Commencement Notification Of Companies Act 2013

Section 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;

(3) “alter” or “alteration” includes the making of additions, omissions and

substitutions;

(4) “Appellate Tribunal” means the National Company Law Appellate Tribunal

constituted under section 410;

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

(6) “associate company”, in relation to another company, means a company in

which that other company has a significant influence, but which is not a subsidiary

company of the company having such influence and includes a joint venture company.

Explanation.—For the purposes of this clause, “significant influence” means

control of at least twenty per cent. of total share capital, or of business decisions

under an agreement;

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

company;

(9) “banking company” means a banking company as defined in clause (c) of

section 5 of the Banking Regulation Act, 1949;

(10) “Board of Directors” or “Board”, in relation to a company, means the

collective body of the directors of the company;

(11) “body corporate” or “corporation” includes a company incorporated outside

India, but does not include—

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

societies; and

(ii) any other body corporate (not being a company as defined in this Act),

which the Central Government may, by notification, specify in this behalf;

(12) “book and paper” and “book or paper” include books of account, deeds,

vouchers, writings, documents, minutes and registers maintained on paper or in

electronic form;

 (14) “branch office”, in relation to a company, means any establishment described

as such by the company;

(15) “called-up capital” means such part of the capital, which has been called for

payment;

(16) “charge” means an interest or lien created on the property or assets of a

company or any of its undertakings or both as security and includes a mortgage;

(17) “chartered accountant” means a chartered accountant as defined in

clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 who

holds a valid certificate of practice under sub-section (1) of section 6 of that Act;

(18) “Chief Executive Officer” means an officer of a company, who has been

designated as such by it;

(19) “Chief Financial Officer” means a person appointed as the Chief Financial

Officer of a company;

(20) “company” means a company incorporated under this Act or under any

previous company law;

(21) “company limited by guarantee” means a company having the liability of its

members limited by the memorandum to such amount as the members may respectively

undertake to contribute to the assets of the company in the event of its being wound

up;

(22) “company limited by shares” means a company having the liability of its

members limited by the memorandum to the amount, if any, unpaid on the shares

respectively held by them;

(24) “company secretary” or “secretary” means a company secretary as defined

in clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980 who

is appointed by a company to perform the functions of a company secretary under this

Act;

(25) “company secretary in practice” means a company secretary who is deemed

to be in practice under sub-section (2) of section 2 of the Company Secretaries

Act, 1980;

(26) “contributory” means a person liable to contribute towards the assets of

the company in the event of its being wound up.

Explanation.—For the purposes of this clause, it is hereby clarified that a

person holding fully paid-up shares in a company shall be considered as a contributory

but shall have no liabilities of a contributory under the Act whilst retaining rights of

such a contributory;

(27) “control” shall include the right to appoint majority of the directors or to

control the management or policy decisions exercisable by a person or persons acting

individually or in concert, directly or indirectly, including by virtue of their shareholding

or management rights or shareholders agreements or voting agreements or in any

other manner;

(28) “cost accountant” means a cost accountant as defined in clause (b) of subsection

(1) of section 2 of the Cost and Works Accountants Act, 1959;

(29) “court” means—

(i) the High Court having jurisdiction in relation to the place at which the

registered office of the company concerned is situate, except to the extent to

which jurisdiction has been conferred on any district court or district courts

subordinate to that High Court under sub-clause (ii);

(ii) the district court, in cases where the Central Government has, by

notification, empowered any district court to exercise all or any of the

jurisdictions conferred upon the High Court, within the scope of its jurisdiction

in respect of a company whose registered office is situate in the district;

(iii) the Court of Session having jurisdiction to try any offence under this

Act or under any previous company law;

 (v) any Metropolitan Magistrate or a Judicial Magistrate of the First Class

having jurisdiction to try any offence under this Act or under any previous

company law;

(30) “debenture” includes debenture stock, bonds or any other instrument of a

company evidencing a debt, whether constituting a charge on the assets of the company

or not;

 (32) “depository” means a depository as defined in clause (e) of sub-section (1)

of section 2 of the Depositories Act, 1996;

(33) “derivative” means the derivative as defined in clause (ac) of section 2 of

the Securities Contracts (Regulation) Act, 1956;

(34) “director” means a director appointed to the Board of a company;

(35) “dividend” includes any interim dividend;

(36) “document” includes summons, notice, requisition, order, declaration, form

and register, whether issued, sent or kept in pursuance of this Act or under any other

law for the time being in force or otherwise, maintained on paper or in electronic form;

(37) “employees’ stock option” means the option given to the directors, officers

or employees of a company or of its holding company or subsidiary company or

companies, if any, which gives such directors, officers or employees, the benefit or

right to purchase, or to subscribe for, the shares of the company at a future date at a

pre-determined price;

(38) “expert” includes an engineer, a valuer, a chartered accountant, a company

secretary, a cost accountant and any other person who has the power or authority to

issue a certificate in pursuance of any law for the time being in force;

(39) “financial institution” includes a scheduled bank, and any other financial

institution defined or notified under the Reserve Bank of India Act, 1934;

(40) “financial statement” in relation to a company, includes—

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

(ii) a profit and loss account, or in the case of a company carrying on any

activity not for profit, an income and expenditure account for the financial year;

(iii) cash flow statement for the financial year;

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

(v) any explanatory note annexed to, or forming part of, any document

referred to in sub-clause (i) to sub-clause (iv):

Provided that the financial statement, with respect to One Person Company,

small company and dormant company, may not include the cash flow statement;

(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 fiftyone

per cent. of the paid-up share capital is held by the Central Government, or by any

State Government or Governments, or partly by the Central Government and partly by

one or more State Governments, and includes a company which is a subsidiary company

of such a Government company;

(46) “holding company”, in relation to one or more other companies, means a

company of which such companies are subsidiary companies;

(49) “interested director” means a director who is in any way, whether by himself

or through any of his relatives or firm, body corporate or other association of individuals

in which he or any of his relatives is a partner, director or a member, interested in a

contract or arrangement, or proposed contract or arrangement, entered into or to be

entered into by or on behalf of a company;

(50) “issued capital” means such capital as the company issues from time to time

for subscription;

(51) “key managerial personnel”, in relation to a company, means—

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

(ii) the company secretary;

(iii) the whole-time director;

(iv) the Chief Financial Officer; and

(v) such other officer as may be prescribed;

(52) “listed company” means a company which has any of its securities listed on

any recognized stock exchange;

(53) “manager” means an individual who, subject to the superintendence, control

and direction of the Board of Directors, has the management of the whole, or

substantially the whole, of the affairs of a company, and includes a director or any

other person occupying the position of a manager, by whatever name called, whether

under a contract of service or not;

(54) “managing director” means a director who, by virtue of the articles of a

company or an agreement with the company or a resolution passed in its general

meeting, or by its Board of Directors, is entrusted with substantial powers of

management of the affairs of the company and includes a director occupying the

position of managing director, by whatever name called.

