CONTENTS u About the authors I-5 u Preface I-7 u Chapter-heads I-9 u A Table showing enforcement of provisions of Companies Act, 2013 from different dates I-53 u Table showing list of sections of Companies Act, 2013 not yet enforced I-81 u Table showing list of sections of Companies Act, 1956 which are still in force I-89 u Section key to prescribed Rules & Forms I-95 u Table of Fees I-123 u Key to prescribed forms I-131 u Table showing sections of Companies Act, 2013 & Corresponding Provisions of Companies Act, 1956 I-143 u Table showing sections of Companies Act, 1956 & Corresponding Provisions of Companies Act, 2013 I-155 u Table showing sections of Companies Act, 1956 not covered in Companies Act, 2013 I-169 u List of notified Rules framed under Companies Act, 2013 I-173 u Section-wise Index I-175 u Draft Notification : Non-applicability of certain provisions to Private Companies or applicability of certain provision to Private Companies with modifications I-181 1 HISTORY OF COMPANY LEGISLATION 1.1 History of company legislation in India 1 I-13
CONTENTS I-14 2 MEANING AND NATURE OF A COMPANY 2.1 What is a company? 4 2.2 Definition of a company 5 2.3 Characteristic features of a company 5 2.3-1 Incorporated association 5 2.3-2 Legal entity distinct from its members 5 2.3-3 Artificial person 9 2.3-4 Limited liability 9 2.3-5 Separate property 10 2.3-6 Transferability of shares 11 2.3-7 Perpetual succession 11 2.3-8 Common seal 11 2.4 Lifting the corporate veil 13 2.5 Advantages of incorporation 22 2.6 Disadvantages of incorporation 23 2.7 Company vis-a-vis Body corporate 24 2.7-1 Is a society registered under the Societies Registration Act, a body corporate? 25 2.7-2 Corporation sole 25 2.8 Is company a citizen 25 3 KINDS OF COMPANIES 3.0 Introduction 27 3.1 Private company 27 3.1-1 Restrictions on transferability of shares 28 3.1-2 Limitation on number of members 29 3.1-3 Restriction on inviting public to subscribe for securities 29 3.1-4 Other requirements relating to a private company 29 3.1A One Person Company 30 3.1B Small Company 32 3.2 Public company [Section 2(71)] 33 3.3 Distinction between private and public company 33 3.4 Special privileges and exemptions available to private companies 34
I-15 CONTENTS 3.5 Conversion of a private company into a public company 35 3.6 Conversion of a public company into a private company 36 3.7 Statutory company 37 3.8 Registered companies 37 3.9 Limited liability companies 37 3.9-1 Companies limited by shares 37 3.9-2 Companies limited by guarantee 38 3.9-3 Companies limited by guarantee having share capital 38 3.10 Unlimited liability company 38 3.11 Associations not for profit [Section 8] 39 3.11-1 Alteration of Memorandum and Articles of Association 40 3.11-2 Partnership firm may become member 40 3.11-3 Conversion of a company formed under section 8 into any other kind 40 3.12 Government companies 40 3.13 Foreign company 44 3.13-1 Special provisions relating to foreign companies 45 3.13-2 Other obligations of a foreign company (Sec. 382) - A foreign company is further bound by the following obligations 46 3.14 Holding and subsidiary companies 48 3.15 Public financial institutions [Sec. 2(72)] 50 3.16 Producer Companies 52 3.16-1 Overview of the provisions 53 3.16-2 Incorporation of Producer Companies 53 3.16-3 Objects of a Producer Company 54 3.16-4 Formation of Producer Company and its registration [Section 581C] 55 3.16-5 Memorandum of association of a producer company shall state 56 3.16-6 Directors 57 3.16-7 Subscription to the memorandum by non-incorporated body of producer institution 57 3.16-8 Status of a Producer Company 57 3.16-9 Articles of Association [Section 581G] 58 3.16-10 Registration of Producer Company 60 3.16-11 Amendment of Memorandum and Articles of Association of a producer company 61
CONTENTS I-16 3.16-12 Benefits to Members [Section 581E] 61 3.16-13 Voting rights of members of a producer company 62 3.16-14 Membership and conflicting business interest 63 3.16-15 Inter-State Co-operative Societies can become Producer Company [Sections 581J-581N] 63 3.16-16 Transformation of inter-state co-operative society into producer company 64 3.16-17 Officers and other employees of the society [Section 581N] 66 3.16-18 Directors of the society 67 3.16-19 Transfer of existing benefits, etc. on transformation 67 3.16-20 Appointment of Directors and their tenure [Section 581P] 68 3.16-21 Vacation of office by directors of a producer company [Section 581Q] 68 3.16-22 Powers and functions of the Board [Section 581R] 69 3.16-23 Committee of Directors [Section 581U] 70 3.16-24 Meetings of the Board and Quorum [Section 581V] 71 3.16-25 Liability of directors [Section 581T] 71 3.16-26 Chief Executive Officer (CEO) and his functions [Section 581W] 72 3.16-27 Secretary of Producer Company [Section 581X] 73 3.16-28 General Meetings [Sections 581ZA, 581S, 581Y and 581Z] 73 3.16-29 Period of Notice 75 3.16-30 Contents of the Notice and Circulation of the notice 75 3.16-31 Quorum and Voting Rights 75 3.16-32 Filing of documents following AGM with ROC [subsection (10) of section 581ZA] 75 3.16-33 Producer institution as member 76 3.16-34 Extraordinary General Meeting on Requisition [Section 581ZA(5)] 76 3.16-35 Share capital, special rights, bonus shares, transfer and transmission [Sections 581ZB to 581ZD and 581ZJ] 76 3.16-36 The shares of a producer company has limited transferability 77 3.16-37 Issue of bonus share 77 3.16-38 Finance, Accounts and Audit [Sections 581ZE to 581ZI] 77 3.16-39 Internal Audit 78
I-17 CONTENTS 3.16-40 Duties of Auditor (Section 581ZG specifies duties of the auditor of a producer company and the same should not be mixed up with duties of internal auditors) 78 3.16-41 Donation or subscription by producer company 78 3.16-42 General and Other Reserves 79 3.16-43 Loans to Members and Investments [Sections 581ZK and 581ZZ] - Loans and Advances 79 3.16-44 Register of investments [Section 581ZL(7) & (8)] 81 3.16-45 Amalgamation, Merger or Division of Producer Company [Section 581ZN] 82 3.16-46 Penalties [Section 581ZM] 85 3.16-47 Dispute Resolution [Section 581ZO] 85 3.16-48 Allied Provision 86 3.16-49 Striking off the name of producer company 86 3.16-50 Reconversion of a Producer Company to inter-state Co-operative Society [Sections 581ZS and 581ZT] 87 3.16-51 Power of the Central Government to modify the provisions of the Companies Act, 1956 in their application to Producer Company [Section 581ZT] 88 3.17 Illegal Association [Sec. 464] 89 3.17-1 Exceptions 89 3.17-2 Effects of an illegal association 90 3.18 Unregistered Companies [Section 375] 90 4 FORMATION AND INCORPORATION OF A COMPANY 4.1 Promotion 92 4.1-1 Who is a promoter 92 4.1-2 When promotion begins and ends 94 4.1-3 Legal position of a promoter 94 4.1-4 Duties of promoters 95 4.1-5 Remedies available to the company against the promoter for breach of his duties 97 4.1-6 Liability of promoters 99 4.1-7 Remuneration of promoters 100 4.1-8 Pre-incorporation contracts 100
