Companies Act, 1956 No. 1 of 1956 Bare Act

The source publishes this enactment as a single document rather than provision by provision, so the whole text is below and there are no per-section pages for it. Nothing has been shortened.

Type	Act
Citation	Act 1 of 1956
Year	1956
Jurisdiction	State of Chhattisgarh
Ministry	State Government
Status	In force as published by the source
Text	Published as one document, as the source published it
Subjects	corporate

Page 1 of 332 COMPANIES ACT, 1956 [Act No. 1 OF 1956]

PART I : PRELIMINARY Sections

1. Short title, commencement and extent

2. Definitions

2A. Interpretation of certain words and expressions

3. Definitions of "company", "existing company", "private company" and "public company"

4. Meaning of "holding company" and "subsidiary"

4A. Public financial institutions

5. Meaning of "officer who is in default"

6. Meaning of "relative"

7. Interpretation of "person in accordance with whose directions or instructions directors are accustomed to act"

8. Power of Central Government to declare an establishment not to be a branch office

9. Act to override memorandum, articles, etc.

10. Jurisdiction of courts

10A. [Omitted]

10B. [Omitted]

10C. [Omitted]

10D. [Omitted]

PART IA : BOARD OF COMPANY LAW ADMINISTRATION

10E. Constitution of Board of Company Law Administration

10F. Appeals against the order of the Company Law Board

10FA. Dissolution of Company Law Board

PART IB : NATIONAL COMPANY LAW TRIBUNAL

10FB. Constitution of National Company Law Tribunal

10FC. Composition of Tribunal

10FD. Qualifications for appointment of President and Members

10FE. Term of office of President and Members

10FF. Financial and administrative powers of Member Administration

10FG. Salary, allowances and other terms and conditions of service of President and other Members

10FH. Vacancy in Tribunal

10FI. Resignation of President and Member

10FJ. Removal and suspension of President or Member

10FK. Officers and employees of Tribunal

10FL. Benches of Tribunal

10FM. Order of Tribunal

10FN. Power to review

10FO. Delegation of powers

10FP. Power to seek assistance of Chief Metropolitan Magistrate and District Magistrate [PART IC : APPELLATE TRIBUNAL

10FQ. Appeal from order of Tribunal

10FR. Constitution of Appellate Tribunal

10FS. Vacancy in Appellate Tribunal, etc

10FT. Term of office of Chairperson and Members

10FU. Resignation of Chairperson and Members

10FV. Removal and suspension of Chairperson and Members of Appellate Tribunal

10FW. Salary, allowances and other terms and conditions of service of Chairperson and Members

10FX. Selection Committee

10FY. Chairperson, etc., to be public servants

10FZ. Protection of action taken in good faith 10FZA. Procedure and powers of Tribunal and Appellate Tribunal

10G. Power to punish for contempt

10GA. Staff of Appellate Tribunal

10GB. Civil court not to have jurisdiction

10GC. Vacancy in Tribunal or Appellate Tribunal not to invalidate acts or proceedings

10GD. Right to legal representation

10GE. Limitation

10GF. Appeal to Supreme Court

PART II : INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO

11. Prohibition of associations and partnerships exceeding certain number

12. Mode of forming incorporated company

13. Requirements with respect to memorandum

14. Form of memorandum Page 2 of 332

15. Printing and signature of memorandum

15A. Special provision as to alteration of memorandum consequent on alteration of name of State of Madras

15B. Special provision as to alteration of memorandum consequent on alteration of name of State of Mysore

16. Alteration of memorandum

17. Special resolution and confirmation by Company Laws Board required for alteration of memorandum

17A. Change of registered office within a State

18. Alteration to be registered within three months

19. Effect of failure to register

20. Companies not to be registered with undesirable names

21.Change of name by company

22. Rectification of name of company

23. Registration of change of name and effect thereof

24. Change of name of existing private limited companies

25. Power to dispense with "Limited" in name of charitable or other company

26. Articles prescribing regulations

27. Regulations required in case of unlimited company, company limited by guarantee or private company limited by shares

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

29. Form of articles in the case of other companies

30. Form and signature of articles

31. Alteration of articles by special resolution

32. Registration of unlimited company as limited, etc.

33. Registration of memorandum and articles

34. Effect of registration

35. Conclusiveness of certificate of incorporation

36. Effect of memorandum and articles

37. Provision as to companies limited by guarantee

38. Effect of alteration in memorandum or articles

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

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

41. Definition of "member"

42. Membership of holding company

43.Consequences of default in complying with conditions constituting a company a private company 43A Private company to become public company in certain cases

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

45. Members severally liable for debts where business carried on with fewer than seven, or in the case of a private company, two members

46. Form of contracts

47. Bills of exchange and promissory notes

48. Execution of deeds

49. Investments of company to be held in its own name

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

51. Service of documents on company

52. Service of documents on Registrar

53. Service of documents on members by company

54. Authentication of documents and proceedings

PART III : PROSPECTUS AND ALLOTMENT, AND OTHER MATTERS RELATING TO ISSUE OF SHARES OR DEBENTURES

55. Dating of prospectus

55A. Powers of Securities and Exchange Board of India

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

57. Expert to be unconnected with formation or management of company

58. Expert's consent to issue of prospectus containing statement by him

58A. Deposits not to be invited without issuing an advertisement

58AA. Small deposits 58AAA. Default in acceptance or refund of deposits to be cognizable

58B. Provisions relating to prospectus to apply to advertisement

59. Penalty and interpretation

60. Registration of prospectus

60A. Filing of self prospectus

60B. Information memorandum

61. Terms of contract mentioned in prospectus or statement in lieu of prospectus, not to be varied

62. Civil liability for mis-statements in prospectus

63. Criminal liability for mis-statements in prospectus

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

65. Interpretation of provisions relating to prospectuses Page 3 of 332

66. Newspaper advertisements of prospectus

67. Construction of references to offering shares or debentures to the public, etc.

68. Penalty for fraudulently inducing persons to invest money 68A Personation for acquisition, etc., of shares

68B. Initial offer of securities to be in dematerialised form in certain cases

69. Prohibition of allotment unless minimum subscription received

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

71. Effect of irregular allotment

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

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

74. Manner reckoning fifth, eighth and tenth days in sections 72 and 73

75. Return as to allotments

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

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

77A. Power of company to purchase its own securities.

77AA. Transfer of certain sums to capital redemption reserve account.

77B. Prohibition for buy-back in certain circumstances

78. Application of premiums received on issue of shares

79. Power to issue shares at a discount

79A. Issue of sweat equity shares

80. Power to issue redeemable preference shares

80A. Redemption of irredeemable preference shares etc.

81. Further issue of capital

PART IV: SHARE CAPITAL AND DEBENTURES

82. Nature of shares

83. Numbering of shares

84. Certificate of shares

85. Two kinds of share capital

86. New issues of share capital to be only of two kinds

87. Voting rights

88. [Omitted]

89. Termination of disproportionately excessive voting rights in existing companies

90. Savings

91. Calls on shares of same class to be made on uniform basis

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

93. Payment of dividend in proportion to amount paid-up

94. Power of limited company to alter its share capital

94A.Share capital to stand increased where an order is made under section 81(4)

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

96. Effect of conversion of shares into stock

97. Notice of increase of share capital or of members

98. Power of unlimited company to provide for reserve share capital on registration

99. Reserve liability of limited company

100. Special resolution for reduction of share capital

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

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

103. Registration of order and minute of reduction

104. Liability of members in respect of reduced shares

105. Penalty for concealing name of creditor, etc.

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

107. Rights of dissentient shareholders

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

108A. Restriction on acquisition of certain shares

108B. Restriction on transfer of shares

108C. Restriction on the transfer of shares of foreign companies

108D. Power of Central Government to direct companies not to give effect to the transfer

108E. Time within which refusal to be communicated

108F. Nothing in sections 108A to 108D to apply to Government Companies, etc.

