The Company Act, 1956


Preamble

Act No.1 of 1956

[18th January, 1956]

An Act to consolidate and amend the law relating to companies and certain other associations.

Comment: This is the basic law which governs the creation, continuation, the winding up of

companies and also the relationships between the shareholders, the company, the public and the

government. Coupled with other statutes dealing with corporate entities, this is an extremely

important piece of legislation.

Be it enacted by Parliament in the Sixth Year of the Republic of India as follows :--

Part I Preliminary

Part I

Preliminary

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

1956.

(2) It shall come into force on such date {1st April, 1956.See Gazette of India, Extraordinary,

1956, Part II, Section 3, p.413.}

as the Central Government may, by notification in the Official Gazette, appoint.

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

2.Definitions.— In this Act, unless the context otherwise requires, --

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

(2) "articles" means the articles of association of a company as originally framed or as altered

from time to time in pursuance of

any previous companies law or of this Act, including so far as they apply to the company, the

regulations contained, as the case

may be, in Table B in the Schedule annexed to Act No.19 of 1857 or in Table A in the First

Schedule annexed to the Indian

Companies Act, 1882 (6 of 1882), or in Table A in the First Schedule annexed to the Indian

Companies Act, 1913 (7 of 1913),

or in Table A in Schedule I annexed to this Act;

(3) "associate", in relation to a managing agent, means any of the following, and no others:--

(a) where the managing agent is an

individual: any partner or relative of such individual; any firm in which such individual, partner or

relative is a partner; any private

company of which such individual or any such partner, relative or firm is the managing agent or

secretaries and treasurers or a

director or the manager; and any body corporate at any general meeting of which not less than

one-third of the total voting

power in regard to any matter may be exercised or controlled by any one or more of the following,

namely, such individual,

partner or partners, relative or relatives, firm or firms; and private company or companies;

(b) where the managing agent is a

firm: any member of such firm; any partner or relative of any such member; and any other firm in

which any such member,

partner or relative is a partner; any private company of which the firm first mentioned, or any such

member, partner, relative or

other firm is the managing agent, or secretaries and treasurers, or a director, or the manager; and

any body corporate at any

general meeting of which not less than one-third of the total voting power in regard to any matter

may be exercised or controlled

by any one or more of the following, namely, the firm first mentioned, any such member or

members, partner or partners, relative

or relatives, other firm or firms and private company or companies;

(c) where the managing agent is a

body corporate; (i) any subsidiary or holding company of such body corporate; the managing

agent or secretaries and treasurers,

or a director , the manger or an officer of the body corporate or of any subsidiary or holding

company thereof; any partner or

relative of any such director or manager; any form in which such director, manager, partner or

relative, is a partner; and

(ii) any other body corporate at any general meeting of which not less than one-third of the total

voting power in regard to any

matter may be exercised or controlled by any one or more of the following, namely, the body

corporate and the companies and

other persons specified in paragraph (i) above; and

(d) where the managing agent is a

private company or a body

corporate having not more

than fifty members; in addition to the persons mentioned in sub-clause (c), any member of the

private company or body

corporate;

Explanation.— If one person is an associate in relation to another within the meaning of this

clause, the latter shall also be

deemed to be an associate in relation to the former within its meaning;

(4) "associate", in relation to any secretaries and treasurers, means any of the following, and no

others:--

(a) where the secretaries and treasurers

are a firm; any member of such firm; any partner or relative of any such member; and any other

firm in which any such member,

partner, or relative is a partner; any private company of which the firm first-mentioned, or any

such member, partner, relative or

other firm is the managing agent, or secretaries and treasurers, or a director, or the manager; and

any body corporate at any

general meeting of which not less than one-third of the total voting power in regard to any matter

may be exercised or controlled

by any one or more of the following, namely, the firm first-mentioned, any such member or

members, partner or partners, relative

or relatives, other firm or firms, and private company or companies;

(b) where the secretaries and treasurers

are a body corporate; (i) any subsidiary or holding company of such body corporate; the

managing agent or secretaries and

treasurers, or a director, the manager or an officer of the body corporate or of any subsidiary or

holding company thereof; any

partner or relative of any such director or manager; any form in which such director or manger,

partner, relative, is a partner;

and

(ii) any other body corporate at any general meeting of which not less than one-third of the total

voting power in regard to any

matter may be exercised or controlled by any one or more of the following, namely, the body

corporate and the companies and

other persons specified in paragraph (i) above; and

(c) where the secretaries and treasurers

are a private company or a body

corporate having not more than

fifty members; in addition to the persons mentioned in sub-clause (b) any member of the private

company or body corporate;

Explanation.— If one person is an associate in relation to another within the meaning of this

clause, the latter shall also be

deemed to be an associate in relation to the former within its meaning;

(5) "banking company" has the same meaning as in the Banking Companies Act 1949 (10 of

1949);

(6) "Board of directors" or "Board", in relation to a company, mans the Board of directors of the

company;

(7) "body corporate" or "corporation" includes a company incorporated outside India but does not

include a corporation sole;

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

(9) "branch office" means any establishment described as a branch by the company, not being an

establishment specified in an

order passed by the Central Government in pursuance of section 8;

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

(11) "the Court" means, with respect t any matter relating to a company, the Court having

jurisdiction under this Act with respect

to that matter in relation to that company, as provided in section 10;

(12) "debentures" includes debenture stock, bonds and any other securities of a company,

whether constituting a charge on the

assets of the company or not;

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

(14) "District Court" means the principal Civil Court of original jurisdiction in a district, but does not

include a High Court in the

exercise of its ordinary original civil jurisdiction;

(15) "document" includes summons, notice, requisition, order, other legal process, and registers,

whether issued, sent or kept in

pursuance of this or any other Act or otherwise;

(16) "existing company" means an existing company as defined in section 3;

(17) "financial year" means, in relation to any body corporate, the period in respect of which any

profit and loss account of the

body corporate laid before it in annual general meeting is made up, whether that period is a year

or not;

Provided that, in relation to an insurance company, "financial year" shall mean the calendar year

referred to in sub-section (1) of

section 11 of the Insurance Act, 1938 (4 of 1933);

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

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

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

(21) "insurance company" means a company which carries on the business of insurance wither

solely or in conjunction with any

other business or businesses;

(22) "issued generally" means, in relation to a prospectus issued to persons irrespective of their

being existing members or

debenture holders of the body corporate to which the prospectus relates;

(23) "limited company" means a company limited by shares or by guarantee;

(24) "manger" means an individual (not being the managing agent) who, subject to the

superintendence, control and direction of

the Board of directors, has the management of the whole, or substantially the whole, of the affairs

of a company and includes a

director or any other person occupying the position of a manger, by whatever name called, and

whether under a contract of

service or not;

(25) "managing agent" means any individual, firm or body corporate entitled, subject to the

provisions of this Act, to the

management of the whole, or substantially the whole of the affairs of a company by virtue of an

agreement with the company, or

by virtue of its memorandum or articles of association and includes any individual, firm or body

corporate occupying the position

of a managing agent, by whatever name called;

(26) "managing director" means a director who, by virtue of an agreement with the company or of

a resolution passed by the

company in general meeting or by its Board of directors, or by virtue of its memorandum or

articles of association, is entrusted

with any powers of management which would not otherwise be exercisable by him, and includes

a director occupying the

position of managing director, by whatever name called;

(27) "member", in relation to a company, does not include a bearer of a share-warrant of the

company issued in pursuance of

section 114;

(28) "memorandum" means the memorandum of association of a company as originally framed or

as altered from time to time in

pursuance of any previous companies law or of this Act;

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

(30) "officer" includes any director, managing agent, secretaries and treasurers, manager or

secretary; where the managing agent

or the secretaries and treasurers are a firm, also includes any partner in the firm; and where the

managing agent or the secretaries

and treasurers are a body corporate, also includes any director, managing agent, secretaries and

treasurers or manager of the

body corporate; but, save in sections 477, 478, 539, 543, 545, 621, 625 and 633 does not include

an auditor;

(31) "officer who is in default", in relation to any provision referred to in section 5, has the

meaning specified in that section;

(32) "paid-up capital" or "capital paid up" includes capital credited as paid-up;

(33) "prescribed" means, as respects the provisions of this Act relating to the winding up of the

companies except sub-section

(5) of section 503, sub-section (1) of section 549 and sub-section (3) of section 550, prescribed

by rules made by the Supreme

Court in consultation with High Courts, and as respects the other provisions of this Act including

sub-section (5) of section 503,

sub-section (1) of section 549 and sub-section (3) of section 550, prescribed by rules made by

the Central Government;

(34) "previous companies law" means any of the laws specified in clause (ii) of sub-section (1) of

section 3;

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

(36) "prospectus" means any prospectus, notice, circular, advertisement or other document

inviting offers from the public for the

subscription on purchase of any shares in, or debentures of, a body corporate;

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

(38) "public holiday" means a public holiday within the meaning of the Negotiable Instruments

Act, 1881 (26 of 1881);

Provided that no day declared by the Central Government to be a public holiday shall be deemed

to be such a holiday, in

relation to any meeting, unless the declaration was notified before the issue of the notice

convening such meeting;

(39) "recognised stock exchange" means, in relation to any provision of this Act in which it occurs,

a stock exchange whether in

or outside India, which is notified by the Central Government in the Official Gazette as a

recognised stock exchange for the

purposes of that provision;

(40) "Registrar" means a Registrar, or an Additional, a Joint, a Deputy or an Assistant Registrar,

having the duty of registering

companies under this Act

(41) "relative" means, with reference to any person, any one who is related to such person in any

of the ways specified in section

6, and no others;

(42) "Schedule" means a Schedule annexed to this Act.

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

1934);

(44) "secretaries and treasurers" means any firm or body corporate (not being the managing

agent) which, subject to the

superintendence, control and direction of the Board of directors, has the management of the

whole or substantially the whole, of

the affairs of a company; and includes any firm or body corporate occupying the position of

securities and treasurers, by

whatever name called, and whether under a contract of service or not;

(45) "secretary" means the person, if any, who is appointed to perform the duty which may be

performed by a secretary under

this Act;

(46) "share" means share the share capital of a company and includes stock except where a

distinction between stock and shares

is expressed or implied;

(47) "subsidiary company" or "subsidiary" means a subsidiary company within the meaning of

section 4;

(48) "total voting power", in regard to any matter relating to a body corporate, means the total

number of votes which may be

case in regard to that matter on a poll at a meeting of such body, if all the members thereof and

all other persons, if any, having a

right to vote on that matter are present at the meeting and cast their votes;

(49) "trading corporation" means a trading corporation within the meaning of entries 43 and 44 in

List I in the Seventy Schedule

to the Constitution.;

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

Section 2A

[ 35a 2A INTERPRETATION OF CERTAIN WORDS AND EXPRESSIONS.

Words and expressions used and not defined in this Act but

defined in the Depositories Act, 1996 (22 of 1996), shall

have the same meanings respectively assigned to them in that

Act. 35a ]

3.Definitions of company, existing company, Private company and public company.— (1) In this

Act, unless the context

otherwise requires, the expressions "company", "existing company", "private company" and

"public company", shall, subject to

the provisions of sub-section (2), have the meanings specified below :--

(i) "company" means a company formed and registered under this Act or an existing company as

defined in clause (ii):

(ii) "existing company" means a company formed and registered under any of the previous

companies laws specified below:--

(a) any Act or Acts relating to companies in force before the Indian Companies Act, 1866 (10 of

1866) and repealed by that

Act;

(b) the Indian Companies Act, 1866 (1006 1966);

(c) the Indian Companies Act, 1882 ( 6 of 1882);

(d) the Indian Companies Act, 1913 (7 of 1913);

(e) the Registration of Transferred Companies Ordinance, 1942 (54 of 1942); and

(f) any law corresponding to any of the Act or the Ordinance aforesaid and in force in the merged

territories or in a Part B Sate,

or any part thereof, before the extension thereto of the Indian Companies Act, 1913( 7 of 1913);

(iii) "private company" means a company which, by its articles,--

(a) restricts the right to transfer its shares, if any;

(b) limits the number of its members to fifty not including --

(i) persons who are in the employment of the company, and

(ii) persons who having been formerly in the employment of the company, were members of the

company while in that

employment and have continued to be members after the employment ceased; and

(c) prohibits any invitation to the public to subscribe for any shares in, or debentures of, the

company;

Provided that where two or more persons hold one or more shares in a company jointly, they

shall, for the purposes of this

definition, be treated as a single member;

(iv) "public company" means a company which is not a private company.

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

the scope of any of the

expressions defined in clauses (i) to (iv) of sub-section (1), and such companies shall be deemed,

for the purposes of this Act, to

have been formed and registered outside India:--

(a) a company the registered officer whereof is in Burma, Aden or Pakistan and which

immediately before the separation of that

country from India was a company as defined in clause (i) of sub-section (1);

(b) a company the registered office whereof is in the State of Jammu and Kashmir and which

immediately before the 26th day of

January, 1950, was a company as defined in clause (i) aforesaid.

Section 4.Meaning of holding company and subsidiary.— (1) For the purposes of this Act, a

company shall, subject to the provisions of

sub-section (3), be deemed to be a subsidiary of another if, but only if, --

(a) that other controls the compositions of its Board of directors; or

(b) that other holds more than half in nominal value of its equity share capital; or

(c) the first-mentioned company is a subsidiary of any company which is that other's subsidiary.

Illustration

Company B is a subsidiary of Company A, and Company C is a subsidiary of Company

B.Company C is a subsidiary of

Company A by virtue of clause (c) above.If Company D is a subsidiary of Company

Commencement Company D will be

subsidiary of Company B and consequently also of Company A, by virtue of clause (c) above;

and so on.

(2) For the purposes of sub-section (1), the composition of a company's Board of directors shall

be deemed to be controlled by

another company if, but only if, that other company by the exercise of some power exercisable by

it at its discretion without the

consent or concurrence of any other person, can appoint or remove the holders of all or a

majority of the directorships; but for

the purposes of this provision that other company shall be deemed to have power to appoint to a

directorship with respect to

which any of the following conditions is satisfied, that is to say --

(a) that a person cannot be appointed thereto without the exercise in his favour by that other

company of such power as

aforesaid;

(b) that a person's appointment thereto follows necessarily from his appointment as director,

managing agent, secretaries and

treasurers, or manager of, or to any other office or employment in, that other company; or

(c) that the directorship is held by that other company itself or by a subsidiary of it.

(3) In determining whether one company is a subsidiary of another--

(a) any shares held or power exercisable by that other company in a fiduciary capacity shall be

treated as not held or exercisable

by it;

(b) subject to the provisions of clauses (c) and (d), any shares held or power exercisable --

(i) by any person as a nominee for that other company (except where that other is concerned only

in a fiduciary capacity); or

(ii) by, or by a nominee for, a subsidiary of that other company, not being a subsidiary which is

concerned only in a fiduciary

capacity;

shall be treated as held or exercisable by that other company;

(c) any shares held or power exercisable by any person by virtue of the provisions of any

debentures of the first-mentioned

company or of a trust deed for securing any issue of such debentures shall be disregarded;

(d) any shares held or power exercisable by, or by a nominee for, that other or its subsidiary [not

being held or exercisable as

mentioned in clause (c) ] shall be treated as not held or exercisable by that other, if the ordinary

business of that other or its

subsidiary, as the case may be, includes the lending of money and the shares are held or the

power is exercisable as aforesaid by

way of security only for the purposes of a transaction entered into in the ordinary course of that

business.

