Companies Act 1956 Part V

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(1) If, on an application made to a Judge of a High Court in chambers by the Public Prosecutor of the State or by the Central Government, 1[or by a company prosecutor appointed under section 624A] it is shown that there is reasonable cause to believe that any person has, while he was an officer of a company, committed an offence in connection with the management of the company’s affairs, and that evidence of the commission of the offence is to be found in any books or papers of or under the control of the company, an order may be made- (i) authorising any person named therein to inspect the said books or papers or any of them for the purpose of ——————————————————————— 1 Ins. by Act 65 of 1960, s. 204. ———————————————————————- 408/54 investigating, and obtaining evidence of the commission of, the offence ; or (ii) requiring the managing agent, secretaries and treasurers or manager of the company or such other officer thereof as may be named in the order, to produce the said books or papers or any of them to a person, and at a place and time, named in the order.

(2) Sub-section (1) shall apply also in relation to any books or papers of a person carrying on the business of banking so far as they relate to the company’s affairs, as it applies to any books or papers of or under the control of the company, except that no such order as is referred to in clause (ii) thereof shall be made by virtue of this sub-section.

(3) No appeal shall lie from the decision of a Judge of the High Court under this section.

Penalty for false statements. 628. Penalty for false statements. If in any return, report, certificate, balance sheet, prospectus, statement or other document required by or for the purposes of any of the provisions of this Act, any person makes a statement- (a) which is false in any material particular, knowing it to be false ; or (b) which omits any material fact knowing it to be material; he shall, save as otherwise expressly provided in this Act, be punish- able with imprisonment for a term which may extend to two years, and shall also be liable to fine.

Penalty for false evidence. 629. Penalty for false evidence. If any person intentionally gives false evidence- (a) upon any examination upon oath or solemn affirmation, authorised under this Act ; or (b) in any affidavit, deposition or solemn affirmation, in or about the winding up of any company under this Act, or otherwise in or about any matter arising under this Act; he shall be punishable with imprisonment for a term which may extend to seven years, and shall also be liable to fine. 629A Penalty where no specific penalty is provided elsewhere in the Act. 1[629A. Penalty where no specific penalty is provided elsewhere in the Act. If a Company or any other person contravenes any provision of this Act for which no punishment- is provided elsewhere in this Act or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition, direction ———————————————————————- 1 Ins. by Act 65 of 1960, s. 205. ———————————————————————- 408/55 or exemption in relation to any matter has been accorded, given or granted, the company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to five hundred rupees, and where the contravention is a continuing one, with a further fine which may extend to fifty rupees for every day after the first during which the contravention continues.]

Penalty for wrongful withholding of property.

630. Penalty for wrongful withholding of property. (1) If any officer or employee of a company- (a) wrongfully obtains possession of any property of a company; or (b) having any such property in his possession, wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by this Act; he shall, on the complaint of the company or any creditor or contri- butory thereof, be punishable with fine which may extend to one thousand rupees.

(2) The Court trying the offence may also order such officer or employee to deliver up or refund, within a time to be fixed by the Court, any such property wrongfully obtained or wrongfully withheld or knowingly misapplied, or in default, to suffer imprisonment for a term which may extend to two years.

Penalty for improper use of words “Limited” and ” Private Limited”. 631. Penalty for improper use of words “Limited” and ” Private Limited”. If any person or persons trade or carry on business under any name or title of which the word “Limited” or the words “Private Limited”, or any contraction or imitation thereof is or are the last word or words, that person or each of those persons shall, unless duly incorporated with limited liability, or unless duly incorporated as a private company with limited liability, as the case may be, be punishable with fine which may extend to fifty rupees for every day upon which that name or title has been used. Legal Proceedings

Power to require limited company to give security for costs. 632. Power to require limited company to give security for costs. Where a limited company is plaintiff or petitioner in any suit or other legal proceeding, any Court having jurisdiction in the matter may, if there is reason to believe that the company will be unable to pay the costs of the defendant if he is successful in his defence, require sufficient security to be given for those costs, and may stay all proceedings until the security is given. 408/56

Power of Court to grant relief in certain cases.

633. Power of Court to grant relief in certain cases. (1) If in any proceeding for negligence, default, breach of duty, misfeasance or breach of trust against an officer of a company it appears to the Court hearing the case that he is or may be liable in respect of the negligence, default, breach of duty, misfeasance or breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances of the case, including those connected with his appointment, he ought fairly to be excused, the Court may relieve him, either wholly or partly, from his liability on such terms as it may think fit : 1[Provided that in a criminal proceeding under this sub-section, the Court shall have no power to grant relief from any civil liability which may attach to an officer in respect of such negligence, default, breach of duty, misfeasance or breach of trust.]

2[(2) Where any such officer has reason to apprehend that any proceeding will or might be brought against him in respect of any negligence, default, breach of duty, misfeasance or breach of trust, he may apply to the High Court for relief and the High Court on such application shall have the same power to relieve him as it would have had if it had been a Court before which a proceeding against that officer for negligence, default, breach of duty, misfeasance or breach

of trust had been brought under sub-section (1).

(3) No Court shall grant any relief to any officer under sub-

section (1) or sub-section (2) unless it has, by notice served in the manner specified by it, required the Registrar and such other person, if any, as it thinks necessary, to show cause why such relief should not be granted.]

Enforcement of orders of Courts. 634. Enforcement of orders of Courts. Any order made by a Court under this Act may be enforced in the same manner as a decree made by the Court in a suit pending therein. 634A Enforcement of orders of Company Law Board. 3[634A. Enforcement of orders of Company Law Board. Any order made by the Company Law Board 4* * * may be enforced by that Board in the same manner as if it were a decree made by a Court in a suit pending therein, and it shall be lawful for that Board to send, in the case of its inability to execute ——————————————————————— 1 Ins. by Act 65 of 1960, s. 206.

2 Subs. by s. 206, ibid., for sub-section (2). 3 Ins. by Act 46 of 1977, S.8. 4 omitted by Act 31 of 1988, s.60 (w.e.f.31-5-1991) ———————————————————————- 408/57 such order, to the Court within the local limits of whose jurisdiction,– (a) in the case of an order against a company, the registered office of the company is situated, or (b) in the case of an order against any other person, the person concerned voluntarily resides, or carries on business or personally works for gain.]

Enforcement of orders of one Court by other Courts.

635. Enforcement of orders of one Court by other Courts. (1) Where any order made by one Court is required to be enforced by another Court, a certified copy of the order shall be produced to the proper officer of the Court required to enforce the order.

(2) The production of such certified copy shall be sufficient evidence of the order.

(3) Upon the production of such certified copy, the Court shall take the requisite steps for enforcing the order, in the same manner as if it had been made by itself.

1[(4) Where any order made by the Company Law Board 2* * * is reqired to be enforced by a Court, a certified copy of the order shall be produced to the proper officer of the Court required to enforce the

order and the provisions of sub-sections (2) and (3) shall, as far as may be, apply to every such order in the same manner and to the same extent as they apply to an order made by a Court.] 635A Protection of acts done in good faith. 3[635A. Protection of acts done in good faith. No suit, prosecution or other legal proceeding shall lie against the Government or any officer of Government or any other person in respect of anything which is in good faith done or intended to be done in pursuance of this Act or any rules or orders made thereunder, or in respect of the publication by or under the authority of the Government or such officer of any report, paper or proceedings. ———————————————————————- 1 Ins. by Act 46 of 1977, s. 9. 2 Omitted by Act 31 of 1988, s.61 (w.e.f. 31-5-1991). 3 Subs. by Act 31 of 1965, s. 58, for section 635A (w.e.f. 15-10-1965). ———————————————————————- 408/58 635A Non-disclosure of information in certain cases. 635AA. Non-disclosure of information in certain cases. Notwithstanding anything contained in any other law for the time being in force, the Registrar, any officer of Government or any other person shall not be compelled to disclose to any Court, tribunal or other authority whence he got any information which- (a) has led the Central Government to direct a special audit under section 233A or to order an investigation under section 235, 237, 247, 248 or 249; or (b) is or has been material or relevant in connection with such special audit or investigation.] 1[Temporary Protection of Employees 635B Protection of employees during investigation by Inspector or pendencyof proceeding before Court in certain cases. 635B. Protection of employees during investigation by Inspector or

pendency of proceeding before Court in certain cases. (1) If- (a) during the course of any investigation of the affairs and other matters of or relating to a company, body or person under section 235, section 237 or section 239 or of the membership and other matters of or relating to a company, or the ownership of shares in or debentures of a company or body corporate, or the affairs and other matters of or relating to a company, body or person, under section 247, section 248 or section 249; or (b) during the pendency of any proceeding against any person concerned in the conduct and management of the affairs of a company under Chapter IVA of Part VI, such company, body or person proposes- (i) to discharge, or (ii) to punish, whether by dismissal, removal, reduction in rank or otherwise, any employee, the company, body or person, as the case may be shall send by post to the Company Law Board previous intimation in writing of the action proposed against the employee and if the Company Law Board has any objection to the action proposed, it shall send by post notice thereof in writing to the company, body or person concerned.

(2) If the company, body or person concerned does not receive within thirty days of the sending of the previous intimation of the ———————————————————————- 1 Ins. by Act 32 of 1964, s. 2. ———————————————————————- 408/59 action proposed against the employee, any notice of the objection from the Company Law Board, then and only then, the company, body or person concerned may proceed to take against the employee the action proposed.

(3) If the company, body or person concerned is dissatisfied with the objection raised by the Company Law Board, it may, within thirty days of the receipt of the notice of the objection, prefer an appeal to the 1[Court] in the prescribed manner and on payment of the prescribed fee.

(4) The decision of the 1[Court] on such appeal shall be final and be binding on the Company Law Board and on the company, body or person concerned.

(5) For the removal of doubt, it is hereby declared that the provisions of this section shall have effect without prejudice to the provisions of any other law for the time being in force.] Reduction of fees payable to company

Reduction of fees, charges, etc, payable to company.

636. Reduction of fees, charges, etc, payable to company. (1) A company which is entitled to any specified fee, charge or other sum by virtue of any provision contained in this Act or in its articles, may reduce the amount thereof to such extent as it thinks fit; and thereupon such provision shall, so long as the reduction is in force, have effect as if the reduced amount had been substituted for the fee, charge or sum specified in such provision.

(2) Any reduction made under sub-section (1) may, at any time, be cancelled or varied by the company. Delegation of powers and functions of Central Government

Delegation by Central Government of its powers and functions underAct. 637 Delegation by Central Government of its powers and functions

under Act. 2[(1) The Central Government may, by notification in the Official Gazette, and subject to such conditions, restrictions and limitations as may be specified therein, delegate any of its powers or functions under this Act (other than the power to appoint a person as public trustee under section 153A and the power to make rules), to such authority or officer as may be specified in the notification.] ———————————————————————- 1 Subs. by Act 17 of 1967, s. 4 and Sch., for “tribunal” (w.e.f. 1-7-1967). 2 Subs. by Act 31 of 1988, s.62 (w.e.f. 31.5.1991). ———————————————————————– 408/60

(2) The powers and functions which cannot be delegated under

1*** sub-section (1) are those conferred by or mentioned in the

following provisions of this Act, namely, sections 10, 81, 89(4),

211(3) and (4), 212, 213, 235, 237 239, 241, 242, 243, 244, 245, 247,

248, 249, 250, 259, 268, 269, 274(2). 295, 300, 310, 311., 324, 326,

328, 329, 332, 343, 345, 346, 347(2), 349, 352, 369, 372, 396, 399(4)

and (5), 401, 408, 1*** 410, 411(b), 448, 609, 613, 620, 638, 641, and

1* * * * *

(3) A copy of every notification issued under sub-section (1) shall, as soon as may be after it is issued, be placed before both Houses of Parliament. 2[Grant of approval, etc., subject to conditions and levy of fees on applications 637A Power of Central Government or company Law Board to accord approval,etc., subject to conditions and to prescrible fees on applications. 637A. Power of Central Government or Company Law Board to accord approval, etc., subject to conditions and to prescrible fees on

applications. (1) Where the 3[Central Government or Company Law Board] is required or authorised by any provision of this Act,– (a) to accord approval, sanction, consent, confirmation or recognition to, or relation to, any matter; (b) to give any direction in relation to any matter; or (c) to grant any exemption in relation to any matter, then, in the absence of anything to the contrary contained in such or any other provision of this Act, the 3[Central Government or Company Law Board] may accord, give or grant such approval, sanction, consent, confirmation, recognition, direction or exemption subject to such conditions, limitations or restrictions as it may think fit to impose and may, in the case of contravention of any such condition, limitation or restriction, rescind or withdraw such approval, sanc- tion, consent, confirmation, recognition, direction or exemption. ———————————————————————- 1 Omitted by Act 31 of 1988, s.62 (w.e.f.31.5.1991). 2 Ins. by Act 65 of 1960, s. 207 (with retrospective effect). 3 Subs. by Act 41 of 1974, s. 37 for “Central Government” (w.e.f. 1-2-1975). ———————————————————————- 408/60A 3 Omitted by Act 31 of 1988, s.63 (w.e.f.15.7.1988).

(2) Save as otherwise expressly provided in this Act, every application which may be, or is required to be, made to the 1[Central Government or Company Law Board] under any provision of this Act- (a) in respect of any approval, sanction, consent, confirmation or recognition to be accorded by that Government 2[or Board] to, or in relation to, any matter; or (b) in respect of any direction or exemption to be given or granted by that Government 2[or Board] in relation to any matter; or (c) in respect of any other matter, shall be accompanied by such fee 3*** as may be prescribed : Provided that different fees may be prescribed for applications in respect of different matters or in case of applications by companies, for applications by different classes of companies.] 637A Power of Central Government to fix a limit with regard to remuneration. 4[637AA. Power of Central Government to fix a limit with regard to remuneration. Notwithstanding anything contained in section 198, section 309 or section 637A, the Central Government may, while according its approval under section 269, to any appointment or to any remuneration under section 309, section 310, section 311 or section 387, fix the remuneration of the person so appointed or the remuneration, as the case may be, [within the limits specified in this Act,] at such amount or percentage of profits of the company, as it may deem fit and while fixing the remuneration, the Central Government shall have regard to– (a) the financial position of the company; (b) the remuneration or commission drawn by the individual concerned in any other capacity, including his capacity as a sole selling agent; (c) the remuneration or commission drawn by him from any other company; (d) professional qualifications and experience of the individual concerned; ———————————————————————– 1 Subs. by Act 41 of 1974, s. 37, for “Central Government” (w.e.f 1-2-1975). 2 Ins. by s. 37, ibid., (w.e.f. 1-2-1975). 3 Omitted by Act 31 of 1988, s.63 (w.e.f.15.7.1988). 4 Ins. by Act 41 of 1974 s.38, (w.e.f.1-2-1975). ———————————————————————– 408/60B (e) public policy relating to the removal of disparities in income.] 637B Condonation of delays in certain cases. 1[637B. Condonation of delays in certain cases. Notwithstanding anything contained in this Act,- (a) where any application required to be made to the Central Government under any provision of this Act in respect of any matter is not made within the time specified therein, that Government may, for reasons to be recorded in writing, condone the delay; (b) where any document required to be filed with the Registrar under any provision of this Act is not filed within the time specified therein, the Central Government may, for reasons to be recorded in writing, condone the delay.] Annual Report on Working of Act

Annual report by Central Government. 638. Annual report by Central Government. The Central Government shall cause a general annual report on the working and administration of this Act to be prepared and laid before both Houses of Parliament, within one year of the close of the year to which the report relates. 2* * * * *

Annual reports on Government companies to be placed beforeParliament, etc. 639. [Annual reports on Government companies to be placed before Parliament, etc.] Rep. by the Companies (Amendment) Act, 1960 (65 of 1960), s. 208. Validation of registration of firms in certain cases

Validation of registration of firms as members of charitable and othercompanies. 640. Validation of registration of firms as members of charitable and other companies. Any firm which stood registered at the commencement of this Act, as a member of any association or company licensed under section 26 of the Indian Companies Act, 1913 (7 of 1913), shall be deemed to have been validly so registered with effect on and from the date of its registration. ———————————————————————- 1 Ins. by Act 31 of 1965, s. 59 (w.e.f. 15-10-1965). 2 The heading “Annual Reports on Government Companies” omitted by Act 65 of 1960, s. 208. ———————————————————————- 408/60C 1[Computation of time for filing orders of 2[Court or the Company Law Board] 640A Exclusion of time required in obtaining copies of orders of Court. 640A. Exclusion of time required in obtaining copies of orders of Court. Except as expressly provided in this behalf elsewhere in this Act, where by any provision of this Act, any order of the Court is required to be filed with the Registrar, or a company or any other person within a period specified therein, then, in computing that period, the time taken in drawing up the order and in obtaining a copy thereof shall be excluded.] Schedules, Forms and Rules 640B Forms of and procedure in relation to, certain applications. 3[640B. Forms of and procedure in relation to, certain

applications. (1) Every application made to the Central Government under section 259, 268, 269, 310, 311, 326, 328, 329, 332, 343, 345, 4[346 or 352] shall be in such form as may be prescribed.

(2)(a) Before any application is made by a company to the Central Government under any of the sections aforesaid, there shall be issued by or on behalf of the company a general notice to the members thereof, indicating the nature of the application proposed to be made. (b) Such notice shall be published at least once in a newspaper in the principal language of the district in which the registered office of the company is situate and circulating in that district, and at least once in English in an English newspaper circulating in that district. (c) Copies of the notices, together with a certificate by the company as to the due publication thereof, shall be attached to the application. (d) Nothing in clause (a), (b) or (c) shall apply to a private company which is not the managing agent of a public company.]

Power to alter Schedules.

641. Power to alter Schedules. (1) Subject to the provisions of this section, the Central Government may, by notification in the Official Gazette, alter any of the regulations, rules, tables, forms and other provisions contained in any of the Schedules to this Act, except Schedules XI and XII.

(2) Any alteration notified under sub-section (1) shall have effect as if enacted in this Act and shall come into force on the date of the notification, unless the notification otherwise directs: ———————————————————————- 1 Ins. by Act 65 of 1960, s. 209. 2 Subs. by Act 31 of 1988, s.64 (w.e.f. 31.5.1991). 3 Ins. by Act 31 of 1965, s.60(w.e.f. 15-10-1965). 4 Subs. by Act 31 of 1988, s.65, (w.e.f.31.5.1991). ———————————————————————- 408/60D Provided that no such alteration in Table A of Schedule I shall apply to any company registered before the date of such alteration.

1[(3) Every alteration made by the Central Government under sub-

section (1) shall be laid as soon as may be after it is made before each House of Parliament while it is in session for a total period of thirty days which may be 2[comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions afore- said,] both Houses agree in making any modification in the alteration, or both Houses agree that the alteration should not be made, the alteration shall thereafter have effect only in such modified form or be of no effect, as the case may be, so, however, that any such modi- fication or annulment shall be without prejudice to the validity of anything previously done in pursuance of that alteration.]

Power of Central Government to make rules.

642. Power of Central Government to make rules. (1) In addition to the powers conferred by section 641, the Central Government may, by notification in the Official Gazette, make rules- 3(a) for all or any of the matters which by this Act are to be, or may be, prescribed by the Central Government; and (b)generally to carry out the purposes of this Act.

4[(2) Any rule made under sub-section (1) may provide that a contravention thereof shall be punishable with fine which may extend to five hundred rupees and where the contravention is a continuing one, with a further fine which may extend to fifty rupees for every day after the first during which such contravention continues.

(3) Every rule made by the Central Government under sub-section

(1) shall be laid as soon as may be after it is made before each House of Parliament while it is in session for a total period of thirty days which may be 5[comprised in one session or in two or more successive sessions, and if, before the expiry of the session ———————————————————————-

1 Subs, by Act 65 of 1960, s. 210, for sub-section (3). 2 Subs. by Act 41 of 1974, s. 39. for certain words (w.e.f. 1-2- 1975). 3 For the Companies (Central Government’s) General Rules and Forms, 1956, see Gazette of India. Extraordinary, 1956, Pt. II, Sec. 3. p. 298/1.

4 Subs, by Act 65 of 1960, s. 211. for sub-sections (2) and

(3). 5 Subs. by Act 41 of 1974, s. 40. for certain words (w.e.f. 1- 2-1975). ———————————————————————- 408/60E immediately following the session or the successive sessions afore- said,] both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be, so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.].

Power of Supreme Court to make rules.

643. Power of Supreme Court to make rules. (1) The Supreme Court, after consulting the High Courts,– (a) shall make rules providing for all matters relating to the winding up of companies which, by this Act, are to be prescribed; and may make rules providing for all such matters as may be prescribed, except those reserved to the Central

Government by sub-section (5) of section 503, 1[sub-section

(3) of section 550, section 552 and sub-section (3) of section 555]; and (b) may make rules consistent with the Code of Civil Procedure, 1908 (5 of 1908)- (i)as to the mode of proceedings to be had for winding up a company in High Courts and in Courts subordinate thereto; ———————————————————————- 1 Subs. by Act 65 of 1960 s. 212 for certain words and figures. ———————————————————————- 408/61 (ii)for the voluntary winding up of companies, whether by members or by creditors; (iii)for the holding of meetings of creditors and members in connection with proceedings under section 391 ; (iv) for giving effect to the provisions of this Act as to the reduction of the capital 1* * * ; and (v)generally for all applications to be made to the Court under the provisions of this Act.

(2) Without prejudice to the generality of the foregoing power, the Supreme Court may, by such rules, enable or require all or any of the powers and duties conferred and imposed on the Court by this Act, in respect of the following matters, that is to say :- (a)the holding and conducting of meetings to ascertain the wishes of creditors and contributories ; (b)the settling of lists of contributories and the rectifying of the register of members where required, and collecting and applying the assets ; (c) the payment, delivery, conveyance, surrender or transfer of money, property, books or papers to the liquidator; (d) the making of calls ; and (e)the fixing of a time within which debts and claims shall be proved ; to be exercised or performed by the Official Liquidator or any other liquidator as an officer of the Court, and subject to the control of the Court: Provided that the liquidator shall not, without the special leave of the Court, rectify the register of members or make any call.

(3) Until rules are made by the Supreme Court as aforesaid, all rules made by any High Court on the matters referred to in this section and in force at the commencement of this Act, shall continue to be in force in so far as they are not inconsistent with the provisions of this Act in that High Court and in courts subordinate thereto.

2[(4) All rules made by the Central Government under sub-section

(1) of section 549 and in force immediately before the ———————————————————————- 1 The words “and the sub-division of the shares of a company” omitted by Act 65 of 1960, s. 212. 2 Ins. by s. 212, ibid. ———————————————————————- 408/62 commencement of the Companies (Amendment) Act, 1960 (65 of 1960),shall continue in force and be deemed to have been made by the Supreme Court unless and until they are superseded by rules made by the Supreme Court after such commencement.] Repeals and savings

Repeal of Acts specified in Schedule XII. 644.Repeal of Acts specified in Schedule XII.The enactments mentioned in Schedule XII are hereby repealed.

Saving of orders, rules, etc., in force at commencement of Act. 645.Saving of orders, rules, etc., in force at commencement of Act. Nothing in this Act shall affect any order, rule, regulation, appointment, conveyance, mortgage, deed, document or agreement made, fee directed, resolution passed, direction given, proceeding taken,instrument executed or issued, or thing done, under or in pursuance of any previous companies law; but any such order, rule, regulation, appointment, conveyance, mortgage, deed, document, agreement, fee, resolution, direction, proceeding, instrument or thing shall, if in force at the commencement of this Act, continue to be in force, and so far as it could have been made, directed, passed, given, taken, executed, issued or done under or in pursuance of this Act, shall have effect as if made, directed, passed, given, taken, executed, issued or done under or in pursuance of this Act.

Saving of operation of section 138 of Act 7 of 1913. 646.Saving of operation of section 138 of Act 7 of 1913. Nothing in this Act shall affect the operation of section 138 of the Indian Companies Act, 1913 (7 of 1913), as respects inspectors, or as resp- ects the continuation of an inspection begun by inspectors, appoin- ted before the commencement of this Act; and the provisions of this Act shall apply to or in relation to a report of inspectors appointed under the said section 138 as they apply to or in relation to a report of inspectors appointed under section 235 or 237 of this Act.

Saving of pending proceedings for winding up. 647.Saving of pending proceedings for winding up. Where the winding up of a company has commenced before the commencement of this Act-

(i)sub-section (7) of section 555 shall apply in respect of any moneys paid into the Companies Liquidation Account whether before or after such commencement ; and (ii)the other provisions with respect to winding up contained in this Act shall not apply, but the company shall be wound up in the same manner and with the same incidents as if this Act had not been passed: 408/63 1[Provided that where the proceedings in any such winding up are pending at the commencement of the Companies (Amendment) Act, 1960,- (a)sections 463, 502, 515 and 524 shall, as far as may be, also apply in relation thereto ; (b)the liquidator appointed by the Court and functioning in any such winding up shall in such manner and at such time as may be prescribed by the Central Government, pay the moneys received by him as such liquidator, into the public account of India in the Reserve Bank of India.]

Saving of prosecutions instituted by liquidator or Court under section237 of Act 7 of 1913. 648.Saving of prosecutions instituted by liquidator or Court under section 237 of Act 7 of 1913.Nothing in this Act shall affect any prosecution instituted or ordered by the Court to be instituted under section 237 of the Indian Companies Act, 1913 (7 of 1913); and the Court shall have the same power of directing how any costs, charges, and expenses properly incurred in any such prosecution are to be defrayed as it would have had, if this Act had not been passed.

Construction of references to former enactments in documents. 649.Construction of references to former enactments in documents.Any document referring to any former enactment relating to companies shall be construed as referring to the corresponding enactment in this Act.

[Repeald.] 650. [Construction of “registrar of joint stock companies” in Act 21 of 1860.] Rep. by the Companies (Amendment) Act, 1960 (65 of 1960), s. 214.

Construction of references to extraordinary resolution in articles,etc. 651.Construction of references to extraordinary resolution in articles, etc. Any reference to an extraordinary resolution in the articles of a company, or in any resolution passed in general meeting by the company, or in any other instrument, or in any law in force immediately before the commencement of this Act, shall, with effect on and from such commencement, be construed as a reference to a special resolution.

Appointment under previous companies laws to have effect as if madeunder Act. 652.Appointment under previous companies laws to have effect as if made under Act. Any person appointed to any office under or by virtue of any previous companies law shall be deemed to have been appointed to that office under or by virtue of this Act. ———————————————————————- 1 Ins. by Act 65 of 1960, s. 213. ———————————————————————- 408/64

Former registration offices continued. 653.Former registration offices continued. The offices existing at the commencement of this Act for the registration of companies shall be continued as if they had been established under this Act.

Registers under previous companies laws to be deemed to be part ofregisters under Act. 654.Registers under previous companies laws to be deemed to be part of registers under Act. Any register kept under the provisions of any previous companies law shall be deemed to be part of the register to be kept under the corresponding provisions of this Act.

Funds and accounts under Act to be in continuation of funds andaccounts under previous companies law. 655.Funds and accounts under Act to be in continuation of funds and accounts under previous companies law. All funds constituted and accounts kept under this Act shall be deemed to be in continuation of the corresponding funds constituted and accounts kept under previous companies laws.

Saving of incorporation under repealed Acts. 656.Saving of incorporation under repealed Acts.Nothing in this Act shall affect the incorporation of any company registered under any enactment hereby repealed.

Saving of certain Tables under previous companies laws. 657.Saving of certain Tables under previous companies laws.Nothing in this Act shall affect- (a) Table B in the Schedule annexed to Act No. XIX of 1857, or any part thereof, so far as the same applies to any company existing at the commencement of this Act; (b) Table A in the First Schedule annexed to the Indian Companies Act, 1882 (6 of 1882), or any part thereof, so far as the same applies to any company existing at the commen- cement of this Act ; (c)Table A in the First Schedule to the Indian Companies Act, 1913 (7 of 1913), either as originally contained in that Sch- edule or as altered in pursuance of section 151 of that Act, so far as the same applies to any company existing at the commencement of this Act.

Section 6 of the General Clauses Act, 1897 to apply in addition tosections 645 to 657 of Act. 658.Section 6 of the General Clauses Act, 1897 to apply in addition to sections 645 to 657 of Act.The mention of particular matters in sections 645 to 657 or in any other provision of this Act shall not prejudice the general application of section 6 of the General Clauses Act, 1897 (10 of 1897), with respect to the effect of repeals. 408/65 SCHE TABLE A.–Regulations for management of a company limited by shares. SCHEDULE I

[See sections 2 (2), 14, 28 (1), 29 and 223]

TABLE A REGULATIONS FOR MANAGEMENT OF A COMPANY LIMITED BY SHARES Interpretation
1. (1) In these regulations- (a) ” the Act” means the Companies Act, 1956; (b) ” the seal” means the common seal of the company.

(2) Unless the context otherwise requires, words or expressions contained in these regulations shall bear the same meaning as in the Act or any statutory modification thereof in force at the date at which these regulations become binding on the company. Share Capital and Variation of Rights 2. Subject to the provisions of section 80, any preference shares may, with the sanction of an ordinary resolution, be issued on the terms that they are, or at the option of the company are liable, to be redeemed on such terms and in such manner as the company before the issue of the shares may, by special resolution, determine.

3. (1) If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, subject to the provisions of sections 106 and 107, and whether or not the company is being wound up, be varied with the consent in writing of the holders of three-fourths of the issued shares of that class, or with the sanction of a special resolution passed at a separate 1* * * meeting of the holders of the shares of that class.

(2) To every such separate 1* * * meeting, the provisions of these regulations relating to general meetings shall mutatis mutandis apply, but so that the necessary quorum shall be two persons at least holding or representing by proxy one-third of the issued shares of the class in question. 4. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith. ———————————————————————- 1 The word “general” omitted by Act 65 of 1960, s. 215. ———————————————————————- 408/66

5. (1) The company may exercise the powers of paying com- missions conferred by section 76, provided that the rate per cent. or the amount of the commission paid or agreed to be paid shall be dis- closed in the manner required by that section.

(2) The rate of the commission shall not exceed the rate of five per cent. of the price at which the shares in respect whereof the same is paid are issued or an amount equal to five per cent. of such price, as the case may be.

(3) The commission may be satisfied by the payment of cash or the allotment of fully or partly paid shares or partly in the one way and partly in the other.

(4) The company may also, on any issue of shares, pay such brokerage as may be lawful. 6. Except as required by law, no person shall be recognised by the company as holding any share upon any trust, and the company shall not be bound by, or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any share, or any interest in any fractional part of a share, or (except only as by these regulations or by law otherwise provided) any other rights in respect of any share except an absolute right to the entirety thereof in the registered holder.

7. (1) Every person whose name is entered as a member in the register of members shall be entitled to receive within three months after allotment or 1[within two months after the application for the] registration of transfer (or within such other period as the conditions of issue shall provide)- (a) one certificate for all his shares without payment ; or (b) several certificates, each for one or more of his shares, upon payment of one rupee for every certificate after the first.

(2)Every certificate shall be under the seal and shall specify the shares to which it relates and the amount paid up thereon.

(3)In respect of any share or shares held jointly by several persons, the company shall not be bound to issue more than one certi- ficate, and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all such holders. ———————————————————————- 1 Ins. by G.S.R. 631. dated the 23rd April, 1966, see Gazette of India, 1966, Pt. II, 3(i), p. 789. ———————————————————————- 409 8.if a share certificate is defaced, lost or destroyed,it may be renewed on payment of such fee, if any, not exceeding 1[two rupees], and on such terms, if any, as to evidence and indemnity, and the pay- ment of out-of-pocket expenses incurred by the company in investi- gating evidence, as the directors think fit. Lien

9. (1) The company shall have a first and paramount lien- (a)on every share (not being a fully-paid share), for all moneys(whether presently payable or not) called, or payable at a fixed time, in respect of that share ; and (b) on all shares (not being fully-paid shares) standing registered in the name of a single person, for all moneys presently payable by him or his estate to the company: Provided that the Board of directors may at any time declare any share to be wholly or in part exempt from the provisions of this clause.

(2) The company’s lien, if any, on a share shall extend to all dividends payable thereon. 10. The company may sell, in such manner as the Board thinks fit, any shares on which the company has a lien: Provided that no sale shall be made- (a)unless a sum in respect of which the lien exists is presently payable ; or (b)until the expiration of fourteen days after a notice in writing stating and demanding payment of such part of the amount in respect of which the lien exists as is presently payable, has been given to the registered holder for the time being of the share or the person entitled thereto by reason of his death or insolvency.

11 (1)To give effect to any such sale, the Board may authorize some person to transfer the shares sold to the purchaser thereof.

(2) The purchaser shall be registered as the holder of the shares comprised in any such transfer.

(3) The purchaser shall not be bound to see to the application of the purchase money, nor shall his title to the shares be affected ———————————————————————- 1 Subs. by G.S.R. 631, dated the 23rd April, 1966, for “eight annas “, see Gazette of India, 1966, Pt. 11, Sec. 3(i), p. 789. ———————————————————————- 410 by any irregularity or invalidity in the proceedings in reference to the sale.

12.(1) The proceeds of the sale shall be received by the company and applied in payment of such part of the amount in respect of which the lien exists as is presently payable.

(2)The residue, if any, shall, subject to a like lien for sums not presently payable as existed upon the shares before the sale, be paid to the person entitled to the shares at the date of the sale. Calls on Shares

13.(1) The Board may, from time to time, make calls upon the members in respect of any moneys unpaid on their shares (whether on account of the nominal value of the shares or by way of premium) and not by the conditions of allotment thereof made payable at fixed times: Provided that no call shall exceed one-fourth of the nominal value of the share or be payable at less than one month from the date fixed for the payment of the last preceding call.

(2)Each member shall, subject to receiving at least fourteen days’ notice specifying the time or times and place of payment, pay to the company, at the time or times and place so specified, the amount called on his shares.

(3)A call may be revoked or postponed at the discretion of the Board. 14.A call shall be deemed to have been made at the time when the resolution of the Board authorizing the call was passed and may be required to be paid by instalments. 15.The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof.

16.(1) If a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest thereon from the day appointed for payment thereof to the time of actual payment at five per cent. per annum or at such lower rate, if any, as the Board may determine.

(2)The Board shall be at liberty to waive payment of any such interest wholly or in part. 411

17.(1) Any sum which by the terms of issue of a share becomes payable on allotment or at any fixed date, whether on account of the nominal value of the share or by way of premium, shall, for the purposes of these regulations, be deemed to be a call duly made and payable on the date on which by the terms of issue such sum becomes payable.

(2)In case of non-payment of such sum, all the relevant provisions of these regulations as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified. 18. The Board- (a) may, if it thinks fit, receive from any member willing to advance the same, all or any part of the moneys uncalled and unpaid upon any shares held by him; and (b) upon all or any of the moneys so advanced, may (until the same would, but for such advance, become presently payable) pay interest at such rate not exceeding, unless the company in general meeting shall otherwise direct, six per cent. per annum, as may be agreed upon between the Board and the member paying the sum in advance. Transfer of shares

19. (1) The instrument of transfer of any share in the company shall be executed by or on behalf of both the transferor and transferee.

(2) The transferor shall be deemed to remain a holder of the share until the name of the transferee is entered in the register of members in respect thereof. 1[20. Subject to the provisions of section 108, the share in the company shall be transferred in the following form, namely:- Date of presentation to the prescribed authority. FORM No. 7B SHARE TRANSFER FORM FOR THE CONSIDERATION stated below the “Transferor(s) named do hereby transfer to the “Transferee(s)” named, his (their) executors, administrators and assigns, the shares specified below subject to the conditions on which the said shares are now held by the ———————————————————————- 1 Subs. by G.S.R. 631, dated the 23rd April, 1966, for regulation 20, see Gazette of India, 1966, Pt. II, See. 3(i), p. 789. ———————————————————————- 412 Transferor(s) and the Transferee(s) do hereby agree to accept and hold the said shares subject to the conditions aforesaid. ———————————————————————- Full Name of Company ———————————————————————- Number and full No.in Figures No. in words Description Equity/ description of Pref. shares shares ———————————————————————- Distinctive Numbers ——————————————————————— Whether the said shares are dealt in or quoted on a recognised Stock-Exchange If reply to above is Yes, Name of St- ock Exchange should be indicated. ———————————————————————- TRANSFER FROM Transferor(s) names in full (Preferably type written or in block capitals). ———————————————————————- SCHE

[See section 6(c)]

1[SCHEDULE IA
[See section 6(c)]

LIST OF RELATIVES 1. Father. 2. Mother (including stepmother). 3. Son (including step-son). 4. Son’s wife. 5. Daughter (including step-daughter). 6. Father’s father. 7. Father’s mother. 8. Mother’s mother. 9. Mother’s father. 10. Son’s son. 11. Son’s son’s wife. 12. Son’s daughter. 13. Son’s daughter’s husband. 14. Daughter’s husband. ——————————————————————— 1 Ins. by Act 65 of 1960, s. 216. ——————————————————————— 440/1-2 15. Daughter’s son. 16. Daughter’s son’s wife. 17. Daughter’s daughter. 18. Daughter’s daughter’s husband. 19. Brother (including step-brother). 20. Brother’s wife. 21. Sister (including step-sister). 22. Sister’s husband. 1* * * * * * ———————————————————————- 1 Serials 23 to 49 omitted by Act 31 of 1965, s.61 (w.e.f. 15-10-1965). ———————————————————————- SCHE
[See sections 44(2)(a) and 56]

SCHEDULE II
[See sections 44(2)(a) and 56]

MATTERS TO BE SPECIFIED IN PROSPECTUS AND REPORTS TO BE SET OUT THEREIN PART MATTERS TO BE SPECIFIED PART I.-MATTERS TO BE SPECIFIED
1. (1) Save as hereinafter provided in clause 27, the main objects of the company, with the names, addresses, descriptions and occupations of the signatories of the memorandum and the number of shares subscribed for by them.

(2)The number and classes of shares, if any, and the nature and extent of the interest of the holders in the property and profits of the company.

(3) The number of redeemable preference shares intended to be issued, with the date of redemption or, where no date is fixed, the period of notice required for redeeming the shares and the proposed method of redemption.

2. (1) The number of shares, if any, fixed by the articles as the qualification of a director.

(2) Any provision in the articles as to the remuneration of the directors whether for their services to the company as directors, managing directors or otherwise.

3. (1) The names, addresses, descriptions and occupations of- (a) the directors or proposed directors ; (b)the managing director or proposed managing Director. if any ; ———————————————————————– 1 Serials 23 to 49 omitted by Act 31 of 1965, s. 61 (w.e.f. 15- 10-1965). ———————————————————————- 441 (c) the managing agent or proposed managing agent, if any; (d)secretaries and treasurers or proposed secretaries and treasurers,if any; (e) the manager or proposed manager, if any: 1[Provided that: – (i) where any such person is already a director, managing director or manager of any other company, or (ii)where any such person (including a firm or a body corporate) is already a managing agent or secretaries and treasurers of any other company, the matters to be specified under this clause shall include the names of all the companies in which such person is a director, managing director or managing agent or secretaries and treasurers or manager, and where any such person is a firm or a body corporate, the said particulars shall also be given in respect of every partner of the firm or, as the case may be, in respect of every director of the body corporate.]

(2) Any provision in the articles or in any contract which has been entered into as to the appointment of a managing director, managing agent, secretaries and treasurers or manager, the remunera- tion payable to him or them, and the compensation, if any, payable to him or them for loss of office. 4. In, the case of a company managed by a managing agent or secretaries and treasurers which is a body corporate, the subscribed capital of that body. 5. Where shares are offered to the public for subscription, particulars as to- (a) the minimum amount which, in the opinion of the directors or of the signatories of the memorandum arrived at after due inquiry, must be raised by the issue of those shares in order to provide the sums, or, if any part thereof is to be defrayed in any other manner, the balance of the sums, required to be provided in respect of each of the ———————————————————————- 1 Added by Notifn. No. G.S.R. 129, dated the 3rd January, 1968, see Gazette of India, Pt. 11, Sec. 3(i), p. 104. ———————————————————————- 442 following heads and distinguishing the amount required under each head: – (i)the purchase price of any property purchased or to be purchased which is to be defrayed in whole or in part out of the proceeds of the issue; (ii) any preliminary expenses payable by the company, and any commission so payable to any person in consideration of his agreeing to subscribe for, or of his procuring or agreeing to procure subscriptions for, any shares in the company; (iii)the repayment of any moneys borrowed by the company in respect of any of the foregoing matters; (iv)..working capital; (v) any other expenditure, stating the nature and purpose thereof and the estimated amount in each case; and (b) the amounts to be provided in respect of the matters aforesaid otherwise than out of the proceeds of the issue and the sources out of which those amounts are to be provided. 6. The time of the opening of the subscription lists. 7. The amount payable on application and allotment on each share, and in the case of a second or subsequent offer of shares, the amount offered for subscription on each previous allotment made within the two preceding years, the amount actually allotted, and the amount, if any, paid on the shares so allotted. 8. The substance of any contract or arrangement or proposed contract or arrangement, whereby any option or preferential right of any kind has been or is proposed to be given to any person to subscribe for any shares in or debentures of, a company, giving the number, description and amount of any such shares or debentures and including the following particulars of the option or right:- (a) the period during which the option or right is exercisable; (b)the price to be paid for shares or debentures subscribed for under the option or right; 442A (c) the consideration, if any, given or to be given for the option or right or for the right thereto; (d) the names, addresses, descriptions and occupations of the persons to whom the option or right or the right thereto has been given or is proposed to be given or, if given to existing shareholders or debenture holders as such, the description and numbers of the relevant shares or debentures; (e) any other material fact or circumstances relevant to the grant of the option or right. Explanation.-Subscribing for shares or debentures shall, for the purposes of this clause, include acquiring them from a person to whom they have been allotted or agreed to be allotted with a view to his offering them for sale. 9. The number, description, and amount of shares and debentures which within the two preceding years have been issued, or agreed to be issued, as fully or partly paid up otherwise than in cash, and in the latter case the extent to which they are so paid up, and in either case the consideration for which those shares or debentures have been issued or agreed to be issued. 443 10. The amount paid or payable by way of premium, if any, on each share which has been issued within the two years preceding the date of the prospectus, or is to be issued, stating the dates or proposed dates of issue and, where some shares have been or are to be issued at a premium and other shares of the same class at a lower premium, or at par or at a discount, the reasons for the differentiation and how any premiums received have been or are to be disposed of. 11. Where any issue of shares or debentures is underwritten, the names of the underwriters, and the opinion of the directors that the resources of the underwriters are sufficient to discharge their obligations.

12. (1) As respects any property to which this clause applies- (a) the names, addresses, descriptions and occupations of the vendors ; (b)the amount paid or payable in cash, shares or debentures to the vendor and, where there is more than one separate vendor, or the company is a sub-purchaser, the amount so paid or payable to each vendor, specifying separately the amount, if any, paid or payable for goodwill; (c)the nature of the title or interest in such property acquired or to be acquired by the company; (d)short particulars of every transaction relating to the property completed within the two preceding years, in which any vendor of the property to the company or any person who is, or was at the time of the transaction, a promoter or a director or proposed director of the company had any interest, direct or indirect, specifying the date of the transaction and the name of such promoter, director or proposed director and stating the amount payable by or to such vendor, promoter, director or proposed director in respect of the transaction.

(2) The property to which sub-clause (1) applies is property purchased or acquired by the company or proposed so to be purchased or acquired, which is to be paid for wholly or partly out of the proceeds of the issue offered for subscription by the prospectus or the purchase or acquisition of which has not been completed at the date of the issue of the prospectus, other than property- (a)the contract for the purchase or acquisition whereof was entered into in the ordinary course of the company’s 444 business, the contract not being made in contemplation of the issue nor the issue in consequence of the contract ; or (b)as respects which the amount of the purchase money is not material.

(3) For the purposes of this clause, where any of the vendors is a firm, the members of the firm shall not be treated as separate vendors, 13.The amount, if any, or the nature and extent of any consideration, paid within the two preceding years, or payable, as commission to any person (including commission so paid or payable to any sub under writer, who is a promoter or officer of the company) for subscribing or agreeing to subscribe, or procuring or agreeing to procure subscriptions for any shares in, or debentures of the company ; and giving also the following particulars, namely:- (a) the name, address, description and occupation of each such person ; (b) particulars of the amounts which each has under written or sub-underwritten as aforesaid ; (c) the rate of the commission payable to each for such underwriting or sub-underwriting; (d) any other material term or condition of the underwriting or sub-underwriting contract with each such person ; and (e) when any such person is a company or a firm, the nature of any interest, direct or indirect such company or firm of any promoter or officer of the company in respect of which the prospectus is issued.

14. (1) Save as hereinafter provided in clause 27, the amount or estimated amount of preliminary expenses and the persons by whom any of those expenses have been paid or are payable.

(2) Save as aforesaid, the amount or estimated amount of the expenses of the issue and the persons by whom any of those expenses have been paid or are payable. 15. Any amount or benefit paid or given within the two preceding years or intended to be paid or given to any promoter or officer, and the consideration for the payment or the giving of the benefit. 445

16. (1) The dates of, parties to, and general nature of- (a) every contract appointing or fixing the remuneration of a managing director, managing agent, secretaries and treasurers or manager whenever entered into, that is to say, whether within, or more than, two years before the date of the prospectus; (b)every other material contract, not being a contract entered into in the ordinary course of the business carried on or intended to be carried on by the company or a contract entered into more than two years before the date of the prospectus.