108G. Applicability of the provisions of sections 108 to 108F

108H. Construction of certain expressions used in section 108A to 108G

108I. Penalty for acquisition or transfer of share in contravention of sections 108A to 108D

109. Transfer by legal representative

109A. Nomination of shares

109B. Transmission of shares

110. Application for transfer Page 4 of 332

111. Power to refuse registration and appeal against refusal

111A. Rectification of register on transfer

112. Certification of transfers

113. Limitation of time for issue of certificates

114. Issue and effect of share warrants to bearer

115. Share warrants and entries in register of members

116. Penalty for personation of shareholder

117. Debentures with voting rights not to be issued hereafter.

117A. Debenture trust deed

117B. Appointment of debenture trustees and duties of debenture trustees

117C. Liability of company to create security and debenture redemption reserve

118. Right to obtain copies of and inspect trust deed

119. Liability of trustees for debenture-holders

120. Perpetual debentures

121. Power to re-issue redeemed debentures in certain cases

122. Specific performance of contract to subscribe for debentures

123. Payments of certain debts out of assets subject to floating charge in priority to claims under the charge

PART V : REGISTRATION OF CHARGES

124. "Charge" to include mortgage in this Part

125. Certain charges to be void against liquidator or creditors unless registered

126. Date of notice of charge

127. Registration of charges on properties acquired subject to charge

128. Particulars in case of series of debentures entitling holders pan passu

129. Particulars in case of commission, etc., on debentures

130. Register of charges to be kept by Registrar

131. Index to register of charges

132. Certificate of registration

133. Endorsement of certificate of registration on debenture or certificate of debenture stock

134. Duty of company as regards registration and right of interested party

135. Provisions of Part to apply to modification of charges

136. Copy of instrument creating charge to be kept by company at registered office

137. Entry in register of charges of appointment of receiver or manager

138. Company to report satisfaction and procedure thereafter

139. Power of Registrar to make entries of satisfaction and release in absence of intimation from company

140. Copy of memorandum of satisfaction to be furnished to company

141. Rectification by Company Law Board of register of charges

142. Penalties

143. Company's register of charges

144. Right to inspect copies of instruments creating charges and company's register of charges

145. Application of Part to charges requiring registration under it but not under previous law

PART VI : MANAGEMENT AND ADMINISTRATION

CHAPTER 1 : GENERAL PROVISIONS REGISTERED OFFICE AND NAME

146. Registered office of company

147. Publication of name by company

148. Publication of authorised as well as subscribed and paid-up capital

149. Restrictions on commencement of business

150. Register of members

151. Index of members

152. Register and index of debenture-holders

152A. Register and index of beneficial owners to be of debenture-holders

153. Trusts not to be entered on register

153A. Appointment of public trustee

153B. Declaration as to shares and debentures held in trust

154. Power to close register of members or debenture-holders

155. [Omitted]

156. [Omitted]

157. Power for company to keep foreign register of members or debenture-holders

158. Provisions as to foreign registers

159. Annual return to be made by company having a share capital

160. Annual return to be made by company not having a share capital

161. Further provisions regarding annual return and certificate to be annexed thereto

162. Penalty and interpretation

163. Place of keeping and inspection of, registers and returns

164. Registers, etc., to be evidence

165. Statutory meeting and statutory report of company

166. Annual general meeting Page 5 of 332

167. Power of Company Law Board to call annual general meeting

168. Penalty for default in complying with section 166 or 167

169. Calling of extraordinary general meeting on requisition

170. Sections 171 to 186 to apply to meetings

171. Length of notice for calling meeting

172. Contents and manner of service of notice and persons on whom it is to be served

173. Explanatory statement to be annexed to notice

174. Quorum for meeting

175. Chairman of meeting

176. Proxies

177. Voting to be by show of hands in first instance

178. Chairman's declaration of result of voting by show of hands to be conclusive

179. Demand for poll

180. Time of taking poll

181. Restriction on exercise of voting right of members who have not paid calls, etc.

182. Restrictions on exercise of voting right in other cases to be void

183. Right of member to use his votes differently

184. Scrutineers at poll

185. Manner of taking poll and result thereof

186. Power of Company Law Board to order meeting to be called

187. Representation of corporations at meetings of companies and of "creditors

187A. Representation of the President and Governors in meetings of companies of which they are members

187B. Exercise of voting rights in respect of shares held in trust

187C. Declaration by persons not holding beneficial interest in any share

187D. Investigation of beneficial ownership of shares in certain cases

188. Circulation of members' resolutions

189. Ordinary and special resolutions

190. Resolutions requiring special notice

191. Resolutions passed at adjourned meetings

192. Registration of certain resolutions and agreements

192A. Passing of resolution by postal ballot

193. Minutes of proceedings of general meetings and of Board and other meetings

194. Minutes to be evidence

195. Presumptions to be drawn where minutes duly drawn and signed

196. Inspection of minute books of general meetings

197. Publication of reports of proceedings of general meetings

197A. Company not to appoint or employ certain different categories of managerial personnel at the same time

198. Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits

199. Calculation of commission, etc., in certain cases\

200. Prohibition of tax-free payments

201. Avoidance of provisions relieving liability of officers and auditors of company

202. Undischarged insolvent not to manage companies

203. Power to restrain fraudulent persons from managing companies

204. Restriction on appointment of firm or body corporate to office or place of profit under a company

204A. [Omitted]

205. Dividend to be paid only out of profits

205A. Unpaid dividend to be transferred to special dividend account

205B. Payment of unpaid or unclaimed dividend

205C. Establishment of Investor Education and Protection Fund

206. Dividend not to be paid except to registered share-holders or to their order or to their bankers

206A. Right to dividend rights, rights shares and bonus shares to be held in abeyance pending registration of transfer of shares

207. Penalty for failure to distribute dividends within thirty days

208. Power of company to pay interest out of capital in certain cases

209. Books of account to be kept by company 209 A. Inspection of books of accounts, etc. of companies

210. Annual accounts and balance-sheet

210A. Constitution of National Advisory Committee on Accounting Standards

211. Form and contents of balance-sheet and profit and loss account

212. Balance-sheet of holding company to include certain particulars as to its subsidiaries

213. Financial year of holding company and subsidiary

214. Rights of holding company's representatives and members

215. Authentication of balance-sheet and profit and loss account

216. Profit and loss account to be annexed and auditors' report to be attached to balance-sheet

217. Board's report Page 6 of 332

218. Penalty for improper issue, circulation or publication of balance-sheet or profit and loss account

219. Right of member to copies of balance-sheet and auditors' report

220. Three copies of balance-sheet, etc., to be filed with Registrar

221. Duty of officer to make disclosure of payments, etc.

222. Construction of references to documents annexed to accounts

223. Certain companies to publish statement in the Form in Table F in Schedule I

224. Appointment and remuneration of auditors

224A. Auditor not to be appointed except with the approval of the company by special resolution in certain cases

225. Provisions as to resolutions for appointing or removing auditors

226. Qualifications and disqualifications of auditors

227. Powers and duties of auditors

228. Audit of accounts of branch office of company

229. Signature of audit report, etc.

230. Reading and inspection of auditor's report

231. Right of auditor to attend general meeting

232. Penalty for non-compliance with sections 225 to 231.

233. Penalty for non-compliance by auditor with sections 227 and 229

233A. Power of Central Government to direct special audit in certain cases

233B. Audit of cost accounts in certain cases

234. Power of Registrar to call for information or explanation

234A. Seizure of documents by Registrar

235. Investigation of affairs of a company

236. Application by members to be supported by evidence and power of call for security

237. Investigation of company's affairs in other cases

238. Firm, body corporate or association not to be appointed as inspector

239. Power of inspectors to carry investigation into affairs of related companies, or of managing agent or associate etc.

240. Production of documents and evidence

240A. Seizure of documents by inspector

241. Inspectors' report

242. Prosecution

243. Application for winding up of company or an order under section 397 or 398

244. Proceedings for recovery of damages or property

245. Expenses of investigation

246. Inspectors' report to be evidence

247. Investigation of ownership of company

248. [Omitted]

249. [Omitted]

250. Imposition of restrictions upon shares and debentures and prohibition of transfer of shares or debentures in certain cases

250A. Voluntary winding up of company, etc., not to stop investigation proceedings

251. Saving for legal advisers and bankers

CHAPTER II : DIRECTORS

252. Minimum number of directors

253. Only individuals to be directors

254. Subscribers of memorandum deemed to be directors

255. Appointment of directors and proportion of those who are to retire by rotation

256. Ascertainment of directors retiring by rotation and filling of vacancies

257. Right of persons other than retiring directors to stand for directorship

258. Right of company to increase or reduce the number of directors

259. Increase in number of directors to require Government sanction

260. Additional directors

261. [Omitted]

262. Filling of casual vacancies among directors

263. Appointment of directors to be voted on individually

263A. Sections 177, 255, 256 and 263 not to apply in relation to companies not carrying business for profit, etc.

