs, charges and expenses of the winding up.
428. Definition of "contributory".—The term "contributory" means every person liable to contribute to the assets of a company in the event of its being wound up, and includes the holder of any shares which are fully paid up; and for the purposes of all proceed- ings for determining, and all proceedings prior to the final deter- mination of, the persons who are to be deemed contributories, in- cludes any person alleged to be a contributory.
230 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
429. Nature of liability of contributory.—(1) The liability of a contributory shall create a debt accruing due from him at the time when his liability commenced, but payable at the times specified in calls made on him for enforcing the liability.
(2) No claim founded on the liability of a contributory shall be cognizable by any Court of Small Causes sitting outside the presi- dency-towns.
430. Contributories in case of death of member.—(2) If a contri- butory dies either before or after he has been placed on the list ol contributories, his legal representatives shall be liable in a due course ef administration, to contribute to the assets of the company in dis- charge of his liability, and shall be contributories accordingly.
(2) If the legal representatives make default in paying any money ordered to be paid by them, proceedings may be taken for adminis- tering the estate of the deceased contributory and compelling pay- ment thereout of the money due.
(3) For the purposes of this section, where the deceased contribu- tory was a member of a Hindu joint family governed by the Mitak- shara School of Hindu Law, his legal representatives shall be deemed to include the surviving coparceners.
431. Contributories in case of insolvency of member.—If a con- tributory is adjudged insolvent, either before or after he has been placed on the list of contributories,—
(a) his assignees in insolvency shall represent him for all the purposes of the winding up, and shall be contributories accordingly, and may be called on to admit to proof against the estate of the insolvent, or otherwise to allow to be paid out of his assets in due course of law, any money due from the insolvent in respect of his liability to contribute to the assets of the com- pany; and
(b) there may be proved against the estate of the insolvent the estimated value of his liability to future calls as well as calls already made.
432. Contributories in case of winding up of a body corporate which is a member.—If a body corporate which is a contributory is ordered to be wound up, either before or after it has been placed on the list of contributories,—
(a) the liquidator of the body corporate shall represent it for all the purposes of the winding up of the company and shall be a contributory accordingly, and may be called on to admit to proof against the assets of the body corporate, or otherwise to allow to be paid out of its assets in due course of law, any money due from the body corporate in respect of its liability to contribute to the assets of the company; and
(b) there may be proved against the assets of the body corporate the estimated value of its liability to future calls as well as calls already made.
SEC. l j | THE GAZETTE OF INDIA EXTRAORDINARY 231
CHAPTER II WINDING UP BY THE COURT
Cases in which company may be wound up by the Court 433. Circumstances in which company may be wound up by
Court.—A company may be wound up by the Court,— (a) if the company has, by special resolution, resolved that
the company be wound up by the Court; (b) if default is made in delivering the statutory report to
the Registrar or in holding the statutory meeting;
(c) if the company does not commence its business within a year from its incorporation, or suspends its business for a whole year;
(d) if the number of members is reduced, in the case of a public company, below seven, and in the case of a private com- pany, below two;
(e) if the company is unable to pay its debts; (f) If the Court is of opinion that it is just and equitable
that the company should be wound up.
434. Company when deemed unable to pay its debts.—(1) A com- pany shall be deemed to be unable to pay its debts -
fa) if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding five hundred rupees then due, has served on the company, by causing it to be deliver- ed at its registered office, by registered post or otherwise, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor;
(b) if execution or other process issued on a decree or order of any Court in favour of a creditor of the company is returned unsatisfied in whole or in part; or
(c) if it is proved to the satisfaction of the Court that the company is unable to pay its debts, and, in determining whether a company Is unable to pay its debts, the Court shall take Into account the contingent and prospective liabilities of the company.
(2) The demand referred to in clause (a) of sub-section (I) shall be deemed to have been duly given under the hand of the creditor If it is signed by any agent or legal adviser duly authorised on his behalf or in the case of a firm, if it is signed by any such agent or legal adviser or by any member of the firm.
Transfer of Proceedings
435. Transfer of winding up proceedings to District Court.— Where a High Court makes an order for winding up a company un- der this Act, the High Court may, if it thinks fit, direct all subse- quent proceedings to be had in a District Court subordinate thereto
232 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
or, with the consent of any other High Court, in such High Court or in a District Court subordinate thereto; and thereupon for the purposes of winding up the company, the Court in respect of which such direction is given shall be deemed to be "the Court" within the meaning of this Act, and shall have all the jurisdiction and powers of a High Court under this Act.
436. Withdrawal and transfer of winding up from one District Court to another.—If during the progress of a winding up in a Dis- trict Court, it appears to the High Court that the same could be more conveniently proceeded with in the High Court or in any other Dis- trict Court, the High Court may, as the case may require,—
(a) withdraw the case and proceed with the winding up itself; or
(b) transfer the case to such other District Court, whereupon the winding up shall proceed in that District Court.
437. Power of High Court to retain winding up proceedings in District Court.—The High Court may direct that a District Court in which proceedings for winding up a company have been commenced, shall retain and continue the proceedings, although it may not be the Court in which they ought to have been com- menced.
438. Jurisdiction of High Court under sections 435, 436 and 437 to be exercised at any time and at any stage The High Court shall have jurisdiction to pass orders under section 435, 436 or 437 at any time and at any stage and either on the application of, or without application from, any of the parties to the proceedings.
Petition for Winding Up 439. Provisions as to applications for winding up.—(1) An appli-
cation to the Court for the winding up of a company shall be by petition presented, subject to the provisions of this section,—
(a) by the company; or (b) by any creditor or creditors, including any contingeni
or prospective creditor or creditors; or (c) by any contributory or contributories; or (d) by all or any of the parties specified in clauses (a), (b)
and (c), whether together or separately; or (e) by the Registrar; or (f) in a case falling under section 243, by any person autho-
rised by the Central Government in that behalf.
(2) A secured creditor, the holder of any debentures (including debenture stock), whether or not any trustee or trustees have been appointed in respect of such and other like debentures, and the trustee for the holders of debentures, shall be deemed to be creditors within the meaning of clause (b) of sub-section (1).
(3) A contributory shall be entitled to present a petition for winding up a company, notwithstanding that he may be the holder of fully paid-up shares, or that the company may have no assets at all, or may have no surplus assets left for distribution among the shareholders after the satisfaction of its liabilities.
SEC. |lj THE GAZETTE OF INDIA EXTRAORDINARY 233
(4) A contributory shall not be entitled to present a petition for winding up a company unless—
(a) either the number of members is reduced, in the case of a public company, below seven, and, in the case of a private company, below two; or
(b) the shares in respect of which he is a contributory, or some of them, either were originally allotted to him or have been held by him, and registered in his name, for at least six months during the eighteen months immediately before the commence- ment of the winding up, or have devolved on him through the death of a former holder. (5) Except in the case where he is authorised in pursuance of
clause (f) of sub-section (1), the Registrar shall be entitled to pre- sent a petition for winding up a company only on the grounds speci- fied in clauses (b), (c) and (e) of section 433:
Provided that the Registrar shall not presenl" a petition on the ground specified in clause (e) aforesaid, unless 't appears to him either from the financial condition of the company as disclosed in Its balance-sheet or from the report of an inspector appointed under section 235 or 237, that the company is unable to pay its debts:
Provided further that the Registrar shall obtain the previous sanction of the Central Government to the presentation of the petition on any of the grounds aforesaid.
(6) The Central Government shall not accord its sanction in pur- suance of the foregoing proviso, unless the company has first been afforded an opportunity of making its representations, if any.
(7) A petition for winding up a company on the ground specified in clause (b) of section 433 shall not be presented—
(a) except by the Registrar or by a contributory; or
(b) before the expiration of fourteen days after the last day on which the statutory meeting referred to in clause (b) afore- said ought to have been held.
(8) Before a petition for winding up a company presented by a contingent or prospective creditor is admitted, the leave of the Court shall be obtained for the admission of the petition and such leave shall not be granted—
(a) unless, in the opinion of the Court, there is a prima facie case for winding up the company; and
(b) until such security for costs has been given as the Court thinks reasonable.
440. Right to present winding up petition where company is being wound up voluntarily or subject to Court's supervision.—(1) Where a company is being wound up voluntarily or subject to the supervi- sion of the Court, a petition for its winding up by the Court may be presented by—
(a) any person authorised to do so under section 439 and subject to the provisions of that section; or
(b) the Official Liquidator.
234 T H E GAZETTE OF INDIA EXTRAORDINARY [PAHT II
(2) The Court shall not make a winding up order on a petition presented to it under sub-section (1), unless it is satisfied that the voluntary winding up or winding up subject to the supervision of the Court cannot be continued with due regard to the interests of the creditors or contributories or both.
Corrnnencernent of Winding Up
441. Commencement of winding up by Court.—(1) Where, before the presentation of a petition for the winding up of a company by the Court, a resolution has been passed by the company for voluntary winding up, the winding up of the company shall be deemed to have commenced at the time of the passing of the resolution, and unless the Court, on proof of fraud or mistake, thinks fit to direct otherwise, all proceedings taken in the voluntary winding up shall be deemed to have been validly taken.
(2) In any other case, the winding up of a company by the Court shall be deemed to commence at the time of the presentation of the petition for the winding up.
Powers of Court
442. Power of Court to stay or restrain proceedings against company.—At any time after the presentation of a winding up petition and before a winding up order has been made, the company, or any creditor or contributory, may—
(a) where any suit or proceeding against the company is pending in the Supreme Court or in any High Court, apply to the Court in which the suit or proceeding is pending for a stay of proceedings therein; and
(b) where any suit or proceeding is pending against the company in any other Court, apply to the Court having jurisdic- tion to wind up the company, to restrain further proceedings in the suit or proceeding;
and the Court to which application is so made may stay or restrain the proceedings accordingly, on such terms as it thinks fit.
443. Powers of Court on hearing petition.—(1) On hearing a winding up petition, the Court may—
(a) dismiss it, with or without costs; or
(b) adjourn the hearing conditionally or unconditionally; or
(c) make any interim order that it thinks fit; or
(d) make an order for winding up the company with or without costs, or any other order that it thinks fit:
Provided that the Court shall not refuse to make a winding up order on the ground only that the assets of the company have Been mortgaged to an amount equal to or in excess of those assets, or that the company has no assets.
(2) Where the petition is presented on the ground that it is just and equitable that the company should be wound up, the Court may refuse to make an order of winding up, if it is of opinion that
SEC. I]1 THE GAZETTE OF INDIA EXTRAORDINARY 235
some other remedy is available to the petitioners and that they art acting unreasonably in seeking to have the company wound up Instead of pursuing that other remedy.
(3) Where the petition is presented on the ground of default in delivering the statutory report to the Registrar, or in holding the statutory meeting, the Court m a y -
fa) instead of making a winding up order, direct that the statutory report shall be delivered or that a meeting shall be held; and
(b) order the costs to be paid by any persona who, In the opinion of the Court, are responsible for the default.
Consequences of Winding up Order 444. Order for winding up to be communicated to Official
Liquidator.—Where the Court makes an order for the winding up of a company, the Court shall forthwith cause intimation thereof to be sent to the Official Liquidator,
445. Copy of winding up order to be filed with Registrar.—(1) On the making of a winding up order, it shall be the duty of the petitioner in the winding up proceedings and of the company to file with the Registrar a certified copy of the order, within one month from the date of the making of the order.
If default is made In complying with the foregoing provision, the petitioner, or as the case may require, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to one hundred rupees for each day during which the default continues.
(2) On the filing of a certified copy of the winding up order, thp Registrar shall make a minute thereof In his books relating to the company, and shall notify in the Official Gazette that such an order has been made.
(3) Such order shall be deemed to be notice of discharge to the officers and employees of the company, except when the business of the company is continued.
446. Suits stayed on winding up order.—(1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the Court and subject to such terms as the Court may Impose.
(2) 1 The Court which is winding up the company shall, notwith- standing anything contained In any other law for the time being in force, have jurisdiction to entertain, or dispose of, any suit or proceeding by or against the company.
(3) Any suit or proceeding by or against the company which is pending in any Court other than that in which the winding up of the company is proceeding rmv, notwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by that Court.
236 THE GAZETTE OF INDIA EXTRAORDINARY [PABT II
447. Effect of winding up order.—An order for winding up a company shall operate in favour of all the creditors and of all the contributories of the company as if it had been made on the joint petition of a creditor and of a contributory.
Official Liquidators
448. Appointment of Official Liquidator.—(1) For the purposes of this Act, so far as it relates to the winding up of companies by the Court,—
(a) there shall be attached to each High Court, an Official Liquidator appointed by the Central Government, who shall be a whole-time officer, unless the Central Government considers that there will not be sufficient work for a whole-time officer in which case a part-time officer may be appointed; and
(b) the Official Receiver attached to a District Court for insolvency purposes, or if there is no such Official Receiver, then, such person as the Central Government may, by notification in the Official Gazette appoint for the purpose, shall be the Official Liquidator attached to the District Court. (2) All references to the "Official Liquidator" in this Act shall
be construed as references to the Official Liquidator referred to in clause (a) or clause (b), as the case may be, of sub-section (1).
449. Official Liquidator to be liquidator.—On a winding up order being made in respect of a company, the Official Liquidator shall, by virtue of his office, become the liquidator of the company.
450. Appointment and powers of provisional liquidator.— (1) At any time after the presentation of a winding up petition and before the making of a winding up order, the Court may appoint the Official Liquidator to be liquidator provisionally.
(2) Before appointing a provisional liquidator, the Court shall give notice to the company and give a reasonable opportunity to It to make its representations, if any, unless, for special reasons to bo recorded in writing, the Court thinks fit to dispense with such notice.
(3) Where a provisional liquidator is appointed by the Court, the Court may limit and restrict his powers by the order appointing him or by a subsequent order; but otherwise he shall have the same powers as a liquidator.
(4) The Official Liquidator shall cease to hold office as provisional liquidator, and shall become the liquidator, of the company, on a winding up order being made.
451. General provisions as to liquidators.—(1) The liquidator shall conduct the proceedings In winding up the company and perform such duties in reference thereto as the Court may impose.
(2) Where the Official Liquidator becomes or acts as liquidator, there shall be paid to the Central Government out of the assets of the company such fees as may be prescribed.
(3) The acts of a liquidator shall be valid, notwithstanding any defect that may afterwards be discovered in his appointment or
qualification:
Sl'cl 1] THE GAZETTE OF INDIA EXTRAORDINARY 237
Provided that nothing in this sub-section shall be deemed to give val.dity to acts done by a liquidator after his appointment has been shown to be invalid.
452. Style, etc., of liquidator.—A liquidator shall be described by the style of "The Official Liquidator of the particular company in lespect of which he acts, and not by his individual name.
453. Receiver not to be appointed of assets with liquidator.— A receiver shall not be appointed of assets in the hands of a liquida- tor except byj or with the leave ôf, the Court.
454. Statement of affairs to be made to Official Liquidator.— (1) Where the Court has made a winding up order or appointed the Official Liquidator as provisional liquidator, unless the Court in its discretion otherwise orders, there shall be made out and sub- mitted to the Official Liquidator a statement as to the affairs of the company in the prescribed form, verified by an affidavit, and con- taining the following particulars, namely:—
(a) the assets of the company, stating separately the cash balance in hand and at the bank, if any, and the negotiable securities, if any, held by the comoany;
(b) its debts and liabilities;
(c) the names, residences and occupations of its creditors, stating separately the amount of secured and unsecured debts; and in the case of secured debts, particulars of the securities given, whether by the company or an officer thereof, their value and the dates on which they were given;
(d) the debts due to the company and the names, residences and occupations of the persons from whom they are due and the amount likely to be realised on account thereof;
(e) such further or other information as may be prescribed, or as the Official Liquidator may require.
(2) The statement shall be submitted and verified by one or more of the persons who are at the relevant date the directors and by the person who is at that date the manager, secretary or other chief officer of the company, or by such of the persons hereinafter in this sub-section mentioned, as the Official* Liquidator, subject to the direction of the Court, may require to submit and verify the statement, that is to say, persons—
(a) who are or have been officers of the company; (b) who have taken part in the formation of the company
at any time within one year before the relevant date;
(c) who are in the employment of the company, or have been in the employment of the company within the' said year, and are, in the opinion of the Official Liquidator, capable of giv- ing the information required;
(d) who are or have been within the said year officers of, or in the employment of, a company which is, or within the said year was, an officer of the company to which the statement relates.
238 ™ E GAZETTE OF INDIA EXTRAORDINARY [PART II
(3) The statement shall be submitted within twenty-one days from the relevant date, or within such extended time not exceeding three months from that date as the Official Liquidator or the Court may, for special reasons, appoint.
(4) Any person making, or concurring in making, the statement and affidavit required by this section shall be allowed, and shall be paid by the Official Liquidator or provisional liquidator, as the case may be, out of the assets of the company, such costs and expenses incurred in and about the preparation and making of the statement and affidavit as the Official Liquidator may consider reasonable, subject to an appeal to the Court.
(5) If any person, without reasonable excuse, makes default in complying with any of the requirements of this section, he shall be punishable with fine which may extend to one hundred rupees for every day during which the default continues.
(6) Any person stating himself in writing to be a creditor or contributory of the company shall be entitled, by himself or by his agent, at all reasonable times, on payment of the prescribed fee, to inspect the statement submitted in pursuance of this section, and to a copy thereof or extract therefrom.
(7) Any person untruthfully so stating himself to be a creditor or contributory shall be guilty of an offence under section 182 of the Indian Penal Code (Act XLV of 1860); and shall, on the applica- tion of the Official Liquidator, be punishable accordingly.
(8) In this section, the expression "the relevant date" means, in a case where a provisional liquidator is appointed, the date of his appointment, and in a case where no such appointment is made, the date of the winding up order.
455. Report by Official Liquidator.—(1) In a case where a winding up order is made, the Official Liquidator shall, as soon as practicable after receipt of the statement to be submitted under section 454 and not later than six months from the date of the order, or in a case where the Court orders that no statement need be submitted, as soon as practicable after the date of the order, submit a preliminary report to the Court—
(a) as to the amount of capital issued, subscribed, and paid up, and the estimated amount of assets and liabilities, giving separately, under the heading of assets, particulars of (i) cash and negotiable securities; (ii) debts due from contributories; (Hi) debts due to the company and securities, if any, available in respect thereof; (iu) movable and immovable properties belonging to the company; and (v) unpaid calls;
(b) if the company has failed, as to the causes of the failure; and
(c) whether, in his opinion, further inquiry is desirable as to any matter relating to the promotion, formation, or failure of the company, or the conduct of the business thereof
Sue. 1] THE GAZETTE OF INDIA EXTRAORDINARY 139
(2) The Official Liquidator may also, if he thinks fit, make a further report, or further reports, stating the manner in which the company was promoted or formed and whether in his opinion any fraud has been committed by any person in its promotion or formation, or by any officer of the company in relation to the company since the for- mation thereof, and any other matters which, in his opinion, it is desirable to bring to the notice of the Court.
(3) If the Official Liquidator states in any such further report that in his opinion a fraud has been committed as aforesaid, the Court shall have the further powers provided in section 478.
456. Custody of company's property.—(2) Where a winding up order has, been made or where a provisional liquidator has -been appointed, the liquidator shall take into his custody or under his control, all the property, effects and actionable claims to which the company ds or appears to be entitled.
(2) All the property and effects of the company shall be deem- ed to be in the custody of the Court as from the date of the order for the winding up of the company.
457. Powers of liquidator.—(1) The liquidator in a winding up by the Court shall have power, with the sanction of the Court,—
(a) to institute or defend any suit prosecution, or other legal proceeding, civil or criminal, in the name and on behalf of the company;
(b) to carry on the business of the company so far as may be necessary for the beneficial winding up of the company;
(c) to sell the immovable and movable property and action- able claims of the company by public auction or private contract, with power to transfer the whole thereof to any person or body corporate, or to sell the same in parcels;
(d) to raise on the security of the assets of the company any money requisite;
(e) to do all such other things as may be necessary for wind- ing up the affairs of the company and distributing its assets.
(2) The liquidator in a winding up by the Court shall have power—
(i) to do all acts and to execute, in the name and on behalf of the company, all deeds, receipts, and other documents, and for that purpose to use, when necessary, the company's seal;
(ii) to prove, rank and claim in the insolvency of any contri- butory, for any balance against his estate, and to receive divi- dends in the insolvency, in respect of that balance, as a separate debt due from the insolvent, and rateatoly with the other separate creditors;
(iii) to draw, accept, make and indorse any bill of exchange hundi or promissory note in the name and on behalf of the
240 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
company, with the same effect with respect to the liability of the company as if the bill, hundi, or note had been drawn, ac- cepted, made or indorsed by or on behalf of the company in the course of its business;
(iu) to take out, in his official name, letters of administration to any deceased contributory, and to do in his official name any other act necessary for obtaining payment of any money due from a contributory or his estate which cannot be conveniently done in the name of the company, and in all such cases, the money due shall, for the purpose of enabling the liquidator to take out the letters of administration or recover the money, be deemed to be due to the liquidator himself:
Provided that nothing herein empowered shall be deemed to affect the rights, duties and privileges of any Administrator-General;
(«) to appoint an agent to do any business which the liqui- dator is unable to do himself.
(3) The exercise by the liquidator in a winding up by the Court of the powers conferred by this section shall be subject to the control of the Court; and any creditor or contributory may apply to the Court with respect to the exercise or proposed exercise of any of the powers conferred by this section.
458. Discretion of liquidator.—The Court may, by order, provide that the liquidator may exercise any of the powers referred to in sub- section (I) of section 457 without the sanction or intervention of the Court:
Provided always that the exercise by the liquidator of such powers shall be subject to the control of the Court.
459. Provision for legal assistance to liquidator.—The liquidator may, with the sanction of the Court, appoint an advocate, attorney or pleader entitled to appear before the Court to assist him in the performance of his duties.
460. Exercise and control of liquidator's powers.—(2) Subject to the provisions of this Act, the liquidator shall, in the administration of the assets of the company and the distribution thereof among its creditors, have regard to any directions which may be given by resolution of the creditors or contributories at any general meeting or by the committee of inspection.
(2) Any directions given by the creditors or contributories at any general meeting shall, in case of conflict, be deemed to override any directions given by the committee of inspection.
(3) The liquidator— (a) may summon general meetings of the creditors or con-
tributories, whenever he thinks fit, for the purpose of ascertain- ing their wishes;
(<b) shall summon such meetings at such times as the credi- tors or contributories, as the case may be, may, by resolution, direct, or whenever requested in writing to do so by not less than one-tenth in value of th'e creditors or contributories, as the case may be.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 24I
(4) The liquidator may apply to the Court in the manner pres- cribed, if any, for directions in relation to any particular matter arising in the winding up.
(5) Subject to the provisions of this Act, the liquidator shall use his own discretion in the administration of the assets of the company and in ;he distribution thereof among the creditors.
(6) A*ny person aggrieved by any act or decision of the liquidator may apply to the Court; and the Court may confirm, reverse or modify the act or decision complained of, and make such further order as it thinks just in the circumstances.
461. Books to be kept by liquidator.—(1) The liquidator shall keep, in the manner prescribed, proper books in which he shall cause entries or minutes to be made of proceedings at meetings and of such other matters as may be prescribed.
(2) Any creditor or contributory may, subject to the control of the Court, inspect any such books, personally or by his agent.
462. Audit of liquidator's accounts.—(1) The liquidator shall, at Buch times as may be prescribed but not less than twice in each year during his tenure of office, present to the Court an account of his receipts and payments as liquidator.
(2) The account shall be In the prescribed form, shall be made in duplicate, and shall be verified by a declaration in the prescribed form.
(3) The Court shall cause the account to be audited in such manner as it thinks fit; and for the purpose of the audit, the liquidator shall furnish the Court with such vouchers and information as the Court may require, and the Court may, at any time, require the production of, and inspect, any books or accounts kept by the liquidator.
(4) IVhen the account has been audited, one copy thereof shall be filed an i kept by the Court, and the other copy shall be delivered to the Registrar for filing; and each oopy shall be open to the inspection of any creditor, contributory or person interested.
(5) The liquidator shall cause the account when audited or a summary thereof to be printed, and shall send a printed copy of the account or summary by post to every creditor and to every contributory:
Provided that the Court may in any case dispense •with compli- ance with this sub-section.
463. Control of Central Government over liquidators.—(1) The Central Government shall take cognisance of the conduct of liquida- tors of tompanies which are being wound up by the Court, and, if a liquidator does not faithfully perform his duties and duly observe all the requirements imposed on him by this Act, the rules there- under, or otherwise, with respect to the performance of his duties, or If any complaint is made to the Central Government by any cre- ditor or contributory in regard thereto, the Central Government shall inquire into the matter, and take such action thereon as it may think expedient.
a42 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(2) The Central Government may at any time require any liqui- dator of a company which is being wound up by the Court to answer any inquiry in relation to any winding up in which he is engaged, and may, if the Central Government thinks fit, apply to the Court to examine him or any other person on oath concerning the winding up.
(3) The Central Government may also direct a local investiga- tion to be made of the books and vouchers of the liquidators.
Committee of inspection 464. Appointment and Composition of committee of Inspection.—
(1) The liquidator shall, within two months from the date of the order for the winding up of a company, convene a meeting of its creditors (as ascertained from its books and documents) for the purpose of determining whether or not a committee of inspection shall be appointed to act with the liquidator, and who are to be members of the committee, if one is appointed.
(2) The liquidator shall, within fourteen days from the date of the creditors' meeting or such further time as the Court in its dis- cretion may grant for the purpose, convene a meeting of the contri- butories to consider the decision of the creditors' meeting and to ex- cress the views of the contributories on the matters specified in sub- section (1); and it shall be open to the meeting to accept the decision of the creditors' meeting with or without modifications or to reject it.
(3) Except in the case where the meeting of the contributories accepts the decision of the creditors' meeting in its entirety, It shall be the duty of the liquidator to apply to the Court for directions as to whether there shall be a committee of inspection; and, if so, what the composition of the committee shall be, and who shall be members thereof.
465. Constitution and proceedings of committee of Inspection.— (1) A committee of inspection appointed in pursuance of section 464 shall consist of not more than twelve members, being creditors and contributories of the company or persons holding general or special powers of attorney from creditors or contributories, in such propor- tions as may be agreed on by the meetings of creditors and contribu- tories, or in case of difference of opinion between the meetings, as may be determined by the Court
(2) The committee of inspection shall have the right to inspect the accounts of the liquidator at all reasonable times.
(3) The committee shall meet at such times as it may from time to time appoint, and, failing such appointment, at least once a month, and the liquidator or any member of the committee may also call a meeting of the committee as and when he thinks necessary.
(4) The quorum for a meeting of the committee shall be one-third of the total number of the members, or two, whichever is higher.
(5) The committee may act by a majority of Its members present at a meeting, but shall not act unless a quorum Is present.
(6) A member of the committee may resign by notice In writing signed by him and delivered to the liquidator.
SKC. l l THE GAZETTE OF INDIA EXTRAORDINARY 243
(7) If a member of the committee is adjudged an insolvent, or compounds or arranges with his creditors, or is absent from five consecutive meetings of the committee without the leave of those members who, together with himself, represent the creditors or con- tributories, as the case may be, his office shall become vacant.
(8) A member of the committee may be removed at a meeting of creditors if he represents creditors, or at a meeting of contributories if he represents contribuloriea, by an ordinary resolution of which seven days' notice has been given, stating the object of the meeting.
(9) On a vacancy occurring in the committee, the liquidator shall forthwith summon a meeting of creditors or of contributories, as the case may require, to fill the vacancy; and the meeting may, by reso- lution, re-appoint the same, or appoint another, creditor or contri- butory to fill the vacancy:
Provided that if the liquidator, having regard to the position in the winding up, is of the opinion that it is unnecessary for the vacancy to be filled, he may apply to the Court and the Court may make an order that the vacancy shall not be filled, or shall not be filled except in such circumstances as may be specified in the order.
(10) The continuing members of the committee, if not less than two, may act notwithstanding any vacancy in the committee.
General powers of Court in case of winding up by Court 466. Power of Court to stay winding up.—(1) The Court may at
any time after making a winding up order, on the application eithar of the Official Liquidator or of any creditor or contributory, and on proof to the satisfaction of the Court that all proceedings in relation to the winding up ought to be stayed, make an order staying the proceedings, either altogether or for a limited time, on such terms and cdnditions as the Court thinks fit.
(2) On any application under this section, the Court may, before making an order, require the Official Liquidator to furnish' to the Court a report with respect to any facts or matters which are in his opinion relevant to the application.
(3) A copy of every order made under this section shall forthwith be forwarded by the company, or otherwise as may be prescribed, to the Registrar, who shall make a minute of the order in his books relating to the company.
467. Settlement of list of contrlbutorles and application of assets. (J) As soon as may be after making a winding up order, the Court shall settle a list of contributories, with power to rectify the register of members in all cases where rectification is required In pursuance of thii Act, and shall cause the assets of the company to be collected and applied in discharge of its liabilities:
Provided that, where it appears to the Court that it will not be necessary to make calls on, or adjust the rights of, contributories, the Court may dispense with the settlement of a list of contributories.
(2) In settling the list of contributories, the Court shall distin- guish between those who are contributories in their own right and those who are contributories as being representatives of, or liable for the debts of, others,
244 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
468. Delivery of property to liquidator.—The Court may, at any time after making a winding up order, require any contributory for the time being on the list of contributories, and any trustee, receiver, banker, agent, or officer of the company, to pay, deliver, surrender or transfer forthwith, or within such time as the Court directs, to the liquidator, any money, property or books and papers in his hands to which the company is prima facie entitled.
469. Payment of debts due by contributory and extent of set-off.— (1) The Court may, at any time after making a winding up order, make an order on any contributory for the time being on the list of contributories to pay, in the manner directed by the order, any money due to the company,. from him or from the estate of the person whom he represents, exclusive of any money payable by him or the estate by virtue of any call in pursuance of this Act.
(2) The Court, in making such an order, may— (a) in the case of an unlimited company, allow to the con-
tributory, by way of set-off, any money due to him or to the estate which he represents, from the company, on any indepen- dent dealing or contract with the company, but not any money due to him as a member of the company in respect of any divi- dend or profit; and
(b) in the case of a limited company, make to any director, managing agent, secretaries and treasurers or manager whose liability is unlimited, or to his estate, the like allowance.
(3) In the case of any company, whether limited or unlimited, when all the creditors have been paid in full, any money due on any account whatever to a contributory from the company may be allowed to him by way of set-off against any subsequent call.
470. Power of Court to make calls.—(1) The Court may, at any time after making a winding up order, and either before or after it has ascertained the sufficiency of the assets of the company,—
(a) make calls on all or any of the contributories for the time being on the list of the contributories, to the extent of their liability, for payment of any money which the Court con- siders necessary to satisfy the debts and liabilities of the com- pany, and the costs, charges and expenses of winding up, and for the adjustment of the rights of the contributories among themselves; and
(b) make an order for payment of any calls so made. (2) In making a call, the Court may take into consideration the
probability that some of the contributories may, partly or wholly, fail to pay the call.
471. Payment into bank of moneys due to company.—(1) The Court may order any contributory, purchaser or other person from whom any money is due to the company to pay the money into the public account of India in the Reserve Bank of India instead of to the liquidator.
(2) Any such order may be enforced in the same manner as if the Court had directed payment to the liquidator.
SEC. 11 THE GAZETTE OF INDIA EXTRAORDINARY 243
472. Moneys and securities paid into Bank to be subject to order of Court.—All moneys, bills, hundis, notes and other securities paid or delivered into the Reserve Bank of India in the course of th« winding up of a company by the Court, shall be subject in all r e * pects to the orders of the Court.
473. Order on contributory to be conclusive evidence.—(1) An order made by the Court on a contributory shall, subject to any right of appeal, be conclusive evidence that the money, if any, thereby appearing to be due or ordered to be paid is due.
(2) All other pertinent matters stated in the order shall be taken to be truly stated as against all persons and in all proceedings what- soever.
474. Pbwer to exclude creditors not proving in time.—The Court may fix a time or times within which creditors are to prove their debts or claims, or to be excluded from the benefit of any distribu- tion made before those debts or claims are proved.
475. Adjustment of rights of contributorics.—The Court shall adjust thp rights of the contributories among themselves, and distri- bute any surplus among the persons entitled thereto.
476. Power to order costs.—The Court may, in the event of the assets being insufficient to satisfy the liabilities, make an order for the payment out ol the assets, oi the costs, charges and expenses incurred in the winding up, in such order of priority inter se as the Court thinks just.
477. Power to summon persons suspected of having property of company, etc.— (i) The Court may, at any time after the appointment of a provisional liquidator or the making of a winding up order, Eummon before it any olUcer of the company or person known or suspected to have in his possession any property or books or papers, of the company, or known or suspected to bo indebted to the com- pany, or any person whom the Court deems capable of giving infor- mation concerning the promotion, formation, trade, dealings, pro- perty, books or papers, or affairs of the company.
(2) The Couit may examine any officer ot person so summoned on oath concerning the matters aforesaid, either by word of mouth or on written interrogatories; and may, in the former case, reduce hia answers] to writing and require him to sign them.
(3) The Court may require any officer or person so summoned to produce any books and papers in his custody or power relating to the company; but, where he claims any lien on books or papers produced by him, the production shall be without prejudice to that lien, and the Court shall have jurisdiction in the winding up to determine all questions relating to that lien.
246 THE GAZETTE OF INDIA EXTEAOEDINABY [PART it
(4) If any officer or person so summoned, after being paid or tendered a reasonable sum for his expenses, fails to appear before the Court at the time appointed, not having a lawful impediment (made known to the Court at the time of its sitting and allowed by it), the Court may cause him to be apprehended and brought before the Court for examination.
478. Power to order public examination of promoters, directors etc.—(2) When an order has been made for winding up a company by the Court, and the Official Liquidator has made a report to the Court under this Act, stating that in his opinion a fraud has been committed by any person in the promotion or formation of the com- pany, or by any officer of the company in relation to the company since its formation, the Court may, after considering the report, direct that that person or officer shall attend before the Court on a day ap- pointed by it for that purpose, and be publicly examined as to the promotion or formation or the conduct of the business of the com- pany, or as to his conduct and dealings as an officer thereof.
(2) The Official Liquidator shall take part in the examination, and for that purpose may, if specially authorised toy the Court in that behalf, employ such legal assistance as may be sanctioned by the Court.
(3) Any creditor or contributory may also take part in the exa- mination either personally or by any advocate, attorney or pleader entitled to appear before the Court.
(4) The Court may put such questions to the person examined as it thinks fit.
(5) The person examined shall be examined on oath, and shall answer all such questions as the Court may put, or allow to be put, to him. ,
(6) A person ordered to be examined under this section-
fa) shall, before his examination, be furnished at his own cost with a copy of the O!Rcial Liquidator's, report; and
(b) may at his own cost employ an advocate, attorney or pleader entitled to appear before the Court, who shall be at liberty to put to him such questions as the Court may deem just for the purpose of enabling him to explain or qualify any answers given by him.
(7) (a) If any such person applies to the Court to be exculpated from any charges made or suggested against him, it shall be the duty of the Official Liquidator to appear on the hearing of the application and call the attention of the Court to any matters which appear to the Official Liquidator to be relevant.
(b) If the Court, after hearing any evidence given or witnesses called by the Official Liquidator, grants the ; ppliraiion, the Court may allow the applicant such costs aa it may think fit.
(8) Notes of the examination shall be taken down in writing, and shall be read over to or bv, and signed by, the person examined; and may thereafter be used in evidence against him, and shall be open to the inspection of any creditor or contributory at all reason- able times.
fijsc.1] THE GAZETTE OF INDIA EXTRAORDINARY 247
(9) The Court may, if it thinks fit, adjourn the examination from time to time.
(20) An examination under this section may, if the Court »o directs and subject to any rules made in this behalf, be held before any District Judge, or before any officer of the High Court, > eing an Official Referee, Master, Registrar or Deputy Registrar.
(11) The powers of the Court under this section as to the conduct of the examination, but not as to costs, may be exercised by the Judge or officer before whom the examination is held in pursuance of sub-section {10).
479. Power to arrest absconding contributory.—At any time either before or after making a winding up order, the Court may, on proof of probable cause for believing that a contributory is about to quit India or otherwise to abscond, or is about to remove or conoeal any of his property, for the purpose of evading payment of calls or of avoiding examination respecting the affairs of the company, cause—
(a) the contributory to be arrested and safely kept until such time as the Court may order ; and
(b) his books and papers and movable property to be seiz- ed anu safely kept until such time as the Court may order.
480. Saving of existing powers of Court.—Any powers conferred on the Court by this Act shall be in addition to, and not in derogation of, any existing powers of instituting proceedings against any contributory or debtor of the company, or the estate of any contri- butory or debtor, for the recovery of any call or other sums.
481. Dissolution of company.—(1) When the affairs of a company have been completely wound up, the Court shall make an order that the company be dissolved from the date of the order, and the company shall be dissolved accordingly.
(2) A copy of the order shall, within fourteen days from the date thereof, be forwarded by the liquidator to the Registrar who shall make in hib books a minute of the dissolution of the company.
(3) If the liquidator makes default in forwarding a copy as afore- said, he shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
Enforcement of and appeal from orders
482. Order made in any Court to be enforced by other Courts. Any order made by a Court for, or in the course of, winding up a company shall be enforceable at any place in India, other than that over which such Court has jurisdiction, by the Court which would have had jurisdiction in respect of the company if its registered office had been situate at such other place, and in the same manner in all respects as if the order had been made by that Court.
248 THE GAZETTE OF INDIA EXTRAORDINARY [PART ft
483. Appeals from orders.—Appeals from any order made, or decision given, in the matter of the winding up of a company by the Court shall lie to the same Court to which, in the same manner in which, and subject to the same conditions under which, appeals lie from any order or decision of the Court in cases within its ordinary Jurisdiction.
CHAPTER III
VOLUNTARY WINDING UP
Resolutions for, and commencement of, voluntary winding up
484. Circumstances in which company may be wound up volun- tarily.— (1) A company may be wound up voluntarily—
(a) when the period, if any, fixed for the duration of the company by the articles has expired, or the event, if any, has occurred, on the occurrence of which the articles provide that the company is to be dissolved, and the company in general meeting passes a resolution requiring the company to be wound up voluntarily;
(b) if the company passes a special resolution that the company be wound up voluntarily.
(2) In this Act, the expression "a resolution for voluntary winding up" means a resolution passed under clause (a) or (b) of sub-section U).
