What type of powers are restrictions by Board?
1. sell, lease or otherwise dispose of the whole, or substantially the whole, of the undertaking of the company, or where the company owns more than one undertaking, of the whole, or substantially the whole, of any such undertaking
2. remit, or give time for the re-payment of, any debt due by a director except in the case or renewal or continuance of any advance made by a banking company to its director in the ordinary course of business
3. invest, otherwise than in trust securities, the amount of compensation received by the company in respect of compulsory acquisition of any such undertaking as is referred to in clause (a), or of any premises or properties used for any such undertaking and without which it cannot be carried on or can be carried on only with difficulty or only after a considerable time
4. borrow moneys, where the moneys to be borrowed together with the moneys already borrowed by the company, (apart from temporary loans obtained from the company’s bankers in the ordinary course of business) will exceed the aggregate of the paid-up capital of the company and its free reserves
5. contribute, to charitable and other funds not directly relating to the business of the company or the welfare of its employees, any amounts the aggregate of which will, in any financial year, exceed fifty thousand rupees, or five per cent of its average net profits during the three financial years immediately preceding, whichever is greater.
The resolutions under clause (d) and (e) above must specify the total amount upto which the Board may borrow or the total amount which may be contributed in a financial year.
Temporary loans mean loans repayable on demand or within 6 months from the date of the loan such as short term cash credit arrangements, the discounting of bills and the issue of other short term loans of a seasonal character, but does not include loans raised for the purpose of financial expenditure of a capital nature.
Any resolution passed by the company permitting any transaction such as is referred to in clause (a) may attach such conditions to the permission as may be specified in the resolution, including conditions regarding the use, disposal or investment of the sale proceeds which may result from the transaction:
The acceptance by a banking company, in the ordinary course of its business, of deposits of money from the public, repayable on demand, or otherwise, and withdrawable by cheque, draft, order or otherwise, shall not be deemed to be a borrowing of moneys by the banking company within the meaning of clause (d).
The Central Government may appoint such number of persons as the Company Law Board may, by order in writing, specify as being necessary to effectively safeguard the interests of the Company or its shareholders or public interests, to act as directors thereof for such period not exceeding 3 years on any one occasion as it deems fit if the Company Law Board :-
Where an order terminates, sets aside or modifies an agreement :-
Where an order makes any alteration in the memorandum or articles of a company, then, notwithstanding any other provision of this Act, the company shall not have power, except to the extent, if any permitted in the order, to make without the leave of the Company Law Board, any alteration whatsoever which is inconsistent with the order, either in the memorandum or in the articles.
Pending the making by it of a final order, the Company Law Board may, on the application of any party to the proceedings, make any interim order which it thinks fit for regulating the conduct of the company’s affairs, upon such terms and conditions as appear to it to be just and equitable.
Without prejudice to the generality of the powers of the Company Law Board, any under either section may provide for :-
The Central Government may itself apply to the Company law Board for an order, or cause an application to be made to the Company Law Board for such an order by any person authorised be it in this behalf.
The Company Law Board must give notice of every application made to it as above to the Central government, and shall take into consideration the representations, if any, made to it by that Government before passing a final order.
The following members of a company shall have the right to apply as above:-
Any members of a company who complain :-
Any members of a company who complain that the affairs of the company are being conducted in a manner prejudical to public interest or in a manner oppressive to any member or members may apply to the Company Law Board for an order for relief, provided such members have a right so to apply as given below.
A limited company may, if so authorised by its articles, by special resolution, alter its memorandum so as to render unlimited the liability of its directors or of any director or of its manager.
In a limited company, the liability of the directors or of any director or of the manager may ie generally limited to the amount of investment in shares of that company. However, if so provided by the memorandum, it may become unlimited.
No director of a company shall, in connection with the transfer to any persons of all or any of the shares in a company, being a transfer resulting from-
No director of a company shall, in connection with the transfer of the whole or any part of any undertaking of property of the company, receive any payment, by way of compensation for loss of office, or as consideration for retirement from office, or in connection with such loss or retirement
Payment may be made by a company, except in the cases specified below and subject to the limit specified, to a managing director or a director holding the office of manager or in the whole time employment of the company, by way of compensation for loss of office, or as consideration for retirement from office, or in connection with such loss or retirement.
Except with the previous consent of the company accorded by a special resolution :-
In the case of a public company, or a private company, which is a subsidiary of a public company, if the terms of any re-appointment or appointment of a managing or whole-time director, purport to increase or have the effect of increasing, whether directly or indirectly, the remuneration which the managing or whole-time director or the previous managing or whole-time director, as the case may be, was receiving immediately before such appointment, the or appointment shall not have any effect unless :-
What are the certain powers which are exercised by Board only at meeting?
1. the power to make calls on shares holders in respect of money unpaid on their shares
2. the power to issue debentures
3. the power to borrow moneys otherwise than on debentures
4. the power to invest the funds of the company
5. the power to make loans
However, the Board may, by a resolution passed at a meeting delegate to any committee of directors, the managing director, or the manager of the company or any other principal officer of the company or in the case of a branch office of the company, a principal officer of the branch office, the powers specified in clauses (c), (d) and (e), to the extent specified in the resolution and subject to such conditions as may be imposed.
Acceptance by a banking company in the ordinary course of its business of deposits of money from the public repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise or the placing of moneys on deposit by a banking company with another banking company on such conditions as the Board may prescribe, shall not be deemed to be borrowing of moneys or making of loans by a banking company for the purpose of these provisions.
These provisions also do not apply to borrowings by a banking company from other banking companies or from the Reserve Bank of India, the State Bank of India or any other banks.
In respect of dealings betwwen a company and its bankers, the exercise by the company of its powers to borrow money otherwise than on debentures shall mean the arrangement made by the company with its bankers for the borrowing of money by way of overdraft or cash credit or otherwise and not the actual day-to-day operation of overdrafts, cash credit or other accounts.
Every resolution delegating the power referred to in clause (c) ( the power to borrow moneys otherwise than on debentures ) shall specify the total amount outstanding at any one time up to which moneys may be borrowed by the delegate.
Every resolution delegating the power referred to in clause (d) (the power to invest the funds of the company ) shall specify the total amount up to which the funds may be invested, and the nature of the investments which may be made, by the delegate.