264. Consent of candidate for directorship to be filed with the company and consent to act as director to be filed with the Registrar

265. Option to company to adopt proportional representation for the appointment of directors

266. Restrictions on appointment or advertisement of director

267. Certain persons not to be appointed managing directors

268. Amendment of provision relating to managing, whole-time or non-rotational directors to require Government approval

269. Appointment of managing or whole-time director or manager to require Government approval only in certain cases

270. Time within which share qualification is to be obtained and maximum amount thereof Page 7 of 332

271. [Omitted]

272. Penalty

273. Saving

274. Disqualifications of directors

275. No person to be a director of more than fifteen companies

276. Choice to be made by director of more than fifteen companies at commencement of Act

277. Choice by person becoming director of more than fifteen companies after commencement of Act

278. Exclusion of certain directorships for the purposes of sections 275, 276 and 277

279. Penalty

280. [Omitted]

281. [Omitted]

282. [Omitted]

283. Vacation of office by directors

284. Removal of directors

285. Board to meet at least once in every three calendar months

286. Notice of meetings

287. Quorum for meetings

288. Procedure where meeting adjourned for want of quorum

289. Passing of resolutions by circulation

290. Validity of acts of directors

291. General powers of Board

292. Certain powers to be exercised by Board only at meeting

292A. Audit Committee

293. Restrictions on powers of Board

293A. Prohibitions and restrictions regarding

293B. Power of Board and other persons to make contributions to the National Defence Fund, etc.

294. Appointment of sole selling agents to require approval of company in general meeting

294A. Prohibition of payment of compensation to sole selling agents for loss of office in certain cases

294AA. Power of Central Government to prohibit the appointment of sole selling agents in certain cases

295. Loans to directors, etc.

296. Application of section 295 to book debts in certain cases

297. Board's sanction to be required for certain contracts in which particular directors are interested

298. [Omitted]

299. Disclosure of interests by director

300. Interested director not to participate or vote in Board's proceedings

301. Register of contracts, companies and firms in which directors are interested

302. Disclosure to members of director's interest in contract appointing manager, managing director

303.Register of directors, etc.

304.Inspection of the register

305.Duty of directors, etc., to make disclosure

306.Register to be kept by Registrar and inspection thereof

307.Register of directors' shareholdings, etc.

308.Duty of directors and persons deemed to be directors to make disclosure of shareholdings

309. Remuneration of directors

310. Provision for increase in remuneration to require Government sanction

311. Increase in remuneration of managing director on reappointment or appointment after Act to require Government sanction

312. Prohibition of assignment of office by directors

313. Appointment and term of office of alternate directors

314. Director, etc. not to hold office or place of profit

315. [Omitted]

316. Number of companies of which one person may be appointed managing director

317. Managing director not to be appointed for more than five years at a time

318. Compensation for loss of office not permissible except to managing or whole-time directors or to directors who are managers

319. Payment to director, etc., for loss of office, etc., in connection with transfer of undertaking of property

320. Payment to director for loss of office, etc., in connection with transfer of shares

321. Provisions supplementary to sections 318, 319 and 320

322. Directors, etc., with unlimited liability in limited company

323. Special resolution of limited company making liability of directors, etc., unlimited

CHAPTER III : MANAGING AGENTS 324 to 347. [Omitted]

348. [Omitted]

349. Determination of net profits

350. Ascertainment of depreciation

351. [Omitted] Page 8 of 332

352. [Omitted]

353. [Omitted]

354. [Omitted]

355. Saving 356 to 367. [Omitted]

368. [Omitted]

369. [Omitted]

370. Loans, etc., to companies under the same management

370A. Provisions as to certain loans which could not have been made if sections 369 and 370 were in force

371. Penalty for contravention of section 369, 370 or 370A

372. Purchase by company of shares, etc., of other companies

372A. Inter-corporate loans and investments

373. Investments made before commencement of Act

374. Penalty for contravention of section 372 or 373

375. [Omitted]

376. Conditions prohibiting reconstruction or amalgamation of company

377. [Omitted]

CHAPTER IV : A. SECRETARIES AND TREASURERS

378. [Omitted]

379. [Omitted]

380. [Omitted]

381. [Omitted]

382. [Omitted]

383. [Omitted]

383A. Certain companies to have secretaries

384. Firm or body corporate not to be appointed manager

385. Certain persons not to be appointed managers

386. Number of companies of which a person may be appointed manager

387. Remuneration of manager

388. Application of sections 269, 310, 311, 312 and 317 to managers

388A. Sections 386 to 388 not to apply to certain private companies

CHAPTER IV A : POWERS OF CENTRAL GOVERNMENT TO REMOVE MANAGERIAL PERSONNEL FROM OFFICE ON THE RECOMMENDATION OF THE COMPANY LAW BOARD

388B. Reference to Company Law Board of cases against managerial personnel

388C. Interim order by Company Law Board

388D. Decisions of the Company Law Board

388E. Power of Central Government to remove managerial personnel on the basis of Company Law Board's decision

CHAPTER V : ARBITRATIONS, COMPROMISES, ARRANGEMENTS AND RECONSTRUCTIONS

389. [Omitted]

390. Interpretation of sections 391 and 393

391. Power to compromise or make arrangements with creditors and members

392. Power of High Court to enforce compromises and arrangements

393. Information as to compromises or arrangements with creditors and members

394. Provisions for facilitating reconstruction and amalgamation of companies

394A. Notice to be given to Central Government for applications under sections 391 and 394

395. Power and duty to acquire shares of shareholders dissenting from scheme or contract approved by majority

396. Power of Central Government to provide for amalgamation of companies in public interest

396A. Preservation of books and papers of amalgamated company

CHAPTER VI : PREVENTION OF OPPRESSION AND MISMANAGEMENT

397. Application to Company Law Board for relief in cases of oppression

398. Application to Company Law Board for relief in cases of mismanagement

399. Right to apply under sections 397 and 398

400. Notice to be given to Central Government of applications under sections 397 and 398

401. Right of Central Government to apply under sections 397 and 398

402. Powers of Company Law Board on application under sections 397 or 398

403. Interim order by Company Law Board

404. Effect of alteration of memorandum or articles of company by order under section 397 or 398

405. Addition of respondents to application under section 397 or 398

406. Application of sections 539 to 544 to proceedings under sections 397 and 398

407. Consequences of termination or modification of certain agreements B Powers of central government

408. Powers of Government to prevent oppression or mismanagement

409. Power of Company Law Board to prevent change in Board of directors likely to affect company prejudicially

CHAPTER VII : CONSTITUTION AND POWERS OF ADVISORY COMMITTEE

410. Appointment of Advisory Committee

411. [Omitted]

412. [Omitted] Page 9 of 332

413. [Omitted]

414. [Omitted]

415. [Omitted]

CHAPTER VIII : MISCELLANEOUS PROVISIONS

416. Contracts by agents of company in which company is undisclosed principal

417. Employees' securities to be deposited in post office savings bank or Scheduled Bank

418. Provisions applicable to provident funds of employees

419. Right of employee to see bank's receipt for moneys or securities referred to in section 417 or 418

420. Penalty for contravention of sections 417, 418 and 419

421. Filing of accounts of receivers

422. Invoices, etc., to refer to receiver where there is one

423. Penalty for non-compliance with sections 421 and 422

424. Application of sections 421 to 423 to receivers and managers appointed by court and managers appointed in pursuance of an instrument

PART VIA : REVIVAL AND REHABILITATION OF SICK INDUSTRIAL COMPANIES

424A. Reference to Tribunal

424B. Inquiry into working of sick industrial companies

424C. Powers of Tribunal to make suitable order on completion of inquiry

424D. Preparation and sanction of schemes

424E. Rehabilitation by giving financial assistance

424F. Arrangement for continuing operations, etc., during inquiry

424G. Winding up of sick industrial company

424H. Operating agency to prepare complete inventory, etc 424-I. Direction not to dispose of assets

424J. Power of Tribunal to call for periodic information

424K. Misfeasance proceedings

424L. Penalty for certain offences

PART VII : WINDING UP

CHAPTER I : PRELIMINARY

425. Modes of winding up

426. Liability as contributories of present and past members

427. Obligations of directors and managers whose liability is unlimited

428. Definition of "contributory"

429. Nature of liability of contributory

430. Contributories in case of death of member

431. Contributories in case of insolvency of member

432. Contributories in case of winding up of a body corporate which is a member

CHAPTER II : WINDING UP BY THE COURT

433.Circumstances in which company may be wound up by court

434. Company when deemed unable to pay its debts

435. [Omitted]

436. [Omitted]

437. [Omitted]

438. [Omitted]

439. Provisions as to applications for winding up

439A. Statement of affairs to the filed o winding up of a company

440. Right to present winding up petition where company is being wound up voluntarily or subject to court's supervision

441. Commencement of winding up by Court

441A. Levy and collection of cess on turnover or gross receipts of companies

441B. Crediting proceeds of cess to Consolidated Fund of India

441C. Rehabilitation Fund

441D. Application of Fund

441E. Power to call for information

441F. Penalty for non-payment of cess

441G. Refund of fund in certain cases

442. [Omitted]

443. Powers of Tribunal on hearing petition

444. Order for winding up to be communicated to Official Liquidator and Registrar

445. Copy of winding up order to be filed with Registrar

446. Suits stayed on winding up order

446A. Responsibility of directors and officers to submit to Tribunal audited books and accounts