485. Publication of resolution to wind up voluntarily.—(1) When a company has passed a resolution for voluntary winding up, it shall, within fourteen days of the passing of the resolution, give notice of the resolution by advertisement in the Official Gazette, and also in some newspaper circulating in the district where the registered office of the company is situate.
(2) If default is made in complying with sub-section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
For the purposes of this sub-section, a liquidator of the company shall be deemed to be an officer of the company.
486. Commencement of voluntary winding up.—A voluntary winding up shall be deemed to commence at the time when the resolution for voluntary winding up is passed.
Consequences of voluntary winding up
487. Effect of voluntary winding up on status of company.—In the case of a voluntary winding up, the company shall, from the commencement of the winding up, cease to carry on its business, except so far as may be required for the beneficial winding up of such business:
Provided that the corporate state and corporate powers of the company shall continue until it is dissolved.
Si i- 11 THE GAZETTE OF TNDIA EXTRAORDINARY 249
Declaration of Solvency 488. Declaration of solvency in case of proposal to wind up volun-
tarily.— [1) Where it is proposed In wind up a company voluntarily, its directors, or in case the company has more than two directors, the majority of the directors, may, at a meeting of the Board, make a declaration verified by an affidavit, to the effect that they have made a full inquiry into the affairs of the company, and that, having done so, they have formed the opinion that the company has no debts, or that it will be able to pay its debts in full within such period not exceeding three years from the commencement of the winding up as may be specified in the declaration.
(2) A declaration made as aforesaid shall have no effect for the purposes of this Act, unless—
(a) it is made within the five weeks immediately preceding the date of the passing of the resolution for winding up the company and is delivered to the Registrar for registration before that date; and
(b) it embodies a statement of the company's assets and liabilities as at the latest practicable date before the making of the declaration. (3) Any director of a company making a declaration under this
section without having reasonable grounds for the opinion that the company will be able to pay its debts in full \u\hin the period specified in the declaration, shall be punishable with imprisonment ior a term which may extend to six months, or with fine which may extend to five thousand rupees, or with both.
(4) If the company is wound up in pursuance of a resolution passed within the period of five weeks after the making of the decla- ration, but its debts are not paid or provided for in full within the period specified in the declaration, it shall be presumed, until the contrary is shown, that the director did not have reasonable grounds for his opinion.
(5) A winding up in the case of which a declaration has been made and delivered in accordance with this section is in this Act referred to as "a members' voluntary winding up"; and a winding up in the case of which a declaration has not been so made and deli- vered ia in this Act referred to as "a creditors' voluntary winding up".
Provisions applicable to a Members' Voluntary Windivg Up 489. Provisions applicable to a members' voluntary winding up.—
The provisions contained in sections 490 to 498, both inclusive, shall subject to the provisions of section 498, apply in relation to a'mem- bers' voluntary winding up.
490. Power of company to appoint and fix remuneration of liqui- dators.—(1) The company in general meeting shall—
(a) appoint one or more liquidators for the purpose of wind- ing up the affairs and distributing the assets of the company; and
2^0 THE GAZETTE OF INDIA EXTRAORDINARY IPART ll
(b) fix the remuneration, if any, to be paid to the liquidator or liquidators.
(2) Any remuneration so fixed shall not be increased in any cir- cumstances whatever, whether with or without the sanction of the Court.
(3) Before the remuneration of the liquidator or liquidators is fixed as aforesaid, the liquidator, or any of the liquidators, as the case may be, shall not take charge of his office.
491. Board's powers to cease on appointment of liquidator.— On the appointment of a liquidator, all the powers of the Board of directors and of the managing or whole-time directors, managing agent, secretaries and treasurers, and manager, if there be any of these, shall cease, except for the purpose of giving notice of such ap- pointment to the Registrar in pursuance of section 493 or in so far as the company in general meeting or the liquidator may sanction the continuance thereof.
492. Power to fill vacancy in office of liquidator,— (2) If a vacancy occurs by death, resignation or otherwise in the office of any liqui- dator appointed by the company, the company in general meeting may, subject to any arrangement with its creditors, fill the vacancy
(2) For that purpose, a general meeting may be convened by any contributory, or by the continuing liquidator or liquidators if any.
(3) The meeting shall be held in the manner provided by this Act or by the articles, or in such other manner as the Court may, on application by any contributory or by the continuing liquidator or liquidators, determine.
493. Notice of appointment of liquidator to be given to Registrar.— (1) The company shall give notice to the Registrar of the appoint- ment of a liquidator or liquidators made by it under section 490, of every vacancy occurring in the office of liquidator, and of the name of the liquidator or liquidators appointed to fill every such vacancy under section 492.
(2) The notice aforesaid shall be given by the company within ten days of the event to which it relates.
(3) If default is made in complying with sub-section (1) or (2), the company, and every officer of the company (including every liquidator or continuing liquidator) who is in default, shall be punish- able with fine which may extend to one hundred rupees for every day during which the default continues.
494. Power of liquidator to accept shares, etc., as consideration for sale of property of company.—(1) Where—
(a) a company (in this section called "the transferor com- pany") is proposed to be, or is in course of being, wound up altogether voluntarily; and
(b) the whole or any part of its business or property is proposed to be transferred or sold to another company, whether
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 251
a company within the meaning of this Act or not (in thia section called "the transferee company");
the liquidator of the transferor company may, with the sanction of a special resolution of that company conferring on the liquidator either a general authority or an authority in respect of any particular arrangement,—
(i) receive, by way of compensation or part computation for the transfer or sale, shares, policies, or other like interests in the transferee company, for distribution among the members of the transferor company; or
(ii) enter into any other arrangement whereby the members of the transferor company may, in lieu of receiving cash, shares, policies, or other like interests or in addition thereto, participate in the profits of, or receive any other benefit from, the transferee company.
(2) Any sale or arrangement in pursuance of this section shall be binding on the members of the transferor company.
(3) If any member of the transferor company who did not vote in favour of the special resolution expresses his dissent therefrom in writing addressed to the liquidator, and left at the registered office of the company within seven days after the passing of the resolution, he may require the liquidator either—
(a) to abstain from carrying the resolution into effect; or (b) to purchase his interest at a price to be determinej by
agreement, or by arbitration in the manner provided by this section.
(4) If the liquidator elects to purchase the member's interest, the purchase money shall be paid before the company is dissolved, ,»nd be raised by the liquidator in such manner as may be determined by special resolution,
(5) A special resolution shall not be invalid for the purposes* ol this section by reason only that it is passed before or concurrently with a resolution for voluntary winding up or for appointing liqui- dators; but if an order is made within a year for winding up the company by or subject to the supervision of the Court, the special resolution shall not be valid unless it is sanctioned by the Court
(6) The provisions of the Arbitration Act, 1940 (X of 1940), other than those restricting the application of that Act in respect of the subject matter of the arbitration, shall apply to all arbitrations in pursuance of this section.
495( Duty of liquidator to call creditors' meeting in case of insol- vency.—(1) If, in the case of a winding up commenced after the commencement of this Act, (he liquidator Is at any time of opinion that the company will not be able to pay its debts in full within the period stated in the declaration under section 488, or that period has expired without the debts having been paid in full, he shall forthwith summon a meeting of the creditors, and shall lay before the meeting a statement of the assets and liabilities of the company.
(2) If the liquidator fails to comply with sub-section (1), he shall be punishable with fine which may extend to five hundred rupees.
252 THE GAZETTE OF INDIA EXTRAOEDINARY [PART II
496. Duty of liquidator to call general meeting at end of each year.—(1) Subject to the provisions of section 498, in the event of the winding up continuing for more than one year, the liquidator shall—
(a) call a general meeting of the company at the end of the first year from the commencement of the winding up, and at the end of each succeeding year, or as soon thereafter as may be convenient within three months from the end of the year or such longer period as the Central Government may allow; and
(b) lay before the meeting an account of his acts and dealings and of the conduct of the winding up during the preceding year, together with a statement in the prescribed form and containing the prescribed particulars with respect to the proceedings in, and position of, the liquidation,
(2) If the liquidator falls to comply with sub-section (1), he shall be punishable, in respect of each failure, with fine which may extend to one hundred rupees.
497. Final meeting and dissolution.—(I) Subject to the provisions of section 498, as soon as the affairs of the company are fully wound up, the liquidator shall—
(a) make up an account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed of; and
(b) call a general meeting of the company for the purpose of laying the account before it, and giving any explanation thereof.
(2) The meeting shall be called by advertisement— (a) specifying the time, place and object of the meeting; and (b) published not less than one month before the meeting In
the Official Gazette, and also in some newspaper circulating in the district where the registered office of the company is situate.
(3) Within one week after the meeting, the liquidator shall send to the Registrar a copy of the account, and shall make a return to him of the holding of the meeting and of the date thereof.
If the copy is not so sent or the return is not so made the liquidator shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
(4) If a quorum is not present at the meeting aforesaid, the liquidator shall, in lieu of the return referred to in sub-section (3), make a return that the meeting was duly called and that no quorum was present thereat.
Upon such a return being made within one week after the date fixed for the meeting, the provisions of sub-section (3) as to the making of the return shall be deemed to have been complied with.
(5) The Registrar, on receiving the account and either the return mentioned in sub-section (3) or the return mentioned in sub-section (4), shall forthwith register them and on the expiration of three months from such registration, the company shall be deemed to be dissolved:
Provided that the Court may, on the application of the liquidator or of any other person who appears to the Court to be interested,
Sac. 1] THE GAZETTE Of INDIA EXTRAORDINARY 333
make an order deferring the date at which the dissolution of the compiny is to take effect, for such time as the Court thinks fit.
(6) It shall be the duty of the person on whose application an order of the Court under the foregoing proviso is made, within twenty-one days after the making of the order, to deliver to the Registrar a certified copy of the order for registration, and if that person! fails so to do, he shall be punishable with fine which may extend to one hundred rupees for every day during which the default continues.
(7) If the liquidator fails to call a general meeting of the com- pany as required by this section, he shall be punishable with fine which may extend to five hundred rupees.
498. Alternative provisions as to annual and final meetings in case of insolvency.—Where section 495 has effect, sections 508 and 509 shall apply to the winding up, to the exclusion of sections 496 and 497, as if the winding up were a creditors' voluntary winding up and not a members' voluntary winding up:
Provided that the liquidator shall not be required to call a meeting of creditors under section 508 at the end of the first year from the commencement of the winding up, unless the meeting held under section 495 has been held more than three months before the end of that year.
Provisions applicable to a Creditors' Voluntary Winding Up 499. Provisions applicable to a creditors' voluntary winding up.—
The provisions contained in sections 500 to 509, both inclusive, shall apply in relation to a creditors' voluntary winding Up.
509. Meeting of creditors.—(1) The company shall cause a meet- ing of the creditors of the company to be called for the day, or the day next following the day, on which there is to be held the general meeting of the company at which the resolution for voluntary wind- ing up is to be proposed, and shall cause notices of the meeting of creditors to be sent by post to the creditors simultaneously with the sending of the notices of the meeting of the company.
(2) The company shall cause notice of the meeting of the creditors to be advertised once at least in the Official Gazette and once at least in two newspapers circulating in the district where the registered office or principal place of business of the company ia situate.
(3) The Board of directors of the company shall— (a) cause a full statement of the position of the company's
affairs together with a list of the creditors of the company and the estimated amount of their claims to be laid before the meet- ing of the creditors to be held as aforesaid; and
(b) appoint one of their number to preside at the said meeting.
(4) It shall be the duty of the director appointed to preside at the meeting of creditors to attend the meeting and preside thereat.
(5) If the meeting of the company at which the resolution for voluntary winding up is to be proposed is adjourned and the reso- lution is passed at an adjourned meeting, any resolution passed at
254 T H E GAZETTE 0 F INDIA EXTRAORDINARY [PART II
che meeting of the creditors held in pursuance of sub-section (1) shall have effect as if it had been passed immediately after the passing of the resolution for winding up the company.
(6) If default is made— (a) by the company, in complying with sub-sections (I)
and (2); (b) by its Board of directors, in complying with sub-section
(3); (c) by any director of the company, in complying with sub-
section (4); the company, each of the directors, or the director, as the case may be, shall be punishable with fine which may extend to one thousand rupees and, in the case of default by the company, every officer of the company who is in default, shall be liable to the like punishment.
501. Notice of resolutions passed by creditors' meeting to be given to Registrar.—(1) Notice of any resolution passed at a creditors' meeting in pursuance of section 500 shall be given by the company to the Registrar within ten days of the passing thereof.
(2) If default is made in complying with sub-section (1), the com- pany, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
For the purposes of this section, a liquidator of the company shal1 be deemed to be an officer of the company.
502. Appointment of liquidator.—(1) The creditors and the com- pany at their respective meetings mentioned in section 500 may nominate a person to be liquidator for the purpose of winding up the affairs and distributing the assets of the company.
(2) If the creditors and the company nominate different persons, the person nominated by the creditors shall be liquidator:
Provided that any director, member or creditor of the company may, within seven days after the date on which the nomination was made by the creditors, apply to the Court for an order either direct- ing that the person nominated as liquidator by the company shall be liquidator instead of or jointly with the person nominated by the creditors, or appointing the Official Liquidator or some other pennon to be liquidator instead of the person appointed by the creditors.
(3) If no person is nominated by the creditors, the person, if any, nominated by the company shall be liquidator.
(4) If no person is nominated by the company, the person, if eny, nominated by the creditors shall be liquidator.
503. Appointment of committee of inspection.—(1) The creditors at the meeting to be held in pursuance of section 500 or at any sub- sequent meeting may, if they think fit, appoint a committee of inspec- tion consisting of not more than five persons.
(2) If such a committee is appointed, the company may, either at the meeting at which the resolution for voluntary winding up is passed or at any subsequent general meeting, appoint such number
SEC. 11 m t GA2ETTffi Of 1NIMA EXTRAORDIKAIIY ^55
of persons (not exceeding live) as they think fit to act as memoers of the committee:
Provided that the creditors may, if they think fit, resolve that all or any of the persons so appointed by the company ought not to be members of the committee of inspection.
(3) If the creditors so resolve, the persons mentioned In the reso- lution shall not, unless the Court otherwise directs, be qualified to act as members of the committee.
(4) On any application to the Court for a direction under sub- section (3), the Court may, if it thinks fit, appoint other persons to act as members of the committee of inspection in the place of the persons mentioned in the creditors' resolution.
(5) Subject to the provisions of sub-sections (1) to (4) and to such rules as may be made by the Central Government, the provisions of section 465 (except sub-section (1) thereof) shall apply with respect to a committee of inspection appointed under this section as they apply with respect to a committee of inspection appointed in a wind- ing up by the Court.
504. Fixing of liquidators' remuneration.—(1) The committee of inspection, or if there is no such committee, the creditors, may fix the remuneration to be paid to the liquidator or liquidators.
(2) Where the remuneration is not so fixed, it shall be determined by the Court.
(3) Any remuneration fixed under sub-section (I) or (2) shall not be increased in any circumstances whatever, whether with or without the sanction of the Court.
505. Board's powers to cease on appointment of liquidator.—On the appointment of a liquidator, all the powers of the Board of directors shall cease, except in so far as the committee, of inspection, or if there is no such committee, the creditors in general meeting, may sanction the continuance thereof.
506. Power to fill vacancy in office of liquidator.—If a vacancy occurs by death, resignation or otherwise, in the office of a liquidator (other than a liquidator appointed by, or by the direction of, the Court), the creditors in general meeting may fill the vacancy.
507. Application of section 494 to a creditors' voluntary winding up.—The provisions of section 494 shall apply in the case of a creditors' voluntary winding up as in the case of a members' voluntary winding up, with the modification that the powers of the liquidator under that section shall not be exercised except with the sanction either of the Court or of the committee of inspection.
508. puty of liquidator to call meetings of company and of creditor^ at end of each year.—(I) In the event of the winding up continuing for more than one year, the liquidator shall—
(a) call a general meeting of the company and a meeting of the creditors at the end of the first year from the commence- ment of the winding up and at the end of each succeeding year, or as soon thereafter as may be convenient within three months
4,6 Sffl& 6A2EWS 6*1 WSiA aXTmAOftBlttARtf tPjjw 11
from the end of the year or such longer period as the Central Government may allow; and
(b) lay before the meetings an account of his acts and deal- ings and of the conduct of the winding up during the preceding year, together with a statement in the prescribed form and con- taining the prescribed particulars with respect to the proceedings in, and position of, the winding up.
(2) If the liquidator fails to comply with sub-section (1), he shall ue punishable, in respect of each failure, with fine which may extend to one hundred rupees.
509. Final meeting and dissolution.—(1) As soon as the affairs of the company are fully wound up, the liquidator shall—
(a) make up an account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed of; and
(b) call a general meeting of the company and a meeting of the creditors for the purpose of laying the account before the meetings and giving any explanation thereof.
(2) Each such meeting shall be called by advertisement— (a) specifying the time, place and object thereof; and (b) published not less than one month before the meeting in
the Official Gazette and also in some newspaper circulating in the district where the registered office of the company is situate.
(3) Within one week after the date of the meetings, or If the meetings are not held on the same date, after the date of the later meeting, the liquidator shall send to the Registrar a copy of the account, and shall make a return to him of the holding of the meet- ings and of the date or dates on which they were held.
If the copy is not so sent or the return is not so made, the liquidator shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
(4) If a quorum (which for the purposes of this section shall be two persons) is not present at either of such meetings, the liquidator shall, in lieu of the return referred to in sub-section (3), make a return that the meeting was duly called and that no quorum was present thereat.
Upon such a return being made within one week after the date fixed for the meeting, the provisions of sub-section (3) as to the making of the return shall, in respect of that meeting, be deemed to have been complied with.
(5) On receiving the account and also, in respect of each such meeting, either the return mentioned in sub-section (3) or the return mentioned in sub-section (4), the Registrar shall forthwith register them, and on the expiration of three months from their registration, the company shall be deemed to be dissolved:
Provided that the Court may, on the application of the liquidator or of any other person who appears to the Court to be interested, make
SEC. I] THE GAZETTE OF INDIA EXTRAORDINARY 257
an order deferring the date at which the dissolution of the company is to take effect for such time as the Court thinks fit.
(6) It shali be the duty of the person on whose application an order is made by the Court under the foregoing proviso, within twenty-one days after the making of the order, to deliver to the Registrar a certified copy of the order for registration, and if that person fails so to do, he shall be punishable with fine which may extend to one hundred rupees for every day during which the default continues.
(7) If the liquidator fails to call a general meeting of the com- pany or a meeting of the creditors as required by this section, he shall be punishable, in respect of each such failure, with fine which may extend to five hundred rupees.
Provisions applicable to every voluntary winding up 510. Provisions applicable to every voluntary winding up.—The
provisions contained in sections 511 to 521, both inclusive, shall apply to every voluntary winding up, whether a members' or a creditors' winding up.
511. Distribution of property of company.—Subject to the pro- visions of this Act as to preferential payments, the assets of a com- pany shall, on its winding up, be applied in satisfaction of its liabilities pari passu and, subject to such application, shall, unless the articles otherwise provide, be distributed among the members according to their rights and interests in the company,
512. Powers and duties of liquidator in voluntary winding up.— (2) The liquidator may,—
(a) in the case of a members' voluntary winding up, with the sanction of a special resolution of the company, and in the case of a creditors' voluntary winding up, with the sanction of the Court or, the committee of inspection or, if there is no such com- mittee, of a meeting of the creditors, exercise any of the powers given by clauses (i) to (iv) of sub-section (2) of section 457 to a liquidator in a winding up by the Court;
(b) without the sanction referred to in clause (a), exercise any of the other powers given by this Act to the liquidator in a winding up by the Court;
(c) exercise the power of the Court under this Act of settling a list of contributories (which shall be prima facie evidence of the liability of the persons named therein to be contributories);
(d) exercise the power of the Court of making calls;
(e) call general meetings of the company for the purpose of obtaining the sanction of the company by ordinary or special resolution, as the case may require, or for any other purpose he may think fit
258 THE GAZETTE OF INDIA EXTKAOBDINARY [PART II
(2) The exercise by the liquidator of the powers given by clause (a) of sub-section (1) shall be subject to the control of the Court; and any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of any of the powers conferred by this section.
(3) The liquidator shall pay the debts of the company and shall adjust the rights of the contnbutories among themselves.
(4) When several liquidators are appointed, any power given by this Act may be exercised by such one or more of them as may be determined at the time of their appointment, or, in default of such determination, by any number of them not being less than two.
513. Body corporate not to be appointed as liquidator.—(7) A body corporate shall not be qualified for appointment as liquidator of a company in a voluntary winding up.
(2) Any appointment made in contravention of sub-section (1) shall be void.
(3) Any body corporate which acts as liquidator of a company, and every director, the managing agent or secretaries and treasurers, or a manager thereof, shall be punishable with fine which may extend to one thousand rupees.
514. Corrupt inducement affecting appointment as liquidator.— Any person who gives, or agrees or offers to give, to any member or creditor of a company any gratification whatever with a view to—
(a) securing his own appointment or nomination as the com- pany's liquidator; or
(b) securing or preventing the appointment or nomination of some person other than himself, as the company's liquidator;
shall be punishable with fine which may extend to one thousand rupees.
515. Power of Court to appoint and remove liquidator In volun- tary winding up.—(1) If from any cause whatever, there is no liqui- dator acting, the Court may appoint a liquidator.
(2) The Court may, on cause shown, remove a liquidator and appoint another liquidator.
516. Notice by liquidator of his appointment.—(1) The liquidator shall, within twenty-one days after his appointment, publish in the Official Gazette, and deliver to the Registrar for registration, a notice of his appointment in the form prescribed.
(2) If the liquidator fails to comply with sub-section (1), he shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
517. Arrangement when binding on company and creditors.—(2) Any arrangement entered into between a company about to be, or in the course of being, wound up and its creditors shall, subject to the right of appeal under this section, be binding on the company and
SKC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 259
on the creditois if it Is sanctioned by a special resolution of the com- pany and acceded to by three-fourths in number and value of the creditors.
(2) Any creditor or contributory may, within three weeks from the completion of the arrangement, appeal to the Court against it and the Court may thereupon, as it thinks just, amend, vary, confirm or set aside the arrangement.
518. Power to apply to Court to have questions determined or powers exercised.—(1) The liquidator or any contributory or creditor may apply to the Court—
(a) to determine any question arising in the winding up of a company; or
(b) to exercise, as respects the enforcing of calls, the stay- ing of proceedings or any other matter, all or any of the powers which the Court might exercise if the company were being wound up by the Court.
(2) The liquidator or any creditor or contributory may apply to the Court specified in sub-section (3) for an order setting aside any attachment, distress or execution put into force against the estate or effects of the company after the commencement of the winding up.
(3) An application under sub-section (2) shall be made— (a) if the attachment, distress or execution is levied or put
into force by a High Court, to such High Court; and (b) if the attachment, distress or execution is levied or put
into force by any other Court, to the Court having jurisdiction to wind up the company.
(4) The Court, if satisfied on an application under sub-section (1) or (2) that the determination of the question or the required exercise of power or the order applied for will be iust and beneficial, may accede wholly or partially to the application on such terms and conditions as it thinks fit, or may make such other order on the application as it thinks just.
(5) A copy of an order staying the proceedings in the winding up, made by virtue of this section, shall forthwith be forwarded by the company, or otherwise as may be prescribed, to the Registrar, whd shall make a minute of the order in his books relating to thfc company.
519. Application of liquidator to Court for public examination of promoters, directors, etc.—(1) The liquidator may make a report to the Court stating that in his opinion a fraud has been committed by any person in the promotion or formation of the company or by any officer of the company in relation to the company since its formation; and the Court may, after considering the report, direct that that person or officer shall attend before the Court on a day appointed by it for that purpose, and be publicly examined as to the promotion or formation or the conduct of the business of the company, or as to his conduct and dealings as officer thereof.
(2) The provisions of sub-sections (2) to (11) of section 478 shall apply in relation to any examination directed under sub-section (1) as they apply in relation to an examination directed under sub- section (1) of section 478 with references to the liquidator being substituted for references to the Official Liquidator in those provi-
26o THE GAZETTE OF INDIA EXTRAORDINARY [PART II
520. Costs of voluntary winding up.—All costs, charges andex- penses properly incurred in the winding up, including the remunera- tion of the liquidator, shall, subject to the rights ot secured credi- tors, if any, be payable out of the assets df the company in priority to all other claims.
521. Saving of right of creditors and contributories to apply for winding1 up.—The voluntary winding up of a company shall not bar the right of any creditor or contributory to have it wound up by the Court, but in the case of an application by a contributory, the Court must be satisfied that the rights of the contributories will be prejudiced by a voluntary winding up.
CHAPTER IV WINDING UP SUBJECT TO SUPERVISION OF COURT
522. Power to order winding up subject to supervision.—At any time after a company has passed a resolution for voluntary winding up, the Court may make an order that the voluntary winding up shall continue, but subject to such supervision of the Court, and with such liberty for creditors, contributories or others to apply to the Court, and generally on such terms and conditions, as the Court thinks just.
523. Effect of petition for winding up subject to supervision.— A petition for the continuance of a voluntary winding up subject to the supervision of the Court shall, for the purpose of giving jurisdic- tion to the Court over suits and legal proceedings, be deemed to be a petition for winding up by the Court.
524. Power of Court to appoint or remove liquidators.—(1) Where an order is made for a winding up subject to supervision, the Court may, by that or any subsequent order, appoint an additional liquidator or liquidators.
(2) The Court may remove any liquidator so appointed or any Liquidator continued under the supervision order, and fill any vacancy occasioned by the removal, or by death or resignation.
525. Powers and obligations of liquidator appointed by Court.— A liquidator appointed by the Court under section 524 shall have the same powers, be subject to the same obligations, and in all respects stand in the same position, as if he had been duly appointed in accordance with the provisions of this Act with respect to the appointment of liquidators in a voluntary winding up.
526. Effect of supervision order.—(1) Where an order is made for a winding up subject to supervision, the liquidator may, subject to any restrictions imposed by the Court, exercise all his powers, without the sanction or intervention of the Court, in the same manner as if the company were being wound up altogether volun- tarily.
(2) Except as provided in sub-section (1), any order made by the Court for a winding up subject to the supervision of the Court, shall for all purposes, including the staying of suits and other pro- ceedings, be deemed to be an order of the Court for winding up the company by the Court, and shall confer full authority on the Court to make calls or to enforce calls made by the liquidators, and to exercise all other powers which it might have exercised if an order had been made for winding up the company altogether by the Court.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 261
(3) In the construction of the provisions whereby the Court is empowered to direct any act or thing to be done to or in favour of the liquidator, the expression "liquidator" shall be deemed to mean the liquidator conducting the winding up, subject to the supervision of the Court.
527. Appointment in certain cases of voluntary liquidators to office of liquidators.—Where an order has been made for winding up a company subject to supervision, and an order is afterwards made for winding up by the Court, the Court may, by the last- mentioned or any subsequent order, appoint any person or persons who are then liquidators, either provisionally or permanently, to be liquidator or liquidators in the winding up by the Court in addition to, and subject to the control of, the Official Liquidator.
CHAPTER V
PROVISIONS APPLICABLE TO EVERY MODE OP WINDING UP
Proof and ranking of claims 528. Debts of all descriptions to be admitted to proof.—In every
winding up (subject, in the case of insolvent companies, to the application in accordance with the provisions of this Act of the law of insolvency), all debts payable on a contingency, and all claims against the company, present or future, certain or contin- gent, ascertained or sounding only in damages, shall be admissible to proof against the company, a just estimate being made, so far as possible, of the value of such debts or claims as may be subject to any contingency, or may sound only in damages, or for some other reason may not bear a certain value.
529. Application of insolvency rules in winding up of insolvent companies.—(1) In the winding up of an insolvent company, the same rules shall prevail and be observed with regard to—
(a) debts provable; (b) the valuation of annuities and future and contingent
liabilities; and (c) the respective rights of secured and unsecured creditors;
as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent.
(2) All persons who in any such case would be entitled to prove for and receive dividends out of the assets of the company, may come in under the winding up, and make such claims against the company as they respectively are entitled to make by virtue of this section.
530. Preferential payments.—(1) In a winding up, there shall be paid in |priority to all other debts—
(a) all revenues, taxes, cesses and rates due from the company to the Central or a State Government or to a local authority at the lelevant date as denned in clause (c) of sub- section (8), and having become due and payable within the twelve months next before that date;
(b) all wages or salary (including wages payable for time or piece work and salary earned wholly or in part by way of commission) of any employee, in respect of services rendered
262 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
to the company and due for a period not exceeding four months within the twelve months next before the relevant date, subject to the limit specified in sub-section (2);
(c) all accrued holiday remuneration becoming payable to any employee, or in the case of his death to any other person in his right, on the termination of his employment before, or by the effect of, the winding up order or resolution;
(d) unless the company is being wound up voluntarily merely for the purposes of reconstruction or of amalgamation with another company, all amounts due, in respect of contribu- tions payable during the twelve months next before the relevant date, by the company as the employer of any persons, under the Employees' State Insurance Act, 1948 (XXXIV of 1948), or any other law for the time being in force;
(e) unless the company is being wound up voluntarily merely for the purposes of reconstruction or of amalgamation with another company, or unless the company has, at the com- mencement of the winding up, under such a contract with insu- rers as is mentioned in section 14 of the Workmen's Compensation Act, 1923 (VIII of 1923), rights capable of being transferred to and vested in the workman, all amounts due in respect of any compensation or liability for compensation under the said Act in respect of the death or disablement of any employee of the company;
(f) all sums due to any employee from a provident fund, a pension fund, a gratuity fund or any other fund for the welfare of the employees, maintained by the company; and
(g) the expenses of any investigation held in pursuance of section 235 or 237, in so far as they are payable by the company. (2) The sum to which priority is to be given under clause (b)
of sub-section (1), shall not, in the case of any one claimant, exceed one thousand rupees:
Provided that where a claimant is a labourer in husbandry who has entered into a contract for the payment of a portion of his wages in a lump sum at the end of the year of hiring, he shall have priority in respect of the whole of such sum, or a part thereof, as the Court may decide to be due under the contract, proportionate to the time of service up to the relevant date.
(3) Where any compensation under the Workmen's Compensation Act, 1923 (VIII of 1923) is a weekly payment, the amount due in respect thereof shall, for the purposes of clause (e) of sub-section (1), be taken to be the amount of the lump sum for which the weekly payment could, if redeemable, be redeemed if the employer made an application for that purpose under the said Act.
(4) Where any payment has been made to any employee of a company,—
(i) on account of wages or salary; or (ii) to him, or in the case of his death, to any other person
in his right, on account of accrued holiday remuneration, out of money advanced by some person for that purpose, the person by whom the money was advanced shall, in a winding up, have a
SKC. 11 THE GAZETTE OF INDIA EXTRAORDINARY 263
right of priority in respect of the money so advanced and paid, up to the amount by which the sum in respect of which the employee or other person in his right, would have been entitled to priority in the finding up has been diminished by reason of the payment having been made.
(5) The foregoing debts shall— (a) rank equally among themselves and be paid in full,
unless the assets are insufficient to meet them, in which case they shall abate in equal proportions; and
(b) so far as the assets of the company available for payment of general creditors are insufficient to meet them, have priority over the claims of holders of debentures under any floating charge created by the company, and be paid accordingly out of any property comprised in or subject to that charge. (6) Subject to the retention of such sums as may be necessary
for the costs and expenses of the winding up, the foregoing debts shall be discharged forthwith so far as the assets are sufficient to meet them, and in the case of the debts to which priority is given by clause (d) of sub-section (1), formal proof thereof shall not be required except in so far as may be otherwise prescribed.
(7) In the event of a landlord or other person distraining or hav- ing distrained on any goods or effects of the company within three months next before the date of a winding up order, the debts to which priority is given by this section shall be a first charge on the goods or effects so distrained on, or the proceeds of the sale thereof:
Provided that, in respect of any money paid under any such charge, the landlord or other person shall have the same rights of priority as the person to whom the payment is made.
(8) For the purposes of this section— (a) any remuneration in respect of a period of holiday or of
absence from work through sickness or other good cause snail be deemed to be wages in respect of services rendered to the com- pany during that period;
(b) the expression "accrued holiday remuneration" includes, in relation to any person, all sums which, by virtue either of his contract of employment or of any enactment (including any order made or direction given under any enactment), are payable on account of the remuneration which would, in the ordinary course, have become payable to him in respect of a period of holiday, had his employment with the company continued until he became entitled to be allowed the holiday; and
(c) the expression "the relevant date" means—
(i) in the case of a company ordered to be wound up compulsorily, the date of the appointment (or first appoint- ment) of a provisional liquidator, or if no such appointment was made, the date of the winding up order, unless in either case the company had commenced to be wound up volun- tarily before that date; and
264 T H E G A Z E T T E O F INDIA EXTRAORDINARY [PART II
(it) in any case where sub-clause (i) does not apply, the date of the passing of the resolution for the voluntary wind- ing up of the company.
(9) This section shall not apply in the case of a winding up where the date referred to in sub-section (5) of section 230 of the Indian Companies Act, 1913 (VII of 1913), occurred before the commence- ment of this Act, and in such a case, the provisions relating to pre- ferential payments which would have applied if this Act had not been passed, shall be deemed to remain in full force.
Effect of winding up on antecedent and other transactions
531. Fraudulent preference.—(1) Any transfer of property, movable or immovable, delivery of goods, payment, execution or other act relating to property made, taken or done by or against a company within six months before the commencement of its winding up which, had it been made, taken or done by or against an indivi- dual within three months before the presentation of an insolvency petition on which he is adjudged insolvent, would be deemed in his insolvency a fraudulent preference, shall in the event of the com- pany being wound up, be deemed a fraudulent preference of its creditors and be invalid accordingly:
Provided that, in relation to things made, taken or done before the commencement of this Act, this sub-section shall have effect with the substitution, for the reference to six months, of a reference to three months.
(2) For the purposes of sub-section (1), the presentation of a petition for winding up in the case of a winding up by or subject to the supervision of the Court, and the passing of a resolution for winding up in the case of a voluntary winding up, shall be deemed to correspond to the act of insolvency in the case of an individual.
532. Transfers for benefit of all creditors to be void.—Any trans- fer or assignment by a company of all its property to trustees for the benefit of all its creditors shall be void.
533. Liabilities and rights of certain fraudulently preferred per- sons.—(1) Where, in the case of a company which is being wound up, anything made, taken or done after the commencement of this Act is invalid under section 531 as a fraudulent preference of a person interested in property mortgaged or charged to secure the company's debt, then (without prejudice to any rights or liabilities arising apart from this provision), the person preferred shall be subject to the same liabilities, and shall have the same rights, as if he had undertaken to be personally liable as surety for the debt, to the extent of the mortgage or charge on the property or the value of his interest, whichever is less.
(2) The value of the said person's interest shall be determined as at the date of the transaction constituting the fraudulent preference, and shall be determined as if the interest were free of all encum- brances other than those to which the mortgage or charge for the company's debt was then subject.
(3) On any application made to the Court with respect to any payment on the ground that the payment was a fraudulent preference
Sue. 1J THE GAZETTE OF INDIA EXTRAORDINARY 265
of a surety or guarantor, the Court shall have jurisdiction to deter- mine any questions with respect to the payment arising between the person to whom the payment was made and the surety or guarantor and to grant relief in respect thereof, notwithstanding that it is not necessary so to do for the purposes of the winding up, and for that purpose may give leave to bring in the surety or guarantor as a third party as in the case pf a suit for the recovery of the sum paid.
This kub-section shall apply, with the necessary modifications, in relation 'to transactions other than the payment of money as it ap- plies in relation to payments of money.
534. Effect of floating charge.—Where a company is being wound up, a floating charge on the undertaking or property of the company created within the twelve months immediately preceding the com- mencement of the winding up, shall, unless it is proved that-the company immediately after the creation of the charge was solvent, be invalid, except to the amount of any cash paid to the company at the time of, or subsequently to the creation of, and in considera- tion for, the charge, together with interest on that amount at the rate of five per cent, per annum or such other rate as may for the time being be notified by the Central Government in this behalf in the Official Gazette:
Provided that in relation to a charge created more than three monthsl before the commencement of this Act, this section shall have effect with the substitution, for references to twelve months of references to three months.
535. Disclaimer of onerous property in case of a company which is being wound up.—(1) Where any part of the property of a com- pany which is being wound up consists of—
(a) land of any tenure, burdened with onerous covenants;
(b) shares or stock in companies;
(c) any other property which is unsaleable or is not readily saleable, by reason of its binding the possessor thereof either to the performance of any onerous act or to the payment of any sum of money; or
(d) unprofitable contracts;
the liquidator of the company, notwithstanding that he has endea- voured to sell or has taken possession of the property, or exercised any act of ownership in relation thereto, or done anything in pursu- ance of the contract, may, with the leave of the Court and subject to the provisions of this section, by writing signed by him, at any time ^ithin twelve months after the commencement of the winding up or such extended period as may be allowed by the Court, dis claim the property:
Provided that, where any such property has not come to the knowledge of the liquidator within one month after the commence- ment of the winding up, the power of disclaiming the property may be exercised at any time within twelve months after he has become aware thereof or such extended period as may be allowed by tnp Court.
266 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(2) The disclaimer shall operate to determine, as from the date of disclaimer, the rights, interest, and liabilities of the company, and the property of the company, in or in respect of the property disclaimed, but shall not, except so far as is necessary for the purpose of releasing the company and the property of the company from liability, affect the rights or liabilities of any other person.
(3) The Court, before or on granting leave to disclaim, may re- quire such notices to be given to persons interested, and impose such terms as a condition of granting leave, and make such other order in the matter as the Court thinks just.
(4) The liquidator shall not be entitled to disclaim any property in any case where an application in writing has been made to him by any person interested in the property requiring him to decide whether he will or will not disclaim, and the liquidator has not, within a period of twenty-eight days after the receipt of the applica- tion or such extended period as may be allowed by the Court, given notice to the applicant that he intends to apply to the Court for leave to disclaim; and in case the property is a contract, if the liquidator, after such an application as aforesaid, does not within the said period or extended period disclaim the contract, the company shall be deemed to have adopted it.
(5) The Court may, on the application of any person who is, as against the liquidator, entitled to the benefit or subject to the burden of a contract made with the company, make an order rescinding the contract on such terms as to payment by or to either party of damages for the non-performance of the contract, or otherwise as the Court thinks just; and any damages payable under the order to any such person may be proved by him as a debt in the winding up.
