(Part I)|(Part II)|(Part III)|(Part IV)|(Part V)|(Part VI)|(Part VII)|(Part VIII)
Certificate of registration. 132.Certificate of registration. The Registrar shall give a certificate under his hand of the registration of any charge registered in pursuance of this Part, stating the amount thereby secured ; and the certificate shall be conclusive evidence that the requirements of this Part as to registration have been complied with.
Endorsement of certificate of registration on debenture or certificateof debenture stock. 133.Endorsement of certificate of registration on debenture or
certificate of debenture stock.(1) The company shall cause a copy of every certificate of registration given under section 132, to be endorsed on every debenture or certificate of debenture stock which is issued by the company and the payment of which is secured by the charge so registered: Provided that nothing in this sub-section shall be construed as requiring a company to cause a certificate of registration of any charge so given to be endorsed on any debenture or certificate of debenture stock issued by the company before the charge was created.
(2) If any person knowingly delivers, or wilfully authorises or permits the delivery of, any debenture or certificate of debenture
stock which, under the provisions of sub-section (1), is required to have endorsed on it a copy of a certificate of registration without the copy being so endorsed upon it, he shall, without prejudice to any other liability, be punishable with fine which may extend to one thousand rupees.
Duty of company as regards registration and right of interested party. 134.Duty of company as regards registration and right of
interested party. (1) It shall be the duty of a company to file with the Registrar for registration the particulars of every charge created by the company, and of every issue of debentures of a series, requiring registration under this Part ; but registration of any such charge may also be effected on the application of any person interested therein.
(2) Where registration is effected on the application of some person other than the company, that person shall be entitled to recover from the company the amount of any fees properly paid by him to the Registrar on the registration.
Provisions of Part to apply to modification of charges. 135.Provisions of Part to apply to modification of charges. Whenever the terms or conditions, or the extent or operation, of any charge registered under this Part are or is modified, it shall be the duty of the company to send to the Registrar the particulars of such modification, and the provisions of this Part as to registration of a charge shall apply to such modification of the charge.
Copy of instrument creating charge to be kept by company at registeredoffice. 136.Copy of instrument creating charge to be kept by company at registered office. Every company shall cause a copy of every instrument creating any charge requiring registration under this Part to be kept at the registered office of the company: Provided that, in the case of a series of uniform debentures, a copy of one debenture of the series shall be sufficient. 146
Entry in register of charges of appointment of receiver or manager. 137.Entry in register of charges of appointment of receiver or
manager. (1) If any person obtains an order for the appointment of a receiver of, or of a person to manage, the property of a company, or if any person appoints such receiver or person under any powers contained in any instrument, he shall, within 1[thirty] days from the date of the passing of the order or of the making of the appointment under the said powers, give notice of the fact to the Registrar ; and the Registrar shall, on payment of the prescribed fee, enter the fact in the Register of charges.
(2) Where any person so appointed under the powers contained in any instrument ceases to act as such, he shall, on so ceasing, give to the Registrar notice to that effect ; and the Registrar shall enter the notice in the Register of charges.
(3) If any person makes default in complying with the require-
ments of sub-section (1) or (2), he shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
Company to report satisfaction and procedure thereafter.
138.Company to report satisfaction and procedure thereafter. (1) The company shall give intimation to the Registrar of the payment or satisfaction 2[in full], of any charge relating to the company and requiring registration under this Part, within 3[thirty] days from the date of such payment or satisfaction.
(2) The Registrar shall, on receipt of such intimation, cause a notice to be sent to the holder of the charge calling upon him to show cause within a time (not exceeding fourteen days) specified in such notice, why payment or satisfaction should not be recorded as intimated to the Registrar.
(3) If no cause is shown, the Registrar shall order that a memo- randum of satisfaction 4* * * shall be entered in the register of charges.
(4) If cause is shown, the Registrar shall record a note to that effect in the register, and shall inform the company that he has done so.
(5) Nothing in this section shall be deemed to affect the power of the Registrar to make an entry in the register of charges under section 139 otherwise than on receipt of an intimation from the company. ——————————————————————— 1. Subs. by Act 31 of 1965, s. 62 and Sch., for “fifteen” (w.e.f. 15-10-1965). 2 Subs. by Act 65 of 1960, s. 30, for ” in whole or in part “. 3 Subs. by Act 31 of 1965, s. 62 and Sch., for “twenty-one” (w.e.f. 15-10-1965). 4 The words ” in whole or in part, as the case may be,” omitted by Act 65 of 1960, S. 30. ——————————————————————— 147
Power of Registrar to make entries of satisfaction and release inabsence of intimation from company. 139.Power of Registrar to make entries of satisfaction and release in absence of intimation from company. The Registrar may, on evidence being given to his satisfaction with respect to any registered charge,- (a) that the debt for which the charge was given has been paid or satisfied in whole or in part; or (b) that part of the property or undertaking charged has been released from the charge or has ceased to form part of the company’s property or undertaking; enter in the register of charges a memorandum of satisfaction in whole or in part, or of the fact that part of the property or undertaking has been released from the charge or has ceased to form part of the company’s property or undertaking, as the case may be, notwithstanding the fact that no intimation has been received by him from the company.
Copy of memorandum of satisfaction to be furnished to company. 140.Copy of memorandum of satisfaction to be furnished to company. Where the Registrar enters a memorandum of satisfaction in whole or in part, in pursuance of section 138 or 139, he shall furnish the company with a copy of the memorandum.
Rectification by Company Law Board of register of charges. 141.Rectification by Company Law Board of register of charges.
1[(1) The 2[Company Law Board], on being satisfied– (a) that the omission to file with the Registrar the particulars of any charge created by a company or of any charge subject to which any property has been acquired by the company or of any modification of any such charge or of any issue of debentures of a series, or that the omission to register any charge within the time required by this Part, or that the omission to give intimation to the Registrar of the payment or satisfaction of a charge, within the time required by this Part, or that the omission or misstatement of any particular with respect to any such charge, modification or issue of debentures of a series or with respect to any memorandum of satisfaction or other entry made in pursuance of section 138 or 139, was accidental or due to inadvertence or to some other sufficient cause or is not of a nature to prejudice the position of creditors or shareholders of the company; or ———————————————————————
1. Subs. by Act 65 of 1960, s. 31, for sub-section (1). 2. Subs. by Act 41 of 1974, s. 13, for “Court” (w.e.f. 1-2-1975). ——————————————————————— 148 (b) that on other grounds it is just and equitable to grant relief; may, on the application of the company or any person interested and on such terms and conditions as seem to the 1[Company Law Board] just and expedient, direct that the time for the filing of the particulars or for the registration of the charge or for the giving of intimation of payment or satisfaction shall be extended or, as the case may require, that the omission or mis-statement shall be rectified.]
(2) The 1[Company Law Board] may make such order as to, the
costs of an application under sub-section (1) as it thinks fit.
(3) Where the 1[Company Law Board] extends the time for the registration of a charge,the order shall not prejudice any rights acquired in respect of the property concerned before the charge is actually registered.
Penalties.
142.Penalties. (1) If default is made in filing with the Registrar for registration the particulars- (a) of any charge created by the company; (b) of the payment or satisfaction, 2* * * of a debt in respect of which a charge has been registered under this Part; or (c) of the issues of debentures of a series; requiring registration with the Registrar under the provisions of this Part, then, unless the registration has been effected on the applica- tion of some other person, the company, and every officer of the company or other person who is in default, shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues.
(2) Subject as aforesaid, if any company makes default in com- plying with any of the other requirements of this Act as to the regis- tration with the Registrar of any charge created by the company or of any fact connected therewith, the company, and every officer of the company who is in default, shall, without prejudice to any other liability, be punishable with fine which may extend to one thousand rupees. ——————————————————————— 1. Subs. by Act 41 of 1974, s. 13, for “Court” (w.e.f. 1-2-1975). 2.The words “in whole or in part” omitted by Act 65 of 1960, s.
148A
Company’s register of charges.
143.Company’s register of charges.(1) Every company shall keep at its registered office a register of charges and enter therein all charges specifically affecting property of the company and all floating charges on the undertaking or on any property of the company, giving in each case- (i) a short description of the property charged; (ii) the amount of the charge; and (iii) except in the case of securities to bearer, the names of the persons entitled to the charge. 149
(2) If any officer of the company knowingly omits, or wilfully authorises or permits the omission of, any entry required to be made
in pursuance of sub-section (1), he shall be punishable with fine which may extend to five hundred rupees.
Right to inspect copies of instruments creating charges and company’sregister of charges. 144.Right to inspect copies of instruments creating charges and
company’s register of charges.(1) The copies of instruments creating charges kept in pursuance of section 136, and the register of charges kept in pursuance of section 143, shall be open during business hours (but subject to such reasonable restrictions as the company in general meeting may impose, so that not less than two hours in each day are allowed for inspection) to the inspection of any creditor or member of the company without fee, at the registered office of the company.
(2) The register of charges kept in pursuance of section 143 shall also be open, during business hours but subject to the reasonable restrictions aforesaid, to the inspection of any other person on payment of a fee of 1[such sum as may be prescribed]for each inspection, at the registered office of the company.
(3) If inspection of the said copies or register is refused the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees and with a further fine which may extend to twenty rupees for every day during which the refusal continues.
(4) The 2[Company Law Board] may also by order compel an immediate inspection of the said copies or register.
Application of Part to charges requiring registration under it but notunder previous law. 145.Application of Part to charges requiring registration under it but not under previous law. In respect of 1[any charge created before, and remaining unsatisfied at, the commencement of this Act,] which, if this Act had been in force at the relevant time, would have had to be registered by the company in pursuance of this Part but which did not require registration under the Indian Companies Act, 1913, (7 of 1913). and in respect of all matters relating to such charge, the provisions of this Part shall apply and have effect in all respects, as if the date of commencement of this Act had been substituted therein for the date of creation of the charge, or the date of completion of the acquisition of the property subject to the charge, as the case may be. Nothing contained in this section shall be deemed to affect the relative priorities as they existed immediately before the commence- ment of this Act, as between charges on the same property. ——————————————————————— 1. Subs. by Act 31 of 1988, s.67 (w.e.f. 15-7-1988). 2. Subs. by s.67, ibid. (w.e.f. 31-5-1991). 3 Subs. by Act 65 of 1960, s, 33, for “any charge created before the commencement of this Act”. ———————————————————————
PART VI MANAGEMENT AND ADMINISTRATION CHAP GENERAL PROVISIONS CHAPTER I.-GENERAL PROVISIONS Registered Office and Name
Registered office of company.
146.Registered office of company.(1) A company shall, as from the day on which it begins to carry on business, or as from the 1[thirtieth] day after the date of its incorporation, whichever is earlier, have a registered office to which all communications and notices may be addressed.
(2)Notice of the situation of the registered office, and of every change there in, shall be given within 2[thirty] days after the date of the incorporation of the company or after the date of the change, as the case may be, to the Registrar who shall record the same: Provided that except on the authority of a special resolution passed by the company, the registered office of the company shall not be removed- (a) in the case of an existing company, outside the local limits of any city, town or village where such office is situated at the commencement of this Act, or where it may be situated later by virtue of a special resolution passed by the company; and (b) in the case of any other company, outside the local limits of any city, town or village where such office is first situated, or where it may be situated later by virtue of a special resolution passed by the company.
(3) The inclusion in the annual return of a company of a state- ment as to the address of its registered office shall not be taken to
satisfy the obligation imposed by sub-section (2).
(4) If default is made in complying with the requirements of this section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
Publication of name by Company.
147.Publication of name by Company.(1) Every company- (a) shall paint or affix its name 3[and the ad-dress of its registered office], and keep the same painted or affixed, on the outside of every office or place in which its business is carried on, in a conspicuous position, in letters easily ——————————————————————— 1 Subs. by Act 31 of 1965, s. 62 and Sch., for twenty-eighth ” (w.e.f. 15-10-1965). 2 Subs. by s. 62 and Sch., ibid., for ” twenty-eighth” (w.e.f. 15-10-1965). 3 Ins. by Act 65 of 1960, s, 34. ——————————————————————— 151 legible; and if the characters employed therefore are not those of the language, or of one of the languages, in general use in that locality, also in the characters of that language or of one of those languages; (b) shall have its name engraven in legible characters on its seal ; and (c) shall have its name 1[and the address of its registered office) mentioned in legible characters in all its business letters, in all its bill heads and letter paper, and in all its notices, 2* * * and other official publications; 3[and also have its name so mentioned in all bills of exchange], hundies, promissory notes, endorsements, cheques and orders for money or goods purporting to be signed by or on behalf of the company, and in all bills of parcels, invoices, receipts and letters of credit of the company.
(2) If a company does not paint or affix its name 1[and the address of its registered office], or keep the same painted or affixed
in the manner directed by clause (a) of sub-section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for not so painting or affixing its name 1[and the address of its registered office], and for every day during which its name 1[and the address of its registered office], is not so kept painted or affixed.
(3) If a company fails to comply with clause (b) or clause (c)
of sub-section (1), the company shall be punishable with fine which may extend to five hundred rupees.
(4) If an officer of a company or any person on its behalf- (a) uses, or authorises the use of, any seal purporting to be a seal of the company whereon its name is not engraven in the manner, aforesaid; (b) issues, or authorises the issue of, any business letter, bill, head, letter paper, notice 4* * * or other official publication of the company wherein 5[its name and the address of its registered office are] not mentioned in the manner aforesaid; ——————————————————————— 1 Ins. by Act 65 of 1960, s. 34. 2 The words “, advertisements” omitted by s. 34, ibid. 3 Subs. by s. 34, ibid., for ” and in all bills of exchange”. 4 The word “,advertisement” omitted by s.34, ibid. 5 Subs. by s. 34, ibid., for ” its name is”. ——————————————————————— 152 (c) signs, or authorises to be signed, on behalf of the company, any bill of exchange, hundi, promissory note, endorsement, cheque or order for money or goods wherein its name is not mentioned in the manner aforesaid; or (d) issues, or authorises the issue of, any bill of parcels, invoice, receipt or letter of credit of the company, wherein its name is not mentioned in the manner aforesaid; such officer or person shall be punishable with fine which may extend to five hundred rupees, and shall further be personally liable to the holder of the bill of exchange, hundi, promissory note, cheque, or order for money or goods, for the amount thereof, unless it is duly paid by the company.
Publication of authorised as well as subscribed and paid-up capital. 148.Publication of authorised as well as subscribed and paid-up
capital. (1) Where any notice, advertisement or other official publi- cation, or any business letter, bill head or letter paper, of a company contains a statement of the amount of the authorised capital of the company, such notice, advertisement or other official publication, or such letter, bill head or letter paper, shall also contain a statement, in an equally prominent position and in equally conspicuous characters, of the amount of the capital which has been subscribed and the amount paid up.
(2) If default is made in complying with the requirements of
subsection (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to one thousand rupees. Restrictions on Commencement of Business
Restrictions on commencement of business.
149.Restrictions on commencement of business.(1) Where a company having a share capital has issued a prospectus inviting the public to subscribe for its shares, the company shall not commence any business or exercise any borrowing powers, unless- (a) shares held subject to the payment of the whole amount thereof in cash have been allotted to an amount not less in the whole than the minimum subscription; (b) every director of the company has paid to the company, on each of the shares taken or contracted to be taken by him and for which he is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares offered for public subscription; 153 (c) no money is, or may become, liable to be repaid to applicants for any shares or debentures which have been offered for public subscription by reason of any failure to apply for, or to obtain, permission for the shares or debentures to be dealt in on any recognized stock exchange ; and (d) there has been filed with the Registrar a duly verified declaration by 1[one of the directors or the secretary or, where the company has not appointed a secretary, a secretary in whole-time practice] in the prescribed form, that clauses (a), (b) and (c) of this sub-section, have been complied with.
(2) Where a company having a share capital has not issued a prospectus inviting the public to subscribe for its shares, the com- pany shall not commence any business or exercise any borrowing powers, unless- (a) there has been filed with the Registrar a statement in lieu of prospectus ; (b) every director of the company has paid to the company, on each of the shares taken or contracted to be taken by him and for which he is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares payable in cash; and (c) there has been filed with the Registrar a duly verified declaration by 1[one of the directors or the secretary or, where the company has not appointed a secretary, a secretary in whole-time practice] in the prescribed form, that clause (b) of this sub-section has been complied with.
2[(2A) Without prejudice to the provisions of sub-section (1) and
sub-section (2) a company having a share capital, whether or not it has issued a prospectus inviting the public to subscribe for its shares, shall not at any time commence any business- (a) if such company is a company in existence immediately before the commencement of the Companies (Amendment) Act, 1965 (31 of 1965), in relation to any of the objects stated in its memorandum in pursuance of clause (c) of sub-section
(1) of section 13 ; (b) if such company is a company formed after such commencement, in relation to any of the objects stated in its memorandum in pursuance of sub-clause (ii) of clause (d) of
sub-section (1) of the said section, ——————————————————————— 1. Subs. by Act 31 of 1988, s.20 (w.e.f. 15-6-1988). 2. Ins. by Act 31 of 1965, s. 15 (w.e.f. 15-10-1965). ———————————————————————- 154 unless- (i) the company has approved of the commencement of any such business by a special resolution passed in that behalf by it in general meeting; and (ii) there has been filed with the Registrar a duly verified declaration by 1[one of the directors or the secretary or, where the company has not appointed a secretary, a secretary in whole-time practice],in the prescribed form, that clause (i) or as the case may be,sub-section (2B) has been complied with; and if the company commences any such business in contravention of this sub-section, every person who is responsible for the contra- vention shall, without prejudice to any other liability, be punishable with fine which may extend to five hundred rupees for every day during which the contravention continues. Explanation.-A company shall be deemed to commence any business within the meaning of clause (a) if and only if it commences any new business which is not germane to the business which it is carrying on at the commencement of the Companies (Amendment) Act, 1965 (31 of 1965),in relation to any of the objects referred to in the said clause. (2B) Notwithstanding anything contained in sub-section (2A) where no such special resolution as is referred to in that sub-section is passed but the votes cast (whether on a show of hands or, as the case may be, on a poll) in favour of the proposal to commence any business contained in the resolution moved in that general meeting (including the casting vote, if any, of the chairman) by members who, being entitled so to do, vote in person, or where proxies are allowed, by proxy, exceed the votes, if any, cast against the proposal by members so entitled and voting, the Central Government may on an application made to it by the Board of directors in this behalf allow the company to commence such business as if the proposal had been passed by a special resolution by the company in general meeting.]
(3) The Registrar shall, on the filing of a duly verified
declaration in accordance with the provisions of sub-section (1) or
sub-section (2), as the case may be, and, in the case of a company
which is required by sub-section (2) to file a statement in lieu of prospectus, also of ‘such a statement, certify that the company is entitled to commence business, and that certificate shall be conclusive evidence that the company is so entitled.
(4) Any contract made by a company before the date at which it is entitled to commence business shall be provisional only, and ——————————————————————— 1. Subs. by Act 31 of 1988, s.20 (w.e.f. 15-6-1988). ——————————————————————— 155 shall not be binding on the company until that date, and on that date it shall become binding.
(5)Nothing in this section shall prevent the simultaneous offer for subscription or allotment of any shares and debentures or the receipt of any money payable on applications for debentures.
(6)If any company commences business or exercises borrowing powers in contravention of this section, every person who is respon- sible for the contravention shall, without prejudice to any other liability, be punishable with fine which may extend to five hundred rupees for every day during which the contravention continues.
(7) Nothing in this section shall apply to- (a) a private company; or (b) a company registered before the first day of April, 1914, which has not issued a prospectus inviting the public to subscribe for its shares. 1* * * * * Registers of members and debenture holders
Register of members.
150.Register of members. (1) Every company shall keep in one or more books a register of its members, and enter therein the following particulars:- (a) the name and address, and the occupation, if any, of each member; (b) in the case of a company having a share capital, the shares held by each member, 2* * * and the amount paid or agreed to be considered as paid on those shares; (c) the date at which each person was entered in the register as a member; and (d) the date at which any person ceased to be a member: Provided that where the company has converted any of its shares into stock and given notice of the conversion to the Registrar, the register shall show the amount of stock held by each of the members concerned instead of the shares so converted which were previously held by him.
(2) If default is made in complying with sub-section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for every day during which the default continues. ———————————————————————
1 Sub-section (8) omitted by Act 65 of 1960, s. 35. 2 The words “distinguishing each share by its number,” omitted by Act 22 of 1996, s.31 and Sch. (w.e.f. 20-9-1995). ——————————————————————— 156
Index of members.
151.Index of members.(1) Every company having more than fifty members shall, unless the register of members is in such a form as in itself to constitute an index, keep an index (which may be in the form of a card index) of the names of the members of the company and shall, within fourteen days after the date on which any alteration is made in the register of members, make the necessary alteration in the index.
(2) The index shall, in respect of each member, contain a sufficient indication to enable the entries relating to that member in the register to be readily found.
(3) The index shall, at all times, be kept at the same place as the register of members.
(4) If default is made in complying with sub-section (1), (2) or
(3), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees.
Register and index of debenture holders.