CONTENTS I-18 4.2 Registration/Incorporation of a company 102 4.2-1 Procedure for registration/incorporation of a company : Important Steps 103 4.3 Certificate of incorporation 105 4.3A Effect of certificate of incorporation 106 4.3B Conclusiveness of certificate of incorporation 106 4.4 Commencement of business 108 4.4-1 Companies not having share capital 108 4.4-2 Companies having share capital 108 4.4-3 Effect of non-compliance of the provisions of section 11 109 5 MEMORANDUM OF ASSOCIATION 5.1 Meaning and importance 110 5.2 Memorandum of Association - Whether an unalterable charter 110 5.3 Form and contents 111 5.3-1 The name clause [Sec. 4(1)(a)] 113 5.3-2 The registered office clause [Sec. 4(1)(b)] 118 5.3-3 The objects clause [Section 4(1)(c)] 119 5.3-4 Doctrine of ultra vires 119 5.3-5 Liability clause [Sec. 4(1)(d)] 123 5.3-6 The capital clause [Sec. 4(1)(e)] 123 5.3-7 Name of a nominee in case of One Person Company [Sec. 4(1)(f)] 124 5.3-8 The association or subscription clause [Sec. 4(1)(e)] 124 5.4 Alteration of memorandum 125 5.4-1 Change of name 125 5.4-2 Change of registered office 127 5.4-3 Change in objects clause 129 5.4-4 Change in liability clause 131 5.4-5 Alteration of capital clause 131 6 ARTICLES OF ASSOCIATION 6.1 Introduction 134 6.2 Memorandum and articles - Their relationship 134 6.3 Distinction between memorandum of association and articles of association 136
I-19 CONTENTS 6.4 Contents 136 6.4-1 Provisions for entrenchment 136 6.4-2 Regulations required in case of unlimited company, company limited by guarantee and private company limited by shares 138 6.5 Model form of articles 138 6.6 Signing of articles 138 6.7 Alteration of articles 139 6.7-1 Limitation on power to alter articles 140 6.7-2 What amounts to alteration of articles 143 6.7-3 Effect of altered articles 144 6.7-4 Procedure for alteration of articles of association 144 6.8 Binding effect of memorandum and articles 145 6.8-1 Members bound to the company 145 6.8-2 Company bound to members 146 6.8-3 Members bound to members 147 6.8-4 Whether company or members bound to outsiders 148 6.8-5 Whether Directors are bound by whatever is contained in the articles 149 6.9 Doctrine of constructive notice 149 6.10 Doctrine of indoor management 150 7 PROSPECTUS 7.1 Steps which are necessary before the issue of prospectus 154 7.2 Meaning and definition of a prospectus 154 7.3 Contents of a prospectus 157 7.3-1 Information to be given in a prospectus 157 7.3-2 Reports to be set out in the prospectus 158 7.3-3 Declaration 159 7.3-4 Other matters 159 7.3-5 Statement of an expert included in a prospectus 159 7.3-6 Penalty for non-compliance 160 7.3-7 Exemptions 160 7.3-8 Variation in terms of contract or objects in prospectus (Section 27) 160 7.3-9 Offer of sale of shares by certain members of company (Section 28) 161
CONTENTS I-20 7.4 SEBI Regulations relating to prospectus 161 7.5 Draft prospectus to be made public 162 7.6 Abridged form of prospectus 163 7.7 Is issue of prospectus (including abridged prospectus) compulsory/when prospectus is not required to be issued 164 7.7A Statutory requirements in relation to a prospectus 164 7.7A-1 Dating of prospectus 164 7.7A-2 Registration of prospectus 164 7.7A-3 When registrar shall refuse registration of a prospectus 165 7.7A-4 Penalty 165 7.8 Prospectus by implication/deemed prospectus [Section 25] 165 7.8-1 Additional requirements relating to deemed prospectus 166 7.9 Shelf Prospectus and Information Memorandum [Section 31] 167 7.10 Red-herring prospectus [Section 32] 167 7.11 Mis-statements in a prospectus and their consequences 168 7.11-1 What is an untrue statement/mis-statement? 168 7.11-2 Remedies for mis-statement in a prospectus 170 7.11-3 Civil Liability 170 7.11-4 Criminal Liability 171 7.11-5 Liability under section 36, i.e., punishment for fraudulently inducing persons to invest money 171 7.11-6 Class action suit/action by affected persons (Section 37) 172 7.12 Golden rule for framing of prospectus 172 7.13 Allotment of shares in fictitious names prohibited [Section 38] 173 7.14 Announcement regarding proposed issue of capital 173 8 ACCEPTANCE OF PUBLIC DEPOSITS 8.1 Meaning of deposits 175 8.2 Acceptance of deposits 177 8.2-1 Acceptance of deposits from members 177 8.2-2 Acceptance of deposits from public 178 8.2-3 Deposits accepted before commencement of the Companies Act, 2013 181
I-21 CONTENTS 9 SHARE AND SHARE CAPITAL 9.1 Meaning and nature of a share 182 9.1-1 Meaning 182 9.1-2 Nature of a share 182 9.2 Share v. Share certificate 184 9.3 Share v. Stock 185 9.4 Kinds of shares 185 9.4-1 Preference Shares or Preference Share Capital 186 9.4-2 Types of Preference Shares 187 9.4-3 Equity shares [Section 43] 189 9.4-4 Preference shares compared with equity shares 190 9.4-5 Non-voting shares 190 9.4-6 Par value of shares 190 9.4-7 Global Depository Receipts [Section 41] 191 9.5 Raising of capital/issue of shares 191 9.5-1 Private placement of shares 191 9.5-2 By an offer for sale 192 9.5-3 By inviting public through prospectus 192 9.5-4 Issue of shares to existing shareholders 192 9.6 Public issue of shares 193 9.6-1 Book Building 193 9.6-2 SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 with respect to public issue of equity shares or any other security convertible into equity shares general conditions 193 9.7 Employees Benefits Schemes 219 9.7A Employees Stock Option Scheme [ESOS] 219 9.7B Employee Stock Purchase Scheme [ESPS] 221 9.7C Stock Appreciation Rights Scheme (SARS) 222 9.8 Book Building 222 9.9 SEBI Regulations for Preferential Issue 228 9.10 Allotment of shares 234 9.10-1 Meaning of allotment 234 9.10-2 General principles regarding allotment 234 9.10-3 Statutory provisions regarding allotment 237 9.11 Jurisdictions of the Court 239 9.12 Allotment of shares to a charitable institution by way of donation - Whether allowed 239 9.13 Return as to allotment 240