Every resolution delegating the power referred to in clause (e) (the power to make loans ) shall specify the total amount up to which loans may be made by the delegate, the purposes for which the loans may be made, and the maximum amount of loans which may be made for each such purpose in individual cases.
Nothing in this section be deemed to affect the right of the company in general meeting to impose restrictions and conditions on the exercise by the Board of any of the powers specified above.
What are the duty of directors and persons deemed to be directors to make disclosure of shareholdings?
Any such notice shall be given in writing, and if it is not given at a meeting of the Board, the person giving the notice shall take all reasonable steps to secure that it is brought up and read at the meeting of the Board next after it is given.
Any person who fails to comply with the above provisions 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
Every director of a company, must give notice to the company of such matters relating to himself as may be necessary for the purpose of enabling the company to company with the aforesaid provisions.
Every company shall keep a register showing, as respects each director of the company, the number, description and amount of any shares in, or debentures, of the company or any other body corporate, being the company’s subsidiary or holding company, or a subsidiary of the company’s holding company, which are held by him or in trust for him, or of which he has any right to become the holder whether on payment or not.
Every director, managing director, manager or secretary of any company, who is appointed to or relinquishes the office of director, managing director, manager of any other body corporate must within 20 days of his appointment or relinquishment, disclose to the company aforesaid the particulars relating to the office in the other body corporate and if he fails to do so, he shall be punishable with fine which may extend to five hundred rupees.
The register kept shall be open to the inspection of any member of the company without charge and of any other person on payment of one rupee for each inspection during business hours subject to such reasonable restrictions as the company may by its articles or in general meeting impost, so that not less than two hours in each day are allowed for inspection.
Every company shall keep at its registered office a register of its directors, managing director, manager and secretary, containing with respect to each of them the following particulars, that is to say:
Where a company :-
Every company shall keep a register in which all contracts or arrangements in which directors are interested are entered into giving detailed information on
No director of a company shall, as a director, take any part in the discussion of, or vote on, any contract or arrangement entered into, or to be entered into, by or on behalf of the company, if he is in any way, whether directly or indirectly, concerned or interested in the contract or arrangement.
Every director of a company who is in any way, whether directly or indirectly concerned or interested in a contract or arrangement, or proposed contract or arrangement entered into or to be entered into, by or on behalf of the company, shall disclose the nature of his concern or interest at a meeting of the Board of directors.
Except with the consent of the Board of directors, a director of the company or his relative, a firm in which such a director or relative is a partner, any other partner in such a firm, or a private company of which the director is a member or director, shall not enter into any contract with the company
Notice of meetings
Every officer of the company whose duty it is to give notice as aforesaid and who fails to do so shall be punishable with fine which may extend to one hundred rupees.
Quorum for meetings
Provided that where at any time the number of interested directors exceeds or is equal to two-thirds of the total strength, the number of the remaining directors, that is to say, the number of the directors who are not interested, present at the meeting being not less than 2 shall be the quorum during such time.
Interested director means any director whose presence cannot, by reason of his being interested in some manner in the subject matter of discussion be counted for the purpose of forming a quorum at a meeting of the Board, at the time of the discussion or vote on any matter.
Procedure where meeting adjourned for want of quorum
Passing or resolutions by circulation
Validity of acts of directors
What points should be included in the Register of Director’s shareholdings?
Where any shares or debentures have to be recorded in the said register or to be omitted therefrom, in relation to any director, by reason of a transaction entered into and while he is a director, the register shall also show the date of, and the price or other consideration for, the transaction.
However, where there is an interval between the agreement for any such transaction and the completion thereof, the date so shown shall be that of the agreement.
The nature and extent of any interest or right in or over any shares or debentures recorded in relation to a director in the said register shall, if he so requires, be indicated in the register.
The said register shall, subject to the provisions of this section, be kept at the registered office of the company, and shall be open to inspection during business hours (subject to such reasonable restrictions as the company may, by its articles or in general meeting, impost so that not less than two hours in each day are allowed for inspection) as follows:-
during the period beginning fourteen days before the date of the company’s annual general meeting and ending three days after the date of its conclusion, it shall be open to the inspection of any member of holder of debentures, of the company; and
during that or any other period, it shall be open to the inspection of any person acting on behalf of the Central Government or of the Registrar.
In computing the fourteen days and the three days mentioned above, any day which is a Saturday, a Sunday or a public holiday shall be disregarded.
The Central Government or the Registrar may, at any time, require a copy of the said register, or any part thereof.
The said register shall also be produced at the commencement of every annual general meeting of the company and shall remain open and accessible during the continuance of the meeting to any person having the right to attend the meeting.
How should the Register of Directors be maintained?
1.in the case of an individual, his present name and surname in full, any former name or surname in full, his father’s name and surname in full or where the individual is a married woman, the husband’s name and surname in full, his usual residential address; his nationality; and, if that nationality is not the nationality of origin, his nationality of origin; his business occupation, if any; if he holds the office of director, managing director, manager or secretary in any other body corporate, the particulars of each such office held by him; and except in the case of a private company which is not a subsidiary of a public company, the date of his birth
2. in the case of a body corporate, its corporate name and registered or principal official and the full name, address, nationality, and nationality of origin, if different from that nationality, his father’s name and surname in full or where the director is a married woman, the husband’s name and surname in full of each of its directors; and if it holds the office of manger or secretary in any other body corporate, the particulars of each such office
3. in the case of a firm, the name of the firm, the full name, address, nationality, and nationality of origin, if different from that nationality, his father’s name and surname in full or where the partner is a married woman, the husband’s name and surname in full of each partner; and the date on which each became a partner; and if the firm holds the office of manager or secretary in any other body corporate, the particulars of each such officer
4. if any director or directors have been nominated by a body corporate; its corporate name; all the particulars referred to in clause (a) in respect of each director so nominated, and also all the particulars referred to in clause (b) in respect of the body corporate
5. if any director or directors have been nominated by a firm, the name of the firm, all the particulars referred to in clause (a) in respect of each director so nominated, and also all the particulars referred to in clause (c) in respect of the firm
The company shall, within the prescribed periods send to the Registrar a return in duplicate in the prescribed form ( form 32 ) within 30 days of appointment containing the particulars specified in the said register and a notification in duplicate in the prescribed form within 30 days of any change among its directors, managing directors or in any of the particulars contained in the register, specifying the date of the change.