Explanation.—For the purposes of this clause, the power to do administrative

acts of a routine nature when so authorised by the Board such as the power to affix the

common seal of the company to any document or to draw and endorse any cheque on

the account of the company in any bank or to draw and endorse any negotiable

instrument or to sign any certificate of share or to direct registration of transfer of any

share, shall not be deemed to be included within the substantial powers of management;

(55) “member”, in relation to a company, means—

(i) the subscriber to the memorandum of the company who shall be deemed

to have agreed to become member of the company, and on its registration, shall

be entered as member in its register of members;

(ii) every other person who agrees in writing to become a member of the

company and whose name is entered in the register of members of the company;

(iii) every person holding shares of the company and whose name is

entered as a beneficial owner in the records of a depository;

(56) “memorandum” means the memorandum of association of a company as

originally framed or as altered from time to time in pursuance of any previous company

law or of this Act;

(57) “net worth” means the aggregate value of the paid-up share capital and all

reserves created out of the profits and securities premium account, after deducting the

aggregate value of the accumulated losses, deferred expenditure and miscellaneous

expenditure not written off, as per the audited balance sheet, but does not include

reserves created out of revaluation of assets, write-back of depreciation and

amalgamation;

(58) “notification” means a notification published in the Official Gazette and the

expression “notify” shall be construed accordingly;

(59) “officer” includes any director, manager or key managerial personnel or any

person in accordance with whose directions or instructions the Board of Directors or

any one or more of the directors is or are accustomed to act;

(60) “officer who is in default”, for the purpose of any provision in this Act

which enacts that an officer of the company who is in default shall be liable to any

penalty or punishment by way of imprisonment, fine or otherwise, means any of the

following officers of a company, namely:—

(i) whole-time director;

(ii) key managerial personnel;

(iii) where there is no key managerial personnel, such director or directors

as specified by the Board in this behalf and who has or have given his or their

consent in writing to the Board to such specification, or all the directors, if no

director is so specified;

(iv) any person who, under the immediate authority of the Board or any

key managerial personnel, is charged with any responsibility including

maintenance, filing or distribution of accounts or records, authorises, actively

participates in, knowingly permits, or knowingly fails to take active steps to

prevent, any default;

(v) any person in accordance with whose advice, directions or instructions

the Board of Directors of the company is accustomed to act, other than a person

who gives advice to the Board in a professional capacity;

(vi) every director, in respect of a contravention of any of the provisions

of this Act, who is aware of such contravention by virtue of the receipt by him of

any proceedings of the Board or participation in such proceedings without

objecting to the same, or where such contravention had taken place with his

consent or connivance;

(vii) in respect of the issue or transfer of any shares of a company, the

share transfer agents, registrars and merchant bankers to the issue or transfer;

(61) “Official Liquidator” means an Official Liquidator appointed under

sub-section (1) of section 359;

 (63) "ordinary or special resolution" means an ordinary resolution, or as the

case may be, special resolution referred to in section 114;

(64) “paid-up share capital” or “share capital paid-up” means such aggregate

amount of money credited as paid-up as is equivalent to the amount received as paidup

in respect of shares issued and also includes any amount credited as paid-up in

respect of shares of the company, but does not include any other amount received in

respect of such shares, by whatever name called;

(65) “postal ballot” means voting by post or through any electronic mode;

(66) “prescribed” means prescribed by rules made under this Act;

(67) “previous company law” means any of the laws specified below:—

(i) Acts relating to companies in force before the Indian Companies

Act, 1866;

(ii) the Indian Companies Act, 1866;

(iii) the Indian Companies Act, 1882;

(iv) the Indian Companies Act, 1913;

(v) the Registration of Transferred Companies Ordinance, 1942;

(vi) the Companies Act, 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; 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, 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, in so far as other corporations are

concerned;

(viii) the Portuguese Commercial Code, in so far as it relates to sociedades

anonimas; and

(68) “private company” means a company having a minimum paid-up share

capital of one lakh rupees or such higher paid-up share capital 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:

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 a

body corporate;

(71) “public company” means a company which—

(a) is not a private company;

(b) has a minimum paid-up share capital of five lakh rupees or such higher

paid-up capital, 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;

(ii) the Infrastructure Development Finance Company Limited, referred to

in clause (vi) of sub-section (1) of section 4A of the Companies Act, 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;

(iv) institutions notified by the Central Government under sub-section (2)

of section 4A of the Companies Act, 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

(B) not less than fifty-one per cent. of the paid-up share capital is

held or controlled by the Central Government or by any State Government

or Governments or partly by the Central Government and partly by one or

more State Governments;

(73) “recognised stock exchange” means a recognised stock exchange as defined

in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956;

(74) “register of companies” means the register of companies maintained by the

Registrar on paper or in any electronic mode under this Act;

(75) “Registrar” means a Registrar, an Additional Registrar, a Joint Registrar, a

Deputy Registrar or an Assistant Registrar, having the duty of registering companies

and discharging various functions under this Act;

(76) “related party”, with reference to a company, means—

(i) a director or his relative;

(ii) a key managerial personnel or his relative;

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

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

director;

(v) a public company in which a director or manager is a director or holds

along with his relatives, more than two per cent. of its paid-up share capital;

(vi) any body corporate whose Board of Directors, managing director or

manager is accustomed to act in accordance with the advice, directions or

instructions of a director or manager;

(vii) any person on whose advice, directions or instructions a director or

manager is accustomed to act:

Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice,

directions or instructions given in a professional capacity;

(viii) any company which is—

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

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

(ix) such other person as may be prescribed;

(77) ‘‘relative’’, with reference to any person, means any one who is related to

another, if—

(i) they are members of a Hindu Undivided Family;

(ii) they are husband and wife; or

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

(78) “remuneration” means any money or its equivalent given or passed to any

person for services rendered by him and includes perquisites as defined under the

Income-tax Act, 1961;

(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;

(81) “securities” means the securities as defined in clause (h) of section 2 of the

Securities Contracts (Regulation) Act, 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;

(84) “share” means a share in the share capital of a company and includes stock;

(86) “subscribed capital” means such part of the capital which is for the time

being subscribed by the members of a company;

(87) “subsidiary company” or “subsidiary”, in relation to any other company

(that is to say the holding company), means a company in which the holding company—

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

(ii) exercises or controls more than one-half of the total share capital

either at its own or together with one or more of its subsidiary companies:

Provided that such class or classes of holding companies as may be prescribed

shall not have layers of subsidiaries beyond such numbers as may be prescribed.

Explanation.—For the purposes of this clause,—

(a) a company shall be deemed to be a subsidiary company of the holding

company even if the control referred to in sub-clause (i) or sub-clause (ii) is of

another subsidiary company of the holding company;

(b) the composition of a company’s Board of Directors shall be deemed to

be controlled by another company if that other company by exercise of some

power exercisable by it at its discretion can appoint or remove all or a majority of

the directors;

(c) the expression “company” includes anybody corporate;

 (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;

(95) words and expressions used and not defined in this Act but defined in the

Securities Contracts (Regulation) Act, 1956 or the Securities and Exchange Board of

India Act, 1992 or the Depositories Act, 1996 shall have the meanings respectively

assigned to them in those Acts.

Section 19

19. (1) No company shall, either by itself or through its nominees, hold any shares in

its holding company and no holding company shall allot or transfer its shares to any of its

subsidiary companies and any such allotment or transfer of shares of a company to its

subsidiary company shall be void:

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

(a) where the subsidiary company holds such shares as the legal representative

of a deceased member of the holding company; or

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

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

subsidiary company of the holding company:

Provided further that the subsidiary company referred to in the preceding proviso

shall have a right to vote at a meeting of the holding company only in respect of the shares

held by it as a legal representative or as a trustee, as referred to in clause (a) or clause (b) of

the said proviso.

(2) The reference in this section to the shares of a holding company which is a company

limited by guarantee or an unlimited company, not having a share capital, shall be construed

as a reference to the interest of its members, whatever be the form of interest.

21. Save as otherwise provided in this Act,—

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

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

may be signed by any key managerial personnel or an officer of the company duly authorised

by the Board in this behalf.

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.

(2) A company may, by writing under its common seal, authorise any person, either

generally or in respect of any specified matters, as its attorney to execute other deeds on its

behalf in any place either in or outside India.

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

shall bind the company and have the effect as if it were made under its common seal.

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

 (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 and the rules and regulations made thereunder.

(2) A private company may issue securities—

(a) by way of rights issue or bonus issue in accordance with the provisions of

this Act; or

Explanation.—For the purposes of this Chapter, "public offer" includes initial public

offer or further public offer of securities to the public by a company, or an offer for sale of

securities to the public by an existing shareholder, through issue of a prospectus.