(2) A reasonable time and place at which any such contract or a copy thereof may be inspected. 17. The names and addresses of the auditors, if any, of the company.

18. (1) Full particulars of the nature and extent of the interest, if any, of every director or promoter- (a)in the promotion of the company ; or (b)in any property acquired by the company within two years of the date of the prospectus or proposed to be acquired by it.

(2) Where the interest of such a director or promoter consists in being a member of a firm or company, the nature and extent of the interest of the firm or company, with a statement of all sums paid or agreed to be paid to him or to the firm or company in cash or shares or otherwise by any person either to induce him to become, or to qualify him as, a director, or otherwise for services rendered by him or by the firm or company in connection with the promotion or formation of the company. 19. If the share capital of the company is divided into different classes of shares, the right of voting at meetings of the company conferred by, and the rights in respect of capital and dividends attached to, the several classes of shares respectively. 20. Where the articles of the company impose any restrictions upon the members of the company in respect of the right to attend, 446 speak or vote at meetings of the company or of the right to transfer shares, or upon the directors of the company in respect of their powers of management, the nature and extent of those restrictions.

21. (1) In the case of a company which has been carrying on business, the length of time during which the business of the company has been carried on.

(2) If the company proposes to acquire a business which has been carried on for less than three years, the length of time during which the business has been carried on,

22. (1) If any reserves or profits of the company or’ any of its subsidiaries have been capitalised, particulars of the capitalisation.

(2) Particulars of the surplus arising from any revaluation of the assets of the company or any of its subsidiaries during the two years preceding the date of the prospectus and the manner in which such surplus has been dealt with. 23. A reasonable time and place at which copies of all balance- sheets and profit and loss accounts, if any, on which the report of the auditors under Part II of this Schedule is based, may be inspected. PART REPORTS TO BE SET OUT. PART II.-REPORTS TO BE SET OUT

24. (1) A report by the auditors of the company with respect to- (a)profits and losses and assets and liabilities, in

accordance with sub-clause (2) or (3) of this clause, as the case may require ; and (b)the rates of the dividends, if any, paid by the company in respect of each class of shares in the company for each of the five financial years immediately preceding the issue of the prospectus, giving particulars of each class of shares on which such dividends have been paid and particulars of the cases in which no dividends have been paid in respect of any class of shares for any of those years; 447 and, if no accounts have been made up in respect of any part of the period of five years ending on a date three months before the issue of the prospectus, containing a statement of that fact 1[and accompanied by a statement of the accounts of the company in respect of that part of the said period up to a date not earlier than six months of the date of issue of the prospectus indicating the profit or loss for that period and the assets and liabilities position as at the end of that period together with a certificate from the auditors that such accounts have been examined and found correct by them. The said statement may indicate the nature of provision or adjustments made or are yet to be made].

(2) If the company has no subsidiaries, the report shall- (a) so far as regards profits and losses, deal with the profits or losses of the company (distinguishing items of a non. recurring nature) for each of the five financial years immediately preceding the issue of the prospectus; and (h)so far as regards assets and liabilities, deal with the assets and liabilities of the company at the last date to which the accounts of the company were made up.

(3) If the company has subsidiaries, the report shall- (a)so far as regards profits and losses, deal separately with

the company’s profits or losses as provided by sub-clause (2) and in addition, deal either- (i) as a whole with the combined profits or losses of its subsidiaries, so far as they concern members of the company; or (ii)individually with the profits or losses of each subsidiary, so far as they concern members of the company; or, instead of dealing separately with the company’s profits or losses, deal as a whole with the profits or losses of the company, and, so far as they concern members of the company, with the combined profits or losses of its subsidiaries; and ———————————————————————- 1 Ins. by Notifn. No. G.S.R. 129, dated the 3rd January, 1968, see Gazette of India, Pt. II, Sec. 3(i), p. 105. ———————————————————————- (b)so far as regards assets and liabilities, deal separately with the company’s assets and liabilities as provided by sub-

clause (2) and in addition, deal either– (i) as a whole with the combined assets and liabilities of its subsidiaries, with or without the company’s assets and liabilities-, or (ii)individually with the assets and liabilities of each subsidiary; and shall indicate as respects the assets and liabilities of the subsidiaries, the allowance to be made for persons other than members of the company. 25. If the proceeds, or any part of the proceeds, of the issue of the shares or debentures are or is to be applied directly or indirectly- (i) in the purchase of any business; or (ii) in the purchase of an interest in any business and by reason of that purchase or, anything to be done in conse- quence thereof, or in connection therewith, the company will become entitled to an interest, as respects either the capital or profits and losses or both, in such business exceeding fifty per cent. thereof; a report made by accountants (who shall be named in the prospectus) upon- (a) the profits or losses of the business for each of the five financial years immediately preceding the issue of the prospectus; and (b) the assets and liabilities of the business at the last date to which the accounts of the business were made up, being a date not more than one hundred and twenty days before the date of the issue of the prospectus.

26. (1) If- (a) the proceeds, or any part of’ the proceeds, of the issue of the shares or debentures are or is to be applied directly or indirectly in any manner resulting in the acquisition by the company of shares in any other body corporate; and 448A (b) by reason of that acquisition or anything to be done in consequence thereof or in connection therewith, that body corporate will become a subsidiary of the company; a report made by accountants (who shall be named in the prospectus) upon- (i) the profits or losses of the other body corporate for each of the five financial years immediately preceding the issue of the prospectus; and (ii) the assets and liabilities of the other body corporate at the last date to which its accounts were made up. 449

(2) The said report shall- (a)indicate how the profits or losses of the other body corporate dealt with by the report would, in respect of the shares to be acquired, have concerned members of the company and what allowance would have fallen to be made, in relation to assets and liabilities so dealt with, for holders of other shares, if the company had at all material times held the shares to be acquired ; and (b)where the other body corporate has subsidiaries, deal with the profits or losses and the assets and liabilities of the body corporate and its subsidiaries in the manner provided by

sub-clause (3) of clause 24 of this Schedule in relation to the company and its subsidiaries. PART PROVISIONS APPLYING TO PARTS I AND II OF SCHEDULE. PART III.-PROVISIONS APPLYING TO PARTS I AND II OF SCHEDULE 27. Clause 1 (so far as it relates to particulars of the signatories of the memorandum and the shares subscribed for by them) and clause 14 (so far as it relates to preliminary expenses) of this Schedule shall not apply in the case of a prospectus issued more than two years after the date at which the company is entitled to commence business. 28. Every person shall, for the purposes of this Schedule, be deemed to be a vendor who has entered into any contract, absolute or conditional, for the sale or purchase, or for any option of purchase, of any property to be acquired by the company, in any case where- (a)the purchase money is not fully paid at the date of the issue of the prospectus ; (b)the purchase money is to be paid or satisfied, wholly or in part, out of the proceeds of the issue offered for subs- cription by the prospectus ; (c)the contract depends for its validity or fulfilment on the result of that issue. 29. Where any property to be acquired by the company is to be taken on lease, this Schedule shall have effect as if the expression “vendor” included the lessor, the expression “purchase money” 450 included the consideration for the lease, and the expression “sub- purchaser” included a sub-lessee. 30. If in the case of a company which has been carrying on business, or of a business which has been carried on for less than five financial years, the accounts of the company or business have only been made up in respect of four such years, three such years, two such years or one such year, Part II of this Schedule shall have effect as if references to four financial years, three financial years, two financial years or one financial year, as the case may be, were substituted for references to five financial years. 31. Where the five financial years immediately preceding the issue of the prospectus which are referred to in Part II of this Schedule or in this Part cover a period of less than five years, references to the said five financial years in either Part shall have effect as if references to a number of financial years the aggregate period covered by which is not less than five years immediately preceding the issue of the prospectus were substituted for references to the five financial years aforesaid. 32. Any report required by Part II of this Schedule shall either– (a) indicate by way of note any adjustments as respects the figures of any profits or losses or assets and liabilities dealt with by the report which appear to the persons making the report necessary; or (b)make those adjustments and indicate that adjustments have been made. 33. Any report by accountants required by Part II of this Schedule- (a)shall be made by accountants qualified under this Act for appointment as auditors of a company; and (b) shall not be made by any accountant who is an officer or servant, or a partner or in the employment of an officer or servant, of the company or of the company’s subsidiary or holding company or of a subsidiary of the company’s holding company. For the purposes of this clause, the expression “officer” shall include a proposed director but not an auditor. 451 SCHE SCHEDULE III (See section 70) FORM OF STATEMENT IN LIEU OF PROSPECTUS TO BE DELIVERED To REGISTRAR BY A COMPANY WHICH DOES NOT ISSUE A PROSPECTUS OR WHICH DOES NOT GO TO ALLOTMENT ON A PROSPECTUS ISSUED, AND REPORTS TO BE SET OUT THERE- IN PART PART I-FORM OF STATEMENT AND PARTICULARS TO BE CONTAINED THEREIN THE COMPANIES ACT, 1956 Statement in lieu of Prospectus delivered for registration by

[Insert the name of the company.]

Pursuant to section 70 of the Companies Act, 1956 Delivered for registration by The nominal share capital of the Rs…… company. Divided into…………………..shares of Rs…….each. ” ” Rs…….each. ” ” Rs…….each. Amount (if any) of above capital…shares of Rs…….each. which consists of redeemable preference shares. The earliest date on which the company has power to redeem these shares. Names, addresses, descriptions and occupations of- (a) directors or proposed directors; (b) managing director or pro- posed managing director; (c) managing agent or proposed managing agent; 452 (d)secretaries and treasurers or proposed secretaries and treasurers; (e) manager or proposed manager. Any provision in the articles of the company, or in any contract irrespective of the time when it was entered into, as to the appointment of and remuneration payable to the persons referred to in (a), (b), (c), (d) and (e) above. If the share capital of the company is divided into different classes of shares, the right of voting at meetings of the company conferred by,and the rights in respect of capital and dividends attached to, the several classes of shares respectively. Number and amount of shares and 1 shares of Rs.. fully paid debentures agreed to be issued as fully or partly paid up otherwise 2 shares upon which Rs. per than in cash. share credited as paid. The consideration for the intended 3 debentures Rs…….. issue of those shares and debentures. Number, description and amount of any shares or debentures which any 4 Consideration: person has or is entitled to be given 1…shares of Rs… and debe- an option to subscribe for, or to ntures of Rs…… acquire from, a person to whom they have been allotted or agreed to be allotted with a view to his offering them for sale. Period during which the option is 2. Until exercisable. Price to be paid for shares or 3. debentures subscribed for or acquired under the option. 453 Consideration for the option or the 4. Consideration: right to option. Persons to whom the option or the 5. Names and addresses- right to option was given or, if given to existing shareholders or debenture holders as such, the relevant shares or debentures. Names, occupations and addresses of vendors of property purchased or acquired, or proposed to be pur- chased or acquired by the company except where the contract for its purchase or acquisition was entered into in the ordinary course of the business intended to be carried on by the company or the amount of the purchase money is not material. Amount (in cash, shares or deben- tures) payable to each separate vendor. Amount (if any) paid or payable (in Total purchase price Rs. cash, shares or debentures) for Cash Rs . each such property, specifying Shares Rs. amount (if any) paid or payable Debentures Rs. for goodwill. ————– Goodwill Rs. Short particulars of every transaction relating to each such property which was completed within the two preceding years and in which any vendor to the company or any person who is, or was at the time thereof, a promoter, director or proposed director of the company had any interest, direct or indirect. Amount (if any) paid or payable as Amount paid . . . commission for subscribing or ” payable agreeing to subscribe or procuring 454 or agreeing to procure subscrip- tions for any shares or debentures in the company ; or Rate of the commission………… Rate per cent……….. The number of shares, if any, which persons have agreed to subscribe for a commission. If it is proposed to acquire any business, the amount, as certified by the persons by whom the accounts of the business have been audited, of the net profits of the business in respect of each of the five years immediately preceding the date of this statement, provided that in the case of a business which has been carried on for less than five years and the accounts of which have only been made up in respect of four years, three years, two years or one year, the above requirements shall have effect as if references to four years, three years, two years or one year, as the case may be, were substituted for references to five years, and in any such case the statement shall say how long the business to be acquired has been carried on. Where the financial year with respect to which the accounts of the business have been made up is greater or less than a year, refer- ences to five years, four years, three years, two years, and one year in this paragraph shall have effect as if references to such number of financial years as in the aggregate, cover a period of not 455 less than five years, four years. three years, two years or one year, as the case may be, were substituted for references to three years, two years and one year respectively. Estimated amount of preliminary Rs……………. expenses. By whom those expenses have been paid or are payable. Amount paid or intended to be paid Name of promoter. to any promoter. Amount Rs. Consideration for the payment Consideration: Any other benefit given or intended Name of promoter: to be given to any promoter. Nature and value of benefit: Consideration for the benefit. Consideration: Dates of, parties to, and general nature of- (a)contract appointing or fixing the remuneration of directors, managing director, managing agent, secretaries and treasurers, or manager ; and (b) every other material contract (other than (i) contracts entered into in the ordinary course of the business intended to be carried on by the company or (ii) entered into more than two years before the delivery of this statement).
Time and place at which (1) the

contracts or copies thereof or (2) (i) in the case of a contract not 456 reduced into writing, a memorandum giving full particulars thereof, and (ii) in the case of a contract wholly or partly in a language other than English, a copy of a translation thereof in English or embodying a translation in English of the parts in the other language, as the case may be, being a translation certified in the prescribed manner to be a correct translation, may be inspected. Names and addresses of the auditors of the company (if any). Full particulars of the nature and extent of the interest of every director, managing director, manag- ing agent, secretaries and treasur- ers or manager in the promotion of or in the property proposed to be acquired by the company, or where the interest of such a director consists in being a partner in a firm, the nature and extent of the interest of the firm, with a state- ment of all sums paid or agreed to be paid to him or to the firm in cash or shares, or otherwise, by any person either to induce him to become, or to qualify him as, a director, or otherwise for services rendered by him or by the firm in connection with the promotion or formation of the company. (Signatures of the persons above- named as directors or proposed ———- directors, or of their agents ———- authorized in writing.) ———- Date 457 PART PART II-REPORTS TO BE SET OUT 1.Where it is proposed to acquire a business, a report made by accountants (who shall be named in the statement) upon- (a)the profits or losses of the business in respect of each of the five financial years immediately preceding the delivery of the statement to the Registrar ; and (b) the assets and liabilities of the business as at the last date to which the accounts of the business were made up.

2. (1) Where it is proposed to acquire shares in a body corporate which by reason of the acquisition or anything to be done in consequence thereof or in connection therewith will become a subsidiary of the company, a report made by accountants (who shall be named in the statement) with respect to the profits and losses and assets and liabilities of the other body corporate in accordance with

sub-clause (2) or (3) of this clause, as the case may require, indicating how the profits or losses of the other body corporate dealt with by the report would, in respect of the shares to be acquired, have concerned members of the company, and what allowance would have fallen to be made, in relation to assets and liabilities so dealt with, for holders of other shares, if the company had at all material times held the shares to be acquired.

(2) If the other body corporate has no subsidiaries, the report

referred to in sub-clause (1) shall- (a)so far as regards profits and losses, deal with the profits or losses of the body corporate in respect of each of the five financial years immediately preceding the delivery of the statement to the Registrar ; and (b)so far as regards assets and liabilities, deal with the assets and liabilities of the body corporate as at the last date to which the accounts of the body corporate were made up.

(3) If the other body corporate has subsidiaries, the report

referred to in sub-clause (1) shall- (a)so far as regards profits and losses, deal separately with the other body corporate’s profits or losses as provided by

sub-clause (2) and in addition deal either- (i) as a whole with the combined profits or losses of its subsidiaries so far as they concern members of the other body corporate ; or 458 (ii) individually with the profits or losses of each subsidiary, so far as they concern members of the other body corporate ; or, instead of dealing separately with the other body corporate’s profits or losses, deal as a whole with the profits or losses of the other body corporate and, so far as they concern members of the other body corporate, with the combined profits or losses of its subsidiaries ; and (b) so far as regards assets and liabilities, deal separately with the other body corporate’s assets and

liabilities as provided by sub-clause (2) and, in addition, deal either- (i) as a whole with the combined assets and liabilities of its subsidiaries, with or without the other body corporate’s assets and liabilities ; or (ii) individually with the assets and liabilities of each subsidiary ; and shall indicate, as respects the assets and liabilities of the subsidiaries, the allowance to be made for persons other than members of the company. PART PART III-PROVISIONS APPLYING TO PARTS I AND II OF THIS SCHEDULE

3. (1) In this Schedule, the expression “vendor” includes a vendor as defined in Part III of Schedule II.

(2) Clause 31 of Schedule II shall apply to the interpretation of Part II of this Schedule as it applies to the interpretation of Part II of Schedule II. 4. If in the case of a business which has been carried on, or of a body corporate which has been carrying on business, for less than five financial years, the accounts of the business or body corporate have only been made up in respect of four such years, three such years, two such years or one such year, Part II of this Schedule shall have effect as if references to four financial years, three financial years, two financial years or one financial year, as the case may be, were substituted for references to five financial years. 5. Any report required by Part II of this Schedule shall either- (a) indicate by way of note any adjustments as respects the figures of any profits or losses or assets and liabilities dealt 459 with by the report which appear to the person making the report necessary ; or (b)make those adjustments and indicate that adjustments have been made. 6. Any report by accountants required by Part II of this Schedule- (a)shall be made by accountants qualified under this Act for appointment as auditors of a company; and (b)shall not be made by any accountant who is an officer or servant, or a partner or in the employment of an officer or servant, of the company or of the company’s subsidiary or holding company or of a subsidiary of the company’s holding company. For the purposes of this clause, the expression “officer” shall include a proposed director but not an auditor. SCHE SCHEDULE IV

[See section 44(2)(b)]

FORM OF STATEMENT IN LIEU OF PROSPECTUS TO BE DELIVERED TO REGISTRAR BY A PRIVATE COMPANY ON BECOMING A PUBLIC COMPANY- AND REPORTS TO BE SET OUT THEREIN PART PART I-FORM OF STATEMENT AND PARTICULARS TO BE CONTAINED THEREIN THE COMPANIES ACT, 1956 Statement in lieu of Prospectus delivered for registration by
[Insert the name of the company.]

Pursuant to clause (b) of sub-section (2) of section 44 of the Companies Act, 1956. Delivered for registration by The nominal share capital of the Rs………… company. 460 Divided into… shares of Rs…each. ” ” Rs…each. ” ” Rs…each. Amount (if any) of above capital shares of Rs….each. which consists of redeemable preference share. The earliest date on which the company has power to redeem these shares. Names, addresses, descriptions and occupations of- (a) directors or proposed directors; (b) managing director or proposed managing director ; (c) managing agent or proposed managing agent; (d) Secretaries and treasurers or proposed secretaries and treasures; (e) manager or proposed manager. Any provision in the articles of the company, or in any contract irrespective of the time when it was entered into, as to the appointment of and remuneration payable to the persons referred to in (a), (b), (c), (d) and (e) above. Amount of shares issued Shares . . . ………..Shares. Amount of commission paid or pay- able in connection therewith. Amount of discount, if any, allowed on the issue of any shares, or so much thereof as has not been written off at the date of the statement. 461 Unless more than two years have lapsed since the date on which the company was entitled to commence business: – Amount of preliminary expenses Rs…………. By whom those expenses have been paid or are payable. Amount paid or intended to be paid Name of promoter: to any promoter. Amount Rs ……. Consideration for the payment. Consideration: Any other benefit given or intend- Name of promoter: ed to be given to any promoter. Nature and value of benefit: Consideration for the benefit. Consideration: If the share capital of the company is divided into different classes of shares, the right of voting at meetings of the company conferred by, and the rights in respect of capital and dividends attached to, the several classes of shares respectively. Number and amount of shares and 1 shares of Rs….fully debentures issued within the two paid. years preceding the date of this 2….shares uponwhich statement as fully or partly paid up Rs…. per share credited otherwise than for cash or agreed as paid. to be so issued at the date of this statement. Consideration for the issue of those 3 debentures. for Rs….. shares or debentures each. 4. Consideration: Number, description and amount of 1 shares of Rs….. and any shares or debentures which debentures of Rs…… any person has or is entitled to be given an option to subscribe for, or to acquire from, a person to whom they have been allotted or agreed to be allotted with a view to his offering them for sale. 462 Period during which the option 2. Until is exercisable. Price to be paid for shares 3. or debentures subscribed for or acquired under the option. Consideration for the option 4. Consideration: or right to option. Persons to whom the option or the 5.Names and addresses: right to option was given or, if given to existing shareholders or debenture holders as such, the rel- evant shares or debentures. Names, addresses, descriptions and occupations of vendors of property

(1)purchased or—-acquired by the company within the two years preceding the date of this

statement or (2) agreed or proposed to be purchased or acquired by the company, except where the contract for its purchase or acquisition was entered into in the ordinary course of business and there is no connec- tion between the transaction and the company ceasing to be a private company or where the amount of the purchase money is not material. Amount (in cash, shares or deben- tures) paid or payable to each separate vendor. Amount paid or payable in cash, Total purchase price Rs…… shares or debentures for each such property, specifying the Cash Rs…. amount paid or payable for good Shares Rs. … will. Debentures Rs…. Goodwill Rs…. Short particulars of every trans- action relating to each such property which was completed within the 463 two preceding years and in which any vendor to the company or any person who is, or was at the time thereof, a promoter, director or proposed director of the company had any interest direct or indirect. Amount (if any) paid or payable as Amount paid……….. commission for subscribing or Amount payable ……. agreeing to subscribe or procuring Rate per cent……… or agreeing to procure subscriptions for any shares or debentures in the company; or rate of the commission. The number of shares, if any, which persons have agreed to subscribe for a commission. If it is proposed to acquire any business, the amount, as certified by the persons by whom the accounts of the business have been audited, of the net profits of the business in respect of each of the five years immediately preceding the date of this statement, provided that in the case of a business which has been carried on for less than five years, and the accounts of which have only been made up in respect of four years, three years, two years or one year, the above requirements shall have effect as if references to four years, three years, two years or one year, as the case may be, were substituted for references to five years, and in any such case, the statement shall say how long the business to be acquired has been carried on. Where the financial year with respect to which the accounts of the business have 464 been made up is greater or less than a year, references to five years, four years, three years, two years and one year in this para- graph shall have effect as if references to such number of financial years as, in the aggregate, cover a period of not less than five years, four years, three years, two years or one year, as the case may be, were substituted for references to three years, two years and one year respectively. Dates of, parties to, and general nature of- (a) Contract appointing or fixing the remuneration of directors, managing director, managing agent, secretaries and treasurers or mana- ger; and (b) every other material contract other than (i) contracts entered into in the ordinary course of the business intended to be carried on by the company or (ii) entered into more than two years before the delivery of this statement.

Time and place at which (1) the contracts or copies thereof ; or

(2) (i) in the case of a contract not reduced into writing, a memorandum giving full particulars thereof, and (ii) in the case of a contract wholly or partly in a language other than English, a copy of translation thereof in English or embodying a translation in English of the parts in 465 the other language, as the case may be, being a translation certified in the prescribed manner to be a correct translation, may be inspected. Names and addresses of the auditors of the company. Full particulars of the nature and extent of the interest of every director, managing director, manag- ing agent, secretaries and treasurers or manager, in any property purchased or acquired by the company within the two years preceding the date of this statement or proposed to be purchased or acquired by the company or, where the interest of such a director consists in being a partner in a firm, the nature and extent of the interest of the firm, with a statement of all sums paid or agreed to be paid to him or to the firm in cash or shares, or otherwise, by any person either to induce him to become or to qualify him as, a director, or otherwise for services rendered or to be rendered to the company by him or by the firm. Rates of the dividends (if any) paid by the company in respect of each class of shares in the company in each of the five financial years immediately preceding the date of this statement or since the incorporation of the company, whichever period is shorter. 466 Particulars of the cases in which no dividends have been paid in res- pect of any class of shares in any of these years. ———————————————————- (Signatures of the persons above- ————— named as directors or proposed ————— directors or of their agents autho- ————— rized in writing.) Date. PART PART II-REPORTS TO BE SET OUT 1.If unissued shares or debentures of the company are to be ap- plied in the purchase of a business, a report made by accountants (who shall be named in the statement) upon- (a)the profits or losses of the business in respect of each of the five financial years immediately preceding the delivery of the statement to the Registrar ; and (b) the assets and liabilities of the business as at the last date to which the accounts of the business were made up.

2. (1) If unissued shares or debentures of the company are to be applied directly or indirectly in any manner resulting in the acquisition of shares in a body corporate which by reason of the acquisition or anything to be done in consequence thereof or in connection therewith will become a subsidiary of the company, a report made by accountants (who shall be named in the statement) with respect to the profits and losses and assets and liabilities of the other body

corporate in accordance with sub-clause (2) or (3) of this clause, as the case may require, indicating how the profits or losses of the other body corporate dealt with by the report would, in respect of the shares to be acquired, have concerned members of the company, and what allowance would have fallen to be made, in relation to assets and liabilities so dealt with, for holders of other shares, if the company had at all material times held the shares to be acquired, 471 (h)of clause 3 (or, in the case of the first return, since the incorporation of the company) by persons who are still members or debenture holders and by persons who have ceased to be members or debenture holders respectively, 1[the dates of registration of transfers and the names of transferees or the relevant ledger folio containing particulars thereof]; (c) if the names aforesaid are not arranged in alphabetical order, having annexed thereto an index sufficient to enable the name of any person therein to be easily found. 6. All such particulars, with respect to the persons who at the date of the company’s last annual general meeting are the directors of the company and with respect to any person who at that date is the managing agent, secretaries and treasurers, the manager or the secretary, of the company, as are by this Act required to be contained with respect to directors, the managing agent, secretaries and treasurers, the manager and the secretary respectively in the register of the directors, managing agents, secretaries and treasurers, managers and secretaries of a company 2[together with all such particulars with respect to those who had ceased to hold such office (that is, the office of director, managing agent, secretaries and treasurers, manager or secretary) on or before the date of the last annual general meeting and since the date referred to in sub-clause

(h) of clause (3) or in the case of the first return, since the incorporation of the company]. SCHE PART II.-FORM Limited ANNUAL RETURN of Private Limited made up to the day of 19 being the date of the last annual general meeting of the company. 1. Address. (Address of the registered office of the company.) ——————————————————————- 2. Situation of Foreign Registers of Members and Debenture holders. (a) Name of every State or country outside India in which foreign register is kept. ———————————————————————- 1 Subs. by G. S. R. 631, dated the 23rd April, 1966, for “and the dates of registration of the transfers “, see Gazette of India, 1966, Pt. IT, See. 3(i), V. 789. 2 Ins. by Notifn. No. G. S. R. 279, dated the 17th April, 1958, see Gazette of India, 1958, Pt. II, See. 3(i), p. 206. ———————————————————————- 472 (b)Address of place in each such State or country in which a foreign register is kept. ————————————————————- 3. Summary of Share Capital and Debentures (a) Nominal Share Capital. Nominal share capital—-Rs divided into: (Insert number and class) shares of each ………………………shares of each ……………………………shares of each ……………………………shares of each (b) 1[Subscribed Share Capital] and Debentures. Number Class Number of shares of each class taken shares up to the date of the last annual shares general meeting (which number shares must agree with the total shown shares in the list as held by members on shares that date). Number of shares of each class issued shares subject to payment wholly in cash shares shares shares ———————————————————————- 1 Subs. by G.-S. R. 631, dated the 23rd April, 1966, for “Issued Share Capital”,see Gazette of India, 1966, Pt. II, See. 3(i), p. 789. ———————————————————————- 473 Number Class Number of shares of each class issued shares. as fully paid up for a considera- shares. tion other than cash….. shares. shares. Number of shares of each class issued shares as partly paid up for a considera- issued as paid tion other than cash and extent up to the ext- to which each such share is so ent of Rs. per paid up. share Number Class Number of shares of each class taken shares up to the date of the last annual shares general meeting (which number shares must agree with the total shown shares in the list as held by members on shares that date). Number of shares of each class issued shares subject to payment wholly in cash —- shares —- shares —- shares ———————————————————————- 1 Subs. by G.-S. R. 631, dated the 23rd April, 1966, for “Issued Share Capital”,see Gazette of India, 1966, Pt. II, See. 3(i), p. 789. ———————————————————————- 473 Number Class Number of shares of each class issued shares. as fully paid up for a considera- shares. tion other than cash….. shares. shares. Number of shares of each class issued shares as partly paid up for a considera- issued as paid tion other than cash and extent up to the ext- to which each such share is so ent of Rs. per paid up. share shares issued as paid upto the extent of Rs per share shares issued as paid up to the extent of Rs per share shares issued as paid up to the extent of Rs……..per share Number of shares (if any) of each.. shares class issued at a discount……… shares …………… shares …………… shares Amount of discount on the issue of Rs……. Rs shares which has not been written off at the date of last annual general meeting. Amount called.. Rs…per share on shares upon num- Rs…per share on…shares ber of shares of each…. Rs…per share on shares class. Rs…per share on…shares 474 Number Class Total amount of calls received, in- cluding payments on application and allotment and any sums re- ceived on shares forfeited. Rs……… Total amount (if any) agreed to be con- sidered as paid on shares number of shares shares of each class is- Rs on sued as fully paid shares up for a considera- sh as paid up to the extent of Rs……..per share Number of shares (if any) of each.. shares class issued at a discount……… shares …………… shares …………… shares Amount of discount on the issue of Rs……. Rs shares which has not been written off at the date of last annual general meeting. Amount called.. Rs…per share on shares upon num- Rs…per share on…shares ber of shares of each…. Rs…per share on shares class. Rs…per share on…shares 474 Number Class Total amount of calls received, in- cluding payments on application and allotment and any sums re- ceived on shares forfeited. Rs……… Total amount (if any) agreed to be con- sidered as paid on shares number of shares shares of each class is- Rs on sued as fully paid shares up for a considera- shares tion other than cash. Total amount (if any) agreed to be considered as paid on shares number of shares shares of each class is- sued as partly paid shares up for a conside- shares ration other than cash. Total amount of calls unpaid Rs…….. Total amount of the sums (if any) paid by way of commission in respect of any shares or debentures Rs………. Total amount of the- sums (if any) allowed by way of discount in res- pect of any debentures since the date of the annual general meet- ing with reference to which the last annual return was submitted Rs……….. Total number of shares of each class shares forfeited. shares shares shares 475 Total amount paid (if any) on shares Rs…….. forfeited. Total amount of shares for which share Rs…….. warrants to bearer are outstanding. Total amount of share warrants to bearer issued and surrendered res- pectively since the date of the Issued Rs……… annual general meeting with refer- Surrendered Rs…….. ence to which the last annual re- turn was submitted. Number of shares comprised in each share warrant to bearer, specifying in the case of warrants of different kinds, particulars of each kind. 4. Particulars of Indebtedness. Total amount of indebtedness of the company in respect of all charges (including mortgages) which are required to be registered with the Registrar under the Companies Act, 1956 or which would have been required so to be registered if created on or after the 1st April, 1914. Rs ——————————————————————– 5. 1[List of Past and Present Members and Debenture Holders] List of persons holding shares or stock in the company on the day of the annual general meeting, namely, the day of 19 ,and of persons who have held shares or stock therein at any time since the day of 19 when the previous annual meeting was ———————————————————————- 1 Subs. by Notifn. No. S.R.O. 1435, dated the 7th May, 1957, see Gazette of India, 1957, Pt. II, Sec. 3, p. 925, for “List of Past and Present Members”. ———————————————————————- 476 held, or in the case of the first return, at any time since the incorporation of the company. ——————————————————————— Folio in register Names, address, 1[Father’s/ Number of sha- ledger containing descriptions Husband’s res held by particulars and occupations, name] members at date if any of annual gene- ral meeting*. —————————————– Account of Shares —————————————– Particulars of shares transferred 2[Names of transferees R since the date of the previous an- or the relevant ledger e nual general meeting or, in the folio containing part- m case of the first return,since the iculars thereof.] a company, by (a) persons who are r still members and (b) persons who k have ceased to be members. s ——————————— Number Date of registration of transfer. ———————————————————————- (a) (b) ——————————————————————— 3[ In the case of a company which has issued debentures particulars about its debenture holders, past and present, should also be furnished under this item, adapting the. form suitably for the purpose.] *The aggregate number of shares held by each member must be stated, and the aggregates must be added up so as to agree with the number of shares stated in the summary of share capital and debentures to have been taken up. When the shares are ‘of different classes these columns should be subdivided so that the number of each class held, or transferred, may be shown separately. Where any shares have been converted into stock, the amount of stock held by each member must be shown. The date of registration of each transfer should be given as well as the number of shares transferred on each date. The particulars should be placed opposite the name of the transferor and not opposite that of the transferee, but the name of the transferee may be inserted in the ” Remarks ” column immediately opposite the particulars of each transfer. ——————————————————————— 1 Ins. by Notifn. No. G.S.R. 1408, dated the 19th December, 1959, see Gazette of India, 1959, Pt. II, See. 3(ii), p. 1710. 2 Ins. by G. S. R. 631 dated the 23rd April, 1966, see Gazette of India, 1966, Pt. II, See. 3(i), P. 789. 3 Ins. by Notifn. No. S.R.O. 1435, dated the 7th May. 1957, see Gazette of India, 1957, Pt. II, Sec. 3, P. 925. ——————————————————————— 476A Notes. 1[1. If either of the two immediately preceding returns has given, as at the date of the annual general meeting with reference to which it was submitted, the full particulars required as to the 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 or two changes as compared with that date in the number of shares held by a member.] 2. If the names in the list are not arranged in alphabetical order, an index sufficient to enable the name of any person to be readily found must be annexed. ——————————————————————— 1 Subs. by Notifn. No. G.S.R. dated the 21s February 1961, see Gazette of India, 1961, Pt. II, See. 3(i), p. 283. ———————————————————————

1[6. Particulars of Directors, Managing Agents, Secretaries and Treasurers, Managers and Secretaries, past and present. A. Particulars of the persons who are directors of the company on the day of the last annual general meeting, namely, the day of 19 and of persons who ceased to be directors on or before that date and since the date referred to in sub-clause (h) of clause 3 of Part I of Schedule V to the Companies Act, 1956, namely, the day of 19.. .. or, in the case of the first return, since the incorporation of the company. ——————————————————————— Present name or Any former Nationality and Usual name and surna- name or names nationality of residential me in full (a). and surname origin if diff- address. in full. erent from pres- ent nationality. ——————————————————————— 1 2 3 4 ——————————————————————— Business occupation, Date of Date of Date of cess- and particulars of birth. appointment. ation, if any. directorships (a) managing agencies, managerships held in other companies/ bodies corporate. ——————————————————————— 5 6 7 8 ——————————————————————— ——————————————————————— Note:-(a) Where the person holds the office of managing director, that fact should be specifically mentioned. ——————————————————————— ——————————————————————— 1 Subs. by Notifn. No. G.S.R. 279, dated the 17th April, 1958, see Gazette of India, 1958, Pt. II, Sec. 3(i), p. 206. ———————————————————————

B. Particulars of the person/persons who is/are managing agent/secretaries and treasurers of the company on the day of the last annual general meeting, namely, the day of 19 and of those who ceased to hold such offices on or before that date and since the date referred to in sub-clause (h) of clause 3 of Part I of Schedule V to the Act, namely, the day of 19 or, in the case of the to first return, since the incorporation of the company. ——————————————————————— Where the managing agent Any former name Nationality and is an individual, present or names and nationality of name or names and surname surname in full. origin if different in full. Where the manag- from present natio- ing agent is, or secreta- nality (b) and (c). ries and treasurers are, a firm , the firm name (b).Where the managing agent is, or secretaries and treasurers are, a body corporate, the corporate name (c). ——————————————————————— 1 2 3 ——————————————————————— Usual residential Particulars of Date of appoint- Date address. (In the managing agen- ment, as managing of case of a firm or cies, offices agent/secretaries cessa- body corporate, of secretaries and treasurers in tion. the registered or and treasures the company filing if principal office.) directorships the annual return. any. managerships and secret- aryships ( in the case of in- dividuals) held in other compa- nies/ bodies corporate. ——————————————————————— 4 5 6 7 ———————————————————————- ——————————————————————— NOTES:(b) In the case of a firm, the full name, address and nationality of each partner and the date on which each became a partner should be indicated. (c) In the case of a body corporate, its corporate name and re- gistered or principal office should be shown along with the full name, address and nationality of each of its directors.

C. Particulars of the person who is manager/secretary of the company on the day of the last annual general meeting, namely, the day of 19 and of the person(s) who ceased to be manager/secretary on or before that date and since the date referred to in sub-clause (h) of clause 3 of Part I of Schedule V to the Act, namely, the…. . day of…. 19……, or, in the case of the first return, since the incorporation of the company. ——————————————————————— Present name Any former name Nationality and Usual or names and or names and nationality of residential surname in surnames in full. origin, if diff- address. full. erent from pres- ent nationality. ——————————————————————— 1 2 3 4 ——————————————————————— Business, occupation and Date of Date of particulars of director- appointment. cessation, if any. ships (d) managing agen- cies, offices of secret- aries and treasurers, managerships and secret- aryships held in other companies/ bodies corporate. ——————————————————————— 5 6 7 ——————————————————————— ——————————————————————— NOTE: (d) Where the person holds the office of managing director, the fact should be specifically mentioned. Signed……………,Director, Signed……………,Director/Managing Director/Managing Agent/Secretaries and Treasurers/ Manager/Secretary.] 480 “Director” includes any person who occupies the position of a director by whatsoever name called, and any person in accordance with whose directions or instructions the Board of Directors of the company is accustomed to act. “Name” includes a “forename”, and “surname” in the case of a person usually known by a title different from his surname, means that title. “Former name” and “former surname” do not include- (a) in the case of a person usually known by a title different from his surname, the name by which he was known previous to the adoption of or succession to the title ; or (b) in the case of any person, a former name or surname where that name or surname was changed or disused before the person bearing the name attained the age of eighteen years or has been changed or disused for a period of not less than twenty years ; or (c) in the case of a married woman the name or surname by which she was known previous to the marriage. The names of all bodies corporate incorporated or carrying on business in India of which the director, managing agent, secretaries and treasurers, manager or secretary is also a director, managing agent, secretaries and treasurers, manager or secretary should be given, except bodies corporate of which the company making the return is the wholly-owned subsidiary or bodies corporate which are the wholly-owned subsidiaries either of the company or of another body corporate of which the company is the wholly-owned subsidiary. A body corporate is deemed to be the wholly-owned subsidiary of another if it has no members except that other and that other’s wholly-owned subsidiaries and its or their nominees. If the space provided in the form is insufficient, particulars of other directorships, managing agencies, offices of secretaries and treasurers, managerships, or secretaryships should be listed on a separate statement attached to this return. Dates of birth need only be given in the case of a company which is subject to section 280 of the Companies Act, 1956, namely, a company which is not a private company or which, being a private company, is the subsidiary of a public company. Where all the partners in a firm are joint secretaries, the name and principal office of the firm may be stated. *Delivered for filing by…………………………. 1* * * * * * 2[Certificate to be given by a Director and the Managing Agent/ Secretaries and Treasurers/Manager/Secretary or two Directors of every company: We certify that the return states the facts as they stood on the date of the annual general meeting aforesaid correctly and completely]. ——————————————————————— * This should be printed at the bottom of the first page of the return. 1 The heading ” CERTIFICATES AND OTHER DOCUMENTS ACCOMPANYING ANNUAL RETURN ” omitted by Notifn. No. S.R.O. 1435, dated the 7th May, 1957, see Gazette of India, 1957, Pt. II, Sec. 3, p. 925. 2 Ins. by Notifn. No. G.S.R. 1177, dated the 8th December, 1958, see Gazette of India, 1958, Pt. II, Sec. 3(i), p. 1217. ——————————————————————— 481 Certificate to be given by a Director and the Managing Agent/ Secretaries and Treasurers, Manager/Secretary or by/ two Directors of every Private Company We certify that the company has not since the date of [the in- corporation of the company/the annual general meeting with reference to which the last annual return was submitted] issued any invitation to the public to subscribe for any shares or debentures of the company. 1 [Signed…………… Director Signed……………… Director/Managing Director Managing Agent, Secretaries and Treasurers, Manager, Secretary.] Further Certificate to be given as aforesaid if the number of Members of the Company exceeds Fifty We certify that the excess of the number of members of the company over fifty consists wholly of persons who, under sub-clause (b)) of clause of section 3 of the Companies Act, 1956, are not to be included in reckoning the number of fifty. 1 [Signed………….Director Signed…………….Director/Managing Director Managing Agent, Secretaries and Treasurers, Manager, Secretary.] 2* * * * * * ——————————————————————— In the case of the first return strike out the second alternative. In the case of a second or subsequent return strike out the first alternative. 1 Subs. by Notifn. No. G.S.R. 279, dated the 17th April, 1958, see Gazette of India, 1958. Pt. II, Sec. 3(i), P. 206. 2 The heading “Certified copies of Accounts” and the paragraph thereunder omitted by Notifn. No. S.R.O. 1435, dated the 7th May, 1957, see Gazette of India, 1957, Pt. II, Sec. 3, p. 925. ——————————————————————— 482 1[7. Names and addresses of, and number of equity shares held, by each of the following, namely: (folio Nos. may also, be given). ——————————————————————— No. Amount of of the Shares total equity share capital ——————————————————————— (a) Foreign holdings (i) Foreign collaborators . . . . . .. (ii) Foreign Financial institutions . . . … (iii) Foreign nationals . . . . . . .. ———————– TOTAL. .. . .. .. ———————– (b) Governments/Government sponsored Financial Institutions (i) Life Insurance Corporation of India .. . . (ii) Unit Trust of India . . .. . . (iii) Industrial Finance Corporation . .. . . (iv) Industrial Development Bank of India . . … . (v) Industrial Credit and Investment Corporation of India . .. . . (vi) General Insurance Corporation of India . . . (vii) Nationalised Banks . . . . . (viii) Government companies . . . . . (ix) Central Government . . . . . . (x) State Governments . . . . . . (vi) State Financial Corporations . . . . . . ———————— TOTAL . .. .. .. ————————- (c) Bodies Corporated [not covered under (a) and (b) above] . . … .. . . ——————————————————————— 1 Ins. by Notifn. No. G.S.R. 1519, dated 15-10-1976. ——————————————————————— 482A (d) Directors and their relatives (as defined in section 6), their share holdings and directorships . . . . . . .. .. . (e) Other top 50 share-holders (other than those listed above) . . . . . . .. . 482B SCHEDULE VI

[See section 211]

PART 1[PART I-FORM OF BALANCE-SHEET Balance-Sheet of…………(Here enter the name of the company) As at …….(Here enter the date as at which the balance-sheet is made out) 2[The Balance sheet of a Company shall be either in horizental or vertical form: A-Horizental form] ———————————————————————- Instructions in LIABILITIES ASSETS accordance with —————————————————– liabilities Figures Figures Figures Figures should be made for the for the for the for the out previous current previous current year year year year ——————————————————————— *Terms of rede- Rs. Rs. Rs. Rs. mption or conv- (b) (b) (b) (b) ersion (if any) of any redeema- *SHARE CAPITAL : *FIXED ASSETS : ble preference capital to be Authorised…… Distinguishing as far as stated, toget- shares of Rs…. possible between expen- her with earli- each. Issued (di- diture upon (a) goodwill, est date of stinguishing bet- (b) land, (c) buildings, redemption or ween the various (d) leaseholds,(e) rail- conversion. classes of capital way sidings, (f) plant and stating the and machinery, (g) furn- Particulars of particulars spec- iture and fittings, (h) any option on ified below, in development of property unissued share respect of each (i)patents, trade marks capital to be class)……… and designs, (j) live- specified. shares of Rs…. stock and (k) vehicles, each. Subscribed etc. Particulars of (distinguishing the different between the va- classes of rious classes of preference capital and sta- shares to be ting the partic- given. ulars specified below, in respe- ct of each class.) (c)….shares of Rs……..each. Rs…..called up. ———————————————————————- Instructions in accordance with which assets should be made out ———————————————————————- *Under each head the original cost, and the additions thereto and deductions therefrom during the year, and the total depreciation written off or provided up to the end of the year to be stated. 3[Where the original cost aforesaid and additions and deductions thereto, relates to any fixed asset which has been acquired from country outside lndia and in consequence of a change in the rate of exchange at any time after the acquisition of such asset, there has been an increase or reduction in the liability of the company, as expressed in Indian currency, for making payment towards the whole or a part of the cost of the asset or for repayment of the whole or a part of monies borrowed by the company.
Of the above shares,…. shares are allotted as fully paid up pursuant to a contract without payments being recei- ved in cash. from any, person, directly or indirectly, in any foreign currency specifically for the purpose of acquiring the asset (being in either case the liability existing immediately before the date on which the change in the rate of exchange takes effect), the amount by which the liability is so increased or reduced during the year, shall be added to, or, as the case may be, deducted from the cost, and the amound arrived at after such addition or deduction shall be taken to be the cost of the fixed asset. Explanation 1.–This paragraph shall apply in relation to all balance-sheets that may be made out as at the 6th day of June, 1966, or any date thereafter and where at the date of issue of the notification of the Government of India, in the Ministery of Industrial Deve- lopment and Company Affairs (Department of Company Affairs), G.S.R. No. 129 dated the 3rd day of January, 1968, any balance-sheet, in relation to which this paragraph applies, has already been made out and laid before the com- pany in Annual General Meeting, the adjustment referred to in this paragraph may be made in the first balance-sheet made out after the issue of the aid notification. Explanation 2.-In this paragraph, unless the context otherwise re- ———————————————————————- ——————————————————————— 1 Subs. by Act 65 of 1960, s. 217, for the original Part I. 2 Ins. by Notifn. No. G.S.R. 129, dated the 3rd January, 1968, see Gazette of India, Part. II, Sec. 3(i), p.105. ———————————————————————

——————————————————————— Instructions LIABILITIES ASSETS in accordance ——————————————————- with which Figures Figures Figures Figures liabilities for the for the for the for the should be previous current previous current made out year year year year ——————————————————————— Rs. Rs. Rs. Rs. (b) (b) (b) (b) 2 *Specify, the 1[of the above shares…. source from shares are allotted as which bonus shares are issued e.g., capitalisation. ——————————————————————— Instructions in accordance with which assets should be made out ——————————————————————— quires the expressions rate of exchange”, “foreign currency” and “Indian currency” shall have the meanings respectively assigned to

them under sub-section (1) of section 43A of the Income-tax Act 4961 (43 of 1961), and Explanation 2 and Explanation 3 of the said Sub-section shall as they- as may be’ apply in relation to the said paragraph as they apply

to the said subsection (1).] 1[In every case where the original cost can not be ascertained, without unreasonable expense or delay the valuation shown by the books shall be given. For the purposes of this paragraph, such valuation shall be the net amount at which an asset stood in the company’s books at the commencement of this Act after deduction of the amounts previously provided or written off for depreciation or depreciation in value, and where any Such asset is sold, the amount of sales proceeds shall be shown as deduction.]

of profits fully paid up by way Where sums have been or Reserves of bonus shares*.] written off on a re- or from Sh- duction of capital are Premium Less: Calls unpaid : or a revaluation of Account.] assets, every balan- (i) By managing age- ce-sheet (after the nt or secretaries and first balance-sheet) treasurers and where sub-sequent to the them an aging agent or reduction or reva- 2[Any capital secretaries and tre- lution shall show profit on re- asurers are afirm, the reduced figures issue of for- by the partners and with the date of feited shares thereof, and where the reduction in should be the managing agent place of the origi- transferred or secretaries and nal cost. to Capital treasurers are a Reserve.] private company Each balance-sheet by the directors for the first five or members of that years subsequent to company. the date of the reduction, shall (ii) By directors. show also the amount of the reduc- (iii) By others. tion made. [Add: Forfeited Similarly, where shares (amount sums have been originally paid added by writing up).] up the assets, every balance-sheet subsequent to such writing up shall show the increased figures with the date of the ——————————————————————— 1 Subs. by Notifn. No. G.S.R. 414, dated the 21st March, 1961, see Gazette of India, Extraordinary, Pt. II, Sec. 3(i) p. 117. 2 Ins., ibid. ———————————————————————

——————————————————————— Instructions LIABILITIES ASSETS in accordance ——————————————————- with which Figures Figures Figures Figures liabilities for the for the for the for the should be previous current previous current made out year year year year ——————————————————————— Rs. Rs. Rs. Rs. (b) (b) (b) (b) *Additions and *RESERVES AND INVESTMENTS : deductions si- SURPLUS : nce last bala-

ce-sheet to be 2[(1) Capital Showing nature of investments shown, under Reserves. and mode of valuation, for each of the example cost or market value

specified (2) Capital and distinguishing between– heads. Redemption

Reserve. *(1) Investments in Government

2[The word ” (3) Share or Trust Securities. fund” in rel- Premium Ac-

ation to any count (cc). *(2) Investments in shares, “Reserve” debentures or bonds (showing

should be (4) Other separately shares, fully paid used only Reserves sp- up and partly paid up and also where such ecifying the distinguishing the different Reserve is nature of classes of shares and showing specifically each reserve also in similar details represented and the amount investments by earmarked in respect investments.] thereof. Less : Debit balance in profit and loss account (if any) (h). ——————————————————————— ——————————————————————— Instructions in accordance with which assets should be made out ——————————————————————— increase in place of the original cost. Each balance-sheet for the first five years subsequent to the date of writing up shall also show the amount of increase made. 1[Explanation.- Nothing contained in the preceding two paragraphs shall apply to any adjustment made in accordance with the second paragraph.] *Aggregate amount of company’s quoted investments and also the market value thereof shall be shown. Aggregate amount of company’s unquoted investments shall also be shown. ———————————————————————- 486/1

1[Loans from Directors, (5)Surplus, i.e., balance in profit the Managing Agents, Se- and loss account after providing cretaries and Trea- for proposed allocations, namely: surers,Manager should be shown separately. Dividend, Bonus or Reserves. Interest accrued and

due on Unsecured Loans (6) Proposed additions to Reserves. should be included u-

nder the appropriate sub- (7) Sinking Funds.] heads under the head “UNSECURED LOANS”]. SECURED LOANS:

*The nature of the security *(1)Debentures.to be specified in each case.