If default is made in complying, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
Inspection of the register
If any inspection is refused :-
1. the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees; and
2. the court may, by order, compel an immediate inspection of the register.
When shall the Disclosure of interests be made by director?
1. In the case of a proposed contract or arrangement, the disclosure required to be made by a director shall be made at the meeting of the Board at which the question of entering into the contract or arrangement is first taken into consideration, or if the director was not, at the date of that meeting, concerned or interested in the proposed contract or arrangement, at the first meeting of the Board held after he comes so concerned or interested.
2. In the case of any other contract or arrangement, the required disclosure shall be made at the first meeting of the Board held after the director becomes concerned or interested in the contract or arrangement.
3. A general notice given to the Board by a director, to the effect that he is a director or a member of a specified body corporate or is a member of a specified firm and is to be regarded as concerned or interested in any contract or arrangement which may, after the date of the notice, be entered into with that body corporate or firm, shall be deemed to be a sufficient disclosure of concern or interest in relation to any contract or arrangement so made.
4. Any such general notice shall expire at the end of the financial year in which it is give, but may be renewed for further periods of one financial year at a time, by a fresh notice given in the last month of the financial year in which it would otherwise expire (Form 24 AA).
5. No such general notice, and no renewal thereof, shall be of effect unless either it is given at a meeting of the Board, or the director concerned takes reasonable steps to secure that it is brought up and read at the first meeting of the Board after it is given.
Every director who fails to comply with the aforesaid provisions shall be punishable with fine which may extend to five thousand rupees.
Nothing in these provisions shall be taken to prejudice or adversely affect the operation of any rule of law restricting a director of a company from having any concern or interest in any contracts or arrangements with the company.
Nothing in these provisions shall apply to any contract or arrangement entered into or to be entered into between two companies where any of the directors of one company or two or more of them together hold not more than 2 % of the paid up capital in the other company.
Interested director not to participate or vote in Boards proceedings
Nor shall his presence count for the purpose of forming a quorum at the time of any such discussion or vote and if he does vote, his vote shall be void.
The above provision shall not apply to :-
1. a private company which is neither a subsidiary not a holding company of a public company
2. a private company which is a subsidiary of a public company, in respect of any contract or arrangement entered into, or to be entered into, by the private company with the holding company thereof
any contract of indemnity against any loss which the directors, or any one or more of them, may suffer by reason of becoming or being sureties or a surety for the company
any contract or arrangement entered into or to be entered into with a public company, or a private company which is a subsidiary of a public company, in which the interest of the director aforesaid consists solely :-
1. in his being a director of such company and the holder of not more than the qualification shares
2. in his being a member holding not more than 2 % of its paid-up share capital
3. a public company, or a private company which is subsidiary of a public company, in respect of which a notification is issued, to the extent specified in the notification.
In the case of a public company or a private company which is a subsidiary of a public company, if the Central government is of opinion that having regard to the desirability of establishing or promoting any industry, business or trade, it would not be in the public interest to apply all or any or the prohibitions contained above to the company, the Central Government may, by notification in the Official Gazette, direct that the said provisions shall not apply to such company, or shall apply thereto subject to such exceptions, modifications and conditions as may be specified in the notification.
Every director who knowingly contravenes the provisions of this section shall be punishable with fine which may extend to five thousand rupees.
Registrar of contracts, companies and firms in which directors are interested
1. the date of the contract or arrangement
2. the names of the parties thereto
3. the principal terms and conditions thereof
4. the date on which it was placed before the Board
5. the names of the directors voting for and against the contract or arrangement and the names of those remaining neutral.
Particulars of every such contract or arrangement shall be entered in the register aforesaid within
7 days ( exclusive of public holidays ) of the meeting of the Board where approval of the board is required
7 days of the receipt of the particulars of such contract or arrangement at the registered office of the company or within 30 days of the date of such other contract or arrangement, whichever is later.
The register must be placed before the next meeting of the Board and must then be signed by all the directors present at that meeting.
The register must also specify in relation to each director of the company, the names of the bodies corporate and firms of which notice has been given by him wherein he has interest.
The above provisions do not apply to :-
any contract or arrangement for the sale, purchase or supply of any goods, materials or services if the value does not exceed Rs. 1000/- per annum
Any contract or arrangement by a banking company for the collection of bills in the ordinary course of its business or to any transaction with the director, , relative, firm, partner or private company as aforesaid in the ordinary course of its business.
If default is made in complying with the aforesaid provisions, the company, and every officer of the company who is in default, shall, in respect of each default, be punishable with fine which may extend to five hundred rupees.
The register aforesaid shall be kept at the registered office of the company, and it shall be open to inspection at such office, and extracts may be taken therefrom and copies thereof may, be required, by any member of the company to the same extent, in the same manner, and on payment of the same fee, as in the case of the register of members of the company.
Disclosure to members of directors interest in contract appointing manager, managing director
enters into a contract for the appointment of a manager of the company, in which contract and director of the company is in any way, whether directly or indirectly, concerned or interested or
varies any such contract already in existence and in which a director is concerned or interested as aforesaid
the company shall, within twenty-one days from the date of entering into the contract or of the varying of the contract, as the case may be, send to every member of the company as abstract of the terms of the contract of variation, together with a memorandum clearly specifying the nature of the concern or interest of the director in such contract or variation.
Where a company enters into a contract for the appointment of a managing director of the company, or varies any such contract which is already in existence, the company shall send an abstract of the terms of the contract or variation to every member of the company within within twenty-one days from such date and if any other director of the company is concerned or interested in the contract or variation, a memorandum clearly specifying the nature of the concern or interest of such other director in the contract or variation shall also be sent to every member of the company with the abstract aforesaid.
Where a director becomes concerned or interested as aforesaid in any such contract as is referred to above after it is made, the abstract and the memorandum, if any, referred to above shall be sent to every member of the company within twenty-one days from the date on which the director becomes so concerned or interested.
If default is made in complying with the foregoing 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.
All contracts entered into by a company for the appointment of a manager, or managing director, shall be kept at the registered office of the company; and shall be open to the inspection of any member of the company at such office; and extracts may be taken therefrom and copies thereof may be required by any such member, to the same extent, in the same manner and on payment of the same fee, as in the case of the registrar of members of the company.
The provisions of this section shall apply in relation to any resolution of the Board of directors of a company appointing a manager or a managing or whole-time director, or varying and previous contract or resolution of the company relating to the appointment of a manager or a managing or whole time director, as they apply in relation to any contract for the like purpose.