(4) For the purposes of this Act, a company shall be deemed to be the holding company of

another if, but only if, that other is its

subsidiary.

(5) In this section, the expression "company" includes any body corporate, and the expression

"equity share capital" has the same

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

(6) In the case of a body corporate which is incorporated in a country outside India, a subsidiary

or holding company of the

body corporate under the law of such country shall be deemed to be a subsidiary or holding

company of the body corporate

within the meaning and for the purpose of this Act also, whether the requirements of this section

are fulfilled or not.

Section 4A

PUBLIC FINANCIAL INSTITUTIONS.

(1) Each of the financial institutions specified in this sub-section shall be regarded, for the

purposes of this Act, as a public financial institution, namely :-

(i) The Industrial Credit and Investment Corporation of India Limited, a company formed and

registered under the Indian Companies Act, 1913 (7 of 1913);

(ii) The Industrial Finance Corporation of India, established under section 3 of the Industrial

Finance Corporation Act, 1948 (15 of 1948);

(iii) The Industrial Development Bank of India, established under section 3 of the Industrial

Development Bank of India Act, 1964 (18 of 1964);

(iv) The Life Insurance Corporation of India, established under section 3 of the Life Insurance

Corporation Act, 1956 (31 of 1956);

(v) The Unit Trust of India, established under section 3 of the Unit Trust of India Act, 1963 (52 of

1963).

(vi) The Infrastructure Development Finance Company Limited, a company formed and registered

under this Act.

(2) Subject to the provisions of sub-section (1), the Central Government may, by notification in the

Official Gazette, specify such other institution as it may think fit to be a public financial institution;

Provided that no institution shall be so specified unless -

(i) It has been established or constituted by or under any Central Act, or

(ii) Not less than fifty-one per cent of the paid-up share capital of such institution is held or

controlled by the Central Government.

Section 5

.Meaning of officer who is in default.— For the purpose of any provision in this Act which enacts

that an officer of the company

who is in default shall be liable to any punishment or penalty, whether by way of imprisonment,

fine or otherwise, the expression

"officer who is in default" means any officer of the company who is knowingly guilty of the default,

non-compliance, failure,

refusal or contravention mentioned in that provision, or who knowingly and wilfully authorises or

permits such default,

non-compliance, failure, refusal or contravention.

Section 6.

Meaning of "relative"

A person shall be deemed to be a relative of another, if, and only if, -

(a) they are members of a Hindu undivided family; or

(b) they are husband and wife; or

(c) the one is related to the other in the manner indicated in Schedule IA."

Section7

.Interpretation of person in accordance with whose directions or instructions directors are

accustomed to act.— Except where this Act expressly provides otherwise, a person shall not be

deemed to be, within the meaning of any provision in this Act, a

person in accordance with whose directions or instructions the Board of directors of a company is

accustomed to act, by reason

only that the Board acts on advice given by him in a professional capacity.

Section8.

Power of Central Government.to declare the establishment not to be a branch office.— The

Central Government may, by order, declare that in the case of any company, not being a banking

or an insurance company, any establishment carrying on

either the same or substantially the same activity as that carried on by the head office of the

company, or any production or manufacture, shall not be treated as a branch office of the

company for all or any of the purposes of this Act.

Section 9.

Act to override memorandum, articles, etc.— Save as otherwise expressly provided in the Act--

(a) the provisions of these Act shall have effect notwithstanding anything to the contrary

contained in the memorandum or articles

of a company, or in any agreement executed by it, or in any resolution passed by the company in

general meeting or by its Board

of directors, whether the same be registered, executed or passed, as the case may be, before or

after the commencement of this

Act; and

(b) any provision contained in the memorandum, articles, agreement or resolution aforesaid shall,

to the extent to which it is

repugnant to the provisions of this Act, become or be void, as the case may be.

Section 10.

Jurisdiction of Courts.— (1) The Court having jurisdiction under this Act shall be --

(a) the High court having jurisdiction in relation to the place at which the registered office of the

company concerned is situate,

except to the extent to which jurisdiction has been conferred on any District Court or District

Courts subordinate to that High

Court in pursuance of sub-section (2); and

(b) where jurisdiction has been so conferred, the District Court in regard to matters falling within

the scope of the jurisdiction

conferred, in respect of companies having their registered offices in the district.

(2) The Central Government may, by notification in the Official Gazette and subject to such

restrictions, limitations and conditions

as it thinks fit, empower any District Court to exercise all or any of the jurisdiction conferred by

this Act upon the Court, not

being the jurisdiction conferred--

(a) in respect of companies generally, by sections 237, 391, 394, 395 and 397 to 407, both

inclusive;

(b) in respect of companies with a paid-up share capital of not less than one lakh of rupees, by

Part VII (sections 425 to 560)

and the other provisions of this Act relating to the winding up of companies.

(3) For the purposes of jurisdiction to wind up companies, the expression "registered office"

means the place which the longest

been the registered office of the company during the six months immediately preceding the

presentation of the petition for winding

up.

Section 10A

CONSTITUTION OF TRIBUNAL.

[Omitted by the Companies Tribunal (Abolition) Act, 1967, (17 of 1967), section 4 and Schedule

with effect from 1-7-1967.

Section 10B

PROCEDURE OF TRIBUNAL.

[Omitted by the Companies Tribunal (Abolition) Act, 1967, (17 of 1967), section 1 and Schedule

with effect from 1-7-1967.]

Section 10C

POWERS OF TRIBUNAL.

[Omitted by the Companies Tribunal (Abolition) Act, 1967, (17 of 1967), section 4 and Schedule

with effect from 1-7-1967.]

Section 10D

APPEALS AGAINST DECISIONS, ETC., OF THE TRIBUNAL.

[Omitted by the Companies Tribunal (Abolition) Act, 1967, (17 of 1967), section 4 and Schedule

with effect from 1-7-1967.]

Part I-A Board of Company Law administration.

Section 10E

CONSTITUTION OF BOARD OF COMPANY LAW ADMINISTRATION.

(1) As soon as may be after the commencement of the Companies (Amendment) Act, 1988, the

Central Government shall, by notification in the Official Gazette, constitute a Board to be called

the Board of Company Law Administration.

(1A) The Company Law Board shall exercise and discharge such powers and functions as may

be conferred on it, by or under this Act or any other law, and shall also exercise and discharge

such other powers and functions of the Central Government under this Act or any other law as

may be conferred on it by the Central Government, by notification in the Official Gazette under

the provisions of this Act or that other law.

(2) The Company Law Board shall consist of such number of members, not exceeding [nine], as

the Central Government deems fit, to be appointed by that Government by notification in the

Official Gazette :

Provided that the Central Government may, by notification in the Official Gazette, continue the

appointment of the chairman or any other member of the Company Law Board functioning as

such immediately before the commencement of the Companies (Amendment) Act, 1988, as the

chairman or any other member of the Company Law Board, after such commencement for such

period not exceeding three years as may be specified in the notification.

(2A) The members of the Company Law Board shall possess such qualifications and experience

as may be prescribed.

(3) One of the members shall be appointed by the Central Government to be the chairman of the

Company Law Board.

(4) No act done by the Company Law Board shall be called in question on the ground only of any

defect in the constitution of, or the existence of any vacancy in, the Company Law Board.

(4A) [Omitted by the Companies (Amendment) Act, 1988, section 4, w.e.f. 31-5-1991. For text of

omitted sub-section (4A), refer Appendix I].

(4B) The Board may, by order in writing, form one or more Benches from among its members and

authorise each such Bench to exercise and discharge such of the Board's powers and functions

as may be specified in the order; and every order made or act done by a Bench in exercise of

such powers or discharge of such functions shall be deemed to be the order or act, as the case

may be, of the Board.

(4C) Every Bench referred to in sub-section (4B) shall have powers which are vested in a Court

under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following

matters, namely :-

(a) discovery and inspection of documents or other material objects producible as evidence;

(b) enforcing the attendance of witnesses and requiring the deposit of their expenses;

(c) compelling the production of documents or other material objects producible as evidence and

impounding the same;

(d) examining witnesses on oath;

(e) granting adjournments;

(f) reception of evidence on affidavits.

(4D) Every Bench shall be deemed to be a civil court for the purposes of section 195 and

[Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974)], and every proceeding

before the Bench shall be deemed to be a judicial proceeding within the meaning of sections 193

and 228 of the Indian Penal Code, 1860 (45 of 1860), and for the purpose of section 196 of that

Code.]

[(5) Without prejudice to the provisions of sub-sections (4C) and (4D), the Company Law Board

shall in the exercise of its powers and the discharge of its functions under this Act or any other

law be guided by the principles of natural justice and shall act in its discretion.

(6) Subject to the foregoing provisions of this section, the Company Law Board shall have power

to regulate its own procedure].

Section 10F

APPEALS AGAINST THE ORDERS OF THE COMPANY LAW BOARD.

Any person aggrieved by any decision or order of the Company Law Board may file an appeal to

the High Court within sixty days from the date of communication of the decision or order of the

Company Law Board to him on any question of law arising out of such order :

Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient

cause from filing the appeal within the said period, allow it to be filed within a further period not

exceeding sixty days.

Part II Incorporation of Company and Matters Incidental thereto.

PART II

Incorporation of Company and Matters Incidental Thereto

Certain companies, associations and partnerships to be registered as companies under Act

Section 11.

PROHIBITION OF ASSOCIATIONS AND PARTNERSHIPS EXCEEDING CERTAIN NUMBER.--

(1) No company, association or partnership

consisting of more than ten persons shall be formed for the purpose of carrying on the business

of banking, unless it is registered

as a company under this Act, or is formed in pursuance of some other Indian law.

(2) No company, association or partnership consisting of more than twenty persons shall be

formed for the purpose of carrying

on any other business that has for its object the acquisition of gain by the company, association

or partnership, or by the

individual members thereof, unless it is registered as a company under this Act, or is formed in

pursuance of some other Indian

law.

(3) This section shall not apply to a joint family as such carrying on a business; and where a

business is carried on by two or

more joint families, in computing the number of persons for the purposes of sub-sections (1) and

(2), minor members of such

families shall be excluded.

(4) Every member of a company, association or partnership carrying on business in contravention

of this section shall be

personally liable for all liabilities incurred in such business.

(5) Every person who is a member of a company, association or partnership formed in

contravension of this section shall be

punishable with fine which may extend to one thousand rupees.

MEMORANDUM OF ASSOCIATION

Section12.

MODE OF FORMING INCORPORATED COMPANY.

— (1) Any seven or more persons, or where the company to be formed will be a private company,

any two or more persons, associated for any lawful purpose may, by subscribing their names to a

memorandum of association and otherwise complying with the requirements of this Act in respect

of registration, form an incorporated company, with or without limited liability.

(2) Such a company may be either --

(a) a company having the liability of its members limited by the memorandum to the amount, if

any, unpaid on the shares

respectively held by them (in its Act termed "a company limited by shares");

(b) a company having the liability of its members limited by the memorandum to such amount as

the members may respectively

undertake by the memorandum to contribute to the assets of the company in the event of its

being wound up (in this Act termed "

a company limited by guarantee"); or

(c) a company not having any limit on the liability of its members (in this Act termed "an unlimited

company").

Section13.

REQUIREMENTS WITH RESPECT TO MEMORANDUM.--

(1) The memorandum of every company shall state --

(a) the name of the company with "Limited" as the last word of the name in the case of a public

limited company, and with

"Private Limited" as the last words of the name in the case of a private Limited company;

(b) the State in which the registered office of the company is to be situate; and

(c) the objects of he company, and, except in the case of trading corporations, the State or States

to whose territories the

objects extend.

(2) The memorandum of a company limited by shares or by guarantee shall also state that the

liability of its members is limited.

(3) The memorandum of a company limited by guarantee shall also state that each member

undertakes to contribute to the assets

of the company in the event of its being wound up while he is a member or within one year after

he ceases to be a member, for

payment of the debts and liabilities of the company, or of such debts and liabilities of the

company as may have been contracted

before he ceases to be a member, as the case may be, and of the costs, charges and expenses

of winding up, and for adjustment

of the rights of the contributories among themselves, such amount as may be required, not

exceeding a specified amount.

(4) In the case of a company having a share capital--

(a) unless the company is an unlimited company, the memorandum shall also state the amount of

share capital with which the

company is to be registered and the division thereof into shares of a fixed amount;

(b) no subscriber of the memorandum shall take less than one share; and

(c) each subscriber of the memorandum shall write opposite to his name the number of shares he

takes.

Section 14.

FORM OF MEMORANDUM.--

The memorandum of association of a company shall be in such one of the Forms in Tables B, C,

D and E in Schedule I as may be applicable to the case of the company, or in a Form as near

thereto as circumstances admit.

Section 15.

PRINTING AND SIGNATURE OF MEMORANDUM.--

The memorandum shall --

(a) be printed,

(b) be divided into paragraphs numbered consecutively, and

(c) be signed by each subscriber (who shall add his address, description and occupation, if any,)

in the presence of at least one

witness who shall attest the signature and shall likewise add his address, description and

occupation, if any.

Section 15A

SPECIAL PROVISION AS TO ALTERATION OF MEMORANDUM CONSEQUENT ON

ALTERATION OF NAME OF STATE OF MADRAS.

Where, in the memorandum of association of a company in existence immediately before the

commencement of the Madras State (Alteration of Name) Act, 1968 (53 of 1968), it is stated that

Madras is the State in which the registered office of that company is situate, then, notwithstanding

anything contained in this Act, the said memorandum shall, as from such commencement, be

deemed to have been altered by substitution of a reference to the State of Tamil Nadu for the

reference to the State of Madras, and the Registrar of the State of Tamil Nadu shall make

necessary alterations in the memorandum of association and the certificate of incorporation of the

said company.

Section 15B

SPECIAL PROVISION AS TO ALTERATION OF MEMORANDUM CONSEQUENT ON

ALTERATION OF NAME OF STATE OF MYSORE.

Where, in the memorandum of association of a company in existence immediately before the

commencement of the Mysore State (Alteration of Name) Act, 1973 (31 of 1973), it is stated that

Mysore is the State in which the registered office of that company is situate, then, notwithstanding

anything contained in this Act, the said memorandum shall, as from such commencement, be

deemed to have been altered by substitution of a reference to the State of Karnataka for the

reference to the State of Mysore, and the Registrar of the State of Karnataka shall make

necessary alterations in the memorandum of association and the certificate of incorporation of the

said company.

Section 16

ALTERATION OF MEMORANDUM.--

(1) A company shall not alter the conditions contained in its memorandum except in the cases,

in the mode, and to the extent, for which express provision is made in this Act.

(2) Only those provisions which are required by section 13 or by any other specific provision

contained in this Act, to be stated

in the memorandum of the company concerned shall be deemed to be conditions contained in its

memorandum.

(3) Other provisions contained in the memorandum, including those relating to the appointment of

a managing director or

managing agent, secretaries and treasurers or manager, may be altered in the same manner as

the articles of the company, but if

there is any express provision in this Act permitting of the alteration of such provisions in any

other manner, they may also be

altered in such other manner.

(4) All references to the articles of a company in this Act shall be constructed as including

references to the other provisions

aforesaid contained in its memorandum.