Where loans have been *(2) Loans and Advances from Banks. guaranteed by managing agents,

secretaries and treasurers, *(3) Loans and Advances from subsi- managers,and or directors, a diaries. mention thereof shall also be

*(4)Other Loans and Advances. in shares, debentures or bonds of subsidiary companies.

(3) Immovable properties.

3[(4) Investments in the capital of partnership Firms.] CURRENT ASSETS, LOANS AND ADVANCES: (A) CURRENT ASSETS

(1)Interest accrued on [[Mode of valuation of stock shall Investments. be stated and the amount in respect of raw materials shall also be sta- PART INTERPRETATION. PART III.-INTERPRETATION

7. (1) For the purposes of Parts I and II of this Schedule, unless the context otherwise requires,- (a)the expression “provision” shall, subject to sub-clause

(2) of this clause, mean any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets, or retained by way of providing for any known liability of which the amount cannot be determined with substantial accuracy. (b) the expression “reserve” shall not, subject as aforesaid,include any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets or retained by way of providing for any known liability; (c)the expression “capital reserve” shall not include any amount regarded is free for distribution through the profit and loss account; and the expression “revenue reserve” shall mean any reserve other than a capital reserve ; and in this sub-clause the expression “liability” shall include all liabilities in respect of expenditure contracted for and all disputed or contingent liabilities.

(2) Where- (a)any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets, not being an amount written off in relation to fixed assets before the commencement of this Act ; or (b)any amount retained by way of providing for any known liability ; is in excess of the amount which in the opinion of the directors is reasonably necessary for the purpose, the excess shall be treated for the purposes of this Schedule as a reserve and not as a Provision. 8.For the purposes aforesaid, the expression “quoted investment ” means an investment as respects which there has been granted 498 a quotation or permission to deal on a recognised stock exchange, and the expression “unquoted investment” shall be construed accordingly. SCHE SCHEDULE VII (See sections 368 and 379) RESTRICTIONS ON POWERS OF MANAGING AGENT/SECRETARIES AND TREASURERS The managing agent/secretaries and treasures shall not exercise any of following powers except after obtaining the previous approval of the Board of directors of the company in regard to each such exercise: – 2* * * * * *

(2) Power to appoint as an officer or member of the staff of the company, payable from its funds (as distinguished from the funds of the managing agent,/secretaries and treasures or from out of any remuneration payable to him/them by the company), any person– (a)on a remuneration or scale of remuneration exceeding the limits laid down by the Board in this behalf ; or (b)who is a relative of the managing agent, or where the managing agent is a firm, of any partner in secretaries and treasurers are managing agent is/the firm, or where the- managing agent is/secretaries and treasures/are a firm of any partner in the firm, or where the -managing agent is/secretaries and treasurers are a private company, of any director or member of such company;

(3) Power to purchase capital assets for the company except where the purchase price is within the limits prescribed by the Board in this behalf

(4) Power to sell the capital assets of the company, except where the sale price is within the limits prescribed by the Board in this behalf ;

(5) Power to compound, or sanction the extension of time for the satisfaction or payment of, any claim or demand of ————————————————————————

1 Cl. (1) omitted by Act 65 of 1960, s. 218. ————————————————————————- 499 the company against (including any debt claimed to be due to it from) the – managing agent/secretaries and treasures or any associate of the-managing agent /secretaries and treasurers;

(6) Power to compound any claim or demand made against the company (including any debt claimed to be due from it) by the– managing agent/secretaries and treasures. or any associate of -managing agent/secretaries and treasurers. SCHE SCHEDULE VIII (See sections 347 and 379) DECLARATIONS TO BE MADE BY FIRMS, PRIVATE COMPANIES AND OTHER BODIES CORPORATE ACTING AS-MANAGING AGENTS /SECRETARIES AND TREASURERS Definition

1. (1) In this Schedule, ” relevant date ” means- (a)in the case of a firm or body corporate holding office at the commencement of this Act as the managing agent/ secretaries and treasurers of a company, the date of such commencement; and (b)in the case of a firm or body corporate appointed or re- appointed after the commencement of this Act as the managing agent/secretaries and treasures of a company, the date of such appointment or re-appointment.

(2) For the purposes of sub-clause (1), the expressions “re- appointment” and “re-appointed” shall have the same meaning as they

have for the purposes of sub-section (1) of section 328. Firms 2. Every firm acting as the managing agent/secretaries and treasures of any 500 company or companies shall file with each company, whether public or private, of which it acts as such, a declaration specifying- (a) the names of the partners constituting the firm on the relevant date ; (b)the share, or the extent of the interest, of each partner in the firm, on the relevant date ; (c) the names of persons, if any, other than partners, who are interested, on the relevant date, in any share of, or amount forming part of, the remuneration payable to the managing agent/secretaries and treasures by the company ; and the extent of the interest of each such person in such remuneration. 3.The declaration shall be signed by a partner of the firm and shall be filed within one month of the relevant date. 4.If any change occurs in regard to any of the matters specified in clause 2 after the relevant date, a declaration specifying the change and signed by a partner of the firm shall be filed, within three weeks of the occurrence of the change, with each of the com- panies referred to in that clause. Private Companies 5. Every private company which acts as managing agent/secretaries and treasurers of any other company or companies, whether public or private, shall file with each of those companies, a declaration specifying- (a)the names of the members of the private company on the relevant date ; (b)where the private company has a share capital, the shares held by each member of the company, on that date ; (c)where the private company has no share capital, the extent of the interest of each member of the company in it on that date; (d) the manner in which each such member holds his shares or interest, that is to say, whether he holds the same beneficially, or on behalf of or in trust for any other person ; and in the latter case, the name or names of the person or persons on whose behalf or in trust for whom 501 the shares or interest is held and the extent of the interest of each such person ; (e) the names of the directors of the private company, and the name of its managing director, if any; (f) the names of persons, if any, who are interested in any share of, or amount forming part of, the remuneration payable to the private company by the company under its management, otherwise than as members of the private company ; and the extent of the interest of each such person in such remuneration; (g)that no arrangement has been entered into to the knowledge of the private company, under which the control of the private company is vested in any persons other than the members of the company and the persons referred to in sub- clause (d): Provided that the obligation to furnish information on the matters specified in sub-clauses (d) and (f) shall extend only to such particulars relating to those matters as are within the knowledge of the private company. 6.The declaration shall be signed by a director of the private company and shall be filed within two months of the relevant date. 7.If, to the knowledge of the private company, there is a sale or transfer of any shares in the company or an agreement has been entered into, for the sale or transfer of any such shares, or any other change occurs in regard to any of the matters specified in clause 5, a declaration specifying the sale, transfer, agreement or change and signed by a director of the company shall be filed, within six weeks thereof, with each of the companies referred to in that clause, 8.Where any shares are sold or transferred or agreed to be sold or transferred, the declaration referred to in clause 7 shall specify the name of the person or persons who part with or have agreed to part with the shares and also the name or names of the person or persons who acquire or have agreed to acquire them, with full details of the sale, transfer or agreement. 502 Other Bodies Corporate 9. The provisions of clauses 5 to 8 shall apply to every body corporate (other than a private company) acting as the managing agent/secretaries and treasures of any company, unless it is exempt from the operation of the provisions of this Schedule by virtue of section 347/ section 379 read with section 347. General

10. (1) All declarations filed with any company in pursuance of this Schedule shall be open to inspection, and extracts may be taken therefrom and copies thereof may be required, by any member of the company to the same extent, in the same manner and on payment of the same fee as in the case of the register of members of the company.

(2) All such declarations shall also be open to inspection by any director of the company, free of charge. SCHE SCHEDULE IX FORM OF PROXY

[See Article 62 of the Table A and also section 176 (6)]

I General Form “.. ………………… Name of Company, I/We……. of………….. in the district of…………being-a member/members of the above-named Company hereby appoint…………….of……………in the district of…………..or falling him, ……………..of…….in the district of ……………as-my/our proxy to vote for -me/use behalf at the annual general meeting/ general meeting not being an annual general meeting of the company to be held on the ……….day of…….and at any adjournment thereof. Signed this……………….day of………………..” 502/1 II Form for affording members an opportunity of voting for or against a resolution 1[*] “………………………..Name of Company I/We …………..of…………in…..the district of………….,being a member/members of the above-named Company, hereby appoint………………….of………….in the district of…….or falling him,…………of……………in the district of…………..as my/our proxy to vote for me/us on my/our behalf at the annual general meeting /general meeting (not being an annual general meeting) of the company, to be held on the ……….day of……..and at any adjournment thereof. Signed this…………….day of…………………..” ———————————————————————- 1 [*This form is…to be used-in favour of/against the resolution. Unless otherwise instructed the proxy will act as he thinks fit.
[Strike out whichever is not desired.]

SCHE (See sections 574 and 611) SCHEDULE X (See sections 574 and 611) TABLE OF FEES TO BE PAID TO THE REGISTRAR 2[1. in respect of a company having a share capital Rs. nP. 3[1. For registration of a company whose nominal share capital does not exceed Rs. 20,000. a fee of. 200.00 2.For registration of a company whose nominal share capital exceeds Rs. 20,000, the above fee of Rs. 200.00 with the following additional fees regulated according to the amount of nominal capital:- ———————————————————————– 1 Ins. by Notifn. No. S.R.O. 1977, dated the 1st September, 1956, see Gazette of India, 1956, Pt. 11, Sec. 3, p. 1487. 2 Subs. by Notifn. No. S.R.O. 3134, dated the 21st December, 1956, see Gazette of India, Extraordinary, Pt. 11, Sec. 3, p. 2685. 3 Subs. by Notifn. No. G.S.R. 260 (E), dated the 24th April, 1972, see Gazette of India, Extraordinary, Pt. 11, Sec. 3(i), p. 646. ———————————————————————- 502/2. Rs. nP. (a) For every Rs. 10,000 of nominal share capital or part of Rs. 10,000 after the first Rs. 20,000 up to Rs. 50,000 100.00 (b) For every Rs. 10,000 of nominal share capital or part of Rs. 10,000 after the first Rs. 50,000 up to Rs. 5,00,000 50.00 (c)For every Rs. 10,000 of nominal share capital or part of Rs. 10,000 after the first Rs. 5,00,000 up to Rs.10,00,000 30.00 (d) For every Rs. 10,000 of nominal share capital or part of Rs. 10,000 after the first Rs. 10,00,000 up to Rs. 25,00,000 20.00 (e) For every Rs. 10,000 of nominal share capital or part of Rs. 10,000 after the first Rs. 25,00,000 15.00 1[Provided that where the additional fees, regulated according to the amount of the nominal capital of a company, exceeds a sum of rupees forty lakhs, the total amount of additional fees payable for the registration of such company shall not, in any case, exceed rupees forty lakhs.) 2[3. For filing a notice of any increase in the nominal share capital of a company, the difference between the fees payable on the date of filing the notice for the registration of a company with a nominal share capital equal to the increased share capital and the fees payable, on such date, for the registration of a company with a share capital equal to the nominal share capital of the company filing the notice immediately before the increase.] 4.For registration of any existing company, except such companies as are by this Act exempted from payment of fees in respect of registration under this Act, the same fee as is charged for registering a new company. ———————————————————————– 1 Ins. by Notifn No. G.S.R. 3(E), dated the 6th January, 1973, see Gazette of India, Extraordinary, Pt. 11, Sec. 3(i), p. 7. 2 Subs. by Notifn. No. S.R.O. 1281, dated the 23rd April, 1957, see Gazette of India, Extraordinary, Pt. 11, Sec. 3, p. 1491. ———————————————————————— 502/3. Rs. nP. 1[5. For filing, registering or recording any documents by this Act required or authorised to be filed,registered or recorded- (a) in respect of a company having a. nominal share capital of less than Rs. 1,00,000, a fee of 15.00 (b) in respect of a company having a nominal share capital of Rs. 1,00,000 or more but less than Rs. 5,00,000, a fee of 30.00 (c) in respect of a company having a nominal share capital of Rs. 5,00,000 or more but less than Rs. 25,00,000, a fee of 50.00 (d) in respect of a company having a nominal share capital of Rs. 25,00,000 or more, a fee of 60.00 6.For making a record of or registering any fact by this Act required or authorised to be recorded or registered by the Registrar,- (a)in respect of a company having a nominal share capital of less than Rs. 1,00,000, a fee of 15.00 (b) in respect of a company having a nominal share capital of Rs. 1,00,000 or more but less than Rs. 5,00,000, a fee of 30.00 (c) in respect of a company having a nominal share capital of Rs. 5,00,000 or more but less than Rs. 25,00,000, a fee of 50.00 (d) in respect of a company having a nominal share capital of Rs. 25,00,000 or more, a fee of 60.00] 2 [II. in respect of a company not having a share capital] 1[7. For registration of a company whose number of members as stated in the articles of association, does not exceed 20, a fee of 80.00 8.For registration of a company whose number of members as stated in the articles of association, exceeds 20 but does not exceed 100, a fee of 200.00 ———————————————————————- 1 Subs. by Notifn. No. G.S.R. 260(E), dated the 24th April, 1972, see Gazette of India, Extraordinary, Pt. II, Sec. 3(i), p. 647. 2 Subs. by Notifn. No. S.R.O. 3134, dated the 21st December, 1956, see Gazette of India, Extraordinary, Pt. II, Sec. 3, p. 2685. ———————————————————————- 502/4. Rs. nP. 9. For registration of a company whose number of members as stated in the articles of association, exceed 100, but is not stated to be unlimited, the above fee of Rs. 200 with an additional Rs. 5 for every 50 members, or less number than 50 members, after the first 100. 10. For registration of a ‘company in which the number of members is stated in the articles of association to be unlimited, a fee of 800.00 11. For registration of any increase on the number of members made after the registration of the company, the same fee as would have been payable in respect of such increase, if such increase had been stated in the articles of association at the time of registration: Provided that no company shall be liable to pay on the whole a greater fee than Rs. 800 in respect of its number, of members, taking into account the fee paid on the first registration of the company. 12. For registration of any existing company except such companies as are by this Act exempted from payment of fees in respect of registration under this Act, the same fee as is charged for registering a new company. 13. For filing or registering any document by this Act required or authorised to be filed or registered with the Registrar, a fee of 10.00 14.For making a record of or registering any fact by this Act required or authorised to be recorded or registered by the Registrar, a fee of 10.00] ———————————————————————– 1 Ins. by Notifn. No. G.S.R. 813, dated the 14th June, 1961, see Gazette of India, 1961, Pt. II, Sec. 3(i), p. 895. 2 Subs. by Notifn. No. G.S.R. 260(E), dated the 24th April, 1972, see Gazette of India, Extraordinary, Pt. II, Sec. 3(i), p. 647. 3. Omitted by Notfin No. G.S.R. 576 (E), dt. 16-7-1985 Gaz. of India, exty, Pt. II. Sec. 3(i). ———————————————————————– 502/5. SCHE SCHEDULE XI (See section 406) FORM IN WHICH SECTIONS 539 To 544 OF ACT ARE TO APPLY TO CASES WHERE AN APPLICATION IS MADE UNDER SECTION 397 OR 398
539.Penalty for falsification of books. If with intent to defraud or deceive any person, any officer or member of a company in respect of which an application has been made under section 397 or 398- (a)destroys, mutilates, alters, falsifies or secretes any books, papers or securities, or is privy to the destruction, mutilation, alteration, falsification, or secreting of any books, papers or securities; or 503 (b)makes, or is privy to the making of, any false or fraudulent entry in any register, book of account or document belonging to the company, he shall be punishable with imprisonment for a term which may extend to seven years, and shall also be liable to fine.

Penalty for frauds by officers. 540.Penalty for frauds by officers.If any person, being at the time of the commission of the alleged offence, an officer of a company in respect of which the 1[Company Law Board] subsequently makes an order under section 397 or 398,- (a) has, by false pretences or by means of any other fraud, induced any person to give credit to the company; (b)with intent to defraud creditors of the company, has made or caused to be made any gift or transfer of or charge on, or has caused or connived at the levying of any execution against, the property of the company ; or (c)with intent to defraud creditors of the company, has concealed or removed any part of the property of the company since the date of any unsatisfied judgment or order for payment of money obtained against the company, or within two months before that date; he shall be punishable with imprisonment for a term which may extend to two years and shall also be liable to fine.

541.Liability where proper accounts not kept. (1) Where an application has been made to the 1[Company Law Board] section 397 or 398 in respect of a company, if it is shown that proper books of account were not kept by the company throughout the period of two years immediately preceding the making of the application, or the period between the incorporation of the company and the making of the application, whichever is shorter, every officer of the company who is in default shall, unless he shows that he acted honestly and that in the circumstances in which the business of the company was carried on, the default was excusable, be punishable with imprisonment for a term which may extend to one year.

(2) For the purposes of this section, proper books of account shall be deemed not to have been kept in the case of any company, if there have not been kept- (a) such books or accounts as are necessary to exhibit and explain the transactions and financial position of the business of the company, including books containing entries made from day to day in sufficient detail of all cash received and all cash-paid; and ———————————————————————– 1 Subs. by Act 31 of 1988, s. 67 (w.e.f. 31-5-1991). ———————————————————————– 504 (b) where the business of the company has involved dealings in goods, statements of the annual stocktakings and (except in the case of goods sold by way of ordinary retail trade) of all goods sold and purchased showing the goods and the buyers and sellers thereof in sufficient detail to enable those goods and those buyers and sellers to be identified.

542.Liability for fraudulent conduct of business. (1) If in the course of the proceedings on an application made to the 1[Company Law Board] under section 397 or 398 in respect of a company, it appears that any business of the company has been carried on with intent to defraud creditors of the company, or any other persons, or for any fraudulent purpose, the 1[Company Law Board] may, if it thinks it proper so to be declare that any persons who were knowingly parties to the carrying on of the business in the manner aforesaid shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the 1[Company Law Board] may direct.

(2) (a) where the 1[Company Low Board] makes any such declaration, it may give such further directions as it thinks proper for the purpose of giving effect to that declaration. (b) In particular the 1[Company Law Board] may make provision for making the liability of any such person under the declaration a charge on any debt or obligation due from the company to him, or on any mortgage or charge or any interest in any mortgage or charge on any assets of the company held by or vested in him, or any person on his behalf, or any person claiming as assignee from or through the person liable or any person acting on his behalf. (C) The 1[Company Law Board ] may, from time to time, make such further order as may be necessary for the purpose of enforcing any charge imposed under this sub-section. (d) For the purpose of this sub-section, the expression “assignee” includes any person to whom or in whose favour, by the directions of the person liable, the debt, obligation, mortgage or charge was created, issued or transferred or the interest was created, but does not include an assignee for valuable consideration (not including consideration by way of marriage) given in good faith and without notice of any of the matters on the ground of which the declaration is made.

(3) Where any business of a company is carried on with such intent or

for such purpose as is mentioned in sub-section (1), every person who was knowingly a party to the carrying on of the business in the manner aforesaid, shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to five thou- sand rupees, or with both. ——————————————————————— 1. Subs. by Act 31 of 1988, s. 67 (w.e.f. 31-5-1991). ———————————————————————

(4) This section shall apply, notwithstanding that the person concerned may be criminally liable in respect of the matters on the ground of which the declaration is to be made.

543.Power of Company Law Board to assess damages against

delinquent directors, etc.(1) If, in the course of the proceedings on an application made to the 1[Company low board] under section 397 or 398, it appears that any person who has taken part in the promotion or formation of the company, or any past or present director, managing agent, secretaries and treasurers, manager or officer of the company- (a)has misapplied or retained or become liable or accountable for any money or property of the company, or (b)has been guilty of any misfeasance or breach of trust in relation to the company; the 1[Company law board] may, on the application of any creditor or member, examine into the conduct of such person, director, managing agent, secretaries and treasurers, manager or officer aforesaid, and compel him to repay or restore the money or property or any part thereof respectively,with interest at such rate as the 1[Company law board] thinks just or to contribute such sum to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust as the 1[Company Law Board] thinks just.

(2) This section shall apply notwithstanding that the matter is one for which the person concerned may be criminally liable.

544.Liability under sections 542 and 543 to extend to partners or directors in firm or company. Where a declaration under section 542 or an order under section 543 is or may be made in respect of a firm or body corporate,the 1[Company Law Board]shall also have power to make a declaration under section. 542 or pass an order under section 543, as the case may be, in respect of any person who is a partner in that firm or a director of that body corporate. ———————————————————————– 1 Subs. by Act 31 of 1988, s. 67 (w.e.f. 31-5-1991). ———————————————————————– 506 SCHE SCHEDULE XII (See section 644) Rates of depreciation ENACTMENTS REPEALED ——————————————————————— Year No. Subject of short title 1 2 3 ——————————————————————— 1913 7 The Indian Companies Act, 1913. 1942 54 The Registration of Transferred Companies Ordinance. 1951 52 The Indian Companies (Amendment) Act, 1951. 1952 51 The Indian Companies (Amendment) Act, 1952. ——————————————————————— SCHE (See sections 198, 269, 310 and 311) 3[SCHEDULE XIII (See sections 198, 269, 310 and 311) CONDITIONS TO BE FULFILLED FOR THE APPOINTMENT OF A MANAGING OR WHOLE-TIME DIRECTOR OR A MANAGER WITHOUT THE APPROVAL OF THE CENTRAL GOVERNMENT PART Appointments. PART I Appointments 1. No person shall be eligible for appointment as a managing or whole-time director or a manager of a company unless he satisfies the following conditions, namely:- (a) he had not been sentenced to imprisonment for any period, or to a fine exceeding one thousand rupees, for the conviction of an offence under any of the following Acts, namely: – (i) The Indian Stamp Act, 1899 (2 of 1899), (ii) The Central Excises and Salt Act, 1944 (1 of 1944), (iii) The Imports and Exports (Control) Act, 1947 (18 of 1947), (iv) The Industries (Development and Regulation) Act, 1951 (65 of 1951), (v) The Prevention of Food Adulteration Act, 1954 (37 of 1954), (vi) The Essential Commodities Act, 1955 (10 of 1955), (vii)The Companies Act, 1956 (1 of 1956), (viii) The Wealth-tax Act, 1957 (27 of 1957), (ix) The Income-tax Act, 1961 (43 of 1961), (x) The Customs Act, 1962 (52 of 1962), (xi) The Gold (Control) Act, 1968 (45 of 1968), (xii) The Monopolies and Restrictive Trade Practices Act, 1.969 (54 of 1969), (xiii) The Foreign Exchange Regulation Act, 1973 (46 of 1973); (b) he had not been detained for any period under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974: Provided that where the Central Government has given its approval to the appointment of a person convicted or detained under sub- paragraph (a) or sub-paragraph (b), as the case may be, no further approval of the Central Government shall be necessary for the subsequent appointment of that person if he had not been so convicted or detained subsequent to such approval; (c) he has completed the age of thirty years and has not attained the age of sixty-five years or the age of retirement, if any, specified by the company, whichever is earlier; (d) he is not a managing or whole-time director or manager in any other company or a managing partner of a firm, or is not in whole-time employment anywhere; (e) he is a citizen of India and is resident in India; (f) if the company had suffered loss or had inadequate profits during the financial year immediately preceding the financial year in which the appointment is made (hereinafter referred to as the preceding financial year) or in any of the three financial years in the four financial years immediately preceding the preceding financial year. PART Remuneration. PART II Remuneration 2. Subject to the ceiling limits laid down in section 198 and section 309, remuneration by way of salary, commission or both and perquisites shall not exceed the following limits, namely:- Salary:-Rupees 1,80,000/- per annum or rupees 15,000/- per month including dearness and all other allowances calculated in the following scale:- where the effective capital of monthly salary payable the Company is– shall not exceed- (i) less than 20 lakhs rupees rupees 6,000/- (ii) rupees 20 lakhs or more rupees 7,500/- but less than rupees 50 lakhs (iii) rupees 50 lakhs or more rupees 9,000/- but less than rupees 1 crore (iv) rupees 1 crore or more rupees 11,000/- but less than rupees 3 crore (v) rupees 3 crores or more rupees 13,000/- but less than rupees 5 crores (vi) rupees 5 crores or more rupees 15,000/-. Explanation.-For the purposes of this Part, “effective capital” means the aggregate of the paid-up share capital amount, if any, for the time being standing to the credit of share premium account, reserves and surplus, long-term loans and deposits received, if any, as reduced by the aggregate of any investments, accumulated losses and preliminary expenses, not written off. Commission: – (i) In case commission is also payable along with the salary, it shall not be more than one per cent. of the net profits of the company, subject to a ceiling of fifty per cent. of the salary or Rs. 90,000/- per annum, whichever is less. (ii) Where it is Proposed to pay remuneration by way of commission only, such commission shall not exceed the fol- lowing limits, namely:- where the effective capital Commission payable an- of the company is- nually shall not exceed- (a) less than 20 lakhs rupees 1,08,000/- rupees (b) rupees 20 lakhs or rupees 1,35,0001- more but less than rupees 50 lakhs (c) rupees 50 lakhs or rupees 1,62,000/- more but less than rupees 1 crore (d) rupees 1 crore or rupees 1,98,000/- more but less than rupees 3 crores (e) rupees 3 crores or rupees 2,34,000/- more but less than rupees 5 crores. (f) rupees 5 crores or rupees 2,70,000/- more Perquisites ; – Perquisites may be allowed in addition to salary and/or commission or both. In the case of persons posted at Bombay, Calcutta, Delhi and Madras, perquisites shall be restricted to an amount equal to the annual salary or Rs. 1,35,000/- per annum, whichever is less. In the case of persons posted at other places, perquisites shall be restricted to an amount equal to the annual salary or Rs. 1,15,000/- per annum, whichever is less. Unless the context otherwise requires, perquisites are classified into three categories ‘A’, ‘B’ and ‘C’ as follows: Category-A This will comprise house rent allowance, leave travel concession, medical reimbursement, fees on clubs and personal accident insurance. These may be provided for as under: – (i) Housing I.-The expenditure by companies on hiring unfurnished accommodation for the appointee will be subject to the following ceilings:- (a) Bombay, Calcutta, Delhi and Madras: Sixty per cent. of the salary, over and above ten per cent. payable by the appointee. (b) other places : Fifty per cent. of the salary, over and above ten per cent. payable by the appointee. Housing IL-In case the accommodation is owned by the company, ten per cent. of the salary of the appointee shall be deducted by the company. Housing III.-In case no accommodation is provided by the company, the appointee shall be entitled to house-rent allowance subject to the ceilings laid down in Housing I. Explanation.-The expenditure incurred by companies on gas, electricity, water and furnishings shall be valued as per the Income-tax Rules, 1962. This shall, however, be subject to a ceiling of ten per cent. of the salary of the person proposed to be appointed. (ii) Medical reimbursement-Expenses incurred for the person to be appointed and the family subject to a ceiling of one month’s salary in a year or three months’ salary over a period of three years. (iii) Leave Travel Concession-For the person pro- posed to be appointed and his family, once in a year incurred in accordance with any rules specified by the company. (iv) Club fees–Fees of clubs subject to a maximum of two clubs. This will not include admission and life membership fees. (v) Personal Accident Insurance-Premium not to exceed Rs. 1,000/- per annum. Explanation.-For the purposes of Category-A, “family” means the spouse, the dependent children and dependent parents of the appointee. Category–B Contribution to provident fund, superannuation fund or annuity fund will not be included in the computation of the ceiling on perquisites to the extent these either singly or put together are not taxable under the Income- tax Act. Gratuity payable should not exceed half a month’s salary for each completed year of service, sub- ject to a ceiling of rupees 1,00,000. Category-C Provision of car for use on company’s business and telephone at residence will not be considered as perqui- sites. Personal long distance calls on telephone and use of car for private purpose shall be billed by the company to the individual appointee concerned. PART Provisions applicable to Parts I and II of this Schedule. PART III Provisions applicable to Parts I and II of this Schedule 1. The appointment and remuneration referred to in Parts I and of this Schedule shall be subject to approval by a resolution of share holders in general meeting.

2. The resolution referred to in paragraph (1) shall, in the event of or inadequacy of profits, provide for a cut of ten per cent. of salary proposed to be paid under Part 11 of this Schedule. 3. The auditor or the secretary of the company or where the company has not appointed a secretary, a secretary in whole-time practice shall certify that the requirement,,; of this Schedule have been complied with and such certificate shall be incorporated in the

return filed with the Registrar under sub-section (2) of section 269.] SCHE (See sections 205 and 350) 4[SCHEDULE XIV (See sections 205 and 350) Rates of depreciation ———————————————————————– Nature of assets Single Shift Double Shift Triple Shift W.D.V.S.L.M. W.D.V.S.L.M. W.D.V. S.L.M ———————————————————————— 1 2 3 4 5 6 7 ———————————————————————— (a)Buildings (other than factory buildings) NESD 5 1.63 per cent. per cent. (b) Factory Buildings 10 3.34 per cent. per cent. (c)Purely temporary erections such as wooden structures 100 100 per cent. per cent. Plant and Machinery (i)General rate applicable to plant and machinery (not being a ship) for which no special rate has been pre- scribed under (ii) be- low 15 5.15 22.5 8.09 30 11.31 per cent. per cent. per cent. per cent. per cent. per cent. (i) Special rates A.1 Cinematograph films-Machi- nery used in the production and exhibition of cinemato- graph films [N.E.S.D.]- (a) Recording equipment, re- producing equipment, developing machines, printing machines, editing machines, synchronisers and studio lights except bulbs (b)Projecting equipment of film exhibiting’ concerns 2 Cycles [N.E.S.D.] 20 7.07 per cent. per cent. 3 Electrical machinery-Batteries; X-Ray and electro-therapeutic apparatus and accessories thereto

[N.E.S.D.]

4 Juice boiling pans (karhais)
[N.E.S.D.]

5 Motor-cars, motor cycles, scooters and other mopeds
[N.E.S.D.]

6 Electrically operated vehicles including battery powered or fuel call powered vehicles [N.E.S.D.] ——————————————————————— 1 2 3 4 5 6 7 ——————————————————————— 7 Sugracane crushers (indigenous kolhus and belans) (N.E.S.D.) 8 Glass manufacutring concern except direct fire glass melting furnaces–Rec- uperative and regenerative glass melting furnaces. 20 7.07 30 11.31 40 16.21 per cent. per cent. per cent. per cent. per cent. per cent. 9 Machinery used in the manufacture of electronic goods or components. B 1 Aeroplanes– Aircraft, aerial photographic apparatus (N.E.S.D.) 2 Concrete pipes manufacture–Moulds (N.E.S.D.) 3 Drum container manufacture– Dies 7(N.E.S.D.) 4 Earth moving machinery employed in heavy construction works, such as dams, tunnels, canals, etc. (N.E.S.D.) 5. Glass manufacturing concerns except direct fire glass melting furnaces- Moulds (N.E.S.D.) 6 Moulds in iron foundaries (N.E.S.D.) 7. Mineral oil concerns–Field 30 11.31 operations (above ground)- per cent. per cent. Portable boilers, drilling tools, well-head tanks, rigs, etc. (N.E.S.D.) 8 Mines and quarries–Portable underground machinery and earth- moving machinery used in open cast mining (N.E.S.D.) 9 Motor buses and motor lorries other than those used in a business of running them on hire (N.E.S.D.) 9A Motor tractors, harvesting combines (N.E.S.D.) 10 Patterns, dies and templates (N.E.S.D.) 11 Ropeway structures–Ropeways, ropes and trestle sheaves and connected parts (N.E.S.D.) ——————————————————————— 1 2 3 4 5 6 7 ——————————————————————— 12Shoe and other leather goods factories-Wooden lasts used in the manufacture of shoes 30 11.31 45 18.96 60 per cent. per cent. per cent. per cent. per cent. 1Aeroplanes-Aero-engines (N.E.S.D.) 2 Motor buses, motor lorries and motor taxies used in a business of running them on hire (N.E.S.D.) 3 Rubber and plastic goods 40 16.21 factories-Moulds (N.E.S.D.) per centt per cent. 4 Data processing machines in- cluding computers (N.E.S.D.) 5 Gas cylinders including valves and regulators (N.E.S.D.) P 1 Artificial silk manufacturing machinery wooden parts 2 Cinematograph films-Bulbs of studio lights 3 Floor mills –Rollers 4Glass manufacturing concerns- Direct fire glass melting furnaces 5 Iron and Steel industries Rolling mill rolls 6 Match factories-Wooden match frames. 7 Mineral oil concerns-(a) Plant 100 100 used in field operations (below per cent. per cent. ground)-Distribution-return- able packages (b) Plant used in field operations (below ground) but not including as- sets used in field operations (distribution)-Kerbside pumps including underground tanks and fittings 8 Mines and quarries- (a) Tubs, winding ropes, haulage ropes and sand stowing pipes (b) Safety lamps 9 Salt works-Salt pans, reservoirs and condensers, etc., made of earthy, sandy or clay material or any other similar mate all 10 Sugar works-Rollers ——————————————————————— 1 2 3 4 5 6 ——————————————————————— FURNITURE AND FITTINGS– General rates NESD 10 3.34 .. .. .. per cent. per cent. Rate for furniture and fittings used in hotels, restaurants and boarding houses; schools, colleges and other educational institutions, libraries; welfare centres ; meeting halls, cinema houses; theatres and circuses; and for furniture and fittings let out on hire for use on the occasion of marriages and similar fun- ctions 15 5.15 .. .. .. NESD per cent. per cent. SHIPS– Ocean-going ships– (i) Fishing vessels with wooden hull NESD . . . 27.05 10 per cent. per cent. .. (ii) Bieagers, tugs, barges, survey launches and other similar ships used mainly for dredg- ing purpose NESD . . . 19.8 7 per cent. per cent. .. (iii) Other ships NESD . 14.6 5 per cent. per cent. . .. 2. Vessels ordinarily operating on inland waters– (i) Speed boats NESD . 20 7.07 per cent. per cent. . .. (ii) Other vessels NESD . 10 3.34 per cent. per cent. . .. .. ——————————————————————– W.D.U : means Written Down Value. S.L.M : means Straight Line Method. NOTES 1. “buildings” include roads, bridges, culverts, wells and tube-wells. 2. “factory buildings” does not include offices, godowns, officers and employees’ quarters, roads, bridges, culverts, wells and tube-wells. 3. “speed boat” means a motor boat driven by a high speed internal combustion engine capable of propelling the boat at a speed exceeding 24 kilometres per hour in still water and so designed that when running at a speed it will plane, i.e., its bow will rise from the water. 4. Where, during any financial year, any addition has been made to any asset, or where any asset has been sold, discarded, demolished or destroyed, the depreciation on such assets shall be calculated on a pro rata basis from the date of such addition or, as the case may be, up to the date on which such asset has been sold, discarded, demolished or destroyed. 5. The following information should also be disclosed in the accounts: (i) depreciation methods used; and (ii) depreciation rates or the useful lives of the assets, if they are different from the principal rates specified in the Schedule. 6. The calculations of the extra depreciation for double shift working and for triple shift working shall be made separately in the proportion which the number of days for which the concern worked double shift or triple shift, as the case may be, bears to’ the normal number of working days during the year For this purpose, the normal number of working days during the year shall be deemed to be- (a) in the case of a seasonal factory or concern, the number of days on which the factory or concern actually worked during the year or 180 days, whichever is greater; (b) in any other case, the number of days on which the factory or concern actually worked during the year or 240 days, whichever is greater. The extra shift depreciation shall not be charged in respect of any item of machinery or plant which has been specifically, excepted by inscription of the letters “N.E.S.D.” (meaning “No Extra Shift Depreciation”) against it in sub-items above and also in respect of the following items of machinery and plant to which the general rate of depreciation of 15 per cent. applies-
(1) Accounting machines.

(2) Air-conditioning machinery including room air- conditioners.

(3) Building contractor’s machiner.

(4) Calculating machines.

(5) Electrical machinery– switchgear and instruments, transformers and other stationary plant and wiring and fitting of electric light and fan installations.

(6) Hydraulic works, pipelines arid sluices.

(7) Locomotives, rolling stocks, tramways and railways used by concerns, excluding railway concerns.

(8) Mineral oil concerns-field operations: (a) Boilers. (b) Prime movers. (c) Process plant. (d) Storage tanks (above ground). (e) Pipelines (above ground). (f) Jetties and dry docks.

(9) Mineral oil concerns-field operations (distribution)- kerbside pumps, including underground tanks and fittings.

(10) Mineral oil concerns-refineries: (a) Boilers. (b) Prime movers. (c) Process plant.

(11) Mines and quarries: (a) Surface and underground machinery (other then electri- cal machinery and portable underground machinery). (b) Head-gears. (c) Rails. (d) Boilers. (e) Shafts and inclines. (f) Tramways on the surface.

(12) Neo-post franking machines.

(13) Office machinery.

(14) Overhead cables and wires.

(15) Railway sidings.

(16) Refrigeration plant, containers, etc. (other than racks) SCHE 5[“SCHEDULE XV

[See section 108B (2) (b)]

1. Arms and ammunition and allied items of defence equipment defence aircrafts and warships. 2. Atomic energy. 3. Coal and lignite. 4. Mineral oils, 5. Mining of iron ore, manganese ore, chrome ore, gypsum, sulphur, gold and diamond. 6. Mining of copper, lead, zinc, tin, molybdenum and wolfram. 7. Minerals specified in the Schedule to the Atomic Energy (Control of Production and Use) Order, 1953. 8. Railway transport.]
(17) Ropeway structures: (a) Trestle and station steel work. (b) Driving and tension gearing.

(18) Salt works-Reservoirs, condensers, salt pans, delivery channels and piers if constructed of masonry, concrete, cement, asphalt or similar materials; barges and floating plant; piers, quays and jetties; and pipelines for conveying brine if constructed of masonry, concrete, cement, asphalt or similar materials.

(19) Surgical instruments.

(20) Tramways electric and tramways run by internal combustion engines–permanent way: cars-car trucks, car bodies, electrical equip- ment and motors; tram cars including engines and gears.

(21) Typewriters.

(22) Weighing machines.