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.

Explanation.—For the removal of doubts, it is hereby declared that all powers relating

to all other matters relating to prospectus, return of allotment, redemption of preference

shares and any other matter specifically provided in this Act, shall be exercised by the

Central Government, the Tribunal or the Registrar, as the case may be.

(2) The Securities and Exchange Board shall, in respect of matters specified in subsection

(1) and the matters delegated to it under proviso to sub-section (1) of section 458,

exercise the powers conferred upon it under sub-sections (1), (2A), (3) and (4) of section 11,

sections 11A, 11B and 11D of the Securities and Exchange Board of India Act, 1992.

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.

(2) For the purposes of this Act, it shall, unless the contrary is proved, be evidence

that an allotment of, or an agreement to allot, securities was made with a view to the securities

being offered for sale to the public if it is shown—

(a) that an offer of the securities or of any of them for sale to the public was made

within six months after the allotment or agreement to allot; or

(b) that at the date when the offer was made, the whole consideration to be

received by the company in respect of the securities had not been received by it.

 (4) Where a person making an offer to which this section relates is a company or a firm,

it shall be sufficient if the document referred to in sub-section (1) is signed on behalf of the

company or firm by two directors of the company or by not less than one-half of the partners

in the firm, as the case may be.

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 and the regulations made thereunder.

(2) Any company, other than a company mentioned in sub-section (1), may convert its

securities into dematerialised form or issue its securities in physical form in accordance with

the provisions of this Act or in dematerialised form in accordance with the provisions of the

Depositories Act, 1996 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 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.

31. (1) Any class or classes of companies, as the Securities and Exchange Board may

provide by regulations in this behalf, may file a shelf prospectus with the Registrar at the

stage of the first offer of securities included therein which shall indicate a period not exceeding

one year as the period of validity of such prospectus which shall commence from the date of

opening of the first offer of securities under that prospectus, and in respect of a second or

subsequent offer of such securities issued during the period of validity of that prospectus,

no further prospectus is required.

(2) A company filing a shelf prospectus shall be required to file an information

memorandum containing all material facts relating to new charges created, changes in the

financial position of the company as have occurred between the first offer of securities or the

previous offer of securities and the succeeding offer of securities and such other changes as

may be prescribed, with the Registrar within the prescribed time, prior to the issue of a

second or subsequent offer of securities under the shelf prospectus:

Provided that where a company or any other person has received applications for the

allotment of securities along with advance payments of subscription before the making of

any such change, the company or other person shall intimate the changes to such applicants

and if they express a desire to withdraw their application, the company or other person shall

refund all the monies received as subscription within fifteen days thereof.

(3) Where an information memorandum is filed, every time an offer of securities is made

under sub-section (2), such memorandum together with the shelf prospectus shall be deemed

to be a prospectus.

Explanation.—For the purposes of this section, the expression "shelf prospectus"

means a prospectus in respect of which the securities or class of securities included therein

are issued for subscription in one or more issues over a certain period without the issue of a

further prospectus.

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

prospectus prior to the issue of a prospectus.

(2) A company proposing to issue a red herring prospectus under sub-section (1) shall

file it with the Registrar at least three days prior to the opening of the subscription list and the

offer.

(3) A red herring prospectus shall carry the same obligations as are applicable to a

prospectus and any variation between the red herring prospectus and a prospectus shall be

highlighted as variations in the prospectus.

(4) Upon the closing of the offer of securities under this section, the prospectus

stating therein the total capital raised, whether by way of debt or share capital, and the

closing price of the securities and any other details as are not included in the red herring

prospectus shall be filed with the Registrar and the Securities and Exchange Board.

Explanation.—For the purposes of this section, the expression "red herring

prospectus" means a prospectus which does not include complete particulars of the quantum

or price of the securities included therein.

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.

(2) A copy of the prospectus shall, on a request being made by any person before the

closing of the subscription list and the offer, be furnished to him.

34. Where a prospectus, issued, circulated or distributed under this Chapter, includes

any statement which is untrue or misleading in form or context in which it is included or

where any inclusion or omission of any matter is likely to mislead, every person who authorises

the issue of such prospectus shall be liable under section 447:

Provided that nothing in this section shall apply to a person if he proves that such

statement or omission was immaterial or that he had reasonable grounds to believe, and did

up to the time of issue of the prospectus believe, that the statement was true or the inclusion

or omission was necessary.

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

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

(a) that, having consented to become a director of the company, he withdrew his

consent before the issue of the prospectus, and that it was issued without his authority

or consent; or

(b) that the prospectus was issued without his knowledge or consent, and that

on becoming aware of its issue, he forthwith gave a reasonable public notice that it

was issued without his knowledge or consent.

(3) Notwithstanding anything contained in this section, where it is proved that a

prospectus has been issued with intent to defraud the applicants for the securities of a

company or any other person or for any fraudulent purpose, every person referred to in subsection

(1) shall be personally responsible, without any limitation of liability, for all or any of

the losses or damages that may have been incurred by any person who subscribed to the

securities on the basis of such prospectus.

36. Any person who, either knowingly or recklessly makes any statement, promise or

forecast which is false, deceptive or misleading, or deliberately conceals any material facts,

to induce another person to enter into, or to offer to enter into,—

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

or underwriting securities; or

(b) any agreement, the purpose or the pretended purpose of which is to secure

a profit to any of the parties from the yield of securities or by reference to fluctuations

in the value of securities; or

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

or financial institution,

shall be liable for action under section 447.

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.

38. (1) Any person who—

(a) makes or abets making of an application in a fictitious name to a company for

acquiring, or subscribing for, its securities; or

(b) makes or abets making of multiple applications to a company in different

names or in different combinations of his name or surname for acquiring or subscribing

for its securities; or

(c) otherwise induces directly or indirectly a company to allot, or register any

transfer of, securities to him, or to any other person in a fictitious name,

shall be liable for action under section 447.

(2) The provisions of sub-section (1) shall be prominently reproduced in every

prospectus issued by a company and in every form of application for securities.

(3) Where a person has been convicted under this section, the Court may also order

disgorgement of gain, if any, made by, and seizure and disposal of the securities in possession

of, such person.

(4) The amount received through disgorgement or disposal of securities under subsection

(3) shall be credited to the Investor Education and Protection Fund.

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.

(2) The amount payable on application on every security shall not be less than

five per cent. of the nominal amount of the security or such other percentage or amount, as

may be specified by the Securities and Exchange Board by making regulations in this behalf.

(3) If the stated minimum amount has not been subscribed and the sum payable on

application is not received within a period of thirty days from the date of issue of the

prospectus, or such other period as may be specified by the Securities and Exchange Board,

the amount received under sub-section (1) shall be returned within such time and manner as

may be prescribed.

 (5) In case of any default under sub-section (3) or sub-section (4), the company and

its officer who is in default shall be liable to a penalty, for each default, of one thousand

rupees for each day during which such default continues or one lakh rupees, whichever is less.

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.

(2) Where a prospectus states that an application under sub-section (1) has been

made, such prospectus shall also state the name or names of the stock exchange in which the

securities shall be dealt with.

(3) All monies received on application from the public for subscription to the securities

shall be kept in a separate bank account in a scheduled bank and shall not be utilised for any

purpose other than—

(a) for adjustment against allotment of securities where the securities have been

permitted to be dealt with in the stock exchange or stock exchanges specified in the

prospectus; or

(b) for the repayment of monies within the time specified by the Securities and

Exchange Board, received from applicants in pursuance of the prospectus, where the

company is for any other reason unable to allot securities.

(4) Any condition purporting to require or bind any applicant for securities to waive

compliance with any of the requirements of this section shall be void.

(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.

44. The shares or debentures or other interest of any member in a company shall be

movable property transferable in the manner provided by the articles of the company.