Section 17

SPECIAL RESOLUTION AND CONFIRMATION BY COURT REQUIRED FOR ALTERATION OF

MEMORANDUM.— (1) A company may, by special resolution, alter the provisions of its

memorandum so as to change the place of its registered office from one State to another, or with

respect to the objects of the company so far as may be required to enable it--

(a) to carry on its business more economically or more efficiently;

(b) to attain its main purpose by new or improved means;

(c) to enlarge or change the local area of its operations'

(d) to carry on some business which under existing circumstances may conveniently or

advantageously be combined with the

business of the company;

(e) to restrict or abandon any of the objects specified in the memorandum;

(f) to sell or dispose of the whole, or any part, f the under taking, or of any of the undertaking, of

the company; or

(g) to amalgamate with any other company or body of persons.

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

petition.

(3) Before confirming the alteration, the Court must be satisfied --

(a) that sufficient notice has been given to every holder of the debentures of the company, and to

every other person or class of

persons whose interests will, in the opinion of the Court, be affected by the alteration; and

(b) that, with respect to every creditor who, in the opinion of the Court, is entitled to object to the

alteration, and who signifies

his objection in the manner directed by the court, either his consent to the alteration has been

obtained or his debt or claim has

been discharged or has determined, or has been secured to the satisfaction of the Court;

Provided that the Court may, in the case of any person or class of persons, for special reasons,

dispense with the notice required

by clause (a).

(4) Notice of the alteration shall also be given to the Registrar and he shall be given a reasonable

opportunity to appear before

the Court and state his objections and suggestions, if any, with respect to the confirmation of the

alteration.

(5) The Court may make an order confirming the alteration either wholly or in part, and on such

terms and conditions, if any, as it

thinks fit, and may make such order as to costs as it thinks proper.

(6) The Court shall, in exercising its powers under this section have regard to the rights and

interests of the members of the

company and of every class of them, as well as to the rights and interests of the creditors of the

company and of every class of

them.

(7) The Court may, if it thinks fit, adjourn the proceedings in order than an arrangement may be

made to the satisfaction of the

Court for the purchase of the interests of dissentient members; and may given such directions

and make such orders as it thinks

fit for facilitating, or carrying into effect, any such arrangement;

Provided that no part of the capital of the company may be expended in any such purchase.

Section 18.

ALTERATION TO BE REGISTERED WITHIN THREE MONTHS.

(1) A certified copy of the order confirming the alteration, together with a

printed copy of the memorandum as altered, shall, within three months from the date of the order,

be filled by the company with

the Registrar, and he shall register the same, and shall certify the registration under his hand.

(2) The certificate shall be conclusive evidence that all the requirements of this Act with respect to

the alteration and the

confirmation thereof have been complied with, and henceforth the memorandum as so altered

shall be the memorandum of the

company.

(3) Where the alteration involves a transfer of the registered office from one State to another, a

certified copy of the order

confirming the alteration shall be filed by the company with the Registrar of each of the States,

and the Registrar of each such

State shall register the same, and shall certify under his hand the registration thereof; and the

Registrar of the State from which

such office is transferred shall send to the Registrar of the other State all documents relating to

the company registered, recorded

or filed in his office.

(4) The Court may, at any time, by order, extend the time for the filing of documents under this

section by such period as its

thinks proper.

Section 19.

EFFECT OF FAILURE TO REGISTER.--

(1) No such alteration as is referred to in section 17 shall have any effect until it has been duly

registered in accordance with the provisions of sub-section 18.

(2) If the registration is not effected within three months next after the date of the order of the

Court confirming the alteration, or

within such further time as may be allowed by the Court under sub-section (4) of section 18, such

alteration and order and all

proceedings connected therewith shall, at the expiry of such period of three months or of such

further time, as the case may be,

become void;

Provided that the Court may, on sufficient cause shown, revive the order on application made

within a further period of one

month.

Provisions with respect to names of companies

Section 20.

COMPANIES NOT TO BE REGISTERED WITH UNDESIRABLE NAMES.

(1) No company shall be registered by a name which, in the

opinion of the Central Government, is undesirable.

(2) Without prejudice to the generality of the foregoing power, a name which is identical with, or

too nearly resembles, the name

by which a company in existence has been previously registered, may be deemed to be

undesirable by the Central Government

within the meaning of sub-section (1).

Section21.

CHANGE OF NAME BY COMPANY.--

A company may, by special resolution and with the approval of the Central Government

signified in writing, change its name.

Section 22.

RECTIFICATION OF NAME OF COMPANY.

(1) If, through inadvertence or otherwise, a company on its first registration or on its

registration by a new name, is registered by a name which, in the opinion of the Central

Government, is identical with, or too

nearly resembles, the name by which a company in existence has been previously registered,

whether under this Act or any

previous companies law, the first-mentioned company--

(a) may, by ordinary resolution and with the previous approval of the Central

Government.signified in writing, change its name or

new name; and

(b) shall, if the Central Government.so directs within twelve months of its first registration or

registration by its new name as the

case may be, or within twelve months of the commencement of this Act, whichever is later, by

ordinary resolution and with the

previous approval of the Central Government signified in writing, change its name or new name

within a period of three months

from the date of the direction or such longer period as the Central Government may think fit to

allow.

(2) If a company makes default in complying with any direction given under clause (b) of subsection

(1), the company, and

every officer who is in default, shall be punishable with fine which may extend to one hundred

rupees for every day during which

the default continues.

Section 23.

REGISTRATION OF CHANGE OF NAME AND EFFECT THEREOF.

(1) Where a company charges its name in pursuance of section 21 or 22, the Registrar shall enter

the new name on the register in the place of the former name, and shall issue a fresh certificate

of incorporation with the necessary alterations embodied therein; and the change of name shall

be complete and effective only on the issue of such a certificate.

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

the company.(3) The change of name shall not affect any rights or obligations of the company, or render

defective any legal proceedings by or

against it; and any legal proceedings which might have been continued or commenced by or

against the company by its former

name may be continued by or against the company by its new name.

Section 24

CHANGE OF NAME OF EXISTING PRIVATE LIMITED COMPANIES.

(1) In the case of a company which was a private limited company immediately before the

commencement of this Act, the Registrar shall enter the word "Private" before the word "Limited"

in the name of the company upon the register and shall also make the necessary alterations in

the certificate of incorporation issued to the company and in its memorandum of association.

(2) Sub-section (3) of section 23 shall apply to a change of name under sub-section (1), as it

applies to a change of name under section 21.

Section 25

POWER TO DISPENSE WITH "LIMITED" IN NAME OF CHARITABLE OR OTHER COMPANY.

(1) Where it is proved to the satisfaction of the Central Government that an association -

(a) is about to be formed as a limited company for promoting commerce, art, science, religion,

charity or any other useful object, and

(b) intends to apply its profits, if any, or other income in promoting its objects, and to prohibit the

payment of any dividend to its members, the Central Government may, by licence direct, that the

association may be registered as a company with limited liability, without the addition to its name

of the word "Limited" or the words "Private Limited".

(2) The association may thereupon be registered accordingly; and on registration shall enjoy all

the privileges, and (subject to the provisions of this section) be subject to all the obligations, of

limited companies.

(3) Where it is proved to the satisfaction of the Central Government -

(a) that the objects of a company registered under this Act as a limited company are restricted to

those specified in clause (a) of sub-section (1), and

(b) that by its constitution the company is required to apply its profits, if any, or other income in

promoting its objects and is prohibited from paying any dividend to its members, the Central

Government may, by licence, authorise the company by a special resolution to change its name,

including or consisting of the omission of the word "Limited" or the words "Private Limited"; and

section 23 shall apply to a change of name under this sub-section as it applies to a change of

name under section 21.

(4) A firm may be a member of any association or company licensed under this section, but on

the dissolution of the firm, its membership of the association or company shall cease.

(5) A licence may be granted by the Central Government under this section on such conditions

and subject to such regulations as it thinks fit, and those conditions and regulations shall be

binding on the body to which the licence is granted, and where the grant is under sub-section (1),

shall, if the Central Government so directs, be inserted in the memorandum, or in the articles, or

partly in the one and partly in the other.

(6) It shall not be necessary for a body to which a licence is so granted to use the word "Limited"

or the words "Private Limited" as any part of its name and, unless its articles otherwise provide,

such body shall, if the Central Government by general or special order so directs and to the

extent specified in the directions, be exempt from such of the provisions of this Act as may be

specified therein.

(7) The licence may at any time be revoked by the Central Government, and upon revocation,

Section 26

ARTICLES PRESCRIBING REGULATIONS.

There may in the case of a public company, limited by shares, and there shall in the case of an

unlimited company or a company limited by guarantee or a private company limited by shares, be

registered with the memorandum, articles of association signed by the subscribers of the

memorandum, prescribing regulations for the company.

Section 27

REGULATIONS REQUIRED IN CASE OF UNLIMITED COMPANY, COMPANY LIMITED BY

GUARANTEE OR PRIVATE COMPANY LIMITED BY SHARES.

(1) In the case of an unlimited company, the articles shall state the number of members with

which the company is to be registered and, if the company has a share capital, the amount of

share capital with which the company is to be registered.

(2) In the case of a company limited by guarantee, the articles shall state the number of members

with which the company is to be registered.

(3) In the case of a private company having a share capital, the articles shall contain provisions

relating to the matters specified in sub-clauses (a), (b) and (c) of clause (iii) of sub-section (1) of

section 3; and in the case of any other private company, the articles shall contain provisions

relating to the matters specified in the said sub-clauses (b) and (c).

Section 28

ADOPTION AND APPLICATION OF TABLE A IN THE CASE OF COMPANIES LIMITED BY

SHARES.

(1) The articles of association of a company limited by shares may adopt all or any of the

regulations contained in Table A in Schedule I.

(2) In the case of any such company which is registered after the commencement of this Act, if

articles are not registered, or if articles are registered, in so far as the articles do not exclude or

modify the regulations contained in Table A aforesaid, those regulations shall, so far as

applicable, be the regulations of the company in the same manner and to the same extent as if

they were contained in duly registered articles.

Section 29

FORM OF ARTICLES IN THE CASE OF OTHER COMPANIES.

The articles of association of any company, not being a company limited by shares, shall be in

such one of the Forms in Tables C, D and E in Schedule I as may be applicable, or in a Form as

near thereto as circumstances admit :

Provided that nothing in this section shall be deemed to prevent a company from including any

additional matters in its articles in so far as they are not inconsistent with the provisions contained

in the Form in any of the Tables C, D and E, adopted by the company.

Section 30

FORM AND SIGNATURE OF ARTICLES.

Articles shall -

(a) be printed;

(b) be divided into paragraphs numbered consecutively; and

(c) be signed by each subscriber of the memorandum of association (who shall add his address,

description and occupation, if any,) in the presence of at least one witness who shall attest the

signature and shall likewise add his address, description and occupation, if any.

Section 31

ALTERATION OF ARTICLES BY SPECIAL RESOLUTION.

(1) Subject to the provisions of this Act and to the conditions contained in its memorandum, a

company may, by special resolution, alter its articles :

Provided that no alteration made in the articles under this sub-section which has the effect of

converting a public company into a private company, shall have effect unless such alteration has

been approved by the Central Government.

(2) Any alteration so made shall, subject to the provisions of this Act, be as valid as if originally

contained in the articles and be subject in like manner to alteration by special resolution.

(2A) Where any alteration such as is referred to in the proviso to sub-section (1) has been

approved by the Central Government, a printed copy of the articles as altered shall be filed by the

company with the Registrar within one month of the date of receipt of the order of approval.

(3) The power of altering articles under this section shall, in the case of any company formed and

registered under Act No. 19 of 1857 and Act No. 7 of 1860 or either of them, extend to altering

any provisions in Table B annexed to Act 19 of 1857, and shall also, in the case of an unlimited

company formed and registered under the said Acts or either of them, extend to altering any

regulations relating to the amount of capital or its distribution into shares, notwithstanding that

those regulations are contained in the memorandum.

Section 32

REGISTRATION OF UNLIMITED COMPANY AS LIMITED, ETC.

(1) Subject to the provisions of this section -

(a) a company registered as unlimited may register under this Act as a limited company; and

(b) a company already registered as a limited company may re-register under this Act.

(2) On registration in pursuance of this Section, the Registrar shall close the former registration of

the company, and may dispense with the delivery to him of copies of any documents with copies

of which he was furnished on the occasion of the original registration of the company; but, save

as aforesaid, the registration shall take place in the same manner and shall have effect, as if it

were the first registration of the company under this Act.

(3) The registration of an unlimited company as a limited company under this section shall not

affect any debts, liabilities, obligations or contracts incurred or entered into, by, to, with or on

behalf of, the company before the registration, and those debts, liabilities, obligations and

contracts may be enforced in the manner provided by Part IX of this Act in the case of a company

registered in pursuance of that Part.

Section 33

REGISTRATION OF MEMORANDUM AND ARTICLES.

(1) There shall be presented for registration, to the Registrar of the State in which the registered

office of the company is stated by the memorandum to be situate -

(a) the memorandum of the company;

(b) its articles, if any; and

(c) the agreement, if any, which the company proposes to enter into with any individual, for

appointment as its managing or whole-time director or manager.

(2) A declaration by an advocate of the Supreme Court or of a High Court, an attorney or a

pleader entitled to appear before a High Court, or a secretary, or a chartered accountant, in

whole-time practice in India, who is engaged in the formation of a company, or by a person

named in the articles as a director, manager or secretary of the company, that all the

requirements of this Act and the rules thereunder have been complied with in respect of

registration and matters precedent and incidental thereto, shall be filed with the Registrar; and the

Registrar may accept such a declaration as sufficient evidence of such compliance.

Explanation : For the purposes of this sub-section, "chartered accountant in whole-time practice

in India" means a chartered accountant within the meaning of clause (b) of sub-section (1) of

section 2 of the Chartered Accountants Act, 1949 (38 of 1949), who is practicing in India and who

is not in full-time employment. 95 ]

(3) If the Registrar is satisfied that all the requirements aforesaid have been complied with by the

company and that it is authorised to be registered under this Act, he shall retain and register the

memorandum, the articles, if any, and the agreement referred to in clause (c) of sub-section (1), if

any.

Section 34

EFFECT OF REGISTRATION.

(1) On the registration of the memorandum of a company, the Registrar shall certify under his

hand that the company is incorporated and, in the case of a limited company, that the company is

limited.

(2) From the date of incorporation mentioned in the certificate of incorporation, such of the

subscribers of the memorandum and other persons, as may from time to time be members of the

company, shall be a body corporate by the name contained in the memorandum, capable

forthwith of exercising all the functions of an incorporated company, and having perpetual

succession and a common seal, but with such liability on the part of the members to contribute to

the assets of the company in the event of its being wound up as is mentioned in this Act.

Section 35

CONCLUSIVENESS OF CERTIFICATE OF INCORPORATION.

A certificate of incorporation given by the Registrar in respect of any association shall be

conclusive evidence that all the requirements of this Act have been complied with in respect of

registration and matters precedent and incidental thereto, and that the association is a company

authorised to be registered and duly registered under this Act.

Section 36

EFFECT OF MEMORANDUM AND ARTICLES.

(1) Subject to the provisions of this Act, the memorandum and articles shall, when registered,

bind the company and the members thereof to the same extent as if they respectively had been

signed by the company and by each members, and contained covenants on its and his part to

observe all the provisions of the memorandum and of the articles.

(2) All money payable by any member to the company under the memorandum or articles shall

be a debt due from him to the company.

Section 37

PROVISION AS TO COMPANIES LIMITED BY GUARANTEE.