CONTENTS I-22 9.14 Underwriting 240 9.14-1 Meaning of underwriting 240 9.14-2 Sub-underwriting 241 9.15 Brokerage 242 9.16 Buy-back/Purchase of its own shares by a company 242 9.16-1 Sources to buy-back 242 9.16-2 Conditions for buy-back 243 9.16-3 Benefits/Objectives underlying buy-back of shares 245 9.16-4 SEBI Regulations : SEBI (Buy-back of Securities) 245 9.16-5 Penalty 248 9.16-6 Prohibition for buy-back in certain circumstances [Section 70] 248 9.16-7 Giving of Loan/Financial Assistance Prohibited 249 9.17 Issue of securities at a premium 250 9.18 Issue of shares at a discount 252 9.19 Issue of sweat equity shares [Section 54] 252 9.19-1 SEBI Regulations with respect to sweat equity 254 9.20 Share certificate [Section 56] 256 9.20-1 Time of issue of share certificate [Section 56] 256 9.20-2 Object and effect of share certificate [Section 46] 257 9.21 Issue of share certificate [Section 46] 258 9.22 Rights shares/further issue of capital [Section 62] 259 9.22-1 Further allotment out of unsubscribed portion of capital 260 9.22-2 SEBI regulations regarding rights issues [w.e.f. 26-8- 2009 as amended up to 1-9-2014] 261 9.22-3 Duty of transferor to transferee in respect of rights shares 263 9.22-4 Allotment to renouncee 263 9.22-5 Procedure for issue of rights shares 263 9.23 Conversion of loans or debentures into shares 265 9.23-1 Share capital to stand increased 266 9.24 Bonus shares 266 9.24-1 SEBI Regulations, 2009 for issue of bonus shares 267 9.25 Distinction between bonus shares and rights shares 268 9.26 Reduction of share capital 268 9.26-1 Procedure for reduction of capital 269
I-23 CONTENTS 9.26-2 Reduction of share capital without the sanction of the Tribunal 270 9.26-3 Reduction of Capital v. Diminution of Capital 271 9.27 Calls on shares 271 9.27-1 Requisites of a valid call 272 9.27-2 Payment of calls otherwise than in cash 273 9.27-3 Payment of calls in advance 274 9.27-4 Interest on calls due but not paid 274 9.27-5 Quantum and interval between two calls 274 9.28 Forfeiture of shares 274 9.28-1 Forfeiture of fully paid shares 277 9.28-2 Effect of forfeiture 277 9.28-3 Re-issue of forfeited shares 278 9.28-4 Annulment of forfeiture 279 9.29 Surrender of shares 279 9.30 Transfer of shares 279 9.30-1 Time within which transfer must be registered 280 9.30-2 Power of the Board of directors to refuse registration of transfer of shares 281 9.30-3 Procedure of transfer 282 9.31 Blank transfer 283 9.31-1 Ills associated with blank transfers 284 9.32 Transfer of partly-paid shares 284 9.33 Transfer of shares held in joint names 284 9.34 Transfer when complete 284 9.35 Right of transferees pending registration of transfer [Sec. 126] 285 9.36 Notice of refusal 285 9.36-1 Returning back the documents 286 9.36-2 Retention of certificates 286 9.37 Appeal against refusal to register transfer 287 9.38 Transfer of shares on the basis of pre-incorporation transfer deeds 288 9.39 Transfer of shares after winding-up - Whether valid 289 9.40 Transfer of shares under depository system 289 9.41 Transfer of shares in favour of pledgee 290 9.42 Transfer of shares by way of gift 290 9.43 Forged transfer 290 9.43-1 Consequences of forged transfer 290
CONTENTS I-24 9.44 Priority between transferees 291 9.45 Transmission of shares and debentures 291 9.46 Distinction between transfer and transmission 293 9.47 Nomination of shares and debentures 293 9.48 Secretarial practice/steps with regard to registration of transfer of shares 294 9.49 Transfer by legal representative 296 9.50 Lien on shares 296 9.51 Lien and forfeiture compared 297 9.52 Variation of shareholders rights 298 9.52-1 Can equity shares already issued be converted into redeemable preference shares? 298 9.52-2 Can redeemable preference shares be converted into convertible preference shares? 298 10 MEMBERSHIP 10.1 Definition of a member 300 10.1-1 Can purported promise to convert loan into shares be a ground for rectification of Register of members? 301 10.2 Member v. Shareholder 301 10.3 Modes of acquiring membership 302 10.3-1 By subscribing to the memorandum of association 302 10.3-2 By agreement and registration 302 10.3-3 By agreeing to purchase qualification shares 303 10.3-4 Can legal heirs of a deceased shareholder be regarded as members for the purpose of filing a petition for prevention of oppression and mismanagement under sections 397-398 [Now section 241]? 303 10.4 Who may become a member 304 10.4-1 Minor 304 10.4-2 Company 305 10.4-3 A partnership firm 305 10.4-4 A foreigner 306 10.4-5 Receiver/Official Liquidator 306 10.4-6 Can a public office be registered as a member 306 10.4-7 Societies registered under the Societies Registration Act, 1860 307 10.4-8 Can shares be held in the name of a trade union? 307
I-25 CONTENTS 10.4-9 Joint membership 307 10.4-10 Hindu undivided family 308 10.5 Termination of membership 308 10.6 Impersonation as a shareholder 309 10.7 Rights of a member/shareholder 309 10.7-1 Contractual and other Rights 310 10.7-2 Statutory Rights 310 10.7-3 Other Rights 310 10.8 Duties and Liability of members 311 10.9 Member v. Contributory 312 10.10 Expulsion of a member 312 11 REGISTERS AND RETURNS 11.1 Introduction 315 11.2 Statutory books to be kept by a company 315 11.3 Optional books 315 11.4 Register of Charges [Section 85] 316 11.5 Register of members/debentureholders 317 11.5-1 Register of Members/Debentureholders and Index of Members/Debentureholders, etc. [Section 88] 317 11.5-2 Foreign Register 318 11.5-3 Penalty 318 11.5-4 Shares held in trust 318 11.5-5 Inspection of Register of Members, etc. [Section 94] 318 11.6 Register of investments not held in company s name [Section 187] 319 11.7 Register of fixed deposits [Section 73] 319 11.8 Books of account 319 11.8-1 Place of maintenance of books of account 319 11.8-2 Inspection of books of account, etc. of companies 320 11.8-3 Period for which books of account to be preserved 320 11.9 Register of contracts or arrangements in which directors are interested [Section 189] 320 11.9-1 Entries in the register 321 11.9-2 Place of keeping and inspection of the register 321 11.9-3 Period for which register to be preserved 321 11.9-4 Filing of particulars 321