What should be the minimum period for meeting of board?
Board to meet once in every three months.
Boards sanction to be required for certain contracts in which particular directors are interested
for the sale, purchase or supply of any goods, materials or services
for underwriting the subscription of any shares in, or debentures of, the company.
In case of a company having paid up share capital of at least Rs. 1 crore, no such contract can be entered into by the company without the previous approval of the Central Government.
However, the above provision will not affect:-
the purchase of goods and materials from the company or the sale of goods and materials to the company by any director, relative, firm, partner or private company as aforesaid for cash at prevailing market prices.
any contract or contracts between the company on one side and any such director, relative, firm, partner or private company on the other for the sale, purchase or supply of any goods, materials or services in which either the company, or the director, firm, partner of private company, as the case may be regularly, trades or does business, provided that such contract or contracts do not relate to goods and materials the value of which or services, the cost of which exceeds five thousand rupees in the aggregate in any calendar year comprised in the period of the contract or contracts
in the case or a banking or insurance company, any transaction in the ordinary course of business of such company with any director, relative, firm, partner or private company.
A director, relative, firm, partner or private company may enter into a contract with the company for the sale, purchase or supply of any goods, materials or services even if the value exceeds Rs. 5000/- and the approval of the Board is not obtained in cases of urgent necessity. However, approval of the Board must be obtained at a meeting within 3 months of the date on which the contract was entered into.
Every consent of the Board under these provisions must be by a resolution passed at a meeting of the Board and either before the contract was entered into, or within 3 months of the date on which it was entered into.
Where such consent is not accorded to the contract, the contract shall be voidable at the option of the Board Procedure, etc, where director interested
What about Disclosure of Director’s Interest & Loans to directors?
No company, without obtaining the prior approval of the Central Government in this behalf, can make any loan to, or give any guarantee or provide any security in connection with a loan made by any other person, to or to any other person by,-
1. any director of the lending company or of a company which is its holding company or any partner or relative of any such director
2. any firm in which any such director or relative is a partner
3. any private company of which any such director is a director or member
4. any body corporate at a general meeting of which not less than twenty five percent of the total voting power may be exercised or controlled by any such director, or by two or more such directors together
5. any body corporate, the Board of directors, managing director, or manager whereof is accustomed to act in accordance with the directions or instructions of the Board, or of any director or directors, of the lending company.
The above provision shall not apply to any loan made, guarantee given or security provided-
1. by a banking company
2. by a private company unless it is a subsidiary of a public company
3. The above provision shall not apply to any loan made by a holding company to its subsidiary.
4. The above provision shall not apply to guarantee given or security provided by a holding company in respect of a loan made to its subsidiary.
Every person who is knowingly a party to any contravention of the aforesaid provisions, including in particular any person to whom the loan is made or who has taken the loan in respect of which the guarantee is given or the security is provided, shall be punishable either with fine which may extend to five thousand rupees or with simple imprisonment for a term which may extend to six months:
However, where any such loan, or any loan in connection with which any such guarantee or security has been given or provided by the lending company, has been repaid in full, no punishment by way of imprisonment shall be imposed.
Where the loan has been re-paid in part, the maximum punishment which may be imposed by way of imprisonment shall be proportionately reduced.
All persons who are knowingly parties to any contravention of the afoesaid provisions shall be liable jointly and severally, to the lending company for the repayment of the loan or for making good the sum which the lending company may have been called upon to pay in virtue of the guarantee given or the security provided by such company.
The above provisions will also apply to any transaction represented by a book debt which was from its inception in the nature of a loan or advance.
No debt incurred by the company in excess of the limit imposed by clause by clause (d) shall be valid or effectual, unless the lender proves that he advanced the loan in good faith and without knowledge that the limit imposed by that clause had been exceeded
Shall the Company Law Board has the power to prevent change in Board of directors ?
Any such order shall have effect notwithstanding anything to the contrary contained in any other provision of this Act or in the memorandum or articles of the company, or in any agreement with, or any resolution passed in general meeting by, or by the Board of directors or, the company.
The Company Law Board shall have power when any such complaint is received by it, to make an interim order to the effect set out above, before making or completing the inquiry aforesaid.
Nothing contained above shall apply to a private company, unless it is a subsidiary of a public company
Where a complaint is made to the Company Law Board by the managing director or any other director or the manager of a company that, as a result of a change which has taken place or is likely to take place in ownership or any shares held in the company, a change in the Board of directors is likely to take place which (if allowed) would affect prejudicially the affairs of the company, the Company Law Board may, if satisfied, after such inquiry as it thinks fit to make that it is just and proper to do so, by order direct that no resolution passed or that may be passed or no action taken or may be taken to effect a change in the Board of directors after the date of the complaint shall have effect unless confirmed by the Company Law Board.
Where an order terminates, sets aside or modifies an agreement :-
The Central Government may appoint such number of persons as the Company Law Board may, by order in writing, specify as being necessary to effectively safeguard the interests of the Company or its shareholders or public interests, to act as directors thereof for such period not exceeding 3 years on any one occasion as it deems fit if the Company Law Board :-
Where an order makes any alteration in the memorandum or articles of a company, then, notwithstanding any other provision of this Act, the company shall not have power, except to the extent, if any permitted in the order, to make without the leave of the Company Law Board, any alteration whatsoever which is inconsistent with the order, either in the memorandum or in the articles.
Pending the making by it of a final order, the Company Law Board may, on the application of any party to the proceedings, make any interim order which it thinks fit for regulating the conduct of the company’s affairs, upon such terms and conditions as appear to it to be just and equitable.
Without prejudice to the generality of the powers of the Company Law Board, any under either section may provide for :-
The Central Government may itself apply to the Company law Board for an order, or cause an application to be made to the Company Law Board for such an order by any person authorised be it in this behalf.
The Company Law Board must give notice of every application made to it as above to the Central government, and shall take into consideration the representations, if any, made to it by that Government before passing a final order.
The following members of a company shall have the right to apply as above:-
Any members of a company who complain :-
1. Any members of a company who complain that the affairs of the company are being conducted in a manner prejudical to public interest or in a manner oppressive to any member or members may apply to the Company Law Board for an order for relief, provided such members have a right so to apply as given below.
2. A limited company may, if so authorised by its articles, by special resolution, alter its memorandum so as to render unlimited the liability of its directors or of any director or of its manager.