(23) Wireless apparatus and gear, wireless appliances and accessories.] ———————————————————————- 1 Ins. by Act 41 of 1974, s.41 (w.e.f. 1-2-1975). 2 Omitted by Act 30 of 1984, s.52 (w.e.f. 1-8-1984). 3 Ins. by Act 31 of 1988, s.66 (w.e.f. 15-6-1988). 4 Ins. by s. 66,ibid . (w.e.f. 2-4-1987). 5 Ins. by Act 58 of 1991, s.29 (w.e.f. 27-9-1991). ———————————————————————- 506B APPENDIX I (Table B in Schedule to Act 19 of 1857)1 REGULATIONS FOR MANAGEMENT OF THE COMPANY Shares 1. No person shall be deemed to have accepted any share in the company unless he has testified his acceptance thereof by writing under his hand in such form as the company from time to time directs. 2. The company may from time to time make such calls upon the shareholders, in respect of all moneys unpaid on their shares, as they think fit, provided that twenty-one days’ notice at least is given of each call; and each shareholder shall be liable to pay the amount of calls so made to the persons and at the times and places appointed by the company. 3. A call shall be deemed to have been made at the time when the resolution authorizing such call was passed. 4. If, before or on the day appointed for payment, any share- holder does not pay the amount of any call to which he is liable, then such shareholder shall be liable to pay interest for the same at the rate of 5 per cent. per annum from the day appointed for the payment thereof to the time of the actual payment. 5. The company may, if they think fit, receive, from any of the shareholders willing to advance the same, all or any part of the moneys due upon their respective shares beyond the sums actually called for, and upon the moneys so paid in advance, or so much thereof as from time to time exceeds the amount of the calls then made upon the shares in respect of which such advance has been made, the company may pay interest at such rate as the shareholder paying such sum in advance and the company agree upon. 6. If several persons are registered as joint holders of any share, any one of such persons may give effectual receipts for any dividend payable in respect of such share. 7. The company may decline to register any transfer of shares made by a shareholder who is indebted to them. 8. Every shareholder shall, on payment, of such sum not exceed- ing eight annas as the company may prescribe, be entitled to a ———————————————————————- 1 The Table is reproduced here as an Appendix for convenience of reference. ———————————————————————- 507 certificate, under the common seal of the company, specifying the share or shares held by him, and the amount paid up thereon. 9.If such certificate is worn out or lost, it may be renewed on payment of such sum, not exceeding eight annas, as the company may prescribe. 10. The transfer books shall be closed during the fourteen days immediately preceding the ordinary general meeting in each year. Transmission of shares 11.The executors or administrators or representatives of a deceased shareholder shall be the only persons recognised by the company as having any title to his share. 12.Any person becoming entitled to a share in consequence of the death, bankruptcy or insolvency of any shareholder, or in consequence of the marriage of any female shareholder or in any way other than by transfer, may be registered as a shareholder upon such evidence being produced as may from time to time be required by the company. 13.Any person who has become entitled to a share in any way other than by transfer may, instead of being registered himself, elect to have some person to be named by him registered as a holder of such share. 14.The person so becoming entitled shall testify such election by executing to his nominee a transfer of such share. 15.The instrument of transfer shall be presented to the company accompanied with such evidence as they may require to prove the title of the transferor, and thereupon the company shall register the transferee as a shareholder. Forfeiture of shares 16.If any shareholder fails to pay any call due on the appointed day, the company may, at any time thereafter, during such time as the call remains unpaid, serve a notice on him, requiring him to pay such call, together with any interest that may have accrued by reason of such non-payment. 17.The notice shall name a further date, and a place or places, being a place or places, at which calls of the company are usually made payable on and at which such call is to be paid ; it shall also state that, in the event of non-payment at the time and place 508 appointed, the shares in respect of which such call was made will be liable to be forfeited. 18.If the requisitions of any such notice as aforesaid are not complied with, any share in respect of which such notice has been given may be forfeited by a resolution of the directors to that effect. 19.Any shares so forfeited shall be deemed to be the property of the company, and may be disposed of in such manner as the company thinks fit. 20.Any shareholder whose shares have been forfeited shall not- withstanding be liable to pay to the company all calls owing upon such shares at the time of the forfeiture. Increase in capital 21.The company may, with the sanction of the company previously given in general meeting, increase its capital. 22.Any capital raised by the creation of new shares shall be considered as part of the original capital, and shall be subject to the same provisions in all respects, whether with reference to the payment of calls, or the forfeiture of shares on non-payment of calls or otherwise, as if it had been part of the original capital. General meetings 23.The first general meeting shall be held at such time, not being more than twelve months after the incorporation of the company, and at such place as the directors may determine. 24.Subsequent general meetings shall be held at such time and place as may be prescribed by the company in general meeting; and if no other time or place is prescribed, a general meeting shall be held on the 1[first Monday in February] in every year, at such place as may be determined by the directors. 25.The above-mentioned general meetings shall be called ordinary meetings ; all other general meetings shall be called extraordinary. 26.The directors may, whenever they think fit, and they shall, upon a requisition made in writing by any number of shareholders holding in the aggregate not less than one-fifth part of the shares of the company, convene an extraordinary general meeting. ———————————————————————- 1 The bracketted portion read originally as follows: “day of”. ———————————————————————- 509 27.Any requisition so made by the shareholders shall express the object of the meeting proposed to be called, and shall be left at the registered office of the company. 28.Upon the receipt of such requisition, the directors shall forthwith proceed to convene a general meeting ; if they do not proceed to convene the same within twenty-one days from the date of the requisition, the requisitionists, or any other shareholders holding the required number of shares, may themselves convene a meeting. 29.Seven days’ notice at the least, specifying the place, the time, the hour of meeting, and the purpose for which any general meeting is to be held, shall be given by advertisement, or in such other manner (if any) as may be prescribed by the company. 30.Any shareholder may, on giving not less than three days’ previous notice, submit any resolution to a meeting beyond the matters contained in the notice given of such meeting. 31. The notice required of a shareholder shall be given by leaving a copy of the resolution at the registered office of the company. 32. No business shall be transacted at any meeting, except the declaration of a dividend, unless a quorum of share holders is present at the commencement of such business; and such quorum shall be ascertained as follows (that is to say): if the shareholders belonging to the company at the time of the meeting do not exceed ten in number, the quorum shall be five ; if they exceed ten, there shall be added to the above quorum one for every five additional shareholders up to fifty, and one for every ten additional shareholders after fifty, with this limitation, that it shall not be necessary for any quorum in any case to exceed forty. 33.If within one hour from the time appointed for the meeting the required number of shareholders is not present, the meeting, if convened upon the requisition of the shareholders, shall be dissolved; in any other case it shall stand adjourned to the following day at the same time and place; and if at such adjourned meeting the required number of shareholders is not present, it shall be adjourned sine die. 34.The chairman (if any) of the Board of directors shall preside as chairman at every meeting of the company. 35.If there is not such chairman, or if at any meeting he is not present at the time of holding the same, the shareholders present shall choose some one of their number to be chairman of such meeting. 510 36. The chairman may, with the consent of the meeting, adjourn any meeting from time to time and from place to place ; but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. 37. At any general meeting, unless a poll is demanded by at least five shareholders, a declaration by the chairman that a resolution has been carried, and an entry to that effect in the book of proceedings of the company, shall be sufficient evidence of the fact, without proof of the number or proportion of the votes recorded in favour of or against such resolution. 38. If a poll is demanded in manner aforesaid, the same shall be taken in such manner as the chairman directs ; and the result of such poll shall be deemed to be the resolution of the company in general meeting. Votes of shareholders 39. Every shareholder shall have one vote for every share up to ten ; he shall have an additional vote for every five shares beyond the first ten shares up to one hundred, and an additional vote for every ten shares held by him beyond the first hundred shares. 40. If any shareholder is a lunatic or idiot, he may vote by his committee ; and if any shareholder is a minor, he may vote by his guardian, or any one of his guardians if more than one. 41. If more persons than one are jointly entitled to a share or shares, the person whose name stands first in the register of share- holders as one of the holders of such share or shares, and no other, shall be entitled to vote in respect of the same. 42. No shareholder shall be entitled to vote at any meeting unless all calls due from him have been paid, nor until he shall have been possessed of his shares three calendar months, unless such shares shall have been acquired or shall have come by bequest, or by marriage, or by succession to an intestate’s estate, or by any deed of settlement after the death of any person who shall have been entitled for life to the dividends of such shares. 43. Votes may be given either personally or by proxies ; a proxy shall be appointed in writing under the hand of the appointor, or, if such appointor is a corporation- under their common seal. 511 44. No person shall be appointed a proxy who is not a share- holder, and the instrument appointing him shall be deposited at the registered office of the company not less than forty-eight hours before the time of holding the meeting at which he proposes to vote; but no instrument appointing a proxy shall be valid after the expiration of one month from the date of its execution. Directors 45.The number of the directors, and the names of the first directors shall be determined by the subscribers of the memorandum of association. 46.Until directors are appointed, the subscribers of the memo- randum of association shall for all the purposes of this Act be deemed to be directors. Powers of directors 47.The business of the company shall be managed by the directors, who may exercise all such powers of the company as are not by this Act or by the articles of association (if any) declared to be exercisable by the company in general meeting, subject nevertheless to any regulations of the articles of association, to the provisions of this Act, and to such regulations, not being inconsistent with the aforesaid regulations or provisions, as may be prescribed by the company in general meeting, but no regulation made by the company in general meeting shall invalidate any prior act of the directors which would have been valid if such regulation had not been made. Disqualification of directors 48. The office of director shall be vacated- if he holds any other office or place of profit under the company ; if he becomes bankrupt or insolvent; if he is concerned in or participates in the profits of any contract with the company; if he participates in the profits of any work done for the company. But the above rules shall be subject to the following exceptions:- that no director shall vacate his office by reason of his being a shareholder in any incorporated company which 512 has entered into contracts with or done any work for the company of which he is director ; nevertheless he shall not vote in respect of such contract or work ; and, if he does so vote, his vote shall not be counted, and he shall incur a penalty, not exceeding five hundred rupees. Rotation of directors 49. At the first ordinary meeting after the incorporation of the company the whole of the directors shall retire from office ; and at the first ordinary meeting in every subsequent year, one-third of the directors for the time being, or, if their number is not a multiple of three, then the number nearest to one-third, shall retire from office. 50. The one-third or other nearest number to retire during the first and second years ensuing the incorporation of the company shall, unless the directors agree among themselves, be determined by ballot ; in every subsequent year the one-third or other nearest number who have been longest in office shall retire. 51. A retiring director shall be re-eligible. 52. The company at the general meeting at which any directors retire in manner aforesaid shall fill up the vacated offices by electing a like manner of persons. 53. If at any meeting at which an election of directors ought to take place no such election is made, the meeting shall stand adjourned till the next day, at the same time and place, and, if at such adjourned meeting no election takes place, the former directors shall continue to act until new directors are appointed at the first ordinary meeting of the following year. 54. The company may from time to time, in general meeting, increase or reduce the number of directors, and may also determine in what rotation such increased or reduced number is to go out of office. 55. Any casual vacancy occurring in the Board of directors may be filled up by the directors ; but any person so chosen shall retain his office so long only as the vacating director would have retained the same if no vacancy had occurred. Proceedings of directors 56. The directors may meet together for the despatch of business, adjourn and otherwise regulate their meetings, as they think fit, 513 and determine the quorum necessary for the transaction of business questions arising at any meeting shall be decided by a majority of votes ; in case of an equality of votes, the chairman, in addition to his original vote, shall have a casting vote ; a director may at any time summon a meeting of the directors. 57. The directors may elect a chairman of their meetings and determine the period for which he is to hold office ; but if no such chairman is elected or if at any meeting the chairman is not present at the time appointed for holding the same, the directors present shall choose some one of their number to be chairman of such meeting. 58. The directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit: any committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may be imposed on them by the directors. 59. A committee may elect a chairman of their meetings: if no such chairman is elected, or if he is not present at the time appointed for holding the same, the members present shall choose one of their number to be chairman of such meeting. 60. A committee may meet and adjourn as they think proper: questions at any meeting shall be determined by a majority of votes of the members present ; and in case of an equal division of votes, the chairman shall have a casting vote. 61. All acts done by any meeting of the directors, or of a com- mittee of directors, or by any person acting as a director, shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any such directors or persons acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a director. 62. The director shall cause minutes to be made in books provided for the purpose-

(1) of all appointments of officers made by the directors ;

(2) of the names of the directors present at each meeting of directors and committees of directors ;

(3) of all orders made by the directors and committees of directors ; and 514

(4) of all resolutions and proceedings of meetings of the company, and of the directors and committees of directors. And any such minute as aforesaid if signed by any person purport- ing to be the chairman of any meeting of directors, or committee of directors, shall be receivable in evidence without any further proof. 63. The company, in general meeting, may, by a special resolution, remove any director before the expiration of his period of office, and appoint another qualified person in his stead; the person so appointed shall hold office during such time only as the director in whose place he is appointed would have held the same if he had not been removed. Dividends 64. The directors may, with the sanction of the company in general meeting, declare a dividend to be paid to the shareholders in proportion to their shares. 65. The directors may, before recommending any dividend, set aside out of the profits of the company such sum as they think proper as a reserved fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining the works connected with the business of the company, or any part thereof ; and the directors may invest the sum so set apart as a reserved fund upon such securities as they, with the sanction of the company, may select. 66. The directors may deduct from the dividends payable to any shareholder all such sums of money as may be due from him to the company on account of calls or otherwise. 67. Notice of any dividend that may have been declared shall be given to each shareholder or sent by post or otherwise to his registered place of abode; and all dividends unclaimed for three years, after having been declared, may be forfeited by the directors for the benefit of the company. 68. No dividend shall bear interest as against the company. Accounts 69. Once at the least in every year the directors shall lay before the company in general meeting a statement of the income and expenditure for the past year made up to a date not more than three months before such meeting. 515 70. The statement so made shall show, arranged under the most convenient heads, the amount of gross income, distinguishing the several sources from which it has been derived, and the amount of gross expenditure, distinguishing the expense of the establishment, salaries, and other like matters ; every item of expenditure fairly chargeable against the year’s income shall be brought into account, so that a just balance of profit and loss may be laid before the meeting; and in cases where any item of expenditure which may in fairness be distributed over several years has been incurred in any one year, the whole amount of such item shall be stated, with the addition of the reasons why only a portion of such expenditure is charged against the income of the year. 71.A balance-sheet shall be made out in every year, and laid before the general meeting of the company ; and such balance-sheet shall contain a summary of the property and liabilities of the company arranged under the heads appearing in the form annexed to this table, or as near thereto as circumstances admit. 72.A printed copy of such balance sheet shall, seven days previously to such meeting, be delivered at or sent by post to the registered address of every shareholder. Audit 73.The account of the company shall be examined, and the correctness of the balance-sheet ascertained by one or more auditor or auditors to be elected by the company in general meeting. 74.If not more than one auditor is appointed, all the provisions herein contained relating to auditors shall apply to him. 75.The auditors need not be shareholders in the company: no person is eligible as an auditor who is interested otherwise than as a shareholder in any transaction of the company ; and no director or other officer of the company is eligible during his continuance in office. 76.The election of auditors shall be made by the company at their ordinary meeting, or, if there are more than one, at their first ordinary meeting in each year. 77.The remuneration of the auditors shall be fixed by the company at the time of their election. 78. Any auditor shall be re-eligible on his quitting office. 516 79.If any casual vacancy occurs in the office of auditor, the directors shall forthwith call an extraordinary general meeting for the purpose of supplying the same. 80.If no election of auditors is made in manner aforesaid, the Local Government may, on the application of one-fifth in number of the shareholders of the company, appoint an auditor for the current year, and fix the remuneration to be paid to him by the company for his services. 81.Every auditor shall be supplied with a copy of the balance- sheet, and it shall be his duty to examine the same with the accounts and vouchers relating thereto. 82.Every auditor shall have a list delivered to him of all books kept by the company, and he shall at all reasonable times have access to the books and accounts of the company ; he may, at the expense of the company, employ accountants or other persons to assist him in investigating such accounts, and he may in relation to such accounts examine the directors or any other officer of the company. 83.The auditors shall make a report to the shareholders upon the balance-sheet and accounts ; and in every such report they shall state whether in their opinion the balance-sheet is a full and fair balance- sheet, containing the particulars required by these regulations, and properly drawn up so as to exhibit a true and correct view of the state of the company’s affairs; and in case they have called for explanations or information from the directors, whether such explanations or information have been given by the directors, and whether they have been satisfactory ; and such report shall be read, together with the report of the directors, at the ordinary meeting. Notices 84.Notices requiring to be served by the company upon the shareholders may be served either personally, or by leaving the same, or sending them through the post in a letter addressed to the share- holders, at their registered places of abode. 85.All notices directed to be given to the shareholders shall, with respect to any share to which persons are jointly entitled, be given to whichever of the said persons is named first in the register of shareholders ; and notice so given shall be sufficient notice to all the proprietors of such share.

FORM OF BALANCE-SHEET REFERRED TO IN TABLE B. Dr. Balance-Sheet* of the Company made up to 18. Cr. ——————————————————————— CAPITAL AND LIABILITIES PROPERTY AND ASSETS ——————————————————————— I.- CAPITAL. SHOWING– Rs.A.P Rs.A.P SHOWING– Rs.A.P Rs.A.P. 1 The total amount III.— 4 Immovable received from the PROPERTY property, shareholders; HELD BY distinguis- showing also- THE COM- hing– PANY. (a) Land (a)The number of (describing shares. tenure)……. (b) Buildings . (b)The amount paid per share. . . 5 Movable property distinguishing– (c)If any arrears (c) Stock-in-trade.. of calls, the (d) Plant . . . nature of the arrear, and the (The cost to be names of the stated with deduction defaulters . for deterioration in value as charged to the (Any arrears due Reserve Fund or Profit from any director and Loss.) or officer of the company to be sep- IV.– SHOWING– arately stated.) DEBTS OWING 6 Debts considered (d) The particulars TO THE good for which the of any forfeited COMPANY. company hold bills shares . or other securities. II.- SHOWING– 7 Debts considered DEBTS good for which the AND 2 The amount of loans company hold no LIABI- on mortgage or security.. . . LITIES debenture bonds . . OF THE 3 The amount of debts COMPANY. owing by the company distinguishing– (a) Debts for which acceptances have been given . . . ———————————————————————- *See clauses 71 and 72 of the foregoing Table B. ———————————————————————-

FORM OF BALANCE-SHEET REFERRED TO IN TABLE B–Contd. Dr. Balance-Sheet* of the ——————————————————————— CAPITAL AND LIABILITIES ——————————————————————— SHOWING– RS.A.P. RS.A.P. V.–DEBTS AND (b) Debts to tradesmen for LIABILITIES OF supplies of stock-in-trade THE COMPANY or other articles .. .. . –contd. (c) Debts of law expenses. (d) Debts for interest on debentures or other loans. (e) Unclaimed dividends. (f) Debts not enumerated above . . . SHOWING– VI.–RESERVE The amount set aside from FUND. profits to meet continge- ncies. . . . SHOWING– VII.–PROFIT The disposable balance for AND LOSS. payment of divident, etc. . CONTINGENT Claim against the company LIABILITIES. not acknowledged as debts. Moneys for which the company is contingently liable . . . ———————————————————————- Company made up to 18 Cr. ——————————————————————— PROPERTY AND ASSETS ——————————————————————— SHOWING– RS.A.P. RS.A.P. IV.–DEBTS OWING 8 Debts considered doubtful TO THE COMPANY and bad . . . . –contd. (Any debt due from a director or other officer of the company to be separately stated.) SHOWING– V.–CASH AND 9 The nature of investment INVESTMENT. and rate of interest. 10 The amount of cash, where lodged, and if bearing interest . . . . ——————————————————————- *See clauses 71 and 72 of the foregoing Table B. ——————————————————————- 519 APPENDIX II (Table A in the First.Schedule to Act 6 of 1882.)1 REGULATIONS FOR MANAGEMENT OF A COMPANY LIMITED BY SHARES Shares

(1)If several persons are registered as joint holders of any share, any one of such persons may give effectual receipts for any dividend payable in respect of such share.

(2)Every member shall, on payment of eight annas or such less sum as the company in general meeting may prescribe, be entitled to a certificate under the common seal of the company, specifying the share or shares held by him, and the amount paid up thereon.

(3)If such certificate is worn out or lost, it may be renewed on payment of eight annas or such less sum as the company in general meeting may prescribe. Calls on shares

(4)The directors may from time to time make such calls upon the members in respect of all moneys unpaid on their shares as they think fit, provided that twenty-one days’ notice at least is given of each call and each member shall be liable to pay the amount of calls so made to the persons and at the times and places appointed by the directors.

(5)A call shall be deemed to have been made at the time when the resolution of the directors authorizing such call was passed.

(6)If the call payable in respect of any share is not paid before or on the day appointed for payment thereof, the holder for the time being of such share shall be liable to pay interest for the same at the rate of five per cent. per annum from the day appointed for the payment thereof to the time of the actual payment.

(7)The directors may, if they think fit, receive, from any member willing to advance the same, all or any part of the moneys due upon the shares held by him beyond the sums actually called for; and, upon the moneys so paid in advance, or so much thereof as from time to time exceeds the amount of the calls then made upon the shares in ———————————————————————- 1 The Table is reproduced here as an Appendix for convenience of reference. ———————————————————————- 520 respect of which such advance has been made, the company may pay interest at such rate as the member paying such sum in advance and the directors agree upon. Transfers of shares

(8) The instrument of transfer of any share in the company shall be executed both by the transferor and transferee, and the transferor shall be deemed to remain a holder of such share until the name of the transferee is entered in the register book in respect thereof.

(9) Shares in the company shall be transferred in the following form: I. A B, of ,in consideration of the sum of rupees paid to me by C D of , do hereby transfer to the said C D the share (or shares) numbered standing in my name in the books of the company, to hold unto the said C D, his executors, administrators and assigns, subject to the several conditions on which I held the same at the time of the execution thereof; and I, the said C D, do hereby agree to take the said share (or shares) subject to the same conditions. As witness our hands the day of .

(10) The company may decline to register any transfer of shares made by a member who is indebted to them.

(11) The transfer books shall be closed during the fourteen days immediately preceding the ordinary general meeting in each year. Transmission of shares

(12) The executors or administrators of a deceased member shall be the only persons recognised by the company as having any title to his share.

(13) Any person becoming entitled to a share in consequence of the death, bankruptcy or insolvency of any member, or in consequence of the marriage of any female member, may be registered as a member upon such evidence being produced as may, from time to time, be required by the company.

(14) Any person who has become entitled to a share in consequence of the death, bankruptcy or insolvency of any member or in 521 consequence of the marriage of any female member, may, instead of being registered himself, elect to have some person to be named by him registered as a transferee of such share.

(15) The person so becoming entitled shall testify such election by executing to his nominee an instrument of transfer of such share.

(16) The instrument of transfer shall be presented to the company, together with such evidence as the directors may require to prove the title of the transferee, and thereupon the company shall register the transferee as a member. Forfeiture of shares

(17)If any member fails to pay any call on the day appointed for payment thereof, the directors may, at any time thereafter, during such time as the call remains unpaid, serve a notice on him requiring him to pay such call together with interest and any expenses that may have accrued by reason of such non-payment.

(18)The notice shall name a further day on or before which such call and all interest and expenses that have accrued by reason of such non-payment are to be paid. It shall also name the place where pay- ment is to be made, the place so named being either the registered office of the company or some other place at which calls of the com- pany are usually made payable. The notice shall also state that, in the event of non-payment at or before the time and at the place appointed, the shares in respect of which such call was made will be liable to be forfeited.

(19)If the requisitions of any such notice as aforesaid are not complied with, any share in respect of which such notice has been given may at any time thereafter, before payment of all calls, interest and expenses due in respect thereof has been made, be forfeited by a resolution of the directors to that effect.

(20)Any share so forfeited shall be deemed to be the property of the company and may be disposed of in such manner as the company in general meeting thinks fit.

(21)Any member whose shares have been forfeited shall notwith- standing be liable to pay to the company all calls owing upon such shares at the time of the forfeiture. 522

(22)A solemn declaration in writing, made before a Magistrate, that the call in respect of a share was made and notice thereof given, and that default in payment of the call was made and that the forfeiture of the share was made by a resolution of the directors to that effect, shall be sufficient evidence of the facts therein stated as against all persons entitled to such share and such declaration and the receipt of the company for the price of such share shall constitute a good title to such share, and a certificate of proprietorship shall be delivered to the purchaser, and thereupon he shall be deemed the holder of such share discharged from all calls due prior to such purchase, and he shall not be bound to see to the application of the purchase-money, nor shall his title to such share be affected by any irregularity in the proceedings in reference to such sale. Conversion of shares into stock

(23)The directors may, with the sanction of the company pre- viously given in general meeting, convert any paid up shares into stock.

(24)When any shares have been converted into stock, the several holders of such stock may thenceforth transfer their respective interests therein, or any part of such interest, in the same manner and subject to the same regulations as and subject to which any shares in the capital of the company may be transferred, or as near thereto as circumstances admit.

(25)The several holders of stock shall be entitled to participate in the dividends and profits of the company according to the amount of their respective interests in such stock ; and such interests shall, in proportion to the amount thereof, confer on the holders thereof, respectively, the same privileges and advantages for the purpose of voting at meetings of the company and for other purposes as would have been conferred by shares of equal amount in the capital of the company but so that none of such privileges or advantages, except the participation in the dividends and profits of the company, shall be conferred by any such aliquot part of the consolidated stock as would not, if existing in shares, have conferred such privileges or advantages. Increase in capital

(26)The directors may, with the sanction of a special resolution of the company previously given in general meeting, increase its capital

by the issue of new shares; such aggregate: increase to be of such amount, and to be divided into shares of such respective amounts, as the company in general meeting directs, or, if no direction is given, as the directors think expedient.

(27)Subject to any direction to the contrary that may be given by the meeting that sanctions the increase of capital, all new shares shall be offered to the members in proportion to the existing shares held by them, and such offer shall be made by notice specifying the number of shares to which the member is entitled and limiting a time within which the offer, if not accepted, will be deemed to be declined; and after the expiration of such time, or on the receipt of an intimation from the member to whom such notice is given that he declines to accept the shares offered, the directors may dispose of the same in such manner as they think most beneficial to the company.

(28)Any capital raised by the creation of new shares shall be considered as part of the original capital, and shall be subject to the same provisions, with reference to the payment of calls, and the forfeiture of shares on non-payment of calls, or otherwise, as if it had been part of the original capital. General meetings

(29)The first general meeting shall be held at such time not being more than six months after the registration of the company, and at such place as the directors may determine.

(30)Subsequent general meetings shall be held, once at the least in every year, at such time and place as may be prescribed by the company in general meeting; and if no other time or place is prescribed, a general meeting shall be held on the first Monday in February in every year, at such place as may be determined by the directors.

(31)The above-mentioned general meetings shall be called ordinary meetings; all other general meetings shall be called extraordinary.

(32)The directors may, whenever they think fit, and they shall, upon a requisition made in writing by not less than one-fifth in number of the members of the company, convene an extraordinary general meeting.

(33)Any requisition made by the members shall express the object of the meeting proposed to be called, and shall be left at the registered office of the company. 524

(34) Upon the receipt of such requisition the directors shall forthwith proceed to convene an extraordinary general meeting. If they do not proceed to convene the same within twenty-one days from the date of the requisition, the requisitionists, or any other members amounting to the required number, may themselves convene an extra- ordinary general meeting. Proceedings at general meeting

(35) Seven days’ notice at the least, specifying the place, the day and the hour of meeting, and, in case of special business, the general nature of such business, shall be given to the members in manner hereinafter mentioned, or in such other manner, if any, as may be prescribed by the company in general meeting; but the non-receipt of such notice by any member shall not invalidate the proceedings at any general meeting.

(36) All business shall be deemed special that is transacted at an extraordinary meeting, and all that is transacted at an ordinary meeting, with the exception of sanctioning a dividend, and the consi- deration of the accounts, balance-sheets and the ordinary report of the directors.

(37) No business shall be transacted at any general meeting except the declaration of a dividend, unless a quorum of members is present at the time when the meeting proceeds to business. Such quorum shall be ascertained as follows, that is to say:-If the persons who have taken shares in the company at the time of the meeting do not exceed ten in number, the quorum shall be five; if they exceed ten, there shall be added to the above quorum one for every five additional members up to fifty, and one for every ten additional members after fifty, with this limitation that no quorum shall in any case exceed twenty.

(38) If, within one hour from the time appointed for the meeting, a quorum is not present, the meeting, if convened upon the requisition of members, shall be dissolved. In any other case, it shall stand adjourned to the same day in the next week, at the same time and place; and if, at such adjourned meeting, a quorum is not present, it shall be adjourned sine die.

(39) The chairman (if any) of the Board of directors shall preside as chairman at every general meeting of the company. 525

(40)If there is no such chairman, or if at any meeting he is not present within fifteen minutes after the time appointed for holding the meeting, the members present shall choose some one of their number to be chairman.

(41)The chairman may, with the consent of the meeting, adjourn any meeting from time to time and from place to place but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

(42)At any general meeting, unless a poll is demanded by at least five members, a declaration by the chairman that a resolution has been carried, and an entry to that effect in the book of proceedings of the company, shall be sufficient evidence of the fact, without proof of the number or proportion of the votes recorded in favour of or against such resolution.

(43)If a poll is demanded by five or more members, it shall be taken in such manner as the chairman directs, and the result of such poll shall be deemed to be the resolution of the company in general meeting. In the case of an equality of votes at any general meeting, the chairman shall be entitled to a second or casting vote. Votes of members

(44)Every member shall have one vote for every share up to ten. He shall have an additional vote for every five shares beyond the first ten shares up to one hundred, and an additional vote for every ten shares beyond the first hundred shares.

(45)If any member is a lunatic or idiot, he may vote by his com- mittee or other legal curator; and, if any member is a minor, he may vote by his guardian or any one of his guardians if more than one.

(46)If one or more persons are jointly entitled to a share or shares, the member whose name stands first in the register of members as one of the holders of such share or shares, and no other, shall be entitled to vote in respect of the same.

(47)No member shall be entitled to vote at any general meeting unless all calls due from him have been paid, and no member shall be entitled to vote in respect of any share that he has acquired by transfer, at any meeting held after the expiration of three months from the 526 registration of the company, unless he has been possessed of the share in respect of which he claims to vote for at least three months pre- viously to the time of holding the meeting at which he proposes to vote.

(48) Votes may be given either personally or by proxy.

(49) The instrument appointing a proxy shall be in writing, under the hand of the appointor, or if such appointor is a corporation, under their common seal, and shall be attested by one or more witness or witnesses. No person shall be appointed a proxy who is not a member of the company.

(50) The instrument appointing a proxy shall be deposited at the registered office of the company not less than seventy-two hours before the time for holding the meeting at which the person named in such instrument proposes to vote ; but no instrument appointing a proxy shall be valid after the expiration of twelve months from the date of its execution.

(51) Any instrument appointing a proxy shall be in the following form: – Company, Limited. I, of ,being a member of the Company, Limited, and entitled to vote or votes, hereby appoint , of ,as my proxy to vote for me and on my behalf at the [ordinary or extra- ordinary as the case may be] general meeting of the Company to be held on the day of , and at any adjournment thereof (or at any meeting of the Company that may be held in the year ). As witness my hand, this day of . Signed by the said in the presence of Directors

(52) The number of the directors, and the names of the first directors, shall be determined by the subscribers of the memorandum of association.

(53) Until directors are appointed, the subscribers of the memo- randum of association shall be deemed to be directors. 527

(54) The future remuneration of the directors, and their remuneration for services performed previously to the first general meeting, shall be determined by the company in general meeting. Powers of directors

(55) The business of the company shall be managed by the direc- tors, who may pay all expenses incurred in getting up and registering the company and may exercise all such powers of the company as are not by the foregoing Act, or by these articles, required to be exercised by the company in general meeting, subject nevertheless to any regulations of these articles, to the provisions of the foregoing Act and to such regulations, being not inconsistent with the aforesaid regulations, or provisions, as may be prescribed by the company in general meeting; but no regulation made by the company in general meeting shall invalidate any prior act of the directors which would have been valid if such regulation had not been made.

(56) The continuing directors may act notwithstanding any vacancy in their body. Disqualification of directors

(57) The office of director shall be vacated- if he, or any partner of his, or the firm of which he is a member, holds any other office or place of profit under the company; if he becomes bankrupt or insolvent; if he is punished under any of the penal provisions of the fore going Act; if he is concerned in or participates in the profits of any contract with the company. But the above rules shall be subject to the following exceptions:- that no director shall vacate his office by reason of his being a member of any company which has entered into contracts with, or done any work for, the company of which he is director ; nevertheless, he shall not vote in respect of such contract or work, and, if he does so vote, his vote shall not be counted. Rotation of directors

(58) At the first ordinary meeting after the registration of the company the whole of the directors shall retire from office ; and at the 528 first ordinary meeting in every subsequent year one-third of the directors for the time being, or, if their number is not a multiple of three, then the number nearest to one-third, shall retire from office.

(59) The one-third or other nearest number to retire during the first and second years ensuing the first ordinary meeting of the company shall, unless the directors agree among themselves, be determined by ballot. In every subsequent year, the one-third or other nearest number, who have been longest in office shall retire.

(60) A retiring director shall be re-eligible.

(61) The company at the general meeting at which any directors retire in manner aforesaid shall fill up the vacated offices by electing a like number of persons.

(62) If at any meeting at which an election of directors ought to take place the places of the vacating directors are not filled up, the meeting shall stand adjourned till the same day in the next week, at the same time and place ; and if at such adjourned meeting the places of the vacating directors are not filled up, the vacating directors, or such of them as have not had their places filled up, shall continue in office until the ordinary meeting in the next year, and so on from time to time until their places are filled up.

(63) The company may from time to time, in general meeting, increase or reduce the number of directors, and may also determine in what rotation such increased or reduced number is to go out of office.

(64) Any casual vacancy occurring in the Board of directors may be filled up by the directors, but any person so chosen shall retain his office so long only as the vacating director would have retained the same if no vacancy had occurred.

(65) The company in general meeting may by a special resolution remove any director before the expiration of his period of office, and may by an ordinary resolution appoint another person in his stead. The person so appointed shall hold office during such time only as the director in whose place he is appointed would have held the same if he had not been removed. Proceedings of directors

(66) The directors may meet together for the despatch of business, adjourn and otherwise regulate their meetings as they think fit, and determine the quorum necessary for the transaction of business. Questions arising at any meeting shall be decided by a majority of votes. 529 In case of an equality of votes, the chairman shall have a second or casting vote. A director may at any time summon a meeting of the directors.

(67)The directors may elect a chairman of their meetings, and determine the period for which he is to hold office ; but, if no such chairman is elected or if at any meeting the chairman is not present at the time appointed for holding the same, the directors present shall choose some one of their number to be chairman of such meeting.

(68)The directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit. Any committees so formed shall, in the exercise of the powers so delegated, conform to any regulations that may be imposed on it by the directors.

(69)A committee may elect a chairman of its meetings. If no such chairman is elected, or if he is not present at the time appointed for holding the same, the members present shall choose one of their number to be chairman of such meeting.

(70)A committee may meet and adjourn as it thinks proper. Questions arising at any meeting shall be determined by a majority of votes of the members present ; and, in case of an equality of votes, the chairman shall have a second or casting vote.

(71)All acts done by any meeting of the directors, or of a committee of directors, or by any person acting as a director, shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any such directors or persons acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a director. Dividends

(72)The directors may, with the sanction of the company in general meeting, declare a dividend to be paid to the members in pro- portion to their shares.

(73)No dividend shall be payable except out of the profits arising from the business of the company.

(74)The directors may, before recommending any dividend, set aside out of the profits of the company such sum as they think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining the works connected with the business 530 of the company or any part thereof ; and the directors may invest the sum so set apart as a reserved fund upon such securities as they may select.

(75)The directors may deduct from the dividends payable to any member all such sums of money as may be due from him to the company on account of calls or otherwise.

(76)Notice of any dividend that may have been declared shall be given to each member in manner hereinafter mentioned; and all dividends unclaimed for three years after having been declared may be forfeited by the directors for the benefit of the company.

(77) No dividend shall bear interest as against the company. Accounts

(78) The directors shall cause true accounts to be kept– of the stock in trade of the company ; of the sums of money received and expended by the company, and the matters in respect of which such receipt and expenditure take place ; and of the credits and liabilities of the company. The books of account shall be kept at the registered office of the company, and, subject to any reasonable restrictions as to the time and manner of inspecting the same that may be imposed by the com- pany in general meeting, shall be open to the inspection of the members during the hours of business.

(79) Once at the least in every year the directors shall lay before the company in general meeting a statement of the income and expenditure for the past year, made up to a date not more than three months before such meeting.

(80) The statement so made shall show. arranged under the most convenient heads, the amount of gross income, distinguishing the several sources from which it has been derived, and the amount of gross expenditure, distinguishing the expenses of the establishment, salaries and other like matters. Every item of expenditure fairly chargeable against the year’s income shall be brought into account, so that a just balance of profit and loss may be laid before the meeting, and, in cases where any item of expenditure which may in fairness be distributed over several years has been incurred in any one year, the whole amount of such item shall be stated, with the addition of 531 the reasons why only a portion of such expenditure is charged against the income of the year.

(81) A balance-sheet shall be made out in every year and laid before the company in general meeting, and such balance-sheet shall contain a summary of the property and liabilities of the company arranged under the heads appearing in the form annexed to this table, or as near thereto as circumstances admit.

(82)A printed copy of such balance-sheet shall, seven days previously to such meeting, be served on every member in the manner in which notices are hereinafter directed to be served. Audit

(83) Once at the least in every year the accounts of the company shall be examined, and the correctness of the balance-sheet ascertain- ed by one or more auditor or auditors.

(84) The first auditors shall be appointed by the directors ; subsequent auditors shall be appointed by the company in general meeting.

(85) If one auditor only is appointed, all the provisions herein contained relating to auditors shall apply to him.

(86) The auditors may be members of the company, but no person is eligible as an auditor who is interested otherwise than as a member in any transaction of the company, and no director or other officer of the company is eligible during his continuance in office.

(87) The election of auditors shall be made by the company at their ordinary meeting in each year.

(88) The remuneration of the first auditors shall be fixed by the directors ; that of subsequent auditors shall be fixed by the company in general meeting.

(89) Any auditor shall be re-eligible on his quitting office.

(90) If any casual vacancy occurs in the office of any auditor appointed by the company, the directors shall forthwith call an extra- ordinary general meeting for the purpose of supplying the same. 532

(91) If no election of auditors is made in manner aforesaid the Local Government may, on the application of not less than five members of the company, appoint an auditor for the current year and fix the remuneration to be paid to him by the company for his services.

(92) Every auditor shall be supplied with a copy of the balance- sheet and it shall be his duty to examine the same with the accounts and vouchers relating thereto.

(93) Every auditor shall have a list delivered to him of all books kept by the company, and shall at all reasonable times have access to the books and accounts of the company. He may, at the expense of the company, employ accountants or other persons to assist him in investigating such accounts, and he may, in relation to such accounts, examine the directors or any other officer of the company.

(94) The auditors shall make a report to the members upon the balance-sheet and accounts, and in such report they shall state whether, in their opinion, the balance-sheet is a full and fair balance-sheet, containing the particulars required by these regulations and properly drawn up so as to exhibit a true and correct view of the state of the company’s affairs, and, in case they have called for explanations or information from the directors, whether such explanations or information have or has been given by the directors, and whether they or it have or has been satisfactory. Such report shall be read, together with the report of the directors, at the ordinary meeting. Notices

(95) A notice may be served by the company upon any member either personally or by sending it through the post in a letter addressed to such member at his registered place of abode.

(96) All notices directed to be given to the members shall, with respect to any share to which persons are jointly entitled, be given to whichever of such persons is named first in the register of members; and notice so given shall be sufficient notice to all the holders of such share.

(97) Any notice, if served by post, shall be deemed to have been served at the time when the letter containing the same would be delivered in the ordinary course of the post ; and, in proving such service, it shall be sufficient to prove that the letter containing the notice was properly addressed and put into the post office.

FORM OF BALANCE-SHEET REFERRED TO IN TABLE A Dr. Balance-Sheet* of the ———————————————————————- CAPITAL AND LIABILITIES ———————————————————————- SHOWING– Rs. As. I.–CAPITAL. 1 The number of shares . 2 The amount paid per share 3 If any arrears of calls, the nature of the arrear and the names of the defaulters . . . 4 The particulars of any forfeited shares . . . SHOWING– II.–DEBTS AND LIABILITIES OF 5 The amount of loans or THE COMPANIES. mortgages or debenture bonds . . . . . 6 The amount of dabts owing by the company– distinguishing– (a) Debts for which acceptances have been given . . . ———————————————————————- Company made up to 18 . Cr. ———————————————————————- PROPERTY AND ASSETS ———————————————————————- SHOWING– Rs. As. III.–PROPERTY 7 Immovable property–dis- HELD BY THE tinguishing– COMPANY. (a) Freehold land . (b) ,, buildings . (c) Leasehold . . 8 Movable property–distin- guishing– (d) Stock-in-trade . (e) Plant . . . The cost to be stated with deductions for deterioration in value as charged to the reserve fund or profit and loss . . SHOWING– IV.–DEBTS 9 Debts considered good for OWING TO THE which the Company hold bills COMPANY. or other securities. ———————————————————————- *See Clauses 81 and 82 of the foregoing Table A. ———————————————————————-