447. Effect of winding up order

448. Appointment of Official Liquidator

449. Official Liquidator to be liquidator Page 10 of 332

450. Appointment and powers of provisional liquidator

451. General Provisions as to liquidators

452. Style, etc., of liquidator

453.Receiver not to be appointed of assets with liquidator

454. Statement of affairs to be made to Official Liquidator

455. Report by Official Liquidator

456. Custody of company's property

457. Powers of liquidator

458. Discretion of liquidator

458A. Exclusion of certain time in computing periods of limitation

459. Provision for legal assistance to liquidator

460. Exercise and control of liquidator's powers

461. Books to be kept by liquidator

462. Audit of liquidator's accounts

463. Control of Central Government over liquidators

464. Appointment and Composition of committee of inspection

465. Constitution and proceedings of committee of inspection

466. Power of court to stay winding up

467. Settlement of list of contributories and application of assets

468.Delivery of property to liquidator

469. Payment of debts due by contributory and extent of set-off

470. Power of court to make calls

471. Payment into bank of moneys due to company

472. Moneys and securities paid into Bank to be subject to order of court

473. Order on contributory to be conclusive evidence

474. Power to exclude creditors not proving in time

475. Adjustment of rights of contributories

476. Power to order costs

477. Power to summon persons suspected of having property of company, etc.

478. Power to order public examination of promoters, directors, etc.

479. Power to arrest absconding contributory

480. Saving of existing powers of court

481. Dissolution of company

482. Order made in any court to be enforced by other courts

483. Appeals from orders

CHAPTER III : VOLUNTARY WINDING UP

484. Circumstances in which company may be wound up voluntarily

485. Publication of resolution to wind up voluntarily

486. Commencement of voluntary winding up

487. Effect of voluntary winding up on status of company

488. Declaration of solvency in case of proposal to wind up voluntarily Provisions applicable to a members' voluntary winding up

489. Provisions applicable to a members' voluntary winding up

490. Power of company to appoint and fix remuneration of liquidators

491. Board's powers to cease on appointment of liquidator

492. Power to fill vacancy in office of liquidator

493. Notice of appointment of liquidator to be given to Registrar

494. Power of liquidator to accept shares, etc., as consideration for sale of property of company

495. Duty of liquidator to call creditors' meeting in case of insolvency

496. Duty of liquidator to call general meeting at end of each year

497. Final meeting and dissolution

498. Alternative provisions as to annual and final meetings in case of insolvency

499. Provisions applicable to a creditors' voluntary winding up

500. Meeting of creditors

501. Notice of resolutions passed by creditors' meeting to be given to Registrar

502. Appointment of liquidator

503. Appointment of committee of inspection

504. Fixing of liquidators' remuneration

505. Board's powers to cease on appointment of liquidator

506. Power to fill vacancy in office of liquidator

507. Application of section 494 to a creditors' voluntary winding up

508. Duty of liquidator to call meetings of company and of creditors at end of each year

509. Final meeting and dissolution

510. Provisions applicable to every voluntary winding up

511. Distribution of property of company

511A. Application of section 454 to voluntary winding up Page 11 of 332

512. Powers and duties of liquidator in voluntary winding up

513. Body corporate not to be appointed as liquidator

514. Corrupt inducement affecting appointment as liquidator

515. Power of court to appoint and remove liquidator in voluntary winding up

516. Notice by liquidator of his appointment

517. Arrangement when binding on company and creditors

518. Power to apply to court to have questions determined or powers exercised

519. Application of liquidator to court for public examination of promoters, directors, etc.

520. Costs of voluntary winding up

521. [Omitted]

CHAPTER IV : WINDING UP SUBJECT TO SUPERVISION OF COURT 522 to 527. [Omitted]

CHAPTER V: PROVISIONS APPLICABLE TO EVERY MODE OF WINDING UP

528. Debts of all descriptions to be admitted to proof

529. Application of insolvency rules in winding up of insolvent companies.

529A. Overriding preferential payment

530. Preferential payments

531. Fraudulent preference

531A. Avoidance of voluntary transfer

532. Transfers for benefit of all creditors to be void

533. Liabilities and rights of certain fraudulently preferred persons

534. Effect of floating charge

535. Disclaimer of onerous property in case of a company which is being wound up

536. Avoidance of transfers, etc., after commencement of winding up

537. Avoidance of certain attachments, executions, etc., in winding up by or subject to supervision of court

538. Offences by officers of companies in liquidation

539. Penalty for falsification of books

540. Penalty for frauds by officers

541. Liability where proper accounts not kept

542. Liability for fraudulent conduct of business

543. Power of court to assess damages against delinquent directors, etc

544. Liability under sections 542 and 543 to extend to partners or directors in firm or company

545. Prosecution of delinquent officers and members of company

546. Liquidator to exercise certain powers subject to sanction

547. Notification that a company is in liquidation

548. Books and papers of company to be evidence

549. Inspection of books and papers by creditors and contributories

550. Disposal of books and papers of company

551. Information as to pending liquidations

552. Official Liquidator to make payments into the public account of India

553. Voluntary liquidator to make payments into Scheduled Bank

554. Liquidator not to pay moneys into private banking account

555. Unpaid dividends and undistributed assets to be paid into the Companies Liquidation Account

556. Enforcement of duty of liquidator to make returns, etc. Supplementary powers of court

557. Meetings to ascertain wishes of creditors or contributories

558. Court or person before whom affidavit may be sworn

559. Power of court to declare dissolution of company void

560. Power of Registrar to strike defunct company off register

PART VIII : APPLICATION OF ACT TO COMPANIES FORMED OR REGISTERE UNDER PREVIOUS COMPANIES LAWS

561. Application of Act to companies formed and registered under previous companies laws

562. Application of Act to companies registered but not formed under previous companies laws

563. Application of Act to unlimited companies re-registered under previous companies laws

564. Mode of transferring shares in the case of companies registered under Acts 19 of 1857 and 7 of 1860.

PART IX : COMPANIES AUTHORISED TO REGISTER UNDER THIS ACT

565. Companies capable of being registered

566. Definition of "joint-stock company"

567. Requirements for registration of joint-stock companies

568. Requirements for registration of companies not being "joint-stock companies"

569. Authentication of statements of existing companies

570. Power of Registrar to require evidence as to nature of company

571. Notice to customers on registration of banking company with limited liability

572. Change of name for purposes of registration

573. Addition of "Limited" or "Private Limited" to name

574. Certificate of registration of existing companies

575. Vesting of property on registration Page 12 of 332

576. Saving for existing liabilities

577. Continuation of pending legal proceedings

578. Effect of registration under Part

579. Power to substitute memorandum and articles for deed of settlement

580. Power of court to stay or restrain proceedings

581. Suits stayed on winding up order

PART IXA

CHAPTER I : PRODUCER COMPANIES

581A. Definitions

CHAPTER II : INCORPORATION OF PRODUCER COMPANIES AND OTHER MATTERS

581B. Objects of Producer Company

581C. Formation of Producer Company and its registration

581D. Membership and voting rights of Members of Producer Company

581E. Benefits to Members

581F. Memorandum of Producer Company

581G. Articles of association

581H. Amendment of memorandum 581-I. Amendment of articles

581J. Option to inter-State co-operative societies to become Producer Companies

581K. Effect of incorporation of Producer Company

581L. Vesting of undertaking in Producer Company

581M. Concession, etc., to be deemed to have been granted to Producer Company

581N. Provisions in respect of officers and other employees of inter-State co-operative society