152.Register and index of debenture holders. (1) Every company shall keep in one or more books a register of the holders of its debentures and enter therein the following particulars, namely: – (a) the name and address, and the occupation, if any, of each debenture holder ; (b) the debentures held by each holder, 1* * * and the amount paid or agreed to be considered as paid on those debentures; (c) the date at which each person was entered in the register as a debenture holder ; and (d) the date at which any person ceased to be a debenture holder.
(2) (a) Every company having more than fifty debenture holders shall, unless the register of debenture holders is in such a form as in itself to constitute an index, keep an index (which may be in the form of a card index) of the names of the debenture holders of the company and shall, within fourteen days after the date on which any alteration is made in the register of debenture holders, make the necessary alteration in the index. (b) The index shall, in respect of each debenture holder, contain a sufficient indication to enable the entries relating to that holder in the register to be readily found.
(3) If default is made in complying with sub-section (1) or (2), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees. ———————————————————————- 1. The words “distinguishing each debenture by its number,” omi- tted by Act 22 of 1996, s.31 and Sch. (w.e.f. 20-9-1996). ——————————-o————————————– 157
(4) Sub-sections (1) to (3) shall not apply with respect to debentures which, ex facie, are payable to the bearer thereof. 152A Register and index of beneficial owners. 1[152A. Register and index of beneficial owners. The register and index of beneficial owners maintainted by a depository under section 11 of the Depositories Act, 1996, shall be deemed to be an index of members and register and index of debenture holders, as the case may be, for the purposes of this Act.]
Trusts not to be entered on register. 153.Trusts not to be entered on register. No notice of any trust, express, implied or constructive, shall be entered on the register of members or of debenture holders 2* * *. 153A Appointment of public trustee. 3[153A.Appointment of public trustee. The Central Government may, by notification in the Official Gazette, appoint a person as public trustee to discharge the functions and to exercise the rights and powers conferred on him by or under this Act. 153B Declaration as to shares and debentures held in trust.
153B.Declaration as to shares and debentures held in trust. (1) Notwithstanding anything contained in section 153, where any shares in, or debentures of, a company are held in trust by any person (hereinafter referred to as the trustee), the trustee shall, within such time and in such form as may be prescribed, make a declaration to the public trustee.
(2) A copy of the declaration made under sub-section (1) shall be sent by the trustee to the company concerned, within twenty-one days, after the declaration has been sent to the public trustee.
(3) (a) If a trustee fails to make a declaration as required by this section, he shall be punishable with fine which may extend to five thousand rupees and in the case of a continuing failure, with a further fine which may extend to one hundred rupees for every day during which the failure continues. (b) If a trustee makes in a declaration aforesaid any statement which is false and which he knows or believes to be false or does not believe to be true, he shall be punishable with imprisonment for a term which may extend to two years and also with fine.
(4) The provisions of this section and section 187B shall not apply in relation to a trust- (a) where the trust is not created by instrument in writing; or (b) even if the trust is created by instrument in writing, 4[where the value of the shares in, or debentures of, a company held in trust]- (i) does not exceed one lakh of rupees, or (ii) exceeds one lakh of rupees but does not exceed either five lakhs of rupees or twenty-five per cent. of ——————————————————————— 1 Ins. by Act 22 of 1996, s.31 and Sch. (w.e.f. 20-9-1995). 2 The words ” or be receivable by the Registrar” omitted by Act 53 of 1963, s. 6 (w.e.f. 1-1-1964). 3 Ins. by s. 7, ibid. (w.e.f. 1-1-1964). 4 Subs. by Act 31 of 1965, s. 16, for certain words (w.e.f. 15-10-1965). ——————————————————————— 158-159 the paid-up share capital of the company, whichever is less.] 1[Explanation.-The expression ” the value of the shares in, or debentures of, a company ” in clause (b) means,- (i) in the case of shares or debentures acquired by way of allotment or transfer for consideration, the cost of acqui- sition thereof, and (ii) in any other case, the paid-up value of the shares or debentures.]
Power to close register of members of debenture holders.
154.Power to close register of members of debenture holders. (1) A company may, after giving not less than seven days’ previous notice by advertisement in some newspaper circulating in the district in which the registered office of the company is situate, close the register of members or the register of debenture holders for any period or periods not exceeding in the aggregate forty-five days in each year, but not exceeding thirty days at any one time.
(2) If the register of members or of debenture holders is closed
without giving the notice provided in sub-section (1), or after giving shorter notice than that so provided, or for a continuous or an aggre- gate 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 punishable with fine which may extend to five hundred rupees for every day during which the register is so closed. 2* * * * * ——————————————————————— 1 Ins. by Act 31 of 1965, s. 16 (w.e.f. 15-10-1965). 2. Omitted by Act 31 of 1988, s.21 (w.e.f. 31-5-1991). ——————————————————————— 160 Foreign registers of members or debenture holders
Power for company to keep foreign register of members of debentureholders. 157.Power for company to keep foreign register of members of
debenture holders.(1) A company which has a share capital or which has issued debentures may, if so authorised by its articles, keep in any State or country outside India a branch register of members or debenture holders resident in that State or country (in this Act called a ” foreign register “).
(2) The company shall, within 1[thirty days] from the date of the opening of any foreign register, file with the Registrar notice of the situation of the office where such register is kept ; and in the event of any change in the situation of such office or of its discontinuance, shall, within 1[thirty days] from the date of such change or discontinuance, as the case may be, file notice with the Registrar of such change or discontinuance.
(3) If default is made in complying with the requirements of
sub-section (2), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
Provisions as to foreign registers.
158.Provisions as to foreign registers. (1) A foreign register shall be deemed to be part of the company’s register (in this section called the ” principal register “) of members or of debenture holders, as the case may be.
(2) A foreign register shall be kept, shall be open to inspection and may be closed, and extracts may be taken therefrom and copies thereof may be required, in the same manner, mutatis mutandis, as is applicable to the principal register under this Act, except that the advertisement before closing the register shall be inserted in some newspaper circulating in the district wherein the foreign register is kept.
(3) (a) The Central Government may, by notification in the Official Gazette, direct that the provisions of clause (b) shall apply, or cease to apply, to foreign registers kept in any State or country outside India. (b) If a foreign register is kept by a company in any State or country to which a direction under clause (a) applies for the time being, the decision of any competent Court in that State or country in regard to-the rectification of the register shall have the same force and effect as if it were the decision of a competent Court in India. ——————————————————————— 1 Subs. by Act 31 of 1965, s. 62 and Sch., for ” one month ” (w.e.f. 15-10-1965). ——————————————————————— 161
(4) The company shall- (a) transmit to its registered office in India a copy of every entry in any foreign register as soon as may be after the entry is made ; and (b) keep at such office a duplicate of every foreign register duly entered up from time to time.
(5) Every such duplicate shall, for all the purposes of this Act, be deemed to be part of the principal register.
(6) Subject to the provisions of this section with respect to duplicate registers, the shares or debentures registered in any foreign register shall be distinguished from the shares or debentures registered in the principal register and in every other foreign register and no transaction with respect to any shares or debentures registered in a foreign register shall, during the continuance of that registration, be registered in any other register.
(7) The company may discontinue the keeping of any foreign register; and thereupon all entries in that register shall be transferred to some other foreign register kept by the company in the same part of the world or to the principal register.
(8) Subject to the provisions of this Act, a company may, by its articles, make such regulations as it thinks fit in regard to its foreign registers.
(9) If default is made in complying with sub-section (4), the company, and every officer of the company who is in default shall be punishable with fine which may extend to fifty rupees. Annual Returns
Annual return to be made by company having a share capital.
159.Annual return to be made by company having a share capital. (1) Every company having a share capital shall, within 1[sixty] days from the day on which each of the annual general meetings referred to in section 166 is held, prepare and file with the Registrar a return containing the particulars specified in Part I of Schedule V, as they stood on that day, regarding- (a) its registered office, (b) the register of its members, (c) the register of its debenture holders, (d) its shares and debentures, (e) its indebtedness, ——————————————————————— 1 Subs. by Act 31 of 1965, s. 62 and Sch., for ” forty-two” (w.e.f. 15-10-1965). ——————————————————————— 162 (f) its members and debenture holders, past and present, and (g) its directors, managing directors, managing agents, secretaries and treasurers, 1[managers and secretaries], past and present : 2[Provided that if 3[any of the five] immediately preceding returns has given as at the date of the annual general meeting with reference to which it was submitted, the full particulars required as to past and present members and the shares held and transferred by them, the return in question may contain only such of the particulars as relate to persons ceasing to be or becoming members since that date and to shares transferred since that date or to changes as compared with that date in the number of shares held by a member. Explanation.-Any reference in this section or in section 160 or 161 or in any other section or in Schedule V to the day on which an annual general meeting is held or to the date of the annual general meeting shall, where the annual general meeting for any year has not been held, be construed as a reference to the latest day on or before which that meeting should have been held in accordance with the provisions of this Act.]
(2) The said return shall be in the Form set out in Part II of Schedule V or as near thereto as circumstances admit 2[and where the return is filed even though the annual general meeting has not been held on or before the latest day by which it should have been held in with the return a statement specifying the reasons for not holding the annual general meeting]: (c) the conditions subject to which any manufacturing into stock and given notice of the conversion to the Registrar. the list referred to in paragraph 5 of Part I of Schedule V shall state the amount of stock held by each of the members concerned instead of the shares so converted previously held by him.
Annual return to be made by company not having a share capital. 160.Annual return to be made by company not having a share
capital. (1) Every company not having a share capital shall, within under section 65. Meetings referred to in section 166 is held, prepare and file with the ——————————————————————— 1 Subs. by Act 65 of 1960, s. 38, for “and managers”. 2 Ins. by s. 38, ibid. 3. Subs. by Act 31 of 1988, s.22 (w.e.f. 15-6-1988). 4 Subs. by Act 31 of 1965, s. 62 and ch., for ” forty-two ” (w.e.f. 15-10-1965). ——————————————————————— 162A Registrar a return stating the following particulars as they stood on that day: – (a) the address of the registered office of the company; 1[(aa) the names of members and the respective dates on which they became members and the names of persons who ceased to be members since the date of the annual general meeting of the immediately preceding year, and the dates on which they so ceased;] (b) all such particulars with respect to the persons who, at the date of the return, were the directors of the company, its managing agent, its secretaries and treasurers, 2[its manager and its secretary] as are set out in section 303.
(2) There shall be annexed to the return a statement containing particulars of the total amount of the indebtedness of the company as on the day aforesaid in respect of all charges which are or were required to be registered with the Registrar under this Act or under any previous companies law, or which would have been required to be registered under this Act if they had been created after the com- mencement of this Act.
Further provisions regarding annual return and certificate to beannexed thereto. 161.Further provisions regarding annual return and certificate to
be annexed thereto. (1) The copy of the annual return filed with the Registrar under section 159 or 160, as the case may be, shall be signed both by a director and by the 3[* * *] manager or secretary of the company, or where there is no managing agent, secretaries and treasurers, manager or secretary, by two directors of the company, one of whom shall be the managing director where there is one: 4[Provided that where the annual return is filed by a company whose shares are listed on a recognised stock exchange, the copy of such annual return shall also be signed by a secretary in whole-time practice].
(2) There shall also be filed with the Registrar along with the return a certificate signed by 5[the signatories] of the return, stating– (a) that the return states the facts as they stood on the day of the annual general meeting aforesaid, correctly and completely ; 6* * * 7[(aa) that since the date of the last annual return the transfer of all shares and debentures and the issue of all further certificates of shares and debentures have been appropriately recorded in the books maintained for the pur- pose; and] ——————————————————————— 1. Ins by Act 65 of 1960, s. 39. 2 Subs by s. 39, ibid., for ” and its manager”. 3 The words “managing agent, secretaries and treasurers,” omitted by Act 31 of 1988, S.23 (w.e.f. 15-6-1988). 4 Ins. by s.23, ibid. (w.e.f. 15-6-1988). 5 Subs. by s.23, ibid. (w.e.f. 15-6-1988). 6 The word “and” omitted by Act 65 of 1960, s. 40, 7 Ins. by s. 40, ibid. ——————————————————————— 162B (b) in the case of a private company also, (i) that the company has not, since the date of the annual general meeting with reference to which the last return was submitted, or in the case of a first return, since the date of the in- corporation of the company, issued any invitation to the public to subscribe for any shares or debentures of the company, and (ii) that, where the annual return discloses the fact that the number of members of the company exceeds fifty, the excess consists wholly of persons who under sub-clause
(b) of clause (iii) of sub-section. (1) of section 3 are not to be included in reckoning the number of fifty.
Penalty and interpretation.
162.Penalty and interpretation. (1) If a company fails to comply with any of the provisions contained in section 159, 160 or 161, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
(2) For the purposes of this section and sections 159, 160, and 161, the expressions ” officer ” and ” director ” shall include any person in accordance with whose directions or instructions the Board of directors of the Company is accustomed to act. General provisions regarding registers and returns
Place of keeping, and inspection of, registers and returns. 163.Place of keeping, and inspection of, registers and
returns.(1) The register of members commencing from the date of the registration of the company, the index of members, the register and index of debenture holders, and copies of all annual returns prepared under sections 159 and 160, together with the copies of certificates and documents required to be annexed thereto under sections 160 and 161, shall be kept at the registered office of the company: 1[Provided that such registers, indexes, returns and copies of certificates and documents or any or more of them may, instead of being kept at the registered office of the company, be kept at any other place within the city, town or village in which the registered office is situate, if– (i) such other place has been approved for this purpose by a special resolution passed by the company in general meeting, 2 [and] 3* * * * *. ——————————————————————– 1. Ins. by Act 65 of 1960, s. 41. 2. Ins. by Act 31 of 1965, s. 17 (w.e.f. 15-10-1965). 3. Cl. (ii) omitted by s. 17, ibid. (w.e.f. 15-10-1965). ——————————————————————— 162C. (iii) the Registrar has been given in advance a copy of the proposed special resolution.]
1[(1A) Notwithstanding anything contained in sub-section (1), the Central Government may make rules for the preservation and for the disposal, whether by destruction or otherwise, of the registers, indexes, ——————————————————————— 1 Ins. by Act 65 of 1960, s. 41. ——————————————————————— 163 returns, and copies of certificates and other documents referred to in
sub-section (1).]
(2) The registers, indexes, returns, and copies of certificates
and other documents referred to in sub-section (1) shall, except when the register of members or debenture holders is closed under the pro- visions of this Act, be open during business hours (subject to such reasonable restrictions, as the company may impose, so that not less than two hours in each day are allowed for inspection) to the inspec- tion– (a) of any member or debenture holder, without fee; and (b) of any other person, on payment of 1[such sum as may be prescribed] each inspection.
(3) Any such member, debenture holder or other person may- (a) make extracts from any register, index, or copy
referred to in sub-section (1) without fee or additional fee, as the case may be ; or (b) require a copy of any such register, index or copy or of any part thereof, on payment of 1[such sum as may be prescribed] for every one hundred words or fractional part thereof required to be copied.
(4) The company shall cause any copy required by any person
under clause (b) of sub-section (3) to be sent to that person within a period of ten days, exclusive of non-working days, commencing on the day next after the day on which the requirement is received by the company.
(5) If any inspection, or the making of any extract required under this section, is refused, or if any copy required under this
section is not sent within the period specified in sub-section (4), the company, and every officer of the company who is in default, shall be punishable, in respect of each offence, with fine which may extend to fifty rupees for every day during which the refusal of default continues.
(6) The 2[company Law Board] may also by order, compel an immediate inspection of the document, or direct that the extract required shall forthwith be. allowed to be taken by the person requiring it, or that the copy required shall forthwith be sent to the person requiring it, as the case may be.
Registers, etc., to be evidence. 164.Registers, etc., to be evidence. The register of members, the register of debenture holders, and the annual returns, certificates and statements referred to in ——————————————————————— 1. Subs. by Act 31 of 1988, s.67 (w.e.f. 15-7-1988). 2. Subs. by s.67, ibid. (w.e.f. 31-5-1991). ——————————————————————— 164 sections 159, 160 and 161 shall be prima facie evidence of any matters directed or authorised to be inserted therein by this Act. Meetings and Proceedings
Statutory meeting and statutory report of company.
165.Statutory meeting and statutory report of company. (1) Every company limited by shares, and every company limited by guarantee and having a share capital, shall, within a period of not less than one month nor more than six months from the date at which the company is entitled to commence business, hold a general meeting of the members of the company, which shall be called ” the statutory meeting”.
(2) The Board of directors shall, at least twenty-one days before the day on which the meeting is held, forward a report (in this Act referred to as ” the statutory report “) to every member of the company: Provided that if the statutory report is forwarded later than is required above, it shall, notwithstanding that fact, be deemed to have been duly forwarded if it is so agreed to by all the members entitled to attend and vote at the meeting.
(3) The statutory report shall set out- (a) the total number of shares allotted, distinguishing shares allotted as fully or partly paid up otherwise than in cash, and stating in the case of shares partly paid up, the extent to which they are so paid up, and in either case, the consideration for which they have been allotted ; (b) the total amount of cash received by the company in respect of all the shares allotted, distinguished as aforesaid ; (c) an abstract of the receipts of the company and of the payments made there out, up to a date within seven days of the date of the report, exhibiting under distinctive headings the receipts of the company from shares and debentures and other sources, the payments made there out, and particulars concerning the balance remaining in hand, and an account or estimate of the preliminary expenses of the company, showing separately any commission or discount paid or to be paid on the issue or sale of shares or debentures ; (d) the names, addresses and occupations of the directors of the company and of its auditors ; and also, if there be any, of its managing agent, secretaries and treasurers, manager, and secretary; and the changes, if any which 165 have occurred in such names, addresses and occupations since the date of the incorporation of the company ; (e) the particulars of any contract which, or the modification or the proposed modification of which, is to submitted to the meeting for its approval, together in the latter case with the particulars of the modification or proposed modification ; (f) the extent, if any, to which each under-writing contract, if any, has not been carried out, and the reasons therefore ; (g) the arrears, if any, due on calls from every director ; from the managing agent, every partner of the managing agent, every firm in which the managing agent is a partner, and where the managing agent is a private company, every director thereof ; from the secretaries and treasurers ; where they are a firm, from every partner therein ; and where they are a private company, from every director thereof ; and from the manager, and (h) the particulars of any commission or brokerage paid or to be paid in connection with the issue or sale of shares or debentures to any director; to the managing agent, any partner of the managing agent, any firm in which the managing agent is a partner; and where the managing agent is a private company, to any director thereof ; to the secretaries and treasurers ; where they are a firm, to any partner therein ; and where they are a private company,to any director thereof; or to the manager.
(4) The statutory report shall be certified as correct by not less than two directors of the company one of whom shall be a managing director, where there is one. After the statutory report has been certified as aforesaid, the auditors of the company shall, in so far as the report relates to the shares allotted by the company, the cash received in respect of such shares and the receipts and payments of the company 1* * *, certify it as correct.
(5) The Board shall cause a copy of the statutory report certified as is required by this section to be delivered to the Registrar for registration forthwith, after copies thereof have been sent to the members of the company. ——————————————————————– 1 The words ” on capital account ” omitted by Act 65 of 1960, s.
166
(6) The Board shall cause a list showing the names, addresses and occupations of the members of the company, and the number of shares held by them respectively, to be produced at the commencement of the statutory meeting, and to remain open and accessible to any member of the company during the continuance of the meeting.
(7) The members of the company present at the meeting shall be at liberty to discuss any matter relating to the formation of the company or arising out of the statutory report, whether previous notice has been given or not ; but no resolution may be passed of which notice has not been given in accordance with the provisions of this Act.
(8) The meeting may adjourn from time to time, and at any adjourned meeting any resolution of which notice has been given in accordance with the provisions of this Act, whether before or after the former meeting, may be passed ; and the adjourned meeting shall have the same powers as an original meeting.
(9) If default is made in complying with the provisions of this section, every director or other officer of the company who is in default shall be punishable with fine which may extend to five hundred rupees.
(10) This section shall not apply to a private company.
Annual general meeting.
166.Annual general meeting. 1[(1) Every company shall in each year hold in addition to any other meetings a general meeting as its annual general meeting and shall specify the meeting as such in the notices calling it ; and not more than fifteen months shall elapse between the date of one annual general meeting of a company and that of the next: Provided that a company may hold its first annual general meeting within a period of not more than eighteen months from the date of its incorporation ; and if such general meeting is held within that period, it shall not be necessary for the company to hold any annual general meeting in the year of its incorporation or in the following year: Provided further that the Registrar may, for any special reason, extend the time within which any annual general meeting (not being the first annual general meeting) shall be held, by a period not exceeding three months.]
(2) Every annual general meeting shall be called for a time during business hours, on a day that is not a public holiday, and shall be ———————————————————————
1 Subs. by Act 65 of 1960, s. 43, for sub-section (1). ——————————————————————— 167 held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situate 1* * *: 2[Provided that the Central Government may exempt any class of companies from the provisions of this sub-section subject to such conditions as it may impose: Provided further that- (a) a public company or a private company which is a subsi- diary of a public company, may by its articles fix the time for its annual general meetings and may also by a resolution passed in one annual general meeting fix the time for its subsequent annual general meetings; and (b) a private company which is not a subsidiary of a public company, may in like manner and also by a resolution agreed to by all the members thereof, fix the times as well at the place for its annual general meeting.]
Power of company Law Board to call annual general meeting.