FORM OF BALANCE-SHEET REFERRED TO IN TABLE A–contd. Dr. Balance-Sheet* of the ———————————————————————- CAPITAL AND LIABILITIES ———————————————————————- SHOWING– Rs. As. II.–DEBTS AND LIABILITIES OF (b) Debts to tradesmen for THE COMPANIES supplies of stock-in trade –contd. or other articles . . . (c) Debts for law expenses . . . (d) Debts for interest on debentures or other loans . . . (e) Unclaimed dividends (f) Debts not enumerated above . . . SHOWING– VI.–RESERVE The amount set aside from FUND. profits to meet contingencies . . . SHOWING– VII.–PROFIT The disposable balance for AND LOSS. payment of dividends, etc . . . CONTINGENT Claims agent the Company LIABILITIES. not acknowledged as debts . Moneys for which the Company is contingently liable . . . ———————————————————————- Company made up to 18 . Cr. ———————————————————————- PROPERTY AND ASSETS ———————————————————————- Rs. As. IV.–DEBTS OWING 10 Debts considered good TO THE COMPANY.– for which the Company hold contd. no security . . . 11 Debts considered doub- tful and bad . . . Any debt due from a director or other officer of the company to be separately stated . . . SHOWING– V.–CASH AND 12 The nature of investment INVESTMENT. and rate of interest . 13 The amount of cash, where lodged and if bearing interest . ——————————————————————– 535 APPENDIX III (Table A in the First Schedule to Act 7 of 1913.)1 REGULATIONS FOR MANAGEMENT OF A COMPANY LIMITED BY SHARES Preliminary 1. In these regulations, unless the context otherwise requires, expressions defined in the Indian Companies Act,1913(7 of 1913),or any statutory modification thereof in force at the date at which these regulations become binding on the company, shall have the meanings so defined; and words importing the singular shall include the plural, and vice versa, and words importing the masculine gender shall include females, and words importing persons shall include bodies corporate. Business 2. The directors shall have regard to the restrictions on the commencement of business imposed by section 103 of the Indian Companies Act, 1913, if, and so far as, those restrictions are binding upon the company. Shares 3. Subject to the provisions, if any, in that behalf of the memorandum of association of the company, and without prejudice to any special rights previously conferred on the holders of existing shares in the company, any share in the company may be issued with such preferred, deferred or other special rights, or such restrictions, whether in regard to dividend, voting, return of share capital, or otherwise, as the company may from time to time by special resolution determine 2[and any preference share may with the sanction of a special resolution be issued on the terms that it is or at the option of the company is liable to be redeemed]. 4. If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may 2 [subject to the provisions of section 66A of the Indian Companies Act, 1913] be varied with the consent in writing of the holders of three- fourths of the issued shares of that class, or with the sanction of an extraordinary resolution passed at a separate general meeting of the holders ———————————————————————- 1 The Table is reproduced here as an Appendix for convenience of reference. 2 Ins. by Act 22 of 1936, s. 122. ———————————————————————- 536 of the shares of the class. To every such separate general meeting the provisions of these regulations relating to general meetings shall mutatis mutandis apply, but so that the necessary quorum shall be two persons at least holding or representing by proxy one-third of the issued shares of the class. 5. No share shall be offered to the public for subscription except upon the terms that the amount payable on application shall be at least five per cent. of the nominal amount of the share ; and the directors shall, as regards any allotment of shares, duly comply with such of the provisions of sections 101 and 104 of the Indian Companies Act, 1913 (7 of 1913), as may be applicable thereto. 6. Every person whose name is entered as a member in the regis- ter of members shall, without payment, be entitled to a certificate under the common seal of the company specifying the share or shares held by him and the amount paid up thereon: Provided that, in respect of a share or shares held jointly by several persons, the company shall not be bound to issue more than one certificate, and delivery of a certificate for a share to one of several joint-holders shall be sufficient delivery to all. 7. If a share certificate is defaced, lost or destroyed, it may be renewed on payment of such fee, if any, not exceeding eight annas, and on such terms, if any, as to evidence and indemnity as the direc- tors think fit. 8. 1[Except to the extent allowed by section 54A of the Indian Companies Act, 1913,] no part of the funds of the company shall be employed in the purchase of, or in loans upon the security of, the company’s shares. Lien 9. The company shall have a lien on every share (not being a fully paid share) for all moneys (whether presently payable or not) called or payable at a fixed time in respect of that share, and the company shall also have a lien on all shares (other than fully-paid shares) standing registered in the name of a single person, for all moneys presently payable by him or his estate to the company; but the ———————————————————————- 1 Ins. by Act 22 of 1936, s. 122. ———————————————————————- 537 directors may at any time declare any share to be wholly or in part exempt from the provisions of this clause. The company’s lien, if any, on a share shall extend to all dividends payable thereon. 10.The company may sell, in such manner as the director thinks fit, any shares on which the company has a lien, but no sale shall, be made unless some sum in respect of which the lien exists is presently payable, nor until the expiration of fourteen days after a notice in writing, stating and demanding payment of such part of amount in respect of which the lien exists as is presently payable, has been given to the registered holder for the time being of the share, or the person entitled by reason of his death or insolvency to the share. 11.The proceeds of the sale shall be applied in payment of such part of the amount in respect of which the lien exists as is presently payable, and the residue shall (subject to a like lien for sums not presently payable as existed upon the shares prior to the sale) be paid to the person entitled to the shares at the date of the sale. The purchaser shall be registered as the holder of the shares, and he shall not be bound to see to the application of the purchase-money, nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings in reference to the sale. Calls on shares 12.The directors may from time to time make calls upon the members in respect of any moneys unpaid on their shares, provided that no call shall exceed one-fourth of the nominal amount of the share, or be payable at less than one month from the last call ; and each member shall (subject to receiving at least fourteen days’ notice specifying the time or times of payments) pay to the company at the time or times so specified the amount called on his shares. 13.The joint-holders of a share shall be jointly and severally liable to pay all calls in respect thereof. 14. If a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest upon the sum at the rate of five per cent. per annum from the day appointed for the payment thereof to the time of the actual payment, but the directors shall be at liberty to waive payment of that interest wholly or in part. 538 15.The provisions of these regulations as to payment of interest shall apply in the case of non-payment of any sum which, by the terms of issue of a share, becomes payable at a fixed time, whether on account of the amount of the share, or by way of premium, as if the same had become payable by virtue of a call duly made and notified. 16.The directors may make arrangements on the issue of shares for a difference between the holders in the amount of calls to be paid and in the times of payment. 17.The directors may, if they think fit, receive from any member willing to advance the same all or any part of the moneys uncalled and unpaid upon any shares held by him ; and upon all or any of the moneys so advanced may (until the same would, but for such advance, become presently payable) pay interest at such rate (not exceeding, without the sanction of the company in general meeting, six per cent.) as may be agreed upon between the member paying the sum in advance and the directors. Transfer and transmission of shares 18.The instrument of transfer of any share in the company shall be executed both by the transferor and transferee, and the transferor shall be deemed to remain holder of the share until the name of the transferee is entered in the register of members in respect thereof, 19.Shares in the company shall be transferred in the following form, or in any usual or common form which the directors shall approve: I, A B of ,in consideration of the sum of rupees paid to me by C D of (hereinafter called “the said transferee”), do hereby transfer to the said transferee the share [or shares] numbered in the undertaking called the Company, Limited, to hold unto the said transferee, his executors, administrators and assigns, subject to the several conditions on which I held the same at the time of the execution thereof, and I, the said transferee, do hereby agree to take the said share [or shares] subject to the conditions aforesaid. As witness our hands the day of Witness to the signatures of, etc. 20.The directors may decline to register any transfer of shares, not being fully-paid shares, to a person of whom they do not approve, 539 and may also decline to register any transfer of shares on which the company has a lien. The directors may also suspend the registration of transfers during the fourteen days immediately preceding the ordinary general meeting in each year. The directors may decline to recognise any instrument of transfer unless- (a) a fee not exceeding two rupees is paid to the company in respect thereof ; and (b) the instrument of transfer is accompanied by the certificate of the shares to which it relates, and such other evidence as the directors may reasonably require to show the right of the transferor to make the transfer. 1[If the directors refuse to register a transfer of any shares, they shall within two months after the date on which the transfer was lodged with the company send to the transferee and the transferor notice of the refusal.] 21. The executors or administrators of a deceased sole holder of a share shall be the only persons recognised by the company as having any title to the share. In the case of a share registered in the names of two or more holders, the survivors or survivor, or the executors or administrators of the deceased survivor, shall be the only persons recognised by the company as having any title to the share. 22. Any person becoming entitled to a share in consequence of the death or insolvency of a member shall, upon such evidence being produced as may from time to time be required by the directors, have the right, either to be registered as a member in respect of the share or, instead of being registered himself, to make such transfer of the share as the deceased or insolvent person could have made ; but the directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the share by the deceased or insolvent person before the death or insolvency. 23. A person becoming entitled to a share by reason of the death or insolvency of the holder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, before being registered as a member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the company. ———————————————————————- 1 Ins. by Act 22 of 1936, s. 122. ———————————————————————- 540 Forfeiture of shares 24. If a member fails to pay any call or instalment of a call on the day appointed for payment thereof, the directors may, at any time thereafter during such time as any part of such call or instalment remains unpaid, serve a notice on him requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued. 25.The notice shall name a further day (not earlier than the expiration of fourteen days, from the date of the notice) on or before which the payment required by the notice is to be made, and shall state that, in the event of non-payment at or before the time appoint- ed, the shares in respect of which the call was made will be liable to be forfeited. 26.If the requirements of any such notice as aforesaid are not complied with, any share in respect of which the notice has been given may at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the directors to that effect. 27.A forfeited share may be sold or otherwise disposed of on such terms and in such manner as the directors think fit, and at any time before a sale or disposition the forfeiture may be cancelled on such terms as the directors think fit. 28.A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares, but shall, notwithstanding, remain liable to pay to the company all moneys which, at the date of forfeiture, were presently payable by him to the company in respect of the shares, but his liability shall cease if and when the company received payment in full of the nominal amount of the shares. 29.A duly verified declaration in writing that the declarant is a director of the company, and that a share in the company has been duly forfeited on a date stated in the declaration, shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share, and that declaration, and the receipt of the company for the consideration, if any, given for the share on the sale or disposition thereof, shall constitute a good title to the share, and the 541 person to whom the share is sold or disposed of shall be registered as the holder of the share and shall not be bound to see to the application of the purchase-money (if any), nor shall his title to the share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the share. 30. The provisions of these regulations as to forfeiture shall apply in the case of nonpayment of any sum which, by the terms of issue of a share, becomes payable at a fixed time, whether on account of the amount of the share, or by way of premium, as if the same had been payable by virtue of a call duly made and notified. Conversion of shares into stock 31. The directors may, with the sanction of the company pre- viously given in general meeting, convert any paid-up shares into stock, and may with the like sanction re-convert any stock into paid- up shares of any denomination. 32. The holders of stock may transfer the same, or any part thereof, in the same manner, and subject to the same regulations, as and subject to which, the shares from which the stock arose might previously to conversion have been transferred, or as near thereto as circumstances admit; but the directors may from time to time fix the minimum amount of stock transferable, and restrict or forbid the transfer of fractions of that minimum, but the minimum shall not exceed the nominal amount of the shares from which the stock arose. 33. The holders of stock shall, according to the amount of the stock held by them, have the same rights, privileges and advantages as regards dividends, voting at meetings of the company, and other matters, as if they held the shares from which the stock arose but no such privilege or advantage (except participation in the dividends and profits of the company) shall be conferred by any such aliquot part of stock as would not, if existing in shares, have conferred that privilege or advantage. 34. Such of the regulations of the company (other than those relating to share-warrants), as are applicable to paid-up shares shall apply to stock, and the words “share” and “shareholder” therein shall include “stock” and “stockholder”. 542 Share-warrants 35. The company may issue share-warrants, and accordingly the directors may in their discretion, with respect to any share which is fully paid up, on application in writing signed by the person regis- tered as holder of the share, and authenticated by such evidence (if any as the directors may from time to time require as to the identity of the person signing the request, and on receiving the certificate (if any) of the share, and the amount of the stamp-duty on the warrant and such fee as the directors may from time to time require, issue under the company’s seal a warrant, duly stamped, stating that the bearer of the warrant is entitled to the shares therein specified, and may provide by coupons or otherwise for the payment of dividends, or other moneys, on the shares included in the warrant. 36. A share-warrant shall entitle the bearer to the shares included in it, and the share shall be transferred by the delivery of the share warrant, and the provisions of the regulations of the company with respect to transfer and transmission of shares shall not apply thereto. 37. The bearer of a share-warrant shall, on surrender of the warrant to the company for cancellation, and on payment of such sum as the directors may from time to time prescribe, be entitled to have his name entered as a member in the register of members in respect of the shares included in the warrant. 38. The bearer of a share-warrant may at any time deposit the warrant at the office of the company and so long as the warrant remains so deposited, the depositor shall have the same right of sign- ing a requisition for calling a meeting of the company, and of attending and voting and exercising the other privileges of a member at any meeting held after the expiration of two clear days from the time of deposit, as if his name were inserted in the register of mem- bers as the holder of the shares included in the deposited warrant. Not more than one person shall be recognised as depositor of the share-warrant. The company shall, on two days’ written notice, return the deposited share-warrant to the depositor. 39. Subject as herein otherwise expressly provided, no person shall, as bearer of a share-warrant, sign a requisition for calling a meeting of the company, or attend, or vote or exercise any other privilege of a member at a meeting of the company, or be entitled 543 to receive any notices from the company ; but the bearer of a share- warrant shall be entitled in all other respects to the same privileges and advantages as if he were named in the register of members as the holder of the shares included in the warrant, and he shall be a member of the company. 40. The directors may, from time to time, make rules as to the terms on which (if they shall think fit) a new share-warrant or coupon may be issued by way of renewal in case of defacement, loss or destruction. Alteration of capital 41. The directors may, with the sanction of 1[the company in general meeting], increase the share capital by such sum, to be divided into shares of such amount, as the resolution shall prescribe. 42. Subject to any direction to the contrary that may be given by the resolution sanctioning the increase of share capital, all new shares shall, before issue, be offered to such persons as at the date of the offer are entitled to receive notices from the company of general meetings in proportion, as nearly as the circumstances admit, to the amount of the existing shares to which they are entitled. The offer shall be made by notice specifying the number of shares offered, and limiting a time within which the offer, if not accepted, will be deemed to be declined, and after the expiration of that time, or on the receipt of an intimation from the person to whom the offer is made that he declines to accept the shares offered, the directors may dispose of the same in such manner as they think most beneficial to the company. The directors may likewise so dispose of any new shares which (by reason of the ratio which the new shares bear to shares held by persons entitled to an offer of new shares) cannot, in the opinion of the directors, be conveniently offered under this article. 43. The new shares shall be subject to the same provisions with reference to the payment of calls, lien, transfer, transmission, for- feiture and otherwise as the shares in the original share capital. 44. The company may, by 2[ordinary resolution],- (a) consolidate and divide its share capital into shares of larger amount than its existing shares ; ———————————————————————- 1 Subs. by Act 22 of 1936, s. 122, for “an extraordinary resolution of the company “. 2 Subs., ibid., for “special resolution”. ———————————————————————- 544 (b) by sub-division of its existing shares or any of them, divide the whole or any part of its share capital into shares of smaller amount than is fixed by the memorandum of association, subject, nevertheless, to the provisions of

paragraph (d) of sub-section (1) of section 50 of the Indian Companies Act, 1913 (7 of 1913); (c) cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person ; 1* * * * * 2[44A. The company may, by special resolution, reduce its share capital in any manner and with, and subject to any incident authorized and consent required, by law.] General meetings 45. The Statutory general meeting of the company shall be held within the period required by section 77 of the Indian Companies Act, 1913 (7 of 1913). 46. A general meeting shall be held 3[within eighteen months from the date of its incorporation and thereafter once at least in every year] at such time (not being more than fifteen months after the holding of the last preceding general meeting) and place as may be prescribed by the company in general meeting, or, in default, at such time in the month following that in which the anniversary of the company’s incorporation occurs, and at such place as the directors shall appoint. In default of a general meeting being so held, a general meeting shall be held in the month next following, and may be called by any two members in the same manner as nearly as possible as that in which meetings are to be called by the directors. 47. The above-mentioned general meetings shall be called ordinary meetings ; all other general meetings shall be called extraordinary. 48. The directors may, whenever they think fit, call an extraordinary general meeting, and extraordinary general meetings shall also be called on such requisition, or in default, may be called by such ———————————————————————- 1 Cl. (d) rep. by Act 22 of 1936. s. 122. 2 Ins., ibid. 3 Subs., ibid., for ” once in every year”. ——————————————————————— 545 requisitionists, as provided by section 78 of the Indian Companies Act,1913 (7 of 1913). If at any time there are not within India suffi- cient directors capable of acting to form a quorum, any director or any two members of the company may call an extraordinary general meeting in the same manner as nearly as possible as that in which meetings may be called by the directors. Proceedings at general meeting

49. 1[Subject to the provisions of sub-section (2) of section 81 of the Indian Companies Act, 1913, relating to special resolution], fourteen days’ notice at the least (exclusive of the day on which the notice is served or deemed to be served, but inclusive of the day for which notice is given) specifying the place, the day and the hour of meeting and, in case of special business, the general nature of that business, shall be given in manner hereinafter mentioned, or in such other manner, if any, as may be prescribed by the company in general meeting, to such persons as are, under 1[the Indian Companies Act, 1913 (7 of 1913), or] the regulations of the company, entitled to receive such notices from the company; but 2[the accidental omission to give notice to or the non-receipt of notice] by any member shall not invalidate the proceedings at any general meeting. 50. All business shall be deemed special that is transacted at an extraordinary meeting, and all that is transacted at an ordinary meeting with the exception of sanctioning a dividend, the considera- tion of the accounts, balance-sheets and the ordinary report of the directors and auditors, the election of directors and other officers in the place of those retiring by rotation, and fixing of the remuneration of the auditors. 51. No business shall be transacted at any general meeting unless a quorum of members is present at the time when the meeting proceeds to business ; save as herein otherwise provided, 3[two members in the case of a private company and five members in the case of any other company] personally present shall be a quorum. 52. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if called upon the requisition of members, shall be dissolved ; in any other case, it shall stand ———————————————————————- 1 Ins. by Act 22 of 1936, s. 122. 2 Subs. by s. 122, ibid., for “non-receipt of the notice”. 3 Subs. by s. 122, ibid., for “three members”. ——————————————————————— 546 adjourned to the same day in the next week at the same time and place, and, if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting, the members present shall be a quorum. 53. The chairman, if any, of the Board of directors shall preside as chairman at every general meeting of the company. 54. If there is no such chairman, or if at any meeting he is not present within fifteen minutes after the time appointed for holding the meeting, or is unwilling to act as chairman, the members present shall choose someone of their number to be chairman. 55. The chairman may, with the consent of any meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a meeting is adjourned for ten days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting. 56. At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded

1[in accordance with the provisions of clause (c) of sub-section (1) of section 79 of the Indian Companies Act, 1913 (7 of 1913), ] and un- less a poll is so demanded, a declaration by the chairman that a reso- lution has, on a show of hands, been carried, or carried unani- mously, or by a particular majority, or lost, and an entry to that effect in the book of the proceedings of the company shall be con- clusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of, or against, that resolution. 57. If a poll is duly demanded, it shall be taken in such manner as the chairman directs, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. ———————————————————————- 1 Subs. by Act 2 of 1938, s. 19, for “by at least three members”. ———————————————————————- 547 58. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place, or at which the poll is demanded, shall be entitled to a second or casting vote. 59. A poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such time as the chairman of the meeting directs. Votes of members 60. On a show of hands every member present in person shall have one vote. 1[On a poll every member shall have one vote in respect of each share or each hundred rupees of stock held by him.] 61. In the case of joint-holders, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint-holders ; and for this purpose seniority shall be determined by the order in which the names stand in the register of members. 62. A member of unsound mind, or in respect of whom an order has been made by any Court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee or other legal guardian, and any such committee or guardian may, on a poll, vote by proxy. 63. No member shall be entitled to vote at any general meeting unless all calls or other sums presently payable by him in respect of shares in the company have been paid. 64. On a poll votes may be given either personally or by proxy: Provided that no company shall vote by proxy as long as a resolution of its directors in accordance with the provisions of section 80 of the Indian Companies Act, 1913 (7 of 1913), is in force. 65. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorized in writing, or, if the appoint or is a corporation either under the common seal, or under the hand of an officer or attorney so authorized. No person shall act as a proxy unless 2 [he is a member of the company]. ———————————————————————- 1 Subs. by Act 22 of 1936, s. 122, for ” On a poll every member shall have one vote for each share of which he is the holder”. 2 Subs., ibid., for the original words. ———————————————————————- 548 66.The instrument appointing a proxy and the power-of-attorney or other authority (if any), under which it is signed or a notarially certified copy of that power or authority, shall be deposited at the registered office of the company not less than seventy-two hours before the time for holding the meeting at which the person named in the instrument proposes to vote, and in default the instrument of proxy shall not be treated as valid. 67.An instrument appointing a proxy may be in the following form, or in any other form which the directors shall approve:- Company, Limited. ” I of in the district of ,being a member of the Company, Limited, hereby appoint of as my proxy to vote for me and on my behalf at the

[ordinary or extraordinary, as the case may be] general meeting of the

company to be held on the day of and at any adjournment thereof.” Signed this day of Directors 68. The number of the directors and the names of the first directors shall be determined in writing by a majority of the sub- scribers of the memorandum of association. 69. The remuneration of the directors shall from time to time be determined by the company in general meeting. 70. The qualification of a director shall be the holding of at least one share in the company, and it shall be his duty to comply with the provisions of section 85 of the Indian Companies Act, 1913 (7 of 1913). Powers and duties of directors 71. The business of the company shall be managed by the directors, who may pay all expenses incurred in getting up and registering the company, and may exercise all such powers of the company as are not, by the Indian Companies Act,1913 (7 of 1913),or any statutory modification thereof for the time being in force, or by these articles, required to be exercised by the company in general meeting, 549 subject nevertheless to any regulation of these articles, to the pro- visions of the said Act, and to such regulations being not inconsistent with the aforesaid regulations or provisions, as may be prescribed by the company in general meeting; but no regulation made by the company in general meeting shall invalidate any prior act of the directors which would have been valid if that regulation had not been made. 72. The directors may from time to time appoint one or more of their body to the office of managing director or manager for such term, and at such remuneration (whether by way of salary, or com- mission, or participation in profits, or partly in one way and partly in another) as they may think fit, and a director so appointed shall not, while holding that office, be subject to retirement by rotation, or taken into account in determining the rotation of retirement of directors, but his appointment shall be subject to determination ipso facto if he ceases from any cause to be a director, or if the company in general meeting resolve that his tenure of the office of managing director or manager be determined. 73. The amount for the time being remaining undischarged of moneys borrowed or raised by the directors for the purposes of the company (otherwise than by the issue of share capital) shall not at any time exceed the issued share capital of the company without the sanction of the company in general meeting. 74. The directors shall duly comply with the provisions of the Indian Companies Act, 1913 (7 of 1913), or any statutory modification thereof for the time being in force, and in particular with the provisions in regard to the registration of the particulars of mort- gages and charges affecting the property of the company or created by it, and to keeping a register of the directors, and to sending to the Registrar an annual list of members, and a summary of particulars re- lating thereto and notice of any consolidation or increase of share capital, or conversion of shares into stock, and copies of special resolutions and a copy of the register of directors and notifications of any changes therein. 75. The director shall cause minutes to be made in books provided for the purpose- (a) of all appointments of officers made by the directors; (b) of the names of the directors present at each meeting of the directors and of any committee of the directors ; 550 (c) of all resolutions and proceedings at all meetings of the company, and, of the directors, and of committees of directors ; and every director present at any meeting of directors or committee of directors shall sign his name in a book to be kept for that purpose. The Seal 76. The seal of the company shall not, be affixed to any instru- ment except by the authority of a resolution of the Board of directors, and in the presence of at least two directors and of the secretary or such other person as the directors may appoint for the purpose ; and those two directors and secretary or other person as aforesaid shall sign every instrument to which the seal of the company is so affixed in their presence. Disqualifications of directors 77. The office of director shall be vacated if the director- 1[(a) fails to obtain within the time specified in sub-
section (1) of section 2[85] of the Indian Companies Act, 1913 (7 of 1913), or at any time thereafter ceases to hold, the share qualification, if any, necessary for his appointment ; or (b) is found to be of unsound mind by a Court of competent jurisdiction ; or (c) is adjudged insolvent ; or (d) fails to pay calls made on him in respect of shares held by him within six months from the date of such calls being made ; or (e) without the sanction of the company in general meeting accepts or holds any office of profit under the company other than that of a managing director or manager or a legal or technical adviser or a banker ; or (f) absents himself from three consecutive meetings of the directors or from all meetings of the directors for a continuous period of three months, whichever is longer, without leave of absence from the Board of directors ; or (g) accepts a loan from the company; or] ———————————————————————- 1 Subs. by Act 22 of 1936, s. 122, for the original cls. (a) to (d). 2 Subs. by Act 2 of 1938, s. 19, for ” 84″. ———————————————————————- 551 1[(h)] is concerned or participates in the profits of any contract with the company; or 1[(i)] is punished with imprisonment for a term exceeding six months: Provided, however, that no director shall vacate his office by reason of his being a member of any company which has entered into contracts with, or done any work for, the company of which he is director, but a director shall not vote in respect of any such contract or work, and if he does so vote, his vote shall not be counted. Rotation of directors 78. At the first ordinary meeting of the company, the whole of the directors shall retire from office, and at the ordinary meeting in every subsequent year, one-third of the directors for the time being or, if their number is not three or a multiple of three, then the number nearest to one-third shall retire from office. 79. The directors to retire in every year shall be those who have been longest in office since their last election, but as between persons who became directors on the same day those to retire shall (unless they otherwise agree among themselves) be determined by lot. 80. A retiring director shall be eligible for re-election. 81. The company at the general meeting at which a director retires in manner aforesaid may fill up the vacated office by electing a person thereto. 82. If at any meeting at which an election of directors ought to take place, the places of the vacating directors are not filled up, the meeting shall stand adjourned till the same day in the next week at the same time and place, and, if at the adjourned meeting the places of the vacating directors are not filled up, the vacating directors or such of them as have not had their places filled up shall be deemed to have been re-elected at the adjourned meeting. 83. 2[Subject to the provisions of sections 83A and 83B of the Indian Companies Act, 1913 (7 of 1913)] the company may from time to time in ———————————————————————- 1 The original cls. (e) and (f) were re-lettered (h) and (i) by Act 22 of 1936, s. 122. 2 Ins. by s. 122, ibid. ——————————————————————— 352 general meeting increase or reduce the number of directors, and may also determine in what rotation the increased or reduced number is to go out of office. 84. Any casual vacancy occurring on the Board of directors may be filled up by the directors, but the person so chosen shall be subject to retirement at the same time as if he had become a director on the day on which the director in whose place he is appointed was last elected a director. 85. The directors shall have power at any time, and from time to time, to appoint a person as an additional director who shall retire from office at the next following ordinary general meeting, but shall be eligible for election by the company at that meeting as an addi- tional director. 86. The company may by extraordinary resolution remove any director before the expiration of his period of office, and may by an ordinary resolution appoint another person in his stead ; the person so appointed shall be subject to retirement at the same time as if he had become a director on the day on which the director in whose place he is appointed was last elected a director. Proceedings of directors 87. The directors may meet together for the despatch of business, adjourn and otherwise regulate their meetings, as they think fit. Questions arising at any meeting shall be decided by a majority of votes. In case of an equality of votes, the chairman shall have a second or casting vote. A director may, and the secretary on the requisition of a director shall, at any time, summon a meeting of directors. 88. The quorum necessary for the transaction of the business of the directors may be fixed by the directors, and unless so fixed shall (when the number of directors exceeds three) be three. 89. The continuing directors may act notwithstanding any vacancy in their body, but, if and so long as their number is reduced below the number fixed by or pursuant to the regulations of the company as the necessary quorum of directors, the continuing directors may act for the purpose of increasing the number of directors 553 to that number, or of summoning a general meeting of the company, but for no other purpose. 90. The directors may elect a chairman of their meetings and determine the period for which he is to hold office ; but if no such chairman is elected, or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same the directors present may choose one of their number to be chairman of the meeting. 91. The directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit; any committee so 1[formed] shall, in the exercise of the powers so delegated, conform to any regulations that may be imposed on them by the directors. 92. A committee may elect a chairman of their meetings: if no such chairman is elected, or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the members present may choose one of their number to be chairman of the meeting. 93. A committee may meet and adjourn as they think proper. Questions arising at any meeting shall be determined by a majority of votes of the members present, and in case of an equality of votes, the chairman shall have a second or casting vote. 94. All acts done by any meeting of the directors or of a com- mittee of directors, or by any person acting as a director, shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any such directors or persons acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a director. Dividends and Reserve 95. The company in general meeting may declare dividends, but no dividends shall exceed the amount recommended by the directors. 96. The directors may from time to time pay to the members such interim dividends as appear to the directors to be justified by the profits of the company. ———————————————————————- 1 Subs. by Act 10 of 1914, Sch. I, for “found”. ———————————————————————- 554 97.No dividends shall be paid otherwise than out of profits 1[of the year or any other undistributed profits]. 98.Subject to the rights of persons (if any) entitled to shares with special rights as to dividends, all dividends shall be declared and paid according to the amounts paid on the shares, but if and so long as nothing is paid upon any of the shares in the company, divi- dends may be declared and paid according to the amounts of the shares. No amount paid on a share in advance of calls shall, while carrying interest, be treated for the purposes of this article as paid on the share. 99.The directors may, before recommending any dividend, set aside out of the profits of the company such sums as they think proper as a reserve or reserves which shall, at the discretion of the directors, be applicable for meeting contingencies, or for equalizing dividends, or for any other purpose to which the profits of the company may be properly applied, and pending such application may, at the like discretion, either be employed in the business of the company or be invested in such investments (other than shares of the company) as the directors may from time to time think fit. 100. If several persons are registered as joint-holders of any share, any one of them may give effectual receipts for any dividend payable on the share. 101. Notice of any dividend that may have been declared shall be given in manner hereinafter mentioned to the persons entitled to share therein. 102. No dividend shall bear interest against the company. Accounts 2[103. The directors shall cause to be kept 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 receipts and expenditure take place: (b) all sales and purchases of goods by the company: (c) the assets and liabilities of the company.] ———————————————————————- 1 Ins. by Act 22 of 1936, s. 122. 2 Subs. by s. 122, ibid., for the original regulation. ———————————————————————- 555 1[104. The books of account shall be kept at the registered office of the company or at such other place as the directors shall think fit and shall be open to inspection by the directors during business hours.] 105. The directors shall from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the company or any of them shall be open to the inspection of members not being directors, and no member (not being a director) shall have any right of inspecting any account or book or document of the company except as conferred by law or authorized by the directors or by the company in general meeting. 1[106. The directors shall as required by sections 131 and 131A of the Indian Companies Act, 1913, cause to be prepared and to be laid before the company in general meeting such profit and loss accounts, 2[income and expenditure accounts], balance-sheets, and reports as are referred to in those sections.] 107. The profit and loss account shall, 3[in addition to the

matters referred to in sub-section (3) of section 132 of the Indian Companies Act, 1913 (7 of 1913)], show, arranged under the most con- venient heads, the amount of gross income 4[(diminished in the case of a banking company by the amount of any provision made to the satis- faction of the auditors for bad and doubtful debts)] distinguishing the several sources from which it has been derived, and the amount of gross expenditure distinguishing the expenses of the establishment, salaries and other like matters. Every item of expenditure fairly chargeable against the year’s income shall be brought into account, so that a just balance of profit and loss may be laid before the meeting, and, in cases where any item of expenditure which may in fairness be distributed over several years has been incurred in any one year, the whole amount of such item shall be stated, with the addition of the reasons why only a portion of such expenditure is charged against the income of the year. ———————————————————————- 1 Subs. by Act 22 of 1936, s. 122, for the original regulation. 2 Ins. by Act 2 of 1938, s. 19. 3 Ins. by Act 22 of 1936, s. 122. 4 Ins. by Act 30 of 1943, s. 4 .(with retrospective effect). ———————————————————————

108. A balance-sheet shall be made out in every year and laid before the company in general meeting made up to a date not more than six months before such meeting. The balance-sheet shall be accompanied by a report of the directors as to the state of the com- pany’s affairs, and the amount which they recommend to be paid by way of dividend, and the amount (if any) which they propose to carry to a reserve fund. 109. A copy of the balance-sheet and report shall, 1[fourteen] days previously to the meeting, be sent to the persons entitled to receive notices of general meetings in the manner in which notices are to be given hereunder. 110. The directors shall in all respects comply with the provisions of sections 130 to .135 of the Indian Companies Act, 1913 (7 of 1913), or any statutory modification thereof for the time being in force. Audit 111. Auditors shall be appointed and their duties regulated in accordance with sections 144 and 145 of the Indian Companies Act, 1913 (7 of 1913), or any statutory modification thereof for the time being in force. Notices

112. (1) A notice may be given by the company to any member either personally or by sending it by post to him to his registered address or (if he has no registered address in India) to the address, if any, within India supplied by him to the company for the giving of notices to him.

(2) Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, prepaying and posting a letter containing the notice and, unless, the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post. 113. If a member has no registered address in India and has not supplied to the company an address within India for the giving of notices to him, a notice addressed to him and advertised in a newspaper circulating in the neighbourhood of the registered ———————————————————————- 1 Subs. by Act 2 of 1938, s. 19, for “seven”. ———————————————————————- 557 office of the company shall be deemed to be duly given to him on the day on which the advertisement appears. 114. A notice may be given by the company to the joint-holders of a share by giving the notice to the joint-holder named first in the register in respect of the share. 115. A notice may be given by the company 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 assignee 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 the same might have been given if the death or insolvency had not occurred. 116. Notice of every general meeting shall be given in some manner hereinbefore authorized to (a) every member of the company (including bearers of share-warrants) except those members who (having no registered address within India) have not supplied to the company an address within India for the giving of notices to them, and also to (b) every person entitled to a share in consequence of the death or insolvency of a member, who but for his death or insolvency would be entitled to receive, notice of the meeting. 1* * *. ———————————————————————- 1 The words “No other persons shall be entitled to receive notices of general meetings.” rep. by Act 2 of 1938, s. 19. ———————————————————————- PART PRELIMINARY PART I PRELIMINARY

Short title, commencement and extent.

1. Short title, commencement and extent.-(1) This Act may be called the Companies Act, 1956.

(2) It shall come into force on such date as the Central Govern- ment may, by notification in the Official Gazette, appoint.

(3) It extends to the whole of India except the State of Jammu and Kashmir.

Definitions. 2. Definitions.-In this Act, unless the context otherwise re- quires,-

(1) “alter” and “alteration” shall include the making of additions and omissions;

(2) “articles” means the articles of association of a company as originally framed or as altered from time to time in pursuance of any previous companies law or of this Act, including, ———————————————————————- 1.1st April, 1956. See Gazette of India, Extraordinary, 1956, Part II, Section 3, P. 413. ———————————————————————- 35 so far as they apply to the company, the regulations contained, as the case may be in Table B in the Schedule annexed to Act No. 19 of 1857 or in Table A in the First Schedule annexed to the Indian Companies Act, 1882 (6 of 1882); or in Table A in the First Schedule annexed to the Indian Companies Act, 1913 (7 of 1918), or in Table A in Schedule I annexed to this Act:

(3) “associate”, in relation to a managing agent, means any of the following, and no others:- (a) where the managing agent is an individual: any partner or relative of such individual; any firm in which such individual, partner or relative is a partner; any private company of which such individual or any such partner, relative or firm is the managing agent or secretaries and treasurers or a director or the manager; and any body corporate at any general meeting of which not less than one-third of the total voting power in regard to any matter may be exercised or controlled by any one or more of the following, namely, such individual, partner or partners, relative or re- latives, firm or firms; and private company or companies; (b) where the managing agent is a firm: any member of such firm; any partner or relative of any such member; and any other firm in which any such member, partner or relative is a partner; any private company of which the firm first mentioned, or any such member, partner, relative or other firm is the managing agent, or secretaries and treasurers, or a director, or the manager; and any body corporate at any general meeting of which not less than one-third of the total voting power in regard to any matter may be exercised or controlled by any one or more of the following, namely, the firm firstmentioned, any such member or members, partner, or partners, relative or relatives, other firm or firms and private company or com- panies; 36 (c) where the managing agent is a body corporate: (i) any subsidiary or holding company of such body corporate; the managing agent or secretaries and treasurers, or a director, the manager or an officer of the body corporate or of any subsidiary or holding company thereof; any partner or relative of any such director or manager; any firm in which such director, manager, partner or relative, is a partner; and (ii) any other body corporate at any general meeting of which not less than one-third of the total voting power in regard to any matter may be exercised or controlled by any one or more of the following, namely, the body corporate and the companies and other persons specified in paragraph (i) above; and (d) where the managing agent is a private company or a body corporate having not more than fifty members: in addition to the persons men- tioned in sub-clause (c), any member of the private company or. body corporate; Explanation.-If one person is an associate in relation to another within the meaning of this clause, the latter shall also be deemed to be an associate in relation to the former within its meaning;

(4) “associate”, in relation to any secretaries and treasurers, means any of the following, and no others:- (a) where the secre- taries and trea- surers are a firm: any member of such firm; any partner or relative of any such member; and any other firm in which any such member, partner, or relative is a partner; any private company of which the firm first-mentioned, or any such member, partner, relative or other firm is the managing agent, or secretaries and treasurers, or a director, or the manager; and any body corporate at any general meeting of which not 37 less than one-third of the total voting power in regard to any matter may be exercised or controlled by any one or more of the following, namely, the firm first-mentioned, any such member or members, partner or partners, relative or relatives, other firm or firms, and private company or companies; (b) where the secre- taries, and tre- asurers are a body corporate: (i) any subsidiary or holding company of such body corporate; the managing agent or secretaries and treasurers, or a director, the manager or an officer of the body corporate or of any subsidiary or holding company thereof; any partner or relative of any such director or manager; any firm in which such director or manager, part- ner or relative, is a partner; and (ii) any other body corporate at any general meeting of which not less than one-third of the total voting power in regard to any matter may be exercised or controlled by any one or more of the following, namely, the body corporate and the companies and other persons specified in paragraph (i) above; and (c) Where the secre- taries and trea- surers are a pri- vate company or a body corporate having not more than fifty mem- bers: in addition to the persons mentioned in sub-clause (b), any member of the private company or body corporate; Explanation.-If one person is an associate in relation to another within the meaning of this clause, the latter shall also be deemed to be an associate in relation to the former within its meaning ;

(5) “banking company” has the same meaning as in the Banking Companies Act, 1949 (10 of 1949);

(6) “Board of directors” or “Board”, in relation to a company, means the Board of directors of the company ;

(7) “body corporate” or “corporation” includes a company incorporated outside India but does not include a corporation sole;

(8) “book and paper” and “book or paper” include accounts, deeds, writings, and documents;

(9) “branch office” means any establishment described as a branch by the company, not being an establishment specified in an order passed by the Central Government in pursuance of section 8;

(10) “company” means a company as defined in section 3;

(11) “the Court’ means, with respect to any matter relating to a company, the Court having jurisdiction under this Act with respect to that matter in relation to that company, as provided in section 10;

(12) “debentures” includes debenture stock, bonds and any other securities of a company, whether constituting a charge on the assets of the company or not ;

(13) “director” includes any person occupying the position of director, by whatever name called;

(14) “District Court” means the principal Civil Court of original jurisdiction in a district, but does not include a High Court in the exercise of its ordinary original civil jurisdiction;

(15) “document” includes summons, notice, requisition, order, other legal process, and registers, whether issued, sent or kept in pursuance of this or any other Act or otherwise;

(16) “existing company” means an existing company as defined in section 3:

(17) “financial year” means, in relation to any body corporate, the period in respect of which any profit and loss account of the body corporate laid before it in annual general meeting is made up, whether that period is a year or not: Provided that, in relation to an insurance company, “financial

year” shall mean the calendar year referred to in sub-section (1) of section 11 of the Insurance Act, 1938 (4 of 1938);

(18) “Government company” means a Government company within the meaning of section 617;

(19) “holding company” means a holding company within the meaning of section 4;

(20) “India” means the territory of India excluding the State of Jammu and Kashmir;

(21) “insurance company” means a company which carries on the business of insurance either solely or in conjunction with any other business or businesses;

(22) “issued generally” means, in relation to a prospectus. issued to persons irrespective of their being existing members or debenture holders of the body corporate to which the prospectus relates;

(23) “limited company” means a company limited by shares or by guarantee; 39

(24) “manager” means an individual (not being the managIng agent) who, subject to the superintendence, control and direction of the Board of directors, has the-management of the whole, or substantially the whole,-of the affairs of a company. and includes a director or any other person occupying the position of a manager, by whatever name called, and whether under a contract of service or not;

(25) “managing agent” means any individual, firm or body corporate entitled, subject to the provisions of this Act, to the management of the whole, or substantially the whole, of the affairs of a company by virtue of an agreement with the company, or by virtue, of its memorandum or articles of association. and includes any ‘individual, firm or body corporate occupying the position of a managing agent, by whatever name called;

(26) “managing director” means a director who, by virtue of an agreement with the company or of a resolution passed by the company in general meeting or by its Board of directors or, by virtue of its memorandum or articles of association, is entrusted with any powers of management which would not otherwise be exercisable by him, and includes a director occupying the position of a managing director, by whatever name called;

(27) “member”, in relation to a company, does not include a bearer of a share-warrant of the company issued in pursuance of section 114;

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

(29) “modify” and “modification” shall include the making of additions and omissions;

(30) “officer” includes any director, managing agent, secretaries and treasurers, manager or secretary; where the managing agent or the secretaries and treasurers are a firm, also includes any partner in the firm; and where the managing agent or the secretaries and treasurers are a body corporate, also includes any director, managing agent, secretaries and treasurers or manager of the body corporate; but, save in sections 477, 478, 539, 543, 545, 621, 625 and 633 does not include an auditor;

(31) “officer who is in default”, in relation to any provision referred to in section 5, has the meaning specified in that section;

(32) “paid-up capital”, or “capital paid up” includes capital credited as paid-up;

(33) “prescribed” means, as respects the provisions of this Act

relating to the winding up of companies except sub-section (5) of

section 503, sub-section (1) of section 549 and sub-section (3) of section 550, prescribed by rules made by the Supreme Court in consultation with High Courts, and as respects the other provisions of

this Act including sub-section (5) of section 503, sub-section (1) of

section 549 and sub-section (3) of section 550, prescribed by rules made by the Central Government: 40

(34) “previous companies law” means any of the laws specified in

clause (ii) of sub-section (1) of section 3;

(35) “private company” means a private company as defined in section 3;

(36) “prospectus” means any prospectus, notice, circular, advertisement or other document inviting offers from the public for the subscription or purchase of any shares in, or debentures of, a body corporate;

(37) “public company” means a public company as defined in section 3;

(38) “public holiday” means a public holiday within the meaning of the Negotiable Instruments Act, 1881 (26 of 1881): Provided that no day declared by the Central Government to be a public holiday shall be deemed to be such a holiday, in relation to any meeting, unless the declaration was notified before the issue of the notice convening such meeting;

(39) “recognised stock exchange” means, in relation to any provision of this Act in which it occurs, a stock exchange, whether in or outside India, which is notified by the Central Government in the Official Gazette as a recognised stock exchange for the purposes of that provision;

(40) “Registrar” means a Registrar, or an Additional, a Joint, a Deputy or an Assistant Registrar, having the duty of registering companies under this Act

(41) “relative” means, with reference to any person, any one who is related to such person in any of the ways specified in section 6, and no others;

(42) “Schedule” means a Schedule annexed to this Act;

(43) “Scheduled Bank” has the same meaning as in the Reserve Bank of India Act, 1934 (2 of 1934);

(44) “secretaries and treasurers” means any firm or body corporate (not being the managing agent) which, subject to the superintendence, control and direction of the Board of directors, has the management of the whole, or substantially the whole, of the affairs of a company; and includes any firm or body corporate occupying the position of secretaries and treasurers, by whatever name called, and whether under a contract of service or not;

(45) “secretary” means the person, if any, who is appointed to perform the duties which may be Performed by a secretary under this Act;

(46) “share” means share in the share capital of a company, and includes stock except where a distinction between stock and shares is expressed or implied;

(47) “subsidiary company” or “subsidiary” means a subsidiary company within the meaning of section 4; 41

(48) “total voting power”, in regard to any matter relating to a body corporate, means. the total number of votes which may be cast in regard to that matter on a poll at a meeting of such body, if all the members thereof and all other persons, if any, having a right to vote on that matter are present at the meeting, and cast their votes;

(49) “trading corporation” means a trading corporation within the meaning of entries 43 and 44 in List I in the Seventh Schedule to the Constitution;

(50) “variation” shall include abrogation; and “vary” shall include abrogate.

Definitions of “company”, “existing company”, “private company” and”public company”. 3. Definitions of “company”, “existing company”, “private com-

pany” and “public company”.-(1) In this Act, unless the context otherwise requires, the expressions “company”, “existing company” “private company” and “Public company”, shall, subject to the

provisions of sub-section (2), have the meanings specified below:- (i) “company” means a company formed and registered under this Act or an existing company as defined in clause (ii); (ii) “existing company” means a company formed and regis- tered under any of the previous companies laws specified below:- (a) any Act or Acts relating to companies in force before the Indian Companies Act, 1866 (10 of 1866) and repealed by that Act; (b) the Indian Companies Act, 1866 (10 of 1986); (c) the Indian Companies Act, 1882 (6 of 1882); (d) the Indian Companies Act, 1913 (7 of 1913); (e) the Registration of Transferred Companies Ordinance, 1942 (54 of 1942); and (f) any law corresponding to any of the Acts or the Ordinance aforesaid and in force in the merged territories or in a Part B State, or any part thereof, before the extension thereto of the Indian Companies Act, 1913 (7 of 1913); (iii) “private company” means a company which, by its articles,- (a) restricts the right to transfer its shares, if any; (b) limits the number of its members to fifty not including- (i) persons who are in the employment of the company, and (ii) persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased; and (c) prohibits any invitation to the public to subscribe for any shares in, or debentures of, the company : Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this definition, be treated as a single member; 42 (iv) “public company” means a company which is not a private company.

(2) Unless the context otherwise requires, the following companies shall not be included within the scope of any of the

expressions defined in clauses (i) to (iv) of sub-section (1), and such companies shall be deemed, for the purposes of this Act, to have been formed and registered outside India :- (a) a company the registered office whereof is in Burma, Aden or Pakistan and which immediately before the separation of that country from India was a company as

defined in clause (i) of sub-section (1); (b) a company the registered office whereof is in the State of Jammu and Kashmir and which immediately before the 26th day of January, 1950, was a company as defined in clause (i) aforesaid.

Meaning of “holding company” and “subsidiary”.

4. Meaning of “holding company” and “subsidiary”.-(1) For the purposes of this Act, a company shall, subject to the provisions of

sub-section (3), be deemed to be a subsidiary of another if, but only if,– (a) that other controls the composition of its Board of directors; or (b) that other holds more than half in nominal value of its equity share capital; or (c) the first-mentioned company is a subsidiary of any company which is that other’s subsidiary. Illustration Company B is a subsidiary of Company A, and Company C is a subsidiary of Company B. Company C ill a subsidiary of Company A by virtue of clause (c) above. If Company D is a subsidiary of Company C, Company D will be subsidiary of Company B and consequently also of Company A, by virtue of clause (c) above; and so on.

(2) For the purposes of sub-section (1), the composition of a company’s Board of directors shall be deemed to be controlled by another company if, but only if, that other company by the exercise of some power exercisable by it at its discretion without the consent or Concurrence of any other person, can appoint or remove the holders of all or a majority of the directorships; but for the purposes of this provision that other company shall be deemed to have power to appoint to a directorship with respect to which any of the following conditions is satisfied, that is to say- (a) that a person cannot be appointed thereto without the exercise in his favour by that other company of such a power as aforesaid; (b) that a person’s appointment thereto follows necessarily from his appointment as director, managing agent, secretaries and treasurers, or manager of, or to any other office or employment in, that other company; or (c) that the directorship is held by that other company itself or by a subsidiary of it. 43

(3) In detedmining whether one copany is a subsidiary of another- (a) any shares held or power exercisable by that other com- pany in a fiduciary capacity shall be treated as not held or exercisable by it; (b) subject to the provisions of clauses (c) and (d), any shares held or power exercisable- (i) by any person as a nominee for that other company (except where that other is concerned only in a fiduciary capacity); or (ii) by, or by a nominee for, a subsidiary of that other company, not being a subsidiary which is concerned only in a fiduciary capacity; shall be treated. as held or exercisable by that other company; (c) any shares held or power exercisable by any person by virtue of the provisions of any debentures of the first- mentioned company or of a trust deed for securing any issue of such debentures shall be disregarded; (d) any shares held or power exercisable by, or by a nominee for, that other or its subsidiary [not being held or exercisable as mentioned in clause (c)] shall be treated as not held or exercisable by that other, if the ordinary business of that other or its subsidiary, as the case may be, includes the lending of money and the shares are held or the. power is exercisable as aforesaid by way of security only for the purposes of a transaction entered into in the ordinary course of that business.

(4) For the purposes of this Act, a company shall be deemed to be the holding company of another if, but only if, that other is its subsidiary.

(5) In this section, the expression “company” includes any body corporate, and the expression “equity share capital” has the same

meaning as in sub-section (2) of section 85.

(6) In the case of a body corporate which is incorporated in a country outside India, a subsidiary or holding company of the body corporate under the law of such country shall be deemed to be a subsidiary or holding company of the body corporate within the meaning and for the purposes of this Act also, whether the requirements of this section are fulfilled or not.

Meaning of “officer who is in default”. 5. Meaning of “officer who is in default”.-For the purpose of any provision in this Act which enacts that an officer of the company who is in default shall be liable to any punishment or penalty, whether by way of imprisonment, fine or otherwise, the expression “officer who is in default” means any officer of the company who is knowingly guilty of the default, noncompliance, failure, refusal or contravention mentioned in that provision, or who knowingly and wilfully authorises or permits such default, non-compliance, failure, refusal or contravention.

