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SECTION
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EARLIER
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REVISED
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Sec 2(28)
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Cost Accountant means
a cost accountant as defined in clause (b) of subsection (1) of
section 2 of the Cost and Works Accountants Act, 1959 (23 of 1959);
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"Cost Accountant" means
a cost accountant as defined in clause (b) of sub-section (1)
of section 2 of the Cost and Works Accountants Act, 1959 and who holds a
valid certificate of practice under sub-section (1) of section 6 of
that Act
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Sec 2(30)
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Debenture includes
debenture stock, bonds or any other instrument of a company evidencing a debt,
whether constituting a charge on the assets of the company or not
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Debenture includes
debenture stock, bonds or any other instrument of a company evidencing a debt,
whether constituting a charge on the assets of the company or not.
Provided that—
(a) the
instruments referred to in Chapter III-D of the Reserve Bank of India Act,
1934; and
(b) such
other instrument, as may be prescribed by the Central Government in consultation
with the Reserve Bank of India, issued by a company, shall not be treated as
debenture;"
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Sec 2(41)
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Financial Year, in relation
to any company or body corporate, means the period ending on the 31st
day of March every year, and where it has been incorporated on or after the
1st day of January of a year, the period ending on the 31st day of March of
the following year, in respect whereof financial statement of the company or
body corporate is made up:
Provided
that on an application made by a company or body corporate, which is a
holding company or a subsidiary of a company incorporated outside India and
is required to follow a different financial year for consolidation of its
accounts outside India, the Tribunal may, if it is satisfied, allow any
period as its financial year, whether or not that period is a year:
Provided
further that a company or body corporate, existing on the commencement of
this Act, shall, within a period of two years from such commencement, align
its financial year as per the provisions of
this clause;
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Financial Year, in relation
to any company or body corporate, means the period ending on the 31st
day of March every year, and where it has been incorporated on or after the
1st day of January of a year, the period ending on the 31st day of March of
the following year, in respect whereof financial statement of the company or
body corporate is made up:
Provided
that on an application made by a company or body corporate, which is a holding
company or a subsidiary or associate company of
a company incorporated outside India and is required to follow a different
financial year for consolidation of its accounts outside India, the Tribunal
may, if it is satisfied, allow any period as its financial year, whether or
not that period is a year:
Provided
further that a company or body corporate, existing on the commencement of
this Act, shall, within a period of two years from such commencement, align
its financial year as per the provisions of this clause;
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Sec 2(46)
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Holding Company, in
relation to one or more other companies, means a company of which such companies
are subsidiary companies;
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Holding Company, in
relation to one or more other companies, means a company of which such companies
are subsidiary companies;
'Explanation.—For the purposes
of this clause, the expression "company" includes any body
corporate
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Sec 2(49)
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interested director means
a director who is in any way, whether by himself or through any of his
relatives or firm, body corporate or other association of individuals in
which he or any of his relatives is a partner, director or a member,
interested in a contract or arrangement, or proposed contract or arrangement,
entered into or to be entered into by or on behalf of a company
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OMITTED
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Sec 2(51)
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Key Managerial Personnel, in
relation to a company, means—
(i)
the Chief Executive Officer or the managing director or the manager;
(ii)
the company secretary;
(iii)
the whole-time director;
(iv)
the Chief Financial Officer; and
(v) such other officer as may be prescribed;
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Key Managerial Personnel, in
relation to a company, means—
(i)
the Chief Executive Officer or the managing director or the manager;
(ii)
the company secretary;
(iii)
the whole-time director;
(iv)
the Chief Financial Officer;
(v) such
other officer, not more than one level below the directors who is in
whole-time employment, designated as key managerial personnel by the Board;
and
(vi)
such other officer as may be prescribed;"
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Sec 2(57)
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Net Worth means the
aggregate value of the paid-up share capital and all reserves created out of the
profits and securities premium account, after deducting the aggregate value
of the accumulated losses, deferred expenditure and miscellaneous expenditure
not written off, as per the audited balance sheet, but does not include
reserves created out of revaluation of assets, write-back of depreciation and
amalgamation;
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Net Worth means the
aggregate value of the paid-up share capital and all reserves created out of the
profits and securities premium account and debit or credit
balance of profit and loss account, after deducting the aggregate value
of the accumulated losses, deferred expenditure and miscellaneous expenditure
not written off, as per the audited balance sheet, but does not include
reserves created out of revaluation of assets, write-back of depreciation and
amalgamation;
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Sec 2(71)
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Public Company means a
company which—
(a)
is not a private company;
(b)
has a minimum paid-up share capital as may be prescribed:
Provided
that a company which is a subsidiary of a company, not being a private
company, shall be deemed to be public company for the purposes of this Act
even where such subsidiary company continues to be a private company in its
articles
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Public Company means a
company which—
(a)
is not a private company and;
(b)
has a minimum paid-up share capital as may be prescribed:
Provided
that a company which is a subsidiary of a company, not being a private
company, shall be deemed to be public company for the purposes of this Act
even where such subsidiary company continues to be a private company in its
articles
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Sec 2(72)
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Public Financial Institution means—
(i)
the Life Insurance Corporation of India, established under section 3 of the
Life Insurance Corporation Act, 1956 (31 of 1956);
(ii)
the Infrastructure Development Finance Company Limited, referred to in clause
(vi) of subsection (1) of section 4A of the Companies Act, 1956
(1 of 1956) so repealed under section 465 of this Act;
(iii)
specified company referred to in the Unit Trust of India (Transfer of
Undertaking and Repeal) Act, 2002 (58 of 2002);
(iv)
institutions notified by the Central Government under sub-section (2)
of section 4A of the Companies Act, 1956 (1 of 1956) so repealed under
section 465 of this Act;
(v)
such other institution as may be notified by the Central Government in
consultation with the Reserve Bank of India:
Provided
that no institution shall be so notified unless—
(A)
it has been established or constituted by or under
any Central or State Act; or
(B)
not less than fifty-one per cent. of the paid-up
share capital is held or controlled by the Central Government or by any State
Government or Governments or partly by the Central Government and partly by
one or more State Governments;
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Public Financial Institution means—
(i)
the Life Insurance Corporation of India, established under section 3 of the
Life Insurance Corporation Act, 1956 (31 of 1956);
(ii)
the Infrastructure Development Finance Company Limited, referred to in clause
(vi) of subsection (1) of section 4A of the Companies Act, 1956
(1 of 1956) so repealed under section 465 of this Act;
(iii)
specified company referred to in the Unit Trust of India (Transfer of
Undertaking and Repeal) Act, 2002 (58 of 2002);
(iv)
institutions notified by the Central Government under sub-section (2)
of section 4A of the Companies Act, 1956 (1 of 1956) so repealed under
section 465 of this Act;
(v)
such other institution as may be notified by the Central Government in
consultation with the Reserve Bank of India:
Provided
that no institution shall be so notified unless—
(A) it has
been established or constituted by or under any Central or State Act other than this Act or the previous company law; or
(B) not
less than fifty-one per cent. of the paid-up share capital is held or
controlled by the Central Government or by any State Government or
Governments or partly by the Central Government and partly by one or more
State Governments;
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Sec 2(76)
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Related Party, with
reference to a company, means—
(i)
a director or his relative;
(ii)
a key managerial personnel or his relative;
(iii)
a firm, in which a director, manager or his relative is a partner;
(iv)
a private company in which a director or manager is a member or director;
(v)
a public company in which a director or manager is a director or holds along
with his relatives, more than two per cent. of its paid-up share capital;
(vi)
any body corporate whose Board of Directors, managing director or manager is
accustomed to act in accordance with the advice, directions or instructions
of a director or manager;
(vii)
any person on whose advice, directions or instructions a director or manager
is accustomed to act:
Provided
that nothing in sub-clauses (vi) and (vii) shall apply to the advice,
directions or instructions given in a professional capacity;
(viii)
any company which is—
(A)
a holding, subsidiary or an associate company of such company; or
(B)
a subsidiary of a holding company to which it is also a subsidiary;
(ix)
such other person as may be prescribed;
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Related Party, with
reference to a company, means—
(i)
a director or his relative;
(ii)
a key managerial personnel or his relative;
(iii)
a firm, in which a director, manager or his relative is a partner;
(iv)
a private company in which a director or manager is a member or director;
(v)
a public company in which a director or manager is a director or holds along
with his relatives, more than two per cent. of its paid-up share capital;
(vi)
any body corporate whose Board of Directors, managing director or manager is
accustomed to act in accordance with the advice, directions or instructions
of a director or manager;
(vii)
any person on whose advice, directions or instructions a director or manager
is accustomed to act:
Provided
that nothing in sub-clauses (vi) and (vii) shall apply to the
advice, directions or instructions given in a professional capacity;
"(viii)
any body corporate which is—
(A) a
holding, subsidiary or an associate company of such company;
(B) a
subsidiary of a holding company to which it is also a subsidiary;
or
(C) an
investing company or the venturer of the company;";
Explanation.—For the purpose of
this clause, “the investing company or the venturer of a company” means a
body corporate whose investment in the company would result in the company becoming
an associate company of the
body corporate.
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Sec 2(85)
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Small Company means a
company, other than a public company,—
(i)
paid-up share capital of which does not exceed fifty lakh rupees or such
higher amount as may be prescribed which shall not be more than five crore
rupees; or
(ii)
turnover of which as per its last profit and loss account does not exceed two
crore rupees or such higher amount as may be prescribed which shall not be
more than twenty crore rupees:
Provided
that nothing in this clause shall apply to—
(A)
a holding company or a subsidiary company;
(B)
a company registered under section 8; or
(C)
a company or body corporate governed by any special Act;
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Small Company means a
company, other than a public company,—
(i)
paid-up share capital of which does not exceed fifty lakh rupees or such
higher amount as may be prescribed which shall not be more than ten crore rupees; or
(ii)
turnover of which as per profit and loss account for
the immediately preceding financial year does not exceed two crore
rupees or such higher amount as may be prescribed which shall not be more
than one hundred
crore rupees:
Provided
that nothing in this clause shall apply to—
(A)
a holding company or a subsidiary company;
(B)
a company registered under section 8; or
(C)
a company or body corporate governed by any special Act
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Sec 2(91)
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Turnover means the
aggregate value of the realisation of amount made from the sale, supply or distribution
of goods or on account of services rendered, or both, by the company during a
financial year
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Turnover means the
gross amount of revenue recognised in the profit and loss account from the
sale, supply, or distribution of goods or on account of services rendered, or
both, by a company during a financial year;'
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Sec 3
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Formation
of company.— (1) A company may be formed for any lawful
purpose by—
(a)
seven or more persons, where the company to be formed is to be a public
company;
(b)
two or more persons, where the company to be formed is to be a private
company; or
(c)
one person, where the company to be formed is to be One Person Company that
is to say, a private company,
by
subscribing their names or his name to a memorandum and complying with the
requirements of this Act in respect of registration:
Provided
that the memorandum of One Person Company shall indicate the name of the
other person, with his prior written consent in the prescribed form, who
shall, in the event of the subscriber‘s death or his incapacity to contract
become the member of the company and the written consent of such person shall
also be filed with the Registrar at the time of incorporation of the One
Person Company along with its memorandum and articles:
Provided
further that such other person may withdraw his consent in such manner as may
be prescribed:
Provided
also that the member of One Person Company may at any time change the name of
such other person by giving notice in such manner as may be prescribed:
Provided
also that it shall be the duty of the member of One Person Company to intimate
the company the change, if any, in the name of the other person nominated by
him by indicating in the memorandum or otherwise within such time and in such
manner as may be prescribed, and the company shall intimate the Registrar any
such change within such time and in such manner as may be prescribed:
Provided
also that any such change in the name of the person shall not be deemed to be
an alteration of the memorandum.
