Notesale: Turn your study into money

Document Preview

Extracts from the notes are below, to see the PDF you'll receive please use the links above

---

THE COMPANIES ACT, 2013
__________________

ARRANGEMENT OF SECTIONS
__________________

CHAPTER I
PRELIMINARY
SECTIONS
1
...

2
...

CHAPTER II
INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO
3
...

5
...

7
...

9
...

11
...

13
...

15
...

17
...

19
...

21
...


Formation of company
...

Articles
...

Incorporation of company
...

Effect of registration
...

[Omitted]
...

Alteration of memorandum
...

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

Copies of memorandum, articles, etc
...

Conversion of companies already registered
...

Service of documents
...

Execution of bills of exchange, etc
...
—Public offer

23
...

25
...

27
...

29
...

31
...

33
...

35
...

Power of Securities and Exchange Board to regulate issue and transfer of securities, etc
...

Matters to be stated in prospectus
...

Offer of sale of shares by certain members of company
...

Advertisement of prospectus
...

Red herring prospectus
...

Criminal liability for mis-statements in prospectus
...

1

SECTIONS
36
...

38
...

40
...


Punishment for fraudulently inducing persons to invest money
...

Punishment for personation for acquisition, etc
...

Allotment of securities by company
...

Global depository receipt
...
—Private placement
42
...

CHAPTER IV
SHARE CAPITAL AND DEBENTURES
43
...

45
...

47
...

49
...

51
...

53
...

55
...

57
...

59
...

61
...

63
...

65
...

67
...

69
...

71
...


Kinds of share capital
...

Numbering of shares
...

Voting rights
Variation of shareholders‘ rights
...

Company to accept unpaid share capital, although not called up
...

Application of premiums received on issue of shares
...

Issues of sweat equity shares
...

Transfer and transmission of securities
...

Refusal of registration and appeal against refusal
...

Publication of authorised, subscribed and paid-up capital
...

Further issue of share capital
...

Notice to be given to Registrar for alteration of share capital
...

Reduction of share capital
...

Power of company to purchase its own securities
...

Prohibition for buy-back in certain circumstances
...

Power to nominate
...
Prohibition on acceptance of deposits from public
...
Repayment of deposits, etc
...

75
...

2

SECTIONS
76
...

76A
...

CHAPTER VI
REGISTRATION OF CHARGES
77
...

79
...

81
...

83
...

85
...

87
...

Application for registration of charge
...

Date of notice of charge
...

Company to report satisfaction of charge
...

Intimation of appointment of receiver or manager
...

Punishment for contravention
...

CHAPTER VII
MANAGEMENT AND ADMINISTRATION

88
...

89
...

90
...

91
...

92
...

93
...

94
...

95
...
, to be evidence
...
Annual general meeting
...
Power of Tribunal to call annual general meeting
...
Power of Tribunal to call meetings of members, etc
...
Punishment for default in complying with provisions of sections 96 to 98
...
Calling of extraordinary general meeting
...
Notice of meeting
...
Statement to be annexed to notice
...
Quorum for meetings
...
Chairman of meetings
...
Proxies
...
Restriction on voting rights
...
Voting by show of hands
...
Voting through electronic means
...
Demand for poll
...
Postal ballot
...
Circulation of members‘ resolution
...
Representation of President and Governors in meetings
...
Representation of corporations at meeting of companies and of creditors
...
Ordinary and special resolutions
...
Resolutions requiring special notice
...
Resolutions passed at adjourned meeting
...
Resolutions and agreements to be filed
...
Minutes of proceedings of general meeting, meeting of Board of Directors and other meeting
and resolutions passed by postal ballot
...
Inspection of minute-books of general meeting
...
Maintenance and inspection of documents in electronic form
...
Report on annual general meeting
...
Applicability of this Chapter to One Person Company
...
Declaration of dividend
...
Unpaid Dividend Account
...
Investor Education and Protection Fund
...
Right to dividend, rights shares and bonus shares to be held in abeyance pending registration of
transfer of shares
...
Punishment for failure to distribute dividends
...
Books of account, etc
...

129
...

130
...

131
...

132
...

133
...
Financial statement, Board‘s report, etc
...
Corporate Social Responsibility
...
Right of member to copies of audited financial statement
...
Copy of financial statement to be filed with Registrar
...
Internal Audit
...
Appointment of auditors
...
Removal, resignation of auditor and giving of special notice
...
Eligibility, qualifications and disqualifications of auditors
...
Remuneration of auditors
...
Powers and duties of auditors and auditing standards
...
Auditor not to render certain services
...
Auditor to sign audit reports, etc
...
Auditors to attend general meeting
...
Punishment for contravention
...
Central Government to specify audit of items of cost in respect of certain companies
...
Company to have Board of Directors
...
Manner of selection of independent directors and maintenance of data bank of independent
directors
...
Appointment of director elected by small shareholders
...
Appointment of directors
...
Application for allotment of Director Identification Number
...
Allotment of Director Identification Number
...
Prohibition to obtain more than one Director Identification Number
...
Director to intimate Director Identification Number
...
Company to inform Director Identification Number to Registrar
...
Obligation to indicate Director Identification Number
...
Punishment for contravention
...
Right of persons other than retiring directors to stand for directorship
...
Appointment of additional director, alternate director and nominee director
...
Appointment of directors to be voted individually
...
Option to adopt principle of proportional representation for appointment of directors
...
Disqualifications for appointment of director
...
Number of directorships
...
Duties of directors
...
Vacation of office of director
...
Resignation of director
...
Removal of directors
...
Register of directors and key managerial personnel and their shareholding
...
Members‘ right to inspect
...
Punishment
...
Meetings of Board
...
Quorum for meetings of Board
...
Passing of resolution by circulation
...
Defects in appointment of directors not to invalidate actions taken
...
Audit committee
...
Nomination and Remuneration Committee and Stakeholders Relationship Committee
...
Powers of Board
...
Restrictions on powers of Board
...
Company to contribute to bona fide and charitable funds, etc
...
Prohibitions and restrictions regarding political contributions
...
Power of Board and other persons to make contributions to national defence fund, etc
...
Disclosure of interest by director
...
Loan to directors, etc
...
Loan and investment by company
...
Investments of company to be held in its own name
...
Related party transactions
...
Register of contracts or arrangements in which directors are interested
...
Contract of employment with managing or whole-time directors
...
Payment to director for loss of office, etc
...

192
...

193
...

194
...

195
...

5

CHAPTER XIII
APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL
SECTIONS
196
...

197
...

198
...

199
...

200
...

201
...

202
...

203
...

204
...

205
...

CHAPTER XIV
INSPECTION, INQUIRY AND INVESTIGATION
206
...

207
...

208
...

209
...

210
...

211
...

212
...

213
...

214
...

215
...

216
...

217
...
, of inspectors
...
Protection of employees during investigation
...
Power of inspector to conduct investigation into affairs of related companies, etc
...
Seizure of documents by inspector
...
Freezing of assets of company on inquiry and investigation
...
Imposition of restrictions upon securities
...
Inspector‘s report
...
Actions to be taken in pursuance of inspector‘s report
...
Expenses of investigation
...
Voluntary winding up of company, etc
...

227
...

228
...
, of foreign companies
...
Penalty for furnishing false statement, mutilation, destruction of documents
...
Power to compromise or make arrangements with creditors and members
...
Power to Tribunal to enforce compromise or arrangement
...
Merger and amalgamation of companies
...
Merger or amalgamation of certain companies
...
Merger or amalgamation of company with foreign company
...
Power to acquire shares of shareholders dissenting from scheme or contract approved by
majority
...
Purchase of minority shareholding
...
Power of Central Government to provide for amalgamation of companies in public interest
...
Registration of offer of schemes involving transfer of shares
...
Preservation of books and papers of amalgamated companies
...
Liability of officers in respect of offences committed prior to merger, amalgamation, etc
...
Application to Tribunal for relief in cases of oppression, etc
...
Powers of Tribunal
...
Consequence of termination or modification of certain agreements
...
Right to apply under section 241
...
Class action
...
Application of certain provisions to proceedings under section 241 or section 245
...
Valuation by registered valuers
...
Power of Registrar to remove name of company from register of companies
...
Restrictions on making application under section 248 in certain situations
...
Effect of company notified as dissolved
...
Fraudulent application for removal of name
...
Appeal to Tribunal
...
Determination of sickness
...
Application for revival and rehabilitation
...
Exclusion of certain time in computing period of limitation
...
Appointment of interim administrator
...
Committee of creditors
...
Order of Tribunal
...
Appointment of administrator
...
Powers and duties of company administrator
...
Scheme of revival and rehabilitation
...
Sanction of scheme
...
Scheme to be binding
...
Implementation of scheme
...
Winding up of company on report of company administrator
...
Power of Tribunal to assess damages against delinquent directors, etc
...
Punishment for certain offences
...
Bar of jurisdiction
...
Rehabilitation and Insolvency Fund
...
Modes of winding up
...
—Winding up by the Tribunal
271
...

272
...

273
...

274
...

275
...

276
...

277
...

278
...

279
...
, on winding up order
...
Jurisdiction of Tribunal
...
Submission of report by Company Liquidator
...
Directions of Tribunal on report of Company Liquidator
...
Custody of company‘s properties
...
Promoters, directors, etc
...

285
...

286
...

287
...

288
...

289
...

290
...

291
...

292
...

293
...

294
...

295
...

296
...

297
...

298
...

299
...

300
...

301
...

302
...

303
...

PART II
...
Circumstances in which company may be wound up voluntarily
...
Declaration of solvency in case of proposal to wind up voluntarily
...
Meeting of creditors
...
Publication of resolution to wind up voluntarily
...
Commencement of voluntary winding up
...
Effect of voluntary winding up
...
Appointment of Company Liquidator
...
Power to remove and fill vacancy of Company Liquidator
...
Notice of appointment of Company Liquidator to be given to Registrar
...
Cesser of Board‘s powers on appointment of Company Liquidator
...
Powers and duties of Company Liquidator in voluntary winding up
...
Appointment of committees
...
Company Liquidator to submit report on progress of winding up
...
Report of Company Liquidator to Tribunal for examination of persons
...
Final meeting and dissolution of company
...
Power of Company Liquidator to accept shares, etc
...

320
...

321
...

322
...

323
...

PART III
...
Debts of all descriptions to be admitted to proof
...
Application of insolvency rules in winding up of insolvent companies
...
Overriding preferential payments
...
Preferential payments
...
Fraudulent preference
...
Transfers not in good faith to be void
...
Certain transfers to be void
...
Liabilities and rights of certain persons fraudulently preferred
...
Effect of floating charge
...
Disclaimer of onerous property
...
Transfers, etc
...

335
...
, in winding up by Tribunal to be void
...
Offences by officers of companies in liquidation
...
Penalty for frauds by officers
...
Liability where proper accounts not kept
...
Liability for fraudulent conduct of business
...
Power of Tribunal to assess damages against delinquent directors, etc
...
Liability under sections 339 and 340 to extend to partners or directors in firms or companies
...
Prosecution of delinquent officers and members of company
...
Company Liquidator to exercise certain powers subject to sanction
...
Statement that company is in liquidation
...
Books and papers of company to be evidence
...
Inspection of books and papers by creditors and contributories
...
Disposal of books and papers of company
...
Information as to pending liquidations
...
Official Liquidator to make payments into public account of India
...
Company Liquidator to deposit monies into scheduled bank
...
Liquidator not to deposit monies into private banking account
...
Company Liquidation Dividend and Undistributed Assets Account
...
Liquidator to make returns, etc
...
Meetings to ascertain wishes of creditors or contributories
...
Court, tribunal or person, etc
...

356
...

357
...

358
...


9

PART IV
...
Appointment of Official Liquidator
...
Powers and functions of Official Liquidator
...
Summary procedure for liquidation
...
Sale of assets and recovery of debts due to company
...
Settlement of claims of creditors by Official Liquidator
...
Appeal by creditor
...
Order of dissolution of company
...
—Companies authorised to Register under this Act
366
...

367
...

368
...

369
...

370
...

371
...

372
...

373
...

374
...

PART II
...
Winding up of unregistered companies
...
Power to wind up foreign companies although dissolved
...
Provisions of Chapter cumulative
...
Saving and construction of enactments conferring power to wind up partnership firm, association
or company, etc
...

CHAPTER XXII
COMPANIES INCORPORATED OUTSIDE INDIA
379
...

380
...
, to be delivered to Registrar by foreign companies
...
Accounts of foreign company
...
Display of name, etc
...

383
...

384
...

385
...

386
...

387
...

388
...

389
...

390
...

391
...

392
...

393
...


10

CHAPTER XXIII
GOVERNMENT COMPANIES
SECTIONS
394
...

395
...

CHAPTER XXIV
REGISTRATION OFFICES AND FEES
396
...

397
...

398
...
, in electronic form
...
Inspection, production and evidence of documents kept by Registrar
...
Electronic form to be exclusive, alternative or in addition to physical form
...
Provision of value added services through electronic form
...
Application of provisions of Information Technology Act, 2000
...
Fee for filing, etc
...
Fees, etc
...

CHAPTER XXV
COMPANIES TO FURNISH INFORMATION OR STATISTICS
405
...

CHAPTER XXVI
NIDHIS
406
...

CHAPTER XXVII
NATIONAL COMPANY LAW TRIBUNAL AND APPELLATE TRIBUNAL
407
...

408
...

409
...

410
...

411
...

412
...

413
...

414
...

415
...

416
...

417
...

418
...

419
...

420
...

421
...

422
...

423
...

424
...

425
...

11

SECTIONS
426
...

427
...
, to be public servants
...
Protection of action taken in good faith
...
Power to seek assistance of Chief Metropolitan Magistrate, etc
...
Civil court not to have jurisdiction
...
Vacancy in Tribunal or Appellate Tribunal not to invalidate acts or proceedings
...
Right to legal representation
...
Limitation
...
Transfer of certain pending proceedings
...
Establishment of Special Courts
...
Offences triable by Special Courts
...
Appeal and revision
...
Application of Code to proceedings before Special Court
...
Offences to be non-cognizable
...
Transitional provisions
...
Compounding of certain offences
...
Mediation and Conciliation Panel
...
Power of Central Government to appoint company prosecutors
...
Appeal against acquittal
...
Compensation for accusation without reasonable cause
...
Application of fines
...
Punishment for fraud
...
Punishment for false statement
...
Punishment for false evidence
...
Punishment where no specific penalty or punishment is provided
...
Punishment in case of repeated default
...
Punishment for wrongful withholding of property
...
Punishment for improper use of ―Limited‖ or ―Private Limited‖
...
Adjudication of penalties
...
Dormant company
...
Protection of action taken in good faith
...
Non-disclosure of information in certain cases
...
Delegation by Central Government of its powers and functions
...
Power of Central Government of Tribunal to accord approval, etc
...

460
...

461
...

462
...

463
...

464
...

465
...

466
...

467
...

468
...

12

SECTIONS
469
...

470
...

SCHEDULE I
SCHEDULE II
SCHEDULE III
SCHEDULE IV
SCHEDULE V
SCHEDULE VI
SCHEDULE VII

13

THE COMPANIES ACT, 2013
ACT NO
...
]

An Act to consolidate and amend the law relating to companies
...
Short title, extent, commencement and application
...

(2) It extends to the whole of India
...

(4) The provisions of this Act shall apply to—
(a) companies incorporated under this Act or under any previous company law;
(b) insurance companies, except in so far as the said provisions are inconsistent with the
provisions of the Insurance Act, 1938 (4 of 1938) or the Insurance Regulatory and Development
Authority Act, 1999 (41 of 1999);
(c) banking companies, except in so far as the said provisions are inconsistent with the provisions
of the Banking Regulation Act, 1949 (10 of 1949);
(d) companies engaged in the generation or supply of electricity, except in so far as the said
provisions are inconsistent with the provisions of the Electricity Act, 2003 (36 of 2003);

1
...
2(2), (7), (13), (31), (41), (42), (47), (48), (62), (83), (85) and Explanation (d) of clause (87); ss
...
7 [except sub-section (7)]; s
...
9, 10, 11, 12 and 13; s
...
15, 16, 17 and 18; section 20; clause (b) of sub-section (1) and sub-section (2) of section 23; sub-section
(3) of section 25; ss
...
33; clause (e) of sub-section (1) of s
...
39; subsection (6) of s
...
41, 42 and 43; ss
...
52, 53 and 54; s
...
56; s
...
62 [except sub-sections (4) to (6)]; ss
...
67 and 68; sub-section (2) of section 70;
s
...
72 and 73; sub-section (1) of s
...
76, 77, 78, 79, 80, 81, 82, 83, 84 and 85; ss
...
92, 93, 94, 95 and 96; sub-section (6) of s
...
101; third and fourth provisos to sub-section (1) and subsection (7) of s
...
108, 109 and 110; clause (b) of sub-section (1) of s
...
115; ss
...
119 [except subsection (4)]; ss
...
126; ss
...
134; ss
...
140 [except second proviso to
sub-section (4) and sub-section (5)]; ss
...
161; ss
...
169 [except sub-section (4)]; ss
...
177, 178 and 179; s
...
186, 187, 188, 189, 190 and 191; s
...
196, 197, 198, 199, 200 and 201; ss
...
212 [except references of sub-section (10) of s
...
140], s
...
251 and sub-section (3) of s
...
214,
215; s
...
217; ss
...
223; s
...
225; ss
...
366, 367, 368 and 369; s
...
371; s
...
380 and 381; ss
...
386;
ss
...
391; ss
...
395, 396, 397 and 398; s
...
400, 401, 402, 403 and 404; s
...
442; ss
...
464; Schs
...
S
...
902(E), dated 26th March, 2014, see Gazette of India, Extraordinary, Part II, sec
...

1st April, 2014 – S
...
VII, vide notification No
...
O
...
3 (ii)
...
74, vide notification No
...
O
...
3(ii)
...

2
...
— In this Act, unless the context otherwise requires,—
(1) ―abridged prospectus‖ means a memorandum containing such salient features of a prospectus as
may be specified by the Securities and Exchange Board by making regulations in this behalf;
(2) ―accounting standards‖ means the standards of accounting or any addendum thereto for companies
or class of companies referred to in section 133;
(3) ―alter‖ or ―alteration‖ includes the making of additions, omissions and substitutions;
(4) ―Appellate Tribunal‖ means the National Company Law Appellate Tribunal constituted under
section 410;
(5) ―articles‖ means the articles of association of a company as originally framed or as altered from
time to time or applied in pursuance of any previous company law or of this Act;
(6) ―associate company‖, in relation to another company, means a company in which that other
company has a significant influence, but which is not a subsidiary company of the company having such
influence and includes a joint venture company
...
—For the purposes of this clause, ―significant influence‖ means control of at least twenty
per cent
...

Explanation
...

(43) ―free reserves‖ means such reserves which, as per the latest audited balance sheet of a company,
are available for distribution as dividend:
Provided that—
(i) any amount representing unrealised gains, notional gains or revaluation of assets, whether
shown as a reserve or otherwise, or
(ii) any change in carrying amount of an asset or of a liability recognised in equity, including
surplus in profit and loss account on measurement of the asset or the liability at fair value,
shall not be treated as free reserves;
(44) ―Global Depository Receipt‖ means any instrument in the form of a depository receipt, by
whatever name called, created by a foreign depository outside India and authorised by a company making
an issue of such depository receipts;
(45) ―Government company‖ means any company in which not less than fifty-one per cent
...

Explanation
...
54 of 1942);
(vi) the Companies Act, 1956 (1 of 1956); and
(vii) any law corresponding to any of the aforesaid Acts or the Ordinances and in force—
(A) in the merged territories or in a Part B State (other than the State of Jammu and Kashmir),
or any part thereof, before the extension thereto of the Indian Companies Act, 1913 (7 of 1913);
or
(B) in the State of Jammu and Kashmir, or any part thereof, before the commencement of the
Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), in so far as banking, insurance
and financial corporations are concerned, and before the commencement of the Central Laws
(Extension to Jammu and Kashmir) Act, 1968 (25 of 1968), in so far as other corporations are
concerned;
(viii) the Portuguese Commercial Code, in so far as it relates to sociedades anonimas; and
(ix) the Registration of Companies (Sikkim) Act, 1961 (Sikkim Act 8 of 1961);
(68) ―private company‖ means a company having a minimum paid-up share capital 1*** as may be
prescribed, and which by its articles,—
(i) restricts the right to transfer its shares;
(ii) except in case of One Person Company, limits the number of its members to two hundred:
Provided that where two or more persons hold one or more shares in a company jointly, they shall, for
the purposes of this clause, be treated as a single member:

1
...
2 (w
...
f
...


20

Provided further that—
(A) persons who are in the employment of the company; and
(B) persons who, having been formerly in the employment of the company, were members of the
company while in that employment and have continued to be members after the employment ceased,
shall not be included in the number of members; and
(iii) prohibits any invitation to the public to subscribe for any securities of the company;
(69) ―promoter‖ means a person—
(a) who has been named as such in a prospectus or is identified by the company in the annual
return referred to in section 92; or
(b) who has control over the affairs of the company, directly or indirectly whether as a
shareholder, director or otherwise; or
(c) in accordance with whose advice, directions or instructions the Board of Directors of the
company is accustomed to act:
Provided that nothing in sub-clause (c) shall apply to a person who is acting merely in a professional
capacity;
(70) ―prospectus‖ means any document described or issued as a prospectus and includes a red herring
prospectus referred to in section 32 or shelf prospectus referred to in section 31 or any notice, circular,
advertisement or other document inviting offers from the public for the subscription or purchase of any
securities of body corporate;
(71) ―public company‖ means a company which—
(a) is not a private company;
(b) has a minimum paid-up share capital 1*** as may be prescribed:
Provided that a company which is a subsidiary of a company, not being a private company, shall be
deemed to be public company for the purposes of this Act even where such subsidiary company continues
to be a private company in its articles ;
(72) ―public financial institution‖ means—
(i) the Life Insurance Corporation of India, established under section 3 of the Life Insurance
Corporation Act, 1956 (31 of 1956);
(ii) the Infrastructure Development Finance Company Limited, referred to in clause (vi) of subsection (1) of section 4A of the Companies Act, 1956 (1 of 1956) so repealed under section 465 of
this Act;
(iii) specified company referred to in the Unit Trust of India (Transfer of Undertaking and
Repeal) Act, 2002 (58 of 2002);
(iv) institutions notified by the Central Government under sub-section (2) of section 4A of the
Companies Act, 1956 (1 of 1956) so repealed under section 465 of this Act;
(v) such other institution as may be notified by the Central Government in consultation with the
Reserve Bank of India:
Provided that no institution shall be so notified unless—
(A) it has been established or constituted by or under any Central or State Act; or

1
...
2 (w
...
f
...


21

(B) not less than fifty-one per cent
...
of its paid-up share capital;
(vi) any body corporate whose Board of Directors, managing director or manager is accustomed
to act in accordance with the advice, directions or instructions of a director or manager;
(vii) any person on whose advice, directions or instructions a director or manager is accustomed
to act:
Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or instructions
given in a professional capacity;
(viii) any company which is—
(A) a holding, subsidiary or an associate company of such company; or
(B) a subsidiary of a holding company to which it is also a subsidiary;
(ix) such other person as may be prescribed;
(77) ‗‗relative‘‘, with reference to any person, means any one who is related to another, if—
(i) they are members of a Hindu Undivided Family;
(ii) they are husband and wife; or
(iii) one person is related to the other in such manner as may be prescribed;
(78) ―remuneration‖ means any money or its equivalent given or passed to any person for services
rendered by him and includes perquisites as defined under the Income-tax Act, 1961 (43 of 1961);
(79) ―Schedule‖ means a Schedule annexed to this Act;
(80) ―scheduled bank‖ means the scheduled bank as defined in clause (e) of section 2 of the Reserve
Bank of India Act, 1934 (2 of 1934);
(81) ―securities‖ means the securities as defined in clause (h) of section 2 of the Securities Contracts
(Regulation) Act, 1956 (42 of 1956);
(82) ―Securities and Exchange Board‖ means the Securities and Exchange Board of India established
under section 3 of the Securities and Exchange Board of India Act,1992 (15 of 1992);
(83) ―Serious Fraud Investigation Office‖ means the office referred to in section 211;
(84) ―share‖ means a share in the share capital of a company and includes stock;
22

(85) ‗‗small company‘‘ means a company, other than a public company,—
(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may
be prescribed which shall not be more than five crore rupees; or
(ii) turnover of which as per its last profit and loss account does not exceed two crore rupees or
such higher amount as may be prescribed which shall not be more than twenty crore rupees:
Provided that nothing in this clause shall apply to—
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act;
(86) ―subscribed capital‖ means such part of the capital which is for the time being subscribed by the
members of a company;
(87) ―subsidiary company‖ or ―subsidiary‖, in relation to any other company (that is to say the
holding company), means a company in which the holding company—
(i) controls the composition of the Board of Directors; or
(ii) exercises or controls more than one-half of the total share capital either at its own or together
with one or more of its subsidiary companies:
Provided that such class or classes of holding companies as may be prescribed shall not have layers of
subsidiaries beyond such numbers as may be prescribed
...
—For the purposes of this clause,—
(a) a company shall be deemed to be a subsidiary company of the holding company even if the
control referred to in sub-clause (i) or sub-clause (ii) is of another subsidiary company of the holding
company;
(b) the composition of a company‘s Board of Directors shall be deemed to be controlled by
another company if that other company by exercise of some power exercisable by it at its discretion
can appoint or remove all or a majority of the directors;
(c) the expression ―company‖ includes any body corporate;
(d) ―layer‖ in relation to a holding company means its subsidiary or subsidiaries;
(88) ―sweat equity shares‖ means such equity shares as are issued by a company to its directors or
employees at a discount or for consideration, other than cash, for providing their know-how or making
available rights in the nature of intellectual property rights or value additions, by whatever name called;
(89) ―total voting power‖, in relation to any matter, means the total number of votes which may be
cast in regard to that matter on a poll at a meeting of a company if all the members thereof or their proxies
having a right to vote on that matter are present at the meeting and cast their votes;
(90) ―Tribunal‖ means the National Company Law Tribunal constituted under section 408;
(91) ―turnover‖ means the aggregate value of the realisation of amount made from the sale, supply or
distribution of goods or on account of services rendered, or both, by the company during a financial year;
(92) ―unlimited company‖ means a company not having any limit on the liability of its members;
(93) ―voting right‖ means the right of a member of a company to vote in any meeting of the company
or by means of postal ballot;
(94) ―whole-time director‖ includes a director in the whole-time employment of the company;

23

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

(2) A company formed under sub-section (1) may be either—
(a) a company limited by shares; or
(b) a company limited by guarantee; or
(c) an unlimited company
...
Memorandum
...

(2) The name stated in the memorandum shall not—
(a) be identical with or resemble too nearly to the name of an existing company registered under
this Act or any previous company law; or
(b) be such that its use by the company—
(i) will constitute an offence under any law for the time being in force; or
(ii) is undesirable in the opinion of the Central Government
...

(4) A person may make an application, in such form and manner and accompanied by such fee, as
may be prescribed, to the Registrar for the reservation of a name set out in the application as—
(a) the name of the proposed company; or
(b) the name to which the company proposes to change its name
...

(ii) Where after reservation of name under clause (i), it is found that name was applied by furnishing
wrong or incorrect information, then,—
(a) if the company has not been incorporated, the reserved name shall be cancelled and the person
making application under sub-section (4) shall be liable to a penalty which may extend to one lakh
rupees;

25

(b) if the company has been incorporated, the Registrar may, after giving the company an
opportunity of being heard—
(i) either direct the company to change its name within a period of three months, after passing
an ordinary resolution;
(ii) take action for striking off the name of the company from the register of companies; or
(iii) make a petition for winding up of the company
...

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

(2) The articles shall also contain such matters, as may be prescribed:
Provided that nothing prescribed in this sub-section shall be deemed to prevent a company from
including such additional matters in its articles as may be considered necessary for its management
...

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

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

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

6
...
— Save as otherwise expressly provided in this
Act—
(a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained
in the memorandum or articles of a company, or in any agreement executed by it, or in any resolution
passed by the company in general meeting or by its Board of Directors, whether the same be
registered, executed or passed, as the case may be, before or after the commencement of this Act; and
(b) any provision contained in the memorandum, articles, agreement or resolution shall, to the
extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be
...
Incorporation of company
...

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

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

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

8
...
— (1) Where it is proved to the
satisfaction of the Central Government that a person or an association of persons proposed to be
registered under this Act as a limited company—
(a) has in its objects the promotion of commerce, art, science, sports, education, research, social
welfare, religion, charity, protection of environment or any such other object;
(b) intends to apply its profits, if any, or other income in promoting its objects; and
(c) intends to prohibit the payment of any dividend to its members,
the Central Government may, by licence issued in such manner as may be prescribed, and on such
conditions as it deems fit, allow that person or association of persons to be registered as a limited
company under this section without the addition to its name of the word ―Limited‖, or as the case may be,
the words ―Private Limited‖ , and thereupon the Registrar shall, on application, in the prescribed form,
register such person or association of persons as a company under this section
...

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

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

(6) The Central Government may, by order, revoke the licence granted to a company registered under
this section if the company contravenes any of the requirements of this section or any of the conditions
subject to which a licence is issued or the affairs of the company are conducted fraudulently or in a
manner violative of the objects of the company or prejudicial to public interest, and without prejudice to
any other action against the company under this Act, direct the company to convert its status and change
its name to add the word ―Limited‖ or the words ―Private Limited‖, as the case may be, to its name and
28

thereupon the Registrar shall, without prejudice to any action that may be taken under sub-section (7), on
application, in the prescribed form, register the company accordingly:
Provided that no such order shall be made unless the company is given a reasonable opportunity of
being heard:
Provided further that a copy of every such order shall be given to the Registrar
...

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

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

9
...
— From the date of incorporation mentioned in the certificate of
incorporation, such subscribers to the memorandum and all other persons, as may, from time to time,
become members of the company, shall be a body corporate by the name contained in the memorandum,
capable of exercising all the functions of an incorporated company under this Act and having perpetual
succession 1*** with power to acquire, hold and dispose of property, both movable and immovable,
tangible and intangible, to contract and to sue and be sued, by the said name
...
Effect of memorandum and articles
...

(2) All monies payable by any member to the company under the memorandum or articles shall be a
debt due from him to the company
...
[Commencement of business, etc
...
4 (w
...
f
...


1
...
3 (w
...
f
...


29

12
...
— (1) A company shall, on and from the fifteenth day of its
incorporation and at all times thereafter, have a registered office capable of receiving and acknowledging
all communications and notices as may be addressed to it
...

(3) Every company shall—
(a) paint or affix its name, and the address of its registered office, and keep the same painted or
affixed, on the outside of every office or place in which its business is carried on, in a conspicuous
position, in legible letters, and if the characters employed therefor are not those of the language or of
one of the languages in general use in that locality, also in the characters of that language or of one of
those languages;
1

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

(c) get its name, address of its registered office and the Corporate Identity Number along with
telephone number, fax number, if any, e-mail and website addresses, if any, printed in all its business
letters, billheads, letter papers and in all its notices and other official publications; and
(d) have its name printed on hundies, promissory notes, bills of exchange and such other
documents as may be prescribed:
Provided that where a company has changed its name or names during the last two years, it shall paint
or affix or print, as the case may be, along with its name, the former name or names so changed during the
last two years as required under clauses (a) and (c):
Provided further that the words ‗‗One Person Company‘‘ shall be mentioned in brackets below the
name of such company, wherever its name is printed, affixed or engraved
...

(5) Except on the authority of a special resolution passed by a company, the registered office of the
company shall not be changed,—
(a) in the case of an existing company, outside the local limits of any city, town or village where
such office is situated at the commencement of this Act or where it may be situated later by virtue of
a special resolution passed by the company; and
(b) in the case of any other company, outside the local limits of any city, town or village where
such office is first situated or where it may be situated later by virtue of a special resolution passed by
the company:
Provided that no company shall change the place of its registered office from the jurisdiction of one
Registrar to the jurisdiction of another Registrar within the same State unless such change is confirmed by
the Regional Director on an application made in this behalf by the company in the prescribed manner
...

(7) The certificate referred to in sub-section (6) shall be conclusive evidence that all the requirements
of this Act with respect to change of registered office in pursuance of subsection (5) have been complied
with and the change shall take effect from the date of the certificate
...
Subs
...
5, for cl
...
e
...
29-5-2015)
...

13
...
— (1) Save as provided in section 61, a company may, by a special
resolution and after complying with the procedure specified in this section, alter the provisions of its
memorandum
...

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

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

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

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

31

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

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

15
...
— (1) Every alteration made
in the memorandum or articles of a company shall be noted in every copy of the memorandum or articles,
as the case may be
...

16
...
— (1) If, through inadvertence or otherwise, a company on its
first registration or on its registration by a new name, is registered by a name which,—
(a) in the opinion of the Central Government, is identical with or too nearly resembles the name
by which a company in existence had been previously registered, whether under this Act or any
previous company law, it may direct the company to change its name and the company shall change
its name or new name, as the case may be, within a period of three months from the issue of such
direction, after adopting an ordinary resolution for the purpose;
(b) on an application by a registered proprietor of a trade mark that the name is identical with or
too nearly resembles to a registered trade mark of such proprietor under the Trade Marks Act, 1999,
made to the Central Government within three years of incorporation or registration or change of name
of the company, whether under this Act or any previous company law, in the opinion of the Central
Government, is identical with or too nearly resembles to an existing trade mark, it may direct the
company to change its name and the company shall change its name or new name, as the case may be,
within a period of six months from the issue of such direction, after adopting an ordinary resolution
for the purpose
...

(3) If a company makes default in complying with any direction given under sub-section (1), the
company shall be punishable with fine of one thousand rupees for every day during which the default
32

continues and every officer who is in default shall be punishable with fine which shall not be less than
five thousand rupees but which may extend to one lakh rupees
...
Copies of memorandum, articles, etc
...
— (1) A company shall, on
being so requested by a member, send to him within seven days of the request and subject to the payment
of such fees as may be prescribed, a copy of each of the following documents, namely:—
(a) the memorandum;
(b) the articles; and
(c) every agreement and every resolution referred to in sub-section (1) of section 117, if and in so
far as they have not been embodied in the memorandum or articles
...

18
...
— (1) A company of any class registered under
this Act may convert itself as a company of other class under this Act by alteration of memorandum and
articles of the company in accordance with the provisions of this Chapter
...

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

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


33

(2) Save as provided in this Act or the rules made thereunder for filing of documents with the
Registrar in electronic mode, a document may be served on Registrar or any member by sending it to him
by post or by registered post or by speed post or by courier or by delivering at his office or address, or by
such electronic or other mode as may be prescribed:
Provided that a member may request for delivery of any document through a particular mode, for
which he shall pay such fees as may be determined by the company in its annual general meeting
...
—For the purposes of this section, the term ‗‗courier‘‘ means a person or agency which
delivers the document and provides proof of its delivery
...
Authentication of documents, proceedings and contracts
...

22
...
— (1) A bill of exchange, hundi or promissory note shall be
deemed to have been made, accepted, drawn or endorsed on behalf of a company if made, accepted,
drawn, or endorsed in the name of, or on behalf of or on account of, the company by any person acting
under its authority, express or implied
...
]
(3) A deed signed by such an attorney on behalf of the company and under his seal shall bind the
company 3***
...
—Public offer
23
...
— (1) A public company may issue securities—
(a) to public through prospectus (herein referred to as "public offer") by complying with the
provisions of this Part; or
(b) through private placement by complying with the provisions of Part II of this Chapter; or
(c) through a rights issue or a bonus issue in accordance with the provisions of this Act and in
case of a listed company or a company which intends to get its securities listed also with the
provisions of the Securities and Exchange Board of India Act, 1992 (15 of 1992) and the rules and
regulations made thereunder
...

Explanation
...

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


34

24
...
—
(1) The provisions contained in this Chapter, Chapter IV and in section 127 shall,—
(a) in so far as they relate to —
(i) issue and transfer of securities; and
(ii) non-payment of dividend,
by listed companies or those companies which intend to get their securities listed on any recognised
stock exchange in India, except as provided under this Act, be administered by the Securities and
Exchange Board by making regulations in this behalf;
(b) in any other case, be administered by the Central Government
...
—For the removal of doubts, it is hereby declared that all powers relating to all other
matters relating to prospectus, return of allotment, redemption of preference shares and any other matter
specifically provided in this Act, shall be exercised by the Central Government, the Tribunal or the
Registrar, as the case may be
...

25
...
— (1) Where a
company allots or agrees to allot any securities of the company with a view to all or any of those
securities being offered for sale to the public, any document by which the offer for sale to the public is
made shall, for all purposes, be deemed to be a prospectus issued by the company; and all enactments and
rules of law as to the contents of prospectus and as to liability in respect of mis-statements, in and
omissions from, prospectus, or otherwise relating to prospectus, shall apply with the modifications
specified in subsections (3) and (4) and shall have effect accordingly, as if the securities had been offered
to the public for subscription and as if persons accepting the offer in respect of any securities were
subscribers for those securities, but without prejudice to the liability, if any, of the persons by whom the
offer is made in respect of mis-statements contained in the document or otherwise in respect thereof
...

(3) Section 26 as applied by this section shall have effect as if —
(i) it required a prospectus to state in addition to the matters required by that section to be stated
in a prospectus—
(a) the net amount of the consideration received or to be received by the company in respect
of the securities to which the offer relates; and
(b) the time and place at which the contract where under the said securities have been or are
to be allotted may be inspected;
(ii) the persons making the offer were persons named in a prospectus as directors of a company
...


35

26
...
— (1) Every prospectus issued by or on behalf of a public
company either with reference to its formation or subsequently, or by or on behalf of any person who is
or has been engaged or interested in the formation of a public company, shall be dated and signed and
shall—
(a) state the following information, namely:—
(i) names and addresses of the registered office of the company, company secretary, Chief
Financial Officer, auditors, legal advisers, bankers, trustees, if any, underwriters and such other
persons as may be prescribed;
(ii) dates of the opening and closing of the issue, and declaration about the issue of allotment
letters and refunds within the prescribed time;
(iii) a statement by the Board of Directors about the separate bank account where all monies
received out of the issue are to be transferred and disclosure of details of all monies including
utilised and unutilised monies out of the previous issue in the prescribed manner;
(iv) details about underwriting of the issue;
(v) consent of the directors, auditors, bankers to the issue, expert‘s opinion, if any, and of
such other persons, as may be prescribed;
(vi) the authority for the issue and the details of the resolution passed therefor;
(vii) procedure and time schedule for allotment and issue of securities;
(viii) capital structure of the company in the prescribed manner;
(ix) main objects of public offer, terms of the present issue and such other particulars as may
be prescribed;
(x) main objects and present business of the company and its location, schedule of
implementation of the project;
(xi) particulars relating to—
(A) management perception of risk factors specific to the project;
(B) gestation period of the project;
(C) extent of progress made in the project;
(D) deadlines for completion of the project; and
(E) any litigation or legal action pending or taken by a Government Department or a
statutory body during the last five years immediately preceding the year of the issue of
prospectus against the promoter of the company;
(xii) minimum subscription, amount payable by way of premium, issue of shares otherwise
than on cash;
(xiii) details of directors including their appointments and remuneration, and such particulars
of the nature and extent of their interests in the company as may be prescribed; and
(xiv) disclosures in such manner as may be prescribed about sources of promoter‘s
contribution;
(b) set out the following reports for the purposes of the financial information, namely:—
(i) reports by the auditors of the company with respect to its profits and losses and assets and
liabilities and such other matters as may be prescribed;
(ii) reports relating to profits and losses for each of the five financial years immediately
preceding the financial year of the issue of prospectus including such reports of its subsidiaries
and in such manner as may be prescribed:

36

Provided that in case of a company with respect to which a period of five years has not
elapsed from the date of incorporation, the prospectus shall set out in such manner as may be
prescribed, the reports relating to profits and losses for each of the financial years immediately
preceding the financial year of the issue of prospectus including such reports of its subsidiaries;
(iii) reports made in the prescribed manner by the auditors upon the profits and losses of the
business of the company for each of the five financial years immediately preceding issue and
assets and liabilities of its business on the last date to which the accounts of the business were
made up, being a date not more than one hundred and eighty days before the issue of the
prospectus:
Provided that in case of a company with respect to which a period of five years has not
elapsed from the date of incorporation, the prospectus shall set out in the prescribed manner, the
reports made by the auditors upon the profits and losses of the business of the company for all
financial years from the date of its incorporation, and assets and liabilities of its business on the
last date before the issue of prospectus; and
(iv) reports about the business or transaction to which the proceeds of the securities are to be
applied directly or indirectly;
(c) make a declaration about the compliance of the provisions of this Act and a statement to the
effect that nothing in the prospectus is contrary to the provisions of this Act, the Securities Contracts
(Regulation) Act, 1956 (42 of 1956) and the Securities and Exchange Board of India Act, 1992 (15 of
1992) and the rules and regulations made thereunder; and
(d) state such other matters and set out such other reports, as may be prescribed
...

(3) Subject to sub-section (2), the provisions of sub-section (1) shall apply to a prospectus or a form
of application, whether issued on or with reference to the formation of a company or subsequently
...
—The date indicated in the prospectus shall be deemed to be the date of its publication
...

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


37

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

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

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

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

29
...
— (1) Notwithstanding anything
contained in any other provisions of this Act,—
(a) every company making public offer; and
(b) such other class or classes of public companies as may be prescribed,
shall issue the securities only in dematerialised form by complying with the provisions of the Depositories
Act, 1996 (22 of 1996) and the regulations made thereunder
...

30
...
— Where an advertisement of any prospectus of a company is
published in any manner, it shall be necessary to specify therein the contents of its memorandum as
38

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

(2) A company filing a shelf prospectus shall be required to file an information memorandum
containing all material facts relating to new charges created, changes in the financial position of the
company as have occurred between the first offer of securities or the previous offer of securities and the
succeeding offer of securities and such other changes as may be prescribed, with the Registrar within the
prescribed time, prior to the issue of a second or subsequent offer of securities under the shelf prospectus:
Provided that where a company or any other person has received applications for the allotment of
securities along with advance payments of subscription before the making of any such change, the
company or other person shall intimate the changes to such applicants and if they express a desire to
withdraw their application, the company or other person shall refund all the monies received as
subscription within fifteen days thereof
...

Explanation
...

32
...
— (1) A company proposing to make an offer of securities may issue a
red herring prospectus prior to the issue of a prospectus
...

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

Explanation
...

33
...
— (1) No form of application for the purchase of any
of the securities of a company shall be issued unless such form is accompanied by an abridged
prospectus:
Provided that nothing in this sub-section shall apply if it is shown that the form of application was
issued—
(a) in connection with a bona fide invitation to a person to enter into an underwriting agreement
with respect to such securities; or
(b) in relation to securities which were not offered to the public
...

39

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

35
...
—(1) Where a person has subscribed for
securities of a company acting on any statement included, or the inclusion or omission of any matter, in
the prospectus which is misleading and has sustained any loss or damage as a consequence thereof, the
company and every person who—
(a) is a director of the company at the time of the issue of the prospectus;
(b) has authorised himself to be named and is named in the prospectus as a director of the
company, or has agreed to become such director, either immediately or after an interval of time;
(c) is a promoter of the company;
(d) has authorised the issue of the prospectus; and
(e) is an expert referred to in sub-section (5) of section 26,
shall, without prejudice to any punishment to which any person may be liable under section 36, be liable
to pay compensation to every person who has sustained such loss or damage
...