Meaning of “relative”. 6.Meaning of “relative”.-Two persons shall be deemed to be “relatives” if, and only if, they are husband and wife, or the one or 44 the spouse of the one is related to the other or the spouse of the other, whether by legitimate or illegitimate descent or by adoption and whether by full blood or by half blood, in any of the following ways, namely: – (i) as parent and Child; (ii) as grand-parent and grand-child; (iii) as brothers or sisters, or as brother and sister; (iv) as uncle or aunt, and nephew or niece; (v) as first cousins, that is to say, as persons having a common grand-parent, provided the cousins are members of a Hindu joint family whether governed by the Mitakshara, the Dayabagha, the Marumakhathayam, the Aliyasanthana or any other system of law.

Interpretation of “person in accordance with whose directions orInstructions directors are accustomed to act’. 7. Interpretation of “person in accordance with whose directions or Instructions directors are accustomed to act’:-Except where this Act expressly provides otherwise, a person shall not be (teemed to be, within the meaning of any provision in this Act, a person in accordance with whose directions or instructions the Board of directors of a company is accustomed to act, by reason only that the Board acts on advice given by him in a professional capacity.

Power of Central Government to declare an establishment not to be abranch office. 8. Power of Central Government to declare an establishment not to be a branch office.-The Central Government may, by order, declare that in the case of any company, not being a banking or an insurance company, any establishment carrying on either the same or substantially the same activity as that carried on by the bead office of the company, or any production or manufacture, shall not be treated as a branch office of the company for all or any of the purposes of this Act.

Act to override memorandum, articles, etc. 9. Act to override memorandum, articles, etc.-Save as otherwise expressly provided in the Act- (a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in the memorandum or articles of a company, or in any agreement executed by it, or in any resolution passed by the company in general meeting or by its Board of directors, whether the same be registered, executed or passed, as the case may be, before or after the commencement of this Act; and (b) any provision contained in the memorandum, articles, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be.

Jurisdiction of Courts.

10. Jurisdiction of Courts.-(1) The Court having jurisdiction under this Act shall be- (a) the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate, except to the extent to which jurisdiction has been conferred on any District Court or District Courts subordinate to that High Court in pursuance of sub-section

(2); and 45 (b) where jurisdiction has been so conferred, the District Court in regard to matters falling within the scope of the jurisdiction conferred, in respect of companies having their registered offices in the district.

(2) The Central Government may, by notification in the Official Gazette and subject to such restrictions, limitations and conditions as it thinks fit, empower any District Court to exercise all or any of the jurisdiction. conferred by this Act upon the Court, not being the jurisdiction conferred- (a) in respect of companies generally, by sections 237, 391, 394, 395 and 397 to 407, both inclusive; (b) in respect of companies with a paid-up share capital of not less than one lakh of rupees, by Part VII (sections 425 to 560) and the other provisions of this Act relating to the winding up of companies.

(3) For the purposes of jurisdiction to wind up companies, the expression “registered office” means the place which has longest been the registered office of the company during the six months immediately preceding the presentation of the petition for winding up. PART INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO PART II INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO Certain companies, associations and partnerships to be registered as companies under Act

Prohibition of associations and partnerships exceeding certainnumber. 11. Prohibition of associations and partnerships exceeding

certain number.-(1) No company, association or partnership consisting of more than ten persons shall be formed for the purpose of carrying on the business of banking, unless it is registered as a company under this Act, or is formed in pursuance of some other Indian law.

(2) No company, association or partnership consisting of more than twenty persons shall be formed for the purpose of carrying on any other business that has for its object the acquisition of gain by the company association or partnership, or by the individual members thereof, unless it is registered as a company under this Act, or is formed in pursuance of some other Indian law.

(3) This section shall not apply to a joint family as such carrying on a business; and where a business is carried on by two or more joint families, in computing the number of persons for the

purposes of sub-sections (1) and (2), minor members of such families shall be excluded.

(4) Every member of a company, association or partnership carrying on business in contravention of this section shall be personally liable for all liabilities incurred in such business.

(5) Every person who is a member of a company, association or partnership formed in contravention of this section shall be punishable with fine which may extend to one thousand rupees. Memorandum of Association

Mode of forming incorporated company.

12. Mode of forming incorporated company.-(1) Any seven or more persons, or where the company to be formed will be a private company, any two or more persons, associated for any lawful purpose may, by subscribing their names to 45 a memorandum of association and otherwise complying with the re- quirements of this Act in respect of registration, form an incorporat- ed company, with or without limited liability.

(2) Such a company may be either- (a) a company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them (in this Act termed “a company limited by shares”); (b) a company having the liability of its members limited by the memorandum to such amount as the members may respec- tively undertake by the memorandum to contribute to the assets of the company in the event of its being wound up (in this Act termed “a company limited by guarantee”); or (c) a company not having any limit on the liability of its members On this Act termed “an unlimited company”).

Requirements with respect to memorandum.

13. Requirements with respect to memorandum.-(1) The memorandum of every company shall state- (a) the name of the company with “Limited” as the last word of the name in the case of a public limited company, and with “Private Limited” as the last words of the name in the case of a private limited company; (b) the State in which the registered office of the company is to be situate; and (c) the objects of the company, and, except in the case of trading corporations, the State or States to whose territories the objects extend.

(2) The memorandum of a company limited by shares or by guarantee shall also state that the liability of its members is limit- ed.

(3) The memorandum of a company limited by guarantee shall also state that each member undertakes to contribute to the assets of the company in the event of its being wound up while he is a member or within one year after he ceases to be a member, for payment of the debts and liabilities of the company, or of such debts and liabilities of the company as may have been contracted before he ceases to be a member, as the case may be, and of the costs, charges and expenses of winding up, and for adjustment of the rights of the contributories among themselves, such amount as may be required, not exceeding a specified amount.

(4) In the case of a company having a share capital- (a) unless the company is an unlimited company, the memorandum shall also state the amount of share capital with which the company is to be registered and the division thereof into shares of a fixed amount; (b) no subscriber of the memorandum shall take less than one share; and (c) each subscriber of the memorandum shall write opposite to his name the number of shares he takes. 47

Form of memorandum. 14. Form of memorandum.-The memorandum of association of a company shall be in such one of the Forms in Tables B, C, D and E in Schedule I as may be applicable to the case of the company, or in a Form as near thereto as circumstances admit.

Printing and signature of memorandum. 15. Printing and signature of memorandum.-The memorandum shall- (a) be printed, (b) be divided into paragraphs numbered consecutively, and (c) be signed by each subscriber (who shall add his address, description and occupation, if any,) in the presence of at least one witness who shall attest the signature and shall likewise add his address, description and occupation, if any.

Alteration of memorandum.

16. Alteration of memorandum.-(1) A company shall not alter the conditions contained in its memorandum except in the cases, in the mode, and to the extent, for which express provision is made in this Act.

(2) Only those provisions which are required by section 13 or by any other specific provision contained in this Act, to be stated in the memorandum of the company concerned shall be deemed to be conditions contained in its memorandum.

(3) Other provisions contained in the memorandum, including those relating to the appointment of a managing director, managing agent, secretaries and treasurers or manager, may be altered in the same manner as the articles of the company, but if there is any express provision in this Act permitting of the alteration of such provisions in any other manner, they may also be altered in such other manner.

(4) All references to the articles of a company in this Act shall be construed as including references to the other provisions aforesaid contained in its memorandum.

Special resolution and confirmation by Court required for alterationof memorandum. 17. Special resolution and confirmation by Court required for

alteration of memorandum.-(1) A company may, by special resolution, alter the provisions of its memorandum so as to change the place of its registered office from one State to another, or with respect to the objects of the company so far as may be required to enable it- (a) to carry on its business more economically or more efficiently; (b) to attain its main purpose by new or improved means; (c) to enlarge or change the local area of its operations; (d) to carry on some business which under existing cir- cumstances may conveniently or advantageously be combined with the business of the company ; 48 (e) to restrict or abandon any of the objects specified in the memorandum; (f) to sell or dispose of the whole; or any part, of the under, taking, or of any of the undertakings, of the company; or (g) to amalgamate with any other company or body of per- sons.

(2) The alteration shall not take effect until, and except in so far as, it is confirmed by the Court on petition.

(3) Before confirming the alteration, the Court must be satisfied- (a) that sufficient notice has been given to every holder of the debentures of the company, and to every other person or class of persons whose interests will, in the opinion of the Court, be affected by the alteration ; and (b) that, with respect to every creditor who, in the opinion of the Court, is entitled to object to the alteration, and who signifies his objection in the manner directed by the Court, either his consent to the alteration has been obtained or his debt or claim has been discharged or has determined, or has been secured to the satisfaction of the Court: Provided that the Court may, in the case of any person or class of persons, for special reasons, dispense with the notice required by clause (a).

(4) Notice of the alteration shall also be given to the Registrar and he shall be given a reasonable opportunity to appear before the Court and state his objections and suggestions, if any, with respect to the confirmation of the alteration.

(5) The Court may make an order confirming the alteration either wholly or in part, and on such terms and conditions, if any, as it thinks fit, and may make such order as to costs as it thinks proper.

(6) The Court shall, in exercising its powers under this section have regard to, the rights and interests of the members of the company and of every class of them, as well as to the rights and interests of the creditors of the company and of every class of them.

(7) The Court may, If it thinks fit, adjourn the proceedings in order that an arrangement may be made to the satisfaction of the Court for the purchase of the interests of dissentient members; and may give such directions and make such orders as it thinks fit for facilitating, or carrying into effect, any such arrangement: Provided that part of the capital of the company may be expended in any such purchase.

Alteration to be registered within three months.

18. Alteration to be registered within three months.-(1) A certified copy of the order confirming the alteration, together with a printed copy of the memorandum as altered, shall, within three months 49 from the date of the order, be filed by the company with the Regis- trar, and he shall register the same, and shall certify the registration under his hand.

(2) The certificate shall be conclusive evidence’ that all the requirements of this Act with respect to the alteration and the con- firmation thereof have been complied with, and thenceforth the memorandum as so altered shall be the memorandum of the company.

(3) Where the alteration involves a transfer of the registered office from one State to another, a certified copy of the order confirmIng the alteration shall be filed by the company with the Registrar of each of the States, and the Registrar of each such State shall register the same, and shall certify under his hand the registration thereof; and the Registrar of the State from which such office is transferred shall send to the Registrar of the other State all documents relating to the company registered, recorded or filed in his office.

(4) The Court may, at any time, by order, extend the time for the fling of documents under this section by such period as it thinks proper.

Effect of failure to register.

19. Effect of failure to register.-(1) No such alteration as is referred to in section 17 shall have any effect until it has been duly registered in accordance with the provisions of section 18.

(2) If the registration is not effected within three months next after the date of the order of the Court confirming the alteration, or within such further time as may be allowed by the Court under sub-

section (4) of section 18, such alteration and order and all proceed- ings connected therewith shall, at the expiry of such period of three months or of such further time, as the case may be, become void: Provided that the Court may, on sufficient cause shown, revive the order on application made within a further period of one month. Provisions with respect to names of companies

Companies not to be registered with undesirable names.-

20. Companies not to be registered with undesirable names. (1) No company shall be registered by a name which, in the opinion of the Central Government, is undesirable.

(2) Without prejudice to the generality of the foregoing power, a name which is identical with, or too nearly resembles, the name by which a company in existence has been previously registered, may be deemed to be undesirable by the Central Government within the meaning

of sub-section (1).

Change of name by company. 21. Change of name by company.-A company may, by special resolution and with the approval of the Central Government signified in writing, change its name.

Rectification of name of company.

22. Rectification of name of company.-(1) If, through inadver- tence or otherwise, a company on its first registration or on its registration by a new name, is registered by a name which, in the opinion of the Central Government, is Identical with, or too nearly resembles, the name by which a company in existence has been pre- 50 viously registered, whether under this Act or any previous companies law, the first-mentioned company- (a) may, by ordinary resolution and with the previous ap. proval of the Central Government signified in writing, change its name or new name; and (b) shall, if the Central Government so directs within twelve months of its first registration or registration by its new name, as the case may be, or within twelve months of the commencement of this Act, whichever is later, by ordinary resolution and with the previous approval of the Central Government signified in writing, change its name or new name within a period of three months from the date of the direction or such longer period as the Central Government may think fit to allow.

(2) If a company makes default in complying with any direction

given under clause (b) of sub-section (1), the company, and every officer who is in default, shall be punishable with fine which may extend to one hundred rupees for every day during which the default continues.

Registration of change of name and effect thereof.

23. Registration of change of name and effect thereof.–(1) Where a company charges its name in pursuance of section 21 or 22, the Registrar shall enter the new name on the register in the place of the former name, and shall issue a fresh certificate of incorporation with the necessary alterations embodied therein; and the change of name shall be complete and effective only on the issue of such a certificate.

(2) The Registrar shall also make the necessary alteration in the memorandum of association of the company.

(3) The change of name shall not affect any rights or obligations of the company, or render defective any legal proceedings by or against it; and any legal proceedings which might have been continued or commenced by or against the company by its former name may be continued by or against the company by its new name.

Change of name of existing private limited companies.-

24. Change of name of existing private limited companies.-(1) In the case of a company which was a private limited company immediately before the commencement of this Act, the Registrar shall enter the word “Private” before the word “Limited” in the name of the company upon the register and shall also make the necessary alterations in the certificate of incorporation issued to the company and in its memorandum of association.

(2) Sub-section (3) of section 23 shall apply to a change of

name under sub-section (1), as it applies to a change of name under section 21.

Power to dispense with “Limited” in name of charitable or othercompany. 25. Power to dispense with “Limited” in name of charitable or

other company.-(1) Where’ it is proved to the satisfaction of the Central Government that an association– (a) is about to be formed as a limited company for promoting commerce, art, science, religion, charity or any other useful object, and

(b) intends to apply its profits, if any, or other income in promoting its objects, and to prohibit the payment of any dividend to its members, the Central Government may, by licence, direct that the association may be registered as a company with limited liability, without the addition to its name of the word “Limited” or the words “Private limited”.

(2) The association may thereupon be registered accordingly; and on registration shall enjoy all the privileges, and (subject to the provisions of this section) be subject to all the obligations, of limited companies.

(3) Where it is proved to the satisfaction of the Central Government- (a) that the objects of a company registered under this Act as a limited company are restricted to those specified in

clause (a) of sub-section (1), and (b) that by its constitution the company is required to apply its profits, if any, or other income in promoting its objects and is prohibited from paying any dividend to its, members, the Central Government may, by licence, authorise the company by a special resolution to charge its name, including or consisting of the omission of the word “Limited” or the words “Private Limited”; and section 23 shall apply to a change of name under this sub-section as it applies to a change of name under section 21.

(4) A firm may be a member of any association or company licensed under this section, but on the dissolution of the firm, its membership of the association or company shall cease.

(5) A licence may be granted by the Central Government under this section on such conditions and subject to such regulations as it thinks fit, and those conditions and regulations shall be binding on the body which the licence is granted, and where the grant is under

sub-section (1), shall, if the Central Government so directs, be inserted in the memorandum, or in the articles, or partly in the one and partly in the other.

(6) The body to which a licence is so granted shall be exempt from the provisions of this Act relating to- (a) the use of the word “Limited” or the words “Private Limited” as any part of its name, (b) the publishing of its name, (c) if the Central Government so directs and to the extent specified in the direction, the obligation laid on the company to send lists of its members to the Registrar, and (d) if the Central Government so directs and to the extent specified in the direction, the obligations laid on the company by section 303. 52

(7) The licence ‘may at any time be revoked by the Central Gov- ernment, and upon revocation, the Registrar shall enter the word “Limited” or the words “Private Limited” at the end of the name upon the register of the body to which it was granted; and the body shall cease to enjoy the exemption granted by this section: Provided that, before a licence is so revoked, the Central Government shall give notice in writing of its intention to the body, and shall afford it an opportunity of being heard in opposition to the revocation.

(8) Where a body in respect if Which a licence under this section is in force alters the provisions of its memorandum with respect to its objects, the Central Government may- (a) revoke the licence if it sees fit to do so, or (b) vary the licence by making it subject to such conditions and regulations as the Central Government thinks fit, in lieu of, or in addition to, the conditions and regulations, if any, to which the licence was formerly subject.

(9) Upon the revocation of a licence granted under this section to a body the name of which contains the words “Chamber of commerce”, that body shall, within a period of three months from the date of revocation or such longer period as the Central Government may think fit to allow, change its name to a name which does not contain those words; and- (a) the notice to be given under the proviso to sub-section

(7) to that body shall include a statement of the effect of the foregoing provisions of this sub-section; and (b) section 23 shall apply to a change of name under this sub-section as it applies to a change of name under section

(10) If the body makes default in complying with the requirements

of sub-section (9), it shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues. Articles of Association

Articles prescribing regulations. 26. Articles prescribing regulations.-There may in the case of a public company limited by shares, and there shall in the case of an unlimited company or a company limited by guarantee or a private company limited by shares, by registered with the memorandum, articles of association signed by the subscribers of the memorandum, prescribing regulations for the company.

Regulation required in case of unlimited company, company limited ‘byguarantee or private company limited by shares. 27.Regulation required in case of unlimited company, company

limited ‘by guarantee or private company limited by shares.-(1) ED the case of an unlimited company, the articles shall state the number of members with which the company is to be registered and, if the company has a share capital, the amount of share capital with which the company is to be registered. 53

(2) In the case of a company limited by guarantee, the articles shall state the number of members with which the company is to be registered.

(3) In the case of a private company having a share capital, the articles shall contain provisions relating to the matters specified in

sub-clauses (a), (b) and (c) of clause (iii) of sub-section (1) of section 3; and in the case of any other private company, the articles shall contain provisions relating to the matters specified in the said sub-clauses (b) and (c).

Adoption and application of Table A in the case of companies limitedby shares. 28. Adoption and application of Table A in the case of companies

limited by shares.-(1) The articles of association of a company limited by shares may adopt all or any of the regulations contained in Table A in Schedule I.

(2) In the case of any such company which is registered after the commencement of this Act, if articles are not registered, or if articles are registered, in so far as the articles do not exclude or modify the regulations contained in Table A aforesaid, those regula- tions shall, so far as applicable, be the regulations of the company in “he same manner and to the same extent as if they were contained in duly registered articles.

Form of articles in the case of other companies. 29. Form of articles in the case of other companies.-The articles of association of any company, not being a company limited by shares, shall be in such one of the Forms in Tables C, D and E in Schedule I as may be applicable, or in a Form as near thereto as circumstances admit.

Form and signature of articles. 30. Form and signature of articles.-Articles shall- (a) be printed; (b) be divided into paragraphs numbered consecutively; and (C) be signed by each subscriber of the memorandum of association (who shall add his address, description and occupation, if any), in the presence of at least one witness who shall attest the signature and shall likewise add his address, description and occupation, if any.

Alteration of articles by special resolution.

31. Alteration of articles by special resolution.-(1) Subject to the provisions of this Act and to the conditions contained in its memorandum, a company may, by special resolution, alter its articles.

(2) Any alteration so made shall, subject to the provisions of this Act, be as valid as if originally contained in the articles and be. subject in like manner to alteration by special resolution.

(3) The power of altering articles under this section shall, in the case of any company formed and registered under Act No. 19 of 1857 and Act No. 7 of 1860 or either of them, extend to altering any provisions in Table B annexed to Act 19 of 1857, and shall also;, in the case of an unlimited company formed and registered under the said Acts or either of them extend to altering any regulations relating to the amount of capital or its distribution into shares, notwithstanding that those regulations are contained in the memorandum. 54 Change of registration of companies

Registration of unlimited company as limited, etc.

32. Registration of unlimited company as limited, etc.-(1) Sub- ject to the provisions of this section,– (a) a company registered as unlimited may register under this Act as a limited company; and (b) a company already registered as a limited company may re-register under this Act.

(2) On registration in pursuance of this section, the Registrar shall close the former registration of the company, and may dispense with the delivery to him of copies of any documents with copies of which he was furnished on the occasion of the original registration of the company; but, save as aforesaid, the registration shall take place in the same manner and shall have effect, as if it were the first registration of the company under this Act.

(3) The registration of an unlimited company as a limited company under this section shall not affect any debts, liabilities, obligations or contracts incurred or entered into, by, to, with or on behalf of, the company before the registration, and those debts, lia- bilities, obligations and contracts may be enforced in the manner provided by Part IX of this Act in the case of a company registered in pursuance of that Part. General provisions with respect to memorandum and articles

Registration of memorandum and articles.

33. Registration of memorandum and articles.-(1) There shall be presented for registration, to the Registrar of the State in which the registered office of the company is stated by the memorandum to be situate- (a) the memorandum of the company; (b) its articles, if any; and (c) the agreement, if any, which the company proposes to enter into with any individual, firm or body corporate to be appointed as its managing agent, or with any firm or body corporate to be appointed as its secretaries and treasurers.

(2) A declaration by an advocate of the Supreme Court or of a High Court, an attorney or a pleader entitled to appear before a High Court, or a chartered accountant practising in India, who is engaged in the formation of a company, or by a person named in the articles as a director, managing agent, secretaries and treasurers, manager or secretary of the company, that all the requirements of this Act and the rules thereunder have been complied with in respect of registration and matters precedent and incidental thereto. shall be filed with the Registrar; and the Registrar may accept such a declaration as sufficient evidence of such compliance.

(3) If the Registrar is satisfied that all the requirements aforesaid have been complied with by the company and that it is autho- rised to be registered under this Act, he shall retain and register the memorandum, the articles, if any, and the agreement referred to in

clause (c) of sub-section (1), if any. 55

Effect of registration.

34. Effect of registration.-(1) On the registration of the memo- randum of a company, the Registrar shall certify under his hand that the company is incorporated and, in the case of a limited company, that the company is limited.

(2) From the date of incorporation mentioned in the certificate of incorporation, such of the subscribers of the memorandum and other persons, as may from time to time be, members of the company, shall be a body corporate by the name contained in the memorandum, capable forthwith of exercising all the functions of an incorporated company, and having perpetual succession and a common seal, but with such liability on the part of the members to contribute to the assets of the company in the event of its being wound up as is mentioned in this Act.

Conclusiveness of certificate of incorporation. 35. Conclusiveness of certificate of incorporation.-A certificate of incorporation given by the Registrar in respect of any association shall be conclusive evidence that all the requirements of this Act have been complied with in respect of registration and matters precedent and incidental thereto, and that the association is a company authorised to be registered and duly registered under this Act.

Effect of memorandum and articles.

36. Effect of memorandum and articles.-(1) Subject to the pro- visions of this Act, the memorandum and articles shall, when regis- tered, bind the company and the members thereof to the same extent as if they respectively had been signed by the company and by each member, and contained covenants on its and his part to observe all the provisions of the memorandum and of the articles.

(2) All money payable by any member to, the company under the memorandum or articles shall be a debt due from him to the company.

Provision as to companies limited by guarantee.

37. Provision as to companies limited by guarantee.-(1) In the case of a company limited by guarantee and not having a share capital, and registered on or after the first day of April, 1914, every provision in the memorandum or articles or in any resolution of the company purporting to give any person a right to participate in the divisible profits of the company otherwise than as a member shall be void.

(2) For the purpose of the provisions of this Act relating to the memorandum of a company limited by guarantee and of this section every provision in the memorandum or articles, or in any resolution, of any company limited by, guarantee and registered on or after the first day of April, 1914, purporting to divide the undertaking of the company into shares or interests, shall be treated as a provision for a share capital, notwithstanding that the nominal amount or number of the shares or interests is not specified thereby.

Effect of alteration in memorandum or articles. 38. Effect of alteration in memorandum or articles.-Notwith- standing anything in the memorandum or articles of a company, no member of the company shall be bound by an alteration made in the memorandum or articles after the date on which he became a member, if and so far as the alteration requires him to take or subscribe for more shares than the number held by him at the date on which the alteration is made, or in any way increases his liability as 56 at that date, to contribute to the share capital of, or otherwise to pay money to, the company: Provided that this section shall not apply in any case where the member agrees in writing either before or after a particular altera- tion is made, to be bound by the alteration.

Copies of memorandum and articles etc. to be given to members. 39. Copies of memorandum and articles etc. to be given to mem-

bers.–(1) A company shall, on being so required by a member, send to him within seven days of the requirement and subject to the payment of a fee of one rupee, a copy each of the following documents as in force for the time being– (a) the memorandum; (b) the articles, if any; (c) the agreement, if any, entered into or proposed to be entered into, by the company with any person appointed or to be appointed as its managing agent or as its secretaries and treasurers; and (b) every other agreement and every resolution referred to in section 192, if and in. so far as they have not been embodied in the memorandum or articles.

(2) If a company makes default in complying with the requirements of this section, the company, and every officer of the company who is in default, shall be punishable, for each offence, with fine. which may extend to fifty rupees.

Alteration of memorandum or articles etc. to be noted in every copy. 40. Alteration of memorandum or articles etc. to be noted in

every copy.–(1) Where an alteration is made in the memorandum or articles of a company, in the agreement referred to in clause (c) of

sub-section (1) of section 39 or in any other agreement. or any resolution, referred to in section 192, every copy of the memorandum, articles, agreement or resolution issued after the date of the alteration shall be in accordance with the alteration.

(2) If, at any time, the company issues any copies of the memorandum articles, resolution or agreement, which are not in accord- ance with the alteration or alterations made therein before that time, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to ten rupees for each copy so issued. Membership of company

Definition of “member”.

41, Definition of “member”.-(1) The subscribers of the memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration, shall be entered as members in its register of members.

(2) Every other person who agrees to become a member of a company and whose name is entered in its register of members, shall be a member of the company.

Membership of holding company.

42. Membership of holding company.-(1) Except in the cases mentioned in this section, a body corporate cannot be a member of a company which is its holding company and any allotment or transfer of shares in a company. to its subsidiary shall be void. 57

(2) Nothing in this section shall apply- (a) where the subsidiary is concerned as the legal repre- sentative of a deceased member of the holding company; or (b) where the subsidiary is concerned as trustee, unless the holding company or a subsidiary thereof is beneficially interested under the trust and is not so interested only by way of security for the purposes of a transaction entered into by it in the ordinary course of a business which includes the lending of money.

(3) This section shall not prevent a subsidiary from continuing to be a member of its holding company if it was a member thereof either at the commencement of this Act or before becoming a subsidiary of the holding company, but, except in the cases referred to in sub-

section (2), the subsidiary shall have no right to vote at meetings of the holding company or of any class of members thereof.

(4) Subject to subsection (2), sub-sections (1) and (3) shall apply in relation to a nominee for a body corporate which is a

subsidiary, as if references in the said sub-sections (1) and (3) to such a body corporate included references to a nominee for it.

(5) In relation to a holding company which is either a company limited by guarantee or an unlimited company, the reference La this section to shares shall, whether or not the company has a share capital, be construed as including a reference to the interest of its members as such, whatever the form of that interest. Private companies

Consequences of default in complying with conditions constituting acompany a private company. 43. Consequences of default in complying with conditions constituting a company a private company.-Where the articles of a company include the provisions which, under clause (iii) of subsection

(1) of section 3, are required to be included in the articles of a company in order to constitute it a private company, but default is made in complying with any of those provisions, the company shall cease to be entitled to the privileges and exemptions conferred on private companies by or under this Act, and this Act shall apply to the company as if it were not a private company: Provided that the Court, on being satisfied that the failure to comply with the conditions was accidental or due to inadvertence or to some other sufficient cause, or that on other grounds it is just, and equitable to grant relief, may, on the application of the company or any other person interested and on such terms and conditions as seem to the Court just and expedient, order that the company be relieved from such consequences as aforesaid.

Prospectus or statement in lieu of prospectus to he filed by privatecompany on ceasing to be private company. 44. Prospectus or statement in lieu of prospectus to he filed by

private company on ceasing to be private company.-(1) If a company, being a private company, alters its articles in such a manner that they no longer include the provisions which, under clause (iii) of

sub-section (1) of section 3, are required to be included in the articles of a company in order to constitute it a private company, the company- (a) shall, as on the date of the alteration, cease to be a private company; and 58 (b) shall, within a period of fourteen days after the said date, file with the Registrar either a prospectus or a statement in lieu of prospectus, as specified in sub-section

(2).

(2) (a) Every prospectus filed under sub-section (1) shall state the matters specified in Part I of Schedule II and set out the reports specified in Part II of that Schedule, and the said Parts I and II shall have effect subject to the provisions contained in Part III of that Schedule. (b) Every statement in lieu of prospectus filed under sub-

section (1) shall be in the form and contain the particulars set out in Part I of Schedule IV, and in the cases mentioned in Part II of that Schedule, shall set out the reports specified therein, and the said Parts I and II shall have effect subject to the provisions contained in Part III of that Schedule. (c) Where the persons making any such report as is referred to in clause (a) or (b) have made therein, or have, without giving the reasons, indicated therein, any such adjustments as are mentioned in clause 32 of Schedule II or clause 5 of Schedule TV, as the case may be, the prospectus or statement in lieu of prospectus filed as aforesaid, shall have endorsed thereon or attached thereto, a written statement signed by those persons, setting out the adjustments and giving the reasons therefor.

(3) If default is made in complying with sub-section (1) or (2), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues.

(4) Where any prospectus or statement in lieu of prospectus filed under this section includes any untrue statement, any person who authorised the filing of such prospectus or statement shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to five thousand rupees, or with both, unless he proves either that the statement was immaterial or that he had reasonable ground to believe, and did up to the time of the filing of the prospectus or statement believe, that the statement was true.

(5) For the purposes of this section- (a) a statement included in a Prospectus or a statement in lieu of prospectus shall be deemed to be untrue if it is misleading in the form and context in which it is included; and (b) where the omission from a prospectus or a statement In lieu of prospectus of any matter is calculated to mislead, the prospectus or statement in lieu of prospectus shall be deemed, in respect of such omission, to be a prospectus or a statement in lieu of prospectus in which an untrue statement is included.

(6) For the purposes of sub-section (4) and clause (a) of sub-

section (5), the expression “Included” when used with reference to a prospectus or statement in lieu of prospectus, means included in the prospectus or statement in lieu of prospectus itself or contained in any report or memorandum appearing on the face thereof, or by reference incorporated therein. 59 Reduction of number of members below legal minimum

Members severally liable for debts where business carried on withfewer than seven, or in the case of a private company, two members. 45. Members severally liable for debts where business carried on with fewer than seven, or in the case of a private company, two members.-If at any time the number of members of a company is reduced, in the case of a public company, below seven, or in the case of a private company, below two, and the company carries on business for more than six months while the number is so reduced every person who is a member of the company during the time that it so carries on business after those six months and is cognizant of the fact that it is carrying on business with fewer than seven members or two members, as the case may be, shall be severally liable for the payment of the whole debts of the company contracted during that time, and may be severally sued therefor. Contracts and deeds, investments, seat, etc.

Form of contracts.

46. Form of contracts.-(1) Contracts on behalf of a company may be made as follows:- (a) a contract which, if made between private persons, would by law be required to be in writing signed by the parties to be charged therewith, may be made on behalf of the company in writing signed by any person acting under its authority, express or implied, and may in the same manner be varied or discharged; (b) a contract which, if made between private persons, would by law be valid although made by parol only and not reduced into writing, may be made by parol on behalf of the company by any person acting under its authority, express or implied, and may in the same manner be varied or discharged.

(2) A contract made according to this section shall bind the company.

Bills of exchange and promissory notes. 47. Bills of exchange and promissory notes.-A bill of exchange, hundi or promissory note shall be deemed to have been made, accepted, drawn or endorsed on behalf of a company if drawn, accepted, made, or endorsed in the name of, or on behalf or on account of, the company by any person acting under its authority, express or implied.

Execution of deeds.

48. Execution of deeds.-(1) A company may, by writing under its common seal, empower any person, either generally or in respect of any specified matters, as its attorney, to execute deeds on its behalf in any place either in or outside India.

(2) A deed signed by such an attorney on behalf of the company and under his seal where sealing is required, shall bind the company and have the same effect as if it were under its common seal.

Investments of company to be held in its own name.

49. Investments of company to be held in its own name.-(1) Save

as otherwise provided in sub-sections (2) to (5) and subject to the

provisions of sub-sections (6) to (8),– (a) all investments made by a company on its own behalf shall be made and held by it in its own name; and (b) where any such investments are not so held at the commencement of this Act the company shall, within a period of one year from such commencement, either cause them to be transferred to, and hold them in, its own name, or dispose of them.

(2) Where the company has a right to appoint any person or persons, or where any nominee or nominees of the company has or have been appointed, as a director or directors of any other body corporate, shares in such other body corporate to an amount not exceeding the nominal value of the qualification shares which are required to be held by a director thereof, may be registered or held by such company jointly in the names of itself and of each such person or nominee or in the name of each such person or nominee expressly described as a nominee of the company.

(3) A company may hold any shares in its subsidiary in the name or names of any nominee or nominees of the company, if and in so far as it is necessary so to do, to ensure that the number of members of the subsidiary is not reduced, where it is a public company, below seven, and where it is a private company, below two.

(4) Sub-section (1) shall not apply to investments made by a company whose principal business consists of the buying and selling of shares or securities.

(5) Nothing in this section shall be deemed to pi-event a company- (a) from depositing with a bank, being the bankers of the company, any shares or securities for the collection of any dividend or interest payable thereon; or (b) from depositing with, or transferring to, any person any shares or securities, by way of security for the repayment of any loan advanced to the company or the performance of any obligation undertaken by it.

(6) The certificate or letter of allotment relating to the shares or securities in which investments have been made by a company

shall except in the cases referred to in sub-sections (4) and (5), be in the custody of such company or with a Scheduled Bank, being the bankers of the company.

(7) Where, in pursuance of sub-sections (2), (3), (4) or (5), any shares or securities in which investments have been made by a com- pany are not held by it in its own name, the company shall forthwith enter in a register maintained by it for the purpose- (a) the nature, value, and such other particulars as may be necessary fully to identify the shares or securities in question; and (b) the bank or person in whose name or custody the shares or securities are held.

(8) The register kept under sub-section (7) shall be open to the inspection of any member or debenture holder of the company without charge, during business hours, subject to such reasonable restrictions as the company may, by its articles or in general meeting, impose, so that not less than two hours in each day are allowed for inspection.

(9) If default is made in complying with any of the requirements

of sub-sections (1) to (8), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees. 61

(10) If any inspection required under sub-section (8) is refused, the Court may, by order, direct an immediate inspection of the register. Nothing in this sub-section shall be construed as prejudicing in

any way the operation of sub-section (9).

(11) In this section, “securities” includes stock and debentures.

Power for company to have official seal for use outside India. 50. Power for company to have official seal for use outside

India.- (1) A company whose objects require or comprise the transaction of business outside India may, if authorised by its articles, have for use in any territory, district or place not situate in India an official seal which shall be a facsimile of the common seal of the, company, with the addition on its face of the name of the territory, district’ or place where it is to be used.

(2) A company having an official seal for use in any such terri- tory, district or place may, by writing,. under its common seal, authorise any person appointed for-the purpose in that territory, dis- trict or place to affix the official seal to any deed or other document to which the company is a party in that territory, district or place.

(3) The authority of any agent authorised under sub-section (2) shall, as between the company and any person dealing with the agent, continue during the period, if any, mentioned in the instrument conferring the authority, or if no period is there mentioned, until notice of the revocation or determination of the agent’s authority has been given to the person dealing with him.

(4) The person affixing any such official seal shall, by writing under his hand, certify on the deed or other document to which the seal is affixed, the date on which and the place at which, it is affixed.

(5) A deed or other document to which an official seal is duly affixed shall bind the company as if it had been sealed with the common seal of the company. Service of documents

Service of documents on company. 51. Service of documents on company.-A document may be served on a company or an officer thereof by sending it to the company or officer at the registered office of the company by post under a certi- ficate of posting or by registered post, or by leaving it at its registered office.

Service of documents on Registrar. 52. Service of documents on Registrar.-A document may be served on a Registrar by sending it to him at his office by post under a certificate of posting or by registered post, or by delivering it to, or leaving it for, him at his office.

Service of documents on members by company.

53. Service of documents on members by company.-(1) A document may be served by a company on any member thereof either personally, or by sending it by post to him to his registered address, or if he has no registered address in India, to the address, if any, within India supplied by him to the company for the giving of notices to him.

(2) Where a document is sent by post,- (a) service thereof shall be deemed to be effected by properly addressing, prepaying and posting a letter containing the document, provided that where a member has intimated to 62 the company in advance that documents should be sent to him under a certificate of posting or by registered post with or without acknowledgement due and has deposited with the company a sum sufficient to defray the expenses of doing so, service of the document shall not be deemed to be effected unless it is sent in the manner intimated by the member; and (b) unless the contrary is proved, such service shall be deemed to have been effected- (i) in the case of a notice of a meeting, at the expiration of forty-eight hours after the letter containing the same is posted, and (ii) in any other case, at the time at which the letter would be delivered in the ordinary course of post.

(3) A document advertised in a newspaper circulating in the neighbourhood of the registered office of the company shall be deemed to be duly served on the day on which the advertisement appears, on every member of the company who has no registered address in India and has not supplied to the company an address within India for the giving of notices to him.

(4) A document may be served by the company on the jointholders of a share by serving it on the joint-holder named first in the register in respect of the share.

(5) A document may be served by the company on the persons entitled to a share in consequence of the death or insolvency of a member by sending it through the post in a prepaid letter addressed to them by name, or by the title of representatives of the deceased or assignees of the insolvent or by any like description, at the address, it any, in India supplied for the purpose by the persons claiming to be so entitled, or until such an address has been so supplied, by serving the document in any manner in which it might have been served if the death or insolvency had not occurred. Authentication of Documents and Proceedings

Authentication of documents and proceedings. 54. Authentication of documents and proceedings.-Save as otherwise expressly provided in this Act, a document or proceeding requiring authentication by a company may be signed by a director, the managing agent, the secretaries and treasurers, the manger, the secretary or other authorised officer of the company, and need not be under its common seal. PART PROSPECTUS AND ALLOTMENT, AND OTHER MATTERS RELATING TO ISSUE OF SHARES OR DEBENTURES PART III PROSPECTUS AND ALLOTMENT, AND OTHER MATTERS RELATING TO ISSUE OF SHARES OR DEBENTURES Prospectus

Dating of prospectus. 55. Dating of prospectus.-A prospectus issued by or on behalf of a company or in relation to an intended company shall be dated, and that date shall, unless the contrary is proved, be taken as the date of publication of the prospectus.

Matters to be stated and reports to be set out in prospectus. 56. Matters to be stated and reports to be set out in

prospectus.- (1) Every prospectus issued- (a) by or on behalf of a company, or (b) by or on behalf of any person who is or has been engaged or interested in the formation of a company, 63 shall state the matters specified in Part I of Schedule II and set out the reports specified in Part II of that Schedule; and the said Parts I and II shall have effect subject to the provisions contained in Part III of that Schedule.

(2) A condition requiring or binding an applicant for shares in or debentures of a company to waive compliance with any of the ,requirements of this section, or purporting to affect him with notice of any contract, document or matter not specifically referred to in the prospectus, shall be void.

(3) No one shall issue any form of application for shares in or debentures of a company, unless the form is accompanied by a pros- pectus which complies with the requirements of this section: Provided that this sub-section shall not apply if it is shown that the form of application was issued either- (a) in connection with a bona-fide invitation to a person to enter into an underwriting agreement with respect to the shares or debentures; or (b) in relation to shares or debentures which were not offered to the public. If any person acts in contravention of the provisions of this subsection , he shall be punishable with fine which may extend to five thousand rupees.

(4) A director or other person responsible for the prospectus shall not incur any liability by reason of any non-compliance with, or contravention of, any of the requirements of this section, if- (a) as regards any matter not disclosed, he proves that he had no knowledge thereof; or (b) he proves that the non-compliance or contravention arose from an honest mistake of fact on his part; or (c) the noncompliance or contravention was in respect of matters which, in the opinion of the Court dealing with the case, were immaterial, or was otherwise such as ought, in the opinion of that Court, having regard to all the circumstances of the case, reasonably to be excused: Provided that no director or other person shall incur any liability in respect of the failure to include in a prospectus a statement with resect to the matters specified in clause 18 of Schedule II unless it is proved that he had knowledge of the matters not disclosed.

(5) This section shall not apply- (a) to the issue to existing members or debenture holders of a company of a prospectus or form of application relating to shares in or debentures of the company, whether an applicant for shares or debentures will or will not have the right to renounce in favour of other persons; or (b) to the issue of a prospectus or form of application relating to shares or debentures which. are, or are to be, In all respects uniform with shares or debentures previously issued and for the time being dealt In or quoted on a recognised stock exchange; but, subject as aforesaid, this section shall apply to a prospectus 64 form of application, whether issued on or with reference to the formation of a company or subsequently.

(6) Nothing in this section shall limit or diminish any liability which any person may incur under the general law or under this Act apart from this section.

Expert to be unconnected with formation or management of company. 57. Expert to be unconnected with formation or management of company.-A prospectus inviting persons to subscribe for shares in or debentures of a company shall not include a statement purporting to be made by an expert, unless the expert is a person who is not, and has not been, engaged or interested in, the formation or promotion, or in the management, of the company.

Expert’s consent to issue of prospectus containing statement by him. 58. Expert’s consent to issue of prospectus containing statement by him.-A prospectus inviting persons to subscribe for shares in or debentures of a company and including a statement purporting to be made by an expert shall not be issued, unless- (a) he has given his written consent to the issue thereof with the statement included in the form and context in which it is included, and has not withdrawn such consent before the delivery of a copy of the prospectus for registration; and (b) a statement that he has given and has not withdrawn his consent as aforesaid appears in the prospectus.

Penalty and interpretation.

59. Penalty and interpretation.-(1) If any prospectus is issued in contravention of section 57 or 58, the company, and every person, who is knowingly a party to the issue thereof, shall be punishable with fine which may extend to five thousand rupees.

(2) In sections 57 and 58, the expression “expert ‘ includes an engineer, a valuer, an accountant and any other person whose profes- sion gives authority to a statement made by him.

Registration of prospectus.

60. Registration of prospectus.-(1) No prospectus shall be issued by or on behalf of a company or in relation to an intended company unless, on or before the date of its publication, there has been delivered to the Registrar for registration a copy thereof signed by every person who, is named therein as a director or proposed director of the company or by his agent authorised in writing, and having endorsed thereon or attached thereto- (a) any consent to the issue of the prospectus required by section 58 from any person as an expert; and (b) in the case of a prospectus issued generally, also- (i) a copy of, every contract required by clause 16 of Schedule II to be specified in the prospectus, or, in the case of a contract not reduced into writing, a memorandum giving full particulars thereof; and (ii) where the persons making any report required by Part II of that Schedule have made therein, or have, without giving the reasons, indicated therein, any such adjustments as are mentioned in clause 32 of that Schedule, a written statement signed by those persons setting out the adjustments and giving the reasons therefor.

(2) Every prospectus to which sub-section (1) applies shall, on the face of it,– (a) state that a copy has been delivered for registration as required by this section; and 65 (b) specify any documents required by this section to be endorsed on or attached to the copy so delivered, or refer to statements included in the prospectus which specify those documents.

(3) The Registrar shall not register a prospectus,- (a) unless it is dated and the copy thereof signed in the manner required by this section and unless further it has en- dorsed thereon or attached thereto the documents (if any’ specified as aforesaid; and (b) in case the prospectus names any person as the auditor, legal adviser, attorney, solicitor, banker or broker of the company or proposed company, unless also it is accompanied by the consent in writing of the person so named, to act in the capacity stated.

(4) No prospectus shall be issued more than ninety days after the date on which a copy-thereof is delivered for registration; and if a prospectus is so issued, it shall be deemed to be a prospectus a copy of which has not been delivered under this section to the Registrar.

(5) If a prospectus is issued without a copy thereof being deli- vered under this section to the Registrar or without the copy so deli- vered having endorsed thereon or attached thereto the required consent or documents, the company, and every person who is knowingly a party to the issue of the prospectus, shall be punishable with fine which may extend to five thousand rupees.

Terms of contract mentioned in prospectus or statement in lieu ofprospectus, not to be varied. 61. Terms of contract mentioned in prospectus or statement in lieu of prospectus, not to be varied.-A company shall not, at any time, vary the terms of a contract referred to in the prospectus or statement in lieu of prospectus, except subject to the approval of, or except on authority given by, the company, in general meeting.

Civil liability for mis-statements in prospectus.

62. Civil liability for mis-statements in prospectus-(1) Subject to the provisions of this section, where a prospectus invites persons to subscribe for shares in or debentures of a company, the following persons shall be liable to pay compensation to every person who subscribes for any shares or debentures on the faith of the prospectus for any loss or damage he may have sustained by reason of any untrue statement included therein, that is to say,- (a) every person who is a director of the company: at the time of the issue of the prospectus; (b) every person who has authorised himself to be named and is named in the prospectus either as a director, or as having agreed to become a director, either immediately or after an interval of time; (c) every person who is a promoter of the company; and (d) every person who has authorised the issue of the prospectus: Provided that where, under section 58, the consent of a person is required to the issue of a prospectus and be has given that consent,

or where, under clause (b) of sub-section (3) of section 60, the consent of a person named in a prospectus is required and he has given 66 that consent, he shall not, by reason of, having given such consent, be liable under this sub-section as a person who has authorised the issue of the prospectus except in respect of an untrue statement, if any, purporting to be made by him as an expert.