(2)
A company formed under sub-section (1) may be either—
(a)
a company limited by shares; or
(b)
a company limited by guarantee; or
(c)
an unlimited company.
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Formation
of company.— (1) A company may be formed for any lawful
purpose by—
(a)
seven or more persons, where the company to be formed is to be a public
company;
(b)
two or more persons, where the company to be formed is to be a private
company; or
(c)
one person, where the company to be formed is to be One Person Company that
is to say, a private company,
by
subscribing their names or his name to a memorandum and complying with the requirements
of this Act in respect of registration:
Provided
that the memorandum of One Person Company shall indicate the name of the
other person, with his prior written consent in the prescribed form, who
shall, in the event of the subscriber‘s death or his incapacity to contract
become the member of the company and the written consent of such person shall
also be filed with the Registrar at the time of incorporation of the One
Person Company along with its memorandum and articles:
Provided
further that such other person may withdraw his consent in such manner as may
be prescribed:
Provided
also that the member of One Person Company may at any time change the name of
such other person by giving notice in such manner as may be prescribed:
Provided
also that it shall be the duty of the member of One Person Company to
intimate the company the change, if any, in the name of the other person nominated
by him by indicating in the memorandum or otherwise within such time and in
such manner as may be prescribed, and the company shall intimate the
Registrar any such change within such time and in such manner as may be prescribed:
Provided
also that any such change in the name of the person shall not be deemed to be
an alteration of the memorandum.
(2)
A company formed under sub-section (1) may be either—
(a)
a company limited by shares; or
(b)
a company limited by guarantee; or
(c)
an unlimited company.
"3A. If at
any time the number of members of a company is reduced, in the case of a
public company, below seven, in the case of a private company, below two, and
the company carries on business for more than six months while the number of
members 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 cognisant
of the fact that it is carrying on business with less 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."
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Sec 35
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Civil
liability for mis-statements in prospectus.—(1)
Where a person has subscribed for securities of a company acting on any statement
included, or the inclusion or omission of any matter, in the prospectus which
is misleading and has sustained any loss or damage as a consequence thereof,
the company and every person who—
(a)
is a director of the company at the time of the issue of the prospectus;
(b)
has authorised himself to be named and is named in the prospectus as a director
of the company, or has agreed to become such director, either immediately or
after an interval of time;
(c)
is a promoter of the company;
(d)
has authorised the issue of the prospectus; and
(e)
is an expert referred to in sub-section (5) of section 26, shall, without
prejudice to any punishment to which any person may be liable under section
36, be liable to pay compensation to every person who has sustained such loss
or damage.
(2)
No person shall be liable under sub-section (1), if he proves—
(a)
that, having consented to become a director of the company, he withdrew his
consent before the issue of the prospectus, and that it was issued without
his authority or consent; or
(b)
that the prospectus was issued without his knowledge or consent, and that on
becoming aware of its issue, he forthwith gave a reasonable public notice
that it was issued without his knowledge or consent.
(3)
Notwithstanding anything contained in this section, where it is proved that a
prospectus has been issued with intent to defraud the applicants for the
securities of a company or any other person or for any fraudulent purpose,
every person referred to in subsection (1) shall be personally
responsible, without any limitation of liability, for all or any of the
losses or damages that may have been incurred by any person
who
subscribed to the securities on the basis of such prospectus.
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Civil
liability for mis-statements in prospectus.—(1)
Where a person has subscribed for securities of a company acting on any
statement included, or the inclusion or omission of any matter, in the
prospectus which is misleading and has sustained any loss or damage as a
consequence thereof, the company and every person who—
(a)
is a director of the company at the time of the issue of the prospectus;
(b)
has authorised himself to be named and is named in the prospectus as a director
of the company, or has agreed to become such director, either immediately or
after an interval of time;
(c)
is a promoter of the company;
(d)
has authorised the issue of the prospectus; and
(e)
is an expert referred to in sub-section (5) of section 26, shall,
without prejudice to any punishment to which any person may be liable under
section 36, be liable to pay compensation to every person who has sustained
such loss or damage.
(2)
No person shall be liable under sub-section (1), if he proves—
(a)
that, having consented to become a director of the company, he withdrew his
consent before the issue of the prospectus, and that it was issued without his
authority or consent; or
(b)
that the prospectus was issued without his knowledge or consent, and that on
becoming aware of its issue, he forthwith gave a reasonable public notice that
it was issued without his knowledge or consent.
"(c)
that, as regards every misleading statement purported to be made 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 the said person had given the consent
required by sub-section (5) of section 26 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.".
(3)
Notwithstanding anything contained in this section, where it is proved that a
prospectus has been issued with intent to defraud the applicants for the securities
of a company or any other person or for any fraudulent purpose, every person
referred to in subsection (1) shall be personally responsible, without
any limitation of liability, for all or any of the losses or damages that may
have been incurred by any person who subscribed to the securities on the
basis of such prospectus.
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Sec 47
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Voting
rights.—(1) Subject to the provisions of section 43
and sub-section (2) of section 50,—
(a)
every member of a company limited by shares and holding equity share capital
therein, shall have a right to vote on every resolution placed before the
company; and
(b)
his voting right on a poll shall be in proportion to his share in the paid-up
equity share capital of the company.
(2)
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 and, any resolution for the winding up of
the company or for the repayment or reduction of its equity or preference
share capital and his voting right on a poll shall be in proportion to his
share in the paid-up preference share capital of the company:
Provided
that the proportion of the voting rights of equity shareholders to the voting
rights of the preference shareholders shall be in the same proportion as the
paid-up capital in respect of the equity shares bears to the paid-up capital
in respect of the preference shares:
Provided
further that where the dividend in respect of a class of preference shares
has not been paid for a period of two years or more, such class of preference
shareholders shall have a right to vote on all the resolutions placed before
the company
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Voting
rights.—(1) Subject to the provisions of section
43, sub-section (2) of section 50 and sub-section (1) of
section 188,—
(a)
every member of a company limited by shares and holding equity share capital
therein, shall have a right to vote on every resolution placed before the
company; and
(b)
his voting right on a poll shall be in proportion to his share in the paid-up
equity share capital of the company.
(2)
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 and, any resolution for the winding up of the
company
or for the repayment or reduction of its equity or preference share capital
and his voting right on a poll shall be in proportion to his share in the
paid-up preference share capital of the company:
Provided
that the proportion of the voting rights of equity shareholders to the voting
rights of the preference shareholders shall be in the same proportion as the
paid-up capital in respect of the equity shares bears to the paid-up capital
in respect of the preference shares:
Provided
further that where the dividend in respect of a class of preference shares
has not been paid for a period of two years or more, such class of preference
shareholders shall have a right to vote on all the resolutions placed before
the company
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Sec 53
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Prohibition
on issue of shares at discount.—(1)
Except as provided in section 54, a company shall not issue shares at a
discount.
(2)
Any share issued by a company at a discounted price shall be void.
(3)
Where a company contravenes the provisions of this section, the company shall
be punishable with fine which shall not be less than one lakh rupees but
which may extend to five lakh rupees and every officer who is in default
shall be punishable with imprisonment for a term which may extend to six months
or with fine which shall not be less than one lakh rupees but which may
extend to five lakh rupees, or with both.
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Prohibition
on issue of shares at discount.—(1)
Except as provided in section 54, a company shall not issue shares at a
discount.
(2)
Any share issued by a company at a discount shall be void.
"(2A)
Notwithstanding anything contained in sub-sections (1) and (2),
a company may issue shares at a discount to its creditors when its debt is converted
into shares in pursuance of any statutory resolution plan or debt restructuring
scheme in accordance with any guidelines or directions or regulations
specified by the Reserve Bank of India under the Reserve Bank of India Act,
1934 or the Banking (Regulation) Act, 1949.
(3)
Where a company contravenes the provisions of this section, the company shall
be punishable with fine which shall not be less than one lakh rupees but which
may extend to five lakh rupees and every officer who is in default shall be
punishable with imprisonment for a term which may extend to six months or with
fine which shall not be less than one lakh rupees but which may extend to
five lakh rupees, or with both.
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Sec 62
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Further
issue of share capital.—(1) Where at any time, a company having a
share capital proposes to increase its subscribed capital by the issue of
further shares, such shares shall be offered—
(a)
to persons who, at the date of the offer, are holders of equity shares of the
company in proportion, as nearly as circumstances admit, to the paid-up share
capital on those shares by sending a letter of offer subject to the following
conditions, namely:—
(i)
the offer shall be made by notice specifying the number of shares offered and
limiting a time not being less than fifteen days and not exceeding thirty
days from the date of the offer within which the offer, if not accepted,
shall be deemed to have been declined;
(ii)
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 or any of them in favour of any other
person; and the notice referred to in clause (i) shall contain a
statement of this right;
(iii)
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 which is not disadvantageous to the shareholders and the
company;
(b)
to employees under a scheme of employees‘ stock option, subject to special
resolution passed by company and subject to such conditions as may be
prescribed; or
(c)
to any persons, if it is authorised by a special resolution, whether or not those
persons include the persons referred to in clause (a) or clause (b),
either for cash or for a consideration other than cash, if the price of such
shares is determined by the valuation report of a registered valuer subject
to such conditions as may be prescribed.
(2)
The notice referred to in sub-clause (i) of clause (a) of
sub-section (1) shall be despatched through registered post or speed
post or through electronic mode to all the existing shareholders at least
three days before the opening of the issue.
(3)
Nothing in this section shall apply to the increase of the subscribed capital
of a company caused by the exercise of an option as a term attached to the
debentures issued or loan raised by the company to convert such debentures or
loans into shares in the company:
Provided
that the terms of issue of such debentures or loan containing such an option
have been approved before the issue of such debentures or the raising of loan
by a special resolution passed by the company in general meeting.
(4)
Notwithstanding anything contained in sub-section (3), where any debentures
have been issued, or loan has been obtained from any Government by a company,
and if that Government considers it necessary in the public interest so to
do, it may, by order, direct that such debentures or loans or any part
thereof shall be converted into shares in the company on such terms and
conditions as appear to the Government to be reasonable in the circumstances
of the case even if terms of the issue of such debentures or the raising of
such loans do not include a term for providing for an option for such
conversion:
Provided
that where the terms and conditions of such conversion are not acceptable to
the company, it may, within sixty days from the date of communication of such
order, appeal to the Tribunal which shall after hearing the company and the
Government pass such order as it deems fit.