CONTENTS I-26 11.9-5 To be produced at general meeting 321 11.9-6 Exemptions 321 11.9-7 Penalty 321 11.10 Register of Directors and Key Managerial Personnel and their shareholding [Section 170] 321 11.10-1 Filing of Return with the Registrar 323 11.10-2 Can the register be kept in loose-leaf form? 323 11.11 Register of loans and investments by company [Section 186] 323 11.12 Minutes book 324 11.12-1 Inspection of minute-books of general meeting [Section 119] 326 11.12-2 Signing of minutes of board meetings 326 11.12-3 Minutes kept in a loose-leaf form 327 11.13 Annual return [Section 92] 327 11.13-1 Signing of the Annual Return 328 11.13-2 Place of keeping 328 11.14 Return of allotment [Section 39] 328 11.15 Place of keeping and inspection of registers, returns, etc. [Section 94] 329 11.15-1 Period for which the registers, returns and records are required to be kept 329 11.15-2 Inspection of registers and returns [Section 94] 330 11.15-3 Penalty 330 11.15-4 Power of the Central Government to order inspection 330 11.15-5 Registers, etc., to be evidence 331 12 INVESTMENTS, LOANS, BORROWINGS AND DEBENTURES 12.1 Investments 332 12.1-1 Meaning of investments 332 12.1-2 Investments to be held in company s own name 332 12.1-3 Investments in other companies and bodies corporate/inter-corporate loans and investments 334 12.2 Implied power to borrow? 336 12.2-1 Exercise of borrowing powers 336 12.2-2 Temporary loans 337 12.2-3 Ultra vires borrowings 337 12.2-4 Charges under the Companies Act, 2013 338
I-27 CONTENTS 12.2-5 Registration of charges [Section 77] 341 12.2-6 Register of charges to be kept by Registrar [Section 81] 343 12.2-7 The memorandum of satisfaction [Sections 82 and 83] 343 12.2-8 Rectification by Central Government in register of charges [Section 87] 344 12.2-9 Company s register of charges [Section 85] 344 12.2-10 Modification of charges 344 12.3 Debentures 345 12.3-1 Meaning and definition 345 12.3-2 Characteristic features of a debenture 345 12.3-3 Debenture stock 346 12.3-4 Distinction between shareholder and debentureholder 346 12.3-5 Issue of debentures 347 12.3-6 Kinds of debentures 351 12.3-7 Debenture trust deed 353 12.3-8 Rights/Remedies of debenture-holders 356 12.3-9 SEBI Regulations, 2009 pertaining to convertible debt instruments 357 13 DIVISIBLE PROFITS AND DIVIDEND 13.1 Meaning of Dividend 360 13.2 Concept of Profit 361 13.3 Profits v. Divisible Profits 361 13.3-1 Meaning of Divisible profits 361 13.3-2 Profits available for Distribution v. Profits available for dividend 361 13.4 Sources out of which dividends may be paid 362 13.4-1 Out of current profits 362 13.4-2 Out of past reserves 362 13.4-3 Monies provided by Government 363 13.4-4 Depositing dividend declared in a scheduled bank in a separate account 363 13.5 Provision for depreciation 363 13.6 Declaration of dividend on preference and equity shares 363 13.6-1 Dividend on preference shares 363 13.6-2 Dividend on equity shares 364 13.6-3 Interim dividend 366
CONTENTS I-28 13.7 Payment of dividend 366 13.7-1 Dividend payable to whom 366 13.7-2 Dividend is to be paid in cash 367 13.7-3 Time within which dividends to be paid 367 13.8 Dividend warrants 369 13.9 Dividend mandate 369 13.10 Unpaid and unclaimed dividends 370 13.10-1 Unpaid dividends 370 13.10-2 Transfer of unpaid dividend to Investor Education and Protection Fund [Fund] 370 13.11 Establishment of Investor Education and Protection Fund [Section 125] 371 13.12 Can dividends be paid out of capital? 373 13.13 Payment of dividend out of capital profits 374 Annex 13.1 Specimen resolutions 379 14 COMPANY MANAGEMENT 14.1 Meaning of a Director 380 14.2 Who may be appointed as a director? 381 14.3 Qualifications for directors 381 14.4 Disqualifications of a director 381 14.5 Legal position of directors 383 14.5-1 Directors as agents 383 14.5-2 Directors as trustees 384 14.5-3 Directors as managing partners 384 14.5-4 Are directors employees of the company? 384 14.6 Full time v. Part time director 385 14.7 Appointment of Directors 386 14.7-1 Appointment of first directors [Section 152] 386 14.7-2 Appointment of directors at general meeting 387 14.7-3 Deemed re-appointment of a retiring director [Section 152] 388 14.7-4 Rotational and non-rotational directors vis-a-vis private company 388 14.7-5 Appointment of a director other than a retiring director [Section 160] 389 14.7-6 Appointment by Board of directors [Section 161] 390
I-29 CONTENTS 14.8 Resident director 392 14.9 Independent director 392 14.9-1 Who is an Independent director 392 14.9-2 Selection of Independent director 394 14.9-3 Manner of Appointment 394 14.9-4 Re-appointment 395 14.9-5 Remuneration 395 14.9-6 Resignation or Removal 395 14.9-7 Separate meetings 395 14.9-8 Evaluation mechanism 396 14.9-9 Term of office 396 14.9-10 Liability of Independent directors 396 14.9-11 Compliance with the Company s Code of Conduct 396 14.10 Appointment of directors by proportional representation [Section 163] 398 14.10-1 Single transferable vote 398 14.10-2 Cumulative voting 400 14.11 Appointment of directors by third parties (Nominee Directors) 401 14.12 Assignment of office by director [Section 166] 402 14.13 Minimum and maximum number of directors 403 14.14 Appointment of woman director on the Board 404 14.15 Appointment of director elected by small shareholders [Section 151] 404 14.16 Number of directorships 405 14.17 Vacation of office of a director [Section 167] 406 14.18 Removal of a director 407 14.18-1 Removal by shareholders 407 14.18-2 Removal by Tribunal [Section 242] 409 14.19 Resignation by a Director 410 14.20 Validity of the acts of a director where his appointment is in valid [Section 176] 411 14.21 Powers of the Board of Directors 412 14.21-1 Restrictions on powers of directors 415 14.22 Political contributions by directors [Section 182] 417 14.22-1 Meaning of Political Contribution 417 14.22A Related party transactions [Section 188] 418 14.23 Interested Director 421 14.23-1 Disclosure of Interest 422 14.24 Duties of Directors 422