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

37
...
—A suit may be filed or any other action may be taken under section
34 or section 35 or section 36 by any person, group of persons or any association of persons affected by
any misleading statement or the inclusion or omission of any matter in the prospectus
...
Punishment for personation for acquisition, etc
...
—(1) Any person who—
(a) makes or abets making of an application in a fictitious name to a company for acquiring, or
subscribing for, its securities; or
(b) makes or abets making of multiple applications to a company in different names or in
different combinations of his name or surname for acquiring or subscribing for its securities; or
(c) otherwise induces directly or indirectly a company to allot, or register any transfer of,
securities to him, or to any other person in a fictitious name,
shall be liable for action under section 447
...

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

39
...
—(1) No allotment of any securities of a company offered
to the public for subscription shall be made unless the amount stated in the prospectus as the minimum
amount has been subscribed and the sums payable on application for the amount so stated have been paid
to and received by the company by cheque or other instrument
...
of the
nominal amount of the security or such other percentage or amount, as may be specified by the Securities
and Exchange Board by making regulations in this behalf
...

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

40
...
—(1) Every company making public offer shall,
before making such offer, make an application to one or more recognised stock exchange or exchanges
and obtain permission for the securities to be dealt with in such stock exchange or exchanges
...

(3) All monies received on application from the public for subscription to the securities shall be kept
in a separate bank account in a scheduled bank and shall not be utilised for any purpose other than—
(a) for adjustment against allotment of securities where the securities have been permitted to be
dealt with in the stock exchange or stock exchanges specified in the prospectus; or
(b) for the repayment of monies within the time specified by the Securities and Exchange Board,
received from applicants in pursuance of the prospectus, where the company is for any other reason
unable to allot securities
...


41

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

41
...
— A company may, after passing a special resolution in its general
meeting, issue depository receipts in any foreign country in such manner, and subject to such conditions,
as may be prescribed
...
—Private placement
42
...
—(1) Without
prejudice to the provisions of section 26, a company may, subject to the provisions of this section, make
private placement through issue of a private placement offer letter
...

Explanation I
...

Explanation II
...

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

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

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

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

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

CHAPTER IV
SHARE CAPITAL AND DEBENTURES
43
...
—The share capital of a company limited by shares shall be of two kinds,
namely:—
(a) equity share capital—
(i) with voting rights; or
(ii) with differential rights as to dividend, voting or otherwise in accordance with such rules
as may be prescribed; and
(b) preference share capital:
Provided that nothing contained in this Act shall affect the rights of the preference shareholders who
are entitled to participate in the proceeds of winding up before the commencement of this Act
...
—For the purposes of this section,—
(i) ‗‗equity share capital‘‘, with reference to any company limited by shares, means all share
capital which is not preference share capital;
(ii) ‗‗preference share capital‘‘, with reference to any company limited by shares, means that part
of the issued share capital of the company which carries or would carry a preferential right with
respect to—
(a) payment of dividend, either as a fixed amount or an amount calculated at a fixed rate,
which may either be free of or subject to income-tax; and
(b) repayment, in the case of a winding up or repayment of capital, of the amount of the share
capital paid-up or deemed to have been paid-up, whether or not, there is a preferential right to the
payment of any fixed premium or premium on any fixed scale, specified in the memorandum or
articles of the company;
(iii) capital shall be deemed to be preference capital, notwithstanding that it is entitled to either or
both of the following rights, namely:—
43

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

45
...
— Every share in a company having a share capital shall be distinguished
by its distinctive number:
Provided that nothing in this section shall apply to a share held by a person whose name is entered as
holder of beneficial interest in such share in the records of a depository
...
Certificate of shares
...

(2) A duplicate certificate of shares may be issued, if such certificate —
(a) is proved to have been lost or destroyed; or
(b) has been defaced, mutilated or torn and is surrendered to the company
...

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

47
...
—(1) Subject to the provisions of section 43 and sub-section (2) of section 50,—
(a) every member of a company limited by shares and holding equity share capital therein, shall
have a right to vote on every resolution placed before the company; and
(b) his voting right on a poll shall be in proportion to his share in the paid-up equity share capital
of the company
...
Subs
...
7, for ―issued under the common seal of the company‖ (w
...
f
...


44

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

(2) Where the holders of not less than ten per cent
...

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

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

Explanation
...

50
...
—(1) A company may, if so
authorised by its articles, accept from any member, the whole or a part of the amount remaining unpaid on
any shares held by him, even if no part of that amount has been called up
...

51
...
—A company may, if so authorised by
its articles, pay dividends in proportion to the amount paid-up on each share
...
Application of premiums received on issue of shares
...

45

(2) Notwithstanding anything contained in sub-section (1), the securities premium account may be
applied by the company—
(a) towards the issue of unissued shares of the company to the members of the company as fully
paid bonus shares;
(b) in writing off the preliminary expenses of the company;
(c) in writing off the expenses of, or the commission paid or discount allowed on, any issue of
shares or debentures of the company;
(d) in providing for the premium payable on the redemption of any redeemable preference shares
or of any debentures of the company; or
(e) for the purchase of its own shares or other securities under section 68
...

53
...
—(1) Except as provided in section 54, a company
shall not issue shares at a discount
...

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

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


46

(2) A company limited by shares may, if so authorised by its articles, issue preference shares which
are liable to be redeemed within a period not exceeding twenty years from the date of their issue subject
to such conditions as may be prescribed:
Provided that a company may issue preference shares for a period exceeding twenty years for
infrastructure projects, subject to the redemption of such percentage of shares as may be prescribed on an
annual basis at the option of such preferential shareholders:
Provided further that—
(a) no such shares shall be redeemed except out of the profits of the company which would
otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the
purposes of such redemption;
(b) no such shares shall be redeemed unless they are fully paid;
(c) where such shares are proposed to be redeemed out of the profits of the company, there shall,
out of such profits, be transferred, a sum equal to the nominal amount of the shares to be redeemed, to
a reserve, to be called the Capital Redemption Reserve Account, and the provisions of this Act
relating to reduction of share capital of a company shall, except as provided in this section, apply as if
the Capital Redemption Reserve Account were paid-up share capital of the company; and
(d) (i) in case of such class of companies, as may be prescribed and whose financial statement
comply with the accounting standards prescribed for such class of companies under section 133, the
premium, if any, payable on redemption shall be provided for out of the profits of the company,
before the shares are redeemed:
Provided also that premium, if any, payable on redemption of any preference shares issued on or
before the commencement of this Act by any such company shall be provided for out of the profits of
the company or out of the company‘s securities premium account, before such shares are redeemed
...

(3) Where a company is not in a position to redeem any preference shares or to pay dividend, if any,
on such shares in accordance with the terms of issue (such shares hereinafter referred to as unredeemed
preference shares), it may, with the consent of the holders of three-fourths in value of such preference
shares and with the approval of the Tribunal on a petition made by it in this behalf, issue further
redeemable preference shares equal to the amount due, including the dividend thereon, in respect of the
unredeemed preference shares, and on the issue of such further redeemable preference shares, the
unredeemed preference shares shall be deemed to have been redeemed:
Provided that the Tribunal shall, while giving approval under this sub-section, order the redemption
forthwith of preference shares held by such persons who have not consented to the issue of further
redeemable preference shares
...
—For the removal of doubts, it is hereby declared that the issue of further redeemable
preference shares or the redemption of preference shares under this section shall not be deemed to be an
increase or, as the case may be, a reduction, in the share capital of the company
...

Explanation
...

56
...
—(1) A company shall not register a transfer of
securities of the company, or the interest of a member in the company in the case of a company having no
share capital, other than the transfer between persons both of whose names are entered as holders of
beneficial interest in the records of a depository, unless a proper instrument of transfer, in such form as
47

may be prescribed, duly stamped, dated and executed by or on behalf of the transferor and the transferee
and specifying the name, address and occupation, if any, of the transferee has been delivered to the
company by the transferor or the transferee within a period of sixty days from the date of execution, along
with the certificate relating to the securities, or if no such certificate is in existence, along with the letter
of allotment of securities:
Provided that where the instrument of transfer has been lost or the instrument of transfer has not been
delivered within the prescribed period, the company may register the transfer on such terms as to
indemnity as the Board may think fit
...

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

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

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

58
...
—(1) If a private company limited by shares
refuses, whether in pursuance of any power of the company under its articles or otherwise, to register the
transfer of, or the transmission by operation of law of the right to, any securities or interest of a member
in the company, it shall within a period of thirty days from the date on which the instrument of transfer, or
48

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

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

(5) The Tribunal, while dealing with an appeal made under sub-section (3) or sub-section (4), may,
after hearing the parties, either dismiss the appeal, or by order—
(a) direct that the transfer or transmission shall be registered by the company and the company
shall comply with such order within a period of ten days of the receipt of the order; or
(b) direct rectification of the register and also direct the company to pay damages, if any,
sustained by any party aggrieved
...

59
...
—(1) If the name of any person is, without sufficient
cause, entered in the register of members of a company, or after having been entered in the register, is,
without sufficient cause, omitted therefrom, or if a default is made, or unnecessary delay takes place in
entering in the register, the fact of any person having become or ceased to be a member, the person
aggrieved, or any member of the company, or the company may appeal in such form as may be
prescribed, to the Tribunal, or to a competent court outside India, specified by the Central Government by
notification, in respect of foreign members or debenture holders residing outside India, for rectification of
the register
...

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

(5) If any default is made in complying with the order of the Tribunal under this section, the company
shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five
49

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

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

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

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

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

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

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

51

(b) it has, on the recommendation of the Board, been authorised in the general meeting of the
company;
(c) it has not defaulted in payment of interest or principal in respect of fixed deposits or debt
securities issued by it;
(d) it has not defaulted in respect of the payment of statutory dues of the employees, such as,
contribution to provident fund, gratuity and bonus;
(e) the partly paid-up shares, if any outstanding on the date of allotment, are made fully paid-up;
(f) it complies with such conditions as may be prescribed
...

64
...
—(1) Where —
(a) a company alters its share capital in any manner specified in sub-section (1) of section 61;
(b) an order made by the Government under sub-section (4) read with sub-section (6) of section
62 has the effect of increasing authorised capital of a company; or
(c) a company redeems any redeemable preference shares,
the company shall file a notice in the prescribed form with the Registrar within a period of thirty days of
such alteration or increase or redemption, as the case may be, along with an altered memorandum
...

65
...
—An unlimited company having a share capital may, by a resolution for registration as a
limited company under this Act, do either or both of the following things, namely—
(a) increase the nominal amount of its share capital by increasing the nominal amount of each of
its shares, subject to the condition that no part of the increased capital shall be capable of being called
up except in the event and for the purposes of the company being wound up;
(b) provide that a specified portion of its uncalled share capital shall not be capable of being
called up except in the event and for the purposes of the company being wound up
...
Reduction of share capital
...

(2) The Tribunal shall give notice of every application made to it under sub-section (1) to the Central
Government, Registrar and to the Securities and Exchange Board, in the case of listed companies, and the
creditors of the company and shall take into consideration the representations, if any, made to it by that
Government, Registrar, the Securities and Exchange Board and the creditors within a period of three
months from the date of receipt of the notice:
52

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

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

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

(8) Where the name of any creditor entitled to object to the reduction of share capital under this
section is, by reason of his ignorance of the proceedings for reduction or of their nature and effect with
respect to his debt or claim, not entered on the list of creditors, and after such reduction, the company is
unable, within the meaning of sub-section (2) of section 271, to pay the amount of his debt or claim,—
(a) every person, who was a member of the company on the date of the registration of the order
for reduction by the Registrar, shall be liable to contribute to the payment of that debt or claim, an
amount not exceeding the amount which he would have been liable to contribute if the company had
commenced winding up on the day immediately before the said date; and
(b) if the company is wound up, the Tribunal may, on the application of any such creditor and
proof of his ignorance as aforesaid, if it thinks fit, settle a list of persons so liable to contribute, and
make and enforce calls and orders on the contributories settled on the list, as if they were ordinary
contributories in a winding up
...

(10) If any officer of the company—
(a) knowingly conceals the name of any creditor entitled to object to the reduction;
(b) knowingly misrepresents the nature or amount of the debt or claim of any creditor; or
(c) abets or is privy to any such concealment or misrepresentation as aforesaid,
he shall be liable under section 447
...

67
...
—(1)
No company limited by shares or by guarantee and having a share capital shall have power to buy its own
shares unless the consequent reduction of share capital is effected under the provisions of this Act
...

(3) Nothing in sub-section (2) shall apply to—
(a) the lending of money by a banking company in the ordinary course of its business;
(b) the provision by a company of money in accordance with any scheme approved by company
through special resolution and in accordance with such requirements as may be prescribed, for the
purchase of, or subscription for, fully paid-up shares in the company or its holding company, if the
purchase of, or the subscription for, the shares held by trustees for the benefit of the employees or
such shares held by the employee of the company;
(c) the giving of loans by a company to persons in the employment of the company other than its
directors or key managerial personnel, for an amount not exceeding their salary or wages for a period
of six months with a view to enabling them to purchase or subscribe for fully paid-up shares in the
company or its holding company to be held by them by way of beneficial ownership:
Provided that disclosures in respect of voting rights not exercised directly by the employees in respect
of shares to which the scheme relates shall be made in the Board's report in such manner as may be
prescribed
...

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

(2) No company shall purchase its own shares or other specified securities under sub-section (1),
unless—
(a) the buy-back is authorised by its articles;
(b) a special resolution has been passed at a general meeting of the company authorising the buyback:
Provided that nothing contained in this clause shall apply to a case where—
(i) the buy-back is, ten per cent
...
or less of the aggregate of paid-up capital and free
reserves of the company:
Provided that in respect of the buy-back of equity shares in any financial year, the reference to
twenty-five per cent
...

(3) The notice of the meeting at which the special resolution is proposed to be passed under clause (b)
of sub-section (2) shall be accompanied by an explanatory statement stating—
(a) a full and complete disclosure of all material facts;
(b) the necessity for the buy-back;
(c) the class of shares or securities intended to be purchased under the buy-back;
(d) the amount to be invested under the buy-back; and
(e) the time-limit for completion of buy-back
...

(5) The buy-back under sub-section (1) may be—
(a) from the existing shareholders or security holders on a proportionate basis;
(b) from the open market;
(c) by purchasing the securities issued to employees of the company pursuant to a scheme of
stock option or sweat equity
...

55

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

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

(11) If a company makes any default in complying with the provisions of this section or any
regulation made by the Securities and Exchange Board, for the purposes of clause (f) of sub-section (2),
the company shall be punishable with fine which shall not be less than one lakh rupees but which may
extend to three lakh rupees and every officer of the company who is in default shall be punishable with
imprisonment for a term which may extend to three years or with fine which shall not be less than one
lakh rupees but which may extend to three lakh rupees, or with both
...
—For the purposes of this section and section 70, ―specified securities‖ includes
employees‘ stock option or other securities as may be notified by the Central Government from time to
time
...
—For the purposes of this section, ―free reserves‖ includes securities premium
account
...
Transfer of certain sums to capital redemption reserve account
...

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

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

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

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

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

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

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

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


57

72
...
—(1) Every holder of securities of a company may, at any time, nominate, in
the prescribed manner, any person to whom his securities shall vest in the event of his death
...

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

CHAPTER V
ACCEPTANCE OF DEPOSITS BY COMPANIES
73
...
—(1) On and after the commencement of
this Act, no company shall invite, accept or renew deposits under this Act from the public except in a
manner provided under this Chapter:
Provided that nothing in this sub-section shall apply to a banking company and nonbanking financial
company as defined in the Reserve Bank of India Act, 1934 (2 of 1934) and to such other company as the
Central Government may, after consultation with the Reserve Bank of India, specify in this behalf
...
of the amount of its deposits
maturing during a financial year and the financial year next following, and kept in a scheduled bank
in a separate bank account to be called as deposit repayment reserve account;
(d) providing such deposit insurance in such manner and to such extent as may be prescribed;
(e) certifying that the company has not committed any default in the repayment of deposits
accepted either before or after the commencement of this Act or payment of interest on such deposits;
and
(f) providing security, if any for the due repayment of the amount of deposit or the interest
thereon including the creation of such charge on the property or assets of the company:
Provided that in case where a company does not secure the deposits or secures such deposits
partially, then, the deposits shall be termed as ‗‗unsecured deposits‘‘ and shall be so quoted in every
circular, form, advertisement or in any document related to invitation or acceptance of deposits
...

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

74
...
, accepted before commencement of this Act
...

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

75
...
—(1) Where a company fails to repay the deposit or part thereof or any
interest thereon referred to in section 74 within the time specified in sub-section (1) of that section or such
further time as may be allowed by the Tribunal under sub-section (2) of that section, and it is proved that
the deposits had been accepted with intent to defraud the depositors or for any fraudulent purpose, every
officer of the company who was responsible for the acceptance of such deposit shall, without prejudice to
the provisions contained in subsection (3) of that section and liability under section 447, be personally
responsible, without any limitation of liability, for all or any of the losses or damages that may have been
incurred by the depositors
...

76
...
—(1) Notwithstanding anything
contained in section 73, a public company, having such net worth or turnover as may be prescribed, may
accept deposits from persons other than its members subject to compliance with the requirements
provided in sub-section (2) of section 73 and subject to such rules as the Central Government may, in
consultation with the Reserve Bank of India, prescribe:
Provided that such a company shall be required to obtain the rating (including its networth, liquidity
and ability to pay its deposits on due date) from a recognised credit rating agency for informing the public

59

the rating given to the company at the time of invitation of deposits from the public which ensures
adequate safety and the rating shall be obtained for every year during the tenure of deposits:
Provided further that every company accepting secured deposits from the public shall within thirty
days of such acceptance, create a charge on its assets of an amount not less than the amount of deposits
accepted in favour of the deposit holders in accordance with such rules as may be prescribed
...

1

[76A
...
—Where a company accepts or
invites or allows or causes any other person to accept or invite on its behalf any deposit in contravention
of the manner or the conditions prescribed under section 73 or section 76 or rules made thereunder or if a
company fails to repay the deposit or part thereof or any interest due thereon within the time specified
under section 73 or section 76 or rules made thereunder or such further time as may be allowed by the
Tribunal under section 73,—
(a) the company shall, in addition to the payment of the amount of deposit or part thereof and the
interest due, be punishable with fine which shall not be less than one crore rupees but which may
extend to ten crore rupees; and
(b) every officer of the company who is in default shall be punishable with imprisonment which
may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but which
may extend to two crore rupees, or with both:
Provided that if it is proved that the officer of the company who is in default, has contravened such
provisions knowingly or wilfully with the intention to deceive the company or its shareholders or
depositors or creditors or tax authorities, he shall be liable for action under section 447
...
Duty to register charges, etc
...

(2) Where a charge is registered with the Registrar under sub-section (1), he shall issue a certificate of
registration of such charge in such form and in such manner as may be prescribed to the company and, as
the case may be, to the person in whose favour the charge is created
...

(4) Nothing in sub-section (3) shall prejudice any contract or obligation for the repayment of the
money secured by a charge
...
Ins
...
8 (w
...
f
...


60

78
...
—Where a company fails to register the charge within
the period specified in section 77, without prejudice to its liability in respect of any offence under this
Chapter, the person in whose favour the charge is created may apply to the Registrar for registration of
the charge along with the instrument created for the charge, within such time and in such form and
manner as may be prescribed and the Registrar may, on such application, within a period of fourteen days
after giving notice to the company, unless the company itself registers the charge or shows sufficient
cause why such charge should not be registered, allow such registration on payment of such fees, as may
be prescribed:
Provided that where registration is effected on application of the person in whose favour the charge is
created, that person shall be entitled to recover from the company the amount of any fees or additional
fees paid by him to the Registrar for the purpose of registration of charge
...
Section 77 to apply in certain matters
...

80
...
—Where any charge on any property or assets of a company or any of
its undertakings is registered under section 77, any person acquiring such property, assets, undertakings or
part thereof or any share or interest therein shall be deemed to have notice of the charge from the date of
such registration
...
Register of charges to be kept by Registrar
...

(2) A register kept in pursuance of this section shall be open to inspection by any person on payment
of such fees as may be prescribed for each inspection
...
Company to report satisfaction of charge
...

(2) The Registrar shall, on receipt of intimation under sub-section (1), cause a notice to be sent to the
holder of the charge calling upon him to show cause within such time not exceeding fourteen days, as
may be specified in such notice, as to why payment or satisfaction in full should not be recorded as
intimated to the Registrar, and if no cause is shown, by such holder of the charge, the Registrar shall order
that a memorandum of satisfaction shall be entered in the register of charges kept by him under section 81
and shall inform the company that he has done so:
Provided that the notice referred to in this sub-section shall not be required to be sent, in case the
intimation to the Registrar in this regard is in the specified form and signed by the holder of charge
...

(4) Nothing in this section shall be deemed to affect the powers of the Registrar to make an entry in
the register of charges under section 83 or otherwise than on receipt of an intimation from the company
...
Power of Registrar to make entries of satisfaction and release in absence of intimation from
company
...

(2) The Registrar shall inform the affected parties within thirty days of making the entry in the
register of charges kept under sub-section (1) of section 81
...
Intimation of appointment of receiver or manager
...

(2) Any person appointed under sub-section (1) shall, on ceasing to hold such appointment, give to
the company and the Registrar a notice to that effect and the Registrar shall register such notice
...
Company‘s register of charges
...

(2) The register of charges and instrument of charges, kept under sub-section (1) shall be open for
inspection during business hours—
(a) by any member or creditor without any payment of fees; or
(b) by any other person on payment of such fees as may be prescribed,
subject to such reasonable restrictions as the company may, by its articles, impose
...
Punishment for contravention
...

87
...
—(1) The Central Government on
being satisfied that—
(i) (a) the omission to file with the Registrar the particulars of any charge created by a company
or any charge subject to which any property has been acquired by a company or any modification of
such charge; or
(b) the omission to register any charge within the time required under this Chapter or the
omission to give intimation to the Registrar of the payment or the satisfaction of a charge, within the
time required under this Chapter; or
(c) the omission or mis-statement of any particular with respect to any such charge or
modification or with respect to any memorandum of satisfaction or other entry made in pursuance of
section 82 or section 83,
was accidental or due to inadvertence or some other sufficient cause or it is not of a nature to prejudice
the position of creditors or shareholders of the company; or
(ii) on any other grounds, it is just and equitable to grant relief,
it may on the application of the company or any person interested and on such terms and conditions as it
may seem to the Central Government just and expedient, direct that the time for the filing of the
62

particulars or for the registration of the charge or for the giving of intimation of payment or satisfaction
shall be extended or, as the case may require, that the omission or mis-statement shall be rectified
...

CHAPTER VII
MANAGEMENT AND ADMINISTRATION
88
...
—(1) Every company shall keep and maintain the following registers
in such form and in such manner as may be prescribed, namely:—
(a) register of members indicating separately for each class of equity and preference shares held
by each member residing in or outside India;
(b) register of debenture-holders; and
(c) register of any other security holders
...

(3) The register and index of beneficial owners maintained by a depository under section 11 of the
Depositories Act, 1996 (22 of 1996), shall be deemed to be the corresponding register and index for the
purposes of this Act
...

(5) If a company does not maintain a register of members or debenture-holders or other security
holders or fails to maintain them in accordance with the provisions of sub-section (1) or sub-section (2),
the company and every officer of the company who is in default shall be punishable with fine which shall
not be less than fifty thousand rupees but which may extend to three lakh rupees and where the failure is a
continuing one, with a further fine which may extend to one thousand rupees for every day, after the first
during which the failure continues
...
Declaration in respect of beneficial interest in any share
...

(2) Every person who holds or acquires a beneficial interest in share of a company shall make a
declaration to the company specifying the nature of his interest, particulars of the person in whose name
the shares stand registered in the books of the company and such other particulars as may be prescribed
...

(4) The Central Government may make rules to provide for the manner of holding and disclosing
beneficial interest and beneficial ownership under this section
...


63

(6) Where any declaration under this section is made to a company, the company shall make a note of
such declaration in the register concerned and shall file, within thirty days from the date of receipt of
declaration by it, a return in the prescribed form with the Registrar in respect of such declaration with
such fees or additional fees as may be prescribed, within the time specified under section 403
...

(8) No right in relation to any share in respect of which a declaration is required to be made under this
section but not made by the beneficial owner, shall be enforceable by him or by any person claiming
through him
...

90
...
—Where it appears to the
Central Government that there are reasons so to do, it may appoint one or more competent persons to
investigate and report as to beneficial ownership with regard to any share or class of shares and the
provisions of section 216 shall, as far as may be, apply to such investigation as if it were an investigation
ordered under that section
...
Power to close register of members or debenture-holders or other security holders
...

(2) If the register of members or of debenture-holders or of other security holders is closed without
giving the notice as provided in sub-section (1), or after giving shorter notice than that so provided, or for
a continuous or an aggregate period in excess of the limits specified in that sub-section, the company and
every officer of the company who is in default shall be liable to a penalty of five thousand rupees for
every day subject to a maximum of one lakh rupees during which the register is kept closed
...
Annual return
...

(2) The annual return, filed by a listed company or, by a company having such paid-up capital and
turnover as may be prescribed, shall be certified by a company secretary in practice in the prescribed
form, stating that the annual return discloses the facts correctly and adequately and that the company has
complied with all the provisions of this Act
...

(4) Every company shall file with the Registrar a copy of the annual return, within sixty days from the
date on which the annual general meeting is held or where no annual general meeting is held in any year
within sixty days from the date on which the annual general meeting should have been held together with
the statement specifying the reasons for not holding the annual general meeting, with such fees or
additional fees as may be prescribed, within the time as specified, under section 403
...

(6) If a company secretary in practice certifies the annual return otherwise than in conformity with the
requirements of this section or the rules made thereunder, he shall be punishable with fine which shall not
be less than fifty thousand rupees but which may extend to five lakh rupees
...
Return to be filed with Registrar in case promoters‘ stake changes
...

94
...
—(1) The registers required to be kept
and maintained by a company under section 88 and copies of the annual return filed under section 92 shall
be kept at the registered office of the company:
Provided that such registers or copies of return may also be kept at any other place in India in which
more than one-tenth of the total number of members entered in the register of members reside, if
approved by a special resolution passed at a general meeting of the company and the Registrar has been
given a copy of the proposed special resolution in advance:
Provided further that the period for which the registers, returns and records are required to be kept
shall be such as may be prescribed
...

(3) Any such member, debenture-holder, other security holder or beneficial owner or any other person
may—
(a) take extracts from any register, or index or return without payment of any fee; or
65

(b) require a copy of any such register or entries therein or return on payment of such fees as may
be prescribed
...

(5) The Central Government may also, by order, direct an immediate inspection of the document, or
direct that the extract required shall forthwith be allowed to be taken by the person requiring it
...
Registers, etc
...
—The registers, their indices and copies of annual returns
maintained under sections 88 and 94 shall be prima facie evidence of any matter directed or authorised to
be inserted therein by or under this Act
...
Annual general meeting
...

(2) Every annual general meeting shall be called during business hours, that is, between 9 a
...
and 6
p
...
on any day that is not a National Holiday and shall be held either at the registered office of the
company or at some other place within the city, town or village in which the registered office of the
company is situate:
Provided that the Central Government may exempt any company from the provisions of this subsection subject to such conditions as it may impose
...
—For the purposes of this sub-section, ―National Holiday‖ means and includes a day
declared as National Holiday by the Central Government
...
Power of Tribunal to call annual general meeting
...

(2) A general meeting held in pursuance of sub-section (1) shall, subject to any directions of the
Tribunal, be deemed to be an annual general meeting of the company under this Act
...
Power of Tribunal to call meetings of members, etc
...

(2) Any meeting called, held and conducted in accordance with any order made under sub-section (1)
shall, for all purposes, be deemed to be a meeting of the company duly called, held and conducted
...
Punishment for default in complying with provisions of sections 96 to 98
...

100
...
—(1) The Board may, whenever it deems fit, call an
extraordinary general meeting of the company
...

(3) The requisition made under sub-section (2) shall set out the matters for the consideration of which
the meeting is to be called and shall be signed by the requisitionists and sent to the registered office of the
company
...

(5) A meeting under sub-section (4) by the requisitionists shall be called and held in the same manner
in which the meeting is called and held by the Board
...

101
...
—(1) A general meeting of a company may be called by giving not less than
clear twenty-one days‘ notice either in writing or through electronic mode in such manner as may be
prescribed:
Provided that a general meeting may be called after giving a shorter notice if consent is given in
writing or by electronic mode by not less than ninety-five per cent
...

(2) Every notice of a meeting shall specify the place, date, day and the hour of the meeting and shall
contain a statement of the business to be transacted at such meeting
...

(4) Any accidental omission to give notice to, or the non-receipt of such notice by, any member or
other person who is entitled to such notice for any meeting shall not invalidate the proceedings of the
meeting
...
Statement to be annexed to notice
...

(2) For the purposes of sub-section (1),—
(a) in the case of an annual general meeting, all business to be transacted thereat shall be deemed
special, other than—
(i) the consideration of financial statements and the reports of the Board of Directors and
auditors;
(ii) the declaration of any dividend;
(iii) the appointment of directors in place of those retiring;
(iv) the appointment of, and the fixing of the remuneration of, the auditors; and
(b) in the case of any other meeting, all business shall be deemed to be special:
Provided that where any item of special business to be transacted at a meeting of the company relates
to or affects any other company, the extent of shareholding interest in that other company of every
promoter, director, manager, if any, and of every other key managerial personnel of the first mentioned
company shall, if the extent of such shareholding is not less than two per cent
...

(3) Where any item of business refers to any document, which is to be considered at the meeting, the
time and place where such document can be inspected shall be specified in the statement under subsection (1)
...

(5) If any default is made in complying with the provisions of this section, every promoter, director,
manager or other key managerial personnel who is in default shall be punishable with fine which may
extend to fifty thousand rupees or five times the amount of benefit accruing to the promoter, director,
manager or other key managerial personnel or any of his relatives, whichever is more
...
Quorum for meetings
...

(2) If the quorum is not present within half-an-hour from the time appointed for holding a meeting of
the company—
(a) the meeting shall stand adjourned to the same day in the next week at the same time and place,
or to such other date and such other time and place as the Board may determine; or
(b) the meeting, if called by requisitionists under section 100, shall stand cancelled:
Provided that in case of an adjourned meeting or of a change of day, time or place of meeting under
clause (a), the company shall give not less than three days notice to the members either individually or by
publishing an advertisement in the newspapers (one in English and one in vernacular language) which is
in circulation at the place where the registered office of the company is situated
...

104
...
—(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
...

105
...
— (1) Any member of a company entitled to attend and vote at a meeting of the
company shall be entitled to appoint another person as a proxy to attend and vote at the meeting on his
behalf:
Provided that a proxy shall not have the right to speak at such meeting and shall not be entitled to
vote except on a poll:
Provided further that, unless the articles of a company otherwise provide, this subsection shall not
apply in the case of a company not having a share capital:
Provided also that the Central Government may prescribe a class or classes of companies whose
members shall not be entitled to appoint another person as a proxy:
Provided also that a person appointed as proxy shall act on behalf of such member or number of
members not exceeding fifty and such number of shares as may be prescribed
...

(3) If default is made in complying with sub-section (2), every officer of the company who is in
default shall be punishable with fine which may extend to five thousand rupees
...

(5) If for the purpose of any meeting of a company, invitations to appoint as proxy a person or one of
a number of persons specified in the invitations are issued at the company‘s expense to any member
entitled to have a notice of the meeting sent to him and to vote thereat by proxy, every officer of the
company who knowingly issues the invitations as aforesaid or wilfully authorises or permits their issue
shall be punishable with fine which may extend to one lakh rupees:
Provided that an officer shall not be punishable under this sub-section by reason only of the issue to a
member at his request in writing of a form of appointment naming the proxy, or of a list of persons
willing to act as proxies, if the form or list is available on request in writing to every member entitled to
vote at the meeting by proxy
...

(7) An instrument appointing a proxy, if in the form as may be prescribed, shall not be questioned on
the ground that it fails to comply with any special requirements specified for such instrument by the
articles of a company
...

106
...
—(1) Notwithstanding anything contained in this Act, the articles
of a company may provide that no member shall exercise any voting right in respect of any shares
registered in his name on which any calls or other sums presently payable by him have not been paid, or
in regard to which the company has exercised any right of lien
...

(3) On a poll taken at a meeting of a company, a member entitled to more than one vote, or his proxy,
where allowed, or other person entitled to vote for him, as the case may be, need not, if he votes, use all
his votes or cast in the same way all the votes he uses
...
Voting by show of hands
...

(2) A declaration by the Chairman of the meeting of the passing of a resolution or otherwise by show
of hands under sub-section (1) and an entry to that effect in the books containing the minutes of the
meeting of the company shall be conclusive evidence of the fact of passing of such resolution or
otherwise
...
Voting through electronic means
...


70

109
...
—(1) Before or on the declaration of the result of the voting on any resolution
on show of hands, a poll may be ordered to be taken by the Chairman of the meeting on his own motion,
and shall be ordered to be taken by him on a demand made in that behalf,—
(a) in the case a company having a share capital, by the members present in person or by proxy,
where allowed, and having not less than one-tenth of the total voting power or holding shares on
which an aggregate sum of not less than five lakh rupees or such higher amount as may be prescribed
has been paid-up; and
(b) in the case of any other company, by any member or members present in person or by proxy,
where allowed, and having not less than one-tenth of the total voting power
...

(3) A poll demanded for adjournment of the meeting or appointment of Chairman of the meeting shall
be taken forthwith
...

(5) Where a poll is to be taken, the Chairman of the meeting shall appoint such number of persons, as
he deems necessary, to scrutinise the poll process and votes given on the poll and to report thereon to him
in the manner as may be prescribed
...

(7) The result of the poll shall be deemed to be the decision of the meeting on the resolution on which
the poll was taken
...
Postal ballot
...

(2) If a resolution is assented to by the requisite majority of the shareholders by means of postal
ballot, it shall be deemed to have been duly passed at a general meeting convened in that behalf
...
Circulation of members‘ resolution
...

(2) A company shall not be bound under this section to give notice of any resolution or to circulate
any statement unless—
(a) a copy of the requisition signed by the requisitionists (or two or more copies which, between
them, contain the signatures of all the requisitionists) is deposited at the registered office of the
company,—
(i) in the case of a requisition requiring notice of a resolution, not less than six weeks before
the meeting;
(ii) in the case of any other requisition, not less than two weeks before the meeting; and
71

(b) there is deposited or tendered with the requisition, a sum reasonably sufficient to meet the
company‘s expenses in giving effect thereto:
Provided that if, after a copy of a requisition requiring notice of a resolution has been deposited at the
registered office of the company, an annual general meeting is called on a date within six weeks after the
copy has been deposited, the copy, although not deposited within the time required by this sub-section,
shall be deemed to have been properly deposited for the purposes thereof
...

(4) An order made under sub-section (3) may also direct that the cost incurred by the company by
virtue of this section shall be paid to the company by the requisitionists, notwithstanding that they are not
parties to the application
...

112
...
—(1) The President of India or the
Governor of a State, if he is a member of a company, may appoint such person as he thinks fit to act as his
representative at any meeting of the company or at any meeting of any class of members of the company
...

113
...
—(1) A body
corporate, whether a company within the meaning of this Act or not, may, —
(a) if it is a member of a company within the meaning of this Act, by resolution of its Board of
Directors or other governing body, authorise such person as it thinks fit to act as its representative at
any meeting of the company, or at any meeting of any class of members of the company;
(b) if it is a creditor, including a holder of debentures, of a company within the meaning of this
Act, by resolution of its directors or other governing body, authorise such person as it thinks fit to act
as its representative at any meeting of any creditors of the company held in pursuance of this Act or
of any rules made thereunder, or in pursuance of the provisions contained in any debenture or trust
deed, as the case may be
...

114
...
—(1) A resolution shall be an ordinary resolution if the
notice required under this Act has been duly given and it is required to be passed by the votes cast,
whether on a show of hands, or electronically or on a poll, as the case may be, in favour of the resolution,
including the casting vote, if any, of the Chairman, by members who, being entitled so to do, vote in
person, or where proxies are allowed, by proxy or by postal ballot, exceed the votes, if any, cast against
the resolution by members, so entitled and voting
...

115
...
—Where, by any provision contained in this Act or in the
articles of a company, special notice is required of any resolution, notice of the intention to move such
resolution shall be given to the company by such number of members holding not less than one per cent
...

116
...
—Where a resolution is passed at an adjourned
meeting of—
(a) a company; or
(b) the holders of any class of shares in a company; or
(c) the Board of Directors of a company,
the resolution shall, for all purposes, be treated as having been passed on the date on which it was in fact
passed, and shall not be deemed to have been passed on any earlier date
...
Resolutions and agreements to be filed
...

(2) If a company fails to file the resolution or the agreement under sub-section (1) before the expiry of
the period specified under section 403 with additional fees, the company shall be punishable with fine
which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees and every
officer of the company who is in default, including liquidator of the company, if any, shall be punishable
with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees
...
The word ―and‖ omitted by Act 21 of 2015, s
...
e
...
29-5-2015)
...

118
...
—(1) Every company shall cause minutes of the
proceedings of every general meeting of any class of shareholders or creditors, and every resolution
passed by postal ballot and every meeting of its Board of Directors or of every committee of the Board, to
be prepared and signed in such manner as may be prescribed and kept within thirty days of the conclusion
of every such meeting concerned, or passing of resolution by postal ballot in books kept for that purpose
with their pages consecutively numbered
...

(3) All appointments made at any of the meetings aforesaid shall be included in the minutes of the
meeting
...

(5) There shall not be included in the minutes, any matter which, in the opinion of the Chairman of
the meeting,—
(a) is or could reasonably be regarded as defamatory of any person; or
(b) is irrelevant or immaterial to the proceedings; or
(c) is detrimental to the interests of the company
...

(7) The minutes kept in accordance with the provisions of this section shall be evidence of the
proceedings recorded therein
...

(9) No document purporting to be a report of the proceedings of any general meeting of a company
shall be circulated or advertised at the expense of the company, unless it includes the matters required by
this section to be contained in the minutes of the proceedings of such meeting
...

(11) If any default is made in complying with the provisions of this section in respect of any meeting,
the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company
who is in default shall be liable to a penalty of five thousand rupees
...

1
...
by Act 21 of 2015, s
...
e
...
29-5-2015)
...
Inspection of minute-books of general meeting
...

(2) Any member shall be entitled to be furnished, within seven working days after he has made a
request in that behalf to the company, and on payment of such fees as may be prescribed, with a copy of
any minutes referred to in sub-section (1)
...

(4) In the case of any such refusal or default, the Tribunal may, without prejudice to any action being
taken under sub-section (3), by order, direct an immediate inspection of the minute-books or direct that
the copy required shall forthwith be sent to the person requiring it
...
Maintenance and inspection of documents in electronic form
...
,—
(a) required to be kept by a company; or
(b) allowed to be inspected or copies to be given to any person by a company under this Act, may
be kept or inspected or copies given, as the case may be, in electronic form in such form and manner
as may be prescribed
...
Report on annual general meeting
...

(2) The company shall file with the Registrar a copy of the report referred to in subsection (1) within
thirty days of the conclusion of the annual general meeting with such fees as may be prescribed, or with
such additional fees as may be prescribed, within the time as specified, under section 403
...

122
...
—(1) The provisions of section 98 and
sections 100 to 111 (both inclusive) shall not apply to a One Person Company
...

(3) For the purposes of section 114, any business which is required to be transacted at an annual
general meeting or other general meeting of a company by means of an ordinary or special resolution, it
shall be sufficient if, in case of One Person Company, the resolution is communicated by the member to
the company and entered in the minutes-book required to be maintained under section 118 and signed and
dated by the member and such date shall be deemed to be the date of the meeting for all the purposes
under this Act
...

CHAPTER VIII
DECLARATION AND PAYMENT OF DIVIDEND
123
...
—(1) No dividend shall be declared or paid by a company for any
financial year except—
(a) out of the profits of the company for that year arrived at after providing for depreciation in
accordance with the provisions of sub-section (2), or out of the profits of the company for any
previous financial year or years arrived at after providing for depreciation in accordance with the
provisions of that sub-section and remaining undistributed, or out of both; or
(b) out of money provided by the Central Government or a State Government for the payment of
dividend by the company in pursuance of a guarantee given by that Government:
Provided that a company may, before the declaration of any dividend in any financial year, transfer
such percentage of its profits for that financial year as it may consider appropriate to the reserves of the
company:
Provided further that where, owing to inadequacy or absence of profits in any financial year, any
company proposes to declare dividend out of the accumulated profits earned by it in previous years and
transferred by the company to the reserves, such declaration of dividend shall not be made except in
accordance with such rules as may be prescribed in this behalf:
Provided also that no dividend shall be declared or paid by a company from its reserves other than
free reserves:
1

[Provided also that no company shall declare dividend unless carried over previous losses and
depreciation not provided in previous year or years are set off against profit of the company for the
current year
...

(3) The Board of Directors of a company may declare interim dividend during any financial year out
of the surplus in the profit and loss account and out of profits of the financial year in which such interim
dividend is sought to be declared:
Provided that in case the company has incurred loss during the current financial year up to the end of
the quarter immediately preceding the date of declaration of interim dividend, such interim dividend shall
not be declared at a rate higher than the average dividends declared by the company during the
immediately preceding three financial years
...

(5) No dividend shall be paid by a company in respect of any share therein except to the registered
shareholder of such share or to his order or to his banker and shall not be payable except in cash:
Provided that nothing in this sub-section shall be deemed to prohibit the capitalization of profits or
reserves of a company for the purpose of issuing fully paid-up bonus shares or paying up any amount for
the time being unpaid on any shares held by the members of the company:
Provided further that any dividend payable in cash may be paid by cheque or warrant or in any
electronic mode to the shareholder entitled to the payment of the dividend
...

1
...
by Act 21 of 2015, s
...
e
...
29-5-2015)
...
Unpaid Dividend Account
...

(2) The company shall, within a period of ninety days of making any transfer of an amount under subsection (1) to the Unpaid Dividend Account, prepare a statement containing the names, their last known
addresses and the unpaid dividend to be paid to each person and place it on the website of the company, if
any, and also on any other website approved by the Central Government for this purpose, in such form,
manner and other particulars as may be prescribed
...
per annum and the interest accruing on such amount shall ensure to the benefit of the members of
the company in proportion to the amount remaining unpaid to them
...

(5) Any money transferred to the Unpaid Dividend Account of a company in pursuance of this section
which remains unpaid or unclaimed for a period of seven years from the date of such transfer shall be
transferred by the company along with interest accrued, if any, thereon to the Fund established under subsection (1) of section 125 and the company shall send a statement in the prescribed form of the details of
such transfer to the authority which administers the said Fund and that authority shall issue a receipt to the
company as evidence of such transfer
...

2

[Explanation
...
]
(7) If a company fails to comply with any of the requirements of this section, the company shall be
punishable with fine which shall not be less than five lakh rupees but which may extend to twenty-five
lakh rupees and every officer of the company who is in default shall be punishable with fine which shall
not be less than one lakh rupees but which may extend to five lakh rupees
...
Investor Education and Protection Fund
...