(6) The Court may, on an application by any person who either claims any interest in any disclaimed property or is under any liabi- lity not discharged by this Act in respect of any disclaimed property, and after hearing any such persons as it thinks fit, make an order for the vesting of the property in, or the delivery of the property to, any person entitled thereto or to whom it may seem just that the property should be delivered by way of compensation for such liabi- lity as aforesaid, or a trustee for him, and on such terms as the Court thinks just; and on any such vesting order being made, the property comprised therein shall vest accordingly in the person therein named in that behalf without any conveyance or assignment for the purpose:
Provided that, where the property disclaimed is of a lease-hold nature, the Court shall not make a vesting order in favour of any person claiming under the company, whether as under-lessee or as mortgagee or holder of a charge by way of demise, except upon the terms of making that person—
(a) subject to the same liabilities and obligations as those to which the company was subject under the lease in respect of the property at the commencement of the winding up; or
(b) if the Court thinks fit, subject only to the same liabilities and obligations as if the lease had been assigned to that person at that date;
and in either event (if the case so requires) as if the lease had com- prised only the property comprised in the vesting order; and any
SEC. i] THE GAZETTE OF INDIA EXTRAORDINARY 267'
mortgagee or under-lessee declining to accept a vesting order upon such terms shall be excluded from all interest in and security upon the property, and, if there is, no person claiming under the com- pany who is willing to accept an order upon such terms, the Court shall have power to vest the estate and interest of the company in the property in any person liable, either personally or in a represen- tative character, and either alone or jointly with the company, to perform the lessee's covenants in the lease, freed and discharged from all estates, encumbrances and interests created therein by the company.
(7) Any person injured by the operation of a disclaimer under this section shall be deemed to be a creditor of the company to the amount of the compensation or damages payable in respect of the injury, and may accordingly prove the amount as a debt in the winding up.
536. Avoidance of transfers, etc., after commencement of winding up.-^(l) In the case of a voluntary winding up. any transfer of shares in the company, not being a transfer made to or with the sanction of the liquidator, and any alteration in the status of the members of the company, made after the commencement of the wind- ing up, shall be void
(2) In the case of a winding up by or subject to the supervision of the Court, any disposition of the property (including actionable claims) of the company, and any transfer of shares in the company or alteration in the status of its members, made after the commencement of the v'hiding up, shall, unless the Court otherwise orders, be void.
537. Avoidance of certain attachments, executions, etc., in wind- Ing up toy or subject to supervision of Court.—(1) Where any com- pany is being wound up by or subject to the supervision of the Court—
(a) any attachment, distress or execution put in force, with- out leave of the Court, against the estate or effects of the company, after the commencement of the winding up; or
(b) any sale held, without leave of the Court, of any of the properties or effects of the company after such commencement;
shall be void. (2) Nothing in this section applies to proceedings by the Govern-
ment. Offences antecedent to or in course of winding up
538 Offences by officers of companies in liquidation.—(1) If any person, being a past or present officer of a company which, at the time of the commission of the alleged offence, is being wound up, whether by or subject to the supervision of the Court or voluntarily, or wh ch is subsequently ordered to be wound up by the Court or which subsequently passes a resolution for voluntary winding up,—
(a.) does not, to the best of his knowledge and belief, fully and truly discover to the liquidator all the property, movable and immovable, of the company, and how and to whom and foi what consideration and when the company disposed of any part thereof, except such part as has been disposed of in the ordinary course of the business of the company;
268 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(b) does not deliver up to the liquidator, or as he directs, all such part of the movable and immovable property of the company as is in his custody or under his control, and which he is required by law to deliver up;
(c) does not deliver up to the liquidator, or as he directs, all such books and papers of the company as are in his custody or under his control and which he is required by law to deliver up;
(d) within the twelve months next before the commencement of the winding up or at any time thereafter, conceals any part of the property of the company td the value of one hundred rupees or upwards, or conceals any debt due to or from the company;
(e) within the twelve months next before the commencement a£the winding up or at any time thereafter, fraudulently removes any part of the property of the company to the value of one hundred rupees or upwards;
(f) makes any material omission in any statement relating to the affairs of the company;
(g) knowing or believing that a false debt has been proved by any person under the winding up, fails for a period of one month to inform the liquidator thereof;
(h) after the commencement of the winding up, prevents the production of any book or paper affecting or relating to the pro- perty or affairs of the company;
(i) within the twelve months next before the commencement of the winding up or at any time thereafter, conceals, destroys, mutilates or falsifies, or is privy to the concealment, destruction, mutilation or falsification of, any book or paper affecting or relating to, the property or affairs of the company;
(j) within the twelve months next before the commencement of the winding up or at any time thereafter makes, or is privy to the making of, any false entry in any book or paper affecting or relating to, the property or affairs of the company;
(k) within the twelve months next before the commence- ment of the winding up OTat any time thereafter, fraudulently parts with, alters or makes any omission in, or is privy to the fraudulent parting with, altering or making of any omission in, any book or paper affecting or relating to1 the property or affairs of the company;
(I) after the commencement of the winding up or at any meeting of the creditors of the company within the twelve mtfnths next before the commencement of the winding up, attempts to account for any part of the property of the company by fictitious losses or expenses;
(m) within the twelve months next before the commence- ment of the winding up or at any time thereafter, by any false representation or other fraud, obtains on credit, for or on behalf of the company, any property which the company does not subsequently pay for;
SEC. 11 THE GAZETTE OF INDIA EXTRAORDINARY 269
(n) within the twelve months next before the commencement of the winding up or at any time thereafter, under the false pretence that the company is carrying on its business, obtains on credit, for ur on behalf of the company, any property which the company does not subsequently pay for;
(o) within the twelve months next before the commence- ment of the winding up or at any time thereafter, pawns, pledges or disposes of any property of the company which has been obtained on credit and has not been paid for, unless such pawn- ing, pledging or disposing is in the ordinary course of the business of the company; or
(p) is guilty of any false representation or other fraud for the purpose of obtaining the consent of the creditors of the com- pany or any of them, to an agreement with reference to the affairs of the company or to the winding up;
he shall be punishable, in the case of any of the offences mentioned in clauses (m), (n) and (o), with imprisonment for a tertn which may extend to five years, or with fine, or with both, and, in the case of any other offence, with imprisonment for a term which may extend to two years, or with fine, or with both:
Provided that it shall be a good defence- fib to a charge under any of the clauses, (b), (c), (d), (f), (n)
and (0), if the accused proves that he had no intent to defraud; and
(ii) to a charge under any of the clauses, (a), (7i), (i) and (j), if he proves that he had no intent to conceal the true state of affairs of1 the company or to defeat the law,
(2) Where any person pawns, pledges or disposes o*f any property in circumstances which amount to an offence under clause (o) of sub-section (I), every person who takes in pawn or pledge or other- wise receives the property, knowing it to be pawned, pledged, or disposed of in such circumstances as aforesaid, shall be punishable with imprisonment for a term which may extend to three years, or with fine, or with both.
(3) For the purposes of this section, the expression "officer" shall include any person in accordance with whose directions o*r instruc- tions the directors of the company have been accustomed to act.
539. Penalty for falsification of books.—If with intent to defraud or deceive any person, any officer or contributory of a compariy which is being wound up—
(a) destroys, mutilates, alters, falsifies or secretes, or is privy to the destruction, mutilation, alteration, falsification or secreiing of, any books, papers or securities; or
(b) makes, or is privy to the making of, any false or fraudu- lent entry in any register, book of account or document belonging to the company;
he shall be punishable with imprisonment for a term which may extend to seven years, and shall also be liable to fine.
270 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
540. Penalty for frauds by officers.—If any person, being at the time of the commission of the alleged offence an officer of a com- pany which is subsequently ordered to be wound up by the Court or which subsequently passes a resolution for voluntary winding up,—
(a) has, by false pretences or by means of any other fraud, induced any person to give credit to the company; or
(b) with intent to defraud creditors of the company, has made or caused to be made any gift or transfer of or charge on, or has caused or connived at the levying of any execution against, the property of the company; or
(c) with intent to defraud creditors of the company, has con- cealed or removed any part of the property of the company since the date of any unsatisfied judgment or order for payment of money obtained against the company, or within two months before that date;
he shall be punishable with imprisonment for a term which may extend to two years and shall also be liable to fine.
541. Liability where proper accounts not kept.—(1) Where a company is being wound up, if it is shown that proper books of account were not kept by the company throughout the period of two years immediately preceding the commencement of the winding up, or the period between the incorporation of the company and the commencement of the winding up, whichever is shorter, every officer of the company who is in default shall, unless he shows that, he acted hofnestly and that in the circumstances in which the business of the company was carried on, the default was excusable, be punishable with imprisonment for a term which may extend to one year.
(2) For the purposes of sub-section (1), it shall be deemed that proper books of account have not been kept in the case of any company, if there have not been k e p t -
fa) such books or accounts as are necessary to exhibit and explain the transactions and financial position of the business of the company, including books containing entries made from day to day in sufficient detail of all cash received and all cash paid; and
(b) where the business of the company has involved dealings in goods, statements of the annual stocktakings and (except in the case of goods sold by way of ordinary retail trade) of all goods sold and purchased, showing the goods and the buyers and sellers thereof in sufficient detail to enable those goods and those buyers and sellers to be identified.
542. Liability for fraudulent conduct of business.—(1) If in the course of the winding up of a company, it appears that any business of the company has been carried on, with intent to defraud creditors of the company or any other persons, or for any fraudulent purpose, the Court, on the application of the Official Liquidator, or the liquidator or any creditor or contributory of the com- pany, may. if it thinks it proper so do, declare that any persons
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 271
wh® were knowingly parties to the carrying on of the business in the manner aforesaid shall be personally responsible, without any limita- tion of liability, for all or any of the debts or other liabilities of the company as the Court may direct.
On the hearing of an application under this sub-section, the Official Liquidator or the liquidator, as the case may be, may himself give evidence or call witnesses.
(2) (a) Where the Court makes any such declaration, it may give such further directions as it thinks proper for the purpose of giving effect to that declaration.
(b) In particular, the Court may make provision for making the Liability of1 any such person under the declaration a charge on any debt or obligation due from the company to him, or on any mortgage or charge or any interest in any mortgage or charge on any assets of the company held by or yested in him, or any person on his behalf, or any person claiming as assignee • from or through the person liable or any person acting on his behalf.
(c) The Court may, from time to time, make such further order as may be necessary for the purpose of enforcing any charge imposed under this sub-section.
(d) For the purpose of this sub-section, the expression "assignee" includes ai(iy person to whom or in whose favour, by the directions of the person liable, the debt, obligation, mortgage or charge was created, issued or transferred or the interest was created, but does not include an assignee for valuable consideration (not including con- sideration by way of marriage) given in good faith and without notice of any of the matters on the ground of which the declaration is made.
(3) Where any business of a company is carried on with such intent or for such purpose as is mentioned in sub-section (1), every person who was knowingly a party to the carrying on of the business in the manner aforesaid, shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to five thousand rupees, or with both.
(4) This section shall apply, notwithstanding that the person con- cerned may be criminally liable in respect of the matters on the ground of which the declaration is to be made.
543. Power of Court to assess damages against delinquent direc- tors, etc.—(1) If in the course of winding up a company, it appears that any person who has taken part in the promotion or formation of the company, or any past or present director, managing agent, sec- retaries ,and treasurers, manager, liquidator or officer of the company-h
(a) has misapplied, or retained, or become liable or account- able for, any money or property of the company; or
(b) has been guilty of any misfeasance or breach of trust in relation to the company;
the Court may, on the application of the Official Liquidator, of the
272 THE GAZETTE OF INDIA EXTBAORDINARY [PART II
liquidator, or of any creditor or contributory, made within the time specified in that behalf in sub-section (2), examine into the conduct of the person, director, managing agent, secretaries and treasurers, manager, liquidator or officer aforesaid, and compel him to repay or restore the money or property or any part thereof respectively, with interest at such rate as the Court thinks just, or to contribute such sum to the assets of the company by way of compensation in respeot of the misapplication, retainer, misfeasance or breach of trust, as the Court thinks just.
(2) An application under sub-section (1) shall be made within five years from the date of the order for winding up, or of the first ap- pointment of the liquidator in the winding up, or of the mis-applica- tion, retainer, misfeasance or breach of trust, as the case may be, whichever is longer.
(3) This section shall apply notwithstanding that the matter is one for which the person concerned may be criminally liable.
544. Liability under sections 542 and 543 to extend to partners or directors in firm or company.—Where a declaration under section 542 or an order under section 543 is or may be made in respect of a firm or body corporate, the Court shall also have power to make a declaration under section 542, or pass an order under section 543, as the case may be, in respect of any person who was at the relevant time a partner in that firm or a director of that body corporate.
545. Prosecution of delinquent officers and members of company.— (1) If it appears to the Court in the course of a winding up by, or subject to the supervision of, the Court, that any _past or present officer, or any member, of the company has been guilty of any offence in relation to the company, the Court may, either on the applica- tion of any person interested in the winding up or of its own motion, direct the liquidator either himself to prosecute the offender or to refer the matter to the Registrar.
(2) If it appears to the liquidator in the course of a voluntary winding up that any past or present officer, or any member, of the company has been guilty of any offence in relation to the company, he shall forthwith report the matter to the Registrar and shall furnish to him such information and give to him such access to and facilities for inspecting and taking copies of any books and papers, being information or books and papers in the possession or under the control of the liquidator and relating to the matter in question, as the Registrar may require.
(3) Where any report is made under sub-section (2) to the Regis- trar, he may, if he thinks fit, refer the matter to the Central Gov- ernment for further inquiry.
The Central Government shall thereupon investigate the matter and may, if it thinks it expedient, apply to the Court for an order conferring on any person designated by the Central Government for the purpose, with respect to the company concerned, all such powers of investigating the affairs of the company as are provided by this Act in the case of a winding up by the Court.
SEC 11 THE GAZETTE OF INGIA EXTRAORDINARY ij$
(4) If on any report to the Registrar under sub-section (2), it appears to him that the case is not one in which proceedings ought to be taken by him, he shall inform the liquidator accordingly, and thereupon, subject to the previous sanction of the Court, the liquida- tor may himself take proceedings against the offender.
(5) If it appears to the Court in the Course of a voluntary wind- ing up that any past or present officer, or any member, of the com- pany has been guilty as aforesaid, and that no report with respect to the matter has been made by the liquidator to the Registrar under sub-section (2), the Court may, on the application of any person interested in the winding up or of its own motion, direct the liquida- tor to make such a report, and on a report being made accordingly, the provisions of this section shall have effect as though the report had been made in pursuance of the provisions of sub-section (2).
(6) If, where any matter is reported or referred to the Registrar under this section, he considers that the case is one in which a prosecution ought to be instituted, he shall report the matter to the Central Government; and that Government may, after taking such legal advice as it thinks fit, direct the Registrar to institute pro- ceedings:
Provided that no report shall be made by the Registrar under this sub-sect}on without first giving the accused person an opportu- nity of making a statement in writing to the Registrar and of being heard thereon.
(7) When any proceedings are instituted under this section, it shall be the duty of the liquidator and of every officer and agent of the company past and present (other than the defendant in the proceedings) to give all assistance in connection with the prosecu- tion which he is reasonably able to give.
For the purposes of this sub-section, the expression "agent", in relation to a company, shall be deemed to include any banker or legal adviser of'the company and any person employed by the com- pany as auditor.
(8) If any person fails or neglects to give assistance in the man- ner required by sub-section (7), the Court may, on the application of the Registrar, direct that person to comply with the requirements of that sub-section.
(9) Where any such application is made with respect to a liquida- tor, the Court may, unless it appears that the failure or neglect was iue to the liquidator not having in his hands sufficient assets of the company to enable him so to do, direct that the costs of the appli- cation shall be borne by the liquidator personally.
Miscellaneous Provisions 54G. Liquidator to oxerclse certain powers subject to sanction.—
(1) The liquidator may— (a) with the sanction of the Court, when the company is
being wound up by or subject to the supervision of the Court; and
274 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(b) with the 'sanction of a special resolution of the company, in the case of a voluntary winding up,—
(t) pay any classes of creditors in full;
(it) make any compromise or arrangement with credi- tors or persons claiming to be creditors, or having or alleging themselves to have any claim, present or .future, certain or contingent, ascertained or sounding only in damages, against the company, or whereby the company may be rendered liable; or
(m) comprornlse any call or liability to call, debt, ana liability capable ot resulting in a debt, and any claim, present or iuture, certain or contingent, ascertained or sounding only in damages, subsisting or alleged to subsist between the company and a contributory or alleged contributory or other debtor or person apprehending liability to the company, and all questions in any way relating to or affecting thf assets or liabilities or the winding up of the company, on such terms as may be agreed, and take any security tor the dis- charge of any such call, debt, liability or claim, and give a complete discharge in respect thereof.
(2) In the case of a voluntary winding up, the exercise by the liquidator of the powers conferred by sub-section (1) shall be subject to the control of the Court.
(3) Any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of any such power.
547. Notification that a company is in liquidation.— (1) Where a company is being wound up, whether by or under the supervision of the court or voluntarily, every invoice, order for goods or busi- ness letter issued by or on behalf of the company or a liquidator of the company, or a receiver or manager of the property of the comoany. being a document on or in which the name of the com- pany appears, shall contain a statement that the company is being wound up.
(2) If default is made in complying with this section, the com- pany, and every one o± the following persons who wilfully authorises or permits the default, namely, any officer ot the company, any liqui- dator oi the company and any receiver or manager, shall be punish- able with fine which may extend to five hundred rupees
548. Books and papers of company to be evidence.—Where a com- pany is being wound up, all books and papers of the company and of the liquidators shall, as between the contubutories of the com- pany, be prima facie evidence of the truth of all matters purporting to be therein recorded.
549. Inspection of books and papers by creditors and contribu- tories.—(I) At any time after the making of an order for the winding up of a company by or subject to the supervision of the Court, any creditor or contributory of the company may, if the Central Govern- ment, by rules prescribed so permit and in accordance with and sub- ject to such rules but not further or otherwise, inspect the books and papers of the company.
S E C . 1 ] • T H E G A Z E T T E O F I N D I A E X T R A O R D I N A R Y 2 7 5
(2) Nothing in sub-section (1) shall be taken as excluding or res- tricting any rights conferred by any law for the time being in force—
(a) on the Central or a State Government; or (b) on any authority or officer thereof; or (c) op any person acting under the authority of any such
Government or of any such authority or officer. 550. Disposal of books and papers of company.—(I) When the
affairs of a company have been completely wound up and it is about to be dissolved, its books and papers end those of the liquidator may be disposed of as follows, that is to say:—
(ai m the case of a winding up by or subject to the super- vision of the Court, in such manner as the Court directs;
(b) in the case of a members' voluntary winding up, in such manner as the company by special resolution directs; and
(c) in the case of a creditors' voluntary winding up, in such manner as the committee of inspection or, if there is no such committee, as the creditors of the company may direct.
(2) After the expiry of five,years from the dissolution of the company, no responsibility shall rest on the company, the liquida- tor, or any person to whom the custody of the books and papers has been committed, by reason of any book or paper not being forthcom- ing to any person claiming to be interested therein.
(3) The Central Government may, by rules,— (a) prevent for such period (not exceeding five years from
the dissolution of the company) as the Central Government thinks proper, the destruction of the books and papers of a company which has been wound up and of its liquidator; and
(b) enable any creditor or contributory of the company to make representations to the Central Government in respect of the matters specified in clause (a) and to appeal to the Court from any direction which may be given by the Central Govern- ment in the matter,
(4) If any person acts in contravention of any such rules or of any direction of the Central Government thereunder, he shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to five thousand rupees, or with both.
551. Information as to pending liquidations.—(1) If the winding up of a company is not concluded within one year after its com- mencement, the liquidator shall, within one month of the expiry Df such year and thereafter until the winding up is concluded, at Intervals of not more than one year or at such shorter intervals, il any, as may be prescribed, file a statement in the prescribed form and containing the prescribed particulars, with respect to the proceedings In, and position of, the liquidation—
(a) in the case of a winding up by or subject to the super- vision of the Court, in Court; and
(b) in the case of a voluntary winding up, with the Registrar,
276 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(2) When the statement is filed in Court under clause (a) of sub- section (i), a copy shall simultaneously be filed' with the Registrar <md shall be kept by him along with the other records of the company.
(3) Any person stating himself in writing to be a creditor or contributory of the company shall be entitled, by himself or by bis agent, at all reasonable times, on payment of the prescribed fee, to inspect the statement, and to receive a copy thereof or an extract therefrom.
(4) Any person untruthfully stating himself to be a creditor or contributory for the above purpose shall be deemed to be guilty of an offence under section 182 of the Indian Penal Code (Act XLV of 1860), and shall, on the application of the liquidator, be punishable accordingly.
(5) If a liquidator fails to comply with any of requirements of this section, he shall be punishable with fine which may extend to five hundred rupees for every day during which the failure continues.
552. Official Liquidator to make payments Into the public account of India.—Every Official Liquidator shall, in such manner and at such times as may be prescribed, pay the moneys received by him as liquidator of any company, into the public account of India in the Reserve Bank of India.
553. Voluntary liquidator to make payments into Scheduled Bank.—(1) Every liquidator of a company, not being an Official Liquidator, shall, in such manner and at such times as may be pres- cribed, pay the moneys received by him in his capacity as such into a Scheduled Bank to the credit of a special banking account opened by him in that behalf, and called the Liquidation Account of
Company Limited" Company Private Limited": Company"
Provided that if the Court is satisfied that for the purpose of carrying on the business of the company or of obtaining advances or for any other reason, it is to the advantage of the creditors or contributories that the liquidator should have an account with any other bank, the Court may authorise the liquidator to make his payments into or out of such other bank as the Court may select; and thereupon those payments shall be made in the prescribed manner and at the prescribed times into or out of such other bank.
(2) If any such liquidator at any time retains for more than ten days a sum exceeding five hundred rupees or such other amount as the Court may, on the application of the liquidator, authorise him to retain, then, unless he explains the retention to the satisfaction of the Court, he shall— 4
(a) pay interest on the amount so retained in excess, at the rate of twelve per cent, per annum and also pay such penalty as may be determined by the Registrar;
(b) be liable to pay any expenses occasioned by reason of his default; and
(c) also be liable to have all or such part of his remunera- tion as the Court may think just disallowed, and to be removed from bis office by the Court.
SKC. 1] ' tHlfi 6A2BtTfi 6tf littiA fiXTftAORfilMAftV 477
554. Liquidator not to pay moneys into private banking ac- count.—Neifther the Official Liquidator nor any other liquidator of a company] shall pay any moneys received by him in his capacity as such into any private banking account.
555. Unclaimed dividends and undistributed assets to be paid into the Companies Liquidation Account.—(1) Where any company is being wound up, if the liquidator has in his hands or under his control any money representing unclaimed dividends payable to Any creditor or undistributed assets refundable to any contributory, which have remained unclaimed or undistributed tor six months after the date on which they became payable or refundable, the liquidator shall forthwith pay the said money into the public account of India in the Reserve Bank of Ind^a.
(2) The liquidator shall, on the dissolution of the company, similar- ly pay into the said account any money representing unclaimed dividends or undistributed assets in his hands at the date of dis- solution.
(3) The liquidator shall, when making any payment referred to in sub-sections (1) and (2), furnish to such officer as the Central Govern- ment may appoint in this behalf, a statement in the prescribed form, setting forth, in respect of all sums included in such payment, the nature of the sums, the names and last known addresses of the per- sons entitled to participate therein, the amount to which each is en- titled and the nature of his claim thereto, and such other particulars as may be prescribed.
(4) The liquidator shall be entitled to a receipt from the Reserve Bank of India for any money paid to it under sub-sections (1) and (2); and such receipt shall be an effectual discharge of the liquidator m respect thereof.
(5) Where the company is being wound up by the Court, the liquidator shall make the payments referred to in sub-sections (1) and (2) by transfer from the account referred to in section 552.
(6) Where the company is being wound up voluntarily or subject to the supervision of the Court, the liquidator shall, when filing a statement in pursuance of sub-section (1) of section 551, indicate the sum of money which is payable to the Reserve Bank of India under sub-sections (I) and (2) of this section which he has had in his hands or under his control during the six months preceding the date bo which the said statement is brought down, and shall, within fourteen days of the date of filing the said statement, pay that sum into the Companies Liquidation Account.
(7) (a) Any person claiming to be entitled to any money paid into the Companies Liquidation Account (whether paid in pursuance of this section or under the provisions of any previous companies law) may apply to the Court for an order for payment thereof, and the Court, if satisfied that the person claiming Is entitled, may make an order for the payment to that person of the sum due:
Provided that before making such an order, the Court shall cause a notice to be served on such officer as the Central Govern- ment may appoint in this behalf, calling on the officer to show oause within one month from the date of the service of the notice why the order should not be made.
"£%8 'Wf&GAZtl&CE OF'INDTA EXTRAORDINARY [Pm* II
(b) Any person claiming as aforesaid may, instead of apply- ing to the Court, apply to the Central Government for an order for payment of the money claimed; and the Central Government may, if satisfied whether on a certificate by the liquidator or the Official Liquidator or otherwise, that such person is entitled to the whole or any part of the money claimed and that no application made in pur- suance of clause (a) is pending in the Court, make an order for the payment to that person of the sum due to him, after taking such security from him as it may think fit.
{8) Any money paid into the Companies Liquidation Account in pursuance of this section, which remains unclaimed thereafter for a period of fifteen years, shall be transferred to the general revenue ac- count of the Central Government; but a claim to any money so trans- ferred may be preferred under sub-section (7) and shall be dealt with as if such transfer had not been made, the order, if any, for payment on the claim being treated as an order for refund of revenue.
(9) Any liquidator retaining any money which should have been paid by him into the Companies Liquidation Account under this section shall—
(o) pay interest on the amount retained at the rate of twelve per cent, per annum, and also pay such penalty as may be determined by the Registrar; '
(b) be liable to pay any expenses occasioned by reason of his default; and
(c) where the winding up is by or Under the supervision of the Court, also be liable to have all or suGh part of his remunera- tion as the Court may think just to be disallowed, and to be re- moved from his office by the Court.
556. Enforcement of duty of liquidator to make returns etc.—(i) If any liquidator who has made any default in filing, delivering or making any return, account or other document, or in giving1 any notice which he is by law required to file, deliver, make or give, fails to make good the default within fourteen days after the service oh him of a notice requiring him to do so, the Court may, on an ap- plication made to the Court by any contributory Or creditor of the company or by the Registrar, make an order directing the liquidator +n make good the default within such time as may be specified in the order.
(2) Any such order may provide that all costs of and incidental to the application shall be borne by the liquidator.
(3) Nothing in this section shall be taken to prejudice the opera- tion of any enactment imposing penalties on a liquidator in respect of any such default as aforesaid.
Supplementary Powers of Court
557. Meetings to ascertain wishes of creditors or contriimtories.— (X) In all matters relating to the winding up of a company, the Court roay^
(cr) have regard to the wishes of creditors or eOntributories oi the company, as proved to It by any sufficient evidence;
$w. 1} THE GAZETTE OP INDIA EXtftA,0ROlNA$.V £79
(b) if it thinks fit for the purpose of ascertaining''those wishes, direct meetings of the creditors or contributors to be called, held and conducted in such manner as the Court directs; and
(c) appoint a person to act as chairman of any such meeting and to report the result thereof to the Court.
(2) When ascertaining the wishes of creditors, regard shall be had to the value oi each creditor's debt.
(3) When ascertaining the wishes of contributories, regard shall be had to the number «£ votes which may be cast by each con- tributory.
558. Court or person before whom affidavit may be sworn.—(2) Any affidavit required to be sworn under the provisions, or for the purposes, of this Part may be sworn—
(a) in India, before any Court, Judge or person lawfully authorised to take and receive affidavits; and
(b) in any other country, either before any Court, Judge or person lawfully authorised to take and receive affidavits in that country or before an Indian Consul or Vice-Consul.
Explanation.—In this sub-section, "India" includes the State of Jammu and Kashmir.
(2) All Courts, Judges, Justices, Commissioners and persons act- ing judicially in India shall take judicial notice of the seal, stamp or signature, as the case may be, of any such Court, Judge, person, Consul or Vice-Consul, attached, appended or subscribed to any such affidavit or to any other document to be used for the purposes of this Part.1
Provisions as to Dissolution
559. Power of Court to declare dissolution of company void.— (1) Where a company has been dissolved, whether in pursuance of this iPart or of section 394 or otherwise, the Court may at any time within two years of the date of the dissolution, on application by the liquidator of the company or by any other person who appears to the Court to be interested, make an order, upon such terms as the Court thinks fit, declaring the dissolution to have been void; and thereupon such proceedings may be taken as might have been taken if the company had not been dissolved.
(2) It shall be the duty of the person on whose application the order was made, within twenty-one days after the making of the order or such further time as the Court may allow, to file a certified copy of the order with the Registrar -who shall register the same; and if such person fails so to do, he shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
560. Power of Registrar to strike defunct company off register.— (1) Where the Registrar has reasonable cause to believe that a com- pany is not carrying on business or in operation, he shall send to the company by p<?st a letter inquiring whether the company is carrying on r business or in operation.
280 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(2) If the Registrar does not within one month of sending the letter receive any answer thereto, he shall, within fourteen days after the expiry of the month, send to the company by post a registered letter referring to the first letter, and stating that no answer thereto has been received and that, if an answer is not received to the second letter within one month from the date thereof, a notice will be pub- lished in the Official Gazette with a view to striking the name of the company off the register.
(3) If the Registrar either receives an answer from the company to the effect that it is not carrying on business or in operation, or does not within one month after sending the second letter receive any answer, he may publish in the Official Gazette, and send to the company by registered post, a notice that, at the expiration of three months from the date of that notice, the name of the company men- tioned therein will, unless cause is shown to the contrary, be struck off the register and the company will be dissolved.
(4) If, in any case where a company is being wound up, the Registrar has reasonable cause to believe either that no liquidator is acting, or that the affairs of the company have been completely wound up, and any returns required to be made by the liquidator have not been made for a period of six consecutive months, the Registrar shall publish in the Official Gazette and send to the com- pany or the liquidator, if any, a like notice as is provided in sub- section (3).
(5) At the expiry of the time mentioned in the notice referred to in sub-section (3) or (4), the Registrar may, unless cause to the con- trary is previously shown by the company, strike its name off the register, and shall publish notice thereof in the Official Gazette; and on the publication in the Official Gazette of this notice, the company shall stand dissolved:
Provided that— (a) the liability, if any, of every director, the managing agent,
secretaries and treasurers, manager or other officer who was exercising any power of management, and of every member of the company, shall continue and may be enforced as if the company had not been dissolved; and
(b) nothing in this sub-section shall affect the power of the Court to wind up a company the name of which has been struck off the register. (6) If a company, or any member or creditor thereof, feels aggriev-
ed by the company having been struck off the register, the Court, on an application made by the company, member or creditor before the expiry of twenty years from the publication in the Official Gazette of the notice aforesaid, may, if satisfied that the company was, at the time of the striking off, carrying on business or in operation or other- wise that it is just that the company be restored to the register, order the name of the company to be restored to the register; and the Court may, by the order, give such directions and make such provi- sions as seem just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off.
(7) Upon a certified copy of the order under sub-section (6) being delivered to the Registrar for registration, the company shall be
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINAHY 281
deemed to have continued in existence as if its name had not been struck off.
(8) A letter or notice to be sent under this section to a company may be addressed to the company at its registered office, or if no office has been registered, to the care of some director, the managing agent, secretaries and treasurers, manager or other officer of the company, or if there is no director, managing agent, secretaries and treasurers, manager or officer of the company whose name and address are known to the Registrar, may be sent to each of the persons who subscribed the memorandum, addressed to him at the address mentioned in the memorandum.
(9) A notice to be sent under this section to a liquidator may be addressed to the liquidator at his last known place of business.
PART Vin Application 0/ Act to companies formed or registered under previous
companies laws 561. Application of Act to companies formed and registered under
previous companies laws.—This Act shall apply to existing companies as follows:—
(a) in the case of a limited company other than a company limited by guarantee, this Act shall apply in the same manner as if 1 the company had been formed and registered under this Act as a company limited by shares;
(b) in the case of a company limited by guarantee, this Act shall applv in the same manner as if the company had been formed and registered under this Act as a company limited b> guarantee; and
(c) in the case of a company other than a limited company, this Act shall apply in the same manner as if the company had been formed and registered under this Act as an unlimited company:
Provided that— (i) nothing in Table A in Schedule I shall apply to a company
formed and registered under Act XIX of 1857 and Act VII of 1860, or either of them, or under the Indian Companies Act, 1866 (X of 1866), or the Indian Companies Act, 1882 (VI of 1882);
(ii) reference, express or implied, to the date of registration shall be construed as a reference to the date at which the com-
pany was registered under the previous companies law concerned.
562. Application of Act to companies registered but not formed under previous companies laws.—This Act shall apply to every company registered but not formed under any previous companies law in the same manner as it is in Part IX of this Act declared to apply to companies registered but not formed under this Act:
Provided that reference, express or implied to the date of regis- tration shall be construed as a reference to tne date at which the company was registered under the previous companies law concerned.
563. Application of Act to unlimited companies re-registered under previous companies laws.—This Act shall apply to every un- limited company registered as a limited company 1n pursuance of
283 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
any previous companies law, in the same manner as it applies to an unlimited company registered in pursuance of this Act as a limited company:
Provided that reference, express or implied,, to the date of regis- tration shall be construed as a reference to the date at which the company was registered as a limited company under the previous companies law concerned.
564. Mode of transferring shares in the case of companies regis- tered under Acts XIXof 1857 andVIIof 1860.—A company registered under Act XIX of 1857and Act VII of 1860or either of them may cause its shares to be transferred in the manner hitherto in use, or in such other manner as the company may direct.
PART DC COMPANIES AUTHORISED TO REGISTER UNDER THIS ACT
565. Companies capable of being registered.—(1) With the ex- ceptions and subject to the provisions contained in this section,—
(a) any company consisting of seven or more members, which was in existence on the first day of May, 1882,including any company registered under Act No. XIX of 1857 and Act No. VII of 1860 or either of them or under any laws or law in force in a Part B State, corresponding to those Acts or either of them; and
(b) any company formed after the date aforesaid, whether before or after the commencement of this Act, in pursuance of any Act of Parliament other than this Act or of any other Indian law (including a law in force in a Part B State), or of any Act of Parliament of the United Kingdom or Letters Patent in force in India, or being otherwise duly constituted according to law, and consisting of seven or more members;
may at any time register under this Act as an unlimited company, or as a company limited by shares, or as a company limited by guarantee; and the registration shall not be invalid by reason only that It has taken place with a view to the company's being wound up:
Provided that— (i) a company registered under the Indian Companies Act,
1882 (VI of 1882), or under the Indian Companies Act, 1913 (VII of 1913), shall not register in pursuance of this section;
(ii) a company having the liability of its members limited by any Act of Parliament other than this Act or by any other Indian law (including a law in force in a Part B State), or by any Act of Parliament of the United Kingdom or Letters Patent in force in India, and not being a joint stock company as defined in section 566,shall not register in pursuance of this section;
(Hi) a company having the liability of its members limited by any Act of Parliament other than this Act or by any other Indian law (including a law in force in a Part B State), orany Act of Parliament of the United Kingdom or Letters Patent tn force in India, shall not register in pursuance of this section as an unlimited company or as a company limited by guarantee;
SHC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 283
(to) a company that is not a joint stock company as denned in section 566 shall not register in pursuance of this section as a company limited by shares;
(p) a company shall not register in pursuance of this section without the assent of a majority of such of its members as are present in person, or where proxies are allowed, by proxy, at a general meeting summoned for the purpose;
(vi) where a company not having the liability of its mem- bers limited by any Act of Parliament or any other Indian law (including a law in force in a Part B State) or by any Act of Parliament of the United Kingdom or Letters Patent in force in India, is about to register as a limited company, the majority required to assent as aforesaid shall consist of not less than three-fourths of the members present in person, or where proxies are allowed, by proxy, at the meeting;
(vii) where a company is about to register as a company limited by guarantee, the assent to its being so registered shal? be accompanied by a resolution declaring that each member undertakes to contribute to the assets of the company, in the event of its being wound up while he is a member, or within one year after he ceases to be a member, for payment of the debts and liabilities of the company or of such debts and liabilities as may have been contracted before he ceases to be a member, and of the costs, charges and expenses of winding up, and for the adjustment of the rights of the contributories among themselves, such amount as may be required, not exceed- ing a specified amount. (2) In computing any majority required for the purposes oi
eub-section (1) when a poll is demanded, regard shall be had to the number of votes to which each member is entitled according to the regulations of the company.
(3) Nothing in this section shall be deemed to apply to any company the registered office whereof at the commencement of this Act Is in Burma, Aden or Pakistan, or in the State of Jammu and Kashmir.
566. Definition of "joint-stock company".—(1) For the purposes of this Part, so far as it relates to the registration of companies as companies limited by shares, a joint-stock company means a com- pany having a permanent paid up or nominal share capital of fixed amount divided into shares, also of fixed amount, or held and transferable as stock, or divided and held partly in the one way and partly in the other, and formed on the principle of having for Its members the holders of those shares or that stock, and no other persons.
(2) Such a company, when registered with limited liability under this Act, shall be deemed to be a company limited by shares.
567. Requirements for registration of joint-stock companies.— Before the registration In pursuance of this Part of a joint-stock company, there shall be delivered to the Registrar the following documents: —
(a) a list showing the names, addresses and occupations of all parsons who on a day named in the list, not being more than
284 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
six clear days before the day of registration, were members of the company, with the addition of the shares or stock held by them respectively, distinguishing, in cases where the shares are numbered, each share by its number;
(b) a copy of any Act of Parliament or other Indian law, Act of Parliament of the United Kingdom, Royal Charter, Letters Patent, deed of settlement, deed of partnership or other in- strument constituting or regulating the company; and
(c) if the company is intended to be registered as a l imi t s company, a statement specifying >the following particulars:—
(i) the nominal share capital of the company and th* number of shares into which it is divided or the amour.' of stock of which it consists;
(ii) the number of shares taken and the amount paid on each share;
(Hi) the name of the company, with the addition of the word "Limited" or "Private Limited" as the case may re- quire, as the last word or words thereof; and
(iu) in the case of a company intended to be register- ed as a company limited by guarantee, a copy of the resolution declaring the amount of the guarantee.
568. Requirements for registration of companies not being joint-stock companies.—Before the registration in pursuance of this Part of any company not being a joint-stock company, there shall be delivered to the Registrar the following documents:—
(a) a list showing the names, addresses and occupations of the directors, the managing agent, if any, the secretaries and treasurers, if any, and the manager, if any, of the company;
(b) a copy of any Act of Parliament or other Indian law Act of Parliament of the United Kingdom, Letters Patent, deed of settlement, deed of partnership or other instrument consti- tuting or regulating the company; and
(c) in the case Of a company intended to be registered 85 a company limited by guarantee, a copy of the resolution d? claring the amount of the guarantee.