167.Power of company Law Board to call annual general meeting.(1) If default is made in holding an annual general meeting in accordance with section 166, the 3[Company Law Board] may, not with standing anything in this Act or in the articles of the company, the application of any member of the company, call, or direct the calling of, a general meeting of the company and give such ancillary or consequential directions as the 3[Company Law Board] thinks expedient in relation to the calling, holding and conducting of the meeting. Explanation.-The directions that may be given under this sub- section may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting.
(2) A general meeting held in pursuance of sub-section (1) shall, subject to any directions of the 3[Company Law Board] be deemed to be an annual general meeting of the company.
Penalty for default in complying with section 166 or 167. 168.Penalty for default in complying with section 166 or 167. If default is made in holding a meeting of the company in accordance with section 166, or in complying with any directions of the Central
Government under sub-section (1) of section 167, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees 4[and ——————————————————————— 1 The words “and the notices calling the meeting shall specify it at the annual general meeting” omitted by Act 65 of 1960, s. 43. 2 Ins. by s. 43, ibid. 3. Subs. by Act 31 of 1988, s.67 (w.e.f. 31-5-1991). 4. Ins. by Act 65 of 1960, s.44. ——————————————————————— 168 in the case of a continuing default, with a further fine which may extend to two hundred and fifty rupees for every day after the first during which such default continues].
Calling of extraordinary general meeting on requisition.
169.Calling of extraordinary general meeting on requisition. (1) The Board of directors of a company shall, on the requisition of such
number of members of the company as is specified in sub-section (4), forthwith proceed duly to call an extraordinary general meeting of the company.
(2) The requisition shall set out the matters for the consideration of which the meeting is to be called, shall be signed by the requisitionists, and shall be deposited at the registered office of the company.
(3) The requisition may consist of several documents in like form, each signed by one or more requisitionists.
(4) The number of members entitled to requisition a meeting in regard to any matter shall be- (a) in the case of a company having a share capital, such number of them as hold at the date of the deposit of the requisition, not less than one-tenth of such of the paid-up capital of the company as at that date carries the right of voting in regard to that matter ; (b) in the case of a company not having a share capital, such number of them as have at the date of deposit of the requisition not less than one-tenth of the total voting power of all the members having at the said date a right to vote in regard to that matter.
(5) Where two or more distinct matters are specified in the
requisition, the provisions of sub-section (4) shall apply separately in regard to each such matter; and the requisition shall accordingly be valid only in respect of those matters in regard to which the condition specified in that sub-section is fulfilled.
(6) If the Board does not, within twenty-one days from the date of the deposit of a valid requisition in regard to any matters, proceed duly to call a meeting for the consideration of those matters on a day not later than forty-five days from the date of the deposit of the requisition, the meeting may be called- (a) by the requisitionists themselves, (b) in the case of a company having a share capital, by such of the requisionists as represent either a majority in value of the paid-up share capital held by all of them or 169 not less than one-tenth of such of the paid-up share capital of the company as is referred to in clause (a) of sub-section
(4), whichever is less ; or (c) in the case of a company not having a share capital, by such of the requisitionists as represent not less than one- tenth of the total voting power of all the members of the
company referred to in clause (b) of sub-section (4). Explanation.-For the purposes of this sub-section, the Board shall, in the case of a meeting at which a resolution is to be proposed as a special resolution, be deemed not to have duly convened the meeting if they do not give such notice thereof as is required by
sub-section (2) of section 189.
(7) A meeting called under sub-section (6) by the requisitionists or any of them- (a) shall be called in the same manner, as nearly as possible, as that in which meetings are to be called by the Board; but (b) shall not be held after the expiration of three months from the date of the deposit of the requisition. Explanation.-Nothing in clause (b) shall be deemed to prevent a meeting duly commenced before the expiry of the period of three months, aforesaid, from adjourning to some day after the expiry of that period.
(8) Where two or more persons hold any shares or interest in a company jointly, a requisition, or a notice calling a meeting, signed by one or some only of them shall, for the purposes of this section, have the same force and effect as if it had been signed by all of them.
(9) Any reasonable expenses incurred by the requisitionists by reason of the failure of the Board duly to call a meeting shall be repaid to the requisitionists by the company; and any sum so repaid shall be retained by the company out of any sums due or to become due from the company by way of fees or other remuneration for their services to such of the directors as were in default.
Section 171 to 186 to apply to meetings.
170.Section 171 to 186 to apply to meetings. (1) The provisions of sections 171 to 186- (i) shall, notwithstanding anything to the contrary in the articles of the company, apply with respect to general meetings of a public company, and of a private company which is a subsidiary of a public company; and 170 (ii) shall. unless otherwise specified therein or unless the articles of the company otherwise provide, apply with respect to general meetings of a private company which is not a subsidiary of a public company.
(2) (a) Section 176, with such adaptations and modifications, if any, as may be prescribed, shall apply with respect to meetings of any class of members, or of debenture holders or any class of debenture holders, of a company, in like manner as it applies with respect to general meetings of the company. (b) Unless the articles of the company or a contract binding on the persons concerned otherwise provide, sections 171 to 175 and sections 177 to 186 with such adaptations and modifications, if any, as may be prescribed, shall apply with respect to meetings of any class of members, or of debenture holders or any class of debenture holders, of a company, in like manner as they apply with respect to general meetings of the company.
Length of notice for calling meeting.
171.Length of notice for calling meeting. (1) A general meeting of a company may be called by giving not less than twenty-one days’ notice in writing.
(2) A general meeting may be called after giving shorter notice
than that specified in sub-section (1), if consent is accorded thereto- (i) in the case of an annual general meeting, by all the members entitled to vote thereat ; and (ii) in the case of any other meeting, by members of the company (a) holding, if the company has a share capital, not less than 95 per cent. of such part of the paid-up share capital of the company as gives a right to vote at the meeting, or (b) having, if the company has no share capital, not less than 95 per cent. of the total voting power exercisable at that meeting : Provided that where any members of a company are entitled to vote only on some resolution or resolutions to be moved at a meeting and not on the others, those members shall be taken into account for the purposes of this sub-section in respect of the former resolution or resolutions and not in respect of the latter.
Contents and manner of service of notice and persons on whom it is tobe served. 172,Contents and manner of service of notice and persons on whom
it is to be served. (1) Every notice of a meeting of a company shall specify the place and the day and hour of the meeting, and shall contain a statement of the business to be transacted thereat. 171
(2) Notice of every meeting of the company shall be given- (i) to every member of the company, in any manner
authorised by sub-sections (1) to (4) of section 53; (ii) to the persons entitled to a share in consequence of the death or insolvency of a member, by sending it through the post in a prepaid letter addressed to them by name, or by the title of representatives of the deceased, or assignees of the insolvent, or by any like description, at the address, if any, in India supplied for the purpose by the persons claiming to be so entitled, or until such an address has been so supplied, by giving the notice in any manner in which it might have been given if the death or insolvency had not occurred; and (iii) to the auditor or auditors for the time being of the company, in any manner authorised by section 53 in the case of any member or members of the company: 1[Provided that where the notice of a meeting is given by advertising the same in a newspaper circulating in the neighbourhood of
the registered office of the company under sub-section (3) of section 53, the statement of material facts referred to in section 173 need not be annexed to the notice as required by that section but it shall be mentioned in the advertisement that the statement has been forwarded to the members of the company.]
(3) The accidental omission to give notice to, or the non- receipt of notice by, any member or other person to whom it should be given shall not invalidate the proceedings at the meeting.
Explanatory statement to be annexed to notice.
173.Explanatory statement to be annexed to notice.(1) For the purposes of this section,– (a) in the case of an annual general meeting, all business to be transacted at the meeting shall be deemed special, with the exception of business relating to (i) the consideration of the accounts, balance sheet and the reports of the Board of directors and auditors, (ii) the declaration of a dividend, (iii) the appointment of directors in the place of those retiring, and (iv) the appointment of, and the fixing of the remuneration of, the auditors; and (b) in the case of any other meeting, all business shall be deemed special. ——————————————————————— 1 Ins. by Act 65 of 1960, s. 45. ———————————————————————
(2) Where any items of business to be transacted at the meeting are deemed to be special as aforesaid, there shall be annexed to the notice of the meeting a statement setting out all material facts concerning each such item of business, including in particular 1[the nature of the concern or interest], if any, therein, of every director, the managing agent, if any, the secretaries and treasurers, if any, and the manager, if any: 2[Provided that where any item of special business as aforesaid 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 director, the managing agent, if any, the secretaries and treasurers, if any, and the manager, if any, of the first- mentioned company shall also be set out in the statement if the extent of such shareholding interest is not less than twenty per cent. of the paid-up share capital of that other company.]
(3) Where any item of business consists of the according of approval to any document by the meeting, the time and place where the document can be inspected shall be specified in the statement aforesaid.
Quorum for meeting.
174.Quorum for meeting. (1) Unless the articles of the company provide for a larger number, five members personally present in the case of 3[public company (other than a public company which has become such by virtue of section 43A), and two members personally present in the case of any other company,] shall be the quorum for a meeting of the company.
(2) Unless the articles of the company otherwise provide, the
provisions of sub-sections (3), (4) and (5) shall apply with respect to the meetings of a public or private company.
(3) If within half an hour from the time appointed for holding a meeting of the company, a quorum is not present, the meeting, if called upon the requisition of members, shall stand dissolved.
(4) In any other case, the meeting shall stand adjourned to the same day in the next week, at the same time and place, or to such other day and at such other time and place as the Board may determine.
(5) If at the adjourned meeting also, a quorum is not present within half an hour from the time appointed for holding the meeting the members present shall be a quorum. ——————————————————————— 1. Subs. by Act 65 of 1960, s. 46, for “the nature and extent of the interest”. 2. Ins. by s. 46, ibid. 3. Subs. by Act 31 of 1965, s. 18, for certain words (w.e.f. 15- 10-1965). ——————————————————————— 173
Chairman of meeting.
175. Chairman of meeting. (1) Unless the articles of the company otherwise provide, the members personally present at the meeting shall elect one of themselves to be the chairman thereof on a show of hands.
(2) If a poll is demanded on the election of the chairman, it shall be taken forthwith in accordance with the provisions of this Act, the chairman elected on a show of hands exercising all the powers of the chairman under the said provisions.
(3) If some other person is elected chairman as a result of the poll, he shall be chairman for the rest of the meeting.
Proxies.
176.Proxies. (1) Any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person (whether a member or not) as his proxy to attend and vote instead of himself; but a proxy so appointed shall not have any right to speak at the meeting: Provided that, unless the articles otherwise provide- (a) this sub-section shall not apply in the case of a company not having a share capital; (b) a member of a private company shall not be entitled to appoint more than one proxy to attend on the same occasion ; and (c) a proxy shall not be entitled to vote except on a poll.
(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. If default is made in complying with this sub-section as respects any meeting, every officer of the company who is in default shall be punishable with fine which may extend to five hundred rupees.
1[(3) Any provision contained in the articles of a public company, or of a private company which is a subsidiary of a public 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 ———————————————————————
1 Subs. by Act 65 of 1960, s. 47, for sub-section (3). ——————————————————————— 174 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.]
(4) 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 thousand 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.
(5) 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.
(6) An instrument appointing a proxy, if in any of the forms set out in Schedule IX, shall not be questioned on the ground that it fails to comply with any special requirements specified for such instrument by the articles.
(7) Every member entitled to vote at a meeting of the company, or on any resolution to be moved thereat, shall be entitled during the period beginning twenty-four hours before the time fixed for the commencement of the meeting and ending with the conclusion of the meeting, to inspect the proxies lodged, at any time during the business hours of the company, provided not less than three days’ notice in writing of the intention so to inspect is given to the company.
Voting to be by show of hands in first instance. 177.Voting to be by show of hands in first instance. At any general meeting, a resolution put to the vote of the meeting shall, unless a poll is demanded under section 179, be decided on a show of hands. 175
Chairman’s declaration of result of voting by show of hands to beconclusive. 178.Chairman’s declaration of result of voting by show of hands to be conclusive. A declaration by the chairman in pursuance of section 177 that on a show of hands, a resolution has or has not been carried, or has or has not been carried either unanimously or by a particular majority, and an entry to that effect in the books containing the minutes of the proceedings of the company, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes cast in favour of or against such resolution.
Demand for poll.
179.Demand for poll. (1) Before or on the declaration of the result of the voting on any resolution on a show of hands, a poll may be ordered to be taken by the chairman of the meeting of his own motion, and shall be ordered to be taken by him on a demand made in that behalf by the persons or person specified below, that is to say,– 1 [(a)in the case of a public company having a share capital, by any members present in person or by proxy and holding shares in the company- (i)which confer a power to vote on the resolution not being less than one tenth of the total voting power in respect of the resolution, or (ii)on which an aggregate sum of not less than fifty thou- sand rupees has been paid up, (b) in the case of a private company having a share capital, by one member having the right to vote on the resolution and present in person or by proxy if not more than seven such members are personally present, and by two such members present in person or by proxy, if more than seven such members are personally present, (c) in the case of any other company, by any member or members present in person or by proxy and having not less than one tenth of the total voting power in respect of the resolution].
(2)The demand for a poll may be withdrawn at any time by the person or persons who made the demand.
Time of taking poll.
180.Time of taking poll. (1) A poll demanded on a question of adjournment shall be taken forthwith.
(2) A poll demanded on any other question (not being a question relating to the election of a chairman which is provided for in sec- tion 175) shall be taken at such time not being later than forty- ——————————————————————— 1. Subs. by Act 31 of 1988, s.24 (w.e.f. 15-6-1988). ——————————————————————— 176 eight hours from the time when the demand was made, as the chairman may direct.
Restriction on exercise of voting right of members who have not paidcalls, etc. 181. Restriction on exercise of voting right of members who have not paid calls, etc. 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 and has exercised any right of lien.
Restrictions on exercise of voting right in other cases to be void. 182. Restrictions on exercise of voting right in other cases to be void. A public company, or a private company which is a subsidiary of a public company shall not prohibit any member from exercising his voting right on the ground that he has not held his share or other interest in the company for any specified period preceding the date on which the vote is taken, or on any other ground not being a ground set out in section 181.
Right member to use his votes differently. 183.Right member to use his votes differently. On a poll taken at a meeting of a company, ‘a member entitled to more than one vote, or his proxy, or other person entitled to vote for him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses.
Scrutineers at poll.
184.Scrutineers at poll. (1) Where a poll is to be taken, the chairman of the meeting shall appoint two scrutineers to scrutinise the votes given on the poll and to report thereon to him.
(2) The chairman shall have power, at any time before the result of the poll is declared, to remove a scrutineer from office and to fill vacancies in the office of scrutineer arising from such removal or from any other cause.
(3) Of the two scrutineers appointed under this section, one shall always be a member(not being an officer or employee of the com- pany) present at the meeting, provided such a member is available and willing to be appointed.
Manner of taking poll and result thereof.
185. Manner of taking poll and result thereof. (1) Subject to the provisions of this Act, the chairman of the meeting shall have power to regulate the manner in which a poll shall be taken.
(2) The result of the poll shall be deemed to be the decision of the meeting on the resolution on which the poll was taken. 177
Power of Company Law Board to order meeting to be called.
186.Power of Company Law Board to order meeting to be called. (1) If for any reason it is impracticable to call a meeting of a company, other than an annual general meeting, in any manner in which meetings of the company may be called, or to hold or conduct the meeting of the company in the manner prescribed by this Act or the articles, the 1[Company Law Board] may, either of its own motion or on the application of any director of the company, or of any member of the company who would be entitled to vote at the meeting,– (a) order a meeting of the company to be called, held and conducted in such manner as the 1[Company Law Board] thinks fit; and (b) give such ancillary or consequential directions as the 1[Company Law Board] thinks expedient, including directions modifying or supplementing in relation to the calling, holding and conducting of the meeting, the operation of the provisions of this Act and of the company’s articles. Explanation.-The directions that may be given under this sub- section may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting.
(2) Any meeting called, held and conducted in accordance with any such order shall, for all purposes, be deemed to be a meeting of the company duly called, held and conducted.
Representation of corporations at meetings of companies and ofcreditors. 187. Representation of corporations at meetings of companies and
of creditors. (1) A body corporate (whether a company within the mean- ing of this Act or not) may- (a) if it is a member of a company within the meaning of this Act, by resolution of its Board of directors or other governing body, authorise such person as it thinks fit to act as its representative at any meeting of the company, or at any meeting of any class of members of the company; (b) if it is a creditor (including a holder of debentures) of a company within the meaning of this Act, by resolution of its directors or other governing body, authorise such person as it thinks fit to act as its representative at any meeting of any creditors of the company held in pursuance of this Act or of any rules made thereunder, or in ——————————————————————— 1 Subs. by Act 41 of 1974, s. 14, for “Court” (w.e.f. 1-2-1975). ——————————————————————— 178 pursuance of the provisions contained in any debenture or trust deed, as the case may be.
(2) A person authorised by resolution as aforesaid shall be entitled to exercise the same rights and powers (including the right to vote by proxy) on behalf of the body corporate which he represents as that body could exercise if it were 1[an individual member), creditor or holder of debentures of the company. 187A Representation of the President and Governors in meetings of companiesof which they are members. 2[187A.Representation of the President and Governors in meetings
of companies of which they are members. (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 as aforesaid 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) as the President or, as the case may be, the Governor could exercise as a member of the company.] 187B Exercise of voting rights in respect of shares held in trust. 3[187B. Exercise of voting rights in respect of shares held in
trust. (1) Save as otherwise provided in section 153B but notwithstanding anything contained in any other provisions of this Act or any other law or any contract, memorandum or articles, where any shares in a company are held in trust by a person (hereinafter referred to as trustee), the rights and powers (including the right to vote by proxy) exercisable at any meeting of the company or at any meeting of any class of members of the company by the trustee as a member of the company shall- (a) cease to be exercisable by the trustee as such member. and (b) become exercisable by the public trustee.
(2) The public trustee may, instead of himself attending the meeting, and exercising the rights and powers, as aforesaid, appoint as his proxy an officer of Government or the trustee himself to attend such meeting and to exercise such rights and powers in accordance with the directions of the public trustee : Provided that where the trustee is appointed by the public trustee as his proxy, the trustee shall be entitled, notwithstanding anything ——————————————————————– 1. Subs. by Act 65 of 1960, s. 48, for “a member”. 2. Ins. by s. 49, ibid. 3. Ins. by Act 53 of 1963, s. 8 (w.e.f. 1-12-1964). ——————————————————————— 178A contained in any other provisions of this Act, to exercise such rights and powers in the same manner as he would have been but for the provisions of this section.
(3) The public trustee may abstain from exercising the rights and powers conferred on him by this section if in his opinion the objects of the trust or the interests of the beneficiaries of the trust are not likely to be adversely affected by such abstention.
(4) If for any reason the trustee considers that the public trustee should not abstain from exercising the rights and powers conferred on him by this section and the exercise of such rights and powers is necessary in order to safeguard the objects of the trust or the interests. of the beneficiaries of the trust, he, may by writing communicate his views in this behalf to the public trustee but the public. trustee may in his discretion either accept such views or reject the same.
(5) No suit, prosecution or other legal proceeding shall lie against ‘the public trustee at the instance of the trustee or any person on his behalf or any other person on the ground that the public trustee has abstained from exercising the rights and powers conferred on him by this section.
(6) In order to enable the public trustee to exercise the rights and powers aforesaid, the public trustee shall also be entitled to. receive and inspect all books and papers under this Act, which a member is entitled to receive and inspect.] 187C Declaration by persons not holding beneficial interest in any share. 1[187C. Declaration by persons not holding beneficial interest in
any share. (1) Notwithstanding anything contained in section 150 section 153B or section 187B, a person, whose name is entered, at the commencement of the Companies (Amendment) Act, 1974,(41 of 1974) or at any time thereafter, in the register of members of a company as the holder of a share in that company but who does not hold the beneficial interest in such share, shall, within such time and in such form as may be prescribed, make a declaration to the company specifying the name and other particulars of the person who holds the beneficial interest in such share.
(2) Notwithstanding anything contained elsewhere in this Act, a person who holds a beneficial interest in a share or a class of shares of a company shall, within thirty days from the commencement of the Companies (Amendment) Act, 1974,(41 of 1974) or within thirty days after ——————————————————————— 1. Ins. by Act 41 of 1974, s. 15 (w.e.f. 1-2-1975). ——————————————————————— 178B his becoming such beneficial owner, whichever is later, make a decla- ration to the company specifying the nature of his interest, parti- culars of the person in whose name the shares stand registered in the books of the company and such other particulars as may be prescribed.
(3) Whenever there is a change in the beneficial interest in such shares the beneficial owner shall, within thirty days from the date of such change, make a declaration to the company in such form and containing such particulars as may be prescribed.
(4) Notwithstanding anything contained in section 153 where any
declaration referred to in sub-section (1), sub-section (2) or sub-
section (3) is made to a company, the company shall make a note of such declaration, in its register of members and shall file, within thirty days from the date of receipt of the declaration by it, a return in the prescribed form with the Registrar with regard to such declaration.
(5) (a) If any person, being required by the provisions of sub-
section (1), sub-section (2) or sub-section (3), to make a declaration, fails without any reasonable excuse, to do so, he shall be punishable with fine which may extend to one thousand rupees for every day during which the failure continues. (b) If a company fails to comply with the provisions of this section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to one hundred rupees for every day during which the default continues.