(5)
In determining the terms and conditions of conversion under sub-section (4),
the Government shall have due regard to the financial position of the
company, the terms of issue of debentures or loans, as the case may be, the
rate of interest payable on such debentures or loans and such other matters
as it may consider necessary.
(6)
Where the Government has, by an order made under sub-section (4),
directed that any debenture or loan or any part thereof shall be converted
into shares in a company and where no appeal has been preferred to the
Tribunal under sub-section (4) or where such appeal has been
dismissed, the memorandum of such company shall, where such order has the
effect of increasing the authorised share capital of the company, stand
altered and the authorised share capital of such company shall stand
increased by an amount equal to the amount of the value of shares which such
debentures or loans or part thereof has been converted into.
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Further
issue of share capital.—(1) Where at any time, a company having a share
capital proposes to increase its subscribed capital by the issue of further
shares, such shares shall be offered—
(a)
to persons who, at the date of the offer, are holders of equity shares of the
company in proportion, as nearly as circumstances admit, to the paid-up share
capital on those shares by sending a letter of offer subject to the following
conditions, namely:—
(i)
the offer shall be made by notice specifying the number of shares offered and
limiting a time not being less than fifteen days and not exceeding thirty days
from the date of the offer within which the offer, if not accepted, shall be
deemed to have been declined;
(ii)
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 or any of them in favour of any other person; and
the notice referred to in clause (i) shall contain a statement of this
right;
(iii)
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 which is not disadvantageous to the shareholders and the company;
(b)
to employees under a scheme of employees‘ stock option, subject to special resolution
passed by company and subject to such conditions as may be prescribed; or
(c)
to any persons, if it is authorised by a special resolution, whether or not those
persons include the persons referred to in clause (a) or clause (b),
either for cash or for a consideration other than cash, if the price of such
shares is determined by the valuation report of a registered
valuer, subject to the compliance with the applicable provisions of Chapter
III and any other conditions as may be prescribed.
(2) The
notice referred to in sub-clause (i) of clause (a) of
sub-section (1) shall be dispatched through registered post or speed
post or through electronic mode or courier or any other mode having proof of
delivery to all the existing shareholders at least three days before the
opening of the issue."
(3)
Nothing in this section shall apply to the increase of the subscribed capital
of a company caused by the exercise of an option as a term attached to the debentures
issued or loan raised by the company to convert such debentures or loans into
shares in the company:
Provided
that the terms of issue of such debentures or loan containing such an option
have been approved before the issue of such debentures or the raising of loan
by a special resolution passed by the company in general meeting.
(4)
Notwithstanding anything contained in sub-section (3), where any debentures
have been issued, or loan has been obtained from any Government by a company,
and if that Government considers it necessary in the public interest so to
do, it may, by order, direct that such debentures or loans or any part
thereof shall be converted into shares in the company on such terms and conditions
as appear to the Government to be reasonable in the circumstances of the case
even if terms of the issue of such debentures or the raising of such loans do
not include a term for providing for an option for such conversion:
Provided
that where the terms and conditions of such conversion are not acceptable to
the company, it may, within sixty days from the date of communication of such
order, appeal to the Tribunal which shall after hearing the company and the
Government pass such order as it deems fit.
(5)
In determining the terms and conditions of conversion under sub-section (4),
the Government shall have due regard to the financial position of the company,
the terms of issue of debentures or loans, as the case may be, the rate of
interest payable on such debentures or loans and such other matters as it may
consider necessary.
(6)
Where the Government has, by an order made under sub-section (4), directed
that any debenture or loan or any part thereof shall be converted into shares
in a company and where no appeal has been preferred to the Tribunal under
sub-section (4) or where such appeal has been dismissed, the memorandum
of such company shall, where such order has the effect of increasing the
authorised share capital of the company, stand altered and the authorised
share capital of such company shall stand increased by an amount equal to the
amount of the value of shares which such debentures or loans or part thereof
has been converted into.
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Sec 76
|
Acceptance
of deposits from public by certain companies.—
(1)
Notwithstanding anything contained in section 73, a public company, having
such net worth or turnover as may be prescribed, may accept deposits from
persons other than its members subject to compliance with the requirements
provided in sub-section (2) of section 73 and subject to such rules as
the Central Government may, in consultation with the Reserve Bank of India,
prescribe:
Provided
that such a company shall be required to obtain the rating (including its net
worth, liquidity and ability to pay its deposits on due date) from a
recognised credit rating agency for informing the public the rating given to
the company at the time of invitation of deposits from the public which
ensures adequate safety and the rating shall be obtained for every year
during the tenure of deposits:
Provided
further that every company accepting secured deposits from the public shall
within thirty days of such acceptance, create a charge on its assets of an
amount not less than the amount of deposits accepted in favour of the deposit
holders in accordance with such rules as may be prescribed.
(2)
The provisions of this Chapter shall, mutatis mutandis, apply to the
acceptance of deposits from public under this section.
[76A.
Punishment for contravention of section 73 or section 76.—Where
a company accepts or invites or allows or causes any other person to accept
or invite on its behalf any deposit in contravention of the manner or the
conditions prescribed under section 73 or section 76 or rules made thereunder
or if a company fails to repay the deposit or part thereof or any interest
due thereon within the time specified under section 73 or section 76 or rules
made thereunder or such further time as may be allowed by the Tribunal under
section 73,—
(a)
the company shall, in addition to the payment of the amount of deposit or
part thereof and the interest due, be punishable with fine which shall not be
less than one crore rupees but which may extend to ten crore rupees; and
(b)
every officer of the company who is in default shall be punishable with
imprisonment which may extend to seven years or with fine which shall not be
less than twenty-five lakh rupees but which may extend to two crore rupees,
or with both:
Provided
that if it is proved that the officer of the company who is in default, has
contravened such provisions knowingly or wilfully with the intention to
deceive the company or its shareholders or depositors or creditors or tax
authorities, he shall be liable for action under section 447.]
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Acceptance
of deposits from public by certain companies.—(1)
Notwithstanding anything contained in section 73, a public company, having such
net worth or turnover as may be prescribed, may accept deposits from persons
other than its members subject to compliance with the requirements provided
in sub-section (2) of section 73 and subject to such rules as the
Central Government may, in consultation with the Reserve Bank of India,
prescribe:
Provided
that such a company shall be required to obtain the rating (including its net
worth, liquidity and ability to pay its deposits on due date) from a recognised
credit rating agency for informing the public the rating given to the company
at the time of invitation of deposits from the public which ensures adequate
safety and the rating shall be obtained for every year during the tenure of
deposits:
Provided
further that every company accepting secured deposits from the public shall
within thirty days of such acceptance, create a charge on its assets of an
amount not less than the amount of deposits accepted in favour of the deposit
holders in accordance with such rules as may be prescribed.
(2)
The provisions of this Chapter shall, mutatis mutandis, apply to the acceptance
of deposits from public under this section.
[76A.
Punishment for contravention of section 73 or section 76.—Where
a company accepts or invites or allows or causes any other person to accept
or invite on its behalf any deposit in contravention of the manner or the conditions
prescribed under section 73 or section 76 or rules made thereunder or if a
company fails to repay the deposit or part thereof or any interest due thereon
within the time specified under section 73 or section 76 or rules made
thereunder or such further time as may be allowed by the Tribunal under section
73,—
(a)
the company shall, in addition to the payment of the amount of deposit or part
thereof and the interest due, be punishable with fine which shall not be less
than one crore rupees or twice the amount of deposit accepted
by the company, whichever is lower but which may extend to ten
crore rupees; and
(b)
every officer of the company who is in default shall be punishable with imprisonment
which may extend to seven years and with
fine which shall not be less than twenty-five lakh rupees but which may
extend to two crore rupees,
Provided
that if it is proved that the officer of the company who is in default, has contravened
such provisions knowingly or wilfully with the intention to deceive the
company or its shareholders or depositors or creditors or tax authorities, he
shall be liable for action under section 447.]
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Sec
100
|
Calling
of extraordinary general meeting.—(1)
The Board may, whenever it deems fit, call an extraordinary general meeting
of the company.
(2)
The Board shall, at the requisition made by,—
(a)
in the case of a company having a share capital, such number of members who
hold, on the date of the receipt of the requisition, not less than one-tenth
of such of the paid-up share capital of the company as on that date carries
the right of voting;
(b)
in the case of a company not having a share capital, such number of members
who have, on the date of receipt of the requisition, not less than one-tenth
of the total voting power of all the members having on the said date a right
to vote, call an extraordinary general meeting of the company within the
period specified in sub-section (4).
(3)
The requisition made under sub-section (2) shall set out the matters for
the consideration of which the meeting is to be called and shall be signed by
the requisitionists and sent to the registered office of the company.
(4)
If the Board does not, within twenty-one days from the date of receipt of a
valid requisition in regard to any matter, proceed to call a meeting for the
consideration of that matter on a day not later than forty-five days from the
date of receipt of such requisition, the meeting may be called and held by
the requisitionists themselves within a period of three months from the date
of the requisition.
(5)
A meeting under sub-section (4) by the requisitionists shall be called
and held in the same manner in which the meeting is called and held by the
Board.
(6)
Any reasonable expenses incurred by the requisitionists in calling a meeting
under sub-section (4) shall be reimbursed to the requisitionists by
the company and the sums so paid shall be deducted from any fee or other
remuneration under section 197 payable to such of the directors who were in
default in calling the meeting.
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Calling
of extraordinary general meeting.—(1)
The Board may, whenever it deems fit, call an extraordinary general meeting
of the company.
"Provided
that an extraordinary general meeting of the company, other than of the
wholly owned subsidiary of a company incorporated outside India, shall be
held at a place within India."
(2)
The Board shall, at the requisition made by,—
(a)
in the case of a company having a share capital, such number of members who
hold, on the date of the receipt of the requisition, not less than one-tenth
of such of the paid-up share capital of the company as on that date carries
the right of voting;
(b)
in the case of a company not having a share capital, such number of members
who have, on the date of receipt of the requisition, not less than one-tenth
of the total voting power of all the members having on the said date a right
to vote, call an extraordinary general meeting of the company within the
period specified in sub-section (4).
(3)
The requisition made under sub-section (2) shall set out the matters
for the consideration of which the meeting is to be called and shall be
signed by the requisitionists and sent to the registered office of the company.
(4)
If the Board does not, within twenty-one days from the date of receipt of a valid
requisition in regard to any matter, proceed to call a meeting for the consideration
of that matter on a day not later than forty-five days from the date of
receipt of such requisition, the meeting may be called and held by the requisitionists
themselves within a period of three months from the date of the requisition.
(5)
A meeting under sub-section (4) by the requisitionists shall be called
and held in the same manner in which the meeting is called and held by the
Board.
(6)
Any reasonable expenses incurred by the requisitionists in calling a meeting
under sub-section (4) shall be reimbursed to the requisitionists by
the company and the sums so paid shall be deducted from any fee or other
remuneration under section 197 payable to such of the directors who were in
default in calling the meeting.
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Sec
101
|
Notice
of meeting.—(1) A general meeting of a company may be
called by giving not less than clear twenty-one days‘ notice either in
writing or through electronic mode in such manner as may be prescribed:
Provided
that a general meeting may be called after giving a shorter notice if consent
is given in writing or by electronic mode by not less than ninety-five per
cent. of the members entitled to vote at such meeting.