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.

49. Where any calls for further share capital are made on the shares of a class, such

calls shall be made on a uniform basis on all shares falling under that class.

Explanation.—For the purposes of this section, shares of the same nominal value

on which different amounts have been paid-up shall not be deemed to fall under the same class.

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.

(2) A member of the company limited by shares shall not be entitled to any voting

rights in respect of the amount paid by him under sub-section (1) until that amount has been

called up.

51. A company may, if so authorised by its articles, pay dividends in proportion to the

amount paid-up on each share.

57. If any person deceitfully personates as an owner of any security or interest in a

company, or of any share warrant or coupon issued in pursuance of this Act, and thereby

obtains or attempts to obtain any such security or interest or any such share warrant or

coupon, or receives or attempts to receive any money due to any such owner, he shall be

punishable with imprisonment for a term which shall not be less than one year but which may

extend to three years and with fine which shall not be less than one lakh rupees but which

may extend to five lakh rupees.

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 the intimation of such transmission, as the case may be, was delivered to the

company, send notice of the refusal to the transferor and the transferee or to the person

giving intimation of such transmission, as the case may be, giving reasons for such refusal.

(2) Without prejudice to sub-section (1), the securities or other interest of any member

in a public company shall be freely transferable:

Provided that any contract or arrangement between two or more persons in respect of

transfer of securities shall be enforceable as a contract.

(3) The transferee may appeal to the Tribunal against the refusal within a period of

thirty days from the date of receipt of the notice or in case no notice has been sent by the

company, within a period of sixty days from the date on which the instrument of transfer or

the intimation of transmission, as the case may be, was delivered to the company.

(4) If a public company without sufficient cause refuses to register the transfer of

securities within a period of thirty days from the date on which the instrument of transfer or

the intimation of transmission, as the case may be, is delivered to the company, the transferee

may, within a period of sixty days of such refusal or where no intimation has been received

from the company, within ninety days of the delivery of the instrument of transfer or

intimation of transmission, appeal to the Tribunal.

(5) The Tribunal, while dealing with an appeal made under sub-section (3) or subsection

(4), may, after hearing the parties, either dismiss the appeal, or by order—

(a) direct that the transfer or transmission shall be registered by the company and

the company shall comply with such order within a period of ten days of the receipt of

the order; or

(b) direct rectification of the register and also direct the company to pay damages,

if any, sustained by any party aggrieved.

(6) If a person contravenes the order of the Tribunal under this section, he shall be

punishable with imprisonment for a term which shall not be less than one year but which may

extend to three years and with fine which shall not be less than one lakh rupees but which

may extend to five lakh rupees.

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.

(2) The Tribunal may, after hearing the parties to the appeal under sub-section (1) by

order, either dismiss the appeal or direct that the transfer or transmission shall be registered

by the company within a period of ten days of the receipt of the order or direct rectification

of the records of the depository or the register and in the latter case, direct the company to

pay damages, if any, sustained by the party aggrieved.

(3) The provisions of this section shall not restrict the right of a holder of securities,

to transfer such securities and any person acquiring such securities shall be entitled to

voting rights unless the voting rights have been suspended by an order of the Tribunal.

(4) Where the transfer of securities is in contravention of any of the provisions of the

Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India

Act, 1992 or this Act or any other law for the time being in force, the Tribunal may, on an

application made by the depository, company, depository participant, the holder of the

securities or the Securities and Exchange Board, direct any company or a depository to set

right the contravention and rectify its register or records concerned.

(5) If any default is made in complying with the order of the Tribunal under this

section, the company shall be punishable with fine which shall not be less than one lakh

rupees but which may extend to five 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.

60. (1) Where any notice, advertisement or other official publication, or any business

letter, billhead or letter paper of a company contains a statement of the amount of the

authorised capital of the company, such notice, advertisement or other official publication,

or such letter, billhead or letter paper shall also contain a statement, in an equally prominent

position and in equally conspicuous characters, of the amount of the capital which has been

subscribed and the amount paid-up.

(2) If any default is made in complying with the requirements of sub-section (1), the

company shall be liable to pay a penalty of ten thousand rupees and every officer of the

company who is in default shall be liable to pay a penalty of five thousand rupees, for each

default

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.

69. (1) Where a company purchases its own shares out of free reserves or securities

premium account, a sum equal to the nominal value of the shares so purchased shall be

transferred to the capital redemption reserve account and details of such transfer shall be

disclosed in the balance sheet.

(2) The capital redemption reserve account may be applied by the company, in paying

up unissued shares of the company to be issued to members of the company as fully paid

bonus shares.

70. (1) No company shall directly or indirectly purchase its own shares or other specified

securities—

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

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

(c) if a default, is made by the company, in the repayment of deposits accepted

either before or after the commencement of this Act, interest payment thereon,

redemption of debentures or preference shares or payment of dividend to any

shareholder, or repayment of any term loan or interest payable thereon to any financial

institution or banking company:

Provided that the buy-back is not prohibited, if the default is remedied and a

period of three years has lapsed after such default ceased to subsist.

86. If any company contravenes any provision of this Chapter, the company shall be

punishable with fine which shall not be less than one lakh rupees but which may extend to

ten lakh rupees and every officer of the company who is in default shall be punishable with

imprisonment for a term which may extend to six months or with fine which shall not be less

than twenty-five thousand rupees but which may extend to one lakh rupees, or with both.

91. (1) A company may close the register of members or the register of debentureholders

or the register of other security holders for any period or periods not exceeding in the

aggregate forty-five days in each year, but not exceeding thirty days at any one time, subject

to giving of previous notice of at least seven days or such lesser period as may be specified

by Securities and Exchange Board for listed companies or the companies which intend to get

their securities listed, in such manner as may be prescribed.

(2) If the register of members or of debenture-holders or of other security holders is

closed without giving the notice as provided in sub-section (1), or after giving shorter notice

than that so provided, or for a continuous or an aggregate period in excess of the limits

specified in that sub-section, the company and every officer of the company who is in

default shall be liable to a penalty of five thousand rupees for every day subject to a maximum

of one lakh rupees during which the register is kept closed.

91. (1) A company may close the register of members or the register of debentureholders

or the register of other security holders for any period or periods not exceeding in the

aggregate forty-five days in each year, but not exceeding thirty days at any one time, subject

to giving of previous notice of at least seven days or such lesser period as may be specified

by Securities and Exchange Board for listed companies or the companies which intend to get

their securities listed, in such manner as may be prescribed.

(2) If the register of members or of debenture-holders or of other security holders is

closed without giving the notice as provided in sub-section (1), or after giving shorter notice

than that so provided, or for a continuous or an aggregate period in excess of the limits

specified in that sub-section, the company and every officer of the company who is in

default shall be liable to a penalty of five thousand rupees for every day subject to a maximum

of one lakh rupees during which the register is kept closed.

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

the company.

(2) The Board shall, at the requisition made by,—

(a) in the case of a company having a share capital, such number of members

who hold, on the date of the receipt of the requisition, not less than one-tenth of such

of the paid-up share capital of the company as on that date carries the right of voting;

(b) in the case of a company not having a share capital, such number of members

who have, on the date of receipt of the requisition, not less than one-tenth of the total

voting power of all the members having on the said date a right to vote,call an extraordinary general meeting of the company within the period specified in subsection (4).

(3) The requisition made under sub-section (2) shall set out the matters for the

consideration of which the meeting is to be called and shall be signed by the requisitionists

and sent to the registered office of the company.

(4) If the Board does not, within twenty-one days from the date of receipt of a valid

requisition in regard to any matter, proceed to call a meeting for the consideration of that

matter on a day not later than forty-five days from the date of receipt of such requisition, the

meeting may be called and held by the requisitonists themselves within a period of three

months from the date of the requisition.