569. Authentication of statements of existing companies.—The lists of members and directors and any other particulars relating to the company required to be delivered to the Registrar shall be duly verified by the declaration of any two or more directors or otbei principal officers of the company.
570. Power of Registrar to require evidence as to nature of company.—The Registrar may require such evidence as he thinks necessary for the purpose of satisfying himself whether any com- pany proposing to be registered, is. or is not a joint-stock company as denned in section 566.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 285
571. Notice to customers on registration of banking company with limited liability.—(2) Where a banking company which was in existence on the first day of May, 1882, proposes to register as a limited company under this Part, it shall, at least thirty days before so registering, give notice of its intention so to register, to every person who has a banking account with the company, either by delivery of the notice to him, or by posting it to him at, or deliver- ing it at, his last known address.
(2) If the banking company omits to give the notice required by sub-section (2), then, as between the company and the person for the time being interested in the account in respect of which the notice ought to have been given, and so far as respects the account down to the time at which notice is given, but not further or otherwise, the certificate of registration with limited liability shall have no operation.
572. Change of name for purposes of registration.—Where the name of a company seeking registration under this Part is one which in the opinion of the Central Government is undesirable, the company may, with the approval of the Central Government signified in writing, change its name with effect from the date of its registration under this Part:
Provided that the like assent of the members of the company shall be required to the change of name as is required by section 565 to the registration of the company under this Part.
573. Addition of "Limited" or "Private Limited" to name.—When a company registers in pursuance of this Part with limited liability, the word "Limited" or the words "Private Limited", as the case may be, shall form, and be registered as, the last word or words of its name:
Provided that this section shall not be deemed to exclude the operation of section 25.
574. Certificate of registration of existing companies.—On com- pliance with the requirements of this Part with respect to registra- tion, and on payment of such fees, if any, as are payable under Schedule X, the Registrar shall certify under his hand that the com- pany applying for registration is incorporated as a company under this Act, and in the case of a limited company that it is limited and thereupon the company shall be so incorporated.
575. Vesting of property on registration.—All property, movable and immovable (including actionable claims), belonging to or vested ih a company at the-date of its registration in pursuance of this Part, shall, on such registration, pass to and vest in the com- pany as incorporated under this Act for all the estate and interest of the company therein.
576. Saving for existing liabilities.—The registration of a com- pany in pursuance of this Part shall not affect its rights or liabllitlei in respect of any debt or obligation incurred, or any contract entered into, by, to. with, or on behalf of, the company before registration.
286 THE GAZETTE OF INDIA EXTRAORDINABY [PART II
577. Continuation of pending legal proceedings.—All suits and other legal proceedings taken by or against the company, or an> public officer or member thereof, which are pending at the time of the registration of a company in pursuance of this Part, may be continued in the same manner as if the registration had not taken place:
Provided that execution shall not issue against the property or person of any individual member of the company on any decree or order obtained in any such suit or proceeding; but, in the event of the property of the company being insufficient to satisfy the decree or order, an order may be obtained for winding up the company.
578. Effect of registration under Part.—(1) When a company is registered in pursuance of this Part, sub-sections (2) to (7) shaU apply.
(2) All provisions contained In any Act of Parliament or other [ndian law, or other instrument constituting or regulating the company, including, in the case of a company registered as a com- pany limited by guarantee, the resolution declaring the amount of the guarantee, shall be deemed to be conditions and regulations of the company, in the same manner and with the same incidents as U so much thereof as would, if the company had been formed under this Act, have been required to be inserted in the memorandum, were contained in a registered memorandum, and the residue thereof were contained in registered articles.
(3) All the provisions of this Act shall apply to the company and the members, contributories and creditors thereof, in the same manner in all respects as if it had been formed under this Act, subject as follows: —
(a) Table A in Schedule I shall not apply unless and except in so far as it is adopted by special resolution;
(b) the provisions of this Act relating to the numbering ol shares shall not apply to any joint-stock company whose share* are not numbered;
(c) subject to the provisions of this section, the company shall not have power to alter any provision contained in any Act of Parliament or other Indian law relating to the company;
(d) subject to the provisions of this section, the company shall not have power, without the sanction of the Central Government, to alter any provision contained in any Act of Parliament of the United Kingdom, Royal Charter or Letters Patent, relating to the company;
fe) the company shall not have power xo alter any provision contained in any Act of Parliament or other Indian law or in any Act of Parliament of the United Kingdom, Royal Charter or Letters Patent, with respect to the objects of the company;
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 287
l (/) in the event of the company being wound up, every person shall be a contributory, In respect of the debts and liabilities of the company contracted before registration, who Is liable to pay or contribute to the payment of any debt or liability of the company contracted before registration, or to pay or contribute to the payment of any sum for the adjust- ment of the rights of the members among themselves in respect of any such debt or liability, or to pay or contribute to the payment of the costs, charges and expenses of winding up the company, so far as relates to such debts or liabilities as afore- said;
(g) in the event of the company being wound up, every contributory shall be liable to contribute to the assets of the company, in the course of the winding up, all sums due from him in respect of any such liability as aforesaid; and in the event of the death or insolvency of any contributory, the pro- visions of this Act with respect to the legal representatives of deceased contributories, or with respect to the assignees of in- solvent contributories, as the case may be, shall apply.
(4) The provisions of this Act with respect to—
(a) the registration of an unlimited as a limited company;
(b) the powers of an unlimited company on registration as a limited company, to increase the nominal amount of its share capital and to provide that a portion of its share capital shall not be capable of being called up except in the event of winding up;
(c) the power of a limited company to determine that a portion of its share capital shall not be capable of being called up I except in the event of winding up;
shall apply, notwithstanding any provisions contained in any Act of Parliament or other Indian law, or other instrument constituting or regulating the company.
(5) Nothing in this section shall authorise the company to alter any such provisions contained in any instrument constituting or regulating the company as would, If the company had originally been formed under this Act, have been required to be contained in the memorandum and are not authorised to be altered by this Act.
(6) None of the provisions of this Act (apart from those of section 404) shall derogate from any power of altering its constitution or regulations which may be vested in the company, by virtue of any Act of 'Parliament or other Indian law, or other instrument consti- tuting or regulating the company.
(7) In this section, the expression "instrument" Mcludes deed of settlement, deed of partnership, Act of Parliament of the United Kingdom, Royal Charter and Letters Patent.
288 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
579. Power to substitute memorandum and articles for deed of settlement.—(X) Subject to the provisions of this section, a com- pany registered in pursuance of this Part may, by special resolution, alter the form of its constitution by substituting a memorandum and articles for a deed of settlement.
(2) The provisions of sections 17 to 19 with respect to an altera- tion of the objects of a company shall, so far as applicable, apply to any alteration under this section, with the following modifica- tions:—
(a) there shall be substituted for the printed copy of the altered memorandum required to be filed with the Registrar a printed copy of the substituted memorandum and articles; and
(fa) on the registration of the alteration being certified by the Registrar, the substituted memorandum and articles shall apply to tht company in the same manner as if it were a com- pany registered under this Act with that memorandum and those articles, and the company's deed of settlement shall cease to apply to the company,
(3) An alteration under this section may be made either with or without any alteration of the objects of the company under this Act.
(4) In this section, the expression "deed of settlement" includes any deed of partnership, Act of Parliament of the United Kingdom, Royal Charter or Letters Patent, or other instrument constituting or regulating the company, not being an Act of Parliament or other Indian law.
580. Power of Court to stay or restrain proceedings.—The pro- visions of this Act with respect to staying and restraining suits and other legal proceedings against a company at any time after the presentation of a petition for winding up and before the making of a winding up order, shall, in the case of a company registered in pursuance of this Part, where the application to stay or restrain is by a creditor, extend to suits and other legal proceedings against any contributory of the company.
581. Suits stayed on winding up order.—Where an order has been made for winding up, or a provisional liquidator has been appointed for, a company registered in pursuance of this Part, no suit or other legal proceeding shall be proceeded with or commenced against the Company or any contributory of the company in respect of any debt of the company, except by leave of the Court and except on such terms as the Court may impose.
PART X WINDING UP OF UNREGISTERED COMPANIES
582. Meaning of "unregistered company".—For the purposes of this Part, the expression "unregistered company"—
(a) shall not include— (i) a railway company incorporated by any Act of
Parliament or other Indian law or any Act of Parliament of the United Kingdom;
SEC 1] THE GAZETTE OF INDIA EXTRAORDINARY 289
(ii) a company registered under this Act; or (Hi) a company registered under any previous com-
panies law and not being a company the registered office whereof was in Burma, Aden or Pakistan Immediately before the separation of that country from India or in the State of Jammu and Kashmir immediately before the 26th January, 1950; and (b) save as aforesaid, shall include any partnership, as-
sociation or company consisting of more than seven members.
583. Winding up of unregistered companies.—(1) Subject to the provisions of this Part, any unregistered company may be wound up under this Act, and all the provisions of this Act with respect to winding up shall apply to an unregistered company, with the exceptions and additions mentioned in sub-sections (2) to (5).
(2) For the purpose of determining the Court having jurisdic- tion in the matter of the winding up, an unregistered company shall be deemed to be registered in the State where its principal place of business is situate or, if it has a principal place of business situate in more than one State, then, in each State where it has a principal place of business; and the principal place of business situate in that State in which proceedings are being instituted shall, for all the purposes of the winding up, be deemed to be the regis- tered office of the company.
(3) No unregistered company shall be wound up under this Act voluntarily or subject to the supervision of the Court.
(4) The circumstances in which an unregistered company may be wound up are as follows: —
(a) if the company is dissjlved, or has ceased to carry on business, or is carrying on business only for the purpose of wind- ing up its affairs;
(b) if the company is unable to pay its debts;
(c) if the Court is of opinion that it is just and equitable that the company should be wound up.
(5) An unregistered company shall, for the purposes of this Act, be deemed to be unable to pay its debts—
(a) if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding five hundred rupees then due, has served on the company, by leaving at its principal place of business, or by delivering to the seceretary, or some director, managing agent, secretaries and treasurers, manager or principal officer of the company, or by otherwise serving in such manner as the Court may approve or direct, a demand under his hand requiring the company to pay the sum so due, and the company has, for three weeks after the service of the demand, neglected to pay the sum or to secure or com- pound for it to the satisfaction of the creditor;
290 THE GAZETTE OF INDIA EXTRAORDINARY [PABT II
(b) if any suit or other legal proceeding has been institut- ed against any member for any debt or demand due, or claimed to be due, from the company, or from him in his character of member, and notice in writing of the institution of the suit or other legal proceeding having been served on the company by leaving the same at its principal place of business or by de- livering it to the secretary, or some director, managing agent. secretaries and treasurers, manager or principal officer of the company or by otherwise serving the same in such manner as the Court may approve or direct, the company has not, within ten days after service of the notice,—
(i) paid, secured or compounded for the debt or de- mand; or
(ii) procured the suit or other legal proceeding to be stayed; or
(in) indemnified the defendant to his satisfaction against the suit or other legal proceeding, and against all costs, damages and expenses to be incurred by him by reason of the same;
(c) if execution or other process issued on a decree or order of any Court in favour of a creditor against the company, or any member thereof as such, or any person authorised to be sued as nominal defendant on behalf of the company, Is re- turned unsatisfied in whole or in part;
(d) if it is otherwise proved to the satisfaction of the Court that the company is unable to pay its debts.
584. Power to wind up foreign companies, although dissolved. Where a body corporate incorporated outside India which has been carrying on business in India, ceases to carry on business in India, it may be wound up as an unregistered company under this Part, notwithstanding that the body corporate has been dissolved or other- wise ceased to exist as such under or by virtue of the laws of the country under which it was incorporated.
585. Contributories in winding up of unregistered company. (i) fn the event of an unregistered company being wound up, every person shall be deemed to be a contributory, who is liable to pay. or contribute to the payment of,—
(a) any debt or liability of the company; or
(b) any sum for the adjustment of the rights erf the mem- bers among themselves; or
(c) the costs, charges and expenses of winding up the com- pany.
(2) Every contributory shall be liable to contribute to the assets of the company all sums due from him in respect of any liability to pay or contribute as aforesaid.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 291
\3) In the event of the death or insolvency of any contributory, the provisions of this Act wilh respect to the legal representatives of deceased contributories, or with respect to the assignees of insolvent contributories, as the case may be, shall apply.
586. Power to stay or restrain proceedings.—The provisions of this Act with respect to staying and restraining suits and legal pro- ceedings against a company at any time after the presentation of a petition for winding up and before the making of a winding up order, shall, in the case of an unregistered company, where the application to stay or restrain is by a creditor, extend to suits and legal proceed- ings against any contributory of the company.
587. Suits etc. stayed on winding up order.—Where an order has Oeen made for winding up an unregistered company, no suit or other legal proceeding shall be proceeded with or commenced against any contributory of the company in respect of any debt of the company, except by leave of the Covrt and except on such terms as the Court may impose.
588. Directions as to property in certain cases.—(1) If an un- registered company has no power to sue and be sued In a common name, or if for any reason it appears expedient, the Court may, by the winding up order or by any subsequent order, direct that all or any part of the property, movable or immovable (including action- able claims), belonging to the company or held by trustees on its behalf, shall vest in the Official Liquidator by his official name; and thereupon the property or the part thereof specified in the order shall vest accordingly.
(2) The Official Liquidator may, after giving such Indemnity, if any, as the Court may direct, bring or defend in his official name any suit or legal proceeding relating to that property, or which it is necessary to bring or defend for the purpose of effectually wind- ing up the company and recovering its property.
589. Provisions of Part cumulative.—(1) The provisions of this Part with respect to unregistered companies shall be in addition to, and not in derogation of, any provisions hereinbefore in this Act contained with respect to the winding up of companies by the Court.
(2) The Court or Official Liquidator may exercise any powers or do any act in the case of unregistered companies which might be exercised or done by the Court or Official Liquidator in winding up companies formed and registered under this Act:
Provided that an unregistered company shall not, except in the event of its being wound up, be deemed to be a company under this Act, and then only to the extent provided by this Part.
590. Saving and construction of enactments conferring power to wind upl partnership, association or company in certain cases.— Nothing1 in this Part shall affect the operation of any enactment which provides for any partnership, association or company being wound up, or being wound up as a company or as an unregistered company, under the Indian Companies Act, 1913 (VII of 1913) ol any Act repealed by that Aci:
Provided that references In any such enactment to any provi- sion contained in the Indian Companies Act, 1913 (VII of 1913) or
833 G of I Ext.
292 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
in any Act repealed by that Act shall be read as references to the corresponding provision, if any contained in this Act.
PART XI
COMPANIES INCORPORATED OUTSIDE INDIA
Provisions as to Establishment of Places of Business in India
591. Application of sections 592 to 602 to foreign companies.— Sections 592 to 602, both inclusive, shall apply to all foreign com- panies, that is to say, companies falling under the following two classes, namely:—
(a) companies incorporated outside India which, after the commencement of this Act, establish a place of business within India; and
(b) companies incorporated outside India which have, before the commencement of this Act, established a place of business within India and continue to have an established place of busi- ness within India at the commencement of this Act.
592. Documents, etc. to be delivered to Registrar by foreign com- panies carrying on business in India.—(2) Foreign companies which, after the commencement of this Act, establish a place of business within India shall, within one month of the establishment of the place of business, deliver to the Registrar for registration—
(a) a certified copy of the-charter, statutes, or memorandum and articles, of the company or other instrument constituting or denning the constitution of the company; and, if the instru- ment is not in the English language, a certified translation thereof;
(b) the full address of the registered or principal office of the company;
(c) a list of the directors and secretary of the company, containing the particulars mentioned in sub-section (2);
(d) the name and address or the names and addresses of some one or more persons resident in India, authorised to accept on behalf of the company service of process and any notices or other documents required to be served on the company; and
(e) the full address of the office of the company in India which is to be deemed its principal place of business in India.
(2) The list referred to in clause (c) of sub-section (1) shall con- tain the following particulars, that is to say:—
(a) with respect to each director,—
(i) in the case of an individual, his present name and surname in full, any former name or names and surname or surnames in full, his usual residential address, his nationality, and if that nationality is not the nationality of origin, his nationality of origin, and his business occupation, if any, or if he has no business occupation but holds any other directorship or directorships, particulars of that director- ship or of some one of those directorships; and
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 293
(ti) in the case of a body corporate, its corporate name and registered or principal office; and the full name, address, nationality, and nationality of origin, if different from that nationality, of each of its directors; (b) with respect to the secretary, or where there are joint
secretaries, with respect to each of them— (i) in the case of an individual, his present name and
surname, any former name or names and surname or sur- names, and his usual residential address; and
(ii) in the case of a body corporate, its corporate name and registered or principal office: Provided that, where all the partners in a firm are Joint
secretaries of the company, the name and principal office ot the firm rnay be stated instead of the particulars mentioned in clause (b) <j>f this sub-section-
(3) Clauses (2) and (3) of the Explanation to sub-section (1) of section 303 shall apply for the purpose of the construction of references in sub-section (2) to present and former names and sur- names aa they apply for the purposes of the construction of such references in sub-section (1) of section 303.
(4) Foreign companies, oiher than those mentioned in sub-sec- tion (2), shall, if they have not delivered to the Registrar before the commencement of this Act the documents and particulars specified in sub-section (1) of section 277 of the Indian Companies Act, 1913 (VII of 1913), continue to be subject to the obligation to deliver those documents and particulars in accordance with that Act.
593. Return to be delivered to Registrar by foreign company where documents, etc., altered.—If any alteration is made or occurs In—
(a) the charter, statutes, or memorandum and articles of a foreign company or other instrument constituting or defining the constitution of a foreign company; or
(b) the registered or principal office of a foreign company; or
(c) the directors or secretary of a foreign company or the particulars contained in the list of the directors and secretary; or
1 d) the name or address of any of the persons authorised to accent service on behalf of a foreign company; or
(e) the principal place of business of the company in India; the company shall, within the prescribed time, deliver to the Registrar for registration a return containing the prescribed par- ticulars of the alteration.
594. Accounts of foreign company.—(1) Every foreign company «hall, in every calendar year,—
(a) make out a balance sheet and profit and loss account in such form, containing such particulars and including or having annexed or attached thereto such documents (including, in particular documents relating to every subsidiary of the foreign company) as under the provisions of this Act it would, if it had been a company within the meaning of this Act, have been
294 T H E GAZETTE OF INDIA EXTRAORDINARY [PART II
required to make out and lay before the company in general meeting; and
(fa) deliver three copies of those documents to the Registrar:
Provided that the Central Government may, by notification in the Official Gazette, direct that, in the case of any foreign company or class of foreign company the requirements of clause (a) shall not apply, or shall apply subject to such exceptions and modifications as may be specified in the notification.
(2) If any such document as is mentioned in sub-section (1) is not in the English language, there shall be annexed to it a certified translation thereof.
(5) Every foreign company shall send to the Registrar with the documents required to be delivered to him under sub-section (1), three copies of a list in the prescribed form of all places of business established by the company in India as at the date with reference to which the balance sheet referred to in sub-seciion (I) is made out.
595. Obligation to state name of foreign company, whether limited, and country where Incorporated.—Every foreign company shall—
(a) in every prospectus inviting subscriptions in India for its shares or debentures, state the country in which the company is incorporated;
(b) conspicuously exhibit on the outside of every office or place where it carries on business in India, the name of the com- pany and the country in which it is incorporated, in letters easily legible in English characters, and also in the characters of the language or one of the languages in general use in the locality in which the office or place is situate;
(c) cause the name of the company and of the country in which the company is incorporated, to be stated in legible English characters in all business letters, bill-heads and letter paper, and in all notices, advertisements and other official pub- lications of the company; and
(d) if the liability of the members of the company is limited, cause notice of that fact—
(i) to be stated in every such prospectus as aforesaid and in all business letters, bill-heads, letter paper, notices, advertisements and other official publications of the com- pany, in legible English characters; and
(ii) to be conspicuously exhibited on the outside of every office or place where it carries on business in India, in legible English characters and also in legible characters of the language or one of the languages in general use in the locality in which the office or place is situate.
596. Service on foreign company.—Any process, notice, or other document required to be served on a foreign company shall be deem- ed to be sufficiently served, if addressed to any person whose name has been delivered to the Registrar under the foregoing provisions
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINAHY 295
of this Part and left at, or sent by post to, the address which has bees so delivered:
Provided that—
(a) where any such company makes default in delivering to the Registrar the name and address of a person resident in India who is authorised to accept on behalf of the company service of process, notices or other documents; or
(b) if at any time all the persons whose names and addresses have been so delivered are dead or have ceased so to reside, or refuse to accept service on behalf of the company, or for any reason, cannot be served;
a document may be served on the company by leaving it at, or sending it by post to, any place of business established by the com- pany in India.
597. Office where documents to be delivered.—XI) Any docu- ment which any foreign company is required to deliver to the Registrar shall be delivered to the Registrar having jurisdiction over New Delhi, and references to the Registrar in this Part [except in sub-section (2) ] shall be construed accordingly.
(2) Any such document as is referred to in sub-section (1) shall also be delivered to the Registrar of the State in which the principal place of business of the company is situate.
(3) If any foreign company ceases to have a place of business in India, it shall forthwith give notice of the fact to the Registrar, and as from the date on which notice is so given, the obligation of the company to deliver any document to the Registrar shall cease, pro- vided it has no other place of business in India.
598. Penalties.—If any foreign company fails to comply with any of the foregoing provisions of this Part, the company, and every officer or agent of the company who is in default, shall be punishable with fine which may extend to one thousand rupees, and in the case of a continuing offence, with an additional fine which may extend to one hundred rupees for every day during which the default continues.
599. Company's failure to comply with Part not to affect its liability under contracts etc.—Any failure by a foreign company to comply with any of the foregoing provisions of this Part shall not affect the validity of any contract, dealing or transaction entered. Into by the company or its liability to be sued in respect thereof; but the company shall not be entitled to bring any suit, claim any set-oft', make any counter-claim or institute any legal proceeding in respect of any such contract, dealing or transaction, until it has complied with the provisions of this Part.
600. Registration of charges, appointment of receiver and books of account.—(1) The provisions of Part V (sections 124 to 145), shall apply mutatis mutandis to—
(a) charges on properties in India which are created by a foreign company after the 15th day of January, 1937; and
296 THE GAZETTE OF INDIA EXTHAORDINARY [PART II
(b) charges on property in India which is acquired by any foreign company after the day aforesaid:
Provided that where a charge is created, or the completion of the acquisition of the property takes place, outside India, sub-section (5) of section 125 and the proviso to sub-section (/) of section 127 shall have effect as if the property, wherever situated, were situated out- side India.
(2) The provisions of section 118 shall apply mutatis mutandis to a foreign company.
(3) The provisions of section 209 shall apply to a foreign com- pany to the extent of requiring it to keep at its principal place of business in India the books of account referred to in thai section, with respect to moneys received and expended, sales and purchases made, and assets and liabilities, in the course of or in relation to its business in India.
(4) In applying the sections referred to in sub-sections (1), (2) and (3) to a foreign company as aforesaid, references in those sections to the Registrar shall be deemed to be references to the Registrar having jurisdiction over New Delhi, and references to the registered office of the foreign company shall be deemed to be references to its principal place of business in India.
601. Fees for registration of documents under Part.—There shall be paid to the Registrar for registering any document required by the foregoing provisions of this Part to be registered by him, such fees as may be prescribed.
602. Interpretation of foregoing sections of Part.—For the pur- poses of the foregoing provisions of this Part—
(a) the expression "certified" means certified in the pre- scribed manner to be a true copy or a correct translation;
(b) the expression "director", in relation to a company, includes any person in accordance with whose directions or Instructions the Board of directors of the company is accustomed to act;
(c) the expression "place of business" includes a share trans- fer or share registration office;
(d) the expression "prospectus" has the same meaning as when used in relation to a company incorporated under this Act; and
(e) the expression "secretary" includes any person occupy- ing the position of secretary, by whatever name called.
Prospectuses
603. Dating of prospectus and particulars to be contained there- in.—(1) No person shall issue, circulate or distribute in India any prospectus offering for subscription shares in or debentures of a company incorporated or to be incorporated outside India, whether the company has or has not established, or when formed will or will
SEC. 1J THE GAZETTE OF INDIA EXTRAORDINARY tyy
not establish, a place of business in India, unless the prospectus is dated; and
(a) contains particulars with respect to the following matters:—
(i) the instrument constituting or denning the consti- tution of the company;
(ii) the enactments or provisions having the force of enactments, by or under which the incorporation of the company was effected;
(Hi) an address in India where the said instrument, en- actments, or provision, or copies thereof, and if the same are not in English, a translation thereof certified in the pre- scribed manner, can be inspected;
(iu) the date on which and the country in which the company was incorporated;
(v) whether the company has established a place of business in India, and, if so, the address of its principal office in India; and (b) subject to the provisions of this section, states the
matters specified in Part I of Schedule II and sets out the reports specified in Part II of that Schedule, subject always to the pro- visions contained in Part lit of that Schedule;
Provided that sub-clauses (i), (ii) and (Hi) of clause (a) shall not apply in the case of a prospectus issued more than two years after the date at which the company is entitled to commence business; and in the application of Part I of Schedule II for the purposes of this sub-section, clause 2 thereof shall have effect with the substi- tution, for references to the articles, of references to the constitution of a company,
(2) Any condition requiring or binding an applicant for shares or debentures to waive compliance with any requirement imposed by virtue of clause (a) or (b) of sub-section (1), or purporting to affect him with notice of any contract, document or matter not specifically referred to in the prospectus, shall be void.
(3) No person shall issue to any person in India a form of appli- cation for shares in or debentures of such a company or intended company as Is mentioned in sub-section (1), unless the form is Issued with a prospectus which complies with the provisions of this Part and the issue whereof in India does not contravene the provisions of section 604:
Provided that this sub-section shall not apply if it is shown that the fonjn of application was issued in connection with a bona fide invitation to a person to enter into an underwriting agreement with respect to the shares or debentures.
(4) In the event of non-compliance with or contravention of any of the requirements imposed by clauses (a) and (b) of sub-section (1), a director or other person responsible for the prospectus shall
298 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
not incur any liability by reason oi the non-compliance or contra- vention, if—
(a) as regards any matter not disclosed, he proves that he had no knowledge thereof; pr
(b) he proves that the non-compliance or contravention arose from an honest mistake of fact on his part; or
(c) the non-compliance or contravention was in respect of matters which, in the opinion of the Court dealing with the case, were immaterial, or was otherwise such as ought in the opinion of that Court, having regard to all the circumstances of the case, reasonably to be excused:
Provided that, in the event of failure to include in a prospectus a statement with respect to the matters contained in clause 18 of Schedule II, no director or other person shall incur any liability in respect of the failure, unless it be proved that he had knowledge of the matters not disclosed.
(5) This section— (a) shall not apply to the issue to existing members or
debenture holders of a company of a prospectus or form of application relating to shares in or debentures of the company, whether an applicant for shares or debentures will or will not have the right to renounce in favour of other persons; and
(b) except in so far as it requires a prospectus to be dated, shall not apply to the issue of a prospectus relating to shares or debentures which 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-
out, subject as aforesaid, this section shall apply to a prospectus or form of application whether issued on or with reference to the for- mation of a company or subsequently.
(6) Nothing in this section shall limit or diminish any liability which any person may incur under the general law or under this Act apart from this section.
604. Provisions as to expert's consent and allotment.— (1) No person shall issue, circulate or distribute in India any prospectus offering for subscription shares in or debentures of a company in- corporated or to be incorporated outside India, whether the com- pany has or has not established, or when formed will or will net establish, a place of business in India-
fa) if, where the prospectus includes a statement purport- ing to be made by an expert, he has not given, or has before delivery of the prospectus for registration withdrawn, his written consent to the issue of the prospectus with the statement in- cluded in the form and context in which it is included, or there does not appear in the prospectus a statement that he has given and has not withdrawn his consent as aforesaid; or
(b) If the prospectus does not have the effect, where an application is made in pursuance thereof, of rendering all per- sons concerned bound by all the provisions (other than penal provisions) of sections 72, 73 and 74, so far as applicable.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 299
(2) In this section, the expression "expert" includes an engineer, a valuer, an accountant and any other person whose profession gives authority to a statement made by him; and for the purposes of thm section a statement shall be deemed to be included in a prospectus if it is contained in any report or memorandum appearing on the face thereof or by reference incorporated therein or issued there- with.
605. Registration of prospectus.—No person shall issue, circulate or distribute in India any prospectus offering for subscription share* in or debentures of a company incorporated or to be incorporated outside India, whether the company has or has not established, or when formed will or will not establish, a place of business in India, unless before the issue, circulation or distribution of the prospectus in India, a copy thereof certified by the chairman and two other directors of the company as having been approved by resolu- tion of the managing body has been delivered for registration to the Registrar knd the prospectus states on the face of it that a copy has been so delivered, and there is endorsed on or attached to the copy—
(a) any consent to the issue of the prospectus required bv section 604;
(b) a copy of any contract required by clause 16 of Schedule II to be stated in the prospectus or, in the case of a contract not reduced into writing, a memorandum giving full particulars thereof; and
(q) where the persons making any report required by Part II of Schedule II have made therein, or have, without giving the reasons, indicated therein, any such adjustments as are men- tioned in clause 32 of that Schedule, a written statement signed by those persons setting out the adjustments and giving the reasons therefor. (2) The references in clause (b) of sub-section (1) to the copy of
a contractor required thereby to be endorsed on or attached to a copy of the prospectus shall, in the case of a contract wholly or partly in a language other than English, be taken as references to a copy of a translation of the contract in English or a copy embodying a transla- tion in English of the parts which are not in English, as the case may be, being a translation certified in the prescribed manner to be a correct translation.
606. Penalty for contravention of sections 603, 604 and 605.—Any person who is knowingly responsible—
(a) for the issue, circulation or distribution of a prospectus; or
(b) for the issue of a form of application for shares or debentures;
in contravention of any of the provisions of sections 603, 604 and 605, shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to five thousand rupees, or with both.
607. Civil liability for mis-statements in prospectus.—Section 62 shall extend to every prospectus offering for subscription shares in
3oo THE GAZETTE OF INDIA EXTBAORDINARY [PART II
or debentures of a company Incorporated or to be incorporated out- side India, whether the company has or has not established, or when formed will or will not establish, a place of business in India, with the substitution for references in section 62 to section 60 of this Act, of references to section 604 thereof.
608. Interpretation of provisions as to prospectuses.—(1) Where any document by which any shares in, or debentures of, a company incorporated outside India are offered for sale to the public, would, if the company concerned had been a company within the meaning of this Act, have been deemed by virtue of section 64, to be a prospectus issued by the company, that document shall be deemed, for the pur- poses of this Part, to be a prospectus issued by the company offering such shares or debentures for subscription.
(2) An offer of shares or debentures for subscription or sale to any person whose ordinary business it is to buy or sell shares or debentures, whether as principal or as agent, shall not be deemed to be an offer to the public for the purposes of this Part.
(3) In this Part, the expressions "prospectus", "shares" and "de- bentures" have the same meanings as when used in relation to a company incorporated under this Act.
PART XII
REGISTRATION OFFICES AND OFFICERS AND FEES
609. Registration Offices.—(1) For the purposes of the registration of companies under this Act, there shall be offices at such places as the Central Government thinks fit-
(2) The Central Government may appoint such Registrars, and such Additional, Joint, Deputy and Assistant Registrars as it thinks necessary for the registration of companies under this Act, and may make regulations with respect to their duties.
(3) The salaries of the persons appointed under this section shall be fixed by the Central Government.
(4) The Central Government may direct a seal or seals to be pre- pared for the authentication of documents required for, or connected with, the registration of companies.
(5) Whenever any act is by this Act directed to be done to or by the Registrar, it shall, until the Central Government otherwise directs, be done to or by the existing Registrar of companies or joint- stock companies, or in his absence, to or by such person as the Central Government may for the time being authorise:
Provided that in the event of the Central Government altering the constitution of the existing registry offices or any of them, any such act shall be done to or by such officer and at such place, with reference to the local situation of the registered offices of the com- panies concerned, as the Central Government may appoint.
Stjc. 1] THE GAZETTE OF INDIA EXTRAORDINARY aoi
610. Inspection, production and evidence of documents kept by Registrar.—(1) Any person may—
(a) inspect any documents kept by the Registrar, being documents filed or registered by him in pursuance of this Act, or making a record of any fact required or authorised to be recorded or registered in pursuance of this Act, on payment for each inspection, of a fee of one rupee;
(b) require a certificate of the incorporation of any com- pany, or a copy or extract of any other document or any part of any other document to be certified by the Registrar, on payment of a fee of five, rupees in the case of a certificate of incorporation, and of six anras for every one hundred words or fractional part thereof requt *d to be copied in the case of a certified copy of extract:
Provided that the rights conferred by this sub-section shall be exercisable—
(i) in relation to documents delivered to the Registrar with a prospectus in pursuance of sub-clause (i) of clause (b) of sub- section (2) of s,ection 60, only during the fourteen days begin- ning with the date of publication of the prospectus; and at other times, only with the permission of the Central Government; and
(ii) in relation to documents so delivered in pursuance of clause (b) of sub-section (2) of section 605, only during the lourteen days beginning with the date of the prospectus; and at other times, only with the permission of the Central Govern- ment. (2) No process for compelling the production of any document
kept by the Registrar shall issue from any Court except with the leave of that Court; and any such process, if issued, shall bear thereon a statement that it is issued with the leave of the Court.
(3) A copy of, or extract from, any document kept and registered at any of the offices for the registration of companies under this Act, certified to be a true copy under the hand of the Registrar (whose official position it shall not be necessary to prove), shall, in all legal proceedings, be admissible in evidence as of equal validity with the original document.
(4) Any person untruthfully stating himself in writing for the purposes of clause (ii) of the proviso to sub-section (1), to be a mem- ber or creditor of a company shall be punishable with fine which may extend to five hundred rupees.
611. Fees in Schedule X to be paid.—In respect of the several matters mentioned in Schedule X, there shall, subject to the limita- tions imposed by that Schedule, be paid to the Registrar the several fee^ therein specified:
Provided that no fees shall be charged in respect of the registra- tion in pursuance of Part IX of a company, if it is not registered as a limited company, or if, before its registration as a limited company, the liability of the shareholders was limited by some other Act of Parliament or any other Indian law or by an Act of Parliament of the United Kingdom, Royal Charter or Letters Patent in force in India.
3o2 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
612. Fees, etc. paid to Registrar and other officers to be accounted for to Central Government.—All fees, charges, and other sums paid to any Registrar, any Additional, Joint, Deputy, or Assistant Regis- trar, or any other officer of the Central Government in pursuance of this Act shall be paid into the public account of India in the Reserve Bank of India.
613. Power of Central Government to reduce fees, charges, etc.— (1) The Central Government may, by order notified in the Official Gazette, reduce the amount of any fee, charge or other sum specified in any provision contained in this Act, as payable in respect of any matter, either to the Central Government or to any Registrar, any Additional, Joint, Deputy, or Assistant Registrar or any other officer of the Central Government; and thereupon such provision shall, dur- ing the period for which the order is in force, have effect as if the reduced fee had been substituted for the fee specified in such provi- sion.
(2) Any order notified under sub-section (1) may, by a like order, be cancelled or varied at any time by the Central Government.
(3) Nothing in this section shall be deemed to affect the power of the Central Government under section 641 to alter any of the fees specified in Schedule X.
G14. Enforcement of duty of company to make returns etc. to Registrar.—(1) If a company, having made default in complying with any provision of this Act which requires it to file or register with, or deliver or send to, the Registrar any return, account or other document, or to give notice to him of any matter, fails to make good the default within fourteen days after the service of a notice on the company requiring it to do so, the Court may, on an application made to it by any member or creditor of the company or by the Registrar, make an order directing the company and any officer thereof to make good the default within such time as may be speci- fied in the order.
(2) Any such order may provide that all costs of and incidental to the application shall be borne by the company or by any officers of the company responsible for the default,
(3) Nothing in this section shall be taken to prejudice the opera- tion of any provisions in this or any other Act imposing penalties on a company or its officers in respect of any such default as afore- said.
PART XIII
GENERAL
Collection of information and statistics from companies
615. Power of Central Government to direct companies to furnish information or statistics.—(2) The Central Government may, by order, require companies generally, or any class of companies, or any company, to furnish such information or statistics with re- gard to their or its constitution or working, and within such time, as may be specified in the order.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 303
(2) (a) Every order under sub-section (1) addressed to com- panies generally or to any class of companies, shall be published in the Official Gazette and in such other manner, if any, as the Central Government may think fit.
(b) The date of publication of the order in the Official Gazette shall be deemed to be the date on which the demand for infor- mation or statistics is made on such companies or class of com- panies, as the case may be.
(3) Every order under sub-section (1) addressed to an in- dividual company shall be served on it in the manner laid down in section 51.
(4) For the purpose of satisfying itself that any information or statistics furnished by a company in pursuance of any order under sub-section (2) is correct and complete, the Central Gov- ernment may require such company—
(a) to produce such records or documents in its posses- sion or under its control for inspection, before such officer and at such time as may be specified by the Central Government; or
(b) to furnish such further information as may be speci- fied by the Central Government and within such time as may be fixed by it.
(5) The Central Government may also, by order, direct an inquiry to be made by any person or persons named in the order—
(a) lor the purpose of obtaining any information or statistics which a company has failed to furnish as required of it by an order under sub-section (2); or
(b) for the purpose of satisfying itself that any infor- mation or statistics furnished by a company in pursuance of an order made under sub-section (2) is correct and complete; and in so far as such information or statistics may be found to be incorrect or incomplete, for the purpose of obtaining such information or statistics as may be necessary to make the in- formation or statistics furnished correct and complete;
and a person or persons so appointed shall, for the purposes of such inquiry, have such powers as may be prescribed.
(6) If any company fails to comply with an order made under sub-section (2) or (4), or knowingly furnishes any information or statistics which is incorrect or incomplete in any material respect, the company, and every officer thereof who is in default, shall be punishable with imprisonment which may extend to three months, or with fine which may extend to one thousand rupees, or with both.
(7) An order requiring any information or statistics to be furnished by a company may also be addressed to any person who is, or has at any time been, an officer or employee of the company,, and all the provisions of this section, so far as may be, shall apply
394 THE GAZETTE OF INDIA EXTRAORDINARY LPAHT II
in relation to scch person as they apply in relation to the company: Provided that no such person shall be punishable under sub-
section (6), unless the Court is satisfied that he was in a position to comply with the order and made wilful default in doing so-
(8) Where a body corporate incorporated outside India and having established an office within India, carries on business in India, all references to a company in this section shall be deemed to include references to the body corporate in relation, and only in relation, to such business.