CONTENTS I-30 14.24-1 Statutory duties 422 14.24-2 General duties 424 14.25 Liabilities of Directors 425 14.25-1 Liability to the company 426 14.25-2 Liability to third parties 427 14.25-3 Liability for breach of statutory duties 428 14.25-4 Liability for acts of co-directors 428 14.25-5 Criminal liability 428 14.26 Loans to Directors 428 14.27 Remuneration of Directors (Managerial Remuneration) 430 14.27-1 Meaning of managerial remuneration 430 14.27-2 Directors entitlement to remuneration 430 14.27-3 Manner of payment of managerial remuneration 431 14.27-4 Sitting fees 431 14.27-5 Overall limits to managerial remuneration 431 14.27-6 Determination of managerial remuneration 431 14.27-7 Individual ceiling on managerial remuneration 432 14.27-8 Remuneration payable to an Independent director 432 14.27-9 Refund of excess remuneration 432 14.27-10 Additional remuneration from subsidiary 433 14.27-11 Private companies 433 14.27-12 Managerial remuneration vis-a-vis Schedule V 433 14.27-13 Perquisites not included in managerial remuneration 435 14.27-14 Remuneration payable to a managerial person in two companies 436 14.27-15 Meaning of effective capital 436 14.28 Managing Director and other Key Managerial Personnel 436 14.28-1 Meaning of managing director 436 14.28-2 Managing director - Whether an employee 437 14.28-3 Meaning of Key Managerial Personnel 437 14.28-4 Appointment of managing director 437 14.28-5 Approval of the Central Government 438 14.28-6 Number of companies of which one person may be appointed Managing Director/Key Managerial Personnel 439 14.28-7 Filling of vacancy in the office of whole-time key managerial personnel 440 14.28-8 Tenure of appointment 440
I-31 CONTENTS 14.28-9 Remuneration 440 14.28-10 Disqualifications 440 14.29 Manager 441 14.29-1 Meaning 441 14.29-2 Disqualifications of a manager 441 14.29-3 Number of companies a person can be appointed manager 441 14.29-4 Remuneration of manager [Section 197] 441 14.30 Prohibition of simultaneous appointment of different categories of managerial personnel [Section 196] 441 14.31 Distinction between managing director and manager 442 14.32 Whole time director 442 14.33 Procedure for appointment of managing director/whole time director/manager 442 15 COMPANY SECRETARY AND PRACTISING COMPANY SECRETARY 15.1 Definition of company secretary/secretary 445 15.2 Appointment of whole-time company secretary 445 15.2-1 Compulsory appointment of a whole-time company secretary 445 15.2-2 Manner of appointment of whole-time company secretary 446 15.2-3 Whole-time company secretary not hold office in more than one company 446 15.2-4 Vacation of office of the whole-time company secretary 446 15.2-5 Penalty 446 15.3 Procedure for appointment 446 15.4 Position of company secretary 447 15.5 Duties of secretary 449 15.5-1 General duties 449 15.5-2 Statutory duties 449 15.6 Liabilities of company secretary 450 15.6-1 Statutory liabilities 450 15.6-2 Contractual liabilities 453 15.7 Functions of company secretary [Section 205] 453 15.8 Secretarial audit [Section 204] 453
CONTENTS I-32 15.9 Rights of company secretary 454 15.10 Role of company secretary 455 15.10-1 As statutory officer 455 15.10-2 Secretary as a coordinator 456 15.10-3 As an administrative officer 458 15.11 Dismissal of a company secretary 458 15.12 Company secretary in practice 459 15.12-1 Who can use the designation of secretary 459 15.12-2 Who can practise 459 15.12-3 Who cannot practise 460 15.12-4 Can a firm practise 460 15.12-5 Areas of practice 461 15.12-6 Certificate of practice 462 15.12-7 Cancellation of certificate of practice 462 15.12-8 Restoration of certificate of practice 463 15.12-9 Company secretary not to engage in any other business or occupation 463 15.12-10 Can a company secretary have more than one office 463 15.13 Professional misconduct 464 15.14 Quality Review Board 465 Annex 15.1 The First Schedule to the Company Secretaries Act, 1980 as amended in 2006 466 Annex 15.2 The Second Schedule to the Company Secretaries Act, 1980 as amended in 2006 469 Annex 15.3 Resolution under regulation 168 of the Company Secretaries Regulations, 1982 471 16 COMPANY MEETINGS-I - GENERAL 16.1 Meaning of meeting 473 16.2 Kinds of meetings 473 16.3 Requisites of a valid meeting 474 16.4 Meeting to be properly convened 474 16.4-1 Proper authority 474 16.4-2 Proper and adequate notice 474 16.5 Meeting to be legally constituted 478 16.5-1 Chairman of a meeting 478 16.5-2 Quorum 480
I-33 CONTENTS 16.6 Meeting to be properly conducted 482 16.6-1 Ascertaining the sense of the general meeting 482 16.6-2 Rules in respect of voting 483 16.6-3 Passing of resolutions by postal ballot 486 16.6-4 Proxy [Section 105] 488 16.6-5 Motion, amendment, point of order 490 16.7 Resolutions 492 16.7-1 Ordinary resolution [Section 114(1)] 492 16.7-2 Special resolution 492 16.7-3 Resolutions requiring special notice 492 16.7A Validity of votes 493 16.8 Circulation of members resolutions [Section 111] 494 16.9 Registration of certain resolutions and agreements [Section 117] 495 16.10 Minutes [Section 118] 495 Annex 16.1 Specimen of notice, agenda, proxy, minutes, resolutions, etc. notice and agenda of annual general meeting 497 17 COMPANY MEETINGS-II - GENERAL BODY MEETINGS 17.1 Need for meetings 501 17.2 Annual General Meeting (AGM) 501 17.2-1 Which companies to hold 501 17.2-2 Gap between two AGMs [Section 96] 501 17.2-3 Extension of time 502 17.2-4 What about a situation where annual accounts are not ready 502 17.2-5 Meeting beyond statutory time 503 17.2-6 Cancelling or postponing of convened meeting 503 17.2-7 Can a general meeting properly convened be cancelled or its holding deferred? 504 17.2-8 Day, hour and place of AGM 504 17.2-9 Can a company hold two AGMs on the same day? 504 17.2-10 Business to be transacted [Section 102] 504 17.2-11 Notice of the meeting 505 17.3 Extraordinary General Meeting (EGM) 507 17.4 Class meetings 509