(6) Any charge, promissory note or any other collateral agree- ment, created, executed or entered into in relation to any share, by the ostensible owner thereof, or any hypothecation by the ostensible owner of any share, in respect of which a declaration is required to be made under the foregoing provisions of this section, but not so declared, shall not be enforceable by the beneficial owner or any person claiming through him.
(7) Nothing in this section shall be deemed to prejudice the obligation of a company to pay dividend in accordance with the provisions of section 206, and the obligation shall, on such payment, stand discharged. 178C. 187D Investigation of beneficial ownership of shares in certain cases. 187D. Investigation of beneficial ownership of shares in certain cases. Where it appears to the Central Government that there are good reasons, so to do, it may appoint one or more Inspectors to investigate and report as to whether the provisions of section 187C have been complied with with regard to any share, and thereupon the provisions of section 247 shall, as far as may be, apply to such investigation as if it were an investigation ordered under that section.]
Circulation of members’ re-solutions.
188.Circulation of members’ re-solutions. (1) Subject to the provisions of this section, a company shall, on the requisition in writing of such number of members as is hereinafter specified and (unless the company otherwise resolves) at the expense of the requisitionists,- (a) give to members of the company entitled to receive notice of the next annual general meeting notice of any resolution which may properly be moved and is intended to be moved at that meeting; (b) circulate to members entitled to have notice of any general meeting sent to them, any statement of not more than one thousand words with respect to- the matter referred to in any proposed resolution, or any business to be dealt with at that meeting.
(2) The number of members necessary for a requisition under sub-
section (1) shall be- (a) such number of members as represent not less than one- twentieth of the total voting power of all the members having at the date of the requisition a right to vote on the resolution or business to which the requisition relates; or (b) not less than one hundred members having the right aforesaid and holding shares in the company on which there has been paid up an aggregate sum of not less than one lakh of rupees in all. 179
(3) Notice of any such resolution shall be given, and any such statement shall be circulated to members of the company entitled to have notice of the meeting sent to them, by serving a copy of the resolution or statement on each member in any manner permitted for service of notice of the meeting; and notice of any such resolution shall be given to any other member of the company by giving notice of the general effect of the resolution in any manner permitted for giving him notice of meetings of the company: Provided that the copy shall be served, or notice of the effect of the resolution shall be given, as the case may be, in the same manner and, so far as practicable, at the same time as notice of the meeting, and where it is not practicable for it to be served or given at that time, it shall be served or given as soon as practicable thereafter.
(4) A company shall not be bound under this section to give notice of any resolution or to circulate any statement unless- (a) a copy of the requisition signed by the 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 for a date six weeks or less after the copy has been deposited, the copy, although not deposited within the time required by this sub-section shall be deemed to have been properly deposited for the purposes thereof.
(5) The company shall also not be bound under this section to circulate any statement if, on the application either of the company or of any other person who claims to be aggrieved, the 1[Company Law Board] satisfied that the rights conferred by this section are being abused to secure needless publicity for defamatory matter; and the 1[Company Law Board] may order the company’s costs on an application under this section ——————————————————————— 1. Subs. by Act 31 of 1988, s.67 (w.e.f. 31-5-1991). ——————————————————————— 180 to be paid in whole or in part by the requisitionists, notwithstanding that they are not parties to the application.
(6) A banking company shall not be bound to circulate any state- ment under this section, if, in the opinion of its Board of directors, the circulation will injure the interests of the company.
(7) Notwithstanding anything in the company’s articles, the business which may be dealt with at an annual general meeting shall include any resolution of which notice is given in accordance with this section, and for the purposes of this sub-section, notice shall be deemed to have been so given, notwithstanding the accidental omission in giving it, of one or more members.
(8) If default is made in complying with the provisions of this section, every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees.
Ordinary and special resolutions.
189.Ordinary and special resolutions. (1) A resolution shall be an ordinary resolution when at a general meeting of which the notice required under this Act has been duly given, the votes cast (whether on a show of hands, or on a poll, as the case may be,) in favour of the resolution (including the casting vote, if any, of the chairman) by members who, being entitled so to do, vote in person, or where proxies are allowed, by proxy, exceed the votes, if any, cast against the resolution by members so entitled and voting.
(2) A resolution shall be a special resolution when- (a) the intention to propose the resolution as a special 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 of the general meeting; and (c) the votes cast in favour of the resolution (whether on a show of hands, or on a poll, as the case may be,) by members who, being entitled so to do, vote in person, or where proxies are allowed, by proxy, are not less than three times the number of the votes, if any, cast against the resolution by members so entitled and voting.
Resolutions requiring special notice.
190. Resolutions requiring special notice. (1) Where, by any provision contained in this Act or in the articles, special notice is required of any resolution, notice of the 181 intention to move the resolution shall be given to the company not less than 1[fourteen days] before the meeting at which it is to be moved, exclusive of the day on which the notice is served or deemed to be served and the day of the meeting.
2[(2) The company shall, immediately after the notice of the intention to move any such resolution has been received by it, give its members notice of the resolution in the same manner as it gives notice of the meeting, or if that is not practicable, shall give them notice thereof, either by advertisement in a newspaper having an appropriate circulation or in any other mode allowed by the articles, not less than seven days before the meeting.]
Resolutions passed at adjourned meetings. 191.Resolutions passed at adjourned meetings. Where a resolution is passed at an adjourned meeting of- (a) a company; (b) the holders of any class of shares in a company; or (c) the Board of directors of a company; the resolution shall, for all purposes, be treated as having been passed on the date on which it was in fact passed, and shall not be deemed to have been passed on any earlier date.
Registration of certain resolutions and agreements.
192.Registration of certain resolutions and agreements. (1) A copy of every resolution 3[(together with a copy of the statement of material facts annexed under section 173 to the notice of the meeting in which such resolution has been passed)] or agreement to which this section applies shall, within 4[thirty] days after the passing or making thereof, be printed or typewritten and duly certified under the signature of an officer of the company and filed with the Registrar who shall record the same.
(2) Where articles have been registered 5[a copy of every reso-
lution referred to in sub-section (1) which has the effect of altering the articles and a copy of every agreement referred to in that sub- section] for the time being in force shall be embodied in or annexed to every copy of the articles issued after the passing of the resolution or the making of the agreement. ——————————————————————— 1 Subs. by Act 65 of 1960, s. 50, for “twenty-eight days”.
2 Subs. by s. 50, ibid., for sub-sections (2) and (3). 3 Ins. by s. 51, ibid. 4 Subs. by Act 31 of 1965, s. 62 and Sch., for “fifteen” (w.e.f. 15-10-1965). 5 Subs. by Act 65 of 1960, s. 51, for “a copy of every such resolution or agreement”. ——————————————————————— 182
(3) Where articles have not been registered, a printed copy of
every 1[resolution or agreement referred to in sub-section (1)] shall be forwarded to any member at his request, on payment of one rupee.
(4) This section shall apply to- (a) special resolutions; (b) resolutions which have been agreed to by all the members of a company, but which, if not so agreed to, would not have been effective for their purpose unless they had been passed as special resolutions; (c) any resolution of the Board of directors of a company or agreement executed by a company, relating to the appointment, re-appointment or renewal of the appointment, or variation of the terms of appointment, of a managing director; (d) any agreement relating tot the appointment, re- appointment or renewal of the appointment of a managing agent or secretaries and treasurers for a company, or varying the terms of any such agreement, executed by the company; (e) resolutions or agreements which have been agreed to by all the members of any class of shareholders but which, if not so agreed to, would not have been effective for their purpose unless they had been passed by some particular majority or otherwise in some particular manner; and all resolutions or agreements which effectively bind all the members of any class of shareholders though not agreed to by all those member; 2* * * 3[(ee) resolutions passed by a company- (i)according consent to the exercise by its Board of directors of any of the powers under clause (a), clause (d)
and clause (e) of sub-section (1) of section 293; ——————————————————————— 1 Subs. by Act 65 of 1960, s. 51, for “such resolution or agreement”. 2 The word “and” omitted by s. 51, ibid. 3 Ins. by s. 51, ibid. ——————————————————————— 182A (ii) approving the appointment of sole selling agents under 1[section 294 or section 294AA]; and] (f) resolutions requiring a company to be wound up volun-
tarily passed in pursuance of sub-section (1) of section 484; 2[(g) copies of the terms and conditions of appointment of a sole selling agent appointed under section 294 or of a sole selling agent or other person appointed under section 294AA.] ——————————————————————— 1 Subs. by Act 41 of 1974, s. 16, for “section 294″ (w.e.f. 1-2- 1975). 2 Ins. by s. 16, ibid. (w.e.f. 1-2-1975). ——————————————————————— 183
(5)If default is made in complying with sub-section (1), the com- pany, and every officer of the company who is in default, shall be punishable with fine which may extend to twenty rupees for every day during which the default continues.
(6)If default is made in complying with sub-section (2) or(3),the company, and every officer of the company who is in default, shall be punishable with fine which may extend to ten rupees for each copy in respect of which default is made.
(7)For the purposes of sub-sections (5) and (6), the liquidator of a company shall be deemed to be an officer of the company.
Minutes of proceedings of general meetings and of Board and othermeetings. 193.Minutes of proceedings of general meetings and of Board and
other meetings. 1[(1) Every company shall cause minutes of all proceedings of every general meeting and of all proceedings of every meeting of its Board of directors or of every committee of the Board, to be kept by making within 2[thirty] days of the conclusion of every such meeting concerned, entries thereof in books kept for that purpose with their pages consecutively numbered. (1A) Each page of every such book shall be initialled or signed and the last page of the record of proceedings of each meeting in such books shall be dated and signed- (a) in the case of minutes of proceedings of a meeting of the Board or of a committee thereof, by the chairman of the said meeting or the chairman of the next succeeding meeting ; (b) in the case of minutes of proceedings of a general meeting, by the chairman of the same meeting within the aforesaid period of 2[thirty] days or in the event of the death or inability of that chairman within that period, by a director duly authorised by the Board for the purpose. (1B) In no case the minutes of proceedings of a meeting shall be attached to any such book as aforesaid by pasting or otherwise.]
(2) The minutes of each meeting shall contain a fair and correct summary of the proceedings thereat.
(3) All appointments of officers made at any of the meetings aforesaid shall be included in the minutes of the meeting.
(4) In the case of a meeting of the Board of directors or of a committee of the Board, the minutes shall also contain- (a) the names of the directors present at the meeting; and ———————————————————————
1 Subs. by Act 65 of 1960, s. 52, for sub-section (1). 2 Subs. by Act 31 of 1965, s. 62 and Sch. for ” fourteen ” (w.e.f. 15-10-1985). ——————————————————————— 184 (b) in the case of each resolution passed at the meeting, the names of the directors, if any, dissenting from, or not concurring in, the resolution.
(5) Nothing contained in Sub-sections (1) to (4) shall be deemed to require the inclusion in any such minutes of any matter which, in the opinion of the chairman of the meeting- (a) is, or could reasonably be regarded as, defamatory of any person ; (b) is irrelevant or immaterial to the proceedings ; or (c) is detrimental to the interests of the company. Explanation.-The chairman shall exercise an absolute discretion in regard to the inclusion or non-inclusion of any matter in the minutes on the grounds specified in this sub-section.
(6) If default is made in complying with the foregoing provi- sions of this section in respect of any meeting, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees.
Minutes to be evidence. 1[194. Minutes to be evidence. Minutes of meetings kept in accordance with the provisions of section 193 shall be evidence of the proceedings recorded therein.]
Presumptions to be drawn where minutes duly drawn and signed. 195.Presumptions to be drawn where minutes duly drawn and signed. Where minutes of the proceedings of any general meeting of the company or of any meeting of its Board of directors or of a committee of the Board 2[have been kept in accordance with the provisions of section 193], then, until the contrary is proved, the meeting shall be deemed to have’ been duly called and held, and all proceedings thereat to have duly taken place, and in particular, all appointments of directors or liquidators made at the meeting shall be deemed to be valid.
Inspection of minute books of general meetings.
196.Inspection of minute books of general meetings. (1) The books containing the minutes of the proceedings of any general meeting of a company held on or after the 15th day of January, 1937, shall- (a) be kept at the registered office of the company, and (b) be open, during business hours, to the inspection of any member without charge, subject to such reasonable ——————————————————————— 1. Subs. by Act 65 of 1960, s. 53, for s. 194. 2. Subs. by s. 54, ibid., for certain words. ——————————————————————— 185 restrictions as the company may, by its articles or in general meeting impose, so however that not less than two hours in each day are allowed for inspection.
(2) Any member shall be entitled to be furnished, within seven days after he has made a request in that behalf to the company, with a
copy of any minutes referred to in sub-section (1),on payment of 1[such sum as may be prescribed] for every one hundred words or fractional part thereof required to be copied.
(3) If any inspection required under sub-section (1) is refused
or if any copy required under sub-section (2) is not furnished within the time specified therein, the company, and every officer of the com- pany who is in default, shall be punishable with fine which may extend to five hundred rupees in respect of each offence.
(4) In the case of any such refusal or default, the 2[company Law Board] may, by order, compel an immediate inspection of the minute books or direct that the copy required shall forthwith be sent to the person requiring it.
Publication of reports of proceedings of general meetings. 197. Publication of reports of proceedings of general meetings.
(1) No document purporting to be a report of the proceedings of any general meeting of a company shall be circulated or advertised at the expense of the company, unless it includes the matters required by section 193 to be contained in the minutes of the proceedings of such meeting.
(2) If any report is circulated or advertised in contravention
of sub-section (1), the company, and every officer of the company who is in default, shall be punishable, in respect of each offence, with fine which may extend to five hundred rupees. 1[Prohibition of simultaneous appointment of different categories of managerial personnel 197A Company not to appoint or employ certain different categories of mana-gerial personnel at the same time. 197A.Company not to appoint or employ certain different categories of managerial personnel at the same time. Notwithstanding anything contained in this Act or any other law or any agreement or instrument, no company shall, after the commencement of the Companies (Amendment) Act, 1960, (65 of 1960) appoint or employ at the same time, or after the expiry of six months from such commencement, continue the appointment or employment at the same time, of more than one of the following categories of managerial personnel, namely:-. (a) managing director, (b) managing agent, ——————————————————————— 1 Subs. by Act 31 of 1988, S.67 (w.e.f. 15-7-1988). 2 Subs. by s.67, ibid. (w.e.f. 31-5-1991). 3 Ins. by Act 65 of 1960, s.55. ——————————————————————— 186 (c) secretaries and treasurers, and (d) manager.] Managerial remuneration, etc.
Overall maximum managerial remuneration and managerial remuneration incase of absence or inadequacy of profits. 1 [198.Overall maximum managerial remuneration and managerial
remuneration in case of absence or inadequacy of profits. (1) The total managerial remuneration payable by a public company or a private company which is a subsidiary of a public company, to its directors and its managing agent, secretaries and treasurers or manager in respect of any financial year shall not exceed eleven per cent. of the net profits of that company for that financial year computed in the manner laid down in sections 349, 350 and 351, except that the remuneration of the directors shall not be deducted from the gross profits : Provided that nothing in this section shall affect the operation of sections 352 to 354 and 356 to 360.
(2) The percentage aforesaid shall be exclusive of any fees pay-
able to directors under sub-section (2) of section 309.
(3) Within the limits of the maximum remuneration specified in
sub-section (1), a company may pay a monthly remuneration to its managing or whole-time director in accordance with the provisions of section 309 or to its manager in accordance with the provisions of section 387.
2[ (4) Notwithstanding anything contained in sub-sections (1) to
(3), but subject to the provisions of section 269, read with Schedule XIII, if, in any financial year, a company has no profits or its profits are inadequate, the company shall not pay to its directors, including any managing or whole-time director or manager, by way of remuneration any sum [exclusive of any fees payable to directors under
sub-section (2) of section 309], except with the previous approval of the Central Government.] ——————————————————————— 1 Subs by Act 65 of 1960, s. 56, for s. 198. 2 Subs. by Act 31 of 1988, s.25 (w.e.f. 15-6-1988). ——————————————————————— 187 Explanation.-For the purposes of this section and sections 309, 310, 311, 348, 352, 381 and 387, “remuneration” shall include,- (a) any expenditure incurred by the company in providing any rent-free accommodation, or any other benefit or amenity in respect of accommodation free of charge, to any of the
persons specified in sub-section (1); (b) any expenditure incurred by the company in providing any other benefit or amenity free of charge or at a concessional rate to any of the persons aforesaid ; (c) any expenditure incurred by the company in respect of any obligation or service which, but for such expenditure by the company, would have been incurred by any of the persons aforesaid ; and (d) any expenditure incurred by the company to effect any insurance on the life of, or to provide any pension, annuity or gratuity for, any of the persons aforesaid or his spouse or child.]
Calculation of commission, etc., in certain cases.
199. Calculation of commission, etc., in certain cases. (1) Where any commission or other remuneration payable to any officer or employee of a company (not being a director, the managing agent, secretaries and treasurers or a manager) is fixed at a percentage of, or is otherwise based on, the net profits of the company, such profits shall be calculated in the manner set out in sections 349, 350 and
(2) Any provision in force at the commencement of this Act for the payment of any commission or other remuneration in any manner based on the net profits of a company, shall continue to be in force for a period of one year from such commencement; and thereafter shall
become subject to the provisions of sub-section (1).
Prohibition of tax-free payments.
200. Prohibition of tax-free payments. (1) No company shall pay to any officer or employee thereof, whether in his capacity as such or otherwise, remuneration free of any tax, or otherwise calculated by reference to, or varying with, any tax payable by him, or the rate or standard rate of any such tax, or the amount thereof. Explanation.-In this sub-section, the expression “tax” comprises any kind of income-tax including super-tax.
(2) Where by virtue of any provision in force immediately before the commencement of this Act, whether contained in the company’s 188 articles, or in any contract made with the company, or in any re- solution passed by the company in general meeting or by the company’s Board of directors, any officer or employee of the company holding any office at the commencement of this Act is entitled to remuneration in
any of the modes prohibited by sub-section (1), such provision shall have effect during the residue of the term for which he is entitled to hold such office at such commencement, as if it provided instead for the payment of a gross sum subject to the tax in question, which, after deducting such tax, would yield the net sum actually specified in such provision.
(3) This section shall not apply to any remuneration- (a) which fell due before the commencement of this Act, or (b) which may fall due after the commencement of this Act, in respect of any period before such commencement.
Avoidance of provisions relieving liability of officers and auditorsof company. 201.Avoidance of provisions relieving liability of officers and
auditors of company. (1) Save as provided in this section, any provision, whether contained in the articles of a company or in an agreement with a company or in any other instrument, for exempting any officer of the company or any person employed by the company as auditor from, or indemnifying him against, any liability which, by virtue of any rule of law, would otherwise attach to him in respect of any negligence, default, misfeasance, breach of duty or breach of trust of which he may be guilty in relation to the company, shall be void; Provided that a company may, in pursuance of any such provision as aforesaid indemnify any such officer or auditor against any liability incurred by him in defending any proceedings, whether civil or criminal, in which judgment is given in his favour or in which he is acquitted or discharged or in connection with any application under section 633 in which relief is granted to him by the Court.
(2) Nothing contained in the proviso to sub-section (1) shall apply to the constituted attorney of the managing agent of a company, unless such attorney is, or is deemed to be, an officer of the company. Prevention of Management by Undesirable Persons
Undischarged insolvent not to manage companies.
202.Undischarged insolvent not to manage companies. (1) If any person, being an undischarged insolvent,- (a) discharges any of the functions of a director, or acts as or discharges any of the functions of the managing agent, secretaries and treasurers, or manager, of any company; or 189 (b) directly or indirectly takes part or is concerned in the promotion, formation or management of any company; he shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to five thousand rupees, or with both.
(2) In this section, ” company ” includes- (a) an unregistered company; and (b) a body corporate incorporated outside India, which has an established place of business within India.
Power to restrain fraudulent person from managing companies. 203.Power to restrain fraudulent person from managing companies.
(1) Where- (a) a person is convicted of any offence in connection with the promotion, formation or management of a company; or (b) in the course of winding up a company it appears that a person- (i)has been guilty of any offence for which he is punishable (whether he has been convicted or not) under section 542 ; or (ii)has otherwise been guilty, while an officer of the company, of any fraud or misfeasance in relation to the company or of any breach of his duty to the company; the Court may make an order that that person shall not, without the leave of the Court, be a director of, or in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of a company, for such period not exceeding five years as may be specified in the order.
(2) In sub-section (1), the expression ” the Court”,- (a) in relation to the making of an order against any person by virtue clause (a) thereof, includes the Court by which he is convicted, as well as any Court having jurisdiction to wind up the company as respects which the offence as committed; and (b) in relation to the granting of leave, means any Court having jurisdiction to wind up the company as respects which leave is sought.
(3) A person intending to apply for the making of an order under this section by the Court having jurisdiction to wind up a company shall give not less than ten days’ notice of his intention to the person
against whom the order is sought, and at the hearing of the applica- tion, the last-mentioned person may appear and himself give evidence or call witnesses.