CHAPTER III: MANAGEMENT OF PRODUCER COMPANY

581O. Number of directors

581P. Appointment of directors

581Q. Vacation of office by directors

581R. Powers and functions of Board

581S. Matters to be transacted at general meeting

581T. Liability of directors

581U. Committee of directors

581V. Meetings of Board and quorum

581W. Chief Executive and his function

581X. Secretary of Producer Company

581Y. Quorum

581Z. Voting rights

CHAPTER IV: GENERAL MEETINGS

581ZA. Annual general meetings

CHAPTER V: SHARE CAPITAL AND MEMBERS RIGHTS

581ZB. Share capital

581ZC. Special user rights

581ZD. Transferability of shares and attendant rights

CHAPTER VI: FINANCE, ACCOUNTS AND AUDIT

581ZE. Books of account

581ZF. Internal audit

581ZG. Duties of auditor under this Part

581ZH. Donations or subscription by Producer Company

581ZI. General and other reserves

581ZJ. Issue of bonus shares

CHAPTER VII: LOANS TO MEMBERS AND INVESTMENTS

581ZK. Loan, etc., to members

581ZL. Investment in other companies, formation of subsidiaries, etc

CHAPTER VIII: PENALTIES

581ZM. Penalty for contravention

CHAPTER IX: AMALGAMATION, MERGER OR DIVISION

581ZN. Amalgamation, merger or division, etc., to form new Producer Companies

CHAPTER X: RESOLUTION OF DISPUTES

581ZO. Disputes

CHAPTER XI: MISCELLANEOUS PROVISIONS

581ZP. Strike off name of Producer Company

581ZQ. Provisions of this Part to override other laws

581ZR. Application of provisions relating to private companies

CHAPTER XII: RECONVERSION OF PRODUCER COMPANY TO INTER-STATE CO-OPERATIVE SOCIETY

581ZS. Reconversion of Producer Company to inter-State co-operative society

581ZT. Power to modify Act in its application to Producer Companies

PART X : WINDING UP OF UNREGISTERED COMPANIES Page 13 of 332

582. Meaning of "unregistered company"

583. Winding up of unregistered companies

584. Power to wind up foreign companies, although dissolved

585. Contributories in winding up of unregistered company

586. Power to stay or restrain proceedings

587. Suits, etc., stayed on winding up order

588. Directions as to property in certain cases

589. Provisions of Part cumulative

590. Saving and construction of enactments conferring power to wind up partnership, association or company in certain cases

PART XI : COMPANIES INCORPORATED OUTSIDE INDIA

591. Application of sections 592 to 602 to foreign companies

592. Documents, etc., to be delivered to Registrar by foreign companies carrying on business in India

593. Return to be delivered to Registrar by foreign company where documents, etc., altered

594. Accounts of foreign company

595. Obligation to state name of foreign company, whether limited, and country where incorporated

596. Service on foreign company

597. Office where documents to be delivered

598. Penalties

599. Company's failure to comply with Part not to affect its liability under contracts, etc.

600. Registration of charges, appointment of receiver and books of account

601. Fees for registration of documents under Part

602. Interpretation of foregoing sections of Part Prospectuses

603. Dating of prospectus and particulars to be contained therein

604. Provisions as to expert's consent and allotment

605. Registration of prospectus

605A. Offer of Indian Depository Receipts

606. Penalty for contravention of sections 603, 604 and 605.

607. Civil liability for mis-statements in prospectus

608. Interpretation of provisions as to prospectuses

PART XII : REGISTRATION OFFICES AND OFFICERS AND FEES

609. Registration Offices

610. Inspection, production and evidence of documents kept by Registrar

610A. Admissibility of micro films, facsimile copies of documents,computer printouts and documents on computer media as documents and as evidence

611. Fees in Schedule X to be paid

612. Fees, etc., paid to Registrar and other officers to be accounted for to Central Government

613. Power of Central Government to reduce fees, charges, etc.

614. Enforcement of duty of company to make returns, etc., to Registrar

614A. Power of court trying offences under the Act to direct the filing of documents with Registrar

PART XIII : GENERAL

615. "Power of Central Government to direct companies to furnish information or statisties

616. Application of Act to insurance, banking, electricity supply and other companies governed by special Acts

617. Definition of "Government Company"

618. [Omitted]

619. Application of sections 224 to 233 to Government companies

619A. Annual reports on Government companies

619B. Provisions of section 619 to apply to certain companies

620. Power to modify Act in relation to Government companies

620A. Power to modify Act in its application to Nidhis, etc.

620B. Special provision as to companies in Goa, Daman and Diu

620C. Special provision as to companies in Jammu and Kashmir

621. Offences against Act to be cognizable only on complaint by Registrar, shareholder of Government

621A. Composition of certain offences

622. Jurisdiction to try offences

623. Certain offences, triable summarily in Presidency towns

624. Offences to be non-cognizable

624A. Power of Central Government to appoint company prosecutors

624B. Appeal against acquittal

625. Payment of compensation in cases of frivolous or vexatious prosecution

626. Application of fines

627. Production and inspection of books where offence suspected

628. Penalty for false statements

629. Penalty for false evidence

629A. Penalty where no specific penalty is provided elsewhere in the Act

630. Penalty for wrongful withholding of property Page 14 of 332

631. Penalty for improper use of words "Limited" and "Private Limited"

632. Power to require limited company to give security for costs

633. Power of court to grant relief in certain cases

634. Enforcement of orders of courts

634A. Enforcement of orders of Company Law Board

635. Enforcement of orders of one court by other courts

635A. Protection of acts done in good faith

635AA. Non-disclosure of information in certain cases

635B. Protection of employees during investigation by Inspector or pendency of proceeding before court in certain cases

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

637. Delegation by Central Government of its powers and fs under Act

637A. Power of Central Government or Company Law Board to accord approval, etc., subject to conditions and to prescribe fees on applications

637AA. Power of Central Government to fix a limit with regard to remuneration

637B. Condonation of delays in certain cases

638. Annual report by Central Government

639. [Omitted]

640. Validation of registration of firms as members of charitable and other companies

640A. Exclusion of time required in obtaining copies of orders of Court or the Tribunal

640B. Forms of, and procedure in relation to, certain applications

641. Power to alter Schedules

642. Power of Central Government to make rules

643. Power of Supreme Court to make rules

644. Repeal of Acts specified in Schedule XII

645. Saving of orders, rules, etc., in force at commencement of Act

646. Saving of operation of section 138 of Act 7 of 1913

647. Saving of pending proceedings for winding up

647A. Transfer of winding up proceedings to Tribunal

648. Saving of prosecutions instituted by liquidator or court under section 237 of Act 7 of 1913.

649. Construction of references to former enactments in documents

650.Construction of "Registrar of joint stock companies" in Act 21 of 1860 [Omitted]

651. Construction of references to extraordinary resolution in articles, etc.

651A. Reference of winding up of companies in other laws

652. Appointment under previous companies laws to have effect as if made under Act

653. Former registration offices continued

654. Registers under previous companies laws to be deemed to be part of registers under Act

655. Funds and accounts under Act to be in continuation of funds and accounts under previous companies taw

656. Saving of incorporation under repealed Acts

657. Saving of certain Tables under previous companies laws

658. Section 6 of the General Clauses Act, 1897 (10 of 1897) to apply in addition to sections 645 to 657 of Act SCHEDULES I SCHEDULES IA SCHEDULES II SCHEDULES III SCHEDULES IV SCHEDULES V SCHEDULES VI SCHEDULES VII SCHEDULES VIII SCHEDULES IX SCHEDULES X SCHEDULES XI SCHEDULES XII SCHEDULES XIII SCHEDULES XIV SCHEDULES XV Page 15 of 332 COMPANIES ACT, 1956 [act no. 1 of 1956] An Act to consolidate and amend the law relating to companies and certain other associations Be it enacted by Parliament in the Sixth Year of the Republic of India as follows :

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

(3) It extends to the whole of India :

Provided that it shall apply to the State of Nagaland subject to such modifications, if any, as the Central Government may, by notification in the Official Gazette, specify.

2. DEFINITIONS In this Act, unless the context otherwise requires, - 1[(1) "abridged prospectus" means a memorandum containing such salient features of a prospectus as may be prescribed ;] 2[(1A) "alter" and "alteration" shall include the making of additions and omissions ; 3[(1B) "Appellate Tribunal" means the National Company Law Appellate Tribunal constituted under sub-section (1) of section 10FR ;]

(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) [Omitted by the Companies (Amendment) Act, 2000 with effect from 13-12-2000 ;]

(4) [Omitted by the Companies (Amendment) Act, 2000 with effect from 13-12-2000 ;]

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

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

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

(a) a corporation sole ;

(b) a co-operative society registered under any law relating to co-operative societies ; and

(c) any other body corporate (not being a company as defined in this Act), which the Central Government may, by notification in the Official Gazette, specify in this behalf ;

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

(9) "branch office" in relation to a company means -

(a) any establishment described as a branch by the company ; or

(b) any establishment carrying on either the same or substantially the same activity as that carried on by the head office of the company ; or

(c) any establishment engaged in any production, processing or manufacture, but does not include any establishment specified in any order made by the Central Government under section 8 ;

(10) "company" means a company as defined in section 3 ; (10A) "Company Law Board" means the Board of Company Law Administration constituted under section 10E ;

(11) "the Court" means, -

(a) with respect to any matter relating to a company (other than any offence against this Act), the Court having jurisdiction under this Act with respect to that matter relating to that company, as provided in section 10 ;

(b) with respect to any offence against this Act, the Court of a Magistrate of the First Class or, as the case may be, a Presidency Magistrate, having jurisdiction to try such offence ;