(5) A meeting under sub-section (4) by the requisitionists shall be called and held in

the same manner in which the meeting is called and held by the Board.

102. (1) A statement setting out the following material facts concerning each item of

special business to be transacted at a general meeting, shall be annexed to the notice calling

such meeting, namely:—

(a) the nature of concern or interest, financial or otherwise, if any, in respect of

each items of—

(i) every director and the manager, if any;

(ii) every other key managerial personnel; and

(iii) relatives of the persons mentioned in sub-clauses (i) and (ii);

(b) any other information and facts that may enable members to understand the

meaning, scope and implications of the items of business and to take decision thereon.

(2) For the purposes of sub-section (1),—

(a) in the case of an annual general meeting, all business to be transacted thereat

shall be deemed special, other than—

(i) the consideration of financial statements and the reports of the Board

of Directors and auditors;

(ii) the declaration of any dividend;

(iii) the appointment of directors in place of those retiring;

(iv) the appointment of, and the fixing of the remuneration of, the auditors;

And

(b) in the case of any other meeting, all business shall be deemed to be special:

Provided that where any item of special business to be transacted at a meeting of the

company relates to or affects any other company, the extent of shareholding interest in that

other company of every promoter, director, manager, if any, and of every other key managerial

personnel of the first mentioned company shall, if the extent of such shareholding is not less

than two per cent. of the paid-up share capital of that company, also be set out in the statement.

(3) Where any item of business refers to any document, which is to be considered at

the meeting, the time and place where such document can be inspected shall be specified in

the statement under sub-section (1).

(4) Where as a result of the non-disclosure or insufficient disclosure in any statement

referred to in sub-section (1), being made by a promoter, director, manager, if any, or other key

managerial personnel, any benefit which accrues to such promoter, director, manager or

other key managerial personnel or their relatives, either directly or indirectly, the promoter,

director, manager or other key managerial personnel, as the case may be, shall hold such

benefit in trust for the company, and shall, without prejudice to any other action being taken

against him under this Act or under any other law for the time being in force, be liable to

compensate the company to the extent of the benefit received by him.

(5) If any default is made in complying with the provisions of this section, every

promoter, director, manager or other key managerial personnel who is in default shall be

punishable with fine which may extend to fifty thousand rupees or five times the amount of

benefit accruing to the promoter, director, manager or other key managerial personnel or any

of his relatives, whichever is more.

103. (1) Unless the articles of the company provide for a larger number,—

(a) in case of a public company,—

(i) five members personally present if the number of members as on the

date of meeting is not more than one thousand;

(ii) fifteen members personally present if the number of members as on the

date of meeting is more than one thousand but up to five thousand;

(iii) thirty members personally present if the number of members as on the

date of the meeting exceeds five thousand;

(b) in the case of a private company, two members personally present, shall be

the quorum for a meeting of the company.

(2) If the quorum is not present within half-an-hour from the time appointed for holding

a meeting of the company—

(a) the meeting shall stand adjourned to the same day in the next week at the

same time and place, or to such other date and such other time and place as the Board

may determine; or

(b) the meeting, if called by requisitionists under section 100, shall stand cancelled:

Provided that in case of an adjourned meeting or of a change of day, time or place of

meeting under clause (a), the company shall give not less than three days notice to the

members either individually or by publishing an advertisement in the newspapers (one in

English and one in vernacular language) which is in circulation at the place where the

registered office of the company is situated.

(3) If at the adjourned meeting also, a quorum is not present within half-an-hour from

the time appointed for holding meeting, the members present shall be the quorum.

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.

(2) If a poll is demanded on the election of the Chairman, it shall be taken forthwith in

accordance with the provisions of this Act and the Chairman elected on a show of hands

under sub-section (1) shall continue to be the Chairman of the meeting until some other

person is elected as Chairman as a result of the poll, and such other person shall be the

Chairman for the rest of the meeting.

105.

(2) In every notice calling a meeting of a company which has a share capital, or the

articles of which provide for voting by proxy at the meeting, there shall appear with reasonable

prominence a statement that a member entitled to attend and vote is entitled to appoint a

proxy, or, where that is allowed, one or more proxies, to attend and vote instead of himself,

and that a proxy need not be a member.

(3) If default is made in complying with sub-section (2), every officer of the company

who is in default shall be punishable with fine which may extend to five thousand rupees.

(4) Any provision contained in the articles of a company which specifies or requires a

longer period than forty-eight hours before a meeting of the company, for depositing with

the company or any other person any instrument appointing a proxy or any other document

necessary to show the validity or otherwise relating to the appointment of a proxy in order

that the appointment may be effective at such meeting, shall have effect as if a period of

forty-eight hours had been specified in or required by such provision for such deposit.

(5) If for the purpose of any meeting of a company, invitations to appoint as proxy a

person or one of a number of persons specified in the invitations are issued at the company’s

expense to any member entitled to have a notice of the meeting sent to him and to vote

thereat by proxy, every officer of the company who knowingly issues the invitations as

aforesaid or wilfully authorises or permits their issue shall be punishable with fine which may

extend to one lakh rupees:

Provided that an officer shall not be punishable under this sub-section by reason only

of the issue to a member at his request in writing of a form of appointment naming the proxy,

or of a list of persons willing to act as proxies, if the form or list is available on request in

writing to every member entitled to vote at the meeting by proxy.

(6) The instrument appointing a proxy shall—

(a) be in writing; and

(b) be signed by the appointer or his attorney duly authorised in writing or, if the

appointer is a body corporate, be under its seal or be signed by an officer or an

attorney duly authorised by it.

 (8) Every member entitled to vote at a meeting of the company, or on any resolution to

be moved thereat, shall be entitled during the period beginning twenty-four hours before the

time fixed for the commencement of the meeting and ending with the conclusion of the

meeting, to inspect the proxies lodged, at any time during the business hours of the company,

provided not less than three days’ notice in writing of the intention so to inspect is given to

the company.

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.

(2) A company shall not, except on the grounds specified in sub-section (1), prohibit

any member from exercising his voting right on any other ground.

(3) On a poll taken at a meeting of a company, a member entitled to more than one vote,

or his proxy, where allowed, or other person entitled to vote for him, as the case may be, need

not, if he votes, use all his votes or cast in the same way all the votes he uses.

107. (1) At any general meeting, a resolution put to the vote of the meeting shall,

unless a poll is demanded under section 109 or the voting is carried out electronically, be

decided on a show of hands.

(2) A declaration by the Chairman of the meeting of the passing of a resolution or

otherwise by show of hands under sub-section (1) and an entry to that effect in the books

containing the minutes of the meeting of the company shall be conclusive evidence of the

fact of passing of such resolution or otherwise.

111. (1) A company shall, on requisition in writing of such number of members, as

required in section 100,—

(a) give notice to members of any resolution which may properly be moved and

is intended to be moved at a meeting; and

(b) circulate to members any statement with respect to the matters referred to in

proposed resolution or business to be dealt with at that meeting.

(2) A company shall not be bound under this section to give notice of any resolution

or to circulate any statement unless—

(a) a copy of the requisition signed by the requisitionists (or two or more copies

which, between them, contain the signatures of all the requisitionists) is deposited at

the registered office of the company,—

(i) in the case of a requisition requiring notice of a resolution, not less than

six weeks before the meeting;

(ii) in the case of any other requisition, not less than two weeks before the

meeting; and

(b) there is deposited or tendered with the requisition, a sum reasonably sufficient

to meet the company’s expenses in giving effect thereto:

Provided that if, after a copy of a requisition requiring notice of a resolution has been

deposited at the registered office of the company, an annual general meeting is called on a

date within six weeks after the copy has been deposited, the copy, although not deposited

within the time required by this sub-section, shall be deemed to have been properly deposited

for the purposes thereof.