(2) There shall be credited to the Fund—
(a) the amount given by the Central Government by way of grants after due appropriation made
by Parliament by law in this behalf for being utilised for the purposes of the Fund;
(b) donations given to the Fund by the Central Government, State Governments, companies or
any other institution for the purposes of the Fund;

1
...
by Act 21 of 2015, s
...
for ―unpaid or unclaimed dividend has been transferred under sub-section (5) shall also be‖
(w
...
f
...

2
...
by s
...
(w
...
f
...


77

(c) the amount in the Unpaid Dividend Account of companies transferred to the Fund under subsection (5) of section 124;
(d) the amount in the general revenue account of the Central Government which had been
transferred to that account under sub-section (5) of section 205A of the Companies Act, 1956 (1 of
1956), as it stood immediately before the commencement of the Companies (Amendment) Act, 1999
(21 of 1999), and remaining unpaid or unclaimed on the commencement of this Act;
(e) the amount lying in the Investor Education and Protection Fund under section 205C of the
Companies Act, 1956 (1 of 1956);
(f) the interest or other income received out of investments made from the Fund;
(g) the amount received under sub-section (4) of section 38;
(h) the application money received by companies for allotment of any securities and due for
refund;
(i) matured deposits with companies other than banking companies;
(j) matured debentures with companies;
(k) interest accrued on the amounts referred to in clauses (h) to (j);
(l) sale proceeds of fractional shares arising out of issuance of bonus shares, merger and
amalgamation for seven or more years;
(m) redemption amount of preference shares remaining unpaid or unclaimed for seven or more
years; and
(n) such other amount as may be prescribed:
Provided that no such amount referred to in clauses (h) to (j) shall form part of the Fund unless such
amount has remained unclaimed and unpaid for a period of seven years from the date it became due for
payment
...

Explanation
...

(4) Any person claiming to be entitled to the amount referred in sub-section (2) may apply to the
authority constituted under sub-section (5) for the payment of the money claimed
...

(6) The manner of administration of the Fund, appointment of chairperson, members and chief
executive officer, holding of meetings of the authority shall be in accordance with such rules as may be
prescribed
...

(8) The authority shall administer the Fund and maintain separate accounts and other relevant records
in relation to the Fund in such form as may be prescribed after consultation with the Comptroller and
Auditor-General of India
...

(10) The accounts of the Fund shall be audited by the Comptroller and Auditor-General of India at
such intervals as may be specified by him and such audited accounts together with the audit report
thereon shall be forwarded annually by the authority to the Central Government
...

126
...
—Where any instrument of transfer of shares has been delivered to
any company for registration and the transfer of such shares has not been registered by the company, it
shall, notwithstanding anything contained in any other provision of this Act,—
(a) transfer the dividend in relation to such shares to the Unpaid Dividend Account referred to in
section 124 unless the company is authorised by the registered holder of such shares in writing to pay
such dividend to the transferee specified in such instrument of transfer; and
(b) keep in abeyance in relation to such shares, any offer of rights shares under clause (a) of subsection (1) of section 62 and any issue of fully paid-up bonus shares in pursuance of first proviso to
sub-section (5) of section 123
...
Punishment for failure to distribute dividends
...
per annum during the period for which such default continues:
Provided that no offence under this section shall be deemed to have been committed:—
(a) where the dividend could not be paid by reason of the operation of any law;
(b) where a shareholder has given directions to the company regarding the payment of the
dividend and those directions cannot be complied with and the same has been communicated to him;
(c) where there is a dispute regarding the right to receive the dividend;
(d) where the dividend has been lawfully adjusted by the company against any sum due to it from
the shareholder; or
(e) where, for any other reason, the failure to pay the dividend or to post the warrant within the
period under this section was not due to any default on the part of the company
...
Books of account, etc
...
—(1) Every company shall prepare and keep at
its registered office books of account and other relevant books and papers and financial statement for
every financial year which give a true and fair view of the state of the affairs of the company, including
that of its branch office or offices, if any, and explain the transactions effected both at the registered office
and its branches and such books shall be kept on accrual basis and according to the double entry system
of accounting:
Provided that all or any of the books of account aforesaid and other relevant papers may be kept at
such other place in India as the Board of Directors may decide and where such a decision is taken, the
company shall, within seven days thereof, file with the Registrar a notice in writing giving the full address
of that other place:
Provided further that the company may keep such books of account or other relevant papers in
electronic mode in such manner as may be prescribed
...

(3) The books of account and other books and papers maintained by the company within India shall
be open for inspection at the registered office of the company or at such other place in India by any
director during business hours, and in the case of financial information, if any, maintained outside the
country, copies of such financial information shall be maintained and produced for inspection by any
director subject to such conditions as may be prescribed:
Provided that the inspection in respect of any subsidiary of the company shall be done only by the
person authorised in this behalf by a resolution of the Board of Directors
...

(5) The books of account of every company relating to a period of not less than eight financial years
immediately preceding a financial year, or where the company had been in existence for a period less than
eight years, in respect of all the preceding years together with the vouchers relevant to any entry in such
books of account shall be kept in good order:
Provided that where an investigation has been ordered in respect of the company under Chapter XIV,
the Central Government may direct that the books of account may be kept for such longer period as it
may deem fit
...

129
...
— (1) The financial statements shall give a true and fair view of the state
of affairs of the company or companies, comply with the accounting standards notified under section 133
and shall be in the form or forms as may be provided for different class or classes of companies in
Schedule III:
Provided that the items contained in such financial statements shall be in accordance with the
accounting standards:

80

Provided further that nothing contained in this sub-section shall apply to any insurance or banking
company or any company engaged in the generation or supply of electricity, or to any other class of
company for which a form of financial statement has been specified in or under the Act governing such
class of company:
Provided also that the financial statements shall not be treated as not disclosing a true and fair view
of the state of affairs of the company, merely by reason of the fact that they do not disclose—
(a) in the case of an insurance company, any matters which are not required to be disclosed by the
Insurance Act, 1938 (4 of 1938), or the Insurance Regulatory and Development Authority Act, 1999
(41 of 1999);
(b) in the case of a banking company, any matters which are not required to be disclosed by the
Banking Regulation Act, 1949 (10 of 1949);
(c) 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 Act, 2003 (36 of 2003);
(d) in the case of a company governed by any other law for the time being in force, any matters
which are not required to be disclosed by that law
...

(3) Where a company has one or more subsidiaries, it shall, in addition to financial statements
provided under sub-section (2), prepare a consolidated financial statement of the company and of all the
subsidiaries in the same form and manner as that of its own which shall also be laid before the annual
general meeting of the company along with the laying of its financial statement under sub-section (2):
Provided that the company shall also attach along with its financial statement, a separate statement
containing the salient features of the financial statement of its subsidiary or subsidiaries in such form as
may be prescribed:
Provided further that the Central Government may provide for the consolidation of accounts of
companies in such manner as may be prescribed
...
—For the purposes of this sub-section, the word ―subsidiary‖ shall include associate
company and joint venture
...

(5) Without prejudice to sub-section (1), where the financial statements of a company do not comply
with the accounting standards referred to in sub-section (1), the company shall disclose in its financial
statements, the deviation from the accounting standards, the reasons for such deviation and the financial
effects, if any, arising out of such deviation
...

(7) If a company contravenes the provisions of this section, the managing director, the whole-time
director in charge of finance, the Chief Financial Officer or any other person charged by the Board with
the duty of complying with the requirements of this section and in the absence of any of the officers
mentioned above, all the directors shall be punishable with imprisonment for a term which may extend to
one year or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh
rupees, or with both
...
—For the purposes of this section, except where the context otherwise requires, any
reference to the financial statement shall include any notes annexed to or forming part of such financial
81

statement, giving information required to be given and allowed to be given in the form of such notes
under this Act
...
Re-opening of accounts on court‘s or Tribunal‘s orders
...

(2) Without prejudice to the provisions contained in this Act the accounts so revised or re-cast under
sub-section (1) shall be final
...
Voluntary revision of financial statements or Board‘s report
...

(2) Where copies of the previous financial statement or report have been sent out to members or
delivered to the Registrar or laid before the company in general meeting, the revisions must be confined
to—
(a) the correction in respect of which the previous financial statement or report do not comply
with the provisions of section 129 or section 134; and
(b) the making of any necessary consequential alternation
...


82

132
...
— (1) The Central Government may,
by notification, constitute a National Financial Reporting Authority to provide for matters relating to
accounting and auditing standards under this Act
...

(3) The National Financial Reporting Authority shall consist of a chairperson, who shall be a person
of eminence and having expertise in accountancy, auditing, finance or law to be appointed by the Central
Government and such other members not exceeding fifteen consisting of part-time and full-time members
as may be prescribed:
Provided that the terms and conditions and the manner of appointment of the chairperson and
members shall be such as may be prescribed:
Provided further that the chairperson and members shall make a declaration to the Central
Government in the prescribed form regarding no conflict of interest or lack of independence in respect of
his or their appointment:
Provided also that the chairperson and members, who are in full-time employment with National
Financial Reporting Authority shall not be associated with any audit firm (including related consultancy
firms) during the course of their appointment and two years after ceasing to hold such appointment
...

Explanation
...

(5) Any person aggrieved by any order of the National Financial Reporting Authority issued under
clause (c) of sub-section (4), may prefer an appeal before the Appellate Authority constituted under subsection (6) in such manner as may be prescribed
...

(7) The qualifications for appointment of the chairperson and members of the Appellate Authority,
the manner of selection, the terms and conditions of their service and the requirement of the supporting
staff and procedure (including places of hearing the appeals, form and manner in which the appeals shall
be filed) to be followed by the Appellate Authority shall be such as may be prescribed
...

(9) The officer authorised by the Appellate Authority shall prepare in such form and at such time as
may be prescribed its annual report giving a full account of its activities and forward a copy thereof to the
Central Government and the Central Government shall cause the annual report to be laid before each
House of Parliament
...

(11) The Central Government may appoint a secretary and such other employees as it may consider
necessary for the efficient performance of functions by the National Financial Reporting Authority under
this Act and the terms and conditions of service of the secretary and employees shall be such as may be
prescribed
...

(13) The National Financial Reporting Authority shall cause to be maintained such books of account
and other books in relation to its accounts in such form and in such manner as the Central Government
may, in consultation with the Comptroller and Auditor-General of India prescribe
...

(15) The National Financial Reporting Authority shall prepare in such form and at such time for each
financial year as may be prescribed its annual report giving a full account of its activities during the
financial year and forward a copy thereof to the Central Government and the Central Government shall

84

cause the annual report and the audit report given by the Comptroller and Auditor-General of India to be
laid before each House of Parliament
...
Central Government to prescribe accounting standards
...

134
...
— (1) The financial statement, including consolidated
financial statement, if any, shall be approved by the Board of Directors before they are signed on behalf
of the Board at least by the chairperson of the company where he is authorised by the Board or by two
directors out of which one shall be managing director and the Chief Executive Officer, if he is a director
in the company, the Chief Financial Officer and the company secretary of the company, wherever they are
appointed, or in the case of a One Person Company, only by one director, for submission to the auditor
for his report thereon
...

(3) There shall be attached to statements laid before a company in general meeting, a report by its
Board of Directors, which shall include—
(a) the extract of the annual return as provided under sub-section (3) of section 92;
(b) number of meetings of the Board;
(c) Directors‘ Responsibility Statement;
1

[(ca) details in respect of frauds reported by auditors under sub-section (12) of section 143 other
than those which are reportable to the Central Government;]
(d) a statement on declaration given by independent directors under sub-section (6) of section
149;
(e) in case of a company covered under sub-section (1) of section 178, company‘s policy on
directors‘ appointment and remuneration including criteria for determining qualifications, positive
attributes, independence of a director and other matters provided under sub-section (3) of section 178;
(f) explanations or comments by the Board on every qualification, reservation or adverse remark
or disclaimer made—
(i) by the auditor in his report; and
(ii) by the company secretary in practice in his secretarial audit report;
(g) particulars of loans, guarantees or investments under section 186;
(h) particulars of contracts or arrangements with related parties referred to in sub-section (1) of
section 188 in the prescribed form;
(i) the state of the company‘s affairs;
(j) the amounts, if any, which it proposes to carry to any reserves;
(k) the amount, if any, which it recommends should be paid by way of dividend;
(l) material changes and commitments, if any, affecting the financial position of the company
which have occurred between the end of the financial year of the company to which the financial
statements relate and the date of the report;
(m) the conservation of energy, technology absorption, foreign exchange earnings and outgo, in
such manner as may be prescribed;

1
...
by Act 21 of 2015, s
...
e
...
29-5-2015)
...

(4) The report of the Board of Directors to be attached to the financial statement under this section
shall, in case of a One Person Company, mean a report containing explanations or comments by the
Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his
report
...

Explanation
...

(6) The Board‘s report and any annexures thereto under sub-section (3) shall be signed by its
chairperson of the company if he is authorised by the Board and where he is not so authorised, shall be
signed by at least two directors, one of whom shall be a managing director, or by the director where there
is one director
...

(8) If a company contravenes the provisions of this section, the company shall be punishable with fine
which shall not be less than fifty thousand rupees but which may extend to twenty-five lakh rupees and
86

every officer of the company who is in default shall be punishable with imprisonment for a term which
may extend to three years or with fine which shall not be less than fifty thousand rupees but which may
extend to five lakh rupees, or with both
...
Corporate Social Responsibility
...

(2) The Board's report under sub-section (3) of section 134 shall disclose the composition of the
Corporate Social Responsibility Committee
...

(4) The Board of every company referred to in sub-section (1) shall,—
(a) after taking into account the recommendations made by the Corporate Social Responsibility
Committee, approve the Corporate Social Responsibility Policy for the company and disclose
contents of such Policy in its report and also place it on the company's website, if any, in such manner
as may be prescribed; and
(b) ensure that the activities as are included in Corporate Social Responsibility Policy of the
company are undertaken by the company
...
of the average net profits of the company made during the
three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy:
Provided that the company shall give preference to the local area and areas around it where it
operates, for spending the amount earmarked for Corporate Social Responsibility activities:
Provided further that if the company fails to spend such amount, the Board shall, in its report made
under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount
...
—For the purposes of this section ―average net profit‖ shall be calculated in accordance
with the provisions of section 198
...
Right of member to copies of audited financial statement
...

(2) A company shall allow every member or trustee of the holder of any debentures issued by the
company to inspect the documents stated under sub-section (1) at its registered office during business
hours
...

137
...
— (1) A copy of the financial
statements, including consolidated financial statement, if any, along with all the documents which are
required to be or attached to such financial statements under this Act, duly adopted at the annual general
meeting of the company, shall be filed with the Registrar within thirty days of the date of annual general
meeting in such manner, with such fees or additional fees as may be prescribed within the time specified
under section 403:
Provided that where the financial statements under sub-section (1) are not adopted at annual general
meeting or adjourned annual general meeting, such unadopted financial statements along with the
required documents under sub-section (1) shall be filed with the Registrar within thirty days of the date of
annual general meeting and the Registrar shall take them in his records as provisional till the financial
statements are filed with him after their adoption in the adjourned annual general meeting for that
purpose:
Provided further that financial statements adopted in the adjourned annual general meeting shall be
filed with the Registrar within thirty days of the date of such adjourned annual general meeting with such
fees or such additional fees as may be prescribed within the time specified under section 403:
Provided also that a One Person Company shall file a copy of the financial statements duly adopted
by its member, along with all the documents which are required to be attached to such financial
statements, within one hundred eighty days from the closure of the financial year:
Provided also that a company shall, along with its financial statements to be filed with the Registrar,
attach the accounts of its subsidiary or subsidiaries which have been incorporated outside India and which
have not established their place of business in India
...

(3) If a company fails to file the copy of the financial statements under sub-section (1) or sub-section
(2), as the case may be, before the expiry of the period specified in section 403, the company shall be
punishable with fine of one thousand rupees for every day during which the failure continues but which
shall not be more than ten lakh rupees, and the managing director and the Chief Financial Officer of the
company, if any, and, in the absence of the managing director and the Chief Financial Officer, any other
director who is charged by the Board with the responsibility of complying with the provisions of this
section, and, in the absence of any such director, all the directors of the company, shall be punishable with
imprisonment for a term which may extend to six months or with fine which shall not be less than one
lakh rupees but which may extend to five lakh rupees, or with both
...
Internal audit
...

(2) The Central Government may, by rules, prescribe the manner and the intervals in which the
internal audit shall be conducted and reported to the Board
...
Appointment of auditors
...

Explanation
...

(2) No listed company or a company belonging to such class or classes of companies as may be
prescribed, shall appoint or re-appoint—
(a) an individual as auditor for more than one term of five consecutive years; and
(b) an audit firm as auditor for more than two terms of five consecutive years:
Provided that—
(i) an individual auditor who has completed his term under clause (a) shall not be eligible for
re-appointment as auditor in the same company for five years from the completion of his term;
(ii) an audit firm which has completed its term under clause (b), shall not be eligible for reappointment as auditor in the same company for five years from the completion of such term:
Provided further that as on the date of appointment no audit firm having a common partner or partners
to the other audit firm, whose tenure has expired in a company immediately preceding the financial year,
shall be appointed as auditor of the same company for a period of five years:
Provided also that every company, existing on or before the commencement of this Act which is
required to comply with provisions of this sub-section, shall comply with the requirements of this subsection within three years from the date of commencement of this Act:
Provided also that, nothing contained in this sub-section shall prejudice the right of the company to
remove an auditor or the right of the auditor to resign from such office of the company
...

89

(4) The Central Government may, by rules, prescribe the manner in which the companies shall rotate
their auditors in pursuance of sub-section (2)
...
—For the purposes of this Chapter, the word ―firm‖ shall include a limited liability
partnership incorporated under the Limited Liability Partnership Act, 2008 (6 of 2009)
...

(6) Notwithstanding anything contained in sub-section (1), the first auditor of a company, other than a
Government company, shall be appointed by the Board of Directors within thirty days from the date of
registration of the company and in the case of failure of the Board to appoint such auditor, it shall inform
the members of the company, who shall within ninety days at an extraordinary general meeting appoint
such auditor and such auditor shall hold office till the conclusion of the first annual general meeting
...

(8) Any casual vacancy in the office of an auditor shall—
(i) in the case of a company other than a company whose accounts are subject to audit by an
auditor appointed by the Comptroller and Auditor-General of India, be filled by the Board of
Directors within thirty days, but if such casual vacancy is as a result of the resignation of an auditor,
such appointment shall also be approved by the company at a general meeting convened within three
months of the recommendation of the Board and he shall hold the office till the conclusion of the next
annual general meeting;
(ii) in the case of a company whose accounts are subject to audit by an auditor appointed by the
Comptroller and Auditor-General of India, be filled by the Comptroller and Auditor-General of India
within thirty days:
Provided that in case the Comptroller and Auditor-General of India does not fill the vacancy
within the said period, the Board of Directors shall fill the vacancy within next thirty days
...

(10) Where at any annual general meeting, no auditor is appointed or re-appointed, the existing
auditor shall continue to be the auditor of the company
...

140
...
— (1) The auditor appointed
under section 139 may be removed from his office before the expiry of his term only by a special
resolution of the company, after obtaining the previous approval of the Central Government in that behalf
in the prescribed manner:
Provided that before taking any action under this sub-section, the auditor concerned shall be given a
reasonable opportunity of being heard
...

(3) If the auditor does not comply with sub-section (2), he or it shall be punishable with fine which
shall not be less than fifty thousand rupees but which may extend to five lakh rupees
...

(ii) On receipt of notice of such a resolution, the company shall forthwith send a copy thereof to the
retiring auditor
...

(5) Without prejudice to any action under the provisions of this Act or any other law for the time
being in force, the Tribunal either suo motu or on an application made to it by the Central Government or
by any person concerned, if it is satisfied that the auditor of a company has, whether directly or indirectly,
acted in a fraudulent manner or abetted or colluded in any fraud by, or in relation to, the company or its
directors or officers, it may, by order, direct the company to change its auditors:
Provided that if the application is made by the Central Government and the Tribunal is satisfied that
any change of the auditor is required, it shall within fifteen days of receipt of such application, make an
order that he shall not function as an auditor and the Central Government may appoint another auditor in
his place:

91

Provided further that an auditor, whether individual or firm, against whom final order has been passed
by the Tribunal under this section shall not be eligible to be appointed as an auditor of any company for a
period of five years from the date of passing of the order and the auditor shall also be liable for action
under section 447
...
—It is hereby clarified that the case of a firm, the liability shall be of the firm and that
of every partner or partners who acted in a fraudulent manner or abetted or colluded in any fraud by, or in
relation to, the company or its director or officers
...
—For the purposes of this Chapter the word ―auditor‖ includes a firm of auditors
...
Eligibility, qualifications and disqualifications of auditors
...

(2) Where a firm including a limited liability partnership is appointed as an auditor of a company,
only the partners who are chartered accountants shall be authorised to act and sign on behalf of the firm
...


92

(4) Where a person appointed as an auditor of a company incurs any of the disqualifications
mentioned in sub-section (3) after his appointment, he shall vacate his office as such auditor and such
vacation shall be deemed to be a casual vacancy in the office of the auditor
...
Remuneration of auditors
...

(2) The remuneration under sub-section (1) shall, in addition to the fee payable to an auditor, include
the expenses, if any, incurred by the auditor in connection with the audit of the company and any facility
extended to him but does not include any remuneration paid to him for any other service rendered by him
at the request of the company
...
Powers and duties of auditors and auditing standards
...

(2) The auditor shall make a report to the members of the company on the accounts examined by him
and on every financial statements which are required by or under this Act to be laid before the company
in general meeting and the report shall after taking into account the provisions of this Act, the accounting
and auditing standards and matters which are required to be included in the audit report under the
provisions of this Act or any rules made thereunder or under any order made under sub-section (11) and
to the best of his information and knowledge, the said accounts, financial statements give a true and fair
view of the state of the company‘s affairs as at the end of its financial year and profit or loss and cash
flow for the year and such other matters as may be prescribed
...

(4) Where any of the matters required to be included in the audit report under this section is answered
in the negative or with a qualification, the report shall state the reasons therefor
...

(6) The Comptroller and Auditor-General of India shall within sixty days from the date of receipt of
the audit report under sub-section (5) have a right to,—
(a) conduct a supplementary audit of the financial statement of the company by such person or
persons as he may authorise in this behalf; and for the purposes of such audit, require information or
additional information to be furnished to any person or persons, so authorised, on such matters, by
such person or persons, and in such form, as the Comptroller and Auditor-General of India may
direct; and
(b) comment upon or supplement such audit report:
Provided that any comments given by the Comptroller and Auditor-General of India upon, or
supplement to, the audit report shall be sent by the company to every person entitled to copies of
audited financial statements under sub section (1) of section 136 and also be placed before the annual
general meeting of the company at the same time and in the same manner as the audit report
...

(8) Where a company has a branch office, the accounts of that office shall be audited either by the
auditor appointed for the company (herein referred to as the company‘s auditor) under this Act or by any
other person qualified for appointment as an auditor of the company under this Act and appointed as such
under section 139, or where the branch office is situated in a country outside India, the accounts of the
branch office shall be audited either by the company‘s auditor or by an accountant or by any other person
duly qualified to act as an auditor of the accounts of the branch office in accordance with the laws of that
country and the duties and powers of the company‘s auditor with reference to the audit of the branch and
the branch auditor, if any, shall be such as may be prescribed:
94

Provided that the branch auditor shall prepare a report on the accounts of the branch examined by him
and send it to the auditor of the company who shall deal with it in his report in such manner as he
considers necessary
...

(10) The Central Government may prescribe the standards of auditing or any addendum thereto, as
recommended by the Institute of Chartered Accountants of India, constituted under section 3 of the
Chartered Accountants Act, 1949 (38 of 1949), in consultation with and after examination of the
recommendations made by the National Financial Reporting Authority:
Provided that until any auditing standards are notified, any standard or standards of auditing specified
by the Institute of Chartered Accountants of India shall be deemed to be the auditing standards
...

1

[(12) Notwithstanding anything contained in this section, if an auditor of a company, in the course of
the performance of his duties as auditor, has reason to believe that an offence involving fraud is being or
has been committed against the company by officers or employees of the company, he shall immediately
report the matter to the Central Government within such time and in such manner as may be prescribed
...

(14) The provisions of this section shall mutatis mutandis apply to—
(a) the cost accountant in practice conducting cost audit under section 148; or
(b) the company secretary in practice conducting secretarial audit under section 204
...

144
...
—An auditor appointed under this Act shall provide to
the company only such other services as are approved by the Board of Directors or the audit committee,
as the case may be, but which shall not include any of the following services (whether such services are
rendered directly or indirectly to the company), or its holding company or subsidiary company, namely:—
(a) accounting and book keeping services;
(b) internal audit;
(c) design and implementation of any financial information system;
(d) actuarial services;
(e) investment advisory services;
(f) investment banking services;
1
...
13, to read as under:
―(12) Notwithstanding anything contained in this section, if an auditor of a company in the course of the performance of his
duties as auditor, has reason to believe that an offence of fraud involving such amount or amounts as may be prescribed, is being
or has been committed in the company by its officers or employees, the auditor shall report the matter to the Central Government
within such time and in such manner as may be prescribed:
Provided that in case of a fraud involving lesser than the specified amount, the auditor shall report the matter to the audit
committee constituted under section 177 or to the Board in other cases within such time and in such manner as may be
prescribed:
Provided further that the companies, whose auditors have reported frauds under this sub-section to the audit committee or
the Board but not reported to the Central Government, shall disclose the details about such frauds in the Board‘s report in such
manner as may be prescribed
...

Explanation
...

145
...
— The person appointed as an auditor of the company shall
sign the auditor‘s report or sign or certify any other document of the company in accordance with the
provisions of sub-section (2) of section 141, and the qualifications, observations or comments on financial
transactions or matters, which have any adverse effect on the functioning of the company mentioned in
the auditor‘s report shall be read before the company in general meeting and shall be open to inspection
by any member of the company
...
Auditors to attend general meeting
...

147
...
— (1) If any of the provisions of sections 139 to 146 (both
inclusive) is contravened, the company shall be punishable with fine which shall not be less than twentyfive thousand rupees but which may extend to five lakh rupees and every officer of the company who is in
default shall be punishable with imprisonment for a term which may extend to one year or with fine
which shall not be less than ten thousand rupees but which may extend to one lakh rupees, or with both
...

(3) Where an auditor has been convicted under sub-section (2), he shall be liable to—
(i) refund the remuneration received by him to the company; and
(ii) pay for damages to the company, statutory bodies or authorities or to any other persons for
loss arising out of incorrect or misleading statements of particulars made in his audit report
...

96

(5) Where, in case of audit of a company being conducted by an audit firm, it is proved that the
partner or partners of the audit firm has or have acted in a fraudulent manner or abetted or colluded in any
fraud by, or in relation to or by, the company or its directors or officers, the liability, whether civil or
criminal as provided in this Act or in any other law for the time being in force, for such act shall be of the
partner or partners concerned of the audit firm and of the firm jointly and severally
...
Central Government to specify audit of items of cost in respect of certain companies
...

(2) If the Central Government is of the opinion, that it is necessary to do so, it may, by order, direct
that the audit of cost records of class of companies, which are covered under sub-section (1) and which
have a net worth of such amount as may be prescribed or a turnover of such amount as may be prescribed,
shall be conducted in the manner specified in the order
...

Explanation
...

(4) An audit conducted under this section shall be in addition to the audit conducted under section
143
...

(6) A company shall within thirty days from the date of receipt of a copy of the cost audit report
prepared in pursuance of a direction under sub-section (2) furnish the Central Government with such
report along with full information and explanation on every reservation or qualification contained therein
...

(8) If any default is made in complying with the provisions of this section,—
(a) the company and every officer of the company who is in default shall be punishable in the
manner as provided in sub-section (1) of section 147;
(b) the cost auditor of the company who is in default shall be punishable in the manner as
provided in sub-sections (2) to (4) of section 147
...
Company to have Board of Directors
...

(2) Every company existing on or before the date of commencement of this Act shall within one year
from such commencement comply with the requirements of the provisions of sub-section (1)
...

(4) Every listed public company shall have at least one-third of the total number of directors as
independent directors and the Central Government may prescribe the minimum number of independent
directors in case of any class or classes of public companies
...
—For the purposes of this sub-section, any fraction contained in such one-third number
shall be rounded off as one
...

(6) An independent director in relation to a company, means a director other than a managing director
or a whole-time director or a nominee director,—
(a) who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and
experience;
(b) (i) who is or was not a promoter of the company or its holding, subsidiary or associate
company;
(ii) who is not related to promoters or directors in the company, its holding, subsidiary or
associate company;
(c) who has or had no pecuniary relationship with the company, its holding, subsidiary or
associate company, or their promoters, or directors, during the two immediately preceding financial
years or during the current financial year;
(d) none of whose relatives has or had pecuniary relationship or transaction with the company, its
holding, subsidiary or associate company, or their promoters, or directors, amounting to two per cent
...
or more of the gross
turnover of such firm;
(iii) holds together with his relatives two per cent
...
or more of its receipts from the company, any of its promoters,
directors or its holding, subsidiary or associate company or that holds two per cent
...

(7) Every independent director shall at the first meeting of the Board in which he participates as a
director and thereafter at the first meeting of the Board in every financial year or whenever there is any
change in the circumstances which may affect his status as an independent director, give a declaration that
he meets the criteria of independence as provided in sub-section (6)
...
—For the purposes of this section, ―nominee director‖ means a director nominated by
any financial institution in pursuance of the provisions of any law for the time being in force, or of any
agreement, or appointed by any Government, or any other person to represent its interests
...

(9) Notwithstanding anything contained in any other provision of this Act, but subject to the
provisions of sections 197 and 198, an independent director shall not be entitled to any stock option and
may receive remuneration by way of fee provided under sub-section (5) of section 197, reimbursement of
expenses for participation in the Board and other meetings and profit related commission as may be
approved by the members
...

(11) Notwithstanding anything contained in sub-section (10), no independent director shall hold
office for more than two consecutive terms, but such independent director shall be eligible for
appointment after the expiration of three years of ceasing to become an independent director:
Provided that an independent director shall not, during the said period of three years, be appointed in
or be associated with the company in any other capacity, either directly or indirectly
...
—For the purposes of sub-sections (10) and (11), any tenure of an independent director
on the date of commencement of this Act shall not be counted as a term under those sub-sections
...

(13) The provisions of sub-sections (6) and (7) of section 152 in respect of retirement of directors by
rotation shall not be applicable to appointment of independent directors
...
Manner of selection of independent directors and maintenance of databank of independent
directors
...

(2) The appointment of independent director shall be approved by the company in general meeting as
provided in sub-section (2) of section 152 and the explanatory statement annexed to the notice of the
general meeting called to consider the said appointment shall indicate the justification for choosing the
appointee for appointment as independent director
...

(4) The Central Government may prescribe the manner and procedure of selection of independent
directors who fulfil the qualifications and requirements specified under section 149
...
Appointment of director elected by small shareholders
...

Explanation
...

152
...
— (1) Where no provision is made in the articles of a company for
the appointment of the first director, the subscribers to the memorandum who are individuals shall be
deemed to be the first directors of the company until the directors are duly appointed and in case of a One
Person Company an individual being member shall be deemed to be its first director until the director or
directors are duly appointed by the member in accordance with the provisions of this section
...

(3) No person shall be appointed as a director of a company unless he has been allotted the Director
Identification Number under section 154
...

(5) A person appointed as a director shall not act as a director unless he gives his consent to hold the
office as director and such consent has been filed with the Registrar within thirty days of his appointment
in such manner as may be prescribed:
Provided that in the case of appointment of an independent director in the general meeting, an
explanatory statement for such appointment, annexed to the notice for the general meeting, shall include a
statement that in the opinion of the Board, he fulfils the conditions specified in this Act for such an
appointment
...

(b) The remaining directors in the case of any such 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
...

(d) 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
...

Explanation
...

(7) (a) If the vacancy of the retiring director is not so filled-up and the meeting has not expressly
resolved not to fill the vacancy, the meeting shall stand adjourned till the same day in the next week, at
the same time and place, or if that day is a national holiday, till the next succeeding day which is not a
holiday, at the same time and place
...

Explanation
...

153
...
— Every individual intending to
be appointed as director of a company shall make an application for allotment of Director Identification
Number to the Central Government in such form and manner and along with such fees as may be
prescribed
...
Allotment of Director Identification Number
...

155
...
— No individual, who
has already been allotted a Director Identification Number under section 154, shall apply for, obtain or
possess another Director Identification Number
...
Director to intimate Director Identification Number
...

157
...
— (1) Every company
shall, within fifteen days of the receipt of intimation under section 156, furnish the Director Identification
Number of all its directors to the Registrar or any other officer or authority as may be specified by the
Central Government with such fees as may be prescribed or with such additional fees as may be
prescribed within the time specified under section 403 and every such intimation shall be furnished in
such form and manner as may be prescribed
...

158
...
— Every person or company, while
furnishing any return, information or particulars as are required to be furnished under this Act, shall
mention the Director Identification Number in such return, information or particulars in case such return,
information or particulars relate to the director or contain any reference of any director
...
Punishment for contravention
...

160
...
— (1) A person who
is not a retiring director in terms of section 152 shall, subject to the provisions of this Act, be eligible for
appointment to the office of a director at any general meeting, if he, or some member intending to propose
him as a director, has, not less than fourteen days before the meeting, left at the registered office of the
company, a notice in writing under his hand signifying his candidature as a director or, as the case may
be, the intention of such member to propose him as a candidate for that office, along with the deposit of
one lakh rupees or such higher amount as may be prescribed which shall be refunded to such person or, as
the case may be, to the member, if the person proposed gets elected as a director or gets more than
twenty-five per cent
...

(2) The company shall inform its members of the candidature of a person for the office of director
under sub-section (1) in such manner as may be prescribed
...
Appointment of additional director, alternate director and nominee director
...

(2) 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 a person, not being a person holding any alternate
directorship for any other director in the company, to act as an alternate director for a director during his
absence for a period of not less than three months from India:
Provided that no person shall be appointed as an alternate director for an independent director unless
he is qualified to be appointed as an independent director under the provisions of this Act:
Provided further that an alternate director shall not hold office for a period longer than that
permissible to the director in whose place he has been appointed and shall vacate the office if and when
the director in whose place he has been appointed returns to India:
Provided also that if the term of office of the original director is determined before he so returns to
India, any provision for the automatic re-appointment of retiring directors in default of another
appointment shall apply to the original, and not to the alternate director
...

(4) In the case of a public company, if the office of any director appointed by the company in general
meeting is vacated before his term of office expires in the normal course, the resulting casual vacancy

102

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:
Provided that 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
...
Appointment of directors to be voted individually
...

(2) A resolution moved in contravention of sub-section (1) shall be void, whether or not any objection
was taken when it was moved
...

163
...
—
Notwithstanding anything contained in this Act, the articles of a company may provide for the
appointment of not less than two-thirds of the total number of the directors of a company in accordance
with the principle of proportional representation, whether by the single transferable vote or by a system of
cumulative voting or otherwise and such appointments may be made once in every three years and casual
vacancies of such directors shall be filled as provided in sub-section (4) of section 161
...
Disqualifications for appointment of director
...

(2) No person who is or has been a director of a company which—
(a) has not filed financial statements or annual returns for any continuous period of three financial
years; or
(b) has failed to repay the deposits accepted by it or pay interest thereon or to redeem any
debentures on the due date or pay interest due thereon or pay any dividend declared and such failure
to pay or redeem continues for one year or more,
shall be eligible to be re-appointed as a director of that company or appointed in other company for a
period of five years from the date on which the said company fails to do so
...

165
...
— (1) No person, after the commencement of this Act, shall hold
office as a director, including any alternate directorship, in more than twenty companies at the same time:
Provided that the maximum number of public companies in which a person can be appointed as a
director shall not exceed ten
...
— For reckoning the limit of public companies in which a person can be appointed as
director, directorship in private companies that are either holding or subsidiary company of a public
company shall be included
...

(3) Any person holding office as director in companies more than the limits as specified in subsection (1), immediately before the commencement of this Act shall, within a period of one year from
such commencement,—
(a) choose not more than the specified limit of those companies, as companies in which he wishes
to continue to hold the office of director;
(b) resign his office as director in the other remaining 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 and to the Registrar having jurisdiction in
respect of each such company
...

(5) No such person shall act as director in more than the specified number of companies,—
(a) after despatching the resignation of his office as director or non-executive director thereof, in
pursuance of clause (b) of sub-section (3); or
(b) after the expiry of one year from the commencement of this Act,
whichever is earlier
...

166
...
— (1) Subject to the provisions of this Act, a director of a company shall act
in accordance with the articles of the company
...


104

(3) A director of a company shall exercise his duties with due and reasonable care, skill and diligence
and shall exercise independent judgment
...

(5) A director of a company shall not achieve or attempt to achieve any undue gain or advantage
either to himself or to his relatives, partners, or associates and if such director is found guilty of making
any undue gain, he shall be liable to pay an amount equal to that gain to the company
...

(7) If a director of the company contravenes the provisions of this section such director shall be
punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh
rupees
...
Vacation of office of director
...

(2) If a person, functions as a director even when he knows that the office of director held by him has
become vacant on account of any of the disqualifications specified in subsection (1), he shall be
punishable with imprisonment for a term which may extend to one year or with fine which shall not be
less than one lakh rupees but which may extend to five lakh rupees, or with both
...

(4) A private company may, by its articles, provide any other ground for the vacation of the office of
a director in addition to those specified in sub-section (1)
...
Resignation of director
...


105

(2) The resignation of a director shall take effect from the date on which the notice is received by the
company or the date, if any, specified by the director in the notice, whichever is later:
Provided that the director who has resigned shall be liable even after his resignation for the offences
which occurred during his tenure
...

169
...
— (1) A company may, by ordinary resolution, remove a director, not
being a director appointed by the Tribunal under section 242, before the expiry of the period of his office
after giving him a reasonable opportunity of being heard:
Provided that nothing contained in this sub-section shall apply where the company has availed itself
of the option given to it under section 163 to appoint not less than two-thirds of the total number of
directors according to the principle of proportional representation
...

(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
...

(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, be filled by the appointment of another director in his
place at the meeting at which he is removed, provided special notice of the intended appointment has been
given under sub-section (2)
...

(7) If the vacancy is not filled under sub-section (5), it may be filled as a casual vacancy in
accordance with the provisions of this Act:
Provided that the director who was removed from office shall not be re-appointed as a director by the
Board of Directors
...

170
...
— (1) Every
company shall keep at its registered office a register containing such particulars of its directors and key
managerial personnel as may be prescribed, which shall include the details of securities held by each of
them in the company or its holding, subsidiary, subsidiary of company‘s holding company or associate
companies
...

171
...
— (1) The register kept under sub-section (1) of section 170,—
(a) shall be open for inspection during business hours and the members shall have a right to take
extracts therefrom and copies thereof, on a request by the members, be provided to them free of cost
within thirty days; and
(b) shall also be kept open for inspection at every annual general meeting of the company and
shall be made accessible to any person attending the meeting
...

172
...
— If a company contravenes any of the provisions of this Chapter and for which no
specific punishment is provided therein, the company and every officer of the company who is in default
shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to
five lakh rupees
...
Meetings of Board
...

(2) The participation of directors in a meeting of the Board may be either in person or through video
conferencing or other audio visual means, as may be prescribed, which are capable of recording and
recognising the participation of the directors and of recording and storing the proceedings of such
meetings along with date and time:
Provided that the Central Government may, by notification, specify such matters which shall not be
dealt with in a meeting through video conferencing or other audio visual means
...


107

(4) Every officer of the company whose duty is to give notice under this section and who fails to do
so shall be liable to a penalty of twenty-five thousand rupees
...

174
...
— (1) The quorum for a meeting of the Board of Directors of a
company hall be one-third of its total strength or two directors, whichever is higher, and the participation
of the directors by video conferencing or by other audio visual means shall also be counted for the
purposes of quorum under this sub-section
...

(3) Where at any time the number of interested directors exceeds or is equal to two-thirds of the total
strength of the Board of Directors, the number of directors who are not interested directors and present at
the meeting, being not less than two, shall be the quorum during such time
...
—For the purposes of this sub-section, ―interested director‖ means a director within the
meaning of sub-section (2) of section 184
...

Explanation
...

175
...
— (1) No resolution shall be deemed to have been duly
passed by the Board or by a committee thereof by circulation, unless the resolution has been circulated in
draft, together with the necessary papers, if any, to all the directors, or members of the committee, as the
case may be, at their addresses registered with the company in India by hand delivery or by post or by
courier, or through such electronic means as may be prescribed and has been approved by a majority of
the directors or members, who are entitled to vote on the resolution:
Provided that, where not less than one-third of the total number of directors of the company for the
time being require that any resolution under circulation must be decided at a meeting, the chairperson
shall put the resolution to be decided at a meeting of the Board
...

176
...
— No act done by a
person as a director shall be deemed to be invalid, notwithstanding that it was subsequently noticed that
his appointment was invalid by reason of any defect or disqualification or had terminated by virtue of any
provision contained in this Act or in the articles of the company:
Provided that nothing in this section shall be deemed to give validity to any act done by the director
after his appointment has been noticed by the company to be invalid or to have terminated
...
Audit Committee
...


108

(2) The Audit Committee shall consist of a minimum of three directors with independent directors
forming a majority:
Provided that majority of members of Audit Committee including its Chairperson shall be persons
with ability to read and understand, the financial statement
...

(4) Every Audit Committee shall act in accordance with the terms of reference specified in writing by
the Board which shall, inter alia, include,—
(i) the recommendation for appointment, remuneration and terms of appointment of auditors of
the company;
(ii) review and monitor the auditor‘s independence and performance, and effectiveness of audit
process;
(iii) examination of the financial statement and the auditors‘ report thereon;
(iv) approval or any subsequent modification of transactions of the company with related parties:
1

[Provided that the Audit Committee may make omnibus approval for related party transactions
proposed to be entered into by the company subject to such conditions as may be prescribed;]
(v) scrutiny of inter-corporate loans and investments;
(vi) valuation of undertakings or assets of the company, wherever it is necessary;
(vii) evaluation of internal financial controls and risk management systems;
(viii) monitoring the end use of funds raised through public offers and related matters
...

(6) The Audit Committee shall have authority to investigate into any matter in relation to the items
specified in sub-section (4) or referred to it by the Board and for this purpose shall have power to obtain
professional advice from external sources and have full access to information contained in the records of
the company
...

(8) The Board‘s report under sub-section (3) of section 134 shall disclose the composition of an Audit
Committee and where the Board had not accepted any recommendation of the Audit Committee, the same
shall be disclosed in such report along with the reasons therefor
...

(10) The vigil mechanism under sub-section (9) shall provide for adequate safeguards against
victimisation of persons who use such mechanism and make provision for direct access to the chairperson
of the Audit Committee in appropriate or exceptional cases:
Provided that the details of establishment of such mechanism shall be disclosed by the company on its
website, if any, and in the Board‘s report
...
Nomination and Remuneration Committee and Stakeholders Relationship Committee
...
Proviso shall stand inserted (date to be notified) by Act 21 of 2015, s
...


109

be prescribed shall constitute the Nomination and Remuneration Committee consisting of three or more
non-executive directors out of which not less than one-half shall be independent directors:
Provided that the chairperson of the company (whether executive or non-executive) may be appointed
as a member of the Nomination and Remuneration Committee but shall not chair such Committee
...