(1) In the case of a company limited by guarantee and not having a share capital, and registered

on or after the first day of April, 1914, every provision in the memorandum or articles or in any

resolution of the company purporting to give any person a right to participate in the divisible

profits of the company otherwise than as a member shall be void.

(2) For the purpose of the provisions of this Act relating to the memorandum of a company limited

by guarantee and of this section, every provision in the memorandum or articles, or in any

resolution, of any company limited by guarantee and registered on or after the first day of April,

1914, purporting to divide the undertaking of the company into shares or interests, shall be

treated as a provision for a share capital, notwithstanding that the nominal amount or number of

the shares or interests is not specified thereby.

Section 38

EFFECTS OF ALTERATION IN MEMORANDUM OR ARTICLES.

Notwithstanding anything in the memorandum or articles of a company, no member of the

company shall be bound by an alteration made in the memorandum or articles after the date on

which he became a member, if and so far as the alteration requires him to take or subscribe for

more shares than the number held by him at the date on which the alternation is made, or in any

way increases his liability as at that date, to contribute to the share capital of, or otherwise to pay

money to, the company :

Provided that this section shall not apply -

(a) in any case where the member agrees in writing either before or after a particular alteration is

made, to be bound by the alteration; or

(b) in any case where the company is a club or the company is any other association and the

alteration requires the member to pay recurring or periodical subscriptions or charges at a higher

rate although he does not agree in writing to be bound by the alteration.

Section 39

COPIES OF MEMORANDUM AND ARTICLES, ETC., TO BE GIVEN TO MEMBERS.

(1) A Company shall, on being so required by a member, send to him within seven days of the

requirement and subject to the payment of a fee of one rupee, a copy each of the following

documents as in force for the time being -

(a) the memorandum;

(b) the articles, if any;

(c) and in section 192, if and in so far as they have not been embodied in the memorandum or

articles.

(2) If a company makes default in complying with the requirement of this section, the company,

and every officer of the company who is in default, shall be punishable, for each offence, with fine

which may extend to fifty rupees.

Section 40

ALTERATION OF MEMORANDUM OR ARTICLES, ETC., TO BE NOTED IN EVERY COPY.

(1) Where an alteration is made in the memorandum or articles of a company, or in any other

agreement, or any resolution, referred to in section 192, every copy of the memorandum, articles,

agreement or resolution issued after the date of the alteration shall be in accordance with the

alteration.

(2) If, at any time, the company issues any copies of the memorandum, articles, resolution or

agreement, which are not in accordance with the alteration or alterations made therein before that

time, the company, and every officer of the company who is in default, shall be punishable with

fine which may extend to ten rupees for each copy so issued.

Section 41

DEFINITION OF "MEMBER".

(1) The subscribers of the memorandum of a company shall be deemed to have agreed to

become members of a company, and on its registration, shall be entered as members in its

register of members.

(2) Every other person who agrees in writing a become a member of a company

Section 42

MEMBERSHIP OF HOLDING COMPANY.

(1) Except in the cases mentioned in this section, a body corporate cannot be a member of a

company which is its holding company and any allotment or transfer of shares in a company to its

subsidiary shall be void.

(2) Nothing in this section shall apply -

(a) where the subsidiary is concerned as the legal representative of a deceased member of the

holding company; or

(b) where the subsidiary is concerned as trustee, unless the holding company or a subsidiary

thereof is beneficially interested under the trust and is not so interested only by way of security for

the purposes of a transaction entered into by it in the ordinary course of a business which

includes the lending of money.

(3) This section shall not prevent a subsidiary from continuing to be a member of its holdings

company if it was a member thereof either at the commencement of this Act or before becoming a

subsidiary of the holding company, but except in the cases referred to in sub-section (2), the

subsidiary shall have no right to vote at meetings of the holding company or of any class of

members thereof.

(4) subject to sub-section (2), sub-sections (1) and (3) shall apply in relation to a nominee for a

body corporate which is a subsidiary, as if references in the said sub-sections (1) and (3) to such

a body corporate included references to a nominee for it.

(5) In relation to a holding company which is either a company limited by guarantee or an

unlimited company, the reference in this section to shares shall, whether or not the company has

a share capital, be construed as including a reference to the interest of its members as such,

whatever the form of that interest.

Section 43

CONSEQUENCES OF DEFAULT IN COMPLYING WITH CONDITIONS CONSTITUTING A

COMPANY A PRIVATE COMPANY.

Where the articles of a company include the provisions which, under clause (iii) of sub-section (1)

of section 3, are required to be included in the articles of a company in order to constitute it a

private company, but default is made in complying with any of those provisions, the company

shall cease to be entitled to the privileges and exemptions conferred on private companies by or

under this Act, and this Act shall apply to the company as if it were not a private company :

Provided that the Company Law Board 99, on being satisfied that the failure to comply with the

conditions was accidental or due to inadvertence or to some other sufficient cause, or that on

other grounds it is just and equitable to grant relief, may, on the application 101 of the company

or any other person interested and on such terms and conditions as seem to the Company Law

Board just and expedient, order that the company be relieved from such consequences as

aforesaid.

Section 43A

PRIVATE COMPANY TO BECOME PUBLIC COMPANY IN CERTAIN CASES.

(1) Save as otherwise provided in this section, where not less than twenty-five per cent of the

paid-up share capital of a private company having a share capital, is held by one or more bodies

corporate, the private company shall, -

(a) on and from the date on which the aforesaid percentage is first held by such body or bodies

corporate, or

(b) where the aforesaid percentage has been first so held before the commencement of the

Companies (Amendment) Act, 1960 (65 of 1960) on and from the expiry of the period of three

months from the date of such commencement unless within that period the aforesaid percentage

is reduced below twenty-five per cent of the paid-up share capital of the private company,

become by virtue of this section a public company :

Provided that even after the private company has so become a public company, its articles of

association may include provisions relating to the matter specified in clause (iii) of sub-section (1)

of section 3 and the number of its members may be, or may at any time be reduced, below seven

:

Provided further that in computing the aforesaid percentage, account shall not be taken of any

share in the private` company held by a banking company if, but only if, the following conditions

are satisfied in respect of such share, namely :-

(a) that the share -

(i) forms part of the subject-matter of a trust.

(ii) has not been set apart for the benefit of any body corporate, and

(iii) is held by the banking company either as a trustee of that trust or in its own name on behalf of

a trustee of that trust; or

(b) that the share -

(i) forms part of the estate of a deceased person,

(ii) has not been bequeathed by the deceased person by his will to any body corporate, and

(iii) is held by the banking company either as an executor or administrator of the deceased person

or in its own name on behalf of an executor or administrator of the deceased person; and the

Registrar may, for the purpose of satisfying himself that any share is held in the private company

by a banking company as aforesaid, call for at any time from the banking company such books

and papers as he considers necessary

Explanation: For the purposes of this sub-section, "bodies corporate" means public companies, or

private companies which had become public companies by virtue of this section.

(1A) Without prejudice to the provisions of sub-section (1), where the average annual turnover of

a private company, whether in existence at the commencement of the Companies (Amendment)

Act, 1974, or incorporated thereafter, is not, during the relevant period, less than such amount as

may be prescribed ,the private company shall, irrespective of its paid-up share capital, become,

on and from the expiry of a period of three months from the last day of the relevant period during

which the private company had the said average annual turnover, a public company by virtue of

this sub-section :

Provided that even after the private company has so become a public company, its articles of

association may include provisions relating to the matters specified in clause (iii) of sub-section

(1) of section 3 and the number of its members may be, or may at any time be reduced, below

seven.

(1B) Where not less than twenty-five per cent of the paid-up share capital of a public company,

having share capital, is held by a private company, the private company shall, -

(a) on and from the date on which the aforesaid percentage is first held by it after the

commencement of the Companies (Amendment) Act, 1974, or

(b) where the aforesaid percentage has been first so held before the commencement of the

Companies (Amendment) Act, 1974 on and from the expiry of the period of three months from the

date of such commencement, unless within that period the aforesaid percentage is reduced

below twenty-five per cent of the paid-up share capital of the public company, become, by virtue

of this sub-section, a public company, and thereupon all other provisions of this section shall

apply thereto :

Provided that even after the private company has so become a public company, its articles of

association may include provisions relating to the matters specified in clause (iii) of sub-section

(1) of section 3 and the number of its members may be, or may at any time be reduced, below

seven.

(1C) Where, after the commencement of the Companies (Amendment) Act, 1988, a private

company accepts, after an invitation is made by an advertisement, or renews, deposits from the

public, other than its members, directors or their relatives, such private company shall, on and

from the date on which such acceptance or renewal, as the case may be, is first made after such

commencement, become a public company and thereupon all the provisions of this section shall

apply thereto :

Provided that even after the private company has so become a public company, its articles of

association may include provisions relating to the matters specified in clause (iii) of sub-section

(1) of section 3 and the number of its members may be or may at any time, be, reduced below

seven.

(2) Within three months from the date on which a private company becomes a public company by

virtue of this section, the company shall inform the Registrar that it has become a public company

as aforesaid, and thereupon the Registrar shall delete the word "Private" before the word

"Limited" in the name of the company upon the register and shall also make the necessary

alterations in the certificate of incorporation issued to the company and in its memorandum of

association.

(3) Sub-section (3) of section 23 shall apply to a change of name under sub-section (2) as it

applies to a change of name under section 21.

(4) A private company which has become a public company by virtue of this section shall

continue to be a public company until it has, with the approval of the Central Government and in

accordance with the provisions of this Act, again become a private company.

(5) If a company makes default in complying with sub-section (2), the company and every officer

of the company who is in default, shall be punishable with fine which may extend to five hundred

rupees for every day during which the default continues.

(6) & (7) [Omitted by the Companies (Amendment) Act, 1988, section 7, w.e.f. 15-6-1988. For

sub-sections (6) and (7) as they stood prior to omission, refer Appendix I].

(8) Every private company having a share capital shall, in addition to the certificate referred to in

sub-section (2) of section 161, file with the Registrar along with the annual return a second

certificate signed by both the signatories of the return, stating either -

(a) that since the date of the annual general meeting with reference to which the last return was

submitted, or in the case of a first return, since the date of the incorporation of the private

company, no body or bodies corporate has or have held twenty-five per cent or more of its paidup

share capital, [ 108 * * * 108 ]

(b) [Omitted by the Companies (Amendment) Act, 1988, section 7, w.e.f. 15-6-1988. For clause

(b) as it stood prior to its

(c) that the private company, irrespective of its paid-up share capital, did not have, during the

relevant period, an average annual turnover of such amount as is referred to in sub-section (1A)

or more,

(d) that the private company did not accept or renew deposits from the public.

(9) Every private company, having share capital, shall file with the Registrar along with the annual

return a certificate signed by both the signatories of the return, stating that since the date of the

annual general meeting with reference to which the last return was submitted, or in the case of a

first return, since the date of the incorporation of the private company, it did not hold twenty-five

per cent or more of the paid-up share capital of one or more public companies.

(10) Subject to the other provisions of this Act, any reference in this section to accepting, after an

invitation is made by an advertisement, or renewing deposists from the public shall be construed

as including a reference to accepting, after an invitation is made by an advertisement or renewing

deposits from any section of the public, and the provisions of section 67 shall, so far as may be,

apply, as if the reference to invitation to the public to subscribe for shares or debentures occurring

in that section, includes a reference to invitation from the public for acceptance of deposits.

Explanation : For the purposes of this section, -

(a) "relevant period" means the period of three consecutive financial years, -

(i) immediately preceding the commencement of the Companies (Amendment) Act, 1974, or

(ii) a part of which immediately preceded such commencement and the other part of which

immediately, followed such commencement, or

(iii) immediately following such commencement or at any time thereafter;

(b) "turnover" of a company, means the aggregate value of the realisation made form the sale,

supply or distribution of goods or on account of services rendered, or both, by the company

during a financial year. 109 ]

(c) "deposit" has the same meaning as in section 58A.

Section 44

PROSPECTUS OR STATEMENT IN LIEU OF PROSPECTUS TO BE FILED BY PRIVATE

COMPANY ON CEASING TO BE PRIVATE COMPANY.

(1) If a company, being a private company, alters its articles in such manner that they no longer

include the provisions which, under clause (iii) of sub-section (1) of section 3, are required to be

included in the articles of a company in order to constitute it a private company, the company -

(a) shall, as on the date of the alteration, cease to be a private company; and

(b) shall, within the a period of thirty days after the said date, file with the Registrar either a

prospectus or a statement in lieu of prospectus, as specified in sub-section (2).

(2)

(a) Every prospectus filed under sub-section (1) shall state the matters specified in Part I of

Schedule II and set out the reports specified in Part II of that Schedule, and the said Parts I and II

shall have effect subject to the provisions contained in Part III of that Schedule.

(b) Every statement in lieu of prospectus filed under sub-section (1) shall be in the form and

contain the particulars set out in Part I of Schedule IV, and in the cases mentioned in Part II of

that Schedule, shall set out the report specified therein, and the said Parts I and II shall have

effect subject to the provision contained in Part III of that Schedule.

(c) Where the persons making any such report as is referred to in clause (a) or (b) have made

therein, or have, without giving the reasons indicated therein, any such adjustments as are

mentioned in clause 32 of Schedule II or clause 5 of Schedule IV, as the case may be, the

prospectus or statement in lieu of prospectus filed as aforesaid, shall have endorsed thereon or

attached thereto, a written statement signed by those persons, setting out there adjustment and

giving the reasons therefor.

(3) If default is made in complying with sub-section (1) or (2), the company, and every officer of

the company who is in default, shall be punishable with fine which may extend to five hundred

rupees for every day during which the default continues.

(4) Where any prospectus or statement in lieu of prospectus filed under this action includes any

untrue statement, any person who authorised the filing of such prospectus or statement shall be

punishable with imprisonment for a term which may extend to two years, or with fine which may

extend to five thousand rupees, or with both, unless he proves either that the statement was

immaterial or that he had reasonable ground to believe, and did up to the time of the filing of the

prospectus or statement believe, that the statement was true.

(5) For the purpose of this section –

(a) a statement included in a prospectus or a statement in lieu of prospectus shall be deemed to

be untrue if it is misleading in the form and context in which it is included; and

(b) where the omission from a prospectus or a statement in lieu of prospectus of any matter is

calculated to mislead, the prospectus or statement in lieu of prospectus shall be deemed, in

respect of such omission, to be a prospects or a statement in lieu of prospectus in which an

untrue statement is included.

(6) For the purpose of sub-section (4) and clause (a) of sub-section (5), the expression "included"

when used with reference to a prospectus or statement in lieu of prospectus, means included in

the prospectus or statement in lieu of prospectus itself or contained in any report or memorandum

appearing on the face thereof, or by reference incorporated therein.

Section 45

MEMBERS SEVERALLY LIABLE FOR DEBTS WHERE BUSINESS CARRIED ON WITH

FEWER THAN SEVEN, OR IN THE CASE OF A PRIVATE COMPANY, TWO MEMBERS.

If at any time the number of members of a company is reduced, in the case of public company,

below seven, or in the case of private company, below two, and the company carrier on business

for more than six months while the number is so reduced, every person who is a member of the

company during the time that it so carries on business after those six months and is cognizant of

the fact that it is carrying on business with fewer than seven members or two members, as the

case may be, shall be severally liable for the payment of the whole debts of the company

contracted during that time, and may be severally sued therefor.