(3) The company shall not be bound to circulate any statement as required by clause

(b) of sub-section (1), if on the application either of the company or of any other person who

claims to be aggrieved, the Central Government, by order, declares that the rights conferred

by this section are being abused to secure needless publicity for defamatory matter.

(4) An order made under sub-section (3) may also direct that the cost incurred by the

company by virtue of this section shall be paid to the company by the requisitionists,

notwithstanding that they are not parties to the application.

(5) If any default is made in complying with the provisions of this section, the company

and every officer of the company who is in default shall be liable to a penalty of twenty-five

thousand rupees.

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.

(2) A person appointed to act under sub-section (1) shall, for the purposes of this Act,

be deemed to be a member of such a company and shall be entitled to exercise the same rights

and powers, including the right to vote by proxy and postal ballot, as the President or, as the

case may be, the Governor could exercise as a member of the company.

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;

 (2) A person authorised by resolution under sub-section (1) shall be entitled to exercise

the same rights and powers, including the right to vote by proxy and by postal ballot, on

behalf of the body corporate which he represents as that body could exercise if it were an

individual member, creditor or holder of debentures of the company.

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.

(2) A resolution shall be a special resolution when—

(a) the intention to propose the resolution as a special resolution has been duly

specified in the notice calling the general meeting or other intimation given to the

members of the resolution;

(b) the notice required under this Act has been duly given; and

(c) the votes cast in favour of the resolution, whether on a show of hands, or

electronically or on a poll, as the case may be, by members who, being entitled so to do,

vote in person or by proxy or by postal ballot, are required to be not less than three

times the number of the votes, if any, cast against the resolution by members so

entitled and voting.

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.

127. Where a dividend has been declared by a company but has not been paid or the

warrant in respect thereof has not been posted within thirty days from the date of declaration

to any shareholder entitled to the payment of the dividend, every director of the company

shall, if he is knowingly a party to the default, be punishable with imprisonment which may

extend to two years and with fine which shall not be less than one thousand rupees for every

day during which such default continues and the company shall be liable to pay simple

interest at the rate of eighteen per cent. per annum during the period for which such default

continues:

Provided that no offence under this section shall be deemed to have been

committed:—

(a) where the dividend could not be paid by reason of the operation of any law;

(b) where a shareholder has given directions to the company regarding the

payment of the dividend and those directions cannot be complied with and the same

has been communicated to him;

(c) where there is a dispute regarding the right to receive the dividend;

(d) where the dividend has been lawfully adjusted by the company against any

sum due to it from the shareholder; or

(e) where, for any other reason, the failure to pay the dividend or to post the

warrant within the period under this section was not due to any default on the part of

the company.

133. The Central Government may prescribe the standards of accounting or any

addendum thereto, as recommended by the Institute of Chartered Accountants of India,

constituted under section 3 of the Chartered Accountants Act, 1949, in consultation with

and after examination of the recommendations made by the National Financial Reporting

Authority.

161. (1) The articles of a company may confer on its Board of Directors the power to

appoint any person, other than a person who fails to get appointed as a director in a general

meeting, as an additional director at any time who shall hold office up to the date of the next

annual general meeting or the last date on which the annual general meeting should have

been held, whichever is earlier.

 (3) Subject to the articles of a company, the Board may appoint any person as a

director nominated by any institution in pursuance of the provisions of any law for the time

being in force or of any agreement or by the Central Government or the State Government by

virtue of its shareholding in a Government company.

(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 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.

162. (1) At a general meeting of a company, a motion for the appointment of two or

more persons as directors of the company by a single resolution shall not be moved unless

a proposal to move such a motion has first been agreed to at the meeting without any vote

being cast against it.

(2) A resolution moved in contravention of sub-section (1) shall be void, whether or

not any objection was taken when it was moved.

(3) A motion for approving a person for appointment, or for nominating a person for

appointment as a director, shall be treated as a motion for his appointment.

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.

164. (1) A person shall not be eligible for appointment as a director of a company, if —

(a) he is of unsound mind and stands so declared by a competent court;

(b) he is an undischarged insolvent;

(c) he has applied to be adjudicated as an insolvent and his application is pending;

(d) he has been convicted by a court of any offence, whether involving moral

turpitude or otherwise, and sentenced in respect thereof to imprisonment for not less

than six months and a period of five years has not elapsed from the date of expiry of the

sentence:

Provided that if a person has been convicted of any offence and sentenced in

respect thereof to imprisonment for a period of seven years or more, he shall not be

eligible to be appointed as a director in any company;

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.

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.

Explanation.—For the purposes of this clause,—

(i) “undertaking” shall mean an undertaking in which the investment of

the company exceeds twenty per cent. of its net worth as per the audited balance

sheet of the preceding financial year or an undertaking which generates 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. or more of the value of the undertaking

as per the audited balance sheet of the preceding financial year;

(b) to invest otherwise in trust securities the amount of compensation received

by it as a result of any merger or amalgamation;

(c) to borrow money, where the money to be borrowed, together with the money

already borrowed by the company will exceed aggregate of its paid-up share capital

and free reserves, apart from temporary loans obtained from the company’s bankers in

the ordinary course of business:

Provided 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, shall not be deemed to be a

borrowing of monies by the banking company within the meaning of this clause.

Explanation.—For the purposes of this clause, the expression “temporary loans”

means loans repayable on demand or within six months from the date of the loan such

as short-term, cash credit arrangements, the discounting of bills and the issue of other

short-term loans of a seasonal character, but does not include loans raised for the

purpose of financial expenditure of a capital nature;

(d) to remit, or give time for the repayment of, any debt due from a director.

(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.

(3) Nothing contained in clause (a) of sub-section (1) shall affect—

(a) the title of a buyer or other person who buys or takes on lease any property,

investment or undertaking as is referred to in that clause, in good faith; or

(b) the sale or lease of any property of the company where the ordinary business

of the company consists of, or comprises, such selling or leasing.

(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.

(5) No debt incurred by the company in excess of the limit imposed by clause (c) of

sub-section (1) shall be valid or effectual, unless the lender proves that he advanced the loan

in good faith and without knowledge that the limit imposed by that clause had been exceeded.

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. of its average net profits for the three immediately preceding financial years.

182. (1) Notwithstanding anything contained in any other provision of this Act, a

company, other than a Government company and 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. of its average net profits during the three immediately

preceding financial years:

Provided further that no such contribution shall be made by a company unless a

resolution authorising the making of such contribution is passed at a meeting of the Board of

Directors and such resolution shall, subject to the other provisions of this section, be

deemed to be justification in law for the making and the acceptance of the contribution

authorised by it.

(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.

(3) Every company shall disclose in its profit and loss account any amount or amounts

contributed by it to any political party during the financial year to which that account relates,

giving particulars of the total amount contributed and the name of the party to which such

amount has been contributed.

(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.

Explanation.—For the purposes of this section, “political party” means a political

party registered under section 29A of the Representation of the People Act, 1951.

183. (1) The Board of Directors of any company or any person or authority exercising

the powers of the Board of Directors of a company, or of the company in general meeting,

may, notwithstanding anything contained in sections 180, 181 and section 182 or any other

provision of this Act or in the memorandum, articles or any other instrument relating to the

company, contribute such amount as it thinks fit to the National Defence Fund or any other

Fund approved by the Central Government for the purpose of national defence.

(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.

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.

Explanation.—For the purposes of this section, the expression “to any other

person in whom director is interested” means—

(a) any director of the lending company, or of a company which is its

holding company or any partner or relative of any such director;

(b) any firm in which any such director or relative is a partner;

(c) any private company of which any such director is a director or member;

(d) any body corporate at a general meeting of which not less than twentyfive

per cent. 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.

(2) If any loan is advanced or a guarantee or security is given or provided in

contravention of the provisions of sub-section (1), 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 the director or the other person to whom any loan is advanced or guarantee or

security is given or provided in connection with any loan taken by him or the other person,

shall be punishable with imprisonment which may extend to six months or with fine which

shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees, or

with both.