(2)
Every notice of a meeting shall specify the place, date, day and the hour of
the meeting and shall contain a statement of the business to be transacted at
such meeting.
(3)
The notice of every meeting of the company shall be given to—
(a)
every member of the company, legal representative of any deceased member or
the assignee of an insolvent member;
(b)
the auditor or auditors of the company; and
(c)
Every director of the company.
(4)
Any accidental omission to give notice to, or the non-receipt of such notice
by, any member or other person who is entitled to such notice for any meeting
shall not invalidate the proceedings of the meeting.
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Notice
of meeting.—(1) A general meeting of a company may be
called by giving not less than clear twenty-one days‘ notice either in
writing or through electronic mode in such manner as may be prescribed:
"Provided
that a general meeting may be called after giving shorter notice than that
specified in this sub-section if consent, in writing or by electronic mode,
is accorded thereto—
(i) in the
case of an annual general meeting, by not less than ninety-five per cent of
the members entitled to vote thereat; and
(ii) in the
case of any other general meeting, by members of the company—
(a)
holding, if the company has a share capital, majority in number of members
entitled to vote and who represent not less than ninety-five per cent of such
part of the paid-up share capital of the company as gives a right to vote at
the meeting; or
(b) having,
if the company has no share capital, not less than ninety-five per cent of
the total voting power exercisable at that meeting:
Provided further
that where any member of a company is 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 his sub-section
in respect of the former resolution or resolutions and not in respect of the
latter.".
(2)
Every notice of a meeting shall specify the place, date, day and the hour of
the meeting and shall contain a statement of the business to be transacted at
such meeting.
(3)
The notice of every meeting of the company shall be given to—
(a)
every member of the company, legal representative of any deceased member or
the assignee of an insolvent member;
(b)
the auditor or auditors of the company; and
(c)
Every director of the company.
(4)
Any accidental omission to give notice to, or the non-receipt of such notice by,
any member or other person who is entitled to such notice for any meeting
shall not invalidate the proceedings of the meeting.
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Sec
110
|
Postal
ballot.—(1) Notwithstanding anything contained in
this Act, a company—
(a)
shall, in respect of such items of business as the Central Government may, by
notification, declare to be transacted only by means of postal ballot; and
(b)
may, in respect of any item of business, other than ordinary business and any
business in respect of which directors or auditors have a right to be heard
at any meeting, transact by means of postal ballot, in such manner as may be
prescribed, instead of transacting such business at a general meeting.
(2)
If a resolution is assented to by the requisite majority of the shareholders
by means of postal ballot, it shall be deemed to have been duly passed at a
general meeting convened in that behalf.
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Postal
ballot.—(1) Notwithstanding anything contained in
this Act, a company—
(a)
shall, in respect of such items of business as the Central Government may, by
notification, declare to be transacted only by means of postal ballot; and
(b)
may, in respect of any item of business, other than ordinary business and any
business in respect of which directors or auditors have a right to be heard
at any meeting, transact by means of postal ballot, in such manner as may be prescribed,
instead of transacting such business at a general meeting.
(2)
If a resolution is assented to by the requisite majority of the shareholders
by means of postal ballot, it shall be deemed to have been duly passed at a
general meeting convened in that behalf.
"Provided
that any item of business required to be transacted by means of postal ballot
under clause (a), may be transacted at a general meeting by a company
which is require to provide the facility to members to vote by electronic
means under section 108, in the manner provided in that section."
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Sec
123
|
Declaration
of dividend.—(1) No dividend shall be declared or paid by
a company for any financial year except—
(a)
out of the profits of the company for that year arrived at after providing
for depreciation in accordance with the provisions of sub-section (2),
or out of the profits of the company for any previous financial year or years
arrived at after providing for depreciation in accordance with the provisions
of that sub-section and remaining undistributed, or out of both; or
(b)
out of money provided by the Central Government or a State Government for the
payment of dividend by the company in pursuance of a guarantee given by that
Government:
Provided
that a company may, before the declaration of any dividend in any financial
year, transfer such percentage of its profits for that financial year as it
may consider appropriate to the reserves of the company:
Provided
further that where, owing to inadequacy or absence of profits in any
financial year, any company proposes to declare dividend out of the
accumulated profits earned by it in previous years and transferred by the
company to the reserves, such declaration of dividend shall not be made
except in accordance with such rules as may be prescribed in this behalf:
Provided
also that no dividend shall be declared or paid by a company from its
reserves other than free reserves:
[Provided
also that no company shall declare dividend unless carried over previous
losses and depreciation not provided in previous year or years are set off
against profit of the company for the current year.]
(2)
For the purposes of clause (a) of sub-section (1), depreciation
shall be provided in accordance with the provisions of Schedule II.
(3)
The Board of Directors of a company may declare interim dividend during any
financial year out of the surplus in the profit and loss account and out of
profits of the financial year in which such interim
dividend
is sought to be declared:
Provided
that in case the company has incurred loss during the current financial year
up to the end of the quarter immediately preceding the date of declaration of
interim dividend, such interim dividend shall not be declared at a rate
higher than the average dividends declared by the company during the
immediately preceding three financial years.
(4)
The amount of the dividend, including interim dividend, shall be deposited in
a scheduled bank in a separate account within five days from the date of
declaration of such dividend.
(5)
No dividend shall be paid by a company in respect of any share therein except
to the registered shareholder of such share or to his order or to his banker
and shall not be payable except in cash:
Provided
that nothing in this sub-section shall be deemed to prohibit the
capitalization of profits or reserves of a company for the purpose of issuing
fully paid-up bonus shares or paying up any amount for the time being unpaid
on any shares held by the members of the company:
Provided
further that any dividend payable in cash may be paid by cheque or warrant or
in any electronic mode to the shareholder entitled to the payment of the
dividend.
(6)
A company which fails to comply with the provisions of sections 73 and 74
shall not, so long as such failure continues, declare any dividend on its
equity shares.
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Declaration
of dividend.—(1) No dividend shall be declared or paid by
a company for any financial year except—
(a)
out of the profits of the company for that year arrived at after providing
for depreciation in accordance with the provisions of sub-section (2),
or out of the profits of the company for any previous financial year or years
arrived at after providing for depreciation in accordance with the provisions
of that sub-section and remaining undistributed, or out of both:
"Provided
that in computing profits any amount representing unrealised gains, notional
gains or revaluation of assets and any change in carrying amount of an asset
or of a liability on measurement of the asset or the liability at fair value
shall be excluded; or";
(b)
out of money provided by the Central Government or a State Government for the
payment of dividend by the company in pursuance of a guarantee given by that
Government:
Provided
that a company may, before the declaration of any dividend in any financial
year, transfer such percentage of its profits for that financial year as it
may consider appropriate to the reserves of the company:
Provided
further that where, owing to inadequacy or absence of profits in any financial
year, any company proposes to declare dividend out of the accumulated profits
earned by it in previous years and transferred by the company to the
free reserves, such declaration of dividend shall not be made
except in accordance with such rules as may be prescribed in this behalf:
Provided
also that no dividend shall be declared or paid by a company from its
reserves other than free reserves:
[Provided
also that no company shall declare dividend unless carried over previous
losses and depreciation not provided in previous year or years are set off
against profit of the company for the current year.]
(2)
For the purposes of clause (a) of sub-section (1), depreciation
shall be provided in accordance with the provisions of Schedule II.
(3) The
Board of Directors of a company may declare interim dividend during any
financial year or at any time during the period from closure of financial year
till holding of the annual general meeting out of the surplus in the profit
and loss account or out of profits of the financial year for which such
interim dividend is sought to be declared or out of profits generated in the
financial year till the quarter preceding the date of declaration of the
interim dividend:
Provided that in
case the company has incurred loss during the current financial year up to
the end of the quarter immediately preceding the date of declaration of
interim dividend, such interim dividend shall not be declared at a rate
higher than the average dividends declared by the company during immediately
preceding three financial years.
(4)
The amount of the dividend, including interim dividend, shall be deposited in
a scheduled bank in a separate account within five days from the date of declaration
of such dividend.
(5)
No dividend shall be paid by a company in respect of any share therein except
to the registered shareholder of such share or to his order or to his banker
and shall not be payable except in cash:
Provided
that nothing in this sub-section shall be deemed to prohibit the capitalization
of profits or reserves of a company for the purpose of issuing fully paid-up
bonus shares or paying up any amount for the time being unpaid on any shares
held by the members of the company:
Provided
further that any dividend payable in cash may be paid by cheque or warrant or
in any electronic mode to the shareholder entitled to the payment of the
dividend.
(6)
A company which fails to comply with the provisions of sections 73 and 74
shall not, so long as such failure continues, declare any dividend on its equity
shares.
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Sec
130
|
Re-opening
of accounts on court‘s or Tribunal‘s orders.— (1)
A company shall not re-open its books of account and not recast its financial
statements, unless an application in this regard is made by the Central
Government, the Income-tax authorities, the Securities and Exchange Board,
any other statutory regulatory body or authority or any person concerned and
an order is made by a court of competent jurisdiction or the Tribunal to the
effect that—
(i)
the relevant earlier accounts were prepared in a fraudulent manner; or
(ii)
the affairs of the company were mismanaged during the relevant period,
casting a doubt on the reliability of financial statements:
Provided
that the court or the Tribunal, as the case may be, shall give notice to the
Central Government, the Income-tax authorities, the Securities and Exchange
Board or any other statutory regulatory body or authority concerned and shall
take into consideration the representations, if any, made by that Government
or the authorities, Securities and Exchange Board or the body or authority
concerned before passing any order under this section.
(2)
Without prejudice to the provisions contained in this Act the accounts so
revised or re-cast under sub-section (1) shall be final.
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Re-opening
of accounts on court‘s or Tribunal‘s orders.— (1)
A company shall not re-open its books of account and not recast its financial
statements, unless an application in this regard is made by the Central
Government, the Income-tax authorities, the Securities and Exchange Board,
any other statutory regulatory body or authority or any person concerned and
an order is made by a court of competent jurisdiction or the Tribunal to the
effect that—
(i)
the relevant earlier accounts were prepared in a fraudulent manner; or
(ii)
the affairs of the company were mismanaged during the relevant period,
casting a doubt on the reliability of financial statements:
Provided
that the court or the Tribunal, as the case may be, shall give notice to the
Central Government, the Income-tax authorities, the Securities and Exchange
Board or any other statutory regulatory body or authority concerned or any other person concerned and shall take into
consideration the representations, if any, made by that Government or the
authorities, Securities and Exchange Board or the body or authority concerned
or the other person concerned before passing
any order under this section.
(2)
Without prejudice to the provisions contained in this Act the accounts so revised
or re-cast under sub-section (1) shall be final.
(3) No
order shall be made under sub-section (1) in respect of re-opening of
books of account relating to a period earlier than eight financial years immediately
preceding the current financial year:
Provided that
where a direction has been issued by the Central Government under the proviso
to sub-section (5) of section 128 for keeping of books of account for
a period longer than eight years, the books of account may be ordered to be
re-opened within such longer period."