(12) "debenture" includes debenture stock, bonds and any other securities of a company, whether constituting a charge on the assets of the company or not ; 4[(12A) "depository" has the same meaning as in the Depositories Act, 1996 (22 of 1996) ;] 4[(12B) "derivative" has the same meaning as in clause (aa) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) ;]

(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 ; 4[(14A) "dividend" includes any interim dividend ;]

(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 ; 4[(15A) "employees stock option" means the option given to the whole-time directors, officers or employees of a company, which gives such directors, officers or employees the benefit or right to purchase or subscribe at a future date, the securities offered by the company at a pre-determined price ;] Page 16 of 332

(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 subsection (1) of section 11 of the Insurance Act, 1938 (4 of 1938) ;

(18) "Government company" means a Government company within the meaning of section 617 ; (18A) [Omitted by the MRTP (Amendment) Act, 1984, with effect from 1-8-1984 ;]

(19) "holding company" means a holding company within the meaning of section 4 ; 4[(19A) "hybrid" means any security which has the character of more than one type of security, including their derivatives ;] 5[(19AA) "industrial company" means a company which owns one or more industrial undertakings ; (19AB) "industrial undertaking" means any undertaking, pertaining to any industry carried on in one or more factories or units by any company, as defined in clause (aa) of section 3 of the Industries (Development and Regulation) Act, 1951 (65 of 1951) but does not include a small-scale industrial undertaking as defined in clause (j) of that section ;] 4[(19B) "information memorandum" means a process undertaken prior to the filing of a prospectus by which a demand for the securities proposed to be issued by a company is elicited, and the price and the terms of issue for such securities is assessed, by means of a notice, circular, advertisement or document;]

(20) [Omitted by the (J & K Extension of Laws) Act, 1956;]

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

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

(23) "limited company" means a company limited by shares or by guarantee; 4[(23A) "listed public companies" means a public company which has any of its securities listed in any recognised stock exchange;]

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

(25) [Omitted by the Companies (Amendment) Act, 2000 with effect from 13-12-2000;]

(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 substantial powers of management which would not otherwise be exercisable by him, and includes a director occupying the position of a managing director, by whatever name called :

Provided that the power to do administrative acts of a routine nature when so authorised by the Board such as the power to affix the common seal of the company to any document or to draw and endorse any cheque on the account of the company in any bank or to draw and endorse any negotiable instrument or to sign any certificate of share or to direct registration of transfer of any share, shall not be deemed to be included within substantial powers of management :

Provided further that a managing director of a company shall exercise his powers subject to the superintendence, control and direction of its Board of directors ;

(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 ; 6[ (29A) "net worth" means the sum total of the paid-up capital and free reserves after deducting the provisions or expenses as may be prescribed.

Explanation. - For the purposes of this clause, "free reserves" means all reserves created out of the profits and share premium account but does not include reserves created out of revaluation of assets, write back of depreciation provisions and amalgamation ;] 7[(30) "officer" includes any director, manager or secretary or any person in accordance with whose directions or instructions the Board of directors or any one or more of the directors is or are accustomed to act ;]

(31) "officer who is in default", in relation to any provision referred to in section 5, has the meaning specified in that section ; 4[(31A) "option in securities" has the same meaning as in clause (d) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) ;] 6[(31AA)"operating agency" means any group of experts consisting of persons having special knowledge of business or industry in which the sick industrial company is engaged and includes public financial institution, State level institution, scheduled bank or any other person as may be specified as the operating agency by the Tribunal;]

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

(33) "prescribed" means, as respects the provisions of this Act relating to the winding up of companies except subsection (5) of section 503, sub-section (3) of section 550, section 552 and sub-section (3) of section 555, prescribed by rules made by the Supreme Court in consultation with 8[the Tribunal], and as respects the other provisions of this Page 17 of 332 Act including sub-section (5) of section 503, sub-section (3) of section 550, section 552 and sub-section (3) of section 555, 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 document described or issued as a prospectus and includes any notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares in, or debentures of, a body corporate ;

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

(38) "public holiday" means a public holiday within the meaning of the Negotiable Instruments Act, 1881 (26 of 1881) :

Provided that no day declared by the Central Government to be a public holiday shall be deemed to be such a holiday, in relation to any meeting, unless the declaration was notified before the issue of the notice convening such meeting ;

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

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

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

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

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

(44) [Omitted by the Companies (Amendment) Act, 2000 with effect from 13-12-2000 ;] 9[(45) "secretary" means a company secretary within the meaning of clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980 (56 of 1980), and includes any other individual possessing the prescribed qualifications and appointed to perform the duties which may be performed by a secretary under this Act and any other ministerial or administrative duties ;] 10[(45A) "secretary in whole-time practice" means a secretary who shall be deemed to be in practice within the meaning of sub-section (2) of section 2 of the Company Secretaries Act, 1980 (56 of 1980), and who is not in full-time employment ;] 4[(45AA) "securities" means securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), and includes hybrids ;] 11[ (45B) "Securities and Exchange Board of India" means the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) ;]

(46) "share" means share in the share capital of a company, and includes stock except where a distinction between stock and shares is expressed or implied ; 4[(46A)"share with differential rights" means a share that is issued with differential rights in accordance with the provisions of section 86;] 6[ (46AA) "sick industrial company" means an industrial company which has.-

(i) the accumulated losses in any financial year equal to fifty per cent, or more of its average net worth during four years immediately preceding such financial year ; or

(ii) failed to repay its debts within any three consecutive quarters on demand made in writing for its repayment by a creditor or creditors of such company ;] 6[(46AB)"State level institution" means any of the following institutions, namely : -

(a) the State Financial Corporations established under section 3 or section 3A and institutions notified under section 46 of the State Financial Corporations Act, 1951 (63 of 1951) ;

(b) the State Industrial Development Corporations registered under this Act ;]

(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 cast in regard to that matter on a poll at a meeting of such body, if all the members thereof and all other persons, if any, having a right to vote on that matter are present at the meeting, and cast their votes ;

(49) "trading corporation" means a trading corporation within the meaning of entries 43 and 44 in List I in the Seventh Schedule to the Constitution ; 6[(49A) "Tribunal" means the National Company Law Tribunal constituted under sub-section (1) of section 10FB ;]

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

1. Inserted by the Companies (Amendment) Act, 2000 w.e.f. 13-12-2000.

2. Clause (1) renumbered as (1A) by the Companies (Amendment) Act, 2000 w.e.f. 13-12-2000.

3. Inserted by the Companies (Second Amendment) Act, 2002 w.e.f. 1-4-2003

4. Inserted by the Companies (Amendment) Act, 2000 w.e.f. 13-12-2000.

5. Inserted by the Companies (Second Amendment) Act, 2002 w.e.f. 1-4-2003

6. Inserted by the Companies (Second Amendment) Act, 2002 w.e.f. 1-4-2003

7. Substituted by the Companies (Amendment) Act, 2000 w.e.f. 13-12-2000. Prior to its substitution, clause

(30), read as under : `(30) "officer" includes any director, managing agent, secretaries and treasurers, manager or secretary, or any person in accordance with whose directions or instructions the Board of directors or any one or more of the director is or are accustomed to act, and also includes - Page 18 of 332

(a) where the managing agent, or the secretaries and treasurers is or are a firm, any partner in the firm ;

(b) where the managing agent or the secretaries and treasurers is or are a body corporate, any director or manager of the body corporate ;

(c) [Omitted by the Companies (Amendment) Act, 1974 w.e.f. 1st August, 1975], but, save in sections 477, 478, 539, 543, 545, 621, 625 and 633, does not include an auditor ;'

8. Substituted for `High Courts' by the Companies (Second Amendment) Act, 2002 w.e.f. 1-4-2003

9. Substituted by the Companies (Amendment) Act, 1988 w.e.f. 1-12-1988.

10. Inserted by the Companies (Amendment) Act, 1988 w.e.f. 15-6-1988.

11. Inserted by the Depositories Act, 1996 w.r.e.f. 20-9-1995. 1[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.]

1. Inserted by the Depositories Act, 1996 w.r.e.f. 20-9-1995.

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 (10 of 1866) ;

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

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

(f) any law corresponding to any of the Acts or the Ordinance aforesaid and in force -

(1) in the merged territories or in a Part B States (other than the State of Jammu and Kashmir), or any part thereof, before the extension thereto of the Indian Companies Act, 1913 (7 of 1913) ; or

(2) in the State of Jammu and Kashmir, or any part thereof, before the commencement of the Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), insofar as banking, insurance and financial corporations are concerned, and before the commencement of the Central Laws (Extension to Jammu & Kashmir) Act, 1968 (25 of 1968), insofar as other corporations are concerned ; and

(g) the Portuguese Commercial Code, insofar as it relates to "sociedades anonimas" ;

(iii) "private company" 1[means a company which has a minimum paid-up capital of one lakh rupees or such higher paid-up capital as may be prescribed, and by is 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 ; 2[(d) prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives:]

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 ; 3[(iv) "public company" means a company which -

(a) is not a private company ;

(b) has a minimum paid-up capital of five lakh rupees or such higher paid-up capital, as may be prescribed ;

(2) Unless the context otherwise requires, the following companies shall not be included within the scope of any of the expressions defined in clauses (i) to (iv) of sub-section (1), and such companies shall be deemed, for the purposes of this Act, to have been formed and registered outside India :

(a) a company the registered office whereof is in Burma, Aden or Pakistan and which immediately before the separation of that country from India was a company as defined in clause (i) of sub-section (1) ;

(b) [Omitted by the J&K (Extension of Laws) Act, 1956]. 4[(3) Every private company, existing on the commencement of the Companies (Amendment) Act, 2000, with a paidup capital of less than one lakh rupees shall, within a period of two years from such commencement, enhance its paidup capital to one lakh rupees. Page 19 of 332

(4) Every public company, existing on the commencement of the Companies (Amendment) Act, 2000, with a paid-up capital of less than five lakh rupees shall, within a period of two years from such commencement, enhance its paid-up capital to five lakh rupees.