Section 46

FORM OF CONTRACTS.

(1) Contracts on behalf of a company may be made as follows :-

(a) a contract which, if made between private persons, would by law be required to be in writing

signed by the parties to be charged therewith, may be made on behalf of the company in writing

signed by any person acting under its authority, express or implied, and may in the same manner

be varied or discharged;

(b) a contract which, if made between private persons, would by law be valid although made by

parol only and not reduced into writing, may be made by parol on behalf of the company by any

person acting under its authority, express or implied, and may in the same manner be varied or

discharged.

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

Section 47

BILLS OF EXCHANGE AND PROMISSORY NOTES.

A Bill of exchange, hundi or promissory note shall be deemed to have been made, accepted,

drawn or endorsed on behalf of the company if drawn, accepted, made, or endorsed in the name

of, or on behalf or on account of, the company by any person acting under its authority, express

or implied. Section 48

Section 48

EXECUTION OF DEEDS.

(1) A company may, by writing under its common seal, empower any person, either generally or

in respect of any specified matters, as its attorney, to execute deeds on its behalf in any place

either in or outside India.

(2) A deed singed by such an attorney on behalf of the company and under his seal where

sealing is required, shall bind the company and have the same effect as if it were under its

common seal.

Section 49

INVESTMENTS OF COMPANY TO BE HELD IN ITS OWN NAME.

(1) Save as otherwise provided in sub-sections (2) to (5) or any other law for time being in force

and subject to the provisions of sub-sections (6) to (8), -

(a) all investments made by a company on its own behalf shall be made and held by its in it own

name; and

(b) where any such investments are not so held at the commencement of this Act the company

shall, within a period of one year from such commencement, either cause them to be transferred

to, and hold them in, its own name, or dispose of them.

(2) Where the company has a right to appoint any person or persons, or where any nominee or

nominees of the company has or have been appointed, as a director or directors of any other

body corporate, shares in such other body corporate to an amount not exceeding the nominal

value of the qualification shares which are required to be held by a director thereof, may be

registered or held by such company jointly in the names of itself and of each such person or

nominee or in the name of each such person or nominee .

(3) A company may hold any shares in its subsidiary in the name or names of any nominee or

nominees of the company, if and in so far as it is necessary so to do, to ensure that the number of

members of the subsidiary is not reduced, where it is a public company, below seven, and where

it is a private company, below two.

(4) Sub-section (1) shall not apply to investments made by a company whose principal business

consists of the buying and selling of shares or securities.

(5) Nothing in this section shall be deemed to prevent a company -

(a) from depositing with a bank, being the bankers of the company, any shares or securities for

the collection of any dividend or interest payable thereon; or

(aa) from depositing with, or transferring to, or holding in the name of, the State Bank of India or a

Scheduled Bank, being the bankers of the company, shares or securities, in order to facilitate the

transfer thereof :

Provided that if within a period of six months from the date on which the shares or securities are

transferred by the company to, or are first held by the company in the name of, the State Bank of

India or a Scheduled Bank as aforesaid, no transfer of such shares or securities takes place, the

company shall, as soon as practicable after the expiry of that period, have the shares or

securities retransferred to it from the State Bank of India or the Scheduled Bank or, as the case

may be, again hold the shares or securities in its own name; or

(b) from depositing with, or transferring to, any person any shares or securities, by way of security

for the repayment of any loan advanced to the company or the performance of any obligation

undertaken by it.

(c) from holding investments in the name of a depository when such investments are in the form

of securities held by the company as a beneficial owner.

(6) The certificate or letter of allotment relating to the shares or securities in which investments

have been made by a company shall, except in the cases referred to in sub-sections (4) and (5),

be in the custody of such company orwith the State Bank of India or a Schedule Bank , being the

bankers of the company.

(7) Where, in pursuance of sub-section (2), (3), (4) and (5), any shares or securities in which

investments have been made by a company are not held by it in its own name, the company shall

forthwith enter in a register maintained by it for the purpose -

(a) the nature, value, and such other particulars as may be necessary fully to identify the shares

or securities in question; and

(b) the bank or person in whose name or custody the shares or securities are held.

(8) The register kept under sub-section (7) shall be open to the inspection of any member or

debenture holder of the company without charge, during business hours, subject to such

reasonable restrictions as the company may, by its articles or in general meetings, impose, so

that not less than two hours in each day are allowed for inspection.

(9) If default is made in complying with any of the requirements of sub-sections (1) to (8), the

company, and every officer of the company who is in default, shall be punishable with fine which

may extend to five thousand rupees.

(10) If any inspection required under sub-section (8) is refused, the Company Law Board may, by

order, direct an immediate inspection of the register 121 . Nothing in this sub-section shall be

construed as prejudicing in any way the operation of sub-section (9).

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

Section 50

POWER FOR COMPANY TO HAVE OFFICIAL SEAL FOR USE OUTSIDE INDIA.

(1) A company whose objects require or comprise the transaction of business outside India may,

if authorised by its articles, have for use in any territory, district or place not situate in India an

official seal which shall be a facsimile of the common seal of the company, with the addition on its

face of the name of the territory, district or place where it is to be used.

(2) A company having an official seal for use in any such territory, district or place may, by writing

under its common seal, authorise any person appointed for the purpose in that territory, district or

place to affix the official seal to any deed or other document to which the company is a party in

that territory, district or place.

(3) The authority of any agent authorised under sub-section (2) shall, as between the company

and any person dealing with the agent, continue during the period, if any, mentioned in the

instrument conferring the authority, or if no period is there mentioned, until notice of the

revocation or determination of the agent's authority has been given to the person dealing with

him.

(4) The person affixing any such official seal shall, by writing under his hand, certify on the deed

or other document to which the seal is affixed, the date on which and the place at which, it is

affixed.

(5) A deed or other document to which an official seal is duly affixed shall bind the company as if

it had been sealed with the common seal of the company.

Section 51

SERVICE OF DOCUMENTS ON COMPANY.

A document may be served on a company or an officer thereof by sending it to the company or

officer at the registered office of the company by post under a certificate of posting or by

registered post, or by leaving it at its registered office :

Provided that where the securities are held in a depository, the records of the beneficial

ownership may be served by such depository on the company by means of electronic mode or by

delivery of floppies or discs.

Section 52

SERVICE OF DOCUMENTS ON REGISTRAR.

A document may be served on a Registrar by sending it to him at his office by post under the

certificate of posting or by registered post, or by delivering it to, or leaving it for, him at his office.

Section 53

SERVICE OF DOCUMENTS ON MEMBERS BY COMPANY.

(1) A document may be served by a company on any member thereof either personally, or by

sending it by post to him to his registered address, or if he has no registered address in India, to

the address, if any, within India supplied by him to the company for the giving of notices to him.

(2) Where a document is sent by post, -

(a) service thereof shall be deemed to be effected by properly addressing, prepaying and posting

a letter containing the document, provided that where a member has intimated to the company in

advance that documents should be sent to him under a certificate of posting or by registered post

with or without acknowledgement due and has deposited with the company a sum sufficient to

defray the expenses of doing so, service of the document shall not be deemed to be effected

unless it is sent in the manner intimated by the member; and

(b) such service shall be deemed to have been effected -

(i) in the case of a notice of a meeting, at the expiration of forty-eight hours after the letter

containing the same is posted, and

(ii) in any other case, at the time at which the letter would be delivered in the ordinary course of

post.

(3) A document advertised in a newspaper circulating in the neighbourhood of the registered

office of the company shall be deemed to be duly served on the day on which the advertisement

appears, on every member of the company who has no registered address in India and has not

supplied to the company an address with in India for the giving of notices to him.

(4) A document may be served by the company on the joint-holders of a share by serving it on the

joint-holder named first in the register in respect of the share.

(5) A document may be served by the company on the persons entitled to a share in

consequence of the death or insolvency of a member by sending it through the post in a prepaid

letter addressed to them by name, or by the title of representatives of the deceased, or assignees

of the insolvent, or by any like description, at the address, if any, in India supplied for the purpose

by the persons claiming to be so entitled, or until such an address has been so supplied, by

serving the document in any manner in which it might have been served if the death or insolvency

hand not occurred

Section 54

AUTHENTICATION OF DOCUMENTS AND PROCEEDINGS.

Save as otherwise expressly provided in this Act, a document or proceeding requiring

authentication by a company may be signed by a director, the manager, the secretary or other

authorised officer of the company, and need not be under its common seal.

Section 55

DATING OF PROSPECTUS.

A prospectus issued by or on behalf of a company or in relation to an intended company shall be

dated, and that date shall, unless the contrary is proved, be taken as the date of publication of the

prospectus.

Section 56

MATTERS TO BE STATED AND REPORTS TO BE SET OUT IN PROSPECTUS.

(1) Every prospectus issued -

(a) by or on behalf of a company, or

(b) by or on behalf of any person who is or has been engaged or interested in the formation of a

company, shall state the matters specified in Part I of Schedule II and set out the reports

specified in

Section 57

EXPERT TO BE UNCONNECTED WITH FORMATION OR MANAGEMENT OF COMPANY.

A prospectus inviting persons to subscribe for shares in or debentures of a company shall not

include a statement purporting to be made by an expert, unless the expert is a person who is not,

and has not been, engaged or interested in the formation or promotion, or in the management, of

the company.

Section 58

EXPERT'S CONSENT TO ISSUE OF PROSPECTUS CONTAINING STATEMENT BY HIM.

A prospectus inviting persons to subscribe for shares in or debentures of a company and

including a statement purporting to be made by an expert shall not be issued, unless -

(a) he has given his written consent to the issue thereof with the statement included in the form

and context in which it is included, and has not withdrawn such consent before the delivery of a

copy of the prospectus for registration;and

(b) a statement that he has given and has not withdrawn his consent as aforesaid appears in the

prospectus.

Section 59

PENALTY AND INTERPRETATION.

(1) If any prospectus is issued in contravention of section 57 or 58, 140 the company, and every

person, who is knowingly a party to the issue thereof, shall be punishable with fine which may

extend to five thousand rupees.

(2) In section 57 and 58, the expression "expert" includes an engineer, a valuer, an accountant

and any other person whose profession gives authority to a statement made by him.

Section 60

REGISTRATION OF PROSPECTUS.

(1) No prospectus shall be issued buy or on behalf of a company or in relation to an intended

company unless, on or before the date of its publication, there has been delivered to the Registrar

for registration a copy thereof signed by every person who is named therein as a director or

proposed director of the company or by his agent authorised in writing, and having endorsed

thereon or attached thereto -

(a) any consent to the issue of the prospectus required by section 58 from any person as an

expert; and

(b) in the case of a prospectus issued generally, also –

(i) a copy of every contract required by clause 16 of Schedule II to be specified in the prospectus,

or, in the case of a contract not reduced into writing, a memorandum giving full particulars

thereof; and

(ii) where the persons making any report required by Part II of that Schedule have made therein,

or have, without giving the reasons, indicated therein, any such adjustments as are mentioned in

clause 32 of that Schedule, a written statement signed by those persons setting out the

adjustments and giving the reasons therefor.

(2) Every prospectus to which sub-section (1) applies shall, on the face of it, -

(a) state that a copy has been delivered for registration as required by this section; and

(b) specify any documents required by this section to be endorsed on or attached to the copy so

delivered, or refer to statements included in the prospectus which specify those documents.

(3) The Registrar shall not register a prospectus unless the requirements of section 55, 56, 57

and 58 and sub-section (1) and (2) of this section have been complied with and the prospectus is

accompanied by the consent in writing of the person, if any, named therein as the auditor, legal

adviser, attorney, solicitor, banker or broker of the company or intended company, to act in that

capacity.

(4) No prospectus shall be issued more than ninety days after the date on which a copy thereof

Section 61

TERMS OF CONTRACT MENTIONED IN PROSPECTUS OR STATEMENT IN LIEU OF

PROSPECTUS, NOT TO BE VARIED.

A company shall not, at any time, vary the terms of a contract refereed to in the prospectus or

statement in lieu of prospectus, except subject to the approval of, or except on authority given by,

the company in general meeting.

Section 62

CIVIL LIABILITY FOR MIS-STATEMENTS IN PROSPECTUS.

(1) Subject to the provisions of this section, where a prospectus invites persons to subscribe for

shares in or debentures of a company, the following persons shall be liable to pay compensation

to every person who subscribes for any shares or debentures on the faith of the prospectus for

any loss or damage he may have sustained by reason of any untrue statement included therein,

that is to say. -

(a) every person who is a director of the company at the time of the issue of the prospectus;

(b) every person who has authorised himself to be named and is named in the prospectus either

as a director, or as having agreed to become a director, either immediately or after an interval of

time;

(c) every person who is a promoter of the company; and

(d) every person who has authorised the issue of the prospectus :

Provided that where, under section 58, the consent of a person is required to the issue of a

prospectus and he has given that consent, or where, under sub-section (3) of section 60, the

consent of a person named in a prospectus is required and he has given that consent, he shall

not, by reason of having given such consent, be liable under this sub-section as a person who

has authorised the issue of the prospectus except in respect of an untrue statement, if any,

purporting to be made by him as an expert.

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

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

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

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

aware of its issue, he forthwith gave reasonable public notice that it was issued without his

knowledge or consent;

(c) that, after the issue of the prospectus and before allotment thereunder, he, on becoming

aware of any untrue statement therein, withdrew his consent to the prospectus and gave

reasonable public notice of the withdrawal and of the reason therefor; or

(d) that -

i) as regards every untrue statement not purporting to be made on the authority of an expert or of

a public official document or statement, he had reasonable ground to believe, and did up to the

time of the allotment of the shares or debentures, as the case may be, believe, that the statement

was true; and

(ii) as regards every untrue statement purporting to be a statement by an expert or contained in

what purports to be a copy of or an extract from a report or valuation of an expert, it was correct

and fair representation of the statement, or a correct copy of, or a correct and fair extract from,

the report or valuation; and he had reasonable ground to believe, and did up to the time of the

issue of the prospectus believe, that the person making the statement was competent to make it

and that that person had given the consent required by section 58 to the issue of the prospectus

and had not withdrawn that consent before delivery of a copy of the prospectus for registration or,

to the defendant's knowledge, before allotment thereunder; and

(iii) as regards every untrue statement purporting to be a statement made by an official person or

contained in what purports to be a copy of or extract from a public official document, it was a

correct and fair representation of the statement, or a correct copy of or a correct and fair extract

from, the document :

Provided that this sub-section shall not apply in the case of a person liable, by reason of his

having given a consent required of him by section 58 as a person who has authorised the issue of

the prospectus in respect of an untrue statement, purporting to be made by him as an expert.

(3) A person who, apart from this sub-section, would under sub-section (1), be liable by reason of

his having given a consent required of him by section 58 as a person who has authorised the

issue of a prospectus in respect of an untrue statement purporting to be made by him as an

expert, shall not be so liable, if he proves –

(a) that, having given his consent under section 58 to the issue of the prospectus, he withdrew it

in writing before delivery of a copy of the prospectus for registration;

(b) that, after delivery of a copy of the prospectus for registration and before allotment thereunder,

he, on becoming aware of the untrue statement, withdrew his consent in writing and gave

reasonable public notice of the withdrawal and of the reason therefor; or

(c) that he was competent to make the statement and that he had reasonable ground to believe,

and did up to the time of the allotment of the shares or debentures, believe, that the statement

was true.