Application of Act to Companies governed by Special Acts
616. Application of Act to insurance, banking, electricity supply and other companies governed by special Acts.—-The provisions of this Act shall apply—
(o) to insurance companies, except in so far as the said pro- visions are inconsistent with the provisions of the Insurance Act, 1938 (IV of 1938);
(fa) to banking companies, except in so far as the said pro- visions are inconsistent with the provisions of the Banking Com- panies Act, 1949 (X of 1949);
(c) to companies engaged in the generation or supply of electricity, except in so far as the said provisions are inconsis- tent with the provisions of the Electricity Supply Act, 1948 (LIV of 1948);
(d) to any other company governed by any special Act for the time being in force, except in so far as the said provisions are inconsistent with the provisions of such special Act.
Application of Act to Government Companies
617. Definition of "Government Company".—For the purposes of sections 618. 619 and 620, Government company means any com- pany in which not less than fifty-one per cent, of the 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.
618. Future Government companies not to have managing agents.—No Government company formed after the commence- ment of this Act shall appoint a managing agent.
619. Application of sections 224 to 233 to Government compa- nies.—(I) In the case of a Government company, the following pro- visions shall apply, notwithstanding anything contained in sections 224 to 233.
" (2) The auditor of a Government company shall be appointed or re-appointed by the Central Government on the advice of the Comp- troller and Auditor-General of India.
SEC. 11 THE GAZETTE OF INDIA EXTRAORDINARY 3O5
(3j) The Comptroller and Auditor General of India shall have power—
(a) to direct the manner in which the company's accounts shall be audited by the auditor appointed in pursuance of sub- sjection (2) and to give such auditor instructions in regard to any matter relating to the performance of his functions as such;
(b) to conduct a supplementary or test audit ol the com- pany's accounts by such person or persons as he may authorise in this behalf; and for the purposes of such audit, to require in- formation or additional information to be furnished to any per- son or persons so authorised, on such matters, by such person or persons, and in such form, as the Comptroller and Auditor- General may, by general or special order, direct.
(4) The auditor aforesaid shall submit a copy of his audit report to the Comptroller and Auditor-General of India who shall have the right to comment upon, or supplement, the audit report in such manner as he may think fit.
(5) Any such comments upon, or supplement to, the audit report shall be placed before the annual general meeting of the company at the same time and in the same manner as the audit report.
620. Power to modifiy Act in relation to Government com- panies.—(1) The Central Government may, by notification in the Official Gazette, direct that any of the provisions of this Act (other than sections 618, 619 and 639) specified in the notification: —
(a) shall not apply to any Government company; or (fa) shall apply to any Government company, only with such
exceptions, modifications and adaptations, as may be specified in the notification.
(2) A copy of every notification proposed to be issued under sub- section (I) shall be laid in draft before both Houses of Parliament for a period of not less than thirty days while they are in session and if within that period, either House disapproves of the issue of the notification or approves of such issue only with modifications, the notification shall not be issued or, as the case may require, shall be issued only with such modifications as may be agreed on by both the Houses.
Offences
621. Offences against Act to be cognizable only on complaint by Registrar, shareholder or Government.—(1> No Court shall take cog- nizance of any offence against this Act (other than an offence with respect to which proceedings are instituted under section 545), which is alleged to have been committed by any company or any officer thereof, except on the complaint in writing of the Registrar, or of a shareholder of the company, or of a person authorised by the Central Government in that behalf:
Provided that nothing in this sub-section shall apply to a prosecu- tion by a company of any of its officers.
306 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(21 Sub-section (1) shall not apply to any action taken by the liquidator of a company in respect of any offence alleged to have been committed in respect of any of the matters included in Part VII (sections 425 to 560) or in any other provision of this Act relat- ing to the winding up of companies.
(3) A liquidator of a company shall not be deemed to be an officer of the company, within the meaning of sub-section (2).
622. Jurisdiction to try offences.—No Court inferior to that of a Presidency Magistrate or a Magistrate of the first class shall try any offence against this Act.
623. Certain offences triable summarily in Presidency towns.— If any offence against this Act which is punishable with fine only is committed by any person within a Presidency town, such person may be tried summarily and punished by any Presidency Magistrate of that Presidency town.
624. Offences to be non-cognizable.—Notwithstanding anything in the Code of Criminal Procedure, 1898 (V of 1898), every offence against this Act shall be deemed to be non-cognizable within the meaning of the said Code.
625. Payment of compensation in cases of frivolous or vexatious prosecution.—(1) In respect of any case instituted upon the complaint of a shareholder against the company or any officer thereof in pursu- ance of section 621, the provisions of section 250 of the Code of Criminal Procedure, 1898 (V of 1898), shall not apply; and the following provisions shall apply instead.
(2) If the Magistrate by whom any such case is heaid discharges or acquits all or any of the accused, and is of opinion that the accusation against them or any of them was false and either frivolous or vexatious, the Magistrate may, by his order of discharge or acquittal, if the shareholder upon whose complaint the accusation was made is present, call upon him forthwith to show cause why he should not pay compensation to such accused, or to each or any of such accused when there is more than one, or if such share- holder is not present, direct the issue of a summons to him to appear and show cause as aforesaid.
(3) The Magistrate shall record and consider any cause which such shareholder may show; and if the Magistrate is satisfied that the accusation was false and either frivolous or vexatious, he may, for reasons to be recorded, direct that compensation to such amount as he may determine be, paid by such shareholder to the accused or to each or any of them, not exceeding one thousand rupees in all.
(4) The Magistrate may, by the order directing payment of the compensation under sub-section (3), further order that, in default of payment, the shareholder ordered to pay such compensation shall suffer simple imprisonment for a term not exceeding two months.
(5) When any person is imprisoned under sub-section (4), the provisions of sections 68 and 69 of the Indian Penal Code (XLTV of 1860) shall, so far as may be, apply.
.Sue. 1] THE GAZETTE OF INDIA EXTRAORDINARY 307
(6) No person who has been directed to pay compensation under this section shall, by reason of such order, be exempted from any * civil or criminal liability in respect of the complaint made by him:
Provided that any amount paid to an accused person under this section shall be taken Into account in awarding compensation to such fperson in any subsequent civil suit relating to the same matter.
(7) A complainant who has been ordered to pay compensation under sub-section (3) by a Magistrate may appeal from the order, in so far as it relates to the payment of compensation, as if such complainant had been convicted on a trial held by such Magistrate.
(8) Where an order for payment of compensation to an accused ^person is made, the compensation shall not be paid to him before the period allowed for the presentation of the appeal under sub- section (7) has elapsed; or, if an appeal is presented, before the -appeal has been decided.
626. Application of fines.—The Court imposing any fine under this "Act may direct that the whole or any part thereof shall be applied in or towards payment of the costs of the proceedings, or in or
"towards the rewarding of the person on whose information or at whose instance the fine is recovered.
627. Production and inspection of books whore offence suspected.— (1) If, on an application made to a Judge of a High Court in cham- bers by the Public Prosecutor of the State or by the Central Govern- ment, it is shown that there is reasonable cause to believe that any person has, while he was an officer of a company, committed an •offence in connection with the management of the company's affairs, and that evidence of the commission of the offence is to be found In any books or papers of or under the control of the company, an 'Order may be made—
(i) authorising any person named therein to inspect the said books or papers or any of them for the purpose of investigating, and obtaining evidence of the commission of, the offence; or
(ii) requiring the managing agent, secretaries and treasurers or manager of the company or such other officer thereof as may be named in the order, to produce the said books or papers or any of them to a person, and at a place and time, named in the drder.
(2) Sub-section (1) shall apply also in relation to any books or papers of a person carrying on the business of banking so far as they relate to the company's affairs, as it applies to any books or papers -of or under the control of the company, except that no such order as is referred to in clause (ii) thereof shall be made by virtue of this sub-section.
(3) No appeal shall lie from the decision of a Judge of the High 'Courl under this section.
3o8 THE GAZETTE OF INDIA EXTRAORDINARY [PART II)
628. Penalty for false statements.—-If in any return, report, certi- ficate, balance sheet, prospectus,, statement or other document requir- ed by or for the purposes of any of the provisions of this Act, any person makes a statement—
(a) which is false in any material particular, knowing it. to be false; or
(b) which omits any material fact knowing it to be material;, he shall, save as otherwise expressly provided In tliis Act, be punish- able with imprisonment for a term which may extend to two years,, and shall also be liable to fine.
629. Penalty for false evidence.—If any person intentionally gives' false evidence—
(a) upon any examination upon oath or solemn affirmation, authorised under this Act; or
(b) in any affidavit, deposition or solemn affirmation, in or about the winding up of any company under this Act, or other- wise in or about any matter arising under this Act;
he shall be punishable with imprisonment for a term which may extend to seven years, and shall also be liable to fine.
630. Penalty for wrongful withholding of property.—(1) If any: officer or employee of a company—
(a) wrongfully obtains possession of any property of a com* pany; or
(b) having any such property in his possession, wrongfully withholds it or knowingly applies it to purposes other than> those expressed or directed in the articles and authorised by this Act;
he shall, on the complaint of the company or any creditor or contri1- butory thereof, be punishable with fine which may extend to one thousand rupees.
(2) The Court trying the offence may also order such officer or employee to deliver up or refund, within a time to be fixed by the Court, any such property wrongfully obtained or wrongfully with- held or knowingly misapplied, or in default, to suffer imprisonment for a term which may extend to two years.
631. Penalty for improper use of words "Limited" and "Private- Limited".—If any person or persons trade or carry on business under any name or title of which the word "Limited" or the words "Private Limited", or any contraction or imitation thereof is or are the last word or words, that person or each of those persons shall, unless duly incorporated with limited liability, or unless duly incorporated as a private company with limited liability, as the case may be, be punishable with fine which may extend to fifty rupees for every day upon which that name or title has been used.
Legal Proceedings
632. Power to require limited company to give security for costs. Where a limited company is plaintiff or petitioner in any suit or other leqal proceeding, any Court having jurisdiction in the matter
Sue. 1] THE GAZETTE OF INDIA EXTRAORDINARY 309
may, if there is reason to believe that the company will be unable to pay the costs of the defendant if he is successful in his defence, require sufficient security to be given for those costs, and may stay all proceedings until the security is given.
631. Power of Court to grant relief in certain cases.— (1) If in any proceeding for negligence, default, breach of duty, misfeasance or breach of trust against an officer of a company it appears to the Court hearing the case that he is or may be liable in respect of the negligence, default, breach of duty, misfeasance or breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances of the case, including those connect- ed with his appointment, he ought fairly to be excused, the Court may relieve him, either wholly or partly, from his liability on such terms as it may think fit.
(2) Where any such officer has reason to apprehend that any claim will or might be made against him in respect of any negli- gence, default, breach of duty, misfeasance or breach of trust, he may apply to the Court for relief, and the Court on any such application shall have the same power to relieve him as it would have had under this section if it had been a Court before which proceedings against that person for negligence, default, breach of duty, misfeasance or breach of trust had been brought.
634. Enforcement of orders of Courts.—Any order made by a Court under this Act may be~enforced in the same manner as a decree made by the Court in a suit pending therein.
635. Enforcement of orders of one Court by other Courts.—(1) Where any order made by one Court is required to be enforced by another Court, a certified copy of the order shall be produced to the proper officer of the Court required to enforce the order.
(2) The production of such certified copy shall be sufficient evi- dence of the order.
(3) Upon the production of such certified copy, the Court shall take the requisite steps for enforcing the order, in the same manner as if it had been made by itself.
Reduction of fees payable to company
636. Reduction of fees, charges, etc. payable to company.— (1) A company which is entitled to any specified fee, charge or other sum by virtue of any provision contained in this Act or in its articles, may reduce the amount thereof to such extent as it thinks fit; and thereupon such provision shall, so long as the reduction is in force, have effect as if the reduced amount had been substituted for the fee, charge or sum specified in such provision.
(2) Any reduction made under sub-section (1) may, at any time, be cancelled or varied by the company.
Delegation of powers and functions of Central Government
637. Delegation by Central Government of its powers and functions under Act.— (1) The Central Government may, by notifica- tion in the Official Gazette, delegate any of its powers or functions
3io THE GAZETTE OF INDIA EXTRAORDINARY [PART II
under this Act, other than those specified in sub-section (2), to such authority or officer, and subject to such conditions, restrictions and limitations, as may be specified in the notification.
(2) The Central Government shall not delegate its powers or functions under the following provisions of this Act, namely, sections 10 89 (4). 211 (3) and (4), 212, 213, 235, 237, 239, 241, 242, 243, 244,
245, 247, 248, 249, 250, 259, 268, 269, 274(2), 295, 300, 310, 311, 324, 326, 328, 329, 332, 343, 345, 346, 347(2), 349, 352, 369, 372, 396, 399(4) and (5), 401, 408, 409, 410, 411 (b), 448, 609, 613, 620, 638, 641 and 642.
(3) A copy of every notification issued under sub-section (1) shall, as soon as may he after it is issued, be placed before both Houses of Parliament.
Annual Report on Working of Act
638. Annual report by Central Government.—The Central Gov- ernment shall cause a general annual report on the working and admi- nistration of this Act to be prepared and laid before both Houses of Parliament, within one year of the close of the year to which the report relates.
Annual Reports on Government Companies
639. Annual reports on Government companies to be placed before Parliament etc.—(1) In addition to the general annual report referred to in section 638, the Central Government shall cause an annual report on the working and affairs of each Government com- pany to be prepared and laid before both Houses of Parliament, together with a copy of the audit report and any comments upon, or supplement to, the audit report, made by the Comptroller and Auditor-General of India.
(2) Where any State Government is a member of a Government company, the annual report on the working and affairs of the com- pany, the audit report, and the comments upon or supplement to the audit report referred to in sub-section (1), shall be placed by the State Government before the State Legislature or where the State Legislature has two Houses, before both Houses of that Legislature.
Validation of registration of firms in certain cases
640. Validation of registration of firms as members of charitable and other companies.—Any firm which stood registered at the com- mencement of this Act, as a member of any association or company licensed under section 26 of the Indian Companies Act, 1913 (VII of 1913) shall be deemed to have been validly so registered with effect on and from the date of its registration.
Schedules, Forms and Rules
641. Power to alter Schedules.—(1) Subject to the provisions of this section, the Central Government may, by notification in the Official Gazette, alter any of the regulations, rules, tables, forms and other provisions contained in any of the Schedules to this Act, ex- cept Schedules XI and XII.
S»c. Ĵ THE GAZETTE OF INDIA EXTRAORDINARY gi l
(2) Any alteration notified under sub-section (1) shall have effect as if enacted in this Act and shall come into force on the date of the notification, unless the notification otherwise directs:
Provided that no such alteration in Table A of Schedule I shall apply to any company registered before the date of such alteration.
(3) All rules made by the Central Government under sub-section (1) shall, as soon as may be after they are made, be laid before both Houses of Parliament
«42. Power of Central Government to make rules.—(1) In addi- tion to the powers conferred by section 641, the Central Government may, by notification in the Official Gazette, make rules—
(a) for all or any of the matters which by this Act are to be, or may be, prescribed by the Central Government; and
(b) generally to carry out the purposes of this Act.
(2) Every rule so notified shall have effect as If enacted In this Act; and shall come into force on the date of the notification, unless the notification otherwise directs.
(3) All rules made by the Central Government under sub-section (1) snail, as soon as may be after they are made, be laid before both Houses of Parliament.
643. Power of Supreme Court to make rules.—(1) The Supreme Court, after consulting the High Courts,—
(a) shall make rules providing for all matters relating to the winding up of companies which, by this Act, are to be pres- cribed; and may make rules providing for all such matters ae may be prescribed, except those reserved to the Central Gov- ernment by sub-section (5) of section 503, sub-section (2) of section 549 and sub-section (3) of section 550; and
(b) may make rules consistent with the Code of Civil Pro- cedure, 1908 (V of 1908) —
(i) as to the mode of proceedings to be had for winding up a company in High Courts and in Courts subordinate thereto;
(ii) for the voluntary winding up of companies, whether by members or by creditors;
(Hi) for the holding of meetings of creditors and mem- bers in connection with proceedings under section 391;
(iv) for giving effect to the provisions of this Act as to the reduction of the capital and the sub-division of the shares of a company; and
(v) generally for all applications to be made to the Court under the provisions of this Act.
(2) Without prejudice to the generality of the foregoing power, the Supreme Court may, by such rules, enable or require all or anv
312 THE GAZETTE OF INDIA EXTRAORDINAEY [PART II
of the powers and duties conferred and imposed on the Court by this Act, in respect of the following matters, that is to say:—
(a) the holding and conducting of meetings to ascertain the wishes of creditors and contributories;
(b) the settling of lists of contributories and the rectifying of the register of members where required, and collecting and applying the assets;
(c) the payment, delivery, conveyance, surrender or transfer of money, property, books or papers to the liquidator;
(d) the making of calls; and (e) the fixing of a time within which debts and claims shall
be proved;
to be exercised or performed by the Official Liquidator or any other liquidator as an officer of the Court, and subject to the control of the Court:
Provided that the liquidator shall not, without the special leave of the Court, rectify the register of members or make any call.
(3) Until rules are made by the Supreme Court as aforesaid, all rules made by any High Court on the matters referred to in this section and in force at the commencement of this Act, shall continue to be in force in so far as they are not inconsistent with the provisions of this Act in that High Court and in courts subordinate thereto.
Repeals and savings
644. Repeal of Acts specified in Schedule XII.—The enact- ments mentioned in Schedule XII are hereby repealed.
645. Saving of orders, rules, etc., in force at commencement of Act.—Nothing in this Act shall affect any order, rule, regulation, appointment, cdhveyance, mortgage, deed, document or agreement made, fee directed, resolution passed, direction given, proceeding taken, instrument executed or issued, or thing done, under or in pursuance of any previous companies law; but any such order, rule, regulation, appointment, conveyance, mortgage, deed, document, agreement, fee, resolution, direction, proceeding, instrument °r thing shall, if in force at the commencement of this Act, continue to be in force, and so far as it could have been made, directed, passed, given, taken, executed, issued or done under or in pursuance of this Act, shall have effect as if made, directed, passed, given, taken, executed, issued or done under or in pursuance of this Act.
646. Saving of operation of section 138 of Act VII of 1913.—Nothing in this Act shall affect the operation of section 138 of the Indian Com- panies Act, 1913 (VII of 1913), as respects inspectors, or as respects the continuation of an inspection begun by inspectors, appointed before the commencement of this Act; and the provisions of thii Act shall apply to or in relation to a report of inspectors appointed under the said section 138 as they apply to or in relation to a report of inspectors appointed under section 235 or 237 of this Act.
• • S E C . i ] T H E G A Z E T T E O F I N D I A E X T R A O R D I N A R Y 3 1 3
t>47. Saving of pending proceedings for winding up.—Where the winding up of a company has commenced before the commencement
01 this Act— (i) sub-section (7) of section 555 shall apply in respect of
any moneys paid into the Companies Liquidation Account whe- ther before or after such commencement; and
(ii) the other provisions with respect to winding up contain- ed in this Act shall not apply, but the company shall be wound up in the same manner and with the same incidents ae if this Act had not been passed.
648. Saving of prosecutions instituted by liquidator or Court under section 237 of Act VII of 1913.—Nothing in this Act shall affect any prosecution instituted or ordered by the Court to be instituted under section 237 of the Indian Companies Act, 1913 (VII of 1913); and the
•Court shall have the same power of directing how any costs, charges, and expenses properly incurred in any such prosecution are to be defrayed as it would have had, if this Act had not been passed.
649. Construction of references to former enactments in docu- ments.—Any document referring In any former enactment relating to companies shall be construed as referring to the corresponding enact- ment in this Act.
650. Construction of "registrar of joint stock companies" in Act XXI of I860.—In sections 1 and 18 of the Societies Registration Act, 1860 (XXI of 1860), the words "registrar of joint stock companies"
ishall be construed to mean the Registrar under this Act.
651. Construction of references to extraordinary resolution in articles etc.—Any reference to an extraordinary resolution in the articles of a company, or in any resolution passed in general meeting by the company, or in any other instrument, or in any law in force immediately before the commencement of this Act, shall, with effect on and from such commencement, be construed as a reference to a special resolution.
65?. Appointment under previous companies laws to have effect os if made under Act.—Any person appointed to any office under or by virtue of any previous companies law shall be deemed to have been appointed to that office under or by virtue of this Act.
653. Former registration offices continued.—The offices existing at the commencement of this Act for the registration of companies shall be continued as if they had been established under this Act.
654. Registers under previous companies laws to be deemed to be part of registers under Act.—Any register kept under the provi- sions of any previous companies law shall be dpemed to be part of the register to be kept under the corresponding provisions of this Act.
655. Funds and accounts under Act to be in continuation of funds and accounts under previous companies law.—All funds constituted Bnd accounts kept under this Act shall be deemed to be in continua- tion of the corresponding funds constituted and accounts kept under
previous companies laws.
314 THE GAZETTE OF INDIA EXTRAORDINARY [PABT Ik
656, Saving of incorporation under repealed Acts.—Nothing la. this Act shall affect the incorporation of any company registered, under any enactment hereby repealed.
657. Saving of certain Tables under previous companies laws^- Nothing in this Act shall affect—
(a) Table B in the Schedule annexed to. Act No. XIX o l 1857, or any part thereof, so far as the same applies to any com- pany existing at the commencement of this Act;
(b) Table A in the First Schedule annexed to the Indian. Companies Act, 1882 (VI of 1882), or any part thereof, so far as the same applies to any company existing at the commence* ment of this Act;
(c) Table A in the First Schedule to the Indian Companies., Act, 1913 (VII of 1913), either as originally contained in that Schedule or as altered in pursuance of section 151 of that Act, so far as the same applies to any company existing at the commence- ment of this Act.
65S. Section 6 of the General Clauses Act, 1897 (X of 1897) te_ apply In addition to sections 645 to 657 of Act.—The mention of parti- cular matters in sections 645 to 657 or in any other provision of thla. Act shall not prejudice the general application of section 6 of the General Clauses Act, 1897 (X of 1897), with respect to the effect of repeals.
SHC. it THE GAZETTE OF INDIA EXTRAORDINARY 313,
SCHEDULE I
[See sections 2 (2), 14, 28 (1), 29 and 223]
TABLE A
Regulations for management of a company limited by share*
Interpretation
1. (1) In these regulations—
(o) "the Act" means the Companies Act, 1858.
(b) "the seal" means the common seal of the company.
(2) Unless the context otherwise requires, words or expressions, contained in these regulations shall bear the same meaning as in the Act or any statutory modification thereof in force at the date at which these regulations become binding on the company.
Share Capital and Variation of Rights
2. Subject to the provisions of section 80, any preference shares. may, with the sanction of an ordinary resolution, be issued on the- terms that they are, or at the option of the company are liable, to be redeemed on such terms and in such manner as the company before the issue of the shares may, by special resolution, determine.
3. (1) If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, sub- ject to the provisions of sections 106 and 107, and whether or not the- company is being wound up, be varied with the consent in writing •of the holders of three-fourths of the issued shares of that class, or with the sanction of a special resolution passed at a separate general, meeting of the holders of the shares of that class.
(2) To every such separate general meeting, the provisions of these regulations relating to general meetings shall mutatis mutandis apply, but so that the necessary quorum shall be two perspns at least hold- ing or representing by proxy one-third of the issued shares of the class in question.
4. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class. be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.
5. (1) The company may exercise the powers of paying com- missions conferred by section 76, provided that the rate per cent, or the amount of the commission paid or agreed to be paid shall be dis- closed in the manner required by that section.
j l 6 THE GAZETTE OF INDIA EXTRAORDINARY TPART II
(2) The rate of the commission shall not exceed the rate of five per cent, of the-price at which the shares in respect whereof the same is paid are issued or an amount equal to five per cent, of such price, as the case may be.
(3) The commission may be satisfied by the payment of cash or the allotment of fully or partly paid shares or partly in the oneway and partly in the other.
(4) The company may also, on any issue of shares, pay such brokerage as may be lawful,
6. Except as required by law, no person shall be recognised by the company as holding any share upon any trust, and the company shall not be bound by, or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent, iuture or partial interest in any share, or any interest in any fractional part of a share, or (except only as by these regulations or by law otherwise provided) any other rights in respect of any share except an abso- lute right to the entirety thereof in the registered holder.
7. (I) Every person whose name is entered as a member in the register of members shall be entitled to receive within three months after allotment or registration of transfer (or within such other period as the conditions of issue shall provide) —
(a) one certificate for all his shares without payment; or (b) several certificates, each for one or more of his shares,
upon payment of one rupee for every certificate after the first. (2) Every certificate shall be under the seal and shall specify the
shares to which it relates and the amount paid up thereon. (3) In respect of any share or shares held jointly by several per-
sons, the company shall not be bound to issue more than one certi- ficate, and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all such holders.
8. If a share certificate is defaced, lost or destroyed, it may be re- newed on payment of such fee, ii any, not exceeding eight annas, and on such terms, if any, as to evidence and indemnity and the payment of out-of-pocket expenses incurred by the company in investigating evidence, as the directors think fit.
Lien
9. (1) The company shall have a first and paramount Hen— (a) on every share (not being a fully-paid share), for all
moneys (whether presently payable or not) called, or payable at a, fixed time, in respect of that share; and
(b) on all shares (not being fully-paid shares) standing registered in the name of a single person, for all moneys presently payable by him or his estate to the company:
Provided that the Board of directors may at any time declare any share to be wholly or in part exempt from the provisions of this clause.
(2) The company's lien, if any, on a share shall extend to all divi- dends payable thereon.
Sue. 1] THE GAZETTE: OF INDIA EXTRAORDINARY 317
10. The company may sell, in such manner as the Board thinks lit, any shares on which the company has a lien:
Provided that no sale shall be made— (a) unless a sum in respect of which the lien exists is pre-
sently payable; or (b) until the expiration of fourteen days after a notice in
writing stating and demanding payment of such part of the amount in respect of which the Tien exists as is presently payable, has been given to the registered holder for the time being of the share or the person entitled thereto by reason of his death or insolvency.
11. (1) To give effect to any such sale, the Board may authorise some person to transfer the shares sold to the purchaser thereof.
(2) The purchaser shall be registered as the holder of the shares comprised in any such transfer.
(3) The purchaser shall not be bound to see to the application of the purchase money, nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings in reference to the sale.
12. (2) The proceeds of the sale shall be received by the company and applied in payment of such part of the amount in respect of -which the lien exists as is presently payable.
(2) The residue, if any, shall, subject to a like lien for sums not presently payable as existed upon the shares before the sale, be paid to the person entitled to the shares at the date of the sale.
Calls on Shares
13. (1) The Board may, from time to time, make calls upon the members' in respect of any moneys unpaid on their shares (whether •on account of the nominal value of the shares or by way of premium) and not by the conditions of allotment thereof made payable at fixed times:
Provided that no call shall exceed one-fourth of the nominal value of the share or be payable at less than one month from the date fixed for the payment of the last preceding call.
(2) Each member shall, subject to receiving at least fourteen days' notice specifying the time or times and place of payment, pay to the company, at the time or times and place so specified, the amount called on his shares.
(3) A call may be revoked or postponed at the discretion of the Board.
14. A call shall be deemed to have been made at the time when the resolution of the Board authorising the call was passed and may t>e required to be paid by instalments.
3 i8 THE GAZETTE OF INDIA EXTRAORDINARY [PART ir
15. The joint holders of a share shall be jointly and severallj liable to pay all calls in respect thereof.
16. (1) If a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest thereon from the day appointed' for payment thereof ta the time of actual payment at five per cent,, per annum or at such lower rate, if any, as the Board may determine.
(2) The Board shall be at liberty to waive payment of any such interest wholly or in part.
17. (1) Any sum which by the terms of issue of a share becomes payable on allotment or at any fixed date, whether on account of the nominal value of the share or by way of premium, shall, for the purposes of these regulations, be deemed to be a call duly made and payable on the date on which by the terms of issue such sum becomes payable.
(2) In case of non-payment of such sum, all the relevant pro- visions of these regulations as to payment of interest and expenses* forfeiture or otherwise shall apply as if such sum had become pay- able by virtue of a call duly made and notified.
18. The Board-
fa) may, if it thinks fit, receive from any member willing to advance the same, all or any part of the moneys uncalled and unpaid upon any shares held by him; and
(b) upon all or any of the moneys so advanced, may (until the same would, but for such advance, become presently pay- able) pay interest at such rate not exceeding, unless the company in general meeting shall otherwise direct, six per cent, per annum, as may be agreed upon between the Board and the- member paying the sum in advance.
Transfer of Shares
19. (1) The instrument of transfer of any share in the company- shall be executed by or on behalf of both the transferor and transferee.
(2) The transferor shall be deemed to remain a holder of the share until the name of the transferee is' entered in the register of members in respect thereof.
20. Shares in the company shall be transferred in the following form, or in any usual or common form which the Board shall approve:—
"I, A. B. of •• •• . •••.. ., in consideration of the sum of rupees paid to me by C. D. of.,. (hereinafter called "the transferee"), do hereby transfer to the trans- feree the share [or shares! numbered to . inclusive, in the undertaking called the Company, Limited, tr»
S E C . II] THE GAZETTE OF INDIA EXTRAORDINARY 319
holo unto the said transferee, his executors, administrators and assigns, subject to the several conditions on which I held the same immediately before the execution hereof; and I, the transferee, do hereby agree to take the said share (or shares) subject to the •conditions aforesaid.
As witness our hands this
day of Witness to the signatures of, etc."
21. The Board may, subject to the right of appeal conferred by section 111, decline to register—
(a) the transfer of a share, not being a fully-paid share, to a person of whom they do not approve; or
(fa) any transfer of shares on which the company has a lien
22. The Board may also decline to recognise any instrument of •transfer unless—
(a) a fee of two rupees is paid to the company in respect thereof;
(fa) the instrument of transfer is accompanied by the certi- ficate of the shares to which it relates, and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer; and
(c) the instrument of transfer is in respect of only one class of shares.
33. The registration of transfers may be suspended at such times and for such periods as the Board may from time to time determine:
Provided that such registration shall not be suspended for more than forty-five days in any year.
24. The company shall be entitled to charge a fee not exceeding two rupees on the registration of every probate, letters of adminis- tration, certificate of death or marriage, power of attorney, or other instrument.
Transmission of Shares
25. (1) On the death of a membei, the survivor or survivors where the member was a joint holder, and his legal representatives where he was a sole holder, shall be the only persons recognised by the company as having any title to his interest in the shares.
(2) Nothing in clause (1) shall release the estate of a deceased joint holder from any liability in respect of any share which had been jointly hold by him with other persons.
26. (1) Any person becoming entitled to a share in consequence of the death or insolvency of a member may, upon such evidence being produced as may from time to time properly be required by the Board and subject as hereinafter provided, olect, either—
(a) to be registered himself as holder of the share; or
320 THE GAZETTE OF INDIA EXTBAORDINARY [PART II
(b) to make such transfer of the share as the deceased or insolvent member could have made.
(2) The Board shall, in either case, have the same right to decline or suspend registration as it would have had, if the deceased or insolvent member had transferred the share before his death or insolvency.
27. (1) If the person so becoming entitled shall elect to be regis- tered as holder of the share himself, he shall deliver or send to the company a notice in writing signed by him stating that he so elects.
(2) If the person aforesaid shall elect to transfer the share, he shall testify his election by executing a transfer of the share.
(3) All the limitations, restrictions and provisions of these regula- tions relating to the right to transfer and the registration of trans- fers of shares shall be applicable to any such notice or transfer as aforesaid as if the death or insolvency of the member had not occur- red and the notice or transfer were a transfer signed by that member.
28. A person becoming entitled to a share by reason of the death or insolvency of the holder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, before being registered as a member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the company:
Provided that the Board may, at any time, give notice requiring any such person to elect either to be registered himself or to transfer the share, and if the notice is not complied with within ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the share, until the require- ments of the notice have been complied with.
Forfeiture of Shares
29. If a member fails to pay any call, or instalment of a call, on the day appointed for payment thereof, the Board may, at any time thereafter during such time as any part of the call or instalment remains unpaid, serve a notice on him requiring payment of so much of the call or instalment ^s is unpaid, together with any interest which may have accrued.
30. Trie notice aforesaid shall— (a) name a further day (not being earlier than the expiry
of fourteen days from the d£ts of service of the notice) on or before which the payment required by the notice is to be made; and
(b) state that, in the event of non-payment on or before the day so named, the shareb in respect of which the call was made will be liable to be forfeited.
31 Tf the requirements of any such notice as aforesaid are not complied with, any share in respect of which the notice has been given may, at any time thereafter, beiore the paymeni required by the notice has been made, be forfeited by ^ resolution of the Board to that effect.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 321
32. (2) A forfeited share may be sold or otherwise disposed of on such terms and in b\ich manner as the Board thinks fit.
(£) At any time before a sale or disposal as aforesaid, the Board may cancel the forfeiture on such terms as it thinks fit.
33. (1) A person whose shares have been forfeited shall cease- to be a member in respect of the forfeited shares, but shall, not- withstanding the forfeiture, remain liable to pay to the company all moneys which, at the date of forfeiture, were presently payable- by him to the company in respect of the shares.
(2) The liability of such person shall cease if and when the com- pany shall have received payment in full of all such moneys in res- pect of the shares.
34. (7) A duly verified declaration in writing that the declarant is a director, the managing agent, the secretaries and treasurers, the manager or the secretary, of the company, and that a share in the company has been duly forfeited on a date stated in the declaration, shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share.
(2) The company may receive the consideration, if any, given for the share on any sale or disposal thereof and may execute a transfer of the share in favour of the person to whom the share is sold or dis- posed of.
(3) The transferee shall thereupon be registered as the holder of the share.
(4) The transferee shall not be bound to see to the application of the purchase money, if any, nor shall his title to the share be affected by any irregulaiity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the share.
35. The provisions of these regulations as to forfeiture shall apply in the case of non-payment of any sum which, by the terms of issue of a share, becomes payable at a fixed time, whether on account of the nominal value of the- share or by way of premium, as if the same had been payable by virtue of a call duly made and notified.
Conversion of Shares into Stock
36. The company may, by ordinary resolution,— (a) convert any paid-up shares into stock; and (b) reconvert any stock into paid-up shares of any denomi-
nation.
37. The holders of stock may transfer the same or any part thereof in the s me manner as, and subject to the same regulations under which, the shares from which the stock arose might before the conversion have been transferred, or as near thereto as circum- stances admit:
Provided that the Board may, from time to time, fix the minimum amount of stock transferable, so however that such minimum shall.
3»2 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
not exceed the nominal amount of the shares from which the stock arose.
38. The holders of stock shall, according to the amount of stock held by them, have the same rights, privileges and advantages as regards dividends, voting at meetings of the company, and other matters, as if they held the shares from which the stock arose; but no such privilege or advantage (except participation In the dividends and profits of the company and in the assets oh winding up) shall be conferred by an amount of stock which would not, if existing In shares, have conferred that privilege or advantage.
39. Such of the regulations of the company (other than those relating to share warrants), as are applicable to paid-up shares shall apply to stock and the words "share" and "shareholder" in those regulations shall include "stock" and "stockholder" respectively.
Share Warrants
40. The company may issue share warrants subject to, and in accordance with, the provisions of sections 114 and 115; and accord- ingly the Board may in its discretion, with respect to any share which is fully paid up, on application in writing signed by the person registered as holder of the share, and authenticated by such evidence (if any) as the Board may, from time to time, require as to the iden- tity of the person signing the application, and on receiving the certi- ficate (if any) of the share, and the amount of the stamp duty on the warrant and such fee as the Board may from time to time re- quire, issue a share warrant.
41. (2) The bearer of a share warrant may at any time deposit the warrant at the office of the company, and so long as the warrant remains so deposited, the depositor shall have the same right of sign- Ing a requisition for calling a meeting of the company, and of attend- ing, and voting and exercising the other privileges of a member at any meeting held after the expiry of two clear days from the time of deposit, as if his name were inserted in the register of members as the holder of the shares included in the deposited warrant.
(2) Not more than one person shall be recognised as depositor of the share warrant.
(3) The company shall, on two days' written notice, return the deposited share warrant to the depositor.
42. (7) Subject as herein otherwise expressly provided, no per- son shall, as bearer of a share warrant, sign a requisition for calling a meeting of the company, or attend, or vote or exercise any other privilege of a member at a meeting of the company] or be entitled to receive any notices from the company.
(2) The bearer of a share warrant shall be entitled in all other respects to the same privileges and advantages as if he were named in the register of members as the holder of the shares included in the warrant, and he shall be a member of the company.
-SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 323
43. The Board may, from time to time, make rules as to the terms -on which (if it shall think fit) a new share warrant or coupon may- be issued by way of renewal in case of defacement, loss or destruc- tion.
Alteration of Capital
44. The company may, from time to time, by ordinary resolution increase the share capital by such sum, to be divided into shares of such amount, as may be specified in the resolution.
45. The company may, by ordinary resolution,—
(a) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;
(b) sub-divide its existing shares or any of them into shares of smaller amount than is fixed by the memorandum, subject, nevertheless, to the provisions of clause (d) of sub-section (/) ol section 94;
(c) cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person.
46. The company may, by special resolution, reduce in any man- ner and with, and subject to, any incident authorised and consent required by law,—
(a) its share capital;
(b) any capital redemption reserve fund; or
(c) any share premium account.
General Meetings
47. All general meetings other than annual general meetings shall be called extraordinary general meetings.
48. (1) The Board may, whenever it thinks fit, call an extra- ordinary general meeting.
(2) If at any time there are not within India directors capable of acting who are sufficient in number to form a quorum, any direc- tor or any two members of the company may call an extraordinary general meeting in the same manner, as nearly as possible, as that in which such a meeting mi^ be called by the Board.
Proceedings at General'Meetings
49. (1) No business shall be transacted at any general meeting unless a quorum of members is present at the time when the meet- ing proceeds to business.
^ (2) Save as herein otherwise provided, five members present in person (in the case of a public company—two members present in person, in the case of a private company) shall be a quorum
=24 THE GAZETTE OF INDIA EXTRAORDINARY [PART IE
50. The chairman, if any, of the Board shall preside as chairman at eviery general meeting of the company.
51. If there is no such chairman, or if he is not present within' fifteen minutes after the time appointed for holding the meeting^ or is unwilling to act as chairman of the meeting, the directors present shall elect one of their number to be chairman of the meeting.
