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Monday, September 16, 2013

COMPANY LAW NOTES

Section 91. Power to close register of members or debentureholders or other security holders.


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.


Section 86. Punishment for contravention.


 If any company contravenes any provision of this Chapter, the company shall be punishable 
with fine which shall not be less than one lakh rupees but which may extend to ten lakh 
rupees and every officer of the company who is in default shall be punishable with 
imprisonment for a term which may extend to six months or with fine which shall not be less 
than twenty-five thousand rupees but which may extend to one lakh rupees, or with both.

Section 70. Prohibition for buy-back in certain circumstances.


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

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

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

(c) if a defaultis made by the companyin 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.

Section 69. Transfer of certain sums to capital redemption 

reserve account.


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

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

Section 65. Unlimited company to provide for reserve share 

capital on conversion into limited company.

An unlimited company having a share capital may, by a resolution for registration as a limited 
company under this Act, do either or both of the following things, namely—
a)       increase the nominal amount of its share capital by increasing the nominal 
amount of each of its shares, subject to the condition that no part of the increased 
capital shall be capable of being called up except in the event and for the purposes 
of the company being wound up;

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

Sections 57 to 60 of the Companies Act 2013


Section 57
Punishment for personation of shareholder.

If any person deceitfully personates as an owner of any security or interest 
in a company, or of any share warrant or coupon issued in pursuance of this 
Act, and thereby obtains or attempts to obtain any such security or interest 
or any such share warrant or coupon, or receives or attempts to receive any 
money due to any such owner, he shall be punishable with imprisonment for a 
term which shall not be less than one year but which may extend to three years
and with fine which shall not be less than one lakh rupees but which may extend 
to five lakh rupees.

Section 58
Refusal of registration and appeal against refusal.

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

Section 59
Rectification of register of members.

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

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

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

4) Where the transfer of securities is in contravention of any of the provisions
 of the Securities Contracts (Regulation) Act, 1956, 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.

Section 60
Publication of authorised, subscribed and paid-up capital.

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

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


Sections 49 to 51 of the Companies Act 2013


Section 49.
Calls on shares of same class to be made on uniform basis.

Where any calls for further share capital are made on the shares of a class,
 such calls shall be made on a uniform basis on all shares falling under that
 class.
Explanation.—For the purposes of this section, shares of the same nominal 
value on which different amounts have been paid-up shall not be deemed to
 fall under the same class.

Section 50.
Company to accept unpaid share capital, although not called up.

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

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

Section 51.
Payment of dividend in proportion to amount paidup

A company may, if so authorised by its articles, pay dividends in proportion to
the amount paid-up on each share.

Sections 44 and 45 of Companies Act 2013


Section 44.
Nature of shares or debentures.

The shares or debentures or other interest of any member in a 
company shall be movable property transferable in the manner provided by 
the articles of the company.

Section 45.
Numbering of shares.

Every share in a company having a share capital shall be distinguished by its
distinctive number:

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

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