(3) The Nomination and Remuneration Committee shall formulate the criteria for determining
qualifications, positive attributes and independence of a director and recommend to the Board a policy,
relating to the remuneration for the directors, key managerial personnel and other employees
...

(5) The Board of Directors of a company which consists of more than one thousand shareholders,
debenture-holders, deposit-holders and any other security holders at any time during a financial year shall
constitute a Stakeholders Relationship Committee consisting of a chairperson who shall be a nonexecutive director and such other members as may be decided by the Board
...

(7) The chairperson of each of the committees constituted under this section or, in his absence, any
other member of the committee authorised by him in this behalf shall attend the general meetings of the
company
...

Explanation
...

179
...
— (1) 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 in exercising such power or doing such act or thing, the Board shall be subject to the
provisions contained in that behalf in this Act, or in the memorandum or articles, or in any regulations not
inconsistent therewith and duly made thereunder, including regulations made by the company in general
meeting:

110

Provided further that the Board shall not exercise any power or do any act or thing which is directed
or required, whether under this Act or by the memorandum or articles of the company or otherwise, to be
exercised or done by the company in general meeting
...

(3) The Board of Directors of a company shall exercise the following powers on behalf of the
company by means of resolutions passed at meetings of the Board, namely:—
(a) to make calls on shareholders in respect of money unpaid on their shares;
(b) to authorise buy-back of securities under section 68;
(c) to issue securities, including debentures, whether in or outside India;
(d) to borrow monies;
(e) to invest the funds of the company;
(f) to grant loans or give guarantee or provide security in respect of loans;
(g) to approve financial statement and the Board‘s report;
(h) to diversify the business of the company;
(i) to approve amalgamation, merger or reconstruction;
(j) to take over a company or acquire a controlling or substantial stake in another company;
(k) any other matter which may be prescribed:
Provided that the Board may, by a resolution passed at a meeting, delegate to any committee of
directors, the managing director, the manager or any other principal officer of the company or in the case
of a branch office of the company, the principal officer of the branch office, the powers specified in
clauses (d) to (f) on such conditions as it may specify:
Provided further that the acceptance by a banking company in the ordinary course of its business of
deposits of money from the public repayable on demand or otherwise and withdrawable by cheque, draft,
order or otherwise, or the placing of monies on deposit by a banking company with another banking
company on such conditions as the Board may prescribe, shall not be deemed to be a borrowing of
monies or, as the case may be, a making of loans by a banking company within the meaning of this
section
...
—Nothing in clause (d) shall apply to borrowings by a banking company from other
banking companies or from the Reserve Bank of India, the State Bank of India or any other banks
established by or under any Act
...
—In respect of dealings between a company and its bankers, the exercise by the
company of the power specified in clause (d) shall mean the arrangement made by the company with its
bankers for the borrowing of money by way of overdraft or cash credit or otherwise and not the actual
day-to-day operation on overdraft, cash credit or other accounts by means of which the arrangement so
made is actually availed of
...

180
...
— (1) The Board of Directors of a company shall exercise the
following powers only with the consent of the company by a special resolution, namely:—
(a) to sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking of
the company or where the company owns more than one undertaking, of the whole or substantially
the whole of any of such undertakings
...
—For the purposes of this clause,—
(i) ―undertaking‖ shall mean an undertaking in which the investment of the company exceeds
twenty per cent
...
of the total income of the company during the
previous financial year;
(ii) the expression ―substantially the whole of the undertaking‖ in any financial year shall
mean twenty per cent
...

Explanation
...

(2) Every special resolution passed by the company in general meeting in relation to the exercise of
the powers referred to in clause (c) of sub-section (1) shall specify the total amount up to which monies
may be borrowed by the Board of Directors
...

(4) Any special resolution passed by the company consenting to the transaction as is referred to in
clause (a) of sub-section (1) may stipulate such conditions as may be specified in such resolution,
including conditions regarding the use, disposal or investment of the sale proceeds which may result from
the transactions:
Provided that this sub-section shall not be deemed to authorise the company to effect any reduction in
its capital except in accordance with the provisions contained in this Act
...

181
...
— The Board of Directors of a
company may contribute to bona fide charitable and other funds:
Provided that prior permission of the company in general meeting shall be required for such
contribution in case any amount the aggregate of which, in any financial year, exceed five per cent
...

182
...
— (1) Notwithstanding
anything contained in any other provision of this Act, a company, other than a Government company and

112

a company which has been in existence for less than three financial years, may contribute any amount
directly or indirectly to any political party:
Provided that the amount referred to in sub-section (1) or, as the case may be, the aggregate of the
amount which may be so contributed by the company in any financial year shall not exceed seven and a
half per cent
...

(2) Without prejudice to the generality of the provisions of sub-section (1),—
(a) a donation or subscription or payment caused to be given by a company on its behalf or on its
account to a person who, to its knowledge, is carrying on any activity which, at the time at which
such donation or subscription or payment was given or made, can reasonably be regarded as likely to
affect public support for a political party shall also be deemed to be contribution of the amount of
such donation, subscription or payment to such person for a political purpose;
(b) the amount of expenditure incurred, directly or indirectly, by a company on an advertisement
in any publication, being a publication in the nature of a souvenir, brochure, tract, pamphlet or the
like, shall also be deemed,—
(i) where such publication is by or on behalf of a political party, to be a contribution of such
amount to such political party, and
(ii) where such publication is not by or on behalf of, but for the advantage of a political party,
to be a contribution for a political purpose
...

(4) If a company makes any contribution in contravention of the provisions of this section, the
company shall be punishable with fine which may extend to five times the amount so contributed and
every officer of the company who is in default shall be punishable with imprisonment for a term which
may extend to six months and with fine which may extend to five times the amount so contributed
...
—For the purposes of this section, ―political party‖ means a political party registered
under section 29A of the Representation of the People Act, 1951 (43 of 1951)
...
Power of Board and other persons to make contributions to national defence fund, etc
...

(2) Every company shall disclose in its profits and loss account the total amount or amounts
contributed by it to the Fund referred to in sub-section (1) during the financial year to which the amount
relates
...
Disclosure of interest by director
...


113

(2) Every director of a company who is in any way, whether directly or indirectly, concerned or
interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered
into—
(a) with a body corporate in which such director or such director in association with any other
director, holds more than two per cent
...

(3) A contract or arrangement entered into by the company without disclosure under sub-section (2)
or with participation by a director who is concerned or interested in any way, directly or indirectly, in the
contract or arrangement, shall be voidable at the option of the company
...

(5) Nothing in this section—
(a) shall be taken to prejudice the operation of any rule of law restricting a director of a company
from having any concern or interest in any contract or arrangement with the company;
(b) shall apply to any contract or arrangement entered into or to be entered into between two
companies where any of the directors of the one company or two or more of them together holds or
hold not more than two per cent
...

185
...
— (1) Save as otherwise provided in this Act, no company shall, directly
or indirectly, advance any loan, including any loan represented by a book debt, to any of its directors or to
any other person in whom the director is interested or give any guarantee or provide any security in
connection with any loan taken by him or such other person:
Provided that nothing contained in this sub-section shall apply to—
(a) the giving of any loan to a managing or whole-time director—
(i) as a part of the conditions of service extended by the company to all its employees; or
(ii) pursuant to any scheme approved by the members by a special resolution; or
(b) a company which in the ordinary course of its business provides loans or gives guarantees or
securities for the due repayment of any loan and in respect of such loans an interest is charged at a
rate not less than the bank rate declared by the Reserve Bank of India;
1

[(c) any loan made by a holding company to its wholly owned subsidiary company or any
guarantee given or security provided by a holding company in respect of any loan made to its wholly
owned subsidiary company; or
(d) any guarantee given or security provided by a holding company in respect of loan made by
any bank or financial institution to its subsidiary company:
Provided that the loans made under clauses (c) and (d) are utilised by the subsidiary company for
its principal business activities
...
Ins
...
15 (w
...
f
...


114

Explanation
...
of the
total voting power may be exercised or controlled by any such director, or by two or more such
directors, together; or
(e) any body corporate, the Board of directors, managing director 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
...

186
...
— (1) Without prejudice to the provisions contained in this
Act, a company shall unless otherwise prescribed, make investment through not more than two layers of
investment companies:
Provided that the provisions of this sub-section shall not affect,—
(i) a company from acquiring any other company incorporated in a country outside India if such
other company has investment subsidiaries beyond two layers as per the laws of such country;
(ii) a subsidiary company from having any investment subsidiary for the purposes of meeting the
requirements under any law or under any rule or regulation framed under any law for the time being
in force
...
of its paid-up share capital, free reserves and securities premium account or one
hundred per cent
...

(3) Where the giving of any loan or guarantee or providing any security or the acquisition under subsection (2) exceeds the limits specified in that sub-section, prior approval by means of a special resolution
passed at a general meeting shall be necessary
...

(5) No investment shall be made or loan or guarantee or security given by the company unless the
resolution sanctioning it is passed at a meeting of the Board with the consent of all the directors present at
the meeting and the prior approval of the public financial institution concerned where any term loan is
subsisting, is obtained:
115

Provided that prior approval of a public financial institution shall not be required where the aggregate
of the loans and investments so far made, the amount for which guarantee or security so far provided to or
in all other bodies corporate, along with the investments, loans, guarantee or security proposed to be made
or given does not exceed the limit as specified in sub-section (2), and there is no default in repayment of
loan instalments or payment of interest thereon as per the terms and conditions of such loan to the public
financial institution
...

(7) No loan shall be given under this section at a rate of interest lower than the prevailing yield of one
year, three year, five year or ten year Government Security closest to the tenor of the loan
...

(9) Every company giving loan or giving a guarantee or providing security or making an acquisition
under this section shall keep a register which shall contain such particulars and shall be maintained in
such manner as may be prescribed
...

(11) Nothing contained in this section, except sub-section (1), shall apply—
(a) to a loan made, guarantee given or security provided by a banking company or an insurance
company or a housing finance company in the ordinary course of its business or a company engaged
in the business of financing of companies or of providing infrastructural facilities;
(b) to any acquisition—
(i) made by a non-banking financial company registered under Chapter IIIB of the Reserve
Bank of India Act, 1934 (2 of 1934) and whose principal business is acquisition of securities:
Provided that exemption to non-banking financial company shall be in respect of its
investment and lending activities;
(ii) made by a company whose principal business is the acquisition of securities;
(iii) of shares allotted in pursuance of clause (a) of sub-section (1) of section 62
...

(13) If a company contravenes the provisions of this section, the company shall be punishable with
fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees
and every officer of the company who is in default shall be punishable with imprisonment for a term
which may extend to two years and with fine which shall not be less than twenty-five thousand rupees but
which may extend to one lakh rupees
...
—For the purposes of this section,—
(a) the expression ―investment company‖ means a company whose principal business is the
acquisition of shares, debentures or other securities;
(b) the expression ―infrastructure facilities‖ means the facilities specified in Schedule VI
...
Investments of company to be held in its own name
...

(2) 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, or holding in the name of, the State Bank of India or a
scheduled bank, being the bankers of the company, shares or securities, in order to facilitate the
transfer thereof:
Provided that if within a period of six months from the date on which the shares or securities are
transferred by the company to, or are first held by the company in the name of, the State Bank of
India or a scheduled bank as aforesaid, no transfer of such shares or securities takes place, the
company shall, as soon as practicable after the expiry of that period, have the shares or securities retransferred to it from the State Bank of India or the scheduled bank or, as the case may be, again hold
the shares or securities in its own name; or
(c) 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;
(d) from holding investments in the name of a depository when such investments are in the form
of securities held by the company as a beneficial owner
...

(4) If a company contravenes the provisions of this section, the company shall be punishable with fine
which shall not be less than twenty-five thousand rupees but which may extend to twenty-five lakh rupees
and every officer of the company who is in default shall be punishable with imprisonment for a term
which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but
which may extend to one lakh rupees, or with both
...
Related party transactions
...
]
Explanation
...

(2) Every contract or arrangement entered into under sub-section (1) shall be referred to in the
Board‘s report to the shareholders along with the justification for entering into such contract or
arrangement
...

(4) Without prejudice to anything contained in sub-section (3), it shall be open to the company to
proceed against a director or any other employee who had entered into such contract or arrangement in
contravention of the provisions of this section for recovery of any loss sustained by it as a result of such
contract or arrangement
...


1
...
by Act 21 of 2015, s
...
e
...
29-5-2015)
...
Ins
...
16, ibid
...
e
...
29-5-2015)

118

189
...
— (1) Every
company shall keep one or more registers giving separately the particulars of all contracts or
arrangements to which sub-section (2) of section 184 or section 188 applies, in such manner and
containing such particulars as may be prescribed and after entering the particulars, such register or
registers shall be placed before the next meeting of the Board and signed by all the directors present at the
meeting
...

(3) The register referred to in sub-section (1) shall be kept at the registered office of the company and
it shall be open for inspection at such office during business hours and extracts may be taken therefrom,
and copies thereof as may be required by any member of the company shall be furnished by the company
to such extent, in such manner, and on payment of such fees as may be prescribed
...

(5) Nothing contained in sub-section (1) shall apply to any contract or arrangement—
(a) for the sale, purchase or supply of any goods, materials or services if the value of such goods
and materials or the cost of such services does not exceed five lakh rupees in the aggregate in any
year; or
(b) by a banking company for the collection of bills in the ordinary course of its business
...

190
...
— (1) Every company
shall keep at its registered office,—
(a) where a contract of service with a managing or whole-time director is in writing, a copy of the
contract; or
(b) where such a contract is not in writing, a written memorandum setting out its terms
...

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

191
...
, in connection with transfer of undertaking,
property or shares
...

(2) Nothing in sub-section (1) shall affect any payment made by a company to a managing director or
whole-time director or manager 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 subject to limits or
priorities, as may be prescribed
...

(4) Where a director of a company receives payment of any amount in contravention of sub-section
(1) or the proposed payment is made before it is approved in the meeting, the amount so received by the
director shall be deemed to have been received by him in trust for the company
...

(6) Nothing in this section shall be taken to prejudice the operation of any law requiring disclosure to
be made with respect to any payment received under this section or such other like payments made to a
director
...
Restriction on non-cash transactions involving directors
...

(2) The notice for approval of the resolution by the company or holding company in general meeting
under sub-section (1) shall include the particulars of the arrangement along with the value of the assets
involved in such arrangement duly calculated by a registered valuer
...

193
...
— (1) Where One Person Company limited by shares or by
guarantee enters into a contract with the sole member of the company who is also the director of the
120

company, the company shall, unless the contract is in writing, ensure that the terms of the contract or
offer are contained in a memorandum or are recorded in the minutes of the first meeting of the Board of
Directors of the company held next after entering into contract:
Provided that nothing in this sub-section shall apply to contracts entered into by the company in the
ordinary course of its business
...

194
...
— (1) No director of a company or any of its key managerial personnel shall buy in the
company, or in its holding, subsidiary or associate company—
(a) a right to call for delivery or a right to make delivery at a specified price and within a
specified time, of a specified number of relevant shares or a specified amount of relevant debentures;
or
(b) a right, as he may elect, to call for delivery or to make delivery at a specified price and within
a specified time, of a specified number of relevant shares or a specified amount of relevant
debentures
...

(3) Where a director or other key managerial personnel acquires any securities in contravention of
sub-section (1), he shall, subject to the provisions contained in sub-section (2), be liable to surrender the
same to the company and the company shall not register the securities so acquired in his name in the
register, and if they are in dematerialised form, it shall inform the depository not to record such
acquisition and such securities, in both the cases, shall continue to remain in the names of the transferors
...
—For the purposes of this section, ‗‗relevant shares‘‘ and ‗‗relevant debentures‘‘ mean
shares and debentures of the company in which the concerned person is a whole-time director or other
key managerial personnel or shares and debentures of its holding and subsidiary companies
...
Prohibition on insider trading of securities
...

Explanation
...

(2) If any person contravenes the provisions of this section, he shall be punishable with imprisonment
for a term which may extend to five years or with fine which shall not be less than five lakh rupees but

121

which may extend to twenty-five crore rupees or three times the amount of profits made out of insider
trading, whichever is higher, or with both
...
Appointment of managing director, whole-time director or manager
...

(2) No company shall appoint or re-appoint any person as its managing director, whole-time director
or manager for a term exceeding five years at a time:
Provided that no re-appointment shall be made earlier than one year before the expiry of his term
...

(4) Subject to the provisions of section 197 and Schedule V, a managing director, whole-time director
or manager shall be appointed and the terms and conditions of such appointment and remuneration
payable be approved by the Board of Directors at a meeting which shall be subject to approval by a
resolution at the next general meeting of the company and by the Central Government in case such
appointment is at variance to the conditions specified in that Schedule:
Provided that a notice convening Board or general meeting for considering such appointment shall
include the terms and conditions of such appointment, remuneration payable and such other matters
including interest, of a director or directors in such appointments, if any:
Provided further that a return in the prescribed form shall be filed within sixty days of such
appointment with the Registrar
...

197
...
— (1) The total managerial remuneration payable by a public
company, to its directors, including managing director and whole-time director, and its manager in respect
of any financial year shall not exceed eleven per cent
...
of the net profits of the company,
subject to the provisions of Schedule V:
Provided further that, except with the approval of the company in general meeting,—
(i) the remuneration payable to any one managing director; or whole-time director or manager
shall not exceed five per cent
...
of the net profits to all such directors and
manager taken together;
(ii) the remuneration payable to directors who are neither managing directors nor whole-time
directors shall not exceed,—
(A) one per cent
...
of the net profits in any other case
...

(3) Notwithstanding anything contained in sub-sections (1) and (2), but subject to the provisions of
Schedule V, if, in any financial year, a company has no profits or its profits are inadequate, the company
shall not pay to its directors, including any managing or whole-time director or manager, by way of
remuneration any sum exclusive of any fees payable to directors under sub-section (5) hereunder except
in accordance with the provisions of Schedule V and if it is not able to comply with such provisions, with
the previous approval of the Central Government
...

(5) A director may receive remuneration by way of fee for attending meetings of the Board or
Committee thereof or for any other purpose whatsoever as may be decided by the Board:
Provided that the amount of such fees shall not exceed the amount as may be prescribed:
Provided further that different fees for different classes of companies and fees in respect of
independent director may be such as may be prescribed
...

(7) Notwithstanding anything contained in any other provision of this Act but subject to the
provisions of this section, an independent director shall not be entitled to any stock option and may
receive remuneration by way of fees provided under sub-section (5), reimbursement of expenses for
participation in the Board and other meetings and profit related commission as may be approved by the
members
...

(9) If any director draws or receives, directly or indirectly, by way of remuneration any such sums in
excess of the limit prescribed by this section or without the prior sanction of the Central Government,
where it is required, he shall refund such sums to the company and until such sum is refunded, hold it in
trust for the company
...

123

(11) In cases where Schedule V is applicable on grounds of no profits or inadequate profits, any
provision relating to the remuneration of any director which purports to increase or has the effect of
increasing the amount thereof, whether the provision be contained in the company‘s memorandum or
articles, or in an agreement entered into by it, or in any resolution passed by the company in general
meeting or its Board, shall not have any effect unless such increase is in accordance with the conditions
specified in that Schedule and if such conditions are not being complied, the approval of the Central
Government had been obtained
...

(13) Where any insurance is taken by a company on behalf of its managing director, whole-time
director, manager, Chief Executive Officer, Chief Financial Officer or Company Secretary for
indemnifying any of them against any liability in respect of any negligence, default, misfeasance, breach
of duty or breach of trust for which they may be guilty in relation to the company, the premium paid on
such insurance shall not be treated as part of the remuneration payable to any such personnel:
Provided that if such person is proved to be guilty, the premium paid on such insurance shall be
treated as part of the remuneration
...

(15) If any person contravenes the provisions of this section, he shall be punishable with fine which
shall not be less than one lakh rupees but which may extend to five lakh rupees
...
Calculation of profits
...

(2) In making the computation aforesaid, credit shall be given for the 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
...


124

(4) In making the computation aforesaid, the following sums shall be deducted, namely:—
(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 Government in this behalf;
(f) interest on debentures issued by the company;
(g) interest on mortgages executed by the company and on loans and advances secured by a
charge on its fixed or floating assets;
(h) interest on unsecured loans and advances;
(i) expenses on repairs, whether to immovable or to movable property, provided the repairs are
not of a capital nature;
(j) outgoings inclusive of contributions made under section 181;
(k) depreciation to the extent specified in section 123;
(l) the excess of expenditure over income, which had arisen in computing the net profits in
accordance with this section in any year which begins at or after the commencement of this Act, in so
far as such excess has not been deducted in any subsequent year preceding the year in respect of
which the net profits have to be ascertained;
(m) any compensation or damages to be paid in virtue of any legal liability including a liability
arising from a breach of contract;
(n) any sum paid by way of insurance against the risk of meeting any liability such as is referred
to in clause (m);
(o) debts considered bad and written off or adjusted during the year of account
...

199
...
— Without prejudice to any liability incurred under
the provisions of this Act or any other law for the time being in force, where a company is required to restate its financial statements due to fraud or non-compliance with any requirement under this Act and the
rules made thereunder, the company shall recover from any past or present managing director or wholetime director or manager or Chief Executive Officer (by whatever name called) who, during the period for
which the financial statements are required to be re-stated, received the remuneration (including stock
option) in excess of what would have been payable to him as per restatement of financial statements
...
Central Government or company to fix limit with regard to remuneration
...

201
...
— (1) Every application made to
the Central Government under this Chapter shall be in such form as may be prescribed
...

(b) Such notice shall be published at least once in a newspaper in the principal language of the district
in which the registered office of the company is situate and circulating in that district, and at least once in
English in an English newspaper circulating in that district
...

202
...
— (1) A
company may make payment to a managing or whole-time director or manager, but not to any other
director, by way of compensation for loss of office, or as consideration for retirement from office or in
connection with such loss or retirement
...

(3) Any payment made to a managing or whole-time director or manager in pursuance of sub-section
(1) shall not exceed the remuneration which he would have earned if he had been in office for the
remainder 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 office, or where he held the office for a lesser period than three years, during
such period:
126

Provided that no such payment shall be made to the director in the event of the commencement of the
winding up of the company, whether before or at any time within twelve months after, the date on which
he ceased to hold office, if the assets of the company on the winding up, after deducting the expenses
thereof, are not sufficient to repay to the shareholders the share capital, including the premiums, if any,
contributed by them
...

203
...
— (1) Every company belonging to such class or
classes of companies as may be prescribed shall have the following whole-time key managerial
personnel,—
(i) managing director, or Chief Executive Officer or manager and in their absence, a whole-time
director;
(ii) company secretary; and
(iii) Chief Financial Officer :
Provided that an individual shall not be appointed or reappointed as the chairperson of the
company, in pursuance of the articles of the company, as well as the managing director or Chief
Executive Officer of the company at the same time after the date of commencement of this Act
unless,—
(a) the articles of such a company provide otherwise; or
(b) the company does not carry multiple businesses:
Provided further that nothing contained in the first proviso shall apply to such class of
companies engaged in multiple businesses and which has appointed one or more Chief Executive
Officers for each such business as may be notified by the Central Government
...

(3) A whole-time key managerial personnel shall not hold office in more than one company except in
its subsidiary company at the same time:
Provided that nothing contained in this sub-section shall disentitle a key managerial personnel from
being a director of any company with the permission of the Board:
Provided further that whole-time key managerial personnel holding office in more than one company
at the same time on the date of commencement of this Act, shall, within a period of six months from such
commencement, choose one company, in which he wishes to continue to hold the office of key
managerial personnel:
Provided also that a company may appoint or employ a person as its managing director, if he is the
managing director or manager of one, and of not more than one, other company and 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
...

(5) If a company contravenes the provisions of this section, the company shall be punishable with fine
which shall not be less than one lakh rupees but which may extend to five lakh rupees and every director
and key managerial personnel of the company who is in default shall be punishable with fine which may

127

extend to fifty thousand rupees and where the contravention is a continuing one, with a further fine which
may extend to one thousand rupees for every day after the first during which the contravention continues
...
Secretarial audit for bigger companies
...

(2) It shall be the duty of the company to give all assistance and facilities to the company secretary in
practice, for auditing the secretarial and related records of the company
...

(4) If a company or any officer of the company or the company secretary in practice, contravenes the
provisions of this section, the company, every officer of the company or the company secretary in
practice, who is in default, shall be punishable with fine which shall not be less than one lakh rupees but
which may extend to five lakh rupees
...
Functions of company secretary
...

Explanation
...

(2) The provisions contained in section 204 and section 205 shall not affect the duties and functions
of the Board of Directors, chairperson of the company, managing director or whole-time director under
this Act, or any other law for the time being in force
...
Power to call for information, inspect books and conduct inquiries
...

(2) On the receipt of a notice under sub-section (1), it shall be the duty of the company and of its
officers concerned to furnish such information or explanation to the best of their knowledge and power
and to produce the documents to the Registrar within the time specified or extended by the Registrar:
Provided that where such information or explanation relates to any past period, the officers who had
been in the employment of the company for such period, if so called upon by the Registrar through a
notice served on them in writing, shall also furnish such information or explanation to the best of their
knowledge
...

(4) If the Registrar is satisfied on the basis of information available with or furnished to him or on a
representation made to him by any person that the business of a company is being carried on for a
fraudulent or unlawful purpose or not in compliance with the provisions of this Act or if the grievances of
investors are not being addressed, the Registrar may, after informing the company of the allegations made
against it 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 carry out such inquiry as he
deems fit after providing the company a reasonable opportunity of being heard:
Provided that the Central Government may, if it is satisfied that the circumstances so warrant, direct
the Registrar or an inspector appointed by it for the purpose to carry out the inquiry under this subsection:
Provided further that where business of a company has been or is being carried on for a fraudulent or
unlawful purpose, every officer of the company who is in default shall be punishable for fraud in the
manner as provided in section 447
...

(6) The Central Government may, having regard to the circumstances by general or special order,
authorise any statutory authority to carry out the inspection of books of account of a company or class of
companies
...

207
...
— (1) Where a Registrar or inspector calls for the books of
account and other books and papers under section 206, it shall be the duty of every director, officer or
other employee of the company to produce all such documents to the Registrar or inspector and furnish
him with such statements, information or explanations in such form as the Registrar or inspector may
require and shall render all assistance to the Registrar or inspector in connection with such inspection
...

(3) Notwithstanding anything contained in any other law for the time being in force or in any contract
to the contrary, the Registrar or inspector making an inspection or inquiry shall have all the powers as are
vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit in respect
of the following matters, namely:—
(a) the discovery and production of books of account and other documents, at such place and time
as may be specified by such Registrar or inspector making the inspection or inquiry;
(b) summoning and enforcing the attendance of persons and examining them on oath; and
(c) inspection of any books, registers and other documents of the company at any place
...

(ii) If a director or an officer of the company has been convicted of an offence under this section, the
director or the officer shall, on and from the date on which he is so convicted, be deemed to have vacated
his office as such and on such vacation of office, shall be disqualified from holding an office in any
company
...
Report on inspection made
...

209
...
— (1) Where, upon information in his possession or otherwise, the
Registrar or inspector has reasonable ground to believe that the books and papers of a company, or
relating to the key managerial personnel or any director or auditor or company secretary in practice if the
company has not appointed a company secretary, are likely to be destroyed, mutilated, altered, falsified or
secreted, he may, after obtaining an order from the Special Court for the seizure of such books and
papers,—
(a) enter, with such assistance as may be required, and search, the place or places where such
books or papers are kept; and
(b) seize such books and papers as he considers necessary after allowing the company to take
copies of, or extracts from, such books or papers at its cost
...

(3) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) relating to searches or
seizures shall apply, mutatis mutandis, to every search and seizure made under this section
...
Investigation into affairs of company
...

(2) Where an order is passed by a court or the Tribunal in any proceedings before it that the affairs of
a company ought to be investigated, the Central Government shall order an investigation into the affairs
of that company
...


130

211
...
— (1) The Central Government shall, by
notification, establish an office to be called the Serious Fraud Investigation Office to investigate frauds
relating to a company:
Provided that until the Serious Fraud Investigation Office is established under subsection (1), the
Serious Fraud Investigation Office set-up by the Central Government in terms of the Government of India
Resolution No
...

(2) The Serious Fraud Investigation Office shall be headed by a Director and consist of such number
of experts from the following fields to be appointed by the Central Government from amongst persons of
ability, integrity and experience in,—
(i) banking;
(ii) corporate affairs;
(iii) taxation;
(iv) forensic audit;
(v) capital market;
(vi) information technology;
(vii) law; or
(viii) such other fields as may be prescribed
...

(4) The Central Government may appoint such experts and other officers and employees in the
Serious Fraud Investigation Office as it considers necessary for the efficient discharge of its functions
under this Act
...

212
...
— (1) Without
prejudice to the provisions of section 210, where the Central Government is of the opinion, that it is
necessary to investigate into the affairs of a company by the Serious Fraud Investigation Office—
(a) on receipt of a report of the Registrar or inspector under section 208;
(b) on intimation of a special resolution passed by a company that its affairs are required to be
investigated;
(c) in the public interest; or
(d) on request from any Department of the Central Government or a State Government,
the Central Government may, by order, assign the investigation into the affairs of the said company to the
Serious Fraud Investigation Office and its Director, may designate such number of inspectors, as he may
consider necessary for the purpose of such investigation
...

(3) Where the investigation into the affairs of a company has been assigned by the Central
Government to Serious Fraud Investigation Office, it shall conduct the investigation in the manner and
131

follow the procedure provided in this Chapter; and submit its report to the Central Government within
such period as may be specified in the order
...

(5) The company and its officers and employees, who are or have been in employment of the
company shall be responsible to provide all information, explanation, documents and assistance to the
Investigating Officer as he may require for conduct of the investigation
...

(7) The limitation on granting of bail specified in sub-section (6) is in addition to the limitations under
the Code of Criminal Procedure, 1973 (2 of 1974) or any other law for the time being in force on granting
of bail
...

(9) The Director, Additional Director or Assistant Director of Serious Fraud Investigation Office
shall, immediately after arrest of such person under sub-section (8), forward a copy of the order, along
with the material in his possession, referred to in that sub-section, to the Serious Fraud Investigation
Office in a sealed envelope, in such manner as may be prescribed and the Serious Fraud Investigation
Office shall keep such order and material for such period as may be prescribed
...

(11) The Central Government if so directs, the Serious Fraud Investigation Office shall submit an
interim report to the Central Government
...


1
...
by Act 21 of 2015, s
...
e
...
29-5-2015)
...

(14) On receipt of the investigation report, the Central Government may, after examination of the
report (and after taking such legal advice, as it may think fit), direct the Serious Fraud Investigation
Office to initiate prosecution against the company and its officers or employees, who are or have been in
employment of the company or any other person directly or indirectly connected with the affairs of the
company
...

(16) Notwithstanding anything contained in this Act, any investigation or other action taken or
initiated by Serious Fraud Investigation Office under the provisions of the Companies Act, 1956 (1 of
1956) shall continue to be proceeded with under that Act as if this Act had not been passed
...

213
...
— The Tribunal may,—
(a) on an application made by—
(i) not less than one hundred members or members holding not less than one-tenth of the total
voting power, in the case of a company having a share capital; or
(ii) not less than one-fifth of the persons on the company‘s register of members, in the case of
a company having no share capital,
and supported by such evidence as may be necessary for the purpose of showing that the applicants have
good reasons for seeking an order for conducting an investigation into the affairs of the company; or
(b) on an application made to it by any other person or otherwise, if it is satisfied that there are
circumstances suggesting that—
(i) the business of the company is being conducted with intent to defraud its creditors, members
or any other person or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive to
any of its members or that the company was formed for any fraudulent or unlawful purpose;
(ii) persons concerned in the formation of the company or the management of its affairs have in
connection therewith been guilty of fraud, misfeasance or other misconduct towards the company or
towards any of its members; or
(iii) 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, or the manager, of the company,
order, after giving a reasonable opportunity of being heard to the parties concerned, that the affairs of the
company ought to be investigated by an inspector or inspectors appointed by the Central Government and
where such an order is passed, the Central Government shall appoint one or more competent persons as
inspectors to investigate into the affairs of the company in respect of such matters and to report thereupon
to it in such manner as the Central Government may direct:
Provided that if after investigation it is proved that—
133

(i) 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 that the company was
formed for any fraudulent or unlawful purpose; or
(ii) any person concerned in the formation of the company or the management of its affairs have
in connection therewith been guilty of fraud,
then, every officer of the company who is in default and the person or persons concerned in the formation
of the company or the management of its affairs shall be punishable for fraud in the manner as provided
in section 447
...
Security for payment of costs and expenses of investigation
...

215
...
— No firm, body
corporate or other association shall be appointed as an inspector
...
Investigation of ownership of company
...

(2) Without prejudice to its powers under sub-section (1), the Central Government shall appoint one
or more inspectors under that sub-section, if the Tribunal, in the course of any proceeding before it,
directs by an order that the affairs of the company ought to be investigated as regards the membership of
the company and other matters relating to the company, for the purposes specified in sub-section (1)
...

(4) Subject to the terms of appointment of an inspector, 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 for the
purposes of his investigation
...
Procedure, powers, etc
...
— (1) It shall be the duty of all officers and other
employees and agents including the former officers, employees and agents of a company which is under
investigation in accordance with the provisions contained in this Chapter, and where the affairs of any
other body corporate or a person are investigated under section 219, of all officers and other employees
and agents including former officers, employees and agents of such body corporate or a person—
(a) to preserve and to produce to an inspector or any person authorised by him in this behalf all
books and papers of, or relating to, the company or, as the case may be, relating to the other body
corporate or the person, which are in their custody or power; and
(b) otherwise to give to the inspector all assistance in connection with the investigation which
they are reasonably able to give
...

(3) The inspector shall not keep in his custody any books and papers produced under sub-section (1)
or sub-section (2) for more than one hundred and eighty days and return the same to the company, body
corporate, firm or individual by whom or on whose behalf the books and papers were produced:
Provided that the books and papers may be called for by the inspector if they are needed again for a
further period of one hundred and eighty days by an order in writing
...

(5) Notwithstanding anything contained in any other law for the time being in force or in any contract
to the contrary, the inspector, being an officer of the Central Government, making an investigation under
this Chapter shall have all the powers as are vested in a civil court under the Code of Civil Procedure,
1908 (5 of 1908), while trying a suit in respect of the following matters, namely:—
(a) the discovery and production of books of account and other documents, at such place and time
as may be specified by such person;
(b) summoning and enforcing the attendance of persons and examining them on oath; and
(c) inspection of any books, registers and other documents of the company at any place
...

(ii) If a director or an officer of the company has been convicted of an offence under this section, the
director or the officer shall, on and from the date on which he is so convicted, be deemed to have vacated
his office as such and on such vacation of office, shall be disqualified from holding an office in any
company
...

(8) If any person fails without reasonable cause or refuses—
(a) to produce to an inspector or any person authorised by him in this behalf any book or paper
which is his duty under sub-section (1) or sub-section (2) to produce;
(b) to furnish any information which is his duty under sub-section (2) to furnish;
(c) to appear before the inspector personally when required to do so under subsection (4) or to
answer any question which is put to him by the inspector in pursuance of that sub-section; or
(d) to sign the notes of any examination referred to in sub-section (7),
he shall be punishable with imprisonment for a term which may extend to six months and with fine which
shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, and also with
a further fine which may extend to two thousand rupees for every day after the first during which the
failure or refusal continues
...

(10) The Central Government may enter into an agreement with the Government of a foreign State for
reciprocal arrangements to assist in any inspection, inquiry or investigation under this Act or under the
corresponding law in force in that State and may, by notification, render the application of this Chapter in
relation to a foreign State with which reciprocal arrangements have been made subject to such
modifications, exceptions, conditions and qualifications as may be deemed expedient for implementing
the agreement with that State
...

(12) Upon receipt of a letter of request from a court or an authority in a country or place outside India,
competent to issue such letter in that country or place for the examination of any person or production of
any document or thing in relation to affairs of a company under investigation in that country or place, the
Central Government may, if it thinks fit, forward such letter of request to the court concerned, which shall
thereupon summon the person before it and record his statement or cause any document or thing to be
produced, or send the letter to any inspector for investigation, who shall thereupon investigate into the
affairs of company in the same manner as the affairs of a company are investigated under this Act and the
inspector shall submit the report to such court within thirty days or such extended time as the court may
allow for further action:
Provided that the evidence taken or collected under this sub-section or authenticated copies thereof or
the things so collected shall be forwarded by the court, to the Central Government for transmission, in
such manner as the Central Government may deem fit, to the court or the authority in country or place
outside India which had issued the letter of request
...
Protection of employees during investigation
...

(2) If the company, other body corporate or person concerned does not receive within thirty days of
making of application under sub-section (1), the approval of the Tribunal, then and only then, the
company, other body corporate or person concerned may proceed to take against the employee, the action
proposed
...

(4) The decision of the Appellate Tribunal on such appeal shall be final and binding on the Tribunal
and on the company, other body corporate or person concerned
...

219
...
— If an
inspector appointed under section 210 or section 212 or section 213 to investigate into the affairs of a
company considers it necessary for the purposes of the 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
company or holding company, or a subsidiary company of its holding company;
(b) any other body corporate which is, or has at any relevant time been managed by any person as
managing director or as manager, who is, or was, at the relevant time, the managing director or the
manager of the company;
(c) any other body corporate whose Board of Directors comprises nominees of the company or is
accustomed to act in accordance with the directions or instructions of the company or any of its
directors; or
(d) any person who is or has at any relevant time been the company‘s managing director or
manager or employee,
he shall, subject to the prior approval of the Central Government, investigate into and report on the affairs
of the other body corporate or of the managing director or manager, in so far as he considers that the
results of his investigation are relevant to the investigation of the affairs of the company for which he is
appointed
...
Seizure of documents by inspector
...

(2) The inspector shall keep in his custody the books and papers seized under this section for such a
period not later than the conclusion of the investigation as he considers necessary and thereafter shall
return the same to the company or the other body corporate, or, as the case may be, to the managing
director or the manager or any other person from whose custody or power they were seized:
Provided that the inspector may, before returning such books and papers as aforesaid, take copies of,
or extracts from them or place identification marks on them or any part thereof or deal with the same in
such manner as he considers necessary
...

221
...
— (1) Where it appears to the
Tribunal, on a reference made to it by the Central Government or in connection with any inquiry or
investigation into the affairs of a company under this Chapter or on any complaint made by such number
of members as specified under sub-section (1) of section 244 or a creditor having one lakh amount
outstanding against the company or any other person having a reasonable ground to believe that the
removal, transfer or disposal of funds, assets, properties of the company is likely to take place in a manner
that is prejudicial to the interests of the company or its shareholders or creditors or in public interest, it
may by order direct that such transfer, removal or disposal shall not take place during such period not
exceeding three years as may be specified in the order or may take place subject to such conditions and
restrictions as the Tribunal may deem fit
...

222
...
— (1) Where it appears to the Tribunal, in
connection with any investigation under section 216 or on a complaint made by any person in this behalf,
that there is good reason to find out the relevant facts about any securities issued or to be issued by a
company and the Tribunal is of the opinion that such facts cannot be found out unless certain restrictions,
as it may deem fit, are imposed, the Tribunal may, by order, direct that the securities shall be subject to
such restrictions as it may deem fit for such period not exceeding three years as may be specified in the
order
...

223
...
— (1) An inspector appointed under this Chapter may, and if so directed by
the Central Government shall, submit interim reports to that Government, and on the conclusion of the
investigation, shall submit a final report to the Central Government
...

(3) A copy of the report made under sub-section (1) may be obtained by making an application in this
regard to the Central Government
...

(5) Nothing in this section shall apply to the report referred to in section 212
...
Actions to be taken in pursuance of inspector‘s report
...
Subs
...
18, for ―by the seal‖ (w
...
f
...


138

company or in relation to any other body corporate or other person whose affairs have been investigated
under this Chapter been guilty of any offence for which he is criminally liable, the Central Government
may prosecute such person for the offence and it shall be the duty of all officers and other employees of
the company or body corporate to give the Central Government the necessary assistance in connection
with the prosecution
...

(3) If from any such report as aforesaid, it appears to the Central Government that proceedings ought,
in the public interest, to be brought by the company or any body corporate whose affairs have been
investigated under this Chapter—
(a) for the recovery of damages in respect of any fraud, misfeasance or other misconduct in
connection with the promotion or formation, or the management of the affairs, of such company or
body corporate; or
(b) for the recovery of any property of such company or body corporate which has been
misapplied or wrongfully retained,
the Central Government may itself bring proceedings for winding up in the name of such company or
body corporate
...

(5) Where the report made by an inspector states that fraud has taken place in a company and due to
such fraud any director, key managerial personnel, other officer of the company or any other person or
entity, has taken undue advantage or benefit, whether in the form of any asset, property or cash or in any
other manner, the Central Government may file an application before the Tribunal for appropriate orders
with regard to disgorgement of such asset, property, or cash, as the case may be, and also for holding such
director, key managerial personnel, officer or other person liable personally without any limitation of
liability
...
Expenses of investigation
...

(2) Any amount for which a company or body corporate is liable under clause (b) of sub-section (1)
shall be a first charge on the sums or property mentioned in that clause
...
Voluntary winding up of company, etc
...
— An
investigation under this Chapter may be initiated notwithstanding, and no such investigation shall be
stopped or suspended by reason only of, the fact that—
(a) an application has been made under section 241;
(b) the company has passed a special resolution for voluntary winding up; or
(c) any other proceeding for the winding up of the company is pending before the Tribunal:
Provided that where a winding up order is passed by the Tribunal in a proceeding referred to in clause
(c), the inspector shall inform the Tribunal about the pendency of the investigation proceedings before
him and the Tribunal shall pass such order as it may deem fit:
Provided further that nothing in the winding up order shall absolve any director or other employee of
the company from participating in the proceedings before the inspector or any liability as a result of the
finding by the inspector
...
Legal advisors and bankers not to disclose certain information
...

228
...
, of foreign companies
...

229
...
— Where a
person who is required to provide an explanation or make a statement during the course of inspection,
inquiry or investigation, or an officer or other employee of a company or other body corporate which is
also under investigation,—
(a) destroys, mutilates or falsifies, or conceals or tampers or unauthorisedly removes, or is a party
to the destruction, mutilation or falsification or concealment or tampering or unauthorised removal of,
documents relating to the property, assets or affairs of the company or the body corporate;
(b) makes, or is a party to the making of, a false entry in any document concerning the company
or body corporate; or
(c) provides an explanation which is false or which he knows to be false, he shall be punishable
for fraud in the manner as provided in section 447
...
Power to compromise or make arrangements with creditors and members
...

Explanation
...

(2) The company or any other person, by whom an application is made under subsection (1), shall
disclose to the Tribunal by affidavit—
(a) all material facts relating to the company, such as the latest financial position of the company,
the latest auditor‘s report on the accounts of the company and the pendency of any investigation or
proceedings against the company;
(b) reduction of share capital of the company, if any, included in the compromise or arrangement;
(c) any scheme of corporate debt restructuring consented to by not less than seventy-five per cent
...