CONTENTS I-34 18 COMPANY MEETINGS-III - BOARD MEETINGS 18.1 Need for board meetings 511 18.2 When to hold 511 18.2-1 First meeting 511 18.2-2 Subsequent meetings 511 18.3 Participation of directors through video conferencing or other audio visual means [Section 173(2)] 512 18.4 Board meeting 514 18.4-1 Notice of board meeting 514 18.4-2 Proper authority to call meeting of Board of Directors 514 18.4-3 Notice - Whom to be given 514 18.4-4 Notice to interested directors 514 18.4-5 Notice of adjourned meeting 515 18.5 Contents and agenda of board meeting 515 18.6 Time and place of board meeting 516 18.7 Quorum 516 18.8 Adjournment for want of quorum 517 18.9 Passing of Resolutions by Circulation [Section 175] 517 18.10 Minutes of the board meeting 518 18.11 Duties of company secretary with respect to board meetings 519 18.11-1 Before the meeting 519 18.11-2 During the meeting 520 18.11-3 After the meeting 520 18.12 Chairman of board meetings 520 Annex 18.1 Specimen of notice, agenda and minutes 522 19 ACCOUNTS AND AUDIT ACCOUNTS 19.1 Books of account required to be kept 526 19.2 Inspection of books of account 528 19.2-1 Directors right of inspection 529 19.2-2 Right of a shareholder to inspect books of account 529 19.2-3 Investigation by the Serious Fraud Investigation Office (SFIO) 529
I-35 CONTENTS 19.3 Persons responsible for keeping proper books of account [vide sub-section (6) of section 128] 530 19.4 Financial Statements 530 19.4-1 Preparation and presentation of financial statements 531 19.5 Authentication of Accounts 533 19.6 Can Approval of Annual Accounts be delegated? 534 19.7 Publication of quarterly results - Requirements under listing agreement 534 19.8 Board s Report 536 19.8-1 Directors Responsibility Statement 537 19.8-2 Disclosures with respect to employees stock option scheme 538 19.8-3 Reserves and Dividends 538 19.8-4 Conservation of energy, technology absorption, foreign exchange earnings and outgo 539 19.8-5 Contracts and arrangements with related parties 540 19.8-6 Policy on directors appointment and remuneration 540 19.8-7 Disclosure about the number of meetings of the Board/Committees 540 19.8-8 Notes forming part of the accounts 540 19.8-9 Additional information under the Companies (Accounts) Rules, 2014 541 19.8-10 Corporate Social Responsibility Report 541 19.8-11 Composition of Audit Committee 542 19.8-12 Management Discussion and Analysis Report as per Clause 49 of the Listing Agreement 542 19.8-13 Corporate Governance Report 542 19.8-14 Report to be signed by the Chairman of the Board 542 19.9 Circulation of Financial Statements 544 19.10 Adoption and filing of financial statements 545 19.10-1 Filing of financial statements with the registrar 545 19.10-2 Filing of financial statements in XBRL format 546 19.11 Reporting on revised annual statements of accounts 546 19.11-1 Re-opening of accounts on Court s or Tribunal s orders 547 19.11-2 Voluntary revision of Financial Statements or Board s Report 548 19.12 Accounting Standards 548
CONTENTS I-36 19.12-1 Convergence of Accounting Standards in India with International Financial Reporting System (IFRS) 550 19.12-2 National Financial Reporting Authority 551 19.13 Internal Audit 552 AUDIT 19.14 Need for audit/objective of audit 552 19.15 Who can be appointed as an Auditor (Qualifications) 554 19.16 Who cannot be appointed as an Auditor (Disqualifications) 555 19.16-1 Disqualification due to fraudulent acts 557 19.16-2 Ceiling on Audit 557 19.17 Auditor not to render certain services 557 19.18 Appointment of first auditors 558 19.19 Appointment of subsequent auditors 558 19.19-1 Appointment of subsequent auditor for a Government company 559 19.20 Tenure of appointment 560 19.21 Compulsory rotation of auditors 560 19.21-1 Period for rotation 560 19.21-2 Cooling off period 561 19.21-3 Joint audit 562 19.22 Reappointment of retiring auditor 562 19.23 Rights of retiring auditor [Section 140(4)] 562 19.24 Casual vacancy 564 19.25 Removal and resignation of an auditor 564 19.25-1 Removal before expiry of the term 564 19.25-2 Resignation of auditor 565 19.25-3 Removal by the Tribunal 565 19.26 Remuneration of auditors 566 19.27 Status of the auditor 566 19.27-1 As an officer of the company 567 19.28 Rights of the company auditor 568 19.28-1 Right of access to books and account, etc. 568 19.28-2 Right to obtain Information or Explanation 568 19.28-3 Rights with respect to branch accounts 568 19.28-4 Right to sign the report 569 19.28-5 Right to receive notices, etc. 569 19.28-6 Right to attend general meeting 569 19.28-7 Right to remuneration 570
I-37 CONTENTS 19.28-8 Auditors lien 570 19.29 Duties of Company Auditor 571 19.29-1 Duty to make a report under section 143 571 19.29-2 Compliance with auditing standards 577 19.29-3 Duty to report fraud 577 19.29-4 Duty to attend general meeting 577 19.29-5 Duty to make statement in prospectus 578 19.30 Duty to produce documents and evidence 578 19.31 Duty to acquaint themselves with their duties 578 19.32 Limitation of auditor s duties 578 19.33 Special provisions relating to audit of Government Companies 580 19.33-1 Appointment of Auditors 580 19.33-2 Audit of Government Companies 581 19.34 Punishment for Contravention 582 19.34-1 Penalty on the company and officers in default 582 19.34-2 Penalty on the auditor 582 19.35 Audit Committee 582 19.35-1 Establishment of vigil mechanism 587 19.36 Joint audit 587 19.37 Cost audit [Section 148] 589 19.37-1 Maintenance of cost records 590 19.37-2 Appointment and remuneration of cost auditor 590 19.37-3 Report of cost auditor 591 19.37-4 Cost audit to be in addition to financial audit 592 19.37-5 Appointment of a firm of cost accountants as cost auditors 592 19.37-6 Cost Auditor cannot be internal auditor 592 19.37-7 Penalties 593 19.37-8 Secretarial audit 593 Annex 19.1 General instructions for preparation of balance sheet and statement of profit and loss of a company 595 Annex 19.2 Extracts from Secretarial Standard-10 (SS-10) on Board s Report 610 Annex 19.3 Summary of requirements for maintenance of cost records and cost audit as prescribed under rule 3 and rule 4 of the Companies (Cost Record and Audit) Rules, 2014 616