192. (1) No company shall enter into an arrangement by which—

(a) a director of the company or its holding, subsidiary or associate company or

a person connected with him acquires or is to acquire assets for consideration other

than cash, from the company; or

(b) the company acquires or is to acquire assets for consideration other than

cash, from such director or person so connected,

unless prior approval for such arrangement is accorded by a resolution of the company in

general meeting and if the director or connected person is a director of its holding company,

approval under this sub-section shall also be required to be obtained by passing a resolution

in general meeting of the holding company.

(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.

(3) Any arrangement entered into by a company or its holding company in contravention

of the provisions of this section shall be voidable at the instance of the company unless—

(a) the restitution of any money or other consideration which is the subjectmatter

of the arrangement is no longer possible and the company has been indemnified

by any other person for any loss or damage caused to it; or

(b) any rights are acquired bona fide for value and without notice of the

contravention of the provisions of this section by any other person.

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.

(2) If a director or any key managerial personnel of the company contravenes the

provisions of sub-section (1), such director or key managerial personnel shall be punishable

with imprisonment for a term which may extend to two years or with fine which shall not be

less than one lakh rupees but which may extend to five lakh rupees, or with both.

(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.

Explanation.—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.

195. (1) No person including any director or key managerial personnel of a company

shall enter into insider trading:

Provided that nothing contained in this sub-section shall apply to any communication

required in the ordinary course of business or profession or employment or under any law.

Explanation.—For the purposes of this section,—

(a) “insider trading” means—

(i) an act of subscribing, buying, selling, dealing or agreeing to subscribe,

buy, sell or deal in any securities by any director or key managerial personnel

or any other officer of a company either as principal or agent if such director or

key managerial personnel or any other officer of the company is reasonably

expected to have access to any non-public price sensitive information in respect

of securities of company; or

(ii) an act of counselling about procuring or communicating directly or

indirectly any non-public price-sensitive information to any person;

(b) “price-sensitive information” means any information which relates, directly

or indirectly, to a company and which if published is likely to materially affect the price

of securities of the company.

(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 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.

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.

(2) No payment shall be made under sub-section (1) in the following cases, namely:—

(a) where the director resigns from his office as a result of the reconstruction of

the company, or of its amalgamation with any other body corporate or bodies corporate, and is appointed as the managing or whole-time director, manager or other officer of

the reconstructed company or of the body corporate resulting from the amalgamation;

(b) where the director resigns from his office otherwise than on the reconstruction

of the company or its amalgamation as aforesaid;

(c) where the office of the director is vacated under sub-section (1) of section 167;

(d) where the company is being wound up, whether by an order of the Tribunal

or voluntarily, provided the winding up was due to the negligence or default of the

director;

(e) where the director has been guilty of fraud or breach of trust in relation to, or

of gross negligence in or gross mismanagement of, the conduct of the affairs of the

company or any subsidiary company or holding company thereof; and

(f) where the director has instigated, or has taken part directly or indirectly in

bringing about, the termination of his office.

(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:

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.

(4) Nothing in this section shall be deemed to prohibit the payment to a managing or

whole-time director, or manager, of any remuneration for services rendered by him to the

company in any other capacity.

379. Where not less than fifty per cent. of the paid-up share capital, whether equity or

preference or partly equity and partly preference, of a foreign company is held by one or

more citizens of India or by one or more companies or bodies corporate incorporated in India,

or by one or more citizens of India and one or more companies or bodies corporate incorporated

in India, whether singly or in the aggregate, such company shall comply with the provisions

of this Chapter and such other provisions of this Act as may be prescribed with regard to the

business carried on by it in India as if it were a company incorporated in India.

382. 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.

383. Any process, notice, or other document required to be served on a foreign company

shall be deemed to be sufficiently served, if addressed to any person whose name and

address have been delivered to the Registrar under section 380 and left at, or sent by post to,

the address which has been so delivered to the Registrar or by electronic mode.

386. For the purposes of the foregoing provisions of this Chapter,—

 (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

(c) the expression “place of business” includes a share transfer or registration

office.

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.

(2) Where in addition to the Central Government, any State Government is also a

member of a Government company, that State Government shall cause a copy of the annual

report prepared under sub-section (1) to be laid before the House or both Houses of the

State Legislature together with a copy of the audit report and the comments upon or

supplement to the audit report referred to in sub-section (1).

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.

(2) Every order under sub-section (1) shall be published in the Official Gazette and may

be addressed to companies generally or to any class of companies, in such manner, as the

Central Government may think fit and the date of such publication shall be deemed to be the

date on which requirement for information or statistics is made on such companies or class

of companies, as the case may be.

(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.

(4) If any company fails to comply with an order made under sub-section (1) or subsection

(3), or knowingly furnishes any information or statistics which is incorrect or

incomplete in any material respect, the company shall be punishable with fine which may

extend to twenty-five thousand 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 three lakh

rupees, or with both.

(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.

407. In this Chapter, unless the context otherwise requires,—

(a) “Chairperson” means the Chairperson of the Appellate Tribunal;

(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.

408. The Central Government shall, by notification, constitute, with effect from such

date as may be specified therein, a Tribunal to be known as the National Company Law

Tribunal consisting of a President and such number of Judicial and Technical members, as

the Central Government may deem necessary, to be appointed by it by notification, to exercise

and discharge such powers and functions as are, or may be, conferred on it by or under this

Act or any other law for the time being in force.

409. (1) The President shall be a person who is or has been a Judge of a High Court for

five years.

(2) A person shall not be qualified for appointment as a Judicial Member unless he—

(a) is, or has been, a judge of a High Court; or

(b) is, or has been, a District Judge for at least five years; or

(c) has, for at least ten years been an advocate of a court.

Explanation.—For the purposes of clause (c), in computing the period during

which a person has been an advocate of a court, there shall be included any period

during which the person has held judicial office or the office of a member of a tribunal

or any post, under the Union or a State, requiring special knowledge of law after he

become an advocate.

(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.

410. The Central Government shall, by notification, constitute, with effect from such

date as may be specified therein, an Appellate Tribunal to be known as the National Company

Law Appellate Tribunal consisting of a chairperson and such number of Judicial and Technical

Members, not exceeding eleven, as the Central Government may deem fit, to be appointed by

it by notification, for hearing appeals against the orders of the 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.

(2) A Judicial Member shall be a person who is or has been a Judge of a High Court or

is a Judicial Member of the Tribunal for five years.

(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.

412. (1) The President of the Tribunal and the chairperson and Judicial Members of

the Appellate Tribunal, shall be appointed after consultation with the Chief Justice of India.

(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.

(3) The Secretary, Ministry of Corporate Affairs shall be the Convener of the Selection

Committee.

(4) The Selection Committee shall determine its procedure for recommending persons

under sub-section (2).

(5) No appointment of the Members of the Tribunal or the Appellate Tribunal shall be

invalid merely by reason of any vacancy or any defect in the constitution of the Selection

Committee.

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.

(2) A Member of the Tribunal shall hold office as such until he attains,—

(a) in the case of the President, the age of sixty-seven years;

(b) in the case of any other Member, the age of sixty-five years:

Provided that a person who has not completed fifty years of age shall not be eligible

for appointment as Member:

Provided further that the Member may retain his lien with his parent cadre or Ministry

or Department, as the case may be, while holding office as such for a period not exceeding

one year.

(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 anonther term of five years.

(4) A Member of the Appellate Tribunal shall hold office as such until he attains,—

(a) in the case of the Chairperson, the age of seventy years;

(b) in the case of any other Member, the age of sixty-seven years:

Provided that a person who has not completed fifty years of age shall not be eligible

for appointment as Member:

Provided further that the Member may retain his lien with his parent cadre or Ministry

or Department, as the case may be, while holding office as such for a period not exceeding

one year.