52. If at any meeting no director is willing to act as chairman or if no director is present within fifteen minutes after the time- appointed for holding the meeting, the members present shall choose one of their number to be chairman of the meeting.
53. (I) The chairman may, with the consent of any meeting- at which a quorum is present, and shall, if so directed by the meet- ing, adjourn the meeting from time to time and from place to place.
(2) No business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.
(3) When a meeting is adjourned for thirty days or more., notice of the adjourned meeting shall be given as in the case ol an original meeting.
(4) Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.
54. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place, or at which the poll is demanded, shall be entitled to a second or casting vote.
55. Any business other than that upon which a poll has been Remanded may be proceeded with, pending the taking of the poll
Votes of Members
56. Subject to any rights or restrictions for the time being- attached to any class or classes of shares,—
(a) on a show of hands, ever^ member present In person- shall have one vote; and
(b) on a poll, the voting rights of members shall be as. laid down in section 87.
57. In the case of joint holders, the vote of the senior who ten- ders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders.
For this purpose, seniority shall be determined by the order tor Which the names stand in the register of members.
SEC. lj THE GAZETTE OF INDIA EXTaAOSblNARY' 3 2 ,
58. A member of unsound mind, or in respect of whom an order has been made by any Court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee or other legal guardian, and any such committee or guardian may, on a poll, vote by proxy.
59. No member shall be entitled to vote at any general meet- ing unless all calls or other sums presently payable by him in. respect of shares in the company have been paid.
60- (2) No objection shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is given or tendered, and every vote not disallow- ed at such meeting shall be valid for all purposes.
(2) Any such objection made hi due time shall be referred to the" chairman of the meeting, whose decision shall be final and conclusive.
61. The instrument appointing a proxy and the power of attor- ney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority, shall be de- posited at the registered office of the company not less than 4& hours before the time for holding the meeting or adjourned meet- ing at which the person named in the instrument proposes to vote, or, in the case of a poll, not less than 24 hours before the time appointed for the taking of the poll; and in default the instrument of proxy shall not be treated as valid.
62. An instrument appointing a proxy shall be in either of the forms in Schedule IX to the Act or a form as near thereto as cir- cumstances admit.
63. A vote given in accordance with the terms of an instrument of proxy shall be valid, notwithstanding the previous death or insanity of the principal or the revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the shares in respect of which the proxy is given:
~ Provided that no intimation in writing of such death, insanity, revocation or transfer shall have been received by the company at its office before the commencement of the meeting or adjourn- ed meeting at which the proxy is used.
Board of Directors 64. The number of the directors and the names of the first
directors shall be determined in writing by the subscribers of the memorandum or a majority of them.
65. (1) The remuneration of the directors shall, in so far as it consists of a monthly payment, be deemed to accrue from day to day.
(A) In addition to the remuneration payable to them in pur- suance of the Act, the directors may be paid all travelling, hotel and pther expenses properly incurred by them—
• (<j) in attending and returning from meetings of the Board of directors or any committee thereof or general meetings of the company; or
326 TUP QAfcSTTE OF INDIA EXTRAORDINARY [PAHT n
(b) In connection with the business of the company.
66. The qualification of a director shall be the holding of at least one share in the company.
67. The Board may pay all expenses incurred in getting up and registering the company.
68. The company may exercise the powers conferred by section 50 with regard to having an official seal for use abroad., and such powers shall be vested in the Board.
69. The company m«y exercise the powers conferred on it by sections 157 and 158 with regard to the keeping of a foreign regis- ter; and the Board may (subject to the provisions of those sections) make and vary such regulations as it may think fit respecting the keeping of any such register.
70. All cheques, promissory notes, drafts, hundis, bills of ex- change and other negotiable instruments, and all receipts for moneys paid to the company, shall be signed, drawn, accepted, en- dorsed, or otherwise executed, as the case may be, by the manag- ing agent or secretaries and treasurers of the company, or where there is no managing agent or secretaries and treasurers, by such person and in such manner as the Board shall from time to time by resolution determine.
71. Every director present at any meeting of the Board or of a committee thereof shall sign his name in a book to be kept for that purpose.
72- (1) The Board shall have power at any time, and from time to time, to appoint a person as an additional director who shall hold office until the next following general meeting.
(2) Such person shall however be eligible for appointment by the company at that meeting as a director, after the meeting has, if necessary, increased the number of the directors.
Proceedings of Board
73. (1) The Board of directors may meet for the despatch of business, adjourn and otherwise regulate its meetings, as it thinks fit.
(2) A director may, and the managing agent, secretaries and treasurers, manager or secretary on the requisition of a director shall, at any time, summon a meeting of the Board.
74 (1) Save as otherwise expressly provided in the Act, ques- tions arising at any meeting of the Board shall be decided by a majority of votes.
(2) In case of an equality of votes, the chairman of the Board, if any, shall have a second or casting vote.
SKC M THE GAZETTE OP INDIA EXTRAORDINARY a**
73. The continuing directors may act notwithstanding any vacancy in the Board; but, if and so long as their number is re- duced below the quorum fixed by the Act for a meeting of the Board, the continuing directors or director may act for the purpose of increasing the number of directors to that fixed for the quorum, or of summoning a general meeting of the company, but for no other purpose.
78. (i) The Board may elect a chairman of its meetings and determine the period for which he is to hold office-
(2) If no such chairman is elected, or if at any meeting the- chairman is not present within five minutes after the time appoint- ed for holding the meeting, the directors present may choose one of their number to be chairman of the meeting.
77. (i) The Board may, subject to the provisions of the Act, delegate any of its powers to committees consisting of such mem- ber or members of its body as it thinks fit.
(2) Any committee so formed shall, In the exercise of the powers so delegated, conform to any regulations that may be im- posed on It by the Board.
78. (1) A committee may elect a chairman of its meetings.
(2) If no such chairman Is elected, or if at any meeting the chairman is not present within five minutes after the time appoint- ed for holding the meeting, the members present may choose one of their number to be chairman of the meeting.
79. (1) A committee may meet and adjourn as it thinks proper.
(2) Questions arising at any meeting of a committee shall be determined by a majority of votes of the members present, and in case of an equality of votes, the chairman shall have a second or casting vote.
80. All acts done by any meeting of the Board or of a committee thereof or by any person acting es a director, shall, not- withstanding that it may be afterwards discovered that there was some defect in the appointment of any one or more of such direc- tors or of any person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such director or such person had been duly appointed and was qualified to be a director,
81. Save as otherwise expressly provided in the Act, a reso- lution in writing, signed by all the members of the Board or of a committee thereof, for the time being entitled to receive notice of a meeting of the Board or committee, shall be as valid and effectual as if it had been passed at a meeting of the Board or committee, duly convened and held.
Manager or Secretary 82. (1) A manager or secretary may be appointed by the Board
for such term, at such remuneration and upon such conditions as
3?8 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
it may think fit; and any manager or secretary so appointed may be removed by the Board.
(2) A director may be appointed as manager or secretary.
83. A provision of the Act or these regulations requiring or authorising a thing to be done by or to a director and the manager or secretary shall not be satisfied by its being done by or to the same person acting both as director and as, or in place of, the manager or secretary.
The Seal
84. (/) The Board shall provide for the safe custody of the seal. (2) The seal of the company shall not be affixed to any ins-
trument except by the authority of a resolution of the Board or -of a committee of the Board authorised by it in that behalf, and except in the presence of at least two directors and of the secretary or such other person as the Board may appoint for the purpose; and those two directors and the secretary or other person aforesaid flhall sign every instrument to which the seal of the company is so affixed in their presenrp
Dividend* and Rnwve
85. The company in general meeting may declare dividends, tout no dividend shall exceed the amount recommended by the Board.
86. The Board may from time to time pay to the members such interim dividends as appear to it to be justified by the profits of the company.
87. (1) The Board may, before recommending any dividend, set aside out of the profits of the company such sums as it thinks proper as a reserve or reserves which shall, at the discretion of the Board, be applicable for any purpose to which the profits of the company may be properly applied, Including provision for meeting contingencies or for equalising dividends; and pending such application, may, at the like discretion, either be employed in the business of the company or be invested in such Investments (other than shares of the company) as the Board may, from time
to time, think fit.
(2) The Board may also carry forward any profits which it -may think prudent not to divide, without setting them aside as a reserve-
88. (1) Subject to the rights of persons, If any, entitled to shares with special rights as to dividends, all dividends shall be declared and paid according to the amounts paid or credited as paid on the shares in respect whereof the dividend is paid, but if and so long as nothing Is paid upon any of the shares In the com- pany, dividends may be declared and paid according to the amounts of the shares.
SEC. l THE GAZETTE OF INDIA EXTRAORDINARY 329
(2) No amount paid or credited as paid on a share in advance of calls shall be treated for the purposes of this regulation as paid on ths share.
(3; All dividends shall be apportioned and paid proportionately to the amounts paid or credited as paid on the shares during any .portion or portions of the period in respect of which the dividend is paid; but if any share is issued on terms providing that it shall rank for dividend as from a particular date such share shall rank for dividend accordingly.
89. The Board may deduct from any dividend payable to any member all sums of money, if any, presently payable by him to rthe company on account of calls or otherwise m relation to the shares of the company.
90. (I) Any general meeting declaring a dividend or bonus may direct payment of such dividend or bonus, wholly or partly, by the distribution of specific assets; and the Board shall give effect -to the resolution of the meeting.
(2) Where any difficulty arises in regard to such distribution, the Board may settle the same as it thinks expedient, and in particular may issue fractional certificates and fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any members upon the footing of the value so fixed in order to adjust the rights of all parties, and may vest any such specific assets in trustees as may seem expedient to the Board.
91. (1) Any dividend, interest or other moneys payable in cash in respect of shares may be paid by cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the registered address of that one of the joint holders who is first named on the register of members, or to such person and to such address as the holder or joint holders may in writing direct.
(2) Every such cheque or warrant shall be made payable to the order of the person to whom it is sent,
92. Any one of two or more joint holders of a share may give effectual receipts for any dividends, bonuses or other moneys pay- able in respect of such share.
93. Notice of any dividend that may have been declared shall be given to the persons entitled to share therein in the manner men- tioned in the Act.
94. No dividend shall bear interest against the company.
Accounts
95. (I) The Board shall from time to time determine whether and to what extent and at what times and places and under what con- ditions or regulations, the accounts and books of the company, or any of them, shall be open to the inspection of members not being
'directors.
330 TflB GAZETTE OF INDIA EXTRAORpINARY [PART II
(2) No member (not being a director) shall have any right o£ Inspecting any account or book or document of the company ex- cept as conferred by law or authorised by the Board or by the company in general meeting.
Capitalisation of pro-fits
96. (1) The company in general meeting may, upon the recom> mendation of the Board, resolve—
(a) that it is desirable to capitalise any part of the amount for the time being standing to the credit of any of the com- pany's reserve accounts, or to the credit of the profit and losa' account, or otherwise available for distribution; and
(b) that such sum be accordingly set free for distribution in the manner specified in clause (2) amongst the members who would have been entitled thereto, if distributed by way of dividend and in the same proportions.
(2) The sum aforesaid shall not be paid in cash but shall be applied, subject to the provision contained in clause (3), either in or towards—
(i) paying up any amounts for the time being unpaid on any shares held by such members respectively;
(ii) paying up in full, unissued shares or debentures of the company to be allotted and distributed, credited as fully paid up, to and amongst such members in the proportions aforesaid; or
(iii) partly in the way specified in sub-clause (i) and! partly in that specified in sub-clause (ii). (3) A share premium account and a capital redemption reserve
fund may, for the purposes of this regulation, only be applied in the paying up of unissued shares to be issued to members of the company as fully paid bonus shares.
(4) The Board shall give effect to the resolution passed by the company in pursuance of this regulation.
97. (1) Whenever such a resolution as aforesaid shall have been passed, the Board shall—
(a) make all appropriations and applications of the un- divided profits resolved to be capitalised thereby, and all allot- ments and issues of fully paid shares or debentures, if any; and
(b) generally do all acts and things required to give effect thereto.
(2) The Board shall have full power— (a) to make such provision, by the issue of fractional cer-
tificates or by payment in cash or otherwise as it thinks fit, for the case of shares or debentures becoming distributable in fractions; and also
(b) to authorise any person to enter, on behalf of all the members entitled thereto, into an agreement with the company providing for the allotment ta them respectively, credited a& fully paid up, of any further shares or debentures to which
SHC. l|] THE GAZETTE- OF INDIA EXTRAORDINARY 33c
they may be entitled upon such capitalisation, or (as the case may require) for the payment up by the company on their behalf, by the application thereto of their respective propor- tions of the profits resolved to be capitalised, of the amounts or any part of the amounts remaining unpaid on their existing shares.
(3) Any agreement made under such authority shall be effec- tive and binding on all such members.
Winding up
98. (1) If the company shall be wound up, the liquidator may, with the sanction of a special resolution of the company and any' other sanction required by the Act, divide amongst the m e m b e r in specie or kind, the whole or any part of the assets of the com- pany, whether they shall consist of property of the same kind or not.
(2) For the purpose aforesaid, the liquidator may set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members.
(3) The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the bene- fit of the contributories as the liquidator, with the like sanction, shall think fit, but so that no member shall be compelled to accept any shares or other securities whereon there is any liability.
99. Every officer or agent for the time being of the company shall be indemnified out of the assets of the company against any liability incurred by him in defending any proceedings, whether civil or criminal, in which judgment is given in his favour or in which he is acquitted or in connection with any application under section 633 in which relief is granted to him by the Court.
TABLE B
MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY SHARES
1st.—The name of the company is "The Eastern Steam Packet Company, Limited".
2nd.—The registered office of the company will be situated in the- State of Bombay.
3rd.—The objects for which the company is established are "the conveyance of passengers and goods in ships or boats between such plaaes as the company may from time to time determine, and the doing of all such other things as are incidental or conducive to the- attainment of the above object".
332 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
4th.—Theliability of the members is limited. 5th.—The share capital of the company is two hundred thousand
rupees, divided into one thousand shares of two hundred rupees -each.
We, the several persons whose names and addresses are sub- scribed, are desirous of being formed into, a company in pursuance of this memorandum of association, and we respectively agree to take the number of shares in the capital of the company set opposite our respective names.
"Names , Addresses, Descriptions and Occupations of Subscribers.
i . A. B. of , merchant . . .
3. E. F. of ,j merchant . 4 . G . H . o f , m e r c h a n t . . . . . 5 . I . J . o f m e r c h a n t . . . . . 6 . K - L . o f , m e r c h a n t . . . . . 7 . M . N . o f m e r c h a n t . . . . .
T o t a l s h a r e s t a k e n
N u m b e r o f s h a r e s
t a k e n b y e a c h s u b s -
c r i b e r .
2 0 0
35 30 40 15 5
1 0
325
Dated the day of 19 .
Witness to the above signatures
X. Y. of...
TABLE C
MEMORANDUM AND ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE AND NOT HAVING A SHARE CAPITAL
Memorandum of Association
1st.—Thename of the company is "The Mutual Calcutta Marine Association, Limited".
2nd.—Theregistered office of the company will be situate in the State of West Bengal.
3rd.—The objects for which the company is established are"the mutual insurance of ships belonging to members of the company, and the doing of all such other things as are incidental or conducive to the attainment of the above object".
4th.—The liability of the members is limited. 5th.—Every member of the company undertakes to contribute to
the assets of the company in the event of its being wound up while he is a member, or within one year after he ceases to be a member, for payment of the debts and liabilities of the company contracted before he ceases to be a member, and the costs, charges and expenses of winding up and for the adjustment of the rights of the contribu- tories among themselves, such amount as may be required, not
•exceeding one hundred rupees.
:inc. 1] THE GAZETTE OF INDIA EXTRAORDINARY 333
We, the several persons whose names and addresses are subscrib- ed, are desirous of being formed into a company, in pursuance of
lihis memorandum of association.
Names, Addresses, Descriptions and Occupations of Subscribers,
1. A. B. of , merchant. 2. C. D. of , merchant. 3. E. F. of , merchant. 4. G. H. of , merchant. 5. I. J. of , , merchant. 6. K. L. of , merchant. 7. M. N. of , merchant. Dated the day of
Witness to the sfoove signatures X. Y. of
ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE AND
NOT HAVING A SHARE CAPITAL
Interpretation
1. (1) In these art ic les- fa) "the Act" means the Companies Act, 1956. (b) "the seal" means the common seal of the company.
(2) Unless the context otherwise requires, words or expressions •contained in these regulations shall bear the same meaning as in the Act or any statutory modification thereof in force at the date at which these regulations become binding on the company.
Members
2. The number of members with which the company proposes to toe registered is 500, but the Board of directors may, from time to time, whenever the company or the business of the company requires it, register an Increase of members.
3. The subscribers to the memorandum and such other persons as the Board shall admit to membership shall be members of the company.
General Meetings
4. All general meetings other than annual general meetings shall be called extraordinary general meetings.
5. (1) The Board may, whenever it thinks fit, call an extra- ordinary general meeting.
(2) If at any time there are not within India directors capable of acting, who are sufficient in number to form a quorum, any director or any two members of the company may call an extraordi- nary general meeting in the same manner as nearly as possible, as that in which such a meeting may be called by the Board.
334 TOE GAZETTE OF INDIA EXTRAOHDINARY [PART I t
Proceedingsat GeneralMeetings
6. (1) No business shall be transacted at any general meeting unless a quorum of members is present at the time when the meet- ing proceeds to business.
(2) Save as herein otherwise provided, five members present ia person shall be a quorum.
7. (I) If within half an hour from the time appointed for holding: the meeting a quorum is not present, the meeting, if called upon the requisition of members, shall be dissolved.
(2) In any other case, the meeting shall stand adjourned to the same day in the next week, at the same time and place, or to such other day and at such other time and place as the Board may determine.
(3) If at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting, the member* present shall be a quorum.
8. The chairman, if any, of the Board shall preside as chairman at every general meeting of the company.
9. If there is no such chairman, or if he is not present within. fifteen minutes after the time appointed for holding the meeting, or is unwilling to act as chairman of the meeting, the directors present shall elect one of their number to be chairman of the meeting.
10. If at any meeting no director is willing to act as chairman or if no director is present within fifteen minutes after the time appointed for holding the meeting, the members present shall choose one of their number to be chairman of the meeting.
11. {1) The chairman may, with the consent of any meeting at which a quorum is present, and shall if so directed by the meeting, adjourn the meeting from time to time and from place to place.
(2) No business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.
(3) When a meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting.
(4) Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourn- ed meeting.
12. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place, or at which the poll is demanded, shall be entitled to a second or casting vote,
13. Any business other than that upon which a poll nas been demanded may be proceeded with, pending the taking of the poll.
^EC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 335
Votes of Members
14. Every member shall have one vote. 15. A member of unsound mind, or in respect of whom an order
has been made by any Court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee or •other legal guardian, and any such committee or guardian may, on a poll, vote by proxy.
16. No member shall be entitled to vote at any general meeting unless all sums presently payable by him to the company have been paid.
17. (1) No objection shall be raised to the qualification of any Voter except at the meeting or adjourned meeting at which the vote -objected to is given or tendered, and every vote not disallowed at such meeting shall be valid for all purposes.
(2) Any such objection made in due time shall be referred to the chairman of the meeting, whose decision shall be final and con- clusive.
18. A vote given in accordance with the terms of an instrument of proxy shall be valid, notwithstanding the previous death or in- sanity of the principal or the revocation of the proxy or of the
-authority Under which the proxy was executed:
Provided that no intimation in writing of such death, insanity, revocation or transfer shall have been received by the company at
its office before the commencement of the meeting or adjourned meeting at which the proxy is used.
Board of Directors
19. The number of the directors and the names of the first direc- tors shall be determined in writing by the subscribers of the memorandum or a majority of them.
20. (1) The remuneration of the directors shall, In BO far as It •consists of a monthly payment, be deemed to accrue from day to •"day.
(2) The directors may also be paid all travelling, hotel and other -expenses properly incurred by them—
(a) in attending and returning from meetings of the Board or any committee thereof or general meetings of the company; or
(b) in connection with the business of the company.
Proceedings of Meetings of Board
21. (I) The Board of directors may meet for the despatch of ^business, adjourn and otherwise regulate its meetings, as It thinks fit
(2) A director may, and the managing agent, secretaries and treasurers, manager or secretary on the requisition of a director shall, -at any time, summon a meeting of the Board.
336 THE GAZETTE OF INDIA EXTRAORDINARY [PART IE
22. (1) Save as otherwise expressly provided in the Act, ques- tions arising at any meeting of the Board shall be decided by a- majority of votes.
(2) In case of an equality of votes, the chairman shall have a second or casting vote.
23. The continuing directors may act notwithstanding any vacancy in the Board; but, if and so long as their number is reduced below the quorum fixed by the Act for a meeting of the Board, the- continuing directors or director may act for the purpose of increas- ing the number of directors to that fixed for the quorum, or ot Bummoning a general meeting of the company, but for no other purpose.
24. (2) The Board may elect a chairman of its meetings and determine the period for which he is to hold office.
(2) If no such chairman is elected, or if at any meeting the chair- men is not present within five minutes after the time appointed for holding the meeting, the directors present may choose one of their number to be chairman of the meeting.
26. (1) The Board may, subject to the provisions of the Act, delegate any of its powers to committees consisting of such member or members of its body as it thinks fit.
(2) Any committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may be imposed on it by the Board.
26. (1) A committee may elect a chairman of its meetings.
(2) If no such chairman is elected, or if at any meeting the* chairman is not present within five minutes after the time appointed for holding the meeting, the members present may choose one ol their number to be chairman of the meeting.
27. (I) A committee may meet and adjourn as it thinks proper.
(2) Questions arising at any meeting of a committee shall be determined by a majority of votes of the members present, and im case of an equality of votes, the chairman shall have a second OP casting vote.
28. All acts done by any meeting of the Board or of a commit- tee thereof, or by any person acting as a director, shall, not- withstanding that it may be afterwards discovered that there was, some defect in the appointment of any one or more of such director* or of any person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such director or such person, had been duly appointed and was qualified to be a director.
29. Save as otherwise expressely provided in the Act, a resolutioni in writing, signed by all the members of the Board or a committee thereof for the time being entitled to receive notice of a meeting of the Board or committee, shall be as valid and effectual as if it had been passed at a meeting of the Board or committee, duly convened and held.
Bite. 1] THE GAZETTE OF INDIA EXTRAORDINARY 337*
Manager or Secretary
30. (1) A manager or secretary may be appointed by the Board for such term, at such remuneration and upon such conditions as it may think tit; and any manager or secretary so appointed may" be removed by the Board.
(2) A director may be appointed as manager or secretary.
31. A provision of the Act or these regulations requiring or authorising a thing to be done by or to a director and the manager or secretary shall not be satisfied by its being done by or to the same person acting both as director and as, or in place of, the manager or secretary.
The Seal
32. (1) The Board shall provide for the safe custody of the seaL.
(2) The seal of the company shall not be affixed to any instru- ment except by the authority of a resolution of the Board of direc- tors, and except in the presence of at least two directors and of the secretary or such other person as the Board may appoint for the- purpose; and those two directors and the secretary or other person as- aforesaid shall sign every instrument to which the seal of the com- pany is so affixed in their presence.
Names, Addresses, Descriptions and Occupations of Subscribers. 1. A. B. of Merchant 2. C. D. of , Merchant 3. E. F. of , Merchant 4. G. H, of , Merchant 5. I. J. of .., Merchant 6. K. L. of , Merchant 7. M, N. of , Merchant
Dated the day of 19 .
Witness to the above signatures X. Y. of
TABLE D
MEMORANDUM AND ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BT GUARANTEE AND HAVING A SHARE CAPITAL
Memorandum of Association
lst.~The name of the company Is "The Snowy Range Hotel Com- pariy, Limited".
2nd.—The registered office of the company will b« situate in. the State of West Bengal.
Brd.—The objects for which the company is established are "the lacllitating of travelling in the Snowy Range, by providing hotels, and conveyances by sea and by land for the accommodation of-
338 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
travellers and the doing of all such other things as are incidental or conducive to the attainment of the above object".
4th.—The liability of the members is limited.
5th.—Every member of the company undertakes to contribute to the assets of the company in the event of its being wound up while he is a member, or within one year after he ceases to be a member for payment of the debts and liabilities of the company, contracted before he ceases to be a member, and the costs, charges and expenses of winding up the same and for the adjustment of the rights of the
•contributories among themselves, such amount as may be required, not exceeding fifty rupees.
6th.—-The share capital of the company shall consist of five hundred thousand rupees, divided into five thousand shares of one hundred rupees each.
We, the several persons whose names and addresses are subscrib- ed are desirous of being formed into a company, in pursuance of this memorandum of association, and we respectively agree to take the number of shares in the capital of the company set opposite our res- ipective names.
Names, Addresses, Descriptions and Occupations of Subscribers.
1 A B of Merchai 2. C. D. of 3 E F of ... 4. G H. of „ 5 I J of „ 6. K. L. of 7. M. N. at
Total shares taken
Number of shares taken by each
subscriber
tit 200 25 30 40 15 s
10
325
«Dotcd the day of 19 . Witness to the above signatures.
X. Y. of
ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE AND
HAVING A SHARE CAPITAL
1. The number of members with which the company proposes to be registered is 100, but the directors may from time to time regis- ter an increase of members.
Smt. 1] THE GAZETTE OF INDIA EXTRAORDINARY 339
2. All the articles of Table A in Schedule I annexed to the Companies Act, 1956, shall be deemed to be incorporated with thlese articles and to apply to the company.
Names, Addresses,
1. A. B. of 2. C D of 3. E. F. of 4. G. H. of 5. I. J. of 6. K. L. of 7. M. N. of
Descriptions and Occupations of Subscribers.
Merchant.
Doted the day of.:. 19 . Witness to the above signatures.
X. Y. of TABLE E
MEMORANDUM AND ARTICLES QF ASSOCIATION OF AN TTNT.rvnTF.rt COMPANY Memorandum of Association
1st.—The name of the company is "The Patent Stereotype Com- pany".
2nd.—The registered office of the company will be situate in the State of West Bengal.
3rd.—The objects for which the company is established are "the working of a patent method of founding and casting stereotype plates of which method P. Q., of Bombay, is the sole patentee".
We, the several persons whose names are subscribed, are desirous of being formed into a company in pursuance of this memorandum of association, and we respectively agree to take the number of shares in the capital of the company set opposite our respective names.
N«imes, Addresses, Descriptions of Subscribers.
1. A. B. of 2. C D of 3, E. F. of . . . . .. . 4. G. H. of 5. I. J of 6. K. L. of 7. M. N. of
Total
Number of share and Occupations taken by each
subscriber Merchant 3
2 1
, 2 * 2
1 1
shares taken ... 12
Dated the day of 19 . Witness to the above signatures.
X. Y. of ^
34O THE GAZETTE OF INDIA EXTRAORDINABY [PABT n
AHTICLKS OF ASSOCIATION OF AN UNLIMITED COMPANY
1. The number of members with which the company proposes to be registered is 20, but the Board may from time to time register an increase of members.
2. The share capital of the company is twenty thousand rupees, divided into twenty shares of one thousand rupees each.
3. The company may by special resolution—
(a) increase the share capital by such sum to be divided into shares of such amount as the resolution may prescribe;
(b) consolidate its shares into shares of a larger amount than its existing shares;
(c) sub-divide its shares into shares »f a smaller amount than its existing shares;
(d) cancel any shares which at the date of the passing of the resolution have not been taken or agreed to be taken by any person;
(e) reduce its share capital in any way.
4. All the articles of Table A in Schedule I to the Companies Act, 1956, except articles (36, 37, 38, 39, 44, 45 and 46) shall be deemed to be incorporated with these articles and to apply to the company.
r Names, Addresses, Descriptions and Occupations of Subscribers,
1. A. B. of Merchant. 2. C. D. of , 3 E. F. of 4. G. H. of „ 6. I. J. of „ „ 6. K. L. of „ „ 7. M. N. of
Dated the day of 19 Witness to the above signatures.
X. Y. of
TABLE F V
FORM OF STATEMENT TO BE PUBLISHED BY LIMITED BANKING COM. PANIES, INSURANCE COMPANIES AND DEPOSIT, PROVIDENT OF BENE- FIT SOCIETIES.
*The share capital of the company is Rs divided into •hares of Rs each.
The number of shares issued is Calls to the amount ol Rs per share have been made, under which the sum of Rs , has been received.
"SEC. 1] THE GAZETTE OF INDIA EXTRAORDINAHY 341
llhe liabilities of the company on the thirty-first day of Decem- ber (or thirtieth day of June) were—
Debts owing to sundry persons by the company: Under decree, Rs. On mortgages or bonds, Rs. On notes, bills or hundis, R». On other contracts, Rs. On estimated liabilities, Rs.
The assets of the company on that day were:1
Government securities [stating them], Rs. Bills of exchange, hundis, and promissory notes, Rs. Cash at the Bankers, Rs.
- Other securities, Rs. •If the company hasno capital divided Into ghares, the portion of the statemen
relating to capital and shares mult be omitted
342 THE GAZETTE OF INDIA EXTRAORDINARY [PART H
SCHEDULE II
[See sections 44(2)(a) and 56.]
Matters to be specified in Prospectus and Reports to be set out therein
PART I
MATTERS TO BE SPECIFIED 1. (1) Save as hereinafter provided in clause 27, the main objects
of the company, with the names, addresses, descriptions and occu- pations of the signatories of the memorandum and the number of shares subscribed for by them.
(2) The number and classes of shares, if any, and the nature and extent of the interest of the holders in the property and profits Of the company.
(3) The number of redeemable preference shares intended to be issued with the date of redemption or, where no date is fixed, the period of notice required for redeeming the shares and the pro- posed method of redemption.
2. (1) The number of shares, if any, fixed by the articles as the qualification of a director.
(2) Any provision in the articles as to the remuneration of th« directors whether for their services to the company as directors* managing directors or otherwise.
3.(1) The names, addresses, descriptions and occupations of— (a) the directors or proposed directors; (b) the managing director or proposed managing director,,
if any; (c) the managing agent or proposed managing agent, if any; (d) secretaries and treasurers or proposed secretaries and
treasurers, if any; (e) the manager or proposed manager, if any.
(2) Any provision in the articles or in any contract which has been entered into as to the appointment of a managing director, managing agent, secretaries and treasurers or manager, the remuneration pay- able to him or them, and the compensation, if any, payable to him or them for loss of office.
4. In the case of a company managed by a managing agent or secretaries and treasurers which is a body corporate, the subscribed capital of that body.
5. Where shares are offered to the public for subscription, parti- culars as to—
(a) the minimum amount which, in the opinion of the directors or of the signatories of the memorandum arrived at after due inquiry, must be raised by the issue of those shares in order to provide the sums, or, if any part thereof is to be defrayed in any other manner, the balance of the sums, required to be provided In
$•{:. 1] THE GAZETTE OF INDIA EXTRAORDINARY 343
respect of each of the following heads and distinguishing the amount required under each head:—
(i) the purchase price of any property purchased or to be purchased which is to be defrayed in whole or in part out of the proceeds of the issue;
(ii) any preliminary expenses payable Dy the company, and any commission so payable to any person hi consideration of his agreeing to subscribe for, or of his procuring or agree- ing to procure subscriptions for, any shares in the company;
(Hi) the repayment of any moneys borrowed by the company in respect of any of̂ the foregoing matters;
(iu) working capital; (u) any other expenditure, stating the nature and purpose
thereof and the estimated amount in each case; and (b) the amounts to be provided in respect of the matter*
aforesaid otherwise than out of the proceeds of the issue and the sources out of which those amounts are to be provided.
6. The time of the opening of the subscription lists. 7. The amount payable on application and allotment on each share,
and in the case of a second or subsequent offer of shares, the amount offered for subscription on each previous allotment made within the two preceding years, the amount actually allotted, and the amount, li any, paid on the shares so allotted.
8. The substance of any contract or arrangement or proposed contract or arrangement, whereby any option or preferential right of any kind has been or is proposed to be given to any person to subscribe for any shares in or debentures of, a company giving the number description and amount of any such shares or debentures and includ- ing the following particulars of the option or right: —
(a) the period during which the option or right is exercis- able;
(b) the price to be paid for shares or debentures subscribed for under the option or right;
(c) the consideration, if any, given or to be given for the option or right or for the right thereto;
(d) the names, addresses, descriptions and occupations, of the persons to whom the option or right or the right thereto has been given or is proposed to be given or, if given to existing shareholders or debenture holders as such, the description and numbers of the relevant shares or debentures;
(e) any other material fact or circumstances relevant to the grant of the option or right.
Explanation.—Subscribing for sh£ires or debentures shall, for the purposes of this clause, include acquiring them from a person to whom they have been allotted or agreed to be allotted with a view to his offering them for sale.
0. The number, description, and amount of shares and debentures which within the two preceding years have been issued, or agreed to be issued, as fully or partly paid up otherwise than In cash, and In
344 ™E GAZETTE OF INDIA EXTRAORDINARY [PART II
the latter case the extent to which they are so paid up, and in either case the consideration for which those shares or debentures have beett issued or agreed to be issued.
10. The amount paid or payable by way of premium, if any, on each share which has been issued within the two years preceding the date of the prospectus, or is to be issued, stating the dates or proposed dates of issue and, where some shares have been or are to be issued at a premium and other shares of the same class at a lower pre- mium, or a.t par or at a discount, the reasons for the differentiation, and how any premiums received have been or are to be disposed of.
11. Where any issue of shares or debentures is underwritten, the names of the underwriters, and the opinion of the directors that the resources of the underwriters are sufficient to discharge their obligations.
12. (I) As respects any property to which this clause applies—
(a) the names, addresses, descriptions and occupations of the vendors;
(b) the amount paid or payable in cash, shares or debentures to the vendor and, where there is more than one separate vendor, or the company is a sub-purchaser, the amount so paid or pay- able to each vendor, specifying separately the amount, if any, paid or payable for goodwill;
(c) the nature of the title or interest in such property acquired or to be acquired by the company;
(d) short particulars of every transaction relating to the property completed within the two preceding years, in which-i any vendor of the property to, the company or any person who- ia, or was at the time of the transaction, a promoter or a director or proposed director of the company had any interest, direct or indirect, specifying the date of the transaction and the name of such promoter, director or proposed director and stating the amount payable by or to such vendor, promoter, director or proposed director in respect of the transaction.
(2) The property to which sub-clause (1) applies is property pur- chased or acquired by the company or proposed so to be purchased or acquired, which is to be paid for wholly or partly out of the pro- ceeds of the issue offered for subscription by the prospectus or the purchase or acquisition of which has not been completed at the -date of the issue of the prospectus, other than property—
(a) the contract for the purchase or acquisition whereof was entered into in the ordinary course of the company's business, the contract not being made in contemplation of the issue nor the issue in consequence of the contract; or
(b) as respects which the amount of the purchase money is not material.
(3) For the purposes of this clause, where any of the vendors is a firm, the members of the firm shall not be treated as separate vendors.
iW;. 1] THE GAZETTE OF INDIA EXTRAORDINARY %i*
13. The amount, if any, or the nature and extent of any considers^ tion, paid within the two preceding years, or payable, as commission to any person (including commission so paid or payable to any sub- underwriter, who is a promoter or officer ol the company) for subs- cribing or agreeing to subscribe, or procuring or agreeing to procure subscriptions for any shares in, or debentures of the company; and giving also the following particulars, namely :-•-
(a) the name, address, description and occupation of each, such person;
(hj particulars of the amounts which each has underwritten or sub-underwritten as aforesaid;
(c) the rate of the commission payable to each for such underwriting or sub-underwriting;
(d) any other material term or condition of the underwriting or sub-underwriting contract with each such person; and
(e) when any such person is a company or a firm, the nature of any interest, direct or indirect, in such company or firm of any promoter or officer of the company jn respect of which the prospectus is issued.
14. (i) Save as hereinafter provided in clause 27, the amount or estimated amount of preliminary expenses and the persons by whom any of those expenses have been paid or are payable.
(2) Save as aforesaid, the amount or estimated amount of th« expenses of the issue and the persons by whom any of those ex- penses have been paid or are payable.
15. Any amount or benefit paid or given within the two preced- ing years or intended to be paid or given to any promoter or officer, and the consideration for the payment or the giving of the benefit.
16. (1) The dates of, parties to, and general nature of— (a) every contract appointing or fixing the remuneration
of a managing director, managing agent, secretaries and treasurers or manager whenever entered into, that is to say, whether with- in, or more than, two years before the date of the prospectus;
(b) every other material contract, not being a contract entered into in the ordinary course of the business carried on or intended to be carried on by the company or a contract entered into more than two years before the date of the prospectus.
(2) A reasonable time and place at which any such contract or a copy thereof may be inspected.
• 17. The names and addresses of the auditors, if any, of the
company. 1
18. (1) Full particulars of the nature and extent of the interest, If any, of every director or promoter—
(o) in the promotion of the company; or
346 THE GAZETTE OF INDIA EXTRAORDINARY [PAHT II
(b) in any property acquired by the company within two years of the date of the prospectus or proposed to be acquired by it.
(2) Where the interest of such a director or promoter consists in being a member of a firm or company, the nature and extent of the interest of the firm or company, with a statement of all sums paid or agreed to be paid to him or to the firm or company in cash or shares or otherwise by any person either to induce him to become, or to qualify him as, a director, or otherwise for services rendered by him or by the firm or company in connection with the promotion or formation of the company.
19. If the share capital of the company is divided into different classes of shares, the right of voting at meetings of the company conferred by, and the rights ki respect of capital and dividends at- tached to, the several classes of shares respectively.
20. Where the articles of the company impose «ny restrictions upon the members of the company in respect of the right to attend, speak or vote at meetings of the company or of the right to transfer shares, or upon the directors of the company in respect of thalr powers of management, the nature and extent of those restrictions.
21. (1) In the case of a company which has been carrying on business, the length of time during which the business of the com- pany has been carried on.
(2) If the company proposes to acquire a business which has been carried on for less than three years, the length of time during which the business has been carried on,
22. (1) If any reserves or profits of the company or any of its subsidiaries have been capitalised, particulars of the capitalisation.
(2) Particulars of the surplus arising from1 any revaluation of the assets of the company or any of its subsidiaries during tha two years preceding the date of the prospectus and the manner in which such surplus has been dealt with.
23. A reasonable time and place at which copies of all "balance sheets and profit and loss accounts, if any, on which the report of the auditors under Part II of this Schedule is based, may bn inspected.