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Sec
132
|
Constitution
of Natural Financial Reporting Authority
Notwithstanding
anything contained in any other law for the time being in force, the National
Financial Reporting Authority shall—
(c)
where professional or other misconduct is proved, have the power to make
order for—
(A)
imposing penalty of—
(I)
not less than one lakh rupees, but which may extend to five times of the fees
received, in case of individuals; and
(II)
not less than ten lakh rupees, but which may extend to ten times of the fees
received, in case of firms;
(5)
Any person aggrieved by any order of the National Financial Reporting
Authority issued under clause (c) of sub-section (4), may
prefer an appeal before the Appellate Authority constituted under subsection
(6) in such manner as may be prescribed.
(6)
The Central Government may, by notification, constitute, with effect from
such date as may be specified therein, an Appellate Authority consisting of a
chairperson and not more than two other members, to be appointed by the
Central Government, for hearing appeals arising out of the orders of the
National Financial Reporting Authority.
(7)
The qualifications for appointment of the chairperson and members of the
Appellate Authority, the manner of selection, the terms and conditions of
their service and the requirement of the supporting staff and procedure
(including places of hearing the appeals, form and manner in which the
appeals shall be filed) to be followed by the Appellate Authority shall be
such as may be prescribed.
(8)
The fee for filing the appeal shall be such as may be prescribed.
(9)
The officer authorised by the Appellate Authority shall prepare in such form
and at such time as may be prescribed its annual report giving a full account
of its activities and forward a copy thereof to the Central Government and
the Central Government shall cause the annual report to be laid before each
House of Parliament.
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Constitution
of Natural Financial Reporting Authority
Notwithstanding
anything contained in any other law for the time being in force, the National
Financial Reporting Authority shall—
(c)
where professional or other misconduct is proved, have the power to make
order for—
(A)
imposing penalty of—
(I)
not less than one lakh rupees, but which may extend to five times of the fees
received, in case of individuals; and
(II)
not less than
(5)
Any person aggrieved by any order of the National Financial Reporting
Authority issued under clause (c) of sub-section (4), may
prefer an appeal before
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Sec
136
|
Right
of member to copies of audited financial statement.—
(1)
Without prejudice to the provisions of section 101, a copy of the financial
statements, including consolidated financial statements, if any, auditor‘s
report and every other document required by law to be annexed or attached to
the financial statements, which are to be laid before a company in its
general meeting, shall be sent to every member of the company, to every
trustee for the debenture-holder of any debentures issued by the company, and
to all persons other than such member or trustee, being the person so
entitled, not less than twenty-one days before the date of the meeting:
Provided
that in the case of a listed company, the provisions of this sub-section
shall be deemed to be complied with, if the copies of the documents are made
available for inspection at its registered office during working hours for a
period of twenty-one days before the date of the meeting and a statement
containing the salient features of such documents in the prescribed form or
copies of the documents, as the company may deem fit, is sent to every member
of the company and to every trustee for the holders of any debentures issued
by the company not less than twenty-one days before the date of the meeting
unless the shareholders ask for full financial statements:
Provided
further that the Central Government may prescribe the manner of circulation
of financial statements of companies having such net worth and turnover as
may be prescribed:
Provided
also that a listed company shall also place its financial statements
including consolidated financial statements, if any, and all other documents
required to be attached thereto, on its website, which
is
maintained by or on behalf of the company:
Provided
also that every company having a subsidiary or subsidiaries shall,—
(a)
place separate audited accounts in respect of each of its subsidiary on its website,
if any;
(b)
provide a copy of separate audited financial statements in respect of each of
its subsidiary, to any shareholder of the company who asks for it.
(2)
A company shall allow every member or trustee of the holder of any debentures
issued by the company to inspect the documents stated under sub-section (1)
at its registered office during business hours.
(3)
If any default is made in complying with the provisions of this section, the
company shall be liable to a penalty of twenty-five thousand rupees and every
officer of the company who is in default shall be liable to a penalty of five
thousand rupees.
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Right
of member to copies of audited financial statement.—
(1)
Provided that if
the copies of the documents are sent less than twenty-one days before the
date of the meeting, they shall, notwithstanding that fact, be deemed to have
been duly sent if it is so agreed by members—
(a)
holding, if the company has a share capital, majority in number entitled to
vote and who represent not less than ninety-five per cent of such part of the
paid-up share capital of the company as gives a right to vote at the meeting;
or
(b) having,
if the company has no share capital, not less than ninety five per cent of
the total voting power exercisable at the meeting:
Provided further that in
the case of a listed company, the provisions of this sub-section shall be
deemed to be complied with, if the copies of the documents are made available
for inspection at its registered office during working hours for a period of
twenty-one days before the date of the meeting and a statement containing the
salient features of such documents in the prescribed form or copies of the
documents, as the company may deem fit, is sent to every member of the
company and to every trustee for the holders of any debentures issued by the
company not less than twenty-one days before the date of the meeting unless
the shareholders ask for full financial statements:
Provided also that
the Central Government may prescribe the manner of circulation of financial
statements of companies having such net worth and turnover as may be
prescribed:
Provided
also that a listed company shall also place its financial statements including
consolidated financial statements, if any, and all other documents required
to be attached thereto, on its website, which is maintained by or on behalf
of the company:
'Provided also
that every listed company having a subsidiary or subsidiaries shall place
separate audited accounts in respect of each of subsidiary on its website, if
any:
Provided also that
a listed company which has a subsidiary incorporated outside India (herein
referred to as "foreign subsidiary")—
(a) where
such foreign subsidiary is statutorily required to prepare consolidated
financial statement under any law of the country of its incorporation, the
requirement of this proviso shall be met if consolidated financial statement
of such foreign subsidiary is placed on the website of the listed company;
(b) where
such foreign subsidiary is not required to get its financial statement
audited under any law of the country of its incorporation and which does not
get such financial statement audited, the holding Indian listed company may
place such unaudited financial statement on its website and where such financial
statement is in a language other than English, a translated copy of the
financial statement in English shall also be placed on the website.’;
(2)
A company shall allow every member or trustee of the holder of any debentures
issued by the company to inspect the documents stated under sub-section (1)
at its registered office during business hours.
Provided that
every company having a subsidiary or subsidiaries shall provide a copy of
separate audited or unaudited financial statements, as the case may be, as
prepared in respect of each of its subsidiary to any member of the company
who asks for it."
(3)
If any default is made in complying with the provisions of this section, the company
shall be liable to a penalty of twenty-five thousand rupees and every officer
of the company who is in default shall be liable to a penalty of five thousand
rupees.
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Sec
140
|
Section 140(3): Removal, resignation of
auditor and giving of special notice: If the
auditor does not comply with sub-section (2), he or it shall be
punishable with fine which shall not be less than fifty thousand rupees but
which may extend to five lakh rupees
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Section 140(3): If
the auditor does not comply with sub-section (2), he or it shall be
punishable with fine which shall not be less than fifty thousand
rupees or the remuneration of the auditor, whichever is less but
which may extend to five lakh rupees
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|
Sec
141
|
Section 141(3): Eligibility, qualification and
disqualification of auditors: The
following persons shall not be eligible for appointment as an auditor of a
company, namely:—
(i)
any person whose subsidiary or associate company or any other form of entity,
is engaged as on the date of appointment in consulting and specialised
services as provided in section 144.
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Section 141(3): The
following persons shall not be eligible for appointment as an auditor of a
company, namely:—
(i) a
person who, directly or indirectly, renders any service referred to in section
144 to the company or its holding company or its subsidiary company.
Explanation.—For the purposes
of this clause, the term "directly or indirectly" shall have the
meaning assigned to it in the Explanation to section 144.
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|
Sec
143
|
Powers
and duties of auditors and auditing standards.— (1)
Every auditor of a company shall have a right of access at all times to the books
of account and vouchers of the company, whether kept at the registered office
of the company or at any other place and shall be entitled to require from
the officers of the company such information and explanation as he may
consider necessary for the performance of his duties as auditor and amongst
other matters inquire into the following matters, namely:—
(a)
whether loans and advances made by the company on the basis of security have
been properly secured and whether the terms on which they have been made are
prejudicial to the interests of the company or its members;
(b)
whether transactions of the company which are represented merely by book
entries are prejudicial to the interests of the company;
(c)
where the company not being an investment company or a banking company,
whether so much of the assets of the company as consist of shares, debentures
and other securities have been sold at a price less than that at which they
were purchased by the company;
(d)
whether loans and advances made by the company have been shown as deposits;
(e)
whether personal expenses have been charged to revenue account;
(f)
where it is stated in the books and documents of the company that any shares
have been allotted for cash, whether cash has actually been received in
respect of such allotment, and if no cash has actually been so received,
whether the position as stated in the account books and the balance sheet is
correct, regular and not misleading:
Provided
that the auditor of a company which is a holding company shall also have the
right of access to the records of all its subsidiaries in so far as it
relates to the consolidation of its financial statements with that of its
subsidiaries.
(3)
The auditor‘s report shall also state—
(i)
whether the company has adequate internal financial controls system in place
and the operating effectiveness of such controls;
(14)
The provisions of this section shall mutatis mutandis apply to—
(a)
the cost accountant in practice conducting cost audit under section 148; or
(b)
the company secretary in practice conducting secretarial audit under section
204.
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Powers and duties of auditors and
auditing standards.— (1) Every auditor of a company shall have a
right of access at all times to the books of account and vouchers of the
company, whether kept at the registered office of the company or at any other
place and shall be entitled to require from the officers of the company such
information and explanation as he may consider necessary for the performance
of his duties as auditor and amongst other matters inquire into the following
matters, namely:—
(a)
whether loans and advances made by the company on the basis of security have
been properly secured and whether the terms on which they have been made are
prejudicial to the interests of the company or its members;
(b)
whether transactions of the company which are represented merely by book
entries are prejudicial to the interests of the company;
(c)
where the company not being an investment company or a banking company,
whether so much of the assets of the company as consist of shares, debentures
and other securities have been sold at a price less than that at which they
were purchased by the company;
(d)
whether loans and advances made by the company have been shown as deposits;
(e)
whether personal expenses have been charged to revenue account;
(f)
where it is stated in the books and documents of the company that any shares
have been allotted for cash, whether cash has actually been received in
respect of such allotment, and if no cash has actually been so received,
whether the position as stated in the account books and the balance sheet is
correct, regular and not misleading:
Provided
that the auditor of a company which is a holding company shall also have the
right of access to the records of all its subsidiaries and associate companies
in so far as it relates to the consolidation of its financial statements with
that of its subsidiaries and associate companies.
(3)
The auditor‘s report shall also state—
(i)
whether the company has adequate internal financial controls with reference
to financial statements in place and the operating effectiveness
of such controls;
(14)
The provisions of this section shall mutatis mutandis apply to—
(a)
the cost accountant conducting cost audit under
section 148; or
(b)
the company secretary in practice conducting secretarial audit under section
204.