(4) An application for the making of an order under this section by the Court having jurisdiction to wind up a company may be made by the Official Liquidator, or by the liquidator of the company, or by any person who is or has been a member or creditor of the company.
(5) On the hearing of any application for an order under this section by the Official Liquidator or the liquidator, or of any application for leave under this section by a person against whom an order has been made on the application of the Official Liquidator or liquidator, the Official Liquidator or liquidator shall appear and call the attention of the Court to any matters which seem to him to be relevant, and may himself give evidence or call witnesses,
(6) An order may be made by virtue of sub-clause (ii) of clause
(b) of sub-section (1), notwithstanding that the person concerned may be criminally liable in respect of the matters on the ground of which the order is to be made 1* * *.
(7) If any person acts in contravention of an order made under this section, he shall, in, respect of each offence, be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to five thousand rupees, or with both.
(8) The provisions of this section shall be in addition to, and without prejudice to the operation of, any other provision contained in this Act. Restriction on appointment of firms and bodies corporate to offices
Restriction on appointment of firm or body corporate to office orplace of profit under a company. 204.Restriction on appointment of firm or body corporate to
office or place of profit under a company. 2[(1) Save as provided in
sub-section (2), no company shall, after the commencement of this Act, appoint or employ any firm or body corporate to or in any office or place of profit under the company, other than the office of managing agent, secretaries and treasurers or trustee for the holders of debentures of the company, for a term exceeding five years at a time: Provided that the initial appointment or employment of a firm or body corporate to or in any office or place of profit as aforesaid may, ——————————————————————— 1. Certain words omitted by Act 31 of 1965, s. 19 (w.e.f. 15-10- 1965).
2. Subs. by Act 65 of 1960, s. 57. for sub-section (1). ——————————————————————— 191 with the approval of the Central Government, be made for a term not exceeding ten years.]
(2) Sub-section (1) shall not apply to the appointment or employment of a firm or body corporate as a technician or a consultant,- (i) unless the firm or body corporate aforesaid is already the managing agent or secretaries and treasurers of the com- pany; or (ii) unless a partner in the firm, aforesaid, or a director or member of the body corporate aforesaid being a private company, or a director of the body corporate aforesaid not being a private company, is- already the managing agent of the company; or a member of the firm, a director or member of the private company, or a director of the body corporate not being a private company,which firm, private company or body corporate is already the managing agent or the secretaries and treasurers of the company.
(3) Any firm or body corporate holding at the commencement of this Act any office or place of profit under the company shall, unless its term of office expires earlier, be deemed to have vacated its office immediately on the expiry of five years from the commencement of this Act.
(4) Nothing contained in sub-section (1) shall be deemed to prohibit the re-appointment, re-employment, or extension of the term of office, of any firm or body corporate, by further periods not exceeding five years on each occasion: Provided that any such re-appointment, re-employment or extension shall not be sanctioned earlier than two years from the date on which it is to come into force.
(5) Any office or place in a company shall be deemed to be an office or place of profit under the company, within the meaning of this section, if the person holding it 1[obtains from the company anything] by way of remuneration, whether as salary, fees, commission, perquisites, the right to occupy free of rent any premises as a place of residence, or otherwise. ——————————————————————— 1 Subs. by Act 65 of 1960, s. 57, for “obtains anything”. ——————————————————————– 192
(6) This section shall not apply to a private company, unless it is a subsidiary of a public company. 204A Restrictions on the appointment of former managing agents orsecretaries and treasurers to any office. 1[204A. Restrictions on the appointment of former managing agents
or secretaries and treasurers to any office. (1) Except with the previous approval of the- (a) company in general meeting, and (b) Central Government, no company shall, during a period of five years from the commence- ment of the Companies (Amendment) Act, 1974, (41 of 1974.) appoint as secretary, consultant or adviser or to any other office, by whatever name called,- (i) any individual, firm or body corporate who, or which, had at any time after the 15th day of August, 1960, been holding office as the managing agents or secretaries and treasurers of the company, or (ii) any associate of the managing agents or secretaries and treasurers as aforesaid : Provided that where any such appointment has been made before the commencement of the Companies (Amendment) Act, 1974, (41 of 1974.) no such appointment shall be continued by the company after a period of six months from such commencement unless such appointment has been approved by the company in general meeting and the Central Government before the expiry of the said period.
(2) (a) Where- (i) any individual, firm or body corporate, who, or which, had at any time after the 15th day of August, 1960, been holding office as the managing agents or secretaries and treasurers of the company, or (ii) any associate of the managing agents or secretaries and treasurers as aforesaid; has been appointed by such company at any time during a period of five years preceding the 3rd day of April, 1970, or at any time after that date, as its secretary, consultant or adviser, or to any other office under it, by whatever name called, the Central Government may, if it appears to it that there is good reason for so doing, require the ——————————————————————— 1 Ins. by Act 41 of 1974, s. 17 (w.e.f. 1-2-1975). ——————————————————————— 193 company to furnish to it such information as it may consider neces- sary, with regard to the terms and conditions of the appointment of such individual, firm or body corporate as secretary, consultant or adviser or as the holder of such other office, for the purpose of determining whether or not such terms and conditions are prejudicial to the interest of the company. (b) If the company refuses or neglects to furnish any such information, the Central Government may appoint a competent person to investigate and report on the terms and conditions of appointment to any of the offices referred to in clause (a) and the provisions of section 240A shall, so far as may be, apply, to such investigation, as they apply to any other investigation made under any other provision of this Act. (c) If, after perusal of the information furnished by the com- pany, or, as the case may be, the report submitted by the person appointed under clause (b), the Central Government is of opinion that the terms and conditions of appointment to any of the offices referred to in clause (a) are prejudicial to the interests of the company, it may, by order, make such variations in those terms and conditions as would, in its opinion, no longer render such terms and conditions of appointment prejudicial to the interests of the company. (d) As from such date as may be specified by the Central Gov- ernment in the order aforesaid, the appointment referred to in clause (a) shall be regulated by the terms and conditions as varied by that Government.
(3) For the purposes of this section, the expression “appointment” includes re-appointment, employment and re-employment.] Dividends and manner and time of payment thereof
Dividend to be paid only out of profits.
1[205. Dividend to be paid only out of profits. (1) No dividend shall be declared or paid by a company for any financial year except out of the profits of the company for that year arrived at after providing for depreciation in accordance with the provisions of sub-
section (2) or out of the profits of the company for any previous financial year or years arrived at after providing for depreciation in accordance with those provisions and remaining undistributed or out of both or out of moneys provided by the Central Government or a State Government for the payment of dividend in pursuance of a guarantee given by that Government: ——————————————————————— 1 Subs. by Act 65 of 1960, s. 58, for s. 205. ——————————————————————— 194 Provided that- (a) if the company has not provided for depreciation for any previous financial year or years which falls or fall after the commencement of the Companies (Amendment) Act, 1960, (65 of 1960.) it shall, before declaring or paying dividend for any financial year provide for such depreciation out of the profits of that financial year or out of the profits of any other previous financial year or years; (b) if the company has incurred any loss in any previous financial year or years, which falls or fall after the commencement of the Companies (Amendment) Act, 1960, (65 of 1960.) then, the amount of the loss or an amount which is equal to the amount provided for depreciation for that year or those years whichever is less, shall be set off against the profits of the company for the year for which dividend is proposed to be declared or paid or against the profits of the company for any previous financial year or years, arrived at in both cases after providing for depreciation in accordance
with the provisions of subsection (2) or against both; (c) the Central Government may, if it thinks necessary so to do in the public interest, allow any company to declare or pay dividend for any financial year out of the profits of the company for that year or any previous financial year or years without providing for depreciation : Provided further that it shall not be necessary for a company to provide for depreciation as aforesaid where dividend for any financial year is declared or paid out of the profits of any previous financial year or years which falls or fall before the commencement of the companies (Amendment) Act, 1960.(65 of 1960.)
(2) For the purpose of sub-section (1), depreciation shall be provided either- (a) to the extent specified in section 350; or (b) in respect of each item of depreciable asset, for such an amount as is arrived at by dividing ninety-five per cent. of the original cost thereof to the company by the specified period in respect of such asset; or 194A (c) on any other basis approved by the Central Government which has the effect of writing off by way of depreciation ninety-five per cent. of the original cost to the company of each such depreciable asset on the expiry of the specified period; or (d) as regards any other depreciable asset for which no rate of depreciation has been laid down by 1[this Act or any rules made thereunder], on such basis as may be approved by the Central Government by any general order published in the Official Gazette or by any special order in any particular case : Provided that where depreciation is provided for in the manner laid down in clause (b) or clause (c), then, in the event of the depreciable asset being sold, discarded, demolished or destroyed the written down value thereof at the end of the financial year in which the asset is sold, discarded, demolished or destroyed, shall be written off in accordance with the proviso to section 350.
2 [(2A) Notwithstanding anything contained in sub-section (1), on and from the commencement of the Companies (Amendment) Act, 1974, (41 of 1974) no dividend shall be declared or paid by a company for any financial year out of the profits of the company for that year arrived at after providing for depreciation in accordance with the provisions
of subsection (2), except after the transfer to the reserves of the company of such percentage of its profits for that year, not exceeding ten per cent., as may be prescribed : Provided that nothing in this sub-section shall be deemed to prohibit the voluntary transfer by a company of a higher percentage of its profits to the reserves in accordance with such rules as may be made by the Central Government in this behalf.] 3[(2B) A company which fails to comply with the provisions of section 80A shall not, so long as such failure continues, declare any dividend on its equity shares.]
(3) No dividend shall be payable except in cash: Provided that nothing in this sub-section shall be deemed to pro- hibit the capitalization of profits or reserves of a company for the purpose of issuing fully paid-up bonus shares or paying up any amount for the time being unpaid on any shares held by the members of the company.
(4) Nothing in this section shall be deemed to affect in any manner the operation of section 208. ———————————————————————– 1 Subs. by Act 31 of 1988, s.26 (w.e.f. 15-6-1988). 2 Ins. by Act 41 of 1974, s. 18 (w.e.f. 1-2-1975). 3 Ins. by Act 31 of 1988, s.26 (w.e.f. 15-6-1988). ———————————————————————— 194B
(5) For the purposes of this section- (a) “specified period” in respect of any depreciable asset shall mean the number of years at the end of which at least ninety-five per cent. of the original cost of that asset to the company will have been provided for by way of depreciation if depreciation were to be calculated in accordance with the provisions of section 350; (b) any dividend payable in cash may be paid by cheque or warrant sent through the post directed to the registered address of the shareholder entitled to the payment of the dividend or in the case of joint shareholders, to the registered address of that one of the joint shareholders which is first named on the register of members, or to such person and to such address as the shareholder or the joint shareholders may in writing direct.] 205A Unpaid divident to be transferred to special divided account. 1[205A. Unpaid dividend to be transferred to special dividend
account. (1) Where, after the commencement of the Companies (Amend- ment) Act, 1974 ( 41 of 1974), a dividend has been declared by a com- pany but has not been paid, 2[or claimed] within forty-two days, from, the date of the declaration, to any shareholder entitled to the pay- ment of the dividend, the company shall, within seven days from the date of expiry of the said period of forty-two days, transfer the total amount of dividend which remains unpaid 2[or unclaimed] within the said period of forty-two days, to a special account to be opened by the company in that behalf in any scheduled bank, to be called “Unpaid Dividend Account of…… Company Limited/Company (Pri- vate) Limited”. 3[Explanation.- In this sub-section, the expression “dividend which remains unpaid” means any dividend the warrant in respect thereof has not been encashed or which has otherwise not been paid or claimed.]
(2) Where the whole or any part of any dividend, declared by a company before the commencement of the Companies (Amendment) Act, 1974, (41 of 1974.) remains unpaid at such commencement, the com- pany shall, within a period of six months from such commencement, transfer such unpaid amount to the account referred to in sub-section
(1).
(3) Where, owing to inadequacy or absence of profits in any year, any company proposes to declare dividend out of the accumulated profits earned by the company in previous years and transferred by it to the reserves, such declaration of dividend shall not be made ———————————————————————- 1 Ins. by Act 41 of 1974, s. 19 (w.e.f. 1-2-1975). 2 Subs. by Act 31 of 1988, s. 27 (w.e.f. 15.6.88) 3 Ins. by s.27, ibid. ———————————————————————- 194C except in accordance with such rules as may be made by the Central Government in this behalf, and, where any such declaration is not in accordance with such rules, such declaration shall not be made except with the previous approval of the Central Government.
(4) If the default is made in transferring the total amount
referred to in sub-section (1) or any part thereof to the unpaid dividend account of the concerned company, the company shall pay, from the date of such default, interest on so much of the amount as has not been transferred to the said account, at the rate of twelve per cent. per annum and the interest accruing on such amount shall enure to the benefit of the members of the company in proportion to the amount remaining unpaid to them.
(5) Any money transferred to the unpaid dividend account of a company in pursuance of this section which remains unpaid or unclaimed for a period of three years from the date of such transfer, shall be transferred by the company to the general revenue account of the Central Government but a claim to, any money so transferred to the general revenue account may be preferred to the Central Government by the person to whom the money is due and shall be dealt with as if such transfer to the general revenue account had not been made, the order, if any, for payment of the claim being treated as an order for refund of revenue.
(6) The company shall, when making any transfer under sub-section
(5) to the general revenue account of the Central Government any unpaid or unclaimed dividend, furnish to such officer as the Central Government may appoint in this behalf a statement in the prescribed form setting forth in respect of all sums included in such transfer, the nature of the sums, the names and last known addresses of the person entitled to receive the sum, the amount to which each person is entitled and the nature his claim thereto and such other particulars as may be prescribed.
(7) The company shall be entitled to a receipt from the Reserve Bank of India for any money transferred by it to the general revenue account of the Central Government and such receipt shall be an effectual discharge of the company in respect thereof.
(8) If a company fails to comply with any of the requirements of this section, the company and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees for every day during which the failure continues. 194D 205B Payment of unpaid or unclaimed dividend. 205B. Payment of unpaid or unclaimed dividend. Any person
claiming to be entitled to any money transferred under sub-section (5) of section 205A to the general revenue account of the Central Government, may apply to the Central Government for an order for payment of the money claimed; and the Central Government may, if satisfied, whether on a certificate by the company or otherwise, that such person is entitled to the whole or any part of the money claimed, make an order for the payment to that person of the sum due to him after taking such security from him as it may think fit.]
Dividend not to be paid except to registered shareholders or to theirorder or to their bankers. 206. Dividend not to be paid except to registered shareholders or
to their order or to their bankers. (1) No dividend shall be paid by a company in respect of any share therein, except- (a) to the registered holder of such share or to his order or to his bankers; or (b) in case a share warrant has been issued in respect of the share in pursuance of section 114, to the bearer of such warrant or to his bankers.
(2) Nothing contained in sub-section (1) shall be deemed to require the bankers of a registered shareholder to make a separate application to the company for the payment of the dividend. 206A Right to dividend rights shares and bonus shares to be help in abeyancepending registration of transfer of shares. 2[206A. Right to dividend rights shares and bonus shares to be held in abeyance pending registration of transfer of shares. Where any instrument of transfer of shares has been delivered to any company for registration and the transfer of such shares has not been registered by the company, it shall, notwithstanding anything contained in any other provision of this Act,- (a) transfer the dividend in relation to such shares to the special account referred to in section 205A unless the company is authorised by the registered holder of such share in writing to pay such dividend to the transferee specified in such instrument of transfer; and (b) keep in abeyance in relation to such shares any offer
of rights shares under clause (a) of sub-section (1) of section 81 and any issue of fully paid-up bonus shares in
pursuance of sub-section (3) of section 205.]
Penalty for failure to distribute dividends within forty-two days. 207. Penalty for failure to distribute dividends within forty-two days. 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 1[forty-two days] from the date of the declaration, to any shareholder entitled to the payment of the dividend, every director of the company; its managing agent or secretaries and treasurers; and where the managing agent is a firm or body corporate, every partner in the firm and every director of the body corporate; and where the secretaries and treasurers are a firm, every partner in the firm and where they are a body corporate, every director thereof; shall, if he is knowingly a party to the default, be punishable with simple imprisonment for a term which may extend to seven days and shall also be liable to fine: Provided that no offence shall be deemed to have been committed within the meaning of the foregoing provision in the following cases, namely:- (a) where the dividend could not be paid by reason of the operation of any law; ———————————————————————– 1 Ins. by Act 31 of 1988, s.28 (w.e.f. 15-6-1988). 2 Subs. by Act 65 of 1960, s. 59, for “three months”. ———————————————————————– 195 (b) where a shareholder has given directions to the company regarding the payment of the dividend and those directions cannot be complied with; (c) where there is a dispute regarding the right to receive the dividend; (d) where the dividend has been lawfully adjusted by the company against any sum due to it from the shareholder; or (e) where, for any other reason, the failure to pay the dividend or to post the warrant within the period aforesaid was not due to any default on the part of the company. Payments of interest out of capital
Power of company to pay interest out of capital in certain cases. 208. Power of company to pay interest out of capital in certain
cases. (1) Where any shares in a company are issued for the purpose of raising money to defray the expenses of the construction of any work or building, or the provision of any plant, which cannot be made profitable for a lengthy period, the company may- (a) pay interest on so much of that share capital as is for the time being paid up, for the period and subject to the
conditions and restrictions mentioned in sub-sections (2) to
(7) ; and (b) charge the sum so paid by way of interest, to capital as part of the cost of construction of the work or building or the provision of the plant.
(2) No such payment shall be made unless it is authorised by the articles or by a special resolution.
(3) No such payment, whether authorised by the articles or by special resolution, shall be made without the previous sanction of the Central Government. The grant of such sanction shall be conclusive evidence, for the purposes of this section, that the shares of the company, in respect of which such sanction is given, have been issued for a purpose specified in this section.
(4) Before sanctioning any such payment, the Central Government may, at the expense of the company, appoint a person to inquire into, and report to the Central Government on, the circumstances of the case; and may, before making the appointment, require the company to give security for the payment of the costs of the inquiry. 196
(5) The payment of interest shall be made only for such period as may be determined by the Central Government; and that period shall in no case extend beyond the close of the half year next after the half-year during which the work or building has been actually completed or the plant provided.
(6) The rate of interest shall in no case exceed four per cent. per annum or such other rate as the Central Government may, by notifi- cation in the Official Gazette, direct.
(7) The payment of the interest shall not operate as a reduction of the amount paid up on the shares in respect of which it is paid.
(8) Nothing in this section shall affect any company to which the Indian Railway Companies Act, 1895, (10 of 1895.) or the Indian Tramways Act, 1902, (4 of 1902.) applies. Accounts
Books of account to be kept by company.
209. Books of account to be kept by company. 1[(1) Every company shall keep at its registered office proper books of account with respect to- (a) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure take place ; (b) all sales and purchases of goods by the company; 2* * * (c) the assets and liabilities of the company ; 3[and] 3[(d) in the case of a company pertaining to any class of companies engaged in production, processing, manufacturing or mining activities, such particulars relating to utilisation of material or labour or to other items of cost as may be prescribed, if such class of companies is required by the Central Government to include such particulars in the books of Account:] Provided that all or any of the books of account aforesaid may be kept at such other place in India as the Board of directors may decide and when the Board of directors so decides, the company shall, within seven days of the decision, file with the Registrar a notice in writing giving the full address of that other place.]
(2) Where a company has a branch office, whether in or outside India, the company shall be deemed to have complied with the
provisions of sub-section (1), if proper books of account relating to the ———————————————————————–
1 Sub. by Act 65 of 1960, s. 60, for sub-section (1). 2 The word ” and” omitted by Act 31 of 1965, s. 20 (w.e.f. 15-10- 1965). 3 Ins. by s. 20, ibid. (w.e.f. 15-10-1965). ———————————————————————– 197 transactions effected at the branch office are kept at that office and proper summarised returns, made up to dates at intervals of not more than three months, are sent by the branch office to the company at its
registered office or the other place referred to in subsection (1).
1[(3) For the purposes of sub-sections (1) and (2), proper books of account shall not be deemed to be kept with respect to the matters specified therein,- (a) if there are not kept such books as are necessary to give a true and fair view of the state of affairs of the company or branch office, as the case may be, and to explain its transactions; and (b) if such books are not kept on accrual basis and accord- ing to the double entry system of accounting.]
2[(4) 2* * * The books of account and other books and papers shall be open to inspection by any director during business hours. 3* * * * 4[(4A) The books of account of every company relating to a period of not less than eight years immediately preceding the current year 4[together with the vouchers relevant to any entry in such books ,of account] shall be preserved in good order: Provided that in the case of a company incorporated less than eight years before the current year, the books of account for the entire period preceding the current year 5[together with the vouchers relevant to any entry in such books of account] shall be so preserved.]
(5) If any of the persons referred to in sub-section (6) fails to take all reasonable steps to secure compliance by the company with the requirements of this section, or has by his own wilful act been the cause of any default by the company thereunder, he shall, in respect of each offence, be punishable with 6 [imprisonment for a term. which may extend to six months, or with fine which may extend to one thousand rupees, or with both] : Provided that in any proceedings against a person in respect of an offence under this section consisting of a failure to take reasonable steps to secure compliance by the company with the requirements of ———————————————————————- 1 Subs. by Act 31 of 1988, s.29 (w.e.f. 15-6-1988).