3. In a limited company, the liability of the directors or of any director or of the manager may ie generally limited to the amount of investment in shares of that company. However, if so provided by the memorandum, it may become unlimited.
4. No director of a company shall, in connection with the transfer to any persons of all or any of the shares in a company, being a transfer resulting from-
5. No director of a company shall, in connection with the transfer of the whole or any part of any undertaking of property of the company, receive any payment, by way of compensation for loss of office, or as consideration for retirement from office, or in connection with such loss or retirement
6. Payment may be made by a company, except in the cases specified below and subject to the limit specified, to a managing director or a director holding the office of manager or in the whole time employment of the company, by way of compensation for loss of office, or as consideration for retirement from office, or in connection with such loss or retirement.
Except with the previous consent of the company accorded by a special resolution :-
In the case of a public company, or a private company, which is a subsidiary of a public company, if the terms of any re-appointment or appointment of a managing or whole-time director, purport to increase or have the effect of increasing, whether directly or indirectly, the remuneration which the managing or whole-time director or the previous managing or whole-time director, as the case may be, was receiving immediately before such appointment, the or appointment shall not have any effect unless :-
In the case of a public company, or a private company which is a subsidiary of a public company, any provision relating to the remuneration of any director or any amendment thereof, which purports to increase or has the effect of increasing, whether directly or indirectly, the amount of remuneration shall not have any effect unless :
In which situation the Central Government has the power to prevent oppression or mismanagement?
1. on a reference being made to it by the Central Government ; or
2. on an application of not less than one hundred members of the company or of members of the company holding not less than one-tenth of the total voting power therein,
is satisfied, after such inquiry as it deems fit to make, that it is necessary to make the appointment or appointments in order to prevent the affairs of the company being conducted either in a manner which is oppressive to any members of the company or in a manner which is prejudicial to the interests of the company or to public interest.
However, in lieu of passing order as aforesaid, the Company Law Board may, if the company has not availed itself of the option given to it of proportional representation to minority shareholders on the Board of the company, direct the company to amend its articles in the manner provided section 265 and make fresh appointments of directors in pursuance of the articles as so amended within such time as may be specified in that behalf by the Company Law Board.
In case the Central Government passes such an order it may, if thinks fit, direct that until new directors are appointed in pursuance of the order aforesaid, not more than two members of the company specified by the Company law Board shall hold office as additional directors of the company. The Central Government shall appoint such additional directors on such directions.
The person appointed as a director by the Central Government in accordance with the above provisions, need not hold any qualification shares nor need to retire by rotation. However, his office as director may be terminated at any time by the Central Government and another person appointed in his place.
No change in the constitution of the Board of Directors can take place after an additional director is appointed by the Central Government in accordance with these provisions unless approved by the Company Law Board.
The Central Government in such cases may also issue such directions to the company as it may consider necessary or appropriate in regard to its affairs.
What are the Consequences of termination or modification of certain agreements?
1. the order shall not give rise to any claim whatever against the company by any person for damages or for compensation for loss of office or in any respect, either in pursuance of the agreement or otherwise;
2. no managing or other director or manager whose agreement is so terminated or set aside, shall for a period of five years from the date of the order terminating the agreement, without the leave of the Company Law Board, be appointed, or act, as the managing or other director or manager of the company.
Any person who knowingly acts as a managing or other director or manager of a company in contravention of the above provision, every director of the company, who is knowingly a party to such contravention shall be punishable with imprisonment for a term which may extend to one year, or with fine which may extend to five thousand rupees, or with both.
The Company Law Board will not grant leave for appointment as managing director or director or manager of the company unless notice of the intention to apply for leave has been served on the Central Government and that Government has been given an opportunity of being heard in the matter.
What is the Effect of alteration of memorandum or articles of company by order?
The alterations made by the order shall, in all respects, have the same effect as if they had been duly made by the company in accordance with the provisions of this Act.
A certified copy of every order altering or giving leave to alter, a company’s memorandum or articles, must within thirty days after the making thereof, be filed by the company with the Registrar who shall registrar the same.
If default is made in complying with the above provisions, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees.
What are the Powers of Company Law Board on application?
1. the regulation of the conduct of the company’s affairs in future;
2. the purchase of the shares or interests of any members of the company by other members thereof or by the company;
3. in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital;
the termination, setting aside or modification of any agreement, howsoever arrived at, between the company on the one hand, and any of the following persons, on the other namely:-
a) the managing director,
b) any other director,
c) the manager,
upon such terms and conditions as may, in the opinion of the Company Law Board, be just and equitable in all the circumstances of the case;
1. the termination, setting aside or modification of any agreement between the company and any person not referred to in clause (d), provided that no such agreement shall be terminated, set aside or modified except after due notice to the party concerned and provided further that no such agreement shall be modified except after obtaining the consent of the party concerned;
2. the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference;
3. any other matter for which in the opinion of the Company Law Board it is just and equitable that provision should be made.
When a company has the Right to apply to the Company Law Board?
1. in the case of a company having a share capital, not less than one hundred members of the company or not less than one tenth of the total number of its members, whichever is less, or any member or members holding not less than one-tenth of the issued share capital of the company, provided that the applicant or applicants have paid all calls and other sums due on their shares;
2. in the case of a company not having a share capital, not less than one-fifth of the total number of its members.
Where any share or shares are held by two or more persons jointly, they shall be counted only as one number.
Where any members of a company, are entitled to make an application, any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them.
The Central Government may, if in its opinion circumstances exist which make it just and equitable so to do, authorise any member or members of the company to apply to the Company Law Board, notwithstanding that the above requirements for application are not fulfilled.
The Central Government may, before authorising any member or members as aforesaid, require such member or members to give security for such amount as the Central Government may deem reasonable, for the payment of any costs which the Court dealing with the application may order such member or members to pay to any other person or persons who are parties to the application.
If the managing director or any other director, or the manager, of a company or any other person, who has not been impleaded as a respondent to any application applies to be added as a respondent thereto, the Company Law Board may, if it is satisfied that there is sufficient cause for doing so, direct that he may be added as a respondent accordingly.
Can a company Apply to Court for relief in cases of mismanagement?