(3) Where a meeting is proposed to be called in pursuance of an order of the Tribunal under subsection (1), a notice of such meeting shall be sent to all the creditors or class of creditors and to all the
members or class of members and the debenture-holders of the company, individually at the address
registered with the company which shall be accompanied by a statement disclosing the details of the
compromise or arrangement, a copy of the valuation report, if any, and explaining their effect on
creditors, key managerial personnel, promoters and non-promoter members, and the debenture-holders
and the effect of the compromise or arrangement on any material interests of the directors of the company
or the debenture trustees, and such other matters as may be prescribed:
Provided that such notice and other documents shall also be placed on the website of the company, if
any, and in case of a listed company, these documents shall be sent to the Securities and Exchange Board
and stock exchange where the securities of the companies are listed, for placing on their website and shall
also be published in newspapers in such manner as may be prescribed:
Provided further that where the notice for the meeting is also issued by way of an advertisement, it
shall indicate the time within which copies of the compromise or arrangement shall be made available to
the concerned persons free of charge from the registered office of the company
...
of the shareholding or having outstanding debt amounting to not less than five
per cent
...

(5) A notice under sub-section (3) along with all the documents in such form as may be prescribed
shall also be sent to the Central Government, the income-tax authorities, the Reserve Bank of India, the
Securities and Exchange Board, the Registrar, the respective stock exchanges, the Official Liquidator, the
Competition Commission of India established under sub-section (1) of section 7 of the Competition Act,
141

2002 (12 of 2003), if necessary, and such other sectoral regulators or authorities which are likely to be
affected by the compromise or arrangement and shall require that representations, if any, to be made by
them shall be made within a period of thirty days from the date of receipt of such notice, failing which, it
shall be presumed that they have no representations to make on the proposals
...

(7) An order made by the Tribunal under sub-section (6) shall provide for all or any of the following
matters, namely:—
(a) where the compromise or arrangement provides for conversion of preference shares into
equity shares, such preference shareholders shall be given an option to either obtain arrears of
dividend in cash or accept equity shares equal to the value of the dividend payable;
(b) the protection of any class of creditors;
(c) if the compromise or arrangement results in the variation of the shareholders‘ rights, it shall be
given effect to under the provisions of section 48;
(d) if the compromise or arrangement is agreed to by the creditors under sub-section (6), any
proceedings pending before the Board for Industrial and Financial Reconstruction established under
section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) shall abate;
(e) such other matters including exit offer to dissenting shareholders, if any, as are in the opinion
of the Tribunal necessary to effectively implement the terms of the compromise or arrangement:
Provided that no compromise or arrangement shall be sanctioned by the Tribunal unless a certificate
by the company's auditor has been filed with the Tribunal to the effect that the accounting treatment, if
any, proposed in the scheme of compromise or arrangement is in conformity with the accounting
standards prescribed under section 133
...

(9) The Tribunal may dispense with calling of a meeting of creditor or class of creditors where such
creditors or class of creditors, having at least ninety per cent
...

(10) No compromise or arrangement in respect of any buy-back of securities under this section shall
be sanctioned by the Tribunal unless such buy-back is in accordance with the provisions of section 68
...

(12) An aggrieved party may make an application to the Tribunal in the event of any grievances with
respect to the takeover offer of companies other than listed companies in such manner as may be
prescribed and the Tribunal may, on application, pass such order as it may deem fit
...
—For the removal of doubts, it is hereby declared that the provisions of section 66 shall
not apply to the reduction of share capital effected in pursuance of the order of the Tribunal under this
section
...
Power of Tribunal to enforce compromise or arrangement
...

(2) If the Tribunal is satisfied that the compromise or arrangement sanctioned under section 230
cannot be implemented satisfactorily with or without modifications, and the company is unable to pay its
debts as per the scheme, it may make an order for winding up the company and such an order shall be
deemed to be an order made under section 273
...

232
...
— (1) Where an application is made to the Tribunal
under section 230 for the sanctioning of a compromise or an arrangement proposed between a company
and any such persons as are mentioned in that section, and it is shown to the Tribunal—
(a) that the compromise or arrangement has been proposed for the purposes of, or in connection
with, a scheme for the reconstruction of the company or companies involving merger or the
amalgamation of any two or more companies; and
(b) that under the scheme, the whole or any part of the undertaking, property or liabilities of any
company (hereinafter referred to as the transferor company) is required to be transferred to another
company (hereinafter referred to as the transferee company), or is proposed to be divided among and
transferred to two or more companies,
the Tribunal may on such application, order a meeting of the creditors or class of creditors or the
members or class of members, as the case may be, to be called, held and conducted in such manner as the
Tribunal may direct and the provisions of sub-sections (3) to (6) of section 230 shall apply mutatis
mutandis
...

(3) The Tribunal, after satisfying itself that the procedure specified in sub-sections (1) and (2) has
been complied with, may, by order, sanction the compromise or arrangement or by a subsequent order,
make provision for the following matters, namely:—
(a) the transfer to the transferee company of the whole or any part of the undertaking, property or
liabilities of the transferor company from a date to be determined by the parties unless the Tribunal,
for reasons to be recorded by it in writing, decides otherwise;
(b) the allotment or appropriation by the transferee company of any shares, debentures, policies or
other like instruments in the company which, under the compromise or arrangement, are to be allotted
or appropriated by that company to or for any person:

143

Provided that a transferee company shall not, as a result of the compromise or arrangement, hold
any shares in its own name or in the name of any trust whether on its behalf or on behalf of any of its
subsidiary or associate companies and any such shares shall be cancelled or extinguished;
(c) the continuation by or against the transferee company of any legal proceedings pending by or
against any transferor company on the date of transfer;
(d) dissolution, without winding-up, of any transferor company;
(e) the provision to be made for any persons who, within such time and in such manner as the
Tribunal directs, dissent from the compromise or arrangement;
(f) where share capital is held by any non-resident shareholder under the foreign direct investment
norms or guidelines specified by the Central Government or in accordance with any law for the time
being in force, the allotment of shares of the transferee company to such shareholder shall be in the
manner specified in the order;
(g) the transfer of the employees of the transferor company to the transferee company;
(h) where the transferor company is a listed company and the transferee company is an unlisted
company,—
(A) the transferee company shall remain an unlisted company until it becomes a listed
company;
(B) if shareholders of the transferor company decide to opt out of the transferee company,
provision shall be made for payment of the value of shares held by them and other benefits in
accordance with a pre-determined price formula or after a valuation is made, and the
arrangements under this provision may be made by the Tribunal:
Provided that the amount of payment or valuation under this clause for any share shall not be less
than what has been specified by the Securities and Exchange Board under any regulations framed by
it;
(i) where the transferor company is dissolved, the fee, if any, paid by the transferor company on
its authorised capital shall be set-off against any fees payable by the transferee company on its
authorised capital subsequent to the amalgamation; and
(j) such incidental, consequential and supplemental matters as are deemed necessary to secure
that the merger or amalgamation is fully and effectively carried out:
Provided that no compromise or arrangement shall be sanctioned by the Tribunal unless a
certificate by the company‘s auditor has been filed with the Tribunal to the effect that the accounting
treatment, if any, proposed in the scheme of compromise or arrangement is in conformity with the
accounting standards prescribed under section 133
...

(5) Every company in relation to which the order is made shall cause a certified copy of the order to
be filed with the Registrar for registration within thirty days of the receipt of certified copy of the order
...

(7) Every company in relation to which the order is made shall, until the completion of the scheme,
file a statement in such form and within such time as may be prescribed with the Registrar every year
duly certified by a chartered accountant or a cost accountant or a company secretary in practice indicating
whether the scheme is being complied with in accordance with the orders of the Tribunal or not
...

Explanation
...

233
...
— (1) Notwithstanding the provisions of
section 230 and section 232, a scheme of merger or amalgamation may be entered into between two or
more small companies or between a holding company and its wholly-owned subsidiary company or such
other class or classes of companies as may be prescribed, subject to the following, namely:—
(a) a notice of the proposed scheme inviting objections or suggestions, if any, from the Registrar
and Official Liquidators where registered office of the respective companies are situated or persons
affected by the scheme within thirty days is issued by the transferor company or companies and the
transferee company;
(b) the objections and suggestions received are considered by the companies in their respective
general meetings and the scheme is approved by the respective members or class of members at a
general meeting holding at least ninety per cent
...

(2) The transferee company shall file a copy of the scheme so approved in the manner as may be
prescribed, with the Central Government, Registrar and the Official Liquidator where the registered office
of the company is situated
...

(4) If the Registrar or Official Liquidator has any objections or suggestions, he may communicate the
same in writing to the Central Government within a period of thirty days:

145

Provided that if no such communication is made, it shall be presumed that he has no objection to the
scheme
...

(6) On receipt of an application from the Central Government or from any person, if the Tribunal, for
reasons to be recorded in writing, is of the opinion that the scheme should be considered as per the
procedure laid down in section 232, the Tribunal may direct accordingly or it may confirm the scheme by
passing such order as it deems fit:
Provided that if the Central Government does not have any objection to the scheme or it does not file
any application under this section before the Tribunal, it shall be deemed that it has no objection to the
scheme
...

(8) The registration of the scheme under sub-section (3) or sub-section (7) shall be deemed to have
the effect of dissolution of the transferor company without process of winding-up
...

(10) A transferee company shall not on merger or amalgamation, hold any shares in its own name or
in the name of any trust either on its behalf or on behalf of any of its subsidiary or associate company and
all such shares shall be cancelled or extinguished on the merger or amalgamation
...

(12) The provisions of this section shall mutatis mutandis apply to a company or companies specified
in sub-section (1) in respect of a scheme of compromise or arrangement referred to in section 230 or
division or transfer of a company referred to clause (b) of subsection (1) of section 232
...

(14) A company covered under this section may use the provisions of section 232 for the approval of
any scheme for merger or amalgamation
...
Merger or amalgamation of company with foreign company
...

(2) Subject to the provisions of any other law for the time being in force, a foreign company, may
with the prior approval of the Reserve Bank of India, merge into a company registered under this Act or
vice versa and the terms and conditions of the scheme of merger may provide, among other things, for the
payment of consideration to the shareholders of the merging company in cash, or in Depository Receipts,
or partly in cash and partly in Depository Receipts, as the case may be, as per the scheme to be drawn up
for the purpose
...
—For the purposes of sub-section (2), the expression ―foreign company‖ means any
company or body corporate incorporated outside India whether having a place of business in India or not
...
power to acquire shares of shareholders dissenting from scheme or contract approved by
majority
...

(2) Where a notice under sub-section (1) is given, the transferee company shall, unless on an
application made by the dissenting shareholder to the Tribunal, within one month from the date on which
the notice was given and the Tribunal thinks fit to order otherwise, be entitled to and bound to acquire
those shares on the terms on which, under the scheme or contract, the shares of the approving
shareholders are to be transferred to the transferee company
...

(4) Any sum received by the transferor company under this section shall be paid into a separate bank
account, and any such sum 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 sum or other consideration were
respectively received and shall be disbursed to the entitled shareholders within sixty days
...

Explanation
...

236
...
— (1) In the event of an acquirer, or a person acting in
concert with such acquirer, becoming registered holder of ninety per cent
...

majority or holding ninety per cent
...

(2) The acquirer, person or group of persons under sub-section (1) shall offer to the minority
shareholders of the company for buying the equity shares held by such shareholders at a price determined
on the basis of valuation by a registered valuer in accordance with such rules as may be prescribed
...

(4) The majority shareholders shall deposit an amount equal to the value of shares to be acquired by
them under sub-section (2) or sub-section (3), as the case may be, in a separate bank account to be
operated by the transferor company for at least one year for payment to the minority shareholders and
such amount shall be disbursed to the entitled shareholders within sixty days:
Provided that such disbursement shall continue to be made to the entitled shareholders for a period of
one year, who for any reason had not been made disbursement within the said period of sixty days or if
the disbursement have been made within the aforesaid period of sixty days, fail to receive or claim
payment arising out of such disbursement
...

(6) In the absence of a physical delivery of shares by the shareholders within the time specified by the
company, the share certificates shall be deemed to be cancelled, and the transferor company shall be
authorised to issue shares in lieu of the cancelled shares and complete the transfer in accordance with law
and make payment of the price out of deposit made under sub-section (4) by the majority in advance to
the minority by dispatch of such payment
...


148

(8) Where the shares of minority shareholders have been acquired in pursuance of this section and as
on or prior to the date of transfer following such acquisition, the shareholders holding seventy-five per
cent
...

Explanation
...

(9) When a shareholder or the majority equity shareholder fails to acquire full purchase of the shares
of the minority equity shareholders, then, the provisions of this section shall continue to apply to the
residual minority equity shareholders, even though,—
(a) the shares of the company of the residual minority equity shareholder had been delisted; and
(b) the period of one year or the period specified in the regulations made by the Securities and
Exchange Board under the Securities and Exchange Board of India Act, 1992 (15 of 1992), had
elapsed
...
Power of Central Government to provide for amalgamation of companies in public
interest
...

(2) The order under sub-section (1) may also provide for the continuation by or against the transferee
company of any legal proceedings pending by or against any transferor company and such consequential,
incidental and supplemental provisions as may, in the opinion of the Central Government, be necessary to
give effect to the amalgamation
...

(4) Any person aggrieved by any assessment of compensation made by the prescribed authority under
sub-section (3) may, within a period of thirty days from the date of publication of such assessment in the
Official Gazette, prefer an appeal to the Tribunal and thereupon the assessment of the compensation shall
be made by the Tribunal
...

149

(6) The copies of every order made under this section shall, as soon as may be after it has been made,
be laid before each House of Parliament
...
Registration of offer of schemes involving transfer of shares
...

(2) An appeal shall lie to the Tribunal against an order of the Registrar refusing to register any
circular under sub-section (1)
...

239
...
— The books and papers of a
company which has been amalgamated with, or whose shares have been acquired by, another company
under this Chapter shall not be disposed of without the prior permission of the Central Government and
before granting such permission, that Government may appoint a person to examine the books and papers
or any of them for the purpose of ascertaining whether they contain any evidence of the commission of an
offence in connection with the promotion or formation, or the management of the affairs, of the transferor
company or its amalgamation or the acquisition of its shares
...
Liability of officers in respect of offences committed prior to merger, amalgamation, etc
...

CHAPTER XVI
PREVENTION OF OPPRESSION AND MISMANAGEMENT
241
...
— (1) Any member of a
company who complains that—
(a) the affairs of the company have been or are being conducted in a manner prejudicial to public
interest or in a manner prejudicial or oppressive to him or any other member or members or in a
manner prejudicial to the interests of the company; or
(b) the material change, not being a change brought about by, or in the interests of, any creditors,
including debenture holders or any class of shareholders of the company, has taken place in the
management or control of the company, whether by an alteration in the Board of Directors, or
manager, or in the ownership of the company‘s shares, or if it has no share capital, in its membership,
or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of
the company will be conducted in a manner prejudicial to its interests or its members or any class of
members,
may apply to the Tribunal, provided such member has a right to apply under section 244, for an order
under this Chapter
...

242
...
— (1) If, on any application made under section 241, the Tribunal is of the
opinion—
(a) that the company‘s affairs have been or are being conducted in a manner prejudicial or
oppressive to any member or members or prejudicial to public interest or in a manner prejudicial to
the interests of the company; and
(b) that to wind up the company would unfairly prejudice such member or members, but that
otherwise the facts would justify the making of a winding-up order on the ground that it was just and
equitable that the company should be wound up,
the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it
thinks fit
...


151

(3) A certified copy of the order of the Tribunal under sub-section (1) shall be filed by the company
with the Registrar within thirty days of the order of the Tribunal
...

(5) Where an order of the Tribunal under sub-section (1) 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, permitted in the order, to make, without the leave of the Tribunal, any
alteration whatsoever which is inconsistent with the order, either in the memorandum or in the articles
...

(7) A certified copy of every order altering, or giving leave to alter, a company‘s memorandum or
articles, shall within thirty days after the making thereof, be filed by the company with the Registrar who
shall register the same
...

243
...
— (1) Where an order
made under section 242 terminates, sets aside or modifies an agreement such as is referred to in subsection (2) of that section,—
(a) such order shall not give rise to any claims whatever against the company by any person for
damages or for compensation for loss of office or in any other respect either in pursuance of the
agreement or otherwise;
(b) no managing director or other director or manager whose agreement is so terminated or set
aside shall, for a period of five years from the date of the order terminating or setting aside the
agreement, without the leave of the Tribunal, be appointed, or act, as the managing director or other
director or manager of the company:
Provided that the Tribunal shall not grant leave under this clause unless notice of the intention to
apply for leave has been served on the Central Government and that Government has been given a
reasonable opportunity of being heard in the matter
...

244
...
— (1) The following members of a company shall have the
right to apply under section 241, namely:—
(a) in the case of a company having a share capital, not less than one hundred members of the
company or not less than one-tenth of the total number of its members, whichever is less, or any
member or members holding not less than one-tenth of the issued share capital of the company,
subject to the condition that the applicant or applicants has or have paid all calls and other sums due
on his or 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 members:

152

Provided that the Tribunal may, on an application made to it in this behalf, waive all or any of the
requirements specified in clause (a) or clause (b) so as to enable the members to apply under section 241
...
—For the purposes of this sub-section, where any share or shares are held by two or
more persons jointly, they shall be counted only as one member
...

245
...
— (1) Such number of member or members, depositor or depositors or any class of
them, as the case may be, as are indicated in sub-section (2) may, if they are of the opinion that the
management or conduct of the affairs of the company are being conducted in a manner prejudicial to the
interests of the company or its members or depositors, file an application before the Tribunal on behalf of
the members or depositors for seeking all or any of the following orders, namely:—
(a) to restrain the company from committing an act which is ultra vires the articles or
memorandum of the company;
(b) to restrain the company from committing breach of any provision of the company‘s
memorandum or articles;
(c) to declare a resolution altering the memorandum or articles of the company as void if the
resolution was passed by suppression of material facts or obtained by mis-statement to the members
or depositors;
(d) to restrain the company and its directors from acting on such resolution;
(e) to restrain the company from doing an act which is contrary to the provisions of this Act or
any other law for the time being in force;
(f) to restrain the company from taking action contrary to any resolution passed by the members;
(g) to claim damages or compensation or demand any other suitable action from or against—
(i) the company or its directors for any fraudulent, unlawful or wrongful act or omission or
conduct or any likely act or omission or conduct on its or their part;
(ii) the auditor including audit firm of the company for any improper or misleading statement
of particulars made in his audit report or for any fraudulent, unlawful or wrongful act or conduct;
or
(iii) any expert or advisor or consultant or any other person for any incorrect or misleading
statement made to the company or for any fraudulent, unlawful or wrongful act or conduct or any
likely act or conduct on his part;
(h) to seek any other remedy as the Tribunal may deem fit
...

(3) (i) The requisite number of members provided in sub-section (1) shall be as under:—
(a) in the case of a company having a share capital, not less than one hundred members of the
company or not less than such percentage of the total number of its members as may be prescribed,
whichever is less, or any member or members holding not less than such percentage of the issued
share capital of the company as may be prescribed, subject to the condition that the applicant or
applicants has or have paid all calls and other sums due on his or 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 members
...

(4) In considering an application under sub-section (1), the Tribunal shall take into account, in
particular—
(a) whether the member or depositor is acting in good faith in making the application for seeking
an order;
(b) any evidence before it as to the involvement of any person other than directors or officers of
the company on any of the matters provided in clauses (a) to (f) of subsection (1);
(c) whether the cause of action is one which the member or depositor could pursue in his own
right rather than through an order under this section;
(d) any evidence before it as to the views of the members or depositors of the company who have
no personal interest, direct or indirect, in the matter being proceeded under this section;
(e) where the cause of action is an act or omission that is yet to occur, whether the act or omission
could be, and in the circumstances would be likely to be—
(i) authorised by the company before it occurs; or
(ii) ratified by the company after it occurs;
(f) where the cause of action is an act or omission that has already occurred, whether the act or
omission could be, and in the circumstances would be likely to be, ratified by the company
...

(6) Any order passed by the Tribunal shall be binding on the company and all its members, depositors
and auditor including audit firm or expert or consultant or advisor or any other person associated with the
company
...

(8) Where any application filed before the Tribunal is found to be frivolous or vexatious, it shall, for
reasons to be recorded in writing, reject the application and make an order that the applicant shall pay to
the opposite party such cost, not exceeding one lakh rupees, as may be specified in the order
...


154

(10) Subject to the compliance of this section, an application may be filed or any other action may be
taken under this section by any person, group of persons or any association of persons representing the
persons affected by any act or omission, specified in sub-section (1)
...
Application of certain provisions to proceedings under section 241 and section 245
...

CHAPTER XVII
REGISTERED VALUERS
247
...
— (1) Where a valuation is required to be made in respect of
any property, stocks, shares, debentures, securities or goodwill or any other assets (herein referred to as
the assets) or net worth of a company or its liabilities under the provision of this Act, it shall be valued by
a person having such qualifications and experience and registered as a valuer in such manner, on such
terms and conditions as may be prescribed and appointed by the audit committee or in its absence by the
Board of Directors of that company
...

(3) If a valuer contravenes the provisions of this section or the rules made thereunder, the valuer shall
be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to
one lakh rupees:
Provided that if the valuer has contravened such provisions with the intention to defraud the company
or its members, he shall be punishable with imprisonment for a term which may extend to one year and
with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees
...

CHAPTER XVIII
REMOVAL OF NAMES OF COMPANIES FROM THE REGISTER OF COMPANIES
248
...
— (1) Where
the Registrar has reasonable cause to believe that—
(a) a company has failed to commence its business within one year of its incorporation; 1[or]
2

*

*

*

*

*

(c) a company is not carrying on any business or operation for a period of two immediately
preceding financial years and has not made any application within such period for obtaining the status
of a dormant company under section 455,
he shall send a notice to the company and all the directors of the company, of his intention to remove the
name of the company from the register of companies and requesting them to send their representations

1
...
by Act 21 of 2015, s
...
e
...
29-5-2015)
...
Cl
...
19, ibid
...
e
...
29-5-2015)
...

(2) Without prejudice to the provisions of sub-section (1), a company may, after extinguishing all its
liabilities, by a special resolution or consent of seventy-five per cent
...

(3) Nothing in sub-section (2) shall apply to a company registered under section 8
...

(5) At the expiry of the time mentioned in the notice, the Registrar may, unless cause to the contrary
is shown by the company, strike off its name from the register of companies, 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
...

(7) The liability, if any, of every director, manager or other officer who was exercising any power of
management, and of every member of the company dissolved under sub-section (5), shall continue and
may be enforced as if the company had not been dissolved
...

249
...
— (1) An
application under sub-section (2) of section 248 on behalf of a company shall not be made if, at any time
in the previous three months, the company—
(a) has changed its name or shifted its registered office from one State to another;
(b) has made a disposal for value of property or rights held by it, immediately before cesser of
trade or otherwise carrying on of business, for the purpose of disposal for gain in the normal course of
trading or otherwise carrying on of business;
(c) has engaged in any other activity except the one which is necessary or expedient for the
purpose of making an application under that section, or deciding whether to do so or concluding the
affairs of the company, or complying with any statutory requirement;
(d) has made an application to the Tribunal for the sanctioning of a compromise or arrangement
and the matter has not been finally concluded; or
(e) is being wound up under Chapter XX, whether voluntarily or by the Tribunal
...

(3) An application filed under sub-section (2) of section 248 shall be withdrawn by the company or
rejected by the Registrar as soon as conditions under sub-section (1) are brought to his notice
...
Effect of company notified as dissolved
...

251
...
— (1) Where it is found that an application by a
company under sub-section (2) of section 248 has been made with the object of evading the liabilities of
the company or with the intention to deceive the creditors or to defraud any other persons, the persons in
charge of the management of the company shall, notwithstanding that the company has been notified as
dissolved—
(a) be jointly and severally liable to any person or persons who had incurred loss or damage as a
result of the company being notified as dissolved; and
(b) be punishable for fraud in the manner as provided in section 447
...

252
...
— (1) Any person aggrieved by an order of the Registrar, notifying a
company as dissolved under section 248, may file an appeal to the Tribunal within a period of three years
from the date of the order of the Registrar and if the Tribunal is of the opinion that the removal of the
name of the company from the register of companies is not justified in view of the absence of any of the
grounds on which the order was passed by the Registrar, it may order restoration of the name of the
company in the register of companies:
Provided that before passing any order under this section, the Tribunal shall give a reasonable
opportunity of making representations and of being heard to the Registrar, the company and all the
persons concerned :
Provided further that if the Registrar is satisfied, that the name of the company has been struck off
from the register of companies either inadvertently or on the basis of incorrect information furnished by
the company or its directors, which requires restoration in the register of companies, he may within a
period of three years from the date of passing of the order dissolving the company under section 248, file
an application before the Tribunal seeking restoration of name of such company
...

(3) If a company, or any member or creditor or workman thereof feels aggrieved by the company
having its name struck off from the register of companies, the Tribunal on an application made by the
company, member, creditor or workman before the expiry of twenty years from the publication in the
Official Gazette of the notice under sub-section (5) of section 248 may, if satisfied that the company was,
at the time of its name being struck off, carrying on business or in operation or otherwise it is just that the
name of the company be restored to the register of companies, order the name of the company to be
restored to the register of companies, and the Tribunal may, by the order, give such other directions and
make such provisions as deemed 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 from the register of companies
...
Determination of sickness
...
or more of its outstanding amount of debt, the company has failed to pay the
debt within a period of thirty days of the service of the notice of demand or to secure or compound it to
the reasonable satisfaction of the creditors, any secured creditor may file an application to the Tribunal in

157

the prescribed manner along with the relevant evidence for such default, non-repayment or failure to offer
security or compound it, for a determination that the company be declared as a sick company
...

(3) The Tribunal may pass an order in respect of an application under sub-section (2) which shall be
operative for a period of one hundred and twenty days
...

(5) Without prejudice to the provisions of sub-sections (1) to (4), the Central Government or the
Reserve Bank of India or a State Government or a public financial institution or a State level institution or
a scheduled bank may, if it has sufficient reasons to believe that any company has become, for the
purposes of this Act, a sick company, make a reference in respect of such company to the Tribunal for
determination of the measures which may be adopted with respect to such company:
Provided that a reference shall not be made under this sub-section in respect of any company by—
(a) the Government of any State unless all or any of the undertakings belonging to such company
are situated in such State;
(b) a public financial institution or a State level institution or a scheduled bank unless it has, by
reason of any financial assistance or obligation rendered by it, or undertaken by it, with respect to
such company, an interest in such company
...

(7) The Tribunal shall, within a period of sixty days of the receipt of an application under sub-section
(1) or sub-section (4), determine whether the company is a sick company or not:
Provided that no such determination shall be made in respect of an application under sub-section (1)
unless the company has been given notice of the application and a reasonable opportunity to reply to the
notice within thirty days of the receipt thereof
...

(9) If the Tribunal deems fit under sub-section (8) that it is practicable for a sick company to pay its
debts referred to in that sub-section within a reasonable time, the Tribunal shall, by order in writing and
subject to such restrictions or conditions as may be specified in the order, give such time to the company
as it may deem fit to make repayment of the debt
...
Application for revival and rehabilitation
...

(2) An application under sub-section (1) shall be accompanied by—
(a) audited financial statements of the company relating to the immediately preceding financial
year;
(b) such particulars and documents, duly authenticated in such manner, along with such fees as
may be prescribed; and
(c) a draft scheme of revival and rehabilitation of the company in such manner as may be
prescribed:
Provided that where the sick company has no draft scheme of revival and rehabilitation to offer, it
shall file a declaration to that effect along with the application
...

255
...
— Notwithstanding anything
contained in the Limitation Act, 1963 (36 of 1963) or in any other law for the time being in force, in
computing the period of limitation specified for any suit or application in the name and on behalf of a
company for which an application has been made to the Tribunal under sub-section (1) of section 253, for
a determination to be declared as a sick company or at any stage thereafter, the period during which the
stay order as provided under sub-section (3) of section 253, was applicable shall be excluded
...
Appointment of interim administrator
...

(2) Where an interim administrator has been directed to take over the management of the company,
the directors and the management of the company shall extend all possible assistance and cooperation to
the interim administrator to manage the affairs of the company
...
Committee of creditors
...

(2) The holding of the meeting of the committee of creditors and the procedure to be followed at such
meetings, including the appointment of its chairperson, shall be decided by the interim administrator
...

258
...
— On the date of hearing fixed by the Tribunal and on consideration of the
report of the interim administrator filed under sub-section (1) of section 256, if the Tribunal is satisfied
that the creditors representing three-fourths in value of the amount outstanding against the sick company
present and voting have resolved that—
(a) it is not possible to revive and rehabilitate such company, the Tribunal shall record such
opinion and order that the proceedings for the winding up of the company be initiated; or
(b) by adopting certain measures the sick company may be revived and rehabilitated, the Tribunal
shall appoint a company administrator for the company and cause such administrator to prepare a
scheme of revival and rehabilitation of the sick company:
Provided that the Tribunal may, if it thinks fit, appoint an interim administrator as the company
administrator
...
Appointment of administrator
...

(2) The terms and conditions of the appointment of interim and company administrators shall be such
as may be ordered by the Tribunal
...

260
...
— (1) The company administrator shall perform
such functions as the Tribunal may direct
...


160

261
...
— (1) The company administrator shall prepare or cause
to be prepared a scheme of revival and rehabilitation of the sick company after considering the draft
scheme filed along with the application under section 254
...

262
...
— (1) The scheme prepared by the company administrator under section
261 shall be placed before the creditors of the sick company in a meeting convened for their approval by
the company administrator within the period of sixty days from his appointment, which may be extended
by the Tribunal up to a period not exceeding one hundred twenty days
...

(3) (i) The scheme prepared by the company administrator shall be examined by the Tribunal and a
copy of the scheme with modification, if any, made by the Tribunal shall be sent, in draft, to the sick
company and the company administrator and in the case of amalgamation, also to any other company
concerned, and the Tribunal may publish or cause to be published the draft scheme in brief in such daily
newspapers as the Tribunal may consider necessary, for suggestions and objections, if any, within such
period as the Tribunal may specify
...

(iii) The Tribunal may make such modifications, if any, in the draft scheme as it may consider
necessary in the light of the suggestions and objections received from the sick company and the company

161

administrator and also from the transferee company and any other company concerned in the
amalgamation and from any shareholder or any creditors or employees of such companies
...

(5) Where a sanctioned scheme provides for the transfer of any property or liability of the sick
company to any other company or person or where such scheme provides for the transfer of any property
or liability of any other company or person in favour of the sick company, then, by virtue of, and to the
extent provided in, the scheme, on and from the date of coming into operation of the sanctioned scheme
or any provision thereof, the property shall be transferred to, and vest in, and the liability shall become the
liability of, such other company or person or, as the case may be, the sick company
...

(7) The sanction accorded by the Tribunal under sub-section (4) shall be conclusive evidence that all
the requirements of the scheme relating to the reconstruction or amalgamation or any other measure
specified therein have been complied with and a copy of the sanctioned scheme certified in writing by an
officer of the Tribunal to be a true copy thereof shall in all legal proceedings be admitted as evidence
...

263
...
— On and from the date of the coming into operation of the sanctioned
scheme or any provision thereof, the scheme or such provision shall be binding on the sick company and
the transferee company or, as the case may be, the other company and also on the employees,
shareholders, creditors and guarantors of the said companies
...
Implementation of scheme
...

(2) The Tribunal may, if it deems necessary or expedient so to do, by order in writing, authorise the
company administrator appointed under section 259 to implement a sanctioned scheme till its successful
implementation on such terms and conditions as may be specified in the order and may for that purpose
require him to file periodic reports on the implementation of the sanctioned scheme
...

(4) Where it is difficult to implement the scheme for any reason or the scheme fails due to nonimplementation of obligations under the scheme by the parties concerned, the company administrator
authorised to implement the scheme and where there is no such administrator, the company, the secured
creditors, or the transferee company in a case of amalgamation, may make an application before the
Tribunal for modification of the scheme or to declare the scheme as failed and that the company may be
wound up
...

(6) Where an application under sub-section (4) has been made before the Tribunal and such
application is pending before it, such application shall abate, if the secured creditors representing not less
than three-fourths in value of the amount outstanding against financial assistance disbursed to the sick
162

company have taken any measures to recover their secured debt under sub-section (4) of section 13 of the
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54
of 2002)
...
Winding up of company on report of company administrator
...

(2) On the passing of an order under sub-section (1), the Tribunal shall conduct the proceedings for
winding up of the sick company in accordance with the provisions of Chapter XX
...
Power of Tribunal to assess damages against delinquent directors, etc
...

(2) If the Tribunal is satisfied on the basis of the information and evidence in its possession with
respect to any person who is or was a director or an officer or other employee of the sick company, that
such person by himself or along with others had diverted the funds or other property of such company for
any purpose other than the purposes of the company or had managed the affairs of the company in a
manner highly detrimental to the interests of the company, the Tribunal shall, by order, direct the public
financial institutions, scheduled banks and State level institutions not to provide, for a maximum period of
ten years from the date of the order, any financial assistance to such person or any firm of which such
person is a partner or any company or other body corporate of which such person is a director, by
whatever name called, or to disqualify the said director, promoter, manager from being appointed as a
director in any company registered under this Act for a maximum period of six years
...

267
...
— Whoever violates the provisions of this Chapter or any
scheme, or any order, of the Tribunal or the Appellate Tribunal or makes a false statement or gives false
evidence before the Tribunal or the Appellate Tribunal or attempts to tamper with the records of reference
or appeal filed under this Act, he shall be punishable with imprisonment for a term which may extend to
seven years and with fine which may extend to ten lakh rupees
...
Bar of jurisdiction
...


163

269
...
— (1) There shall be formed a Fund to be called the
Rehabilitation and Insolvency Fund for the purposes of rehabilitation, revival and liquidation of the sick
companies
...

(3) A company which has contributed any amount to the Fund shall, in the event of proceedings
initiated in respect of such company under this Chapter or Chapter XX, may make an application to the
Tribunal for withdrawal of funds not exceeding the amount contributed by it, for making payments to
workmen, protecting the assets of the company or meeting the incidental costs during proceedings
...

CHAPTER XX
WINDING UP
270
...
— (1) The winding up of a company may be either—
(a) by the Tribunal; or
(b) voluntary
...

PART I
...
Circumstances in which company may be wound up by Tribunal
...


164

(2) A company shall be deemed to be unable to pay its debts,—
(a) if a creditor, by assignment or otherwise, to whom the company is indebted for an amount
exceeding one lakh rupees then due, has served on the company, by causing it to be delivered at its
registered office, by registered post or otherwise, a demand requiring the company to pay the amount
so due and the company has failed to pay the sum within twenty-one days after the receipt of such
demand or to provide adequate security or re-structure or compound the debt to the reasonable
satisfaction of the creditor;
(b) if any execution or other process issued on a decree or order of any court or tribunal 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 Tribunal that the company is unable to pay its debts,
and, in determining whether a company is unable to pay its debts, the Tribunal shall take into account
the contingent and prospective liabilities of the company
...
Petition for winding up
...

(2) A secured creditor, the holder of any debentures, 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)
...

(4) The Registrar shall be entitled to present a petition for winding up under subsection (1) on any of
the grounds specified in sub-section (1) of section 271, except on the grounds specified in clause (b),
clause (d) or clause (g) of that sub-section:
Provided that the Registrar shall not present a petition on the ground that the company is unable to
pay its debts unless it appears to him either from the financial condition of the company as disclosed in its
balance sheet or from the report of an inspector appointed under section 210 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 a petition:
Provided also that the Central Government shall not accord its sanction unless the company has been
given a reasonable opportunity of making representations
...


165

(6) Before a petition for winding up of a company presented by a contingent or prospective creditor is
admitted, the leave of the Tribunal shall be obtained for the admission of the petition and such leave shall
not be granted, unless in the opinion of the Tribunal there is a prima facie case for the winding up of the
company and until such security for costs has been given as the Tribunal thinks reasonable
...

273
...
— (1) The Tribunal may, on receipt of a petition for winding up under
section 272 pass any of the following orders, namely:—
(a) dismiss it, with or without costs;
(b) make any interim order as it thinks fit;
(c) appoint a provisional liquidator of the company till the making of a winding up order;
(d) make an order for the winding up of the company with or without costs; or
(e) any other order as it thinks fit:
Provided that an order under this sub-section shall be made within ninety days from the date of
presentation of the petition:
Provided further that before appointing a provisional liquidator under clause (c), the Tribunal shall
give notice to the company and afford a reasonable opportunity to it to make its representations, if any,
unless for special reasons to be recorded in writing, the Tribunal thinks fit to dispense with such notice:
Provided also that the Tribunal shall not refuse to make a winding up order on the ground only that
the assets of the company have been mortgaged for an amount equal to or in excess of those assets, or that
the company has no assets
...

274
...
— (1) Where a petition for winding up is filed before
the Tribunal by any person other than the company, the Tribunal shall, if satisfied that a prima facie case
for winding up of the company is made out, by an order direct the company to file its objections along
with a statement of its affairs within thirty days of the order in such form and in such manner as may be
prescribed:
Provided that the Tribunal may allow a further period of thirty days in a situation of contingency or
special circumstances:
Provided further that the Tribunal may direct the petitioner to deposit such security for costs as it may
consider reasonable as a precondition to issue directions to the company
...

(3) The directors and other officers of the company, in respect of which an order for winding up is
passed by the Tribunal under clause (d) of sub-section (1) of section 273, shall, within a period of thirty
days of such order, submit, at the cost of the company, the books of account of the company completed
and audited up to the date of the order, to such liquidator and in the manner specified by the Tribunal
...


166

(5) The complaint may be filed in this behalf before the Special Court by Registrar, provisional
liquidator, Company Liquidator or any person authorised by the Tribunal
...
Company Liquidators and their appointments
...

(2) The provisional liquidator or the Company Liquidator, as the case may be, shall be appointed
from a panel maintained by the Central Government consisting of the names of chartered accountants,
advocates, company secretaries, cost accountants or firms or bodies corporate having such chartered
accountants, advocates, company secretaries, cost accountants and such other professionals as may be
notified by the Central Government or from a firm or a body corporate of persons having a combination
of such professionals as may be prescribed and having at least ten years‘ experience in company matters
...

(4) The Central Government may remove the name of any person or firm or body corporate from the
panel maintained under sub-section (2) on the grounds of misconduct, fraud, misfeasance, breach of
duties or professional incompetence:
Provided that the Central Government before removing him or it from the panel shall give him or it a
reasonable opportunity of being heard
...

(6) On appointment as provisional liquidator or Company Liquidator, as the case may be, such
liquidator shall file a declaration within seven days from the date of appointment in the prescribed form
disclosing conflict of interest or lack of independence in respect of his appointment, if any, with the
Tribunal and such obligation shall continue throughout the term of his appointment
...

276
...
— (1) The Tribunal may, on a reasonable cause being
shown and for reasons to be recorded in writing, remove the provisional liquidator or the Company
Liquidator, as the case may be, as liquidator of the company on any of the following grounds, namely:—
(a) misconduct;
(b) fraud or misfeasance;
(c) professional incompetence or failure to exercise due care and diligence in performance of the
powers and functions;
(d) inability to act as provisional liquidator or as the case may be, Company Liquidator;
(e) conflict of interest or lack of independence during the term of his appointment that would
justify removal
...

(3) Where the Tribunal is of the opinion that any liquidator is responsible for causing any loss or
damage to the company due to fraud or misfeasance or failure to exercise due care and diligence in the
performance of his or its powers and functions, the Tribunal may recover or cause to be recovered such
loss or damage from the liquidator and pass such other orders as it may think fit
...

277
...
— (1) Where the
Tribunal makes an order for appointment of provisional liquidator or for the winding up of a company, it
shall, within a period not exceeding seven days from the date of passing of the order, cause intimation
thereof to be sent to the Company Liquidator or provisional liquidator, as the case may be, and the
Registrar
...

(3) The winding up order shall be deemed to be a notice of discharge to the officers, employees and
workmen of the company, except when the business of the company is continued
...

(5) The Company Liquidator shall be the convener of the meetings of the winding up committee
which shall assist and monitor the liquidation proceedings in following areas of liquidation functions,
namely:—
(i) taking over assets;
(ii) examination of the statement of affairs;
(iii) recovery of property, cash or any other assets of the company including benefits derived
therefrom;
(iv) review of audit reports and accounts of the company;
(v) sale of assets;
(vi) finalisation of list of creditors and contributories;
(vii) compromise, abandonment and settlement of claims;
(viii) payment of dividends, if any; and
(ix) any other function, as the Tribunal may direct from time to time
...

(7) The Company Liquidator shall prepare the draft final report for consideration and approval of the
winding up committee
...

278
...
— The order for the winding up of a company shall operate in
favour of all the creditors and all contributories of the company as if it had been made out on the joint
petition of creditors and contributories
...
Stay of suits, etc
...
— (1) When a winding up order has been passed or a
provisional liquidator has been appointed, no suit or other legal proceeding shall be commenced, or if
pending at the date of the winding up order, shall be proceeded with, by or against the company, except
with the leave of the Tribunal and subject to such terms as the Tribunal may impose:
Provided that any application to the Tribunal seeking leave under this section shall be disposed of by
the Tribunal within sixty days
...

280
...
— The Tribunal shall, notwithstanding anything contained in any
other law for the time being in force, have jurisdiction to entertain, or dispose of,—
(a) any suit or proceeding by or against the company;
(b) any claim made by or against the company, including claims by or against any of its branches
in India;
(c) any application made under section 233;
(d) any scheme submitted under section 262;
(e) any question of priorities or any other question whatsoever, whether of law or facts, including
those relating to assets, business, actions, rights, entitlements, privileges, benefits, duties,
responsibilities, obligations or in any matter arising out of, or in relation to winding up of the
company,
whether such suit or proceeding has been instituted, or is instituted, or such claim or question has arisen
or arises or such application has been made or is made or such scheme has been submitted, or is
submitted, before or after the order for the winding up of the company is made
...
Submission of report by Company Liquidator
...

(2) The Company Liquidator shall include in his report 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 formation
thereof and any other matters which, in his opinion, it is desirable to bring to the notice of the Tribunal
...

(4) The Company Liquidator may also, if he thinks fit, make any further report or reports
...

282
...
— (1) The Tribunal shall, on
consideration of the report of the Company Liquidator, fix a time limit within which the entire
proceedings shall be completed and the company be dissolved:
Provided that the Tribunal may, if it is of the opinion, at any stage of the proceedings, or on
examination of the reports submitted to it by the Company Liquidator and after hearing the Company
Liquidator, creditors or contributories or any other interested person, that it will not be advantageous or
economical to continue the proceedings, revise the time limit within which the entire proceedings shall be
completed and the company be dissolved
...

(3) Where a report is received from the Company Liquidator or the Central Government or any
person that a fraud has been committed in respect of the company, the Tribunal shall, without prejudice to
the process of winding up, order for investigation under section 210, and on consideration of the report of
such investigation it may pass order and give directions under sections 339 to 342 or direct the Company
Liquidator to file a criminal complaint against persons who were involved in the commission of fraud
...

(5) The Tribunal may pass such other order or give such other directions as it considers fit
...
Custody of company‘s properties
...

(2) Notwithstanding anything contained in sub-section (1), all the property and effects of the company
shall be deemed to be in the custody of the Tribunal from the date of the order for the winding up of the
company
...

170

284
...
, to cooperate with Company Liquidator
...

(2) Where any person, without reasonable cause, fails to discharge his obligations under sub-section
(1), he shall be punishable with imprisonment which may extend to six months or with fine which may
extend to fifty thousand rupees, or with both
...
Settlement of list of contributories and application of assets
...