2 Subs. by Act 31 of 1965, s. 20, for sub-section (4) (w.e.f, 15- 10-1965). 3 The brackets and letter “(a)” and (clauses (b), (c) and (d) omitted by Act 41 of 1974, s. 20) (w.e.f. 1-2 1975). 4 Ins. by Act 65 of 1960, s. 60. 5 Ins. by Act 31 of 1965, s. 20 (w.e.f. 15-10-1965). 6 Subs. by Act 65 of 1960, s. 60, for “fine which may extend lo one thousand rupees” ——————————————————————— 198 this section, it shall be a defence to prove 1* * * that a competent and reliable person was charged with the duty of seeing that those requirements were complied with and was in a position to discharge that duty : 2[Provided further that no person shall be sentenced to imprison- ment for any such offence unless it was committed wilfully.]
(6) The persons referred to in sub-section (5) are the following, namely:- (a) where the company has a managing agent, 3[secretaries and treasurers or managing director or manager], such managing agent, 3[secretaries and treasurers or managing director or manager] 4[and all officers and other employees
and agents [as defined in sub-section (6) of section 240 but excluding bankers, auditors and legal advisers] of such managing agent or secretaries and treasurers]; (b) where such managing agent or secretaries and treasurers are a firm, every partner in the firm; (c) where such managing agent or secretaries and treasurers are a body corporate, every director of such body corporate; 5* * * (d) where the company has neither a managing agent nor 6[secretaries and treasurers nor managing director nor manager, every director of the company]; 4[and] 4[(e) whether or not a company has a managing agent or secre- taries and treasurers, every officer and other employee and agent (defined as aforesaid) of the company.]
(7) If any person, not being a person referred to in sub-section
(6), having been charged by the managing agent, secretaries and treasurers, 2[managing director, manager] or Board of directors, as ——————————————————————— 1 The words “that he had reasonable ground to believe, and did believe”, omitted by Act 65 of 1960, s. 60. 2 Ins. by s. 60, ibid. 3 Subs. by s. 60, ibid, for “or secretaries and treasurers”. 4 Ins. by Act 31 of 1965, s. 20 (w.e.f. 15-10-1965). 5 The word “and” omitted by s. 20, ibid. (w e.f. 15-10-1965). 6 Subs. by Act 65 of 1960, s. 60, for “secretaries and treasurers, every director of the company”. ———————————————————————- 198A the case may be, with the duty of seeing that the requirements of this section are complied with, makes default in doing so, he shall, in respect of each offence, be punishable with 1[imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both]. 209A Inspection of books of account, etc., of companies.
2[209A. Inspection of books of account, etc., of companies (1) The books of account and other books and papers of every company shall be open to inspection during business hours- (i) by the Registrar, or (ii) by such officer of Government as may be authorised by the Central Government in this behalf: Provided that such inspection may be made without giving any previous notice to the company or any officer thereof.
(2) It shall be the duty of every director, other officer or employee of the company to produce to the person making inspection
under sub-section (1), all such books of account and other books and papers of the company in his custody or control and to furnish him with any statement, information or explanation relating to the affairs of the company as the said person may require of him within such time and at such place as he may specify.
(3) It shall also be the duty of every director, other officer or employee of the company to give to the person making inspection under this section all assistance in connection with the inspection which the company may be reasonably expected to give.
(4) The person making the inspection under this section may, during the course of inspection,- (i) make or cause to be made copies of books of account and other books and papers, or (ii) place or cause to be placed any marks of identification thereon in token of the inspection having been made.
(5) Notwithstanding anything contained in any other law for the time being in force or any contract to the contrary, any person making an inspection under this section shall have the same powers, as are vested in a civil court under the Code of Civil Procedure, ——————————————————————— 1 Subs. by Act 65 of 1960, s. 60, for “fine which may extend to one thousand rupees”. 2 Ins. by Act 41 of 1974, s. 21 (w.e.f. 1-2-1975). ——————————————————————— 198B 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:- (i) the discovery and production of books of account and other documents, at such place and such time as may be specified by such person; (ii) summoning and enforcing the attendance of persons and examining them on oath; (iii) inspection of any books, registers and other documents of the company at any place.
(6) Where an inspection of the books of account and other books and papers of the company has been made under this section, the person making the inspection shall make a report to the Central Government.
(7) Any officer authorised to make an inspection under this section shall have all the powers that a Registrar has under this Act in relation to the making of inquiries.
(8) If default is made in complying with the provisions of this section, every officer of the company who is in default shall be punishable with fine which shall not be less than five thousand rupees, and also with imprisonment for a term not exceeding one year.
(9) Where a director or any other officer of a company has been convicted of an offence under this section he shall, on and from the date on which he is so convicted, be deemed to have vacated his office as such and on such vacation of office, shall be disqualified for holding such office in any company, for a period of five years from such date.]
Annual accounts and balance sheet.
210.Annual accounts and balance sheet. (1) At every annual general meeting of a company held in pursuance of section 166, the Board of directors of the company shall lay before the company- (a) a balance sheet as at the end of the period specified
in sub-section (3); and (b) a profit and loss account for that period.
(2) In the case of a company not carrying on business for profit, an income and expenditure account shall be laid before the company 198C at its annual general meeting instead of a profit and loss account, and all references to “profit and loss account”, “profit” and “loss” in this section and elsewhere in this Act, shall be construed, in relation to such a company, as references respectively to the “income and expenditure account”, “the excess of income over expenditure”, and “the excess of expenditure over income”.
(3) The profit and loss account shall relate- (a) in the case of the first annual general meeting of the company, to the period beginning with the incorporation of the company and ending with a day which shall not 199 precede the day of the meeting by more than nine months ; and 1[(b) in the case of any subsequent annual general meeting of the company, to the period beginning with the day immediately after the period for which the account was last submitted and ending with a day which shall not precede the day of the meeting by more than six months, or in cases where an extension of time has been granted for holding the meeting
under the second proviso to subsection (1) of section 166, by more than six months and the extension so granted.]
(4) The period to which the account aforesaid relates is referred to in this Act as a ” financial year ” ; and it may be less or more than a calendar year, but it shall not exceed fifteen months : Provided that it may extend to eighteen months where special permission has been granted in that behalf by the Registrar.
(5) If any person, being a director of a company, fails to take all reasonable steps to comply with the provisions of this section, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both: Provided that in any proceedings against a person in respect of an offence under this section, it shall be a defence to prove 2* * * that a competent and reliable person was charged with the duty of seeing that the provisions of this section were complied with and was in a position to discharge that duty: Provided further that no person shall be sentenced to imprison- ment for any such offence unless it was committed wilfully.
(6) If any person, not being a director of the company, having been charged by the Board of directors with the duty of seeing that the provisions of this section are complied with, makes default in doing so, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both: Provided that no person shall be sentenced to imprisonment for any such offence unless it was committed wilfully. ——————————————————————— 1 Subs. by Act 65 of 1960, s. 61, for cl. (b). 2 The words” that he had reasonable ground to believe, and did believe” omitted by s. 61, ibid. ———————————————————————- 200
Form and contents of balance sheet and profit and loss account. 211.Form and contents of balance sheet and profit and loss
account. 1[(1) Every balance sheet of a company shall give a true and fair view of the state of affairs of the company as at the end of the financial year and shall, subject to the provisions of this section, be in the form set out in Part I of Schedule VI, or as near thereto as circumstances admit or in such other form as may be approved by the Central Government either generally or in any particular case; and in preparing the balance sheet due regard shall be had, as far as may be, to the general instructions for preparation of balance sheet under the heading ” Notes ” at the end of that Part: Provided that nothing contained in this subsection shall apply to any insurance or banking company or any company engaged in the generation or supply of electricity or to any other class of company for which a form of balance sheet has been specified in or under the Act governing such class of company.]
(2) Every profit and loss account of a company shall give a true and fair view of the profit or loss of the company for the financial year and shall, subject as aforesaid, comply with the requirements of Part II of Schedule VI, so far as they are applicable thereto : Provided that nothing contained in this sub-section shall apply to any insurance or banking company 2 [or any company engaged in the generation or supply of electricity], or to any other class of company for which a form of profit and loss account has been specified in or under the Act governing such class of company.
(3) The Central Government may, by notification in the Official Gazette, exempt any class of companies from compliance with any of the requirements in Schedule VI if, in its opinion, it is necessary to grant the exemption in the I [public interest]. Any such exemption may be granted either unconditionally or subject to such conditions as may be specified in the notification.
(4) The Central Government may, on the application or with the consent of the Board of directors of the company, by order, modify in relation to that company any of the requirements of this Act as to the matters to be stated in the company’s balance sheet or profit and loss account for the purpose of adapting them to the circumstances of the company.
(5) The balance sheet and the profit and loss account of a com- pany shall not be treated as not disclosing a true and fair view of the ———————————————————————-
1 Subs. by Act 65 of 1960, s. 62, for sub-section (1). 2 Ins. by s. 62, ibid. 3 Subs. by s. 62 ibid. for “national interest” ———————————————————————- 201 state of affairs of the company, merely by reason of the fact that they do not disclose- (i) in the case of an insurance company, any matters which are not required to be disclosed by the Insurance Act, 1938 ; (4 of 1838.) (ii) in the case of a banking company, any matters which are not required to be disclosed by the Banking Companies Act, 1949 ; (10 of 1994) (iii) in the case of a company engaged in the generation or supply of electricity, any matters which are not required to be disclosed by 1[both the Indian Electricity Act, 1910, (9 of 1910) and the Electricity (Supply) Act, 1948]; (54 of 1948.) (iv) in the case of a company governed by any other special Act for the time being in force, any matters which are not required to be disclosed by that special Act; or (v) in the case of any company, any matters which are not required to be disclosed by virtue of the provisions con- tained in Schedule VI or by virtue of a notification issued
under sub-section (3) or an order issued under, subsection
(4).
(6) For the purposes of this section, except where the context otherwise requires, any reference to a balance sheet or profit and loss account shall include any notes thereon or documents annexed thereto, giving information required by this Act, and allowed by this Act to be given in the form of such notes or documents.
(7) If any such person as is referred to in sub-section (6) of section 209 fails to take all reasonable steps to secure compliance by the company, as respects any accounts laid before the company in general meeting, with the provisions of this section and with the other requirements of this Act as to the matters to be stated in the accounts, he shall, in respect of each offence, be punishable with imprisonment for a term which may I extend to six months, or with fine which may extend to one thousand rupees, or with both: Provided that in any proceedings against a person in respect of an offence under this section, it shall be a defence to prove 2* * * that a competent and reliable person was charged with the duty of seeing that the provisions of this section and the other requirements ——————————————————————— 1 Subs. by Act 65 of 1960; s. 62, for ” the Electricity (Supply) Act, 1948 (54 of 1948) “. 2 The words “that he had reasonable ground to believe and did believe” omitted by S. 62, ibid. ——————————————————————— 202 aforesaid were complied with and was in a position to discharge that duty: Provided further that no person shall be sentenced to imprison- ment for any such offence unless it was committed wilfully.
(8) If any person, not being a person referred to in sub-section
(6)of section 209, having been charged by the managing agent, secretaries and treasurers, 1[managing director or manager,] or Board of directors, as the case may be, with the duty of seeing that the provisions of this section and the other requirements aforesaid are complied with, makes default in doing so, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months or with fine which may extend to one thousand rupees, or with both: Provided that no person shall be sentenced to imprisonment for any such offence unless it was committed wilfully.
Balance sheet of holding company to include certain particulars as toits subsidiaries. 212.Balance sheet of holding company to include certain
particulars as to its subsidiaries. (1) There shall be attached to the balance sheet of a holding company having a subsidiary or subsidiaries at the end of the financial year as at which the holding company’s balance sheet is made out, the following documents in respect of such subsidiary or of each such subsidiary, as the case may be:- (a) a copy of the balance sheet of the subsidiary; (b) a copy of its profit and loss account ; (c) a copy of the report of its Board of directors (d) a copy of the report of its auditors ; (e) a statement of the holding company’s interest in the
subsidiary as specified in sub-section (3); the statement
referred to in sub-section (5), if any ; and
(g) the report referred to in sub-section (6), if any.
(2) 2[(a) The balance sheet referred to in clause (a) of sub-
section (1)shall be made out in accordance with the requirements of this Act,- (i) as at the end of the financial year of the subsidiary, where such financial year coincides with the financial year of the holding company; ——————————————————————— 1 Ins. by Act 65 of 1960, s. 62. 2 Subs. by s. 63, ibid., for cl. (a). ——————————————————————– 203 (ii) as at the end of the financial year of the subsidiary last before that of the holding company where the financial year of the subsidiary does not coincide with that of the holding company;] (b) The profit and loss account and the reports of the Board of directors and of the auditors, referred to in clauses (b), (c) and (d)
of subsection (1), shall be made out, in accordance with the require- ments of this Act, for the financial year of the subsidiary referred to in clause (a). (c) 1[Where the financial year of the subsidiary does not coincide with that of the holding company, the financial year aforesaid] of the subsidiary shall not end on a day which precedes the day on which the holding company’s financial year ends by more than six months. (d) Where the financial year of a subsidiary is shorter in duration than that of its holding company, references to the financial year of the subsidiary in clauses (a), (b) and (c) shall be construed as references to two or more financial years of the subsidiary the duration of which, in the aggregate, is not less than the duration of the holding company’s financial year.
(3) The statement referred to in clause (e) of sub-section (1) shall specify- (a) the extent of the holding company’s interest in the subsidiary at the end of the financial year or of the last of the financial years of the subsidiary referred to in sub-
section (2); (b) the net aggregate amount, so far as it concerns members of the holding company and is not dealt with in the company’s accounts, of the subsidiary’s profits after deducting its losses or vice versa- (i) for the financial year or years of the subsidiary aforesaid ; and (ii) for the previous financial years of the subsidiary since it became the holding company’s subsidiary; (c) the net aggregate amount of the profits of the subsidiary after deducting its losses or vice versa- (i)for the financial year or years of the subsidiary aforesaid; and ——————————————————————— 1 Subs. by Act 65 of 1960, s. 63, for “the financial year aforesaid”. ——————————————————————– 204 (ii)for the previous financial years of the subsidiary since it became the holding company’s subsidiary; so far as those profits are dealt with, or provision is made for those losses, in the company’s accounts.
(4) Clauses (b) and (c) of sub-section (3) shall apply only to profits and losses of the subsidiary which may properly be treated in the holding company’s accounts as revenue profits or losses, and the profits or losses attributable to any shares in a subsidiary for the time being held by the holding company or any other of its subsi- diaries shall not (for that or any other purpose) be treated as afore- said so far as they are profits or losses for the period before the date on or as from which the shares were acquired by the company or any of its subsidiaries, except that they may in a proper case be so treated where- (a) the company itself the subsidiary of another body corporate ; and (b) the shares were acquired from that body corporate or a subsidiary of it ; and for the purpose of determining whether any profits or losses are to be treated as profits or losses for the said period, the profit or loss for any financial year of the subsidiary may, if it is not practicable to apportion it with reasonable accuracy by reference to the facts, be treated as accruing from day to day during that year and be apportioned accordingly.
(5) Where the financial year or years of a subsidiary referred
to in sub-section (2) do not coincide with the financial year of the holding company, a statement containing information on the following matters shall also be attached to the balance sheet of the holding company:- (a) whether there has been any, and, if so, what change in the holding company’s interest in the subsidiary between the end of the financial year or of the last of the financial years of the subsidiary and the end of the holding company’s financial year; (b) details of any material changes which have occurred between the end of the financial year or of the last of the financial years of the subsidiary and the end of the holding company’s financial year in respect of- (i) the subsidiary’s fixed assets 205 (ii) its investments (iii)the moneys lent by it; (iv) the moneys borrowed by it for any purpose other than that of meeting current liabilities.
(6) If, for any reason, the Board of directors of the holding company is unable to obtain information on any of the matters required
to be specified by sub-section (4), a report in writing to that effect shall be attached to the balance sheet of the holding company.
(7) The documents referred to in clauses (e), (f) and (g) of
sub-section (1) shall be signed by the persons by whom the balance sheet of the holding company is required to be signed.
(8) The Central Government may, on the application or with the consent of the Board of directors of the company, direct that in relation to any subsidiary, the provisions of this section shall not apply, or shall apply only to such extent as may- be specified in the direction.
(9) If any such person as is referred to in sub-section (6) of section 209 fails to take all reasonable steps to comply with the provisions of this section, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both: Provided that in any proceedings against a person in respect of an offence under this section, it shall be a defence to prove 1* * * that a competent and reliable person was charged with the duty of seeing that the provisions of this section were complied with and was in a position to discharge that duty: Provided further that no person shall be sentenced to imprison- ment for any such offence unless it was committed wilfully.
(10) If any person, not being a person referred to in sub-section
(6) of section 209, having been charged by the managing agent, secretaries and treasures, 2[managing director, manager,] or Board of directors, as the case may be, with the duty of seeing that the provisions of this section are complied with, makes default in doing so, he shall, in respect of each offence, be punishable with ———————————————————————- 1 The words “that he had reasonable ground to believe, and did believe,” omitted by Act 65 of 1960, s. 63. 2 Ins. by s. 63, ibid. ———————————————————————- 206 imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both: Provided that no person shall be sentenced to imprisonment for any such offence unless it was committed wilfully.
Financial year of holding company and subsidiary.
213.Financial year of holding company and subsidiary. (1) Where it appears to the Central Government desirable for a holding company or a holding company’s subsidiary, to extend its financial year so that the subsidiary’s financial year may end with that of the holding company, and for that purpose to postpone the submission of the relevant accounts to a general meeting, the Central Government may, on the application or with the consent of the Board of directors of the company whose financial year is to be extended, direct that in the case of that company, the submission of accounts to a general meeting, the holding of an annual general meeting or the making of an annual return, shall not be required to be submitted, held or made, earlier than the dates specified in the direction, notwithstanding anything to the contrary in this Act or in any other Act for the time being in force.
(2) The Central Government shall, on the application of the Board of directors of a holding company or a holding company’s sub- sidiary, exercise the powers conferred on that Government by sub-
section (1) if it is necessary so to do, in order to secure that the end of the financial year of the subsidiary does not precede the end of the holding company’s financial year by more than six months, where that is not the case at the commencement of this Act, or at the date on which the relationship of holding company and subsidiary comes into existence where that date is later than the commencement of this Act.
Rights of holding company’s representatives and members.
214.Rights of holding company’s representatives and members. (1) A holding company may, by resolution, authorise representatives named in the resolution to inspect the books of account kept by any of its subsidiaries; and the books of account of any such subsidiary shall be open to inspection by those representatives at any time during business hours.
(2) The rights conferred by section 235 upon members of a com- pany may be exercised, in respect of any subsidiary, by members of the holding company as if they alone were members of the subsidiary. 207
Authentication of balance sheet and profit and loss account. 215.Authentication of balance sheet and profit and loss account.
(1) Save as provided by sub-section (2), every balance sheet and every profit and loss account of a company shall be signed on behalf of the Board of directors- (i) in the case of a banking company, by the persons specified in clause (a) or clause (b), as the case may be, of
subsection (2) of section 29 of the Banking Companies Act, 1949; (10 of 1949). (ii) in the case of any other company, by its, managing agent, secretaries and treasurers, manager or secretary, if any, and by not less than two directors of the company one of whom shall be a managing director where there is one.
(2) In the case of a company not being a banking company, when only one of its directors is for the time being in India, the balance sheet and the profit and loss account shall be signed by such director; but in such a case there shall be attached to the balance sheet and the profit and loss account a statement signed by him explaining the reason for non-compliance with the provisions of
subsection (1).
(3) The balance sheet and the profit and loss account shall be approved by the Board of directors before they are signed on behalf of the Board in accordance with the provisions of this section and before they are submitted to the auditors for their report thereon.
Profit and loss account to be annexed and auditors’ report to beattached to balance sheet. 216.Profit and loss account to be annexed and auditors’ report to be attached to balance sheet. The profit and loss account shall be annexed to the balance sheet and the auditors’ report 1[(including the auditors’ separate special or supplementary report, if any)] shall be attached thereto.
Board’s report.
217.Board’s report. (1) There shall be attached to every balance sheet laid before a company in general meeting, a report by its Board of directors, with respect to- (a) the state of the company’s affairs; (b) the amounts, if any, which it proposes to carry to any reserves 2* * * in such balance sheet 3* * * ——————————————————————— 1 Ins. by Act 65 of 1960, s. 64. 2 The word “either” omitted by s. 65, ibid. 3 The words “or in a subsequent balance sheet; and” omitted by s. 65, ibid. ——————————————————————— 208 (c) the amount, if any, which it recommends should be paid by way of dividend; 1[(d) material changes and commitments, if any; affecting the financial position of the company which have occurred between the end of the financial year of the company to which the balance sheet relates and the date of the report.] 2[(e) the conservation of energy technology absorption, foreign exchange earnings and outgo, in such manner as may be prescribed.]