CONTENTS I-38 20 INSPECTION, INQUIRY AND INVESTIGATION INSPECTION 20.1 Power to call for information, inspect books and conduct inquiries 619 20.2 What books and papers can be inspected? 621 20.3 Place and time of inspection 621 20.4 Duties of directors, officers, employees of the company to assist in inspection 621 20.5 Powers of the inspector 622 20.6 Supply of report 623 20.7 Inspection by Reserve Bank 623 INVESTIGATION 20.8 Investigation 624 20.9 Who can apply and the scope of investigation 624 20.9-1 On the report of Registrar or inspector 624 20.9-2 The company, by passing special resolution [Section 210(1)(b)] 624 20.9-3 The Court or Tribunal, by order [Section 210(2)] 624 20.9-4 In public interest 625 20.10 Guidelines for ordering investigation into company s affairs 625 20.10-1 Complaint for violation by SEBI - Whether a bar to investigation 626 20.10-2 Fraud on creditors and on the court 626 20.11 Investigation into affairs of a company by Serious Fraud Investigation Office 626 20.12 Investigation into company s affairs in other cases 627 20.13 Security for payment of costs and expenses of investigations 630 20.14 Firm, body corporate or association not to be appointed as inspector 630 20.15 Investigation of ownership of a company [Section 216] 631 20.16 Powers of inspectors 631 20.17 Report of the inspector 634 20.18 Follow up action by the Central Government on the investigation report of the inspector 635 20.19 Expenses of investigation 636 20.20 Protection of employees during investigation 636 20.21 Publication of Inspector s Report 637
I-39 CONTENTS 20.22 Freezing of assets of company 637 20.23 Imposition of restrictions upon securities [Section 222] 637 20.24 Saving for legal advisors and bankers [Section 227] 638 20.25 Investigations etc. of foreign companies [Section 228] 638 20.26 Non-disclosure of information in certain cases [Section 457] 639 20.27 Penalty for furnishing false statements, mutilation or destruction of documents 639 20.28 Difference between inspection and investigation 639 20.29 Role of secretary with regard to investigation 640 21 MAJORITY RULE AND MINORITY PROTECTION 21.1 Rule of majority 643 21.2 Personal rights of members 645 21.3 Representative and Derivative Action 646 21.4 Exceptions to the rule in Foss v. Harbottle 648 21.4-1 Ultra vires and illegal acts 648 21.4-2 Breach of fiduciary duties 648 21.4-3 Fraud or oppression against minority 649 21.4-4 Inadequate notice of a resolution passed at a meeting of members 650 21.4-5 Qualified majority 650 21.4-6 Where the personal rights of an individual member have been infringed 650 21.4-7 Statutory exceptions 650 22 PREVENTION OF OPPRESSION AND MISMANAGEMENT 22.1 Application to Tribunal for relief in cases of oppression, etc. 653 22.1-1 Application to the Tribunal 653 22.1-2 Who can apply [Section 241] 654 22.1-3 Who cannot apply 662 22.2 Power of Tribunal 663 22.2-1 Conditions for relief under section 242 663 22.2-2 Relief under section 242 665 22.3 Meaning of oppression 667 22.3-1 Oppression may be past or continuing nature 670
CONTENTS I-40 22.3-2 Applicability of principle of dissolution of partnership 671 22.3-3 Acts held as oppressive 672 22.3-4 Acts held as not oppressive 680 22.3-5 Matrimonial differences 686 22.4 Meaning of public interest 686 22.5 Petition to contain all material facts 687 22.5-1 True scope of section 241 687 22.6 Oppression of majority 688 22.7 Limitation 690 22.8 Prevention of mismanagement 691 22.8-1 Application to Tribunal for relief in cases of mismanagement 691 22.8-2 Relief by the Tribunal 691 22.8-3 Instance of mismanagement 692 22.8-4 Conditions precedent for obtaining relief 692 22.8-5 Acts held as mismanagement 693 22.8-6 Acts held as not mismanagement 698 22.8-7 Private agreement for investment and section 241 699 22.8-8 Oppression and mismanagement and family centred Companies 699 22.8-9 Affairs of a company include affairs of its subsidiary(ies) in appropriate cases 705 22.8-10 Waiver, estoppel or acquiescence by a shareholder holding 10% or more of shares in the company 706 22.8-11 Interim Order 706 22.8-12 Amalgamation of transferor company after filing of petition under section 241 706 22.9 Effect of Arbitration clause in the Articles/Separate Agreement 707 22.10 Appeals against the orders of the Tribunal and variation of the order of Tribunal 708 22.11 Difference between winding up proceedings and proceedings under sections 241 and 242 709 22.12 Composite/simultaneous petition under sections 241 and 271 - Whether maintainable 710 22.13 Powers of the Tribunal [Section 242] 711 22.13-1 Whether the provisions of the Evidence Act and Code of Civil Procedure are applicable to proceedings under section 241 716
I-41 CONTENTS 22.13-2 Some more cases on oppression and mismanagement 718 22.14 Class Action 726 22.14-1 Who may file an application 726 22.14-2 Against whom an application may be filed 727 22.14-3 Relief under a class action 727 22.14.4 Procedure to be followed by the Tribunal 728 22.14-5 Order of the Tribunal 730 22.14-6 Differences between application under section 241/ 244 and class action under section 245 730 23 COMPROMISES, ARRANGEMENTS, RECONSTRUCTION AND AMALGAMATION 23.1 Meaning of compromise 732 23.2 Meaning of arrangement 732 23.3 Statutory provisions regarding compromise or arrangement 734 23.4 Exercise of the Tribunal s discretion 738 23.5 Powers of the Tribunal 745 23.6 Information as to compromise or arrangement [Section 230] 750 23.6-1 Matter to be addressed in the Tribunal s order [Section 230(7)] 750 23.6-2 Is consent of stock exchange necessary for a scheme under clause 24 of Listing Agreement? 751 23.6-3 Whether a scheme of arrangement sanctioned by the Tribunal would prevail over parallel agreement between the company and a shareholder? 751 23.6-4 Financial corporations, statutory corporations and Government being shareholders/lenders etc. 751 23.6-5 Buy-back of shares affected under section 230 751 23.6-6 Takeover offer under section 230 752 23.6-7 Reduction of share capital under section 230 752 23.6-8 Debt Recovery Tribunal and the Companies Act in the context of compromise and arrangement 752 23.7 Reconstruction and amalgamation 752 23.8 Meaning of reconstruction 753 23.9 Meaning of amalgamation and merger 753 23.10 Difference between amalgamation and reconstruction 753 23.11 Reverse Merger 756 23.11-1 Features of Reverse Merger 756