1. that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner prejudicial to the interests of the company; or
2. that a material change has taken place in the management or control of the company, whether by an alteration in its Board of directors, or manager or in the ownership of the company’s shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to public interest or in a manner prejudicial to the interests of the company;
may apply to the Company Law Board for an order of relief provided such members have a right so to apply as given below.
If, on any such application, the Company Law Board is of opinion that the affairs of the company are being conducted as aforesaid or that by reason of any material change as aforesaid in the management or control of the company, it is likely that the affairs of the company will be conducted as aforesaid, the court may, with a view to bringing to an end or preventing the matters complained of or apprehended, make such order as it thinks fit.
Can a company apply to the Company Law Board for relief in cases of oppression?
If, on any application, the Company Law Board is of the opinion :-
a) that the company’s affairs are being conducted in a manner oppressive to any member or members; and
b) that to wind up the company would unfairly prejudice such member or members and would be a very serious step, but that otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be would up;
the Company Law Board may, with a view to bringing to an end the matters complained of, make such order as it thinks fit.
What is the Special resolution of limited company to make liability of directors unlimited?
However no alteration of the memorandum making the liability of any of the officers unlimited shall apply to such officer, if he was holding the office from before the date of the alteration, until the expiry of his then term, unless he has accorded his consent to his liability becoming unlimited.
Tell about the liability of a Director in a Limited Compancy?
In a limited company in which the liability of a director or manager is unlimited, the directors, and the manager of the company, and the member who proposes a person for appointment, to the office of director or manager, shall add to that proposal a statement that the liability of the person holding that office will be unlimited and before the person accepts the office or acts therein, notice in writing that his liability will be unlimited, shall be given to him.
If any director, manager or proposer makes default in adding such a statement, or if any promoter, director, manager or officer of the company makes default in giving such a notice, he shall be punishable with fine which may extend to one thousand rupees and shall also be liable for any damage which the person so appointed may sustain from the default; but the liability of the person appointed shall continue to remain unlimited.
What should be the Payment to director for loss of office, etc., in connection with transfer of shares?
1. an offer made to the general body of shareholders;
2. an offer made by or on behalf of some other body corporate with a view to the company becoming a subsidiary of such body corporate or a subsidiary of its holding company;
3. an offer made by or on behalf of an individual with a view to his obtaining the right to exercise, or control the exercise of, not less than one-third of the total voting power at any general meetings of the company; or
4. any other offer which is conditional on acceptance to a given extent;
5. receive any payment by way of compensation for loss of office, or as consideration for retirement from office, or in connection with such loss or retirement,-from such company; or
from the transferees of the shares or from any other person except as provided below.
It shall be the duty of the director concerned to take all reasonable steps to secure that details with respect to the payment proposed to be made by the transferees or other person (including the amount thereof) are sent with, any notice of the offer made for their shares which is given to any shareholders.
If :-
a) any such director fails to take reasonable steps as aforesaid; or
b) any person who has been properly required by any such director to include the said details in the aforesaid notice fails so to do;
he shall be punishable with fine which may extend to two hundred and fifty rupees.
If-
a) the above provisions are not complied with ; or
b) the making of the proposed payment is not, before the transfer of any shares in pursuance of the offer, approved by a meeting, called for the purpose ,of the concerned shareholders
any sum received by the director on account of the payment shall be deemed to have been received by him in trust for any persons who have sold their shares as a result of the offer made, and the expenses incurred by him in distributing that sum amongst those persons shall be borne by him and not retained out of that sum.
If at a meeting called for the purpose of approving any payment, a quorum is not present and, after the meeting has been adjourned to a later date, a quorum is again not present, the payment shall, be deemed to have been approved.
What should be the Payment to director for loss of office in connection with transfer of undertaking or property?
from such company; or
from the transferee of such undertaking or property or from any other person, unless particulars with respect to the payment proposed to be made by such transferee or person (including the amount thereof) have been disclosed to the members of the company and the proposal has been approved by the company in general meeting.
Where a director of a company receives payment of any amount in contravention of the above provisions, the amount shall be deemed to have been received by him in trust for the company.
What should be the Compensation for loss of office to directors?
However, such payment cannot be made by the company to any other director.
No payment shall be made to a managing or other director in the following cases :-
1. where the director resigns his office in view of the reconstruction of the company, or of its amalgamation with any other body corporate or bodies corporate, and is appointed as the managing director, manager or other officer of the reconstructed company or of the body corporate resulting from the amalgamation;
2. where the director resigns his office otherwise than on the reconstruction of the company or its amalgamation as aforesaid;
3. where the office of the director is vacated
4. where the company is being wound up, whether by or subject to the supervision of the Court or voluntarily, provided the winding up was due to the negligence or default of the director;
5. where the director has been guilty of fraud or breach of trust in relation to, or gross negligence in or gross mismanagement or, the conduct of the affairs of the company or any subsidiary or holding company thereof;
6. whether the director has instigated, or has taken part directly or indirectly in bringing about, the termination of his office.
Any such payment made to a managing or other director shall not exceed the remuneration which he would have earned if he had been in office for the unexpired residue of his term or for three years, whichever is shorter, calculated on the basis of the average remuneration actually earned by him during a period of three years immediately proceeding the date on which he ceased to hold the office, or where he held the office for a lesser period than three years, during such period.
No such payment shall be made to the director in the event of the commencement of the winding up of the company, whether before, or at any time within twelve months after, the date on which he ceased to hold office, if the assets of the company on the winding up, after deducting the expenses thereof , are not sufficient to repay to the share-holders the share capital (including the premiums, if any) contributed by them.
These provisions do not prohibit the payment to a managing director or a director holding the office of manager, of any remuneration for services rendered by him to the company in any other capacity.
Can a Director hold office or place of profit ?
No partner or relative of such a director ( i.e. a director holding an office or place of profit in the company ), no firm in which such a director or relative is a partner, no private company of which such a director is a director or member, and no director, or manger of such a private company can hold any office or place of profit carrying monthly remuneration in excess of the prescribed amount ( Rs. 10000/-).
However, the above restrictions are not applicable to the office of managing director, manager, banker, or trustee for the holders of debentures of the company either :-
a. in the company ; or
b. in any subsidiary of the company, unless the remuneration received from such subsidiary in respect of such office or place is paid over to the company or its holding company.
The special resolution required for the above purpose may be passed at the first general meeting after the appointment. Such special resolutions will required at subsequent re-appointments also on a higher remuneration not covered by the earlier special resolution.