PART II
REPORTS TO BE 3nr OUT
24. (1) A report by the auditors of the company with respect to—
(a) profits and losses and assets and liabilities, in accord- ance with sub-clause (2) or (3) of this clause, as the case may require; and
(b) the rates of the dividends, if any, paid by the company in respect of each class of shares in the company for each of
flpJc. 1J THE GAZETTE OF INDIA EXTRAORDINARY 347
the five financial years immediately preceding the issue of the prospectus, giving particulars of each class of shares on which such dividends have been paid and particulars of the cases in which no dividends have been paid in respect of any class of shares for any of those years;
and, if no accounts have been made up in respect of any part of the period of five years ending on a date three months before the issue of the prospectus, containing a statement of that fact.
(2) If the company has no subsidiaries, the report shall— * (a) so far as regards profits and losses, deal with the
profits or losses of the company (distinguishing items of a non- recurring nature) for each of the five financial years immediate- ly preceding the issue of the prospectus; and
(b) so far as regards assets and liabilities, deal with the assets and liabilities of the company at the last date to which the accounts of the company were made up. (3) If the company has subsidiaries, the report shall—
(a) so far as regards profits and losses, deal separately with the company's profits or losses as provided by sub-clausa (2) and in addition, deal either—
(i) as a whole with the combined profits or losses of its subsidiaries, so far as they concern members of the company; or
(ii) individually with the profits or losses of each subsidiary, so far as they concern members of the com- pany;
or, instead of dealing separately with the company's profits or losses, deal as a whole with the profits or losses of the company, and, so far as they concern members of the company, with the combined profits or losses of its subsidiaries; and
(b) so far as regards assets and liabilities, deal separately with the company's assets and liabilities as provided by sub- clause (2) and in addition, deal either—
(i) as a whole with the combined assets and liabilities of its subsidiaries, with or without the company's assets and liabilities; or
(ii) individually with the assets and liabilities of each subsidiary;
and shall indicate as respects the assets and liabilities of the subsidiaries, the allowance to be made for persons other than members of the company.
25. If the proceeds, or any part of the proceeds, of the issue of the shares or debentures are or is to be applied directly or indirectly—
(i) in the purchase of any business; or
348 THE GAZETTE OF INDIA EXTRAORDINARY [PAHT II 4
(ii) in the purchase of an interest in any business and by reason of that purchase or, anything to be done in consequence thereof, or in connection therewith, the company will become entitled to an interest, as respects either the capital or profits and losses or both, in such business exceeding fifty per cent, thereof;
a report made by accountants (who shall be named in the prospectus) upon—
(a) the profits or losses of the business for each of the five financial years immediately preceding the issue of the prospec- tus; and
(b) the assets and liabilities of the business at the last data to which the accounts of the business were made up, being a dat« not more than one hundred and twenty days before the date at the issue of the prospectus.
28. (1) If—
(a) the proceeds, or any part of the proceeds, of the issue of the shares or debentures are or is to be applied directly or in- directly in any manner resulting in the acquisition by the com- pany of shares in any other body corporate; and
(b) by reason of that acquisition or anything to be done in consequence thereof or in connection therewith, that body cor- porate will become a subsidiary of the company;
a report made by accountants (who shall be named in the prospectus) upon—
(i) the profits or losses of the other body corporate for each of the five financial years immediately preceding the issue of the prospectus; and
(ii) the assets and liabilities of the other body corporate at the last date to which its accounts were made up.
(2) The said report shall—
(0) indicate how the profits or losses of the other body corporate dealt with by the report would, in respect of the shares to be acquired, have concerned members of the company and what allowance would have fallen to be made, in relation to assets and liabilities so dealt with, for holders of other shares, if the company had at all material times held the shares to be acquired; and
(b) where the other body corporate has subsidiaries, deal with the profits or losses and the assets and liabilities of the body corporate and its subsidiaries In the manner provided by sub-clause (3) of clause 24 of this Schedule in relation to the oompany and Its subsidiaries.
SBC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 349
PART III
PROVISIONS APPLYING TO PAHTS I AND II OF SCHEDULE
27. Clause 1 (so far as it relates to particulars of the signatories of the memorandum and the shares subscribed for by them) and clause 14 (so far as it relates to preliminary expenses) of this Schedule shall not apply in the case of a prospectus issued more than two years after the date at which the company is entitled to commence business.
28. Every person shall, for the purposes of this Schedule, be deem- ed to be a vendor who has entered into any contract, absolute or conditional, for the sale or purchase, or for any option of purchase, of any property to be acquired by the company, in any case where—
(a) the purchase money is not fully paid at the date of the issue of the prospectus;
(b) the purchase money is to be paid or satisfied, wholly or in part, out of the proceeds of the issue offered for subscription by the prospectus;
(c) the contract depends for its validity or fulfilment on the result of that issue.
29. Where any property to be acquired by the company is to be taken on lease, this Schedule shall have effect as if the expression "vendor" included the lessor, the expression "purchase money" included the consideration for the lease, and the expression "sub- purchaser" included a sub-lessee.
30. If in the case of a company which has been carrying on busi- ness, or of a business which has been carried on for less than five financial years, the accounts of the company or business have only been made up in respect of four such years, three such years, two such years or one such year, Part II of this Schedule shall have effect as if references to four financial years, three financial years, two financial years or one financial year, as the case may be, were substituted for references to five financial years.
31. Where the five financial years immediately preceding the issue of the prospectus which are referred to in Part II of this Schedule or in this Part cover a period of less than five years, refer- ences to the said five financial years in either Part shall have effect as if references to a number of financial years the aggregate period covered by which is not less than five years immediately preceding the issue of the prospectus were substituted for references to the five financial years aforesaid.
32. Any report required by Part II of this Schedule shall either—
(a) indicate by way of note any adjustments as respects the figures of any profits or losses or assets and liabilities dealt with by the report which appear to the persons making the report necessary; or
(b) make those adjustments and indicate that adjustments have been made.
j 5 o THE GAZETTE OP INDIA. EXTRAORDINARY [PAST U
33. Any report by accountants required by Part II of this Schedule—
(a) shall be made by accountants qualified under this Act for appointment as auditors of a company; and
(b) shall not be made by any accountant who la an officer or servant, or a partner or in the employment of an officer or servant, of the company or of the company's subsidiary or hold- ing company or of a subsidiary of the company's holding company.
For the purposes of this clause, the expression "officer" shall in- clude a proposed director but not an auditor.
Stac. 1] THE GAZETTE OF INDIA EXTRAORDINARY 351
SCHEDULE m (See section 70)
FbRM OF STATEMENT IN IJEU OF PROSPECTUS TO BE DEUVERED TO REGIS- TRAR BY A COMPANY WHICH DOES NOT I S S U E A PROSPECTUS OR WHICH
1 DOES NOT GO TO ALLOTMENT ON A PROSPECTUS ISSUED, AND REPORTS TO BE SET OUT THEREIN.
PART I FbRM OF STATEMENT AND PARTICULARS TO BE CONTAINED THEREIN.
THE COMPANIES ACT, 1956.
Statement in lieu of Prospectus delivered, for registration by [Insert the name of the Company.]
Pursuant to section 70 of the Companies Act, 1950. Delivered for registration by The nominal share capital of the
company " s- Divided into Shares of Rs. each.
» n n » » it
Amount (if any) of above capital Shares of Rs. each, which consists of redeemable pre- ference shares.
The earliest date on which the com- pany has power to redeem these shares.
Names, addresses, descriptions and occupations of— (a) directors or proposed directors; (b) managing director or proposed
managing director; (c) managing agent or proposed
managing agent; (d) secretaries and treasurers or
proposed secretaries and trea- surers;
(e) manager or proposed manager. Jftmy provision in the articles of the
company, or in any contract irres- pective of the time when it was entered into, as to the appointment of and remuneration payable to the persons referred to in (a), (b), (c), (d) and (e) above.
If the share capital of the company Is divided into different classes of shares, the right of voting at meet- ings of the company conferred by, and the rights in respect of capital and dividends attached to, the several classes of shares respec- tively.
35* THE GAZETTE OF INDIA EXTRAORDINARY [PART II
Number and amount of shares and debentures agreed to be issued as fully or partly paid up otherwise than in cash.
The consideration for the intended issue of those shares and debentures.
Number, description and amount of any shares or debentures which any person has or is entitled to be given an option to subscribe for, or to acquire from, a person jo whom they have been allotted or agreed to be allotted with a view to his offering them for sale.
Period during which the option is exer- cisable.
Price to be paid for shares or deben- tures subscribed for or acquired under the option.
Consideration for the option or the right to option.
Persons to Whom the option or the right to option was given or, if given to existing shareholders or debenture holders as such, the relevant shares or debentures.
Names, occupations and addresses of vendors of property purchased or ac- quired, or proposed to be purchased or acquired by the company except where the contract for its purchase or acquisition was entered into in the ordinary course of the business intended to be carried on by the company or the amount of the purchase money is not material.
Amount (in cash, shares or deben- tures) payable to each separate vendor.
.Amount (if any) paid or payable (in ' cash, shares or debentures) for each > such property, specifying amount (if any ) paid or payable for goodwill.
Short particulars of every transaction relating to each such property which was completed within the two pre- ceding years and in which any vendor to the company or any per- son who is, or was at the time thereof, a promoter director or pro- posed director of the company had any interest, direct or indirect.
1. Shares of Rs. fully paid.
2. Shares upon which Rs. per share credited as paid.
3 Debentures. Rs.
4. Consideration : « 1. Shares of Rs and
Debentures of Rs
2. Until
i-
4. Consideration :
5. Names and addresses—
Total purchase price Rs Cash . . , Rs Shares . . . Rs Debentures . . R<; . . , , . .
Goodwill . . RB
Sac. 1} THE GAZETTE OF ITTOIA EXTRAORDINAKY 35*
Amount (if any) paid or payable as commission for subscribing or agreeing to subscribe or procuring or agreeing to procure subscriptions for any shared or debentures in the company ; or
Rate of the commission . The number of shares, if any, which
persons have agreed to subscribe for a commission.
If it is proposed to acquire any busi- ness, the amount, as certified by the persons by whom the accounts of the business have been audited, of the net profits of the business in respect of each of the five years immediately preceding the date of this statement, provided that in the case of a business which has been carried on for less than five years and the accounts of which have only been made up in respect of four years, three years, two years or one year, the above requirerrients shall have effect* as if references to four years, three yeart, two years or one year, as the case may be, were substituted for refer- ences to five years, and in any such case the statement shall say how long the business to be acquired
* has been carried oft.
Where the financial year with respect to which the accounts of the business have been made up is greater or less than a year, references to five years, four years, three ygars, two years, and one year in this paragraph shall have effect as if references to such number of financial years as in the aggregate, cover a period of not less than five years, four years, three years, two years or one year, as the case may be, were substitu- ted for references to three years, two years and one year respectively.
Estimated amount of preliminary ex- penses.
By whom those expenses have been paid or are payable.
Amount paid or intended to be paid to any promoter.
Amount paid, „ payable.
Rate per cent
Rs.
Name of promoter. Amount Re.
354 THE GAZETTE OF INDIA EXTRAORDINARY (PARS II
Consideration for the payment. Any other benefit given or intended
to be given to any promoter. Consideration for the benefit.
Dates of, parties to, and general nature of—
(a) contract appointing or fixing the remuneration of direc- tors, managing director, ma- naging agent, secretaries and treasurers, or manager; and
(b) every other material contract (other than (i) contracts en- tered into in the ordinary course of the business in- tended to be carried on by the company or (it) entered into more than two years before the delivery of this statement.)
Time and place at which (7) the con- tracts or copies thereof or (2) (») in the case of a contract not reduced into writing, a memorandum giving full particulars thereof, and (it) in the case of a contract wholly or partly in a language other than English, a copy of a translation thereof in English or embodying a translation in English of the parts in the other language, as the case may be, being a translation certified in the pres- cribed manner to be a correct trans- lation, may be inspected.
Names and addresses of the auditors of the company (if any).
Full particulars of the nature and extent of the interest of every director, managing director, managing agent, secretaries and treasurers or manager in the promotion of or in the property proposed to be acquired by the company, or where the interest of such a director consists in being a partner in a firm, the nature and extent of the interest of the firm, with a statement of all sums paid or agreed to be paid to him or to the firm in cash or shares, or otherwise, by any person either to induce him to become, or to qualify him as, a director, or otherwise for services
Consideration : Name of promoter : Nature and value of benefit 1 Considerauon :
-SEC. 1J THE GAZETTE OF INDIA EXTRAORDINARY 355
rendered toy him or by the firm in connection with the promo- tion or formation of the com- pany.
(Signatures of the persons above- named as directors or proposed _ _ _ _ _ _ directoie, or of their agents authorised im writing.)
Date ——-—
PART II REPORTS TO BE SET OUT
1. Where it is proposed to acquire a business, a report made by .accountants (who shall be named in the statement) upon—
(a) the profits or losses of the business in respect of each of the five financial years immediately preceding the delivery of the statement to.the Registrar; and
(fo) the assets and liabilities of the business as at the last date to which the accounts of the business were made up.
2. (I) Where it is proposed to acquire shares in a body corporate which by reason of the acquisition or anything to be done in conse- quence thereof or in connection therewith will become a subsidiary of the company, a report made by accountants (who shall be named in the statement) with respect to the profits and losses and assets and liabilities of the other body corporate in accordance with sub- clause (2) or (3) of this clause, as the case may require, indicating how the profits or losses of the other body corporate dealt with by the report would, in respect of the shares to be acquired, have con- cerned members of the company, and what allowance would have fallen to be made, in relation fo assets and liabilities so dealt with, for holders of other shares, if the company had a1 all material times held the shares to be acquired.
(2) If the other body corporate has no subsidiaries, the report referred to in sub-clause (1) shall—
(a) so far as regards profits and losses, deal with the profits or losses of the body corporate in respect of each of the five financial years immediately preceding the delivery of the state- ment to the Registrar; and
(b) so far as regards assets and liabilities, deal with the assets and liabilities of the body corporate as at the last date to which the accounts of the body corporate were made up.
(3) If the other body corporate has subsidiaries, the report re- ferred to in sub-clause (I) shall—
(a) so far as regards profits and losses, deal separately with the other body corporate's profits or losses as provided by sub- clause (2) and in addition deal either—
(i) as a whole with the combined profits or losses of its subsidiaries so far as they concern members of the other body corporate; or
356 THE GAZETTE OF INDIA EXTRAORDINARY [PAHT H
(ti) individually with the profits or loases of each subsi- diary, so far as they concern members of the other body corporate; or, instead of dealing separately with the other body cor-
porate's profits or losses, deal as a whole with the profits or losses of the other body corporate and, so far as they concern members of the*other body corporate, with the combined profits or losses of its subsidiaries; and
(b) so far as regards assets and liabilities, deal separately with the other body corporate's assets and liabilities as provided by sub-clause (2) and, in addition, deal either—
(1) as a whole with the combined assets and liabilities of its subsidiaries, with or without the other body corporate's assets and liabilities; or
(it) individually with the assets and liabilities of each subsidiary; and shall indicate, as respects the assets and liabilities of the subsidiaries, the allowance to be made for persons other than members of the company.
PART III PROVISIONS APPLYING TO PARTS I AND II OF THIS SCHEDULE
3. (1) In this Schedule, the expression "vendor" includes a vendor as defined in Part III of Schedule II.
(2) Clause 31 of Schedule II shall apply to the interpretation of Part II of this Schedule as it applies to the interpretation of Part II of Schedule II.
4. If in the case of a business which has been carried on, or of a body corporate which has been carrying on business, for less than five financial years, the accounts of the business or body corporate have only been made up in respect of four such years, three such years, two such years or one such year, Part II of this Schedule shall have effect as if references to four financial years, three finan- cial years, two financial years or one financial year, as the case may be, were substituted for references to five financial years.
5. Any report required by Part II of this Schedule shall either— (a) indicate by way of note any adjustments as respects the
ligures of any profits or losses or assets and liabilities dealt with by the report which appear to the person making the report necessary; or
(b) make those adjustments and indicate that adjustments have been made.
6. Any report by accountants required by "Part II of this Sche- dule-
fa) shall be made by accountants qualified under this Act for appointment as auditors of a company; and
(b) shall not be made by any accountant who is an officer or servant, or a partner or in the employment of an officer or servant, of the company or of the company's subsidiary or hold- ing company or of a subsidiary of the company's holding com- pany.
For the purposes of this clause, the expression ''officer" shall include a proposed director but not an auditor.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 357
SCHEDULE IV [See section 44(2X6)]
FORM OF STATBMBNT IN LIBU OF PROSPECTUS TO BE DELIVERED TO REGISTRAR BY A PRIVATE COMPANY ON BECOMING A PUBLIC COMPANY AND REPORTS TO B(E SBT OUT THEREIN.
PART I FO«M OF STATEMENT AND PARTICULARS TO BE CONTAINKD THHRSIH.
T H E COMPANIBS ACT, 1956
Statement in lieu of Prospectus delivered for registration by
[Insert the name of the Company.}
Pursuant to clause (b) of sub-section (2) of section 44 of the Companies Act, 1956.
Delivered for registration by The nominal share capital of the company. Rs. Divided into Shares of Rs. each.
i 7 > J •>%
Amount (if any) of above capital which Shares of Rs. each, consists of redeemable preference shares.
The earliest date on which the company has power to redeem these shares.
!Names, addresses, descriptions and occupations of—
(a) directors or proposed directors; (fc) managing director or proposed
managing direcioi; (c) managing' agent or proposed
managing agent; (d) secretaries and treasurers or pro-
posed secretaries and treasurers; (e) manager or proposed manager.
*Any provision in the articles of the com- pany, or in any contract irrespective of the time when it was enteied into, as t(o the appointment of and remun- eration payable to the persons referred to in(a), (b), (c), (d) and (e) above.
Amount of shares issued . , , Sh.ues
Amount of commission paid or payable in connection therewith.
Amount of discount, if any, allowed on the issue of any shares, or so much thereof as has not been written off .at the date of the statement.
q<8 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
Unless more than two years have elapsed since the date on which the company was entitled to commence business :— Amount of preliminary expenses. Rs By whom those expenses have been paid
or are payable. Amount paid or intended to be paid. Name of promoter :
to any promoter. Amount Rs Consideration for the payment. Consideration : Any other benefit ^iven or intended to Name of promoter :
be given to qny promoter. Nature and value of benefit r
Consideration for the benefit. Consideration i
If the share capital of the company is divided into different classes of shares, the right of voting at meetings of the company conferred by, and the rights in respect of capital and dividends attached to, the several classes of shares respectively.
Number and amount of shares and de- i . . . Shares of Rs fully bentures issued within the two years paid. preceding the date of this statement 2 . . . Shares upon which Rs as fully or partly paid up otherwise per share credited as paid. than for cash or agreed to be so issued at the date of this statement-
Consideration for the issue of those shares 3. Debentures for Rs each or debentures. 4. Consideration •
Number, description and amount of any 1.. .shares of Rs and • shares or debentures which any person debentures of Rs
has or is entitled to be given an option to subscribe for, or to acquire trom, a person to whom they have been allotted or agreed to be allotted with a view to his offering them for sale.
Period during which the option is excr- 2. Until, cisable,
Price to be paid for shares or debentures 3. subscribed for or acquired under the option.
Consideration for the option or right to 4. Consideration : option.
Persons to whom the option or the right 5. Names and addresses r to option was given or, if given to existing shareholders or debenture holders as such, the relevant shares or debentures.
Names, addresses, descriptions and occupa- tions of vendors of property (1) purchased or— ~ >
SEC 11 THE GAZETTE OF INDIA EXTRAORDINARY 359
acquired by the company within the two years preceding the date of this statement or (2) agreed or proposed to be purchased or acquired by the company, except where the contract for its purchase or acquisition was entered into in the ordinary course of business and there is no connection between the transaction and the com- pany ceasing to be a private company or where the amount of the purchase money is not material.
Amount (in cash, shares or debentures) paid or payable to each separate vendor.
Amount paid or payable in cash, shares Total purchase price Rs -•- or debentures for each such property, • specifying the amoun oaid or payable Cash . . . Rs for goodwill. Shares . . Rs.. . .
Debentures . . Rs
Goodwill . . R« Short particulars of every Transaction re-
lating to each such property which was completed within the two preceding years and in which any vendor to the company or any person who is, or was at the time thereof, a promoter, director or proposed director of the company had any interest direct or indirect.
Amount (if any) paid or payable as com- Amount paid . . . . mission for subscribing or agreeing Amount payable to subscribe or procuring or agreeing Rate per cent to procure subscriptions for any shares or debentures in the company ; or rate of the commission.
The number of shares, if any, which per- sons have agreed to subscribe for a commission.
If it is proposed to acquire any business, the amount, as certified by the persons by whom the accounts of the business have been audited, of the net profits of the business in respect of each of the five years immediately preceding the date of this statement, provided that in the case of a bussincss which has b|een carried on for le•, s than five yeari, and the accounts of which have only been made up in respect of four years, three years, two years or one year, the above requirements shall have effect as if references to four years, three years, two years or one year, as the case
30o . THE GAZETTE OF INDIA EXTRAORDINARY [PART I I
may be, were substituted for refer- ences to five years, and in any such case, the statement shall say how long the business to be acquired has been carried on.
Where the financial year with respect to which the accounts of the business have been made up is greater or less than a year, references to five years, four years, three years, two years and one year in this paragra- ph shall have effect as if references to such number of financial years as, in the aggregate, cover a period of not less than five years, four years, three years, two years or one year, as the case may be, were substituted for references to three years, two years and one year respectively.
Dates of, parties to, and general nature of—
(a) contract appointing or fixing the remuneration of directors, managing director, managing agent, secretaries and treasurers or manager ; and
(ft) every other material contract [other than (i) contracts en- tered into in the ordinary eourse of the business intend- ed to be carried on by the company or (it) entered into more than two years before the delivery of this statement.]
Time and place at which (/) the contracts or copies thereof; or (2) (i) in the case of a contract not reduced into writing, a memorandum giving full particulars thereof, and (it) in the case of a con- tract wholly or partly in a language other than English, a copy of trans- lation thereof in English or embody- ing a translation in English of the parts in the other language, as the case may be, being a translation certified in the prescribed manner to be a cor- rect translation, may be inspected.
Nances and addresses of the auditors of the company.
Sfec. 1] THE GAZETTE OF INDIA EXTRAORDINARY 361
Full particulars of the nature and extent of the interest of every director, managing director, managing agent, secretaries and treasurers or manager, in any , property purchased or aquired by the company within the two years preceding the date of this statement or proposed to be purchased or acqui red by the company or, where the interest of such a director consists in being a partner in a firm, the nature and extent of the interest of the firm, with a statement of all sums paid or agreed to be paid to him or to the firm in cash or shares, or otherwise, by any person either to induce him to become, or to qualify him as, a director, or otherwise for services rendered or to be rendered to the company by him or by the firm.
Rates of the dividends (if any) paid by the company in respect of each class of shares in the company in each of the five financial years immediately preceding the date of this statement or since th- incorporation of the com- pany, whichever period is shorter.
Particulars of the cases in which no divi- dends have been paid in respect of any class of shares in any of these years.
(Signatures of the persons above-named as directors or proposed directors or of their agents authorised in writing.)
Date. ' ~~ "
PART II
REPORTS TO BE SET OUT
1. If unissued shares or debentures of the company are to be ap- plied in the purchase of a business, a report made by accountants (who shall be named in the statement) upon—
(a) the profits or losses of the business in respect of each of the five financial years immediately preceding the delivery of the statement to the Registrar; arjd
(b) the assets and liabilities of the business as at the last date to which the accounts of the business were made up.
2. (1) If unissued shares or debentures of the company are to be applied directly or indirectly in any manner resulting in the acquisi- tion of shares in a body corporate which by reason of the acquisitios
362 THE GAZETTE OF INDIA EXTRAORDINARY (JPARI II
or anything to be done in consequence thereof or in connection therewith will become a subsidiary of the company, a report made by accountants (who shall be named in the statement) with respect to the profits and losses and assets and liabilities of the other body corporate in accordance with sub-clause (2) or (3) of this clause, as the case may require, indicating how the profits or losses of the other body corporate dealt with by the report would, in respect of the shares to be acquired, have concerned members of the company, and what allowance would have fallen to be made, in relation to assets and liabilities so dealt with, for holders of other shares, if the company had at all material times held the shares to be acquired.
(2) If the other body corporate has no subsidiaries, the report referred to in sub-clause (I) shall—
(a) so far as regards profits and losses, deal with the profits or losses of the body corporate in respect of each of the five iinancial years immediately preceding the delivery of the state- ment to the Registrar; and
(b) so far as regards assets and liabilities, deal with the assets and liabilities of the body corporate as at the last date to which the accounts of the body corporate were made up.
(3) If the other body corporate has subsidiaries, the report referred Co in sub-clause (1) shall—
(a) so far as regards profits and losses, deal separately with the other body corporate's profits or losses as provided by sub- clause (2), and in addition deal either—
(i) as a whole with the combined profits or losses of its subsidiaries, so far as they concern members of the other body corporate; or
' (ii) individually with the profits or losses of each subsi- diary, so far as they concern members of the other body corporate;
or, Instead of dealing separately with the other body corporate's profits or losses, deal as a whole with the profits or losses of the other body corporate and, so far as they concern members of the other body corporate, with the combined profits or losses of its subsidiaries; and
(b) so far as regards assets and liabilities, deal separately with the other body corporate's assets and liabilities as provided by sub-clause (2) and in adiilion. dn1 n i h n —
(i) as a whole with the combined assets and liabilities of its subsidiaries, with or without the other body corporate's assets and liabilities; or
(ii) individually with the assets and liabilities of each subsidiary; and shall indicate, as respects the assets and liabilities of the subsidiaries, the allowance to be made for persons other than members of the company.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 363
PART III PROVISIONS APPLYING TO PARTS I AND II OF THIS SCHEDULE
3. (1) In this Schedule, the expression "vendor" includes a ven- dor as defined in Part III of Schedule II.
(2) Clause 31 of Schedule II shall apply to the interpretation of Parts 1 and II of this Schedule as it applies to the interpretation of Part II of Schedule II.
4. II in the case of a business which has been carried on, or of a body corporate which has been carrying on business, for less than five financial years, the accounts of the business or body corporate have only been made up in respect of four such years, three such years, two such years or one such year, Parts I and II of this Sche- dule shall have effect as if references to four financial years, three financial years, two financial years or one financial year, as the case may be, were substituted for references to five financial years.
5. Any report.required by Part II of this Schedule shall either— (a) indicate by way of note any adjustments as respects the
figures of any profits or losses or assets and liabilities dealt with by the report which appear to the persons making the report necessary; or
(b) make those adjustments and indicate that adjustments have been made.
6. Any report by accountants required by Part II of this Sche- dule shall—
(a) be made by accountants qualified under this Act for appointment as auditors of a company; and
(b) shall not be made by any accountant who is an officer or servant or a partner or in the employment of an officer or servant, of the company, or of the company's subsidiary or holding company or of a subsidiary of the company's holding company.
For the purposes of this clause, the expression "officer" shall include a proposed director but not an auditor.
364 THE GAZETTE OF INDIA EXTRAORDINARY [PART It
SCHEDULE V (See section 159)
CONTENTS AND FORM OF ANNUAL RETURN OF A COMPANY HAVING A SHARE CAPITAL
PART I CONTENTS
1. The address of the registered office of the company.
2. If any part of the register o,f members or debenture holders of a company is, under the provisions of this Act, kept in any State or country outside India, the name of that State or country and the address of the place where such part of the register is kept.
3. A summary, distinguishing wherever possible between shares issued for cash, bonus shares, and shares other than bonus shares issued as fully or partly paid up otherwise than in cash, and spe- cifying in respect of each class of shares the following particu- lars : —
(a) the amount of the nominal share capital of the company and the number of shares into which it is divided;
(b) the number of shares taken, from the commencement of the company up to the date of the company's last annual general meeting;
(c) the amount called up on each share up to the date afore- said;
(d) the total amount of calls received up to that date; (e) the total amount of calls unpaid on that date; (/) the total amount of the sums (if any) paid by way of
commission in respect of any shares or debenturesjip to'that date; (g) the discount allowed on the issue of any shares issued at
a discount or so much of that discount as has not been written off at the date aforesaid;
(h) the total amount of the sums (if any) allowed by way of discount in respect of any debentures since the date of the annual general meeting with reference to which the last return was sub- mitted;
(i) the total number of shares forfeited up to the date re- ferred to in sub-clause (b);
(j) the total amount of shares for which share warrants are outstanding at the date referred to in sub-clause (b) and of share warrants issued and > surrendered respectively since the date referred to in sub-clause (h) and the number of shares compris- ed In each warrant.
4. Particulars of the total amount of the indebtedness of the company on the date referred to in sub-clause (b) of clause 3 in respect of all charges (including mortgages) which are required to be registered with the Registrar under this Act, or which would have been required so to be registered if created on or after the 1st day of April, 1914.
Sue. 1] THE GAZETTE OF INDIA EXTRAORDINARY 365
5. A list— (a) containing the names, addresses, descriptions and occupa-
tions, if any, of all persons who, on the day of the company's 1as;t annual general meeting, are members of the company, ar d of persons who had ceased to be members on or before that dt.y and since the date referred to m sub-clause (h) of clause 3 or, in the case of the first return, since the incorporation of the company;
(b) stating the number of shares held by each of the exist- ing members at the date referred in sub-clause (b) of clause 3, specifying shares transferred since the date referred to in sub- clause (h) of clause 3 (or, in the case of the first return, since- the incorporation of the company) by persons who are still mem- bers and by persons who have ceased to be members respective- ly, and the dates of registration of the transfers;
(c) if the names aforesaid are not arranged in alphabetical' order, having annexed thereto an index sufficient to enable the name of any person therein to be easily found.
6. All such particulars, with respect to the persons who at the date of the company's last annual general meeting are the directors of the company and with respect to any person who at that date ia the managing agent, secretaries and treasurers, the manager or the secretary of the company, as are by this Act required to be contain- ed with respect to directors, the managing agent, secretaries and treasurers, the manager and the secretary respectively in the register of the directors, managing agents, secretaries and treasurers,. managers and secretaries of a company.
PART n FORM
ANNUAL RETURN of Limited Private Limited
made up to the day of , 19 being th» date of the last annual general meeting of the company.
1. Address. (Address of the registered office of the company.)
2. Situation of Foreign Registers of Members and Debenture hold- ers.
(a) Name of every State or country outside India in which foreign register is kept.
(b) Address of place in each such State or country in which a foreign register is kept.
3. Summary of Share Capital and Debentures, (a) Nominal Share Capital.
Nominal share capital—Rs divided into : {Insert number and class) shares of each
shares of each shares of each
. . . . shares of each
366 THE GAZETTE OFINDIA EXTRAORDINARY [PAHT II
(b) Issued Share Capital and Debenture*.
Number of shares of each class taken up to the date of the last annual general meet- ing (which number must agree with the total shown in thelist a<s held by mem- .bers on that date).
'.Nuniber of shares of each class issuedsub- ject to payment wholly in cash.
"Number of shares of each class issued as fully paid up for a consideration other than cash.
.Number of shares of each class issued as partly paid upfor a consideration other than cash and extent to which each such shaie is sopaid up.
Number of shares (if any) of each class issued at a discount.
Amount of discount on theissue of shares which hasnot been written off at the date of last annual general meeting
Amount called "1Rs per share on upon number i_Rs per share on of shares of f Rs . . . . per share on each class, J Rs per share on
Total amount of calls received, including payments on application and allot- ment andanysums received on shares forfeited.
Number
. ,
* *
t#
•-
Class
m ^
issued as paid u p to the extent of Rs per share
issued as paid up to the extent of Rs per share
issued as paid up to the extent of Rs per share
• * issued as paid up to the extent of Rs per share
Rs . . .
Number Class
t
shares shares shares shares •shares
shares shares shares shares
shares shares shares shares
share*
shares
shares
shares
shares shares shares shares
shares shares shares shares
Ri
SKC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 367
Number Class Total amount (if any)
ag: eed to be con- sicered as paid on f . . . . shares number of shares of > Re on -j . . .. share* ea:h class issued as | . . share** fu ly paid up for a L •• • • shares consideration other than cash.
Total amount (if any) ag- " reed to be considered as paid on number of f •• shares shares of each class VRs on | .. . . shures issued as partly paid ^ •• •• shares- up for a considera- j .. sharea. tion other than cash, J [
Total amount of calls unpaid . . . Rs Total amount of the sums (if any) paid
by waj of commission in respect of any shares or debentures . . . Rs
Total amount of the sums (if any) allowed by way of discount in respect of any debentures since the date of the annual general meeting with reference to which the last annual return was submitted. Rs
Number Class Total number of shares of each class . . . . shares-
forfeited. .. . . shares shares shares
Total amount paid (if any) on shares Rs , forfeited.
Total amount of shares for which share warrants to bearer arc outstanding. Rs
Total amount of share warrants to bearer issued and surrendered respectively Issued Rs since the date of the annual general Surrendered Rs meeting with reference to which the last annual return was submitted.
Number of shares comprised in each share warrant to bearer, specifying in the case of warrants of different kinds, particulars of each kind. „,
4. Particulars of Indebtedness.
Total amount of indebtedness of the company in respect of all charges (including mort- gages) which are required to be registered with the Registrar under the Companies Act,
368 THE GAZETTE OF INDIA EXTRAORDINARY [PART It
19^6 or which would have been re- quired so to be registered if created on or after ihe 1st April, 1914. Rs
5. List of Past and Present Members.
List of persons holding shares or stock in the company on the day of the annual general meeting, namely, the day of 19 and of persons who have held shares or stock therein at any time since tl,c day of 19 when the previous annual meeting was held, or in the case of nhe first return, at any time since the incorporation of the company.
Folio in register ledger
containing particulars
Names, addresses, descriptions
and occupations,
if any
Number of shares held by members at date of annual general
meeting
Account of Shares
Particulars of shares transferred since the date of the previous annual general meeting or, in the case of the first return, since the incorporation of the company, by (0) persons who are still members and (b) persons who have ceased to
be members}:
Number
t Date of registration
of transfer
(b)
Remark
*The aggregate number of shares held by each member must be stated, and the aggregates must be added up so as to agree with the number of sharcB stated in the summary of share capital and debentures to have been taken up.
IWhcn the shares are of different classes these columns should be sub-divided so that (he number of each class held, or transferred, may be shown separately. Where any shares have been converted into stock, the amount of stock held by each member must be shown.
JThe date of registration of each transfer should be given as well as the number of shares transferred <MI each date. The particulars should be placed opposite the name of the transferor and not opposite that of the transferee, but the name of the transferee may be inserted in the " Remarks " column immediately opposite the particulars of each transfer.
Notes.
1. If either of the two immediately preceding returns has given as at the date of the annual general meeting with reference to which it was submitted, the full particulars required as to past and present members and the snares and stock held and transferred by them, only such of the particulars need be given as relate to persons ceasing to be or be- coming members since that date and to shares transferred since that date or to changes at compared with that date in the amount of stock held by a member.
2. If the names in the list are not arranged in alphabetical order, an index sufficient ro enable the name of any person tn be readily found must be annexed.
SEC 1] THE GAZETTE OF INDIA EXTRAORDINARY 369
6. Particulars of Directors, Managing Agents, Secteuries and Treasurers Munagcts and Secretaries
A. Particulars of the persons who arc directors of the company on the •day of the annual general meeting, namely, the,. . .day of 19
1 »l
'rucnt name 01 imes and surname,
in full
1
Any former name or namei and sum 1me, in full
Nationality Usual
residential address
Busmeu occupation
and particulars of other
directorships, managing
agencies, 0 flices of tecretaties and treasurer*) managerships
and secretaryships
held
Date of birth
„ „ . , c , person , is Managing Agent B. Particulars of the —^—— whe c • -
g — i ^ T i T , " , " persons are Sacretaries and Treasurer
•of the company on the day aforesaid.
Name (In the case of an
individual, present name or names and surname, in full.* In the case of a corporation or a firm, the corporate orfirmname)
Any former
name or names and
surname, in full
Usual residential address (In the case of a corporation
or firm, the registered or principal office)
Particulars of other managing
agencies, offices of secretaries and treasurers., directorships,
manager- ships and secretary- ships held
C. Particulars of the person who is Manager/Secretary of the company on the day aforesaid.
Preuc-nt name or names and surname,
in full
1
Any former name or
names and surname, in full Nationality
Usual resi- dential address
Particulars of other
managerships, secretaryshipsj direaorihipBj
managing agencies
and offices of secretaries
and treasurers held
Signed , Director Signed , Director Signed , Managing Agent Signed , Secretaries
and Treasurers Signed , Manager Signed , Secretary
370 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
" Director " includes any person who occupies the position of a director by whatsoever name called, and any person in accordunce with whose directions or instructions the Board of directors of the company is accustomed to act.
" Name " includes a " forename ", and " surname " in the case of a person usually known by a title different from his surname, means that title.
" Former name " and " former surname " do not include—
(a) in the case of a person usually known by a title different from his surname, the Dame by which he was known previous to the adoption of or succession to the title ; or
(A) in the caJCjOf any person, a former name or surname where that name or aur" name was changed or disused before the person bearing the name attained the ageof eighteen years or has been changed or disused for a period of not less than twdnly years ; or
(c) in the case of a married woman the name or surname by which she was known previous to the marriage.
The names of all bodies corporate Incorporated or carrying on business in India of which the director, managing agent, secretaries and treasurers, manager or secretary is also a director, managing agent, secretaries and treasurers, manager or secretary should be £iven3 except bodies corporate of which the company making the return is the wholly- owned subsidiary or bodies corporate which are the wholly*owned subsidiaries either of the company or of another body corporate of which thecompany is the wholly-owned subsidiary. A'body corporate is deemed to be the wholly-owned subsidiary of another if it has no members except that other and that other's wholly-owned subsidiari-s and its or their nominees. If the space provided in the form is insufficient, particular* of other directorships, managing agencies, offices of secietaries and treasurers, managerships, or secretaryships should be listed on a separate statement attached to this return.
Dates of birth need only be given m the case of a LOmpany which is subject to section -.so ol ihe Companies Act, 1956} namely, a company which is not a private company ( r which, being a private company, is the subsidiary of s public company.
Whew all the partners in a firm are joint secretaries, the name and principal olllce of the firm may be stated.
•Delivered for filing by
CERTIFICATES AND OTHER DOCUMENTS ACCOMPANYING ANNUAL RETURN.
Certificate to be given by a Director and the Managing Agent/ Secretaries and Treasurers, Manager/Secretary or by two Direc- tors of every Private Company.
We certify that the company has not since the date off [the incorporation of the company/the annual general meeting with reference to which the last annual return was submitted] issued any
*Thl8 should be printed at the bottom of the first page of the return, t in the case of the first return strike out the second alternative. In the case of a
second or subsequent return strike out the first alternative.