(2) The Board’s report shall, so far as is material for the appreciation of the state of the company’s affairs by its members and will not in the Board’s opinion be harmful to the business of the company or of any of its subsidiaries, deal with any changes which have occurred during the financial year- (a) in the nature of the company’s business: (b) in the company’s subsidiaries or in the nature of the business carried on by them; and (c) generally in the classes of business in which the company has an interest. 3[(2A) (a) The Board’s report shall also include a statement showing the name of every employee of the company who- (i) if employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than 4[such sum as may be prescribed]; or (ii) if employed for a part of the financial year, was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than 4[such sum per month as may be prescribed; or] 5[(iii) if employed throughout the financial year or part thereof, was in receipt of remuneration in that year which,in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two per cent., of the equity shares of the company. (b) The statement referred to in clause (a) shall also indicate,- (i) whether any such employee is a relative of any director or manager of the company and if so, the name of such director, and (ii) such other particulars as may be prescribed. Explanation.- “Remuneration” has the meaning assigned to it in the Explanation to section 198.] ———————————————————————– 1 Ins. by Act 65 of 1960, s. 65. 2 Added by Act 31 of 1988, s. 30 (w.e.f. 1.4.1989). 3 Ins. by Act 41 of 1974, s. 22 (w.e.f. 1-2-1975). 4 Subs. by Act 31 of 1988, s.30 (w.e.f. 15-6-1988). 5 Ins. by s. 30, ibid. (w.e.f. 15.6.1988). ———————————————————————- 208A
(3) The Board shall also be bound to give the fullest information and explanations in its report aforesaid, or in cases falling under the proviso to section 222, in an addendum to that report, on every reservation, qualification or adverse remark contained in the auditors’ report.
(4) The Board’s report and any addendum thereto shall be signed by its chairman if he is authorised in that behalf by the Board; and where he is not so authorised, shall be signed by such number of directors as are required to sign the balance sheet and the profit and
loss account of the company by virtue of sub-sections (1) and
(2) of section 215.
(5) If any person, being a director of a company, fails to take
all reasonable steps to comply with the provisions of subsections (1)
to (3), or being the chairman, signs the Board’s report otherwise than
in conformity with the provisions of sub-section (4), he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to two thousand rupees, or with both : Provided that no person shall be sentenced to imprisonment for any such offence unless it was committed wilfully: Provided further that in any proceedings against a person in
respect of an offence under sub-section (1), it shall be a defence to 209 prove 1* * * that a competent and reliable person was charged with the duty of seeing that the provisions of that sub-section were complied with and was in a position to discharge that duty.
(6) If any person, not being a director, having been charged by the Board of directors with the duty of seeing that the provisions of
sub-sections (1) to (3) are complied with, makes default in doing so, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to two thousand rupees, or with both: Provided that no person shall be sentenced to imprisonment for any such offence unless it was committed wilfully.
Penalty for improper issue, circulation or publication of balancesheet or profit and loss account. 218.Penalty for improper issue, circulation or publication of balance sheet or profit and loss account. (a) If any copy of a balance sheet or profit and loss account which has not been signed as required by section 215 is issued, circulated or published; or (b) If any copy of a balance sheet is issued, circulated or published without there being annexed or attached thereto, as the case may be, a copy each of (i) the profit and loss account, (ii) any accounts, reports or statements which, by virtue of section 212, are required to be attached to the balance sheet, (iii) the auditors’ report, and (iv) the Board’s report referred to in section 217 the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees.
Right of member to copies of balance sheet and auditors’ report. 219 Right of member to copies of balance sheet and auditors’
report. (1) A copy of every balance sheet (including the profit and loss account, the auditors’ report and every other document required by law to be annexed[ or attached, , as the case may be, to the balance sheet) which is to be laid before a company in general meeting shall, not less than twenty-one days, before the date of the meeting, be sent to every member of the company, 2[to every trustee for the holders of any debentures issued by the company, whether such member or trustee is or is not entitled to have notices of general meetings of the company sent to him, and to all persons other than such members or trustees, being persons so entitled:] ———————————————————————- 1 The words “that he had reasonable ground to believe, and did believe, ” omitted by Act 65 of 1960, s. 65. 2 Subs. by Act 31 of 1988, s. 31 (w.e.f. 17.4.1989) ———————————————————————- 210 Provided that- (a) in the case of a company not having a share capital, this sub-section shall not require the sending of a copy of the documents aforesaid to a member, or holder of debentures, of the company who is not entitled to have notices of general meetings of the company sent to him; (b) this sub-section shall not require a copy of the documents aforesaid to be sent- (i)to a member, or holder of debentures, of the company, who is not entitled to have notices of general meetings of the company sent to him and of whose address the company is unaware; (ii)to more than one of the joint holders of any shares or debentures none of whom is entitled to have such notices sent to him; 1* * * (iii) in the case of joint holders of any shares or debentures some of whom are and some of whom are not entitled to have such notices sent to them, to those who are not so entitled; 1* * * 1[(iv) in the case of a company whose shares are listed on a recognised stock exchange, if the copies of the documents aforesaid are made available for inspection at its registered office during working hours for a period of twenty-one days before the date of the meeting and a statement containing the salient features of such documents in the prescribed form or copies of the documents aforesaid, as the company may deem fit, is sent to every member of the company and to every trustee for the holders of any debentures issued by the company not less than twenty-one days before the date of the meeting] (c) if the copies of the documents aforesaid are sent less than twenty-one days before the date of the meeting, they shall, notwithstanding that fact, be deemed to have been duly sent if it is so agreed by all the members entitled to vote at the meeting.
2[(2) Any member or holder of debentures of a company and any person from whom the company has accepted a sum of money by way of deposit shall, on demand, be entitled to be furnished free of cost, with a copy of the last balance sheet of the company and of every document required by law to be annexed or attached thereto, including the profit and loss account and the auditors’ report.]
(3) If default is made in complying with sub-section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees.
(4) If, when any person makes a demand for a copy of any document with which he is entitled to be furnished by virtue of sub-
section (2), default is made in complying with the demand within seven days after the making thereof, the company, and every officer ———————————————————————- 1 Omitted by Act 31 of 1988, s. 31 (w.e.f 17.4.1989) 2 Subs. by s.31, ibid (w.e.f. 17-4-1989). ———————————————————————- 211 of the company who is in default, shall be punishable with fine which may extend to five hundred rupees, unless it is proved that that person had already made a demand for and been furnished with a copy of the document. The 1[Company Law Board] may, also by order, direct that the copy demanded shall forthwith be furnished to the person concerned.
(5) Sub-sections (1) to (4) shall not apply in relation to a balance sheet of a private company laid before it before the commencement of this Act; and in such a case the right of any person to have sent to him or to be furnished with a copy of the balance sheet, and the liability of the company in respect of a failure to satisfy that right, shall be the same as they would have been if this Act had not been passed.
Three copies of balance sheet, etc., to be filed with Registrar. 220.Three copies of balance sheet, etc., to be filed with
Registrar. (1) After the balance sheet and the profit and loss account have been laid before a company at an annual general meeting as aforesaid, there shall be filed with the Registrar 2[within thirty days from, the date on-which the balance sheet and the profit and loss account were so laid 3[, or where the annual general meeting of a company for any year has not been held, there shall be filed with the Registrar within thirty days from the latest day on or before which that meeting should have been held in accordance with the provisions of this Act.]] (a) 4* * * three copies of the balance sheet and the profit and loss account, signed by the managing director, managing agent, secretaries and treasurers, manager or secretary of the company, or if there be none of these, by a director of the company, together with three copies of all documents which are required by this Act to be annexed or attached to such balance sheet or profit and loss account : 5[Provided that in the case of a private company, copies of the balance sheet and copies of the ]profit and loss account shall be filed with the Registrar separately: 6* * * * * ——————————————————————— 1 Subs. by Act 31 of 1988, s. 31 (w.e.f. 31.5.1991). 2 Subs. by Act 31 of 1965, s. 62 and Sch., for certain words (w.e.f. 15-10-1965). 3 Ins. by Act 46 of 1977, s. 5. 4 The words “in the case of a public company” omitted by Act 65 of 1960, s. 66. 5 Ins. by s. 66, ibid. 6 Cl. (b) omitted bys. 66, ibid. ——————————————————————— 212 1[Provided further that,- (i)in the case of a private company which is not a subsidiary of a public company, or (ii)in the case of a private company of which the entire paid-up share capital is held by one or more bodies corporate incorporated outside India, or (iii)in the case of a company which becomes a public company by virtue of section 43A, if the Central Government directs that it is not in the public interest that any person other than a member of the company shall be entitled to inspect, or obtain copies of, the profit and loss account of the company, no person other than a member of the company concerned shall be entitled to inspect, or obtain copies of, the profit and loss account of that company under section 610.]
(2)If the annual general meeting of a 2* * * company before which a balance sheet is laid as aforesaid does not adopt the balance sheet 3[, 4[,or is adjourned without adopting the balance sheet, ]or, if the annual general meeting of a company for any year has not been held], a statement of that fact and of the reasons therefor shall be annexed to the balance sheet and to the copies thereof required to be filed with the Registrar.
(3) If default is made in complying with the requirements of
sub-sections (1) and (2), the company, and every officer of the com- pany who is in default, shall be liable to the like punishment as is provided by section 162 for a default in complying with the provisions of sections 159, 160 or 161.
Duty of officer to make disclosure of payments, etc.
221.Duty of officer to make disclosure of payments, etc. (1) Where any particulars or information is required to be given in the balance sheet or profit and loss account of a company or in any document required to be annexed or attached thereto, it shall be the duty of the concerned officer of the company to furnish without delay to the company, and also to the company’s auditor whenever he so requires, those particulars or that information in as full a manner as possible. ———————————————————————- 1 Ins. by Act 65 of 1960, s. 66. 2 The words “Public or private” omitted by s. 66, ibid. 3 Ins. by Act 46 of 1977, s. 5. 4 Ins. by Act 31 of 1988, s. 32 (w.e.f. 15.6.1988) ———————————————————————– 213
(2) Where the officer concerned is a firm or body corporate acting as managing agent or as secretaries and treasurers, the duty aforesaid shall extend to every partner in the firm, or to every director of the body corporate, as the case may be.
(3) The particulars or information referred to in sub-section
(1) may relate to payments made to any director, managing agent, secretaries and treasurers, or other person by any other company, body corporate, firm or person.
(4) If any person knowingly makes default in performing the duty cast on him by the foregoing provisions of this section, he shall be punishable with imprisonment which may extend to six months, or with fine which may extend to five thousand rupees, or with both.
Construction of references to documents annexed to accounts. 222.Construction of references to documents annexed to accounts. References in this Act to documents annexed or required to be annexed to a company’s accounts or any of them shall not include the Board’s report, the auditors’ report or any document attached or required to be attached to those accounts : Provided that any information which is required by this Act to be given in the accounts, and is allowed by it to be given in a statement annexed to the accounts, may be given in the Board’s report instead of in the accounts; and if any such information is so given, the report shall be annexed to the accounts and this Act shall apply in relation there to accordingly, except that the auditors shall report thereon only in so far as it gives the said information.
Certain companies to publish statement in the Form in Table F inSchedule I. 223.Certain companies to publish statement in the Form in Table
F in Schedule I. (1) Every company which is a limited banking company, an insurance company, or a deposit, provident or benefit society, shall, before it commences business and also on the first Monday in February and the first Monday in August in every year during which it carries on business, make a statement in the Form in Table F in Schedule I. or in a Form as near thereto as circumstances admit.
(2) A copy of the statement, together with a copy of the last audited balance sheet laid before the members of the company, shall be displayed and until the display of the next following statement, shall be kept displayed, in a conspicuous place in the registered office of the company, and in every branch office or place where the business of the company is carried on.
(3) Every member, and every creditor, of the company shall be entitled, on payment of a sum of eight annas, to be furnished with a copy of the statement, within seen days of such payment. 214
(4) If default is made in complying with any of the requirement of this section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
(5) This section shall not apply, to a life assurance company or provident insurance society to which the, provisions of the Insurance Act, 1938 (4 of 1938), as to the annual statements to be made by such company or society, apply with or without modifications, if the company or society complies with those provisions. Audit
Appointment and remuneration of auditors.
224.Appointment and remuneration of auditors. 1[(1) Every company shall, at each annual general meeting, appoint an auditor or auditors to hold office from the conclusion of that meeting until the conclusion of the next annual general meeting and shall, within seven days of the appointment, give intimation thereof to every auditor so appointed 2* * * : 3[Provided that before any appointment or re-appointment of auditor or auditors is made by any company at any annual general meeting, a written certificate shall be obtained by the company from the auditor or auditors proposed to be so appointed to the effect that the appointment or re-appointment, if made, will be in accordance with the limits specified in sub-section (1B).]
(1A) Every auditor appointed under subsection (1), 2* * * shall within thirty days of the receipt from the company of the intimation of his appointment, inform the Registrar in writing that he has accepted, or refused to accept, the appointment.] 3[(1B) On and from, the financial year next following the commencement of the Companies (Amendment) Act, 1974 (41 of 1974), no company or its Board of directors shall appoint or re-appoint any person 4[ who is in full time employment elsewhere] or firm as its auditor if such person or firm is, at the date of such appoint- ment or re-appointment, holding appointment as auditor of the specified number of companies or more than the specified number of companies: 4[Provided that in the case of a firm of auditors, “specified number of companies” shall be construed as the number of companies specified for every partner of the firm who is not in full-time employment elsewhere:] ———————————————————————
1 Subs. by Act 65 of 1960, s. 67, for sub-section (1). 2 Omitted by Act 41 of 1974, s. 23 (w.e.f. 1-2-1975). 3 Ins. by s. 23, ibid. (w.e.f. 1-2-1975) 4 Ins. by Act 31 of 1988, s. 33 (w.e.f. 15.6.1988) 5 Subs. by s.33, ibid. (w.e.f. 15-6-1988). ——————————————————————– 215 Provided further that where any partner of the firm is also a partner of any other firm or firms of auditors, the number of compa- nies which may be taken into account, by all the firms together, in relation to such partner shall not exceed the specified number in the aggregate: Provided also that where any partner of a firm of auditors is also holding office, in his individual capacity, as the auditor of one or more companies, the number of companies which may be taken into account in his case shall not exceed the specified number, in the aggregate. (1C) For the purposes of enabling a company to comply with the provisions of sub-section (lB), a person or firm holding, immediately before the commencement of the Companies (Amendment) Act, 1974, (41 of 1974.) appointment as the auditor of a number of companies exceeding the specified number, shall, within sixty days from such commencement, intimate his or its unwillingness to be re-appointed as the auditor from the financial year next following such commencement, to the company or companies of which he or it is not willing to be re- appointed as the auditor; and shall simultaneously intimate to the Registrar the names of the companies of which he or it is willing to be re-appointed as the auditor and forward a copy of the intimation to each of the companies referred to therein. Explanation I.-For the purposes of sub-sections (1B) and (lC), “specified number” means,- (a) in the case of a person or firm holding appointment as auditor of a number of companies each of which has a paid-up share capital of less than rupees twenty-five lakhs, twenty such companies; (b) in any other case, twenty companies, out of which not more than ten shall be companies each of which has a paid-up share capital of rupees twenty-five lakhs or more. Explanation II.-In computing the specified number, the number of companies in respect of which or any part of which any person or firm has been appointed as an auditor, whether singly or in combination with any other person or firm., shall be taken into account.] 216
(2) 1[Subject to the provisions of sub-section (lB) and section 224A, at any annual general meeting], a retiring auditor, by whatso- ever authority appointed, shall be re-appointed, unless- (a) he is not qualified for re-appointment; (b) he has given the company notice in writing of his unwillingness to be re-appointed; (c) a resolution has been passed at that meeting appointing somebody instead of him or providing expressly that he shall not be re-appointed; or (d) where notice has been given of an intended resolution to appoint some person or persons in the place of a retiring auditor, and by reason of the death, incapacity or dis- qualification of that person or of all those persons, as the case may be, the resolution cannot be proceeded with.
(3) Where at an annual general meeting no auditors are appointed or re-appointed, the Central Government may appoint a person to fill the vacancy.
(4) The company shall, within seven days of the Central Govern-
ment’s power under sub-section (3), becoming exercisable, give notice of, that fact to that Government; and, if a company fails to give such notice, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees.
(5) The first auditor or auditors of a company shall be appointed by the Board of directors within one month of the date of registration of the company; and the auditor or auditors so appointed shall hold office until the conclusion of the first annual general meeting: Provided that- (a) the company may, at a general meeting, remove any such auditor or all or any of such auditors and appoint in his or their places any other person or persons who have been nominated for appointment by any member of the company and of whose nomination notice has been given to the members of the company not less than fourteen days before the date of the meeting; and ——————————————————————— 1 Subs. by Act 41 of 1974, s.23, for certain words (w.e.f. 1-2- 1975). ———————————————————————- 216A (b) if the Board falls to exercise its powers under this sub-section, the company in general meeting may appoint the first auditor or auditors.
(6) (a) The Board may fill any casual vacancy in the office of an auditor; but while any such vacancy continues, the remaining auditor or auditors, if any, may act : Provided that where such vacancy is caused by the resignation of an auditor, the vacancy shall only be filled by the company In general meeting. (b) Any auditor appointed in a casual vacancy shall hold office until the conclusion of the next annual general meeting.
(7) Except as provided in the proviso to sub-section (5), any auditor appointed under this section may be removed from office before the expiry of his term only by the company in general meeting, after obtaining the previous approval of the Central Government in that behalf.
(8) The remuneration of the auditors of a company- (a) in the case of an auditor appointed by the Board or the Central Government, may be fixed by the Board or the Central Government, as the case may be; and (b) subject to clause (a), shall be fixed by the company in general meeting or in such manner as the company in general meeting may determine. For the purposes of this sub-section, any sums paid by the company in respect of the auditors’ expenses shall be deemed to be included in the expression “remuneration”. 224A Auditor not to be appointed except with the approval of the company byspecial resolution in certain cases. 1[224A.Auditor not to be appointed except with the approval of
the company by special resolution in certain cases. (1) In the case of a company in which not less than twenty-five per cent of the subscribed share capital is held, whether singly or in any combination, by- (a) a public financial institution or a Government company or Central Government or any State Government, or, (b) any financial or other institution established by any Provincial or State Act in which a State Government holds not less than fifty-one per cent. of the subscribed share capital, or ———————————————————————- 1 Ins. by Act 41 of 1974, s. 24 (w.e.f. 1-2-1975). ———————————————————————- 216B (c) a nationalised bank or an insurance company carrying on general insurance business, the appointment or reappointment at each annual general meeting of an auditor or auditors shall be made by a special resolution.
(2) Where any company referred to in sub-section (1) omits or fails to pass at its annual general meeting any special resolution appointing an auditor or auditors, it shall be deemed that no auditor or auditors had been appointed by the company at its annual general
meeting, and thereupon the provisions of sub-section (3) of section 224 shall become applicable in relation to such company. Explanation.-For the purposes of this section,- (a) “general insurance business” has the meaning assigned to it in the General Insurance (Emergency Provisions) Act, 1971; (17 of 1971.) (b) “nationalised bank” means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), 1[or in the Banking Comp- anies (Acquisition and Transfer of Undertakings) Act, 1980] (40 of 1980)]
Provisions as to resolutions for appointing or removing auditors. 225.Provisions as to resolutions for appointing or removing
auditors. (1) Special notice shall be required for a resolution at an annual general meeting appointing as auditor a person other than a retiring auditor, or providing expressly that a retiring auditor shall not be re-appointed.
(2) On receipt of notice of such a resolution, the company shall forthwith send a copy thereof to the retiring auditor.
(3) Where notice is given of such a resolution and the retiring auditor makes with respect thereto representations in writing to the company (not exceeding a reasonable length) and requests their notification to members of the company, the company shall, unless the representations are received by it too late for it to do so,- (a) in any notice of the resolution given to members of the company, state the fact of the representations having been made; and (b) send a copy of the representations to every member of the company to whom notice of the meeting is sent, whether before or after the receipt of the representations by the company; ——————————————————————— 1 Added by Act 31 of 1988, s.34 (w.e.f. 15-6-1988). ———————————————————————- 216C and if a copy of the representations is not sent as aforesaid because they were received too late or because of the company’s default, the auditor may (without prejudice to his right to be heard orally) require that the representations shall be read out at the meeting: Provided that copies of the representations need not be sent out and the representations need not be read out at the meeting if, on the application either of the company or of any other person who claims to be aggrieved, the 1[Company Law Board]is satisfied that the rights conferred by this sub-section are being abused to secure needless publicity for defamatory matter; and the 1[Company Law Board] may order the company’s costs on such an application to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the application.
(4) Sub-sections (2) and (3) shall apply to a resolution to
remove the first auditors or any of them under sub-section (5) of section 224 or to the removal of any auditor or auditors under sub-
section (7) of that section, as they apply in relation to a resolution that a retiring auditor shall not be re-appointed.
Qualifications and disqualifications of auditors.
226.Qualifications and disqualifications of auditors. (1) A person shall not be qualified for appointment as auditor of a company unless he is a chartered accountant within the meaning of the Chartered Accountants Act, 1949 (48 of 1949) : Provided that a firm whereof all the partners practising in India are qualified for appointment as aforesaid may be appointed by its ———————————————————————– 1. Subs. by Act 31 of 1988, s.67 (w.e.f. 31-5-1991). ———————————————————————– 217 firm name to be auditor of a company, in which case any partner so practising may act in the name of the firm.