However, if the monthly remuneration is not less than Rs. 20000/- per month, the special resolution mentioned above has to be obtained prior to the appointment and in addition to the special resolution, approval of the Central Government will also be required for the appointment.
If any office or place of profit under the company or a subsidiary thereof is held in contravention of the above provisions, the director, partner, relative, firm, private company or, manager shall be deemed to have vacated his office, with effect from the day following the date of general meeting mentioned above. Such person will also be liable to refund to the company any remuneration received, or the monetary equivalent of any perquisites or advantage enjoyed by him, in respect of such office or place of profit. The company will not be able to waive recovery of such amounts, except with the approval of the Central Government.
Any office or place in a company shall be deemed to be an office or place or profit under the company for these provisions :-
1. in case the office or place is held by a director, if the director holding it obtains from the company anything by way of remuneration over and above the remuneration to which he is entitled as such director, whether as salary, fees, commission, perquisites, the right to occupy free of rent any premises as a place of residence, or otherwise;
2. in case the office or place is held by an individual other than a director or by any firm, private company or other body corporate, if the individual, firm private company or body corporate holding it obtains from the company anything by way of remuneration whether as salary, fees, commission, perquisites, the right to occupy free of rent any premises as a place of residence, or otherwise.
None of the above provisions apply to a director appointed by the Central Government u/s 408 of the Companies Act, 1956
What should be the Increase in remuneration of managing director on reappointment or appointment after Act to require government sanction?
1. is within the limits specified in Schedule XIII, where Schedule XIII is applicable ; or
2. approved by the Central Government
and the amendment shall become void if, and in so far as, it is disapproved by the Government.1.
What are the provision for increase in remuneration to require Government sanction?
is within the limits specified in Schedule XIII, where Schedule XIII is applicable ; or
approved by the Central Government
and the amendment shall become void if, and in so far as, it is disapproved by the Government.
How the Remuneration of Directors be paid ?
The remuneration payable to the directors of a company, including any managing or whole-time director, shall be determined, in accordance the provisions given below either by the articles of the company, or by a resolution ( special resolution if the articles so require ), passed by the company in general meeting and the remuneration payable to any such director determined as per the said provisions shall be inclusive of the remuneration payable to such director for services rendered by him in any other capacity. However, any remuneration for services will not be so included if the services are of a professional nature and in the opinion of the Central Government, the director possesses the requisite qualifications.
A director may receive remuneration by way of fees for attending each meeting of the Board or of any committee thereof ( Sitting Fees ).
A director who is in whole time employment of the company or a managing director may be paid remuneration either by way of a monthly payment or at a specified percentage of net profits of the company or partly by one and partly by the other. Such remuneration cannot exceed 5 % of the net profits of the company, except with the approval of the Central Government in case of one director and 10 % for all such directors.
The total managerial remuneration payable by a public company or a private company which is a subsidiary of a public company to its directors and its manager in any financial year must not exceed 11 % of the net profits of the company calculated in accordance with the provisions of section 349, 350 and 351.
In the case of a director who is neither in the whole-time employment of the company nor a managing director may be paid remuneration either by way of a monthly, quarterly or annual payment with the approval of the Central Government or by way of commission if the company by special resolution authorises such payment. Such special resolution to in sub-section (4) shall not remain in force for a period of more than five years; but may be renewed, from time to time, by special resolution for further periods of not more than five years at a time. Remuneration payable to such directors cannot exceed :-
if the company has a managing or whole-time director or a manager, one per cent, of the net profits of the company;
in any other case, three percent of the net profits of the company.
If any director earns remuneration from a company in excess of the above limits without prior approval of the Central Government, he shall refund the excess to the company and until such repayment, hold the money in trust with him.
The Company cannot waive recovery of such sum due from the director unless approved by the Central Government.
No approval of the Central Government is required in case the remuneration is within the limits mentioned in Schedule XIII to the Companies Act, 1956.
No director of a company who is in receipt of any commission from the company and who is either in the whole-time employment of the company or a managing director shall be entitled to receive any commission or other remuneration from any subsidiary of such company.
The above provisions pertaining to remuneration do not apply to a private company unless it is a subsidiary of a public company.
What are the situations in which a company has the power to compromise or make arrangements with creditors and members?
Where a compromise or arrangements is proposed-
between a company and its creditors or any class or them; or
the Court may, on the application of the company or of any creditor or member of the company, or, in the case of a company which is being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members of class or members, as the case may be to be called, held and conducted in such manner in the court directs.
If 3/4 in value of the creditors, or class of creditors, or members or class of members, present and voting either in person or, where proxies are allowed, under rules made by the Court, by proxy, at the meeting, agree, to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the court, be binding on all the creditors, all the creditors of the class, all the members, or all the members of the class, as the case may be, and also, on the company, or, in the case of a company which is being would up, on the liquidator and contributories of the company.
The Court shall not approve of such a scheme unless it is satisfied that the Company or the applicant has disclosed to the Court all material facts relating to the company such as the latest financial position of the company, the latest auditor’s report, details of any investigation pending against the company, etc.
An order made by the Court shall have no effect until a certified copy of the order has been filed with the registrar.
A copy of every such order shall be annexed to every copy of the memorandum of the company issued after the certified copy of the order has been filed, as aforesaid.
If default is made in complying with the above provisions, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to ten rupees for each copy in respect of which default is made.
The Court may, at any time after an application has been made to it under this section, stay the commencement or continuation of any suit or proceeding against the company on such terms as the Court thinks fit, until the application is finally disposed of.
An appeal shall lie from any order made by a Court exercising original jurisdiction under this section to the Court empowered to hear appeals from the decisions of that Court, or if more than one Court is so empowered to the Court of inferior jurisdiction.
Power of High Court to enforce compromises and arrangements
Where a High Court makes an order as above sanctioning a compromise or an arrangements in respect of a company, it-
shall have power to supervise the carrying out of the compromise or arrangement; and
may, at the time of making such order or at any time thereafter, give such directions in regard to any matter or make such modifications in the compromise or arrangement as it may consider necessary for the proper working of the compromise or arrangement.
If the Court aforesaid is satisfied that a compromise or arrangement sanctioned under the above provisions cannot be worked satisfactorily with or without modifications, it may, either on its own motion or on the application of any person interested in the affairs of the company, make an order winding up the company.