(5) Where a private company or a public company fails to enhance its paid-up capital in the manner specified in subsection (3) or sub-section (4), such company shall be deemed to be a defunct company within the meaning of section 560 and its name shall be struck off from the register by the Registrar.

(6) A company registered under section 25 before or after the commencement of Companies (Amendment) Act, 2000 shall not be required to have minimum paid-up capital specified in this section.]

1. Substituted for "means a company which, by its articles,-" by the Companies (Amendment) Act, 2000 w.e.f. 13-12-2000.

2. Inserted by the Companies (Amendment) Act, 2000 w.e.f. 13-12-2000.

3. Substituted for the clause (iv) by the Companies (Amendment) Act, 2000 w.e.f. 13-12-2000. Prior to substitution clause (iv) read as under : `(iv) "public company" means a company which is not a private company.'

4. Sub-sections (3), (4), (5) and (6) inserted b the Companies (Amendment) Act, 2000 w.e.f. 13-12-2000.

4. MEANING OF "HOLDING COMPANY" AND "SUBSIDIARY"

(1) For the purposes of this Act, a company shall, subject to the provisions of sub-section (3), be deemed to be a subsidiary of another if, but only if, -

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

(b) that other -

(i) where the first-mentioned company is an existing company in respect of which the holders of preference shares issued before the commencement of this Act have the same voting rights in all respects as the holders of equity shares, exercises or controls more than half of the total voting power of such company ;

(ii) where the first-mentioned company is any other company, 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 C, Company D will be a subsidiary of Company B and consequently also of Company A, by virtue of clause (c) above, and so on.

(2) For the purposes of sub-section (1), the composition of a company's Board of directors shall be deemed to be controlled by another company if, but only if, that other company by the exercise of some power exercisable by it at its discretion without the consent or concurrence of any other person, can appoint or remove the holders of all or a majority of the directorships ; but for the purposes of this provision that other company shall be deemed to have power to appoint to a directorship with respect to which any of the following conditions is satisfied, that is to say -

(a) that a person cannot be appointed thereto without the exercise in his favour by that other company of such a power as aforesaid ;

(b) that a person's appointment thereto follows necessarily from his appointment as director 1[***] or manager of, or to any other office or employment in, that other company ; or

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

(d) any shares held or power exercisable by, or by a nominee for, that other or its subsidiary [not being held or exercisable as mentioned in clause (c)] shall be treated as not held or exercisable by that other, if the ordinary business of that other or its subsidiary, as the case may be, includes the lending of money and the shares are held or the power is exercisable as aforesaid by way of security only for the purposes of a transaction entered into in the ordinary course of that business.

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

(5) In this section, the expression "company" includes any body corporate, and the expression "equity share capital" has the same meaning as in sub-section (2) of section 85.

(6) In the case of a body corporate which is incorporated in a country outside India, a subsidiary or holding company of the body corporate under the law of such country shall be deemed to be a subsidiary or holding company of the body corporate within the meaning and for the purposes of this Act also, whether the requirements of this section are fulfilled or not. Page 20 of 332

(7) A private company, being a subsidiary of a body corporate incorporated outside India, which, if incorporated in India, would be a public company within the meaning of this Act, shall be deemed for the purposes of this Act to be a subsidiary of a public company if the entire share capital in that private company is not held by that body corporate whether alone or together with one or more other bodies corporate incorporated outside India.

1. Words ", managing agent, secretaries and treasurers" omitted by the Companies (Amendment) Act, 2000 w.e.f. 13-12-2000.

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) ; 1[(vi) the Infrastructure Development Finance Company Limited, a company formed and registered under this Act ;] 2[(vii) the securitisation company or the reconstruction company which has obtained a certificate of registration under sub-section (4) of section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.]

(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.

1. Inserted by the Companies (Amendment) Act 1999, w.r.e.f. 31-10-1998.

2. Inserted by the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 w.e.f. 21-6-2002. 1[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 all the following officers of the company, namely :

(a) the managing director or managing directors ;

(b) the whole-time director or whole-time directors ;

(d) the secretary ;

(e) any person in accordance with whose directions or instructions the Board of directors of the company is accustomed to act ;

(f) any person charged by the Board with the responsibility of complying with that provision :

Provided that the person so charged has given his consent in this behalf to the Board ;

(g) where any company does not have any of the officers specified in clauses (a) to (c), any director or directors who may be specified by the Board in this behalf or where no director is so specified, all the directors :

Provided that where the Board exercises any power under clause (f) or clause (g), it shall, within thirty days of the exercise of such powers, file with the Registrar a return in the prescribed form.]

1. Substituted by the Companies (Amendment) Act, 1988 w.e.f. 15-7-1988.

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

7. INTERPRETATION OF "PERSON IN ACCORDANCE WITH WHOSE DIRECTIONS OR INSTRUCTIONS DIRECTORS ARE ACCUSTOMED TO ACT" Except where this Act expressly provides otherwise, a person shall not be 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. Page 21 of 332

8. POWER OF CENTRAL GOVERNMENT TO DECLARE AN ESTABLISHMENT NOT TO BE A BRANCH OFFICE The Central Government may, by order, declare that in the case of any company, 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 establishment engaged in any production, processing or manufacture, shall not be treated as a branch office of the company for all or any of the purposes of this Act.

9. ACT TO OVERRIDE MEMORANDUM, ARTICLES, ETC Save as otherwise expressly provided in the Act -

(a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in the memorandum or articles of a company, or in any agreement executed by it, or in any resolution passed by the company in general meeting or by its Board of directors, whether the same be registered, executed or passed, as the case may be, before or after the commencement of this Act ; and

(b) any provision contained in the memorandum, articles, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be.

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 has longest been the registered office of the company during the six months immediately preceding the presentation of the petition for winding up.

10A. CONSTITUTION OF TRIBUNAL [Omitted by the Companies Tribunal (Abolition) Act, 1967, with effect from 1-7-1967.]

10B. PROCEDURE OF TRIBUNAL [Omitted by the Companies Tribunal (Abolition) Act, 1967, with effect from 1-7-1967.]

10C. POWERS OF TRIBUNAL [Omitted by the Companies Tribunal (Abolition) Act, 1967, with effect from 1-7-1967.]

10D. APPEALS AGAINST DECISIONS, ETC., OF THE TRIBUNAL [Omitted by the Companies Tribunal (Abolition) Act, 1967, with effect from 1-7-1967.]

PART IA BOARD OF COMPANY LAW ADMINISTRATION

10E. CONSTITUTION OF BOARD OF COMPANY LAW ADMINISTRATION 1[(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 2[conferred on it, before the commencement of the Companies (Second Amendment) Act, 2002] 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 2[conferred on it before the commencement of the Companies (Second Amendment) Act, 2002] 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 : 3[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.] 4[(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. Page 22 of 332

(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, with effect from 31-5-1991.] (4B) 5[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 ;

(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 (45 of 1860), and for the purpose of section 196 of that Code. 2[(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.]

1. Substituted by the Companies (Amendment) Act, 1988 w.e.f. 31-5-1991.

2. Substituted for "conferred on it" by the Companies (Second Amendment) Act, 2002 (w.e.f. a date yet to be notified).

3. Inserted by the Companies (Amendment) Act, 1988 w.e.f. 31-5-1991.

4. Inserted by the Companies (Amendment) Act, 1988 w.e.f. 4-8-1989.

5. Substituted for "Without prejudice to the provisions of sub-section (4A), the Board, with the previous approval of the Central Government" by the Companies (Amendment) Act, 1988 w.e.f. 31-5-1991. 1[10F. APPEALS AGAINST THE ORDERS OF THE COMPANY LAW BOARD Any person aggrieved by any decision or order of the Company Law Board 2[made before the commencement of the Companies (Second Amendment) Act, 2002] 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.]