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|
Sec
147
|
Punishment
for contravention.— (1) If any of the provisions of sections 139
to 146 (both inclusive) is contravened, the company shall be punishable with
fine which shall not be less than twenty five thousand rupees but which may
extend to five lakh rupees and every officer of the company who is in default
shall be punishable with imprisonment for a term which may extend to one year
or with fine
which
shall not be less than ten thousand rupees but which may extend to one lakh
rupees, or with both.
(2)
If an auditor of a company contravenes any of the provisions of section 139,
section 143, section 144 or section 145, the auditor shall be punishable with
fine which shall not be less than twenty-five thousand rupees but which may
extend to five lakh rupees:
Provided
that if an auditor has contravened such provisions knowingly or wilfully with
the intention to deceive the company or its shareholders or creditors or tax
authorities, he shall be punishable with
imprisonment
for a term which may extend to one year and with fine which shall not be less
than one lakh rupees but which may extend to twenty-five lakh rupees.
(3)
Where an auditor has been convicted under sub-section (2), he shall be
liable to—
(i) refund
the remuneration received by him to the company; and
(ii)
pay for damages to the company, statutory bodies or authorities or to any
other persons for loss arising out of incorrect or misleading statements of
particulars made in his audit report.
(4)
The Central Government shall, by notification, specify any statutory body or
authority or an officer for ensuring prompt payment of damages to the company
or the persons under clause (ii) of subsection
(3)
and such body, authority or officer shall after payment of damages to such
company or persons file a report with the Central Government in respect of
making such damages in such manner as may be specified in the said
notification
(5)
Where, in case of audit of a company being conducted by an audit firm, it is
proved that the partner or partners of the audit firm has or have acted in a
fraudulent manner or abetted or colluded in any fraud by, or in relation to
or by, the company or its directors or officers, the liability, whether civil
or
criminal
as provided in this Act or in any other law for the time being in force, for
such act shall be of the partner or partners concerned of the audit firm and
of the firm jointly and severally.
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Punishment for contravention.— (1)
If any of the provisions of sections 139 to 146 (both inclusive) is
contravened, the company shall be punishable with fine which shall not be
less than twenty five thousand rupees but which may extend to five lakh
rupees and every officer of the company who is in default shall be punishable
with imprisonment for a term which may extend to one year or with fine
which
shall not be less than ten thousand rupees but which may extend to one lakh
rupees, or with both.
(2)
If an auditor of a company contravenes any of the provisions of section 139,
section 143, section 144 or section 145, the auditor shall be punishable with
fine which shall not be less than twenty-five thousand rupees but which may
extend to five lakh rupees or four times the remuneration of
the auditor:
Provided
that if an auditor has contravened such provisions knowingly or wilfully with
the intention to deceive the company or its shareholders or creditors or tax
authorities, he shall be punishable with
imprisonment
for a term which may extend to one year and with fine which shall not be
less than fifty thousand rupees but which may extend to twenty-five lakh
rupees or eight times the remuneration of the auditor, whichever is less.
(3)
Where an auditor has been convicted under sub-section (2), he shall be
liable to—
(i) refund
the remuneration received by him to the company; and
(ii)
pay for damages to the company, statutory bodies or authorities or to members or creditors of the company for loss arising
out of incorrect or misleading statements of particulars made in his audit
report.
(4)
The Central Government shall, by notification, specify any statutory body or
authority or an officer for ensuring prompt payment of damages to the company
or the persons under clause (ii) of subsection
(3)
and such body, authority or officer shall after payment of damages to such
company or persons file a report with the Central Government in respect of
making such damages in such manner as may be specified in the said
notification
(5)
Where, in case of audit of a company being conducted by an audit firm, it is
proved that the partner or partners of the audit firm has or have acted in a
fraudulent manner or abetted or colluded in any fraud by, or in relation to
or by, the company or its directors or officers, the liability, whether civil
or
criminal
as provided in this Act or in any other law for the time being in force, for
such act shall be of the partner or partners concerned of the audit firm and
of the firm jointly and severally.
Provided that in
case of criminal liability of an audit firm, in respect of liability other
than fine, the concerned partner or partners, who acted in a fraudulent
manner or abetted or, as the case may be, colluded in any fraud shall only be
liable.
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|
Sec
148
|
Central
Government to specify audit of items of cost in respect of certain companies.
(3)
The audit under sub-section (2) shall be conducted by a cost accountant in
practice who shall be appointed by the Board on such remuneration as may be
determined by the members in such manner as may be prescribed:
Provided
that no person appointed under section 139 as an auditor of the company shall
be appointed for conducting the audit of cost records:
Provided
further that the auditor conducting the cost audit shall comply with the cost
auditing standards.
Explanation.—For
the purposes of this sub-section, the expression ―cost auditing standards‖
mean such standards as are issued by the Institute of Cost and Work
Accountants of India, constituted under the Cost and Works Accountants Act, 1959
(23 of 1959), with the approval of the Central Government.
(5)
The qualifications, disqualifications, rights, duties and obligations
applicable to auditors under this Chapter shall, so far as may be applicable,
apply to a cost auditor appointed under this section and it shall be the duty
of the company to give all assistance and facilities to the cost auditor
appointed under this section for auditing the cost records of the company:
Provided
that the report on the audit of cost records shall be submitted by the cost
accountant in practice to the Board of Directors of the company.
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Central
Government to specify audit of items of cost in respect of certain companies.
(3)
The audit under sub-section (2) shall be conducted by a cost accountant who shall be appointed
by the Board on such remuneration as may be determined by the members in such
manner as
may be
prescribed:
Provided
that no person appointed under section 139 as an auditor of the company shall
be appointed for conducting the audit of cost records:
Provided
further that the auditor conducting the cost audit shall comply with the cost
auditing standards.
Explanation.—For
the purposes of this sub-section, the expression ―cost auditing standards‖
mean such standards as are issued by the Institute of Cost Accountants of
India,
constituted under the Cost and Works Accountants Act, 1959 (23 of 1959), with
the approval of the Central Government.
(5)
The qualifications, disqualifications, rights, duties and obligations
applicable to auditors under this Chapter shall, so far as may be applicable,
apply to a cost auditor appointed under this section and it shall be the duty
of the company to give all assistance and facilities to the cost auditor
appointed under this section for auditing the cost records of the company:
Provided
that the report on the audit of cost records shall be submitted by the cost accountant to the Board of
Directors of the company.
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|
Sec
152
|
Appointment
of directors
(3)
No person shall be appointed as a director of a company unless he has been
allotted the Director Identification Number under section 154.
(4)
Every person proposed to be appointed as a director by the company in general
meeting or otherwise, shall furnish his Director Identification Number and a
declaration that he is not disqualified to become a director under this Act.
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Appointment
of directors
(3)
No person shall be appointed as a director of a company unless he has been
allotted the Director Identification Number under section 154 or any other number as may be prescribed under section 153.
(4)
Every person proposed to be appointed as a director by the company in general
meeting or otherwise, shall furnish his Director Identification Number or such other number as may be prescribed under section
153 and a declaration that he is not disqualified to become a director
under this Act.
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Sec
153
|
Application
for allotment of Director Identification Number.—
Every individual intending to be appointed as director of a company shall
make an application for allotment of Director Identification Number to the
Central Government in such form and manner and along with such fees as may be
prescribed.
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Application
for allotment of Director Identification Number.—
Every individual intending to be appointed as director of a company shall make
an application for allotment of Director Identification Number to the Central
Government in such form and manner and along with such fees as may be
prescribed.
"Provided
that the Central Government may prescribe any identification number which
shall be treated as Director Identification Number for the purposes of this
Act and in case any individual holds or acquires such identification number,
the requirement of this section shall not apply or apply in such manner as
may be prescribed."
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|
Sec
160
|
Right
of persons other than retiring directors to stand for directorship.— (1)
A person who is not a retiring director in terms of section 152 shall,
subject to the provisions of this Act, be eligible for
appointment
to the office of a director at any general meeting, if he, or some member
intending to propose him as a director, has, not less than fourteen days
before the meeting, left at the registered office of the company, a notice in
writing under his hand signifying his candidature as a director or, as the case
may be, the intention of such member to propose him as a candidate for that
office, along with the deposit of one lakh rupees or such higher amount as
may be prescribed which shall be refunded to such person or, as the case may
be, to the member, if the person proposed gets elected as a director or gets
more than twenty-five per cent of total valid votes cast either on show of
hands or on poll on such resolution.
(2)
The company shall inform its members of the candidature of a person for the
office of director under sub-section (1) in such manner as may be
prescribed.
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Right
of persons other than retiring directors to stand for directorship.— (1)
A person who is not a retiring director in terms of section 152 shall,
subject to the provisions of this Act, be eligible for
appointment
to the office of a director at any general meeting, if he, or some member
intending to propose him as a director, has, not less than fourteen days
before the meeting, left at the registered office of the company, a notice in
writing under his hand signifying his candidature as a director or, as the
case may be, the intention of such member to propose him as a candidate for
that office, along with the deposit of one lakh rupees or such higher amount
as may be prescribed which shall be refunded to such person or, as the case
may be, to the member, if the person proposed gets elected as a director or
gets more than twenty-five per cent of total valid votes cast either on show
of hands or on poll on such resolution.
Provided that requirements
of deposit of amount shall not apply in case of
appointment of an
independent director or a director recommended by the Nomination and
Remuneration Committee, if any, constituted under sub-section (1) of
section 178 or a director recommended by the Board of Directors of the
Company, in the case of a company not required to constitute Nomination and
Remuneration Committee
(2)
The company shall inform its members of the candidature of a person for the
office of director under sub-section (1) in such manner as may be
prescribed.
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Sec
161
|
Appointment
of additional director, alternate director and nominee director.—
(2)
The Board of Directors of a company may, if so authorised by its articles or
by a resolution passed by the company in general meeting, appoint a person,
not being a person holding any alternate directorship for any other director
in the company, to act as an alternate director for a director during his
absence for a period of not less than three months from India:
Provided
that no person shall be appointed as an alternate director for an independent
director unless he is qualified to be appointed as an independent director
under the provisions of this Act:
Provided
further that an alternate director shall not hold office for a period longer
than that permissible to the director in whose place he has been appointed
and shall vacate the office if and when the director in whose place he has
been appointed returns to India:
Provided
also that if the term of office of the original director is determined before
he so returns to India, any provision for the automatic re-appointment of
retiring directors in default of another
appointment
shall apply to the original, and not to the alternate director.
(4)
In the case of a public company, if the office of any director appointed by
the company in general meeting is vacated before his term of office expires
in the normal course, the resulting casual vacancy may, in default of and
subject to any regulations in the articles of the company, be filled by the
Board of Directors at a meeting of the Board:
Provided
that any person so appointed shall hold office only up to the date up to
which the director in whose place he is appointed would have held office if
it had not been vacated.
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Appointment
of additional director, alternate director and nominee director.—
(2)
The Board of Directors of a company may, if so authorised by its articles or
by a resolution passed by the company in general meeting, appoint a person,
not being a person holding any alternate directorship for any other director
in the company or holding directorship in the same company,
to act as an alternate director for a director during his absence for a
period of not less than three months from India:
Provided
that no person shall be appointed as an alternate director for an independent
director unless he is qualified to be appointed as an independent director
under the provisions of this Act:
Provided
further that an alternate director shall not hold office for a period longer
than that permissible to the director in whose place he has been appointed
and shall vacate the office if and when the director in whose place he has
been appointed returns to India:
Provided
also that if the term of office of the original director is determined before
he so returns to India, any provision for the automatic re-appointment of
retiring directors in default of another appointment shall apply to the
original, and not to the alternate director.