(2) In settling the list of contributories, the Tribunal shall distinguish between those who are
contributories in their own right and those who are contributories as being representatives of, or liable for
the debts of, others
...

286
...
— In the case of a limited company, any person who is
or has been a director or manager, whose liability is unlimited under the provisions of this Act, 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 winding up, a member of an unlimited company:
Provided that —
(a) a person who has been a director 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 person who has been a director 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;
171

(c) subject to the articles of the company, a director or manager shall not be liable to make such
further contribution unless the Tribunal 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
...
Advisory committee
...

(2) The advisory committee appointed by the Tribunal shall consist of not more than twelve members,
being creditors and contributories of the company or such other persons in such proportion as the Tribunal
may, keeping in view the circumstances of the company under liquidation, direct
...

(4) The advisory committee shall have the right to inspect the books of account and other documents,
assets and properties of the company under liquidation at a reasonable time
...

(6) The meeting of advisory committee shall be chaired by the Company Liquidator
...
Submission of periodical reports to Tribunal
...

(2) The Tribunal may, on an application by the Company Liquidator, review the orders made by it
and make such modifications as it thinks fit
...
Power of Tribunal on application for stay of winding up
...

(2) The Tribunal may, while passing the order under sub-section (1), require the applicant to furnish
such security as to costs as it considers fit
...

(4) Without prejudice to the provisions of sub-section (1), the Tribunal may at any time after making
a winding up order, on an application of the Company Liquidator, make an order staying the winding up
proceedings or any part thereof, for such time and on such terms and conditions as it thinks fit
...

(6) A copy of every order made under this section shall forthwith be forwarded by the Company
Liquidator to the Registrar who shall make an endorsement of the order in his books and records relating
to the company
...
Powers and duties of Company Liquidator
...

(2) The exercise of powers by the Company Liquidator under sub-section (1) shall be subject to the
overall control of the Tribunal
...

291
...
— (1) The Company
Liquidator may, with the sanction of the Tribunal, appoint one or more chartered accountants or company
secretaries or cost accountants or legal practitioners or such other professionals on such terms and

173

conditions, as may be necessary, to assist him in the performance of his duties and functions under this
Act
...

292
...
— (1) Subject to the provisions of this
Act, the Company 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 the resolution of the
creditors or contributories at any general meeting or by the advisory committee
...

(3) The Company Liquidator—
(a) may summon meetings of the creditors or contributories, whenever he thinks fit, for the
purpose of ascertaining their wishes; and
(b) shall summon such meetings at such times, as the creditors or contributories, as the case may
be, may, by resolution, direct, or whenever requested in writing to do so by not less than one-tenth in
value of the creditors or contributories, as the case may be
...

293
...
— (1) The Company Liquidator shall keep proper
books in such manner, as may be prescribed, in which he shall cause entries or minutes to be made of
proceedings at meetings and of such other matters as may be prescribed
...

294
...
— (1) The Company Liquidator shall maintain
proper and regular books of account including accounts of receipts and payments made by him in such
form and manner as may be prescribed
...

(3) The Tribunal shall cause the accounts to be audited in such manner as it thinks fit, and for the
purpose of the audit, the Company Liquidator shall furnish to the Tribunal with such vouchers and
information as the Tribunal may require, and the Tribunal may, at any time, require the production of, and
inspect, any books of account kept by the Company Liquidator
...

(5) Where an account referred to in sub-section (4) relates to a Government company, the Company
Liquidator shall forward a copy thereof—
(a) to the Central Government, if that Government is a member of the Government company; or
(b) to any State Government, if that Government is a member of the Government company; or
(c) to the Central Government and any State Government, if both the Governments are members
of the Government company
...

295
...
— (1) The Tribunal may, at any time
after passing of a winding up order, pass an order requiring 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
...

(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
...
Power of Tribunal to make calls
...

297
...
— The Tribunal shall adjust the rights of the
contributories among themselves and distribute any surplus among the persons entitled thereto
...
Power to order costs
...

299
...
— (1) The
Tribunal may, at any time after the appointment of a provisional liquidator or the passing of a winding up
order, summon before it any officer of the company or person known or suspected to have in his
possession any property or books or papers, of the company, or known or suspected to be indebted to the
company, or any person whom the Tribunal thinks to be capable of giving information concerning the
promotion, formation, trade, dealings, property, books or papers, or affairs of the company
...

(3) The Tribunal may require any officer or person so summoned to produce any books and papers
relating to the company in his custody or power, but, where he claims any lien on books or papers
produced by him, the production shall be without prejudice to such lien, and the Tribunal shall have
power to determine all questions relating to that lien
...

(5) If the Tribunal finds that—
(a) a person is indebted to the company, the Tribunal may order him to pay to the provisional
liquidator or, as the case may be, the liquidator at such time and in such manner as the Tribunal may
consider just, the amount in which he is indebted, or any part thereof, either in full discharge of the
whole amount or not, as the Tribunal thinks fit, with or without costs of the examination;
(b) a person is in possession of any property belonging to the company, the Tribunal may order
him to deliver to the provisional liquidator or, as the case may be, the liquidator, that property or any
part thereof, at such time, in such manner and on such terms as the Tribunal may consider just
...

(7) Every order made under sub-section (5) shall be executed in the same manner as decrees for the
payment of money or for the delivery of property under the Code of Civil Procedure, 1908 (5 of 1908)
...

300
...
— (1) Where an order has been
made for the winding up of a company by the Tribunal, and the Company Liquidator has made a report to
the Tribunal under this Act, stating that in his opinion a fraud has been committed by any person in the
promotion, formation, business or conduct of affairs of the company since its formation, the Tribunal
may, after considering the report, direct that such person or officer shall attend before the Tribunal on a
day appointed by it for that purpose, and be examined as to the promotion or formation or the conduct of
the business of the company or as to his conduct and dealings as an officer thereof
...

(3) The person shall be examined on oath and shall answer all such questions as the Tribunal may put,
or allow to be put, to him
...

(5) If any such person applies to the Tribunal to be exculpated from any charges made or
suggested against him, it shall be the duty of the Company Liquidator to appear on the hearing of
such application and call the attention of the Tribunal to any matters which appear to the Company
Liquidator to be relevant
...

(7) Notes of the examination shall be taken down in writing, and shall be read over to or by, and
signed by, the person examined, a copy be supplied to him and may thereafter be used in evidence
against him, and shall be open to inspection by any creditor or contributory at all reasonable times
...

176

(9) An examination under this section may, if the Tribunal so directs, be held before any person
or authority authorised by the Tribunal
...

301
...
— At any time either before or after
passing a winding up order, if the Tribunal is satisfied that a contributory or a person having property,
accounts or papers of the company in his possession is about to leave India or otherwise to abscond,
or is about to remove or conceal any of his property, for the purpose of evading payment of calls or of
avoiding examination respecting the affairs of the company, the Tribunal may cause—
(a) the contributory to be detained until such time as the Tribunal may order; and
(b) his books and papers and movable property to be seized and safely kept until such time as
the Tribunal may order
...
Dissolution of company by Tribunal
...

(2) The Tribunal shall on an application filed by the Company Liquidator under sub-section (1) or
when the Tribunal is of the opinion that it is just and reasonable in the circumstances of the case that an
order for the dissolution of the company should be made, make an order that the company be dissolved
from the date of the order, and the company shall be dissolved accordingly
...

(4) If the Company Liquidator makes a default in forwarding a copy of the order within the period
specified in sub-section (3), the Company Liquidator shall be punishable with fine which may extend to
five thousand rupees for every day during which the default continues
...
Appeals from orders made before commencement of Act
...

PART II
...
Circumstances in which company may be wound up voluntarily
...

305
...
— (1) Where it is
proposed to wind up a company voluntarily, its director or directors, or in case the company has more
than two directors, the majority of its directors, shall, 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
they have formed an opinion that the company has no debt or whether it will be able to pay its debts in
full from the proceeds of assets sold in voluntary winding up
...

(3) Where the company is wound up in pursuance of a resolution passed within a period of five weeks
after the making of the declaration, but its debts are not paid or provided for in full, it shall be presumed,
until the contrary is shown, that the director or directors did not have reasonable grounds for his or their
opinion under sub-section (1)
...

306
...
— (1) The company shall along with the calling of meeting of the
company at which the resolution for the voluntary winding up is to be proposed, cause a meeting of its
creditors either on the same day or on the next day and shall cause a notice of such meeting to be sent by
registered post to the creditors with the notice of the meeting of the company under section 304
...

(3) Where two-thirds in value of creditors of the company are of the opinion that—
(a) it is in the interest of all parties that the company be wound up voluntarily, the company shall
be wound up voluntarily; or
(b) the company may not be able to pay for its debts in full from the proceeds of assets sold in
voluntary winding up and pass a resolution that it shall be in the interest of all parties if the company
is wound up by the Tribunal in accordance with the provisions of Part I of this Chapter, the company
shall within fourteen days thereafter file an application before the Tribunal
...

(5) If a company contravenes the provisions of this section, the company shall be punishable with fine
which shall not be less than fifty thousand rupees but which may extend to two lakh rupees and the
director of the company who is in default shall be punishable with imprisonment for a term which may
extend to six months or with fine which shall not be less than fifty thousand rupees but which may extend
to two lakh rupees, or with both
...
Publication of resolution to wind up voluntarily
...

(2) If a company contravenes the provisions of sub-section (1), the company and every officer of the
company who is in default shall be punishable with fine which may extend to five thousand rupees for
every day during which such default continues
...
Commencement of voluntary winding up
...

309
...
— 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 as far as required for the
beneficial winding up of its business:
Provided that the corporate state and corporate powers of the company shall continue until it is
dissolved
...
Appointment of Company Liquidator
...

(2) Where the creditors have passed a resolution for winding up the company under sub-section (3) of
section 306, the appointment of the Company Liquidator under this section shall be effective only after it
is approved by the majority of creditors in value of the company:
Provided that where such creditors do not approve the appointment of such Company Liquidator,
creditors shall appoint another Company Liquidator
...

(4) On appointment as Company Liquidator, such liquidator shall file a declaration in the prescribed
form within seven days of the date of appointment disclosing conflict of interest or lack of independence
in respect of his appointment, if any, with the company and the creditors and such obligation shall
continue throughout the term of his or its appointment
...
Power to remove and fill vacancy of Company Liquidator
...

(2) Where a Company Liquidator is sought to be removed under this section, he shall be given a
notice in writing stating the grounds of removal from his office by the company or the creditors, as the
case may be
...

(4) If a vacancy occurs by death, resignation, removal or otherwise in the office of any Company
Liquidator appointed under section 310, the company or the creditors, as the case may be, fill the vacancy
in the manner specified in that section
...
Notice of appointment of Company Liquidator to be given to Registrar
...

179

(2) If a company contravenes the provisions of sub-section (1), the company and every officer of the
company who is in default shall be punishable with fine which may extend to five hundred rupees for
every day during which such default continues
...
Cesser of Board‘s powers on appointment of Company Liquidator
...

314
...
— (1) The Company
Liquidator shall perform such functions and discharge such duties as may be determined from time to
time by the company or the creditors, as the case may be
...

(3) The Company Liquidator shall 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 consider necessary
...

(5) The Company Liquidator shall prepare quarterly statement of accounts in such form and manner
as may be prescribed and file such statement of accounts duly audited within thirty days from the close of
each quarter with the Registrar, failing which the Company Liquidator shall be punishable with fine
which may extend to five thousand rupees for every day during which the failure continues
...

(7) The Company Liquidator shall observe due care and diligence in the discharge of his duties
...

315
...
— Where there are no creditors of a company, such company in its
general meeting and, where a meeting of creditors is held under section 306, such creditors, as the case
may be, may appoint such committees as considered appropriate to supervise the voluntary liquidation
and assist the Company Liquidator in discharging his or its functions
...
Company Liquidator to submit report on progress of winding up
...

(2) If the Company Liquidator fails to comply with the provisions of sub-section (1), he shall be
punishable, in respect of each such failure, with fine which may extend to ten lakh rupees
...
Report of Company Liquidator to Tribunal for examination of persons
...


180

(2) The provisions of section 300 shall mutatis mutandis apply in relation to any examination directed
under sub-section (1)
...
Final meeting and dissolution of company
...

(2) The meeting referred to in sub-section (1) shall be called by the Company Liquidator in such form
and manner as may be prescribed
...

(4) Within two weeks after the meeting, the Company Liquidator shall—
(a) send to the Registrar—
(i) a copy of the final winding up accounts of the company and shall make a return in respect
of each meeting and of the date thereof; and
(ii) copies of the resolutions passed in the meetings; and
(b) file an application along with his report under sub-section (1) in such manner as may be
prescribed along with the books and papers of the company relating to the winding up, before the
Tribunal for passing an order of dissolution of the company
...

(6) The Company Liquidator shall file a copy of the order under sub-section (5) with the Registrar
within thirty days
...

(8) If the Company Liquidator fails to comply with the provisions of this section, he shall be
punishable with fine which may extend to one lakh rupees
...
Power of Company Liquidator to accept shares, etc
...
— (1) Where a company (the transferor company) is proposed to be, or is in the course of
being, wound up voluntarily and the whole or any part of its business or property is proposed to be
transferred or sold to another company (the transferee company), the Company Liquidator of the
transferor company may, with the sanction of a special resolution of the company conferring on him
either a general authority or an authority in respect of any particular arrangement,—
(a) receive, by way of compensation wholly or in part for the transfer or sale of shares, policies,
or other like interest in the transferee company, for distribution among the members of the transferor
company; or
(b) enter into any other arrangement whereby the members of the transferor company may, in lieu
of receiving cash, shares, policies or other like interest or in addition thereto, participate in the profits
of, or receive any other benefit from, the transferee company:
Provided that no such arrangement shall be entered into without the consent of the secured creditors
...

(3) Any member of the transferor company who did not vote in favour of the special resolution and
expresses his dissent therefrom in writing addressed to the Company Liquidator, and left at the registered
181

office of the company within seven days after the passing of the resolution, may require the liquidator
either—
(a) to abstain from carrying the resolution into effect; or
(b) to purchase his interest at a price to be determined by agreement or the registered valuer
...

320
...
— Subject to the provisions of this Act as to overriding
preferential payments under section 326, the assets of a company shall, on its winding up, be applied in
satisfaction of its liabilities pari passu and, subject to such application, shall, unless the articles otherwise
provide, be distributed among the members according to their rights and interests in the company
...
Arrangement when binding on company and creditors
...

(2) Any creditor or contributory may, within three weeks from the completion of the arrangement,
apply to the Tribunal and the Tribunal may thereupon amend, vary, confirm or set aside the arrangement
...
Power to apply to Tribunal to have questions determined, etc
...

(2) The Company Liquidator or any creditor or contributory may apply to the Tribunal 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
...

(4) A copy of an order staying the proceedings in the winding up, 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
...
Costs of voluntary winding up
...

PART III
...
Debts of all descriptions to be admitted to proof
...


182

325
...
— (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:
Provided that the security of every secured creditor shall be deemed to be subject to a pari passu
charge in favour of the workmen to the extent of the workmen‘s portion therein, and, where a secured
creditor, instead of relinquishing his security and proving his debts, opts to realise his security,—
(i) the liquidator shall be entitled to represent the workmen and enforce such charge;
(ii) any amount realised by the liquidator by way of enforcement of such charge shall be applied
rateably for the discharge of workmen‘s dues; and
(iii) so much of the debts due to such secured creditor as could not be realised by him or the
amount of the workmen‘s portion in his security, whichever is less, shallrank pari passu with the
workmen‘s dues for the purposes of section 326
...

Explanation
...

(3) For the purposes of this section, section 326 and section 327,—
(a) ―workmen‘‘, in relation to a company, means the employees of the company, being workmen
within the meaning of clause (s) of section 2 of the Industrial Disputes Act, 1947 (14 of 1947);
(b) ―workmen‘s dues‘‘, in relation to a company, means the aggregate of the following sums due
from the company to its workmen, namely:—
(i) all wages or salary including wages payable for time or piece work and salary earned
wholly or in part by way of commission of any workman in respect of services rendered to the
company and any compensation payable to any workman under any of the provisions of the
Industrial Disputes Act, 1947 (14 of 1947);
(ii) all accrued holiday remuneration becoming payable to any workman or, in the case of his
death, to any other person in his right on the termination of his employment before or by the
effect of the winding up order or resolution;
(iii) unless the company is being wound up voluntarily merely for the purposes of
reconstruction or amalgamation with another company or unless the company has, at the
commencement of the winding up, under such a contract with insurers as is mentioned in section
14 of the Workmen‘s Compensation Act, 1923 (8 of 1923), rights capable of being transferred to
and vested in the workmen, all amount due in respect of any compensation or liability for
compensation under the said Act in respect of the death or disablement of any workman of the
company;

183

(iv) all sums due to any workman from the provident fund, the pension fund, the gratuity fund
or any other fund for the welfare of the workmen, maintained by the company;
(c) ―workmen‘s portion‘‘, in relation to the security of any secured creditor of a company, means
the amount which bears to the value of the security the same proportion as the amount of the
workmen‘s dues bears to the aggregate of the amount of workmen‘s dues and the amount of the debts
due to the secured creditors
...
1,00,000
...
1,00,000
...
3,00,000
...
4,00,000
...
25,000
...
Overriding preferential payments
...

(2) The debts payable under the proviso to sub-section (1) shall be paid in full before any payment is
made to secured creditors and thereafter debts payable under that sub-section shall be paid in full, unless
the assets are insufficient to meet them, in which case they shall abate in equal proportions
...
Preferential payments
...

(2) Where any payment has been made to any employee of a company on account of wages or salary
or accrued holiday remuneration, himself or, in the case of his death, to any other person claiming through
him, out of money advanced by some person for that purpose, the person by whom the money was
advanced shall, in a winding up, have a right of priority in respect of the money so advanced and paid-up
to the amount by which the sum in respect of which the employee or other person in his right would have
been entitled to priority in the winding up has been reduced by reason of the payment having been made
...

(4) Subject to the retention of such sums as may be necessary for the costs and expenses of the
winding up, the debts under this section 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 under clause (d) of sub-section (1),
formal proof thereof shall not be required except in so far as may be otherwise prescribed
...

(6) Any remuneration in respect of a period of holiday or of absence from work on medical grounds
through sickness or other good cause shall be deemed to be wages in respect of services rendered to the
company during that period
...
—For the purposes of this section,—
(a) 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 thereunder, 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;
(b) the expression ―employee‖ does not include a workman; and
(c) the expression ―relevant date‖ means—
(i) in the case of a company being wound up by the Tribunal, the date of appointment or first
appointment of a provisional liquidator, or if no such appointment was made, the date of the
winding up order, unless, in either case, the company had commenced to be wound up voluntarily
before that date; and

185

(ii) in any other case, the date of the passing of the resolution for the voluntary winding up of
the company
...
Fraudulent preference
...

(2) If the Tribunal is satisfied that there is a preference transfer of property, movable or immovable,
or any delivery of goods, payment, execution made, taken or done by or against a company within six
months before making winding up application, the Tribunal may order as it may think fit and may declare
such transaction invalid and restore the position
...
Transfers not in good faith to be void
...

330
...
— Any transfer or assignment by a company of all its properties or
assets to trustees for the benefit of all its creditors shall be void
...
Liabilities and rights of certain persons fraudulently preferred
...

(2) The value of the interest of the person preferred under sub-section (1) shall be determined as at the
date of the transaction constituting the fraudulent preference, as if the interest were free of all
encumbrances other than those to which the mortgage or charge for the debt of the company was then
subject
...

(4) The provisions of sub-section (3) shall apply mutatis mutandis in relation to transactions other
than payment of money
...
Effect of floating charge
...
per annum or such other rate as may be notified by the Central
Government in this behalf
...
Disclaimer of onerous property
...

(2) The disclaimer shall operate to determine, as from the date of disclaimer, the rights, interest and
liabilities 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, interest or liabilities of any other person
...

(4) The Company 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 Company Liquidator has not, within a period of
twenty-eight days after the receipt of the application or such extended period as may be allowed by the
Tribunal, give notice to the applicant that he intends to apply to the Tribunal for leave to disclaim, and in
case the property is under a contract, if the Company Liquidator after such an application as aforesaid
does not within the said period or extended period disclaim the contract, he shall be deemed to have
adopted it
...

(6) The Tribunal may, on an application by any person who either claims any interest in any
disclaimed property or is under any liability not discharged under this Act in respect of any disclaimed
property, and after hearing any such persons as it thinks fit, make an order for the vesting of the property
in, or the delivery of the property to, any person entitled thereto or to whom it may seem just that the
property should be delivered by way of compensation for such liability as aforesaid, or a trustee for him,
and on such terms as the Tribunal considers just and proper, and on any such vesting order being made,
the property comprised therein shall vest accordingly in the person named therein in that behalf without
any conveyance or assignment for the purpose:

187

Provided that where the property disclaimed is of a leasehold nature, the Tribunal 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 Tribunal 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 as if the lease had comprised only the property comprised in the vesting order, and any
mortgagee or under-lessee declining to accept a vesting order upon such terms shall be excluded from all
interest in, and security upon the property, and, if there is no person claiming under the company who is
willing to accept an order upon such terms, the Tribunal shall have power to vest the estate and interest of
the company in the property in any person liable, either personally or in a representative character, and
either alone or jointly with the company, to perform the covenants of the lessee in the lease, free and
discharged from all estates, encumbrances and interests created therein by the company
...

334
...
, after commencement of winding up to be void
...

(2) In the case of a winding up by the Tribunal, 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 winding up, shall, unless the Tribunal otherwise orders,
be void
...
Certain attachments, executions, etc
...
— (1) Where
any company is being wound up by the Tribunal,—
(a) any attachment, distress or execution put in force, without leave of the Tribunal against the
estate or effects of the company, after the commencement of the winding up; or
(b) any sale held, without leave of the Tribunal of any of the properties or effects of the company,
after such commencement,
shall be void
...

336
...
— (1) If any person, who is or has been an
officer of a company which, at the time of the commission of the alleged offence, is being wound up,
whether by the Tribunal or voluntarily, or which is subsequently ordered to be wound up by the Tribunal
or which subsequently passes a resolution for voluntary winding up,—
(a) does not, to the best of his knowledge and belief, fully and truly disclose to the Company
Liquidator all the property, movable and immovable, of the company, and how and to whom and for
what consideration and when the company disposed of any part thereof, except such part as has been
disposed of in the ordinary course of the business of the company;
(b) does not deliver up to the Company 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 Company 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;

188

(d) within the twelve months immediately before the commencement of the winding up or at any
time thereafter,—
(i) conceals any part of the property of the company to the value of one thousand rupees or
more, or conceals any debt due to or from the company;
(ii) fraudulently removes any part of the property of the company to the value of one
thousand rupees or more;
(iii) 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;
(iv) 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;
(v) fraudulently parts with, alters or makes any omission in, or is privy to the fraudulent
parting with, altering or making of any omission in, any book or paper affecting or relating to the
property or affairs of the company;
(vi) 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;
(vii) under the false pretence that the company is carrying on its business, obtains on credit,
for or on behalf of the company, any property which the company does not subsequently pay for;
or
(viii) pawns, pledges or disposes of any property of the company which has been obtained on
credit and has not been paid for, unless such pawning, pledging or disposing of the property is in
the ordinary course of business of the company;
(e) makes any material omission in any statement relating to the affairs of the company;
(f) 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 Company Liquidator thereof;
(g) after the commencement of the winding up, prevents the production of any book or paper
affecting or relating to the property or affairs of the company;
(h) after the commencement of the winding up or at any meeting of the creditors of the company
within the twelve months next before the commencement of the winding up, attempts to account for
any part of the property of the company by fictitious losses or expenses; or
(i) is guilty of any false representation or fraud for the purpose of obtaining the consent of the
creditors of the company or any of them, to an agreement with reference to the affairs of the company
or to the winding up,
he shall be punishable with imprisonment for a term which shall not be less than three years but which
may extend to five years and with fine which shall not be less than one lakh rupees but which may extend
to three lakh rupees:
Provided that it shall be a good defence if the accused proves that he had no intent to defraud or to
conceal the true state of affairs of the company or to defeat the law
...

Explanation
...

189

337
...
— If any person, being at the time of the commission of the
alleged offence an officer of a company which is subsequently ordered to be wound up by the Tribunal 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;
(b) with intent to defraud creditors of the company or any other person, has made or caused to be
made any gift or transfer of, or charge on, or has caused or connived at the levying of any execution
against, the property of the company; or
(c) with intent to defraud creditors of the company, has concealed or removed any part of the
property of the company since the date of any unsatisfied judgment or order for payment of money
obtained against the company or within two months before that date,
he shall be punishable with imprisonment for a term which shall not be less than one year but which may
extend to three years and with fine which shall not be less than one lakh rupees but which may extend to
three lakh rupees
...
Liability where proper accounts not kept
...

(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,—
(a) if such books of account 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, have not been kept; and
(b) where the business of the company has involved dealings in goods, statements of the annual
stock takings and, except in the case of goods sold by way of ordinary retail trade, of all goods sold
and purchased, showing the goods and the buyers and the sellers thereof in sufficient detail to enable
those goods and those buyers and sellers to be identified, have not been kept
...
Liability for fraudulent conduct of business
...

(2) Where the Tribunal makes any such declaration, it may give such further directions as it thinks
proper for the purpose of giving effect to that declaration and, in particular,—
(a) make provision for making the liability of any such person under the declaration a charge on
any debt or obligation due from the company to him, or on any mortgage or charge or any interest in
any mortgage or charge on any assets of the company held by or vested in him, or any person on his
behalf, or any person claiming as assignee from or through the person liable or any person acting on
his behalf;

190

(b) make such further order as may be necessary for the purpose of enforcing any charge imposed
under this sub-section
...

(4) This section shall apply, notwithstanding that the person concerned may be punishable under any
other law for the time being in force in respect of the matters on the ground of which the declaration is to
be made
...
—For the purposes of this section,—
(a) the expression ―assignee‖ includes any person to whom or in whose favour, by the directions
of the person liable, the debt, obligation, mortgage or charge was created, issued or transferred or the
interest was created, but does not include an assignee for valuable consideration, not including
consideration by way of marriage, given in good faith and without notice of any of the matters on the
ground of which the declaration is made;
(b) the expression ―officer‖ includes any person in accordance with whose directions or
instructions the directors of the company have been accustomed to act
...
Power of Tribunal to assess damages against delinquent directors, etc
...

(2) An application under sub-section (1) shall be made within five years from the date of the winding
up order, or of the first appointment of the Company Liquidator in the winding up, or of the
misapplication, retainer, misfeasance or breach of trust, as the case may be, whichever is longer
...

341
...
— Where a declaration under section 339 or an order under section 340 is made in respect of
a firm or body corporate, the Tribunal shall also have power to make a declaration under section 339, or
pass an order under section 340, 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
...
Prosecution of delinquent officers and members of company
...

(2) If it appears to the Company Liquidator in the course of a voluntary winding up that any
person,who is or has been an officer, or any member, of the company has been guilty of any offence in
relation to the company under this Act, he shall forthwith report the matter to the Registrar and shall
191

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 Company Liquidator and relating to the matter in question, as the Registrar may require
...

(4) If it appears to the Tribunal in the course of a voluntary winding up that any person, who is or has
been an officer, or any member, of the company has been guilty as aforesaid, and that no report with
respect to the matter has been made by the Company Liquidator to the Registrar under sub-section (2), the
Tribunal may, on the application of any person interested in the winding up or suo motu, direct the
Company Liquidator to make such a report, and on a report being made, the provisions of this section
shall have effect as though the report had been made in pursuance of the provisions of sub-section (2)
...

Explanation
...

(6) If a person fails or neglects to give assistance required by sub-section (5), he shall be liable to pay
fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees
...
Company Liquidator to exercise certain powers subject to sanction
...

(2) Notwithstanding anything contained in sub-section (1), in the case of a winding up by the
Tribunal, the Central Government may make rules to provide that the Company Liquidator may, under
such circumstances, if any, and subject to such conditions, restrictions and limitations, if any, as may be
prescribed, exercise any of the powers referred to in sub-clause (ii) or sub-clause (iii) of clause (b) of subsection (1) without the sanction of the Tribunal
...

344
...
— (1) Where a company is being wound up, whether
by the Tribunal or voluntarily, every invoice, order for goods or business letter issued by or on behalf of
the company or a Company Liquidator of the company, or a receiver or manager of the property of the
company, being a document on or in which the name of the company appears, shall contain a statement
that the company is being wound up
...

345
...
— Where a company is being wound up, all
books and papers of the company and of the Company Liquidator shall, as between the contributories of
the company, be prima facie evidence of the truth of all matters purporting to be recorded therein
...
Inspection of books and papers by creditors and contributories
...

(2) Nothing contained in sub-section (1) shall exclude or restrict any rights conferred by any law for
the time being in force—
(a) on the Central Government or a State Government;
(b) on any authority or officer thereof; or
(c) on any person acting under the authority of any such Government or of any such authority or
officer
...
Disposal of books and papers of company
...

(2) After the expiry of five years from the dissolution of the company, no responsibility shall devolve
on the company, the Company Liquidator, or any person to whom the custody of the books and papers
has been entrusted, by reason of any book or paper not being forthcoming to any person claiming to be
interested therein
...

(4) If any person acts in contravention of any rule framed or an order made under sub-section (3), he
shall be punishable with imprisonment for a term which may extend to six months or with fine which may
extend to fifty thousand rupees, or with both
...
Information as to pending liquidations
...

(2) When the statement is filed with the Tribunal under clause (a) of sub-section (1), a copy shall
simultaneously be filed with the Registrar and shall be kept by him along with the other records of the
company
...

(4) 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 referred to in sub-section (1), and to receive a copy thereof or an extract therefrom
...

(6) If a Company Liquidator contravenes the provisions of this section, the Company Liquidator shall
be punishable with fine which may extend to five thousand rupees for every day during which the failure
continues
...

349
...
—Every Official
Liquidator shall, in such manner and at such times as may be prescribed, pay the monies received by him
as Official Liquidator of any company, into the public account of India in the Reserve Bank of India
...
Company Liquidator to deposit monies into scheduled bank
...

(2) If any Company Liquidator at any time retains for more than ten days a sum exceeding five
thousand rupees or such other amount as the Tribunal may, on the application of the Company Liquidator,
authorise him to retain, then, unless he explains the retention to the satisfaction of the Tribunal, he shall—
(a) pay interest on the amount so retained in excess, at the rate of twelve per cent
...

351
...
— Neither the Official
Liquidator nor the Company Liquidator of a company shall deposit any monies received by him in his
capacity as such into any private banking account
...
Company Liquidation Dividend and Undistributed Assets Account
...

(2) The liquidator shall, on the dissolution of the company, pay into the Company Liquidation
Dividend and Undistributed Assets Account any money representing unpaid dividends or undistributed
assets in his hands at the date of dissolution
...

(4) The liquidator shall be entitled to a receipt from the scheduled bank for any money paid to it under
sub-sections (1) and (2), and such receipt shall be an effectual discharge of the Company Liquidator in
respect thereof
...

(6) Any person claiming to be entitled to any money paid into the Company Liquidation Dividend
and Undistributed Assets Account, whether paid in pursuance of this section or under the provisions of
any previous company law may apply to the Registrar for payment thereof, and the Registrar, if satisfied
that the person claiming is entitled, may make the payment to that person of the sum due:
Provided that the Registrar shall settle the claim of such person within a period of sixty days from the
date of receipt of such claim, failing which the Registrar shall make a report to the Regional Director
giving reasons of such failure
...

(8) Any liquidator retaining any money which should have been paid by him into the Company
Liquidation Dividend and Undistributed Assets Account under this section shall—
(a) pay interest on the amount so retained at the rate of twelve per cent
...

353
...
— (1) If any Company Liquidator who has made any default
in filing, delivering or making any return, account or other document, or in giving any notice which he is
by law required to file, deliver, make or give, fails to make good the default within fourteen days after the
service on him of a notice requiring him to do so, the Tribunal may, on an application made to it by any
contributory or creditor of the company or by the Registrar, make an order directing the Company
Liquidator to make good the default within such time as may be specified in the order
...

(3) Nothing in this section shall prejudice the operation of any enactment imposing penalties on a
Company Liquidator in respect of any such default as aforesaid
...
Meetings to ascertain wishes of creditors or contributories
...

(2) While ascertaining the wishes of creditors under sub-section (1), regard shall be had to the value
of each debt of the creditor
...

355
...
, before whom affidavit may be sworn
...

(2) All tribunals, judges, Justices, commissioners and persons acting judicially in India shall take
judicial notice of the seal, stamp or signature, as the case may be, of any such court, tribunal, judge,
person, diplomatic or consular officer, attached, appended or subscribed to any such affidavit or to any
other document to be used for the purposes of this Chapter
...
Powers of Tribunal to declare dissolution of company void
...

(2) It shall be the duty of the Company Liquidator or the person on whose application the order was
made, within thirty days after the making of the order or such further time as the Tribunal may allow, to
file a certified copy of the order with the Registrar who shall register the same, and if the Company
Liquidator or the person fails so to do, the Company Liquidator or the person shall be punishable with
fine which may extend to ten thousand rupees for every day during which the default continues
...
Commencement of winding up by Tribunal
...

(2) In any other case, the winding up of a company by the Tribunal shall be deemed to commence at
the time of the presentation of the petition for the winding up
...
Exclusion of certain time in computing period of limitation
...

PART IV
...
Appointment of Official Liquidator
...

(2) The liquidators appointed under sub-section (1) shall be whole-time officers of the Central
Government
...

360
...
— (1) The Official Liquidator shall exercise such
powers and perform such duties as the Central Government may prescribe
...

361
...
— (1) Where the company to be wound up under this
Chapter, —
(i) has assets of book value not exceeding one crore rupees; and
(ii) belongs to such class or classes of companies as may be prescribed,
the Central Government may order it to be wound up by summary procedure provided under this Part
...

(3) The Official Liquidator shall forthwith take into his custody or control all assets, effects and
actionable claims to which the company is or appears to be entitled
...

(5) On receipt of the report under sub-section (4), if the Central Government is satisfied that any fraud
has been committed by the promoters, directors or any other officer of the company, it may direct further
investigation into the affairs of the company and that a report shall be submitted within such time as may
be specified
...

362
...
— (1) The Official Liquidator shall
expeditiously dispose of all the assets whether movable or immovable within sixty days of his
appointment
...

(3) Where any debtor does not deposit the amount under sub-section (2), the Central Government
may, on an application made to it by the Official Liquidator, pass such orders as it thinks fit
...

363
...
— (1) The Official Liquidator within
thirty days of his appointment shall call upon the creditors of the company to prove their claims in such
manner as may be prescribed, within thirty days of the receipt of such call
...

364
...
— (1) Any creditor aggrieved by the decision of the Official Liquidator
under section 363 may file an appeal before the Central Government within thirty days of such decision
...

(3) The Official Liquidator shall make payment to the creditors whose claims have been accepted
...

365
...
— (1) The Official Liquidator shall, if he is satisfied that the
company is finally wound up, submit a final report to—
(i) the Central Government, in case no reference was made to the Tribunal under sub-section (4)
of section 364; and
(ii) in any other case, the Central Government and the Tribunal
...

(3) Where an order is made under sub-section (2), the Registrar shall strike off the name of the
company from the register of companies and publish a notification to this effect
...
— Companies Authorised to Register under this Act
366
...
— (1) For the purposes of this Part, the word
―company‖ includes any partnership firm, limited liability partnership, cooperative society, society or any
other business entity formed under any other law for the time being in force which applies for registration
under this Part
...

(3) In computing any majority required for the purposes of sub-section (1), when a poll is demanded,
regard shall be had to the number of votes to which each member is entitled according to the regulations
of the company
...
Certificate of registration of existing companies
...

368
...
— All property, movable and immovable (including
actionable claims), belonging to or vested in a company at the date of its registration in pursuance of this
Part, shall, on such registration, pass to and vest in the company as incorporated under this Act for all the
estate and interest of the company therein
...
Saving of existing liabilities
...

370
...
— All suits and other legal proceedings taken by
or against the company, or any public officer or member thereof, which are pending at the time of the
registration of a company in pursuance of this Part, may be continued in the same manner as if the
registration had not taken place:

199

Provided that execution shall not issue against the property or persons 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
...
Effect of registration under this Part
...

(2) All provisions contained in any Act of Parliament or any other law for the time being in force, or
other instrument constituting or regulating the company, including, in the case of a company registered as
a company limited by guarantee, the resolution declaring the amount of the guarantee, shall be deemed to
be conditions and regulations of the company, in the same manner and with the same incidents as if so
much thereof as would, if the company had been formed under this Act, have been required to be inserted
in the memorandum, were contained in a registered memorandum, and the residue thereof were contained
in registered articles
...

(4) The provisions of this Act with respect to—
(a) the registration of an unlimited company as a limited company;
(b) the powers of an unlimited company on registration as a limited company, to increase the
nominal amount of its share capital and to provide that a portion of its share capital shall not be
capable of being called-up except in the event of winding up;
(c) the power of a limited company to determine that a portion of its share capital shall not be
capable of being called-up except in the event of winding up,
shall apply, notwithstanding anything in any Act of Parliament or any other law for the time being in
force, or other instrument constituting or regulating the company
...

(6) None of the provisions of this Act (apart from those of section 242) shall derogate from any power
of altering its constitution or regulations which may be vested in the company, by virtue of any Act of

200

Parliament or any other law for the time being in force, or other instrument constituting or regulating the
company
...

372
...
— The provisions of this Act with respect to
staying and restraining suits and other legal proceedings against a company at any time after the
presentation of a petition for winding up and before the making of a winding up order, shall, in the case of
a company registered in pursuance of this Part, where the application to stay or restrain is by a creditor,
extend to suits and other legal proceedings against any contributory of the company
...
Suits stayed on winding up order
...

374
...
— Every company which is seeking
registration under this Part shall,—
(a) ensure that secured creditors of the company, prior to its registration under this Part, have
either consented to or have given their no objection to company's registration under this Part;
(b) publish in a newspaper, advertisement one in English and one in vernacular language in such
form as may be prescribed giving notice about registration under this Part, seeking objections and
address them suitably;
(c) file an affidavit, duly notarised, from all the members or partners to provide that in the event
of registration under this Part, necessary documents or papers shall be submitted to the registering or
other authority with which the company was earlier registered, for its dissolution as partnership firm,
limited liability partnership, cooperative society, society or any other business entity, as the case may
be
...

PART II
...
Winding up of unregistered companies
...

(2) No unregistered company shall be wound up under this Act voluntarily
...

(4) 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 one lakh rupees then due, has served on the company, by leaving at its principal place of
business, or by delivering to the secretary, or some director, manager or principal officer of the
company, or by otherwise serving in such manner as the Tribunal may approve or direct, a demand
under his hand requiring the company to pay the sum so due, and the company has, for three weeks
after the service of the demand, neglected to pay the sum or to secure or compound for it to the
satisfaction of the creditor;
201

(b) if any suit or other legal proceeding has been instituted against any member for any debt or
demand due, or claimed to be due, from the company, or from him in his character as a 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 delivering it to the secretary, or
some director, manager or principal officer of the company or by otherwise serving the same in such
manner as the Tribunal may approve or direct, the company has not, within ten days after service of
the notice,—
(i) paid, secured or compounded for the debt or demand;
(ii) procured the suit or other legal proceeding to be stayed; or
(iii) indemnified the defendant to his satisfaction against the suit or other legal proceeding,
and against all costs, damages and expenses to be incurred by him by reason of the same;
(c) if execution or other process issued on a decree or order of any Court or Tribunal in favour of
a creditor against the company, or any member thereof as such, or any person authorised to be sued as
nominal defendant on behalf of the company, is returned unsatisfied in whole or in part;
(d) if it is otherwise proved to the satisfaction of the Tribunal that the company is unable to pay
its debts
...
—For the purposes of this Part, the expression "unregistered company"—
(a) shall not include—
(i) a railway company incorporated under any Act of Parliament or other Indian law or any
Act of Parliament of the United Kingdom;
(ii) a company registered under this Act; or
(iii) a company registered under any previous companies law and not being a company the
registered office whereof was in Burma, Aden, Pakistan immediately before the separation of that
country from India; and
(b) save as aforesaid, shall include any partnership firm, limited liability partnership or society or
co-operative society, association or company consisting of more than seven members at the time
when the petition for winding up the partnership firm, limited liability partnership or society or cooperative society, association or company, as the case may be, is presented before the Tribunal
...
Power to wind up foreign companies, although dissolved
...

377
...
— (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 Tribunal
...

378
...
, in certain cases
...

CHAPTER XXII
COMPANIES INCORPORATED OUTSIDE INDIA
379
...
— Where not less than fifty per cent
...

380
...
, to be delivered to Registrar by foreign companies
...

(2) Every foreign company existing at the commencement of this Act shall, if it has not delivered to
the Registrar before such commencement, the documents and particulars specified in sub-section (1) of
section 592 of the Companies Act, 1956 (1 of 1956), continue to be subject to the obligation to deliver
those documents and particulars in accordance with that Act
...

381
...
— (1) Every foreign company shall, in every calendar year,—
(a) make out a balance sheet and profit and loss account in such form, containing such particulars
and including or having annexed or attached thereto such documents as may be prescribed; and
(b) deliver a copy of those documents to the Registrar:
Provided that the Central Government may, by notification, direct that, in the case of any foreign
company or class of foreign companies, the requirements of clause (a) shall not apply, or shall apply
subject to such exceptions and modifications as may be specified in that notification
...

(3) Every foreign company shall send to the Registrar along with the documents required to be
delivered to him under sub-section (1), a copy of a list in the prescribed form of all places of business
established by the company in India as at the date with reference to which the balance sheet referred to in
sub-section (1) is made out
...
Display of name, etc
...
— Every foreign company shall—
(a) conspicuously exhibit on the outside of every office or place where it carries on business in
India, the name of the company and the country in which it is incorporated, in letters easily legible in
English characters, and also in the characters of the language or one of the languages in general use in
the locality in which the office or place is situate;
(b) cause the name of the company and of the country in which the company is incorporated, to
be stated in legible English characters in all business letters, billheads and letter paper, and in all
notices, and other official publications of the company; and
(c) if the liability of the members of the company is limited, cause notice of that fact—
(i) to be stated in every such prospectus issued and in all business letters, bill-heads, letter
paper, notices, advertisements and other official publications of the company, in legible English
characters; and
(ii) to be conspicuously exhibited on the outside of every office or place where it carries on
business in India, in legible English characters and also in legible characters of the language or
one of the languages in general use in the locality in which the office or place is situate
...
Service on foreign company
...

384
...
— (1) The provisions of section 71 shall apply mutatis mutandis to a foreign company
...

(3) The provisions of section 128 shall apply to a foreign company to the extent of requiring it to keep
at its principal place of business in India, the books of account referred to in that section, with respect to
monies received and spent, sales and purchases made, and assets and liabilities, in the course of or in
relation to its business in India
...

(5) The provisions of Chapter XIV shall apply mutatis mutandis to the Indian business of a foreign
company as they apply to a company incorporated in India
...
Fee for registration of documents
...

386
...
— For the purposes of the foregoing provisions of this Chapter,—
(a) the expression ―certified‖ means certified in the prescribed manner to be a true copy or a
correct translation;
(b) the expression ―director‖, in relation to a foreign company, includes any person in accordance
with whose directions or instructions the Board of Directors of the company is accustomed to act; and

204

(c) the expression ―place of business‖ includes a share transfer or registration office
...
Dating of prospectus and particulars to be contained therein
...