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:

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.

439. (1) Notwithstanding anything in the Code of Criminal Procedure, 1973, every

offence under this Act except the offences referred to in sub-section (6) of section 212 shall

be deemed to be non-cognizable within the meaning of the said Code.

(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.

(3) Notwithstanding anything contained in the Code of Criminal Procedure, 1973,

where the complainant under sub-section (2) is the Registrar or a person authorised by the

Central Government, the presence of such officer before the Court trying the offences shall

not be necessary unless the court requires his personal attendance at the trial.

(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.

Explanation.—The liquidator of a company shall not be deemed to be an officer of the

company within the meaning of sub-section (2).

443. Notwithstanding anything contained in the Code of Criminal Procedure, 1973, 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.

444. Notwithstanding anything contained in the Code of Criminal Procedure, 1973, the

Central Government may, in any case arising under this Act, direct any company prosecutor

or authorise any other person either by name or by virtue of his office, to present an appeal

from an order of acquittal passed by any court, other than a High Court, and an appeal

presented by such prosecutor or other person shall be deemed to have been validly presented

to the appellate court.

445. The provisions of section 250 of the Code of Criminal Procedure, 1973 shall apply

mutatis mutandis to compensation for accusation without reasonable cause before the

Special Court or the Court of Session.

446. The court imposing any fine under this Act may direct that the whole or any part

thereof shall be applied in or towards payment of the costs of the proceedings, or in or towards

the payment of a reward to the person on whose information the proceedings were instituted.

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 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.

Explanation.—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.

448. Save as otherwise provided in this Act, if in any return, report, certificate, financial

statement, prospectus, statement or other document required by, or for, the purposes of any

of the provisions of this Act or the rules made thereunder, any person makes a statement,—

(a) which is false in any material particulars, knowing it to be false; or

(b) which omits any material fact, knowing it to be material,

he shall be liable under section 447.

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.

450. If a company or any officer of a company or any other person contravenes any of

the provisions of this Act or the rules made thereunder, or any condition, limitation or

restriction subject to which any approval, sanction, consent, confirmation, recognition,

direction or exemption in relation to any matter has been accorded, given or granted, and for

which no penalty or punishment is provided elsewhere in this Act, the company and every

officer of the company who is in default or such other person shall be punishable with fine

which may extend to ten thousand rupees, and where the contravention is continuing one,

with a further fine which may extend to one thousand rupees for every day after the first

during which the contravention continues.

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.

452. (1) If any officer or employee of a company—

(a) wrongfully obtains possession of any property, including cash of the

company; or

(b) having any such property including cash in his possession, wrongfully

withholds it or knowingly applies it for the purposes other than those expressed or

directed in the articles and authorised by this Act,

he shall, on the complaint of the company or of any member or creditor or contributory

thereof, be punishable with fine which shall not be less than one lakh rupees but which may

extend to five lakh rupees.

(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.

453. If any person or persons trade or carry on business under any name or title, of

which the word “Limited” or the words “Private Limited” or any contraction or imitation

thereof is or are the last word or words, that person or each of those persons shall, unless

duly incorporated with limited liability, or unless duly incorporated as a private company

with limited liability, as the case may be, punishable with fine which shall not be less than five

hundred rupees but may extend to two thousand rupees for every day for which that name or

title has been used.

456. No suit, prosecution or other legal proceeding shall lie against the Government or

any officer of the Government or any other person in respect of anything which is in good

faith done or intended to be done in pursuance of this Act or of any rules or orders made

thereunder, or in respect of the publication by or under the authority of the Government or

such officer, of any report, paper or proceedings.

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.

458. (1) The Central Government may, by notification, and subject to such conditions,

limitations and restrictions as may be specified therein, delegate any of its powers or functions

under this Act other than the power to make rules to such authority or officer as may be

specified in the notification:

Provided that the powers to enforce the provisions contained in section 194 and

section 195 relating to forward dealing and insider trading shall be delegated to Securities

and Exchange Board for listed companies or the companies which intend to get their securities

listed and in such case, any officer authorised by the Securities and Exchange Board shall

have the power to file a complaint in the court of competent jurisdiction.

(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.

459. (1) Where the Central Government or the Tribunal is required or authorised by

any provision of this Act—

(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.

(2) Save as otherwise provided in this Act, every application which may be, or is

required to be, made to the Central Government or the Tribunal under any provision of this

Act—

(a) in respect of any approval, sanction, consent, confirmation or recognition to

be accorded by that Government or the Tribunal to, or in relation to, any matter; or

(b) in respect of any direction or exemption to be given or granted by that

Government or the Tribunal in relation to any matter; or

(c) in respect of any other matter,

shall be accompanied by such fees as may be prescribed:

Provided that different fees may be prescribed for applications in respect of different

matters or in case of applications by different classes of companies.

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.

461. The Central Government shall cause a general annual report on the working and

administration of this Act to be prepared and laid before each House of Parliament within one

year of the close of the year to which the report relates.

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.

(2) A copy of every notification proposed to be issued under sub-section (1), shall be

laid in draft 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 disapproving the issue of the notification or both Houses

agree in making any modification in the notification, the notification shall not be issued or, as

the case may be, shall be issued only in such modified form as may be agreed upon by both

the Houses.

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.

(2) Where any such officer has reason to apprehend that any proceeding will or might

be brought against him in respect of any negligence, default, breach of duty, misfeasance or

breach of trust, he may apply to the High Court for relief and the High Court on such

application shall have the same power to relieve him as it would have had if it had been a

court before which a proceedings against that officer for negligence, default, breach of duty,

misfeasance or breach of trust had been brought under sub-section (1).

(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.

467. (1) Subject to the provisions of this section, the Central Government may, by

notification, alter any of the regulations, rules, Tables, forms and other provisions contained

in any of the Schedules to this Act.

(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.

(3) Every alteration made by the Central Government under sub-section (1) 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 alteration, or both Houses agree that the alteration should not be made, the alteration

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 in pursuance of that alteration.

468. (1) The Central Government shall, make rules consistent with the Code of Civil

Procedure, 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.

(2) In particular, and without prejudice to the generality of the foregoing power, such

rules may provide for all or any of the following matters, namely:—

(i) as to the mode of proceedings to be held for winding up of a company by the

Tribunal;

(ii) for the voluntary winding up of companies, whether by members or by

creditors;

(iii) for the holding of meetings of creditors and members in connection with

proceedings under section 230;

(iv) for giving effect to the provisions of this Act as to the reduction of the

capital;

(v) generally for all applications to be made to the Tribunal under the provisions

of this Act;

(vi) the holding and conducting of meetings to ascertain the wishes of creditors

and contributories;

(vii) the settling of lists of contributories and the rectifying of the register of

members where required, and collecting and applying the assets;

(viii) the payment, delivery, conveyance, surrender or transfer of money, property,

books or papers to the liquidator;

(ix) the making of calls; and

(x) the fixing of a time within which debts and claims shall be proved.

(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.

469. (1) The Central Government may, by notification, make rules for carrying out the

provisions of this Act.

(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.

(3) Any rule made under sub-section (1) may provide that a contravention thereof

shall be punishable with fine which may extend to five thousand rupees and where the

contravention is a continuing one, with a further fine which may extend to five hundred

rupees for every day after the first during which such contravention continues.

(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.

470. (1) If any difficulty arises in giving effect to the provisions of this Act, the Central

Government may, by order published in the Official Gazette, make such provisions, not

inconsistent with the provisions of this Act, as appear to it to be necessary or expedient for

removing the difficulty:

Provided that no such order shall be made after the expiry of a period of five years from

the date of commencement of section 1 of this Act.

(2) Every order made under this section shall, as soon as may be after it is made, be laid

before each House of Parliament.