(2) No person shall be liable under sub-section (1), if he proves- (a) that, having consented to become a director of the company, he withdrew his consent before the issue of the prospectus, and that it was issued without his authority or consent; (b) that the prospectus was issued without his knowledge or consent, and that on becoming aware of its issue, he forthwith gave reasonable public notice that it was issued without his knowledge or consent; (c) that, after the issue of the prospectus and before allotment thereunder, he, on becoming aware of any untrue statement therein, withdrew his consent to the prospectus and gave reasonable public notice of the withdrawal and of the reason therefor; or (d) that- (i) as regards every untrue statement not purporting to be made on the authority of an expert or of a public official document or statement, he had reasonable ground to believe, and did up to the time of the allotment of the shares or debentures, as the case may be, believe, that the statement was true; and (ii) as regards every untrue statement purporting to be a statement by an expert or contained in what purports to be a copy of or an extract from a report or valuation of an expert, it was a correct and fair representation of the statement, or a correct copy of, or a correct and fair extract from, the report or valuation; and he had reasonable ground to believe, and did up to the time of the issue of the prospectus believe, that the person making the statement was competent to make it and that that person had given the consent, required by section 58 to the issue of the prospectus and had not withdrawn that consent before delivery of a copy of the prospectus for registration or, to the defendant’s knowledge, before allotment thereunder; and (iii) as regards every untrue statement purporting to be a statement made by an official person or contained in what purports to be a copy of or extract from a public official document, it was a correct and fair representation of the statement, or a correct copy of, or a correct and fair extract from, the document: Provided that this sub-section shall not apply in the case of a person liable, by reason of his having given a consent required of him by section 58, as a person who has authorised the issue of the pros- pectus in respect of an untrue statement purporting to be made by him as an expert.

(3) A person who, apart from this sub-section. would, under sub-

section (1), be liable by reason of his having given a consent required of him by section 58 as a person who has authorised the issue 67 of a prospectus in respect of an untrue statement purporting to be made by him as an expert, shall not be so liable, if he proves- (a) that, having given his consent under section 58 to the issue of the prospectus, he withdrew it in writing before delivery of a copy of the prospectus for registration; (b) that, after delivery of a copy of the prospectus for registration and before allotment thereunder, he, on becoming aware of the untrue statement, withdrew his consent in writing and gave reasonable public notice of the withdrawal and of the reason therefor; or (c) that he was competent to make the statement and that he had reasonable ground to believe, and did up to the time of the allotment of the shares or debentures, believe, that the statement was true.

(4) Where- (a) the prospectus specifies the name of a person as a director of the company, or as having agreed to become a director thereof, and he has not consented to become a director, or has withdrawn his consent before the issue of the prospectus, and has not authorised or consented to the issue thereof; or (b) the consent of a person is required under section 58 to the issue of the prospectus and he either has not given. that consent or has withdrawn it before the issue of the prospectus; the directors of the company excluding those without whose knowledge or consent the prospectus was issued, and every other person who authorised the issue thereof, shall be liable to indemnify the person referred to in clause (a) or clause (b), as the case may be, against all damages, costs and expenses to which he may be made liable by reason of his name having been inserted in the prospectus or of the inclusion therein of a statement purporting to be made by him as an expert, as the case may be, or in defending himself against any suit or legal proceeding brought against him in respect thereof: Provided that a person shall not be deemed for the purposes of this sub-section to have authorised the issue of a prospectus by reason only of his having given the consent required by section 58 to the inclusion therein of a statement purporting to be made by him as an expert.

(5) Every person who, becomes liable to make any payment by virtue of this section, may recover contribution, as in cases of con- tract, from any other person who, if sued separately, would have been liable to make the same payment, unless the former person was, and the latter person was not, guilty of fraudulent misrepresentation.

(6) For the purposes of this section- (a) the expression “promoter” means a promoter who was a party to the preparation of the prospectus or of, the portion thereof containing the untrue statement, but does not include any person by reason of his acting in a professional capacity for persons engaged in procuring the formation of the company; and 68 (b)the expression “expert” has the same meaning as in section 58.

Criminal liability for misstatements in prospectus.

63. Criminal liability for misstatements in prospectus.-(1) Where a prospectus issued after the commencement of this Act includes any untrue statement, every person who authorised the issue of the prospectus shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to five thousand rupees, or with both, unless he proves either that the statement was immaterial or that he had reasonable ground to believe, and did up to the time of the issue of the prospectus believe, that the statement was true.

(2) A person shall not be deemed for the purposes of this section to have authorised the issue of a prospectus by reason only of his having given- (a) the consent required by section 58 to the inclusion therein of a statement purporting to be made by him as an expert, or

(b) the consent required by clause (b) of sub-section (3) of section 60.

Document containing offer of shares or debentures for sale to bedeemed prospectus. 64. Document containing offer of shares or debentures for sale

to be deemed prospectus.-(1) Where a company allots or agrees to allot any shares in or debentures of the company with a view to au or any of those shares or debentures being offered for sale to the public, any document by which the offer for sale to the public is made shall, for all purposes, be deemed to be a prospectus issued by the company; and all enactments and rules of law as to the contents of prospectuses and as to liability in respect of statements in and omissions from prospectuses, or otherwise relating to prospectuses shall apply with

than modifications specified in sub-sections (3), (4) and (5), and have effect accordingly, as if the shares or debentures had been offered to the public for subscription and as if persons accepting the offer in respect of any shares or debentures were subscribers for those shares or debentures, but without prejudice to the liability, if any, of the persons by whom the offer is made in respect of misstatements contained in the document or otherwise in respect thereof.

(2) For the purposes of this Act, it shall, unless the contrary is proved, be evidence that an allotment of, or an agreement to allot, shares or debentures was made with a view to the shares or debentures being offered for sale to the public if it is shown- (a) that an offer of the shares or debentures or of any of them for sale to the public was made within six months after the allotment or agreement to allot; or (b) that at the date when the offer was made, the whole consideration to be received by the company in respect of the shares or debentures had not been received by it. 69

(3) Section 56 as applied by this section shall have effect as if it required a prospectus to state in addition to the matters required by that section to be stated in a prospectus- (a) the net amount of the consideration received or to be received by the company in respect of the shares or debentures to which the offer relates; and (b) the place and time at which the contract under which the said shares or debentures have been or are to be allotted may be inspected.

(4) Section 60 as applied by this section shall have effect as if the persons making the offer were persons named in a prospectus as directors of a company.

(5) Where a person making an offer to which this section relates is a company or a firm, it shall be sufficient if the document

referred to in sub-section (1) is signed on behalf of the company or firm by two directors of the company or by not less than one-half of the partners in the firm, as the case may be; and any such director or partner may sign by his agent authorised in writing.

Interpretation of provisions relating to prospectuses.

65. Interpretation of provisions relating to prospectuses.-(1) For the purposes of the foregoing provisions of this Part- (a) a statement included in a prospectus shall be deemed to be untrue, if the statement is misleading in the form and context in which it is included; and (b) where the omission from a prospectus of any matter is calculated to mislead, the prospectus shall be deemed, in respect of such omission, to be a prospectus in which an untrue statement is included.

(2) For the purposes of sections 61, 62 and 63 and clause (a) of

sub-section (1) of this section, the expression “included” when used with reference to a prospectus, means included in the prospectus it- self or contained in any report or memorandum appearing on the face thereof or by reference incorporated therein or issued therewith.

Newspaper advertisements of prospectus. 66. Newspaper advertisements of prospectus.-Where any prospectus is published as a newspaper advertisement, it shall not be necessary in the advertisement to specify the contents of the memorandum or the signatories thereto, or the number of shares subscribed for by them.

Construction of references to offering shares or debentures to thepublic etc. 67. Construction of references to offering shares or debentures

to the public etc.-(1) Any reference in this Act or in the articles of a company to offering shares or debentures to the public shall, subject to any provision to the contrary contained in this Act and

subject also to the provisions of sub-sections (3) and (4), be construed as including a reference to offering them to any section of the public, whether selected as members or debenture holders of the company concerned or as clients of the person issuing the prospectus or in any other manner. 70

(2) Any reference in this Act or in the articles of a company to invitations to the public to subscribe for shares or debentures shall, subject as aforesaid, be construed as including a reference to invitations to subscribe for them extended to any section of the public, whether selected as members or debenture holders of the company concerned or as clients of the person issuing the prospectus or in any other manner.

(3) No offer or invitation shall be treated as made to the

public by virtue of sub-section (1) or sub-section (2), as the case may be, if the offer or invitation can properly be regarded, in all the circumstances– (a) as not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation; or (b) otherwise as being a domestic concern of the persons making and receiving the offer or invitation.

(4) Without prejudice to the generality of sub-section (3), a provision in a company’s articles prohibiting invitations to the public to subscribe for shares or debentures shall not be taken as prohibiting the making to members or debenture holders of an invitation which can properly be regarded in the manner set forth in that sub-section.

(5) The provisions of this Act relating to private companies shall be construed in accordance with the provisions contained is sub-

sections (1) to (4).

Penalty for fraudulently inducing persons to invest money. 68. Penalty for fraudulently inducing persons to invest money.- Any person who, either by knowingly or recklessly making any statement, promise or forecast which is false, deceptive or misleading, or by any dishonest concealment of material facts, induces or attempts to induce another person to enter into, or to offer to enter into- (a) any agreement for, or with a view to, acquiring, disposing of, subscribing for, or underwriting shares or debentures; or (b) any agreement the purpose or pretended purpose of which is to secure a profit to any of the parties from the yield of shares or debentures, or by reference to fluctuations in the value of shares or debentures; shall be punishable with imprisonment for a term which may extend to five years, or with fine which may extend to ten thousand rupees, or with both. Allotment

Prohibition of allotment unless minimum subscription received. 69. Prohibition of allotment unless minimum subscription

received.–(1) No allotment shall be made of any share capital of 71 a company offered to the public for subscription, unless the amount stated in the prospectus as the minimum amount which, in the opinion of the Board of directors, must be raised by; the issue of share capital in order to provide for the matters specified in clause 5 of Schedule II has been subscribed, and the sum payable on application for the amount so stated has been paid to and received by the company, whether in cash or by a cheque or other instrument which has been paid.

(2) The amount so stated in the prospectus shall be reckoned exclusively of any amount payable otherwise than in money, and is in this Act referred to as “the minimum subscription”.

(3) The amount payable on application on each share shall not be less than five per cent. of the nominal amount of the share.

(4) All moneys received from applicants for shares shall be deposited and kept deposited in a Scheduled Bank until they are

returned in accordance with the provisions of sub-section (5) or until the certificate to commence business is obtained under section 149. In the event of any contravention of the provisions of this sub- section, every promoter, director or other person who is knowingly responsible for such contravention shall be punishable with fine which may extend to five thousand rupees.

(5) If the conditions aforesaid have not been complied with on the expiry of one hundred and twenty days after the first issue of the prospectus, all moneys received from applicants for shares shall be forthwith repaid to them without interest; and if any such money is not so repaid within one hundred and thirty days after the issue of the prospectus, the directors of the company shall be jointly and severally liable to repay that money with interest at the rate of six per cent. per annum from the expiry of the one hundred and thirtieth day: Provided that a director shall not be so liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part.

(6) Any condition purporting to require or bind any applicant for shares to waive compliance with any requirement of this section shall be void.

(7) This section, except sub-section (3) thereof, shall not apply in relation to any allotment of shares subsequent to the first allotment of shares offered to the public for subscription.

Prohibition of allotment in certain cases unless statement in lieu ofprospectus delivered to Registrar. 70. Prohibition of allotment in certain cases unless statement

in lieu of prospectus delivered to Registrar.-(1) A company having a share capital, which does sot issue a prospectus on or with reference to its formation, or which has issued such a prospectus but has not proceeded to allot any of the shares offered to the public for 72 subscription, shall not allot any of its shares or debentures unless at least three days before the first allotment of either shares or debentures, there has been delivered to the Registrar for registration a statement in lieu of prospectus signed by every person who is named therein as a director or proposed director of the company or by his agent authorised in writing, in the form and containing the particulars set out in Part I of Schedule III and, in the cases mentioned in Part II of that Schedule, setting out the reports specified therein, and the said Parts I and II shall have effect subject to the provisions contained in Part III of that Schedule.

(2) Every statement in lieu of prospectus delivered under sub-

section (1), shall, where the persons making any such report as aforesaid have made therein, or have without giving the reasons indicated therein. any such adjustments as are mentioned in clause 5 of Schedule III, have endorsed thereon or attached thereto a written statement signed by those persons, setting out the adjustments and giving the reasons thereof.

(3) This section shall not apply to a private company.

(4) If a company acts in contravention of sub-section (1) or

(2), the company, and every director of the company who wilfully authorises or permits the, contravention, shall be punishable with fine which may extend to one thousand rupees.

(5) Where a statement in lieu of prospectus delivered to the

Registrar under sub-section (1) includes any untrue statement, any person who authorised the delivery of the statement in lieu of prospectus for registration shall be punishable with imprisonment for a term which may extend to two years or with fine which may extend to five thousand rupees or with both, unless he proves either that the statement was immaterial or that he had reasonable ground to believe, and did up to the time of the delivery for registration of the statement in lieu of prospectus believe, that the statement was true.

(6) For the purposes of this section- (a) a statement included in a statement in lieu of pros- pectus shall be deemed to be untrue if it is misleading in the form and context in which it is included; and (b) where the omission from a statement in lieu of pros- pectus of any matter is calculated to mislead, the statement in lieu of prospectus shall be deemed, in respect of such omission, to be a statement in lieu of prospectus in which an untrue statement is included.

(7) For the purposes of sub-section (5) and clause (a) of sub-

section (6), the expression “included”, when used with reference to a statement in lieu of prospectus, means included in the statement in lieu of prospectus itself or contained in any report or 73 memorandum appearing on the face thereof, or by reference incorporated therein, or issued therewith.

Effect of irregular allotment.

71. Effect of irregular allotment.-(1) An allotment made by a company to an applicant in contravention of the provisions of section 69 or 70 shall be voidable at the instance of the applicant- (a) within two months after the holding of the statutory meeting of the company, and not later, or (b) in any case where the company is not required to hold a statutory meeting or where the allotment is made after the holding of the statutory meeting, within two months after the date of the allotment, and not later.

(2) The allotment shall be voidable as aforesaid, notwithstand- ing that the company is in course of being wound up.

(3) If any director of a company knowingly contravenes, or wilfully authorises. or permits the contravention of, any of the pro- visions of section 69 or 70 with respect to allotment, he shall be liable to compensate the company and the allottee respectively for any loss, damages or costs which the company or the allottee may have sustained or incurred thereby: Provided that proceedings to recover any such loss, damages or costs shall not be commenced after the expiration of two years from the date of the allotment.

Applications for, and allotment of, shares and debentures. 72. Applications for, and allotment of, shares and debentures.-

(1) (a) No allotment shall be made of any shares in or debentures of a company in pursuance of a prospectus issued generally, and no pro- ceedings shall be taken on applications made in pursuance of a pros- pectus so issued, until the beginning of the fifth day after that on which the prospectus is first so issued or such later time, if any, as may be specified in the prospectus: Provided that where, after a prospectus is first issued generally, a public notice is given by some person responsible under section 62 for the prospectus which has the effect of excluding, limiting or diminishing his responsibility, no allotment shall be made until the beginning of the fifth day after that on which such public notice is first given. (b) Nothing in the foregoing proviso shall be deemed to exclude, limit or diminish any liability that might be incurred in the case referred to therein under the general law or this Act. (c) The beginning of the fifth day or such later time as is mentioned in the first paragraph of clause (a), or the beginning of the fifth day mentioned in the second paragraph of that clause, as the case may be, is hereinafter in this Act referred to as “the time of the opening of the subscription lists”.

(2) In sub-section (1), the reference to the day on which the prospectus is first issued generally shall be construed as referring to the day on which it is first so issued as a newspaper advertisement: Provided that if it is not so issued as a newspaper advertisement before the fifth day after that on which it is first so issued in any 74 other manner, the said reference shall be construed as referring to the day on which it is first so issued in any manner.

(3) The validity of an allotment shall not be affected by any contravention of the foregoing provisions of this section; but, in the event of any such contravention, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees.

(4) In the application of this section to a prospectus offering

shares or debentures for sale, sub-sections (1) to (3) shall have effect with the substitution of references to sale for references to allotment, and with the substitution for the reference to the company and every officer of the company who is in default of a reference to any person by or through whom the offer is made and who is knowingly guilty of, or wilfully authorises or permits, the contravention.

(5) An, application for shares in, or debentures of, a company. which is made in pursuance of a prospectus issued generally shall not be revocable until after the expiration of the fifth day after the time of the opening of the subscription lists, or the giving, before the expiry of the said fifth day by some person responsible under section 62 for the prospectus, of, a public notice having the effect under that section of excluding, limiting or diminishing the responsi- bility of the person giving it.

Allotment of shares and debentures to be dealt in on stock exchange. 73. Allotment of shares and debentures to be dealt in on stock

exchange.-(1) Where a prospectus, whether issued generally or not, states that application has been or will be made for permission for the shares or debentures offered thereby to be dealt in on a recognised stock exchange, any allotment made on an application in pursuance of the prospectus shall, whenever made, be void, if the permission has not been applied for before the tenth day after the first issue of the prospectus or, if the permission has not been granted before the expiry of three weeks from the date of the closing of the subscription lists or such longer period not exceeding six weeks as may, within the said three weeks, be notified to the applicant for permission by or on behalf of the stock exchange.

(2) Where-the permission has not been applied for as aforesaid, or has not been granted as aforesaid, the company shall forthwith repay without interest all moneys received from applicants in pur- suance of the prospectus, and, if any such money is not repaid within eight days after the company becomes liable to repay it, the directors of the company shall be jointly and severally liable to repay that money with interest at the rate of five per cent. per annum from the expiry of the eighth day: Provided that a director shall not be liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part.

(3) All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled Bank so long as the company

may become liable to repay it under sub-section (2); and if default is made in complying with this sub-section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees. 75

(4) Any condition purporting to require or bind any applicant for shares or debentures to waive compliance with any of the require- ments of this section shall be void.

(5) For the purpose of this section, permission shall not be deemed to be refused if it is intimated that the application for permission though not at present granted,, will be given further consideration.

(6) This section shall have effect- (a) in relation to any shares or debentures agreed to be taken by a person underwriting an offer thereof by a prospectus, as if he had applied therefor in pursuance of the prospectus; and (b) in relation to a prospectus offering shares for sale, with the following modifications, namely,- (i) references to sale shall be substituted for references to allotment; (ii) the persons by whom the offer is made, and not the

company, shall be liable under sub-section (2) to repay money received from applicants, and references to the company’s liability under that sub-section shall be construed accordingly; and

(iii) for the reference in sub-section (3) to the company and every officer of the company who is in default, there shall be substituted a reference to any person by or through whom the offer is made and who is knowingly guilty of, or wilfully authorises or permits, the default.

(7) No prospectus shall state that application has been made for permission for the shares or debentures offered thereby to be dealt in on any stock exchange, unless it is a recognised stock exchange.

Manner of reckoning fifth, eighth and tenth days in sections 72 and73. 74. Manner of reckoning fifth, eighth and tenth days in sections 72 and 73.–In reckoning for the purposes of sections 72 and 73, the fifth day, the eighth day, or the tenth day after another day, any Intervening day which is a public holiday under the Negotiable Instruments Act, 1881 (26 of 1881), shall be disregarded, and if the fifth, eighth, or tenth day .(as so reckoned) is itself such a public holiday, there shall for the said purposes be substituted the first day thereafter which is not such a holiday.

Return as to allotments.

75. Return as to allotments.-(1) Whenever a company having a share capital makes any allotment of its shares, the company shall, within one month thereafter,- (a) file with the Registrar a return of the allotments, stating the number and nominal amount of the shares comprised in the allotment, the names, addresses and occupations of the allottees, and the amount, if any, paid or due and payable on each share; (b) in the case of shares (not being bonus shares) allotted as fully or partly paid up otherwise than in cash, produce for the Inspection and examination of the Registrar a contract in writing constituting the title of the allottee to the allotment together with any contract of sale, or a contract for services or other consideration in respect of which that allotment was made, such contracts being duly stamped, and file with the Registrar copies verified in the prescribed manner of all such contracts and a 76 return stating the number and nominal amount of shares So allotted, the extent to which they are to be treated as paid up, and the consideration for which they have been allotted; and (c) in the case of bonus shares, file with the Registrar a return stating the number and nominal amount of the bonus shares so allotted.

(2) Where a contract such as is mentioned in clause (b) of sub-

section (1) is not reduced to writing, the company shall, within one month after the allotment, file with the Registrar the prescribed particulars of the contract stamped with the same stamp duty as would have been payable if the contract had been reduced to writing; and those particulars shall be deemed to be an instrument within the meaning of the Indian Stamp Act, 1899 (2 of 1899), and the Registrar may, as a condition of filing the particulars, require that the duty payable thereon be adjudicated under section 31 of that Act.

(3) If the Registrar is satisfied that in the circumstances of any particular case the period of one month specified in sub-sections

(1) and (2) for compliance with the requirements of this section is inadequate, he may extend that period as he thinks fit; and if he does

so, the provisions of sub-sections (1) and (2) shall have effect in that particular case as if for the said period of one month the extended period allowed by the Registrar were substituted.

(4) If default is made in complying with this section, every officer of the company who is in default shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues: Provided that, in case of default in filing with the Registrar any document required to be filed by this section within the time specified therein, the company, or any officer who is in default, may apply to the Court for relief, and the Court, if satisfied that the omission to file the document was accidental or due to inadvertence or that on other grounds it is just and equitable to grant relief, may make an order extending the time for the filing of the document for such period as the Court may think proper.

(5) Nothing in this section shall apply to the issue and allotment by a company of shares which under the provisions of its articles were forfeited for non-payment of calls. Commissions and Discounts

Power to pay certain commissions and prohibition of payment of allother commissions, discounts, etc. 76. Power to pay certain commissions and prohibition of payment

of all other commissions, discounts, etc.–(1) A company may pay a commission to any person in consideration of– (a) his subscribing or agreeing to subscribe, whether abso- lutely or conditionally, for any shares in, or debentures of, the company, or (b) his procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in, or debentures of, the company, if the following conditions are fulfilled, namely:- (i) the payment of the commission is authorised by the articles; 77 (ii) the commission paid or agreed to be paid does not ex- ceed in the case of shares, five per cent. of the price at which the shares are issued or the amount or rate authorised by the articles, whichever is less, and in the case of debentures, two and a half per cent. of the price at which the debentures are issued or the amount or rate authorised by the articles, whichever is less; (iii)the amount or rate per cent. of, the commission paid or agreed to be paid is- in the case of shares or debentures offered to the public for subscription, disclosed in the prospectus; and in the case of shares or debentures not offered to the public for subscription, disclosed in the statement in lieu of prospectus, or in a statement in the prescribed form signed in like manner as a statement in lieu of prospectus and filed before the payment of the commission with the Registrar and, where a circular or notice, not being a prospectus inviting subscription for the shares or debentures, is issued, also disclosed in that circular or notice; and (iv) the number of shares or debentures which persons have agreed for a commission to subscribe absolutely or conditionally is disclosed in the manner aforesaid.

(2) Save as aforesaid and save as provided in section 79, no company shall allot any of its shares or debentures or apply any of its capital moneys, either directly or indirectly, in payment of any commission, discount or allowance, to any person in consideration of- (a) his subscribing or agreeing to subscribe, whether abso- lutely or conditionally, for any shares in, or debentures of, the company, or (b) his procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in, or debentures of, the company, whether the shares, debentures or money be so allotted or applied by being added to the purchase money of any property acquired by the company or to the contract price of any work to be executed for the company, or the money be paid out of the nominal purchase money or contract price, or otherwise.

(3) Nothing in this section shall affect the power of any company to pay such brokerages as it has heretofore been lawful for a company to pay.

(4) A vendor to, promoter of, or other person who receives pay- ment in shares, debentures or money from, a company shall have and shall be deemed always to have had power to apply any part of the shares, debentures or money so received in payment of any commission the payment of which, if Made directly by the company, would have been legal under this section.

(5) If default is made in complying with the provisions of this section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees. 78

Restrictions on purchase by company, or loans by company forpurchase, of its own or its holding company’s shares. 77. Restrictions on purchase by company, or loans by company for

purchase, of its own or its holding company’s shares.-(1) No company limited by shares, and no company limited by guarantee and having a share capital, shall have power to buy its own shares. unless the consequent reduction of capital is effected and sanctioned in pursuance of sections 100 to 104 or of section 402.

(2) No public company, and no private company which is a subsidiary of a public company, shall give, whether directly or indirectly, and whether by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of of in connection with a purchase or subscription made or to be made by any person of or for any shares in the company or in its holding company: Provided that nothing in this sub-section shall be taken to prohibit- (a) the lending of money by a banking company in the ordinary course of its business; or (b) the provision by a company, in accordance with any scheme for the time being in force, of money for the purchase of, or subscription for, fully paid shares in the company or its holding company, being a purchase or subscription by trustees of or for shares to be held by or for the benefit of employees of the company, including any director holding a salaried office or employment in the company; or (c) the making by a company of loans, within the limit laid

down in sub-section (3), to persons (other than directors, managing agents, secretaries and treasurers or managers) bona fide in the employment of the company, with a view to enabling those persons to purchase or subscribe for fully paid shares in the company or its holding company to be held by themselves by way of beneficial ownership.

(3) No loan made to any person in pursuance of clause (c) of the foregoing proviso shall exceed in amount his salary or wages at that time for a period of six months.

(4) If a company acts in contravention of sub-sections (1) to

(3) the company, and every officer of the company who is in default, shall be punishable with fine which may extend to one thousand rupees.

(5) Nothing in this section shall affect the right of a company to redeem any shares issued under section 80 or under any corres- ponding provision in any previous companies law. Issue of shares at premium and discount

Application of premiums received on issue of shares.

78. Application of premiums received on issue of shares.-(1) Where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the pre- miums on those shares shall be transferred to an account, to be called “the share premium account”; and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the share premium account were paid-up share capital of the company. 79

(2) The share premium account may, notwithstanding anything in

sub-section (1), be applied. by the company– (a) in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares; (b) in-writing off the preliminary expenses of the company; (c) in writing off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company; or (d) in providing for the premium payable on the redemption of any redeemable preference shares or of any debentures of the company.

(3) Where a company has, before the commencement of this Act, issued any shares at a premium, this section shall apply as if the shares had been issued after the commencement of this Act: Provided that any part of the premiums which has been so applied that it does not at the commencement of this Act form an identifiable part of the company’s reserves within the meaning of Schedule VI, shall be disregarded in determining the sum to be included in the share premium account.

Power to issue shares at a discount.

79. Power to issue shares at a discount.-(1) A company shall not issue shares at a discount except as provided in this section.

(2) A company may issue at a discount shares in the company of a class already issued, if the following conditions are fulfilled, namely: – (i) the issue of the shares at a discount is authorised by a resolution passed by the company in general meeting, and sanctioned by the Court; (ii) the resolution specifies the maximum rate of discount (not exceeding ten per cent. or such higher percentage as the Central Government may permit in any special case) at which the shares are to be issued; (iii) not less than one year has at the date of the issue elapsed since-the date on which the company was entitled to commence business; and (iv) the shares to be issued at a discount are issued within two months after the date on which the issue is sanctioned by the Court or within such extended time as the Court may allow.

(3) Where a company has passed a resolution authorising the issue of shares at a discount, it may apply to the Court for an order sanctioning the issue; and on any such application, the Court, if, having regard to all the circumstances of the case, it thinks proper so to do, may make an order sanctioning the issue on such terms and conditions as it thinks fit.

(4) Every prospectus relating to the issue of the shares shall contain particulars of the discount allowed on the issue of the shares or 80 of so much of that discount as has not been written off at the date of the issue of the prospectus. If default is made in complying with this sub-section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees. Redeemable preference shares

Power to issue redeemable preference shares.

80. Power to issue redeemable preference shares.-(1) Subject to the provisions of this section, a company limited by shares may, if so authorised by its articles, issue preference shares which are, or at the option of the company are to be liable, to be redeemed: Provided that- (a) no such shares shall be redeemed except out of profits of the company which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the purposes of the redemption; (b) no such shares shall be redeemed unless they are fully paid; (c) the premium, if any, payable on redemption shall have been provided for out of the profits of the company or out of the company’s share premium account, before the shares are redeemed; (d) where any such shares are redeemed otherwise than out of the proceeds of a fresh issue, there shall, out of profits which would otherwise have been available for dividend, be transferred to a reserve fund, to be called “the capital redemption reserve fund”, a sum equal to the nominal amount of the shares redeemed; and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the capital redemption reserve fund were paid-up share capital of the company.

(2) Subject to the provisions of this section, the redemption of preference shares thereunder may be effected on such terms and in such manner as may be provided by the articles of the company.

(3) The redemption of preference shares under this section by a company shall not be taken as reducing the amount of its authorised share capital.

(4) Where in pursuance of this section, a company has redeemed or is about to redeem any preference shares, it shall have power to issue shares up to the nominal amount of the shares redeemed or to be redeemed as if those shares had never been issued; and accordingly the share capital of the company shall not, for the purpose of calculating the fees payable under section 601, be deemed to be increased by the issue of shares in pursuance of this sub-section: Provided that, where new shares are issued before the redemption of the old shares, the new shares shall not, so far as relates to stamp duty, be deemed to have been issued in pursuance of this sub- section unless the old shares are redeemed within one month after the Issue of the new shares. 81

(5) The capital redemption reserve fund may, notwithstanding anything in this section, be applied by the company, in paying up un- issued shares of the company to be issued to members of the company as fully paid bonus shares.

(6) 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 thousand rupees. Further issue of capital

Further issue of capital.

81. Further issue of capital.-(1) Where at any time subsequent to the first allotment of shares in a company, it is proposed to in crease the subscribed capital of the company by the issue of new shares, then, subject to any directions to the contrary which may be given by the company in general meeting, and subject only to those directions- (a) such new shares shall be offered to the persons who, at the date of the offer are holders of the equity shares of the company, in proportion, as nearly as circumstances admit, to the capital paid up on those shares at that date ; (b) the offer aforesaid shall be made by notice specifying the number of shares offered and limiting a time not being less than fifteen days from the date of the offer within which the offer, if not accepted, will be deemed to have been declined; (c) unless the articles of the company otherwise provide the offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to him of any of them in favour of any other person; and the notice referred to in, clause (b) shall contain a statement of this right; (d) after the expiry of the time specified in the notice aforesaid, or on receipt of earlier intimation from the person to whom such notice is given that he declines to accept the shares offered, the Board of directors may dispose of them in such manner as they think most beneficial to the company. Explanation-In this subsection, “equity share capital” and equity shares” have the same meaning as in section 85.

(2) Nothing in clause (c) of sub-section (1) shall be deemed- (a) to extend the time within which the offer should ‘be accepted, or (b) to authorise any person to exercise the right of renun- ciation for a second time, on the ground that the person in whose favour the renunciation was first made has declined to take the shares comprised in the renunciation.

(3) This section shall not apply to a private company. 82 PART SHAM CAPITAL AND DEBENTURES PART IV SHAM CAPITAL AND DEBENTURES Nature, numbering and certificate of shares

Nature of shares. 82. Nature of shares.-The shares or other interest of any member in a company shall be movable property, transferable in the manner provided by the articles of the company.

Numbering of shares. 83. Numbering of shares.-Each share in a company having a share capital shall be distinguished by its appropriate number.

Certificate of shares. 84. Certificate of shares.-A certificate, under the common seal of the company, specifying any shares held by any member, shall be prima facie evidence of the title of the member to such shares. Kinds of share capital

Two kinds of share capital.

85. Two kinds of share capital.-(1) “Preference share capital” means, with reference to any company limited by shares, whether formed before or after the commencement of this Act, that part of the share capital of the company which fulfils both the following requirements, namely- (a) that as respects dividends, it carries or will carry a preferential right to be paid a fixed amount or an amount calculated at a fixed rate, which may be either free of or subject to income-tax; and (b) that as respects capital, it carries or will carry, on a winding up or repayment of capital, a preferential right to be repaid the amount of the capital paid UP or deemed to have been paid up, whether or not there is a preferential right to the payment of either or both of the following amounts, namely:- (i) any money remaining unpaid, in respect of the amounts specified in clause (a), up to the date of the winding up or repayment of capital; and (ii) any fixed premium or premium on any fixed scale, specified in the memorandum or articles of the company. Explanation.-Capital shall be deemed to be preference capital, notwithstanding that it is entitled. to either or both of the following rights, namely:- (i) that, as respects dividends, in addition to the preferential right to the amount specified in clause (a), it has a right to participate, whether fully or to a limited extent, with capital not, entitled to the preferential right aforesaid; (ii) that, as respects capital, in addition to the preferential. right to the repayment, on a winding up, of the amounts specified in clause (b), it has a right to participate, whether fully or to a limited extent with capital not entitled to that preferential 83 right in any surplus which may remain after the entire capi- tal has been repaid.

(2) “Equity share capital” means, with, reference to any such company, all share capital which is not preference share capital.

(3) The expressions “preference share” and “equity share” shall be construed accordingly.

New issues of share capital to be only of two kinds. 86. New issues of share capital to be only of two kinds.-The share capital of a company limited by shares formed after the com- mencement of this Act, or issued after such commencement, shall be of two kinds only, namely:- (a) equity share capital; and (b) preference share capital.

Voting rights.

87. Voting rights.-(1) Subject to the provisions of section 89

and sub-section (2) of section 92– (a) every member of a company limited by shares and holding any equity share capital therein shall have a right to vote, in respect of such capital, on every resolution placed before the company; and (b) his voting right on a poll shall be in proportion to his share of the paid up equity capital of the company.

(2) (a) Subject as aforesaid and save as provided in clause (b) of this sub-section, every member of a company limited by shares and holding any preference share capital therein shall, in respect of such capital, have a right to vote only on resolutions placed before the company which directly affect the rights attached to his preference shares. Explanation.-Any resolution for winding up the company or for the repayment or reduction of its share capital shall be deemed directly to affect the rights attached to preference shares within the meaning of this clause. (b) Subject as aforesaid, every member of a company limited by shares and holding any preference share capital therein shall, in res- pect of such capital, be entitled to vote on every resolution placed before the company at any meeting, if the dividend due on such capital or any part of such dividend has remained unpaid- (i) in the case of cumulative preference shares, in respect of an aggregate period of not less than two years preceding the date of commencement of the meeting; and (ii) in the case of non-cumulative preference shares, either in respect of a period of not less than two years ending with the expiry of the financial year immediately preceding the commencement of the meeting or in respect of an aggregate period of not less than three years comprised in the six years ending with the expiry of the financial year aforesaid. 84 Explanation.-For the purposes of this clause, dividend shall be deemed to be due on preference shares in respect of any period, whether a dividend has been declared by the company on such shares for such period or not,- (a) on the last day specified for the payment of such divi- dend for such period, in the articles or other instrument executed by the company in that behalf; or (b) in case no day is so specified, on the day immediately following such period. (c) Where the holder of any preference share has a right to vote on any resolution in accordance with the provisions of this sub- section, his voting right on a poll, as the holder of such share,

shall, subject to the provisions of section 89 and sub-section (2) of section 92, be in the same proportion as the capital paid up in. respect of the preference share bears to the total paid up equity capital of the company.

Prohibition of issue of shares with disproportionate rights. 88. Prohibition of issue of shares with disproportionate rights. No company formed after the commencement of this Act, or issuing any share capital after such commencement, shall issue any shares (not being preference shares) which carry voting rights or rights in the company as to dividend, capital or otherwise which are dispro- portionate to the rights attaching to the holders of other shares (not being preference shares).

Termination of disproportionately excessive voting rights in existingcompanies. 89. Termination of disproportionately excessive voting rights in

existing companies.-(1) If at the commencement of this Act any shares, by whatever name called, of any existing company limited by shares carry voting rights in excess of the voting rights attaching under

sub-section (1) of section 87 to equity shares in respect of which the same amount of capital has been paid up, the company shall, within a period of one year from the commencement of this Act, reduce the voting rights in respect of the shares first mentioned so as to bring them into conformity with the voting rights attached to such equity

shares under sub-section (1) of section 87.

(2) Before the voting rights are brought into such conformity, the holders of the shares in question shall not exercise in respect thereof voting rights in excess of what would have been exercisable by them if the capital paid up on their shares had been equity share capital, in respect of the following resolutions placed before the company, namely:- (a) any resolution relating to the appointment or re- appointment of a director or of a managing agent or secretaries and treasurers, or to any variation in the terms of an agreement between the company and a managing or wholetime director thereof or its managing agent or secretaries and treasurers; (b) any resolution relating to the appointment of buying or selling agents; (c) any resolution relating to the grant of a loan or to the giving of a guarantee or any other financial assistance, to any 85 other body corporate having any person as managing agent or secretaries and treasurers who is also either the managing agent or the secretaries and treasurers of the company or an associate of such managing agent or secretaries and treasurers.

(3) If, by reason of the failure of the requisite proportion of any class of members to agree, it is not found possible to comply with

the provisions of sub-section (1), the company shall, within one month of the expiry of the period of one year mentioned in that subsection, apply to the Court for an order specifying the manner in which the provisions of that sub-section shall be complied with; and any order made by the Court in this behalf shall bind the company and all its shareholders. If default is made in complying with this sub-section, the com- pany, and every officer of the company who is in default, shall be punishable with fine which may extend to one thousand rupees.

(4) The Central Government may, in respect of any shares issued by a company before the 1st day of December, 1949, exempt the company

from the requirements of sub-sections (1), (2) and (3), wholly or in part, if in the opinion of the Central Government the exemption is required either in the public interest or in the interests of the company or of any class of shareholders therein or of the creditors or any class of creditors thereof. Every order of exemption made by the Central Government under this sub-section shall be laid before both Houses of Parliament as soon as may be after it is made.

Savings. 90. Savings.-Nothing in sections 85 to 89 shall,- (a) in the case of any shares issued before the commence- ment of this Act, affect any voting rights attached to the shares save as otherwise provided in section 89, or any right attached to the shares as to dividend, capital or otherwise; or (b) apply to a private company, unless it is a subsidiary of a public company. Miscellaneous provisions as to share capital

Calls on shares of same class to be made on uniform basis. 91. Calls on shares of same class to be made on uniform basis.- Where after the commencement of this Act, any calls for further share capital are made on shares, such calls shall be made on a uniform basis on all shares falling under the same class. Explanation.-For the purposes of this section, shares of the same nominal value on which different amounts have been paid up shall not be deemed to fall under the same class.

Power of company to accept unpaid share capital, although not calledup. 92. Power of company to accept unpaid share capital, although

not called up.-(1) A company may, if so authorised by its articles, accept from any member the whole or a part of the amount remaining unpaid on any shares held by him, although, no part of that amount has been called up. 86

(2) The member shall not however be entitled, where the company is one limited by shares, to any voting rights in respect of the moneys so paid by him until the same would, but for such payment, become presently payable.

Payment of dividend in proportion to amount paid up. 93. Payment of dividend in proportion to amount paid up.-A company may, if so authorised by its articles, pay dividends in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others.

Power of limited company to alter its share capital.

94. Power of limited company to alter its share capital.-(1) A limited company having a share capital, may, if so authorised by its articles, alter the conditions of its memorandum as follows, that is to say, it may- (a) increase its share capital by such amount as it thinks expedient by issuing new shares; (b) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares; (c) convert all or any of its fully paid up shares into stock, and reconvert that stock into fully paid up shares of any denomination; (d) sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the memorandum, so however, that in the sub-division the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived; (e) cancel shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled.

(2) The powers conferred by this section shall be exercised by the company in general meeting and shall not require to be confirmed by the Court.

(3) A cancellation of shares in pursuance of this section shall not be deemed to be a reduction of share capital within the meaning of this Act.

Notice to Registrar of consolidation of share capital, conversion ofshares into stock, etc. 95. Notice to Registrar of consolidation of share capital,

conversion of shares into stock, etc.-(1) If a company having a share capital has- (a) consolidated and divided its share capital into shares of larger amount than its existing shares; (b) converted any shares into stock; (c) re-converted any stock into shares; 87 (d) sub-divided its shares or any of them; (e) redeemed any redeemable preference shares; or (f) cancelled any shares, otherwise than in connection with reduction of share capital under sections 100 to 104; the company shall within one month after doing so, give notice thereof to the Registrar specifying, as the case may be, the shares consolidated, divided, converted, sub-divided, redeemed or cancelled, or the stock reconverted.

(2) The Registrar shall thereupon record the notice, and make any alterations which may be necessary in the company’s memorandum or articles or both.

(3) If default is made in complying with sub-section (1), the company, and every office 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.

Effect of conversion of shares into stock. 96. Effect of conversion of shares into stock.-Where a company having a share capital has converted any of its shares into stock, and given notice of the conversion to the Registrar, all the provisions of this Act which are applicable to shares only, shall cease to apply as to so much of the share capital as is converted into stock.

Notice of increase of share capital or of members.

97. Notice of increase of share capital or of members.-(1) Where a company having a share capital, whether its shares have or have not been converted into stock, has increased its share capital beyond the authorised capital, and where a company, not being a company limited by shares, has increased the number of its members beyond the registered number, it shall file with the Registrar, notice of the increase of capital or of members within fifteen days after the pas- sing of the resolution authorising the increase, and the Registrar shall record the increase and also make any alterations which may be necessary in the company’s memorandum or articles or bath.

(2) The notice to be given as aforesaid shall include particulars of the classes of shares-affected and the conditions, if any, subject to which the new shares have been or are to be issued.

(3) If default is made in complying with this section, the com- pany, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for everyday during which the default continues.

Power of unlimited company to provide for reserve share capital on re-registration. 98. Power of unlimited company to provide for reserve share capital on re-registration.-An unlimited company having a share capital may, by its resolution for registration as a limited company in pursuance of this Act, do either or both of the following things namely: – (a) increase the nominal amount of its share capital by In- creasing the nominal amount of each of its shares, but subject to 88 the condition that no part of the increased capital shall be capable of being called up except in the event and for the purposes of the company being wound up; (b) provide that a specified portion of its uncalled share capital shall not be capable of being called up except in the event and for the purposes of the company being wound up.

Reserve liability of limited company. 99. Reserve liability of limited company.-A limited company may, by special resolution, determine that any portion of its share capital which has not been already called up shall not be capable of being called up, except in the event and for the purposes of the company being wound up, and thereupon that portion of its share capital shall not be capable of being called up except in that event and for those purposes. Reduction of share capital

Special resolution for reduction of share capital.

100. Special resolution for reduction of share capital.-(1) Subject to confirmation by the Court, a company limited by shares or a company limited by guarantee and having a share capital, may, if so authorised by its articles, by special resolution, reduce its share capital In any way; and in particular and without prejudice to the generality of the foregoing power, may- (a) extinguish or reduce the liability on any of its shares in respect of share capital not paid up; (b) either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is lost, or is unrepresented by available assets; or (c) either with or without extinguishing or reducing liability on any of its shares, pay off any paid-up share capital which is in excess of the wants of the company; and may, if and so far as is necessary, alter its memorandum by reducing the amount of its share capital and of its share’s accordingly.

(2) A special resolution under this section is in this Act referred to as “a resolution for reducing share capital”.

Application to Court for confirming order, objections by creditors,and settlement of list of objecting creditors. 101. Application to Court for confirming order, objections by

creditors, and settlement of list of objecting creditors.-(1) Where a company has passed a resolution for reducing share capital, it may apply, by petition, to the Court for an order confirming the reduction.

(2) Where the proposed reduction of share capital involves either the diminution of liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, and in any other case if the Court so directs, the following provisions shall

have effect, subject to the provisions of sub-section (3):- (a) every creditor of the company who at the date fixed by the Court is entitled to any debt or claim which, if that date were the commencement of the winding up of the company, would be admissible in proof against the company, shall be entitled to object to the, reduction; 89 (b) the Court shall settle a list of creditors so entitled to object, and for that purpose shall ascertain, as far as possible without requiring an application from any creditor, the names of those creditors and the nature and amount of their debts or claims, and may publish notices fixing a day or days within which creditors not entered on the list are to claim to be so entered or are to. be excluded from the right of objecting to the, reduction; (c) where a creditor entered on the list whose debt or claim is not discharged or has not determined does not consent to the reduction, the Court may, if it thinks fit, dispense with the consent of that creditor, on the company securing payment of his debt or claim by appropriating, as the Court may direct, the following amount:- (i) if the company admits the full amount of the debt or claim, or, though not admitting it, is willing to provide for it, then, the full amount of the debt or claim; (ii) if the company does not admit and is not Willing to provide for the full amount of the debt or claim, or if the amount is contingent or not ascertained, then, an amount fixed by the Court after the like inquiry and adjudication as if the company were being wound up by the Court.

(3) Where a proposed reduction of share capital involves either the diminution of any liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, the Court may, if, having regard to any special circumstances of the case, it

thinks proper so to do, direct that the provisions of subsection (2) shall not apply as regards any class or any classes of creditors.

Order confirming reduction and powers of Court on making such order. 102. Order confirming reduction and powers of Court on making

such order.-(1) The Court, if satisfied with respect to every creditor of the company who under section 101 is entitled to object to the reduction, that either his consent to the reduction has been obtained or his debt or claim has been discharged, or has determined, or has been secured, may make an order confirming the reduction on such terms and conditions as it thinks fit.