(2) Any condition requiring or binding an applicant for securities to waive compliance with any
requirement imposed by virtue of sub-section (1), or purporting to impute him with notice of any contract,
documents or matter not specifically referred to in the prospectus, shall be void
...

(4) 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 securities of the company, whether an applicant for
securities 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, to the issue of a prospectus relating to
securities which are or are to be in all respects uniform with securities previously issued and for the
time being dealt in or quoted on a recognised stock exchange,
but, subject as aforesaid, this section shall apply to a prospectus or form of application whether issued on
or with reference to the formation of a company or subsequently
...

388
...
— (1) No person shall issue, circulate or
distribute in India any prospectus offering for subscription in securities of a company incorporated or to
be incorporated outside India, whether the company has or has not been established, or when formed will
or will not establish, a place of business in India,—
205

(a) if, where the prospectus includes a statement purporting to be made by an expert, he has not
given, or has before delivery of the prospectus for registration withdrawn, his written consent to the
issue of the prospectus with the statement included in the 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 persons concerned bound by all the provisions of sections 33 and 40, so far as
applicable
...

389
...
— No person shall issue, circulate or distribute in India any
prospectus offering for subscription in securities 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 chairperson of the company and two other directors of the company as having
been approved by resolution of the managing body has been delivered for registration to the Registrar and
the prospectus states on the face of it that a copy has been so delivered, and there is endorsed on or
attached to the copy, any consent to the issue of the prospectus required by section 388 and such
documents as may be prescribed
...
Offer of Indian Depository Receipts
...

391
...
— (1) The provisions of sections 34 to 36
(both inclusive) shall apply to—
(i) the issue of a prospectus by a company incorporated outside India under section 389 as they
apply to prospectus issued by an Indian company;
(ii) the issue of Indian Depository Receipts by a foreign company
...

392
...
— Without prejudice to the provisions of section 391, if a
foreign company contravenes the provisions of this Chapter, the foreign company shall be punishable
with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees and in
the case of a continuing offence, with an additional fine which may extend to fifty thousand rupees for
every day after the first during which the contravention continues and every officer of the foreign
company who is in default shall be punishable with imprisonment for a term which may extend to six
months or with fine which shall not be less than twenty-five thousand rupees but which may extend to
five lakh rupees, or with both
...
Company‘s failure to comply with provisions of this Chapter not to affect validity of
contracts, etc
...

CHAPTER XXIII
GOVERNMENT COMPANIES
394
...
— (1) Where the Central Government is a member
of a Government company, the Central Government shall cause an annual report on the working and
affairs of that company to be—
(a) prepared within three months of its annual general meeting before which the comments given
by the Comptroller and Auditor-General of India and the audit report is placed under the proviso to
sub-section (6) of section 143; and
(b) as soon as may be after such preparation, laid before both Houses of Parliament together with
a copy of the audit report and comments upon or supplement to the audit report, made by the
Comptroller and Auditor-General of India
...

395
...
— (1)
Where the Central Government is not a member of a Government company, every State Government
which is a member of that company, or where only one State Government is a member of the company,
that State Government shall cause an annual report on the working and affairs of the company to be—
(a) prepared within the time specified in sub-section (1) of section 394; and
(b) as soon as may be after such preparation, laid before the House or both Houses of the State
Legislature together with a copy of the audit report and comments upon or supplement to the audit
report referred to in sub-section (1) of that section
...

CHAPTER XXIV
REGISTRATION OFFICES AND FEES
396
...
— (1) For the purposes of exercising such powers and discharging such
functions as are conferred on the Central Government by or under this Act or under the rules made
thereunder and for the purposes of registration of companies under this Act, the Central Government
shall, by notification, establish such number of offices at such places as it thinks fit, specifying their
jurisdiction
...

(3) The terms and conditions of service, including the salaries payable to persons appointed under
sub-section (2), shall be such as may be prescribed
...

397
...
— Notwithstanding anything contained in any
other law for the time being in force, any document reproducing or derived from returns and documents
filed by a company with the Registrar on paper or in electronic form or stored on any electronic data
storage device or computer readable media by the Registrar, and authenticated by the Registrar or any
207

other officer empowered by the Central Government in such manner as may be prescribed, shall be
deemed to be a document for the purposes of this Act and the rules made thereunder and shall be
admissible in any proceedings thereunder without further proof or production of the original as evidence
of any contents of the original or of any fact stated therein of which direct evidence is admissible
...
Provisions relating to filing of applications, documents, inspection, etc
...
— (1) Notwithstanding anything to the contrary contained in this Act, and without prejudice to the
provisions contained in section 6 of the Information Technology Act, 2000 (21 of 2000), the Central
Government may make rules so as to require from such date as may be prescribed in the rules that—
(a) such applications, balance sheet, prospectus, return, declaration, memorandum, articles,
particulars of charges, or any other particulars or document as may be required to be filed or delivered
under this Act or the rules made thereunder, shall be filed in the electronic form and authenticated in
such manner as may be prescribed;
(b) such document, notice, any communication or intimation, as may be required to be served or
delivered under this Act, in the electronic form and authenticated in such manner as may be
prescribed;
(c) such applications, balance sheet, prospectus, return, register, memorandum, articles,
particulars of charges, or any other particulars or document and return filed under this Act or rules
made thereunder shall be maintained by the Registrar in the electronic form and registered or
authenticated, as the case may be, in such manner as may be prescribed;
(d) such inspection of the memorandum, articles, register, index, balance sheet, return or any
other particulars or document maintained in the electronic form, as is otherwise available for
inspection under this Act or the rules made thereunder, may be made by any person through the
electronic form in such manner as may be prescribed;
(e) such fees, charges or other sums payable under this Act or the rules made thereunder shall be
paid through the electronic form and in such manner as may be prescribed; and
(f) the Registrar shall register change of registered office, alteration of memorandum or articles,
prospectus, issue certificate of incorporation, register such document, issue such certificate, record the
notice, receive such communication as may be required to be registered or issued or recorded or
received, as the case may be, under this Act or the rules made thereunder or perform duties or
discharge functions or exercise powers under this Act or the rules made thereunder or do any act
which is by this Act directed to be performed or discharged or exercised or done by the Registrar in
the electronic form in such manner as may be prescribed
...
— For the removal of doubts, it is hereby clarified that the rules made under this section
shall not relate to imposition of fines or other pecuniary penalties or demand or payment of fees or
contravention of any of the provisions of this Act or punishment therefor
...

399
...
— (1) Save as
otherwise provided elsewhere in this Act, any person may—
(a) inspect by electronic means any documents kept by the Registrar in accordance with the rules
made, 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 such fees as may be prescribed;
(b) require a certificate of the incorporation of any company, or a copy or extract of any other
document or any part of any other document to be certified by the Registrar, on payment in advance
of such fees as may be prescribed:

208

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
section 26, only during the fourteen days beginning with the date of publication of the prospectus;
and at other times, only with the permission of the Central Government; and
(ii) in relation to documents so delivered in pursuance of clause (b) of subsection (1) of
section 388, only during the fourteen days beginning with the date of the prospectus; and at other
times, only with the permission of the Central Government
...

(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 by 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
...
Electronic form to be exclusive, alternative or in addition to physical form
...

401
...
— The Central Government may
provide such value added services through the electronic form and levy such fee thereon as may be
prescribed
...
Application of provisions of Information Technology Act, 2000
...

403
...
— (1) Any document, required to be submitted, filed, registered or recorded,
or any fact or information required or authorised to be registered under this Act, shall be submitted, filed,
registered or recorded within the time specified in the relevant provision on payment of such fee as may
be prescribed:
Provided that any document, fact or information may be submitted, filed, registered or recorded, after
the time specified in relevant provision for such submission, filing, registering or recording, within a
period of two hundred and seventy days from the date by which it should have been submitted, filed,
registered or recorded, as the case may be, on payment of such additional fee as may be prescribed:
Provided further that any such document, fact or information may, without prejudice to any other
legal action or liability under the Act, be also submitted, filed, registered or recorded, after the first time
specified in first proviso on payment of fee and additional fee specified under this section
...

404
...
, to be credited into public account
...


209

CHAPTER XXV
COMPANIES TO FURNISH INFORMATION OR STATISTICS
405
...
—
(1) The Central Government may, by order, require companies generally, or any class of companies, or
any company, to furnish such information or statistics with regard to their or its constitution or working,
and within such time, as may be specified in the order
...

(3) For the purpose of satisfying itself that any information or statistics furnished by a company or
companies in pursuance of any order under sub-section (1) is correct and complete, the Central
Government may by order require such company or companies to produce such records or documents in
its possession or allow inspection thereof by such officer or furnish such further information as that
Government may consider necessary
...

(5) Where a foreign company carries on business in India, all references to a company in this section
shall be deemed to include references to the foreign company in relation, and only in relation, to such
business
...
Power to modify Act in its application to Nidhis
...

(2) Save as otherwise expressly provided, the Central Government may, by notification, direct that
any of the provisions of this Act shall not apply, or shall apply with such exceptions, modifications and
adaptations as may be specified in that notification, to any Nidhi or Nidhis of any class or description as
may be specified in that notification
...

CHAPTER XXVII
NATIONAL COMPANY LAW TRIBUNAL AND APPELLATE TRIBUNAL
407
...
— In this Chapter, unless the context otherwise requires,—
(a) ―Chairperson‖ means the Chairperson of the Appellate Tribunal;

210

(b) ―Judicial Member‖ means a member of the Tribunal or the Appellate Tribunal appointed as
such and includes the President or the Chairperson, as the case may be;
(c) ―Member‖ means a member, whether Judicial or Technical of the Tribunal or the Appellate
Tribunal and includes the President or the Chairperson, as the case may be;
(d) ―President‖ means the President of the Tribunal;
(e) ―Technical Member‖ means a member of the Tribunal or the Appellate Tribunal appointed as
such
...
Constitution of National Company Law Tribunal
...

409
...
— (1) The President shall be a person
who is or has been a Judge of a High Court for five years
...

Explanation
...

(3) A person shall not be qualified for appointment as a Technical Member unless he—
(a) has, for at least fifteen years been a member of the Indian Corporate Law Service or Indian
Legal Service out of which at least three years shall be in the pay scale of Joint Secretary to the
Government of India or equivalent or above in that service; or
(b) is, or has been, in practice as a chartered accountant for at least fifteen years; or
(c) is, or has been, in practice as a cost accountant for at least fifteen years; or
(d) is, or has been, in practice as a company secretary for at least fifteen years; or
(e) is a person of proven ability, integrity and standing having special knowledge and experience,
of not less than fifteen years, in law, industrial finance, industrial management or administration,
industrial reconstruction, investment, accountancy, labour matters, or such other disciplines related to
management, conduct of affairs, revival, rehabilitation and winding up of companies; or
(f) is, or has been, for at least five years, a presiding officer of a Labour Court, Tribunal or
National Tribunal constituted under the Industrial Disputes Act, 1947 (14 of 1947)
...
Constitution of Appellate Tribunal
...

411
...
— (1) The chairperson
shall be a person who is or has been a Judge of the Supreme Court or the Chief Justice of a High Court
...

211

(3) A Technical Member shall be a person of proven ability, integrity and standing having special
knowledge and experience, of not less than twenty-five years, in law, industrial finance, industrial
management or administration, industrial reconstruction, investment, accountancy, labour matters, or such
other disciplines related to management, conduct of affairs, revival, rehabilitation and winding up of
companies
...
Selection of Members of Tribunal and Appellate Tribunal
...

(2) The Members of the Tribunal and the Technical Members of the Appellate Tribunal shall be
appointed on the recommendation of a Selection Committee consisting of—
(a) Chief Justice of India or his nominee—Chairperson;
(b) a senior Judge of the Supreme Court or a Chief Justice of High Court— Member;
(c) Secretary in the Ministry of Corporate Affairs—Member;
(d) Secretary in the Ministry of Law and Justice—Member; and
(e) Secretary in the Department of Financial Services in the Ministry of Finance— Member
...

(4) The Selection Committee shall determine its procedure for recommending persons under subsection (2)
...

413
...
— (1) The President and every
other Member of the Tribunal shall hold office as such for a term of five years from the date on which he
enters upon his office, but shall be eligible for re-appointment for another term of five years
...

(3) The chairperson or a Member of the Appellate Tribunal shall hold office as such for a term of five
years from the date on which he enters upon his office, but shall be eligible for re-appointment for another
term of five years
...

414
...
— The salary,
allowances and other terms and conditions of service of the Members of the Tribunal and the Appellate
Tribunal shall be such as may be prescribed:

212

Provided that neither the salary and allowances nor the other terms and conditions of service of the
Members shall be varied to their disadvantage after their appointment
...
Acting President and Chairperson of Tribunal or Appellate Tribunal
...

(2) When the President or the Chairperson is unable to discharge his functions owing to absence,
illness or any other cause, the senior-most Member shall discharge the functions of the President or the
Chairperson, as the case may be, until the date on which the President or the Chairperson resumes his
duties
...
Resignation of Members
...

417
...
— (1) The Central Government may, after consultation with the Chief
Justice of India, remove from office the President, Chairperson or any Member, who—
(a) has been adjudged an insolvent; or
(b) has been convicted of an offence which, in the opinion of the Central Government, involves
moral turpitude; or
(c) has become physically or mentally incapable of acting as such President, the Chairperson, or
Member; or
(d) has acquired such financial or other interest as is likely to affect prejudicially his functions as
such President, the Chairperson or Member; or
(e) has so abused his position as to render his continuance in office prejudicial to the public
interest:
Provided that the President, the Chairperson or the Member shall not be removed on any of the
grounds specified in clauses (b) to (e) without giving him a reasonable opportunity of being heard
...

(3) The Central Government may, with the concurrence of the Chief Justice of India, suspend from
office, the President, the Chairperson or Member in respect of whom reference has been made to the
Judge of the Supreme Court under sub-section (2) until the Central Government has passed orders on
receipt of the report of the Judge of the Supreme Court on such reference
...

418
...
— (1) The Central Government shall, in
consultation with the Tribunal and the Appellate Tribunal, provide the Tribunal and the Appellate
Tribunal, as the case may be, with such officers and other employees as may be necessary for the exercise
of the powers and discharge of the functions of the Tribunal and the Appellate Tribunal
...

(3) The salaries and allowances and other conditions of service of the officers and other employees of
the Tribunal and the Appellate Tribunal shall be such as may be prescribed
...
Benches of Tribunal
...

(2) The Principal Bench of the Tribunal shall be at New Delhi which shall be presided over by the
President of the Tribunal
...

(4) The President shall, for the disposal of any case relating to rehabilitation, restructuring, reviving
***, of companies, constitute one or more Special Benches consisting of three or more Members,
majority necessarily being of Judicial Members
...

420
...
— (1) The Tribunal may, after giving the parties to any proceeding before
it, a reasonable opportunity of being heard, pass such orders thereon as it thinks fit
...

(3) The Tribunal shall send a copy of every order passed under this section to all the parties
concerned
...
Appeal from orders of Tribunal
...

(2) No appeal shall lie to the Appellate Tribunal from an order made by the Tribunal with the consent
of parties
...
The words ―or winding up‖ omitted by Act 21 of 2015, s
...
e
...
29-5-2015)
...

(4) On the receipt of an appeal under sub-section (1), the Appellate Tribunal shall, after giving the
parties to the appeal a reasonable opportunity of being heard, pass such orders thereon as it thinks fit,
confirming, modifying or setting aside the order appealed against
...

422
...
— (1) Every application or petition
presented before the Tribunal and every appeal filed before the Appellate Tribunal shall be dealt with and
disposed of by it as expeditiously as possible and every endeavour shall be made by the Tribunal or the
Appellate Tribunal, as the case may be, for the disposal of such application or petition or appeal within
three months from the date of its presentation before the Tribunal or the filing of the appeal before the
Appellate Tribunal
...

423
...
— Any person aggrieved by any order of the Appellate Tribunal
may file an appeal to the Supreme Court within sixty days from the date of receipt of the order of the
Appellate Tribunal to him on any question of law arising out of such order:
Provided that the Supreme Court may, if it is satisfied that the appellant was prevented by sufficient
cause from filing the appeal within the said period, allow it to be filed within a further period not
exceeding sixty days
...
Procedure before Tribunal and Appellate Tribunal
...

(2) The Tribunal and the Appellate Tribunal shall have, for the purposes of discharging their
functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure,
1908 (5 of 1908) while trying a suit in respect of the following matters, namely:—
(a) summoning and enforcing the attendance of any person and examining him on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
(d) subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872 (1 of
1872), requisitioning any public record or document or a copy of such record or document from any
office;
(e) issuing commissions for the examination of witnesses or documents;
(f) dismissing a representation for default or deciding it ex parte;
(g) setting aside any order of dismissal of any representation for default or any order passed by it
ex parte; and
(h) any other matter which may be prescribed
...

(4) All proceedings before the Tribunal or the Appellate Tribunal shall be deemed to be judicial
proceedings within the meaning of sections 193 and 228, and for the purposes of section 196 of the Indian
Penal Code (45 of 1860), and the Tribunal and the Appellate Tribunal shall be deemed to be civil court
for the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974)
...
Power to punish for contempt
...

426
...
— The Tribunal or the Appellate Tribunal may, by general or special
order, direct, subject to such conditions, if any, as may be specified in the order, any of its officers or
employees or any other person authorised by it to inquire into any matter connected with any proceeding
or, as the case may be, appeal before it and to report to it in such manner as may be specified in the order
...
President, Members, officers, etc
...
— The President, Members, officers
and other employees of the Tribunal and the Chairperson, Members, officers and other employees of the
Appellate Tribunal shall be deemed to be public servants within the meaning of section 21 of the Indian
Penal Code (45 of 1860)
...
Protection of action taken in good faith
...

429
...
— (1) The Tribunal may, in
any proceeding relating to a sick company or winding up of any other company, in order to take into
custody or under its control all property, books of account or other documents, request, in writing, the
Chief Metropolitan Magistrate, Chief Judicial Magistrate or the District Collector within whose
jurisdiction any such property, books of account or other documents of such sick or other company, are
situate or found, to take possession thereof, and the Chief Metropolitan Magistrate, Chief Judicial
Magistrate or the District Collector, as the case may be, shall, on such request being made to him,—
(a) take possession of such property, books of account or other documents; and
(b) cause the same to be entrusted to the Tribunal or other person authorised by it
...

(3) No act of the Chief Metropolitan Magistrate, Chief Judicial Magistrate or the District Collector
done in pursuance of this section shall be called in question in any court or before any authority on any
ground whatsoever
...
Civil court not to have jurisdiction
...

431
...
— No act
or proceeding of the Tribunal or the Appellate Tribunal shall be questioned or shall be invalid merely on
the ground of the existence of any vacancy or defect in the constitution of the Tribunal or the Appellate
Tribunal, as the case may be
...
Right to legal representation
...

433
...
— The provisions of the Limitation Act, 1963 (36 of 1963) shall, as far as may be,
apply to proceedings or appeals before the Tribunal or the Appellate Tribunal, as the case may be
...
Transfer of certain pending proceedings
...

(d) any appeal preferred to the Appellate Authority for Industrial and Financial Reconstruction or
any reference made or inquiry pending to or before the Board of Industrial and Financial
Reconstruction or any proceeding of whatever nature pending before the Appellate Authority for
Industrial and Financial Reconstruction or the Board for Industrial and Financial Reconstruction
under the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) immediately before
the commencement of this Act shall stand abated:
Provided that a company in respect of which such appeal or reference or inquiry stands abated
under this clause may make a reference to the Tribunal under this Act within one hundred and eighty
days from the commencement of this Act in accordance with the provisions of this Act:
Provided further that no fees shall be payable for making such reference under this Act by a
company whose appeal or reference or inquiry stands abated under this clause
...


217

CHAPTER XXVIII
SPECIAL COURTS
435
...
— (1) The Central Government may, for the purpose of
providing speedy 1[trial of offences punishable under this Act with imprisonment of two years or more],
by notification, establish or designate as many Special Courts as may be necessary:
2

[Provided that all other offences shall be tried, as the case may be, by a Metropolitan Magistrate or a
Judicial Magistrate of the First Class having jurisdiction to try any offence under this Act or under any
previous company law
...

(3) A person shall not be qualified for appointment as a judge of a Special Court unless he is,
immediately before such appointment, holding office of a Sessions Judge or an Additional Sessions
Judge
...
Offences triable by Special Courts
...

(2) When trying an offence under this Act, a Special Court may also try an offence other than an
offence under this Act with which the accused may, under the Code of Criminal Procedure, 1973 (2 of
1974) be charged at the same trial
...
Subs
...
21, for ―trial of offences under this Act‖ (w
...
f
...

2
...
by s
...
(w
...
f
...

3
...
by s
...
for ―all offences under this Act‖ (w
...
f
...


218

Provided further that when at the commencement of, or in the course of, a summary trial, it appears to
the Special Court that the nature of the case is such that the sentence of imprisonment for a term
exceeding one year may have to be passed or that it is, for any other reason, undesirable to try the case
summarily, the Special Court shall, after hearing the parties, record an order to that effect and thereafter
recall any witnesses who may have been examined and proceed to hear or rehear the case in accordance
with the procedure for the regular trial
...
Appeal and revision
...

438
...
—Save as otherwise provided in
this Act, the provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply to the
proceedings before a Special Court and for the purposes of the said provisions, the Special Court shall be
deemed to be a Court of Session and the person conducting a prosecution before a Special Court shall be
deemed to be a Public Prosecutor
...
Offences to be non-cognizable
...

(2) No court shall take cognizance of any offence under this Act which is alleged to have been
committed by any company or any officer thereof, except on the complaint in writing of the Registrar, a
shareholder of the company, or of a person authorised by the Central Government in that behalf:
Provided that the court may take cognizance of offences relating to issue and transfer of securities and
non-payment of dividend, on a complaint in writing, by a person authorised by the Securities and
Exchange Board of India:
Provided further that nothing in this sub-section shall apply to a prosecution by a company of any of
its officers
...

(4) The provisions of sub-section (2) 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 in
Chapter XX or in any other provision of this Act relating to winding up of companies
...
—The liquidator of a company shall not be deemed to be an officer of the company
within the meaning of sub-section (2)
...
Transitional provisions
...

441
...
— (1) Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), any offence punishable under this Act (whether committed by a
company or any officer thereof) with fine only, may, either before or after the institution of any
prosecution, be compounded by—
(a) the Tribunal; or
(b) where the maximum amount of fine which may be imposed for such offence does not exceed
five lakh rupees, by the Regional Director or any officer authorised by the Central Government,
219

on payment or credit, by the company or, as the case may be, the officer, to the Central Government of
such sum as that Tribunal or the Regional Director or any officer authorised by the Central Government,
as the case may be, may specify:
Provided that the sum so specified shall not, in any case, exceed the maximum amount of the fine
which may be imposed for the offence so compounded:
Provided further that in specifying the sum required to be paid or credited for the compounding of an
offence under this sub-section, the sum, if any, paid by way of additional fee under sub-section (2) of
section 403 shall be taken into account:
Provided also that any offence covered under this sub-section by any company or its officer shall not
be compounded if the investigation against such company has been initiated or is pending under this Act
...

Explanation
...

(3) (a) Every application for the compounding of an offence shall be made to the Registrar who shall
forward the same, together with his comments thereon, to the Tribunal or the Regional Director or any
officer authorised by the Central Government, as the case may be
...

(c) Where any offence is compounded before the institution of any prosecution, no prosecution shall
be instituted in relation to such offence, either by the Registrar or by any shareholder of the company or
by any person authorised by the Central Government against the offender in relation to whom the offence
is so compounded
...

(4) The Tribunal or the Regional Director or any officer authorised by the Central Government, as the
case may be, while dealing with a proposal for the compounding of an offence for a default in compliance
with any provision of this Act which requires a company or its officer to file or register with, or deliver or
send to, the Registrar any return, account or other document, may direct, by an order, if it or he thinks fit
to do so, any officer or other employee of the company to file or register with, or on payment of the fee,
and the additional fee, required to be paid under section 403, such return, account or other document
within such time as may be specified in the order
...

(6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),—
(a) any offence which is punishable under this Act, with imprisonment or fine, or with
imprisonment or fine or with both, shall be compoundable with the permission of the Special Court,
in accordance with the procedure laid down in that Act for compounding of offences;

220

(b) any offence which is punishable under this Act with imprisonment only or with imprisonment
and also with fine shall not be compoundable
...

442
...
— (1) The Central Government shall maintain a panel of
experts to be called as the Mediation and Conciliation Panel consisting of such number of experts having
such qualifications as may be prescribed for mediation between the parties during the pendency of any
proceedings before the Central Government or the Tribunal or the Appellate Tribunal under this Act
...

(3) The Central Government or the Tribunal or the Appellate Tribunal before which any proceeding is
pending may, suo motu, refer any matter pertaining to such proceeding to such number of experts from
the Mediation and Conciliation Panel as the Central Government or the Tribunal or the Appellate
Tribunal, as the case may be, deems fit
...

(5) The Mediation and Conciliation Panel shall follow such procedure as may be prescribed and
dispose of the matter referred to it within a period of three months from the date of such reference and
forward its recommendations to the Central Government or the Tribunal or the Appellate Tribunal, as the
case may be
...

443
...
— Notwithstanding anything
contained in the Code of Criminal Procedure, 1973 (2 of 1974), the Central Government may appoint
generally, or for any case, or in any case, or for any specified class of cases in any local area, one or more
persons, as company prosecutors for the conduct of prosecutions arising out of this Act and the persons so
appointed as company prosecutors shall have all the powers and privileges conferred by the Code on
Public Prosecutors appointed under section 24 of the Code
...
Appeal against acquittal
...

445
...
— The provisions of section 250 of
the Code of Criminal Procedure, 1973 (2 of 1974) shall apply mutatis mutandis to compensation for
accusation without reasonable cause before the Special Court or the Court of Session
...
Application of fines
...

CHAPTER XXIX
MISCELLANEOUS
447
...
— Without prejudice to any liability including repayment of any debt
under this Act or any other law for the time being in force, any person who is found to be guilty of fraud,
shall be punishable with imprisonment for a term which shall not be less than six months but which may
221

extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the
fraud, but which may extend to three times the amount involved in the fraud:
Provided that where the fraud in question involves public interest, the term of imprisonment shall not
be less than three years
...
—For the purposes of this section—
(i) ―fraud‖ in relation to affairs of a company or any body corporate, includes any act, omission,
concealment of any fact or abuse of position committed by any person or any other person with the
connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the
interests of, the company or its shareholders or its creditors or any other person, whether or not there
is any wrongful gain or wrongful loss;
(ii) ―wrongful gain‖ means the gain by unlawful means of property to which the person gaining is
not legally entitled;
(iii) ―wrongful loss‖ means the loss by unlawful means of property to which the person losing is
legally entitled
...
Punishment for false statement
...

449
...
— Save as otherwise provided in this Act, if any person
intentionally gives false evidence—
(a) upon any examination on oath or solemn affirmation, authorised under this Act; or
(b) in any affidavit, deposition or solemn affirmation, in or about the winding up of any company
under this Act, or otherwise in or about any matter arising under this Act,
he shall be punishable with imprisonment for a term which shall not be less than three years but which
may extend to seven years and with fine which may extend to ten lakh rupees
...
Punishment where no specific penalty or punishment is provided
...

451
...
— If a company or an officer of a company commits
an offence punishable either with fine or with imprisonment and where the same offence is committed for
the second or subsequent occasions within a period of three years, then, that company and every officer
thereof who is in default shall be punishable with twice the amount of fine for such offence in addition to
any imprisonment provided for that offence
...
Punishment for wrongful withholding of property
...

(2) The Court trying an offence under sub-section (1) may also order such officer or employee to
deliver up or refund, within a time to be fixed by it, any such property or cash wrongfully obtained or
wrongfully withheld or knowingly misapplied, the benefits that have been derived from such property or
cash or in default, to undergo imprisonment for a term which may extend to two years
...
Punishment for improper use of ―Limited‖ or ―Private Limited‖
...

454
...
— (1) The Central Government may, by an order published in the
Official Gazette, appoint as many officers of the Central Government, not below the rank of Registrar, as
adjudicating officers for adjudging penalty under the provisions of this Act in the manner as may be
prescribed
...

(3) The adjudicating officer may, by an order impose the penalty on the company and the officer who
is in default stating any non-compliance or default under the relevant provision of the Act
...

(5) Any person aggrieved by an order made by the adjudicating officer under sub-section (3) may
prefer an appeal to the Regional Director having jurisdiction in the matter
...

(7) The Regional Director may, after giving the parties to the appeal an opportunity of being heard,
pass such order as he thinks fit, confirming, modifying or setting aside the order appealed against
...

(ii) Where an officer of a company who is in default does not pay the penalty within a period of
ninety days from the date of the receipt of the copy of the order, such officer shall be punishable with
imprisonment which may extend to six months or with fine which shall not be less than twenty-five
thousand rupees but which may extend to one lakh rupees, or with both
...
Dormant company
...


223

Explanation
...

(2) The Registrar on consideration of the application shall allow the status of a dormant company to
the applicant and issue a certificate in such form as may be prescribed to that effect
...

(4) In case of a company which has not filed financial statements or annual returns for two financial
years consecutively, the Registrar shall issue a notice to that company and enter the name of such
company in the register maintained for dormant companies
...

(6) The Registrar shall strike off the name of a dormant company from the register of dormant
companies, which has failed to comply with the requirements of this section
...
Protection of action taken in good faith
...

457
...
— Notwithstanding anything contained in any
other law for the time being in force, the Registrar, any officer of the Government or any other person
shall not be compelled to disclose to any court, Tribunal or other authority, the source from where he got
any information which—
(a) has led the Central Government to order an investigation under section 210; or
(b) is or has been material or relevant in connection with such investigation
...
Delegation by Central Government of its powers and functions
...

(2) A copy of every notification issued under sub-section (1) shall, as soon as may be after it is issued,
be laid before each House of Parliament
...
Powers of Central Government of Tribunal to accord approval, etc
...
— (1) Where the Central Government or the Tribunal is required
or authorised by any provision of this Act—
224

(a) to accord approval, sanction, consent, confirmation or recognition to, or in relation to, any
matter; or
(b) to give any direction in relation to any matter; or
(c) to grant any exemption in relation to any matter,
then, the Central Government or the Tribunal may in the absence of anything to the contrary contained in
that provision or any other provision of this Act, accord, give or grant such approval, sanction, consent,
confirmation, recognition, direction or exemption, subject to such conditions, limitations or restrictions as
it may think fit to impose and may, in the case of a contravention of any such condition, limitation or
restriction, rescind or withdraw such approval, sanction, consent, confirmation, recognition, direction or
exemption
...

460
...
— Notwithstanding anything contained in this Act,—
(a) where any application required to be made to the Central Government under any provision of
this Act in respect of any matter is not made within the time specified therein, that Government may,
for reasons to be recorded in writing, condone the delay; and
(b) where any document required to be filed with the Registrar under any provision of this Act is
not filed within the time specified therein, the Central Government may, for reasons to be recorded in
writing, condone the delay
...
Annual report by Central Government
...

462
...
— (1) The Central
Government may in the public interest, by notification direct that any of the provisions of this Act,—
(a) shall not apply to such class or classes of companies; or
(b) shall apply to the class or classes of companies with such exceptions, modifications and
adaptations as may be specified in the notification
...

(3) In reckoning any such period of thirty days as is referred to in sub-section (2), no account shall be
taken of any period during which the House referred to in sub-section (2) is prorogued or adjourned for
more than four consecutive days
...
Subs
...
23, for sub-sec
...
e
...
29-5-2015)
...
]
463
...
— (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 connected with his appointment, he ought fairly to be
excused, the court may relieve him, either wholly or partly, from his liability on such term, as it may think
fit:
Provided that in a criminal proceeding under this sub-section, the court shall have no power to grant
relief from any civil liability which may attach to an officer in respect of such negligence, default, breach
of duty, misfeasance or breach of trust
...

(3) No court shall grant any relief to any officer under sub-section (1) or sub-section (2) unless it has,
by notice served in the manner specified by it, required the Registrar and such other person, if any, as it
thinks necessary, to show cause why such relief should not be granted
...
Prohibition of association or partnership of persons exceeding certain number
...

(2) Nothing in sub-section (1) shall apply to—
(a) a Hindu undivided family carrying on any business; or
(b) an association or partnership, if it is formed by professionals who are governed by special
Acts
...

465
...
— (1) The Companies Act, 1956 (1 of 1956) and
the Registration of Companies (Sikkim) Act, 1961 (Sikkim Act 8 of 1961) (hereafter in this section
referred to as the repealed enactments) shall stand repealed:
Provided that the provisions of Part IX A of the Companies Act, 1956 (1 of 1956) shall be applicable
mutatis mutandis to a Producer Company in a manner as if the Companies Act, 1956 has not been
repealed until a special Act is enacted for Producer Companies:
Provided further that until a date is notified by the Central Government under subsection (1) of
Section 434 for transfer of all matters, proceedings or cases to the Tribunal, the provisions of the
Companies Act, 1956 (1 of 1956) in regard to the jurisdiction, powers, authority and functions of the
Board of Company Law Administration and court shall continue to apply as if the Companies Act, 1956
has not been repealed:
Provided also that provisions of the Companies Act, 1956 (1 of 1956) referred in the notification
issued under section 67 of the Limited Liability Partnership Act, 2008 (6 of 2009) shall, until the relevant
226

notification under such section applying relevant corresponding provisions of this Act to limited liability
partnerships is issued, continue to apply as if the Companies Act, 1956 has not been repealed
...

(3) The mention of particular matters in sub-section (2) shall not be held to prejudice the general
application of section 6 of the General Clauses Act, 1897 (10 of 1897) with regard to the effect of repeal
of the repealed enactments as if the Registration of Companies (Sikkim) Act, 1961 (Sikkim Act 8 of
1961) were also a Central Act
...
Dissolution of Company Law Board and consequential provisions
...

(2) The persons holding the offices of Chairman, Vice-Chairman and Members, and officers and
other employees of the Company Law Board immediately before the constitution of the Tribunal and the
Appellate Tribunal who are not covered under proviso to sub-section (1) shall vacate their respective
offices on such constitution and no such Chairman, Vice-Chairman and Members and officers or other
employees shall be entitled to claim any compensation for the premature termination of the term of his
office or of any contract of service, if any
...
Power of Central Government to amend Schedules
...

(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 F of Schedule I shall apply to any company registered before
the date of such alteration
...

468
...
— (1) The Central
Government shall, make rules consistent with the Code of Civil Procedure, 1908 (5 of 1908) providing
for all matters relating to the winding up of companies, which by this Act, are to be prescribed, and may
make rules providing for all such matters, as may be prescribed
...

(3) All rules made by the Supreme Court on the matters referred to in this section as it stood
immediately before the commencement of this Act and in force at such commencement, shall continue to
be in force, till such time the rules are made by the Central Government and any reference to the High
Court in relation to winding up of a company in such rules shall be construed as a reference to the
Tribunal
...
Power of Central Government to make rules
...

(2) Without prejudice to the generality of the provisions of sub-section (1), the Central Government
may make rules for all or any of the matters which by this Act are required to be, or may be, prescribed or
in respect of which provision is to be or may be made by rules
...

(4) Every rule made under this section and every regulation made by Securities and Exchange Board
under this Act, shall be laid, as soon as may be after it is made, before each House of Parliament, while it
is in session, for a total period of thirty days which may be comprised in one session or in two or more
successive sessions, and if, before the expiry of the session immediately following the session or the
successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or
both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter
have effect only in such modified form or be of no effect, as the case may be; so, however, that any such
modification or annulment shall be without prejudice to the validity of anything previously done under
that rule or regulation
...
Power to remove difficulties
...

(2) Every order made under this section shall, as soon as may be after it is made, be laid before each
House of Parliament
...
Limited / Private Limited‘‘
...


3rd

(a) The objects to be pursued by the company on its incorporation are:—
(b) Matters which are necessary for furtherance of the objects specified in clause 3(a) are:—

4th

The liability of the member(s) is limited and this liability is limited to the amount unpaid, if any,
on the shares held by them
...
rupees,
into
...
rupees each
...
of Shares taken
by each subscriber

A
...
of
...


Signature of
subscriber

divided

Signature, names, addresses,
descriptions and occupations
of witnesses
Signed before me:
Signature
...
D
...
Merchant


...


E
...
of
...


Signed before me:
Signature
...
H
...
Merchant


...


I
...
of
...


Signed before me:
Signature
...
L
...
Merchant


...


M
...
of
...


Signed before me:
Signature
...
B
...


8th

Shri/Smt
...
, resident of
...
years shall
be the nominee in the event of death of the sole member (Applicable in case of one person
company)
Dated
...


TABLE –B
MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY
GUARANTEE AND NOT HAVING A SHARE CAPITAL
1st

The name of the company is ‗‗
...


2nd

The registered office of the company will be situated in the State of
...


5th

Every member of the company undertakes to contribute:

(i) 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
(ii) to the costs, charges and expenses of winding up (and for the adjustment of the rights of the
contributories among themselves),
such amount as may be required, not exceeding
...

6th
into a

We, the several persons, whose names and addresses are subscribed, are desirous of being formed
company in pursuance of this memorandum of association
...
B
...
Merchant

Signature, names, addresses,
descriptions and occupations of
witnesses
Signed before me:
Signature
...
D
...
Merchant

Signed before me:
Signature
...
F
...
Merchant

Signed before me:
Signature
...
H
...
Merchant

Signed before me:
Signature
...
J
...
Merchant

Signed before me:

232

Signature
...
L
...
Merchant

Signed before me:
Signature
...
N
...
Merchant

Signed before me:
Signature
...
B
...


8th

Shri/Smt
...
, resident of
...
years shall be the
nominee in the event of death of the sole member (Applicable in case of one person company)
Dated
...


TABLE -C
MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY
GUARANTEE AND HAVING A SHARE CAPITAL
1st

The name of the company is ‗‗
...


2nd

The registered office of the company will be situated in the State of
...


5th

Every member of the company undertakes to contribute:
(i) 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
(ii) to the costs, charges and expenses of winding up (and for the adjustment of the rights of the
contributories among themselves),
such amount as may be required, not exceeding
...


6th

The
share
capital
of
the
company
is
...
shares of
...
of Shares taken
by each subscriber

A
...
of
...


Signature of
subscriber

Signature, names, addresses,
descriptions and occupations
of witnesses
Signed before me:
Signature
...
D
...
Merchant


...


E
...
of
...


Signed before me:
Signature
...
H
...
Merchant


...


I
...
of
...


Signed before me:
Signature
...
L
...
Merchant


...


M
...
of
...


Signed before me:
Signature
...
B
...


9th

Shri/Smt
...
, resident of
...
years shall be the
nominee in the event of death of the sole member (Applicable in case of one person company)
Dated
...


TABLE -D
MEMORANDUM OF ASSOCIATION OF AN UNLIMITED COMPANY
AND NOT HAVING SHARE CAPITAL
1st

The name of the company is ‗‗
...


2nd

The registered office of the company will be situated in the State of
...


234

5th

We, the several persons, whose names and addresses are subscribed are desirous of being formed
into a company in pursuance of this memorandum of association
...
B
...
Merchant

Signature, names, addresses,
descriptions and occupations of
witnesses
Signed before me:
Signature
...
D
...
Merchant

Signed before me:
Signature
...
F
...
Merchant

Signed before me:
Signature
...
H
...
Merchant

Signed before me:
Signature
...
J
...
Merchant

Signed before me:
Signature
...
L
...
Merchant

Signed before me:
Signature
...
N
...
Merchant

Signed before me:
Signature
...
B
...


7th

Shri/Smt
...
, resident of
...
years shall be the
nominee in the event of death of the sole member (Applicable in case of one person company)
Dated
...


TABLE -E
MEMORANDUM OF ASSOCIATION OF AN UNLIMITED COMPANY
AND HAVING SHARE CAPITAL
1st

The name of the company is ‗‗
...


2nd

The registered office of the company will be situated in the State of
...


5th

The
share
capital
of
the
company
is
...
shares of
...


6th

We, the several persons, whose names, and addresses are subscribed, are desirous of being
formed into a company in pursuance of this memorandum of association and we respectively
agree to take the number of shares in the capital of the company set against our respective
names:—

Names, addresses,
descriptions and
occupations of subscribers

No
...
B
...
Merchant


...


C
...
of
...


Signed before me:
Signature
...
F
...
Merchant


...


G
...
of
...


Signed before me:
Signature
...
J
...
Merchant


...


K
...
of
...


Signed before me:
Signature
...
N
...
Merchant


...


7th

I, whose name and address is given below, am desirous of forming a company in pursuance of
this memorandum of association and agree to take all the shares in the capital of the company
(Applicable in case of one person company):—

Name, address, description
and occupation of subscriber

Signature of subscriber

A
...
Merchant

Signature, name, address, description
and occupation of witness
Signed before me:
Signature
...
, son/daughter of
...
aged
...
the day of
...
(1) In these regulations—
(a) ―the Act‖ means the Companies Act, 2013,
(b) ―the seal‖ means the common seal of the company
...

Share capital and variation of rights
II
...
Subject to the provisions of the Act and these Articles, the shares in the capital of the company
shall be under the control of the Directors who may issue, allot or otherwise dispose of the same or any of
them to such persons, in such proportion and on such terms and conditions and either at a premium or at
par and at such time as they may from time to time think fit
...
(i) Every person whose name is entered as a member in the register of members shall be entitled to
receive within two months after incorporation, in case of subscribers to the memorandum or after
allotment or within one month after the application for the registration of transfer or transmission or
within such other period as the conditions of issue shall be provided,—
(a) one certificate for all his shares without payment of any charges; or
(b) several certificates, each for one or more of his shares, upon payment of twenty rupees for
each certificate after the first
...

(iii) In respect of any share or shares held jointly by several persons, the company shall not be bound
to issue more than one certificate, and delivery of a certificate for a share to one of several joint holders
shall be sufficient delivery to all such holders
...
(i) If any share certificate be worn out, defaced, mutilated or torn or if there be no further space on
the back for endorsement of transfer, then upon production and surrender thereof to the company, a new
certificate may be issued in lieu thereof, and if any certificate is lost or destroyed then upon proof thereof
to the satisfaction of the company and on execution of such indemnity as the company deem adequate, a
new certificate in lieu thereof shall be given
...

(ii) The provisions of Articles (2) and (3) shall mutatis mutandis apply to debentures of the company
...
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, future or partial interest in any share, or any
interest in any fractional part of a share, or (except only as by these regulations or by law otherwise
provided) any other rights in respect of any share except an absolute right to the entirety thereof in the
registered holder
...
(i) The company may exercise the powers of paying commissions conferred by sub-section (6) of
section 40, provided that the rate per cent
...

(ii) The rate or amount of the commission shall not exceed the rate or amount prescribed in rules
made under sub-section (6) of section 40
...

237

6
...

(ii) To every such separate meeting, the provisions of these regulations relating to general meetings
shall mutatis mutandis apply, but so that the necessary quorum shall be at least two persons holding at
least one-third of the issued shares of the class in question
...
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
...
Subject to the provisions of section 55, any preference shares may, with the sanction of an ordinary
resolution, be issued on the terms that they are to be redeemed on such terms and in such manner as the
company before the issue of the shares may, by special resolution, determine
...
(i) The company shall have a first and paramount lien—
(a) on every share (not being a fully paid share), for all monies (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 monies 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
...