(4) Where -

(a) the prospectus specifies the name of a person as a director of the company, or as having

agreed to become a director thereof, and he has not consented to become a director, or has

withdrawn his consent before the issue of the prospectus, and has not authorised or consented to

the issue thereof; or

(b) the consent of a person is required under section 58 to the issue of the prospectus and he

either has not given that consent or has withdrawn it before the issue of the prospectus;

the directors of the company excluding those without whose knowledge or consent the

prospectus was issued, and every other person who authorised the issue thereof, shall be liable

to indemnify the person refereed to in clause (a) or clause (b), as the case may be, against all

damages, costs and expenses to which he may be made liable by reason of his name having

been inserted in the prospectus or of the inclusion therein of a statement purporting to be made

by him as an expert, as the case may be, or in defending himself against any suit or legal

proceeding brought against him in respect thereof :

Provided that a person shall not be deemed for the purposes of this sub-section to have

authorised the issue of a prospectus by reason only of his having given the consent required by

section 58 to the inclusion therein of a statement purporting to be made by him as an expert.

(5) Every person who, becomes liable to make any payment by virtue of this section, may recover

contribution, as in cases of contract, from any other person who, if sued separately, would have

been liable to make the same payment, unless of former person was, and the latter person was

not, guilty of fraudulent misrepresentation.

(6) For the purposes of this section -

(a) the expression "promoter" means a promoter who was a party to the preparation of the

prospectus or of the portion thereof containing the untrue statement, but does not include any

person by reason of his acting in a professional capacity for persons engaged in procuring the

formation of the company; and

(b) the expression "expert" has the same meaning as in section 58.

Section 63

CRIMINAL LIABILITY FOR MIS-STATEMENTS IN PROSPECTUS.

(1) Where a prospectus issued after the commencement of this Act includes any untrue

statement, every person who authorised the issue of the prospectus shall be punishable with

imprisonment for a term which may extend to two years, or with fine which may extend to five

thousand rupees, or with both, unless he proves either that the statement was immaterial or that

he had reasonable ground to believe, and did up to the time of the issue of the prospectus

believe, that the statement was true.

(2) A person shall not be deemed for the purpose of this section to have authorised the issue of a

prospectus by reason only of his having given -

(a) the consent required by section 58 to the inclusion therein of a statement purporting to be

made by him as an expert, or

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

Section 64

DOCUMENT CONTAINING OFFER OF SHARES OR DEBENTURES FOR SALE TO BE

DEEMED PROSPECTUS.

(1) Where a company allots or agrees to allot any shares in or debentures of the company with a

view to all or any of those shares or debentures being offered for sale to the public, any document

by which the offer for sale to the public is made shall, for all purposes, be deemed to be a

prospectus issued by the company; and all enactment and rules of law as to the contents of

prospectuses and as to liability in respect of statements in and omissions from prospectuses, or

otherwise relating to prospectuses, shall apply with the modifications specified in sub-section (3),

(4) and (5), and have effect accordingly, as if the shares or debentures had been offered to the

public for subscription and as if person accepting the offer in respect of any shares or debentures

were subscribers for those shares or debentures, but without prejudice to the liability, if any, of

the persons by whom the offer is made in respect of mis-statements contained in the document or

otherwise in respect thereof.

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

allotment of, or an agreement to allot, shares or debentures was made with a view to the shares

or debentures being offered for sale to the public if it is shown -

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

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

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

company in respect of the shares or debentures had not been received by it.

(3) Section 56 as applied by this section shall have effect as if it required a prospectus to state in

addition to the matters required by that section to be stated in a prospectus -

(a) the net amount of the consideration received or to be received by the company in respect of

the shares or debentures to which the offer relates; and

(b) the place and time at which the contract under which the said shares or debentures have

been or are to be allotted may be inspected.

(4) Section 60 as applied by this section shall have effect as if the persons making the offer were

persons named in a prospectus as directors of a company.

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

sufficient if the document referred to in sub-section (1) is signed on behalf of the company or firm

by two directors of the company or by not less that one-half of the partners in the firm, as the

case may be; and any such director or partner may sign by his agent authorised in writing.Section 65

INTERPRETATION OF PROVISION RELATING TO PROSPECTUSES.

(1) For the purposes of the foregoing provisions of this Part -

(a) a statement included in a prospectus shall be deemed to be untrue, if the statement is

misleading in the form and context in which it is included; and

(b) where the omission from a prospectus of any matter is calculated to mislead, the prospectus

shall be deemed, in respect of such omission, to be a prospectus in which an untrue statement in

included.

(2) For the purposes of sections 61, 62 and 63 and clause (a) of sub-section (1) of this section,

the expression "included" when used with reference to a prospectus, means included in the

prospectus itself or contained in any report or memorandum appearing on the face thereof or by

reference incorporated therein or issued therewith.

Section 66

NEWSPAPER ADVERTISEMENTS OF PROSPECTUS.

Where any prospectus is published as a newspaper advertisement, it shall not be necessary in

the advertisement to specify the contents of the memorandum or the signatories thereto, or the

number of shares subscribed for by them.

Section 67

CONSTRUCTION OF REFERENCES TO OFFERING SHARES OR DEBENTURES TO THE

PUBLIC, ETC.

(1) Any reference in this Act or in the articles of a company to offering shares or debentures to the

public shall, subject to any provision to the contrary contained in this Act and subject also to the

provisions of sub-section (3) and (4), be construed as including a reference to offering them to

any section of the public, whether selected as members or debentures holders of the company

concerned or as clients of the person issuing the prospectus or in any other manner.

(2) Any reference in this Act or in the articles of a company to invitations to the public to subscribe

for shares or debentures shall, subject as aforesaid, be construed as including a reference to

invitations to subscribe for them extended to any section of the public, whether selected as

members or debenture holders of the company concerned or as clients of the person issuing the

prospectus or in any other manner.

(3) No offer or invitation shall be treated as made to the public by virtue of sub-section (1) or subsection

(2), as the case may be, if the offer or invitation can properly be regarded, in all the

circumstances -

(a) as not being calculated to result, directly or indirectly, in the shares or debentures becoming

available for subscription or purchase by persons other than those receiving the offer or invitation;

or

(b) otherwise as being a domestic concern of the persons making and receiving the offer or

invitation.

(4) Without prejudice to the generality of sub-section (3), a provision in a company's articles

prohibiting invitation to the public to subscribe for the shares or debentures shall not be taken as

prohibiting the making to members or debenture holders of an invitation which can properly be

regarded in the manner set forth in that sub-section.

(5) The provisions of this Act relating to private companies shall be construed in accordance with

the provisions contained in sub-sections (1) to (4).

Section 68

PENALTY FOR FRAUDULENTLY INDUCING PERSONS TO INVEST MONEY 143b .

Any person who, either by knowingly or recklessly making any statement, promise or forecast

which is false, deceptive or misleading, or by any dishonest concealment of material facts,

induces or attempts to induce another person to enter into, or to offer to enter into -

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

shares or debentures; or

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

parties from the yield of shares or debentures, or by reference to fluctuations in the value of

shares or debentures;

shall be punishable with imprisonment for a term which may extend to five years, or with the fine

which may extend to ten thousand rupees, or with both.

Section 68A

PERSONATION FOR ACQUISITION, ETC., OF SHARES.

(1) Any person who -

(a) makes in a fictitious name an application to a company for acquiring, or subscribing for, any

shares therein, or

(b) otherwise induces a company to allot, or register any transfer of shares therein to him, or any

other person in a fictitious name,

shall be punishable with imprisonment for a term which may extend to five years.

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

by the company and in every form of application for shares which is issued by the company to

any person.

Section 69

PROHIBITION OF ALLOTMENT UNLESS MINIMUM SUBSCRIPTION RECEIVED.

(1) No allotment shall be made of any share capital of a company offered to the public for

subscription, unless the amount in the prospectus as the minimum amount, which, in the opinion

of the Board of directors, must be raised by the issue of share capital in order to provide for the

matters specified in clause 5 of Schedule II has been subscribed, and the sum payable on

application for the amount so stated has been paid to and received by the company, whether in

cash or by a cheque or other instrument which has been paid.

(2) The amount so stated in the prospectus shall be reckoned exclusively of any amount payable

otherwise than in money, and is in this Act referred to as "the minimum subscription".

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

nominal amount of the share.

(4) All moneys received from applicants for shares shall be deposited and kept deposited in a

Scheduled Bank -

(a) until the certificate to commence business is obtained under the section, or

(b) where such certificate has already been obtained, until the entire amount payable on

applications for shares in respect of the minimum subscription has been received by the

company,

and where such amount has not been received by the company within the time on the expiry of

which the moneys received from the applicants for shares are required to be repaid without

interest under sub-section (5), all moneys received from applicants for shares shall be returned in

accordance with the provisions of that sub-section.

In the event of any contravention of the provisions of this sub-section, every promoter, director or

other person who is knowingly responsible for such contravention shall be punishable with fine

which may extend to five thousand rupees.

(5) If the conditions aforesaid have not been complied with on the expiry of one hundred and

twenty days after the first issue of the prospectus, all moneys received from applicants for shares

shall be forthwith repaid to them without interest; and if any such money is not so repaid within

one hundred and thirty days after the issue of the prospectus, the directors, of the company shall

be jointly and severally liable to repay that money with interest at the rate of six per cent per

annum from the expiry of the one hundred and thirtieth day :

Provided that a director shall not be so liable if he proves that the default in the repayment of the

money was not due to any misconduct or negligence on his part.

(6) Any condition purporting to require or bind any applicant for shares to waive compliance the

any requirement of this section shall be void.

(7) This section, except sub-section (3) thereof, shall not apply in relation to any allotment of

shares subsequent to the first allotment of shares offered to the public for subscription.

Section 70

PROHIBITION OF ALLOTMENT IN CERTAIN CASES UNLESS STATEMENT IN LIEU OF

PROSPECTUS DELIVERED TO REGISTRAR.

(1) A company having a share capital, which does not issue prospectus on or with reference to its

formation, or which has issued such a prospectus but has not proceeded to allot any of the

shares offered to the public for subscription, shall not allot any of its shares or debentures unless

at least three day before the first allotment of either shares or debentures, there has been

delivered to the Registrar for registration a statement in lieu of prospectus signed by every person

who is named therein as a director or proposed director of the company or by his agent

authorised in writing, in the form and containing the particulars set out in Part I of Schedule III

and, in the cases mentioned in Part II of that Schedule, setting out reports specified therein, and

the said Parts I and II shall have effect subject to the provisions contained in Part III of that

Schedule.

(2) Every statement in lieu of prospectus delivered under sub-section (1), shall, where the

persons making any such report as aforesaid have made therein, or have without giving the

reason indicated therein, any such adjustments as are mentioned in clause 5 of Schedule III,

have endorsed thereon or attached thereto a written statement signed by those persons, setting

out the adjustments and giving the reasons thereof.

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

(4) If a company acts in contravention of sub-section (1) or (2), the company, and every director

of the company who wilfully authorises or permits the contravention, shall be punishable with fine

which may extend to one thousand rupees.

(5) Where a statement in lieu of prospectus delivered to the Registrar under sub-section (1)

includes any untrue statement, any person who authorised the delivery of the statement in lieu of

prospectus for registration shall be punishable with imprisonment for a term which may extend to

two years or with fine which may extend to five thousand rupees or with both, unless he proves

either that the statement was immaterial or that he had reasonable ground to believe, and did up

to the time of the delivery for registration of the statement in lieu of prospectus believe, that the

statement was true.

(6) For the purposes of this section -

(a) a statement included in a statement in lieu of prospectus shall be deemed to be untrue if it is

misleading in the form and context in which it is included; and

(b) where the omission from a statement in lieu of prospectus of any matter is calculated to

mislead, the statement in lieu of prospectus shall be deemed, in respect of such omission, to be a

statement in lieu of prospectus in which an untrue statement is included.

(7) For the purposes of sub-section (5) and clause (a) of sub-section (6), the expression

"included", when used with reference to a statement in lieu of prospectus, means included in the

statement in lieu of prospectus itself or contained in any report or memorandum appearing on the

face thereof, or by reference incorporated therein, or issued therewith.

Section 71

EFFECT OF IRREGULAR ALLOTMENT.

(1) An allotment made by a company to an applicant in contravention of the provisions of section

69 or 70 shall be voidable at the instance of the applicant -

(a) within two months after the holding of the statutory meeting of the company, and not later, or

(b) in any case where the company is not required to hold a statutory meeting or where the

allotment is made after the holding of the statutory meeting, within two months after the date of

the allotment, and not later.

(2) The allotment shall be voidable as aforesaid, notwithstanding that the company is in course of

being wound up.

(3) If any director of a company knowingly contravenes, or wilfully authorises or permits the

contravention of, any of the provisions of section 69 or 70 with respect of allotment, he shall be

liable to compensate the company and the allotment respectively for any loss, damages or costs

which the company or the allottee may have sustained or incurred thereby :

Provided that proceedings to recover any such loss, damages or costs shall not be commenced

after the expiration of two years from the date of the allotment.

Section 72

APPLICATIONS FOR, AND ALLOTMENT OF, SHARES AND DEBENTURES.

(1) (a) No allotment shall be made of any shares in or debentures of a company in pursuance of a

prospectus issued generally, and no proceedings shall be taken on the applications made in

pursuance of a prospectus so issued, until the beginning of the fifth day after that on which the

prospectus is first so issued or such later time, if any, as may be specified in the prospectus :

Provided that where, after a prospectus is first issued generally, a public notice is given by some

person responsible under section 62 for the prospectus which has the effect of excluding, limiting

or diminishing his responsibility, no allotment shall be made until the beginning of the fifth day

after that on which such public notice is first given.

(b) Nothing in the foregoing provision shall be deemed to exclude, limit or diminish any liability

that might be incurred in the case referred to therein under the general law or this Act.

(c) The beginning of the fifth day or such later time as is mentioned in the first paragraph of

clause (a), or the beginning of the fifth day mentioned in the second paragraph of that clause, as

the case may be, is hereinafter in this Act referred to as "the time of the opening of the

subscription lists".

(2) In sub-section (1), the reference to the day on which the prospectus is first issued generally

shall be construed as referring to the day on which it is first so issued as a newspaper

advertisement :

Provided that, if it is not so issued as a newspaper advertisement before the fifth day after that on

which it is first so issued in any other manner, the said reference shall be construed as referring

to the day on which it is first so issued in any manner.

(3) The validity of an allotment shall not be affected by any contravention of the foregoing

provisions of this section; but, in the event of any such contravention, the company, and every

officer of the company who is in default, shall be punishable with fine which may extend to five

thousand rupees.

(4) In the application of this section to a prospectus offering shares or debentures for sale, subsections

(1) to (3) shall have effect with the substitution of references to sale for references to

allotment, and with the substitution for the reference to the company and every officer of the

company who is in default of a reference to any person by or through whom the offer is made and

who is knowingly guilty of, or wilfully authorises or permits, the contravention.

(5) An application for shares in, or debentures of, a company, which is made in pursuance of a

prospectus issued generally shall not be revocable until after the expiration of the fifth day after

the time of the opening of the subscription lists, or the giving, before the expiry of the said fifth

day by some person responsible under section 62 for the prospectus, of a public notice having

the effect under that section of excluding, limiting or diminishing the responsibility of the person

giving it.

Section 73

ALLOTMENT OF SHARES AND DEBENTURES TO BE DEALT IN ON STOCK EXCHANGE.