1. Inserted by the Companies (Amendment) Act, 1988 w.e.f. 31-5-1991.

2. Inserted by the Companies (Second Amendment) Act, 2002 (w.e.f. a date yet to be notified). 1[10FA. DISSOLUTION OF COMPANY LAW BOARD

(1) On and from the commencement of the Companies (Second Amendment) Act, 2002, the Board of Company Law Administration constituted under sub-section (1) of section 10E shall stand dissolved.

(2) On the dissolution of the Company Law Board, the persons appointed as Chairman, Vice-Chairman and members and officers and other employees of that Board and holding office as such immediately before such commencement shall vacate their respective offices and no such Chairman, Vice-Chairman and member and officer and other employee shall be entitled to claim any compensation for the premature termination of the term of his office or of any contract of service :

Provided that every officer or other employee, who has been, immediately before the dissolution of the Company Law Board, appointed on deputation basis to that Board, shall, on such dissolution, stand reverted to his parent cadre, Ministry or Department, as the case may be :

Provided further that every officer and other employee of the Company Law Board employed on regular basis by that Board, shall become, on and from the dissolution of the Board, the officer and employee, respectively, of the Central Government with the same rights and privileges as to pension, gratuity and other like benefits as would have been admissible to him if the rights in relation to that Board had not been transferred to, and vested in, the Central Government and shall continue to do so unless and until his employment in the Central Government is duly terminated or until his remuneration, terms and conditions of employment are duly altered by that Government :

Provided also that notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947), or in any other law for the time being in force, the transfer of the services of any officer or other employee employed in the Company Law Board, to the Central Government shall not entitle such officer or other employee to any compensation Page 23 of 332 under this Act or under any other law for the time being in force and no such claim shall be entertained by any court, Tribunal (including the Tribunal under this Act) or other authority :

Provided also that where the Company Law Board has established a provident fund, superannuation fund, welfare fund or other fund for the benefit of the officers and other employees employed in that Board, the monies relatable to the officers and other employees whose services have been transferred by or under this Act to the Central Government shall, out of the monies standing, on the dissolution of the Company Law Board to the credit of such provident fund, superannuation fund, welfare fund or other fund, stand transferred to, and vest in, the Central Government and such monies which stand so transferred shall be dealt with by that Government in such manner as may be prescribed.

(3) All matters or proceedings or cases pending before the Company Law Board on or before the constitution of the Tribunal under section 10FB, shall, on such constitution, stand transferred to the National Company Law Tribunal and the said Tribunal shall dispose of such cases in accordance with the provisions of this Act.]

1. Inserted by the Companies (Second Amendment) Act, 2002 (w.e.f. a date yet to be notified). 1[PART IB NATIONAL COMPANY LAW TRIBUNAL

1. Part IB, consisting of sections 10FB to 10 FP, and Part IC, consisting of sections 10FQ to 10GF, inserted by the Companies (Second Amendment) Act, 2002 w.e.f. 1-4-2003

10FB. CONSTITUTION OF NATIONAL COMPANY LAW TRIBUNAL The Central Government shall, by notification in the Official Gazette, constitute a Tribunal to be known as the National Company Law Tribunal to exercise and discharge such powers and functions as are, or may be, conferred on it by or under this Act or any other law for the time being in force.

10FC. COMPOSITION OF TRIBUNAL The Tribunal shall consist of a President and such number of Judicial and Technical Members not exceeding sixtytwo, as the Central Government deems fit, to be appointed by that Government, by notification in the Official Gazette.

10FD. QUALIFICATIONS FOR APPOINTMENT OF PRESIDENT AND MEMBERS

(1) The Central Government shall appoint a person who has been, or is qualified to be, a Judge of a High Court as the President of the Tribunal.

(2) A person shall not be qualified for appointment as Judicial Member unless he -

(a) has, for at least fifteen years, held a judicial office in the territory of India ; or

(b) has, for at least ten years been an advocate of a High Court, or has partly held judicial office and has been partly in practice as an advocate for a total period of fifteen years ; or

(c) has held for at least fifteen years a Group `A' post or an equivalent post under the Central Government or a State Government [including at least three years of service as a Member of the Indian Company Law Service (Legal Branch) in Senior Administrative Grade in that service] ; or

(d) has held for at least fifteen years a Group `A' post or an equivalent post under the Central Government (including at least three years of service as a Member of the Indian Legal Service in Grade I of that service).

(3) A person shall not be qualified for appointment as Technical Member unless he -

(a) has held for, at least fifteen years a Group `A' post or an equivalent post under the Central Government or a State Government [including at least three years of service as a Member of the Indian Company Law Service, (Accounts Branch) in Senior Administrative Grade in that service] ; or

(b) is, or has been, a Joint Secretary to the Government of India under the Central Staffing Scheme, or any other post under the Central Government or a State Government carrying a scale of pay which is not less than that of a Joint Secretary to the Government of India for at least five years and has adequate knowledge of, and experience in, dealing with problems relating to company law ; or

(c) is, or has been, for at least fifteen years in practice as a chartered accountant under the Chartered Accountants Act, 1949 (38 of 1949); or

(d) is, or has been, for at least fifteen years in practice as a cost accountant under the Costs and Works Accountants Act, 1959 (23 of 1959); or

(e) is, or has been, for at least fifteen years working experience as a secretary in whole-time practice as defined in clause (45A) of section 2 of this Act and is a member of the Institute of the Companies Secretaries of India constituted under the Company Secretaries Act, 1980 (56 of 1980) ; or

(f) is a person of ability, integrity and standing having special knowledge of, and professional experience of not less than twenty years in, science, technology, economics, banking, industry, law, matters relating to industrial finance, industrial management, industrial reconstruction, administration, investment, accountancy, marketing or any other matter, the special knowledge of, or professional experience in, which would be in the opinion of the Central Government useful to the Tribunal ; or

(g) is, or has been, a Presiding Officer of a Labour Court, Tribunal or National Tribunal constituted under the Industrial Disputes Act, 1947 (14 of 1947) ; or

(h) is a person having special knowledge of, and experience of not less than fifteen years in, the matters relating to labour.

Explanation. - For the purposes of this Part, - Page 24 of 332

(i) "Judicial Member" means a Member of the Tribunal appointed as such under sub-section (2) of section 10FD and includes the President of the Tribunal ;

(ii) "Technical Member" means a Member of the Tribunal appointed as such under sub-section (3) of section 10FD.

10FE. TERM OF OFFICE OF PRESIDENT AND MEMBERS The President and every other Member of the Tribunal shall hold office as such for a term of three years from the date on which he enters upon his office but shall be eligible for re-appointment :

Provided that no President or other Member shall hold office as such after he has attained, -

(a) in the case of the President, the age of sixty-seven years ;

(b) in the case of any other Member, the age of sixty-five years :

Provided further that the President or other Member may retain his lien with his parent cadre or Ministry or Department, as the case may be, while holding office as such.

10FF. FINANCIAL AND ADMINISTRATIVE POWERS OF MEMBER ADMINISTRATION The Central Government shall designate any Judicial Member or Technical Member as Member Administration who shall exercise such financial and administrative powers as may be vested in him under the rules which may be made by the Central Government :

Provided that the Member Administration shall have authority to delegate such of his financial and administrative powers as he may think fit to any other officer of the Tribunal subject to the condition that such officer shall, while exercising such delegated powers continue to act under the direction, superintendence and control of the Member Administration.

10FG. SALARY, ALLOWANCES AND OTHER TERMS AND CONDITIONS OF SERVICE OF PRESIDENT AND OTHER MEMBERS The salary and allowances and other terms and conditions of service of the President and other Members of the Tribunal shall be such as may be prescribed :

Provided that neither the salary and allowances nor the other terms and conditions of service of the President and other Members shall be varied to their disadvantage after their appointment.

10FH. VACANCY IN TRIBUNAL

(1) In the event of the occurrence of any vacancy in the office of the President of the Tribunal by reason of his death, resignation or otherwise, the senior-most Member shall act as the President of the Tribunal until the date on which a new President, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office.

(2) When the President is unable to discharge his functions owing to absence, illness or any other cause, the seniormost Member or, as the case may be, such one of the Members of the Tribunal, as the Central Government, may, by notification, authorise in this behalf, shall discharge the functions of the President until the date on which the President resumes his duties.

(3) If, for reason other than temporary absence, any vacancy occurs in the office of the President or a Member, the Central Government shall appoint another pe

The Companies Act, 1956 No. 1 of 1956

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