(2) Where the Court makes any such order, it may- (a) if for any special reason it thinks proper so to do, make an order directing that the company shall, during such period commencing on, or at any time after, the date of the order, as is specified in the order, add to its name as the last words thereof the words “and reduced”; and (b) make an order requiring the company to publish as the Court directs the reasons for reduction or such other information in regard thereto as the Court may think expedient with a view to giving proper information to the public, and, if the Court thinks fit, the causes which led to the reduction.

(3) Where a company is ordered to add to its name the words “and reduced”, those words shall, until the expiration of the period 90 specified in the order, be deemed to be part of the name of the company.

Registration of order and minute of reduction.

103. Registration of order and minute of reduction.-(1) The Registrar- (a) on production to him of an order of the Court confirming the reduction of the share capital of a company; and (b) on the delivery to him of a certified copy of the order and of a minute approved by the Court showing, with respect to the share capital of the company as altered by the order, (i) the amount of the share capital, (ii) the number of shares into which it is to be divided, (iii) the amount of each share, and (iv) the amount, if any, at the date of the registration deemed to be paid up on each share; shall register the order and minute.

(2) On the registration of the order and minute, and not before, the resolution for reducing share capital as confirmed by the order shall take effect.

(3) Notice of the registration shall be published in such manner as the Court may direct.

(4) The Registrar shall certify under his hand the registration of the order and minute, and his certificate shall be conclusive evidence that all the requirements of this Act with respect to reduction of share capital have been complied with, and that the share capital of the company is such as is stated in the minute.

(5) The minute when registered shall be deemed to be substituted for the corresponding part of the memorandum of the company, and shall be valid and alterable as if it had been originally contained therein.

(6) The substitution of any such minute as aforesaid for part of the memorandum of the company shall be deemed to be an alteration of the memorandum within the meaning and for the purposes of section 40.

Liability of members in respect of reduced shares.

104. Liability of members in respect of reduced shares.-(1) A member of the company, past or present, shall not be liable, in respect of any share, to any call or contribution exceeding in amount the difference, if any, between the amount paid on the share, or the reduced amount, if any, which is to be deemed to have been paid thereon, as the case may be, and the amount of the share as fixed by the minute of reduction: Provided that, if any creditor entitled in respect of any debt Or claim to object to the reduction of share capital is, by reason of his ignorance of the proceedings for reduction or of their nature and effect with respect to his debt or claim, not entered on the list of creditors, and after the reduction the company is unable, within the 91 meaning of section 434, to pay the amount of his debt or claim, then- (a) every person who was a member of the company at the date of the registration of the order for reduction and minute, shall be liable to contribute for the payment of that debt or claim an amount not exceeding the amount which he would have been liable to contribute if the company had commenced to be wound up on the day immediately before the said date; and (b) if the company is wound up, the Court, on the appli- cation of any such creditor and proof of his ignorance as aforesaid, may, if it thinks fit, settle accordingly a list of persons so liable to contribute, and make and enforce calls and orders on the contributories settled on the list, as if they were ordinary contributories in a winding up.

(2) Nothing in this section shall affect the rights of the contributories among themselves.

Penalty for concealing name of creditor, etc. 105. Penalty for concealing name of creditor, etc.-If any officer of the company- (a) knowingly conceals the name of any creditor entitled to object to the reduction, (b) knowingly misrepresents the nature or amount of the debt or claim of any creditor; or (c) abets or is privy to any such concealment or misrepresentation as aforesaid; he shall be punishable with imprisonment for a term which may extend to one year, or with fine, or with both. Variation of shareholders’ rights

Alteration of rights of holders of special classes of shares. 106. Alteration of rights of holders of special classes of

shares.-(1) In the case of a company the share capital of, which is divided into different classes of shares, provision may be made by the memorandum or articles for authorising the variation of the rights attached to any class of shares in the company, subject to- (a) the consent of the holders of any specified proportion, not being less than three-fourths, of the issued shares of that class, or (b) the sanction of a resolution passed at a separate meeting of the holders of those shares, and supported by the votes of the holders of any specified proportion, not being less than three-fourths, of those shares.

(2) Any provision in the memorandum or articles of a company in force immediately before the commencement of this Act which specifies for the purpose aforesaid any proportion which is less than three- fourths of the shareholders of the class concerned shall, after such commencement. have effect as if a proportion of three. fourths had been specified therein instead. 92

Rights of dissentient shareholders.

107. Rights of dissentient shareholders.-(1) If, in pursuance of any provision such as is referred to in section 106, the rights attached to any such class of shares are at any time varied, the holders of not less in the aggregate than ten per cent. of the issued shares of that class, being persons who did not consent to or vote in favour of the resolution for the variation, may apply to the Court to have the variation cancelled, and where any such application is made, the variation shall not have effect unless and until it is confirmed by the Court.

(2) An application under this section shall be made within twenty-one days after the date on which the consent was given or the resolution was passed, as the case may be, and may be made. on behalf of the shareholders entitled to make the application by such one or more of their number as they may appoint in writing for the purpose.

(3) On any such application, the Court, after hearing the appli- cant and any other persons who apply to the Court to be heard and appear to the Court to be interested in the application, may, if it is satisfied, having regard to all the circumstances of the case, that the variation would unfairly prejudice the shareholders of the class represented by the applicant, disallow the variation; and shall, if not so satisfied, confirm the variation.

(4) The decision of the Court on any such application shall be final.

(5) The company shall, within fifteen days after the service on the company of any order made on any such application, forward a copy of the order-to the Registrar; and if default is made in complying with this provision, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees. Transfer of shares and debentures

Transfer not to be registered except on production of instrument oftransfer. 108. Transfer not to be registered except on production of

instrument of transfer.-(1) A company shall not register a transfer of shares in, or debentures of, the company, unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor and by or on behalf of the transferee and specifying the name, address and occupation, if any, of the transferee, has been delivered to the company along with the certificate relating to the shares or debentures, or if no such certificate is in existence, along with the letter of allotment of the shares or debentures: Provided that where, on an application in writing made to the company by the transferee and bearing the stamp required for an instrument of transfer, it is proved to the satisfaction of the Board of directors that the instrument of transfer signed by or or 93 behalf of the transferor and by or on behalf of the transferee has been lost, the company may register the transfer on such terms as to indemnity as the Board may think fit: Provided further that nothing in this section shall prejudice any power of the company to register as shareholder or debenture holder any person to whom the right to any shares in, or debentures of, the company has been transmitted by operation of law.

(2) In the case of a company having no share capital, sub-

section (1) shall apply as if the references therein to shares were reference instead to the interest of the member in the company.

Transfer by legal representative. 109. Transfer by legal representative.-A transfer of the share or other interest in a company of a deceased member thereof made by his legal representative shall, although the legal representative is not himself a member, be as valid as if he had been a member at the time of the execution of the instrument of transfer.

Application for transfer.

110. Application for transfer.-(1) Am application for the registration of a transfer of the shares or other interest of a member in a company may be made either by the transferor or by the transferee.

(2) Where the application is made by the transferor and relates to partly paid shares, the transfer shall not be registered, unless the company gives notice of the application to the transferee and the transferee makes no objection to the transfer within two weeks from the receipt of the notice.

(3) For the purposes of sub-section (2), notice to the transferee shall be deemed to have been duly given if it is dispatched by prepaid registered post to the transferee at the address given in the instrument of transfer, and shall be deemed to have been duly delivered at the time at which it would have been delivered in the ordinary course of post.

Power to refuse registration and appeal against refusal.

111. Power to refuse registration and appeal against refusal.(1) Nothing in sections 108, 109 and 110 shall prejudice any power of the company under its articles to refuse to register the transfer of, or the transmission by operation of law of the right to, any shares or interest of a member in, or debentures of, the company.

(2) If, in pursuance of any such power, a company refuses to register any such transfer or transmission of right, it shall, within two months from the date on which the instrument of transfer, or the intimation of such transmission, as the case may be, was delivered to the company, send notice of the refusal to the transferee and the transferor or to the person giving intimation of such transmission, as the case may be. If default is made in complying with this sub-section, the com- pany, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for every day during which the default continues. 94

(3) The transferor or transferee, or the person who gave intimation of the transmission by operation of law, as the case may be, may, where the company is a public company or a private company which is a subsidiary of a public company, appeal to the Central Government against any refusal of the company to register the transfer or transmission, or against any failure on its part, within the period

referred to in sub-section (2), either to register the transfer or transmission or to send notice of its refusal to register the same.

(4) An appeal to the Central Government under sub-section (3) shall be made- (a) in case the appeal is against the ‘refusal to register a transfer or transmission, within two months of the receipt by him of the notice of refusal; and (b) in case the appeal is against the failure referred to

in sub-section (3), within two months from the expiry of the

period referred to in sub-section (2).

(5) The Central Government shall, after causing reasonable notice to be given to the company and also to, the transferor and the transferee or, as the case may require, to the person giving intimation of the transmission by operation of law and the previous owner, if any, and giving them a reasonable opportunity to make their representations, if any, in writing, by order, direct either that the transfer or transmission shall be registered by the company or that it need not be registered by it; and In the former case, the company shall give effect to the decision forthwith.

(6) The Central Government may, in its order aforesaid, give such incidental and consequential directions as to the payment of costs or otherwise as it thinks fit.

(7) All proceedings in appeals under sub-section (3) or in relation thereto shall be confidential, and no suit, prosecution or other legal proceeding shall lie in respect of any allegation made in such proceedings, whether orally or otherwise.

(8) In the case of a private company which is not a subsidiary of a public company, where the right to any shares or interest of a member in, or debentures of, the company, is transmitted by a sale thereof held by a Court or other public authority, the provisions of

sub-sections (3) to (7) shall apply as if the company were a public company: Provided that the Central Government may, in lieu of an order

under sub-section (5), pass an order directing the company to register the transmission of the right unless any member or members of the company specified in the order acquire the right aforesaid within such time as may be allowed for the purpose by the order, on payment to the purchaser of the price paid by him therefor or such other sum as the Central Government may determine to be a reasonable compensation for the right in all the circumstances of the case.

Certification of transfers.

112. Certification of transfers.-(1) The certification by a com- pany of any instrument of transfer of shares in, or debentures of, the company, shall be taken as a representation by the company, to any person acting on the faith of the certification that there have been 95 produced to the company such documents as on the face of them show a prima facie title to the shares or debentures in the transferor named in the instrument of transfer, but not as a representation that the transferor has any title to the shares or debentures.

(2) Where any person acts on the faith of an erroneous certification made by a company negligently, the company shall be under the same liability to him as if the certification had been made fraudulently.

(3) For the purposes of this section- (a) an instrument of transfer shall be deemed to be certificated if it bears the words “certificate lodged” or words to the like effect; (b) the certification of an instrument of transfer shall be deemed to be made by a company, if- (i) the person issuing the certificated instrument is a person authorised to issue such instruments of transfer on the company’s behalf; and (ii) the certification is signed by any officer or servant of the company or any other person, authorised to certificate transfers on the company’s behalf, or if a body corporate has been so authorised, by any officer or servant of that body corporate; (c) a certification shall be deemed to be signed by any person, if it purports to be authenticated by his signature unless it is shown that the signature was placed there neither by himself nor by any person authorised to use the signature for the purpose of certificating transfers on the company’s behalf. Issue of certificate of shares, etc.

Limitation of time for issue of certificates.

113. Limitation of time for issue of certificates.-(1) Every com- pany shall, within three months after the allotment of any of its shares, debentures or debenture stock, and within three months after the application for the registration of the transfer of any such shares, debentures or debenture stock, complete and have ready for delivery the certificates of all shares, the debentures, and the certificates of all debenture stock allotted or transferred, unless the conditions of issue of the shares, debentures or debenture stock otherwise provide. The expression “transfer”, for the purposes of this sub-section, means a transfer duly stamped and otherwise valid, and does not in- clude any transfer which the company is for any reason entitled to refuse to register and does not register.

(2) If default is made in complying with sub-section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues.

(3) If any company on which a notice has been served requiring it to make good any default in complying with the provisions of sub-

section (1), fails to make good the default within ten days after the service of the notice, the Court may, on the application of the person entitled to have the certificates or the debentures delivered to him, make an order directing the company and any officer of the company 96 to make good the default within such time as may be specified in the order; and any such order may provide that all costs of and incidental to the application shall be borne by the company or by any officer of the company responsible for the default. Share warrants

Issue and effect of share warrants to bearer.

114. Issue and effect of share warrants to bearer.–(1) A public company limited by shares, if so authorised by its articles, may, with the previous approval of the Central Government, with respect to any fully paid-up shares, issue under its common seal a warrant stating that the bearer of the warrant is entitled to the shares therein specified, and may provide, by coupons or otherwise, for the payment of the future dividends on the shares specified in the warrant.

(2) The warrant aforesaid is in this Act referred to as a “share warrant”.

(3) A share warrant shall entitle the bearer thereof to the shares therein specified, and the shares may be transferred by delivery of the warrant.

Share warrants and entries in register of members.

115. Share warrants and entries in register of members.-(1) On the issue of a share warrant, the company shall strike out of its register of members the name of the member then entered therein as holding the shares specified in the warrant as if he had ceased to be a member, and shall enter in that register the following particulars namely: – (a) the fact of the issue of the warrant; (b) a statement of the shares specified in the warrant, distinguishing each share by its number; and (c) the date of the issue of the warrant.

(2) The bearer of a share warrant shall, subject to the articles of the company, be entitled, on surrendering the warrant for cancella- tion and paying such fee to the company as the Board of directors may from time to time determine, to have his name entered as a member in the register of members.

(3) The company shall be responsible for any loss incurred by any person by reason of the company entering in its register of mem- bers the name of a bearer of a share warrant in respect of the shares therein specified, without the warrant being surrendered and cancelled.

(4) Until the warrant is surrendered, the particulars specified

in sub-section (1) shall be deemed to be the particulars required by this Act to be entered in the register of members; and, on the surrender, the date of the surrender shall be entered in that register.

(5) Subject to the provisions of this Act, the bearer of a share warrant may, if the articles of the company so provide, be deemed to be a member of the company within the meaning of this. Act, for any purposes defined in the articles.

(6) If default is made in complying 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. fifty rupees for every day during which the default continues. 97 Penalty for personation of shareholder

Penalty for personation of shareholder. 116. Penalty for personation of shareholder.-If any person deceitfully personates an owner of any share or interest in a company, or of any share warrant or coupon issued in pursuance of this Act, and thereby obtains or attempts to obtain any such share or interest or any such share warrant or coupon, or receives or attempts to receive any money due to any such owner, he shall be punishable with imprisonment for a term which may extend to three years and shall also be liable to fine. Special provisions as to debentures

Debentures with voting rights not to be issued hereafter. 117. Debentures with voting rights not to be issued hereafter.No company shall, after the commencement of this Act, issue any debentures carrying voting rights at any meeting of the company whether generally or in respect of particular classes of business.

Right to obtain copies of and inspect trust deed.

118. Right to obtain copies of and inspect trust deed.–(1) A copy of any trust deed for securing any issue of debentures shall be forwarded to the holder of any such debentures or any member of the company, at his request and within seven days of the making thereof, on payment- (a) in the case of a printed trust deed, of the sum of one rupee; and (b) in the case of a trust deed which has not been printed, of six annas for every one hundred words or fractional part thereof required to be copied.

(2) If a copy is refused, or is not forwarded within the time

specified in sub-section (1), the company, and every officer of the company who is in default, shall be punishable, for each offence, with fine which may extend to fifty rupees and with a further fine which may extend to tyenty rupees for everyday during which the offence continues.

(3) The Court may also, by order, direct that the copy required shall forthwith be sent to the person requiring it.

(4) The trust deed referred to in sub-section (1) shall also be open to inspection by any member or debenture holder of the company in the same manner, to the same extent, and on payment of the same fees, as if it were the register of members of the company.

Liability of trustees for debenture holders.

119. Liability of trustees for debenture holders.–(1) Subject to the provisions of this section, any provision contained in a trust deed for securing an issue of debentures, or in any contract with the holders of debentures secured by a trust deed, shall be void in so far as it would have the effect of exempting a trustee thereof from, or Indemnifying him against, liability for breach of trust, where he fails to show the degree of care and diligence required of him as trustee, having regard to the provisions of the trust deed conferring on him any powers, authorities or discretions.

(2) Sub-section (1) shall not invalidate- (a) any release otherwise validly given in respect of any- thing done or omitted to be done by a trustee before the giving of the release; or 98 (b) any provision enabling such a release to be given- (i) on the agreement thereto of a majority of not less than three-fourths in value of the debenture holders present and voting in person or, where proxies are permitted, by proxy, at a meeting summoned for the purpose; and (ii) either with respect to specific acts or omissions or on the trustee dying or ceasing to act.

(3) Sub-section (1) shall not operate- (a) to in validate any provision in force at the commence- ment of this Act so long as any person then entitled to the benefit of that provision or afterwards given the benefit

thereof under sub-section (4) remains a trustee of the deed in question; or (b) to deprive any person of any exemption or right to be indemnified in respect of anything done or omitted to be done by him while an such provision was in force.

(4) While any trustee of a trust deed remains entitled to the

benefit of a provision saved by sub-section (3), the benefit of that provision may be given either- (a) to all trustees of the deed, present and future; or (b) to any named trustees or proposed trustees thereof; by a resolution passed by a majority of not less than three-fourths in value of the debenture holders present in person or, where proxies are permitted, by proxy, at a meeting called for the purpose in accordance with the provisions of the deed or, if the deed makes no provision for calling meetings, at a meeting called for the purpose in any manner approved by the Court.

Perpetual debentures. 120. Perpetual debentures.-A condition contained in any deben- tures or in any deed for securing any debentures, whether issued or executed before or after the commencement of this Act, shall not be invalid by reason only that thereby, the debentures are made irre- deemable or redeemable only on the happening of a contingency, however remote, or on the expiration of a period, however long.

Power to re-issue redeemed debentures in certain cases. 121. Power to re-issue redeemed debentures in certain

cases.-(1) Where either before or after the commencement of this Act, a company has redeemed any debentures previously issued, then,- (a) unless any provision to the contrary, whether express or implied, is contained in the articles, or in the conditions of issue, or in any contract entered into by the company; or (b) unless the company has, by passing a resolution to that effect or by some other act, manifested its intention that the debentures shall be cancelled; the company shall have, and shall be deemed always to have had. the right to keep the debentures alive for the purposes of re-issue; and in exercising such a right, the company shall have, and shall be deemed always to have had, power to re-issue the debentures either by re-issuing the same debentures or by issuing other debentures in their place. 99

(2) Upon such re-issue, the person entitled to the debentures shall have, and shall be deemed always to have had, the same rights and priorities as if the debentures had never been redeemed.

(3) Where with the object of keeping debentures alive for the purpose of re-issue, they have, either before or after the commencement of this Act, been transferred to a nominee of the company, a transfer from that nominee shall be deemed to be a re-issue for the purposes of this section.

(4) Where a company has, either before or after the commencement of this Act, deposited any of its debentures to secure advances from time to time on current account or otherwise, the debentures shall not be deemed to have been redeemed by reason only of the account of the company having ceased to be in debit whilst the debentures remained so deposited.

(5) The re-issue of a debenture or the issue of another debenture in its place under. the power by this section given to, or deemed to have been possessed by, a company, whether the re-issue or issue was made before or after the commencement of this Act, shall be treated as the issue of a new debenture for the purposes of stamp duty, but it shall not be so treated for the purposes of any provision limiting the amount or number of debentures to be issued: Provided that any person lending money on the security of a debenture re-issued under this section which appears to be duly stamped may give the debenture in evidence in any proceedings for enforcing his security without payment of the stamp duty or any penalty in respect thereof, unless he had notice or, but for his negligence, might have discovered, that the debenture was not duly stamped; but in any such case the company shall be liable to pay the proper stamp duty and penalty.

(6) Nothing in this section shall prejudice- (a) the operation of any decree or order of a Court of com- petent jurisdiction pronounced or made before the twenty- fifth day of February, 1910, as between the parties to the proceedings in which the decree or order was made; (b) where an appeal has been preferred against any such de- cree or order, the operation of any decree or order passed on such appeal, as between the parties to such appeal; or (c) any power to issue debentures in the place of any debentures paid off or otherwise satisfied or extinguished, reserved to a company by its debentures or the, securities for the same.

Specific performance of contract to subscribe for debenture. 122. Specific performance of contract to subscribe for deben- tures.-A contract with a company to take up and pay for any debentures of the company may be enforced by a decree for specific performance.

Payments of certain debts out of assets subject to floating charge inpriority to claims under the charge. 123. Payments of certain debts out of assets subject to floating

charge in priority to claims under the charge.-(1) Where either- (a) a receiver is appointed on behalf of the holders of any debentures of a company secured by a floating charge; or (b) possession is taken by or on behalf of those debenture holders of any property comprised in or subject to the charge: 100 then, if the company is not at the time in course of being wound up, the debts which in every winding up are, under the provisions of Part VII relating to preferential payments, to be paid in priority to all other debts, shall be paid forthwith out of any assets coming to the hands of the receiver or other person taking possession as aforesaid in priority to any claim for principal or interest in respect of the debentures.

(2) In the application of the provisions aforesaid, section 530 shall be construed as if the provision for payment of accrued, holiday remuneration becoming payable on the termination of employment before or by the effect of the winding-up order or resolution were a provision for payment of such remuneration becoming payable on the termination of employment before or by the effect of the appointment of the receiver or possession being taken as aforesaid.

(3) The periods of time mentioned in the said provisions of Part VII shall be reckoned from the date of appointment of the receiver or of possession being taken as aforesaid, as the case may be.

(4) Where the date referred to in sub-section (3) occurred

before the commencement of this Act, sub-sections (1) and (3) shall have. effect with the substitution, for references to the said provisions of Part VII, of references to the provisions which, by

virtue of sub-section (9) of section 530, are deemed to remain in

force in the case therein mentioned, and sub-section (2) shall not apply.

(5) Any payments made under this section shall be recouped, as far as may be, out of the assets of the company available for payment of general creditors. PART REGISTRATION CHARGES PART V REGISTRATION CHARGES

“Charge” to include mortgage in this Part. 124. “Charge” to include mortgage in this Part.-In this Part, the expression “charge” includes a mortgage.

Certain charges to be void against liquidator or creditors unlessregistered. 125. Certain charges to be void against liquidator or creditors

unless registered.-(1) Subject to the provisions of this Part, every charge created on or after the 1st day of April, 1914, by a company and being a charge to which this section applies shall, so far as any security on the company’s property or undertaking is conferred thereby, be void against the liquidator and any creditor of the com- pany, unless the prescribed particulars of the charge, together with the instrument, if any, by which the charge is created or evidenced, or a copy thereof verified in the prescribed manner, are filed with the Registrar for registration in the manner required by this Act within twenty-one days after the date of its creation.

(2) Nothing in sub-section (1) shall prejudice any contract or obligation for the repayment of the money secured by the charge.

(3) When a charge becomes void under this section, the money secured thereby shall immediately become payable.

(4) This section applies to the following charges:- (a) a charge for the purpose of securing any issue of debentures; (b) a charge on uncalled share capital of the company; 101 (c) a charge on any immovable property, wherever situate, or any interest therein; (d) a charge on any book debts of the company; (e) a charge, not being a pledge, on any movable property of the company; (f) a floating charge on the undertaking or any property of the company including stock-in-trade; (g) a charge on calls made but not paid; (h) a charge on a Ship or any share in a ship; (i) a charge on goodwill, on a patent or a licence under a patent, on a trade mark, or on a copyright or a licence under a copyright.

(5) In the case or a charge created out of India and comprising solely property situate outside India, twenty-one days after the date on which the instrument creating or evidencing the charge or a copy thereof could, in due course of post and if despatched with due dili- gence, have been received in India, shall be substituted for twentyone days after the date of the creation of the charge, as the time within which the particulars and instrument or copy are to be filed with the Registrar.

(6) Where a charge is created in India but comprises property outside India, the instrument creating or purporting to create the charge under this section or a copy thereof verified in the prescribed manner, may be filed for registration, notwithstanding that further proceedings may be necessary to make the charge valid or effectual according to the law of the country in which the property is situate.

(7) Where a negotiable instrument has been given to secure the payment of any book debts of a company, the deposit of the instrument for the purpose of securing an advance to the company shall not, for the purposes of this section, be treated as a charge on those book debts.

(8) The holding of debentures entitling the holder to a charge on immovable property shall not, for the purposes of this section, be deemed to be an interest in immovable property.

Date of notice of charge. 126. Date of notice of charge.-Where any charge on any property of a company required to be registered under section 125 has been so registered, any person acquiring such property or any part thereof, or an share or interest therein, shall be deemed to have notice of the charge as from the date of such registration.

Registration of charges on properties acquired subject to charge. 127. Registration of charges on properties acquired subject

to charge.-(1) Where a company acquires any property which is subject to a charge of any such kind as would, if it had been created by the company after the acquisition of the property, have been required to be registered under this Part, the company shall cause the prescribed particulars of the charge, together with a copy (certified in the prescribed manner to be a correct copy) of the instrument, if any, by which the charge was created or is evidenced, to be delivered to the Registrar for registration in the manner required 102 by this Act within twenty-one days after the date on which the ac- quisition is completed: Provided that, if the property is situate, and the charge was created, outside India, twenty-one days after the date on which a copy of the instrument could, in due course of post and if despatched with due diligence, have been received in India shall be substituted for twenty-one days after the completion of the acquisition as the time within which the particulars and the copy of the instrument are to be delivered to the Registrar.

(2) If default is made in complying with sub-section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees.

Particulars in case of series of debentures entitling holders paripassu. 128. Particulars in case of series of debentures entitling holders pari passu.-Where a series of debentures containing, or giving by reference to any other instrument, any charge to the benefit of which the debenture holders of that series are entitled pari passu is created by a company, it shall, for the purposes of section 125, be ,sufficient, if there are filed with the Registrar, within twenty-one days after the execution of the deed containing the charge or, if there is no such deed, after the execution of any debentures of the series, the following particulars:- (a) the total amount secured by the whole series; (b) the dates of the resolutions authorising the issue of the series and the date of the covering deed, if any, by which the security is created or defined; (c) a general description of the property charged; and (d) the names of the trustees, if any, for the debenture holders; together with the deed containing the charge, or a copy of the deed verified in the prescribed manner, or if there is no such deed, one of the debentures of the series: Provided that, where more than one issue is made of debentures in the series, there shall be filed with the Registrar, for-entry in the: register, particulars of the date and amount of each issue; but an omission to do this shall not affect the validity of the, debentures issued.

Particulars in case of commission etc., on debentures. 129. Particulars in case of commission etc., on debentures. Where any commission, allowance or discount has been paid or made either directly or indirectly by a company to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any, debentures of the company, ox procuring or agreeing to procure subscriptions, whether absolute or conditional, for any such debentures, the particulars required to be filed for registration under sections 125 and 128 shall include particulars as to the amount or rate per cent of the commission, discount or allowance so paid or made; but an omission to do this shall not affect the validity of the debentures issued: Provided that the deposit of any debentures as security for any debt of the company shall not, for the purposes of this section, be treated as the issue of the debentures at a discount. 103

Register of charges to be kept by Registrar.

130. Register of charges to be kept by Registrar.-(1) The Registrar shall keep, with respect to each company, a register in the prescribed form of all the charges requiring registration tinder this Part, and shall, on payment of the prescribed fee, enter in the regis- ter. with respect to every such charge, the following particulars:- (a) in the case of a charge to the benefit of which the holders of a series of debentures are entitled, such particulars as are specified in sections 128 and 129; (b) in the case of any other charge– (i) if the charge is a charge created by the company, the date of its creation; and if the charge was a charge existing on property acquired by the company, the date of the acquisition of the property; – (ii) the amount secured by the charge; (iii) short particulars of the property charged; and (iv) the persons entitled to the charge.

(2) After making the entry required by sub-section (1), the Registrar shall return the instrument, if any, or the verified copy thereof, as the case may be, filed in accordance with the provisions of this Part, to the person filing the same.

(3) The register kept in pursuance of this section shall be open to inspection by any person on payment of a fee of one rupee for each inspection.

Index to register of charges. 131. Index to register of charges.-The Registrar shall keep a chronological index, in the prescribed form and with the prescribed particulars, of the charges registered with him in pursuance of this Part.

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 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. 104

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, re- quiring registration under this Part; but registration of any such charge may also be effected on the application of any person interest- ed therein.

(2) Where registration 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.

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 fifteen days from the date of the passing of the order or of the making of the appointment under the said powers, give notice of the fact to the Registrar; and the Registrar shall, on payment of the prescribed free, 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 within twenty-one days from the date of such payment or satisdefault 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, in whole or in part, of any charge relating to the company and requiring registration under this Part, within twenty-one 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. 105

(3) If no cause is shown, the Registrar shall order that a memo- randum of satisfaction in whole or in part, as the case may be, 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.

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 Ms 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 Court of register of charges.

141. Rectification by Court of register of charges.-(1) The Court, on being satisfied- (a) that the omission to register a charge within the time required by this Part, or that the omission or misstatement of any particular with respect to any such charge or 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 (b) that on other grounds it is just and equitable to grant relief ; may, on the application of the company or any person interested and on such terms and conditions as seem to the Court just and expedient, order that the time for the registration shall be-extended or, as the case may require, that the omission or misstatement shall be rectified.

(2) The Court may make such order as to the costs of an applica-

tion under sub-section (1) as it thinks fit 106

(3) Where the Court extends the time for the registration of a charge, the order shall not prejudice any rights acquired in respect of the 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, in whole or in part, 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 line which may extend to five hundred rupees for everyday 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.

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.

(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 line 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 one rupee for each inspection, at the registered office of the company. 107

(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 everyday during which the refusal continues.

(4) The Court 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 any charge created before 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 commen- cement of this Act, as between charges on the same property. PART MANAGEMENT AND ADMINISTRATION 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 twenty-eighth 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 therein, shall be given within twenty-eight 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 statement as to the address of its registered office shall not be

taken to satisfy the obligation imposed by sub-section (2). 108

(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 everyday 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, and keep the same painted or affixed, on, the outside of every office or place in which its business is carried on, in a conspicuous position, in letters easily legible; and if the characters employed therefor are not those of the language, or of one of the languages, in general use in that locality, also in the characters of that language or of one of those languages; (b) shall have its name engraven in legible characters on its seal; and (c) shall have its name mentioned in legible characters in all its business letters, in all its bill heads and letter paper, and in all its notices, advertisements and other official publications-, and, 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, or keep the same painted or affixed in the manner directed by clause (a) of sub-

section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for not so painting or affixing its name, and for everyday during which its name 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, advertisement or other official publication of the company wherein its name is not mentioned in the manner aforesaid; (c) signs, or authorises to be signed, on behalf of 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 109 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 publication, or any business letter, bill head or letter paper, of a company contains a statement of the amount of the authorised capital of the company, such notice, advertisement or other official publication, or such letter, bill head or letter paper, shall also contain a statement, in an equally prominent position and in equally 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

sub-section (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; (c) no money is. or may become, liable to be repaid to ap- plicants for any shares or debentures which have been offered for public subscription by reason of any failure to apply for, or to obtain, permission for the shares or debentures to be dealt in on any recognized stock exchange; and (d) there hag been filed with the Registrar a duly verified declaration by one of the directors or the secretary, in the prescribed form, that clauses (a), (b) and (c) of this, sub- section, have been complied with.

(2) Where a company having a ,hare 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 one of the directors or the secretary, in the 110 prescribed form, that clause (b) of this sub-section has been complied with.

(3) The Registrar shall, on the filing of a duly verified

declaration In accordance with the provisions of sub-section (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 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 res- ponsible 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.

(8) The provisions of this section, in so far as they do not relate to shares, shall also apply to a company limited by guarantee and not having a share capital. Registers of members and debenture holders

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, distinguishing each share by its number, and the amount paid or agreed to be considered as paid on those shares; (c) the date at which each person was entered in the register as a 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 111 be punishable with fine which may extend to fifty rupees for everyday during which the default continues.

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 suffi- cient indication to enable the entries relating to that member in the register to be readily found.

(3) The index shall, at all times, be kept at the same place as the register of members.

(4) If default is made in complying with sub-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, distinguishing each debenture by its number, and the amount paid or agreed to be considered as paid on those debentures; (c) the date at which each person was 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 itself to constitute an index, keep an index (which may be in the form of a card index) of the names of the debenture holder’s of the company and shall, within fourteen days after the date on which any alteration is made in the register of debenture holders, make the necessary alteration in the index. (b) The index shall, in respect of each debenture holder, contain a sufficient indication to enable the entries relating to that holder in the register to be readily found.

(3) If default is made in complying with sub-section (1) or (2), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees.

(4) Sub-sections (1) to (3) shall not apply with respect to debentures which, ex facie, are payable to the bearer thereof.

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, or be receivable by the Registrar. 112

Power to close register of members or debenture holders. 154. Power to close register of members or 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 aggregate period in excess of the limits specified in that sub- section, the company, and every officer of the company who is in default. shall be punishable with fine which may, extend to five hunderd rupees for every day during which the register is so closed.

power of Court to rectify register of members.

155. power of Court to rectify register of members.-(1) If- (a) the name of any person is, without sufficient cause, entered in or omitted from the register of members of a company; or (b) default is made, or unnecessary delay takes place, in entering on the register the fact of any person having become, of ceased To be, a member; the person aggrieved, or any member of the company, or the company, may apply to the Court for rectification of the register.

(2) The Court may either reject the application or order rectification of the register; and in the latter case, may direct the company to pay the damages, if any, sustained by any party aggrieved. In either case, the Court in its discretion may make such order as to costs as it thinks fit.

(3) On an application under this section, the Court- (a) may decide any question relating to the title of any person who is a party to the application to have his name entered in or omitted from the register, whether the question arises between members or alleged members, or between members or alleged members on the one hand and the company on the other hand; and (b) generally, may decide any question which it is necessary or expedient to decide in connection with the application for rectification.

(4) From any order passed by the Court on the application, or on an issue raised therein and tried separately, an appeal shall lie on the grounds mentioned in section 100 of the Code of Civil Procedure, 1908 (Act 5 of 1908) – (a) if the order be passed by a District Court, to the High Court; (b) if the order be passed by a single Judge of a High Court consisting of three or more Judges, to a Bench of that High Court.

Notice to Registrar of rectification of register. 156. Notice to Registrar of rectification of register.-In the case of a company required by this Act to file a list of its members with 113 the Registrar, the Court, when making an order for rectification of the register, shall, by its order, direct notice of the rectification to be filed with the Registrar within fourteen days from the date of the making of the order. Foreign registers of members or debenture holders

Power for company to keep foreign register of members, or debentureholders. 157. Power for company to keep foreign register of members, or

debenture holders.-(1) A company which has a share capital or which has issued debentures may, if so authorised by its articles, keep in any State or country outside India a branch, register of members or debenture holders resident in that State or country (in this Act called a “foreign register”).

(2) The company shall, within one month from the date of the opening of any foreign register, file with the Registrar notice of the situation of the office where such register is kept; and in the event, of any change in the situation of such office or of its discontinuance, shall, within one month from the date of such change or 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.

(4) The company shall- (a) transmit to its registered office in India a copy of ever entry in any foreign register as soon as may be after the entry is made; and 114 (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 forty-two days from the day on which each of the annual general meetings referred to in section 166 is held, prepare and file with the Registrar a return containing the particulars specified in Part I 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, (f) its members and debenture holders, past and present, and (g) its directors, managing directors, managing agents secretaries and treasurers and managers, past and present.

(2) The said return shall be in the Form set out in Part II of Schedule V or as near thereto as circumstances admit: Provided that where the company has converted any of its shares into 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 forty-two days from the day on which each of the annual general meetings referred to in section 166 is held, prepare and file with the 115 Registrar a return stating the following particulars as they stood on that day:– (a) the address of the registered office of the company; (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 and its manager 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 commencement 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 managing agent, secretaries and treasurers, 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.

(2) There shall also be filed with the Registrar along with the return a certificate signed by both 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; and (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 incorporation 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 sections 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. 116 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.

(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 provisions 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 inspection- (a) of any member or debenture holder, without fee; and (b) of any other person, on payment of a fee of one rupee for each inspection.

(3) Any such member, debenture holder 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 six annas 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 or default continues.

(6) The Court 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 sections 159, 160, and 161 shall be prima facie evidence of any matters directed or authorised to be inserted therein by this Act. 117 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 be-en allotted; (b) the total amount of cash received by the company in respect of all the shares allotted, distinguished as aforesaid; (c) an abstract of the receipts of the company and of the payments made thereout, up to a date within seven days of the date of the report, exhibiting under distinctive headings the receipts of the company from shares and debentures and other sources, the payments made thereout, and particulars concerning the balance remaining in hand, and an account or estimate of the preliminary expenses of the company, showing separately any. commission or discount paid or to be paid on the issue or sale of shares or debentures; (d) the names, addresses and occupations of the directors of the company and of its auditors; and also, if there be any, of its managing agent, secretaries and treasurers, manager, and secretary; and the changes, if any, which have occurred in such names, addresses and occupations since the date of the incorporation of the company; (e) the particulars of any contract which, or the modification or the proposed modification of which, is to be submitted to the meeting for Its approval, together in the latter case with the particulars of the modification or proposed modification; (f) the extent, If any, to which each under-writing contract, if any, has not been carried out, and the reasons therefor; (g) the arrears, if any, due on calls from every director; from the managing agent, every partner of the managing agent, every firm in which the managing agent is a partner, and where the managing agent is a private company, every director thereof; from the secretaries and treasurers; where they are a 118 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 on capital account, 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.

(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 OIL 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) (a) Every company shall, in addition to any other meetings, hold a general meeting which shall be styled its annual general meeting at the intervals, and in accordance with the provisions, specified below. 119 (b) The first annual general meeting shall be held by a company within eighteen months of its incorporation. (c) The next annual general meeting of the company shall be held by it within nine months after the expiry of the financial year in which the first annual general meeting was held; and thereafter an annual general meeting shall be held by the company within nine months after the expiry of each financial year: Provided that the Registrar may, for any special reason, extend the time within which any annual general meeting (not being the first annual general meeting) shall be held, by a further period not exceeding six months. (d) Except in the case referred to in the foregoing proviso, not more than fifteen months shall elapse between the date of one annual general meeting and that of the next.

(2) Every annual general meeting shall be called for a time during business hours, on a day that is not a public holiday, and shall be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situate; and the notices calling the meeting shall specify it as the annual general meeting.

Power of Central Government to call annual general meeting. 167. Power of Central Government to call annual general meeting.-

(1) If default is made in holding an annual general meeting in accordance with section 166, the Central Government may, notwithstanding anything in this Act or in the articles of the company, on 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 Central Government 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 Central Government, 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.

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 oft 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. 120

(2) The requisition shall set out the matters for the considera- tion of which the meeting is to be called, shall be signed by the requisitionists, and shall be deposited at the registered office of the company.

(3) The requisition may consist of several documents in like form, 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 re- quisition, not less than one-tenth of such of the paid-up capital of the company as at that date carries the right of voting in regard to that matter; (b) in the case of a company not having a share. capital, such number of them as have at the date of deposit of the re- quisition not less than one-tenth of the total voting power of all the members having at the said date a right to vote in regard to that matter.

(5) Where two or more distinct matters are specified in the

requisition, the provisions of sub-section (4) shall apply separately in regard to each such matter; and the requisition shall accordingly be valid only in respect of those matters in regard to which the condition specified in that sub-section is fulfilled.

(6) If the Board does not, within twenty-one days from the date of the deposit of a valid requisition in regard to any matters,. proceed duly to call a meeting for the consideration of those matters on a day not later than forty-five days from the date of the deposit of the requisition, the meeting may be called- (a) by the requisitionists themselves, (b) in the case of a company having a share capital, by such of the requisitionists as represent either a majority in value of the paid-up share capital held by all of them or not less than one-tenth of such of the paid-up share capital of the company as is referred to in clause (a) of sub-

section(4), whichever is 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. 121 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.

Sections 171 to 186 to apply to meetings.

170. Sections 171 to 186 to apply to meetings.-(1) The provisions of sections 171 to 186– (i) shall, notwithstanding anything to the contrary in the articles of the company, apply with respect to general meetings of a public company, and of a private company which is a subsidiary of a public company; and (ii) shall, unless otherwise specified therein or unless the articles of the company otherwise provide, apply with respect to general meetings of a private company which is a sub- sidiary of a public company.

(2) (a) Section 176, with such adaptations and modifications, if any, as may be prescribed, shall apply with respect to meetings of’ any class of members, or of debenture holders or any class of deben- ture holders, of a company, in like manner as it applies with respect to general Meetings of the company. (b) Unless the articles of the company or a contract binding on the persons concerned otherwise provide, sections 171 to 175 and sections 177 to 186 with such adaptations and modifications, if any, as may be prescribed, shall apply with respect to meetings of any class of members, or of debenture holders or any class of 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 twentyone 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 122 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.

(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.

(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.

(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 123 notice of the meeting a statement setting out all material facts con- cerning each such item of business, including in particular the nature and extent of the interest, if any, therein, of every director, the managing agent, if any, the secretaries and treasurers, if any, and the manager, if any.

(3) Where any item of business consists of the according of 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 public company, and two members personally present in the case of a private company, shall be the quorum for a meeting of the company.

(2) Unless the articles of the company otherwise provide, the

provisions of sub-sections (3) (4), and (5) shall apply with respect to the meetings of a 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 deter- mine.

(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.

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 or 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. 124

(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 a 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 tiny meeting, every officer of the company who is in default shall be punishable with fine which may extend to five hundred rupees.

(3) Any provision contained in the articles of a public company, or of a private company which is a subsidiary of a public company, shall be void, in so far as it would have the effect of requiring. the Instrument appointing a proxy, or any other document necessary to show the validity of or otherwise relating to the appointment of, , a proxy, to be received by the company or any other person forty-eight hours before the meeting in order that the appointment may be effective thereat.

(4) If for the purpose of any meeting of a company, invitations to 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 extent 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 ft.

(6) An instrument appointing a proxy, if in any of the forms set out in Schedule IX, shall not be questioned on the ground that it falls to comply with any special requirements specified for such Instrument by the articles.

(7) Every member entitled to vote. at a meeting of, the company, or on any resolution to be moved thereat, shall be entitled during the period beginning twenty-four hours before the time fixed for the commencement of the meeting and ending with the conclusion of the meeting. to inspect the. Proxies lodged, at any time during the business hours of the company. provided, not, less than three days’ notice in writing of the intention so to Inspect is given to the com- pany. 125

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.

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, either 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,- (a) in the case of a public company, by at least five members having the right to vote on the resolution and present in person or by proxy, (b) in the case of a private company, by one member having’ the right to vote on the resolution and present in person or by proxy If not more than seven such members are personally present, and by two such members present in person or by proxy if more than seven such members are personally present, (c) by any member or members present in person or by proxy and having not less than one-tenth of the total voting power in respect of the resolution, or (d) by any member or members present in person or by proxy and holding shares in the company conferring a right to vote on the resolution, being shares on which an aggregate sum has been paid up which is not less than one-tenth of the total sum paid up on all the shares conferring that right.

(2) The demand for a poll may be withdrawn at any time by the person or persons who made the demand.

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 section 175) shall be taken at such time not being later than forty- eight hours from the time when the demand was made, as the chairman may direct.

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 M. the articles of a company may provide that no member shall exercise any voting right in respect of any shares registered in his name has and has 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. 126

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 of. member to use his votes differently. 183. Right of. member to use his votes differently.-On a poll taken at a meeting of a company, a member entitled to more than one vote, or his proxy, or other person entitled to vote for him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses.

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.

Power of Court to order meeting to be called.

186. Power of Court to order meeting to be called.-(1) If for any reason it is impracticable to call a meeting of a company, other than an annual general meeting, in any manner in which meetings of the company may be called, or to hold or conduct the meeting of the company in the manner prescribed by this Act or the articles, the Court may, either of its own motion or on the application of any director of the company, or of any member of the company who would be entitled to vote at the meeting,- (a) order a meeting of the company to be called, held and conducted in such manner as the Court thinks fit; and (b) give such ancillary or consequential directions as the Court thinks expedient, including directions modifying or 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. 127

Representation of corporations at meetings of companies and ifcreditors. 187. Representation of corporations at meetings of companies

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

(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 a member, creditor or holder of debentures of the company.

Circulation of members’ resolutions.

188. Circulation of members’ resolutions.-(1) Subject to the pro- visions of this section, a company shall, on the requisition in writing of such number of members as is hereinafter specified and (unless the company otherwise resolves) at the expense of the requisi- tionists,- (a) give to members of the company entitled to receive notice of the next annual general meeting, notice of any 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.

(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 128 for service of notice of the meeting; and notice of any such resolu- tion shall be given to any other member of the company by giving notice of the general effect of the resolution in any manner permitted for 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 her person who claims to be aggrieved, the Court is satisfied that the rights conferred by this section are being abused to secure needless publicity for defamatory matter; and the Court may order the company’s costs on an application under this section to be paid in whole or in part by the requisitionists, notwithstanding that they-are not parties to the application.

(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 omis- sion, 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. 129

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.