CONTENTS I-42 23.11-2 Characteristics of a shell company 757 23.11-3 Legal structure and compliance 757 23.11-4 Procedure of a reverse merger 758 23.11A Legal provisions regarding reconstruction and amalgamation 759 23.12 Reconstruction/Amalgamation by sale of undertaking [Section 232] 759 23.12-1 Effect of amalgamation 765 23.12-2 Duties of the Tribunal with respect to reconstruction/ amalgamation 765 23.12-3 Amalgamation with existing company only 768 23.12-4 Synergy of operation 768 23.12-5 Compliance with the scheme 769 23.12-6 Effect on legal proceedings 769 23.12-7 Critical dates in amalgamation, mergers, etc. 770 23.12-8 Valuation of shares and fairness of exchange ratio 771 23.13 Merger and Amalgamation of certain companies [Section 233] 777 23.14 Merger or Amalgamation with foreign company [Section 234] 779 23.15 Power to acquire shares of shareholders dissenting from scheme or contract approved by majority [Section 235] 779 23.15-1 Purchase of minority shareholding [Section 236] 780 23.15-2 Registration of offer of schemes involving transfer of shares 781 23.16 Amalgamation of companies in public interest [Section 237] 785 23.16-1 Saving of proceedings 786 23.16-2 Protection of members and creditors 786 23.16-3 Role of Tribunal 787 23.17 Preservation of Books and Papers of Amalgamated Company [Section 239] 787 23.18 Offences committed prior to merger, amalgamation [Section 240] 787 23.19 Impact of stamp duty on amalgamation 787 23.20 Some more cases on compromises, arrangements, amalgamations etc. 788 Annex 23.1 Salient features of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 797
I-43 CONTENTS 24 REVIVAL AND REHABILITATION OF SICK COMPANIES 24.1 Determination of Sickness 802 24.2 Measures for revival and rehabilitation 803 24.3 Procedure in pursuant of the application 804 24.3-1 Appointment of interim administrator 804 24.3-2 Committee of creditors 804 24.3-3 Order for winding up proceeding 804 24.3-4 Appointment of company administrator 805 24.3-5 Power and duties of company administrator [Section 260] 805 24.3-6 Scheme of revival and rehabilitation 805 24.4 Sanction of the scheme 806 24.5 Winding up if scheme not approved by creditors 807 24.6 Implementation of the scheme 807 24.6-1 Conclusive evidence 807 24.6-2 Transfer of property and liabilities 807 24.6-3 Binding nature of the scheme 807 24.6-4 Modification, enforcement etc. of contracts 808 24.6-5 Company administrator to implement the scheme 808 24.6-6 Sale proceeds to be used as directed 808 24.7 Review of the sanctioned scheme 808 24.8 Liability for misfeasance etc. 808 24.9 Punishment for certain offences 809 24.10 Bar on jurisdiction 809 24.11 Rehabilitation and insolvency fund 809 25 WINDING UP 25.1 Meaning 811 25.2 Modes of winding up [Section 270(1)] 811 25.3 Winding up by the Tribunal 811 25.3-1 Inability to pay its debts [Section 271(1)(a)] 813 25.3-2 Winding up by Special Resolution [Section 271(1)(b)] 831 25.3-3 Company acting against the interests of sovereignty and integrity of India, the security of the State, the friendly relations with foreign states, public order, decency or morality [Section 271(1)(c)] 832 25.3-4 Failure of revival or rehabilitation of a sick company under Chapter XIX [Section 271(1)(d)] 833
CONTENTS I-44 25.3-5 Company s affairs been conducted in a fraudulent or unlawful manner etc. [Section 271(1)(e)] 837 25.3-6 Company making default in filing with the Registrar its Financial Statements or Annual returns for immediately preceding five consecutive financial years [Section 271(1)(f)] 838 25.3-7 Just and Equitable [Section 271(1)(g)] 838 25.4 Who can make petition [Section 272] 847 25.4-1 The Company [Section 272(1)(a)] 847 25.4-2 Creditor s petition [Section 272(1)(b)] 847 25.4-3 Contributory s petition [Section 272(1)(c)] 851 25.4-4 Joint petition [Section 272(1)(d)] 852 25.4-5 The Registrar [Section 272(1)(e)] 852 25.4-6 Person authorized by the Central Government [Section 272(1)(f)] 853 25.4-7 Central Government s/state Government s petition [Section 272(1)(g)] 853 25.4-8 Section 69 of the Indian Partnership Act and winding up 853 25.4-9 Can a petition be made for winding up by workers union of a company 853 25.4-10 Right of any other person to be heard 854 25.4-11 Admission of the winding up petition 854 25.4-12 Winding-up and the Arbitration and Conciliation Act, 1996 857 25.4-13 Procedure for making and service of the winding up petition 859 25.5 Commencement of winding up [Section 357] 860 25.6 Procedure for winding up order 861 25.6-1 Petition 861 25.6-2 Powers of the Tribunal [Section 273] 861 25.6-3 Recall of winding up order 862 25.6-4 Can winding up order be passed without hearing the company concerned 863 25.6-5 Admission of winding up petition does not necessarily lead to Winding up order 863 25.6-6 Stay of suits etc. on winding up order [Section 279] 863 25.6-7 Statement of affairs to be filed on winding up 867 25.6-8 Appointment of Company Liquidator 868
I-45 CONTENTS 25.6-9 Winding up Committee 869 25.7 Consequences of winding up order 870 25.7-1 Does Board of directors become functus officio when a company is ordered to be wound up? 874 25.7-2 Directors and Officers of the company to submit to the Tribunal audited books and account 875 25.8 Submission of report by Company Liquidator [Section 281] 875 25.9 Promoters, directors etc. to cooperate with the Company Liquidator [Section 284] 876 25.10 Advisory Committee [Section 287] 877 25.10-1 Constitution and proceedings of Advisory Committee 877 25.11 General powers of Tribunal in case of winding up by Tribunal 878 25.11-1 Power to stay winding up [Section 289] 878 25.11-2 Settlement of list of contributories [Section 285] 880 25.11-3 Delivery of property to Company Liquidator [Section 283] 880 25.11-4 Set off [Section 295] 881 25.11-5 Power to make calls [Section 296] 881 25.11-6 Power to adjust Rights of Contributories [Section 297] 882 25.11-7 Power to order costs [Section 298] 882 25.11-8 Power to Order Public Examination of Promoters, Directors, etc. [Section 300] 882 25.11-9 Power to arrest absconding person [Section 301] 883 25.11-10 Power to modify the terms and conditions after confirmation of sale of properties 883 25.12 Dissolution of company [Section 302] 883 25.12-1 Effect of order of dissolution 884 25.13 Enforcement of and appeal from orders 884 25.13-1 Enforcement of orders [Section 424(3)] 884 25.13-2 Appeals from orders [Section 421] 884 VOLUNTARY WINDING UP 25.14 Meaning and manner of voluntary winding up 885 25.15 Declaration of solvency [Section 305] 885 25.16 Meeting of creditors [Section 306] 886 25.17 Commencement of voluntary winding up 886 25.18 Consequences of voluntary winding up 887