(2) (a) Notwithstanding anything contained in sub-section (1) but subject to the provisions of any rules made under clause (b), the holder of a certificate granted under a law in force in the whole or any portion of a Part B State immediately before the commencement of the Part B States (Laws) Act, 1951 (3 of 1951.) 1[or of the Jammu and Kashmir (Extension of Laws) Act, 1956, (62 of 1956.) as the case may be,] entitling him to act as an auditor of companies 2[in the territories which, immediately before the 1st November, 1956, were comprised in that State] or any portion thereof, shall be entitled to be appointed to act as an auditor of companies registered anywhere in 3[India]. (b) The Central Government may, by notification in the Official Gazette, make rules providing for the grant, renewal, suspension or cancellation of auditors’ certificates to persons in 4[the territories which, immediately before the 1st November, 1956, were comprised in Part- B States] for the purposes of clause (a), and prescribing conditions and restrictions for such grant, renewal, suspension or cancellation.
(3) None of the following persons shall be qualified for appointment as auditor of a company- (a) a body corporate; (b) an officer or employee of the company ; (c) a person who is a partner, or who is in the employment, of an officer or employee of the company ; (d) a person who is indebted to the company for an amount exceeding one thousand rupees, or who, has given any guarantee or provided any security in connection with the indebtedness of any third person to the company for an amount exceeding one thousand rupees; (e) a person who is a director or member of a private company, or a partner of a firm, which is the managing agent or the secretaries and treasurers of the company; (f) a person who is a director or the holder of shares exceeding five per cent. in nominal value of the subscribed ——————————————————————— 1 Ins. by Act 62 of 1956, s. 2 and Sch. (w.e.f. 1-11-1956). 2 Subs. by the A. O. (No. 3) 1956, for “in that State”. 3 Subs. by Act 65 of 1960, s. 68, for ” those territories”. 4 Subs. by the A. O. (No. 3) 1956, for ” Part B States”. ——————————————————————— 218 capital, of any body corporate which is the managing agent or the secretaries and treasurers, of the company: Provided that any shares held by such person as nominee or trustee for any third person and in which the holder has no beneficial interest shall be excluded in computing the percentage of shares held by him for the purpose of this clause. Explanation.-References in this sub-section to an officer or employee shall be construed as not including references to an auditor.
(4) A person shall also not be qualified for appointment as
auditor of a company if he is, by virtue of sub-section (3), disqualified for appointment as auditor of any other body corporate which is that company’s subsidiary or holding company or a subsidiary of that company’s holding company, or would be so disqualified if the body corporate were a company.
(5) If an auditor becomes subject, after his appointment, to any
of the disqualifications specified in subsections (3) and (4), he shall be deemed to have vacated his office as such.
Powers and duties of auditors.
227.Powers and duties of auditors. (1) Every auditor of a company shall have a right of access at all times to the books and accounts and vouchers of the company, whether kept at the head office of the company or elsewhere, and shall be entitled to require from the officers of the company such information and explanations as the auditor may think necessary for the performance of his duties as auditor.
1[(1A) Without prejudice to the provisions of sub-section (1), the auditor shall inquire- (a) whether loans and advances made by the company on the basis of security have been properly secured and whether the terms on which they have been made are not prejudicial to the interests of the company or its members ; (b) whether transactions of the company which are represented merely by book entries are not prejudicial to the interests of the company ; (c) where the company is not an investment company within the meaning of section 372 or a banking company, whether so much of the assets of the company as consist of shares, debentures and other securities have been sold at a price less than that at which they were purchased by the company; ———————————————————————– 1 Ins. by Act 31 of 1965, s. 21 (w.e.f. 15-10-1965). ———————————————————————– 219 (d) whether loans and advances made by the company have been shown as deposits; (e) whether personal expenses have been charged to revenue account ; (f) where it is stated in the books and papers of the company that any shares have been allotted for cash, whether cash has actually been received in respect of such allotment, and if no cash has actually been so received, whether the position as stated in the account books and the balance-sheet is correct, regular and not misleading.]
(2) The auditor shall make a report to the members of the company on the accounts examined by him, and on every balance sheet and profit and loss account and on every other document declared by this Act to be part of or annexed to the balance sheet or profit and loss account, which are laid before the company in general meeting during his tenure of office, and the report shall state whether, in his opinion and to the best of his information and according to the explanations given to him, the said accounts give the information required by this Act in the manner so required and give a true and fair view- (i) in the case of the balance sheet, of the state of the company’s affairs as at the end of its financial year; and (ii) in the case of the profit and loss account, of the profit or loss for its financial year.
(3) The auditor’s report shall also state- (a) whether he has obtained all the information and explanations which to the best of his knowledge and belief were necessary for the purposes of his audit; (b) whether, in his opinion, proper books of account as required by law have been kept by the company so far as appears from his examination of those books, and proper returns adequate for the purposes of his audit have been received from branches not visited by him; 1[(bb) whether the report on the accounts of any branch office audited under section 228 by a person other than the company’s auditor has been forwarded to him as required by
clause (c) of sub-section (3) of that section and how he has dealt with the same in preparing the auditor’s report; ———————————————————————- 1 Ins. by Act 65 of 1960, s. 69. ———————————————————————- 220 (c) whether the company’s balance sheet and profit and loss account dealt with by the report are in agreement with the books of account and returns.
(4) Where any of the matters referred to in clauses (i) and (ii)
of sub-section (2) or in clauses (a), (b), I [(bb)] and (c) of sub-
section (3) is answered in the negative or with a qualification, the auditor’s report shall state the reason’ for the answer, 2[(4A) The Central Government may, by general or special order, direct. that, in the case, of such class or description of companies as may be specified in the order, the auditor’s report shall also include a statement on such matters as may be specified therein: Provided that before making any such order the Central Government may consult the Institute of Chartered Accountants of India constituted under the Chartered Accountants Act, 1949, (38 of 1949) in regard to the class or description of companies and other ancillary matters proposed to be specified therein unless the Government decides that such consultation is not necessary or expedient in the circumstances of the case.]
3[(5) The accounts of a company shall not be deemed as not having been, and the auditor’s report shall not state that those accounts have not been, properly drawn up on the ground merely that the company has not disclosed certain matters if- (a) those matters are such as the company is not required to disclose by virtue of any provisions contained in this or any other Act, and (b) those provisions are specified in the balance sheet and profit and loss account of the company.]
Audit of accounts of branch office of company.
228.Audit of accounts of branch office of company. (1) Where a company has a branch office, the accounts of that office shall, 4[be audited by the company’s auditor appointed under section 224 or] by a person qualified for appointment as auditor of the company under section 226, or where the branch office is situate in a country outside India, either 5[by the company’s auditor or a person qualified as aforesaid] or by an accountant duly qualified to act as an auditor of the accounts of the branch office in accordance with the laws of that country. ———————————————————————- 1 Ins. by Act 65 of 1960, s. 69. 2 Ins. by Act 31 of 1965, s. 21(W.e.f. 15-10-1965).
3 Subs. by Act 65 of 1960, s. 69, for sub-section (5). 4 Subs. by s. 70, ibid., for certain words. 5 Subs. by s. 70, ibid., for “by a person qualified as aforesaid”. ——————————————————————— 221
(2) Where the accounts of any branch office are 1[audited by a person other than the company’s auditor] the company’s auditor- (a) shall be entitled to visit the branch office, if he deems it necessary to do so for the performance of his duties as auditor, and (b) shall have a right of access at all times to the books and accounts and vouchers of the company maintained at the branch office: Provided that in the case of a banking company having a branch office outside India, it shall be sufficient if the auditor is allowed access to such copies of, and extracts from, the books and accounts of the branch as have been transmitted to the principal office of the company in India.
2[(3) (a) Where a company in general meeting decides to have the accounts of a branch office audited otherwise than by the company’s auditor, the company in that meeting shall for the audit of those accounts appoint a person qualified for appointment as auditor of the company under section 226, or where the branch office is situate in a country outside India, a person who is either qualified as aforesaid or an accountant duly qualified to act as an auditor, of the accounts of the branch office in accordance with the laws of that country, or authorise the Board of directors to appoint such a person in consultation with the company’s auditor; (b) the person so appointed (hereafter in this section referred to as the branch auditor) shall have the same powers and duties in respect of audit of the accounts of the branch office as the company’s auditor has in respect of the same ; (c) the branch auditor shall prepare a report on the accounts of the branch office examined by him and forward the same to the company’s auditor who shall in preparing the auditor’s report, deal with the same in such manner as he considers necessary; (d) the branch auditor shall receive such remuneration and shall hold his appointment subject to such terms and conditions as may be fixed either by the company in general meeting or by the Board of directors if so authorised by the company in general meeting.
(4) Notwithstanding anything contained in the foregoing pro- visions of this section, the Central Government 3[may make rules ———————————————————————- 1 Subs. by Act 65 of 1960, s. 70, for “not so audited”. 2 Ins. by s 70, ibid. 3 Subs. by Act 31 of 1965, S. 22, for “may, by rules made in this behalf, exempt” (w.e.f. 15-10-1965). ———————————————————————– 222 providing for the exemption of) any branch office from the provisions of this section to the extent specified in the rules and in making such rules the Central Government shall have regard to all or any of the following matters, namely :- (a) the arrangement made by the company for the audit of accounts of the branch office by a person otherwise qualified for appointment as branch auditor even though such person may be an officer or employee of the company; (b) the nature and quantum of activity carried on at the branch office during a period of three years immediately preceding the date on which the branch office is exempted from the provisions of this section ; (c) the availability at a reasonable cost of a branch auditor for the audit of accounts of the branch office; (d) any other matter which in the opinion of the Central Government justifies the grant of exemption to the branch office from the provisions of this section.]
Signature of audit report, etc. 229. Signature of audit report, etc. Only the person appointed as auditor of the company, or where a firm is so appointed in pursuance
of the proviso to sub-section (1) of section 226, only a partner in the firm practising in India, may sign the auditor’s report, or sign or authenticate any other document of the company required by law to be signed or authenticated by the auditor.
Reading and inspection of auditor’s report. 230.Reading and inspection of auditor’s report. The auditor’s report shall be read before the company in general meeting and shall be open to inspection by any member of the company.
Right of auditor to attend general meeting. 231.Right of auditor to attend general meeting. All notices of, and other communications relating to, any general meeting of a company which any member of the company is entitled to have sent to him shall also be forwarded to the auditor of the company; and the auditor shall be entitled to attend any general meeting and to be heard at any general meeting which he attends on any part of the business which concerns him as auditor.
Penalty for non-compliance with sections 225 to 231. 232.Penalty for non-compliance with sections 225 to 231. If default is made by a company in complying with any of the provisions contained in sections 225 to 231, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees. 223
Penalty for non-compliance by auditor with sections 227 and 229. 233. Penalty for non-compliance by auditor with sections 227 and 229. If any auditor’s report is made, or any document of the company is signed or authenticated, otherwise than in conformity with the requirements of sections 227 and 229, the auditor concerned, and the person, if any, other than the auditor who signs the report or signs or authenticates the document, shall, if the default is wilful, be punishable with fine which may extend to one thousand rupees. 233A Power of Central Government to direct special audit in certain cases. 1[233A.Power of Central Government to direct special audit
in certain cases. (1) Where the Central Government is of the opinion- (a) that the affairs of any company are not being managed in accordance with sound business principles or prudent commercial practices; or (b) that any company is being managed in a manner likely to cause serious injury or damage to the interests of the trade, industry or business to which it pertains; or (c) that the financial position of any company is such as to endanger its solvency; the Central Government may at any time by order direct that a special audit of the company’s accounts for such period or periods as may be specified in the order, shall be conducted and may by the same or a different order appoint either a chartered accountant as defined in
clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act. 1949 ( 38 of 1949.) (whether or not such chartered accountant is a chartered accountant in practice within the meaning of that Act), or the company’s auditor himself to conduct such special audit.
(2) The chartered accountant or the company’s auditor appointed
under sub-section (1) to conduct a special audit as aforesaid is here- after in this section referred to as the special auditor.
(3) The special auditor shall have the same powers and duties in relation to the special audit as an auditor of a company has under section 227 : Provided that the special. auditor shall, instead of making his report to the members of the company, make the same to the Central Government.
(4) The report of the special auditor shall, as far as may be, include all the matters required to be included in an auditor’s report under section 227 and, if the Central Government so directs, shall ——————————————————————— 1 Ins. by Act 65 of 1960, s. 71. ——————————————————————– 224 also include a statement on any other matter which may be referred to him by that Government.
(5) The Central Government may by order direct any person specified in the order to furnish to the special auditor within such time as may be specified therein such information or additional in- formation as may be required by the special auditor in connection with the special audit; and on failure to comply with such order such person shall be punishable with fine which may extend to five hundred rupees.
(6) On receipt of the report of the special auditor, the Central Government may take such action on the report as it considers necessary in accordance with the provisions of this Act or any other law for the time being in force : Provided that if the Central Government does not take any action on the report within four months from the date of its receipt, that Government shall send to the company either a copy of, or relevant extract from, the report with its comments thereon and require the company either to circulate that copy or those extracts to the members or to have such copy or extracts read before the company at its next general meeting.
(7) The expenses of, and incidental to, any special audit under this section (including the remuneration of the special auditor) shall be determined by the Central Government (which determination shall be final) and paid by the company and in, default of such payment shall be recoverable from the company as an arrear of land revenue.] 233B Audit of cost accounts in certain cases.
1[233B. Audit of cost accounts in certain cases. (1) Where in the opinion of the Central Government it is necessary so to do in relation
to any company required under clause (d) of sub-section (1) of section 209 to include in its books of account the particulars referred to therein, the Central Government may, by order, direct that an audit of cost accounts of the company shall be conducted in such manner as may be specified in the order by an auditor 2[who shall be a cost accountant within the meaning of the Cost and Works Accountants Act, 1959(23 of 1959): Provided that if the Central Government is of opinion that sufficient number of cost accountants within the meaning of the Cost ———————————————————————- 1 Ins. by Act 31 of 1965, s. 23 (w.e.f. 15-1965). 2 Subs. by Act 41 of 1974, s. 25, for certain words (w.e.f. 1-2- 1975). ———————————————————————- 225 and Works Accountants Act, 1959 (23 of 1959), are not available for conducting the audit of the cost accounts, of companies generally, that Government may, by notification in the Official Gazette, direct that, for such period as may be specified in the said notification, such Chartered Accountant within the meaning of the Chartered Accountants Act, 1949 (13 of 1949), as possesses the prescribed qualifications, may also conduct the audit of the cost accounts of companies, and thereupon a Chartered Accountant possessing the prescribed qualifications may be appointed to audit the cost accounts of the company.]
1[(2) The auditor under this section shall be appointed by the Board of directors of the company in accordance with the provisions of sub-section (1B) of section 224 and with the previous approval of the Central Government: Provided that before the appointment of any auditor is made by the Board, a written certificate shall be obtained by the Board from the auditor proposed to be so appointed to the effect that the appointment, if made, will be in accordance with the provisions of sub-section (1B) of section 224.]
(3) An audit conducted by an auditor under this section shall be in addition to an audit conducted by an auditor appointed under section 224.
(4) An auditor shall have the same powers and duties in relation to an audit conducted by him under this section as an auditor of a
company has under sub-section (1) of section 227 and such auditor shall make his report to the 2[Central Government] in such form and within such time as may be prescribed and shall also at the same time forward a copy of the report to the company.]
3[(5) (a) A person referred to in sub-section (3) or sub-section
(4) of section 226 shall not be appointed or re-appointed for con- ducting the audit of the cost accounts of a company. (b) A person appointed, under section 224, as an auditor of a company, shall not be appointed or re-appointed for conducting the audit of the cost accounts of that company. (c) If a person, appointed for conducting the audit of cost accounts of a company, becomes subject, after his appointment, to any of the disqualifications specified in clause (a) or clause (b) of this sub-section, he shall, on and from the date on which he becomes so subject, cease to conduct the audit of the cost accounts of the company.
(6) Upon receipt of an order under sub-section (1), it shall be the duty of the company to give all facilities and assistance to the ———————————————————————- 1 Subs. by Act 31 of 1988, S.35 (w.e.f. 15-6-1988). 2 Subs. by Act 41 of 1974, s.25 for “Company Law Board” (w.e.f. 1-2- 1975). 3 Ins. by s. 25, ibid. (w.e.f. 1-2-1975) ———————————————————————- 226 person appointed for conducting the audit of the cost accounts of the company.
(7) The company shall, within thirty days from the date of
receipt of a copy of the report referred to in sub-section (4), furnish the Central Government with full information and explanations or every reservation or qualification contained in such report.
(8) If, after considering the report referred to in sub-section
(4) and the information and explanations furnished by the company
under sub-section (7), the Central Government is of opinion that any further information or explanation is necessary, that Government may call for such further information and explanation and thereupon the company shall furnish the same within such time as may be specified by that Government.
(9) On receipt of the report referred to in sub-section (4) and the informations and explanations furnished by the company under sub-
section (7) and sub-section (8), the Central Government may take such action on the report, in accordance with the provisions of this Act or any other law for the time being in force, as it may consider necessary.
(10) The Central Government may direct the company whose cost accounts have been audited under this section to circulate to its members, along with the notice of the annual general meeting to be held for the first time after the submission of such report, the whole or such portion of the said report as it may specify in this behalf.
(11) If default is made in complying with the provisions of this section, the company shall be liable to be punished with fine which may extend to five thousand rupees, and every officer of the company who is in default, shall be liable to be punished with imprisonment for a term which may extend to three years, or with fine which may extend to five thousand rupees, or with both.] Power of Registrar to call for information, etc.
Power of Registrar to call for information or explanation. 234.Power of Registrar to call for information or explanation.
(1) Where, on perusing any document which a company is required to submit to him under this Act, the Registrar is of opinion that any information or explanation is necessary 1[with respect to ,any matter to which such document] purports to relate, he may, by a written order, call on the company submitting the document to ———————————————————————– 1 Subs. by Act 65 of 1960, s. 72, for certain words. ———————————————————————– 226A furnish in writing such information or explanation, within such time as he may specify in the order.
(2) On receipt by the company of an order under sub-section (1), it shall be the duty of the company, and of all persons who are officers of the company, to furnish such information or explanation to the best of their power.
(3) On receipt of a copy of an order under sub-section (1), it shall also be the duty of every person who has been an officer of the company to furnish such information or explanation to the best of his power. 1[(3A) If no information or explanation is furnished within the time specified or if the information or explanation furnished is, in the opinion of the Registrar, inadequate, the Registrar may by another written order call on the company to produce before him for his inspection such books and papers as he considers necessary within such time as he may specify in the order; and it shall be the duty of the company, and of all persons who are officers of the company, to produce such books and papers.]
(4) If the company, or any such person as is referred to in,
sub-section (2) or (3), refuses or neglects to furnish any such information or explanation 1[or if the company or any such person as is referred to in sub-section (3A) refuses or neglects to produce any such books and papers],- 2[(a) the company and each such person shall be punishable with fine which may extend to five hundred rupees and in the case of a continuing offence, with an additional fine which may extend to fifty rupees for every day after the first during which the offence continues; and (b) the Court trying the offence may, on application of the Registrar and after notice to the company, make an order on the company for production before the Registrar of such books and papers as in the opinion of the Court, may reasonably be required by the Registrar for the purpose referred to in sub-
section (1).] ———————————————————————- 1 Ins. by Act 65 of 1960, s. 72. 2 Subs. by s. 72, ibid., for cls. (a) and (b). ———————————————————————- 226B
1[(5) On receipt of any writing containing the information or
explanation referred to in sub-section (1), or of any book or paper produced whether in pursuance of an order of the Registrar under sub-
section (3A) or of an order of the Court under sub-section (4), the Registrar may annex that writing, book or paper, or where that book or paper is required by the company, any copy or extract thereof, to the
document referred to in sub-section (1); and any writing or any book or paper or copy or extract thereof so annexed, shall be subject to the like provisions as to inspection, the taking of extracts and the furnishing of copies, as that document is subject.]
2[(6) If such information or explanation is not furnished within the specified time or if after perusal of such information or explana- tion or of the books and papers produced whether in pursuance of an order of the Registrar under sub-section (3A) or of an order of the
Court under sub-section (4), the Registrar is of opinion that the
document referred to in sub-section (1), together with such informa- tion or explanation or such books and papers discloses an unsatis- factory state of affairs or does not disclose a full and fair statement of any matter to which the document purports to relate, the Registrar shall report in writing the circumstances of the case to the Central Government.]
(7) If it is represented to the Registrar on materials placed before him by any contributory or creditor or any other person interested that the business of a company is being carried on in fraud of its creditors or of persons dealing with the company or otherwise for a fraudulent or unlawful purpose, he may, after giving the company an opportunity of being heard, by a written order, call on the company to furnish in writing any information or explanation on matters specified in the order, within such time as he may specify therein;
and the provisions of sub-sections (2), (3), 3[(3A)], (4) and (6) of this section shall apply to such order. If upon inquiry the Registrar is satisfied that any representation on which he took action under this sub-section was frivolous or vexatious, he shall disclose the identity of his informant to the company. ———————————————————————-
1 Subs. by Act 65 of 1960, s. 72, for sub-section (5).
2 Subs. by s. 72, ibid., for sub-section (6). 3 Ins. by s. 72, ibid ———————————————————————- 226C