(1) Every company intending to offer shares or debentures to the public for subscription by the

issue of a prospectus shall, before such issue, make an application to one or more recognised

stock exchanges for permission for the shares or debentures intending to be so offered to be

dealt with in the stock exchange or each such stock exchange.

(1A)Where a prospectus, whether issued generally or not, states that an application under subsection

(1) has been made for permission for the shares or debentures offered thereby to be dealt

in one or more recognized stock exchanges, such prospectus shall state the name of the stock

exchange or, as the case may be, each such stock exchange, and any allotment made on an

application in pursuance of such prospectus shall, whenever made, be void, if the permission has

not been granted by the stock exchange or each such stock exchange, as the case may be,

before the expiry of ten weeks from the date of the closing of the subscription lists :

Provided that where an appeal against the decision of any recognized stock exchange refusing

permission for the shares or debentures to be dealt in on that stock exchange has been preferred

under section 22 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), such allotment

shall not be void until the dismissal of the appeal.

(2) Where the permission has not been applied under sub-section (1), or, such permission having

been applied for, has not been granted as aforesaid, the company shall forthwith repay without

interest all moneys received from applicants in pursuance of the prospectus, and, if any such

money is not repaid within eight days after the company becomes liable to repay it, the company

and every director of the company who is an officer in default shall, on and from the expiry of the

eighth day, be jointly and severally liable to repay that money with interest at such rate, not less

than four percent and not more than fifteen per cent. as may be prescribed, having regard to the

length of the period of delay in making the repayment of such money.

(2A) Where permission has been granted by the recognised stock exchange or stock exchanges

for dealing in any shares or debentures in such stock exchange or each such stock exchange and

the moneys received from applicants for shares or debentures are in excess of the aggregate of

the application moneys relating to the shares or debentures in respect of which allotments have

been made, the company shall repay the moneys to the extent of such excess forthwith without

interest, and if such money is not repaid within eight days, from the day the company becomes

liable to pay it, the company and every director of the company who is an officer in default shall,

on and from the expiry of the eighth day, be jointly and severally liable to repay that money with

interest at such rate, not less than four per cent. and not more than fifteen per cent. as may be

prescribed having regard to the length of the period of delay in making the repayment of such

money.

(2B) If default is made in complying with the provisions of sub-section (2A), the company and

every officer of the company who is in default shall be punishable with fine which may extend to

five thousand rupees, and where repayment is not made within six months from the expiry of the

eighth day, also with imprisonment for a term which may extend to one year.

(3) All moneys received as aforesaid shall be kept in a separate bank account maintained with a

Scheduled Bank until the permission has been granted, or where an appeal has been preferred

against the refusal to grant such permission, until the disposal of the appeal, and the money

standing in such separate account shall, where the permission has not been applied for as

aforesaid or has not been granted, be repaid within the time and in the manner specified in subsection

(2), and if default is made in complying with this sub-section, the company, and every

officer of the company who is in default, shall be punishable with fine, which may extend to five

thousand rupees.

(3A) Moneys standing to the credit of the separate bank account referred to in sub-section (3)

shall not be utilised for any purpose other than the following purposes, namely :-

(a) adjustment against allotment of shares, where the shares have been permitted to be dealt in

on the stock exchanger or each stock exchange specified in the prospectus; or

(b) repayment of moneys received from applicants in pursuance of the prospectus, where shares

have not been permitted to be dealt in on the stock exchanger or each stock exchange specified

in the prospectus, as the case may be, or, where the company is for any other reason unable to

make the allotment of share.

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

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

(5) For the purposes of this section, it shall be deemed that permission has not been granted if

the application for permission, where made, has not been disposed of within the time specified in

sub-section (1).

(6) This section shall have effect -

(a) in relation to any shares or debentures agreed to be taken by a person underwriting an offer

thereof by a prospectus, as if he had applied therefor in pursuance of the prospectus; and

(b) in relation to a prospectus offering shares for sale, with the following modifications, namely, -

(i) references to sale shall be substituted for references to allotment;

(ii) the persons by whom the offer is made, and not the company, shall be liable under subsection

(2) to repay money received from applicants, and references to the company's liability

under that sub-section shall be construed accordingly; and

(iii) for the reference in sub-section (3) to the company and every officer of the company who is in

default, there shall be substituted a reference to any person by or through whom the offer is made

and who is knowingly guilty of, or wilfully authorises or permits, the default.

(7) No prospectus shall state that application has been made for permission for the shares or

debentures offered thereby to be dealt in on any stock exchange, unless it is a recognised stock

exchange.

Section 74

MANNER OF RECKONING FIFTH, EIGHTH AND TENTH DAYS IN SECTIONS 72 AND 73.

In reckoning for the purposes of sections 72 and 73, the fifth day, or the eighth day after another

day, any intervening day which is a public holiday under the Negotiable Instruments Act, 1881 (26

of 1881), shall be disregarded, and if the fifth, or eighth day (as so reckoned) is itself such a

public holiday, there shall for the said purposes be substituted the first day thereafter which is not

such a holiday.

Section 75

RETURN AS TO ALLOTMENTS.

(1) Whenever a company having a share capital makes any allotment of its shares, the company

shall, within thirty days thereafter, -

(a) file with the Registrar a return of the allotments, stating the number and nominal amount of the

shares comprised in the allotment, the names, addresses and occupations of the allottees, and

the amount, if any, paid or due and payable on each share :

Provided that the company shall not show in such return any shares as having been allotted for

cash if cash has not actually been received in respect of such allotment;

(b) in the case of shares (not being bonus shares) allotted as fully or partly paid-up otherwise

than in cash, produce for the inspection and examination of the Registrar a contract in writing

constituting the tile of the allottee to the allotment together with any contract of sale, or a contract

for services or other consideration in respect of which that allotment was made, such contracts

being duly stamped, and file with the Registrar copies verified in the prescribed manner of all

such contracts and a return stating the number and nominal amount of shares so allotted, the

extent to which they are to be treated as paid up, and the consideration for which they have been

allotted; and

(c) file with the Registrar -

(i) in the case of bonus shares, a return stating the number and nominal amount of such shares

comprised in the allotment and the names, addresses and occupations of the allottees and a

copy of the resolution authorising the issue of such shares;

(ii) in the case of issue of shares at a discount, a copy of the resolution passed by the company

authorising such issue together with a copy of the order of the Court sanctioning the issue and

where the maximum rate of discount exceeds ten per cent. a copy of the order of the Central

Government permitting the issue at the higher percentage.

(2) Where a contract such as in mentioned in clause (b) of sub-section (1) is not reduced to

writing, the company shall, within thirty days after the allotment, file with the Registrar the

prescribed particulars of the contract stamped with the same stamp duty as would have been

payable if the contract had been reduced to writing; and those particulars shall be deemed to be

an instrument within the meaning of the Indian Stamp Act, 1899 (2 of 1899), and the Registrar

may, as a condition of filing the particulars, require that the duty payable thereon be adjudicated

under section 31 of that Act.

(3) If the Registrar is satisfied that in the circumstances of any particular case the period ofthirty

days specified in sub-sections (1) and (2) for compliance with the requirements of this section is

or was inadequate, he may, on application made in that behalf by the company, whether before

or after the expiry of the said period, extend that period as he thinks fit ; and if he does so, the

provisions of sub-sections (1) and (2) shall have effect in that particular case as if for the said

period of thirty days the extended period allowed by the Registrar were substituted.

(4) If default is made in complying with this section, every officer of the company who is in default

shall be punishable with fine which may extend to five hundred rupees for every day during which

the default continues :

Provided that in case of contravention of the proviso to clause (a) of sub-section (1), every such

officer, and every promoter of the company who is guilty of the contravention shall be punishable

with fine which may extend to five thousand rupees.

(5) Nothing in this section shall apply to the issue and allotment by a company of shares which

under the provisions of its articles were forfeited for non-payment of calls.

Section 76

POWER TO PAY CERTAIN COMMISSION AND PROHIBITION OF PAYMENT OF ALL OTHER

COMMISSIONS, DISCOUNTS, ETC.

(1) A company may pay a commission to any person in consideration of -

(a) his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in,

or debentures of, the company, or

(b) his procuring or agreeing to procure subscriptions, whether absolute or conditional, for any

shares in, or debentures of, the company, if the following conditions are fulfilled, namely :-

(i) the payment of the commission is authorised by the articles;

(ii) the commission paid or agreed to be paid does not exceed in the case of shares, five per cent

of the price at which the shares are issued or the amount or rate authorised by the articles,

whichever is less, and in the case of debentures, two and a half per cent of the price at which the

debentures are issued or the amount or rate authorised by the articles, whichever is less;

(iii) the amount or rate per cent of the commission paid or agreed to be paid is -

in the case of shares or debentures offered to the public for subscription, disclosed in the

prospectus; and

in the case of shares or debentures not offered to the public for subscription, disclosed in the

statement in lieu of prospectus, or in a statement in the prescribed form signed in like manner as

a statement in lieu of prospectus and filed before the payment of the commission with the

Registrar and, where a circular or notice, not being a prospectus inviting subscription for the

shares or debentures, is issued, also disclosed in that circular or notice; and

(iv) the number of shares or debentures which persons have agreed for a commission to

subscribe absolutely or conditionally is disclosed in the manner aforesaid;

(v) a copy of the contract for the payment of the commission is delivered to the Registrar at the

time of delivery of the prospectus or the statement in lieu of prospectus for registration.

(2) Save as aforesaid and save as provided in section 79, no company shall allot any of its shares

or debentures or apply any of its moneys, either directly or indirectly, in payment of any

commission, discount or allowance, to any person in consideration of -

(a) his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in,

or debentures of, the company, or

(b) his procuring or agreeing to procure subscriptions, whether absolute or conditional, for any

shares in, or debentures of, the company.

whether the shares, debentures or money be so allotted or applied by being added to the

purchase money of any property acquired by the company or to the contract price of any work to

be executed for the company, or the money be paid out of the nominal purchase money or

contract price, or otherwise.

(3) Nothing in this section shall affect the power of any company to pay such brokerage as it has

heretofore been lawful for a company to pay.

(4) A vendor to, promoter of, or other person who receives payment in shares, debentures or

money from, a company shall have and shall be deemed always to have had power to apply any

part of the shares, debentures or money so received in payment of any commission the payment

of which, if made directly by the company, would have been legal under this section.

(4A) For the removal of doubts it is hereby declared that no commission shall be paid under

clause (a) of sub-section (1) to any person on shares or debentures which are not offered to the

public for subscription :

Provided that where a person has subscribed or agreed to subscribe under clause (a) of subsection

(1) for any shares in, or debentures of, the company and before the issue of the

prospectus or statement in lieu thereof any other person or persons has or have subscribed for

any or all of those shares or debentures and that fact together with the aggregate amount of

commission payable under this section in respect of such subscription is disclosed in such

prospectus or statement, then, the company may pay commission, to the first-mentioned person

in respect of such subscription.

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

officer of the company who is in default, shall be punishable with fine which may extend to five

hundred rupees.

Section 77

RESTRICTIONS ON PURCHASE BY COMPANY, OR LOANS BY COMPANY FOR PURCHASE,

OF ITS OWN OR ITS HOLDING COMPANY'S SHARES.

(1) No company limited by shares, and no company limited by guarantee and having a share

capital, shall have power to buy its own shares, unless the consequent reduction of capital is

effected and sanctioned in pursuance of sections 100 to 104 or of section 402.

(2) No public company, and no private company which is a subsidiary of a public company, shall

give, whether directly or indirectly, and whether by means of a loan, guarantee, the provision of

security or otherwise, any financial assistance for the purpose of or in connection with a purchase

or subscription made or to be made by any person of or for any shares in the company or in its

holding company :

Provided that nothing in this sub-section shall be taken to prohibit -

(a) the lending of money by a banking company in the ordinary course of its business; or

(b) the provision by a company, in accordance with any scheme for the time being in force, of

money for the purchase of, or subscription for, fully paid shares in the company or its holding

company, being a purchase or subscription by trustees of or for shares to be held by or for the

benefit of employees of the company, including any director holding a salaried office or

employment in the company; or

(c) the making by a company of loans, within the limit laid down in sub-section (3), to persons

(other than directors , or managers) bona fide in the employment of the company with a view to

enabling those persons to purchase or subscribe for fully paid shares in the company or its

holding company to be held by themselves by way of beneficial ownership.

(3) No loan made to any person in pursuance of clause (c) of the foregoing proviso shall exceed

in amount his salary or wages at that time for a period of six months.

(4) If a company acts in contravention of sub-section (1) to (3), the company, and every officer of

the company who is in default, shall be punishable with fine which may extend to one thousand

rupees.

(5) Nothing in this section shall affect the right of a company to redeem any shares issued under

section 80 or under any corresponding provision in any previous companies law.

Section 77A

POWER OF COMPANY TO PURCHASE ITS OWN SECURITIES.

(1) Notwithstanding anything contained in this Act, but subject to the provisions of sub-section (2)

of this section and section 77B, a company may purchase its own shares or other specified

securities (hereinafter referred to as "buy-back") out of -

(i) its free reserves; or

(ii) the securities premium account; or

(iii) the proceeds of any shares or other specified securities :

PROVIDED that no buy-back of any kind of shares or other specified securities shall be made out

of the proceeds of an earlier issue of the same kind of shares or same kind of other specified

securities.

(2) No company shall purchase its own shares or other specified securities under sub-section (1)

unless-

(a) the buy-back is authorised by its articles

(b) a special resolution has been passed in general meeting of the company authorising the buyback;

(c) the buy-back is of less than twenty-five per cent of the total paid-up capital and fee reserves of

the company :

Provided that the buy-back of equity shares in any financial year shall not exceed twenty-five per

cent of its total paid-up equity capital in that financial year;

(d) the ratio of the debt owed by the company is not more than twice the capital and its free

reserves after such buy-back :

Provided that the Central Government may prescribe a higher ratio of the debt than that specified

under this clause for class or classes of companies.

Explanation : For the purposes of this clause, the expression "debt" includes all amounts of

unsecured and secured debts;

(e) all the shares or other specified securities for buy-back are fully paid-up;

(f) the buy-back of the shares or other specified securities listed on any recognised stock

exchange is in accordance with the regulations made by the Securities and Exchange Board of

India in this behalf; and

(g) the buy-back in respect of shares or other specified securities other than those specified in

clause (f) is in accordance with the guidelines as may be prescribed.

(3) The notice of the meeting at which special resolution is proposed to be passed shall be

accompanied by an explanatory statement stating -

(a) a full and complete disclosure of all material facts;

(b) the necessity for the buy-back;

(c) the class of security intended to be purchased under the buy-back;

(d) the amount to be invested under the buy-back; and

(e) the time-limit for completion of buy-back.

(4) Every buy-back shall be completed within twelve months from the date of passing the special

resolution under clause (b) of sub-section (2).

(5) The buy-back under sub-section (1) may be -

(a) from the existing security-holders on a proportionate basis; or

(b) from the open market; or

(c) from odd lots, that is to say, where the lot of securities of a public company, whose shares are

listed on a recognised stock exchange, is smaller than such marketable lot, as may be specified

by the stock exchange; or

(d) by purchasing the securities issued to employees of the company pursuant to a scheme of

stock option or sweat equity.