(4)
Provided
that any person so appointed shall hold office only up to the date up to
which the director in whose place he is appointed would have held office if
it had not been vacated.
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Sec
165
|
Number
of directorships. — (1) No person, after the commencement of
this Act, shall hold office as a director, including any alternate
directorship, in more than twenty companies at the same time:
Provided
that the maximum number of public companies in which a person can be
appointed as a director shall not exceed ten.
Explanation.— For
reckoning the limit of public companies in which a person can be appointed as
director, directorship in private companies that are either holding or
subsidiary company of a public company shall be included.
(2)
Subject to the provisions of sub-section (1), the members of a company
may, by special resolution, specify any lesser number of companies in which a
director of the company may act as directors.
(3)
Any person holding office as director in companies more than the limits as
specified in subsection (1), immediately before the commencement of
this Act shall, within a period of one year from
such
commencement,—
(a)
choose not more than the specified limit of those companies, as companies in
which he wishes to continue to hold the office of director;
(b)
resign his office as director in the other remaining companies; and
(c)
intimate the choice made by him under clause (a), to each of the
companies in which he was holding the office of director before such
commencement and to the Registrar having jurisdiction in respect of each such
company.
(4)
Any resignation made in pursuance of clause (b) of sub-section (3)
shall become effective immediately on the despatch thereof to the company
concerned.
(5)
No such person shall act as director in more than the specified number of
companies,—
(a)
after despatching the resignation of his office as director or non-executive
director thereof, in pursuance of clause (b) of sub-section (3);
or (b) after the expiry of one year from the commencement of this Act,
whichever is earlier.
(6)
If a person accepts an appointment as a director in contravention of
sub-section (1), he shall be punishable with fine which shall not be
less than five thousand rupees but which may extend to twentyfive thousand
rupees for every day after the first during which the contravention
continues.
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Number
of directorships. — (1) No person, after the commencement of
this Act, shall hold office as a director, including any alternate
directorship, in more than twenty companies at the same time:
Provided
that the maximum number of public companies in which a person can be
appointed as a director shall not exceed ten.
Explanation I.— For
reckoning the limit of public companies in which a person can be appointed as
director, directorship in private companies that are either holding or
subsidiary company of a public company shall be included.
Explanation II.—For reckoning
the limit of directorships of twenty companies, the directorship in a dormant
company shall not be included
(2)
Subject to the provisions of sub-section (1), the members of a company
may, by special resolution, specify any lesser number of companies in which a
director of the company may act as directors.
(3)
Any person holding office as director in companies more than the limits as
specified in subsection (1), immediately before the commencement of
this Act shall, within a period of one year from
such
commencement,—
(a)
choose not more than the specified limit of those companies, as companies in
which he wishes to continue to hold the office of director;
(b)
resign his office as director in the other remaining companies; and
(c)
intimate the choice made by him under clause (a), to each of the
companies in which he was holding the office of director before such
commencement and to the Registrar having jurisdiction in respect of each such
company.
(4)
Any resignation made in pursuance of clause (b) of sub-section (3)
shall become effective immediately on the despatch thereof to the company
concerned.
(5)
No such person shall act as director in more than the specified number of
companies,—
(a)
after despatching the resignation of his office as director or non-executive
director thereof, in pursuance of clause (b) of sub-section (3);
or (b) after the expiry of one year from the commencement of this Act,
whichever is earlier.
(6)
If a person accepts an appointment as a director in contravention of
sub-section (1), he shall be punishable with fine which shall not be
less than five thousand rupees but which may extend to twenty-five thousand
rupees for every day after the first during which the contravention
continues.
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|
Sec
180
|
Restriction
on powers of Board.— (1) The Board of Directors of a company
shall exercise the following powers only with the consent of the company by a
special resolution, namely:—
(a)
to sell, lease or otherwise dispose of the whole or substantially the whole
of the undertaking of the company or where the company owns more than one
undertaking, of the whole or substantially the whole of any of such
undertakings.
Explanation.—For
the purposes of this clause,—
(i)
―undertaking‖ shall mean an undertaking in which the investment of the
company exceeds twenty per cent. of its net worth as per the audited balance
sheet of the preceding financial year or an undertaking which generates
twenty per cent. of the total income of the company during the previous
financial year;
(ii)
the expression ―substantially the whole of the undertaking‖ in any financial
year shall mean twenty per cent. or more of the value of the undertaking as
per the audited balance sheet of the preceding financial year;
(b)
to invest otherwise in trust securities the amount of compensation received
by it as a result of any merger or amalgamation;
(c)
to borrow money, where the money to be borrowed, together with the money
already borrowed by the company will exceed aggregate of its paid-up share
capital and free reserves, apart from temporary loans obtained from the
company‘s bankers in the ordinary course of business:
Provided
that the acceptance by a banking company, in the ordinary course of its business,
of deposits of money from the public, repayable on demand or otherwise, and
withdrawable by cheque, draft, order or otherwise, shall not be deemed to be
a borrowing of monies by the banking company within the meaning of this
clause.
Explanation.—For
the purposes of this clause, the expression temporary loans means loans
repayable on demand or within six months from the date of the loan such as
short-term, cash credit arrangements, the discounting of bills and the issue
of other short-term loans of a seasonal character, but does not include loans
raised for the purpose of financial expenditure of a capital nature;
(d)
to remit, or give time for the repayment of, any debt due from a director.
(2)
Every special resolution passed by the company in general meeting in relation
to the exercise of the powers referred to in clause (c) of sub-section
(1) shall specify the total amount up to which monies may be borrowed
by the Board of Directors.
(3)
Nothing contained in clause (a) of sub-section (1) shall
affect—
(a)
the title of a buyer or other person who buys or takes on lease any property,
investment or undertaking as is referred to in that clause, in good faith; or
(b)
the sale or lease of any property of the company where the ordinary business
of the company consists of, or comprises, such selling or leasing.
(4)
Any special resolution passed by the company consenting to the transaction as
is referred to in clause (a) of sub-section (1) may stipulate
such conditions as may be specified in such resolution, including conditions
regarding the use, disposal or investment of the sale proceeds which may
result from the transactions:
Provided
that this sub-section shall not be deemed to authorise the company to effect
any reduction in its capital except in accordance with the provisions
contained in this Act.
(5)
No debt incurred by the company in excess of the limit imposed by clause (c)
of sub-section (1) shall be valid or effectual, unless the lender
proves that he advanced the loan in good faith and without knowledge that the
limit imposed by that clause had been exceeded.
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Restriction
on powers of Board.— (1) The Board of Directors of a company
shall exercise the following powers only with the consent of the company by a
special resolution, namely:—
(a)
to sell, lease or otherwise dispose of the whole or substantially the whole
of the undertaking of the company or where the company owns more than one
undertaking, of the whole or substantially the whole of any of such
undertakings.
Explanation.—For
the purposes of this clause,—
(i)
―undertaking‖ shall mean an undertaking in which the investment of the
company exceeds twenty per cent of its net worth as per the audited balance
sheet of the preceding financial year or an undertaking which generates
twenty per cent. of the total income of the company during the previous
financial year;
(ii)
the expression ―substantially the whole of the undertaking‖ in any financial
year shall mean twenty per cent. or more of the value of the undertaking as
per the audited balance sheet of the preceding financial year;
(b)
to invest otherwise in trust securities the amount of compensation received
by it as a result of any merger or amalgamation;
(c)
to borrow money, where the money to be borrowed, together with the money
already borrowed by the company will exceed aggregate of its paid-up share capital, free reserves and securities premium, apart from temporary
loans obtained from the company‘s bankers in the ordinary course of business:
Provided
that the acceptance by a banking company, in the ordinary course of its
business, of deposits of money from the public, repayable on demand or
otherwise, and withdrawable by cheque, draft, order or otherwise, shall not
be deemed to be a borrowing of monies by the banking company within the meaning
of this clause.
Explanation.—For
the purposes of this clause, the expression ―temporary loans means loans
repayable on demand or within six months from the date of the loan such as
short-term, cash credit arrangements, the discounting of bills and the issue
of other short-term loans of a seasonal character, but does not include loans
raised for the purpose of financial expenditure of a capital nature;
(d)
to remit, or give time for the repayment of, any debt due from a director.
(2)
Every special resolution passed by the company in general meeting in relation
to the exercise of the powers referred to in clause (c) of sub-section
(1) shall specify the total amount up to which monies may be borrowed
by the Board of Directors.
(3)
Nothing contained in clause (a) of sub-section (1) shall
affect—
(a)
the title of a buyer or other person who buys or takes on lease any property,
investment or undertaking as is referred to in that clause, in good faith; or
(b)
the sale or lease of any property of the company where the ordinary business
of the company consists of, or comprises, such selling or leasing.
(4)
Any special resolution passed by the company consenting to the transaction as
is referred to in clause (a) of sub-section (1) may stipulate
such conditions as may be specified in such resolution, including conditions
regarding the use, disposal or investment of the sale proceeds which may
result from the transactions:
Provided
that this sub-section shall not be deemed to authorise the company to effect
any reduction in its capital except in accordance with the provisions
contained in this Act.
(5)
No debt incurred by the company in excess of the limit imposed by clause (c)
of sub-section (1) shall be valid or effectual, unless the lender
proves that he advanced the loan in good faith and without knowledge that the
limit imposed by that clause had been exceeded.
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Sec
184
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Disclosure
of interest by director
(4)
If a director of the company contravenes the provisions of sub-section (1)
or subsection (2), such director shall be punishable with imprisonment
for a term which may extend to one year or with fine which shall not be less
than fifty thousand rupees but which may extend to one lakh rupees, or with
both.
(5)
Nothing in this section—
(a)
shall be taken to prejudice the operation of any rule of law restricting a
director of a company from having any concern or interest in any contract or
arrangement with the company;
(b)
shall apply to any contract or arrangement entered into or to be entered into
between two companies where any of the directors of the one company or two or
more of them together holds or hold not more than two per cent of the paid-up
share capital in the other company.
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Disclosure
of interest by director
(4)
If a director of the company contravenes the provisions of sub-section (1)
or subsection (2), such director shall be punishable with imprisonment
for a term which may extend to one year or with fine which
(5)
Nothing in this section—
(a)
shall be taken to prejudice the operation of any rule of law restricting a
director of a company from having any concern or interest in any contract or
arrangement with the company;
(b) shall
apply to any contract or arrangement entered into or to be entered into
between two companies or between one or more companies and one or more bodies
corporate where any of the directors of the one company or body corporate or
two or more of them together holds or hold not more than two per cent of the
paid-up share capital in the other company or the body corporate.
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|
Sec
188
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Related
party transactions.