Information as to compromises or arrangements with creditors and members
Where a meeting of creditors, or any class of creditors, or of members or any class of members, is called: -
with every notice calling the meeting which is sent to a creditor or member, there shall be sent also a statement setting for the terms of the compromise or arrangement and explaining its effect; and in particulars, stating any material interests of the directors, managing director or manager of the company, whether in their capacity as such or as members or creditors of the company or otherwise, and the effect on those interest, of the compromise or arrangement, if, and in so far as, it is different from the effect on the like interests of other persons; and
in every notice calling the meeting which is given by advertisement there shall be included either such a statement as aforesaid or a notification of the place at which and the manner in which creditors or members entitled to attend the meeting may obtain copies of such a statement as aforesaid.
Where the compromise or arrangement affects the rights of debenture holders of the company, the said statement shall give the like information and explanation as respects the trustees of any deed for securing the issued of the debentures as it is required to give as respects the company’s directors.
Where a notice given by advertisement includes a notification that copies of a statement setting forth the terms of the compromise or arrangement proposed and explaining its effect can be obtained by creditors or members entitled to attend the meeting, every creditor or member so entitled shall, on making an application in the manner indicated by the notice, by furnished by the company, free of charge, with a copy of the statement.
Provisions for facilitating reconstruction and amalgamation of companies
Where an application is made to the Court as above for the sanctioning of a compromise or arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the Court-
that the compromise or arrangement has been proposed for the purposes of , or in connection with, a scheme for the reconstruction of any company or companies, or the amalgamation of any two or more companies; and
that under the scheme the whole or any part of the undertaking, property or liabilities of any company concerned in the scheme is to be transferred to another company : -
the Court may, either by the order sanctioning the compromise or arrangement or by a subsequent order, make provision for all or any of the following matters:-
the transfer to the transferee company of the whole or any part of the undertaking, property or liabilities of any transferor company;
the allotment or appropriation by the transferee company of any shares, debentures, policies, or other like interests in that company which, under the compromise or arrangement, are to be allotted or appropriated by that company to or for any person;
the continuation by or against the transferee company of any legal proceedings pending by or against any transferor company;
the dissolution, without winding up, of any transferor company;
the provision to be made for any persons who, within such time and in such manner as the court directs, dissent from the compromise or arrangement; and
such incidental, consequential and supplemental matters as are necessary to secure that the reconstruction or amalgamation shall be fully and effectively carried out.
Where an order provides the transfer or any property or liabilities then, by virtue of the order, that property shall be transferred to and vest, and those liabilities shall be transferred to and become the liabilities of, the transferee company; and in the case of any property, it the order so directs, freed from any charge which is, by virtue of the compromise or arrangement, to cease to have effect.
Within fourteen days after the making of an order under this section, every company in relation to which the order is made shall cause a certified copy thereof to be filed with the Registrar for registration.
Power and duty to acquire shares of shareholders dissecting from scheme or contract approved by majority
Where a scheme or contract involving the transfer of shares or any class of shares in a company to another company has, within four months after the making of the offer in that behalf by the transferee company, been approved by the holders of not less than nine-tenths in value of the shares whose transfer is involved (other than shares already held at the date of the officer by, or by a nominee for, the transferee company or its subsidiary), the transferee company may, at any time within two months after the expiry of the said four months, give notice in the prescribed manner to any dissenting shareholder, that it desires to acquire his shares; and when such a notice is given, the transferee company, shall, unless, on an application made by the dissenting shareholder within one month from the date on which the notice was given, the Court thinks fit to order otherwise, be entitled and bound to acquire those shares on the terms on which, under the scheme or contract, the shares of the approving share holders are to be transferred to the transferee company.
However, where shares in the transferor company of the same class as the shares whose transfer is involved are already held as aforesaid to a value greater than one-tenth of the aggregate of the values of all the shares in the company of such class, the foregoing provisions shall not apply, unless :-
the transferee company offers the same terms to all holders of the shares of that class (other than those already held as aforesaid) whose transfer is involved; and
the holders who approve the scheme or contract, besides holding not less than nine-tenths in value of the shares (other than those already held as aforesaid) whose transfer is involved are not less than three-fourths in number of the holders of those shares.
Where, in pursuance of any such scheme or contract, as aforesaid, shares or shares of any class, in a company are transferred to another company or its nominee, and those shares together with any other shares or any other shares of the same class, as the case may be, in the first- mentioned company held at the date of the transfer by, or by a nominee for, the transferee company or its subsidiary comprise nine-tenths in value of the shares, or the shares of that class, as the case may be, in the first-mentioned company, then :-
the transferee company shall, within one month from the date of the transfer (unless on a previous transfer in pursuance of the scheme or contract it has already complied with this requirement) give notice of that fact in the prescribed manner to the holder so the remaining shares or of t remaining shares of that class, as the cast may be, who have not assented to the scheme or contract; and
any such holder may, within three months from the giving of the notice to him, require the transferee company to acquire the shares in question; and where a shareholder gives notice under clause (b) with respect to any shares, the transferee company shall be entitled and bound to acquire those shares on the terms on which, under the scheme or contract, the shares, of the approving shareholders were transferred to it, or on such other terms as may be agreed, or as the Court on the application of either the transferee company or the shareholder thinks fit to order.
Where a notice has been given by the transferee company and the Court has not, on an application made by the dissenting shareholder, made an order to the contrary, the transferee company shall, on the expiry of one month from the date on which the notice has been given, or, if an application to the Court by the dissenting shareholder is then pending, after that application has been disposed of, transmit a copy of the notice to the transferor company together with an instrument of transfer executed of behalf of the shareholder by any person appointed by the transferee company and on its own behalf by the transferee company, and pay or transfer to the transferor company the amount or other consideration representing the price payable by the transferee company for the shares which, by virtue of this section, that company is entitled to acquires; and the transferor company shall thereupon register the transferee company as the holder of those shares.
Any sums received by the transferor company shall be paid into a separate bank account, and any such sums and any other consideration so received shall be held by that company in trust for the several persons entitled to the shares in respect of which the said sums or other consideration were respectively received.
Power of Central Government to provide for amalgamation of companies in national interest
Where the Central Government is satisfied that it is essential in the natio
FAQs on Company Laws are in 4 parts :
- FAQs on Company Law – Part I
- FAQs on Company Law – Part II
- FAQs on Company Law – Part III
- FAQs on Company Law – Part IV