10
...

11
...

(ii) The purchaser shall be registered as the holder of the shares comprised in any such transfer
...

12
...

(ii) 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
...
(i) The Board may, from time to time, make calls upon the members in respect of any monies
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:
238

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
...

(iii) A call may be revoked or postponed at the discretion of the Board
...
A call shall be deemed to have been made at the time when the resolution of the Board
authorising the call was passed and may be required to be paid by instalments
...
The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof
...
(i) If a sum called in respect of a share is not paid before or on the day appointed for payment
thereof, the person from whom the sum is due shall pay interest thereon from the day appointed for
payment thereof to the time of actual payment at ten per cent
...

(ii) The Board shall be at liberty to waive payment of any such interest wholly or in part
...
(i) 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
...

18
...
per annum, as may be agreed upon between the Board
and the member paying the sum in advance
...
(i) The instrument of transfer of any share in the company shall be executed by or on behalf of
both the transferor and transferee
...

20
...

21
...


239

22
...

Transmission of shares
23
...

(ii) Nothing in clause (i) shall release the estate of a deceased joint holder from any liability in respect
of any share which had been jointly held by him with other persons
...
(i) 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, elect, either—
(a) to be registered himself as holder of the share; or
(b) to make such transfer of the share as the deceased or insolvent member could have made
...

25
...

(ii) If the person aforesaid shall elect to transfer the share, he shall testify his election by executing a
transfer of the share
...

26
...

27
...


240

Forfeiture of shares
28
...

29
...

30
...

31
...

(ii) At any time before a sale or disposal as aforesaid, the Board may cancel the forfeiture on such
terms as it thinks fit
...
(i) A person whose shares have been forfeited shall cease to be a member in respect of the
forfeited shares, but shall, notwithstanding the forfeiture, remain liable to pay to the company all monies
which, at the date of forfeiture, were presently payable by him to the company in respect of the shares
...

33
...

34
...

Alteration of capital
35
...

36
...

37
...

(b) the holders of stock shall, according to the amount of stock held by them, have the same
rights, privileges and advantages as regards dividends, voting at meetings of the company, and other
matters, as if they held the shares from which the stock arose; but no such privilege or advantage
(except participation in the dividends and profits of the company and in the assets on winding up)
shall be conferred by an amount of stock which would not, if existing in shares, have conferred that
privilege or advantage
...

38
...

Capitalisation of profits
39
...

(ii) The sum aforesaid shall not be paid in cash but shall be applied, subject to the provision contained
in clause (iii), either in or towards—
(A) paying up any amounts for the time being unpaid on any shares held by such members
respectively;
(B) paying up in full, unissued shares of the company to be allotted and distributed, credited as
fully paid-up, to and amongst such members in the proportions aforesaid;
(C) partly in the way specified in sub-clause (A) and partly in that specified in sub-clause (B);
(D) A securities premium account and a capital redemption reserve account may, for the purposes
of this regulation, be applied in the paying up of unissued shares to be issued to members of the
company as fully paid bonus shares;
(E) The Board shall give effect to the resolution passed by the company in pursuance of this
regulation
...
(i) Whenever such a resolution as aforesaid shall have been passed, the Board shall—
(a) make all appropriations and applications of the undivided profits resolved to be capitalised
thereby, and all allotments and issues of fully paid shares if any; and
(b) generally do all acts and things required to give effect thereto
...

Buy-back of shares
41
...

General meetings
42
...

43
...

(ii) If at any time directors capable of acting who are sufficient in number to form a quorum are not
within India, any director or any two members of the company may call an extraordinary general meeting
in the same manner, as nearly as possible, as that in which such a meeting may be called by the Board
...
(i) No business shall be transacted at any general meeting unless a quorum of members is present
at the time when the meeting proceeds to business
...

45
...

46
...

47
...

48
...

Adjournment of meeting
49
...

(ii) No business shall be transacted at any adjourned meeting other than the business left unfinished at
the meeting from which the adjournment took place
...

(iv) Save as aforesaid, and as provided in section 103 of the Act, it shall not be necessary to give any
notice of an adjournment or of the business to be transacted at an adjourned meeting
...
Subject to any rights or restrictions for the time being attached to any class or classes of shares,—
(a) on a show of hands, every member present in person shall have one vote; and
(b) on a poll, the voting rights of members shall be in proportion to his share in the paid-up equity
share capital of the company
...
A member may exercise his vote at a meeting by electronic means in accordance with section 108
and shall vote only once
...
(i) In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by
proxy, shall be accepted to the exclusion of the votes of the other joint holders
...

53
...

54
...

55
...

56
...

(ii) Any such objection made in due time shall be referred to the Chairperson of the meeting, whose
decision shall be final and conclusive
...
The instrument appointing a proxy and the power-of-attorney or other authority, if any, under
which it is signed or a notarised copy of that power or authority, shall be deposited at the registered office
of the company not less than 48 hours before the time for holding the meeting or adjourned meeting at
which the person named in the instrument proposes to vote, or, in the case of a poll, not less than 24 hours
before the time appointed for the taking of the poll; and in default the instrument of proxy shall not be
treated as valid
...
An instrument appointing a proxy shall be in the form as prescribed in the rules made under
section 105
...
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
244

authority under which the proxy was executed, or the transfer of the shares in respect of which the proxy
is given:
Provided that no intimation in writing of such death, insanity, revocation or transfer shall have been
received by the company at its office before the commencement of the meeting or adjourned meeting at
which the proxy is used
...
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
...
(i) The remuneration of the directors shall, in so far as it consists of a monthly payment, be
deemed to accrue from day-to-day
...

62
...

63
...

64
...

65
...

66
...

(ii) Such person shall hold office only up to the date of the next annual general meeting of the
company but shall be eligible for appointment by the company as a director at that meeting subject to the
provisions of the Act
...
(i) The Board of Directors may meet for the conduct of business, adjourn and otherwise regulate
its meetings, as it thinks fit
...

68
...

(ii) In case of an equality of votes, the Chairperson of the Board, if any, shall have a second or casting
vote
...
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 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
...
(i) The Board may elect a Chairperson of its meetings and determine the period for which he is to
hold office
...

71
...

(ii) 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
...
(i) A committee may elect a Chairperson of its meetings
...

73
...

(ii) 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 Chairperson shall have a second or casting vote
...
All acts done in any meeting of the Board or of a committee thereof or by any person acting as a
director, shall, notwithstanding that it may be afterwards discovered that there was some defect in the
appointment of any one or more of such directors or of any person acting as aforesaid, or that they or any
of them were disqualified, be as valid as if every such director or such person had been duly appointed
and was qualified to be a director
...
Save as otherwise expressly provided in the Act, a resolution 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 valid and effective as if it had been passed at a meeting of the Board
or committee, duly convened and held
...
In case of a One Person Company—
(i) where the company is having only one director, all the businesses to be transacted at the
meeting of the Board shall be entered into minutes book maintained under section 118;
(ii) such minutes book shall be signed and dated by the director;
(iii) the resolution shall become effective from the date of signing such minutes by the director
...
Subject to the provisions of the Act,—
(i) A chief executive officer, manager, company secretary or chief financial officer may be
appointed by the Board for such term, at such remuneration and upon such conditions as it may thinks
fit; and any chief executive officer, manager, company secretary or chief financial officer so
appointed may be removed by means of a resolution of the Board;
(ii) A director may be appointed as chief executive officer, manager, company secretary or chief
financial officer
...
A provision of the Act or these regulations requiring or authorising a thing to be done by or to a
director and chief executive officer, manager, company secretary or chief financial officer shall not be
satisfied by its being done by or to the same person acting both as director and as, or in place of, chief
executive officer, manager, company secretary or chief financial officer
...
(i) The Board shall provide for the safe custody of the seal
...

Dividends and Reserve
80
...

81
...

82
...

(ii) The Board may also carry forward any profits which it may consider necessary not to divide,
without setting them aside as a reserve
...
(i) 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
company, dividends may be declared and paid according to the amounts of the shares
...

(iii) 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
...
The Board may deduct from any dividend payable to any member all sums of money, if any,
presently payable by him to the company on account of calls or otherwise in relation to the shares of the
company
...
(i) Any dividend, interest or other monies 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
...

86
...

87
...

88
...

Accounts
89
...


247

(ii) No member (not being a director) shall have any right of inspecting any account or book or
document of the company except as conferred by law or authorised by the Board or by the company in
general meeting
...
Subject to the provisions of Chapter XX of the Act and rules made thereunder—
(i) 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 members, in specie or
kind, the whole or any part of the assets of the company, whether they shall consist of property of the
same kind or not
...

(iii) The liquidator may, with the like sanction, vest the whole or any part of such assets in
trustees upon such trusts for the benefit of the contributories if he considers necessary, but so that no
member shall be compelled to accept any shares or other securities whereon there is any liability
...
Every officer 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 which relief is granted to him by the court or the
Tribunal
...
B
...
Merchant

Signed before me
Signature……………
...
D
...
Merchant

Signed before me
Signature……………
...
F
...
Merchant

Signed before me
Signature……………
...
H
...
Merchant

Signed before me
Signature……………
...
J
...
Merchant

Signed before me
Signature……………
...
L
...
Merchant

Signed before me
Signature……………
...
N
...
Merchant

Signed before me
Signature……………
...
day of ………20……
Place:
...
The number of members with which the company proposes to be registered is hundred, but the
Board of Directors may, from time to time, register an increase of members
...
All the articles of Table F in Schedule I annexed to the Companies Act, 2013 shall be deemed to be
incorporated with these articles and to apply to the company
...
(1) In these regulations—
(a) ―the Act‖ means the Companies Act, 2013;
(b) ―the seal‖ means the common seal of the company
...

Members
II
...
The number of members with which the company proposes to be registered is hundred, 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
...
The subscribers to the memorandum and such other persons as the Board shall admit to
membership shall be members of the company
...
All general meetings other than annual general meeting shall be called extraordinary general
meeting
...
(i) The Board may, whenever it thinks fit, call an extraordinary general meeting
...

Proceedings at general meetings
5
...

(ii) Save as otherwise provided herein, the quorum for the general meetings shall be as provided in
section 103
...
The Chairperson, if any, of the Board shall preside as Chairperson at every general meeting of the
company
...
If there is no such Chairperson, or if he is not present within fifteen minutes after the time
appointed for holding the meeting, or is unwilling to act as Chairperson of the meeting, the directors
present shall elect one of their members to be Chairperson of the meeting
...
If at any meeting no director is willing to act as Chairperson 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 members to be Chairperson of the meeting
...
(i) The Chairperson 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
...

(iii) 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
...

Voting rights
10
...

11
...

12
...

13
...

(ii) Any such objection made in due time shall be referred to the Chairperson of the meeting, whose
decision shall be final and conclusive
...
A vote given in accordance with the terms of an instrument of proxy shall be valid,
notwithstanding the previous death or insanity of the principal or the revocation of the proxy or of the
authority under which the proxy was executed, or the transfer of the shares in respect of which the proxy
is given:
Provided that no intimation in writing of such death, insanity, revocation or transfer shall have been
received by the company at its office before the commencement of the meeting or adjourned meeting at
which the proxy is used
...
A member may exercise his vote at a meeting by electronic means in accordance with section 108
and shall vote only once
...
Any business other than that upon which a poll has been demanded may be proceeded with,
pending the taking of the poll
...
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
...
(i) The remuneration of the directors shall, in so far as it consists of a monthly payment, be
deemed to accrue from day-to-day
...

250

Proceedings of the Board
19
...

(ii) A director may, and the manager or secretary on the requisition of a director shall, at any time,
summon a meeting of the Board
...
(i) Save as otherwise expressly provided in the Act, questions arising at any meeting of the Board
shall be decided by a majority of votes
...

21
...

22
...

(ii) If no such chairperson is elected, or if at any meeting the Chairperson is not present within five
minutes after the time appointed for holding the meeting, the directors present may choose one of their
members to be Chairperson of the meeting
...
(i) 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
...

24
...

(ii) If no such Chairperson is elected, or if at any meeting the chairperson is not present within five
minutes after the time appointed for holding the meeting, the members present may choose one of their
members to be Chairperson of the meeting
...
(i) A committee may meet and adjourn as it thinks proper
...

26
...

27
...

Chief Executive Officer, Manager, Company Secretary or
Chief Financial Officer
28
...


251

(ii) A director may be appointed as chief executive officer, manager, company secretary or chief
financial officer
...
A provision of the Act or these regulations requiring or authorising a thing to be done by or to a
director and chief executive officer, manager, company secretary or chief financial officer shall not be
satisfied by its being done by or to the same person acting both as director and as, or in place of, chief
executive officer, manager, company secretary or chief financial officer
...
(i) The Board shall provide for the safe custody of the seal
...

Note: The Articles shall be signed by each subscriber of the memorandum of association who shall add
his address, description and occupation, if any, in the presence of at least one witness who shall attest the
signature and shall likewise add his address, description and occupation, if any, and such signatures shall
be in form specified below:
Names, addresses, descriptions

Witnesses (along with names, addresses,

and occupations of subscribers

descriptions and occupations)

A
...
of…………
...


C
...
of…………
...


E
...
of…………
...


G
...
of…………
...


I
...
of…………
...


K
...
of…………
...


M
...
of…………
...


Dated the……
...

TABLE – I
ARTICLES OF ASSOCIATION OF AN UNLIMITED COMPANY AND
HAVING A SHARE CAPITAL
1
...

2
...

252

TABLE - J
ARTICLES OF ASSOCIATION OF AN UNLIMITED COMPANY AND
NOT HAVING SHARE CAPITAL
1
...

2
...

3
...


253

SCHEDULE II
(See section 123)
USEFUL LIVES TO COMPUTE DEPRECIATION
PART ‗A‘
1
...

The depreciable amount of an asset is the cost of an asset or other amount substituted for cost, less its
residual value
...

2
...

3
...

(ii) In respect of other companies the useful life of an asset shall not be longer than the useful life
and the residual value shall not be higher than that prescribed in Part C
...

PART ‗B‘
4
...

PART ‗C‘
5
...


Useful Life

Buildings [NESD]
(a) Buildings (other than factory buildings) RCC Frame Structure

60 Years

(b) Buildings (other than factory buildings) other than RCC Frame
Structure

30 Years

(c) Factory buildings

-do-

(d) Fences, wells, tube wells

5 Years

(e) Others (including temporary structure, etc
...

III
...
[NESD]
Roads [NESD]

(a) Carpeted roads
(i) Carpeted Roads-RCC

10 Years

(ii) Carpeted Roads-other than RCC

5 Years

(b) Non-carpeted roads

3 Years
254

IV
...
Cinematograph films—Machinery used in the production and
exhibition of cinematograph films, recording and reproducing
equipments, developing machines, printing machines, editing
machines, synchronizers and studio lights except bulbs
2
...
Plant and Machinery except direct fire glass melting furnaces
— Recuperative and regenerative glass melting furnaces

13 Years

2
...
Float Glass Melting Furnaces [NESD]

10 Years

(c) Plant and Machinery used in mines and quarries—Portable
underground machinery and earth moving machinery used in
open cast mining [NESD]

8 Years

(d) Plant and Machinery used in Telecommunications [NESD]
1
...
Telecom transceivers, switching centres, transmission and
other network equipment

13 Years

3
...
Satellites

-do-

(e) Plant and Machinery used in exploration, production and
refining oil and gas [NESD]
1
...
Oil and gas assets (including wells), processing plant and
facilities

-do-

3
...
Storage tanks and related equipment

-do-

5
...
Drilling Rig

-do-

7
...

255

8 Years

8
...
Thermal/ Gas/ Combined Cycle Power Generation Plant

40 Years

2
...
Nuclear Power Generation Plant

-do-

4
...
Wind Power Generation Plant

22 Years

6
...
Gas Storage and Distribution Plant

30 Years

8
...
Sinter Plant

20 Years

2
...
Coke ovens

-do-

4
...
Basic oxygen Furnace Converter

25 Years

(h) Plant and Machinery used in manufacture of non-ferrous
metals
1
...
Bauxite crushing and grinding section [NESD]

-do-

3
...
Turbine [NESD]

-do-

5
...
Copper Smelter [NESD]

-do-

7
...
Soaking Pit

30 Years

9
...
Rolling Mills

-do-

11
...
[NESD]

-do-

12
...
, used in mines
13
...
Electrical Machinery, X-ray and electrotherapeutic apparatus
and accessories thereto, medical, diagnostic equipments,
namely, Cat-scan, Ultrasound Machines, ECG Monitors, etc
...
Other Equipments
...
Reactors

20 Years

2
...
Drying equipments/Centrifuges and Decanters

-do-

4
...
Concreting, Crushing, Piling Equipments and Road Making
Equipments

12 Years

2
...
Transmission line, Tunneling Equipments [NESD]
4
...
Others including Material
Equipments [NESD]

9 Years
Handling

/Pipeline/Welding

(l) Plant and Machinery used in salt works [NESD]
V
...

VI
...
Motor cycles, scooters and other mopeds

10 Years

2
...
Motor buses, motor lorries and motor cars other than those
used in a business of running them on hire

8 Years

4
...
Electrically operated vehicles including battery powered or
fuel cell powered vehicles
VII
...
Ocean-going ships
(i) Bulk Carriers and liner vessels

25 Years

(ii) Crude tankers, product carriers and easy chemical carriers with
or without conventional tank coatings
...
Vessels ordinarily operating on inland waters—
(i) Speed boats

13 Years

(ii) Other vessels

28 Years

VIII
...


X
...


Aircrafts or Helicopters [NESD]

20 Years

Railways sidings, locomotives, rolling stocks, tramways
and railways used by concerns, excluding railway concerns
[NESD]

15 Years

Ropeway structures [NESD]

15 Years
5 Years

Office equipment [NESD]

XII
...


3 Years

XIII
...


Electrical Installations and Equipment [NESD]

10 years

XV
...
—
1
...

2
...

3
...

4
...
Where cost of a part of the
asset is significant to total cost of the asset and useful life of that part is different from the useful life of
the remaining asset, useful life of that significant part shall be determined separately
...
Depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual
value
...

6
...
Except for assets in respect of which no extra shift depreciation is permitted
(indicated by NESD in Part C above), if an asset is used for any time during the year for double shift, the
depreciation will increase by 50% for that period and in case of the triple shift the depreciation shall be
calculated on the basis of 100% for that period
...
From the date this Schedule comes into effect, the carrying amount of the asset as on that date—
(a) shall be depreciated over the remaining useful life of the asset as per this Schedule;
(b) after retaining the residual value, shall be recognised in the opening balance of retained
earnings where the remaining useful life of an asset is nil
...
‗‗Continuous process plant‘‘ means a plant which is required and designed to operate for twentyfour hours a day
...
Where compliance with the requirements of the Act including Accounting Standards as applicable
to the companies require any change in treatment or disclosure including addition, amendment,
substitution or deletion in the head or sub-head or any changes, inter se, in the financial statements or
statements forming part thereof, the same shall be made and the requirements of this Schedule shall stand
modified accordingly
...
The disclosure requirements specified in this Schedule are in addition to and not in substitution of
the disclosure requirements specified in the Accounting Standards prescribed under the Companies Act,
2013
...

Similarly, all other disclosures as required by the Companies Act shall be made in the notes to accounts in
addition to the requirements set out in this Schedule
...
(i) Notes to accounts shall contain information in addition to that presented in the Financial
Statements and shall provide where required (a) narrative descriptions or disaggregations of items
recognised in those statements; and (b) information about items that do not qualify for recognition in
those statements
...
In preparing the Financial Statements
including the notes to accounts, a balance shall be maintained between providing excessive detail that
may not assist users of financial statements and not providing important information as a result of too
much aggregation
...
(i) Depending upon the turnover of the company, the figures appearing in the Financial Statements
may be rounded off as given below:—
Turnover

Rounding off

(a) less than one hundred crore rupees

To the nearest hundreds, thousands, lakhs or
millions, or decimals thereof
...


(ii) Once a unit of measurement is used, it shall be used uniformly in the Financial Statements
...
Except in the case of the first Financial Statements laid before the Company (after its
incorporation) the corresponding amounts (comparatives) for the immediately preceding reporting period
for all items shown in the Financial Statements including notes shall also be given
...
For the purpose of this Schedule, the terms used herein shall be as per the applicable Accounting
Standards
...
Line items, sub-line items and sub-totals
shall be presented as an addition or substitution on the face of the Financial Statements when such
presentation is relevant to an understanding of the company‘s financial position or performance
or to cater to industry/sector-specific disclosure requirements or when required for compliance
with the amendments to the Companies Act or under the Accounting Standards
...

Balance Sheet as at ………………………
(Rupees in…………)

Particulars

Note
No
...
EQUITY AND LIABILITIES
(1) Shareholders‘ funds
(a) Share capital
(b) Reserves and surplus
(c) Money received against share
warrants
(2) Share application money pending
allotment
(3) Non-current liabilities
(a) Long-term borrowings
(b) Deferred tax liabilities (Net)
(c) Other Long term liabilities
(d) Long-term provisions
(4) Current liabilities
(a) Short-term borrowings
(b) Trade payables
(c) Other current liabilities
(d) Short-term provisions
TOTAL
II
...

Notes
GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET
1
...

All other assets shall be classified as non-current
...
An operating cycle is the time between the acquisition of assets for processing and their realisation
in cash or cash equivalents
...

3
...
Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity instruments do not affect its classification
...

4
...

5
...

6
...

A
...
shares
specifying the number of shares held;
(h) shares reserved for issue under options and contracts/commitments for the sale of
shares/disinvestment, including the terms and amounts;
(i) for the period of five years immediately preceding the date as at which the Balance Sheet
is prepared:
(A) Aggregate number and class of shares allotted as fully paid-up pursuant to contract(s)
without payment being received in cash
...

(C) Aggregate number and class of shares bought back
...

B
...
e
...
;
(Additions and deductions since last balance sheet to be shown under each of the specified
heads);
(ii) A reserve specifically represented by earmarked investments shall be termed as a ―fund‖
...
Similarly, the balance of ―Reserves and Surplus‖, after adjusting negative balance of
263

surplus, if any, shall be shown under the head ―Reserves and Surplus‖ even if the resulting figure is in
the negative
...
Long-Term Borrowings
(i) Long-term borrowings shall be classified as:
(a) Bonds/debentures;
(b) Term loans:
(A) from banks
...

(c) Deferred payment liabilities;
(d) Deposits;
(e) Loans and advances from related parties;
(f) Long term maturities of finance lease obligations;
(g) Other loans and advances (specify nature)
...
Nature of security shall
be specified separately in each case
...

(iv) Bonds/debentures (along with the rate of interest and particulars of redemption or conversion,
as the case may be) shall be stated in descending order of maturity or conversion, starting from
farthest redemption or conversion date, as the case may be
...

(v) Particulars of any redeemed bonds/debentures which the company has power to reissue shall
be disclosed
...

(vii) Period and amount of continuing default as on the balance sheet date in repayment of loans
and interest, shall be specified separately in each case
...
Other Long-term Liabilities
Other Long-term Liabilities shall be classified as:
(a) Trade payables;
(b) Others
...
Long-term provisions
The amounts shall be classified as:
(a) Provision for employee benefits;
(b) Others (specify nature)
...
Short-term borrowings
(i) Short-term borrowings shall be classified as:
(a) Loans repayable on demand;
(A) from banks
...

264

(b) Loans and advances from related parties;
(c) Deposits;
(d) Other loans and advances (specify nature)
...
Nature of security shall
be specified separately in each case
...

(iv) Period and amount of default as on the balance sheet date in repayment of loans and interest,
shall be specified separately in each case
...
Other current liabilities
The amounts shall be classified as:
(a) Current maturities of long-term debt;
(b) Current maturities of finance lease obligations;
(c) Interest accrued but not due on borrowings;
(d) Interest accrued and due on borrowings;
(e) Income received in advance;
(f) Unpaid dividends;
(g) Application money received for allotment of securities and due for refund and interest
accrued thereon
...

The terms and conditions including the number of shares proposed to be issued, the amount of
premium, if any, and the period before which shares shall be allotted shall be disclosed
...
Further, the
period for which the share application money has been pending beyond the period for allotment
as mentioned in the document inviting application for shares along with the reason for such share
application money being pending shall be disclosed
...
e
...

H
...

(b) Others (specify nature)
...
Tangible assets
(i) Classification shall be given as:
(a) Land;
(b) Buildings;
(c) Plant and Equipment;
265

(d) Furniture and Fixtures;
(e) Vehicles;
(f) Office equipment;
(g) Others (specify nature)
...

(iii) A reconciliation of the gross and net carrying amounts of each class of assets at the beginning
and end of the reporting period showing additions, disposals, acquisitions through business
combinations and other adjustments and the related depreciation and impairment losses/reversals shall
be disclosed separately
...

J
...

(ii) A reconciliation of the gross and net carrying amounts of each class of assets at the beginning
and end of the reporting period showing additions, disposals, acquisitions through business
combinations and other adjustments and the related amortization and impairment losses/reversals
shall be disclosed separately
...

K
...

Under each classification, details shall be given of names of the bodies corporate indicating
separately whether such bodies are (i) subsidiaries, (ii) associates,(iii) joint ventures, or (iv) controlled
special purpose entities in whom investments have been made and the nature and extent of the
investment so made in each such body corporate (showing separately investments which are partlypaid)
...

(ii) Investments carried at other than at cost should be separately stated specifying the basis for
valuation thereof;
(iii) The following shall also be disclosed:
(a) Aggregate amount of quoted investments and market value thereof;
(b) Aggregate amount of unquoted investments;
(c) Aggregate provision for diminution in value of investments
...
Long-term loans and advances
(i) Long-term loans and advances shall be classified as:
(a) Capital Advances;
(b) Security Deposits;
(c) Loans and advances to related parties (giving details thereof);
(d) Other loans and advances (specify nature)
...

(iii) Allowance for bad and doubtful loans and advances shall be disclosed under the relevant
heads separately
...

M
...


267

(b) Allowance for bad and doubtful debts shall be disclosed under the relevant heads
separately
...

N
...

Under each classification, details shall be given of names of the bodies corporate [indicating
separately whether such bodies are: (i) subsidiaries, (ii) associates, (iii) joint ventures, or (iv)
controlled special purpose entities] in whom investments have been made and the nature and extent of
the investment so made in each such body corporate (showing separately investments which are
partly paid)
...

(ii) The following shall also be disclosed:
(a) The basis of valuation of individual investments;
(b) Aggregate amount of quoted investments and market value thereof;
(c) Aggregate amount of unquoted investments;
(d) Aggregate provision made for diminution in value of investments
...
Inventories
(i) Inventories shall be classified as:
(a) Raw materials;
(b) Work-in-progress;
(c) Finished goods;
(d) Stock-in-trade (in respect of goods acquired for trading);
(e) Stores and spares;
(f) Loose tools;
(g) Others (specify nature)
...

(iii) Mode of valuation shall be stated
...
Trade Receivables
(i) Aggregate amount of Trade Receivables outstanding for a period exceeding six months from
the date they are due for payment should be separately stated
...

(iii) Allowance for bad and doubtful debts shall be disclosed under the relevant heads separately
...

Q
...

(ii) Earmarked balances with banks (for example, for unpaid dividend) shall be separately stated
...

(iv) Repatriation restrictions, if any, in respect of cash and bank balances shall be separately
stated
...

R
...

(ii) The above shall also be sub-classified as:
(a) Secured, considered good;
(b) Unsecured, considered good;
(c) Doubtful
...

(iv) Loans and advances due by directors or other officers of the company or any of them either
severally or jointly with any other person or amounts due by firms or private companies respectively
in which any director is a partner or a director or a member shall be separately stated
...
Other current assets (specify nature)
This is an all-inclusive heading, which incorporates current assets that do not fit into any other
asset categories
...
Contingent liabilities and commitments (to the extent not provided for)
(i) Contingent liabilities shall be classified as:
(a) Claims against the company not acknowledged as debt;
(b) Guarantees;
269

(c) Other money for which the company is contingently liable
...

U
...
Arrears of fixed cumulative
dividends on preference shares shall also be disclosed separately
...
Where in respect of an issue of securities made for a specific purpose, the whole or part of the
amount has not been used for the specific purpose at the balance sheet date, there shall be indicated
by way of note how such unutilised amounts have been used or invested
...
If, in the opinion of the Board, any of the assets other than fixed assets and non-current
investments do not have 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
...

Profit and loss statement for the year ended ………………………
(Rupees in…………)

Particulars

Note
No
...
Revenue from operations
II
...
Total Revenue (I + II)
IV
...
Profit/(loss) from Discontinuing
operations (after tax) (XII-XIII)

xxx

xxx

XV
...
Profit before exceptional and
extraordinary items and tax (III IV)
VI
...
Profit before extraordinary items
and tax (V - VI)
VIII
...
Profit before tax (VII- VIII)
X
...
Profit (Loss) for the period from
continuing operations (VII-VIII)
XII
...
Tax expense
operations

of

XVI
...


271

GENERAL INSTRUCTIONS FOR PREPARATION OF STATEMENT OF
PROFIT AND LOSS
1
...

2
...

(B) In respect of a finance company, revenue from operations shall include revenue from—
(a) Interest; and
(b) Other financial services
...

3
...

4
...

5
...

(b) Depreciation and amortisation expense;
(c) Any item of income or expenditure which exceeds one per cent
...
1,00,000, whichever is higher;
(d) Interest Income;
(e) Interest expense;
(f) Dividend income;

272

(g) Net gain/loss on sale of investments;
(h) Adjustments to the carrying amount of investments;
(i) Net gain or loss on foreign currency transaction and translation (other than considered as
finance cost);
(j) Payments to the auditor as (a) auditor; (b) for taxation matters; (c) for company law matters;
(d) for management services; (e) for other services; and (f) for reimbursement of expenses;
(k) In case of Companies covered under section 135, amount of expenditure incurred on corporate
social responsibility activities;
(l) Details of items of exceptional and extraordinary nature;
(m) Prior period items;
(ii) (a) In the case of manufacturing companies,—
(1) Raw materials under broad heads
...

(b) In the case of trading companies, purchases in respect of goods traded in by the company
under broad heads
...

(d) In the case of a company, which falls under more than one of the categories mentioned in (a),
(b) and (c) above, it shall be sufficient compliance with the requirements herein if purchases, sales
and consumption of raw material and the gross income from services rendered is shown under broad
heads
...

(iii) In the case of all concerns having works in progress, works-in-progress under broad heads
...

(b) The aggregate, if material, of any amounts withdrawn from such reserves
...

(b) The aggregate, if material, of the amounts withdrawn from such provisions, as no longer
required
...

273

(b) Provisions for losses of subsidiary companies
...
I
...
Raw materials;
II
...
Capital goods;
(b) Expenditure in foreign currency during the financial year on account of royalty, knowhow, professional and consultation fees, interest, and other matters;
(c) Total value if all imported raw materials, spare parts and components consumed during
the financial year and the total value of all indigenous raw materials, spare parts and components
similarly consumed and the percentage of each to the total consumption;
(d) The amount remitted during the year in foreign currencies on account of dividends with a
specific mention of the total number of non-resident shareholders, the total number of shares held
by them on which the dividends were due and the year to which the dividends related;
(e) Earnings in foreign exchange classified under the following heads, namely:—
I
...
O
...
basis;
II
...
Interest and dividend;
IV
...

Note:— Broad heads shall be decided taking into account the concept of materiality and presentation
of true and fair view of financial statements
...
Where a company is required to prepare Consolidated Financial Statements, i
...
, consolidated
balance sheet and consolidated statement of profit and loss, the company shall mutatis mutandis follow
the requirements of this Schedule as applicable to a company in the preparation of balance sheet and
statement of profit and loss
...

(ii) ―Minority interests‖ in the balance sheet within equity shall be presented separately from the
equity of the owners of the parent
...
In Consolidated Financial Statements, the following shall be disclosed by way of additional
information:

274

Name of the entity in
the

1
Parent
Subsidiaries
Indian

Net Assets, i
...
, total assets minus total
liabilities

Share in profit or loss

As % of
consolidated net
assets

Amount

As % of
consolidated profit
or loss

Amount

2

3

4

5

1
...

3
...


...

2
...


...

Minority
Interest in
all subsidiaries
Associates
(Investment
as per the equity
method)
1
...

3
...


...

2
...


...


275

1
Joint Ventures
(as per proportionate
consolidation/
investment
as per the
equity method)
Indian

2

3

4

5

________________________________ _______________________________

1
...

3
...


...

2
...


...

Total
3
...

4
...


276

SCHEDULE IV
[See section 149(8)]
CODE FOR INDEPENDENT DIRECTORS
The Code is a guide to professional conduct for independent directors
...

I
...


II
...

III
...

IV
...

(2) The appointment of independent director(s) of the company shall be approved at the meeting of
the shareholders
...

(4) The appointment of independent directors shall be formalised through a letter of appointment,
which shall set out :
(a) the term of appointment;
(b) the expectation of the Board from the appointed director; the Board-level committee(s) in
which the director is expected to serve and its tasks;
(c) the fiduciary duties that come with such an appointment along with accompanying liabilities;
(d) provision for Directors and Officers (D and O) insurance, if any;
(e) the Code of Business Ethics that the company expects its directors and employees to follow;
(f) the list of actions that a director should not do while functioning as such in the company; and

278

(g) the remuneration, mentioning periodic fees, reimbursement of expenses for participation in the
Boards and other meetings and profit related commission, if any
...

(6) The terms and conditions of appointment of independent directors shall also be posted on the
company‘s website
...
Re-appointment:
The re-appointment of independent director shall be on the basis of report of performance evaluation
...
Resignation or removal:
(1) The resignation or removal of an independent director shall be in the same manner as is provided
in sections 168 and 169 of the Act
...

(3) Where the company fulfils the requirement of independent directors in its Board even without
filling the vacancy created by such resignation or removal, as the case may be, the requirement of
replacement by a new independent director shall not apply
...
Separate meetings:
(1) The independent directors of the company shall hold at least one meeting in a year, without the
attendance of non-independent directors and members of management;
(2) All the independent directors of the company shall strive to be present at such meeting;
(3) The meeting shall:
(a) review the performance of non-independent directors and the Board as a whole;
(b) review the performance of the Chairperson of the company, taking into account the views of
executive directors and non-executive directors;
(c) assess the quality, quantity and timeliness of flow of information between the company
management and the Board that is necessary for the Board to effectively and reasonably
perform their duties
...
Evaluation mechanism:
(1) The performance evaluation of independent directors shall be done by the entire Board of
Directors, excluding the director being evaluated
...


279

SCHEDULE V
(See sections 196 and 197)
PART I
CONDITIONS TO BE FULFILLED FOR THE APPOINTMENT OF A MANAGING OR WHOLETIME DIRECTOR OR A MANAGER WITHOUT THE APPROVAL OF THE CENTRAL
GOVERNMENT
APPOINTMENTS
No person shall be eligible for appointment as a managing or whole-time director or a manager
(hereinafter referred to as managerial person) of a company unless he satisfies the following conditions,
namely:—
(a) he had not been sentenced to imprisonment for any period, or to a fine exceeding one
thousand rupees, for the conviction of an offence under any of the following Acts, namely:—
(i) the Indian Stamp Act, 1899 (2 of 1899);
(ii) the Central Excise Act, 1944 (1 of 1944);
(iii) the Industries (Development and Regulation) Act, 1951 (65 of 1951);
(iv) the Prevention of Food Adulteration Act, 1954 (37 of 1954);
(v) the Essential Commodities Act, 1955 (10 of 1955);
(vi) the Companies Act, 2013;
(vii) the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(viii) the Wealth-tax Act, 1957 (27 of 1957);
(ix) the Income-tax Act, 1961 (43 of 1961);
(x) the Customs Act, 1962 (52 of 1962);
(xi) the Competition Act, 2002 (12 of 2003);
(xii) the Foreign Exchange Management Act, 1999 (42 of 1999);
(xiii) the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986);
(xiv) the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(xv) the Foreign Trade (Development and Regulation) Act, 1922 (22 of 1922);
(xvi) the Prevention of Money-Laundering Act, 2002 (15 of 2003);
(b) he had not been detained for any period under the Conservation of Foreign Exchange and
Prevention of Smuggling Activities Act, 1974 (52 of 1974):
Provided that where the Central Government has given its approval to the appointment of a person
convicted or detained under sub-paragraph (a) or sub-paragraph (b), as the case may be, no further
approval of the Central Government shall be necessary for the subsequent appointment of that person if
he had not been so convicted or detained subsequent to such approval
...

280

Explanation I
...

Explanation II
...
For this purpose, such person
shall be required to furnish, along with the visa application form, profile of the company, the principal
employer and terms and conditions of such person‘s appointment
...
— Remuneration payable by companies having profits:
Subject to the provisions of section 197, a company having profits in a financial year may pay
remuneration to a managerial person or persons not exceeding the limits specified in such section
...
— Remuneration payable by companies having no profit or inadequate profit without
Central Government approval:
Where in any financial year during the currency of tenure of a managerial person, a company has no
profits or its profits are inadequate, it may, without Central Government approval, pay remuneration to
the managerial person not exceeding the higher of the limits under (A) and (B) given below:—
(A):
(1)

(2)

Where the effective capital is

Limit of yearly remuneration payable shall not
exceed (Rupees)

(i) Negative or less than 5 crores

30 lakhs

(ii) 5 crores and above but less than 100 crores

42 lakhs

(iii) 100 crores and above but less than 250 60 lakhs
crores
(iv) 250 crores and above

60 lakhs plus 0
...
250 crores:

Provided that the above limits shall be doubled if the resolution passed by the shareholders is a
special resolution
...
—It is hereby clarified that for a period less than one year, the limits shall be pro-rated
...
5% of the current relevant profit:
Provided that if the resolution passed by the shareholders is a special resolution, this limit shall be
doubled:
Provided further that the limits specified under this section shall apply, if—
(i) payment of remuneration is approved by a resolution passed by the Board and, in the case of a
company covered under sub-section (1) of section 178 also by the Nomination and Remuneration
Committee;
281

(ii) the company has not made any default in repayment of any of its debts (including public
deposits) or debentures or interest payable thereon for a continuous period of thirty days in the
preceding financial year before the date of appointment of such managerial person;
(iii) a special resolution has been passed at the general meeting of the company for payment of
remuneration for a period not exceeding three years;
(iv) a statement along with a notice calling the general meeting referred to in clause (iii) is given
to the shareholders containing the following information, namely:—
I
...

II
...

III
...

IV
...
, of all the directors;
(ii) details of fixed component and performance linked incentives along with the
performance criteria;
(iii) service contracts, notice period, severance fees;
(iv) stock option details, if any, and whether the same has been issued at a discount as
well as the period over which accrued and over which exercisable
...
— Remuneration payable by companies having no profit or inadequate profit without
Central Government approval in certain special circumstances:
In the following circumstances a company may, without the Central Government approval, pay
remuneration to a managerial person in excess of the amounts provided in Section II above:—
(a) where the remuneration in excess of the limits specified in Section I or Section II is paid by any
other company and that other company is either a foreign company or has got the approval of its
shareholders in general meeting to make such payment, and treats this amount as managerial
remuneration for the purpose of section 197 and the total managerial remuneration payable by
such other company to its managerial persons including such amount or amounts is within
permissible limits under section 197
...

(c) where remuneration of a managerial person exceeds the limits in Section II but the remuneration
has been fixed by the Board for Industrial and Financial Reconstruction or the National Company
Law Tribunal:
Provided that the limits under this Section shall be applicable subject to meeting all the conditions
specified under Section II and the following additional conditions:—
(i) except as provided in para (a) of this Section, the managerial person is not receiving
remuneration from any other company;
(ii) the auditor or Company Secretary of the company or where the company has not appointed a
Secretary, a Secretary in whole-time practice, certifies that all secured creditors and term
lenders have stated in writing that they have no objection for the appointment of the
managerial person as well as the quantum of remuneration and such certificate is filed along
with the return as prescribed under sub-section (4) of section 196
...

(d) a company in a Special Economic Zone as notified by Department of Commerce from time to
time which has not raised any money by public issue of shares or debentures in India, and has not
made any default in India in repayment of any of its debts (including public deposits) or
debentures or interest payable thereon for a continuous period of thirty days in any financial year,
may pay remuneration up to Rs
...

Section IV
...
A managerial person shall be eligible for the following perquisites which shall not be included in
the computation of the ceiling on remuneration specified in Section II and Section III:—
(a) contribution to provident fund, superannuation fund or annuity fund to the extent these either
singly or put together are not taxable under the Income-tax Act, 1961 (43 of 1961);
(b) gratuity payable at a rate not exceeding half a month‘s salary for each completed year of service;
and
(c) encashment of leave at the end of the tenure
...
In addition to the perquisites specified in paragraph 1 of this section, an expatriate managerial
person (including a non-resident Indian) shall be eligible to the following perquisites which shall not be
included in the computation of the ceiling on remuneration specified in Section II or Section III—
(a) Children’s education allowance: In case of children studying in or outside India, an allowance
limited to a maximum of Rs
...

Such allowance is admissible up to a maximum of two children
...

(c) Leave travel concession: Return passage for self and family in accordance with the rules specified
by the company where it is proposed that the leave be spent in home country instead of anywhere in India
...
— For the purposes of Section II of this Part, ―effective capital‖ means the aggregate of
the paid-up share capital (excluding share application money or advances against shares); amount, if any,
for the time being standing to the credit of share premium account; reserves and surplus (excluding
revaluation reserve); long-term loans and deposits repayable after one year (excluding working capital
loans, over drafts, interest due on loans unless funded, bank guarantee, etc
...

Explanation II
...

Explanation III
...

Explanation IV
...
;
(b) be in a position to bring about objectivity in determining the remuneration package while
striking a balance between the interest of the company and the shareholders
...
— For the purposes of this Schedule, ―negative effective capital‖ means the effective
capital which is calculated in accordance with the provisions contained in Explanation I of this Part is less
than zero
...
— For the purposes of this Schedule:—
(A) ―current relevant profit‖ means the profit as calculated under section 198 but without
deducting the excess of expenditure over income referred to in sub-section 4(l) thereof in respect of
those years during which the managerial person was not an employee, director or shareholder of the
company or its holding or subsidiary companies
...

Section V
...

284

PART III
Provisions applicable to Parts I and II of this Schedule
1
...

2
...

PART IV
The Central Government may, by notification, exempt any class or classes of companies from any of
the requirements contained in this Schedule
...

(2) Agriculture, including the following, namely:—
(a) infrastructure related to storage facilities;
(b) construction relating to projects involving agro-processing and supply of inputs to
agriculture;
(c) construction for preservation and storage of processed agro-products, perishable goods
such as fruits, vegetables and flowers including testing facilities for quality
...

(4) Telecommunication, including the following, namely:—
(a) basic or cellular, including radio paging;
(b) domestic satellite service (i
...
, satellite owned and operated by an Indian company for
providing telecommunication service);
(c) network of trunking, broadband network and internet services
...

(6) Power, including the following:—
(a) generation of power through thermal, hydro, nuclear, fossil fuel, wind and other
renewable sources;

286

(b) transmission, distribution or trading of power by laying a network of new transmission or
distribution lines
...

(8) Housing, including the following:—
(a) urban and rural housing including public / mass housing, slum rehabilitation, etc;
(b) other allied activities such as drainage, lighting, laying of roads, sanitation and facilities
...

(10) such other facility service as may be prescribed
...

__________

288



---