(6) Where a company has passed a special resolution under clause (b) of sub-section (2) to buyback

its own shares or other securities under this section, it shall, before making such buy-back,

file with the Registrar and the Securities and Exchange Board of India a declaration of solvency in

the form as may be prescribed and verified by an affidavit to the effect that the Board has made a

full inquiry into the affairs of the company as a result of which they have formed an opinion that it

is capable of meeting its liabilities and will not be rendered insolvent within a period of one year of

the date of declaration adopted by the Board, and signed by at least two directors of the

company, one of whom shall be the managing director, if any :

PROVIDED that no declaration of solvency shall be filed with the Securities and Exchange Board

of India by a company whose shares are not listed on any recognised stock exchange.

(7) Where a company buys-back its own securities, it shall extinguish and physically destroy the

securities so bought-back within seven days of the last date of completion of buy-back.

(8) Where a company completes a buy-back of its shares or other specified securities under this

section, it shall not make further issue of the same kind of shares [including allotment of further

shares under clause (a) of sub-section (1) of section 81] or other specified securities within a

period of twenty-four months except by way of bonus issue or in the discharge of subsisting

obligations such as conversion of warrants, stock option schemes, sweat equity or conversion of

preference shares or debentures into equity shares.

(9) Where a company buys-back its securities under this section, it shall maintain a register of the

securities so bought, the consideration paid for the securities bought-back, the date of

cancellation of securities, the date of extinguishing and physically destroying of securities and

such other particulars as may be prescribed.

(10) A Company shall, after the completion of the buy-back under this section, file with the

Registrar and the Securities and Exchange Board of India, a return containing such particulars

relating to the buyback within thirty days of such completion, as may be prescribed :

PROVIDED that no return shall be filed with the Securities and Exchange Board of India by a

company whose shares are not listed on any recognised stock exchange.

(11) If a company makes default in complying with the provisions of this section or any rules

made thereunder, or any regulations made under clause (f) of sub-section (2), the company or

any officer of the company who is in default shall be punishable with imprisonment for a term

which may extend to two years, or with fine which may extend to fifty thousand rupees, or with

both.

Explanation : For the purposes of this section, -

(a) "specified securities" includes employees' stock option or other securities as may be notified

by the Central Government from time to time;

(b) "free reserves" shall have the meaning assigned to it in clause (b) of Explantion to section

372A. 179b ]

Section 77AA

TRANSFER OF CERTAIN SUMS TO CAPITAL REDEMPTION RESERVE ACCOUNT.

Where a company purchases its own shares out of free reserves, then a sum equal to the

nominal value of the share so purchased shall be transferred to the capital redemption reserve

account referred to in clause (d) of the proviso to sub-section (1) of section 80 and details of such

transfer shall be disclosed in the balance-sheet.

Section 77B

PROHIBITION FOR BUY-BACK IN CERTAIN CIRCUMSTANCES.

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

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

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

(c) if a default, by the company, in repayment of deposit or interest payable thereon, redemption

of debentures, or preference shares or payment of dividend to any shareholder or repayment of

any term loan or interest payable thereon to any financial institution or bank, is subsisting.

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

case such company has not complied with provisions of sections 159, 207 and 211.

Section 78

APPLICATION OF PREMIUMS RECEIVED ON ISSUE OF SECURITIES.

(1) Where a company issues securities at a premium, whether for cash or otherwise, a sum equal

to the aggregate amount or value of the premiums on those securities shall be transferred to an

account, to be called "the securities premium account"; and the provisions of this Act relating to

the reduction of the securities capital of a company shall except as provided in this section, apply

as if the securities premium account were paid-up share capital of the company.

(2) The share premium accounts may, notwithstanding anything in sub-section (1), be applied by

the company -

(a) in paying up unissued securities of the company to be issued to members of the company as

fully paid bonus securities;

(b) in writing off the preliminary expenses of the company;

(c) in writing off the expenses of, or the commission paid or discount allowed on, any issue of

securities or debentures of the company; or

(d) in providing for the premium payable on the redemption of any redeemable preference

securities or of any debentures of the company.

(3) Where a company has, before the commencement of this Act, issued any securities at a

premium, this section shall apply as if the securities had been issued after the commencement of

this Act;

Provided that any part of the premiums which has been so applied that it does not at the

commencement of this Act form an identifiable part of the company's reserves within the meaning

of Schedule VI, shall be disregarded in determining the sum to be included in the securities

premium account.

Section 79

POWER TO ISSUE SHARES AT A DISCOUNT.

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

(2) A company may issue at a discount shares in the company of a class already issued, if the

following conditions are fulfilled, namely :-

(i) the issue of the shares at a discount is authorised by a resolution passed by the company in

general meetings, and sanctioned 181 by the Company Law Board;

(ii) the resolution specifies the maximum rate of discount at which the shares are to be issued :

Provided that no such resolution shall be sanctioned by the Company Law Board if the maximum

rate of discount specified in the resolution exceeds ten per cent, unless that Board is of opinion

that a higher percentage of discount may be allowed in the special circumstances of the case;

(iii) not less than one year has at the date of the issue elapsed since the date on which the

company was entitled to commence business; and

(iv) the shares to be issued at a discount are issued within two months after the date on which the

issue is sanctioned by the Company Law Board or within such extended time as the Company

Law Board may allow.

(3) Where a company has passed a resolution authorising the issue of shares at a discount, it

may apply to the Company Law Board for an order sanctioning the issue; and on any such

application, the Company Law Board, if, having regard to all the circumstances of the case, it

thinks proper so to do, may make an order sanctioning the issue on such terms and conditions as

it thinks fit.

(4) Every prospectus relating to the issue of the shares shall contain particulars of the discount

allowed on the issue of the shares or of so much of that discount as has not been written off at

the date of the issue of the prospectus.

If default is made in complying with this sub-section, the company, and every officer of the

company who is in default, shall be punishable with fine which may extend to fifty rupees.

Section 79A

ISSUE OF SWEAT EQUITY SHARES.

(1) Notwithstanding anything contained in section 79, a company may issue sweat equity shares

of a class of shares already issued if the following conditions are fulfilled, namely :-

(a) the issue of sweat equity shares is authorised by a special resolution passed by the company

in the general meeting;

(b) the resolution specifies the number of shares, current market price, consideration, if any, and

the class or classes of directors or employees to whom such equity shares are to be issued;

(c) not less than one year has, at the date of the issue elapsed since the date on which the

company was entitled to commence, business;

(d) the sweat equity shares of a company whose equity shares are listed on a recognised stock

exchange are issued in accordance with the regulations made by the securities and Exchange

Board of India in this behalf :

PROVIDED that in the case of a company whose equity shares are not listed on any recognised

stock exchange, the sweat equity shares are issued in accordance with the guidelines as may be

prescribed.

Explanation I : For the purposes of this sub-section, the expression "a company" means company

incorporated, formed and registered under this Act and includes its subsidiary company

incorporated in a country outside India.

Explanation II : For the purposes of this Act, the expression "sweat equity shares" means equity

shares issued by the company to employees or directors at a discount or for consideration other

than cash for providing know-how or making available rights in the nature of intellectual property

rights or value additions, by whatever name called.

(2) All the limitations, restrictions and provisions relating to equity shares shall be applicable to

such sweat equity shares issued under sub-section (1).

Section 80

POWER TO ISSUE REDEEMABLE PREFERENCE SHARES.

(1) Subject to the provisions of this section, a company limited by shares may, if so authorized by

its articles, issue preference shares which are, or at the option of the company are to be liable, to

be redeemed :

Provided that -

(a) no such shares shall be redeemed except out of profits of the company which would otherwise

be available for dividend or out of the proceeds of a fresh issue of shares made for the purposes

of the redemption;

(b) no such shares shall be redeemed unless they are fully paid;

(c) the premium, if any, payable on redemption shall have been provided for out of the profits of

the company or out of the company's security premium account, before the shares are redeemed;

(d) where any such shares are redeemed otherwise than out of the proceeds of a fresh issue,

there shall, out of profits which would otherwise have been available for dividend, be transferred

to a reserve fund, to be called the capital redemption reserve account, a sum equal to the

nominal amount of the shares redeemed; and the provisions of this Act relating to the reduction of

the share capital of a company shall, except as provided in this section, apply as if the capital

redemption reserve account were paid-up share capital of the company.

(2) Subject to the provisions of this section, the redemption of preference shares thereunder may

be effected on such terms and in such manner as may be provided by the articles of the

company.

(3) The redemption of preference shares under this section by a company shall not be taken as

reducing the amount of its authorised share capital.

(4) Where in pursuance of this section, a company has redeemed or is about to redeem any

preference shares, it shall have power to issue shares up to the nominal amount of the shares

redeemed or to be redeemed as if those shares had never been issued; and accordingly the

share capital of the company shall not, for the purpose of calculating the fees payable under

section 611, be deemed to be increased by the issue of shares in pursuance of this sub-section :

Provided that, where new shares are issued before the redemption of the old shares, the new

shares shall not, so far as relates to stamp duty, be deemed to have been issued in pursuance of

this sub-section unless the old shares are redeemed within one month after the issue of the new

shares.

(5) The capital redemption reserve account may, notwithstanding anything in this section, be

applied by the company, in paying up unissued shares of the company to be issued to members

of the company as fully paid bonus shares.

(5A) Notwithstanding anything contained in this Act, no company limited by shares shall, after the

commencement of the Companies (Amendment) Act, 1996, issue any preference share which is

irredeemable or is redeemable after the expiry of a period of twenty years from the date of its

issue.

(6) If a company fails to comply with the provisions of this section, the company, and every officer

of the company who is in default, shall be punishable with fine which may extend to one thousand

rupees.

Section 81

FURTHER ISSUE OF CAPITAL.

(1) Where at any time after the expiry of two years from the formation of a company or at any time

after the expiry of one year from the allotment of shares in that company made for the first time

after its formation, whichever is earlier, it is proposed to increase the subscribed capital of the

company by allotment of further shares, then

(a) such further shares shall be offered to the persons who, at the date of the offer, are holders of

the equity shares of the company, in proportion, as nearly as circumstances admit, to the capital

paid-up on those shares at that date;

(b) the offer aforesaid shall be made by notice specifying the number of shares offered and

limiting a time not being less than fifteen days from the date of the offer within which the offer, if

not accepted, will be deemed to have been declined.

(c) unless the articles of the company otherwise provide, the offer aforesaid shall be deemed to

include a right exercisable by the person concerned to renounce the shares offered to him or any

of them in favour of any other person; and the notice referred to in clause (b) shall contain a

statement of this right;

(d) after the expiry of the time specified in the notice aforesaid, or on receipt of earlier intimation

from the person to whom such notice is given that he declines to accept the shares offered, the

Board of directors may dispose of them in such manner as they think most beneficial to the

company.

Explanation : In this sub-section, "equity share capital" and "equity shares" have the same

meaning as in section 85.

(1A) Notwithstanding anything contained in sub-section (1), the further shares aforesaid may be

offered to any persons [whether or not those persons include the persons referred to in clause (a)

of sub-section (1)] in any manner whatsoever -

(a) if a special resolution to that effect is passed by the company in general meeting, or

(b) where no such special resolution is passed, if the votes cast (whether on a show of hands, or

on a poll, as the case may be) in favour of the proposal contained in the resolution moved in that

general meeting (including the casting vote, if any, of the chairman) by members who, being

entitled so to do, vote in person, or where proxies are allowed, by proxy, exceed the votes, if any,

cast against the proposal by members so entitled and voting and the Central Government is

satisfied, on an application made by the Board of directors in this behalf, that the proposal is most

beneficial to the company.

(2) Nothing in clause (c) of sub-section (1) shall be deemed -

(a) to extend the time within which the offer should be accepted, or

(b) to authorise any person to exercise the right of renunciation for a second time, on the ground

that the person in whose favour the renunciation was first made has declined to take the shares

comprised in the renunciation.

(3) Nothing in this section shall apply -

(a) to a private company; or

(b) to the increase of the subscribed capital of a public company caused by the exercise of an

option attached to debentures issued or loans raised by the company -

(i) to convert such debentures or loans into shares in the company, or

(ii) to subscribe for shares in the company :

Provided that the terms of issue of such debentures or the terms of such loans include a term

providing for such option and such term :

(a) either has been approved by the Central Government before the issue of debentures or the

raising of the loans, or is in conformity with the rules 197 , if any, made by that Government in this

behalf; and

(b) in the case of debentures or loans other than debentures issued to, or loans obtained from,

the Government or any institution specified by the Central Government in this behalf, has also

been approved by a special resolution passed by the company in general meeting before the

issue of the debentures or the raising of the loans.

(4) Notwithstanding anything contained in the foregoing provisions of this section, where any

debentures have been issued to, or loans have been obtained from, the Government by a

company, whether such debentures have been issued or loans have been obtained before or

after the commencement of the Companies (Amendment) Act, 1963, the Central Government

may, if in its opinion it is necessary in the public interest so to do, by order, direct that such

debentures or loans or any part thereof shall be converted into shares 201 in the company on

such terms and conditions as appear to that Government to be reasonable in the circumstances

of the case, even if the terms of issue of such debentures or the terms of such loans do not

include a term providing for an option for such conversion.

(5) In determining the terms and conditions of such conversion, the Central Government shall

have due regard to the following circumstance, that is to say, the financial position of the

company, the terms of issue of the debentures or the terms of the loans, as the case may be, the

rate of interest payable on the debentures or the loans, the capital of the company, its loan

liabilities, its reserves, its profits during the preceding five years and the current market price of

the shares in the company.

(6) A copy of every order proposed to be issued by the Central Government under sub-section (4)

shall be laid in draft before each House of Parliament while it is in session for a total period of

thirty days which may be comprised in one session or in two or more successive sessions.

(7) If the terms and conditions of such conversion are not acceptable to the company, the

company may, within thirty days from the date of communication to it of such order or within such

further time as may be granted by the Court, prefer an appeal to the Court in regard to such terms

and conditions and the decision of the Court on such appeal and, subject only to such decision,

the order of the Central Government under sub-section (4) shall be final and conclusive.

Section 82

NATURE OF SHARES.

Nature, numbering and certificate of shares

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

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

Section 83

NUMBERING OF SHARES.

Each share in a company having a share capital shall be distinguished by its appropriate number

:

Provided that nothing in this section shall apply to the shares held with a depository.

Section 84

CERTIFICATE OF SHARES.

(1) A certificate, under the common seal of the company, specifying any shares held by any

member, shall be prima facie evidence of the title of the member to such shares.

(2) A certificate, may be renewed or a duplicate of a certificate may be issued if such certificate -

(a) is proved to have been lost or destroyed, or

(b) having been defaced or mutilated or torn is surrendered to the company.

(3) If a company with intent to defraud renews a certificate or issues a duplicate thereof, the

company shall be punishable with fine which may extend to ten thousand rupees and every

officer of the company who is in default shall be punishable with imprisonment for a term which

may extend to six months, or with fine which may extend to ten thousand rupees, or with both.

(4) Notwithstanding anything contained in the articles of association of a company, the manner of

issue or renewal of a certificate or issue of a duplicate thereof, the form of a certificate (original or

renewed) or of a duplicate thereof, the particulars to be entered in the register of members or in

the register of renewed or duplicate certificates, the form of such registers, the fee on payment of

which, the terms and conditions, if any (including terms and conditions as to evidences and

indemnity and the payment of out-of-pocket expenses incurred by a company in investigating

evidence) on which a certificate may be renewed or a duplicate thereof may be issued, shall be

such as may be prescribed.





The ComPany Act, 1956