SEC 11 THE GAZETTE OF INDIA EXTRAORDINARY 371
Invitation to the public to subscribe for any snaies or debentures of the company.
Signed , Director, Signed , Director, Signed , Managing Agent,
Secretaries and Treasurers,
Manager, Secretary.
Further Certificate to be given as aforesaidij the numberof Members of the Company exceeds Fifty.
We certify that the excess of the number of members of the company over fifty consists wholly of persons who, under sub-clause (b) of clause (Hi) of section 3 of the Companies Act, 1956, are not to be included in reckoning the number of fifty.
Signed , Director, Signed , Director, Signed , Managing Agent,
Secretaries and Treasurers,
Manager, Secretary.
Certified copies of Accounts.
There must be annexed to this return a written copy, certified both by a director and by the managing agent/secretaries and treasur- ers/manager/secretary of the company to be a true copy, of every balance sheet laid before the company in general meeting during the period to which this return relates (including every document re- quired by law to be annexed to the balance sheet) and a copy (certified as aforesaid) of the report of the auditors on, and of the report of the directors accompanying, each such balance sheet. If any such balance sheet or document required by law to be annexed thereto is in a language other than English, there must also be annex- ed to that balance sheet a translation in English of the balance sheet or document certified in the prescribed manner to be a correct translation. If any such balance sheet as aforesaid or document re- quired by law to be annexed thereto did not comply with the requirements of the law as in force at the date of the audit with respect to the form of balance sheets or documents aforesaid, as the case may be, there must be made such additions to and corrections in the copy as would have been required to be made in the balance sheet or document in order to make it comply with the said require- ments, and the fact that tiaa copy has been so amended must be stated thereon-
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SCHEDULE VI [See section a n ]
PART I Form of balance sheet.
Balance Sheet of (Here enter the name ofthe company) As at (Here enter the date as at which the balance sheet is madeout)
Instructions in accordance with whkh liabilities shook! bemadeout
Terms of redemption or conversion (if any) ofany Redeem- able Preference Capital tobestared, together with earli- est date of redemp- tion or conversion.
Particulars of any option onunissued share capital to be specified.
Figures for the previous year
Rs. (b)
Liabilities
Figures for the current
year
Rs.
*I. SHARE CAPITAL : Authorised shares of
Rs each. Subscribed (distinguishing
between the various classes of capital and stating the particulars specified below, in respect of each class.) ..shares of Rs. each. Rs. called up.
Of the above shares, shares are allotted as
fully paid up pursuant to a contract without payments being received in cash.
Of the above shares, shares are allotted as fuDv paid up bywayof bonus shares.
Less : Calls unpaid : ft) Ry mmngrng agents or STTT- taries and treasurers and where the managing agent or secre- taries and treasurers are a firm, by the partners thereof,
Assets
Figures for the previous
year
Rs. Q>)
• I . FIXED ASSETS : Distinguishing asferaspossible
between expenditure upon (a) goodwill, (b) land, (c) buildings, (<5) lease- holds, (e) railway sidings, (f) plant and machinery, (g) furniture and fittings, (h) development ofproperty (i) patents, trade marksand designs, (j) live-stock and (k) vehiclesetc
Figures for the current
year
Rs.
Instructions in accordance with which assets should be made out
•Under each head the original cost, and the additions thereto and deductions therefrom made during the year, and the total depre- dation written off or provided upto the end of the year, to be stated.
In case where figures of original cost cannot be ascertain- ed, the valuation shown by the books shall be given and where any of the assets are soM and the original cost in respect thereof is not ascertainable, the amount of the sale proceeds shall be shown as deduc-
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1
i
!
1
3
I
1
•ad mhere tbe nanagmg ifem at secretaries aod treasurers are a private company, by (be directors or members of tint comp&ny.
(a") By directois. (m) Byothas.
Where sums have been written off on a reduction of capital or a revaloa- tion of assets, every balance sheet, (after the first balance sheet) subsequent to the re- duction or revalua- tion shall show tbe reduced figures and with the date of the reduction, in place of the original cost. |
Each balance sheet for the first five years subsequent to the date of the reduction, shah1 show also the amount of the reduction made.
Simuarlyj where sums have been add- ed by writing up the assets, every balance sheet subsequent to such writing cp shall show tbe increased figures with the date of the increase in place of the original cost.
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Instructions in accordance with which liabilities
should be made out-
*Additions and de- ductions since last Balance .Sheet tobe shown under each °f the specified
•heads.
Liabilities
Figures far the previous year.
Rs4*
Add: Forfeited paid up)
Share Premium
Figures for the current
year.
Rs. 9)
shares (amount
Account.
*H. RESERVES AND SURPLUS : (i) Capita] Reserves not available
for dividend. (2) Capital Redemption Reserve
Fund. (3) Other Reserves specifying
the nature of each reserve and tie amount in respect thereof.
Lest : Debit balance in Profit and Loss Account (if any).
(4) Any other Fund created out of net profit,
(5) Surplus, that is, balance in Profit and Loss Account, after providing for proposed allocations, viz, Dividend, Bonus or Reserves.
(6) Proposed additions to Reserves. (7) Liability Funds. (8) Sinking Funds. (9) Pension, Insurance or Provident
Funds,etc.
Assets
Figures for the previous year.
Rs. &)
Figures for the current
year.
Rs. (*)
II. INVESTMENTS : Showing nature of investments
and mode of valuation, for example, cost or market value, and distinguishing between—
*(i) Investments in Govern- ment or Trust Securities.
*(2) Investments in shares, debentures or bonds, (showing separately shares fully paid up and partly paid up and also distinguish- ing the different classes of shares).
*(3) Investments hi shares, debentures or bonds of sub- sidiary companies (c).
(4) Immovable properties.
i
Instnicdoas in accordance with
which assets should be made out
Each Balance Sheet for the first five years subsequent to the date of writing up shall also show the amount of increase made.
•Aggregate amount of company's quoted investments and also the market value thereof shall be shown. Aggregate amount of company's unquoted investments shall also be shown.
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*The nature of t ie security tD be spe- cified in each case.
TPhere loans have been guaranteed by managing agents, secretaries and trea- surers, managers, aal/or directors, a mention thereof shall also be made and also the aggre- gate amount of such loans under each head.
III. SECURED LOANS : (1) Debentures.
*(2> Loans and Advances from Banks.
*(3) Loans and Advances from subsidiaries.
*(4) Other Loans and Advances.
INTEREST ACCRUED ON INVESTMENTS
III. CURRENT ASSETS : (1) Stores and Spare Parts. (2) Loose Tools.
J(3) Stock-in-trade. *%0 Works in Progress. t(s) Sundry Debtors. Less : Reserves.
JMode of valuation of stock shall be stated and the amount in respect of raw materials shall also be stated separately where practicable.
**Mode of valuation of works shall be stated.
t i n regard to Sundry Debtors, particulars to be given sepa- rately of—(a) debts considered good and in respect of which the company is fully secured ; and (£>) debts considered good for which the company holds no security other than the debtor's personal security; and (c) debts considered doubtful or bad.
Debts due by directors or other officers of the company or any of them either severally or jointly with any other per- son or debts due by firms or private
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Instructions jp accordance with
thonld be madeout.
1 Liabilities.
Figures for the previous year.
Rs. (*)
Figures for the current
year.
Rs. (*>
1 Assets.
Figures for the previous year.
Rs. (6)
Figures for the
current year.
Rs.
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1
J
i i
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Instructions in accordance with
should be made out.
companies respec- tively in which any director is a partner or a direc- tor or a member to be separately stated.
Debts due from other companies under the qqmp management to be disclosed with the names of the companies (vide section 570).
The maximum amount due by directors or other officers of the company at any time during the year - to be siwwn by" way oi a oote.
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IV. UNSECURED LOANS i :
*See note (d) at foot of form.
(i) Fixed Deposits. (2) Loans and Advances from
subsidiaries. *(3) Short Term Loans and
Advances :
(a) From Banks. (6) From others.
(4) Other Loans and Advances :
(a) From Banks. (6) From others. | i
V. CURRENT LIABILITIES AND PROVISIONS :
(^Acceptances. (2)^Sundry Creditors. (3) Interest accrued and^accming
on secured loans. (4) Interest accrued and accruing
on unsecured loans. (5) Subsidiary Companies. (6) Provision for Taxation. (7) Provision for Contingencies. (8) Proposed Dividends. (9) Advance Payments and Un-
expired Discounts for the portion for which value has still to be given, e.g., in the case of the following classes of companies :— (Newspaper, Fire Insurance, Theatre, dubs , Banking, Steamship Comp.uues, etc.)
tlV. LOANS AND ADVANCES :
(i) Bills of Exchange. (2) Advances recoveraflle in cash
or in fcind or for value to be received, e.g., Rates, Taxes,
| Insurance, etc (3) Balances on current account
with Tnanag^ng agents or secretaries and treasurers. |
1 (4) Balances with Customs, i Port Trust, etc (where
1 payable on demand). ' 1
tThe above instruc- tions regarding "Sundry Debtors" apply to "Loans and Advances" also. In addition. Loans and Advances to subsidiary com- panies shall be separately stated.
378 T
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lattnKtiosu in accordance with which Eabflftk*
should be madeouL
tThe period for which thedividends are in wear or if there fs more than ' one class of shares, the period for which] the dividends oo each socb class are In arrear, shall be stated.
The amount shall be ttued before deduc-
LiabflitiCT.
Figure* for the previous year.
Figure* for the current
year.
Rs. RB. (V) C*>
(10) Unclaimed Dividends. (II) Other Liabilities fif any), (12) Contingent Iiabilitiea :
fci) Ckints against the company not acknowledged as debts.
C*0 Uncalled KabOity on ihares partly paid held as invest- ment.
VI. CONTINGENT LIABILI- TIES NOT PROVIDED FOR 1
t(i) Arrears of Fixed Carrmla- tive Drrideads.
Assets.
Figures foe the prertous year.
Rs. (»
•V. CASH AN] BALANCES,
Figures for the cuiieii t
year.
Rs. (»
D BA f̂K
Instructions in accordance with
which assets shouMbe made out.
*Tbe balances lying with Banters on current accounts,
SEC. 1]
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Y 379
don of income-tax, except that in the case of tax-tee divi- dends the amount shall be shown free of income-tax and the fact that it is so shown sbaD be stated.
tJThe amount of any guarantees given by the company on behalf of directors or other officers of die company shall be stated and where practicable, the general nature and amount of each such contingent liability, tf material, shall also be specified.
tt(2) Other money for which the company is contingently liable.
VI. MISCELLANEOUS EX- PENDITURE AND LOSSES
(to the extent not written off):
(i) Preliminary expenses. (2) Expenses including Commis-
sion or Brokerage on under-writing or subscrip- tion of shares or debentures.
(3) Discount allowed on the issue of shares or debentures.
(4) Interest paid out of Capital during construction (also sta- ting the rate of interest).
(5) Profit and Loss Account (only, if there is no General Reserve from which it can be deducted).
call accounts and deposit accounts shall be shown separately:
380 T
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MOTES
General instructions for preparation >fbalance sheet.—(a) The information required to be given under any of the items or sub-items in this Form, if it cannot be conveniently included in the Balance Sheet itself, shall be furnished in a separate Schedule or Schedules to be annexed tu and to form part of the Balance Sheet. This is recommended when items are numerous,
(6) Annas and pies can also be given in addition to Rupees, if desired. (c) In the case of subsidiary companies, etc, the number of shares held by the ultimate holding company and its subsidiaries must be sepa-
rately stated. (d) Short Term Loans will inchide those which are due for not more than one year as at the date of the Balance Sheet. (e) Depreciation written off or provided shall be allocated under the different asset heads and deducted in arriving at the value of Fhed Assets. (f) Dividends declared by subsidiary companies after tiie date of the Balance Sheet cannot be included unless they are in respect of a period
which closed on or before the date of the Balance Sheet. (g) Any reference to benefits expected from contracts not executed shall not be made in the Balance Sheet but shall be made in tbe Board's
report. (A) The debit balance in the Profit and Loss Account shall be set off against the General Reserve and where there is no General Reserve, against
future profits. (i) As regards Loans and Advances(Group TV),amounts due by the managing agents or secretaries and treasurers, either severally or jointly with
any other persons, to be separately stated ; the amounts due from otfier companies under the same management should also be given with the names of the companies: vide, section 370 ; the maximum amount due from every one of these at any rime during the year must be shown.
(j) Particulars of any redeemed debentures which the company has power to issue should be given. (i) Where any of the company's debentures are held by a nominee or a trustee for the company, the nominal amount of the debentures and the
amount at which they are stated in the books of the company shall be stated. (/) A list of investments separately classifying Trade Investments and Other Investments should be attached to the Balance Sheet stating the
names of the bodies corporate (with the names of their managing agent or secretaries and treasurers, if any,) in whose shares, debentures or bonds, investments have been made and also stating the amounts in respect of each hem, provided however that it shall not be necessary to give such parti- culars (a) in respect of investments made by Managing Agency companies in managed companies' shares, debentures or bonds, or (6) in respect of investments made by Investment Companies, provided that particulars in respect of investments in shares of Private Companies shall be given. The amount in respect of the holdings by Investment Companies in unquoted shares or shares of private limited companies shall be separately stated, specify- ing the name of each such company and tbe amount invested therein.
(m) If in the opinion of the Board, any of the current assets have not a value on realisation in the ordinary course of business at least equal to the amount at which they are stated, the fact that the Board is of that opinion shall be stated.
1 (n) Except in the case of the first Balance Sheet laid before the company after the commencement of the Act, the corresponding amounts for the immediately preceding financial year for all items shown in the Balance Sheet shall be also given in the Balance Sheet. The requirements in this behalf shall in the case of companies preparing quarterly or half-yearly accounts etc. relate to the Balance Sheet for the corresponding date in the previous year.
(0) The amounts to be shown under Sundry Debtors shall inchide the amounts due in respect of goods sold or services rendered or in respect of other contractual obligations but shall not include the amounts which are in the nature of loans or advances. A debt which remains unrealised after a period of three months from the date on which the debit in respect of the same arose shall be treated as a loan or an advance and the amounts in this behalf shall, for the purposes of the Balance Sheet, be treated as a loan or an advance and separately shown as such under th heading "Loans and Atdnnce* .
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 381
PART II
Requirements as to Profit and Loss Account
1. The provisions of this Part shall apply to the income and expenditure account referred to in sub-section (2) of section 210 of the Act, in like manner as they apply to a profit and loss account, but subject to the modification of references as specified in that sub- section.
2. The profit and loss account— (a) shall be so made out as clearly to disclose the result of
the working of the company during the period covered by the account; and
(b) shall disclose every material feature, including credits or receipts and debits or expenses in respect of non-recurring transactions or transactions of an exceptional nature.
3. The profit and loss account shall set out the various items re- lating to the income and expenditure of the company arranged under the most convenient heads; and in particular, shall disclose the follow- ing information in respect of the* period covered by the account: —
(i) (a) The turnover, that is, the aggregate amount for which sales are effected by the company.
(t>) The selling agents' commission, brokerage and discount on sales, other than the usual trade discount.
(ii) (a) In the case of manufacturing concerns, the purchases of raw material, and the opening and the closing stocks of the goods produced.
(b) In the case of trading concerns, the purchases made, and the opening and the closing stocks.
(c) In the case of concerns rendering or supplying services, the gross income derived from services rendered or supplied.
(d) In the case of other concerns, the gross income derived under the different heads.
(Hi)In the case of all concerns having works in progress, the amounts for which works remained to be executed at the com- mencement and at the end of the accounting period.
(iv) The amount provided for depreciation, renewals or diminution in value of fixed assets.
If such provision is not made by means of a depreciation charge, the method adopted for making such provision.
If no provision is made for depreciation, the fact that no provision has been made shall be stated.
(v) The amount of interest on the company's debentures and other fixed loans, that is to say, loans for fixed periods, stating separately the amount of interest, if any, payable^'to the manag- ing director, the managing agent, the secretaries and treasurer? and the manager, if any.
382 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
(vi) The amount of charge for Indian income-tax and other Indian taxation on profits, including, where practica- ble, with Indian income-tax any taxation imposed elsewhere to the extent of the relief, if any, from Indian income-tax and distinguishing, where practicable, between income-tax and other taxation.
(vii) The amounts provided for— (a) repayment of share capital; and (b) repayment of loans.
(viii) (a) The aggregate, if material, of any amounts set aside or proposed to be set aside, to reserves, but not includ- ing provisions made to meet any specific liability, contingency or commitment known to exist at the date as at which the balance sheet is made up.
(b) The aggregate, if material, of any amounts withdrawn from such reserves.
(ir) (a) The aggregate, if material, of the amounts set aside to provisions made for meeting specific liabilities, con- tingencies or commitments.
(b) The aggregate, if material, of the amounts withdrawn from such provisions, as no longer required.
(x) Expenditure incurred on each of the following items, separately for each item: —
(a) Consumption of stores and spare parts. (b) Power and fuel. (c) Rent. (d) Repairs to Buildings. (e) Repairs to machinery. (f) (1) Salaries, wages and bonus.
(2) Contribution to provident and other funds. (3) Workmen and staff welfare expenses.
(g) Insurance. (h) Rates and taxes, excluding taxes on income, (i) Miscellaneous expenses.
(xi) (a) The amount of income from investments, dis- tinguishing between trade investments and other investments.
(b) Other income by way of interest, specifying the nature of the income.
(c) The amount of income-tax deducted if the gross income is stated under sub-paragraphs (a) and (b) above.
(xii) (a) Profits or losses on investments. (b) Profits or losses in respect of transactions of a kind,
not usually undertaken by the company or undertaken in cir- cumstances of an exceptional or non-recurring nature, if mate- rial in amount.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 383
(c) Miscellaneous income. (xiii) (a) Dividends from subsidiary companies. (b) Provisions for losses of subsidiary companies. (xiv) The aggregate amount of the dividends paid and pro-
posed, and stating whether such amounts are subject to deduc- tion of income-tax or not.
(xv) Amount, if material, by which any items shown in the profit and loss account are affected by any change in the basis of accounting.
4. The profit and losss account shall also contain, or give by way of a note the following further information:—
(i) The total of the amounts payable to the managing agent, if any, whether as fees, percentages or otherwise for services rendered as managing agent or in any other capacity.
(it) The total of the amounts payable to secretaries and treasurers, if any, whether as fees, percentages or otherwise, for services rendered as secretaries and treasurers or in any other capacity.
(in) The total of the amounts payable whether as fees, per- centages or otherwise to the directors, managing director or manager respectively as remuneration for services rendered as directors, managing director or manager or in any other capa- city. If any director of the company is, by virtue of any nomi- nation made by it, whether directly or indirectly, a director of any other company, any remuneration or other emolu- ments received by him for his own use whether as direc- tor or in any other capacity, in connection with the manage- ment of that other company shall be shown in a note at the foot of the account or in a statement annexed thereto.
Particulars of the amounts received by individual directors shall be separately given for each of the subsidiaries of the company.
(iv) The aggregate amount of any compensation paid to the managing agent, secretaries and treasurers, directors, the managing director or the manager or the former managing agent, secretaries and treasurers, directors, managing director, or manager of the company—
(a) as such, and (b) in any other capacity,
for loss of office in connection with, or arising out of, their re- tirement from the office held by them in the company or from any office held" by them in any other company by virtue of any nomination made by the first-mentioned company, whether directly or indirectly.
Any compensation so paid to any person shall be sub-divid- ed so as to show the amounts paid respectively—
(a) by the company;
384 T H E GAZETTE OF INDIA EXTRAORDINARY LPART II
(b) by the other company or each of the other compa- nies; and
(c) by any other person.
(u) The aggregate amount of any pension or gratuity paid to the directors, managing directors, or manager, or former direc- tors, managing directors or managers of the company—
(a) as such; and (b) in any other capacity.
Any pension or gratuity so paid to any person shall be sub- divided so as to show the amounts paid respectively—
(a) by the company; and (b) by any subsidiary company.
5. The Central Government may direct that a company shall not be obliged to show the amount set aside to provisions other than those relating to depreciation, renewal or diminution in value of assets, if the Central Government is satisfied that the information should not be disclosed in the public interest and would prejudice the company, but subject to the condition that in any heading stating an amount arrived at after taking into account the amount set aside as such, the provision shall be so framed or marked as to indicate that fact. ,
fi. (1) Except in the case of the first profit and loss account laid before the company after the commencement of the Act, the corres- ponding amounts for the immediately preceding financial year for al.1 items shown in the profit and loss account shall also be given in the profit and loss account.
(2) The requirement in sub-clause (1) shall, in the case of com- panies preparing quarterly or half-yearly accounts, relate to the profit and loss account for the period which ended on the corres- ponding date of the previous year.
PART III
Interpretation
7. (2) For the purposes of Parts I and II of this Schedule, unless the context otherwise requires,—
(a) the expression "provision" shall, subject to sub-clause (2) of this clause, mean any amount written off or retainedJDV way of providing for depreciation, renewals or diminutiorr in value of assets, or retained by way of providing for any known liability of which the amount cannot be determined with subs- tantial accuracy;
(b) the expression "reserve" shall not, subject as aforesaid, include any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets or retained by way of providing for any known liability;
(c) the expression "capital reserve" shall not include any amount regarded as free for distribution through the profit and loss account; and the expression "revenue reserve" shall mean any reserve other than a capital reserve;
SBC 1] THE GAZETTE OF INDIA EXTRAORDINARY 385
and in this sub-clause the expression "liability" shall include all liabi- lities in lespect of expenditure contracted for and all disputed or contingent liabilities.
(2) Where—
(a) any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets, not being an amount written off in relation to fixed assets before the commencement of this Act; or
(b) any amount retained by way of providing for any known liability;
is in excess of the amount which in the opinion of the directors is reasonably necessary for the purpose, the excess shall be treated for the purposes of this Schedule as a reserve and not as a provision.
8. For the purposes aforesaid, the expression "quoted investment" means an investment as respects which there has been granted a quotation or permission to deal on a recognised stock exchange, and the expression "unquoted investment" shall be construed accordingly.
386 THE GAZKTTE OF INDIA EXTRAORDINARY [PAHT II
SCHEDULE VII
(See sections 368 and 379)
managingagent Restrictions on powers of ^ c r ^ ^ j ^ t^asl^eTi
The managing agent- _ shall not exercise any of the secretaries and treasurers
following powers except after obtaining the previous approval of the Board of directors of- the company in regard to each such exercise:—
(1) Power to appoint (but not to suspend or dismiss) any person as manager of the company;
(2) Power to appoint as an officer or member of the staff of the company, payable from its funds (as distinguished from the funds of the managing agent, or from out of any remuneration payable secretaries and treasurers to him by the company), any person—
them (a) on a remuneration or scale of remuneration exceeding
the limits laid down by the Board in this behalf; or
(b) who is a relative of the managing agent, or where the managing agent is a firm, of any partner in the firm, secretaries and treasurers are or where the managing agent is a private company,
secretaries and treasurers are of any director or member of such company;
(3) Power to purchase capital assets for the company except where the purchase price is within the limits prescribed by the Board in this behalf;
(4) Power to sell the capital assets of the company, except where the sale price is within the limits prescribed by the Board in this behalf;
(5) Power to compound, or sanction the extension of time for the satisfaction or payment of, any claim or demand of the company against (including any debt claimed to be due to it from) the managing agent or any associate of the managing agent. Secretaries and treasurers secretaries and treasurers.
(6) Power to compound any claim or demand made against the company (including any debt claimed to be due from It) by the managing agent __ or any associate of the managing agent. secretaries and treasurers secretaries and treasurers.
SEC. 11 THE GAZETTE OF INDIA EXTRAORDINARY 387
SCHEDULE Vltl (See sections 347 and 379)
Declarations to be made by firms, private companies and other bodies corporate acting as - Jiana^fig^gents^ _
secretaries and treasurers
Definition
1. (J) In this Schedule, "relevant date" m e a n s -
fa) in the case of a firm or body corporate holding office at
the commencement of this Act as the 8 3 ^ t i r i e 8 " f e t reasure r of a company, the date of such comflMtoa'celnent; and
(b) in the case of a firm or body corporate appointed or re- appointed after the commencement of this Act as the m a n a g m ^ g e n t _ ^ — o f a c a t h e d a t f e o f ^ ^ a p_ secretaries and treasurers pointment or reappointment.
(2) For the purposes of sub-clause (1), the expression* "re- appointment" and re-appointed"' shall have the same meaning as they have for the purposes of sub-section (1) of section 328.
Firms
2. Every firm actim? as the - m a n aS l n£_»jg_?n _ Qf a n y •y ft secretaries and treasurers 3
company or companies shall file with each company, whether public or private, of which it acts as such, a declaration specifying—
(a) the names of the partners constituting the firm on the relevant date;
(b) the share, or the extent of the interest, of each partner in the firm, on the relevant date;
(c) the names of persons, if any, other than partners, who are interested, on th« rolevant date, in snv share of, or amount forming part of, the remuneration payable to the managing agent ,
-—^-.-D-- - - , : - - - by the company; and the extent of secretaries and treasurers the interest of each such person in such remuneration.
3. The declaration shall be signed by a partner of the firm and shall be filed within one month of the relevant date.
4. If any change occurs in regard to any of the matters specified In clause 2 after the relevant date, a declaration specifying the change and signed by a partner of the firm shall be filed, within three weeks of the occurrence of the change, with each of the com- panies referred to in that clause.
388 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
°rivate Companies 6. Every private company which acts as— _5aanagng_agMt___
secretaries and treasurers of any other company or companies, whether public or private, shall file with each of those companies, a declaration specifying—
(a) the names of the members of the private company on the relevant date;
(b) where the private company has a share capital, the shares held by each member of the company, on that date;
(c) where the private company has no share capital, the extent of the interest of each member of the company in it on that date;
(d) the manner in which each such member holds his shares or interest, that is to say, whether he holds the same beneficially, or on behalf of or in trust for any other person; and in the latter case, the name or names of the person or persons on whose behalf or in trust for whom the shares or interest is held and the extent of the interest of each such person;
(e) the names of the directors of the private company, and the name of its managing director, if any;
(f) the names of persons, if any, who are interested in any share of, or amount forming part of, the remuneration payable to the private company by the company under its management, otherwise than as members of the private company; and the extent of the interest of each such person in such remuneration;
(g) that no arrangement has been entered into to the know- ledge of the private company, under which the control of the private company is vested in any persons other than the mem- bers of the company and the persons referred to in sub-clause (d):
Provided that the obligation to furnish information on the matters specified in sub-clauses (d) and (f) shall extend only to such parti- culars relating to those matters as are within the knowledge of the private company.
6. The declaration shall be signed by a director of the private company and shall be filed within two months of the relevant date.
7. If, to the knowledge of the private company, there is a sale or transfer of any shares in the company or an agreement has been en- tered into, for the sale or transfer of any such shares, or any other change occurs in regard to any of the matters specified in clause 5, a declaration specifying the sale, transfer, agreement or change and signed by a director of the company shall be filed, within six weeks thereof, with each of the companies referred to in that clause.
8. Where any shares are sold or transferred or agreed to be sold or transferred, the declaration referred to in clause 7 shall specify the name of the person or persons who part with or have agreed to part with the shares and also the name or names of the person or persons who acquire or have agreed to acquire them, with full details of the sale, transfer or agreement.
SBC. 1J THE GAZETTE OF INDIA EXTRAORDINARY 389
Other Bodies Corporate
9. The provisions of clauses 5 to 8 shall apply to every body cor- porate (other than a private company) acting as the managing agent
secretaries and treasurers of any company, unless it is exempt from the operation of the provi- sions of this Schedule by virtue of section 347.
section 379 read with section 347.
General 10. (1) All declarat ons filed with any company in pursuance cf
this Schedule shall be open to inspection, and extracts may be taken therefrom and copies thereof may be required, by any member of the company to the same extent, in the same manner and on pay- ment of the same fee as in the case of the register of members of the company.
(2) AH such declarations shall also be open to inspection by any director of the company, free cf charge.
4QO tHE 6A2EfTE OF *Nt)lA EXfRAdRtilNARY [PART tt
SCHEDULE IX
F O R M or PBOXY
[See Article 62 of the Table A and also section 176 (6)1
1 General Form
" Name of Company,
I of In the district of
fceing a member of th* above-named Company hereby appoint members
of ,... in the district of or failing him,
of tn the district of
as _my proxy to vote for me on ray behalf at the our us our
annual general meeting general meeting (not being an annual general meeting)
of the company to be held on the day of... and at any adjournment thereof.
Signed fhj* day of ••• "
n Form for affording members an opportunity of voting for or against
a resolution " Name of Company
I of ,
in the district of , being a member of the members
above-named Company, hereby appoint of In the district of or falling him of
in the district of , as tny our
proxj to vote for m£ on my behalf at the us our
annual general meeting general meeting (not being an annual general meeting) of the company, to be held on the day of ......19 and at any adjournment thereof.
Signed this ...day of ,...19 "
SBC. 11 TH» GA2BTTD Ot INOIA fcXTftAORDlNARY 391
SCHEDULE X
(Sec sections 574 and 611)
Table of fees to be paid to the Registrar t. By a company having a share capital
R8. A. P. 1. For registration of a company whose nominal share
capital does not exceed Rs. 20,000, a fee of " .
2. For registration of a company whose nominal Bhare capital exceeds Rs. 20,000, the above fee of forty rupees, with the following additional fees regu- lated according to the amount of nominal capital:—
For every 10,000 rupees of nominal share capital, or part of 10,000 rupees, after the first 20,000 rupees up to 50,000 rupees . . . . . .
For every 10,000 rupees of nominal share capital, or part of 10,000 rupees, after the first 50,000 rupees up to 10,00,000 rupees . . . . .
For every 10,000 rupees of nominal share capital, or part of 10,000 rupees, after the first 10,00,000 rupees . . . . . . .
3. For registration of any increase of share capital made after the first registration of the company, the same fees per 10,000 rupees or part of 10,000 rupees, as would have bean payable if such increased share capital had formed part of the original share capital at the time of registration :
Provided that no company shall be liable to pay in respect of nominal share capital on registration, or afterwards, any greater amount of fees than 1,000 rupees, taking into account, in the case of fees payable on an increase of share capital after registration, the fees paid on registration.
4. For registration of any existing company, except such companies as are by this Act exempted frotti payment of fees in respect of registration under this Act, the same fee as is charged for registering a new company.
5. For filing, registering or recording any document by this Act required or authorised to be filed, registered or recorded, other than—
(a) the memorandum or the abstract required to be filed with the Registrar by a receiver, or
(b) the statement required to be filed with the Registrar by the liquidator in a winding up
a fee of
6. For making a record of or registering any fact by his Act required or authorised to be recorded or registered by he Registrar, a fee of
40
2 0
5
1
5
5
0 0-
0 0
0 0
0 0
0 0
U 0
392 THE GAZETTE OF INDIA EXTRAORDINARY [PART II
II. By a companynot having a share capital
7. For registration of a coir.p iny whose number of members as stated in the articles of association, does not exceed 20, a fee of
8. For registration of a company whose number of mem- bers as stated in the articles of association, exceeds 20 but does not exceed 100, a fee of .
9. For registration of a company whose number of mem- bers as stated in the articles of association, exceeds 100, but is not sTated to be unlimited, the above fee of Rs. 100 with an additional Rs. 3 for every 50 members, or less number than 50 members, after the first 100.
10. For registration of a company in which the number of members is stated in the articles of association to be unlimited, a fee of • . . .
11. For registration of any increase on the number of mem- bers made after the registration of the company, the same fee as would have been payable in respect of such increase, if such increase had been stated in the articles of association at the time of registration :
Provided that no company shall be liable to pay on the whole a greater fee than Rs. 400 in respect of its number of members, taking into account the fee paid on the first registration of the company.
12. For registration of any existing company except such companies as are by this Act exempted from payment of fees in respect of registration under this Act, the same fee as is charged for registering a new company.
13. For filing or registering any document by this Act required or authorised to be filed or registered with thr Registrar other than—
(a) rhe memorandum or the abstract required to befiled with the Registrar by a receiver, or
(A) the statement required to be filed with the Registrar by the liquidator in a winding up,
a fee of
14. For making a record of or registering any fact by this Act required or authorised to be recorded or registered by the Registrar, a fee of .
r
Rs A. P.
40 0 0
IOO 0 0
400 0 0
5 0 0
5 0 0
SEC. 1] THE GAZETTE O INDIA EXTRAORDINARY 393
SCHEDULE XI
(See section 406)
FORM IN WHICH SECTIONS 539 TO 544 OF ACT ARE TO APPLY TO CASHS WHERE AN APPLICATION IS MADE UNDER SECTION 397 OR 398.
539. Penalty for falsification of books.—If with intent to defraud or deceive any person, any officer or member of a company in res- pect of which an application has been made under section 397 or 398—
(0) destroys, mutilates, alters, falsifies or secretes any books, papers or securities, or is privy to the destruction, mutilation, alteration, falsification, or secreting of any books, papers or securi- ties; or
(b) makes, or is privy to the making of, any false or frau- dulent entry in any register, book of account or document be- longing to the company,
he shall be punishable with imprisonment for a term which may extend to seven years, and shall also be liable to fine.
540. Penalty for frauds by officers.—If any person, being at the time of the commission of the alleged offence, an officer of a com- pany in respect of which the Court subsequently makes an order under section 397 or 398.—
(a) has, by false preiences or by means of any other fraud, induced any person to givf credit to the company;
(b) with intent to defraud creditors of the company, has made or caused to be made any gift or transfer of or charge on, or has caused or connived at the levying of anv execution against, the property of the company; or
(c) with intent to defraud creditors of the company, has concealed or removed any part of the property of the company since thf date of any unsatisfied judgment or order for pay- ment of money obtained against the company, or within two months before that date;
he shall be punishable with imprisonment for a term which may extend to two years and shall also be liable to fine.
541. Liability where proper accounts not kept. (1) Where an application has been made to the Court under section 397 or 398 in respect of a company, if it is shown that proper books of account were not kept by the company throughout the period of two years immediately preceding the making of the application, or the period between the incorporation of the company and the making of the
394 THE GAZETTE OF INDIA EXTRAORDINARY £FART II
application, whichever is shorter, every officer of the company who is in default shall, unless he shows that he acted honestly and that in the circumstances in which the business of the company was carried on, the default was excusable, be punishable with imprison- ment for a term which may extend to one year
(2) For the purposes of this section, proper books of account shall be deemed not to have been kept in the case of any company, if there have not been kept—
(a) such books or accounts as are necessary to exhibit and explain the transactions and financial position of the business of the company, including books containing eniries made from day to day in sufficient detail of all cash received and all cash paid; and
(b) where the business of the company has involved dealings in goods, statements of the annual stocktakings and (except in the case of goods sold by way of ordinary retail trade) of all goods sold and purchased showing the goods and the buyers and sellers thereof in sufficient detail to enable those goods and those buyers and sellers to be identified.
54£ Liability for fraudulent conduct of business—(1) If in the course of the proceedings on an application made to Ihp Court under flection 397 or 398 in respect of a company, it appears that any busi- ness of the company has been carried on with intent to defraud creditors of the company, or any other persons, or for any fraudulent purpose, the Court may, if it thinks it proper so to do, declare that any persons who were knowingly parties to the carrying on of the business in the manner aforesaid shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the Court may direct. -
(2) (a) Where the Court makes any such declaration, it may give such further directions as it thinks proper for the purpose of giving effect to that declaration.
(b) Tn particular, the Court may make provision for making the liability of any such person under the declaration a charge on any debt or obligation due from the company to him, or on any mortgage or charge or any interest in anv mortgage or charge on any assets of the company held by or vested in him, or any person on his behalf, or anj person claiming as assignee from or through the person liable or any person acting on his behalf.
(c) The Court may, from time to time, make such further order as may be necessary for the purpose of enforcing any charge imposed under this sub-section.
(d) For the purpose of this sub-section, the expression "assignee" includes anv person to whom or in whose favour, by the directions of the person liable, the debt, obligation, mortgage or charge was created, issued or transferred or the interest was created, but does not include an assignee for valuable consideration (not including consideration by way of marriage) given in good faith and without
kc. 1J THE GAZETTE OS1 DtolA E X T R A O B D W A R Y 395 1 J
iotice of any of the matters on the ground of which the declaration s made.
(3) Where any business of a company is carried on with such intent or for such purpose as is mentioned in sub-section (1), every person who was knowingly a party to the carrying on of the business in the manner aforesaid, shall be punishable with imprison- ment for a term which may extend to two years, or with fine which may extend to five thousand rupees, or with both.
(4) This section shall appty, notwithstanding that the person concerned may be criminally liable in respect of the matters on the ground of which the declaration is to be made.
543. Power of Court to assess damages against delinquent direc- tors, etc.—(2) If, in the course of the proceedings on an applica- tion made to the Court under section 397 or 398, it appears that any person who has tafeen part in the promotion or formation of the company, or a-iy past or present director, managing agent, -secretaries and treasurers, manager or officer of the company—
(a) has misapplied or retained or become liable or account- able for any money or property of the company, or
(b) has been guilty of any misfeasance or breach of trust in relation to the company;
the. Court may, on the application of any creditor or member, examine into the conduct of such person, director, managing agent, secretaries and treasurers, manager or officer aforesaid, and compel him to repay or restore the money or property or any part thereof respectively! with interest at such rate as the Court thinks just or to contribute such sum to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust as the Court thinks just.
(2) This section shall apply notwithstanding that the matter is one for which the person concerned may be criminally liable.
544. Liability under sections 542 and 543 to extend to partners or directors in firm or company.—Where a declaration under section 542 or an order under section 543 is or may be made in respect of a firm or body corporate, the Court shall also have power to make a declaration under section 542 or pass an order under section 543, as the case may be, in respect of any person who is a partner in that firm or a director of that body corporate.
%g3K TI&FflWBflTfE OP INDIA BtfRAORDlNABY [PAM tf
SCHEDULE XII
(See section 644)
Enactments repealed
Year
i
1913
194a
' 9 5 1
»952
No.
a
vn
LIV
LII
LI
Subject or short title
3
The Indian Companies Act, 1913.
The Registration of Transferred Companies Ordinance.
The Indian Companies Amendment Act, 1951.
The Indian\ Companies Amendment ^ c t , 195a.
K. Y. BHANDARKAR,
Secy, to the Govt. of India.
PRflNTlD IN INDIA BY THE MANAGER, GOVT. OF INDIA PRESS, NEW DKUU1
AND PUBLISHED BY THE MANAGER OF PUBLICATIONS DELHI 185fl