(3)
Where any contract or arrangement is entered into by a director or any other
employee, without obtaining the consent of the Board or approval by a [resolution]
in the general meeting under sub-section (1) and if it is not ratified
by the Board or, as the case may be, by the shareholders at a meeting within
three months from the date on which such contract or arrangement was entered
into, such contract or arrangement shall be voidable at the option of the
Board and if the contract or arrangement is with a related party to any
director, or is authorised by any other director, the directors concerned
shall indemnify the company against any loss incurred by it.
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Related
party transactions.
(1) Provided
also that nothing contained in the second proviso shall apply to a company in
which ninety per cent or more members, in number, are relatives of promoters
or are related parties:";
(3)
Where any contract or arrangement is entered into by a director or any other
employee, without obtaining the consent of the Board or approval by a [resolution]
in the general meeting under sub-section (1) and if it is not ratified
by the Board or, as the case may be, by the shareholders at a meeting within
three months from the date on which such contract or arrangement was entered
into, such contract or arrangement shall be voidable at the option of
the Board or, as the case may be, of the shareholders and if the
contract or arrangement is with a related party to any director, or is
authorised by any other director, the directors concerned shall indemnify the
company against any loss incurred by it.
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|
Sec 194
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Prohibition
on forward dealings in securities of company by director or key managerial
personnel
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Omitted.
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|
Sec
195
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Prohibition
on insider trading of securities
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Omitted.
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|
Sec
223
|
|
In section 223 of the
principal Act, in sub-section (3), after the words "may be
obtained",
the words "by members, creditors or any other person whose interest is
likely to be affected" shall be inserted.
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Sec
236
|
|
In section 236 of the
principal Act, in sub-sections (4), (5) and (6), for the
words, "transferor company", wherever they occur, the words
"company whose shares are being transferred" shall be substituted.
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Sec
247
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Valuation
by registered valuers.— (1) Where a valuation is required to be made
in respect of any property, stocks, shares, debentures, securities or
goodwill or any other assets (herein referred to as the assets) or net worth
of a company or its liabilities under the provision of this Act, it shall be
valued by a person having such qualifications and experience and registered
as a valuer in such manner, on such terms and conditions as may be prescribed
and appointed by the audit committee or in its absence by the Board of
Directors of that company.
(2)
The valuer appointed under sub-section (1) shall,—
(a)
make an impartial, true and fair valuation of any assets which may be
required to be valued;
(b)
exercise due diligence while performing the functions as valuer;
(c)
make the valuation in accordance with such rules as may be prescribed; and
(d)
not undertake valuation of any assets in which he has a direct or indirect
interest or becomes so interested at any time during or after the valuation
of assets.
(3)
If a valuer contravenes the provisions of this section or the rules made
thereunder, the valuer shall be punishable with fine which shall not be less
than twenty-five thousand rupees but which may extend to
one
lakh rupees:
Provided
that if the valuer has contravened such provisions with the intention to
defraud the company or its members, he shall be punishable with imprisonment
for a term which may extend to one year and with fine which shall not be less
than one lakh rupees but which may extend to five lakh rupees.
(4)
Where a valuer has been convicted under sub-section (3), he shall be
liable to—
(i)
refund the remuneration received by him to the company; and
(ii)
pay for damages to the company or to any other person for loss arising out of
incorrect or misleading statements of particulars made in his report.
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Valuation
by registered valuers.— (1) Where a valuation is required to be made
in respect of any property, stocks, shares, debentures, securities or
goodwill or any other assets (herein referred to as the assets) or net worth
of a company or its liabilities under the provision of this Act, it shall be
valued by a person having such qualifications and experience and registered
as a valuer in such manner, on such terms and conditions as may be prescribed
and appointed by the audit committee or in its absence by the Board of
Directors of that company.
(2)
The valuer appointed under sub-section (1) shall,—
(a)
make an impartial, true and fair valuation of any assets which may be
required to be valued;
(b)
exercise due diligence while performing the functions as valuer;
(c)
make the valuation in accordance with such rules as may be prescribed; and
(d)
not undertake valuation of any assets in which he has a direct or indirect
interest or becomes so interested at any time during a period of
three years prior to his appointment as valuer or three years after the
valuation of assets was conducted by him.
(3)
If a valuer contravenes the provisions of this section or the rules made
thereunder, the valuer shall be punishable with fine which shall not be less
than twenty-five thousand rupees but which may extend to one lakh rupees:
Provided
that if the valuer has contravened such provisions with the intention to
defraud the company or its members, he shall be punishable with imprisonment
for a term which may extend to one year and with fine which shall not be less
than one lakh rupees but which may extend to five lakh rupees.
(4)
Where a valuer has been convicted under sub-section (3), he shall be
liable to—
(i)
refund the remuneration received by him to the company; and
(ii)
pay for damages to the company or to any other person for loss arising out of
incorrect or misleading statements of particulars made in his report.
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Sec
379
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Section 379 of the
principal Act shall be renumbered as sub-section (2) thereof
and
before sub-section (2) as so renumbered, the following sub-section
shall be inserted,
namely:—
"(1)
Sections 380 to 386 (both inclusive) and sections 392 and 393 shall apply to all
foreign companies:
Provided
that the Central Government may, by Order published in the Official
Gazette,
exempt any class of foreign companies, specified in the Order, from any of
the provisions of sections 380 to 386 and sections 392 and 393 and a copy of
every such Order shall, as soon as may be after it is made, be laid before
both Houses of Parliament
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Sec
384
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384.
Debentures, annual return, registration of charges, books of account and
their
inspection.— (1)
The provisions of section 71 shall apply mutatis mutandis to a foreign
company.
(2)
The provisions of section 92 shall, subject to such exceptions, modifications
and adaptations as may be made therein by rules made under this Act, apply to
a foreign company as they apply to a company incorporated in India.
(3)
The provisions of section 128 shall apply to a foreign company to the extent
of requiring it to keep at its principal place of business in India, the
books of account referred to in that section, with respect to
monies
received and spent, sales and purchases made, and assets and liabilities, in
the course of or in relation to its business in India.
(4)
The provisions of Chapter VI shall apply mutatis mutandis to charges
on properties which are created or acquired by any foreign company.
(5)
The provisions of Chapter XIV shall apply mutatis mutandis to the
Indian business of a foreign company as they apply to a company incorporated
in India.
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384.
Debentures, annual return, registration of charges, books of account and
their
inspection.— (1)
The provisions of section 71 shall apply mutatis mutandis to a foreign
company.
(2)
The provisions of section 92 and section 135 shall,
subject to such exceptions, modifications and adaptations as may be made
therein by rules made under this Act, apply to a foreign company as they
apply to a company incorporated in India.
(3)
The provisions of section 128 shall apply to a foreign company to the extent
of requiring it to keep at its principal place of business in India, the
books of account referred to in that section, with respect to
monies
received and spent, sales and purchases made, and assets and liabilities, in
the course of or in relation to its business in India.
(4)
The provisions of Chapter VI shall apply mutatis mutandis to charges
on properties which are created or acquired by any foreign company.
(5)
The provisions of Chapter XIV shall apply mutatis mutandis to the
Indian business of a foreign company as they apply to a company incorporated
in India.
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Sec
391
|
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In section 391 of the
principal Act, for sub-section (2), the following sub-section
shall
be substituted, namely:—
“(2)
Subject to the provisions of section 376, the provisions of Chapter XX shall
apply mutatis
mutandis for closure of the place of business of a foreign company in India
as if it were a company incorporated in India in case such foreign company
has raised monies through offer or issue of securities under this Chapter
which have not been repaid or redeemed.”
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Sec
409
|
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In section 409 of the
principal Act, in sub-section (3),—
(i)
in clause (a), for the words "out of which at least three years
shall be in the
pay
scale of Joint Secretary to the Government of India or equivalent or above in
that service", the words "and has been holding the rank of
Secretary or Additional Secretary to the Government of India" shall be
substituted;
(ii)
for clause (e), the following clause shall be substituted, namely:—
"(e)
is a person of proven ability, integrity and standing having special
knowledge and professional experience of not less than fifteen years in
industrial finance, industrial management, industrial reconstruction,
investment and accountancy.".
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Sec
411
|
|
In section 411 of the
principal Act, for sub-section (3), the following sub-section
shall
be substituted, namely:—
"(3)
A technical member shall be a person of proven ability, integrity and
standing having special knowledge and professional experience of not less
than twenty-five years in industrial finance, industrial management,
industrial reconstruction, investment and accountancy.".
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Sec
412
|
|
In section 412 of the
principal Act, for sub-section (2), the following sub-sections
shall
be substituted, namely:—
"(2)
The Members of the Tribunal and the Technical Members of the Appellate
Tribunal
shall be appointed on the recommendation of a Selection Committee consisting of—
(a)
Chief Justice of India or his nominee—Chairperson;
(b)
a senior Judge of the Supreme Court or Chief Justice of High Court—
Member;
(c)
Secretary in the Ministry of Corporate Affairs—Member; and
(d)
Secretary in the Ministry of Law and Justice—Member.
(2A)
Where in a meeting of the Selection Committee, there is equality of votes on any
matter, the Chairperson shall have a casting vote.".
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Sec
441
|
|
In section 441 of the
principal Act, in sub-section (1), for the words "with fine
only",
the words "not being an offence punishable with imprisonment only, or
punishable with imprisonment and also with fine" shall be substituted
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Sec
446
|
|
After section 446 of
the principal Act, the following sections shall be inserted,
namely:—
"446A. The court or
the Special Court, while deciding the amount of fine or
imprisonment
under this Act, shall have due regard to the following factors, namely:—
(a)
size of the company;
(b)
nature of business carried on by the company;
(c)
injury to public interest;
(d)
nature of the default; and
(e)
repetition of the default.
446B.
Notwithstanding anything contained in this Act, if a One Person Company or a
small company fails to comply with the provisions of sub-section (5)
of section 92,
sub-section
(2) of section 117 or sub-section (3) of section 137, such
company and officer in default of such company shall be punishable with fine
or imprisonment or fine and imprisonment, as the case may be, which shall not
be more than one-half of the fine or imprisonment or fine and imprisonment,
as the case may be, of the minimum or maximum fine or imprisonment or fine
and imprisonment, as the case may be, specified in such sections.".
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|
Sec
447
|
|
In section 447 of the
principal Act,—
(i)
after the words "guilty of fraud", the words "involving an
amount of at least
ten
lakh rupees or one per cent. of the turnover of the company, whichever is
lower" shall be inserted;
(ii)
after the proviso, the following proviso shall be inserted, namely:—
"Provided
further that where the fraud involves an amount less than ten lakh rupees or
one per cent. of the turnover of the company, whichever is lower,
and
does not involve public interest, any person guilty of such fraud shall be
punishable
with imprisonment for a term which may extend to five years or with fine
which may extend to twenty lakh rupees or with both.".
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|
Sec
458
|
|
In section 458 of the
principal Act, in sub-section (1), the proviso shall be omitted
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Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided. I assume no responsibility for the consequences of use of such information. In no event I shall be liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information.
References:
Companies Act 2013
Companies (Amendment) Act, 2017
Companies (Amendment) Act, 2017
Contact:
CS Divyanshu Bansal
Email ID: divyanshubansal401@gmail.com
Ph: 9958381905
